OPERATION OF STATE PLANS

SEC. 134. In case of any State plan for medical care which has been approved by the Board, if the Board, after reasonable notice and opportunity for hearing to the State agency administering or supervising the administration of such plan, finds

(a) that the plan has been so changed as to impose any requirement prohibited by section 132 (b), or that in the administration of the plan any prohibited requirement is imposed, with the knowledge of such State agency, in a substantial number of cases; or

(b) that in the administration of the plan there is a failure to comply substantially with any provision required by section 132 (a) to be included in the plan;

the Board shall notify such State agency that further payments will not be made to the State under such plan until the Board is satisfied that such prohibited requirement is no longer imposed, and that there is no longer any such failure to comply. Until it is so satisfied it shall make no further certification to the Secretary of the Treasury with respect to such plan for such State.

FEDERAL GRANT PERCENTAGES

SEC. 135. (a) The Federal proportion with respect to any State, for the purposes of section 133 of this title, shall be 100 per centum less the non-Federal proportion. The non-Federal proportion for each State whose per capita income is greater than or equal to the per capita income of the continental United States and for the District of Columbia, Alaska, and Hawaii shall be 50 per centum each, and the non-Federal proportion for Puerto Rico and the Virgin Islands shall be 25 per centum each. The non-Federal proportion for each State whose per capita income is less than the per capita income of the continental United States shall be that percentage which bears the same ratio to 50 per centum as the per capita income of such State bears to the per capita income of the continental United States, except that (1) the non-Federal proportion shall in no case be less than 25 per centum, and (2) the non-Federal proportion shall be rounded to the nearest whole per centum.

(b) The percentages representing the Federal proportion of total expenditures under this program shall be promulgated by the Board between July 1 and August 31 of each even-numbered year, on the basis of the average of the per capita incomes of the States and of the continental United States for the three most recent consecutive years for which satisfactory data are available from the Department of Commerce. Such promulgation shall for the purposes of this section be conclusive for each of the eight quarters in the period beginning July 1 next succeeding such promulgation: Provided, That the Board shall promulgate such percentages as soon as possible after the enactment of this Act, which promulgation shall be conclusive for the purposes of this section for each of the two fiscal years in the period beginning July 1, 1945, and ending June 30, 1947.

ADMINISTRATION

SEC. 136. (a) In carrying out the duties imposed upon it by this part, the Board is hereby authorized and directed, with the approval of the Federal Security Administrator, to enter into such agreements or cooperative working arrangements with the Surgeon General of the Public Health Service, and with the Chief of the Children's Bureau, as may be necessary to insure coordination in the administration of programs and services under this part with those under parts A and B of this title and with those under title II of this Act.

(b) Medical care under this part may be provided either (1) by the State or local public assistance agency administering the plan for medical care through (A) money payments to individuals claiming such care, or (B) payments to the persons or institutions furnishing such care or, (C) direct provision of such care; (2) in accordance with agreements (authorized in regulations by the Board) between such State or local agency and other agencies of the State or political subdivision thereof, by such other agencies; or, (3) through arrangements by a State or local public agency with the Surgeon General for services furnished under title II of this Act, on the basis of equitable payments to the Personal Health Services Account established under title II of this Act: or (4) through such combination or modification of (1), (2), or (3) as the Board may approve.

DEFINITION

SEC. 137. In this part, the term "State" includes Alaska, Hawaii, the District of Columbia, Puerto Rico, and the Virgin Islands.

TITLE II-PREPAID PERSONAL HEALTH SERVICE BENEFITS

PRIMARY PERSONAL HEALTH SERVICE BENEFITS

SEC. 201. (a) Every individual, who is currently insured, and has been determined by the Board to be eligible for benefits under this title in a current benefit year, shall be entitled to receive personal health service benefits.

DEPENDENT'S PERSONAL HEALTH SERVICE BENEFITS

(b) Every dependent (as defined in section 214 (1)) of an individual who is currently insured and who has been determined by the Board to be eligible for benefits under this title in a current benefit year, shall be entitled to receive personal health service benefits, if such dependent is not entitled to receive such benefits under subsection (a) of this section in the current benefit year.

