I

103D CONGRESS

2D SESSION H. R. 4519

To increase access to health insurance for employees of small businesses,

and for other purposes.

IN THE HOUSE OF REPRESENTATIVES

MAY 26, 1994

Mr. MANZULLO introduced the following bill; which was referred jointly to the

Committees on Energy and Commerce, Education and Labor, Ways and

Means, and the Judiciary

A BILL

To increase access to health insurance for employees of small

businesses, and for other purposes.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE; FINDINGS.

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

5 ‘‘Small Business Health Insurance Choice Act’’.

6 (b) FINDINGS RELATING TO INTERSTATE COM7 MERCE.—Congress finds that health insurance is a critical

8 part of the economy of the United States and interstate

9 commerce, consumes a significant percentage of public
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1 and private spending, and affects all industries and indi2 viduals in the United States.

3 SEC. 2. TABLE OF CONTENTS.

4 The table of contents of this Act is as follows:

Sec. 1. Short title; findings.

Sec. 2. Table of contents.

TITLE I—IMPROVED ACCESS TO AFFORDABLE HEALTH CARE

Subtitle A—Increased Availability and Continuity of Health Coverage for

Employees and Their Families

PART 1—PREEXISTING CONDITIONS AND CONTINUITY OF

COVERAGE; RENEWABILITY

Sec. 101. Limitation on pre-existing condition clauses.

Sec. 102. Assurance of continuity of coverage through previous satisfaction of

pre-existing condition requirement.

Sec. 103. Requirements relating to renewability generally.

PART 2—ENFORCEMENT; EFFECTIVE DATES; DEFINITIONS

Sec. 111. Enforcement.

Sec. 112. Effective dates.

Sec. 113. Definitions.

Subtitle B—Preemption of Scope of State Regulation

Sec. 121. Prohibition of State benefit mandates for group health plans.

Sec. 122. Prohibition of provisions prohibiting employer groups from purchasing health insurance.

Sec. 123. Restrictions on managed care.

Sec. 124. Definitions.

Subtitle C—Health Deduction Fairness

Sec. 131. Permanent extension and increase in health insurance tax deduction

for self-employed individuals.

Sec. 132. Deduction of health insurance premiums for certain previously uninsured individuals.

TITLE II—REMOVING ANTI-TRUST IMPEDIMENTS

Sec. 201. Establishment of limited exemption program for health care joint

ventures.

Sec. 202. Issuance of health care certificates of public advantage.

Sec. 203. Interagency Advisory Committee on Competition, Antitrust Policy,

and Health Care.

Sec. 204. Definitions.
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1 TITLE I—IMPROVED ACCESS TO

2 AFFORDABLE HEALTH CARE

3 Subtitle A—Increased Availability

4 and Continuity of Health Cov5 erage for Employees and Their

6 Families

7 PART 1—PREEXISTING CONDITIONS AND

8 CONTINUITY OF COVERAGE; RENEW9 ABILITY

10 SEC. 101. LIMITATION ON PRE-EXISTING CONDITION

11 CLAUSES.

12 A group health plan may not impose (and an insurer

13 may not require an employer under a group health plan

14 to impose through a waiting period for coverage under a

15 plan or similar requirement) a limitation or exclusion of

16 benefits relating to treatment of a condition based on the

17 fact that the condition pre-existed the effective date of the

18 plan with respect to an individual if—

19 (1) the condition relates to a condition that was

20 not diagnosed or treated within 3 months before the

21 date of coverage under the plan;

22 (2) the limitation or exclusion extends over

23 more than 6 months after the date of coverage

24 under the plan;
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1 (3) the limitation or exclusion applies to an in2 dividual who, as of the date of birth, was covered

3 under the plan; or

4 (4) the limitation or exclusion relates to preg5 nancy.

6 In the case of an individual who is eligible for coverage

7 under a plan but for a waiting period imposed by the em8 ployer, in applying paragraphs (1) and (2), the individual

9 shall be treated as having been covered under the plan

10 as of the earliest date of the beginning of the waiting pe11 riod.

12 SEC. 102. ASSURANCE OF CONTINUITY OF COVERAGE

13 THROUGH PREVIOUS SATISFACTION OF PRE14 EXISTING CONDITION REQUIREMENT.

15 (a) IN GENERAL.—Each group health plan shall

16 waive any period applicable to a preexisting condition for

17 similar benefits with respect to an individual to the extent

18 that the individual, prior to the date of such individual’s

19 enrollment in such plan, was covered for the condition

20 under any other health plan that was in effect before such

21 date.

22 (b) CONTINUOUS COVERAGE REQUIRED.—

23 (1) IN GENERAL.—Subsection (a) shall no

24 longer apply if there is a continuous period of more

25 than 60 days (or, in the case of an individual de-
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1 scribed in paragraph (3), 6 months) on which the in2 dividual was not covered under a group health plan.

