Omnibus Budget Reconciliation Act of 1986

(Conference report filed in House, H. Rept. 99-1012)

Omnibus Budget Reconciliation Act of 1986 - Title I: Agricultural Programs - Subtitle A: Sale of Notes - Directs the Secretary of Agriculture to sell notes and other obligations held in the Rual Development Insurance Fund in such amounts as to realize specified minimum net proceeds from sales during FY 1987 through 1989.

Amends the Consolidated Farm and Rural Development Act to permit the sale of such notes on a nonrecourse basis. Relieves the Secretary and any subsequent purchaser of such notes of any responsibilities that might have been imposed had the borrower remained indebted to the Secretary.

Makes institutions of the Farm Credit System eligible to purchase such notes and to service, collect, and dispose of them, subject only to such terms and conditions as may be agreed to by the Secretary and such purchasing institutions, with the approval of the Farm Credit Administration.

Requires the Secretary to require persons offering to purchase an obligation to demonstrate ability or resources to continue servicing the loan in question.

Prohibits, during FY 1987 through 1989, the sale of any note out of the Agricultural Credit Insurance Fund, except in connection with transactions with the Secretary of the Treasury, without prior approval by the Congress.

Subtitle B: Prepayment of Loans - Amends the Rural Electrification Act of 1936 to permit a borrower of a guaranteed loan made by the Federal Financing Bank to prepay such loan by paying the outstanding principal balance due, if: (1) the loan is outstanding on July 2, 1986; (2) private capital, with the existing loan guarantee, is used to replace the loan; and (3) the borrower certifies that any savings from such prepayment will be passed on to its customers or used to improve the financial strength of the borrower in cases of financial hardship.

Declares that no sums in addition to the payment of the outstanding principal balance due may be charged as the result of such prepayment against the borrower, the fund, or the Rural Electrification Administration.

Prohibits any borrower from qualifying for prepayment if, in the Secretary of the Treasury's opinion, prepayment in the borrower's case would adversely affect the Bank's operation. Limits this prohibition, during FY 1987, to any loan the prepayment of whose principal amount will cause the cumulative amount of net proceeds from such prepayments to exceed $2,017,500,000. Directs the Administrator of the Rural Electric Administration to permit prepayment during FY 1987 in such amounts as to realize net proceeds from such prepayments in FY 1987 in an amount not less than $2,017,500,000. Directs the Administrator to establish eligibility criteria to ensure that any loan prepayment activity will be directed to those cooperative borrowers in greatest need of benefits.

Permits the Administrator to require that transferred or assigned loan guarantees be grouped with nonguaranteed loans or securities and sold in a way that does not unreasonably compete with the marketing of U.S. obligations.

Declares that a direct or insured loan made under such Act shall not be sold or prepaid at less than the face value of any outstanding principal balance of such loan, except under specified conditions.

Directs the Secretary of Agriculture to issue regulations to implement this subtitle within 15 days after enactment of this Act.

Subtitle C: Advance Deficiency Payments - Directs the Secretary to make advance deficiency payments available for the 1987 crops of wheat, feed grains, upland cotton, and rice. Declares that the projected rate used in computing such payments shall not be less than: (1) 40 percent in the case of wheat and feed grains; or (2) 30 percent in the case of rice and upland cotton.

Subtitle D: Farm Credit Institutions - Farm Credit Act Amendments of 1986 - Amends the Farm Credit Act of 1971 to terminate the Farm Credit Administration's (FCA) prior approval authority over Farm Credit System (FCS) loan interest rates.

Authorizes FCS banks, through December 31, 1988, and subject to FCA approval, to reduce borrowing costs by capitalizing "excess" borrowing costs (amounts by which debt incurred before January 1, 1985, exceeds prevailing market rates) and loan losses and amortizing such amounts over 20 years.

Declares that interest rates on loans from FCS banks shall not be subject to any interest rate limitation imposed by any State constitution or statute or other laws.

Terminates FCA's prior approval authority over interest rates on FCS direct and discounted loans.

Exempts FCS banks from having to follow generally accepted accounting principles in preparing financial statements relating to amortization of capitalized costs.

Title II: Banking and Housing Programs - Directs the Secretary of Agriculture to: (1) ensure and establish guidelines for the public sale of rural housing loans sufficient to reduce FY 1987 outlays by a specified amount; (2) use the Federal Financing Bank as an agent to sell the loans or notify the Federal Financing Bank of his or her determination to sell loans directly in order to receive a higher rate of return; (3) report to specified congressional committees on the estimated discount at which loans will be sold at the initial sale and at each subsequent sale during FY 1987; and (4) report to specified congressional committees on such activity every 60 days during FY 1987. Directs the Comptroller General to audit such activity and report the results of such audit to specified congressional committees. Exempts such loan sales from any Federal or State securities law.

Amends the Export-Import Bank Act of 1945 to prescribe similar requirements for the sale of Export-Import Bank loans by the Export-Import Bank of the United States.

Title III: Energy and Environmental Programs - Subtitle A: Distribution of Petroleum Overcharge Funds - Petroleum Overcharge Distribution and Restitution Act of 1986 - Specifies procedures for the disbursement of funds collected, including interest thereon, by the Secretary of Energy (Secretary) or the courts under the Emergency Petroleum Allocation Act of 1973 or the Economic Stabilization Act of 1970 as restitution for actual or alleged overcharges or other violations of such Acts. Declares that the Secretary of the Treasury shall administer escrow accounts holding such funds for the Secretary.

Declares that nothing in this subtitle shall affect the settlement approved on July 7, 1986, in In Re: the Department of Energy Stripper Well Exemption Litigation, M.D.L. No. 378, in the United States District Court for the District of Kansas.

Prescribes guidelines for the disbursement of such funds.

Directs the Secretary to provide for disbursement of a portion or all excess amounts of such funds as indirect restitution to energy conservation programs. Requires apportionment to such programs in the same proportion as was provided by the Congress for FY 1986. Requires deposit of any remainder in the Treasury.

Bars commencement of any civil enforcement action later than: (1) September 30, 1988; or (2) six years after the date of the violation upon which the action is based.

Declares that it is the intent of the Congress that the Secretary and the Administrator of the Economic Regulatory Administration shall commence within certain time frames all cases known by them as of the enactment of this Act.

Prohibits the initiation of any audit or investigation, after January 1, 1987, for the purpose of commencing any civil enforcement action. Prohibits the initiation in any court of any review of a final agency action after: (1) 60 days after the effective date of that action; or (2) 90 days after enactment of this Act, whichever occurs later.

Requires the Secretary to maintain a specified personnel level to ensure the expeditious, effective, and efficient resolution of all civil enforcement actions.

Directs the Secretary to: (1) require that the States use restitutionary funds to supplement rather than supplant funds otherwise available for energy conservation activities; (2) report to the Congress within 60 days after enactment of this Act regarding all receipts, disbursements and commitments of funds related to the enforcement of petroleum pricing and allocation regulations; and (3) report to the Congress each fiscal year beginning in FY 1987 regarding the status of certain deficiency funds.

Terminates this subtitle 90 days after the Secretary: (1) determines that all restitutionary funds have been collected and disbursed; and (2) submits to the Congress the final receipts, disbursements, and deficiency reports. Exempts from such termination the use by any State of excess restitutionary amounts for energy conservation programs.

Subtitle B: Information and Study Requirements - Amends the Energy Policy and Conservation Act to direct the Administrator of the Federal Energy Administration to conduct on a triennial basis a survey of energy consumption in the manufacturing industries in the United States.

