0142_Health_Centers_Act

PUBLIC LAW 104–299—OCT. 11, 1996

HEALTH CENTERS CONSOLIDATION ACT OF
1996

110 STAT. 3626

PUBLIC LAW 104–299—OCT. 11, 1996

Public Law 104–299
104th Congress
An Act
Oct. 11, 1996
[S. 1044]
Health Centers
Consolidation Act
of 1996.
42 USC 201 note.

To amend title III of the Public Health Service Act to consolidate and reauthorize
provisions relating to health centers, and for other purposes.

Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.

This Act may be cited as the ‘‘Health Centers Consolidation
Act of 1996’’.
SEC. 2. CONSOLIDATION AND REAUTHORIZATION OF PROVISIONS.

Subpart I of part D of title III of the Public Health Service
Act (42 U.S.C. 254b et seq.) is amended to read as follows:
‘‘Subpart I—Health Centers
42 USC 254b.

‘‘SEC. 330. HEALTH CENTERS.

‘‘(a) DEFINITION OF HEALTH CENTER.—
‘‘(1) IN GENERAL.—For purposes of this section, the term
‘health center’ means an entity that serves a population that
is medically underserved, or a special medically underserved
population comprised of migratory and seasonal agricultural
workers, the homeless, and residents of public housing, by
providing, either through the staff and supporting resources
of the center or through contracts or cooperative arrangements—
‘‘(A) required primary health services (as defined in
subsection (b)(1)); and
‘‘(B) as may be appropriate for particular centers, additional health services (as defined in subsection (b)(2)) necessary for the adequate support of the primary health
services required under subparagraph (A);
for all residents of the area served by the center (hereafter
referred to in this section as the ‘catchment area’).
‘‘(2) LIMITATION.—The requirement in paragraph (1) to provide services for all residents within a catchment area shall
not apply in the case of a health center receiving a grant
only under subsection (g), (h), or (i).
‘‘(b) DEFINITIONS.—For purposes of this section:
‘‘(1) REQUIRED PRIMARY HEALTH SERVICES.—
‘‘(A) IN GENERAL.—The term ‘required primary health
services’ means—
‘‘(i) basic health services which, for purposes of
this section, shall consist of—

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110 STAT. 3627

‘‘(I) health services related to family medicine,
internal medicine, pediatrics, obstetrics, or gynecology that are furnished by physicians and where
appropriate, physician assistants, nurse practitioners, and nurse midwives;
‘‘(II) diagnostic laboratory and radiologic services;
‘‘(III) preventive health services, including—
‘‘(aa) prenatal and perinatal services;
‘‘(bb) screening for breast and cervical cancer;
‘‘(cc) well-child services;
‘‘(dd) immunizations against vaccinepreventable diseases;
‘‘(ee) screenings for elevated blood lead
levels, communicable diseases, and cholesterol;
‘‘(ff) pediatric eye, ear, and dental
screenings to determine the need for vision
and hearing correction and dental care;
‘‘(gg) voluntary family planning services;
and
‘‘(hh) preventive dental services;
‘‘(IV) emergency medical services; and
‘‘(V) pharmaceutical services as may be appropriate for particular centers;
‘‘(ii) referrals to providers of medical services and
other health-related services (including substance
abuse and mental health services);
‘‘(iii) patient case management services (including
counseling, referral, and follow-up services) and other
services designed to assist health center patients in
establishing eligibility for and gaining access to Federal, State, and local programs that provide or financially support the provision of medical, social, educational, or other related services;
‘‘(iv) services that enable individuals to use the
services of the health center (including outreach and
transportation services and, if a substantial number
of the individuals in the population served by a center
are of limited English-speaking ability, the services
of appropriate personnel fluent in the language spoken
by a predominant number of such individuals); and
‘‘(v) education of patients and the general population served by the health center regarding the availability and proper use of health services.
‘‘(B) EXCEPTION.—With respect to a health center that
receives a grant only under subsection (g), the Secretary,
upon a showing of good cause, shall—
‘‘(i) waive the requirement that the center provide
all required primary health services under this paragraph; and
‘‘(ii) approve, as appropriate, the provision of certain required primary health services only during certain periods of the year.
‘‘(2) ADDITIONAL HEALTH SERVICES.—The term ‘additional
health services’ means services that are not included as
required primary health services and that are appropriate to

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PUBLIC LAW 104–299—OCT. 11, 1996
meet the health needs of the population served by the health
center involved. Such term may include—
‘‘(A) environmental health services, including—
‘‘(i) the detection and alleviation of unhealthful
conditions associated with water supply;
‘‘(ii) sewage treatment;
‘‘(iii) solid waste disposal;
‘‘(iv) rodent and parasitic infestation;
‘‘(v) field sanitation;
‘‘(vi) housing; and
‘‘(vii) other environmental factors related to health;
and
‘‘(B) in the case of health centers receiving grants
under subsection (g), special occupation-related health services for migratory and seasonal agricultural workers,
including—
‘‘(i) screening for and control of infectious diseases,
including parasitic diseases; and
‘‘(ii) injury prevention programs, including prevention of exposure to unsafe levels of agricultural chemicals including pesticides.
‘‘(3) MEDICALLY UNDERSERVED POPULATIONS.—
‘‘(A) IN GENERAL.—The term ‘medically underserved
population’ means the population of an urban or rural
area designated by the Secretary as an area with a shortage
of personal health services or a population group designated
by the Secretary as having a shortage of such services.
‘‘(B) CRITERIA.—In carrying out subparagraph (A), the
Secretary shall prescribe criteria for determining the specific shortages of personal health services of an area or
population group. Such criteria shall—
‘‘(i) take into account comments received by the
Secretary from the chief executive officer of a State
and local officials in a State; and
‘‘(ii) include factors indicative of the health status
of a population group or residents of an area, the
ability of the residents of an area or of a population
group to pay for health services and their accessibility
to them, and the availability of health professionals
to residents of an area or to a population group.
‘‘(C) LIMITATION.—The Secretary may not designate
a medically underserved population in a State or terminate
the designation of such a population unless, prior to such
designation or termination, the Secretary provides reasonable notice and opportunity for comment and consults
with—
‘‘(i) the chief executive officer of such State;
‘‘(ii) local officials in such State; and
‘‘(iii) the organization, if any, which represents
a majority of health centers in such State.
‘‘(D) PERMISSIBLE DESIGNATION.—The Secretary may
designate a medically underserved population that does
not meet the criteria established under subparagraph (B)
if the chief executive officer of the State in which such
population is located and local officials of such State recommend the designation of such population based on