3 (2) TREATMENT OF WAITING PERIODS.—In ap4 plying paragraph (1), any waiting period imposed by

5 an employer before an employee is eligible to be cov6 ered under a plan shall be treated as a period in

7 which the employee was covered under a group

8 health plan.

9 (3) JOB TERMINATION.—An individual is de10 scribed in this paragraph if the individual loses cov11 erage under a group health plan due to termination

12 of employment.

13 (4) EXCLUSION OF CASH-ONLY AND DREAD

14 DISEASE PLANS.—In this subsection, the term

15 ‘‘group health plan’’ does not include any group

16 health plan which is offered primarily to provide—

17 (A) coverage for a specified disease or ill18 ness, or

19 (B) a hospital or fixed indemnity policy,

20 unless the Secretary determines that such a

21 plan provides sufficiently comprehensive cov22 erage of a benefit so that it should be treated

23 as a group health plan under this subsection.
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1 SEC. 103. REQUIREMENTS RELATING TO RENEWABILITY

2 GENERALLY.

3 (a) MULTIEMPLOYER PLANS AND EXEMPTED MUL4 TIPLE EMPLOYER HEALTH PLANS.—A multiemployer

5 plan and an exempted multiple employer health plan may

6 not cancel coverage or deny renewal of coverage under

7 such a plan with respect to an employer other than—

8 (1) for nonpayment of contributions,

9 (2) for fraud or other misrepresentation by the

10 employer,

11 (3) for noncompliance with plan provisions,

12 (4) for misuse of a provider network provision,

13 or

14 (5) because the plan is ceasing to provide any

15 coverage in a geographic area.

16 (b) INSURERS.—

17 (1) IN GENERAL.—An insurer may not cancel a

18 health insurance plan or deny renewal of coverage

19 under such a plan other than—

20 (A) for nonpayment of premiums,

21 (B) for fraud or other misrepresentation

22 by the insured,

23 (C) for noncompliance with plan provi24 sions,

25 (D) for misuse of a provider network provi26 sion, or
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1 (E) because the insurer is ceasing to pro2 vide any health insurance plan in a State, or,

3 in the case of a health maintenance organiza4 tion, in a geographic area.

5 (2) LIMITATION ON MARKET REENTRY.—If an

6 insurer terminates the offering of health insurance

7 plans in an area, the insurer may not offer such a

8 health insurance plan to any employer in the area

9 until 5 years after the date of the termination.

10 PART 2—ENFORCEMENT; EFFECTIVE

11 DATES; DEFINITIONS

12 SEC. 111. ENFORCEMENT.

13 (a) ENFORCEMENT BY DEPARTMENT OF LABOR FOR

14 EMPLOYERS AND GROUP HEALTH PLANS.—

15 (1) IN GENERAL.—For purposes of part 5 of

16 subtitle B of title I of the Employee Retirement In17 come Security Act of 1974, the provisions of part 1

18 of this subtitle shall be deemed to be provisions of

19 title I of such Act irrespective of exclusions under

20 section 4(b) of such Act.

21 (2) REGULATORY AUTHORITY.—With respect to

22 the regulatory authority of the Secretary of Labor

23 under this subtitle pursuant to subsection (a), sec24 tion 505 of the Employee Retirement Income Secu25 rity Act of 1974 (29 U.S.C. 1135) shall apply.
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1 (b) ENFORCEMENT BY EXCISE TAX FOR INSUR2 ERS.—

3 (1) IN GENERAL.—Chapter 43 of the Internal

4 Revenue Code of 1986 (relating to qualified pension,

5 etc., plans) is amended by adding at the end thereof

6 the following new section:

7 ‘‘SEC. 4980C. FAILURE OF INSURER TO COMPLY WITH

8 HEALTH INSURANCE STANDARDS.

9 ‘‘(a) IMPOSITION OF TAX.—

10 ‘‘(1) IN GENERAL.—There is hereby imposed a

11 tax on the failure of an insurer to comply with the

12 requirements applicable to the insurer under part 1

13 of subtitle A of title I of the Small Business Health

14 Insurance Choice Act.

15 ‘‘(2) EXCEPTION.—Paragraph (1) shall not

16 apply to a failure by an insurer in a State if the Sec17 retary of Health and Human Services determines

18 that the State has in effect a regulatory enforcement

19 mechanism that provides adequate sanctions with re20 spect to such a failure by such an insurer.

21 ‘‘(b) AMOUNT OF TAX.—

22 ‘‘(1) IN GENERAL.—Subject to paragraph (2),

23 the amount of the tax imposed by subsection (a)

24 shall be $100 for each day during which such failure

25 persists for each individual to which such failure re-
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1 lates. A rule similar to the rule of section

2 4980B(b)(3) shall apply for purposes of this section.

3 ‘‘(2) LIMITATION.—The amount of the tax im4 posed by subsection (a) for an insurer with respect

5 to a health insurance plan shall not exceed 25 per6 cent of the amounts received under the plan for cov7 erage during the period such failure persists.

8 ‘‘(c) LIABILITY FOR TAX.—The tax imposed by this

9 section shall be paid by the insurer.

