I

104TH CONGRESS

1ST SESSION H. R. 1200

To provide for health care for every American and to control the cost and

enhance the quality of the health care system.

IN THE HOUSE OF REPRESENTATIVES

MARCH 9, 1995

Mr. MCDERMOTT (for himself, Mr. WAXMAN, Mr. CONYERS, Mr. ABERCROMBIE, Mr. PAYNE of New Jersey, Ms. VELA ́ZQUEZ, Mr. OBERSTAR, Mr.

STARK, Mr. SCOTT, Mr. VENTO, Mr. GONZALEZ, Mr. YATES, Mr. DELLUMS, Mr. BECERRA, Ms. WOOLSEY, Mr. SANDERS, Mr. MARTINEZ, Mr.

DIXON, Mr. OLVER, Mrs. COLLINS of Illinois, Mr. GIBBONS, Mr. WATT

of North Carolina, Mr. GUTIERREZ, Mr. HINCHEY, Mr. EVANS, Mr.

ENGEL, Mr. FRANK of Massachusetts, Ms. PELOSI, Ms. EDDIE BERNICE

JOHNSON of Texas, Mr. MILLER of California, Mr. COYNE, Mr. SABO,

Mr. CLAY, Mr. BERMAN, Mrs. MEEK of Florida, Mr. TORRES, Mr.

OWENS, Mr. SCHUMER, Mr. STOKES, Mr. ROMERO-BARCELO ́, Mr. LEWIS

of Georgia, Mr. STUDDS, Mr. TOWNS, Mr. NADLER, Ms. NORTON, Mr.

FATTAH, Mr. SERRANO, Mr. FORD, Mr. RANGEL, Mrs. MINK of Hawaii,

Mr. FRAZER, Ms. RIVERS, Mr. FLAKE, Mr. MOAKLEY, Mr. KENNEDY of

Massachusetts, and Ms. WATERS) introduced the following bill; which was

referred to the Committee on Commerce, and in addition to the Committees on Ways and Means, Government Reform and Oversight, National

Security, and Veterans’ Affairs, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions

as fall within the jurisdiction of the committee concerned

A BILL

To provide for health care for every American and to control

the cost and enhance the quality of the health care system.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,
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1 SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

2 (a) SHORT TITLE.—This Act may be cited as the

3 ‘‘American Health Security Act of 1995’’.

4 (b) TABLE OF CONTENTS.—The table of contents of

5 this Act is as follows:

Sec. 1. Short title; table of contents.

TITLE I—ESTABLISHMENT OF A STATE-BASED AMERICAN

HEALTH SECURITY PROGRAM; UNIVERSAL ENTITLEMENT; ENROLLMENT

Sec. 101. Establishment of a State-based American Health Security Program.

Sec. 102. Universal entitlement.

Sec. 103. Enrollment.

Sec. 104. Portability of benefits.

Sec. 105. Effective date of benefits.

Sec. 106. Relationship to existing Federal health programs.

TITLE II—COMPREHENSIVE BENEFITS, INCLUDING PREVENTIVE

BENEFITS AND BENEFITS FOR LONG TERM CARE

Sec. 201. Comprehensive benefits.

Sec. 202. Definitions relating to services.

Sec. 203. Special rules for home and community-based long-term care services.

Sec. 204. Exclusions and limitations.

Sec. 205. Certification; quality review; plans of care.

TITLE III—PROVIDER PARTICIPATION

Sec. 301. Provider participation and standards.

Sec. 302. Qualifications for providers.

Sec. 303. Qualifications for comprehensive health service organizations.

Sec. 304. Limitation on certain physician referrals.

TITLE IV—ADMINISTRATION

Subtitle A—General Administrative Provisions

Sec. 401. American Health Security Standards Board.

Sec. 402. American Health Security Advisory Council.

Sec. 403. Consultation with private entities.

Sec. 404. State health security programs.

Sec. 405. Complementary conduct of related health programs.

Subtitle B—Control Over Fraud and Abuse

Sec. 411. Application of Federal sanctions to all fraud and abuse under American Health Security Program.

Sec. 412. National health care fraud data base.

Sec. 413. Requirements for operation of State health care fraud and abuse control units.

Sec. 414. Assignment of unique provider and patient identifiers.
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TITLE V—QUALITY ASSESSMENT

Sec. 501. American Health Security Quality Council.

Sec. 502. Development of certain methodologies, guidelines, and standards.

Sec. 503. State quality review programs.

Sec. 504. Elimination of existing utilization review programs; transition.

Sec. 505. Uniform electronic data bases.

TITLE VI—NATIONAL HEALTH SECURITY BUDGET; PAYMENTS;

COST CONTAINMENT MEASURES

Subtitle A—Budgeting and Payments to States

Sec. 601. National health security budget.

Sec. 602. Computation of individual and State capitation amounts.

Sec. 603. State health security budgets.

Sec. 604. Federal payments to States.

Sec. 605. Account for health professional education expenditures.

Subtitle B—Payments by States to Providers

Sec. 611. Payments to hospitals and other facility-based services for operating

expenses on the basis of approved global budgets.

Sec. 612. Payments to health care practitioners based on prospective fee

schedule.

Sec. 613. Payments to comprehensive health service organizations.

Sec. 614. Payments for community-based primary health services.

Sec. 615. Payments for prescription drugs.

Sec. 616. Approved devices and equipment.

Sec. 617. Payments for other items and services.

Sec. 618. Payment incentives for medically underserved areas.

Sec. 619. Authority for alternative payment methodologies.

Subtitle C—Mandatory Assignment and Administrative Provisions

Sec. 621. Mandatory assignment.

Sec. 622. Procedures for reimbursement; appeals.

TITLE VII—PROMOTION OF PRIMARY HEALTH CARE; DEVELOPMENT OF HEALTH SERVICE CAPACITY; PROGRAMS TO ASSIST

THE MEDICALLY UNDERSERVED

Subtitle A—Promotion and Expansion of Primary Care Professional Training

Sec. 701. Role of Board; establishment of primary care professional output

goals.

Sec. 702. Establishment of Advisory Committee on Health Professional Education.

Sec. 703. Grants for health professions education, nurse education, and the National Health Service Corps.

Subtitle B—Direct Health Care Delivery

Sec. 711. Setaside for public health block grants.

Sec. 712. Setaside for primary health care delivery.

Sec. 713. Primary care service expansion grants.

Subtitle C—Primary Care and Outcomes Research
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Sec. 721. Set-aside for outcomes research.

Sec. 722. Office of Primary Care and Prevention Research.

Subtitle D—School-Related Health Services

Sec. 731. Authorizations of appropriations.

Sec. 732. Eligibility for development and operation grants.

Sec. 733. Preferences.

Sec. 734. Grants for development of projects.

Sec. 735. Grants for operation of projects.

Sec. 736. Federal administrative costs.

Sec. 737. Definitions.

TITLE VIII—FINANCING PROVISIONS; AMERICAN HEALTH

SECURITY TRUST FUND

Sec. 800. Amendment of 1986 code; section 15 not to apply.

Subtitle A—American Health Security Trust Fund

Sec. 801. American Health Security Trust Fund.

Subtitle B—Taxes Based on Income and Wages

Sec. 811. Payroll tax on employers.

Sec. 812. Health care income tax.

Subtitle C—Increase in Excise Taxes on Tobacco Products

Sec. 821. Increase in excise taxes on tobacco products.

TITLE IX—CONFORMING AMENDMENTS TO THE EMPLOYEE

RETIREMENT INCOME SECURITY ACT OF 1974

Sec. 901. ERISA inapplicable to health coverage arrangements under State

health security programs.

Sec. 902. Exemption of State health security programs from ERISA preemption.

Sec. 903. Prohibition of employee benefits duplicative of benefits under State

health security programs; coordination in case of workers’ compensation.

Sec. 904. Repeal of continuation coverage requirements under ERISA and certain other requirements relating to group health plans.

Sec. 905. Effective date of title.
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1 TITLE I—ESTABLISHMENT OF A

2 STATE-BASED AMERICAN

3 HEALTH SECURITY PRO4 GRAM; UNIVERSAL ENTITLE5 MENT; ENROLLMENT

6 SEC. 101. ESTABLISHMENT OF A STATE-BASED AMERICAN

7 HEALTH SECURITY PROGRAM.

8 (a) IN GENERAL.—There is hereby established in the

9 United States a State-Based American Health Security

10 Program to be administered by the individual States in

11 accordance with Federal standards specified in, or estab12 lished under, this Act.

13 (b) STATE HEALTH SECURITY PROGRAMS.—In order

14 for a State to be eligible to receive payment under section

15 604, a State must establish a State health security pro16 gram in accordance with this Act.

17 (c) STATE DEFINED.—

18 (1) IN GENERAL.—In this Act, subject to para19 graph (2), the term ‘‘State’’ means each of the fifty

20 States and the District of Columbia.

21 (2) ELECTION.—If the Governor of Puerto

22 Rico, the Virgin Islands, Guam, American Samoa, or

23 the Northern Mariana Islands certifies to the Presi24 dent that the legislature of the Commonwealth or

25 territory has enacted legislation desiring that the
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1 Commonwealth or territory be included as a State

2 under the provisions of this Act, such Common3 wealth or territory shall be included as a ‘‘State’’

4 under this Act beginning January 1 of the first year

5 beginning ninety days after the President receives

6 the notification.

7 SEC. 102. UNIVERSAL ENTITLEMENT.

8 (a) IN GENERAL.—Every individual who is a resident

9 of the United States and is a citizen or national of the

10 United States or lawful resident alien (as defined in sub11 section (d) is entitled to benefits for health care services

12 under this Act under the appropriate State health security

13 program. In this section, the term ‘‘appropriate State

14 health security program’’ means, with respect to an indi15 vidual, the State health security program for the State in

16 which the individual maintains a primary residence.

17 (b) TREATMENT OF CERTAIN NONIMMIGRANTS.—

18 (1) IN GENERAL.—The American Health Secu19 rity Standards Board (in this Act referred to as the

20 ‘‘Board’’) may make eligible for benefits for health

21 care services under the appropriate State health se22 curity program under this Act such classes of aliens

23 admitted to the United States as nonimmigrants as

24 the Board may provide.
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1 (2) CONSIDERATION.—In providing for eligi2 bility under paragraph (1), the Board shall consider

3 reciprocity in health care services offered to United

4 States citizens who are nonimmigrants in other for5 eign states, and such other factors as the Board

6 determines to be appropriate.

7 (c) TREATMENT OF OTHER INDIVIDUALS.—

8 (1) BY BOARD.—The Board also may make eli9 gible for benefits for health care services under the

10 appropriate State health security program under this

11 Act other individuals not described in subsection (a)

12 or (b), and regulate the nature of the eligibility of

13 such individuals, in order—

14 (A) to preserve the public health of

15 communities,

16 (B) to compensate States for the addi17 tional health care financing burdens created by

18 such individuals, and

19 (C) to prevent adverse financial and medi20 cal consequences of uncompensated care,

21 while inhibiting travel and immigration to the

22 United States for the sole purpose of obtaining

23 health care services.
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1 (2) BY STATES.—Any State health security pro2 gram may make individuals described in paragraph

3 (1) eligible for benefits at the expense of the State.

4 (d) LAWFUL RESIDENT ALIEN DEFINED.—For pur5 poses of this section, the term ‘‘lawful resident alien’’

6 means an alien lawfully admitted for permanent residence

7 and any other alien lawfully residing permanently in the

8 United States under color of law, including an alien with

9 lawful temporary resident status under section 210, 210A,

10 or 234A of the Immigration and Nationality Act (8 U.S.C.

11 1160, 1161, or 1255a).

12 SEC. 103. ENROLLMENT.

13 (a) IN GENERAL.—Each State health security pro14 gram shall provide a mechanism for the enrollment of indi15 viduals entitled or eligible for benefits under this Act. The

16 mechanism shall—

17 (1) include a process for the automatic enroll18 ment of individuals at the time of birth in the

19 United States and at the time of immigration into

20 the United States or other acquisition of lawful resi21 dent status in the United States,

22 (2) provide for the enrollment, as of January 1,

23 1997, of all individuals who are eligible to be en24 rolled as of such date, and
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1 (3) include a process for the enrollment of indi2 viduals made eligible for health care services under

3 subsections (b) and (c) of section 102.

4 (b) AVAILABILITY OF APPLICATIONS.—Each State

5 health security program shall make applications for enroll6 ment under the program available—

7 (1) at employment and payroll offices of em8 ployers located in the State,

9 (2) at local offices of the Social Security

10 Administration,

11 (3) at social services locations,

12 (4) at out-reach sites (such as provider and

13 practitioner locations), and

14 (5) at other locations (including post offices

15 and schools) accessible to a broad cross-section of

16 individuals eligible to enroll.

17 (c) ISSUANCE OF HEALTH SECURITY CARDS.—In

18 conjunction with an individual’s enrollment for benefits

19 under this Act, the State health security program shall

20 provide for the issuance of a health security card which

21 shall be used for purposes of identification and processing

22 of claims for benefits under the program. The State health

23 security program may provide for issuance of such cards

24 by employers for purposes of carrying out enrollment pur25 suant to subsection (a)(2).
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1 SEC. 104. PORTABILITY OF BENEFITS.

2 (a) IN GENERAL.—To ensure continuous access to

3 benefits for health care services covered under this Act,

4 each State health security program—

5 (1) shall not impose any minimum period of

6 residence in the State, or waiting period, in excess

7 of three months before residents of the State are

8 entitled to, or eligible for, such benefits under the

9 program;

10 (2) shall provide continuation of payment for

11 covered health care services to individuals who have

12 terminated their residence in the State and estab13 lished their residence in another State, for the dura14 tion of any waiting period imposed in the State of

15 new residency for establishing entitlement to, or

16 eligibility for, such services; and

17 (3) shall provide for the payment for health

18 care services covered under this Act provided to indi19 viduals while temporarily absent from the State

20 based on the following principles:

21 (A) Payment for such health care services

22 is at the rate that is approved by the State

23 health security program in the State in which

24 the services are provided, unless the States con25 cerned agree to apportion the cost between

26 them in a different manner.
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1 (B) Payment for such health care services

2 provided outside the United States is made on

3 the basis of the amount that would have been

4 paid by the State health security program for

5 similar services rendered in the State, with due

6 regard, in the case of hospital services, to the

7 size of the hospital, standards of service, and

8 other relevant factors.

9 (b) CROSS-BORDER ARRANGEMENTS.—A State

10 health security program for a State may negotiate with

11 such a program in an adjacent State a reciprocal arrange12 ment for the coverage under such other program of health

13 care services to enrollees residing in the border region.

14 SEC. 105. EFFECTIVE DATE OF BENEFITS.

15 Benefits shall first be available under this Act for

16 items and services furnished on or after January 1, 1997.

17 SEC. 106. RELATIONSHIP TO EXISTING FEDERAL HEALTH

18 PROGRAMS.

19 (a) MEDICARE AND MEDICAID.—

20 (1) IN GENERAL.—Notwithstanding any other

21 provision of law, subject to paragraph (2)—

22 (A) no benefits shall be available under

23 title XVIII of the Social Security Act for any

24 item or service furnished after December 31,

25 1996,
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1 (B) no individual is entitled to medical as2 sistance under a State plan approved under

3 title XIX of such Act for any item or service

4 furnished after such date, and

5 (C) no payment shall be made to a State

6 under section 1903(a) of such Act with respect

7 to medical assistance for any item or service

8 furnished after such date.

9 (2) TRANSITION.—In the case of inpatient hos10 pital services and extended care services during a

11 continuous period of stay which began before Janu12 ary 1, 1997, and which had not ended as of such

13 date, for which benefits are provided under title

14 XVIII, or under a State plan under title XIX, of the

15 Social Security Act, the Secretary of Health and

16 Human Services and each State plan, respectively,

17 shall provide for continuation of benefits under such

18 title or plan until the end of the period of stay.

19 (b) FEDERAL EMPLOYEES HEALTH BENEFITS PRO20 GRAM.—No benefits shall be made available under chapter

21 89 of title 5, United States Code, for any part of a cov22 erage period occurring after December 31, 1996.

23 (c) CHAMPUS.—No benefits shall be made available

24 under sections 1079 and 1086 of title 10, United States
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1 Code, for items or services furnished after December 31,

2 1996.

3 (d) TREATMENT OF BENEFITS FOR VETERANS AND

4 NATIVE AMERICANS.—Nothing in this Act shall affect the

5 eligibility of veterans for the medical benefits and services

6 provided under title 38, United States Code, or of Indians

7 for the medical benefits and services provided by or

8 through the Indian Health Service.

9 TITLE II—COMPREHENSIVE BEN10 EFITS, INCLUDING PREVEN11 TIVE BENEFITS AND BENE12 FITS FOR LONG-TERM CARE

13 SEC. 201. COMPREHENSIVE BENEFITS.

14 (a) IN GENERAL.—Subject to the succeeding provi15 sions of this title, individuals enrolled for benefits under

16 this Act are entitled to have payment made under a State

17 health security program for the following items and serv18 ices if medically necessary or appropriate for the mainte19 nance of health or for the diagnosis, treatment, or rehabili20 tation of a health condition:

21 (1) HOSPITAL SERVICES.—Inpatient and out22 patient hospital care, including 24-hour-a-day emer23 gency services.

24 (2) PROFESSIONAL SERVICES.—Professional

25 services of health care practitioners authorized to
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1 provide health care services under State law, includ2 ing patient education and training in self-manage3 ment techniques.

4 (3) COMMUNITY-BASED PRIMARY HEALTH

5 SERVICES.—Community-based primary health serv6 ices (as defined in section 202(a)).

7 (4) PREVENTIVE SERVICES.—Preventive serv8 ices (as defined in section 202(b)).

9 (5) LONG-TERM, ACUTE, AND CHRONIC CARE

10 SERVICES.—

11 (A) Nursing facility services.

12 (B) Home health services.

13 (C) Home and community-based long-term

14 care services (as defined in section 202(c)) for

15 individuals described in section 203(a).

16 (D) Hospice care.

17 (E) Services in intermediate care facilities

18 for individuals with mental retardation.

19 (6) PRESCRIPTION DRUGS, BIOLOGICALS, INSU20 LIN, MEDICAL FOODS.—

21 (A) Outpatient prescription drugs and

22 biologicals, as specified by the Board consistent

23 with section 515.

24 (B) Insulin.
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1 (C) Medical foods (as defined in section

2 202(e)).

3 (7) DENTAL SERVICES.—Dental services (as de4 fined in section 202(h)).

5 (8) MENTAL HEALTH AND SUBSTANCE ABUSE

6 TREATMENT SERVICES.—Mental health and sub7 stance abuse treatment services (as defined in sec8 tion 202(f)).

9 (9) DIAGNOSTIC TESTS.—Diagnostic tests.

10 (10) OTHER ITEMS AND SERVICES.—

11 (A) OUTPATIENT THERAPY.—Outpatient

12 physical therapy services, outpatient speech pa13 thology services, and outpatient occupational

14 therapy services in all settings.

15 (B) DURABLE MEDICAL EQUIPMENT.—Du16 rable medical equipment.

17 (C) HOME DIALYSIS.—Home dialysis sup18 plies and equipment.

19 (D) AMBULANCE.—Emergency ambulance

20 service.

21 (E) PROSTHETIC DEVICES.—Prosthetic de22 vices, including replacements of such devices.

23 (F) ADDITIONAL ITEMS AND SERVICES.—

24 Such other medical or health care items or

25 services as the Board may specify.
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1 (b) COST-SHARING.—

2 (1) IN GENERAL.—Except as provided in this

3 subsection, there are no deductibles, coinsurance, or

4 copayments applicable to acute care and preventive

5 benefits provided under this title.

6 (2) COST-SHARING FOR LONG-TERM CARE

7 SERVICES.—

8 (A) IN GENERAL.—

9 (i) payments for home and commu10 nity-based long-term care services are sub11 ject to coinsurance of 20 percent, and

12 (ii) payments for nursing facility serv13 ices are subject to coinsurance of 35 per14 cent.

15 (B) EXCEPTION.—With respect to the co16 insurance established under subparagraph

17 (A)—

18 (i) such coinsurance shall not apply to

19 an individual with income (as defined by

20 the Secretary) of not more than 100 per21 cent of the income official poverty line ap22 plicable to a family of the size involved;

23 and

24 (ii) in the case of an individual with

25 such income that exceeds 100 percent, but
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1 is less than 200 percent, of such applicable

2 poverty line, the coinsurance shall be re3 duced in the same proportion as the pro4 portion of such income is less than 200

5 percent of such applicable poverty line.

6 (c) PROHIBITION OF BALANCE BILLING.—As pro7 vided in section 531, no person may impose a charge for

8 covered services for which benefits are provided under this

9 Act.

10 (d) NO DUPLICATE HEALTH INSURANCE.—Each

11 State health security program shall prohibit the sale of

12 health insurance in the State if payment under the insur13 ance duplicates payment for any items or services for

14 which payment may be made under such a program.

15 (e) STATE PROGRAM MAY PROVIDE ADDITIONAL

16 BENEFITS.—Nothing in this Act shall be construed as

17 limiting the benefits that may be made available under a

18 State health security program to residents of the State

19 at the expense of the State.

20 (f) EMPLOYERS MAY PROVIDE ADDITIONAL BENE21 FITS.—Nothing in this Act shall be construed as limiting

22 the additional benefits that an employer may provide to

23 employees or their dependents, or to former employees or

24 their dependents.
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1 SEC. 202. DEFINITIONS RELATING TO SERVICES.

2 (a) COMMUNITY-BASED PRIMARY HEALTH SERV3 ICES.—In this title, the term ‘‘community-based primary

4 health services’’ means ambulatory health services fur5 nished—

6 (1) by a rural health clinic;

7 (2) by a Federally qualified health center (as

8 defined in section 1905(l)(2)(B) of the Social Secu9 rity Act), and which, for purposes of this Act, in10 clude services furnished by State and local health

11 agencies;

12 (3) in a school-based setting;

13 (4) by public educational agencies and other

14 providers of services to children entitled to assist15 ance under the Individuals with Disabilities Edu16 cation Act for services furnished pursuant to a

17 written Individualized Family Services Plan or

18 Individual Education Plan under such Act; and

19 (5) public and private nonprofit entities receiv20 ing Federal assistance under the Public Health

21 Service Act.

22 (b) PREVENTIVE SERVICES.—

23 (1) IN GENERAL.—In this title, the term ‘‘pre24 ventive services’’ means items and services—

25 (A) which—

26 (i) are specified in paragraph (2), or
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1 (ii) the Board determines to be effec2 tive in the maintenance and promotion of

3 health or minimizing the effect of illness,

4 disease, or medical condition; and

5 (B) which are provided consistent with the

6 periodicity schedule established under para7 graph (3).

8 (2) SPECIFIED PREVENTIVE SERVICES.—The

9 services specified in this paragraph are as follows:

10 (A) Basic immunizations.

11 (B) Prenatal and well-baby care (for in12 fants under one year of age).

13 (C) Well-child care (including periodic

14 physical examinations, hearing and vision

15 screening, and developmental screening and ex16 aminations) for individuals under 18 years of

17 age.

18 (D) Periodic screening mammography, Pap

19 smears, and colorectal examinations and exami20 nations for prostate cancer.

21 (E) Physical examinations.

22 (F) Family planning services.

23 (G) Routine eye examinations, eyeglasses,

24 and contact lenses.
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1 (H) Hearing aids, but only upon a deter2 mination of a certified audiologist or physician

3 that a hearing problem exists and is caused by

4 a condition that can be corrected by use of a

5 hearing aid.

6 (3) SCHEDULE.—The Board shall establish, in

7 consultation with experts in preventive medicine and

8 public health and taking into consideration those

9 preventive services recommended by the Preventive

10 Services Task Force and published as the Guide to

11 Clinical Preventive Services, a periodicity schedule

12 for the coverage of preventive services under para13 graph (1). Such schedule shall take into consider14 ation the cost-effectiveness of appropriate preventive

15 care and shall be revised not less frequently than

16 once every 5 years, in consultation with experts in

17 preventive medicine and public health.