PERSONAL HEALTH SERVICE BENEFITS FOR RETIRED AND SURVIVOR BENEFICIARIES

SEC. 202. Every individual entitled for any period to monthly benefits under title II of the Social Security Act, as amended, shall be entitled to receive personal health service benefits for the current benefit year, if such individual is not entitled to receive such benefits under section 201.

ADMINISTRATION

SEC. 203. (a) The Surgeon General of the Public Health Service shall perform the duties imposed upon him by this Act, under the supervision and direction of the Federal Security Administrator, and after consultations with the Advisory Council (hereinafter established) as to questions of general policy and administration, and in consultation with the Board shall also have the duty of studying and making recommendations as to the most effective methods of providing personal health service benefits, and as to legislation and matters of administrative policy concerning health and related subjects.

(b) The Surgeon General is hereby authorized and directed to take all necessary and practical steps, not inconsistent with the provisions of this title, to arrange for the availability of the benefits provided under this title and of services and reports required by the Board for administration under this Act. (c) In carrying out the duties imposed upon him by this title, the Surgeon General is hereby authorized and directed, after consultation with the Advisory Council as to questions of general policy and administration, and with the approval of the Federal Security Administrator, to negotiate and periodically to renegotiate agreements or cooperative working arrangements with appropriate agencies of the United States, or of any State or political subdivision thereof, and with other appropriate public agencies, and with private agencies or institutions, and with private persons or groups of persons, and with combinations thereof, to utilize their services and facilities and to pay fair, reasonable, and equitable compensation for such services or facilities, and for the Personal Health Services Account (hereinafter referred to as the "Account"), established in accordance with section 212, to receive reimbursements for services rendered with respect to individuals or services under section 209, and to negotiate and periodically renegotiate agreements or cooperative working arrangements for the purchase or availability of supplies and commodities necessary for the benefits provided under this title, and to enter into contracts for such services, facilities, supplies, and commodities (subject to the limitations specified in section 214 (h)).

(d) In carrying out the duties imposed upon him by this title, the Surgeon General is hereby authorized and directed, with the approval of the Federal Security Administrator, to enter into such agreements or cooperative working arrangements with the chief of the Children's Bureau and with the Social Security Board as may be necessary to ensure coordination in the administration of programs and services under this title with those under parts B and C of title I of this Act.

(e) In the administration of this title, the Surgeon General shall, insofar as practicable, give priority and preference to utilizing the facilities and services of State and local departments or agencies on the basis of mutual agreements with such departments or agencies.

(f) The Surgeon General may delegate to any officer or employee of the Public Health Service or of any Federal, State or local cooperating department or agency, such of his powers and duties, except that of prescribing rules and regulations, as he may consider necessary and proper to carry out the purposes of this title.

(g) The Surgeon General, after consultation with the Board, and after consultation with the Advisory Council as to questions of general policy and administration, and with the approval of the Federal Security Administrator, shall prescribe and publish such rules and regulations and require such records and reports, not inconsistent with other provisions of this Act, as may be necessary to the efficient administration of this title: Provided, That when rules and regulations relate to the performance by Federal, State, or local departments or agencies, of functions under mutual agreements made therewith, or to the establishment or determination of local areas for administrative purposes, such rules and regulations shall be made by the Surgeon General after consultation with representatives of such departments or agencies.

(h) The Surgeon General shall periodically notify the Secretary of the Treasury of obligations incurred under arrangements entered into by the Surgeon General in accordance with this section and to whom such obligations obtain and the Surgeon General shall from time to time certify disbursements from the Account to meet such obligations, and such certified disbursements shall be paid from the Account by the Secretary of the Treasury.