10 ‘‘(d) EXCEPTIONS.—

11 ‘‘(1) CORRECTIONS WITHIN 30 DAYS.—No tax

12 shall be imposed by subsection (a) by reason of any

13 failure if—

14 ‘‘(A) such failure was due to reasonable

15 cause and not to willful neglect, and

16 ‘‘(B) such failure is corrected within the

17 30-day period beginning on earliest date the in18 surer knew, or exercising reasonable diligence

19 would have known, that such failure existed.

20 ‘‘(2) WAIVER BY SECRETARY.—In the case of a

21 failure which is due to reasonable cause and not to

22 willful neglect, the Secretary may waive part or all

23 of the tax imposed by subsection (a) to the extent

24 that payment of such tax would be excessive relative

25 to the failure involved.
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1 ‘‘(e) DEFINITIONS.—For purposes of this section, the

2 terms ‘health insurance plan’ and ‘insurer’ have the re3 spective meanings given such terms in section 113 of the

4 Small Business Health Insurance Choice Act.’’

5 (2) CLERICAL AMENDMENT.—The table of sec6 tions for chapter 43 of such Code is amended by

7 adding at the end thereof the following new items:

‘‘Sec. 4980C. Failure of insurer to comply with health insurance

standards.’’

8 SEC. 112. EFFECTIVE DATES.

9 (a) PART 1.—The requirements of part 1 with re10 spect to—

11 (1) group health plans and employers shall

12 apply to plans years beginning after December 31,

13 1994, and

14 (2) insurers shall take effect on January 1,

15 1995.

16 SEC. 113. DEFINITIONS.

17 (a) IN GENERAL.—For purposes of this subtitle:

18 (1) EMPLOYER.—The term ‘‘employer’’ shall

19 have the meaning applicable under section 3(5) of

20 the Employee Retirement Income Security Act of

21 1974.

22 (2) EXEMPTED MULTIPLE EMPLOYER HEALTH

23 PLAN.—The term ‘‘exempted multiple employer

24 health plan’’ means a multiple employer welfare ar-
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1 rangement treated as an employee welfare benefit

2 plan by reason of an exemption under part 7 of sub3 title B of title I of the Employee Retirement Income

4 Security Act of 1974 (as added by part 2 of subtitle

5 C of this title).

6 (3) GROUP HEALTH PLAN; PLAN.—(A) The

7 term ‘‘group health plan’’ means an employee wel8 fare benefit plan providing medical care (as defined

9 in section 213(d) of the Internal Revenue Code of

10 1986) to participants or beneficiaries directly or

11 through insurance, reimbursement, or otherwise, but

12 does not include any type of coverage excluded from

13 the definition of a health insurance plan under sec14 tion 1107(4)(B).

15 (B) The term ‘‘plan’’ means, unless used with

16 a modifying term or the context specifically indicates

17 otherwise, a group health plan (including any such

18 plan which is a multiemployer plan), an exempted

19 multiple employer health plan, or an insured mul20 tiple employer health plan.

21 (4) HEALTH INSURANCE PLAN.—

22 (A) IN GENERAL.—Except as provided in

23 subparagraph (B), the term ‘‘health insurance

24 plan’’ means any hospital or medical service

25 policy or certificate, hospital or medical service
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1 plan contract, or health maintenance organiza2 tion group contract offered by an insurer.

3 (B) EXCEPTION.—Such term does not in4 clude any of the following—

5 (i) coverage only for accident, dental,

6 vision, disability income, or long-term care

7 insurance, or any combination thereof,

8 (ii) medicare supplemental health in9 surance,

10 (iii) coverage issued as a supplement

11 to liability insurance,

12 (iv) worker’s compensation or similar

13 insurance, or

14 (v) automobile medical-payment insur15 ance,

16 or any combination thereof.

17 (5) INSURED MULTIPLE EMPLOYER HEALTH

18 PLAN.—The term ‘‘insured multiple employer health

19 plan’’ means a fully insured multiple employer wel20 fare arrangement under which benefits consist solely

21 of medical care described in section 607(1) of the

22 Employee Retirement Income Security Act of 1974

23 (disregarding such incidental benefits as the Sec24 retary of Health and Human Services shall specify

25 by regulations).
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1 (6) INSURER.—The term ‘‘insurer’’ means a li2 censed insurance company, a prepaid hospital or

3 medical service plan, and a health maintenance orga4 nization offering such a plan to an employer, and in5 cludes a similar organization regulated under State

6 law for solvency.

7 (7) STATE.—The term ‘‘State’’ means the 50

8 States, the District of Columbia, Puerto Rico, the

9 Virgin Islands, Guam, and American Samoa.

10 Subtitle B—Preemption of Scope of

11 State Regulation

12 SEC. 121. PROHIBITION OF STATE BENEFIT MANDATES FOR

13 GROUP HEALTH PLANS.

14 In the case of a group health plan, no provision of

15 State or local law shall apply that requires the coverage

16 of one or more specific benefits, services, or categories of

17 health care, or services of any class or type of provider

18 of health care.