Directs the Secretary (acting through the Energy Information Administration) to conduct a study of domestic crude oil production and petroleum refining capacity, and to report the results of such study to the President and to the Congress within 120 days after the date of enactment of this Act. Requires the President (within 45 days after such report is transmitted to the Congress) to advise the Congress about his views on the levels at which imports of crude oil and refined petroleum products threaten national security.

Subtitle C: Strategic Petroleum Reserve - Authorizes appropriations for FY 1987 through 1989 for the acquisition, transportation, and injection of petroleum products for the Strategic Petroleum Reserve (SPR) and for any drawdown and distribution of such Reserve.

Amends the Energy Policy and Conservation Act to provide that, beginning in FY 1987 and continuing through FY 1988 and 1989 (until the quantity of crude oil in storage within the Reserve is at least 750,000,000), the President shall implement petroleum acquisition, transportation, and injection activities (to the extent of the availability of appropriated funds) at a level which assures a minimum average annual fill-rate of at least 100,000,000 barrels per day. Increases from 527,000,000 barrels to 750,000,000 barrels the quantity of crude oil that must be in storage within the SPR before any Federal share of crude oil in Naval Petroleum Reserve Numbered 1 (Elk Hills) may be disposed of (other than to the SPR) during any fiscal year. Decreases from 100,000 to 75,000 barrels per day the average rate increase of crude oil in storage in the SPR that must be met before the share of crude oil in Elk Hills may be disposed of (other than to the SPR) during any fiscal year. Repeals the requirement that the fill rate reach a specified level before the Federal share of crude oil in Elk Hills may be disposed of (other than to the SPR) during any fiscal year. Delineates the contents of the Secretary's annual and quarterly reports to the President and the Congress regarding the status of the SPR.

Subtitle D: Federal Energy Management - Amends the National Energy Conservation Policy Act to permit "average market" energy costs in calculations of the energy costs savings of energy conservation investments in Federal buildings.

Subtitle E: Fees and Charges - Directs the Federal Energy Regulatory Commission, starting in FY 1987 and in every fiscal year thereafter, to assess and collect fees and annual charges, computed on the basis of fair and equitable methods, in amounts equal to all of the costs incurred by the Commission in that fiscal year.

Subtitle F: Environmental Programs - Transfers the research and development authorities of the Department of the Interior regarding abandoned mine reclamation to the Bureau of Mines, to be implemented by the Director of such Bureau.

Directs the U.S. Environmental Protection Agency, within 60 days after enactment of this Act, to provide certain congressional committees with an interim status report on the implementation of agency responsibilities regarding the Great Swamp National Wildlife Refuge, New Jersey.

Title IV: Transportation and Related Programs - Subtitle A: Rail Related Issues - Conrail Privatization Act - Requires the Secretary of Transportation, within 30 days after enactment of this Act, to retain the services of investment banking firms to serve jointly and be compensated equally as co-lead managers of the public offering of Consolidated Rail Corporation (Conrail) stock. Specifies considerations in the selection of such firms.

Requires Conrail, within 30 days after enactment of this Act, to transfer $200,000,000 to the Secretary of the Treasury.

Specifies requirements for a public offering of Conrail stock. Sets a goal of at least $2,000,000,000 in aggregate gross proceeds from the public offering and other specified payments. Requires all costs of the public offering to be paid from proceeds of the offering.

Specifies the rail service obligations of Conrail during the five years following enactment of this Act, including minimum capital expenditures and continuation of affirmative action and minority vendor programs. Prohibits any transactions whereby all or a substantial part of the railroad assets and business of Conrail are sold or otherwise disposed of to any entity other than a wholly owned subsidiary of Conrail. Requires abandonments to be offered at 75 percent of net liquidation value. Prohibits deferral of maintenance.

Requires Conrail to maintain a minimum cash balance of $400,000,000 after payment of dividends. States that dividend payments may only be made if Conrail is in compliance with the capital expenditure and minimum cash balance requirements of this Act. Requires Conrail to provide reasonable compliance certificates to the Secretary of Transportation on a periodic basis with respect to all obligations relating to the payment of dividends, and on an annual basis with respect to all other obligations.

Limits ownership of Conrail stock by any person for a three-year period to ten percent, except for the Employee Stock Ownership Plan (ESOP). Limits ownership of Conrail stock by any Class I railroad to ten percent for one year. Prohibits the filing of any application for a merger, consolidation, or acquisition of control with respect to Conrail during such one-year period.

Provides for the Board of Directors of Conrail. States that if more than 50 percent of Conrail stock has not been sold before June 1, 1987, the special court established under the Rail Reorganization Act of 1973 shall, on that date, name three trustees who shall appoint directors. Prohibits specified persons from serving as special court trustees or directors.

Amends the Regional Rail Reorganization Act of 1973 with respect to payment of benefits by the Railroad Retirement Board to certain Conrail employees. Provides for the resolution of disputes regarding benefit eligibility by the Board.

Directs Conrail to pay $200,000,000 to present and former employees subject to collective bargaining agreements for certain wages below industry standards.

Provides for the exchange by the ESOP of Conrail Equity Corporation preferred stock for Conrail common stock. Directs the ESOP, as soon as practicable after 180 days after 100 percent of the U.S. shares of Conrail stock are sold, to distribute all of the stock in the accounts of its participants. Terminates the ESOP after completion of such distribution.

Authorizes the Secretary and any person who suffers direct and substantial economic injury as a result of an alleged violation by Conrail to bring an action to require compliance with this Act. Declares that any such action must be brought before the special court, which may limit enforcement of a restriction if its effect would be to substantially impair the continued viability of Conrail.

Abolishes the United States Railway Association as of April 1, 1987.

Withdraws the consent of the United States to be sued for acts or omissions under this subtitle, except for actions brought to require the Secretary of Transportation to perform duties or acts with respect to the public offering of Conrail stock.

Establishes standards for the disclosure of terms of contracts for the transportation of agricultural commodities.

Confirms the authority of the Interstate Commerce Commission to promulgate that portion of the rule adopted in Ex Parte No. 346 (Sub.-No. 19), served September 12, 1986, consisting of protections for small railroads.

Subtitle B: Economic Development Administration - Directs the Secretary of Commerce to sell defaulted notes held by the Economic Development Administration in such amounts as to realize net proceeds of not less than $50,000,000 from such sales during FY 1987.

Title V: Maritime Programs- Subtitle A: Maritime Loan Guarantees - Amends Federal bankruptcy provisions to provide that the filing of a petition for bankruptcy shall not operate as an automatic stay of the commencement or continuation of an action, by either the Secretary of Transportation or of Commerce, to foreclose a mortgage on a vessel under the Ship Mortgage Act, 1920. Directs each of the Secretaries, before July 1, 1989, to report to specified congressional committees on the effects of the above provisions, together with any recommendations for legislation. Amends the Merchant Marine Act of 1920 to allow either Secretary, when acting as a mortgagee under such Act, to foreclose on liens arising under title XI of the Merchant Marine Act, 1936.

Amends the Merchant Marine Act, 1936 to provide that a guaranty of a loan obligation made by either Secretary under such Act shall cover 100 percent of the principal and interest of the obligation. Lowers from 87.5 percent to 80 percent of the cost of a fishing vessel or fishery facility the amount of a loan obligation to be undertaken by the appropriate Secretary, with an exception.

Declares certain waters bordering Alaska to be internal waters under the Fishery Conservation and Management Act, until September 30, 1993, for purposes of processing pink salmon within the internal waters of the State of Alaska.