(i) Except with respect to States or local areas for which other arrangements have been made, under the provisions of this section, the Surgeon General shall appoint local-area committees to aid in the administration of this title. The members of such local-area committees shall be selected from panels of names submitted by the professional and other agencies and organizations concerned with medical, dental, and nursing services and education and with the operation of hospitals and laboratories and from among other persons, agencies, or organizations informed on the need for or provision of medical, dental, nursing, hospital, laboratory, or related services and benefits. The membership of such local-area committees shall include (1) medical and other professional representatives, and (2) public representatives, in such proportions as are likely to provide fair representation to the principal interested groups that furnish and receive personal health services, having regard for the functions of the local-area committees. Such committees shall be consulted at frequent intervals, and shall be kept informed by the local-area officers of the Public Health Service with respect to arrangements for the availability of benefits under this title and policies to be followed in carrying out the provisions of this title. Such committees are hereby authorized to make annual and special reports, with recommendations, if any, to the local-area officers or to the Surgeon General through his State or regional officers having administrative responsibility for the respective local areas. Such committees, with the same or corresponding functions, shall be appointed by each State or local cooperating department or agency with respect to local areas for which such other arrangements have been made under the provisions of this section.

(j) There is hereby authorized to be appropriated for the fiscal year ending June 30, 1946, and for each fiscal year thereafter, a sum sufficient for all necessary expenses in carrying out the duties imposed upon the Surgeon General, the Board, and the Advisory Council by this title, including the printing of forms and reports, making such studies and demonstrations and such provisions for the training of personnel as may be expected to improve the quality of the services and promote the efficient administration of this title and for the pay allowances, and traveling expenses of commissioned officers and other personnel assigned to duty in carrying out the purposes of this title in the District of Columbia and elsewhere.

(k) Appointment is hereby authorized in the Public Health Service of such personnel and in such grades as may be necessary for the proper and efficient administration of this title, in accordance with the provisions of the civil-service laws and the Classification Act of 1923, as amended. Such personnel, and commissioned officers of the Regular or Reserve Corps of the Public Health Service. may be assigned to duty in such bureaus, divisions, sections, and other units as the Surgeon General may find it necessary to establish, with the approval of the Administrator, for carrying out the purposes of this title, without regard to

limitations otherwise specified in the Public Health Service Act (Act of July 1, 1944, 58 Stat. 682).

(1) The Surgeon General shall make a full report to Congress, at the beginning of each regular session, of the administration of the functions with which he is charged under this title. Such report shall include a record of consultations with the Advisory Council, recommendations of the Advisory Council, and comments thereon.

NATIONAL ADVISORY MEDICAL POLICY COUNCIL

SEC, 204. (a) There is hereby established a National Advisory Medical Policy Council (herein referred to as the "Advisory Council") to consist of the Surgeon General as Chairman and sixteen members to be appointed without regard to the civil-service laws by the Surgeon General and with the approval of the Federal Security Administrator. The sixteen appointed members shall be selected from panels of names submitted by the professional and other agencies and organizations concerned with medical, dental, and nursing services and education and with the operation of hospitals and laboratories and from among other persons, agencies, or organizations informed on the need for or provision of medical, dental, nursing, hospital, laboratory, or related services and benefits. The membership of the Advisory Council shall include (1) medical and other professional representatives, and (2) public representatives, in such proportions as are likely to provide fair representation to the principal interested groups that furnish and receive personal health services, having regard for the functions of the Advisory Council. The Advisory Council shall meet not less frequently than twice a year and whenever at least four of the members request a meeting. Each appointed member shall hold office for a term of four years, except that any member appointed to fill a vacancy occurring prior to the expiration of the term for which his predecessor was appointed shall be appointed for the remainder of such term, and the terms of office of the members first taking office shall expire, as designated by the Surgeon General at the time of appointment, four at the end of the first year, four at the end of the second year, four at the end of the third year, and four at the end of the fourth year after the date of appointment. Each appointed member shall receive compensation at a rate not to exceed $25 per day during the time spent in attending meetings of the Advisory Council and for the time devoted to official business of the Advisory Council under this title, inclusive of travel time; and actual and necessary traveling expenses and per diem in lieu of subsistence, allowable in accordance with the Standardized Government Travel Regulations, while away from his place of residence upon official business under this Act. The Advisory Council, and each of its appointed members, shall be provided by the Surgeon General with such secretarial, clerical or other assistants as the Congress shall authorize and provide each year for carrying out the purposes of this section.