18 (c) HOME AND COMMUNITY-BASED LONG-TERM

19 CARE SERVICES.—In this title, the term ‘‘home and com20 munity-based long-term care services’’ means the following

21 services provided to an individual to enable the individual

22 to remain in such individual’s place of residence within

23 the community:

24 (1) Home health aide services.
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1 (2) Adult day health care, social day care or

2 psychiatric day care.

3 (3) Medical social work services.

4 (4) Care coordination services, as defined in

5 subsection (g)(1).

6 (5) Respite care, including training for informal

7 caregivers.

8 (6) Personal assistance services, and home9 maker services (including meals) incidental to the

10 provision of personal assistance services.

11 (d) HOME HEALTH SERVICES.—

12 (1) IN GENERAL.—The term ‘‘home health

13 services’’ means items and services described in sec14 tion 1861(m) of the Social Security Act and includes

15 home infusion services.

16 (2) HOME INFUSION SERVICES.—The term

17 ‘‘home infusion services’’ includes the nursing, phar18 macy, and related services that are necessary to con19 duct the home infusion of a drug regimen safely and

20 effectively under a plan established and periodically

21 reviewed by a physician and that are provided in

22 compliance with quality assurance requirements es23 tablished by the Secretary.

24 (e) MEDICAL FOODS.—In this title, the term ‘‘medi25 cal foods’’ means foods which are formulated to be
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1 consumed or administered enterally under the supervision

2 of a physician and which are intended for the specific die3 tary management of a disease or condition for which

4 distinctive nutritional requirements, based on recognized

5 scientific principles, are established by medical evaluation.

6 (f) MENTAL HEALTH AND SUBSTANCE ABUSE

7 TREATMENT SERVICES.—

8 (1) SERVICES DESCRIBED.—In this title, the

9 term ‘‘mental health and substance abuse treatment

10 services’’ means the following services related to the

11 prevention, diagnosis, treatment, and rehabilitation

12 of mental illness and promotion of mental health:

13 (A) INPATIENT HOSPITAL SERVICES.—In14 patient hospital services furnished primarily for

15 the diagnosis or treatment of mental illness or

16 substance abuse for up to 60 days during a

17 year, reduced by a number of days determined

18 by the Secretary so that the actuarial value of

19 providing such number of days of services

20 under this paragraph to the individual is equal

21 to the actuarial value of the days of inpatient

22 residential services furnished to the individual

23 under subparagraph (B) during the year after

24 such services have been furnished to the indi25 vidual for 120 days during the year (rounded to
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1 the nearest day), but only if (with respect to

2 services furnished to an individual described in

3 section 204(b)(1)) such services are furnished

4 in conformity with the plan of an organized sys5 tem of care for mental health and substance

6 abuse services in accordance with section

7 204(b)(2).

8 (B) INTENSIVE RESIDENTIAL SERVICES.—

9 Intensive residential services (as defined in

10 paragraph (2)) furnished to an individual for

11 up to 120 days during any calendar year, ex12 cept that—

13 (i) such services may be furnished to

14 the individual for additional days during

15 the year if necessary for the individual to

16 complete a course of treatment to the ex17 tent that the number of days of inpatient

18 hospital services described in subparagraph

19 (A) that may be furnished to the individual

20 during the year (as reduced under such

21 subparagraph) is not less than 15; and

22 (ii) reduced by a number of days de23 termined by the Secretary so that the actu24 arial value of providing such number of

25 days of services under this paragraph to
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1 the individual is equal to the actuarial

2 value of the days of intensive community3 based services furnished to the individual

4 under subparagraph (D) during the year

5 after such services have been furnished to

6 the individual for 90 days (or, in the case

7 of services described in subparagraph

8 (D)(ii), for 180 days) during the year

9 (rounded to the nearest day).

10 (C) OUTPATIENT SERVICES.—Outpatient

11 treatment services of mental illness or sub12 stance abuse (other than intensive community13 based services under subparagraph (D)) for an

14 unlimited number of days during any calendar

15 year furnished in accordance with standards es16 tablished by the Secretary for the management

17 of such services, and, in the case of services fur18 nished to an individual described in section

19 204(b)(1) who is not an inpatient of a hospital,

20 in conformity with the plan of an organized sys21 tem of care for mental health and substance

22 abuse services in accordance with section

23 204(b)(2).
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1 (D) INTENSIVE COMMUNITY-BASED SERV2 ICES.—Intensive community-based services (as

3 described in paragraph (3))—

4 (i) for an unlimited number of days

5 during any calendar year, in the case of

6 services described in section 1861(ff)(2)(E)

7 that are furnished to an individual who is

8 a seriously mentally ill adult, a seriously

9 emotionally disturbed child, or an adult or

10 child with serious substance abuse disorder

11 (as determined in accordance with criteria

12 established by the Secretary);

13 (ii) in the case of services described in

14 section 1861(ff)(2)(C), for up to 180 days

15 during any calendar year, except that such

16 services may be furnished to the individual

17 for a number of additional days during the

18 year equal to the difference between the

19 total number of days of intensive residen20 tial services which the individual may re21 ceive during the year under part A (as de22 termined under subparagraph (B)) and the

23 number of days of such services which the

24 individual has received during the year, or
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1 (iii) in the case of any other such

2 services, for up to 90 days during any cal3 endar year, except that such services may

4 be furnished to the individual for the num5 ber of additional days during the year de6 scribed in clause (ii).

7 (2) INTENSIVE RESIDENTIAL SERVICES DE8 FINED.—

9 (A) IN GENERAL.—Subject to subpara10 graphs (B) and (C), the term ‘‘intensive resi11 dential services’’ means inpatient services pro12 vided in any of the following facilities:

13 (i) Residential detoxification centers.

14 (ii) Crisis residential programs or

15 mental illness residential treatment pro16 grams.

17 (iii) Therapeutic family or group

18 treatment homes.

19 (iv) Residential centers for substance

20 abuse treatment.

21 (B) REQUIREMENTS FOR FACILITIES.—No

22 service may be treated as an intensive residen23 tial service under subparagraph (A) unless the

24 facility at which the service is provided—
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1 (i) is legally authorized to provide

2 such service under the law of the State (or

3 under a State regulatory mechanism pro4 vided by State law) in which the facility is

5 located or is certified to provide such serv6 ice by an appropriate accreditation entity

7 approved by the State in consultation with

8 the Secretary; and

9 (ii) meets such other requirements as

10 the Secretary may impose to assure the

11 quality of the intensive residential services

12 provided.

13 (C) SERVICES FURNISHED TO AT-RISK

14 CHILDREN.—In the case of services furnished

15 to an individual described in section 204(b)(1),

16 no service may be treated as an intensive resi17 dential service under this subsection unless the

18 service is furnished in conformity with the plan

19 of an organized system of care for mental

20 health and substance abuse services in accord21 ance with section 204(b)(2).

22 (D) MANAGEMENT STANDARDS.—No serv23 ice may be treated as an intensive residential

24 service under subparagraph (A) unless the serv25 ice is furnished in accordance with standards
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1 established by the Secretary for the manage2 ment of such services.

3 (3) INTENSIVE COMMUNITY-BASED SERVICES

4 DEFINED.—

5 (A) IN GENERAL.—The term ‘‘intensive

6 community-based services’’ means the items

7 and services described in subparagraph (B) pre8 scribed by a physician (or, in the case of serv9 ices furnished to an individual described in sec10 tion 204(b)(1), by an organized system of care

11 for mental health and substance abuse services

12 in accordance with such section) and provided

13 under a program described in subparagraph

14 (D) under the supervision of a physician (or, to

15 the extent permitted under the law of the State

16 in which the services are furnished, a non-phy17 sician mental health professional) pursuant to

18 an individualized, written plan of treatment es19 tablished and periodically reviewed by a physi20 cian (in consultation with appropriate staff par21 ticipating in such program) which sets forth the

22 physician’s diagnosis, the type, amount, fre23 quency, and duration of the items and services

24 provided under the plan, and the goals for

25 treatment under the plan, but does not include
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1 any item or service that is not furnished in ac2 cordance with standards established by the Sec3 retary for the management of such services.

4 (B) ITEMS AND SERVICES DESCRIBED.—

5 The items and services described in this sub6 paragraph are—

7 (i) partial hospitalization services con8 sisting of the items and services described

9 in subparagraph (C);

10 (ii) psychiatric rehabilitation services;

11 (iii) day treatment services for indi12 viduals under 19 years of age;

13 (iv) in-home services;

14 (v) case management services, includ15 ing collateral services designated as such

16 case management services by the Sec17 retary;

18 (vi) ambulatory detoxification services;

19 (vii) such other items and services as

20 the Secretary may provide (but in no event

21 to include meals and transportation),

22 that are reasonable and necessary for the diag23 nosis or active treatment of the individual’s

24 condition, reasonably expected to improve or

25 maintain the individual’s condition and func-
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1 tional level and to prevent relapse or hos2 pitalization, and furnished pursuant to such

3 guidelines relating to frequency and duration of

4 services as the Secretary shall by regulation es5 tablish (taking into account accepted norms of

6 medical practice and the reasonable expectation

7 of patient improvement).

8 (C) ITEMS AND SERVICES INCLUDED AS

9 PARTIAL HOSPITALIZATION SERVICES.—For

10 purposes of subparagraph (B)(i), partial hos11 pitalization services consist of the following:

12 (i) Individual and group therapy with

13 physicians or psychologists (or other men14 tal health professionals to the extent au15 thorized under State law).

16 (ii) Occupational therapy requiring

17 the skills of a qualified occupational thera18 pist.

19 (iii) Services of social workers, trained

20 psychiatric nurses, behavioral aides, and

21 other staff trained to work with psychiatric

22 patients (to the extent authorized under

23 State law).

24 (iv) Drugs and biologicals furnished

25 for therapeutic purposes (which cannot, as
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1 determined in accordance with regulations,

2 be self-administered).

3 (v) Individualized activity therapies

4 that are not primarily recreational or di5 versionary.

6 (vi) Family counseling (the primary

7 purpose of which is treatment of the indi8 vidual’s condition).

9 (vii) Patient training and education

10 (to the extent that training and edu11 cational activities are closely and clearly

12 related to the individual’s care and treat13 ment).

14 (viii) Diagnostic services.

15 (D) PROGRAMS DESCRIBED.—A program

16 described in this subparagraph is a program

17 (whether facility-based or freestanding) which is

18 furnished by an entity—

19 (i) legally authorized to furnish such a

20 program under State law (or the State reg21 ulatory mechanism provided by State law)

22 or certified to furnish such a program by

23 an appropriate accreditation entity ap24 proved by the State in consultation with

25 the Secretary; and
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1 (ii) meeting such other requirements

2 as the Secretary may impose to assure the

3 quality of the intensive community-based

4 services provided.

5 (g) CARE COORDINATION SERVICES.—

6 (1) IN GENERAL.—In this title, the term ‘‘care

7 coordination services’’ means services provided by

8 care coordinators (as defined in paragraph (2)) to

9 individuals described in paragraph (3) for the co10 ordination and monitoring of home and community11 based long term care services to ensure appropriate,

12 cost-effective utilization of such services in a com13 prehensive and continuous manner, and includes—

14 (A) transition management between inpa15 tient facilities and community-based services,

16 including assisting patients in identifying and

17 gaining access to appropriate ancillary services;

18 and

19 (B) evaluating and recommending appro20 priate treatment services, in cooperation with

21 patients and other providers and in conjunction

22 with any quality review program or plan of care

23 under section 205.

24 (2) CARE COORDINATOR.—
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1 (A) IN GENERAL.—In this title, the term

2 ‘‘care coordinator’’ means an individual or non3 profit or public agency or organization which

4 the State health security program determines—

5 (i) is capable of performing directly,

6 efficiently, and effectively the duties of a

7 care coordinator described in paragraph

8 (1), and

9 (ii) demonstrates capability in estab10 lishing and periodically reviewing and re11 vising plans of care, and in arranging for

12 and monitoring the provision and quality

13 of services under any plan.

14 (B) INDEPENDENCE.—State health secu15 rity programs shall establish safeguards to as16 sure that care coordinators have no financial in17 terest in treatment decisions or placements.

18 Care coordination may not be provided through

19 any structure or mechanism through which

20 quality review is performed.

21 (3) ELIGIBLE INDIVIDUALS.—An individual de22 scribed in this paragraph is an individual described

23 in section 203 (relating to individuals qualifying for

24 long term and chronic care services).

25 (h) DENTAL SERVICES.—
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1 (1) IN GENERAL.—In this title, subject to sub2 section (b), the term ‘‘dental services’’ means the

3 following:

4 (A) Emergency dental treatment, including

5 extractions, for bleeding, pain, acute infections,

6 and injuries to the maxillofacial region.

7 (B) Prevention and diagnosis of dental dis8 ease, including examinations of the hard and

9 soft tissues of the oral cavity and related struc10 tures, radiographs, dental sealants, fluorides,

11 and dental prophylaxis.

12 (C) Treatment of dental disease, including

13 non-cast fillings, periodontal maintenance serv14 ices, and endodontic services.

15 (D) Space maintenance procedures to pre16 vent orthodontic complications.

17 (E) Orthodontic treatment to prevent se18 vere malocclusions.

19 (F) Full dentures.

20 (G) Medically necessary oral health care.

21 (H) Any items and services for special

22 needs patients that are not described in sub23 paragraphs (A) through (G) and that—
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1 (i) are required to provide such pa2 tients the items and services described in

3 subparagraphs (A) through (G);

4 (ii) are required to establish oral func5 tion (including general anesthesia for indi6 viduals with physical or emotional limita7 tions that prevent the provision of dental

8 care without such anesthesia);

9 (iii) consist of orthodontic care for se10 vere dentofacial abnormalities; or

11 (iv) consist of prosthetic dental de12 vices for genetic or birth defects or fitting

13 for such devices.

14 (I) Any dental care for individuals with a

15 seizure disorder that is not described in sub16 paragraphs (A) through (H) and that is re17 quired because of an illness, injury, disorder, or

18 other health condition that results from such

19 seizure disorder.

20 (2) LIMITATIONS.—Dental services are subject

21 to the following limitations:

22 (A) PREVENTION AND DIAGNOSIS.—

23 (i) EXAMINATIONS AND PROPHY24 LAXIS.—The examinations and prophylaxis

25 described in paragraph (1)(B) are covered
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1 only consistent with a periodicity schedule

2 established by the Board, which schedule

3 may provide for special treatment of indi4 viduals less than 18 years of age and of

5 special needs patients.

6 (ii) DENTAL SEALANTS.—The dental

7 sealants described in such paragraph are

8 not covered for individuals 18 years of age

9 or older. Such sealants are covered for in10 dividuals less than 10 years of age for pro11 tection of the 1st permanent molars. Such

12 sealants are covered for individuals 10

13 years of age or older for protection of the

14 2d permanent molars.

15 (B) TREATMENT OF DENTAL DISEASE.—

16 Prior to January 1, 2002, the items and serv17 ices described in paragraph (1)(C) are covered

18 only for individuals less than 18 years of age

19 and special needs patients. On or after such

20 date, such items and services are covered for all

21 individuals enrolled for benefits under this Act,

22 except that endodontic services are not covered

23 for individuals 18 years of age or older.

24 (C) SPACE MAINTENANCE.—The items and

25 services described in paragraph (1)(D) are cov-
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1 ered only for individuals at least 3 years of age,

2 but less than 13 years of age and—

3 (i) are limited to posterior teeth;

4 (ii) involve maintenance of a space or

5 spaces for permanent posterior teeth that

6 would otherwise be prevented from normal

7 eruption if the space were not maintained;

8 and

9 (iii) do not include a space maintainer

10 that is placed within 6 months of the ex11 pected eruption of the permanent posterior

12 tooth concerned.

13 (D) ORTHODONTIC TREATMENT.—Prior to

14 January 1, 2002, the items and services de15 scribed in paragraph (1)(E) are covered only

16 for individuals at least 6 years of age, but less

17 than 12 years of age, who have severe

18 dentofacial abnormalities. On or after such

19 date, such items and services are covered only

20 for individuals at least 6 years of age, but less

21 than 12 years of age.

22 (E) DENTURES.—Prior to January 1,

23 2002, the dentures described in paragraph

24 (1)(F) are not covered, except for special needs

25 patients. On or after such date, dentures are
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1 covered for an individual consistent with a peri2 odicity schedule established by the Board, ex3 cept that the limitation of periodicity provided

4 in such schedule shall not apply to a special

5 needs patient.

6 (3) DEFINITIONS.—For purposes of this title:

7 (A) MEDICALLY NECESSARY ORAL HEALTH

8 CARE.—The term ‘‘medically necessary oral

9 health care’’ means oral health care that is re10 quired as a direct result of, or would have a di11 rect impact on, an underlying medical condi12 tion. Such term includes oral health care di13 rected toward control or elimination of pain, in14 fection, or reestablishment of oral function.

15 (B) SPECIAL NEEDS PATIENT.—The term

16 ‘‘special needs patient’’ includes an individual

17 with a genetic or birth defect, a developmental

18 disability, or an acquired medical disability.

19 (i) NURSING FACILITY; NURSING FACILITY SERV20 ICES.—Except as may be provided by the Board, the

21 terms ‘‘nursing facility’’ and ‘‘nursing facility services’’

22 have the meanings given such terms in sections 1919(a)

23 and 1905(f), respectively, of the Social Security Act.
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1 (j) SERVICES IN INTERMEDIATE CARE FACILITIES

2 FOR INDIVIDUALS WITH MENTAL RETARDATION.—Ex3 cept as may be provided by the Board—

4 (1) the term ‘‘intermediate care facility for indi5 viduals with mental retardation’’ has the meaning

6 specified in section 1905(d) of the Social Security

7 Act (as in effect before the enactment of this Act);

8 and

9 (2) the term ‘‘services in intermediate care fa10 cilities for individuals with mental retardation’’

11 means services described in section 1905(a)(15) of

12 such Act (as so in effect) in an intermediate care fa13 cility for individuals with mental retardation to an

14 individual determined to require such services in ac15 cordance with standards specified by the Board and

16 comparable to the standards described in section

17 1902(a)(31)(A) of such Act (as so in effect).

18 (k) OTHER TERMS.—Except as may be provided by

19 the Board, the definitions contained in section 1861 of the

20 Social Security Act shall apply.

21 SEC. 203. SPECIAL RULES FOR HOME AND COMMUNITY22 BASED LONG-TERM CARE SERVICES.

23 (a) QUALIFYING INDIVIDUALS.—For purposes of sec24 tion 201(a)(5)(C), individuals described in this subsection

25 are the following individuals:
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1 (1) ADULTS.—Individuals 18 years of age or

2 older determined (in a manner specified by the

3 Board)—

4 (A) to be unable to perform, without the

5 assistance of an individual, at least 2 of the fol6 lowing 5 activities of daily living (or who has a

7 similar level of disability due to cognitive

8 impairment)—

9 (i) bathing;

10 (ii) eating;

11 (iii) dressing;

12 (iv) toileting; and

13 (v) transferring in and out of a bed or

14 in and out of a chair;

15 (B) due to cognitive or mental impair16 ments, to require supervision because the indi17 vidual behaves in a manner that poses health or

18 safety hazards to himself or herself or others;

19 or

20 (C) due to cognitive or mental impair21 ments, to require queuing to perform activities

22 of daily living.

23 (2) CHILDREN.—Individuals under 18 years of

24 age determined (in a manner specified by the Board)

25 to meet such alternative standard of disability for
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1 children as the Board develops. Such alternative

2 standard shall be comparable to the standard for

3 adults and appropriate for children.

4 (b) LIMIT ON SERVICES.—

5 (1) IN GENERAL.—The aggregate expenditures

6 by a State health security program with respect to

7 home and community-based long-term care services

8 in a period (specified by the Board) may not exceed

9 65 percent (or such alternative ratio as the Board

10 establishes under paragraph (2)) of the average of

11 the amount of payment that would have been made

12 under the program during the period if all the home13 based long-term care beneficiaries had been resi14 dents of nursing facilities in the same area in which

15 the services were provided.

16 (2) ALTERNATIVE RATIO.—The Board may es17 tablish for purposes of paragraph (1) an alternative

18 ratio (of payments for home and community-based

19 long term care services to payments for nursing fa20 cility services) as the Board determines to be more

21 consistent with the goal of providing cost-effective

22 long-term care in the most appropriate and least

23 restrictive setting.
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1 SEC. 204. EXCLUSIONS AND LIMITATIONS.

2 (a) IN GENERAL.—Subject to section 201(e), benefits

3 for service are not available under this Act unless the

4 services meet the standards specified in section 201(a).

5 (b) SPECIAL DELIVERY REQUIREMENTS FOR MEN6 TAL HEALTH AND SUBSTANCE ABUSE TREATMENT SERV7 ICES PROVIDED TO AT-RISK CHILDREN.—

8 (1) REQUIRING SERVICES TO BE PROVIDED

9 THROUGH ORGANIZED SYSTEMS OF CARE.—A State

10 health security program shall ensure that mental

11 health services and substance abuse treatment serv12 ices are furnished through an organized system of

13 care, as described in paragraph (2), if—

14 (A) the services are provided to an individ15 ual less than 22 years of age;

16 (B) the individual has a serious emotional

17 disturbance or a substance abuse disorder; and

18 (C) the individual is, or is at imminent risk

19 of being, subject to the authority of, or in need

20 of the services of, at least 1 public agency that

21 serves the needs of children, including an agen22 cy involved with child welfare, special education,

23 juvenile justice, or criminal justice.

24 (2) REQUIREMENTS FOR SYSTEM OF CARE.—In

25 this subsection, an ‘‘organized system of care’’ is a

26 community-based service delivery network, which
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1 may consist of public and private providers, that

2 meets the following requirements:

3 (A) The system has established linkages

4 with existing mental health services and sub5 stance abuse treatment service delivery pro6 grams in the plan service area (or is in the

7 process of developing or operating a system

8 with appropriate public agencies in the area to

9 coordinate the delivery of such services to indi10 viduals in the area).

11 (B) The system provides for the participa12 tion and coordination of multiple agencies and

13 providers that serve the needs of children in the

14 area, including agencies and providers involved

15 with child welfare, education, juvenile justice,

16 criminal justice, health care, mental health, and

17 substance abuse prevention and treatment.

18 (C) The system provides for the involve19 ment of the families of children to whom mental

20 health services and substance abuse treatment

21 services are provided in the planning of treat22 ment and the delivery of services.

23 (D) The system provides for the develop24 ment and implementation of individualized

25 treatment plans by multidisciplinary and multi-
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1 agency teams, which are recognized and fol2 lowed by the applicable agencies and providers

3 in the area.

4 (E) The system ensures the delivery and

5 coordination of the range of mental health serv6 ices and substance abuse treatment services re7 quired by individuals under 22 years of age who

8 have a serious emotion disturbance or a sub9 stance abuse disorder.

10 (F) The system provides for the manage11 ment of the individualized treatment plans de12 scribed in subparagraph (D) and for a flexible

13 response to changes in treatment needs over

14 time.

15 (c) TREATMENT OF EXPERIMENTAL SERVICES.—In

16 applying subsection (a), the Board shall make national

17 coverage determinations with respect to those services that

18 are experimental in nature. Such determinations shall be

19 made consistent with a process that provides for input

20 from representatives of health care professionals and pa21 tients and public comment.

22 (d) APPLICATION OF PRACTICE GUIDELINES.—In

23 the case of services for which the American Health Secu24 rity Quality Council (established under section 501) has

25 recognized a national practice guideline, the services are
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1 considered to meet the standards specified in section

2 201(a) if they have been provided in accordance with such

3 guideline or in accordance with such guidelines as are pro4 vided by the State health security program consistent with

5 title V. For purposes of this subsection, a service shall

6 be considered to have been provided in accordance with

7 a practice guideline if the health care provider providing

8 the service exercised appropriate professional discretion to

9 deviate from the guideline in a manner authorized or an10 ticipated by the guideline.

11 (e) SPECIFIC LIMITATIONS.—

12 (1) LIMITATIONS ON EYEGLASSES, CONTACT

13 LENSES, HEARING AIDS, AND DURABLE MEDICAL

14 EQUIPMENT.—Subject to section 201(e), the Board

15 may impose such limits relating to the costs and fre16 quency of replacement of eyeglasses, contact lenses,

17 hearing aids, and durable medical equipment to

18 which individuals enrolled for benefits under this Act

19 are entitled to have payment made under a State

20 health security program as the Board deems appro21 priate.

