I

103D CONGRESS

2D SESSION H. R. 3222

To contain health care costs and improve access to health care through

accountable health plans and managed competition, and for other purposes.

IN THE HOUSE OF REPRESENTATIVES

OCTOBER 6, 1993

Mr. COOPER (for himself, Mr. ANDREWS of Texas, Mr. GRANDY, Mr. KLUG,

Mr. STENHOLM, Mrs. JOHNSON of Connecticut, Mr. PAYNE of Virginia,

Mr. GUNDERSON, Mr. PETERSON of Florida, Mr. HOBSON, Mr. CARR of

Michigan, Mr. HOUGHTON, Mr. MCCURDY, Mr. QUILLEN, Mr. BARCIA of

Michigan, Mr. BOEHLERT, Mr. BROWDER, Mr. CLEMENT, Mr. CLINGER,

Mr. DOOLEY, Mr. EDWARDS of Texas, Mr. EMERSON, Mrs. FOWLER, Mr.

GILCHREST, Mr. GORDON, Mr. GOSS, Mr. HAYES, Mr. HORN, Mr.

HUGHES, Mr. HUTTO, Mr. LAUGHLIN, Mrs. LLOYD, Ms. LONG, Mr.

MCHALE, Mr. MCMILLAN, Mr. MACHTLEY, Mr. MILLER of Florida, Mr.

MONTGOMERY, Mr. MORAN, Mr. NEAL of North Carolina, Mr. NUSSLE,

Mr. ORTON, Mr. PARKER, Mr. PETRI, Mr. PORTER, Mr. SHAYS, Ms.

SNOWE, Mr. TANNER, and Mr. TAUZIN) introduced the following bill;

which was referred jointly to the Committees on Energy and Commerce,

Ways and Means, Education and Labor, and the Judiciary

OCTOBER 27, 1993

Additional sponsor: Mr. SABO

JANUARY 27, 1994

Additional sponsors: Mr. SYNAR, Mr. KOLBE, Mr. MINGE, Mr. REGULA, Ms.

ENGLISH of Arizona, Mr. CAMP, and Mr. WALSH

A BILL

To contain health care costs and improve access to health

care through accountable health plans and managed competition, and for other purposes.
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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; TABLE OF CONTENTS.

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

5 ‘‘Managed Competition Act of 1993’’.

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

7 this Act is as follows:

Page

Sec. 2. Findings; purposes ...................................................................... 7

Sec. 3. Glossary of certain terms used in titles I and II ........................ 10

TITLE I—MANAGED COMPETITION IN EMPLOYER-BASED HEALTH

PLANS: INCENTIVES TO CONTROL COSTS

Subtitle A—Use of Tax Incentives to Purchase Cost-Effective Plans

Sec. 1001. Uniform tax disincentive to effectively limit deductibility of

excess employer health plan expenses ........................... 15

Sec. 1002. Increase in deduction for health plan premium expenses of

self-employed individuals ............................................... 21

Sec. 1003. Deduction for health plan premium expenses of individuals 22

Sec. 1004. Exclusion from gross income for contributions by a partnership or S corporation to a health plan covering its

partners or shareholders ............................................... 24

Sec. 1005. Employer obligations ............................................................. 25

Sec. 1006. Encouraging group purchasing for large employer by eliminating commonality of interest or geographic location

requirement for tax exempt trust status ....................... 31

Sec. 1007. Simplifying filing of reports by permitting single annual filing for all employers covered under an insured multiple employer health plan ............................................. 32

Subtitle B—Health Plan Purchasing Cooperatives (HPPCs)

Sec. 1101. Establishment and organization; HPPC areas ..................... 33

Sec. 1102. Agreements with accountable health plans (AHPs) .............. 40

Sec. 1103. Agreements with small employers ......................................... 46

Sec. 1104. Enrolling individuals in accountable health plans through a

HPPC ............................................................................ 49

Sec. 1105. Receipt of premiums .............................................................. 54

Sec. 1106. Coordination among HPPCs ................................................. 56

Sec. 1107. Complaint process; ombudsman ............................................ 58

Sec. 1108. Enrollee satisfaction surveys; monitoring enrollee

disenrollment ................................................................. 59

Subtitle C—Accountable Health Plans (AHPs)

PART 1—Requirements for Accountable Health Plans
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Sec. 1201. Registration process; qualifications ....................................... 61

Sec. 1202. Specified uniform set of effective benefits; reduction in costsharing for low-income individuals; quality standards .. 63

Sec. 1203. Collection and provision of standardized information ........... 67

Sec. 1204. Prohibition of discrimination based on health status for certain conditions; limitation on pre-existing condition exclusions .......................................................................... 69