Subtitle B: Load Line and Tonnage Measurement User Fees - Amends Federal shipping provisions to require that an ocean vessel may be operated only if the vessel has been assigned load lines (load weights as measured by lines on the side of a ship near the waterline). Directs the Secretary of Transportation to assign load lines for a vessel so that they indicate the minimum safe freeboard (distance from the load line to the deck) to which the vessel may be loaded. Allows existing vessels to retain their load lines assigned before January 1, 1986, unless the Secretary deems otherwise. Authorizes the Secretary to reduce the minimum freeboard for vessels operating in areas of less severe weather and sea conditions.

Authorizes the Secretary to provide for annual, renewal, and other load line surveys. Directs the Secretary to issue a vessel a load line certificate on a survey's finding that a load line for such vessel is satisfactory and correctly marked.

Provides for the delegation of the Secretary's load line authority to the American Bureau of Shipping, certain other qualified organizations, or to a foreign country that is a party to the International Convention on Load Lines, 1966.

Outlines conditions for special exemptions by the Secretary from such load line requirements, and for reciprocity for foreign vessels operating under similar load line requirements.

Authorizes the Secretary to prescribe regulations for submersible vessels to provide minimum safety levels. Authorizes the Secretary to require vessel owners, operators, or agents to provide loading information to the person in charge of the vessel.

Sets forth certain vessel loading restrictions. Authorizes the Secretary to detain vessels believed to be in violation of these load line provisions. Authorizes the use of U.S. Customs Service personnel for enforcement purposes.

Authorizes the Secretary to prescribe regulations to carry out these provisions, and provides penalties for violations.

Authorizes the Secretary to delegate to a qualified person the authority to measure a vessel and issue an International Tonnage Certificate or other appropriate certificate of measurement. Authorizes the Secretary to delegate such authority to a foreign country that is a party to the International Convention on Tonnage Measurement of Ships, 1969, for ships engaged on a foreign voyage.

Requires a vessel to be measured under these provisions when the application of a U.S. law to a vessel depends on the vessel's tonnage. Directs the Secretary, after measuring a vessel, to issue to a vessel owner or master an International Tonnage Certificate. Outlines conditions requiring remeasurement of a vessel. Provides for optional regulatory measurement by the Secretary for certain documented vessels, specifying those provisions of Federal law to which such tonnage determinations will apply.

Provides reciprocity in the measurement of vessels for foreign countries whose laws are similar or who are a party to the aforementioned International Convention. Authorizes the Secretary to inspect foreign vessels to determine measurement compliance.

Outlines provisions concerning vessel measurement by the Secretary in accordance with specified regulatory measurement requirements. Provides for vessel remeasurement in appropriate circumstances. Provides for the standard tonnage measurement and the dual tonnage measurement of such vessels. Provides for the tonnage measurements of vessels not otherwise covered under the above provisions. Provides civil penalties for general violations and false statements related to vessel measurement under these provisions.

Requires amounts collected as Coast Guard user fees by either the Secretary of Transportation or the Secretary of the department in which the Coast Guard is operating to be deposited in the general fund of the Treasury as proprietary. Outlines conditions under which such fees may and may not be charged. Directs the Secretary of Transportation, before January 1 of each year, to report to the Senate Commerce, Science, and Transportation Committee and the House Merchant Marine and Fisheries Committee concerning the application and collection of such user fees.

Authorizes the Secretary to issue a temporary certificate of documentation for a vessel before it is measured.

Requires the Secretary, before July 19, 1990, to submit to the Congress a study concerning vessel tonnage requirements and thresholds. Requires an interim progress report on such study to be submitted before July 19, 1988. Repeals specified Federal provisions made inconsistent by the above provisions.

Subtitle C: Establishment of a Timetable for Compensation of Coast Guard Offshore Safety Studies - Directs the Secretary of the department in which the Coast Guard is operating (the Secretary) to issue final regulations pursuant to the advance notice of proposed rulemaking regarding the revision of the regulations on outer Continental Shelf activities, taking into consideration the use of standby vessels for personnel evacuations from manned installations on the outer Continental Shelf. Requires an interim report from the Secretary to the Congress, before December 31, 1986, and a final report, before September 1, 1987, concerning such regulations and evacuation procedures.

Title VI: Civil Service, Postal Service, and Governmental Affairs Generally - Amends the Federal Employees' Retirement System Act of 1986 to change the date on which post-1983 employees may make contributions to the Thrift Savings Plan from January 1, 1987, to April 1, 1987. Changes the date that other Federal employees may begin contributing to the Plan from July 1, 1987, to April 1, 1987. Allows employees to increase their contributions during such periods until September 30, 1987.

Provides for the Secretary of the Treasury to suspend additional investments of amounts in the Civil Service Retirement and Disability Fund if such investments could not be made without exceeding the public debt limit.

Amends Federal law to revise the method by which revenue forgone is computed for reduced-rate mail and mailers. Assumes that the combination of postage and appropriations to be received for each of the reduced-rate categories will bear the same ratio to the costs attributed to such respective categories as the revenues to be received from the most closely corresponding regular-rate category bear to the costs attributed to that regular-rate category.

Establishes administrative remedies of civil penalties and assessments to be imposed upon persons who make false claims and statements to Federal agencies in cases involving amounts less than $150,000. Requires agencies to make annual reports to the Congress on any actions taken concerning such cases.

Title VII: Fiscal Procedures - Exempts certain Federal benefits payable in calendar years 1987 through 1991 and cost-of-living adjustments therein from modification, suspension, or reduction pursuant to a presidential sequestration order.

Amends the Balanced Budget and Emergency Deficit Control Act of 1985 (Gramm-Rudman- Hollings Act) to exempt from any benefit reduction under such Act the dual benefits payments account in the Treasury (60-0111-0-1-601) pertaining to certain railroad retirement benefits. Applies such exemption to fiscal years beginning FY 1987.

Restores provisions repealed by the Consolidated Omnibus Budget Reconciliation Act of 1985 concerning the computation of retirement annuities for part-time employees of the Veterans Administration's Department of Medicine and Surgery.

Directs the Secretary of the Treasury, by September 30, 1986, to make the installment payment of revenue sharing funds required to be paid by October 5, 1986.

Requires the provisions of the Higher Education Amendments of 1986 to be treated as if they were included in this Act.

Amends the Consolidated Omnibus Budget Reconciliation Act of 1985 to revise and extend provisions setting forth Senate procedures regarding extraneous material and germaneness in the consideration of a reconciliation bill or resolution.

Amends the Higher Education Act to revise provisions governing the allocation formula for grants to institutions with special needs.

Authorizes the city of Boston, Massachusetts, to: (1) retain any land disposition proceeds from the financially closed-out Government Center Urban Renewal Project not paid to the Department of Housing and Urban Development; and (2) use such proceeds in accordance with the requirements of the community development block grant program.

Title VIII: Revenues, Trade, and Related Programs - Subtitle A: Revenue Provisions - Part I: Increases in Certain Penalties - Increases from five percent to ten percent the penalty for underpayments of tax deposits.

Increases from ten percent to 25 percent the penalty for a substantial underpayment of tax liability.

Part II: Certain Excise Tax Deposits Accelerated - Revises the payment schedule for excise taxes on: (1) tobacco products and cigarette papers and tubes; and (2) distrilled spirits, wines, and beer.