19 SEC. 122. PROHIBITION OF PROVISIONS PROHIBITING EM20 PLOYER GROUPS FROM PURCHASING

21 HEALTH INSURANCE.

22 No provision of State or local law shall apply that

23 prohibits 2 or more employers from obtaining coverage

24 under an insured multiple employer health plan.
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1 SEC. 123. RESTRICTIONS ON MANAGED CARE.

2 (a) PREEMPTION OF STATE LAW PROVISIONS.—Sub3 ject to subsection (c), the following provisions of State law

4 are preempted and may not be enforced:

5 (1) RESTRICTIONS ON REIMBURSEMENT RATES

6 OR SELECTIVE CONTRACTING.—Any law that re7 stricts the ability of a group health plan to negotiate

8 reimbursement rates with providers or to contract

9 selectively with one provider or a limited number of

10 providers.

11 (2) RESTRICTIONS ON DIFFERENTIAL FINAN12 CIAL INCENTIVES.—Any law that limits the financial

13 incentives that a group health plan may require a

14 beneficiary to pay when a non-plan provider is used

15 on a non-emergency basis.

16 (b) GAO STUDY.—

17 (1) IN GENERAL.—The Comptroller General

18 shall conduct a study of the benefits and cost effec19 tiveness of the use of managed care in the delivery

20 of health services.

21 (2) REPORT.—By not later than 4 years after

22 the date of the enactment of this Act, the Comptrol23 ler General shall submit a report to Congress on the

24 study conducted under paragraph (1) and shall in25 clude in the report such recommendations (including
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1 whether the provisions of subsection (a) should be

2 extended) as may be appropriate.

3 (c) SUNSET.—Unless otherwise provided, subsection

4 (a) shall not apply 5 years after the date of the enactment

5 of this Act.

6 SEC. 124. DEFINITIONS.

7 For purposes of this subtitle, the terms ‘‘employee’’,

8 ‘‘employer’’, ‘‘group health plan’’, ‘‘health insurance

9 plan’’, ‘‘insured multiple employer health plan’’, and

10 ‘‘State’’ have the meanings given such terms in section

11 113.

12 Subtitle C—Health Deduction

13 Fairness

14 SEC. 131. PERMANENT EXTENSION AND INCREASE IN

15 HEALTH INSURANCE TAX DEDUCTION FOR

16 SELF-EMPLOYED INDIVIDUALS.

17 (a) PERMANENT EXTENSION OF DEDUCTION.—

18 (1) IN GENERAL.—Subsection (l) of section 162

19 of the Internal Revenue Code of 1986 (relating to

20 special rules for health insurance costs of self-em21 ployed individuals) is amended by striking paragraph

22 (6).

23 (2) EFFECTIVE DATE.—The amendment made

24 by this subsection shall apply to taxable years begin25 ning after December 31, 1994.
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1 (b) INCREASE IN AMOUNT OF DEDUCTION.—

2 (1) IN GENERAL.—Paragraph (1) of section

3 162(l) of such Code is amended by striking ‘‘25 per4 cent of’’ and inserting ‘‘100 percent (50 percent in

5 the case of taxable years beginning in 1996 or 1997)

6 of’’.

7 (2) EFFECTIVE DATE.—The amendments made

8 by this subsection shall apply to taxable years begin9 ning after December 31, 1994.

10 SEC. 132. DEDUCTION OF HEALTH INSURANCE PREMIUMS

11 FOR CERTAIN PREVIOUSLY UNINSURED INDI12 VIDUALS.

13 (a) IN GENERAL.—Section 213 of the Internal Reve14 nue Code of 1986 (relating to medical, dental, etc., ex15 penses) is amended by adding at the end thereof the fol16 lowing new subsection:

17 ‘‘(f) DEDUCTION FOR HEALTH INSURANCE COSTS

18 DETERMINED WITHOUT REGARD TO ADJUSTED GROSS

19 INCOME THRESHOLD.—

20 ‘‘(1) IN GENERAL.—Subsection (a) shall be ap21 plied without regard to the limitation based on ad22 justed gross income in the case of the applicable per23 centage of the amounts paid for insurance which

24 constitutes medical care for the taxpayer, his spouse,

25 and dependents.
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1 ‘‘(2) APPLICABLE PERCENTAGE.—For purposes

2 of paragraph (1), the term ‘applicable percentage’

3 means—

4 ‘‘(A) 25 percent for taxable years begin5 ning in 1995 or 1996,

6 ‘‘(B) 50 percent for taxable years begin7 ning in 1997 or 1998, and

8 ‘‘(C) 100 percent for taxable years begin9 ning after 1999.