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110 STAT. 3629

unusual local conditions which are a barrier to access to
or the availability of personal health services.
‘‘(c) PLANNING GRANTS.—
‘‘(1) IN GENERAL.—
‘‘(A) CENTERS.—The Secretary may make grants to
public and nonprofit private entities for projects to plan
and develop health centers which will serve medically
underserved populations. A project for which a grant may
be made under this subsection may include the cost of
the acquisition and lease of buildings and equipment
(including the costs of amortizing the principal of, and
paying the interest on, loans) and shall include—
‘‘(i) an assessment of the need that the population
proposed to be served by the health center for which
the project is undertaken has for required primary
health services and additional health services;
‘‘(ii) the design of a health center program for
such population based on such assessment;
‘‘(iii) efforts to secure, within the proposed
catchment area of such center, financial and professional assistance and support for the project;
‘‘(iv) initiation and encouragement of continuing
community involvement in the development and operation of the project; and
‘‘(v) proposed linkages between the center and
other appropriate provider entities, such as health
departments, local hospitals, and rural health clinics,
to provide better coordinated, higher quality, and more
cost-effective health care services.
‘‘(B) COMPREHENSIVE SERVICE DELIVERY NETWORKS AND
PLANS.—The Secretary may make grants to health centers
that receive assistance under this section to enable the
centers to plan and develop a network or plan for the
provision of health services, which may include the provision of health services on a prepaid basis or through
another managed care arrangement, to some or to all of
the individuals which the centers serve. Such a grant may
only be made for such a center if—
‘‘(i) the center has received grants under subsection
(e)(1)(A) for at least 2 consecutive years preceding the
year of the grant under this subparagraph or has otherwise demonstrated, as required by the Secretary, that
such center has been providing primary care services
for at least the 2 consecutive years immediately preceding such year; and
‘‘(ii) the center provides assurances satisfactory to
the Secretary that the provision of such services on
a prepaid basis, or under another managed care
arrangement, will not result in the diminution of the
level or quality of health services provided to the medically underserved population served prior to the grant
under this subparagraph.
Any such grant may include the acquisition and lease
of buildings and equipment which may include data and
information systems (including the costs of amortizing the
principal of, and paying the interest on, loans), and providing training and technical assistance related to the provi-

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PUBLIC LAW 104–299—OCT. 11, 1996
sion of health services on a prepaid basis or under another
managed care arrangement, and for other purposes that
promote the development of managed care networks and
plans.
‘‘(2) LIMITATION.—Not more than two grants may be made
under this subsection for the same project, except that upon
a showing of good cause, the Secretary may make additional
grant awards.
‘‘(d) MANAGED CARE LOAN GUARANTEE PROGRAM.—
‘‘(1) ESTABLISHMENT.—
‘‘(A) IN GENERAL.—The Secretary shall establish a program under which the Secretary may, in accordance with
this subsection and to the extent that appropriations are
provided in advance for such program, guarantee the principal and interest on loans made by non-Federal lenders
to health centers funded under this section for the costs
of developing and operating managed care networks or
plans.
‘‘(B) USE OF FUNDS.—Loan funds guaranteed under
this subsection may be used—
‘‘(i) to establish reserves for the furnishing of services on a pre-paid basis; or
‘‘(ii) for costs incurred by the center or centers,
otherwise permitted under this section, as the Secretary determines are necessary to enable a center
or centers to develop, operate, and own the network
or plan.
‘‘(C) PUBLICATION OF GUIDANCE.—Prior to considering
an application submitted under this subsection, the Secretary shall publish guidelines to provide guidance on the
implementation of this section. The Secretary shall make
such guidelines available to the universe of parties affected
under this subsection, distribute such guidelines to such
parties upon the request of such parties, and provide a
copy of such guidelines to the appropriate committees of
Congress.
‘‘(2) PROTECTION OF FINANCIAL INTERESTS.—
‘‘(A) IN GENERAL.—The Secretary may not approve a
loan guarantee for a project under this subsection unless
the Secretary determines that—
‘‘(i) the terms, conditions, security (if any), and
schedule and amount of repayments with respect to
the loan are sufficient to protect the financial interests
of the United States and are otherwise reasonable,
including a determination that the rate of interest
does not exceed such percent per annum on the principal obligation outstanding as the Secretary determines to be reasonable, taking into account the range
of interest rates prevailing in the private market for
similar loans and the risks assumed by the United
States, except that the Secretary may not require as
security any center asset that is, or may be, needed
by the center or centers involved to provide health
services;
‘‘(ii) the loan would not be available on reasonable
terms and conditions without the guarantee under this
subsection; and