Sec. 1205. Use of standard premiums .................................................... 72

Sec. 1206. Financial solvency requirements ........................................... 78

Sec. 1207. Grievance mechanisms; enrollee protections; written policies

and procedures respecting advance directives; agent

commissions ................................................................... 79

Sec. 1208. Additional requirements of open AHPs ................................ 81

Sec. 1209. Coordination of benefits with low-income assistance ............ 86

Sec. 1210. Additional requirement of certain AHPs .............................. 87

Sec. 1211. Funding for approved medical residency training programs

and physician retraining programs ............................... 88

PART 2—Preemption of State Laws for Accountable Health Plans

Sec. 1221. Preemption from State benefit mandates ............................. 89

Sec. 1222. Preemption of State law restrictions on network plans ........ 89

Sec. 1223. Preemption of State laws restricting utilization review programs ............................................................................ 92

PART 3—Antitrust Provisions

Sec. 1231. Publication of guidelines for accountable health plans ......... 92

Sec. 1232. Issuance of health care certificates of public advantage. ...... 93

Subtitle D—Health Care Standards Commission

Sec. 1301. Establishment of Health Care Standards Commission ......... 101

Sec. 1302. Specification of uniform set of effective benefits .................. 104

Sec. 1303. Benefits, Evaluations, and Data Standards Board ............... 119

Sec. 1304. Health Plan Standards Board ............................................... 122

Sec. 1305. Registration of accountable health plans .............................. 124

Sec. 1306. Specification of risk-adjustment factors ................................ 126

Sec. 1307. National health data system .................................................. 128

Sec. 1308. Measures of quality of care of specialized centers of care .... 130

Sec. 1309. Agency for Clinical Evaluations ............................................ 132

Sec. 1310. Report and recommendations on achieving universal coverage .............................................................................. 136

Sec. 1311. No authority to impose controls relating to health care

spending ........................................................................ 137

Sec. 1312. Monitoring reinsurance market ............................................. 138

Sec. 1313. Authorization of appropriations; sunset ................................ 138

Subtitle E—Managed Competition in Rural and Urban Underserved Areas

PART 1—Special Treatment of Designated Underserved Areas

Sec. 1401. Designation of underserved areas ......................................... 138

Sec. 1402. Special treatment .................................................................. 140

PART 2—Transitional Support for Development of Accountable Health Plans

in Underserved Areas
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Sec. 1411. Technical assistance funding ................................................. 141

Sec. 1412. Rural development grants ..................................................... 142

Sec. 1413. Migrant health centers .......................................................... 145

Sec. 1414. Community health centers ..................................................... 146

PART 3—Establishment of Rural Emergency Access Care Hospitals

Sec. 1421. Rural emergency access care hospitals described .................. 147

Sec. 1422. Coverage of and payment for services ................................... 150

Sec. 1423. Effective date ........................................................................ 152

PART 4—Transitional Assistance for Safety Net Hospitals

Sec. 1431. Payments to hospitals ........................................................... 152

Sec. 1432. Application for assistance ...................................................... 155

Sec. 1433. Public service responsibilities ................................................ 156

Sec. 1434. Authorization of appropriations ............................................ 157

Subtitle F—Treatment of Chronically Underserved Areas

Sec. 1501. Promoting State action ......................................................... 157

Subtitle G—Repeal of COBRA Continuation Requirements

Sec. 1601. Repeal of COBRA continuation requirements ...................... 159

Subtitle H—Definitions

Sec. 1701. Definitions ............................................................................. 160

TITLE II—LOW-INCOME ASSISTANCE FOR HEALTH COVERAGE

Subtitle A—Low-Income Assistance

Sec. 2001. Eligibility ............................................................................... 170

Sec. 2002. Premium assistance ............................................................... 171

Sec. 2003. Cost-sharing assistance ......................................................... 172

Sec. 2004. Assistance for certain items and services .............................. 175

Sec. 2005. Computation of base Federal premium amount .................... 177

Sec. 2006. Applications for assistance .................................................... 182

Sec. 2007. Reconciliation of premium assistance through use of income

statements ..................................................................... 187

Sec. 2008. Treatment of certain cash assistance recipients ................... 190

Sec. 2009. Definitions ............................................................................. 190

Subtitle B—Long-Term Care Phase-Down Assistance to States

Sec. 2101. Long-term care phase-down assistance ................................. 196

Subtitle C—Financing

PART 1—Medicare Savings

Sec. 2201. Reduction in update for inpatient hospital services .............. 199