22 (2) OVERLAP WITH PREVENTIVE SERVICES.—

23 The coverage of services described in section 201(a)

24 (other than paragraph (3)) which also are preventive

25 services are required to be covered only to the extent
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1 that they are required to be covered as preventive

2 services.

3 (3) MISCELLANEOUS EXCLUSIONS FROM COV4 ERED SERVICES.—Covered services under this Act

5 do not include the following:

6 (A) Surgery and other procedures (such as

7 orthodontia) performed solely for cosmetic pur8 poses (as defined in regulations) and hospital or

9 other services incident thereto, unless—

10 (i) required to correct a congenital

11 anomaly;

12 (ii) required to restore or correct a

13 part of the body which has been altered as

14 a result of accidental injury, disease, or

15 surgery; or

16 (iii) otherwise determined to be medi17 cally necessary and appropriate under sec18 tion 201(a).

19 (B) Personal comfort items or private

20 rooms in inpatient facilities, unless determined

21 to be medically necessary and appropriate

22 under section 201(a).

23 (C) The services of a professional practi24 tioner if they are furnished in a hospital or
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1 other facility which is not a participating pro2 vider.

3 (f) NURSING FACILITY SERVICES AND HOME

4 HEALTH SERVICES.—Nursing facility services and home

5 health services (other than post-hospital services, as de6 fined by the Board) furnished to an individual who is not

7 described in section 203(a) are not covered services unless

8 the services are determined to meet the standards speci9 fied in section 201(a) and, with respect to nursing facility

10 services, to be provided in the least restrictive and most

11 appropriate setting.

12 SEC. 205. CERTIFICATION; QUALITY REVIEW; PLANS OF

13 CARE.

14 (a) CERTIFICATIONS.—State health security pro15 grams may require, as a condition of payment for institu16 tional health care services and other services of the type

17 described in such sections 1814(a) and 1835(a) of the So18 cial Security Act, periodic professional certifications of the

19 kind described in such sections.

20 (b) QUALITY REVIEW.—For requirement that each

21 State health security program establish a quality review

22 program that meets the requirements for such a program

23 under title V, see section 404(b)(1)(H).

24 (c) PLAN OF CARE REQUIREMENTS.—A State health

25 security program may require, consistent with standards
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1 established by the Board, that payment for services ex2 ceeding specified levels or duration be provided only as

3 consistent with a plan of care or treatment formulated by

4 one or more providers of the services or other qualified

5 professionals. Such a plan may include, consistent with

6 subsection (b), case management at specified intervals as

7 a further condition of payment for services.

8 TITLE III—PROVIDER

9 PARTICIPATION

10 SEC. 301. PROVIDER PARTICIPATION AND STANDARDS.

11 (a) IN GENERAL.—An individual or other entity fur12 nishing any covered service under a State health security

13 program under this Act is not a qualified provider unless

14 the individual or entity—

15 (1) is a qualified provider of the services under

16 section 302;

17 (2) has filed with the State health security pro18 gram a participation agreement described in sub19 section (b); and

20 (3) meets such other qualifications and condi21 tions as are established by the Board or the State

22 health security program under this Act.

23 (b) REQUIREMENTS IN PARTICIPATION AGREE24 MENT.—
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1 (1) IN GENERAL.—A participation agreement

2 described in this subsection between a State health

3 security program and a provider shall provide at

4 least for the following:

5 (A) Services to eligible persons will be fur6 nished by the provider without discrimination

7 on the ground of race, national origin, income,

8 religion, age, sex or sexual orientation, disabil9 ity, handicapping condition, or (subject to the

10 professional qualifications of the provider) ill11 ness. Nothing in this subparagraph shall be

12 construed as requiring the provision of a type

13 or class of services which services are outside

14 the scope of the provider’s normal practice.

15 (B) No charge will be made for any cov16 ered services other than for payment authorized

17 by this Act.

18 (C) The provider agrees to furnish such in19 formation as may be reasonably required by the

20 Board or a State health security program, in

21 accordance with uniform reporting standards

22 established under section 401(g)(1), for—

23 (i) quality review by designated enti24 ties;
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1 (ii) the making of payments under

2 this Act (including the examination of

3 records as may be necessary for the ver4 ification of information on which payments

5 are based);

6 (iii) statistical or other studies re7 quired for the implementation of this Act;

8 and

9 (iv) such other purposes as the Board

10 or State may specify.

11 (D) The provider agrees not to bill the pro12 gram for any services for which benefits are not

13 available because of section 204(d).

14 (E) In the case of a provider that is not

15 an individual, the provider agrees not to employ

16 or use for the provision of health services any

17 individual or other provider who or which has

18 had a participation agreement under this sub19 section terminated for cause.

20 (F) In the case of a provider paid under a

21 fee-for-service basis under section 612, the pro22 vider agrees to submit bills and any required

23 supporting documentation relating to the provi24 sion of covered services within 30 days (or such

25 shorter period as a State health security pro-
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1 gram may require) after the date of providing

2 such services.

3 (2) TERMINATION OF PARTICIPATION AGREE4 MENTS.—

5 (A) IN GENERAL.—Participation agree6 ments may be terminated, with appropriate no7 tice—

8 (i) by the Board or a State health se9 curity program for failure to meet the

10 requirements of this title, or

11 (ii) by a provider.

12 (B) TERMINATION PROCESS.—Providers

13 shall be provided notice and a reasonable oppor14 tunity to correct deficiencies before the Board

15 or a State health security program terminates

16 an agreement unless a more immediate termi17 nation is required for public safety or similar

18 reasons.

19 SEC. 302. QUALIFICATIONS FOR PROVIDERS.

20 (a) IN GENERAL.—A health care provider is consid21 ered to be qualified to provide covered services if the pro22 vider is licensed or certified and meets—

23 (1) all the requirements of State law to provide

24 such services,
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1 (2) applicable requirements of Federal law to

2 provide such services, and

3 (3) any applicable standards established under

4 subsection (b).

5 (b) MINIMUM PROVIDER STANDARDS.—

6 (1) IN GENERAL.—The Board shall establish,

7 evaluate, and update national minimum standards to

8 assure the quality of services provided under this

9 Act and to monitor efforts by State health security

10 programs to assure the quality of such services. A

11 State health security program may also establish ad12 ditional minimum standards which providers must

13 meet.

14 (2) NATIONAL MINIMUM STANDARDS.—The na15 tional minimum standards under paragraph (1) shall

16 be established for institutional providers of services,

17 individual health care practitioners, and comprehen18 sive health service organizations. Except as the

19 Board may specify in order to carry out this title,

20 a hospital, nursing facility, or other institutional

21 provider of services shall meet standards for such a

22 facility under the medicare program under title

23 XVIII of the Social Security Act. Such standards

24 also may include, where appropriate, elements relat25 ing to—
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1 (A) adequacy and quality of facilities;

2 (B) training and competence of personnel

3 (including continuing education requirements);

4 (C) comprehensiveness of service;

5 (D) continuity of service;

6 (E) patient satisfaction (including waiting

7 time and access to services); and

8 (F) performance standards (including or9 ganization, facilities, structure of services, effi10 ciency of operation, and outcome in palliation,

11 improvement of health, stabilization, cure, or

12 rehabilitation).

13 (3) TRANSITION IN APPLICATION.—If the

14 Board provides for additional requirements for pro15 viders under this subsection, any such additional re16 quirement shall be implemented in a manner that

17 provides for a reasonable period during which a pre18 viously qualified provider is permitted to meet such

19 an additional requirement.

20 (4) EXCHANGE OF INFORMATION.—The Board

21 shall provide for an exchange, at least annually,

22 among State health security programs of informa23 tion with respect to quality assurance and cost

24 containment.
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1 SEC. 303. QUALIFICATIONS FOR COMPREHENSIVE HEALTH

2 SERVICE ORGANIZATIONS.

3 (a) IN GENERAL.—For purposes of this Act, a com4 prehensive health service organization (in this section re5 ferred to as a ‘‘CHSO’’) is a public or private organization

6 which, in return for a capitated payment amount, under7 takes to furnish, arrange for the provision of, or provide

8 payment with respect to—

9 (1) a full range of health services (as identified

10 by the Board), including at least hospital services

11 and physicians services, and

12 (2) out-of-area coverage in the case of urgently

13 needed services,

14 to an identified population which is living in or near a

15 specified service area and which enrolls voluntarily in the

16 organization.

17 (b) ENROLLMENT.—

18 (1) IN GENERAL.—All eligible persons living in

19 or near the specified service area of a CHSO are eli20 gible to enroll in the organization; except that the

21 number of enrollees may be limited to avoid overtax22 ing the resources of the organization.

23 (2) MINIMUM ENROLLMENT PERIOD.—Subject

24 to paragraph (3), the minimum period of enrollment

25 with a CHSO shall be twelve months, unless the en-
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1 rolled individual becomes ineligible to enroll with the

2 organization.

3 (3) WITHDRAWAL FOR CAUSE.—Each CHSO

4 shall permit an enrolled individual to disenroll from

5 the organization for cause at any time.

6 (c) REQUIREMENTS FOR CHSOS.—

7 (1) ACCESSIBLE SERVICES.—Each CHSO, to

8 the maximum extent feasible, shall make all services

9 readily and promptly accessible to enrollees who live

10 in the specified service area.

11 (2) CONTINUITY OF CARE.—Each CHSO shall

12 furnish services in such manner as to provide con13 tinuity of care and (when services are furnished by

14 different providers) shall provide ready referral of

15 patients to such services and at such times as may

16 be medically appropriate.

17 (3) BOARD OF DIRECTORS.—In the case of a

18 CHSO that is a private organization—

19 (A) CONSUMER REPRESENTATION.—At

20 least one-third of the members of the CHSO’s

21 board of directors must be consumer members

22 with no direct or indirect, personal or family

23 financial relationship to the organization.

24 (B) PROVIDER REPRESENTATION.—The

25 CHSO’s board of directors must include at
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1 least one member who represents health care

2 providers.

3 (4) PATIENT GRIEVANCE PROGRAM.—Each

4 CHSO must have in effect a patient grievance pro5 gram and must conduct regularly surveys of the sat6 isfaction of members with services provided by or

7 through the organization.

8 (5) MEDICAL STANDARDS.—Each CHSO must

9 provide that a committee or committees of health

10 care practitioners associated with the organization

11 will promulgate medical standards, oversee the pro12 fessional aspects of the delivery of care, perform the

13 functions of a pharmacy and drug therapeutics com14 mittee, and monitor and review the quality of all

15 health services (including drugs, education, and pre16 ventive services).

17 (6) PREMIUMS.—Premiums or other charges by

18 a CHSO for any services not paid for under this Act

19 must be reasonable.

20 (7) UTILIZATION AND BONUS INFORMATION.—

21 Each CHSO must—

22 (A) comply with the requirements of sec23 tion 1876(i)(8) of the Social Security Act (re24 lating to prohibiting physician incentive plans
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1 that provide specific inducements to reduce or

2 limit medically necessary services), and

3 (B) make available to its membership utili4 zation information and data regarding financial

5 performance, including bonus or incentive pay6 ment arrangements to practitioners.

7 (8) PROVISION OF SERVICES TO ENROLLEES AT

8 INSTITUTIONS OPERATING UNDER GLOBAL BUDG9 ETS.—The organization shall arrange to reimburse

10 for hospital services and other facility-based services

11 (as identified by the Board) for services provided to

12 members of the organization in accordance with the

13 global operating budget of the hospital or facility ap14 proved under section 611.

15 (9) BROAD MARKETING.—Each CHSO must

16 provide for the marketing of its services (including

17 dissemination of marketing materials) to potential

18 enrollees in a manner that is designed to enroll indi19 viduals representative of the different population

20 groups and geographic areas included within its

21 service area and meets such requirements as the

22 Board or a State health security program may

23 specify.

24 (10) ADDITIONAL REQUIREMENTS.—Each

25 CHSO must meet—
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1 (A) such requirements relating to mini2 mum enrollment,

3 (B) such requirements relating to financial

4 solvency,

5 (C) such requirements relating to quality

6 and availability of care, and

7 (D) such other requirements,

8 as the Board or a State health security program

9 may specify.

10 (d) PROVISION OF EMERGENCY SERVICES TO

11 NONENROLLEES.—A CHSO may furnish emergency serv12 ices to persons who are not enrolled in the organization.

13 Payment for such services, if they are covered services to

14 eligible persons, shall be made to the organization unless

15 the organization requests that it be made to the individual

16 provider who furnished the services.

17 SEC. 304. LIMITATION ON CERTAIN PHYSICIAN REFERRALS.

18 (a) APPLICATION TO AMERICAN HEALTH SECURITY

19 PROGRAM.—Section 1877 of the Social Security Act, as

20 amended by subsections (b) and (c), shall apply under this

21 Act in the same manner as it applies under title XVIII

22 of the Social Security Act; except that in applying such

23 section under this Act any references in such section to

24 the Secretary or title XVIII of the Social Security Act are
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1 deemed references to the Board and the American Health

2 Security Program under this Act, respectively.

3 (b) EXPANSION OF PROHIBITION TO CERTAIN ADDI4 TIONAL DESIGNATED SERVICES.—Section 1877(h)(6) of

5 the Social Security Act (42 U.S.C. 1395nn(h)(6)) is

6 amended by adding at the end the following:

7 ‘‘(L) Ambulance services.

8 ‘‘(M) Home infusion therapy services.’’.

9 (c) CONFORMING AMENDMENTS.—Section 1877 of

10 such Act is further amended—

11 (1) in subsection (a)(1)(A), by striking ‘‘for

12 which payment otherwise may be made under this

13 title’’ and by inserting ‘‘for which a charge is

14 imposed’’;

15 (2) in subsection (a)(1)(B), by striking ‘‘under

16 this title’’;

17 (3) by amending paragraph (1) of subsection

18 (g) to read as follows:

19 ‘‘(1) DENIAL OF PAYMENT.—No payment may

20 be made under a State health security program for

21 a designated health service for which a claim is pre22 sented in violation of subsection (a)(1)(B). No indi23 vidual, third party payor, or other entity is liable for

24 payment for designated health services for which a
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1 claim is presented in violation of such subsection.’’;

2 and

3 (4) in subsection (g)(3), by striking ‘‘for which

4 payment may not be made under paragraph (1)’’

5 and by inserting ‘‘for which such a claim may not

6 be presented under subsection (a)(1)’’.

7 TITLE IV—ADMINISTRATION

8 Subtitle A—General Administrative

9 Provisions

10 SEC. 401. AMERICAN HEALTH SECURITY STANDARDS

11 BOARD.

12 (a) ESTABLISHMENT.—There is hereby established

13 an American Health Security Standards Board.

14 (b) APPOINTMENT AND TERMS OF MEMBERS.—

15 (1) IN GENERAL.—The Board shall be com16 posed of—

17 (A) the Secretary of Health and Human

18 Services, and

19 (B) 6 other individuals (described in para20 graph (2)) appointed by the President with the

21 advice and consent of the Senate.

22 The President shall first nominate individuals under

23 subparagraph (B) on a timely basis so as to provide

24 for the operation of the Board by not later than

25 January 1, 1995.
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1 (2) SELECTION OF APPOINTED MEMBERS.—

2 With respect to the individuals appointed under

3 paragraph (1)(B):

4 (A) They shall be chosen on the basis of

5 backgrounds in health policy, health economics,

6 the healing professions, and the administration

7 of health care institutions.

8 (B) They shall provide a balanced point of

9 view with respect to the various health care in10 terests and at least two of them shall represent

11 the interests of individual consumers.

12 (C) Not more than three of them shall be

13 from the same political party.

14 (D) To the greatest extent feasible, they

15 shall represent the various geographic regions

16 of the United States and shall reflect the racial,

17 ethnic, and gender composition of the popu18 lation of the United States.

19 (3) TERMS OF APPOINTED MEMBERS.—Individ20 uals appointed under paragraph (1)(B) shall serve

21 for a term of 6 years, except that the terms of 5 of

22 the individuals initially appointed shall be, as des23 ignated by the President at the time of their ap24 pointment, for 1, 2, 3, 4, and 5 years. During a

25 term of membership on the Board, no member shall
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1 engage in any other business, vocation or employ2 ment.

3 (c) VACANCIES.—

4 (1) IN GENERAL.—The President shall fill any

5 vacancy in the membership of the Board in the same

6 manner as the original appointment. The vacancy

7 shall not affect the power of the remaining members

8 to execute the duties of the Board.

9 (2) VACANCY APPOINTMENTS.—Any member

10 appointed to fill a vacancy shall serve for the re11 mainder of the term for which the predecessor of the

12 member was appointed.

13 (3) REAPPOINTMENT.—The President may re14 appoint an appointed member of the Board for a

15 second term in the same manner as the original ap16 pointment. A member who has served for two con17 secutive 6-year terms shall not be eligible for re18 appointment until two years after the member has

19 ceased to serve.

20 (4) REMOVAL FOR CAUSE.—Upon confirmation,

21 members of the Board may not be removed except

22 by the President for cause.

23 (d) CHAIR.—The President shall designate one of the

24 members of the Board, other than the Secretary, to serve

25 at the will of the President as Chair of the Board.
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1 (e) COMPENSATION.—Members of the Board (other

2 than the Secretary) shall be entitled to compensation at

3 a level equivalent to level II of the Executive Schedule,

4 in accordance with section 5313 of title 5, United States

5 Code.

6 (f) GENERAL DUTIES OF THE BOARD.—

7 (1) IN GENERAL.—The Board shall develop

8 policies, procedures, guidelines, and requirements to

9 carry out this Act, including those related to—

10 (A) eligibility;

11 (B) enrollment;

12 (C) benefits;

13 (D) provider participation standards and

14 qualifications, as defined in title III;

15 (E) national and State funding levels;

16 (F) methods for determining amounts of

17 payments to providers of covered services, con18 sistent with subtitle B of title VI;

19 (G) the determination of medical necessity

20 and appropriateness with respect to coverage of

21 certain services;

22 (H) assisting State health security pro23 grams with planning for capital expenditures

24 and service delivery;
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1 (I) planning for health professional edu2 cation funding (as specified in title VI);

3 (J) allocating funds provided under title

4 VII; and

5 (K) encouraging States to develop regional

6 planning mechanisms (described in section

7 404(a)(3)).

8 (2) REGULATIONS.—Regulations authorized by

9 this Act shall be issued by the Board in accordance

10 with the provisions of section 553 of title 5, United

11 States Code.

12 (g) UNIFORM REPORTING STANDARDS; ANNUAL RE13 PORT; STUDIES.—

14 (1) UNIFORM REPORTING STANDARDS.—

15 (A) IN GENERAL.—The Board shall estab16 lish uniform reporting requirements and stand17 ards to ensure an adequate national data base

18 regarding health services practitioners, services

19 and finances of State health security programs,

20 approved plans, providers, and the costs of fa21 cilities and practitioners providing services.

22 Such standards shall include, to the maximum

23 extent feasible, health outcome measures.

24 (B) REPORTS.—The Board shall analyze

25 regularly information reported to it, and to
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1 State health security programs pursuant to

2 such requirements and standards.

3 (2) ANNUAL REPORT.—Beginning January 1,

4 of the second year beginning after the date of the

5 enactment of this Act, the Board shall annually

6 report to Congress on the following:

7 (A) The status of implementation of the

8 Act.

9 (B) Enrollment under this Act.

10 (C) Benefits under this Act.

11 (D) Expenditures and financing under this

12 Act.

13 (E) Cost-containment measures and

14 achievements under this Act.

15 (F) Quality assurance.

16 (G) Health care utilization patterns, in17 cluding any changes attributable to the pro18 gram.

19 (H) Long-range plans and goals for the de20 livery of health services.

21 (I) Differences in the health status of the

22 populations of the different States, including in23 come and racial characteristics.

24 (J) Necessary changes in the education of

25 health personnel.
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1 (K) Plans for improving service to medi2 cally underserved populations.

3 (L) Transition problems as a result of im4 plementation of this Act.

5 (M) Opportunities for improvements under

6 this Act.

7 (3) STATISTICAL ANALYSES AND OTHER STUD8 IES.—The Board may, either directly or by con9 tract—

10 (A) make statistical and other studies, on

11 a nationwide, regional, state, or local basis, of

12 any aspect of the operation of this Act, includ13 ing studies of the effect of the Act upon the

14 health of the people of the United States and

15 the effect of comprehensive health services upon

16 the health of persons receiving such services;

17 (B) develop and test methods of providing

18 through payment for services or otherwise, ad19 ditional incentives for adherence by providers to

20 standards of adequacy, access, and quality;

21 methods of consumer and peer review and peer

22 control of the utilization of drugs, of laboratory

23 services, and of other services; and methods of

24 consumer and peer review of the quality of serv25 ices;
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1 (C) develop and test, for use by the Board,

2 records and information retrieval systems and

3 budget systems for health services administra4 tion, and develop and test model systems for

5 use by providers of services;

6 (D) develop and test, for use by providers

7 of services, records and information retrieval

8 systems useful in the furnishing of preventive

9 or diagnostic services;

10 (E) develop, in collaboration with the phar11 maceutical profession, and test, improved ad12 ministrative practices or improved methods for

13 the reimbursement of independent pharmacies

14 for the cost of furnishing drugs as a covered

15 service; and

16 (F) make such other studies as it may con17 sider necessary or promising for the evaluation,

18 or for the improvement, of the operation of this

19 Act.

20 (4) REPORT ON USE OF EXISTING FEDERAL

21 HEALTH CARE FACILITIES.—Not later than one year

22 after the date of the enactment of this Act, the

23 Board shall recommend to the Congress one or more

24 proposals for the treatment of health care facilities

25 of the Federal Government.
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1 (h) EXECUTIVE DIRECTOR.—

2 (1) APPOINTMENT.—There is hereby estab3 lished the position of Executive Director of the

4 Board. The Director shall be appointed by the

5 Board and shall serve as secretary to the Board and

6 perform such duties in the administration of this

7 title as the Board may assign.

8 (2) DELEGATION.—The Board is authorized to

9 delegate to the Director or to any other officer or

10 employee of the Board or, with the approval of the

11 Secretary of Health and Human Services (and sub12 ject to reimbursement of identifiable costs), to any

13 other officer or employee of the Department of

14 Health and Human Services, any of its functions or

15 duties under this Act other than—

16 (A) the issuance of regulations; or

17 (B) the determination of the availability of

18 funds and their allocation to implement this

19 Act.

20 (3) COMPENSATION.—The Executive Director

21 of the Board shall be entitled to compensation at a

22 level equivalent to level III of the Executive Sched23 ule, in accordance with section 5314 of title 5,

24 United States Code.
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1 (i) INSPECTOR GENERAL.—The Inspector General

2 Act of 1978 (5 U.S.C. App.) is amended—

3 (1) in section 11(1) by inserting after ‘‘Cor4 poration;’’ the following: ‘‘the Chair of the American

5 Health Security Standards Board;’’;

6 (2) in section 11(2) by inserting after ‘‘Infor7 mation Agency,’’ the following: ‘‘the American

8 Health Security Standards Board,’’; and

9 (3) by inserting after the second section 8G the

10 following:

11 ‘‘§ 8I. Special provisions concerning American Health

12 Security Standards Board

13 ‘‘The Inspector General of the American Health Se14 curity Standards Board, in addition to the other authori15 ties vested by this Act, shall have the same authority, with

16 respect to the Board and the American Health Security

17 Program under this Act, as the Inspector General for the

18 Department of Health and Human Services has with re19 spect to the Secretary of Health and Human Services and

20 the medicare and medicaid programs, respectively.’’.

21 (j) STAFF.—The Board shall employ such staff as the

22 Board may deem necessary.

23 (k) ACCESS TO INFORMATION.—The Secretary of

24 Health and Human Services shall make available to the

25 Board all information available from sources within the
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1 Department or from other sources, pertaining to the

2 duties of the Board.

3 SEC. 402. AMERICAN HEALTH SECURITY ADVISORY COUN4 CIL.

5 (a) IN GENERAL.—The Board shall provide for an

6 American Health Security Advisory Council (in this sec7 tion referred to as the ‘‘Council’’) to advise the Board on

8 its activities.