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110 STAT. 3631

‘‘(iii) amounts appropriated for the program under
this subsection are sufficient to provide loan guarantees under this subsection.
‘‘(B) RECOVERY OF PAYMENTS.—
‘‘(i) IN GENERAL.—The United States shall be entitled to recover from the applicant for a loan guarantee
under this subsection the amount of any payment made
pursuant to such guarantee, unless the Secretary for
good cause waives such right of recovery (subject to
appropriations remaining available to permit such a
waiver) and, upon making any such payment, the
United States shall be subrogated to all of the rights
of the recipient of the payments with respect to which
the guarantee was made. Amounts recovered under
this clause shall be credited as reimbursements to
the financing account of the program.
‘‘(ii) MODIFICATION OF TERMS AND CONDITIONS.—
To the extent permitted by clause (iii) and subject
to the requirements of section 504(e) of the Credit
Reform Act of 1990 (2 U.S.C. 661c(e)), any terms and
conditions applicable to a loan guarantee under this
subsection (including terms and conditions imposed
under clause (iv)) may be modified or waived by the
Secretary to the extent the Secretary determines it
to be consistent with the financial interest of the
United States.
‘‘(iii) INCONTESTABILITY.—Any loan guarantee
made by the Secretary under this subsection shall
be incontestable—
‘‘(I) in the hands of an applicant on whose
behalf such guarantee is made unless the applicant
engaged in fraud or misrepresentation in securing
such guarantee; and
‘‘(II) as to any person (or successor in interest)
who makes or contracts to make a loan to such
applicant in reliance thereon unless such person
(or successor in interest) engaged in fraud or misrepresentation in making or contracting to make
such loan.
‘‘(iv) FURTHER TERMS AND CONDITIONS.—Guarantees of loans under this subsection shall be subject
to such further terms and conditions as the Secretary
determines to be necessary to assure that the purposes
of this section will be achieved.
‘‘(3) LOAN ORIGINATION FEES.—
‘‘(A) IN GENERAL.—The Secretary shall collect a loan
origination fee with respect to loans to be guaranteed under
this subsection, except as provided in subparagraph (C).
‘‘(B) AMOUNT.—The amount of a loan origination fee
collected by the Secretary under subparagraph (A) shall
be equal to the estimated long term cost of the loan guarantees involved to the Federal Government (excluding
administrative costs), calculated on a net present value
basis, after taking into account any appropriations that
may be made for the purpose of offsetting such costs,
and in accordance with the criteria used to award loan
guarantees under this subsection.

110 STAT. 3632

Reports.

PUBLIC LAW 104–299—OCT. 11, 1996
‘‘(C) WAIVER.—The Secretary may waive the loan origination fee for a health center applicant who demonstrates
to the Secretary that the applicant will be unable to meet
the conditions of the loan if the applicant incurs the additional cost of the fee.
‘‘(4) DEFAULTS.—
‘‘(A) IN GENERAL.—Subject to the requirements of the
Credit Reform Act of 1990 (2 U.S.C. 661 et seq.), the
Secretary may take such action as may be necessary to
prevent a default on a loan guaranteed under this subsection, including the waiver of regulatory conditions, deferral of loan payments, renegotiation of loans, and the
expenditure of funds for technical and consultative assistance, for the temporary payment of the interest and principal on such a loan, and for other purposes. Any such
expenditure made under the preceding sentence on behalf
of a health center or centers shall be made under such
terms and conditions as the Secretary shall prescribe,
including the implementation of such organizational, operational, and financial reforms as the Secretary determines
are appropriate and the disclosure of such financial or
other information as the Secretary may require to determine the extent of the implementation of such reforms.
‘‘(B) FORECLOSURE.—The Secretary may take such
action, consistent with State law respecting foreclosure
procedures and, with respect to reserves required for furnishing services on a prepaid basis, subject to the consent
of the affected States, as the Secretary determines appropriate to protect the interest of the United States in the
event of a default on a loan guaranteed under this subsection, except that the Secretary may only foreclose on
assets offered as security (if any) in accordance with paragraph (2)(A)(i).
‘‘(5) LIMITATION.—Not more than one loan guarantee may
be made under this subsection for the same network or plan,
except that upon a showing of good cause the Secretary may
make additional loan guarantees.
‘‘(6) ANNUAL REPORT.—Not later than April 1, 1998, and
each April 1 thereafter, the Secretary shall prepare and submit
to the appropriate committees of Congress a report concerning
loan guarantees provided under this subsection. Such report
shall include—
‘‘(A) a description of the number, amount, and use
of funds received under each loan guarantee provided under
this subsection;
‘‘(B) a description of any defaults with respect to such
loans and an analysis of the reasons for such defaults,
if any; and
‘‘(C) a description of the steps that may have been
taken by the Secretary to assist an entity in avoiding
such a default.
‘‘(7) PROGRAM EVALUATION.—Not later than June 30, 1999,
the Secretary shall prepare and submit to the appropriate
committees of Congress a report containing an evaluation of
the program authorized under this subsection. Such evaluation
shall include a recommendation with respect to whether or
not the loan guarantee program under this subsection should

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be continued and, if so, any modifications that should be made
to such program.
‘‘(8) AUTHORIZATION OF APPROPRIATIONS.—There are
authorized to be appropriated to carry out this subsection such
sums as may be necessary.
‘‘(e) OPERATING GRANTS.—
‘‘(1) AUTHORITY.—
‘‘(A) IN GENERAL.—The Secretary may make grants
for the costs of the operation of public and nonprofit private
health centers that provide health services to medically
underserved populations.
‘‘(B) ENTITIES THAT FAIL TO MEET CERTAIN REQUIREMENTS.—The Secretary may make grants, for a period of
not to exceed 2 years, for the costs of the operation of
public and nonprofit private entities which provide health
services to medically underserved populations but with
respect to which the Secretary is unable to make each
of the determinations required by subsection (j)(3).
‘‘(2) USE OF FUNDS.—The costs for which a grant may
be made under subparagraph (A) or (B) of paragraph (1) may
include the costs of acquiring and leasing buildings and equipment (including the costs of amortizing the principal of, and
paying interest on, loans), and the costs of providing training
related to the provision of required primary health services
and additional health services and to the management of health
center programs.
‘‘(3) CONSTRUCTION.—The Secretary may award grants
which may be used to pay the costs associated with expanding
and modernizing existing buildings or constructing new buildings (including the costs of amortizing the principal of, and
paying the interest on, loans) for projects approved prior to
October 1, 1996.
‘‘(4) LIMITATION.—Not more than two grants may be made
under subparagraph (B) of paragraph (1) for the same entity.
‘‘(5) AMOUNT.—
‘‘(A) IN GENERAL.—The amount of any grant made in
any fiscal year under paragraph (1) to a health center
shall be determined by the Secretary, but may not exceed
the amount by which the costs of operation of the center
in such fiscal year exceed the total of—
‘‘(i) State, local, and other operational funding provided to the center; and
‘‘(ii) the fees, premiums, and third-party
reimbursements, which the center may reasonably be
expected to receive for its operations in such fiscal
year.
‘‘(B) PAYMENTS.—Payments under grants under
subparagraph (A) or (B) of paragraph (1) shall be made
in advance or by way of reimbursement and in such installments as the Secretary finds necessary and adjustments
may be made for overpayments or underpayments.
‘‘(C) USE OF NONGRANT FUNDS.—Nongrant funds
described in clauses (i) and (ii) of subparagraph (A), including any such funds in excess of those originally expected,
shall be used as permitted under this section, and may
be used for such other purposes as are not specifically

