text: SECTION 1. SHORT TITLE.
  
      This Act may be cited as the ``Medicare Nonprofit Hospital 
  Protection Act of 1997''.
  
  SEC. 2. DISQUALIFICATION FROM MEDICARE PAYMENT OF NON-PROFIT HOSPITALS 
                THAT TRANSFER ASSETS OR CONTROL TO A FOR-PROFIT ENTITY 
                WITHOUT APPROVAL.
  
      (a) In General.--Part A of title XVIII of the Social Security Act 
  is amended by adding at the end the following new section:
  
     ``disqualification of certain nonprofit hospitals from payment if 
   assets or control transferred to a for-profit entity without approval
  
      ``Sec. 1821. (a) Requirement.--No payment may be made under this 
  part with respect to inpatient hospital services of a hospital if the 
  hospital, on or after January 7, 1997, was owned or controlled by a 
  nonprofit entity and there is an impermissible transfer (as defined in 
  subsection (b)) with respect to the hospital or the entity.
      ``(b) Impermissible Transfers.--
              ``(1) In general.--For purposes of this section, the term 
          `impermissible transfer' means any covered transfer (as defined 
          in paragraph (2)) that has not been considered to be approved 
          in accordance with subsection (c).
              ``(2) Covered transfer defined.--For purposes of this 
          section, the term `covered transfer' means, with respect to a 
          hospital that is owned or controlled by a nonprofit entity--
                      ``(A) the sale, transfer, lease, exchange, option, 
                  conveyance, or other disposition of, the assets of the 
                  hospital (or of the entity in relation to the hospital) 
                  to a for-profit entity, if a material amount of the 
                  assets relating to the hospital are involved in such 
                  disposition; or
                      ``(B) the transfer of control, responsibility, or 
                  governance of a material amount of the assets or 
                  operation of the hospital (or of the entity in relation 
                  to the hospital) to any for-profit entity.
          Transfers described in this paragraph may be effected through 
          sale, joint venture, joint operating agreement, or any other 
          means.
              ``(3) Other definitions.--For purposes of this section:
                      ``(A) The term `acquired hospital' means, with 
                  respect to a covered transfer, the non-profit hospital 
                  the assets or control of which are the subject of the 
                  transfer.
                      ``(B) The term `acquiring entity' means, with 
                  respect to a covered transfer, the for-profit entity 
                  that is involved in the transfer.
      ``(c) Conditions for Approval.--Subject to subsection (d)--
              ``(1) In general.--A covered transfer with respect to an 
          acquired hospital owned or controlled by a nonprofit entity is 
          not considered to be approved in accordance with this 
          subsection unless--
                      ``(A) the acquiring entity has disclosed to the 
                  Secretary, in a form and manner specified by the 
                  Secretary, the information described in paragraph (2) 
                  relating to the transfer;
                      ``(B) there has been an independent fairness review 
                  conducted of the proposed transfer and the report on 
                  the review concludes that no assets of the acquired 
                  hospital in relation to the nonprofit entity have 
                  inappropriately benefited any private parties; and
                      ``(C) the Secretary has approved the transfer.
              ``(3) Information to be disclosed.--The information 
          described in this paragraph is a complete description of the 
          terms of covered transfer, together with a description of all 
          collateral arrangements, including information describing--
                      ``(A) the acquired hospital and the nonprofit 
                  entity that owns or controls the hospital;
                      ``(B) the acquiring entity;
                      ``(C) other parties to the transfer;
                      ``(D) terms of the proposed transfer;
                      ``(E) the value of consideration to be provided in 
                  connection with the transfer (including details as to 
                  the basis for the valuation);
                      ``(F) copies of documents relating to the transfer;
                      ``(G) the identity of individuals and persons who 
                  are officers, directors, or affiliates of the nonprofit 
                  entity and whether they have any direct or indirect 
                  economic interest in the transfer (including any 
                  promise or discussion of future employment); and
                      ``(H) such other information as the Secretary may 
                  require.
              ``(3) Public disclosure.--The Secretary shall provide for 