9 (b) MEMBERSHIP.—The Council shall be composed

10 of—

11 (1) the Chair of the Board, who shall serve as

12 Chair of the Council, and

13 (2) twenty members, not otherwise in the em14 ploy of the United States, appointed by the Board

15 without regard to the provisions of title 5, United

16 States Code, governing appointments in the competi17 tive service.

18 The appointed members shall include, in accordance with

19 subsection (e), individuals who are representative of State

20 health security programs, public health professionals, pro21 viders of health services, and of individuals (who shall con22 stitute a majority of the Council) who are representative

23 of consumers of such services, including a balanced rep24 resentation of employers, unions, consumer organizations,

25 and population groups with special health care needs. To
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1 the greatest extent feasible, the membership of the Council

2 shall represent the various geographic regions of the Unit3 ed States and shall reflect the racial, ethnic, and gender

4 composition of the population of the United States.

5 (c) TERMS OF MEMBERS.—Each appointed member

6 shall hold office for a term of four years, except that—

7 (1) any member appointed to fill a vacancy oc8 curring during the term for which the member’s

9 predecessor was appointed shall be appointed for the

10 remainder of that term; and

11 (2) the terms of the members first taking office

12 shall expire, as designated by the Board at the time

13 of appointment, five at the end of the first year, five

14 at the end of the second year, five at the end of the

15 third year, and five at the end of the fourth year

16 after the date of enactment of this Act.

17 (d) VACANCIES.—

18 (1) IN GENERAL.—The Board shall fill any va19 cancy in the membership of the Council in the same

20 manner as the original appointment. The vacancy

21 shall not affect the power of the remaining members

22 to execute the duties of the Council.

23 (2) VACANCY APPOINTMENTS.—Any member

24 appointed to fill a vacancy shall serve for the re-
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1 mainder of the term for which the predecessor of the

2 member was appointed.

3 (3) REAPPOINTMENT.—The Board may re4 appoint an appointed member of the Council for a

5 second term in the same manner as the original

6 appointment.

7 (e) QUALIFICATIONS.—

8 (1) PUBLIC HEALTH REPRESENTATIVES.—

9 Members of the Council who are representative of

10 State health security programs and public health

11 professionals shall be individuals who have extensive

12 experience in the financing and delivery of care

13 under public health programs.

14 (2) PROVIDERS.—Members of the Council who

15 are representative of providers of health care shall

16 be individuals who are outstanding in fields related

17 to medical, hospital, or other health activities, or

18 who are representative of organizations or associa19 tions of professional health practitioners.

20 (3) CONSUMERS.—Members who are represent21 ative of consumers of such care shall be individuals,

22 not engaged in and having no financial interest in

23 the furnishing of health services, who are familiar

24 with the needs of various segments of the population

25 for personal health services and are experienced in
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1 dealing with problems associated with the consump2 tion of such services.

3 (f) DUTIES.—

4 (1) IN GENERAL.—It shall be the duty of the

5 Council—

6 (A) to advise the Board on matters of gen7 eral policy in the administration of this Act, in

8 the formulation of regulations, and in the per9 formance of the Board’s duties under section

10 401; and

11 (B) to study the operation of this Act and

12 the utilization of health services under it, with

13 a view to recommending any changes in the ad14 ministration of the Act or in its provisions

15 which may appear desirable.

16 (2) REPORT.—The Council shall make an an17 nual report to the Board on the performance of its

18 functions, including any recommendations it may

19 have with respect thereto, and the Board shall

20 promptly transmit the report to the Congress, to21 gether with a report by the Board on any rec22 ommendations of the Council that have not been

23 followed.

24 (g) STAFF.—The Council, its members, and any com25 mittees of the Council shall be provided with such sec-
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1 retarial, clerical, or other assistance as may be authorized

2 by the Board for carrying out their respective functions.

3 (h) MEETINGS.—The Council shall meet as fre4 quently as the Board deems necessary, but not less than

5 four times each year. Upon request by seven or more mem6 bers it shall be the duty of the Chair to call a meeting

7 of the Council.

8 (i) COMPENSATION.—Members of the Council shall

9 be reimbursed by the Board for travel and per diem in

10 lieu of subsistence expenses during the performance of du11 ties of the Board in accordance with subchapter I of chap12 ter 57 of title 5, United States Code.

13 (j) FACA NOT APPLICABLE.—The provisions of the

14 Federal Advisory Committee Act shall not apply to the

15 Council.

16 SEC. 403. CONSULTATION WITH PRIVATE ENTITIES.

17 The Secretary and the Board shall consult with pri18 vate entities, such as professional societies, national asso19 ciations, nationally recognized associations of experts,

20 medical schools and academic health centers, consumer

21 groups, and labor and business organizations in the for22 mulation of guidelines, regulations, policy initiatives, and

23 information gathering to assure the broadest and most in24 formed input in the administration of this Act. Nothing

25 in this Act shall prevent the Secretary from adopting
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1 guidelines developed by such a private entity if, in the Sec2 retary’s and Board’s judgment, such guidelines are gen3 erally accepted as reasonable and prudent and consistent

4 with this Act.

5 SEC. 404. STATE HEALTH SECURITY PROGRAMS.

6 (a) SUBMISSION OF PLANS.—

7 (1) IN GENERAL.—Each State shall submit to

8 the Board a plan for a State health security pro9 gram for providing for health care services to the

10 residents of the State in accordance with this Act.

11 (2) REGIONAL PROGRAMS.—A State may join

12 with one or more neighboring States to submit to

13 the Board a plan for a regional health security pro14 gram instead of separate State health security

15 programs.

16 (3) REGIONAL PLANNING MECHANISMS.—The

17 Board shall provide incentives for States to develop

18 regional planning mechanisms to promote the ration19 al distribution of, adequate access to, and efficient

20 use of, tertiary care facilities, equipment, and

21 services.

22 (b) REVIEW AND APPROVAL OF PLANS.—

23 (1) IN GENERAL.—The Board shall review

24 plans submitted under subsection (a) and determine

25 whether such plans meet the requirements for ap-
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1 proval. The Board shall not approve such a plan un2 less it finds that the plan (or State law) provides,

3 consistent with the provisions of this Act, for the

4 following:

5 (A) Payment for required health services

6 for eligible individuals in the State in accord7 ance with this Act.

8 (B) Adequate administration, including the

9 designation of a single State agency responsible

10 for the administration (or supervision of the

11 administration) of the program.

12 (C) The establishment of a State health

13 security budget.

14 (D) Establishment of payment methodolo15 gies (consistent with subtitle B of title VII).

16 (E) Assurances that individuals have the

17 freedom to choose practitioners and other

18 health care providers for services covered under

19 this Act.

20 (F) A procedure for carrying out long-term

21 regional management and planning functions

22 with respect to the delivery and distribution of

23 health care services that—
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1 (i) ensures participation of consumers

2 of health services and providers of health

3 services, and

4 (ii) gives priority to the most acute

5 shortages and maldistributions of health

6 personnel and facilities and the most seri7 ous deficiencies in the delivery of covered

8 services and to the means for the speedy

9 alleviation of these shortcomings.

10 (G) The licensure and regulation of all

11 health providers and facilities to ensure compli12 ance with Federal and State laws and to

13 promote quality of care.

14 (H) Establishment of a quality review sys15 tem in accordance with section 503.

16 (I) Establishment of an independent om17 budsman for consumers to register complaints

18 about the organization and administration of

19 the State health security program and to help

20 resolve complaints and disputes between con21 sumers and providers.

22 (J) Publication of an annual report on the

23 operation of the State health security program,

24 which report shall include information on cost,

25 progress towards achieving full enrollment, pub-
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1 lic access to health services, quality review,

2 health outcomes, health professional training,

3 and the needs of medically underserved

4 populations.

5 (K) Provision of a fraud and abuse preven6 tion and control unit that the Inspector General

7 determines meets the requirements of section

8 413(a).

9 (L) Provision that—

10 (i) all claims or requests for payment

11 for services shall be accompanied by the

12 unique provider identifier assigned under

13 section 414(a) to the provider and the

14 unique patient identifier assigned to the

15 individual under section 414(b);

16 (ii) no payment shall be made under

17 the program for the provision of health

18 care services by any provider unless the

19 provider has furnished the program with

20 the unique provider identifier assigned

21 under section 414(a);

22 (iii) the plan shall use the unique pa23 tient identifier assigned under section

24 414(b) to an individual as the identifier of

25 the individual in the processing of claims
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1 and other purposes (as specified by the

2 Board); and

3 (iv) queries made under section

4 412(c)(2) shall be made using the unique

5 provider identifier specified under section

6 414(a).

7 (M) Prohibit payment in cases of prohib8 ited physician referrals under section 304.

9 (N) Effective January 1, 2002, provide for

10 use of a uniform electronic data base in accord11 ance with section 505(a).

12 (2) CONSEQUENCES OF FAILURE TO COMPLY.—

13 If the Board finds that a State plan submitted

14 under paragraph (1) does not meet the requirements

15 for approval under this section or that a State

16 health security program or specific portion of such

17 program, the plan for which was previously ap18 proved, no longer meets such requirements, the

19 Board shall provide notice to the State of such fail20 ure and that unless corrective action is taken within

21 a period specified by the Board, the Board shall

22 place the State health security program (or specific

23 portions of such program) in receivership under the

24 jurisdiction of the Board.
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1 (c) STATE HEALTH SECURITY ADVISORY COUN2 CILS.—

3 (1) IN GENERAL.—For each State, the Gov4 ernor shall provide for appointment of a State

5 Health Security Advisory Council to advise and

6 make recommendations to the Governor and State

7 with respect to the implementation of the State

8 health security program in the State.

9 (2) MEMBERSHIP.—Each State Health Security

10 Advisory Council shall be composed of at least 11 in11 dividuals. The appointed members shall include indi12 viduals who are representative of the State health

13 security program, public health professionals, provid14 ers of health services, and of individuals (who shall

15 constitute a majority) who are representative of con16 sumers of such services, including a balanced

17 representation of employers, unions and consumer

18 organizations. To the greatest extent feasible, the

19 membership of each State Health Security Advisory

20 Council shall represent the various geographic re21 gions of the State and shall reflect the racial, ethnic,

22 and gender composition of the population of the

23 State.

24 (3) DUTIES.—
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1 (A) IN GENERAL.—Each State Health Se2 curity Advisory Council shall review, and sub3 mit comments to the Governor concerning the

4 implementation of the State health security pro5 gram in the State.

6 (B) ASSISTANCE.—Each State Health Se7 curity Advisory Council shall provide assistance

8 and technical support to community organiza9 tions and public and private non-profit agencies

10 submitting applications for funding under ap11 propriate State and Federal public health pro12 grams, with particular emphasis placed on as13 sisting those applicants with broad consumer

14 representation.

15 (d) STATE USE OF FISCAL AGENTS.—

16 (1) IN GENERAL.—Each State health security

17 program, using competitive bidding procedures, may

18 enter into such contracts with qualified entities, such

19 as voluntary associations, as the State determines to

20 be appropriate to process claims and to perform

21 other related functions of fiscal agents under the

22 State health security program.

23 (2) RESTRICTION.—Except as the Board may

24 provide for good cause shown, in no case may more
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1 than one contract described in paragraph (1) be

2 entered into under a State health security program.

3 SEC. 405. COMPLEMENTARY CONDUCT OF RELATED

4 HEALTH PROGRAMS.

5 In performing functions with respect to health per6 sonnel education and training, health research, environ7 mental health, disability insurance, vocational rehabilita8 tion, the regulation of food and drugs, and all other mat9 ters pertaining to health, the Secretary of Health and

10 Human Services shall direct all activities of the Depart11 ment of Health and Human Services toward contributions

12 to the health of the people complementary to this Act.

13 Subtitle B—Control Over Fraud

14 and Abuse

15 SEC. 411. APPLICATION OF FEDERAL SANCTIONS TO ALL

16 FRAUD AND ABUSE UNDER AMERICAN

17 HEALTH SECURITY PROGRAM.

18 The following sections of the Social Security Act shall

19 apply to State health security programs in the same man20 ner as they apply to State medical assistance plans under

21 title XIX of such Act (except that in applying such provi22 sions any reference to the Secretary is deemed a reference

23 to the Board):

24 (1) Section 1128 (relating to exclusion of indi25 viduals and entities).
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1 (2) Section 1128A (civil monetary penalties).

2 (3) Section 1128B (criminal penalties).

3 (4) Section 1124 (relating to disclosure of own4 ership and related information).

5 (5) Section 1126 (relating to disclosure of cer6 tain owners).

7 SEC. 412. NATIONAL HEALTH CARE FRAUD DATA BASE.

8 (a) ESTABLISHMENT.—The American Health Secu9 rity Standards Board, through the Inspector General,

10 shall establish a national data base (in this section

11 referred to as the ‘‘data base’’) containing information

12 relating to health care fraud and abuse.

13 (b) DATA INCLUDED.—

14 (1) IN GENERAL.—The data base shall include

15 such information as the Inspector General, in con16 sultation with the Board, shall specify, and shall

17 include at least the information described in

18 paragraph (2).

19 (2) SPECIFIED INFORMATION.—The informa20 tion specified in this paragraph is, with respect to

21 providers of health care services, the identity of any

22 provider—

23 (A) that has been convicted of a crime for

24 which the provider may be excluded from par-
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1 ticipation under a health program (as defined

2 in paragraph (3));

3 (B) whose license to provide health care

4 has been revoked or suspended (as described in

5 section 1128(b)(5) of the Social Security Act);

6 (C) that has been excluded or suspended

7 from a health program under section 1128 of

8 the Social Security Act or from any other

9 Federal or State health care program;

10 (D) with respect to whom a civil money

11 penalty has been imposed under this Act or the

12 Social Security Act; or

13 (E) that otherwise is subject to exclusion

14 from participation under a health program.

15 (3) HEALTH PROGRAM DEFINED.—In this sec16 tion, the term ‘‘health program’’ means a State

17 health security program and includes the medicare

18 program (under title XVIII of the Social Security

19 Act) and a State health care program (as defined in

20 section 1128(h) of such Act).

21 (c) REPORTING REQUIREMENT.—

22 (1) REPORTING.—Each State health security

23 program shall provide such information to the In24 spector General as the Inspector General may re25 quire in order to carry out fraud and abuse control
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1 activities and for purposes of maintaining the data

2 base.

3 (2) QUERYING.—In accordance with rules es4 tablished by the Board (in consultation with the In5 spector General), each State health security program

6 shall query periodically (as specified by the Inspector

7 General)—

8 (A) the data base to determine if providers

9 of health services for which the program makes

10 payment are not disqualified from providing

11 such services, and

12 (B) the Secretary of Health and Human

13 Services, concerning information obtained by

14 the Secretary under part B of the Health Care

15 Quality Improvement Act of 1986 relating to

16 practitioners.

17 (3) COORDINATION WITH MALPRACTICE DATA

18 BASE.—The Secretary of Health and Human Serv19 ices shall provide for the coordination of the report20 ing and disclosure of information under this section

21 with information under part B of the Health Care

22 Quality Improvement Act of 1986.

23 (4) UNIFORM MANNER.—Information shall be

24 reported under this subsection in a uniform manner

25 (in accordance with standards of the Inspector Gen-
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1 eral) that permits aggregation of reported informa2 tion.

3 (5) ACCESS FOR AUDIT.—Each State health se4 curity program shall provide the Inspector General

5 such access to information as may be required to

6 verify the information reported under this sub7 section.

8 (6) PENALTY FOR FALSE INFORMATION.—Any

9 person that submits false information required to be

10 provided under this subsection or that denies access

11 to information under paragraph (5) may be impris12 oned for not more than 5 years, or fined, or both,

13 in accordance with title 18, United States Code.

14 (7) CONFIDENTIALITY.—The Board shall estab15 lish rules that protect the confidentiality of the

16 information in the data base.

17 SEC. 413. REQUIREMENTS FOR OPERATION OF STATE

18 HEALTH CARE FRAUD AND ABUSE CONTROL

19 UNITS.

20 (a) REQUIREMENT.—In order to meet the require21 ment of section 404(b)(1)(K), each State health security

22 program must establish and maintain a health care fraud

23 and abuse control unit (in this section referred to as a

24 ‘‘fraud unit’’) that meets requirements of this section and

25 other requirements of the Board. Such a unit may be a
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1 State medicaid fraud control unit (described in section

2 1903(q) of the Social Security Act).

3 (b) STRUCTURE OF UNIT.—The fraud unit must—

4 (1) be a single identifiable entity of the State

5 government;

6 (2) be separate and distinct from the State

7 agency with principal responsibility for the adminis8 tration of the State health security program; and

9 (3) meet 1 of the following requirements:

10 (A) It must be a unit of the office of the

11 State Attorney General or of another depart12 ment of State government which possesses

13 statewide authority to prosecute individuals for

14 criminal violations.

15 (B) If it is in a State the constitution of

16 which does not provide for the criminal prosecu17 tion of individuals by a statewide authority and

18 has formal procedures, approved by the Board,

19 that (i) assure its referral of suspected criminal

20 violations relating to the State health insurance

21 plan to the appropriate authority or authorities

22 in the States for prosecution, and (ii) assure its

23 assistance of, and coordination with, such au24 thority or authorities in such prosecutions.
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1 (C) It must have a formal working rela2 tionship with the office of the State Attorney

3 General and have formal procedures (including

4 procedures for its referral of suspected criminal

5 violations to such office) which are approved by

6 the Board and which provide effective coordina7 tion of activities between the fraud unit and

8 such office with respect to the detection, inves9 tigation, and prosecution of suspected criminal

10 violations relating to the State health insurance

11 plan.

12 (c) FUNCTIONS.—The fraud unit must—

13 (1) have the function of conducting a statewide

14 program for the investigation and prosecution of vio15 lations of all applicable State laws regarding any

16 and all aspects of fraud in connection with any as17 pect of the provision of health care services and ac18 tivities of providers of such services under the State

19 health security program;

20 (2) have procedures for reviewing complaints of

21 the abuse and neglect of patients of providers and

22 facilities that receive payments under the State

23 health security program, and, where appropriate, for

24 acting upon such complaints under the criminal laws
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1 of the State or for referring them to other State

2 agencies for action; and

3 (3) provide for the collection, or referral for col4 lection to a single State agency, of overpayments

5 that are made under the State health security pro6 gram to providers and that are discovered by the

7 fraud unit in carrying out its activities.

8 (d) RESOURCES.—The fraud unit must—

9 (1) employ such auditors, attorneys, investiga10 tors, and other necessary personnel,

11 (2) be organized in such a manner, and

12 (3) provide sufficient resources (as specified by

13 the Board), as is necessary to promote the effective

14 and efficient conduct of the unit’s activities.

15 (e) COOPERATIVE AGREEMENTS.—The fraud unit

16 must have cooperative agreements (as specified by the

17 Board) with—

18 (1) similar fraud units in other States,

19 (2) the Inspector General, and

20 (3) the Attorney General of the United States.

21 (f) REPORTS.—The fraud unit must submit to the

22 Inspector General an application and annual reports con23 taining such information as the Inspector General deter24 mines to be necessary to determine whether the unit meets

25 the previous requirements of this section.
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1 SEC. 414. ASSIGNMENT OF UNIQUE PROVIDER AND PA2 TIENT IDENTIFIERS.

3 (a) PROVIDER IDENTIFIERS.—

4 (1) IN GENERAL.—The Board shall provide for

5 the assignment, to each individual or entity provid6 ing health care services under a State health secu7 rity program, of a unique provider identifier.

8 (2) RESPONSE TO QUERIES.—Upon the request

9 of a State health security program with respect to

10 a provider, the Board shall provide the program with

11 the unique provider identifier (if any) assigned to

12 the provider under paragraph (1).

13 (b) PATIENT IDENTIFIERS.—The Board shall provide

14 for the assignment, to each eligible individual, of a unique

15 patient identifier. The identifier so assigned may be the

16 Social Security account number of the individual.

17 (c) REQUIREMENT TO USE IDENTIFIERS.—Each

18 State health security program is required under section

19 404(b)(1)(L) to use the unique identifiers assigned under

20 this section.

21 TITLE V—QUALITY ASSESSMENT

22 SEC. 501. AMERICAN HEALTH SECURITY QUALITY COUNCIL.

23 (a) ESTABLISHMENT.—There is hereby established

24 an American Health Security Quality Council (in this title

25 referred to as the ‘‘Council’’).
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1 (b) DUTIES OF THE COUNCIL.—The Council shall

2 perform the following duties:

3 (1) PRACTICE GUIDELINES.—The Council shall

4 review and evaluate each practice guideline devel5 oped under part B of title IX of the Public Health

6 Service Act. The Council shall determine whether

7 the guideline should be recognized as a national

8 practice guideline to be used under section 204(d)

9 for purposes of determining payments under a State

10 health security program.

11 (2) STANDARDS OF QUALITY, PERFORMANCE

12 MEASURES, AND MEDICAL REVIEW CRITERIA.—The

13 Council shall review and evaluate each standard of

14 quality, performance measure, and medical review

15 criterion developed under part B of title IX of the

16 Public Health Service Act. The Council shall deter17 mine whether the standard, measure, or criterion is

18 appropriate for use in assessing or reviewing the

19 quality of services provided by State health security

20 programs, health care institutions, or health care

21 professionals.

22 (3) CRITERIA FOR ENTITIES CONDUCTING

23 QUALITY REVIEWS.—The Council shall develop mini24 mum criteria for competence for entities that can

25 qualify to conduct ongoing and continuous external
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1 quality review for State quality review programs

2 under section 503. Such criteria shall require such

3 an entity to be administratively independent of the

4 individual or board that administers the State health

5 security program and shall ensure that such entities

6 do not provide financial incentives to reviewers to

7 favor one pattern of practice over another. The

8 Council shall ensure coordination and reporting by

9 such entities to assure national consistency in qual10 ity standards.

11 (4) REPORTING.—The Council shall report to

12 the Board annually on the conduct of activities

13 under such title and shall report to the Board annu14 ally specifically on findings from outcomes research

15 and development of practice guidelines that may af16 fect the Board’s determination of coverage of serv17 ices under section 401(f)(1)(G).

18 (5) OTHER FUNCTIONS.—The Council shall

19 perform the functions of the Council described in

20 sections 502 and 505.

21 (c) APPOINTMENT AND TERMS OF MEMBERS.—

22 (1) IN GENERAL.—The Council shall be com23 posed of 10 members appointed by the President.

24 The President shall first appoint individuals on a
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1 timely basis so as to provide for the operation of the

2 Council by not later than January 1, 1996.

3 (2) SELECTION OF MEMBERS.—Each member

4 of the Council shall be a member of a health profes5 sion. Five members of the Council shall be physi6 cians. Individuals shall be appointed to the Council

7 on the basis of national reputations for clinical and

8 academic excellence. To the greatest extent feasible,

9 the membership of the Council shall represent the

10 various geographic regions of the United States and

11 shall reflect the racial, ethnic, and gender composi12 tion of the population of the United States.

13 (3) TERMS OF MEMBERS.—Individuals ap14 pointed to the Council shall serve for a term of 5

15 years, except that the terms of 4 of the individuals

16 initially appointed shall be, as designated by the

17 President at the time of their appointment, for 1, 2,

18 3, and 4 years.

19 (d) VACANCIES.—

20 (1) IN GENERAL.—The President shall fill any

21 vacancy in the membership of the Council in the

22 same manner as the original appointment. The va23 cancy shall not affect the power of the remaining

24 members to execute the duties of the Council.
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1 (2) VACANCY APPOINTMENTS.—Any member

2 appointed to fill a vacancy shall serve for the re3 mainder of the term for which the predecessor of the

4 member was appointed.

5 (3) REAPPOINTMENT.—The President may re6 appoint a member of the Council for a second term

7 in the same manner as the original appointment. A

8 member who has served for two consecutive 5-year

9 terms shall not be eligible for reappointment until

10 two years after the member has ceased to serve.

11 (e) CHAIR.—The President shall designate one of the

12 members of the Council to serve at the will of the Presi13 dent as Chair of the Council.