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prohibited under this section if such use furthers the objectives of the project.
‘‘(f) INFANT MORTALITY GRANTS.—
‘‘(1) IN GENERAL.—The Secretary may make grants to
health centers for the purpose of assisting such centers in—
‘‘(A) providing comprehensive health care and support
services for the reduction of—
‘‘(i) the incidence of infant mortality; and
‘‘(ii) morbidity among children who are less than
3 years of age; and
‘‘(B) developing and coordinating service and referral
arrangements between health centers and other entities
for the health management of pregnant women and children described in subparagraph (A).
‘‘(2) PRIORITY.—In making grants under this subsection
the Secretary shall give priority to health centers providing
services to any medically underserved population among which
there is a substantial incidence of infant mortality or among
which there is a significant increase in the incidence of infant
mortality.
‘‘(3) REQUIREMENTS.—The Secretary may make a grant
under this subsection only if the health center involved agrees
that—
‘‘(A) the center will coordinate the provision of services
under the grant to each of the recipients of the services;
‘‘(B) such services will be continuous for each such
recipient;
‘‘(C) the center will provide follow-up services for
individuals who are referred by the center for services
described in paragraph (1);
‘‘(D) the grant will be expended to supplement, and
not supplant, the expenditures of the center for primary
health services (including prenatal care) with respect to
the purpose described in this subsection; and
‘‘(E) the center will coordinate the provision of services
with other maternal and child health providers operating
in the catchment area.
‘‘(g) MIGRATORY AND SEASONAL AGRICULTURAL WORKERS.—
‘‘(1) IN GENERAL.—The Secretary may award grants for
the purposes described in subsections (c), (e), and (f) for the
planning and delivery of services to a special medically underserved population comprised of—
‘‘(A) migratory agricultural workers, seasonal agricultural workers, and members of the families of such migratory and seasonal agricultural workers who are within
a designated catchment area; and
‘‘(B) individuals who have previously been migratory
agricultural workers but who no longer meet the requirements of subparagraph (A) of paragraph (3) because of
age or disability and members of the families of such
individuals who are within such catchment area.
‘‘(2) ENVIRONMENTAL CONCERNS.—The Secretary may enter
into grants or contracts under this subsection with public and
private entities to—
‘‘(A) assist the States in the implementation and
enforcement of acceptable environmental health standards,
including enforcement of standards for sanitation in migra-

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110 STAT. 3635

tory agricultural worker labor camps, and applicable Federal and State pesticide control standards; and
‘‘(B) conduct projects and studies to assist the several
States and entities which have received grants or contracts
under this section in the assessment of problems related
to camp and field sanitation, exposure to unsafe levels
of agricultural chemicals including pesticides, and other
environmental health hazards to which migratory agricultural workers and members of their families are exposed.
‘‘(3) DEFINITIONS.—For purposes of this subsection:
‘‘(A) MIGRATORY AGRICULTURAL WORKER.—The term
‘migratory agricultural worker’ means an individual whose
principal employment is in agriculture on a seasonal basis,
who has been so employed within the last 24 months,
and who establishes for the purposes of such employment
a temporary abode.
‘‘(B) SEASONAL AGRICULTURAL WORKER.—The term ‘seasonal agricultural worker’ means an individual whose principal employment is in agriculture on a seasonal basis
and who is not a migratory agricultural worker.
‘‘(C) AGRICULTURE.—The term ‘agriculture’ means
farming in all its branches, including—
‘‘(i) cultivation and tillage of the soil;
‘‘(ii) the production, cultivation, growing, and
harvesting of any commodity grown on, in, or as an
adjunct to or part of a commodity grown in or on,
the land; and
‘‘(iii) any practice (including preparation and
processing for market and delivery to storage or to
market or to carriers for transportation to market)
performed by a farmer or on a farm incident to or
in conjunction with an activity described in clause
(ii).
‘‘(h) HOMELESS POPULATION.—
‘‘(1) IN GENERAL.—The Secretary may award grants for
the purposes described in subsections (c), (e), and (f) for the
planning and delivery of services to a special medically underserved population comprised of homeless individuals, including
grants for innovative programs that provide outreach and comprehensive primary health services to homeless children and
children at risk of homelessness.
‘‘(2) REQUIRED SERVICES.—In addition to required primary
health services (as defined in subsection (b)(1)), an entity that
receives a grant under this subsection shall be required to
provide substance abuse services as a condition of such grant.
‘‘(3) SUPPLEMENT NOT SUPPLANT REQUIREMENT.—A grant
awarded under this subsection shall be expended to supplement, and not supplant, the expenditures of the health center
and the value of in kind contributions for the delivery of services
to the population described in paragraph (1).
‘‘(4) DEFINITIONS.—For purposes of this section:
‘‘(A) HOMELESS INDIVIDUAL.—The term ‘homeless
individual’ means an individual who lacks housing (without
regard to whether the individual is a member of a family),
including an individual whose primary residence during
the night is a supervised public or private facility that