10 ‘‘(3) DEDUCTION NOT ALLOWED TO INDIVID11 UALS ELIGIBLE FOR EMPLOYER-SUBSIDIZED COV12 ERAGE.—

13 ‘‘(A) IN GENERAL.—Paragraph (1) shall

14 not apply to any individual—

15 ‘‘(i) who is eligible to participate in

16 any subsidized health plan maintained by

17 an employer of such individual or the

18 spouse of such individual, or

19 ‘‘(ii) who is (or whose spouse is) a

20 member of a subsidized class of employees

21 of an employer.

22 ‘‘(B) SUBSIDIZED CLASS.—For purposes of

23 subparagraph (A), an individual is a member of

24 a subsidized class of employees of an employer

25 if, at any time during the 3 calendar years end-
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1 ing with or within the taxable year, any mem2 ber of such class was eligible to participate in

3 any subsidized health plan maintained by such

4 employer.

5 ‘‘(C) SPECIAL RULES.—

6 ‘‘(i) CONTROLLED GROUPS.—All per7 sons treated as a single employer under

8 subsection (a) or (b) of section 52 or sub9 section (m) or (o) of section 414 shall be

10 treated as a single employer for purposes

11 of subparagraph (B).

12 ‘‘(ii) CLASSES.—Classes of employees

13 shall be determined under regulations pre14 scribed by the Secretary based on such fac15 tors as the Secretary determines appro16 priate to carry out the purposes of this

17 subsection.

18 ‘‘(4) COORDINATION WITH DEDUCTION FOR

19 OTHER AMOUNTS.—Amounts allowable as a deduc20 tion under subsection (a) by reason of this sub21 section shall not be taken into account in determin22 ing the deduction under subsection (a) for other

23 amounts.

24 ‘‘(5) SUBSECTION NOT TO APPLY TO INDIVID25 UALS ELIGIBLE FOR MEDICARE.—This subsection
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1 shall not apply to amount paid for insurance cover2 ing an individual who is eligible for benefits under

3 title XVIII of the Social Security Act.’’

4 (b) DEDUCTION ALLOWED WHETHER OR NOT INDI5 VIDUAL ITEMIZES OTHER DEDUCTIONS.—Subsection (a)

6 of section 62 of such Code is amended by inserting after

7 paragraph (15) the following new paragraph:

8 ‘‘(16) COSTS OF CERTAIN HEALTH INSUR9 ANCE.—The deduction allowed by section 213 to the

10 extent allowable by reason of section 213(f).’’

11 (c) EFFECTIVE DATE.—The amendments made by

12 this section shall apply to taxable years beginning after

13 December 31, 1994.

14 TITLE II—REMOVING ANTI15 TRUST IMPEDIMENTS

16 SEC. 201. ESTABLISHMENT OF LIMITED EXEMPTION PRO17 GRAM FOR HEALTH CARE JOINT VENTURES.

18 (a) ESTABLISHMENT.—

19 (1) IN GENERAL.—Not later than 6 months

20 after the date of the enactment of this Act, the At21 torney General, after consultation with the Secretary

22 of Health and Human Services and the Interagency

23 Advisory Committee on Competition, Antitrust Pol24 icy, and Health Care, shall promulgate specific

25 guidelines under which a health care joint venture
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1 may submit an application requesting that the At2 torney General provide the entities participating in

3 the joint venture with an exemption under which

4 (notwithstanding any other provision of law)—

5 (A) monetary recovery on a claim under

6 the antitrust laws shall be limited to actual

7 damages if the claim results from conduct with8 in the scope of the joint venture that occurs

9 while the exemption is in effect; and

10 (B) the conduct of the entity in making or

11 performing a contract to carry out the joint

12 venture shall not be deemed illegal per se under

13 the antitrust laws but shall be judged on the

14 basis of its reasonableness, taking into account

15 all relevant factors affecting competition, in16 cluding (but not limited to) effects on competi17 tion in properly defined, relevant research, de18 velopment, product, process, and service mar19 kets (taking into consideration worldwide capac20 ity to the extent that it may be appropriate in

21 the circumstances).

22 (2) DEADLINE FOR RESPONSE.—The Attorney

23 General, after consultation with the Secretary and

24 the Advisory Committee, shall approve or disapprove

25 the application of a health care joint venture for an
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1 exemption under this subsection not later than 30

2 days after the Attorney General receives the joint

3 venture’s application.

4 (3) PROVIDING REASONS FOR DISAPPROVAL.—

5 If the Attorney General disapproves the application

6 of a health care joint venture for an exemption

7 under this subsection, the Attorney General shall

8 provide the joint venture with a statement explaining

9 the reasons for the Attorney General’s disapproval.

10 (b) REQUIREMENTS FOR APPROVAL.—For purposes

11 of subsection (a), the Attorney General shall approve the

12 application of a health care joint venture for an exemption

13 under subsection (a) if an entity participating in the joint

14 venture submits to the Attorney General an application

15 not later than 30 days after the entity has entered into

16 a written agreement to participate in the joint venture (or

17 not later than 30 days after the date of the enactment

18 of this Act in the case of a joint venture in effect as of

19 such date) that contains the following information and as20 surances:

21 (1) The identities of the parties to the joint

22 venture.