14 (f) COMPENSATION.—Members of the Council who

15 are not employees of the Federal Government shall be en16 titled to compensation at a level equivalent to level II of

17 the Executive Schedule, in accordance with section 5313

18 of title 5, United States Code.

19 SEC. 502. DEVELOPMENT OF CERTAIN METHODOLOGIES,

20 GUIDELINES, AND STANDARDS.

21 (a) PROFILING OF PATTERNS OF PRACTICE; IDENTI22 FICATION OF OUTLIERS.—The Council shall adopt meth23 odologies for profiling the patterns of practice of health

24 care professionals and for identifying outliers (as defined

25 in subsection (e)).
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1 (b) CENTERS OF EXCELLENCE.—The Council shall

2 develop guidelines for certain medical procedures des3 ignated by the Board to be performed only at tertiary care

4 centers which can meet standards for frequency of proce5 dure performance and intensity of support mechanisms

6 that are consistent with the high probability of desired pa7 tient outcome. Reimbursement under this Act for such a

8 designated procedure may only be provided if the proce9 dure was performed at a center that meets such stand10 ards.

11 (c) REMEDIAL ACTIONS.—The Council shall develop

12 standards for education and sanctions with respect to

13 outliers so as to assure the quality of health care services

14 provided under this Act. The Council shall develop criteria

15 for referral of providers to the State licensing board if edu16 cation proves ineffective in correcting provider practice be17 havior.

18 (d) DISSEMINATION.—The Council shall disseminate

19 to the State—

20 (1) the methodologies adopted under subsection

21 (a),

22 (2) the guidelines developed under subsection

23 (b), and

24 (3) the standards developed under subsection

25 (c),
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1 for use by the States under section 503.

2 (e) OUTLIER DEFINED.—In this title, the term

3 ‘‘outlier’’ means a health care provider whose pattern of

4 practice, relative to applicable practice guidelines, suggests

5 deficiencies in the quality of health care services being pro6 vided.

7 SEC. 503. STATE QUALITY REVIEW PROGRAMS.

8 (a) REQUIREMENT.—In order to meet the require9 ment of section 404(b)(1)(H), each State health security

10 program shall establish one or more qualified entities to

11 conduct quality reviews of persons providing covered serv12 ices under the program, in accordance with standards es13 tablished under subsection (b)(1) (except as provided in

14 subsection (b)(2)) and subsection (d).

15 (b) FEDERAL STANDARDS.—

16 (1) IN GENERAL.—The Council shall establish

17 standards with respect to—

18 (A) the adoption of practice guidelines

19 (whether developed by the Federal Government

20 or other entities),

21 (B) the identification of outliers (consist22 ent with methodologies adopted under section

23 502(a)),

24 (C) the development of remedial programs

25 and monitoring for outliers, and
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1 (D) the application of sanctions (consistent

2 with the standards developed under section

3 502(c)).

4 (2) STATE DISCRETION.—A State may apply

5 under subsection (a) standards other than those es6 tablished under paragraph (1) so long as the State

7 demonstrates to the satisfaction of the Council on an

8 annual basis that the standards applied have been as

9 efficacious in promoting and achieving improved

10 quality of care as the application of the standards

11 established under paragraph (1). Positive improve12 ments in quality shall be documented by reductions

13 in the variations of clinical care process and im14 provement in patient outcomes.

15 (c) QUALIFICATIONS.—An entity is not qualified to

16 conduct quality reviews under subsection (a) unless the

17 entity satisfies the criteria for competence for such entities

18 developed by the Council under section 501(b)(3).

19 (d) INTERNAL QUALITY REVIEW.—Nothing in this

20 section shall preclude an institutional provider from estab21 lishing its own internal quality review and enhancement

22 programs.
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1 SEC. 504. ELIMINATION OF UTILIZATION REVIEW PRO2 GRAMS; TRANSITION.

3 (a) INTENT.—It is the intention of this title to re4 place by January 1, 1999, random utilization controls with

5 a systematic review of patterns of practice that com6 promise the quality of care.

7 (b) SUPERSEDING CASE REVIEWS.—

8 (1) IN GENERAL.—Subject to the succeeding

9 provisions of this subsection, the program of quality

10 review provided under the previous sections of this

11 title supersede all existing Federal requirements for

12 utilization review programs, including requirements

13 for random case-by-case reviews and programs re14 quiring pre-certification of medical procedures on a

15 case-by-case basis.

16 (2) TRANSITION.—Before January 1, 1999, the

17 Board and the States may employ existing utiliza18 tion review standards and mechanisms as may be

19 necessary to effect the transition to pattern of prac20 tice-based reviews.

21 (3) CONSTRUCTION.—Nothing in this sub22 section shall be construed—

23 (A) as precluding the case-by-case review

24 of the provision of care—
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1 (i) in individual incidents where the

2 quality of care has significantly deviated

3 from acceptable standards of practice, and

4 (ii) with respect to a provider who has

5 been determined to be an outlier; or

6 (B) as precluding the case management of

7 catastrophic, mental health, or substance abuse

8 cases or long-term care where such manage9 ment is necessary to achieve appropriate, cost10 effective, and beneficial comprehensive medical

11 care, as provided for in section 204.

12 SEC. 505. UNIFORM ELECTRONIC DATA BASES.

13 (a) IN GENERAL.—In order to meet the requirement

14 of this section, for purposes of section 404(b)(1)(N)), each

15 State health security program shall develop and use a uni16 form electronic data base in order to perform systematic

17 quality review and support comparative outcomes research

18 and analysis. Each data base shall contain the data de19 scribed in subsection (b) and use the software described

20 in subsection (c). Information in such a data base may

21 be used or disclosed only in a manner consistent with the

22 standards established by the Council under subsection (d).

23 (b) MEDICAL RECORD DATA SET.—

24 (1) ESTABLISHMENT.—Not later than January

25 1, 2005, the Council shall establish a set of clinical
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1 data derived from patient medical records to be

2 transmitted by health care providers to the elec3 tronic data bases used by State health security pro4 grams for the purposes described in subsection (a).

5 (2) TRANSMISSION.—Each health care provider,

6 as a condition for being considered a qualified pro7 vider of services under section 302, shall transmit

8 (on a periodic basis determined appropriate by the

9 Council and using a uniform electronic format speci10 fied by the Council) the set of clinical data described

11 in paragraph (1) to the State health security pro12 gram data base used by each State in which the pro13 vider is licensed.

14 (c) COMPATIBLE SOFTWARE.—The Board shall des15 ignate the standards that software, used by States in the

16 operation of their electronic data bases, must meet in

17 order to assure compatibility among the States. The

18 Board shall not grant any waiver of the requirement of

19 the previous sentence.

20 (d) USE AND DISCLOSURE OF DATA.—

21 (1) IN GENERAL.—The Council shall establish

22 standards concerning the purposes for which, and

23 the procedures by which, data that is transmitted to

24 an electronic data base under this section may be

25 used or disclosed by a State health security program
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1 (or by any other person using or operating such a

2 data base).

3 (2) INDIVIDUALLY IDENTIFIABLE DATA.—The

4 standards under paragraph (1) shall include stand5 ards that prohibit a State health security program

6 (or any other person using or operating a data base

7 established under this section) from disclosing, to

8 any person or public agency other than the State

9 health security program for which the data base was

10 developed, data from the data base that identify a

11 patient (or with respect to which there is a reason12 able basis to believe that the data can be used to

13 identify a patient) unless the following conditions

14 are met:

15 (A) The person or agency is conducting a

16 biomedical, epidemiological, or health services

17 research or statistics project, or a research

18 project on behavioral or social factors affecting

19 health.

20 (B) The project involves outcomes research

21 or analysis.

22 (C) The project is—

23 (i) of sufficient importance so as to

24 outweigh the intrusion into the privacy of
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1 the patient that would result from the dis2 closure; and

3 (ii) impracticable to conduct without

4 the data.

5 (D) The disclosure is limited to the mini6 mum amount of data necessary to accomplish

7 the purpose for which the data are disclosed.

8 (E) The person who, or agency that, re9 ceives the data agrees—

10 (i) to use the data solely for purposes

11 of the project; and

12 (ii) to remove or destroy, at the earli13 est opportunity consistent with the pur14 poses of the project, data that would en15 able a patient to be identified, unless the

16 State health security program has deter17 mined that there is a health or research

18 justification for retention of such identifi19 ers and there is an adequate plan to pro20 tect the identifiers from use and disclosure

21 that is inconsistent with this section.

22 (3) MANDATORY DISCLOSURES.—The standards

23 under paragraph (1) shall require a State health se24 curity program to disclose data in the uniform elec-
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1 tronic data base used by the program to any person

2 or public agency requesting such data if—

3 (A) the person or agency is conducting a

4 project of the type described in subparagraphs

5 (A) and (B) of paragraph (2); and

6 (B) the disclosure otherwise satisfies any

7 applicable standard established by the Council.

8 TITLE VI—HEALTH SECURITY

9 BUDGET; PAYMENTS; COST

10 CONTAINMENT MEASURES

11 Subtitle A—Budgeting and

12 Payments to States

13 SEC. 601. NATIONAL HEALTH SECURITY BUDGET.

14 (a) NATIONAL HEALTH SECURITY BUDGET.—

15 (1) IN GENERAL.—By not later than September

16 1 before the beginning of each year (beginning with

17 1996), the Board shall establish a national health

18 security budget, which—

19 (A) specifies the total expenditures (includ20 ing expenditures for administrative costs) to be

21 made by the Federal Government and the

22 States for covered health care services under

23 this Act, and

24 (B) allocates those expenditures among the

25 States consistent with section 604.
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1 Pursuant to subsection (b), such budget for a year

2 shall not exceed the budget for the preceding year

3 increased by the percentage increase in gross domes4 tic product.

5 (2) DIVISION OF BUDGET INTO COMPONENTS.—

6 The national health security budget shall consist of

7 at least 4 components:

8 (A) A component for quality assessment

9 activities (described in title V).

10 (B) A component for health professional

11 education expenditures.

12 (C) A component for administrative costs.

13 (D) A component (in this title referred to

14 as the ‘‘operating component’’) for operating

15 and other expenditures not described in sub16 paragraphs (A) through (C), consisting of

17 amounts not included in the other components.

18 A State may provide for the allocation of this

19 component between capital expenditures and

20 other expenditures.

21 (3) ALLOCATION AMONG COMPONENTS.—Tak22 ing into account the State health security budgets

23 established and submitted under section 603, the

24 Board shall allocate the national health security

25 budget among the components in a manner that—
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1 (A) assures a fair allocation for quality as2 sessment activities (consistent with the national

3 health security spending growth limit); and

4 (B) assures that the health professional

5 education expenditure component is sufficient

6 to provide for the amount of health professional

7 education expenditures sufficient to meet the

8 need for covered health care services (consistent

9 with the national health security spending

10 growth limit under subsection (b)(2)).

11 (b) BASIS FOR TOTAL EXPENDITURES.—

12 (1) IN GENERAL.—The total expenditures speci13 fied in such budget shall be the sum of the capita14 tion amounts computed under section 602(a) and

15 the amount of Federal administrative expenditures

16 needed to carry out this Act.

17 (2) NATIONAL HEALTH SECURITY SPENDING

18 GROWTH LIMIT.—For purposes of this subtitle, the

19 national health security spending growth limit de20 scribed in this paragraph for a year is (A) zero, or,

21 if greater, (B) the average annual percentage in22 crease in the gross domestic product (in current dol23 lars) during the 3-year period beginning with the

24 first quarter of the fourth previous year to the first

25 quarter of the previous year minus the percentage
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1 increase (if any) in the number of eligible individuals

2 residing in any State the United States from the

3 first quarter of the second previous year to the first

4 quarter of the previous year.

5 (c) DEFINITIONS.—In this title:

6 (1) CAPITAL EXPENDITURES.—The term ‘‘cap7 ital expenditures’’ means expenses for the purchase,

8 lease, construction, or renovation of capital facilities

9 and for equipment and includes return on equity

10 capital.

11 (2) HEALTH PROFESSIONAL EDUCATION EX12 PENDITURES.—The term ‘‘health professional edu13 cation expenditures’’ means expenditures in hospitals

14 and other health care facilities to cover costs associ15 ated with teaching and related research activities.

16 SEC. 602. COMPUTATION OF INDIVIDUAL AND STATE CAPI17 TATION AMOUNTS.

18 (a) CAPITATION AMOUNTS.—

19 (1) INDIVIDUAL CAPITATION AMOUNTS.—In es20 tablishing the national health security budget under

21 section 601(a) and in computing the national aver22 age per capita cost under subsection (b) for each

23 year, the Board shall establish a method for comput24 ing the capitation amount for each eligible individual

25 residing in each State. The capitation amount for an
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1 eligible individual in a State classified within a risk

2 group (established under subsection (d)(2)) is the

3 product of—

4 (A) a national average per capita cost for

5 all covered health care services (computed

6 under subsection (b)),

7 (B) the State adjustment factor (estab8 lished under subsection (c)) for the State, and

9 (C) the risk adjustment factor (established

10 under subsection (d)) for the risk group.

11 (2) STATE CAPITATION AMOUNT.—

12 (A) IN GENERAL.—For purposes of this

13 title, the term ‘‘State capitation amount’’

14 means, for a State for a year, the sum of the

15 capitation amounts computed under paragraph

16 (1) for all the residents of the State in the year,

17 as estimated by the Board before the beginning

18 of the year involved.

19 (B) USE OF STATISTICAL MODEL.—The

20 Board may provide for the computation of

21 State capitation amounts based on statistical

22 models that fairly reflect the elements that com23 prise the State capitation amount described in

24 subparagraph (A).
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1 (C) POPULATION INFORMATION.—The Bu2 reau of the Census shall assist the Board in de3 termining the number, place of residence, and

4 risk group classification of eligible individuals.

5 (b) COMPUTATION OF NATIONAL AVERAGE PER CAP6 ITA COST.—

7 (1) FOR 1996.—For 1996, the national average

8 per capita cost under this paragraph is equal to—

9 (A) the average per capita health care ex10 penditures in the United States in 1994 (as

11 estimated by the Board),

12 (B) increased to 1995 by the Board’s esti13 mate of the actual amount of such per capita

14 expenditures during 1995, and

15 (C) updated to 1996 by the national health

16 security spending growth limit specified in sec17 tion 601(b)(2) for 1996.

18 (2) FOR SUCCEEDING YEARS.—For each suc19 ceeding year, the national average per capita cost

20 under this subsection is equal to the national aver21 age per capita cost computed under this subsection

22 for the previous year increased by the national

23 health security spending growth limit (specified in

24 section 601(b)(2)) for the year involved.

25 (c) STATE ADJUSTMENT FACTORS.—
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1 (1) IN GENERAL.—Subject to the succeeding

2 paragraphs of this subsection, the Board shall de3 velop for each State a factor to adjust the national

4 average per capita costs to reflect differences

5 between the State and the United States in—

6 (A) average labor and nonlabor costs that

7 are necessary to provide covered health services;

8 (B) any social, environmental, or geo9 graphic condition affecting health status or the

10 need for health care services, to the extent such

11 a condition is not taken into account in the es12 tablishment of risk groups under subsection (d);

13 (C) the geographic distribution of the

14 State’s population, particularly the proportion

15 of the population residing in medically under16 served areas, to the extent such a condition is

17 not taken into account in the establishment of

18 risk groups under subsection (d); and

19 (D) any other factor relating to operating

20 costs required to assure equitable distribution

21 of funds among the States.

22 (2) MODIFICATION OF HEALTH PROFESSIONAL

23 EDUCATION COMPONENT.—With respect to the por24 tion of the national health security budget allocated

25 to expenditures for health professional education, the
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1 Board shall modify the State adjustment factors so

2 as to take into account—

3 (A) differences among States in health

4 professional education programs in operation as

5 of the date of the enactment of this Act, and

6 (B) differences among States in their rel7 ative need for expenditures for health profes8 sional education, taking into account the health

9 professional education expenditures proposed in

10 State health security budgets under section

11 603(a).

12 (3) BUDGET NEUTRALITY.—The State adjust13 ment factors, as modified under paragraph (2), shall

14 be applied under this subsection in a manner that

15 results in neither an increase nor a decrease in the

16 total amount of the Federal contributions to all

17 State health security programs under subsection (b)

18 as a result of the application of such factors.

19 (4) PHASE-IN.—In applying State adjustment

20 factors under this subsection during the five-year pe21 riod beginning with 1996, the Board shall phase-in,

22 over such period, the use of factors described in

23 paragraph (1) in a manner so that the adjustment

24 factor for a State is based on a blend of such factors

25 and a factor that reflects the relative actual average
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1 per capita costs of health services of the different

2 States as of the time of enactment of this Act.

3 (5) PERIODIC ADJUSTMENT.—In establishing

4 the national health security budget before the begin5 ning of each year, the Board shall provide for appro6 priate adjustments in the State adjustment factors

7 under this subsection.

8 (d) ADJUSTMENTS FOR RISK GROUP CLASSIFICA9 TION.—

10 (1) IN GENERAL.—The Board shall develop an

11 adjustment factor to the national average per capita

12 costs computed under subsection (b) for individuals

13 classified in each risk group (as designated under

14 paragraph (2)) to reflect the difference between the

15 average national average per capita costs and the

16 national average per capita cost for individuals clas17 sified in the risk group.

18 (2) RISK GROUPS.—The Board shall designate

19 a series of risk groups, determined by age, health in20 dicators, and other factors that represent distinct

21 patterns of health care services utilization and costs.

22 (3) PERIODIC ADJUSTMENT.—In establishing

23 the national health security budget before the begin24 ning of each year, the Board shall provide for appro-
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1 priate adjustments in the risk adjustment factors

2 under this subsection.

3 SEC. 603. STATE HEALTH SECURITY BUDGETS.

4 (a) ESTABLISHMENT AND SUBMISSION OF BUDG5 ETS.—

6 (1) IN GENERAL.—Each State health security

7 program shall establish and submit to the Board for

8 each year a proposed and a final State health secu9 rity budget, which specifies the following:

10 (A) The total expenditures (including ex11 penditures for administrative costs) to be made

12 under the program in the State for covered

13 health care services under this Act, consistent

14 with subsection (b), broken down as follows:

15 (i) By the 4 components (described in

16 section 601(a)(2)), consistent with sub17 section (b).

18 (ii) Within the operating component—

19 (I) expenditures for operating

20 costs of hospitals and other facility21 based services in the State,

22 (II) expenditures for payment to

23 comprehensive health service organiza24 tions,
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1 (III) expenditures for payment of

2 services provided by health care prac3 titioners, and

4 (IV) expenditures for other cov5 ered items and services.

6 Amounts included in the operating compo7 nent include amounts that may be used by

8 providers for capital expenditures.

9 (B) The total revenues required to meet

10 the State health security expenditures.

11 (2) PROPOSED BUDGET DEADLINE.—The pro12 posed budget for a year shall be submitted under

13 paragraph (1) not later than June 1 before the year.

14 (3) FINAL BUDGET.—The final budget for a

15 year shall—

16 (A) be established and submitted under

17 paragraph (1) not later than October 1 before

18 the year, and

19 (B) take into account the amounts estab20 lished under the national health security budget

21 under section 601 for the year.

22 (4) ADJUSTMENT IN ALLOCATIONS PER23 MITTED.—

24 (A) IN GENERAL.—Subject to subpara25 graphs (B) and (C), in the case of a final
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1 budget, a State may change the allocation of

2 amounts among components.

3 (B) NOTICE.—No such change may be

4 made unless the State has provided prior notice

5 of the change to the Board.

6 (C) DENIAL.—Such a change may not be

7 made if the Board, within such time period as

8 the Board specifies, disapproves such change.

9 (b) EXPENDITURE LIMITS.—

10 (1) IN GENERAL.—The total expenditures speci11 fied in each State health security budget under sub12 section (a)(1) shall take into account Federal

13 contributions made under section 604.

14 (2) LIMIT ON CLAIMS PROCESSING AND BILL15 ING EXPENDITURES.—Each State health security

16 budget shall provide that State administrative ex17 penditures, including expenditures for claims proc18 essing and billing, shall not exceed 3 percent of the

19 total expenditures under the State health security

20 program, unless the Board determines, on a case-by21 case basis, that additional administrative expendi22 tures would improve health care quality and cost

23 effectiveness.

24 (3) WORKER ASSISTANCE.—A State health se25 curity program may provide that, for budgets for
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1 years before 2001, up to 1 percent of the budget

2 may be used for purposes of programs providing as3 sistance to workers who are currently performing

4 functions in the administration of the health insur5 ance system and who may experience economic dis6 location as a result of the implementation of the

7 program.

8 (c) APPROVAL PROCESS FOR CAPITAL EXPENDI9 TURES PERMITTED.—Nothing in this title shall be con10 strued as preventing a State health security program from

11 providing for a process for the approval of capital expendi12 tures based on information derived from regional planning

13 agencies.

14 SEC. 604. FEDERAL PAYMENTS TO STATES.

15 (a) IN GENERAL.—Each State with an approved

16 State health security program is entitled to receive, from

17 amounts in the American Health Security Trust Fund, on

18 a monthly basis each year, of an amount equal to one19 twelfth of the product of—

20 (1) the State capitation amount (computed

21 under section 602(a)(2)) for the State for the year,

22 and

23 (2) the Federal contribution percentage (estab24 lished under subsection (b)).
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1 (b) FEDERAL CONTRIBUTION PERCENTAGE.—The

2 Board shall establish a formula for the establishment of

3 a Federal contribution percentage for each State. Such

4 formula shall take into consideration a State’s per capita

5 income and revenue capacity and such other relevant eco6 nomic indicators as the Board determines to be appro7 priate. In addition, during the 5-year period beginning

8 with 1996, the Board may provide for a transition adjust9 ment to the formula in order to take into account current

10 expenditures by the State (and local governments thereof)

11 for health services covered under the State health security

12 program. The weighted-average Federal contribution per13 centage for all States shall equal 86 percent and in no

14 event shall such percentage be less than 81 percent nor

15 more than 91 percent.

16 (c) USE OF PAYMENTS.—All payments made under

17 this section may only be used to carry out the State health

18 security program.

19 (d) EFFECT OF SPENDING EXCESS OR SURPLUS.—

20 (1) SPENDING EXCESS.—If a State exceeds it’s

21 budget in a given year, the State shall continue to

22 fund covered health services from its own revenues.

23 (2) SURPLUS.—If a State provides all covered

24 health services for less than the budgeted amount
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1 for a year, it may retain its Federal payment for

2 that year for uses consistent with this Act.

3 SEC. 605. ACCOUNT FOR HEALTH PROFESSIONAL EDU4 CATION EXPENDITURES.

5 (a) SEPARATE ACCOUNT.—Each State health secu6 rity program shall—

7 (1) include a separate account for health pro8 fessional education expenditures, and

9 (2) specify the general manner, consistent with

10 subsection (b), in which such expenditures are to be

11 distributed among different types of institutions and

12 the different areas of the State.

13 (b) DISTRIBUTION RULES.—The distribution of

14 funds to hospitals and other health care facilities from the

15 account must conform to the following principles:

16 (1) The disbursement of funds must be consist17 ent with achievement of the national and program

18 goals (specified in section 701(b)) within the State

19 health security program and the distribution of

20 funds from the account must be conditioned upon

21 the receipt of such reports as the Board may require

22 in order to monitor compliance with such goals.

23 (2) The distribution of funds from the account

24 must take into account the potentially higher costs

25 of placing health professional students in clinical
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1 education programs in health professional shortage

2 areas.

3 Subtitle B—Payments by States to

4 Providers

5 SEC. 611. PAYMENTS TO HOSPITALS AND OTHER FACILITY6 BASED SERVICES FOR OPERATING EXPENSES

7 ON THE BASIS OF APPROVED GLOBAL

8 BUDGETS.

9 (a) DIRECT PAYMENT UNDER GLOBAL BUDGET.—

10 Payment for operating expenses for institutional and facil11 ity-based care, including hospital services and nursing fa12 cility services, under State health security programs shall

13 be made directly to each institution or facility by each

14 State health security program under an annual prospec15 tive global budget approved under the program. Such a

16 budget shall include payment for outpatient care and non17 facility-based care that is furnished by or through the fa18 cility. In the case of a hospital that is wholly owned (or

19 controlled) by a comprehensive health service organization

20 that is paid under section 614 on the basis of a global

21 budget, the global budget of the organization shall include

22 the budget for the hospital.