Part III: Tax Treatment of Conrail Public Sale - Provides that Conrail shall be treated as a new corporation which purchased all of its assests as of the beginning of the day after the date of the public sale for an amount equal to the deemed purchase price. Provides that the deemed purchase price shall be allocated among the assets of Conrail in accordance with specified regulations. Sets forth the method of calculating the deemed purchase price.

Provides that no income shall be realized from the cancellation of debt or preferred stock of Conrail.

Disallows an income tax deduction to Conrail for any amount which is paid after the date of the public sale to employees of Conrail for services performed on or before the date of the public sale.

Waives certain employee stock ownership plan provisions for the employee stock ownership plans of Conrail.

Part IV: Tax on Petroleum and Oil Spill Liability Trust Fund - Subpart A: Tax Provisions If Superfund Amendments Not Enacted - Increases the environmental tax on petroleum from 0.79 cent per barrel to the sum of a 0.79 cent per barrel Hazardous Substance Superfund financing rate and a 1.3 cent per barrel Oil Spill Liability Trust Fund financing rate. Provides that such increase in tax shall not take effect if the Superfund Amendments and Reauthorization Act of 1986 is enacted.

Subpart B: Tax Provisions If Superfund Amendments Enacted - Provides that if the Superfund Amendments and Reauthorization Act of 1986 is enacted then the rate of the environmental tax on petroleum shall be the sum of the Hazardous Substance Superfund financing rate of 8.2 cents per barrel (11.7 cents in the case of certain types of oil) and the Oil Spill Liability Trust Fund financing rate of 1.3 cents per barrel.

Subpart C: Oil Spill Liability Trust Fund - Establishes in the Treasury the "Oil Spill Liability Trust Fund" (trust fund). Transfers to such trust fund: (1) revenues raised by the Oil Spill Liability Trust Fund financing rate of the environmental tax on oil; (2) amounts received under the Comprehensive Oil Pollution Liability and Compensation Act; (3) amounts remaining in the Deep Water Port Liability Fund; (4) amounts remaining in the Offshore Oil Pollution Compensation Fund; and (5) amounts credited to such trust fund under the Federal Water Pollution Control Act.

Authorizes expenditures from such trust fund for the payment of removal costs, claims, administrative expenses, and contributions to the International Fund under the Comprehensive Oil Pollution Liability and Compensation Act. Sets forth administrative provisions for such fund.

Part V: Denial of Certain Tax Benefits with Respect to Activities in Certain Foreign Countries - Denies a foreign income tax credit, certain income tax deductions, and the deferral of income with respect to income derived from business conducted in foreign countries: (1) which the United States does not diplomatically recognize; (2) with which the United States has severed diplomatic relations; (3) with which the United States does not conduct diplomatic relations; or (4) which the Secretary of State has designated as repeatedly providing support for acts of international terrorism.

Part VI: Appropriations for IRS Enforcement - Makes appropriations for Internal Revenue Service enforcement activities for the fiscal year ending September 30, 1987.

Part VII: Study of Communication Services Not Subject to Federal Excise Tax - Requires the Secretary of the Treasury to conduct a study of communication services not subject to Federal excise tax. Requires the Secretary to submit a report of such study to specified committees of the Congress not later than June 30, 1987.

Part VIII: Amendments Related to Tax Reform Act of 1986 - Specifies that the capital cost depreciation provisions of the Tax Reform Act of 1986 shall not apply to certain trucks. Applies the at-risk rules to the low-income housing credit. Treats certain rural housing as qualified low-income housing for purposes of transitional rules applicable to low-income housing.

Part IX: Coordination With Other Provisions - Specifies that nothing in any provision of this Act (other than this title) shall be construed as: (1) imposing any tax (or exempting any person or property from any tax); (2) establishing any trust fund; or (3) authorizing amounts to be expended from any trust fund.

Subtitle B: Customs Revenues - Amends the Consolidated Omnibus Budget Reconciliation Act of 1985 to impose a customs user fee for the processing of merchandise entries. Sets forth the method of calculating such fee.

Specifies that all funds in the Customs User Fee Account shall only be available for the salaries and expenses of the United States Customs Service incurred in conducting commercial operations.

Authorizes appropriations for FY 1987 for specified activities of the United States Customs Service.

Subtitle C: Public Debt Limit and Related Provisions - Increases, until May 15, 1987, the public debt limit by $189,000,000,000.

Requires the Secretary of the Treasury to make payments to certain Government trust funds of interest lost because of noninvestments, redemptions, and disinvestments occurring after September 30, 1986, because of the public debt limit. Directs the Secretary to issue to the Department of Defense Military Retirement Fund obligations which would have been issued to such Fund on October 1, 1986, if not for the existing public debt limit.

Title IX: Income Security, Medicare, Medicaid, and Maternal and Child Health Programs - Subtitle A: OASDI Provisions - Amends title II (Old Age, Survivors and Disability Insurance) of the Social Security Act (the Act) to eliminate the requirement that there be at least a three-percent rise in the Consumer Price Index before a cost-of-living adjustment of benefits is made.

Amends the Internal Revenue Code to permit State and local government employers to directly deposit social security contributions with the Federal Government. (Currently, the State is responsible for collecting the contributions of its political subdivisions.) Places State and local government employers under a depositing schedule that conforms with the frequency required of private employers.

Subtitle B: Provisions Relating to Public Assistance - Amends title XI (General Provisions) of the Act to eliminate the requirement that States use information provided by income and eligibility verification systems, used for certain public assistance programs, to verify the eligibility of all beneficiaries of such programs.

Amends the Consolidated Budget Reconciliation Act of 1985 to hold a State harmless in FY 1987 against changes that Act effected in the annual calculation of the Federal medical assistance percentage under the AFDC program if such changes would cause a reduction of AFDC payments to the State in FY 1987.

Amends part D (Child Support) of title VI of the Act to prohibit the retroactive modification of child support arrearages except with respect to such arrearages which accumulate after the obligee or obligor which issued the child support order receives notice that the obligor or obligee has pending an active application for modification of such order.

Subtitle C: Older Americans Pension Benefits - Amends the Age Discrimination in Employment Act, the Employee Retirement Income Security Act, and the Internal Revenue Code to prohibit the reduction or discontinuation of benefit accruals or continued allocations to an employee's account under a defined benefit or contribution plan because of the employee's age. Allows limitations on the amount of benefits provided, or the number of years of service or plan participation taken into account, under a benefit plan. Makes such benefit accrual and allocation requirements inapplicable to highly compensated employees to the extent provided in regulations prescribed by the Secretary of the Treasury for the purpose of precluding discrimination in favor of such employees. Prohibits employers from excluding employees hired within five years of normal retirement age from benefit plans, but permits the extension of such employee's normal retirement age. Sets forth effective dates.

Subtitle D: Provisions Relating to Medicare - Part 1: Provisions Relating to Medicare Part A Only - Amends part A (Hospital Insurance) of title XVIII (Medicare) of the Act to set the inpatient hospital deductible at $520 in 1987. Ties future increases in the deductible to the annual increase in the average cost of a Medicare hospital discharge instead of the cost of an average day of hospital care. States that the deductible applicable to a hospital stay falling on two calandar years is the deductible in effect on the first day of hospitalization. Requires the Secretary of Health and Human Services to publish the new deductible, premium, and coinsurance amounts for 1987 within 30 days of this Act's enactment.

Increases hospital prospective payment rates by 1.15 percent for FY 1987 and by the market basket percentage minus two percent for FY 1988. Provides for the same increases in cost levels for hospitals exempt from the prospective payment system (PPS). Requires the Secretary to recalibrate the Diagnosis Related Groups (DRGs) annually. (Currently, DRGs must be recalibrated at least every four years.)