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provides temporary living accommodations and an individual who is a resident in transitional housing.
‘‘(B) SUBSTANCE ABUSE.—The term ‘substance abuse’
has the same meaning given such term in section 534(4).
‘‘(C) SUBSTANCE ABUSE SERVICES.—The term ‘substance
abuse services’ includes detoxification and residential treatment for substance abuse provided in settings other than
hospitals.
‘‘(i) RESIDENTS OF PUBLIC HOUSING.—
‘‘(1) IN GENERAL.—The Secretary may award grants for
the purposes described in subsections (c), (e), and (f) for the
planning and delivery of services to a special medically underserved population comprised of residents of public housing (such
term, for purposes of this subsection, shall have the same
meaning given such term in section 3(b)(1) of the United States
Housing Act of 1937) and individuals living in areas immediately accessible to such public housing.
‘‘(2) SUPPLEMENT NOT SUPPLANT.—A grant awarded under
this subsection shall be expended to supplement, and not supplant, the expenditures of the health center and the value
of in kind contributions for the delivery of services to the
population described in paragraph (1).
‘‘(3) CONSULTATION WITH RESIDENTS.—The Secretary may
not make a grant under paragraph (1) unless, with respect
to the residents of the public housing involved, the applicant
for the grant—
‘‘(A) has consulted with the residents in the preparation
of the application for the grant; and
‘‘(B) agrees to provide for ongoing consultation with
the residents regarding the planning and administration
of the program carried out with the grant.
‘‘(j) APPLICATIONS.—
‘‘(1) SUBMISSION.—No grant may be made under this section
unless an application therefore is submitted to, and approved
by, the Secretary. Such an application shall be submitted in
such form and manner and shall contain such information
as the Secretary shall prescribe.
‘‘(2) DESCRIPTION OF NEED.—An application for a grant
under subparagraph (A) or (B) of subsection (e)(1) for a health
center shall include—
‘‘(A) a description of the need for health services in
the catchment area of the center;
‘‘(B) a demonstration by the applicant that the area
or the population group to be served by the applicant
has a shortage of personal health services; and
‘‘(C) a demonstration that the center will be located
so that it will provide services to the greatest number
of individuals residing in the catchment area or included
in such population group.
Such a demonstration shall be made on the basis of the criteria
prescribed by the Secretary under subsection (b)(3) or on any
other criteria which the Secretary may prescribe to determine
if the area or population group to be served by the applicant
has a shortage of personal health services. In considering an
application for a grant under subparagraph (A) or (B) of subsection (e)(1), the Secretary may require as a condition to
the approval of such application an assurance that the applicant

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will provide any health service defined under paragraphs (1)
and (2) of subsection (b) that the Secretary finds is needed
to meet specific health needs of the area to be served by
the applicant. Such a finding shall be made in writing and
a copy shall be provided to the applicant.
‘‘(3) REQUIREMENTS.—Except as provided in subsection
(e)(1)(B), the Secretary may not approve an application for
a grant under subparagraph (A) or (B) of subsection (e)(1)
unless the Secretary determines that the entity for which the
application is submitted is a health center (within the meaning
of subsection (a)) and that—
‘‘(A) the required primary health services of the center
will be available and accessible in the catchment area
of the center promptly, as appropriate, and in a manner
which assures continuity;
‘‘(B) the center has made and will continue to make
every reasonable effort to establish and maintain collaborative relationships with other health care providers in
the catchment area of the center;
‘‘(C) the center will have an ongoing quality improvement system that includes clinical services and management, and that maintains the confidentiality of patient
records;
‘‘(D) the center will demonstrate its financial responsibility by the use of such accounting procedures and other
requirements as may be prescribed by the Secretary;
‘‘(E) the center—
‘‘(i) has or will have a contractual or other arrangement with the agency of the State, in which it provides
services, which administers or supervises the administration of a State plan approved under title XIX of
the Social Security Act for the payment of all or a
part of the center’s costs in providing health services
to persons who are eligible for medical assistance under
such a State plan; or
‘‘(ii) has made or will make every reasonable effort
to enter into such an arrangement;
‘‘(F) the center has made or will make and will continue
to make every reasonable effort to collect appropriate
reimbursement for its costs in providing health services
to persons who are entitled to insurance benefits under
title XVIII of the Social Security Act, to medical assistance
under a State plan approved under title XIX of such Act,
or to assistance for medical expenses under any other public
assistance program or private health insurance program;
‘‘(G) the center—
‘‘(i) has prepared a schedule of fees or payments
for the provision of its services consistent with locally
prevailing rates or charges and designed to cover its
reasonable costs of operation and has prepared a corresponding schedule of discounts to be applied to the
payment of such fees or payments, which discounts
are adjusted on the basis of the patient’s ability to
pay;
‘‘(ii) has made and will continue to make every
reasonable effort—

110 STAT. 3638

PUBLIC LAW 104–299—OCT. 11, 1996
‘‘(I) to secure from patients payment for services in accordance with such schedules; and
‘‘(II) to collect reimbursement for health services to persons described in subparagraph (F) on
the basis of the full amount of fees and payments
for such services without application of any discount; and
‘‘(iii) has submitted to the Secretary such reports
as the Secretary may require to determine compliance
with this subparagraph;
‘‘(H) the center has established a governing board
which except in the case of an entity operated by an Indian
tribe or tribal or Indian organization under the Indian
Self-Determination Act or an urban Indian organization
under the Indian Health Care Improvement Act (25 U.S.C.
1651 et seq.)—
‘‘(i) is composed of individuals, a majority of whom
are being served by the center and who, as a group,
represent the individuals being served by the center;
‘‘(ii) meets at least once a month, selects the services to be provided by the center, schedules the hours
during which such services will be provided, approves
the center’s annual budget, approves the selection of
a director for the center, and, except in the case of
a governing board of a public center (as defined in
the second sentence of this paragraph), establishes general policies for the center; and
‘‘(iii) in the case of an application for a second
or subsequent grant for a public center, has approved
the application or if the governing body has not
approved the application, the failure of the governing
body to approve the application was unreasonable;
except that, upon a showing of good cause the Secretary
shall waive, for the length of the project period, all or
part of the requirements of this subparagraph in the case
of a health center that receives a grant pursuant to subsection (g), (h), (i), or (p);
‘‘(I) the center has developed—
‘‘(i) an overall plan and budget that meets the
requirements of the Secretary; and
‘‘(ii) an effective procedure for compiling and
reporting to the Secretary such statistics and other
information as the Secretary may require relating to—
‘‘(I) the costs of its operations;
‘‘(II) the patterns of use of its services;
‘‘(III) the availability, accessibility, and acceptability of its services; and
‘‘(IV) such other matters relating to operations
of the applicant as the Secretary may require;
‘‘(J) the center will review periodically its catchment
area to—
‘‘(i) ensure that the size of such area is such that
the services to be provided through the center (including any satellite) are available and accessible to the
residents of the area promptly and as appropriate;
‘‘(ii) ensure that the boundaries of such area conform, to the extent practicable, to relevant boundaries