23 (b) ANNUAL NEGOTIATIONS; BUDGET APPROVAL.—

24 (1) IN GENERAL.—The prospective global budg25 et for an institution or facility shall—
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1 (A) be developed through annual negotia2 tions between (i) a panel of individuals who are

3 appointed by the Governor of the State and who

4 represent consumers, labor, business, and the

5 State government, and (ii) the institution or fa6 cility, and

7 (B) be based on a nationally uniform sys8 tem of cost accounting established under stand9 ards of the Board.

10 (2) CONSIDERATIONS.—In developing a budget

11 through negotiations, there shall be taken into

12 account at least the following:

13 (A) With respect to inpatient hospital serv14 ices, the number, and classification by diag15 nosis-related group, of discharges.

16 (B) An institution’s or facility’s past ex17 penditures.

18 (C) The extent to which debt service for

19 capital expenditures has been included in the

20 proposed operating budget.

21 (D) The extent to which capital expendi22 tures are financed directly or indirectly through

23 reductions in direct care to patients, including

24 (but not limited to) reductions in registered

25 nursing staffing patterns or changes in emer-
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1 gency room or primary care services or avail2 ability.

3 (E) Change in the consumer price index

4 and other price indices.

5 (F) The cost of reasonable compensation

6 to health care practitioners.

7 (G) The compensation level of the institu8 tion’s or facility’s work force.

9 (H) The extent to which the institution or

10 facility is providing health care services to meet

11 the needs of residents in the area served by the

12 institution or facility, including the institution’s

13 or facility’s occupancy level.

14 (I) The institution’s or facility’s previous

15 financial and clinical performance, based on uti16 lization and outcomes data provided under this

17 Act.

18 (J) The type of institution or facility, in19 cluding whether the institution or facility is

20 part of a clinical education program or serves

21 a health professional education, research or

22 other training purpose.

23 (K) Technological advances or changes.
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1 (L) Costs of the institution or facility asso2 ciated with meeting Federal and State regula3 tions.

4 (M) The costs associated with necessary

5 public outreach activities.

6 (N) In the case of a for-profit facility, a

7 reasonable rate of return on equity capital,

8 independent of those operating expenses nec9 essary to fulfill the objectives of this Act.

10 (O) Incentives to facilities that maintain

11 costs below previous reasonable budgeted levels

12 without reducing the care provided.

13 (P) With respect to facilities that provide

14 mental health services and substance abuse

15 treatment services, any additional costs involved

16 in the treatment of dually diagnosed individ17 uals.

18 The portion of such a budget that relates to expendi19 tures for health professional education shall be con20 sistent with the State health security budget for

21 such expenditures.

22 (3) PROVISION OF REQUIRED INFORMATION; DI23 AGNOSIS-RELATED GROUP.—No budget for an insti24 tution or facility for a year may be approved unless

25 the institution or facility has submitted on a timely
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1 basis to the State health security program such in2 formation as the program or the Board shall specify,

3 including in the case of hospitals information on dis4 charges classified by diagnosis-related group.

5 (c) ADJUSTMENTS IN APPROVED BUDGETS.—

6 (1) ADJUSTMENTS TO GLOBAL BUDGETS THAT

7 CONTRACT WITH COMPREHENSIVE HEALTH SERVICE

8 ORGANIZATIONS.—Each State health security pro9 gram shall develop an administrative mechanism for

10 reducing operating funds to institutions or facilities

11 in proportion to payments made to such institutions

12 or facilities for services contracted for by a com13 prehensive health service organization.

14 (2) AMENDMENTS.—In accordance with stand15 ards established by the Board, an operating and

16 capital budget approved under this section for a year

17 may be amended before, during, or after the year if

18 there is a substantial change in any of the factors

19 relevant to budget approval.

20 (d) DONATIONS PERMISSIBLE.—The States health

21 security programs may permit institutions and facilities

22 to raise funds from private sources to pay for newly con23 structed facilities, major renovations, and equipment. The

24 expenditure of such funds, whether for operating or cap25 ital expenditures, does not obligate the State health secu-
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1 rity program to provide for continued support for such ex2 penditures unless included in an approved global budget.

3 SEC. 612. PAYMENTS TO HEALTH CARE PRACTITIONERS

4 BASED ON PROSPECTIVE FEE SCHEDULE.

5 (a) FEE FOR SERVICE.—

6 (1) IN GENERAL.—Every independent health

7 care practitioner is entitled to be paid, for the provi8 sion of covered health services under the State

9 health security program, a fee for each billable cov10 ered service.

11 (2) GLOBAL FEE PAYMENT METHODOLOGIES.—

12 The Board shall establish models and encourage

13 State health security programs to implement alter14 native payment methodologies that incorporate glob15 al fees for related services (such as all outpatient

16 procedures for treatment of a condition) or for a

17 basic group of services (such as primary care serv18 ices) furnished to an individual over a period of

19 time, in order to encourage continuity and efficiency

20 in the provision of services. Such methodologies shall

21 be designed to ensure a high quality of care.

22 (3) BILLING DEADLINES; ELECTRONIC BILL23 ING.—A State health security program may deny

24 payment for any service of an independent health

25 care practitioner for which it did not receive a bill
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1 and appropriate supporting documentation (which

2 had been previously specified) within 30 days after

3 the date the service was provided. Such a program

4 may require that bills for services for which payment

5 may be made under this section, or for any class of

6 such services, be submitted electronically.

7 (b) PAYMENT RATES BASED ON NEGOTIATED PRO8 SPECTIVE FEE SCHEDULES.—With respect to any pay9 ment method for a class of services of practitioners, the

10 State health security program shall establish, on a pro11 spective basis, a payment schedule. The State health secu12 rity program may establish such a schedule after negotia13 tions with organizations representing the practitioners in14 volved. Such fee schedules shall be designed to provide in15 centives for practitioners to choose primary care medicine,

16 including general internal medicine and pediatrics, over

17 medical specialization. Nothing in this section shall be con18 strued as preventing a State from adjusting the payment

19 schedule amounts on a quarterly or other periodic basis

20 depending on whether expenditures under the schedule will

21 exceed the budgeted amount with respect to such expendi22 tures.

23 (c) BILLABLE COVERED SERVICE DEFINED.—In this

24 section, the term ‘‘billable covered service’’ means a service

25 covered under section 201 for which a practitioner is enti-
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1 tled to compensation by payment of a fee determined

2 under this section.

3 SEC. 613. PAYMENTS TO COMPREHENSIVE HEALTH SERV4 ICE ORGANIZATIONS.

5 (a) IN GENERAL.—Payment under a State health se6 curity program to a comprehensive health service organi7 zation to its enrollees shall be determined by the State—

8 (1) based on a global budget described in sec9 tion 611, or

10 (2) based on the basic capitation amount de11 scribed in subsection (b) for each of its enrollees.

12 (b) BASIC CAPITATION AMOUNT.—

13 (1) IN GENERAL.—The basic capitation amount

14 described in this subsection for an enrollee shall be

15 determined by the State health security program on

16 the basis of the average amount of expenditures that

17 is estimated would be made under the State health

18 security program for covered health care services for

19 an enrollee, based on actuarial characteristics (as de20 fined by the State health security program).

21 (2) ADJUSTMENT FOR SPECIAL HEALTH

22 NEEDS.—The State health security program shall

23 adjust such average amounts to take into account

24 the special health needs, including a disproportionate
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1 number of medically underserved individuals, of pop2 ulations served by the organization.

3 (3) ADJUSTMENT FOR SERVICES NOT PRO4 VIDED.—The State health security program shall ad5 just such average amounts to take into account the

6 cost of covered health care services that are not pro7 vided by the comprehensive health service organiza8 tion under section 303(a).

9 SEC. 614. PAYMENTS FOR COMMUNITY-BASED PRIMARY

10 HEALTH SERVICES.

11 (a) IN GENERAL.—In the case of community-based

12 primary health services, subject to subsection (b), pay13 ments under a State health security program shall—

14 (1) be based on a global budget described in

15 section 611,

16 (2) be based on the basic primary care capita17 tion amount described in subsection (c) for each in18 dividual enrolled with the provider of such services,

19 or

20 (3) be made on a fee-for-service basis under

21 section 612.

22 (b) PAYMENT ADJUSTMENT.—Payments under sub23 section (a) may include, consistent with the budgets devel24 oped under this title—
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1 (1) an additional amount, as set by the State

2 health security program, to cover the costs incurred

3 by a provider which serves persons not covered by

4 this Act whose health care is essential to overall

5 community health and the control of communicable

6 disease, and for whom the cost of such care is other7 wise uncompensated,

8 (2) an additional amount, as set by the State

9 health security program, to cover the reasonable

10 costs incurred by a provider that furnishes case

11 management services (as defined in section

12 1915(g)(2) of the Social Security Act), transpor13 tation services, and translation services, and

14 (3) an additional amount, as set by the State

15 health security program, to cover the costs incurred

16 by a provider in conducting health professional edu17 cation programs in connection with the provision of

18 such services.

19 (c) BASIC PRIMARY CARE CAPITATION AMOUNT.—

20 (1) IN GENERAL.—The basic primary care capi21 tation amount described in this subsection for an en22 rollee with a provider of community-based primary

23 health services shall be determined by the State

24 health security program on the basis of the average

25 amount of expenditures that is estimated would be
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1 made under the State health security program for

2 such an enrollee, based on actuarial characteristics

3 (as defined by the State health security program).

4 (2) ADJUSTMENT FOR SPECIAL HEALTH

5 NEEDS.—The State health security program shall

6 adjust such average amounts to take into account

7 the special health needs, including a disproportionate

8 number of medically underserved individuals, of pop9 ulations served by the provider.

10 (3) ADJUSTMENT FOR SERVICES NOT PRO11 VIDED.—The State health security program shall ad12 just such average amounts to take into account the

13 cost of community-based primary health services

14 that are not provided by the provider.

15 (d) COMMUNITY-BASED PRIMARY HEALTH SERVICES

16 DEFINED.—In this section, the term ‘‘community-based

17 primary health services’’ has the meaning given such term

18 in section 202(a).

19 SEC. 615. PAYMENTS FOR PRESCRIPTION DRUGS.

20 (a) ESTABLISHMENT OF LIST.—

21 (1) IN GENERAL.—The Board shall establish a

22 list of approved prescription drugs and biologicals

23 that the Board determines are necessary for the

24 maintenance or restoration of health or of employ-
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1 ability or self-management and eligible for coverage

2 under this Act.

3 (2) EXCLUSIONS.—The Board may exclude re4 imbursement under this Act for ineffective, unsafe,

5 or over-priced products where better alternatives are

6 determined to be available.

7 (b) PRICES.—For each such listed prescription drug

8 or biological covered under this Act, for insulin, and for

9 medical foods, the Board shall from time to time deter10 mine a product price or prices which shall constitute the

11 maximum to be recognized under this Act as the cost of

12 a drug to a provider thereof. The Board may conduct ne13 gotiations, on behalf of State health security programs,

14 with product manufacturers and distributors in determin15 ing the applicable product price or prices.

16 (c) CHARGES BY INDEPENDENT PHARMACIES.—

17 Each State health security program shall provide for pay18 ment for a prescription drug or biological or insulin fur19 nished by an independent pharmacy based on the drug’s

20 cost to the pharmacy (not in excess of the applicable prod21 uct price established under subsection (b)) plus a dispens22 ing fee. In accordance with standards established by the

23 Board, each State health security program, after consulta24 tion with representatives of the pharmaceutical profession,

25 shall establish schedules of dispensing fees, designed to af-
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1 ford reasonable compensation to independent pharmacies

2 after taking into account variations in their cost of oper3 ation resulting from regional differences, differences in the

4 volume of prescription drugs dispensed, differences in

5 services provided, the need to maintain expenditures with6 in the budgets established under this title, and other

7 relevant factors.

8 SEC. 616. PAYMENTS FOR APPROVED DEVICES AND EQUIP9 MENT.

10 (a) ESTABLISHMENT OF LIST.—The Board shall es11 tablish a list of approved durable medical equipment and

12 therapeutic devices and equipment (including eyeglasses,

13 hearing aids, and prosthetic appliances), that the Board

14 determines are necessary for the maintenance or restora15 tion of health or of employability or self-management and

16 eligible for coverage under this Act.

17 (b) CONSIDERATIONS AND CONDITIONS.—In estab18 lishing the list under subsection (a), the Board shall take

19 into consideration the efficacy, safety, and cost of each

20 item contained on such list, and shall attach to any item

21 such conditions as the Board determines appropriate with

22 respect to the circumstances under which, or the frequency

23 with which, the item may be prescribed.

24 (c) PRICES.—For each such listed item covered under

25 this Act, the Board shall from time to time determine a
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1 product price or prices which shall constitute the maxi2 mum to be recognized under this Act as the cost of the

3 item to a provider thereof. The Board may conduct nego4 tiations, on behalf of State health security programs, with

5 equipment and device manufacturers and distributors in

6 determining the applicable product price or prices.

7 (d) EXCLUSIONS.—The Board may exclude from cov8 erage under this Act ineffective, unsafe, or overpriced

9 products where better alternatives are determined to be

10 available.

11 SEC. 617. PAYMENTS FOR OTHER ITEMS AND SERVICES.

12 In the case of payment for other covered health serv13 ices, the amount of payment under a State health security

14 program shall be established by the program—

15 (1) in accordance with payment methodologies

16 which are specified by the Board, after consultation

17 with the American Health Security Advisory Coun18 cil, or methodologies established by the State under

19 section 620, and

20 (2) consistent with the State health security

21 budget.

22 SEC. 618. PAYMENT INCENTIVES FOR MEDICALLY UNDER23 SERVED AREAS.

24 (a) MODEL PAYMENT METHODOLOGIES.—In addi25 tion to the payment amounts otherwise provided in this
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1 title, the Board shall establish model payment methodolo2 gies and other incentives that promote the provision of

3 covered health care services in medically underserved

4 areas, particularly in rural and inner-city underserved

5 areas.

6 (b) CONSTRUCTION.—Nothing in this title shall be

7 construed as limiting the authority of State health security

8 programs to increase payment amounts or otherwise pro9 vide additional incentives, consistent with the State health

10 security budget, to encourage the provision of medically

11 necessary and appropriate services in underserved areas.

12 SEC. 619. AUTHORITY FOR ALTERNATIVE PAYMENT METH13 ODOLOGIES.

14 A State health security program, as part of its plan

15 under section 404(a), may use a payment methodology

16 other than a methodology required under this subtitle so

17 long as—

18 (1) such payment methodology does not affect

19 the entitlement of individuals to coverage, the

20 weighting of fee schedules to encourage an increase

21 in the number of primary care providers, the ability

22 of individuals to choose among qualified providers,

23 the benefits covered under the program, or the com24 pliance of the program with the State health security

25 budget under subtitle A, and
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1 (2) the program submits periodic reports to the

2 Board showing the operation and effectiveness of the

3 alternative methodology, in order for the Board to

4 evaluate the appropriateness of applying the alter5 native methodology to other States.

6 Subtitle C—Mandatory Assignment

7 and Administrative Provisions

8 SEC. 631. MANDATORY ASSIGNMENT.

9 (a) NO BALANCE BILLING.—Payments for benefits

10 under this Act shall constitute payment in full for such

11 benefits and the entity furnishing an item or service for

12 which payment is made under this Act shall accept such

13 payment as payment in full for the item or service and

14 may not accept any payment or impose any charge for

15 any such item or service other than accepting payment

16 from the State health security program in accordance with

17 this Act.

18 (b) ENFORCEMENT.—If an entity knowingly and will19 fully bills for an item or service or accepts payment in

20 violation of subsection (a), the Board may apply sanctions

21 against the entity in the same manner as sanctions could

22 have been imposed under section 1842(j)(2) of the Social

23 Security Act for a violation of section 1842(j)(1) of such

24 Act. Such sanctions are in addition to any sanctions that
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1 a State may impose under its State health security

2 program.

3 SEC. 632. PROCEDURES FOR REIMBURSEMENT; APPEALS.

4 (a) PROCEDURES FOR REIMBURSEMENT.—In accord5 ance with standards issued by the Board, a State health

6 security program shall establish a timely and administra7 tively simple procedure to assure payment within 60 days

8 of the date of submission of clean claims by providers

9 under this Act.

10 (b) APPEALS PROCESS.—Each State health security

11 program shall establish an appeals process to handle all

12 grievances pertaining to payment to providers under this

13 title.

14 TITLE VII—PROMOTION OF PRI15 MARY HEALTH CARE; DEVEL16 OPMENT OF HEALTH SERV17 ICE CAPACITY; PROGRAMS TO

18 ASSIST THE MEDICALLY UN19 DERSERVED

20 Subtitle A—Promotion and Expan21 sion of Primary Care Profes22 sional Training

23 SEC. 701. ROLE OF BOARD; ESTABLISHMENT OF PRIMARY

24 CARE PROFESSIONAL OUTPUT GOALS.

25 (a) IN GENERAL.—The Board is responsible for—
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1 (1) coordinating health professional education

2 policies and goals, in consultation with the Secretary

3 of Health and Human Services (in this title referred

4 to as the ‘‘Secretary’’), to achieve the national goals

5 specified in subsection (b);

6 (2) overseeing the health professional education

7 expenditures of the State health security programs

8 from the account established under section 602(c);

9 (3) developing and maintaining, in cooperation

10 with the Secretary, a system to monitor the number

11 and specialties of individuals through their health

12 professional education, any postgraduate training,

13 and professional practice; and

14 (4) developing, coordinating, and promoting

15 other policies that expand the number of primary

16 care practitioners.

17 (b) NATIONAL GOALS.—The national goals specified

18 in this subsection are as follows:

19 (1) GRADUATE MEDICAL EDUCATION.—By not

20 later than 5 years after the date of the enactment

21 of this Act, at least 50 percent of the residents in

22 medical residency education programs (as defined in

23 subsection (e)(1)) are primary care residents (as

24 defined in subsection (e)(3)).
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1 (2) MIDLEVEL PRIMARY CARE PRACTITION2 ERS.—To assure an adequate supply of primary care

3 practitioners, there shall be a number, specified by

4 the Board, of midlevel primary care practitioners (as

5 defined in subsection (e)(2)) employed in the health

6 care system as of January 1, 2001.

7 (c) METHOD FOR ATTAINMENT OF NATIONAL GOAL

8 FOR GRADUATE MEDICAL EDUCATION; PROGRAM

9 GOALS.—

10 (1) IN GENERAL.—The Board shall establish a

11 method of applying the national goal in subsection

12 (b)(1) to program goals for each medical residency

13 education program or to medical residency education

14 consortia.

15 (2) CONSIDERATION.—The program goals

16 under paragraph (1) shall be based on the distribu17 tion of medical schools and other teaching facilities

18 within each State health security program, and the

19 number of positions for graduate medical education.

20 (3) MEDICAL RESIDENCY EDUCATION CONSOR21 TIUM.—In this subsection, the term ‘‘medical resi22 dency education consortium’’ means a consortium of

23 medical residency education programs in a contig24 uous geographic area (which may be an interstate

25 area) if the consortium—
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1 (A) includes at least one medical school

2 with a teaching hospital and related teaching

3 settings, and

4 (B) has an affiliation with qualified com5 munity-based primary health service providers

6 described in section 202(a) and with at least

7 one comprehensive health service organization

8 established under section 303.

9 (4) ENFORCEMENT THROUGH STATE HEALTH

10 SECURITY BUDGETS.—The Board shall develop a

11 formula for reducing payments to State health secu12 rity programs (that provide for payments to a medi13 cal residency education program) that failed to meet

14 the goal for the program established under this sub15 section.

16 (d) METHOD FOR ATTAINMENT OF NATIONAL GOAL

17 FOR MIDLEVEL PRIMARY CARE PRACTITIONERS.—To as18 sist in attaining the national goal identified in subsection

19 (b)(2), the Board shall—

20 (1) advise the Public Health Service on alloca21 tions of funding under titles VII and VIII of the

22 Public Health Service Act, the National Health

23 Service Corps, and other programs in order to in24 crease the supply of midlevel primary care practi25 tioners, and
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1 (2) commission a study of the potential benefits

2 and disadvantages of expanding the scope of practice

3 authorized under State laws for any class of midlevel

4 primary care practitioners.

5 (e) DEFINITIONS.—In this title:

6 (1) MEDICAL RESIDENCY EDUCATION PRO7 GRAM.—The term ‘‘medical residency education pro8 gram’’ means a program that provides education

9 and training to graduates of medical schools in order

10 to meet requirements for licensing and certification

11 as a physician, and includes the medical school su12 pervising the program and includes the hospital or

13 other facility in which the program is operated.

14 (2) MIDLEVEL PRIMARY CARE PRACTI15 TIONER.—The term ‘‘midlevel primary care practi16 tioner’’ means a clinical nurse practitioner, certified

17 nurse midwife, physician assistance, or other non18 physician practitioner, specified by the Board, as

19 authorized to practice under State law.

20 (3) PRIMARY CARE RESIDENT.—The term ‘‘pri21 mary care resident’’ means (in accordance with cri22 teria established by the Board) a resident being

23 trained in a distinct program of family practice med24 icine, general practice, general internal medicine, or

25 general pediatrics.
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1 SEC. 702. ESTABLISHMENT OF ADVISORY COMMITTEE ON

2 HEALTH PROFESSIONAL EDUCATION.

3 (a) IN GENERAL.—The Board shall provide for an

4 Advisory Committee on Health Professional Education (in

5 this section referred to as the ‘‘Committee’’) to advise the

6 Board on its activities under section 701.

7 (b) MEMBERSHIP.—The Committee shall be com8 posed of—

9 (1) the Chair of the Board, who shall serve as

10 Chair of the Committee, and

11 (2) 12 members, not otherwise in the employ of

12 the United States, appointed by the Board without

13 regard to the provisions of title 5, United States

14 Code, governing appointments in the competitive

15 service.

16 The appointed members shall provide a balanced point of

17 view with respect to health professional education, primary

18 care disciplines, and health care policy and shall include

19 individuals who are representative of medical schools,

20 other health professional schools, residency programs, pri21 mary care practitioners, teaching hospitals, professional

22 associations, public health organizations, State health

23 security programs, and consumers.

24 (c) TERMS OF MEMBERS.—Each appointed member

25 shall hold office for a term of five years, except that—
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1 (1) any member appointed to fill a vacancy oc2 curring during the term for which the member’s

3 predecessor was appointed shall be appointed for the

4 remainder of that term; and

5 (2) the terms of the members first taking office

6 shall expire, as designated by the Board at the time

7 of appointment, two at the end of the second year,

8 two at the end of the third year, two at the end of

9 the fourth year, and three at the end of the fifth

10 year after the date of enactment of this Act.

11 (d) VACANCIES.—

12 (1) IN GENERAL.—The Board shall fill any va13 cancy in the membership of the Committee in the

14 same manner as the original appointment. The va15 cancy shall not affect the power of the remaining

16 members to execute the duties of the Committee.

17 (2) VACANCY APPOINTMENTS.—Any member

18 appointed to fill a vacancy shall serve for the re19 mainder of the term for which the predecessor of the

20 member was appointed.

21 (3) REAPPOINTMENT.—The Board may re22 appoint an appointed member of the Committee for

23 a second term in the same manner as the original

24 appointment.
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1 (e) DUTIES.—It shall be the duty of the Committee

2 to advise the Board concerning graduate medical edu3 cation policies under this title.

4 (f) STAFF.—The Committee, its members, and any

5 committees of the Committee shall be provided with such

6 secretarial, clerical, or other assistance as may be author7 ized by the Board for carrying out their respective

8 functions.

9 (g) MEETINGS.—The Committee shall meet as fre10 quently as the Board deems necessary, but not less than

11 4 times each year. Upon request by four or more members

12 it shall be the duty of the Chair to call a meeting of the

13 Committee.

14 (h) COMPENSATION.—Members of the Committee

15 shall be reimbursed by the Board for travel and per diem

16 in lieu of subsistence expenses during the performance of

17 duties of the Board in accordance with subchapter I of

18 chapter 57 of title 5, United States Code.