(b) The Advisory Council shall advise the Surgeon General with reference to questions of general policy and administration in carrying out the provisions of this title, including

(1) professional standards of quality to apply to personal health service benefits;

(2) designation of specialists and consultants;

(3) methods and arrangements to stimulate and encourage the attainment of high standards through coordination of the services of general or family practitioners, specialists and consultants, laboratories, and other auxiliary services, and through the coordination of the services of physicians and dentists with those of educational and research institutions, hospitals and public-health centers, and through other useful means;

(4) standards to apply to participating hospitals, to the relations or coordination among hospitals, and to the establishment and maintenance of the list of participating hospitals;

(5) adequate and suitable methods and arrangements of paying for personal health service benefits;

(6) studies and surveys of personal health services and of the quality and adequacy of such services; and

(7) grants-in-aid for professional education and research projects.

(c) The Advisory Council shall establish special advisory, technical regional, or local committees or commissions, whose membership may include members of the Advisory Council or other persons or both, to advise upon general or special questions, professional and technical subjects, questions concerning administration, problems affecting regions or localities, and related matters.

METHODS AND POLICIES FOR ADMINISTRATION

SEC. 205. (a) Any physician, dentist, or nurse legally qualified by a State to furnish any services included as personal health service benefits under this title shall be qualified to furnish such services as benefits under this title (except as otherwise provided in subsection (c) of this section or in subsection (f) of section 214), and this provision shall extend to any group of physicians, dentists, or nurses or combinations thereof whose members are similarly qualified.

(b) Every individual entitled to receive general medical or general dental benefit shall be permitted to select, from among those designated in subsection (a) of this section, those from whom he shall receive such benefit, subject to the consent of the practitioner or group of practitioners selected, and every such individual and every group of such individuals shall be permitted to make such selection through a representative of his or their own choosing, and to change such selection.

(c) Services which shall be deemed to be specialist or consultant services, for the purposes of special rates of payment under this title, shall be those so designated by the Surgeon General, and the practitioners from among those included in subsection (a) of this section who shall be qualified as specialists or consultants and entitled to the special rates of compensation provided for specialists or consultants shall be those so designated by the Surgeon General as qualified to furnish such specialist or consultant services and only with respect to the particu lar class or classes of specialist or consultant services he shall determine for each such specialist or consultant, in accordance with general standards previously prescribed by him after consultation with the Advisory Council. In establishing such standards and in designating such specialists or consultants the Surgeon General shall utilize as far as is consistent with the purposes of this title standards and certifications developed by competent professional agencies and shall take into account the personnel resources and needs of regions and local

areas.

(d) The services of a specialist or consultant shall ordinarily be available only upon the advice of the general or family practitioner or of a specialist or consultant attending the individual. The services of specialists and consultants shall also be available when requested by an individual entitled to specialist and consultant services as benefits and approved by a medical administrative officer appointed by the Surgeon General.

(e) The Surgeon General shall publish and otherwise make known in each local area to individuals entitled to benefit under this title the names of medical and dental practitioners and groups of practitioners who have agreed to furnish services as benefits under this title and to make such lists of names readily available to individuals entitled to benefits under this title. Such lists of names shall include general or family practitioners and qualified specialists and consultants, respectively, and with respect to qualified specialists and consultants the class or classes of specialist or consultant services for which each has been qualified.

(f) The methods of administration, including the methods of making payments to practitioners, shall

(1) insure the prompt and efficient care of individuals entitled to personal health service benefits;

(2) promote personal relationships between physician and patient; (3) provide professional and financial incentives for the professional advancement of practitioners and encourage high standards in the quality of services furnished as benefits under this title through the adequacy of payments to practitioners, assistance in their use of opportunities for postgraduate study, coordination among the services furnished by general or family practitioners, specialists and consultants, laboratory, and other auxiliary services, coordination among the services furnished by practitioners, hos pitals, public-health centers, educational, research, and other institutions, and between preventive and curative services, and otherwise;

(4) aid in the prevention of disease, disability, and premature death; and (5) insure the provision of adequate service with the greatest economy consistent with high standards of quality.

(g) Payments from the Account to general medical and family practitioners or to general dental practitioners, for services under this part,shall be made(1) on the basis of fees for services rendered to individuals entitled to benefits, according to a fee schedule;

(2) on a per capita basis, the amount being according to the number of individuals entitled to benefit who are on the practitioner's list;