          public disclosure (including disclosure through electronic 
          means on the Internet) of information described in paragraph 
          (3) provided under paragraph (1)(A) and the report on the 
          transfer described in paragraph (1)(B).
              ``(4) Conditions for approval of transfers.--The Secretary 
          may not approve a covered transfer relating to an acquired 
          hospital owned or controlled by a nonprofit entity unless, 
          after completion of the public hearing described in paragraph 
          (6), the Secretary determines that the following conditions are 
          met:
                      ``(A) Due care was exercised by the nonprofit 
                  entity in deciding to enter into the transfer, 
                  selecting the acquiring entity, and negotiating the 
                  terms of the transfer.
                      ``(B) The nonprofit entity sought appropriate 
                  expert assistance in making decisions in relation to 
                  the transfer.
                      ``(C) The nonprofit entity took all reasonable 
                  steps to avoid conflict of interests.
                      ``(D) The nonprofit entity will receive fair market 
                  value for its assets transferred in connection with the 
                  covered transfer.
                      ``(E) No charitable funds are placed at risk in 
                  connection with the covered transfer.
                      ``(F) The amount of any compensation under any 
                  management contract entered into in connection with the 
                  covered transfer is fair.
                      ``(G) The proceeds to the nonprofit entity in 
                  connection with the covered transfer will be used only 
                  for appropriate charitable purposes consistent with the 
                  entity's non-profit charter and for the promotion of 
                  health in the affected community and such proceeds will 
                  be controlled as charitable funds independent of the 
                  acquiring entity.
                      ``(H) Any charitable corporation established to 
                  hold proceeds of the acquired hospital in connection 
                  with the covered transfer will be broadly based in the 
                  community.
                      ``(I) There are sufficient safeguards to assure the 
                  affected community continues to have access to 
                  affordable hospital services.
                      ``(J) The acquiring entity has made a commitment to 
                  provide comparable care to the disadvantaged, the 
                  uninsured, and the underinsured, and to provide 
                  benefits to the affected community.
                      ``(K) The acquiring entity has no contractual right 
                  to receive or direct future grants in relation to the 
                  acquired hospital.
                      ``(L) The acquiring entity has paid the Secretary, 
                  with respect to the covered transfer, a fee sufficient 
                  to cover the costs of the Secretary in administering 
                  this section in relation to such transfer.
              ``(6) Public hearing.--Before approving a covered transfer, 
          the Secretary shall provide for notice and a public hearing to 
          take place in the community of the acquired hospital concerning 
          the transfer and publication of a public report on testimony 
          received at the hearing.
      ``(d) Application of Alternative State Law Requirements.--A covered 
  transfer is deemed to meet an applicable requirement of subsection (c) 
  relating to the transfer to the extent that the Secretary determines 
  that there is a State law that imposes a requirement at least as 
  stringent as the requirement involved with respect to the transfer.
      ``(e) Delegation of Authority.--The Secretary may exercise the 
  Secretary's authority under this section through any appropriate 
  official in the Department of Health and Human Services.
      ``(f) No Effect on Other Rights.--The fact that the Secretary has 
  approved a covered transfer under this section shall not supersede 
  other rights that any entity (including the federal government or a 
  State or local government) may have to challenge the transfer on any 
  grounds.''.
      (b) Effective Date.--The amendment made by this section shall apply 
  with respect to covered transfers for which agreements or transactions 
  are entered into on or after January 7, 1997.
target: Medicare Nonprofit Hospital Protection Act of 1997 - Amends part A (Hospital Insurance) of title XVIII (Medicare) of the Social Security Act to disqualify for Medicare payment any non-profit hospital that transfers assets or control to a for-profit entity without appropriate approval by the Secretary of Health and Human Services.
feat_title: Medicare Nonprofit Hospital Protection Act of 1997