23 (2) The nature, objectives, and planned activi24 ties of the joint venture.
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1 (3) Assurances that the entities participating in

2 the joint venture shall notify the Attorney General

3 of any changes in the information described in para4 graphs (1) and (2) during the period for which the

5 exemption is in effect.

6 (c) REVOCATION OF EXEMPTION.—

7 (1) IN GENERAL.—The Attorney General, after

8 consultation with the Secretary, may revoke an ex9 emption provided to a health care joint venture

10 under this section if, at any time during which the

11 exemption is in effect, the Attorney General finds

12 that the joint venture no longer meets the applicable

13 requirements for approval under subsection (b), ex14 cept that the Attorney General may not revoke such

15 an exemption if the failure of the health care joint

16 venture to meet such requirements is merely tech17 nical in nature.

18 (2) TIMING.—The revocation of an exemption

19 under paragraph (1) shall apply only to conduct of

20 the health care joint venture occurring after the ex21 emption is no longer in effect.

22 (d) WITHDRAWAL OF APPLICATION.—Any party that

23 submits an application under this section may withdraw

24 such application at any time before the Attorney General’s

25 response to the application.
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1 (e) REQUIREMENTS RELATING TO NOTICE AND PUB2 LICATION OF EXEMPTIONS AND RELATED INFORMA3 TION.—

4 (1) PUBLICATION OF APPROVED APPLICATIONS

5 FOR EXEMPTIONS IN FEDERAL REGISTER.—

6 (A) IN GENERAL.—With respect to each

7 exemption for a health care joint venture pro8 vided under subsection (a), the Attorney Gen9 eral (acting jointly with the Secretary) shall—

10 (i) prepare a notice with respect to

11 the joint venture that identifies the parties

12 to the venture and that describes the

13 planned activities of the venture;

14 (ii) submit the notice to the entities

15 participating in the joint venture; and

16 (iii) after submitting the notice to

17 such entities (but not later than 30 days

18 after approving the application for the ex19 emption for the joint venture), publish the

20 notice in the Federal Register.

21 (B) EFFECT OF PUBLICATION.—An ex22 emption provided by the Attorney General

23 under subsection (a) shall take effect as of the

24 date of the publication in the Federal Register
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1 of the notice with respect to the exemption pur2 suant to subparagraph (A).

3 (2) WAIVER OF DISCLOSURE REQUIREMENTS

4 FOR INFORMATION RELATING TO APPLICATIONS FOR

5 EXEMPTIONS.—

6 (A) IN GENERAL.—All information and

7 documentary material submitted as part of an

8 application of a health care joint venture for an

9 exemption under subsection (a), together with

10 any other information obtained by the Attorney

11 General, the Secretary, or the Advisory Com12 mittee in the course of any investigation, ad13 ministrative proceeding, or case with respect to

14 a potential violation of the antitrust laws by the

15 joint venture with respect to which the exemp16 tion applies, shall be exempt from disclosure

17 under section 552 of title 5, United States

18 Code, and shall not be made publicly available

19 by any agency of the United States to which

20 such section applies, except as relevant to a law

21 enforcement investigation or in a judicial or ad22 ministrative proceeding in which such informa23 tion and material is subject to any protective

24 order.
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1 (B) EXCEPTION FOR INFORMATION IN2 CLUDED IN FEDERAL REGISTER NOTICE.—Sub3 paragraph (A) shall not apply with respect to

4 information contained in a notice published in

5 the Federal Register pursuant to paragraph

6 (1).

7 (3) USE OF INFORMATION TO SUPPORT OR AN8 SWER CLAIMS UNDER ANTITRUST LAWS.—

9 (A) IN GENERAL.—Except as provided in

10 subparagraph (B), the fact of disclosure of con11 duct under an application for an exemption

12 under subsection (a) and the fact of publication

13 of a notice in the Federal Register under para14 graph (1) shall be admissible into evidence in

15 any judicial or administrative proceeding for the

16 sole purpose of establishing that a person is en17 titled to the protections provided by an exemp18 tion granted under subsection (a).

19 (B) EFFECT OF REJECTED APPLICA20 TION.—If the Attorney General denies, in whole

21 or in part, an application for an exemption

22 under subsection (a), or revokes an exemption

23 under such section, neither the negative deter24 mination nor the statement of reasons therefore

25 shall be admissible into evidence in any admin-
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1 istrative or judicial proceeding for the purpose

2 of supporting or answering any claim under the

3 antitrust laws.

4 SEC. 202. ISSUANCE OF HEALTH CARE CERTIFICATES OF

5 PUBLIC ADVANTAGE.

6 (a) ISSUANCE AND EFFECT OF CERTIFICATE.—The

7 Attorney General, after consultation with the Secretary

8 and the Advisory Committee, shall issue in accordance

9 with this section a certificate of public advantage to each

10 eligible health care joint venture that complies with the

11 requirements in effect under this section on or after the

12 expiration of the 1-year period that begins on the date

13 of the enactment of this Act (without regard to whether

14 or not the Attorney General has promulgated regulations

15 to carry out this section by such date). Such venture, and

16 the parties to such venture, shall not be liable under any

17 of the antitrust laws for conduct described in such certifi18 cate and engaged in by such venture if such conduct oc19 curs while such certificate is in effect.