Establishes, beginning on October 1, 1986, separate prospective payment offsets for outlier payments to urban and rural hospitals. Maintains the outlier standards and thresholds in effect at that time. Alters the formula used to calculate the average standardized amounts for urban and rural hospitals under the PPS so that such amounts are based on the number of patients discharged rather than the number of hospitals. Sets the discharge threshold for regional referral center status at the lesser of $5,000 discharges or the median number of discharges in urban hospitals in the region. Provides that hospitals designated as regional referral centers as of this Act's enactment shall retain that designation from FY 1987 until FY 1990. Requires the Secretary to conduct a three-year rural secondary specialty center demonstration project testing a modified system of making Medicare payments to such centers. Extends, through FY 1988, the provision of additional payments to sole community hospitals experiencing an annual decrease of more than five percent in patient volume due to circumstances beyond their control.

Reduces payments for hospital capital costs of inpatient services by 3.5 percent in FY 1987, seven percent in FY 1988, and ten percent in FY 1989. Places certain restrictions on the Secretary's authority, which begins in FY 1988, to incorporate capital costs into the PPS.

Requires the inclusion of Puerto Rican hospitals into the PPS. Sets the prospective payment rate for such hospitals at 75 percent of the Puerto Rican standardized rate and 25 percent of the national standardized rate, providing for adjustments necessitated by certain cost and care variations among hospitals. Requires the Secretary to make the adjustments in national and regional standardized rates necessary to assure that aggregate PPS payments in FY 1988 are neither greater or less than they would have been without the inclusion of Puerto Rican hospitals in the PPS.

Requires the Secretary to develop and submit to the Congress a legislative proposal to improve the PPS so that it more accurately approximates the costs of inpatient hospital services and accounts for variations in case complexity.

Requires a hospital to give Medicare beneficiaries, upon their admission to the hospital, a written statement explaining: (1) the individual's rights to benefits for inpatient hospital and post-hospital Medicare services; (2) the circumstances under which such individual will be liable for charges for a continued hospital stay; (3) the individual's right to appeal denials of continued hospital services; and (4) the individual's liability for payment for services if such a denial of benefits is upheld on appeal. Requires hospitals to implement a discharge planning process which meets guidelines and standards, to be established by the Secretary, ensuring patients a timely and smooth transition to the most appropriate type of, and setting for, post-hospital or rehabilitative care.

Directs the Secretary to study the adequacy of standards used for hospital compliance with Medicare participation conditions in assuring the quality of hospital services. Requires the Secretary to study the adequacy with which the PPS compensates hospitals, and distributes such compensation among hospitals, for costs attributable to patients' extended hospital stays necessitated by delays in patient placement in skilled nursing facilities.

Provides that, until November 1988, hospice programs which keep their services for which Medicare coverage is denied below specified percentages and comply with certain administrative requirements shall not subsequently be denied payment for care provided. Extends such limitations on provider liability, through FY 1988, for disallowed Medicare claims for home health services provided to individuals who were not homebound or did not require skilled nursing care on an intermittent basis. Sets forth reporting requirements.

Directs the Secretary to develop a uniform needs assessment instrument enabling health care providers and fiscal intermediaries to evaluate an individual's need and ability to pay for post-hospital extended care, home-health, and long-term care services.

Amends the Social Security Amendments of 1983 to extend, through 1989, the annual report on the impact of the PPS and require the inclusion of information in such reports regarding the quality, and accessibility to Medicare beneficiaries, of post-hospital services.

Directs the Secretary to conduct, and report to the Congress by February 1989, on, a demonstration program concerning prior and concurrent authorization for Medicare post-hospital extended care and home health services.

Applies the formula used to determine additional payments for urban hospitals serving a disproportionate share of low-income patients to rural hospitals of at least 500 beds which serve a disproportionate share of low-income patients. Continues disproportionate share payments for patient discharges occurring prior to FY 1990.

Sets forth technical amendments and miscellaneous provisions.

Part 2: Provisions Relating to Parts A and B - Eliminates periodic interim payments for PPS hospitals when prompt payments have been received for three consecutive months. Permits certain PPS hospitals, such as small rural hospitals and hospitals serving a disproportionate share of low-income patients, to continue to receive periodic interim payments. Authorizes the Secretary to make accelerated payments to hospitals experiencing significant cash flow problems. Requires Medicare intermediaries and carriers to process and pay at least 95 percent of all clean Medicare claims within 30 days of receiving such claims in FY 1987. (Such time limit is to be reduced in each succeeding fiscal year until it stands at 24 days in FY 1990.) Assesses interest on late claims payments.

Amends the Tax Equity and Fiscal Responsibility Act of 1982 to repeal the requirement that health maintenance organizations (HMOs) which had a Medicare cost contract but sign a risk contract enroll two new risk contract enrollees before they convert one cost contract member. Amends the Medicare program to require HMOs and competitive medical plans (CMPs) to provide Medicare beneficiaries with an explanation of their rights as enrollees when they enroll and at least annually thereafter. Prohibits new waivers of the requirement that no more than 50 percent of such enrollees be Medicare or Medicaid (title XIX of the Act) eligible, unless more than 50 percent of the population in the area served by the organization consists of Medicare or Medicaid-eligible individuals or the organization is publicly owned and operated. Provides that, where a waiver has already been granted for some other purpose, such waiver may only be extended if the Secretary determines that the organization is making reasonable efforts to meet scheduled enrollment goals. Authorizes the Secretary to suspend the enrollment of Medicare beneficiaries or payment for newly enrolled individuals in organizations failing to comply with enrollment requirements. (Currently, the Secretary's sanction authority is limited to terminating the risk-sharing with the HMO or CMP.)

Requires HMOs and CMPs to meet the time limts for paying provider clean claims, except where the HMO or CMP is under contract with the provider. Requires HMOs and CMPs to give the Secretary access to the financial records of certain subcontractors and notification as to their loans and special financial arrangements with subcontractors, affiliates, and related parties. Authorizes the Secretary to impose a civil monetary penalty on HMOs or CMPs which substantially fail to provide medically necessary items and services, provided such failure adversely affects HMO or CMP enrollees. Requires a study into methods by which adjusted average per capita cost and adjusted community rate calculations (used in calculating payments to HMOs and CMPs) can be refined. Permits Medicare beneficiaries to disenroll from an HMO at any local office of the Social Security Administration. Authorizes HMOs and CMPs to use benefit stabilization funds to offset any FY 1986 payment reductions resulting from the Balanced Budget and Emergency Deficit Control Act of 1985 (Gramm-Rudman-Hollings Act).

Allows providers to represent beneficiaries in appeals of claim denials, but prohibits providers from charging beneficiaries for the items and services involved in the appeal or for such representation. Prohibits providers which represent beneficiaries in unsuccessful appeals of claim denials from treating representation costs as reasonable costs covered by Medicare. Gives beneficiaries the right to appeal any payment denial for home health services.

Amends part A (General Provisions) of title XI of the Act to prohibit hospitals, HMOs, and CMPs from making payments to a physician as an inducement to reduce or limit services to Medicare or Medicaid beneficiaries under the physician's care. Directs the Secretary to report to the Congress by 1988 on providing HMOs and CMPs with an appropriate exception to the incentive payment prohibition.