PUBLIC LAW 104–299—OCT. 11, 1996

110 STAT. 3639

of political subdivisions, school districts, and Federal
and State health and social service programs; and
‘‘(iii) ensure that the boundaries of such area eliminate, to the extent possible, barriers to access to the
services of the center, including barriers resulting from
the area’s physical characteristics, its residential patterns, its economic and social grouping, and available
transportation;
‘‘(K) in the case of a center which serves a population
including a substantial proportion of individuals of limited
English-speaking ability, the center has—
‘‘(i) developed a plan and made arrangements
responsive to the needs of such population for providing
services to the extent practicable in the language and
cultural context most appropriate to such individuals;
and
‘‘(ii) identified an individual on its staff who is
fluent in both that language and in English and whose
responsibilities shall include providing guidance to
such individuals and to appropriate staff members with
respect to cultural sensitivities and bridging linguistic
and cultural differences; and
‘‘(L) the center, has developed an ongoing referral relationship with one or more hospitals.
For purposes of subparagraph (H), the term ‘public center’
means a health center funded (or to be funded) through a
grant under this section to a public agency.
‘‘(4) APPROVAL OF NEW OR EXPANDED SERVICE APPLICATIONS.—The Secretary shall approve applications for grants
under subparagraph (A) or (B) of subsection (e)(1) for health
centers which—
‘‘(A) have not received a previous grant under such
subsection; or
‘‘(B) have applied for such a grant to expand their
services;
in such a manner that the ratio of the medically underserved
populations in rural areas which may be expected to use the
services provided by such centers to the medically underserved
populations in urban areas which may be expected to use
the services provided by such centers is not less than two
to three or greater than three to two.
‘‘(k) TECHNICAL AND OTHER ASSISTANCE.—The Secretary may
provide (either through the Department of Health and Human
Services or by grant or contract) all necessary technical and other
nonfinancial assistance (including fiscal and program management
assistance and training in such management) to any public or
private nonprofit entity to assist entities in developing plans for,
or operating as, health centers, and in meeting the requirements
of subsection (j)(2).
‘‘(l) AUTHORIZATION OF APPROPRIATIONS.—
‘‘(1) IN GENERAL.—For the purpose of carrying out this
section, in addition to the amounts authorized to be appropriated under subsection (d), there are authorized to be appropriated $802,124,000 for fiscal year 1997, and such sums as
may be necessary for each of the fiscal years 1998 through
2001.
‘‘(2) SPECIAL PROVISIONS.—

110 STAT. 3640

PUBLIC LAW 104–299—OCT. 11, 1996

‘‘(A) PUBLIC CENTERS.—The Secretary may not expend
in any fiscal year, for grants under this section to public
centers (as defined in the second sentence of subsection
(j)(3)) the governing boards of which (as described in subsection (j)(3)(G)(ii)) do not establish general policies for
such centers, an amount which exceeds 5 percent of the
amounts appropriated under this section for that fiscal
year. For purposes of applying the preceding sentence,
the term ‘public centers’ shall not include health centers
that receive grants pursuant to subsection (h) or (i).
‘‘(B) DISTRIBUTION OF GRANTS.—
‘‘(i) FISCAL YEAR 1997.—For fiscal year 1997, the
Secretary, in awarding grants under this section shall
ensure that the amounts made available under each
of subsections (g), (h), and (i) in such fiscal year bears
the same relationship to the total amount appropriated
for such fiscal year under paragraph (1) as the amounts
appropriated for fiscal year 1996 under each of sections
329, 340, and 340A (as such sections existed one day
prior to the date of enactment of this section) bears
to the total amount appropriated under sections 329,
330, 340, and 340A (as such sections existed one day
prior to the date of enactment of this section) for such
fiscal year.
‘‘(ii) FISCAL YEARS 1998 AND 1999.—For each of
the fiscal years 1998 and 1999, the Secretary, in awarding grants under this section shall ensure that the
proportion of the amounts made available under each
of subsections (g), (h), and (i) is equal to the proportion
of amounts made available under each such subsection
for the previous fiscal year, as such amounts relate
to the total amounts appropriated for the previous
fiscal year involved, increased or decreased by not more
than 10 percent.
‘‘(3) FUNDING REPORT.—The Secretary shall annually prepare and submit to the appropriate committees of Congress
a report concerning the distribution of funds under this section
that are provided to meet the health care needs of medically
underserved populations, including the homeless, residents of
public housing, and migratory and seasonal agricultural workers, and the appropriateness of the delivery systems involved
in responding to the needs of the particular populations. Such
report shall include an assessment of the relative health care
access needs of the targeted populations and the rationale
for any substantial changes in the distribution of funds.
‘‘(m) MEMORANDUM OF AGREEMENT.—In carrying out this section, the Secretary may enter into a memorandum of agreement
with a State. Such memorandum may include, where appropriate,
provisions permitting such State to—
‘‘(1) analyze the need for primary health services for medically underserved populations within such State;
‘‘(2) assist in the planning and development of new health
centers;
‘‘(3) review and comment upon annual program plans and
budgets of health centers, including comments upon allocations
of health care resources in the State;