20 (b) REQUIREMENTS APPLICABLE TO ISSUANCE OF

21 CERTIFICATES.—

22 (1) STANDARDS TO BE MET.—The Attorney

23 General shall issue a certificate to an eligible health

24 care joint venture if the Attorney General finds

25 that—
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1 (A) the benefits that are likely to result

2 from carrying out the venture outweigh the re3 duction in competition (if any) that is likely to

4 result from the venture, and

5 (B) such reduction in competition is rea6 sonably necessary to obtain such benefits.

7 (2) FACTORS TO BE CONSIDERED.—

8 (A) WEIGHING OF BENEFITS AGAINST RE9 DUCTION IN COMPETITION.—For purposes of

10 making the finding described in paragraph

11 (1)(A), the Attorney General shall consider

12 whether the venture is likely —

13 (i) to maintain or to increase the

14 quality of health care,

15 (ii) to increase access to health care,

16 (iii) to achieve cost efficiencies that

17 will be passed on to health care consumers,

18 such as economies of scale, reduced trans19 action costs, and reduced administrative

20 costs,

21 (iv) to preserve the operation of

22 health care facilities located in underserved

23 geographical areas,

24 (v) to improve utilization of health

25 care resources, and
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1 (vi) to reduce inefficient health care

2 resource duplication.

3 (B) NECESSITY OF REDUCTION IN COM4 PETITION.—For purposes of making the finding

5 described in paragraph (1)(B), the Attorney

6 General shall consider—

7 (i) the ability of the providers of

8 health care services that are (or likely to

9 be) affected by the health care joint ven10 ture and the entities responsible for mak11 ing payments to such providers to nego12 tiate societally optimal payment and serv13 ice arrangements,

14 (ii) the effects of the health care joint

15 venture on premiums and other charges

16 imposed by the entities described in clause

17 (i), and

18 (iii) the availability of equally effi19 cient, less restrictive alternatives to achieve

20 the benefits that are intended to be

21 achieved by carrying out the venture.

22 (c) ESTABLISHMENT OF CRITERIA AND PROCE23 DURES.—Subject to subsections (d) and (e), not later than

24 1 year after the date of the enactment of this Act, the

25 Attorney General and the Secretary shall establish jointly
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1 by rule the criteria and procedures applicable to the issu2 ance of certificates under subsection (a). The rules shall

3 specify the form and content of the application to be sub4 mitted to the Attorney General to request a certificate,

5 the information required to be submitted in support of

6 such application, the procedures applicable to denying and

7 to revoking a certificate, and the procedures applicable to

8 the administrative appeal (if such appeal is authorized by

9 rule) of the denial and the revocation of a certificate. Such

10 information may include the terms of the health care joint

11 venture (in the case of a venture in existence as of the

12 time of the application) and implementation plan for the

13 joint venture.

14 (d) ELIGIBLE HEALTH CARE JOINT VENTURE.—To

15 be an eligible health care joint venture for purposes of this

16 section, a health care joint venture shall submit to the At17 torney General an application that complies with the rules

18 in effect under subsection (c) and that includes—

19 (1) an agreement by the parties to the venture

20 that the venture will not foreclose competition by en21 tering into contracts that prevent health care provid22 ers from providing health care in competition with

23 the venture,

24 (2) an agreement that the venture will submit

25 to the Attorney General annually a report that de-
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1 scribes the operations of the venture and informa2 tion regarding the impact of the venture on health

3 care and on competition in health care, and

4 (3) an agreement that the parties to the ven5 ture will notify the Attorney General and the Sec6 retary of the termination of the venture not later

7 than 30 days after such termination occurs.

8 (e) REVIEW OF APPLICATIONS FOR CERTIFICATES.—

9 Not later than 30 days after an eligible health care joint

10 venture submits to the Attorney General an application

11 that complies with the rules in effect under subsection (c)

12 and with subsection (d), the Attorney General shall issue

13 or deny the issuance of such certificate. If, before the expi14 ration of such 30-day period, the Attorney General fails

15 to issue or deny the issuance of such certificate, the Attor16 ney General shall be deemed to have issued such certifi17 cate.

18 (f) REVOCATION OF CERTIFICATE.—Whenever the

19 Attorney General finds that a health care joint venture

20 with respect to which a certificate is in effect does not

21 meet the standards specified in subsection (b), the Attor22 ney General shall revoke such certificate.

23 (g) WRITTEN REASONS; JUDICIAL REVIEW.—

24 (1) DENIAL AND REVOCATION OF CERTIFI25 CATES.—If the Attorney General denies an applica-
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1 tion for a certificate or revokes a certificate, the At2 torney General shall include in the notice of denial

3 or revocation a statement of the reasons relied upon

4 for the denial or revocation of such certificate.