Sec. 2202. Reduction in conversion factor for physician fee schedule

for non-primary care services ........................................ 200

Sec. 2203. Reduction in hospital outpatient services through establishment of prospective payment system ............................ 201
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Sec. 2204. Increase in medicare part B premium for individuals with

high income ................................................................... 202

Sec. 2205. Phased-in elimination of medicare hospital disproportionate

share adjustment payments .......................................... 206

Sec. 2206. Reduction in routine cost limits for home health services .... 207

Sec. 2207. Reduction in routine cost limits for extended care services 207

Sec. 2208. Reductions in payments for hospice services ........................ 208

PART 2—Other Savings

Sec. 2211. Requirement that certain agencies prefund government

health benefits contributions for their annuitants ........ 209

Subtitle D—Repeal of Medicaid Program

Sec. 2301. Repeal of medicaid program .................................................. 212

TITLE III—TRAINING AND EDUCATION OF HEALTH CARE

PROFESSIONALS

Subtitle A—Reform of Federal Funding for Medical Residency Training

Sec. 3001. Definitions ............................................................................. 213

Sec. 3002. Approval of medical residency training positions .................. 215

Sec. 3003. Funding for approved medical residency training programs

and physician retraining programs ............................... 218

Sec. 3004. Financing ............................................................................... 222

Sec. 3005. National Medical Education Fund ........................................ 223

Sec. 3006. Repeal of separate medical education payments under medicare ................................................................................ 224

Subtitle B—Other Medical Education Grants and Programs

Sec. 3101. Scholarship and loan repayment programs of National

Health Service Corps .................................................... 226

Sec. 3102. Area health education centers ............................................... 227

Sec. 3103. Public health and preventive medicine .................................. 227

Sec. 3104. Family medicine .................................................................... 227

Sec. 3105. General internal medicine and pediatrics .............................. 227

Sec. 3106. Physician assistants .............................................................. 227

Sec. 3107. Allied health project grants and contracts ............................ 228

Sec. 3108. Nurse allied health project grants and contracts .................. 228

Sec. 3109. Nurse practitioner and nurse midwife programs .................. 228

Sec. 3110. Use of health care policy and research funds for primary

care ................................................................................ 228

TITLE IV—PREVENTIVE HEALTH AND INDIVIDUAL

RESPONSIBILITY

Subtitle A—Expansion of Public Health Programs

Sec. 4001. Immunizations against vaccine-preventable diseases ............ 229

Sec. 4002. Prevention, control, and elimination of tuberculosis ............. 229

Sec. 4003. Lead poisoning prevention. .................................................... 229

Sec. 4004. Preventive health measures with respect to breast and cervical cancers .................................................................. 229

Sec. 4005. Office of Disease Prevention and Health Promotion ............ 230

Sec. 4006. Preventive health and health services block grant ................ 231
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Sec. 4007. Categorical grants for early intervention regarding acquired

immune deficiency syndrome ........................................ 231

Sec. 4008. Programs of Office of Smoking and Health ......................... 231

Subtitle B—Medicare

PART 1—Coverage of Preventive Services

Sec. 4101. Coverage of colorectal screening ............................................ 232

Sec. 4102. Coverage of certain immunizations ....................................... 238

Sec. 4103. Coverage of well-child care .................................................... 239

Sec. 4104. Annual screening mammography .......................................... 242

Sec. 4105. Financing of additional benefits ............................................ 242

PART 2—Notice of Advance Directive Rights

Sec. 4111. Providing notice of rights regarding medical care to individuals entering medicare .................................................. 243

TITLE V—MALPRACTICE REFORM

Subtitle A—Findings; Purpose; Definitions

Sec. 5001. Findings; purpose .................................................................. 244

Sec. 5002. Definitions ............................................................................. 245

Subtitle B—Uniform Standards for Malpractice Claims

Sec. 5101. Applicability ........................................................................... 250

Sec. 5102. Requirement for initial resolution of action through alternative dispute resolution ............................................... 250

Sec. 5103. Procedural requirements for filing of actions ....................... 254

Sec. 5104. Treatment of noneconomic and punitive damages ................ 258

Sec. 5105. Periodic payments for future losses ...................................... 263

Sec. 5106. Treatment of attorney’s fees and other costs ....................... 264

Sec. 5107. Uniform statute of limitations .............................................. 268

Sec. 5108. Special provision for certain obstetric services ...................... 268

Sec. 5109. Uniform standard for determining liability in actions based

on negligence ................................................................. 269

Sec. 5110. Jurisdiction of Federal courts ............................................... 270

Sec. 5111. Preemption ............................................................................ 270

Subtitle C—Requirements for State Alternative Dispute Resolution Systems

(ADR)