PUBLIC LAW 104–299—OCT. 11, 1996

110 STAT. 3641

‘‘(4) assist health centers in the development of clinical
practices and fiscal and administrative systems through a technical assistance plan which is responsive to the requests of
health centers; and
‘‘(5) share information and data relevant to the operation
of new and existing health centers.
‘‘(n) RECORDS.—
‘‘(1) IN GENERAL.—Each entity which receives a grant under
subsection (e) shall establish and maintain such records as
the Secretary shall require.
‘‘(2) AVAILABILITY.—Each entity which is required to establish and maintain records under this subsection shall make
such books, documents, papers, and records available to the
Secretary or the Comptroller General of the United States,
or any of their duly authorized representatives, for examination,
copying or mechanical reproduction on or off the premises of
such entity upon a reasonable request therefore. The Secretary
and the Comptroller General of the United States, or any
of their duly authorized representatives, shall have the authority to conduct such examination, copying, and reproduction.
‘‘(o) DELEGATION OF AUTHORITY.—The Secretary may delegate
the authority to administer the programs authorized by this section
to any office, except that the authority to enter into, modify, or
issue approvals with respect to grants or contracts may be delegated
only within the central office of the Health Resources and Services
Administration.
‘‘(p) SPECIAL CONSIDERATION.—In making grants under this
section, the Secretary shall give special consideration to the unique
needs of sparsely populated rural areas, including giving priority
in the awarding of grants for new health centers under subsections
(c) and (e), and the granting of waivers as appropriate and permitted
under subsections (b)(1)(B)(i) and (j)(3)(G).
‘‘(q) AUDITS.—
‘‘(1) IN GENERAL.—Each entity which receives a grant under
this section shall provide for an independent annual financial
audit of any books, accounts, financial records, files, and other
papers and property which relate to the disposition or use
of the funds received under such grant and such other funds
received by or allocated to the project for which such grant
was made. For purposes of assuring accurate, current, and
complete disclosure of the disposition or use of the funds
received, each such audit shall be conducted in accordance
with generally accepted accounting principles. Each audit shall
evaluate—
‘‘(A) the entity’s implementation of the guidelines
established by the Secretary respecting cost accounting,
‘‘(B) the processes used by the entity to meet the financial and program reporting requirements of the Secretary,
and
‘‘(C) the billing and collection procedures of the entity
and the relation of the procedures to its fee schedule and
schedule of discounts and to the availability of health insurance and public programs to pay for the health services
it provides.
A report of each such audit shall be filed with the Secretary
at such time and in such manner as the Secretary may require.

110 STAT. 3642
Regulations.

PUBLIC LAW 104–299—OCT. 11, 1996
‘‘(2) RECORDS.—Each entity which receives a grant under
this section shall establish and maintain such records as the
Secretary shall by regulation require to facilitate the audit
required by paragraph (1). The Secretary may specify by regulation the form and manner in which such records shall be
established and maintained.
‘‘(3) AVAILABILITY OF RECORDS.—Each entity which is
required to establish and maintain records or to provide for
and audit under this subsection shall make such books, documents, papers, and records available to the Secretary or the
Comptroller General of the United States, or any of their duly
authorized representatives, for examination, copying or
mechanical reproduction on or off the premises of such entity
upon a reasonable request therefore. The Secretary and the
Comptroller General of the United States, or any of their duly
authorized representatives, shall have the authority to conduct
such examination, copying, and reproduction.
‘‘(4) WAIVER.—The Secretary may, under appropriate circumstances, waive the application of all or part of the requirements of this subsection with respect to an entity.’’.

SEC. 3. RURAL HEALTH OUTREACH, NETWORK DEVELOPMENT, AND
TELEMEDICINE GRANT PROGRAM.

(a) IN GENERAL.—Subpart I of part D of title III of the Public
Health Service Act (42 U.S.C. 254b et seq.) (as amended by section
2) is further amended by adding at the end thereof the following
new section:
42 USC 254c.

‘‘SEC. 330A. RURAL HEALTH OUTREACH, NETWORK DEVELOPMENT,
AND TELEMEDICINE GRANT PROGRAM.

‘‘(a) ADMINISTRATION.—The rural health services outreach demonstration grant program established under section 301 shall be
administered by the Office of Rural Health Policy (of the Health
Resources and Services Administration), in consultation with State
rural health offices or other appropriate State governmental entities.
‘‘(b) GRANTS.—Under the program referred to in subsection
(a), the Secretary, acting through the Director of the Office of
Rural Health Policy, may award grants to expand access to, coordinate, restrain the cost of, and improve the quality of essential
health care services, including preventive and emergency services,
through the development of integrated health care delivery systems
or networks in rural areas and regions.
‘‘(c) ELIGIBLE NETWORKS.—
‘‘(1) OUTREACH NETWORKS.—To be eligible to receive a grant
under this section, an entity shall—
‘‘(A) be a rural public or nonprofit private entity that
is or represents a network or potential network that
includes three or more health care providers or other entities that provide or support the delivery of health care
services; and
‘‘(B) in consultation with the State office of rural health
or other appropriate State entity, prepare and submit to
the Secretary an application, at such time, in such manner,
and containing such information as the Secretary may
require, including—

PUBLIC LAW 104–299—OCT. 11, 1996

110 STAT. 3643

‘‘(i) a description of the activities which the
applicant intends to carry out using amounts provided
under the grant;
‘‘(ii) a plan for continuing the project after Federal
support is ended;
‘‘(iii) a description of the manner in which the
activities funded under the grant will meet health
care needs of underserved rural populations within
the State; and
‘‘(iv) a description of how the local community or
region to be served by the network or proposed network
will be involved in the development and ongoing operations of the network.
‘‘(2) FOR-PROFIT ENTITIES.—An eligible network may include
for-profit entities so long as the network grantee is a nonprofit
entity.
‘‘(3) TELEMEDICINE NETWORKS.—
‘‘(A) IN GENERAL.—An entity that is a health care
provider and a member of an existing or proposed telemedicine network, or an entity that is a consortium of health
care providers that are members of an existing or proposed
telemedicine network shall be eligible for a grant under
this section.
‘‘(B) REQUIREMENT.—A telemedicine network referred
to in subparagraph (A) shall, at a minimum, be composed
of—
‘‘(i) a multispecialty entity that is located in an
urban or rural area, which can provide 24-hour a day
access to a range of specialty care; and
‘‘(ii) at least two rural health care facilities, which
may include rural hospitals, rural physician offices,
rural health clinics, rural community health clinics,
and rural nursing homes.
‘‘(d) PREFERENCE.—In awarding grants under this section, the
Secretary shall give preference to applicant networks that include—
‘‘(1) a majority of the health care providers serving in
the area or region to be served by the network;
‘‘(2) any federally qualified health centers, rural health
clinics, and local public health departments serving in the
area or region;
‘‘(3) outpatient mental health providers serving in the area
or region; or
‘‘(4) appropriate social service providers, such as agencies
on aging, school systems, and providers under the women,
infants, and children program, to improve access to and
coordination of health care services.
‘‘(e) USE OF FUNDS.—
‘‘(1) IN GENERAL.—Amounts provided under grants awarded
under this section shall be used—
‘‘(A) for the planning and development of integrated
self-sustaining health care networks; and
‘‘(B) for the initial provision of services.
‘‘(2) EXPENDITURES IN RURAL AREAS.—
‘‘(A) IN GENERAL.—In awarding a grant under this
section, the Secretary shall ensure that not less than 50
percent of the grant award is expended in a rural area
or to provide services to residents of rural areas.