19 (i) FACA NOT APPLICABLE.—The provisions of the

20 Federal Advisory Committee Act shall not apply to the

21 Committee.
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1 SEC. 703. GRANTS FOR HEALTH PROFESSIONS EDUCATION,

2 NURSE EDUCATION, AND THE NATIONAL

3 HEALTH SERVICE CORPS.

4 (a) TRANSFERS TO PUBLIC HEALTH SERVICE.—

5 From the amounts provided under subsection (c), the

6 Board shall make transfers from the American Health Se7 curity Trust Fund to the Public Health Service under sub8 part II of part D of title III, title VII, and title VIII of

9 the Public Health Service Act for the support of the Na10 tional Health Service Corps, health professions education,

11 and nursing education, including education of clinical

12 nurse practitioners, certified registered nurse anesthetists,

13 certified nurse midwives, and physician assistants. Of the

14 amounts so transferred in each year, not less than 50 per15 cent shall be expended for the support of the National

16 Health Service Corps.

17 (b) RANGE OF FUNDS.—The amount of transfers

18 under subsection (a) for any fiscal year shall be an amount

(specified by the Board each year) not less than 4 19 ⁄100 percent and not to exceed 6 20 ⁄100 percent of the amounts the

21 Board estimates will be expended from the Trust Fund

22 in the fiscal year.

23 (c) FUNDS SUPPLEMENTAL TO OTHER FUNDS.—The

24 funds provided under this section with respect to provision

25 of services are in addition to, and not in replacement of,

26 funds made available under the provisions referred to in
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1 subsection (a) and shall be administered in accordance

2 with the terms of such provisions. The Board shall make

3 no transfer of funds under this section for any fiscal year

4 for which the total appropriations for the programs au5 thorized by such provisions are less than the total amount

6 appropriated for such programs in fiscal year 1994.

7 Subtitle B—Direct Health Care

8 Delivery

9 SEC. 711. SETASIDE FOR PUBLIC HEALTH.

10 (a) TRANSFERS TO PUBLIC HEALTH SERVICE.—

11 From the amounts provided under subsection (c), the

12 Board shall make transfers from the American Health Se13 curity Trust Fund to the Public Health Service for the

14 following purposes (other than payment for services cov15 ered under title II):

16 (1) For payments to States under the maternal

17 and child health block grants under title V of the

18 Social Security Act.

19 (2) For prevention and treatment of tuber20 culosis under section 317 of the Public Health Serv21 ice Act.

22 (3) For the prevention and treatment of sexu23 ally transmitted diseases under section 318 of the

24 Public Health Service Act.
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1 (4) Preventive health block grants under part A

2 of title XIX of the Public Health Service Act.

3 (5) Grants to States for community mental

4 health services under subpart I of part B of title

5 XIX of the Public Health Service Act.

6 (6) Grants to States for prevention and treat7 ment of substance abuse under subpart II of part B

8 of title XIX of the Public Health Service Act.

9 (7) Grants for HIV health care services under

10 parts A, B, and C of title XXVI of the Public

11 Health Service Act.

12 (8) Public health formula grants described in

13 subsection (d).

14 (b) RANGE OF FUNDS.—The amount of transfers

15 under subsection (a) for any fiscal year shall be an amount

(specified by the Board each year) not less than 1 16 ⁄10 percent and not to exceed 14 17 ⁄100 percent of the amounts the

18 Board estimates will be expended from the Trust Fund

19 in the fiscal year.

20 (c) FUNDS SUPPLEMENTAL TO OTHER FUNDS.—The

21 funds provided under this section with respect to provision

22 of services are in addition to, and not in replacement of,

23 funds made available under the programs referred to in

24 subsection (a) and shall be administered in accordance

25 with the terms of such programs.
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1 (d) REQUIRED REPORTS ON HEALTH STATUS.—The

2 Secretary shall require each State receiving funds under

3 this section to submit annual reports to the Secretary on

4 the health status of the population and measurable objec5 tives for improving the health of the public in the State.

6 Such reports shall include the following:

7 (1) A comparison of the measures of the State

8 and local public health system compared to relevant

9 objectives set forth in ‘‘Health People 2000’’ or sub10 sequent national objectives set by the Secretary.

11 (2) A description of health status measures to

12 be improved within the State (at the State and local

13 levels) through expanded public health functions and

14 health promotion and disease prevention programs.

15 (3) Measurable outcomes and process objectives

16 for improving health status, and a report on out17 comes from the previous year.

18 (4) Information regarding how Federal funding

19 has improved population-based prevention activities

20 and programs.

21 (5) A description of the core public health func22 tions to be carried out at the local level.

23 (6) A description of the relationship between

24 the State’s public health system, community-based
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1 health promotion and disease prevention providers,

2 and the State health security program.

3 (e) LIMITATION ON FUND TRANSFERS.—The Board

4 shall make no transfer of funds under this section for any

5 fiscal year for which the total appropriations for such pro6 grams are less than the total amount appropriated for

7 such programs in fiscal year 1994.

8 (f) PUBLIC HEALTH FORMULA GRANTS.—The Sec9 retary shall provide stable funds to States through for10 mula grants for the purpose of carrying out core public

11 health functions to monitor and protect the health of com12 munities from communicable diseases and exposure to

13 toxic environmental pollutants, occupational hazards,

14 harmful products, and poor health outcomes. Such func15 tions include the following:

16 (1) Data collection, analysis, and assessment of

17 public health data, vital statistics, and personal

18 health data to assess community health status and

19 outcomes reporting. This function includes the ac20 quisition and installation of hardware and software,

21 and personnel training and technical assistance to

22 operate and support automated and integrated infor23 mation systems.
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1 (2) Activities to protect the environment and to

2 assure the safety of housing, workplaces, food, and

3 water.

4 (3) Investigation and control of adverse health

5 conditions, and threats to the health status of indi6 viduals and the community. This function includes

7 the identification and control of outbreaks of infec8 tious disease, patterns of chronic disease and injury,

9 and cooperative activities to reduce the levels of vio10 lence.

11 (4) Health promotion and disease prevention

12 activities for which there is a significant need and a

13 high priority of the Public Health Service.

14 (5) The provision of public health laboratory

15 services to complement private clinical laboratory

16 services, including—

17 (A) screening tests for metabolic diseases

18 in newborns,

19 (B) toxicology assessments of blood lead

20 levels and other environmental toxins,

21 (C) tuberculosis and other disease requir22 ing partner notification, and

23 (D) testing for infectious and food-borne

24 diseases.
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1 (6) Training and education for the public

2 health professions.

3 (7) Research on effective and cost-effective pub4 lic health practices. This function includes the devel5 opment, testing, evaluation, and publication of re6 sults of new prevention and public health control

7 interventions.

8 (8) Integration and coordination of the preven9 tion programs and services of community-based pro10 viders, local and State health departments, and

11 other sectors of State and local government that af12 fect health.

13 SEC. 712. SETASIDE FOR PRIMARY HEALTH CARE DELIV14 ERY.

15 (a) TRANSFERS TO PUBLIC HEALTH SERVICE.—

16 From the amounts provided under subsection (c), the

17 Board shall make transfers from the American Health Se18 curity Trust Fund to the Public Health Service for the

19 program of primary care service expansion grants under

20 subpart V of part D of title III of the Public Health

21 Service Act (as added by section 713 of this Act).

22 (b) RANGE OF FUNDS.—The amount of transfers

23 under subsection (a) for any fiscal year shall be an amount

(specified by the Board each year) not less than 6 24 ⁄100 percent and not to exceed 1 25 ⁄10 percent of the amounts the
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1 Board estimates will be expended from the Trust Fund

2 in the fiscal year.

3 (c) FUNDS SUPPLEMENTAL TO OTHER FUNDS.—The

4 funds provided under this section with respect to provision

5 of services are in addition to, and not in replacement of,

6 funds made available under the sections 329, 330, 340,

7 340A, 1001, and 2655 of the Public Health Service Act.

8 The Board shall make no transfer of funds under this sec9 tion for any fiscal year for which the total appropriations

10 for such sections are less than the total amount appro11 priated under such sections in fiscal year 1994.

12 SEC. 713. PRIMARY CARE SERVICE EXPANSION GRANTS.

13 Part D of title III of the Public Health Service Act

14 (42 U.S.C. 254b et seq.) is amended by adding at the end

15 thereof the following new subpart:

16 ‘‘Subpart IX—Primary Care Expansion

17 ‘‘SEC. 340E. EXPANDING PRIMARY CARE DELIVERY CAPAC18 ITY IN URBAN AND RURAL AREAS.

19 ‘‘(a) GRANTS FOR PRIMARY CARE CENTERS.—From

20 the amounts described in subsection (c), the American

21 Health Security Standards Board shall make grants to

22 public and nonprofit private entities for projects to plan

23 and develop primary care centers which will serve medi24 cally underserved populations (as defined in section

25 330(b)(3)) in urban and rural areas and to deliver primary
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1 care services to such populations in such areas. The funds

2 provided under such a grant may be used for the same

3 purposes for which a grant may be made under subsection

4 (c) or (d) of section 330.

5 ‘‘(b) PROCESS OF AWARDING GRANTS.—The provi6 sions of subsection (e)(1) of section 330 shall apply to a

7 grant under this section in the same manner as they apply

8 to a grant under subsection (c) of such section. The provi9 sions of subsection (g)(3) of such section shall apply to

10 grants for projects to plan and develop primary care cen11 ters under this section in the same manner as they apply

12 to grants under such section.

13 ‘‘(c) FUNDING AS SET-ASIDE FROM TRUST FUND.—

14 Funding to carry out this section is provided from the

15 American Health Security Trust Fund in accordance with

16 section 912 of the American Health Security Act.

17 ‘‘(d) PRIMARY CARE CENTER DEFINED.—In this sec18 tion, the term ‘primary care center’ means—

19 ‘‘(1) a migrant health center (as defined in sec20 tion 329(a)(1)),

21 ‘‘(2) a community health center (as defined in

22 section 330(a)),

23 ‘‘(3) an entity qualified to receive a grant under

24 section 340, 340A, 1001, or 2655, or
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1 ‘‘(4) a Federally-qualified health center (as de2 fined in section 1905(l)(2)(B) of the Social Security

3 Act).’’.

4 Subtitle C—Primary Care and

5 Outcomes Research

6 SEC. 721. SET-ASIDE FOR OUTCOMES RESEARCH.

7 (a) GRANTS FOR OUTCOMES RESEARCH.—The

8 Board shall make transfers from the American Health Se9 curity Trust Fund to the Agency for Health Care Policy

10 and Research under title IX of the Public Health Service

11 Act for the purpose of carrying out activities under such

12 title. The Secretary shall assure that there is a special em13 phasis placed on pediatric outcomes research.

14 (b) RANGE OF FUNDS.—The amount of transfers

15 under subsection (a) for any fiscal year shall be an amount

(specified by the Board each year) not less than 1 16 ⁄100 percent and not to exceed 2 17 ⁄100 percent of the amounts the

18 Board estimates will be expended from the Trust Fund

19 in the fiscal year.

20 (c) FUNDS SUPPLEMENTAL TO OTHER FUNDS.—The

21 funds provided under this section with respect to provision

22 of services are in addition to, and not in replacement of,

23 funds made available to the Agency for Health Care Policy

24 and Research under section 926 of the Public Health

25 Service Act. The Board shall make no transfer of funds
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1 under this section for any fiscal year for which the total

2 appropriations under such section are less than the total

3 amount appropriated under such section and title in fiscal

4 year 1994.

5 (d) CONFORMING AMENDMENT.—Section 926(a) of

6 the Public Health Service Act (42 U.S.C. 299c–5(a)) is

7 amended by striking ‘‘$115,000,000’’ and all that follows

8 and inserting ‘‘for each fiscal year (beginning with fiscal

9 year 1996) such sums as may be necessary.’’.

10 SEC. 722. OFFICE OF PRIMARY CARE AND PREVENTION RE11 SEARCH.

12 (a) IN GENERAL.—Title IV of the Public Health

13 Service Act, as amended by section 141 of Public Law

14 103–43 (107 Stat. 136), is amended—

15 (1) by redesignating parts G through I as parts

16 H through J, respectively; and

17 (2) by inserting after part F the following new

18 part:

19 ‘‘PART G—RESEARCH ON PRIMARY CARE AND

20 PREVENTION

21 ‘‘SEC. 486E. OFFICE OF PRIMARY CARE AND PREVENTION

22 RESEARCH.

23 ‘‘(a) ESTABLISHMENT.—There is established within

24 the Office of the Director of NIH an office to be known

25 as the Office of Primary Care and Prevention Research
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1 (in this part referred to as the ‘Office’). The Office shall

2 be headed by a director, who shall be appointed by the

3 Director of NIH.

4 ‘‘(b) PURPOSE.—The Director of the Office shall—

5 ‘‘(1) identify projects of research on primary

6 care and prevention, for children as well as adults,

7 that should be conducted or supported by the na8 tional research institutes, with particular emphasis

9 on—

10 ‘‘(A) clinical patient care, with special em11 phasis on pediatric clinical care and diagnosis,

12 ‘‘(B) diagnostic effectiveness,

13 ‘‘(C) primary care education,

14 ‘‘(D) health and family planning services,

15 ‘‘(E) medical effectiveness outcomes of pri16 mary care procedures and interventions,

17 ‘‘(F) the use of multidisciplinary teams of

18 health care practitioners.

19 ‘‘(2) identify multidisciplinary research related

20 to primary care and prevention that should be so

21 conducted;

22 ‘‘(3) promote coordination and collaboration

23 among entities conducting research identified under

24 any of paragraphs (1) and (2);
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1 ‘‘(4) encourage the conduct of such research by

2 entities receiving funds from the national research

3 institutes;

4 ‘‘(5) recommend an agenda for conducting and

5 supporting such research;

6 ‘‘(6) promote the sufficient allocation of the re7 sources of the national research institutes for con8 ducting and supporting such research; and

9 ‘‘(7) prepare the report required in section

10 486G.

11 ‘‘(c) PRIMARY CARE AND PREVENTION RESEARCH

12 DEFINED.—For purposes of this part, the term ‘primary

13 care and prevention research’ means research on improve14 ment of the practice of family medicine, general internal

15 medicine, and general pediatrics, and includes research

16 relating to—

17 ‘‘(1) obstetrics and gynecology, dentistry, or

18 mental health or substance abuse treatment when

19 provided by a primary care physician or other

20 primary care practitioner, and

21 ‘‘(2) primary care provided by multidisciplinary

22 teams.
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1 ‘‘SEC. 486F. NATIONAL DATA SYSTEM AND CLEARINGHOUSE

2 ON PRIMARY CARE AND PREVENTION RE3 SEARCH.

4 ‘‘(a) DATA SYSTEM.—The Director of NIH, in con5 sultation with the Director of the Office, shall establish

6 a data system for the collection, storage, analysis, re7 trieval, and dissemination of information regarding pri8 mary care and prevention research that is conducted or

9 supported by the national research institutes. Information

10 from the data system shall be available through informa11 tion systems available to health care professionals and pro12 viders, researchers, and members of the public.

13 ‘‘(b) CLEARINGHOUSE.—The Director of NIH, in

14 consultation with the Director of the Office and with the

15 National Library of Medicine, shall establish, maintain,

16 and operate a program to provide, and encourage the use

17 of, information on research and prevention activities of the

18 national research institutes that relate to primary care

19 and prevention research.

20 ‘‘SEC. 486G. BIENNIAL REPORT.

21 ‘‘(a) IN GENERAL.—With respect to primary care

22 and prevention research, the Director of the Office shall,

23 not later than one year after the date of the enactment

24 of this part, and biennially thereafter, prepare a report—

25 ‘‘(1) describing and evaluating the progress

26 made during the preceding two fiscal years in re-
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1 search and treatment conducted or supported by the

2 National Institutes of Health;

3 ‘‘(2) summarizing and analyzing expenditures

4 made by the agencies of such Institutes (and by

5 such Office) during the preceding two fiscal years;

6 and

7 ‘‘(3) making such recommendations for legisla8 tive and administrative initiatives as the Director of

9 the Office determines to be appropriate.

10 ‘‘(b) INCLUSION IN BIENNIAL REPORT OF DIRECTOR

11 OF NIH.—The Director of the Office shall submit each

12 report prepared under subsection (a) to the Director of

13 NIH for inclusion in the report submitted to the President

14 and the Congress under section 403.

15 ‘‘SEC. 486H. AUTHORIZATION OF APPROPRIATIONS.

16 ‘‘For the Office of Primary Care and Prevention Re17 search, there are authorized to be appropriated

18 $150,000,000 for fiscal year 1996, $180,000,000 for fis19 cal year 1997, and $216,000,000 for fiscal year 1998.’’.

20 (b) REQUIREMENT OF SUFFICIENT ALLOCATION OF

21 RESOURCES OF INSTITUTES.—Section 402(b) of the Pub22 lic Health Service Act (42 U.S.C. 282(b)) is amended—

23 (1) in paragraph (11), by striking ‘‘and’’ after

24 the semicolon at the end;
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1 (2) in paragraph (12), by striking the period at

2 the end and inserting ‘‘; and’’; and

3 (3) by inserting after paragraph (12) the fol4 lowing new paragraph:

5 ‘‘(13) after consultation with the Director of

6 the Office of Primary Care and Prevention Re7 search, shall ensure that resources of the National

8 Institutes of Health are sufficiently allocated for

9 projects on primary care and prevention research

10 that are identified under section 486E(b).’’.

11 Subtitle D—School-Related Health

12 Services

13 SEC. 731. AUTHORIZATIONS OF APPROPRIATIONS.

14 (a) FUNDING FOR SCHOOL-RELATED HEALTH SERV15 ICES.—For the purpose of carrying out this subtitle, there

16 are authorized to be appropriated $100,000,000 for fiscal

17 year 1998, $275,000,000 for fiscal year 1999,

18 $350,000,000 for fiscal year 2000, and $400,000,000 for

19 each of the fiscal years 2001 and 2002.

20 (b) RELATION TO OTHER FUNDS.—The authoriza21 tions of appropriations established in subsection (a) are

22 in addition to any other authorizations of appropriations

23 that are available for the purpose described in such sub24 section.
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1 SEC. 732. ELIGIBILITY FOR DEVELOPMENT AND OPER2 ATION GRANTS.

3 (a) IN GENERAL.—Entities eligible to apply for and

4 receive grants under section 734 or 735 are the following:

5 (1) State health agencies that apply on behalf

6 of local community partnerships and other commu7 nities in need of health services for school-aged chil8 dren within the State.

9 (2) Local community partnerships in States in

10 which health agencies have not applied.

11 (b) LOCAL COMMUNITY PARTNERSHIPS.—

12 (1) IN GENERAL.—A local community partner13 ship under subsection (a)(2) is an entity that, at a

14 minimum, includes—

15 (A) a local health care provider with expe16 rience in delivering services to school-aged chil17 dren;

18 (B) one or more local public schools; and

19 (C) at least one community based organi20 zation located in the community to be served

21 that has a history of providing services to

22 school-aged children in the community who are

23 at-risk.

24 (2) PARTICIPATION.—A partnership described

25 in paragraph (1) shall, to the maximum extent fea26 sible, involve broad based community participation
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1 from parents and adolescent children to be served,

2 health and social service providers, teachers and

3 other public school and school board personnel, de4 velopment and service organizations for adolescent

5 children, and interested business leaders. Such par6 ticipation may be evidenced through an expanded

7 partnership, or an advisory board to such partner8 ship.

9 (c) DEFINITIONS REGARDING CHILDREN.—For pur10 poses of this subtitle:

11 (1) The term ‘‘adolescent children’’ means

12 school-aged children who are adolescents.

13 (2) The term ‘‘school-aged children’’ means in14 dividuals who are between the ages of 4 and 19 (in15 clusive).

16 SEC. 733. PREFERENCES.

17 (a) IN GENERAL.—In making grants under sections

18 734 and 735, the Secretary shall give preference to appli19 cants whose communities to be served show the most sub20 stantial level of need for such services among school-aged

21 children, as measured by indicators of community health

22 including the following:

23 (1) High levels of poverty.

24 (2) The presence of a medically underserved

25 population.
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1 (3) The presence of a health professional short2 age area.

3 (4) High rates of indicators of health risk

4 among school-aged children, including a high propor5 tion of such children receiving services through the

6 Individuals with Disabilities Education Act, adoles7 cent pregnancy, sexually transmitted disease (includ8 ing infection with the human immunodeficiency

9 virus), preventable disease, communicable disease,

10 intentional and unintentional injuries, community

11 and gang violence, unemployment among adolescent

12 children, juvenile justice involvement, and high rates

13 of drug and alcohol exposure.

14 (b) LINKAGE TO COMMUNITY HEALTH CENTERS.—

15 In making grants under sections 734 and 735, the Sec16 retary shall give preference to applicants that demonstrate

17 a linkage to community health centers.

18 SEC. 734. GRANTS FOR DEVELOPMENT OF PROJECTS.

19 (a) IN GENERAL.—The Secretary may make grants

20 to State health agencies or to local community partner21 ships to develop school health service sites.

22 (b) USE OF FUNDS.—A project for which a grant

23 may be made under subsection (a) may include but not

24 be limited to the cost of the following:
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1 (1) Planning for the provision of school health

2 services.

3 (2) Recruitment, compensation, and training of

4 health and administrative staff.

5 (3) The development of agreements, and the ac6 quisition and development of equipment and infor7 mation services, necessary to support information

8 exchange between school health service sites and

9 health plans, health providers, and other entities au10 thorized to collect information under this Act.

11 (4) Other activities necessary to assume oper12 ational status.

13 (c) APPLICATION FOR GRANT.—

14 (1) IN GENERAL.—Applicants shall submit ap15 plications in a form and manner prescribed by the

16 Secretary.

17 (2) APPLICATIONS BY STATE HEALTH AGEN18 CIES.—

19 (A) In the case of applicants that are State

20 health agencies, the application shall contain

21 assurances that the State health agency is ap22 plying for funds—

23 (i) on behalf of at least one local com24 munity partnership; and
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1 (ii) on behalf of at least one other

2 community identified by the State as in

3 need of the services funded under this sub4 title but without a local community part5 nership.

6 (B) In the case of the communities identi7 fied in applications submitted by State health

8 agencies that do not yet have local community

9 partnerships (including the community identi10 fied under subparagraph (A)(ii)), the State

11 shall describe the steps that will be taken to aid

12 the communities in developing a local commu13 nity partnership.

14 (C) A State applying on behalf of local

15 community partnerships and other communities

16 may retain not more than 10 percent of grants

17 awarded under this subtitle for administrative

18 costs.

19 (d) CONTENTS OF APPLICATION.—In order to receive

20 a grant under this section, an applicant must include in

21 the application the following information:

22 (1) An assessment of the need for school health

23 services in the communities to be served, using the

24 latest available health data and health goals and ob25 jectives established by the Secretary.
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1 (2) A description of how the applicant will de2 sign the proposed school health services to reach the

3 maximum number of school-aged children who are at

4 risk.

5 (3) An explanation of how the applicant will in6 tegrate its services with those of other health and

7 social service programs within the community.

8 (4) A description of a quality assurance pro9 gram which complies with standards that the Sec10 retary may prescribe.

11 (e) NUMBER OF GRANTS.—Not more than one plan12 ning grant may be made to a single applicant. A planning

13 grant may not exceed two years in duration.

14 SEC. 735. GRANTS FOR OPERATION OF PROJECTS.

15 (a) IN GENERAL.—The Secretary may make grants

16 to State health agencies or to local community partner17 ships for the cost of operating school health service sites.

18 (b) USE OF GRANT.—The costs for which a grant

19 may be made under this section include but are not limited

20 to the following:

21 (1) The cost of furnishing health services that

22 are not otherwise covered under this Act or by any

23 other public or private insurer.

24 (2) The cost of furnishing services whose pur25 pose is to increase the capacity of individuals to uti-
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1 lize available health services, including transpor2 tation, community and patient outreach, patient

3 education, translation services, and such other serv4 ices as the Secretary determines to be appropriate in

5 carrying out such purpose.

6 (3) Training, recruitment and compensation of

7 health professionals and other staff.

8 (4) Outreach services to school-aged children

9 who are at risk and to the parents of such children.