Directs the Secretary to arrange a study which would serve as the basis for a strategy assuring the quality of Medicare services. Requires the Secretary to designate an office to coordinate studies relating to the quality of Medicare and Medicaid services.

Counts, for the purpose of reimbursing hospitals for direct costs of medical education, all the time a resident spends in patient care activities regardless of the setting of those activities, provided the hospital is incurring substantially all of the costs for such training.

Sets limits on Medicare payments for home health service, but requires that such limits be applied on an aggregate rather than a discipline-specific basis for home health agencies.

Requires the Secretary to establish a program providing for research regarding outcomes of selected medical treatments and surgical procedures so as to assess their quality and effectiveness. Places a priority on the selection of procedures and treatments with significant costs, risks, hospitalization periods, and utilization patterns.

Authorizes appropriations from the Federal Hospital Insurance Trust Fund and the Federal Supplementary Medical Insurance Trust Fund for FY 1987 through 1989 to carry out such research. Requires that at least 90 percent of the funds available in any fiscal year be used to fund grants to, and cooperative agreements with, non-Federal research entities.

Directs that the program be administered by the National Center for Health Services Research and Health Care Technology (Center). Requires the Center to report to the Congress, within 18 months of enactment of this Act and annually thereafter, on the findings of the project.

Amends part A (General Provisions) of title XI of the Act to expand the doctrine of collateral estoppel to make it applicable when an individual has entered a plea of nolo contendere in a Federal criminal prosecution and attempts to relitigate the essential elements of the offense in civil monetary penalty proceedings charging such individual with presenting false or improper claims under the Medicare, Medicaid, or Maternal and Child Health Services (title V of the Act) programs. Authorizes officials conducting such civil monetary penalty proceedings to impose limited sanctions on any party or attorney for failing to comply with orders, failing to defend an action, or other misconduct interfering with the speedy, orderly, or fair conduct of the hearing. Defines the term "convicted", for the purposes of excluding providers convicted of Medicare or Medicaid-related crimes from participating in such programs, to include: (1) convictions entered in a local, State, or Federal court, regardless of whether an appeal is pending or the conviction has been expunged from an individual's criminal record; (2) findings of guilt by a Federal, State, or local court; (3) a plea of guilty or nolo contendere accepted by a Federal, State, or local court; and (4) convictions withheld by reason of such individual's participation in a first offender or similar program.

Requires hospitals to establish protocols for encouraging organ and tissue donation by identifying and assisting potential donors in a manner considerate of such donors' families and by notifying an organ procurement agency of potential donors. Requires hospitals performing transplants to abide by the rules of the Organ Procurement and Transplantation Network. Precludes Medicare or Medicaid payments for organ procurement, if the organ procurement agency fails to meet specified standards. Prohibits the Secretary from providing coverage to more than one organization per service area.

Prohibits, until 1992, large group health plans (covering at least 100 employees) from taking an individual's status as a disabled Medicare beneficiary into account in providing coverage. Excludes from such prohibition the consideration of an individual's receipt of Medicare end-stage renal disease benefits. Makes Medicare the secondary payor for disabled Medicare beneficiaries covered by large group health plans. Authorizes the Government to bring an action and collect double damages from primary payors to ensure that Medicare is reimbursed for payments it makes to disabled beneficiaries. Amends the Internal Revenue Code to impose an excise tax equal to 25 percent of group health plan expenses if such a plan restricts its coverage of Medicare beneficiaries in violation of this Act. Establishes a private cause of action for double damages when a workmen's compensation law, insurance policy, or group health plan which is the primary payor fails to make primary payment. Directs the Comptroller General to report to the Congress by March 1990 on the impact such changes have on the access of the disabled and their family members to employment and health insurance.

Provides Medicare part B (Supplementary Medical Insurance) coverage, beginning in 1989, for 80 percent of the lesser of the actual charge or the fee schedule, to be established by the Secretary, for the services of certified registered nurse anesthetists. Requires the Secretary to adjust the fee schedule for anesthesia services to the extent necessary to maintain total payments at the level they would be at if such services continued to be reimbursed as inpatient hospital services under part A of the Medicare program. Requires that payment for certified registered nurse anesthetist services be made on an assigned basis.

Amends the Medicare program to exempt amounts paid by vendors of goods and services to authorized purchasing agents for entities reimbursed under either program from the Act's kickback prohibitions if the purchasing agent: (1) has a written contract with each vendor and each Medicare or Medicaid-reimbursed client specifying the amount or percentage to be paid to the vendor; and (2) discloses the amount it received from the vendor. Sets forth technical amendments and miscellaneous provisions.

Part 3: Provisions Relating to Medicare Part B - Amends part B (Supplementary Medical Insurance) of the Medicare program to set the prevailing charges for nonparticipating physicians at 96 percent of the prevailing charges for participating physicians. Provides that, beginning in 1987, all physicians will receive the same increase in prevailing charges based on the percentage increase in the Medicare Economic Index (MEI). Authorizes nonparticipating physicians to annually increase their actual charges by one percent or, if their actual charges for the previous year were less than 115 percent of the prevailing charges, pursuant to a specified formula.

Directs the Secretary to simplify the HCFA (Health Care Financing Administration) Common Procedure Coding System by July 1989 to minimize the possibility that such system overstates the intensity or volume of services provided. Require's Medicare carriers to make part B payments on the basis of the simplified codes by 1990.

Requires the Secretary, in making recommendations regarding the relative value scale for physicians' services, to establish an index which considers justifiable geographic differences in the costs of practice without exacerbating the geographic maldistribution of physicians.

Requires carriers to implement programs to recruit participating physicians and familiarize beneficiaries with the participating physician program. Provides bonuses to carriers successful in increasing the proportion of physicians in their service area. Directs the Secretary to annually send a letter with title II (Old Age, Survivors and Disability Insurance) benefit checks reminding beneficiaries of the participating physician program and offering them a copy of the directory.

Prohibits physicians who do not accept assignment on a claim from charging a beneficiary for unnecessary services unless: (1) the physician did not know and could not reasonably have been expected to know that the services would be deemed unnecessary; or (2) the beneficiary was informed that Medicare coverage would be denied, but agreed to pay for the services. Requires physicians providing elective surgical procedures (at an actual charge of $500 or more) on an unassigned basis to provide the individual with a written form disclosing charges in excess of the Medicare approved charge and the coinsurance amount applicable to the procedure. Requires hospitals to make the directory available to beneficiaries and, when referring a patient to a nonparticipating physician on an outpatient basis, provide the patient with the name of at least one participating physician.

Sets forth factors which must be considered by carriers in determining reasonable charges for physicians' services. Lists tests and comparisons which may be made and effects which must be considered before the Secretary adjusts the reasonable charge for a physician's service on the grounds that it is not inherently reasonable. Authorizes the Secretary, when faced with a charge the Secretary believes is not inherently reasonable, to propose a reasonable charge or methodology for arriving at such a charge and, after giving the public and the Physician Payment Review Commission an opportunity to comment on such proposal, make a final determination regarding the charge or methodology. Requires the Secretary to review, by October 1987, the inherent reasonableness of the reasonable charges for each of the ten most costly procedures paid for under part B of the Medicare program.

Cuts the prevailing charges for participating and nonparticipating physicians providing cataract surgery by ten percent in 1987 and by an additional two percent in 1988. Limits the number of base units which may be used in computing the payment for anesthesia services during cataract surgery.

Requires a reduction of two dollars in the prospective payment rate for routine dialysis in a free-standing or hospital-based facility.