5 (2) JUDICIAL REVIEW.—

6 (A) AFTER ADMINISTRATIVE PROCEED7 ING.—(i) If the Attorney General denies an ap8 plication submitted or revokes a certificate is9 sued under this section after an opportunity for

10 hearing on the record, then any party to the

11 health care joint venture involved may com12 mence a civil action, not later than 60 days

13 after receiving notice of the denial or revoca14 tion, in an appropriate district court of the

15 United States for review of the record of such

16 denial or revocation.

17 (ii) As part of the Attorney General’s an18 swer, the Attorney General shall file in such

19 court a certified copy of the record on which

20 such denial or revocation is based. The findings

21 of fact of the Attorney General may be set aside

22 only if found to be unsupported by substantial

23 evidence in such record taken as a whole.

24 (B) DENIAL OR REVOCATION WITHOUT AD25 MINISTRATIVE PROCEEDING.—If the Attorney
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1 General denies an application submitted or re2 vokes a certificate issued under this section

3 without an opportunity for hearing on the

4 record, then any party to the health care joint

5 venture involved may commence a civil action,

6 not later than 60 days after receiving notice of

7 the denial or revocation, in an appropriate dis8 trict court of the United States for de novo re9 view of such denial or revocation.

10 (h) EXEMPTION.—A person shall not be liable under

11 any of the antitrust laws for conduct necessary—

12 (1) to prepare, agree to prepare, or attempt to

13 agree to prepare an application to request a certifi14 cate under this section, or

15 (2) to attempt to enter into any health care

16 joint venture with respect to which such a certificate

17 is in effect.

18 SEC. 203. INTERAGENCY ADVISORY COMMITTEE ON COM19 PETITION, ANTITRUST POLICY, AND HEALTH

20 CARE.

21 (a) ESTABLISHMENT.—There is hereby established

22 the Interagency Advisory Committee on Competition,

23 Antitrust Policy, and Health Care. The Advisory Commit24 tee shall be composed of—
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1 (1) the Secretary of Health and Human Serv2 ices (or the designee of the Secretary);

3 (2) the Attorney General (or the designee of the

4 Attorney General);

5 (3) the Director of the Office of Management

6 and Budget (or the designee of the Director); and

7 (4) a representative of the Federal Trade Com8 mission.

9 (b) DUTIES.—The duties of the Advisory Committee

10 are—

11 (1) to discuss and evaluate competition and

12 antitrust policy, and their implications with respect

13 to the performance of health care markets;

14 (2) to analyze the effectiveness of health care

15 joint ventures receiving exemptions under the pro16 gram established under section 201(a) or certificates

17 under section 202 in reducing the costs of and ex18 panding access to the health care services that are

19 the subject of such ventures; and

20 (3) to make such recommendations to Congress

21 not later than 2 years after the date of the enact22 ment of this Act (and at such subsequent periods as

23 the Advisory Committee considers appropriate) re24 garding modifications to the program established

25 under section 201(a) or to section 202 as the Advi-
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1 sory Committee considers appropriate, including

2 modifications relating to the costs to health care

3 providers of obtaining an exemption for a joint ven4 ture under such program.

5 SEC. 204. DEFINITIONS.

6 For purposes of this title:

7 (1) The term ‘‘Advisory Committee’’ means the

8 Interagency Advisory Committee on Competition,

9 Antitrust Policy, and Health Care established under

10 section 203.

11 (2) The term ‘‘antitrust laws’’—

12 (A) has the meaning given it in subsection

13 (a) of the first section of the Clayton Act (15

14 U.S.C. 12(a)), except that such term includes

15 section 5 of the Federal Trade Commission Act

16 (15 U.S.C. 45) to the extent such section ap17 plies to unfair methods of competition; and

18 (B) includes any State law similar to the

19 laws referred to in subparagraph (A).

20 (3) The term ‘‘certificate’’ means a certificate

21 of public advantage authorized to be issued under

22 section 202(a).

23 (4) The term ‘‘health care joint venture’’ means

24 an agreement (whether existing or proposed) be25 tween 2 or more providers of health care services
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1 that is entered into solely for the purpose of sharing

2 in the provision of health care services and that in3 volves substantial integration or financial risk-shar4 ing between the parties, but does not include the ex5 changing of information, the entering into of any

6 agreement, or the engagement in any other conduct

7 that is not reasonably required to carry out such

8 agreement.

9 (5) The term ‘‘health care services’’ includes

10 services related to the delivery or administration of

11 health care services.

12 (6) The term ‘‘liable’’ means liable for any civil

13 or criminal violation of the antitrust laws.

14 (7) The term ‘‘provider of health care services’’

15 means any individual or entity that is engaged in the

16 delivery of health care services in a State and that

17 is required by State law or regulation to be licensed

18 or certified by the State to engage in the delivery of

19 such services in the State.

20 (8) The term ‘‘Secretary’’ means the Secretary

21 of Health and Human Services.

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