110 STAT. 3644

42 USC 254b
note.

PUBLIC LAW 104–299—OCT. 11, 1996

‘‘(B) TELEMEDICINE NETWORKS.—An entity described
in subsection (c)(3) may not use in excess of—
‘‘(i) 40 percent of the amounts provided under a
grant under this section to carry out activities under
paragraph (3)(A)(iii); and
‘‘(ii) 20 percent of the amounts provided under
a grant under this section to pay for the indirect costs
associated with carrying out the purposes of such
grant.
‘‘(3) TELEMEDICINE NETWORKS.—
‘‘(A) IN GENERAL.—An entity described in subsection
(c)(3), may use amounts provided under a grant under
this section to—
‘‘(i) demonstrate the use of telemedicine in facilitating the development of rural health care networks
and for improving access to health care services for
rural citizens;
‘‘(ii) provide a baseline of information for a systematic evaluation of telemedicine systems serving rural
areas;
‘‘(iii) purchase or lease and install equipment; and
‘‘(iv) operate the telemedicine system and evaluate
the telemedicine system.
‘‘(B) LIMITATIONS.—An entity described in subsection
(c)(3), may not use amounts provided under a grant under
this section—
‘‘(i) to build or acquire real property;
‘‘(ii) purchase or install transmission equipment
(such as laying cable or telephone lines, microwave
towers, satellite dishes, amplifiers, and digital switching equipment); or
‘‘(iii) for construction, except that such funds may
be expended for minor renovations relating to the
installation of equipment;
‘‘(f) TERM OF GRANTS.—Funding may not be provided to a
network under this section for in excess of a 3-year period.
‘‘(g) AUTHORIZATION OF APPROPRIATIONS.—For the purpose of
carrying out this section there are authorized to be appropriated
$36,000,000 for fiscal year 1997, and such sums as may be necessary
for each of the fiscal years 1998 through 2001.’’.
(b) TRANSITION.—The Secretary of Health and Human Services
shall ensure the continued funding of grants made, or contracts
or cooperative agreements entered into, under subpart I of part
D of title III of the Public Health Service Act (42 U.S.C. 254b
et seq.) (as such subpart existed on the day prior to the date
of enactment of this Act), until the expiration of the grant period
or the term of the contract or cooperative agreement. Such funding
shall be continued under the same terms and conditions as were
in effect on the date on which the grant, contract or cooperative
agreement was awarded, subject to the availability of appropriations.
SEC. 4. TECHNICAL AND CONFORMING AMENDMENTS.

(a) IN GENERAL.—The Public Health Service Act is amended—
(1) in section 224(g)(4) (42 U.S.C. 233(g)(4)), by striking
‘‘under’’ and all that follows through the end thereof and inserting ‘‘under section 330.’’;

PUBLIC LAW 104–299—OCT. 11, 1996

110 STAT. 3645

(2) in section 340C(a)(2) (42 U.S.C. 256c) by striking
‘‘under’’ and all that follows through the end thereof and inserting ‘‘with assistance provided under section 330.’’; and
(3) by repealing subparts V and VI of part D of title
III (42 U.S.C. 256 et seq.).
(b) SOCIAL SECURITY ACT.—The Social Security Act is amended—
(1) in clauses (i) and (ii)(I) of section 1861(aa)(4)(A) (42
U.S.C. 1395x(aa)(4)(A) (i) and (ii)(I)) by striking ‘‘section 329,
330, or 340’’ and inserting ‘‘section 330 (other than subsection
(h))’’; and
(2) in clauses (i) and (ii)(II) of section 1905(l)(2)(B) (42
U.S.C. 1396d(l)(2)(B) (i) and (ii)(II)) by striking ‘‘section 329,
330, 340, or 340A’’ and inserting ‘‘section 330’’.
(c) REFERENCES.—Whenever any reference is made in any provision of law, regulation, rule, record, or document to a community
health center, migrant health center, public housing health center,
or homeless health center, such reference shall be considered a
reference to a health center.
(d) FTCA CLARIFICATION.—For purposes of section 224(k)(3)
of the Public Health Service Act (42 U.S.C. 233(k)(3)), transfers
from the fund described in such section for fiscal year 1996 shall
be deemed to have occurred prior to December 31, 1995.
(e) ADDITIONAL AMENDMENTS.—After consultation with the
appropriate committees of the Congress, the Secretary of Health
and Human Services shall prepare and submit to the Congress
a legislative proposal in the form of an implementing bill containing
technical and conforming amendments to reflect the changes made
by this Act.
SEC. 5. EFFECTIVE DATE.

42 USC 254b
note.

42 USC 254b
note.

42 USC 233 note.

This Act and the amendments made by this Act shall become
effective on October 1, 1997.
Approved October 11, 1996.

LEGISLATIVE HISTORY—S. 1044:
SENATE REPORTS: No. 104–186 (Comm. on Labor and Human Resources).
CONGRESSIONAL RECORD, Vol. 142 (1996):
Sept. 20, considered and passed Senate.
Sept. 27, considered and passed House.

Æ