Sets limits on reductions the Secretary may make in payment rates for free-standing and hospital-based renal disease facilities. Provides that an application by an isolated essential facility for an exception to such rates shall be deemed to be approved unless the Secretary dissapproves of it within 60 days of its being filed. Directs the Secretary to report to the Congress, by 1988, on the results of a study evaluating the effects of such rate reductions on access to, and the quality of care provided to, renal disease patients.

Covers immunosuppressive drugs furnished within one year of an individual's Medicare-covered organ transplant.

Directs the Secretary to consolidate existing renal disease network areas into no fewer than 17 areas, giving existing network organizations the first opportunity to perform network functions in a newly designated area. Requires that the network council and medical review board established by each network organization have at least one patient representative. Expands the list of network organization responsibilities to include the: (1) encouragement of patient and provider participation in vocational rehabilitation programs; (2) implementation of a procedure for evaluating and resolving patient grievances; (3) necessary on-site review of facility and provider compliance with standards of care; and (4) collection of data for specified reports.

Requires the Secretary to establish by 1988, a national end-stage renal disease registry for the purpose of collecting uniform and comprehensive data on all dialysis and transplant patients.

Alters the methods of funding network organizations by requiring the Secretary to supply such organizations with 50 cents from each payment otherwise made to a dialysis facility for dialysis services. (Currently, organization funds are provided from the Medicare trust funds.)

Requires the Secretry to establish conditions on the reuse of dialysis filters by facilities and providers which voluntarily reuse such filters. Prohibits facilities, beginning in 1988, from reusing other dialysis supplies unless they are reused pursuant to conditions to be established by the Secretary.

Provides Medicare part B coverage for: (1) the items and services which an optometrist is legally authorized to provide; (2) occupational therapy services in the same manner in which outpatient physical therapy services are covered; and (3) physician-supervised services performed by a physician's assistant in a skilled nursing or intermediate care facility, a hospital, or as an assistant at surgery. Sets forth details regarding payments to physician's assistants, including the requirement that such payments be made on an assigned basis.

Eliminates the payment differential between independent laboratory tests and hospital laboratory tests on outpatients unless a hospital laboratory provides 24-hour services for a hospital's 24-hour emergency room. Postpones, until 1990, the implementation of a national fee schedule for clinical diagnostic laboratory tests performed by a physician and those performed by an independent laboratory. Authorizes payments for transportation and personnel expenses incurred in collecting laboratory samples from certain immobile beneficiaries. Allows laboratories to qualify for Medicare reimbursement if they satisfy State standards regarding the qualifications of the laboratory's director. Amends the Consolidated Omnibus Budget Reconciliation Act of 1985 to extend, until 1988, the moratorium on a demonstration project authorizing competitive bidding for laboratory services.

Directs the Secretary to pay for parenteral and entoral nutrition supplies at the lowest charge levels at which such supplies are widely and consistently available in a locality.

Establishes an appeals procedure for part B claim denials which provides for: (1) review by an administrative law judge if the amount in controversy equals or exceeds $500; and (2) judicial review if the amount in controversy equals or exceeds $1000. Authorizes judicial review of national Medicare coverage determinations provided such determinations are not: (1) overturned by reason of their not having been issued in accordance with the notice and comment procedures in the Administrative Procedure Act; or (2) reviewed by administrative law judges. Prohibits judicial review of part B payment methodologies established by instructions or regulations issued by the Secretary prior to 1981.

Directs the Secretary to conduct at least five, but no more than ten, demonstration projects to determine the feasibility and effectiveness of providing comprehensive services to Medicare beneficiaries who are victims of Alzheimer's disease or related disorders.

Requires payments to be made to hospitals for outpatient hospital services furnished in connection with surgery approved for performance in an ambulatory surgical center (ASC), in accordance with a specified formula. Directs the Secretary to annually review and update ASC prospective rates and biennially review and update the surgical procedures approved for ASC performance and reimbursement. Requires that all services (other than physician services) provided by a hospital outpatient department be billed through the hospital. Requires peer review organizations (PROs) to review the necessity and quality of ambulatory surgical procedures. Imposes the standard part B coinsurance and deductible for ambulatory surgery services. Directs the Secretary to submit to the Congress: (1) an interim report, by April 1988, and a final report, a year later, concerning the development of a fully prospective payment system for ambulatory surgical procedures by FY 1990; and (2) a report, by 1991, on a model payment system for other outpatient hospital services. Requires hospitals to use a HCFA Common Procedure Coding System by July 1, 1987, to report claims for outpatient hospital services.

Provides for the appointment of two additional members to the Physician Payment Review Commission. (Currently, there are 11 Commission members.) Sets forth technical amendments and miscellaneous provisions.

Part 4: Improved Review of Quality by Peer Review Organizations - Amends part B (Peer Review) of title XI of the Act to require peer review organizations (PROs) receiving a hospital inpatient's request for review of a hospital's decision that the patient no longer needs inpatient care, to inform the patient of its decision within one full working day of receiving the request and the patient's medical records. Prohibits hospitals from charging patients for inpatient hospital services provided while patients wait for a PRO to respond to their timely review requests.

Requires fiscal intermediaries to submit data to PROs on a monthly basis. Requires PROs to review selected cases where individuals are readmitted to a hospital within 30 days of their most recent hospital discharge to determine if the previous inpatient hospital services and post-hospital services met professionally recognized health care standards. Excludes physician services provided in an office setting from the scope of readmission review until 1989.

Directs each PRO to commit a reasonable proportion of its activities to review of the quality of services provided, concentrating on cases and settings which have a high potential of yielding quality of care problems. Requires PROs to review inpatient and outpatient services provided by HMOs and CMPs to determine whether the quality of such care meets professionally recognized standards of health care. Authorizes the use of competitive bidding in up to 25 States for PRO review of HMOs and CMPs. Requires the Secretary to: (1) identify methods facilitating the discovery of cases which are more likely than others to involve substandard care; and (2) provide at least 12 PROs with data and data processing assistance so that they may review and analyze small-area variations in the utilization of Medicare services.

Requires each PRO to have at least one consumer representative on its governing body. Directs PROs to investigate and arrive at a final disposition of all written beneficiary complaints about the quality of Medicare services which are filed with the PRO.

Requires PROs to share data with State agencies or national accreditation bodies responsible for licensing or accrediting providers or practioners if such data relates to a specific case or to a possible pattern of substandard care.

Directs providers to execute agreements with PROs for the provision of such new review activities. Reimburses providers for the costs of such agreements.

Subtitle E: Medicaid and Maternal and Child Health - Part I: Coverage of Individuals - Amends title XIX (Medicaid) of the Act to give States the option of extending coverage to women in need of pregnancy-related medical services and children up to age five whose family income exceeds current income eligibility thresholds, but does not exceed a State maximum income level to be established at or below the Federal poverty level. Leaves to each State's discretion the decision as to whether a resource standard shall be applied in determining the eligibility of such women and children, but prohibits the use of a more restrictive methodology than that used under the State plan under part A (Aid to Families with Dependent Children) of title VI of the Act. Prohibits States which provide coverage pursuant to this Act from reducing Aid to Families with Dependent Children (AFDC) payment levels after April 17, 1986.

Gives States the option of extending Medicaid coverage to elderly and disabled individuals with income too high to qualify for Medicaid under current income tests, but below a State maximum income level to be established at or below the Federal poverty level. Requires States providing coverage under this Act to provide Medicaid coverage to pregnant women and infants with income below a State maximum income level which, while at or below the Federal poverty level, is not necessarily the same as the level established for newly eligible aged and disabled individuals.