10 (5) Linkage of individuals to health plans, com11 munity health services and social services.

12 (6) Other activities deemed necessary by the

13 Secretary.

14 (c) APPLICATION FOR GRANT.—Applicants shall sub15 mit applications in a form and manner prescribed by the

16 Secretary. In order to receive a grant under this section,

17 an applicant must include in the application the following

18 information:

19 (1) A description of the services to be furnished

20 by the applicant.

21 (2) The amounts and sources of funding that

22 the applicant will expend, including estimates of the

23 amount of payments the applicant will receive from

24 sources other than the grant.
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1 (3) Such other information as the Secretary de2 termines to be appropriate.

3 (d) ADDITIONAL CONTENTS OF APPLICATION.—In

4 order to receive a grant under this section, an applicant

5 must meet the following conditions:

6 (1) The applicant furnishes the following serv7 ices:

8 (A) Diagnosis and treatment of simple ill9 nesses and minor injuries.

10 (B) Preventive health services, including

11 health screenings.

12 (C) Services provided for the purpose de13 scribed in subsection (b)(2).

14 (D) Referrals and followups in situations

15 involving illness or injury.

16 (E) Health and social services, counseling

17 services, and necessary referrals, including re18 ferrals regarding mental health and substance

19 abuse.

20 (F) Such other services as the Secretary

21 determines to be appropriate.

22 (2) The applicant is a participating provider in

23 the State’s program for medical assistance under

24 title XIX of the Social Security Act.
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1 (3) The applicant does not impose charges on

2 students or their families for services (including col3 lection of any cost-sharing for services under the

4 comprehensive benefit package that otherwise would

5 be required).

6 (4) The applicant has reviewed and will periodi7 cally review the needs of the population served by

8 the applicant in order to ensure that its services are

9 accessible to the maximum number of school-aged

10 children in the area, and that, to the maximum ex11 tent possible, barriers to access to services of the ap12 plicant are removed (including barriers resulting

13 from the area’s physical characteristics, its eco14 nomic, social and cultural grouping, the health care

15 utilization patterns of such children, and available

16 transportation).

17 (5) In the case of an applicant which serves a

18 population that includes a substantial proportion of

19 individuals of limited English speaking ability, the

20 applicant has developed a plan to meet the needs of

21 such population to the extent practicable in the lan22 guage and cultural context most appropriate to such

23 individuals.
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1 (6) The applicant will provide non-Federal con2 tributions toward the cost of the project in an

3 amount determined by the Secretary.

4 (7) The applicant will operate a quality assur5 ance program consistent with section 734(d).

6 (e) DURATION OF GRANT.—A grant under this sec7 tion shall be for a period determined by the Secretary.

8 (f) REPORTS.—A recipient of funding under this sec9 tion shall provide such reports and information as are re10 quired in regulations of the Secretary.

11 SEC. 736. FEDERAL ADMINISTRATIVE COSTS.

12 Of the amounts made available under section 731, the

13 Secretary may reserve not more than 5 percent for admin14 istrative expenses regarding this subtitle.

15 SEC. 737. DEFINITIONS.

16 For purposes of this subtitle:

17 (1) The term ‘‘adolescent children’’ has the

18 meaning given such term in section 732(c).

19 (2) The term ‘‘at risk’’ means at-risk with re20 spect to health.

21 (3) The term ‘‘community health center’’ has

22 the meaning given such term in section 330 of the

23 Public Health Service Act.

24 (4) The term ‘‘health professional shortage

25 area’’ means a health professional shortage area des-
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1 ignated under section 332 of the Public Health Serv2 ice Act.

3 (5) The term ‘‘medically underserved popu4 lation’’ has the meaning given such term in section

5 330 of the Public Health Service Act.

6 (6) The term ‘‘school-aged children’’ has the

7 meaning given such term in section 732(c).

8 TITLE VIII—FINANCING PROVI9 SIONS; AMERICAN HEALTH

10 SECURITY TRUST FUND

11 SEC. 800. AMENDMENT OF 1986 CODE; SECTION 15 NOT TO

12 APPLY.

13 (a) AMENDMENT OF 1986 CODE.—Except as other14 wise expressly provided, whenever in this title an amend15 ment or repeal is expressed in terms of an amendment

16 to, or repeal of, a section or other provision, the reference

17 shall be considered to be made to a section or other provi18 sion of the Internal Revenue Code of 1986.

19 (b) SECTION 15 NOT TO APPLY.—The amendments

20 made by subtitle B shall not be treated as a change in

21 a rate of tax for purposes of section 15 of the Internal

22 Revenue Code of 1986.
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1 Subtitle A—American Health

2 Security Trust Fund

3 SEC. 801. AMERICAN HEALTH SECURITY TRUST FUND.

4 (a) IN GENERAL.—There is hereby created on the

5 books of the Treasury of the United States a trust fund

6 to be known as the American Health Security Trust Fund

7 (in this section referred to as the ‘‘Trust Fund’’). The

8 Trust Fund shall consist of such gifts and bequests as

9 may be made and such amounts as may be deposited in,

10 or appropriated to, such Trust Fund as provided in this

11 Act.

12 (b) APPROPRIATIONS INTO TRUST FUND.—

13 (1) TAXES.—There are hereby appropriated to

14 the Trust Fund for each fiscal year (beginning with

15 fiscal year 1996), out of any moneys in the Treasury

16 not otherwise appropriated, amounts equivalent to

17 100 percent of the aggregate increase in tax liabil18 ities under the Internal Revenue Code of 1986 which

19 is attributable to the application of the amendments

20 made by this title. The amounts appropriated by the

21 preceding sentence shall be transferred from time to

22 time (but not less frequently than monthly) from the

23 general fund in the Treasury to the Trust Fund,

24 such amounts to be determined on the basis of esti25 mates by the Secretary of the Treasury of the taxes
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1 paid to or deposited into the Treasury; and proper

2 adjustments shall be made in amounts subsequently

3 transferred to the extent prior estimates were in ex4 cess of or were less than the amounts that should

5 have been so transferred.

6 (2) CURRENT PROGRAM RECEIPTS.—Notwith7 standing any other provision of law, there are hereby

8 appropriated to the Trust Fund for each fiscal year

9 (beginning with fiscal year 1996) the amounts that

10 would otherwise have been appropriated to carry out

11 the following programs:

12 (A) The medicare program, under parts A

13 and B of title XVIII of the Social Security Act

14 (other than amounts attributable to any pre15 miums under such parts).

16 (B) The medicaid program, under State

17 plans approved under title XIX of such Act.

18 (C) The Federal employees health benefit

19 program, under chapter 89 of title 5, United

20 States Code.

21 (D) The CHAMPUS program, under chap22 ter 55 of title 10, United States Code.

23 (E) The maternal and child health pro24 gram (under title V of the Social Security Act),

25 vocational rehabilitation programs, programs
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1 for drug abuse and mental health services

2 under the Public Health Service Act, programs

3 providing general hospital or medical assistance,

4 and any other Federal program identified by

5 the Board, in consultation with the Secretary of

6 the Treasury, to the extent the programs pro7 vide for payment for health services the pay8 ment of which may be made under this Act.

9 (c) INCORPORATION OF PROVISIONS.—The provisions

10 of subsections (b) through (i) of section 1817 of the Social

11 Security Act shall apply to the Trust Fund under this Act

12 in the same manner as they applied to the Federal Hos13 pital Insurance Trust Fund under part A of title XVIII

14 of such Act, except that the American Health Security

15 Standards Board shall constitute the Board of Trustees

16 of the Trust Fund.

17 (d) TRANSFER OF FUNDS.—Any amounts remaining

18 in the Federal Hospital Insurance Trust Fund or the Fed19 eral Supplementary Medical Insurance Trust Fund after

20 the settlement of claims for payments under title XVIII

21 have been completed, shall be transferred into the Amer22 ican Health Security Trust Fund.
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1 Subtitle B—Taxes Based on Income

2 and Wages

3 SEC. 811. PAYROLL TAX ON EMPLOYERS.

4 (a) IN GENERAL.—Section 3111 (relating to tax on

5 employers) is amended by redesignating subsection (c) as

6 subsection (d) and by inserting after subsection (b) the

7 following new subsection:

8 ‘‘(c) HEALTH CARE.—In addition to other taxes,

9 there is hereby imposed on every employer an excise tax,

10 with respect to having individuals in his employ, equal to

11 8.7 percent of the wages (as defined in section 3121(a))

12 paid by him with respect to employment (as defined in

13 section 3121(b)).’’

14 (b) SELF-EMPLOYMENT INCOME.—Section 1401 (re15 lating to rate of tax on self-employment income) is amend16 ed by redesignating subsection (c) as subsection (d) and

17 by inserting after subsection (b) the following new sub18 section:

19 ‘‘(c) HEALTH CARE.—In addition to other taxes,

20 there shall be imposed for each taxable year, on the self21 employment income of every individual, a tax equal to 8.7

22 percent of the amount of the self-employment income for

23 such taxable year.’’

24 (c) COMPARABLE TAXES FOR RAILROAD SERV25 ICES.—
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1 (1) TAX ON EMPLOYERS.—Section 3221 is

2 amended by redesignating subsections (c), (d), and

3 (e) as subsections (d), (e), and (f), respectively, and

4 by inserting after subsection (b) the following new

5 subsection:

6 ‘‘(c) HEALTH CARE.—In addition to other taxes,

7 there is hereby imposed on every employer an excise tax,

8 with respect to having individuals in his employ, equal to

9 8.7 percent of the compensation paid by such employer

10 for services rendered to such employer.’’

11 (2) TAX ON EMPLOYEE REPRESENTATIVES.—

12 Subsection (a) of section 3211 (relating to tax on

13 employee representatives) is amended by redesignat14 ing paragraph (3) as paragraph (4) and by inserting

15 after paragraph (2) the following new paragraph:

16 ‘‘(3) HEALTH CARE.—In addition to other

17 taxes, there is hereby imposed on the income of each

18 employee representative a tax equal to 8.7 percent of

19 the compensation received during the calendar year

20 by such employee representative for services ren21 dered by such employee representative.

22 (3) NO APPLICABLE BASE.—Subparagraph (A)

23 of section 3231(e)(2) is amended by adding at the

24 end thereof the following new clause:
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1 ‘‘(iv) HEALTH CARE TAXES.—Clause

2 (i) shall not apply to the taxes imposed by

3 sections 3221(c) and 3211(a)(3).’’

4 (4) TECHNICAL AMENDMENTS.—

5 (A) Paragraph (4) of section 3211, as re6 designated by paragraph (2), is amended by

7 striking ‘‘and (2)’’ and inserting ‘‘, (2), and

8 (3)’’.

9 (B) Subsection (f) of section 3221, as re10 designated by paragraph (1), is amended by

11 striking ‘‘and (b)’’ and inserting ‘‘, (b), and

12 (c)’’.

13 (d) EFFECTIVE DATE.—The amendments made by

14 this section shall apply to remuneration paid after Decem15 ber 31, 1996.

16 SEC. 812. HEALTH CARE INCOME TAX.

17 (a) GENERAL RULE.—Subchapter A of chapter 1 (re18 lating to determination of tax liability) is amended by add19 ing at the end thereof the following new part:

20 ‘‘PART VIII—HEALTH CARE INCOME TAX ON

21 INDIVIDUALS

‘‘Sec. 59B. Health care income tax.

22 ‘‘SEC. 59B. HEALTH CARE INCOME TAX.

23 ‘‘(a) IMPOSITION OF TAX.—In the case of an individ24 ual, there is hereby imposed a tax (in addition to any other
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1 tax imposed by this subtitle) equal to 2.2 percent of the

2 taxable income of the taxpayer for the taxable year.

3 ‘‘(b) NO CREDITS AGAINST TAX; NO EFFECT ON

4 MINIMUM TAX.—The tax imposed by this section shall not

5 be treated as a tax imposed by this chapter for purposes

6 of determining—

7 ‘‘(1) the amount of any credit allowable under

8 this chapter, or

9 ‘‘(2) the amount of the minimum tax imposed

10 by section 55.

11 ‘‘(c) SPECIAL RULES.—

12 ‘‘(1) TAX TO BE WITHHELD, ETC.—For pur13 poses of this title, the tax imposed by this section

14 shall be treated as imposed by section 1.

15 ‘‘(2) REIMBURSEMENT OF TAX BY EMPLOYER

16 NOT INCLUDIBLE IN GROSS INCOME.—The gross in17 come of an employee shall not include any payment

18 by his employer to reimburse the employee for the

19 tax paid by the employee under this section.

20 ‘‘(3) OTHER RULES.—The rules of section

21 59A(d) shall apply to the tax imposed by this sec22 tion.’’

23 (b) CLERICAL AMENDMENT.—The table of parts for

24 subchapter A of chapter 1 is amended by adding at the

25 end the following new item:

‘‘Part VIII. Health care income tax on individuals.’’
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1 (c) EFFECTIVE DATE.—The amendments made by

2 this section shall apply to taxable years beginning after

3 December 31, 1996.

4 Subtitle C—Increase in Excise

5 Taxes on Tobacco Products

6 SEC. 821. INCREASE IN EXCISE TAXES ON TOBACCO PROD7 UCTS.

8 (a) CIGARETTES.—Subsection (b) of section 5701 is

9 amended—

10 (1) by striking ‘‘$12 per thousand ($10 per

11 thousand on cigarettes removed during 1991 or

12 1992)’’ in paragraph (1) and inserting ‘‘$22.50 per

13 thousand’’, and

14 (2) by striking ‘‘$25.20 per thousand ($21 per

15 thousand on cigarettes removed during 1991 or

16 1992)’’ in paragraph (2) and inserting ‘‘$47.25 per

17 thousand’’.

18 (b) CIGARS.—Subsection (a) of section 5701 is

19 amended—

20 (1) by striking ‘‘$1.125 cents per thousand

21 (93.75 cents per thousand on cigars removed during

22 1991 or 1992)’’ in paragraph (1) and inserting

23 ‘‘$2.11 per thousand’’, and

24 (2) by striking ‘‘equal to’’ and all that follows

25 in paragraph (2) and inserting ‘‘equal to 23.91 per-
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1 cent of the price for which sold but not more than

2 $56.25 per thousand.’’

3 (c) CIGARETTE PAPERS.—Subsection (c) of section

4 5701 is amended by striking ‘‘0.75 cent (0.625 cent on

5 cigarette papers removed during 1991 or 1992)’’ and in6 serting ‘‘1.41 cents’’.

7 (d) CIGARETTE TUBES.—Subsection (d) of section

8 5701 is amended by striking ‘‘1.5 cents (1.25 cents on

9 cigarette tubes removed during 1991 or 1992)’’ and in10 serting ‘‘2.81 cents’’.

11 (e) SMOKELESS TOBACCO.—Subsection (e) of section

12 5701 is amended—

13 (1) by striking ‘‘36 cents (30 cents on snuff re14 moved during 1991 or 1992)’’ in paragraph (1) and

15 inserting ‘‘67.5 cents’’, and

16 (2) by striking ‘‘12 cents (10 cents on chewing

17 tobacco removed during 1991 or 1992)’’ in para18 graph (2) and inserting ‘‘22.5 cents’’.

19 (f) PIPE TOBACCO.—Subsection (f) of section 5701

20 is amended by striking ‘‘67.5 cents (56.25 cents on pipe

21 tobacco removed during 1991 or 1992)’’ and inserting

22 ‘‘$1.27’’.

23 (g) EFFECTIVE DATE.—The amendments made by

24 this section shall apply to articles removed (as defined in
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1 section 5702(k) of the Internal Revenue Code of 1986)

2 after December 31, 1996.

3 (h) FLOOR STOCKS TAXES.—

4 (1) IMPOSITION OF TAX.—On tobacco products

5 and cigarette papers and tubes manufactured in or

6 imported into the United States which are removed

7 before January 1, 1997, and held on such date for

8 sale by any person, there is hereby imposed a tax in

9 an amount equal to the excess of—

10 (A) the tax which would be imposed under

11 section 5701 of the Internal Revenue Code of

12 1986 on the article if the article had been re13 moved on such date, over

14 (B) the prior tax (if any) imposed under

15 section 5701 or 7652 of such Code on such ar16 ticle.

17 (2) AUTHORITY TO EXEMPT CIGARETTES HELD

18 IN VENDING MACHINES.—To the extent provided in

19 regulations prescribed by the Secretary, no tax shall

20 be imposed by paragraph (1) on cigarettes held for

21 retail sale on January 1, 1997, by any person in any

22 vending machine. If the Secretary provides such a

23 benefit with respect to any person, the Secretary

24 may reduce the $500 amount in paragraph (3) with

25 respect to such person.
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1 (3) CREDIT AGAINST TAX.—Each person shall

2 be allowed as a credit against the taxes imposed by

3 paragraph (1) an amount equal to $500. Such credit

4 shall not exceed the amount of taxes imposed by

5 paragraph (1) for which such person is liable.

6 (4) LIABILITY FOR TAX AND METHOD OF PAY7 MENT.—

8 (A) LIABILITY FOR TAX.—A person hold9 ing any article on January 1, 1997, to which

10 any tax imposed by paragraph (1) applies shall

11 be liable for such tax.

12 (B) METHOD OF PAYMENT.—The tax im13 posed by paragraph (1) shall be paid in such

14 manner as the Secretary shall prescribe by reg15 ulations.

16 (C) TIME FOR PAYMENT.—The tax im17 posed by paragraph (1) shall be paid on or be18 fore July 31, 1997.

19 (5) ARTICLES IN FOREIGN TRADE ZONES.—

20 Notwithstanding the Act of June 18, 1934 (48 Stat.

21 998, 19 U.S.C. 81a) and any other provision of law,

22 any article which is located in a foreign trade zone

23 on January 1, 1997, shall be subject to the tax im24 posed by paragraph (1) if—
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1 (A) internal revenue taxes have been deter2 mined, or customs duties liquidated, with re3 spect to such article before such date pursuant

4 to a request made under the 1st proviso of sec5 tion 3(a) of such Act, or

6 (B) such article is held on such date under

7 the supervision of a customs officer pursuant to

8 the 2d proviso of such section 3(a).

9 (6) DEFINITIONS.—For purposes of this sub10 section—

11 (A) IN GENERAL.—Terms used in this sub12 section which are also used in section 5702 of

13 the Internal Revenue Code of 1986 shall have

14 the respective meanings such terms have in

15 such section.

16 (B) SECRETARY.—The term ‘‘Secretary’’

17 means the Secretary of the Treasury or his del18 egate.

19 (7) CONTROLLED GROUPS.—Rules similar to

20 the rules of section 5061(e)(3) of such Code shall

21 apply for purposes of this subsection.

22 (8) OTHER LAWS APPLICABLE.—All provisions

23 of law, including penalties, applicable with respect to

24 the taxes imposed by section 5701 of such Code

25 shall, insofar as applicable and not inconsistent with
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1 the provisions of this subsection, apply to the floor

2 stocks taxes imposed by paragraph (1), to the same

3 extent as if such taxes were imposed by such section

4 5701. The Secretary may treat any person who bore

5 the ultimate burden of the tax imposed by para6 graph (1) as the person to whom a credit or refund

7 under such provisions may be allowed or made.

8 TITLE IX—CONFORMING AMEND9 MENTS TO THE EMPLOYEE

10 RETIREMENT INCOME SECU11 RITY ACT OF 1974

12 SEC. 901. ERISA INAPPLICABLE TO HEALTH COVERAGE AR13 RANGEMENTS UNDER STATE HEALTH SECU14 RITY PROGRAMS.

15 Section 4 of the Employee Retirement Income Secu16 rity Act of 1974 (29 U.S.C. 1003) is amended—

17 (1) in subsection (a), by striking ‘‘subsection

18 (b)’’ and inserting ‘‘subsections (b) and (c)’’; and

19 (2) by adding at the end the following new sub20 section:

21 ‘‘(c) The provisions of this title shall not apply to any

22 arrangement forming a part of a State health security pro23 gram established pursuant to section 101(b) of the Amer24 ican Health Security Act of 1995.’’.
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1 SEC. 902. EXEMPTION OF STATE HEALTH SECURITY PRO2 GRAMS FROM ERISA PREEMPTION.

3 Section 514(b) of the Employee Retirement Income

4 Security Act of 1974 (29 U.S.C. 1144(b)) is amended by

5 adding at the end the following new paragraph:

6 ‘‘(9) Subsection (a) of this section shall not apply to

7 State health security programs established pursuant to

8 section 101(b) of the American Health Security Act of

9 1995.’’.

10 SEC. 903. PROHIBITION OF EMPLOYEE BENEFITS DUPLICA11 TIVE OF BENEFITS UNDER STATE HEALTH

12 SECURITY PROGRAMS; COORDINATION IN

13 CASE OF WORKERS’ COMPENSATION.

14 (a) IN GENERAL.—Part 5 of subtitle B of title I of

15 the Employee Retirement Income Security Act of 1974 is

16 amended by adding at the end the following new section:

17 ‘‘PROHIBITION OF EMPLOYEE BENEFITS DUPLICATIVE OF

18 STATE HEALTH SECURITY PROGRAM BENEFITS; CO19 ORDINATION IN CASE OF WORKERS’ COMPENSATION

20 ‘‘SEC. 516. (a) Subject to subsection (b), no employee

21 benefit plan may provide benefits which duplicate payment

22 for any items or services for which payment may be made

23 under a State health security program established pursu24 ant to section 101(b) of the American Health Security Act

25 of 1995.
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1 ‘‘(b)(1) Each workers compensation carrier that is

2 liable (or would be liable but for the enactment of the

3 American Health Security Act) for payment for workers

4 compensation services furnished in a State shall reimburse

5 the State health security plan for the State in which the

6 services are furnished for the cost of such services.

7 ‘‘(2) In this subsection:

8 ‘‘(A) The term ‘workers compensation carrier’

9 means an insurance company that underwrites work10 ers compensation medical benefits with respect to

11 one or more employers and includes an employer or

12 fund that is financially at risk for the provision of

13 workers compensation medical benefits.

14 ‘‘(B) The term ‘workers compensation medical

15 benefits’ means, with respect to an enrollee who is

16 an employee subject to the workers compensation

17 laws of a State, the comprehensive medical benefits

18 for work-related injuries and illnesses provided for

19 under such laws with respect to such an employee.

20 ‘‘(C) The term ‘workers compensation services’

21 means items and services included in workers com22 pensation medical benefits and includes items and

23 services (including rehabilitation services and long24 term-care services) commonly used for treatment of

25 work-related injuries and illnesses.’’.
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1 (b) CLERICAL AMENDMENT.—The table of contents

2 in section 1 of such Act is amended by inserting after the

3 item relating to section 514 the following new items:

‘‘Sec. 515. Delinquent contributions.

‘‘Sec. 516. Prohibition of employee benefits duplicative of State health security

program benefits.’’.

4 SEC. 904. REPEAL OF CONTINUATION COVERAGE REQUIRE5 MENTS UNDER ERISA AND CERTAIN OTHER

6 REQUIREMENTS RELATING TO GROUP

7 HEALTH PLANS.

8 (a) IN GENERAL.—Part 6 of subtitle B of title I of

9 the Employee Retirement Income Security Act of 1974

10 (29 U.S.C. 1161 et seq.) is repealed.

11 (b) CONFORMING AMENDMENTS.—

12 (1) Section 502(a) of such Act (29 U.S.C.

13 1132(a)) is amended—

14 (A) by striking paragraph (7); and

15 (B) by redesignating paragraph (8) as

16 paragraph (7).

17 (2) Section 502(c)(1) of such Act (29 U.S.C.

18 1132(c)(1)) is amended by striking ‘‘paragraph (1)

19 or (4) of section 606 or’’.

20 (3) Section 4301(c)(4) of the Omnibus Budget

21 Reconciliation Act of 1993 (Public Law 103–66; 107

22 Stat. 377) and the amendments made thereby are

23 repealed.
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1 (4) The table of contents in section 1 of the

2 Employee Retirement Income Security Act of 1974

3 is amended by striking the items relating to part 6

4 of subtitle B of title I of such Act.

5 SEC. 905. EFFECTIVE DATE OF TITLE.

6 The amendments made by this title shall take effect

7 January 1, 1997.

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