1390
PUBLIC LAW 92-603~OCT. 30, 1972
[86 STAT.
DKMOXSTKATIOXS AXl) HEPOKTS; rKOSPECTIVE REIMBURSEMENT; EXTENDED C A R E; INTERMEDIATE CARE AND HOMEMAKER SERVICES; AMBULATORY SURGICAL C E N T E R S;
PHYSICIANS'
ASSISTANTS;
PERFORMANCE
INCEN-
TIVE CONTRACTS
42 USC 1395. 701^ "^^ ^^^^'
42 USC 13951. 42 USC i3 95t,
SEC. 222. (a)(1) The Secretary of Health, Education, and "Welfare, directly or through contracts with, or grants to, public or private agencies or organizations, shall develop and carry out experiments and demonstration projects designed to determine the relative advantages and disadvantages of various alternative methods of making payment on a prospective basis to hospitals, skilled nursing facilities, and other providers of services for care and services provided by them under title X VIII of the Social Security Act and under State plans approved under titles X IX and V of such Act, including alternative methods for classifying providers, for establishing prospective rates of payment, and for implementing on a gradual, selective, or other basis the establishment of a prospective payment system, in order to stimulate such providers through positive (or negative) financial incentives to use their facilities and pereonnel more efficiently and thereby to reduce the total costs of the health programs involved without adversely aft'ecting the quality of services by containing or lowering the rate of increase in provider costs that has been and is being experienced under the existing system of retroactive cost reimbursement. (2) The experiments and demonstration projects developed under paragraph (1) shall be of sufficient scope and shall be carried out on a wide enough scale to permit a thorough evaluation of the alternative methods of prospective payment under consideration while giving assurance that the results derived from the experiments and projects will obtain generally in the operation of the programs involved (without committing such programs to the adoption of any prospective payment system either locally or nationally). (3) I n the case of any experiment or demonstration project under paragraph (1), the Secretary may waive compliance with the requirements of titles X VIII, X IX, and V of the Social Security Act insofar as such requirements relate to methods of payment for services provided; and costs incurred in such experiment or project in excess of those which would otherwise be reimbursed or paid under such titles may be reimbursed or paid to the extent that such waiver applies to them (with such excess being borne by the Secretary). No experiment or demonstration project shall be developed or carried out under paragraph (1) until the Secretary obtains the advice and recommendations of specialists who are competent to evaluate the proposed experiment or project as to the soundness of its objectives, the possibilities of securing productive results, the adequacy of resources to conduct it, and its relationship to other similar experiments or projects already completed or in process; and no such experiment or project shall be actually placed in operation unless at least 30 days prior thereto a written report, prepared for purposes of notification and information only, containing a full and complete description thereof has been transmitted to the Committee on Ways and Means of the House of Representatives and to the Committee on Finance of the Senate. (4) Grants, payments under contracts, and other expenditures made for experiments and demonstration projects under this subsection shall be made in appropriate part from the Federal Hospital Insurance Trust Fund (established by section 1817 of the Social Security Act) and the Federal Supplementary Medical Insurance Trust Fund (established by section 1841 of the Social Security Act) and from funds appropriated under titles V and X IX of such Act. Grants and payments under contracts may be made either in advance or by way of
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