PUBLIC LAW 105-33—AUG. 5, 1997 111 STAT. 501 (B) REPORT. —Not later than 2 years after the date of the enactment of this Act, the Secretary shall submit to Committees described in paragraph (1)(B) a report on such study. SEC. 4706. SOLVENCY STANDARDS. Section 1903(m)(l) (42 U.S.C. 1396b(m)(l)) is amended— (1) in subparagraph (A)(ii), by inserting ", meets the requirements of subparagraph (C)(i) (if applicable)," after "provision is satisfactory to the State", and (2) by adding at the end the following: "(C)(i) Subject to clause (ii), a provision meets the requirements of this subparagraph for an organization if the organization meets solvency standards established by the State for private health maintenance organizations or is licensed or certified by the State as a risk-bearing entity. "(ii) Clause (i) shall not apply to an organization if— "(I) the organization is not responsible for the provision (directly or through arrangements with providers of services) of inpatient hospitsil services and physicians' services; (II) the organization is a public entity; "(III) the solvency of the organization is guaranteed by the State; or "(IV) the organization is (or is controlled by) one or more Federally-qualified health centers 2ind meets solvency standards established by the State for such an organization. For purposes of subclause (IV), the term 'control' meeins the possession, whether direct or indirect, of the power to direct or cause the direction of the management and policies of the organization through membership, bosird representation, or an ownership interest equal to or greater than 50.1 percent.". SEC. 4707. PROTECTIONS AGAINST FRAUD AND ABUSE. 42 USC 1396u-2. (a) IN GENERAL. —Section 1932 (42 U.S.C. 1396v) is further amended by adding at the end the following: "(d) PROTECTIONS AGAINST FRAUD AND ABUSE. — "(1) PROHIBITING AFFILIATIONS WITH INDIVIDUALS DEBARRED BY FEDERAL AGENCIES.— "(A) IN GENERAL.—^A managed care entity may not knowingly— (i) have a person described in subparagraph (C) as a director, officer, partner, or person with beneficial ownership of more than 5 percent of the entit/s equity, or "(ii) have an employment, consulting, or other agreement with a person described in such subparagraph for the provision of items and services that are significant and material to the entity's obligations under its contract with the State. "(B) EFFECT OF NONCOMPLIANCE. — If a State finds that a managed care entity is not in compliance with clause (i) or (ii) of subparagraph (A), the State— "(i) shall notify the Secretary of such noncompliance; "(ii) may continue an existing agreement with the entity unless the Secretary (in consultation with the Inspector General of the Department of Health and Human Services) directs otherwise; and
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