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tem, to oversee the professional aspects of the delivery

of services, and to review the utilization of all health

services, drugs and supplies;

(6) such system shall, to the extent practicable

and consistent with good medical practice, train and

employ allied health personnel and subprofessional and lay persons in the rendering of services;

(7) any participating extended care facility is affiliated with a hospital or with a group practice or similar organization and the medical staff of the hospital or the group practice organization assumes responsibility for rendering or supervising professional services in the facility;

(8) premiums charged by such system for services not paid for under title XVIII of the Social Security Act are reasonable; and

(9) the establishment of such system shall be consistent with any comprehensive State health plan developed pursuant to section 314 (a) of the Public Health Service Act, as amended, and shall be approved by the

State planning agency designated or established pursu

ant to that section, and, where appropriate, shall be in

accord with areawide health planning carried out pursu

ant to section 314 (b) of that Act;

(b) In administering this title, the Secretary shall em

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1 phasize local initiative and consumer and community involve2 ment of the planning, development and operation of such 3 comprehensive health service systems, and shall seek to 4 insure prompt response to local initiative, and maximum 5 flexibility in the planning, development and operation of 6 such systems. Appropriate Federal departments and agen7 cies shall provide maximum coordination of other Federal 8 assistance with the operation of this title.

9

10

11

12

13

FINANCIAL AND TECHNICAL ASSISTANCE FOR PLANNING

COMPREHENSIVE HEALTH SERVICE SYSTEMS

SEC. 404. (a) The Secretary is authorized to make grants to, and to contract with, any public or nonprofit hos

pital, or any medical school or other institution of higher 14 education, or any insurance carrier or nonprofit prepayment

15

16

17

18

19

20

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plan providing health coverage, or any nonprofit community organization, or any community group organized for this purpose in a geographically defined primary service area and representing a broad range of income and social groups,

or any combination of two or more such entities, to pay 80 percent of the cost of planning and developing a plan for a comprehensive health service system (as defined in section 407) which will meet the requirements of section 403. The

Secretary is also authorized to undertake such activities as 24 he determines to be desirable to provide, either directly or

25

25

by contracts or other arrangements, technical assistance to

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1 such entities for the development of plans for such com

2 prehensive health service systems.

3 (b) Financial and technical assistance for planning such

4

a system will be provided under this section only if the appli5 cation for such assistance has been approved by the State

6 health planning agency designated or established pursuant to 7 section 314 (a) of the Public Health Service Act, as 8 amended.

9

10

11

12

FINANCIAL AND TECHNICAL ASSISTANCE FOR THE OPERA

TION OF APPROVED COMPREHENSIVE HEALTH SERVICE

SYSTEMS

13

SEC. 405. (a) The Secretary is authorized to approve

a plan for a comprehensive health service system (as defined 14 in section 407) if, after review of the plan, he determines 15 that such plan satisfies the criteria set forth in section 403.

16

17

(b) The Secretary is authorized to contract, in accordance with section 403 (a) (1), with a comprehensive health 18 service system, if he has approved the plan for such system, 19 to pay so much of the administrative, operating, and maintenance costs of such system as exceed its income for the 21 first five years of operation after approval under this section.

20

22 2

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25

Any such contract shall require the system to make all reasonable efforts to enroll members, to control costs and the utilization of services, facilities, and supplies, and otherwise

to maximize its income and minimize its costs. If at any

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1 time the Secretary finds that the system in not making rea2 sonable progress toward becoming self-supporting, he may,

3 after hearing, terminate the contract on not less than six 4 months' notice.

5 (c) To assist a comprehensive health service system to

6

carry out programs of capital development which the Secre7 tary finds necessary for the purposes of this title, the Secre8 tary is authorized to make a grant to such system of not to 9 exceed 80 percent of the amount of non-Federal contribution 10 otherwise required for the construction or modernization of 11 hospitals and other medical facilities assisted under title VI 12 of the Public Health Service Act, as amended: Provided, 13 That such project has been approved by the State agency 14 under that title and is consistent with the approved State 15 plan, other than the provisions thereof respecting priorities. 16 (d) In connection with any project of an approved 17 comprehensive health service system for the modernization, 18 rehabilitation, or construction of ambulatory care facilities 19 which the Secretary finds necessary for the purposes of this 20 title, the Secretary is authorized, in lieu of assistance under

21

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any other Federal program or under subsection (c) of this

section, to make a grant for up to 50 percent of the cost of

23 such project and to make a loan, on such terms as he shall 24 prescribe, except that the rate shall not exceed 3 percent per

25

annum, for the remaining cost of the project.

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1 (e) The Secretary is authorized to contract to make 2 periodic interest reduction payments on behalf of any group

3 practice or other ambulatory care facility, nonprofit hospital

4

or nursing home which is operated or to be operated as part 5 of an approved comprehensive health service system, such 6 interest reduction to be accomplished through payments

to the holder of a mortgage insured under Title XI, or 8 Section 232, or Section 242, of the National Housing Act. 9 Interest reduction payments with respect to a facility shall 10 be made during such time as the facility is operated as part 11 of the approved comprehensive health service system. The 12 interest reduction payments shall be in an amount not exceeding the difference between the monthly payment for

13

14

principal, interest, and mortgage insurance premium which 15 the owner of the facility is obliged to pay under the mort

16

gage, and the monthly payment for such purposes which 17 the owner would be obliged to pay if the mortgage bore in18 terest at the rate of 1 percent per annum.

19 (f) Of the sums appropriated pursuant to section 406 20 for any fiscal year, 2 per centum shall be available for grants

21

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22

by the Secretary to pay 100 per centum of the costs (but in

no case to exceed $100,000) of projects, in areas designated

23 by the Secretary as urban or rural poverty areas, for assess

ing local needs for comprehensive health service systems, ob

taining local financial and professional assistance and sup