Authorizes the States to provide Medicaid coverage for Medicare premiums, deductibles, and coinsurance payments for which Medicare-eligible individuals with income below the State maximum income level would otherwise be accountable.

Provides Medicaid coverage to "qualified severely impaired individuals", defined as individuals under age 65 who received benefits under the Medicaid program and title XVI (Supplemental Security Income) (SSI) of the Act and who: (1) continue to be blind or have a disabling physical or mental impairment; (2) except for earnings, continue to meet all other SSI eligibility requirements; (3) without Medicaid coverage, would be seriously inhibited from continuing or obtaining employment; and (4) have earnings which are insufficient to provide a reasonable equivalent of the Medicaid, SSI, and attendant care benefits (under title XX of the Act) which would be available in the absence of such earnings.

Prohibits otherwise eligible individuals from being denied Medicaid benefits by reason of their failure to maintain a fixed address.

Prohibits Federal Medicaid participation payments for State expenditures on aliens who are not lawfully admitted for permanent residence or not permanently residing in the United States under color of law, unless such an alien requires emergency medical care and would otherwise be eligible for Medicaid.

Permits States to provide ambulatory prenatal care to women during a presumptive eligibility period not to exceed 45 days, if: (1) the woman has begun maternity care with a qualified provider; (2) the provider determines that the woman's family income falls below the applicable Medicaid standard and notifies the State of the woman's eligibility within five working days; and (3) the woman applies for such benefits within 14 days of being presumed eligible.

Gives States the option of covering home respiratory services for individuals who: (1) are medically dependent on a ventilator for life support for at least six hours a day; (2) have been so dependent for at least 30 consecutive days as inpatients; and (3) wish, and have adequate social support services, to be cared for at home.

Part 2: Provision of Services under Waiver Authority - Permits States to provide home and community-based Medicaid services to all individuals who, but for the provisions of such services, would require the level of Medicaid services provided in a skilled nursing or intermediate care facility or in a hospital. Authorizes States to limit their provision of Medicaid case management services to individuals with AIDS or AIDS-related conditions, or to individuals with chronic mental illness.

Waives certain Medicaid requirements to authorize the establishment of demonstration programs receiving specified private and public funding and providing a wide-range of services to chronically mentally ill Medicaid beneficiaries. Limits such programs to a three-year term with a possible two-year extension. Requires the Secretary to report to the Congress by 1993 on the services provided by such programs.

Directs the Secretary to grant Medicare and Medicaid waivers to up to ten public or non-profit private community-based organizations which have received a grant from the Robert Wood Johnson Foundation so that they may provide comprehensive health care services on a capitated basis to frail elderly patients at risk of institutionalization.

Continues, through June 30, 1989, the waiver of certain Medicare and Medicaid requirements for a Massachusetts demonstration project providing alternatives to hospital care for Medicaid-eligible nursing home patients.

Directs the Secretary to enter into an agreement with New Jersey to conduct a Medicaid demonstration project to be administered by a State health agency and provide respite care services to the elderly and disabled in order to determine the extent to which such services: (1) delay or avert the need for institutionalized care; and (2) support the family's provision of long-term care. Includes as respite care: (1) short-term sitter, homemaker, and personal-care services, adult day care, inpatient care, and emergency respite care; and (2) peer support and training for family caregivers. Provides that the State and Federal government shall each cover one-half of project costs, but sets a fiscal year limit on Federal outlays. Limits the duration of the project to four years, plus an additional period of up to six months for final evaluation and reporting. Sets forth reporting requirements.

Makes the Paperwork Reduction Act inapplicable to information required in implementing this part.

Part 3: Payments - Amends the Consolidated Budget Reconciliation Act of 1985 to hold a State harmless in FY 1987 against changes that Act effected in the annual calculation of the Federal medical assistance percentage under the Medicaid program if such changes would cause a reduction of Medicaid payments to the State in FY 1987.

Waives the prohibition of Medicaid payments for care provided preceding a three-month period before the date an application is filed by a potential Medicaid beneficiary to authorize payments to the Medical University of South Carolina for care provided between October 1, 1984, and June 30, 1985, to children and pregnant women who, but for the lack of an application, would have been eligible for such care under Medicaid at the time it was provided. Requires eligibility determinations to be made within six months of this Act's enactment.

Part 4: Other Quality and Efficiency Measures - Requires States to provide for independent, external reviews by PROs or private accreditation bodies, of the quality of services provided by HMOs.

Prohibits the Secretary from requiring States to operate Medicaid second surgical opinion programs or inpatient hospital preadmission review programs until 180 days after the Secretary submits a report (by October 1988) to the Congress on: (1) surgical procedure utilization patterns; (2) surgical procedures for which second opinion programs may be appropriate and the extent to which such programs impede access to necessary care; and (3) the number of physicians willing and qualified to perform second opinions. Directs the Secretary to conduct a study and report to the Congress by 1990 on the utilization of selected medical treatments and surgical procedures by Medicaid beneficiaries in order to assess the appropriateness, necessity, and effectiveness of such treatments and procedures.

Makes it clear that the Secretary has no authority to limit the amount of Medicaid payment adjustments that may be made with respect to hospitals that serve a disproportionate number of low-income patients with special needs.

Requires nonqualified HMOs to disclose to the State all transactions between the organization and a party in interest. Subjects all contracts with HMOs under which total Federal and State expenditures will exceed $100,000 to the prior approval of the Secretary. Directs the Secretary to delegate administrative responsibilities over State Medicaid Fraud Control Units to the Inspector General of the Department of Health and Human Services. Imposes a civil monetary penalty on prepaid health plans providing Medicaid services for each substantial failure to provide medically necessary items and services to a Medicaid beneficiary if such failure is or is likely to be detrimental to that individual.

Makes several technical corrections to, and clarifications of, the Consolidated Omnibus Budget Reconciliation Act of 1985.

Authorizes New York to pay the inpatient rate for hospital patients receiving services at an inappropriate level of care if the Secretary determines that enough hospital beds in the State have been decertified so as to reduce Medicaid payments to hospitals by an amount equal to or greater than any increase in such payments occasioned by reimbursements for inappropriate levels of care.

Part 5: Maternal and Child Health - Amends title V (Maternal and Infant Welfare) of the Act to increase the authorization level for the Maternal and Child Health Block Grant for FY 1987, 1988, and 1989. Sets aside a specified portion of funds in each such fiscal year for: (1) screening newborns for sickle-cell anemia and other genetic disorders; and (2) primary and specialized health care services and projects for children.

Directs the Secretary to establish a National Adoption Information Clearinghouse which collects, maintains, and disseminates information on various aspects of adoption.

Amends part E (Foster Care and Adoption Assistance) of title IV of the Act to direct the Secretary to create an Advisory Committee on Adoption and Foster Care Information to study and report to the Secretary and the Congress by October 1987 on the various methods of establishing, administering, and financing an adoption and foster care data collection system. Requires the Secretary to report to the Congress on a proposed data collection system by July 1988 and promulgate final regulations by 1989 providing for the system's full implementation by October 1991. Requires gathered information to be disseminated through the National Adoption Information Clearinghouse.

Subtitle F: Provisions Relating to Access to Health Care - Amends the Internal Revenue Code and the Employee Retirement Income Security Act of 1974 to make certain technical amendments relating to the continuation of employer-based health insurance coverage. Allows retirees to continue their coverage under an employer-based health insurance plan in the event of such employer's bankruptcy.