Sec. 5201. Basic requirements ................................................................ 271

Sec. 5202. Certification of State systems; applicability of alternative

Federal system .............................................................. 273

Sec. 5203. Grants to States .................................................................... 276

Sec. 5204. Reports on implementation and effectiveness of alternative

dispute resolution systems ............................................ 276

Subtitle D—Grants to States for Development of Practice Guidelines

Sec. 5301. Grants to States .................................................................... 277

TITLE VI—PAPERWORK REDUCTION AND ADMINISTRATIVE

SIMPLIFICATION
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Sec. 6001. Preemption of State quill pen laws ....................................... 279

Sec. 6002. Confidentiality of electronic health care information ............ 279

Sec. 6003. Standardization for the electronic receipt and transmission

of health plan information ............................................ 283

Sec. 6004. Use of uniform health claims forms and identification numbers ................................................................................ 284

Sec. 6005. Priority among insurers ........................................................ 285

Sec. 6006. Furnishing of information among health plans .................... 286

Sec. 6007. Failure to satisfy certain health plan requirements .............. 287

Sec. 6008. Definitions ............................................................................. 290

TITLE VII—ADDITIONAL BENEFITS ON A PAY-AS-YOU-GO BASIS

Sec. 7001. Sense of Congress .................................................................. 291

1 SEC. 2. FINDINGS; PURPOSES.

2 (a) FINDINGS.—Congress finds the following:

3 (1) NEED FOR COST CONTAINMENT INCEN4 TIVES.—The current health insurance marketplace is

5 unable to provide efficient and effective health care

6 coverage because—

7 (A) there is no organized method for price8 based competition among health plans offering

9 standardized benefits;

10 (B) there is no method by which health

11 plans are held accountable for their perform12 ance in effectively and efficiently improving the

13 health and well-being of their enrollees;

14 (C) the Internal Revenue Code not only

15 provides no incentives for employees to select

16 carefully among competing health plans on the

17 basis of cost, but also provides incentives for

18 employers and employees to select plans with

19 greater expenses;
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1 (D) health plans frequently manage costs

2 through underwriting practices and favorable

3 selection rather than through increased effi4 ciencies in the provision of health care; and

5 (E) underwriting practices discriminate

6 unfairly against individuals in need of health

7 care.

8 (2) MANAGED COMPETITION.—

9 (A) The economy of the United States has

10 been based on a model of competitive markets

11 and the United States has successfully relied on

12 this model in order to promote efficiencies and

13 innovation in nearly every economic area.

14 (B) However, in order to provide for such

15 a market in health care, there is a need to pro16 vide proper incentives to providers and pur17 chasers in the market for health care.

18 (C) Only through such a reform will the

19 country achieve the dual goals of maintaining

20 high quality care, innovation, and consumer

21 choice and of providing real incentives for cost

22 containment.

23 (b) PURPOSE.—

24 (1) GENERAL OBJECTIVE.—It is the general ob25 jective of this Act to reform the health care market-
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1 place to provide universal access to high quality,

2 cost-effective care through competitive health plans.

3 (2) COST CONTAINMENT OBJECTIVE.—It is also

4 a specific objective of this Act to bring the rate of

5 increase in health care costs by the year 2000 down

6 to the rate of increase in costs in the economy as a

7 whole.

8 (3) SPECIFIC MEASURES TO ACHIEVE OBJEC9 TIVES.—In order to—

10 (A) control costs through enhanced price

11 competition, the Act extends tax benefits for

12 employer contributions only to the lowest price

13 of a qualifying plan in an area;

14 (B) promote competition based on cost-ef15 fective care instead of through risk selection,

16 the Act standardizes benefits, prohibits experi17 ence rating, and adjusts premium payments to

18 plans based on the risk characteristics of indi19 viduals enrolled in the plan;

20 (C) provide access to coverage, the Act

21 makes available to all individuals competitively

22 priced accountable health plans regardless of

23 their employment status;

24 (D) to promote competition based on qual25 ity, the Act provides for the systematic report-
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1 ing and public dissemination of information on

2 the performance of plans in meeting the clinical

3 health requirements, functional needs, well4 being, and personal satisfaction of its enrollees;

5 and

6 (E) improve health care coverage of low-in7 come individuals, the Act offers financial assist8 ance in purchasing accountable health plans

9 and meeting cost-sharing requirements.

10 SEC. 3. GLOSSARY OF CERTAIN TERMS USED IN TITLES I

11 AND II.

12 The following specialized, defined terms are used in

13 titles I and II of this Act:

14 ACCOUNTABLE HEALTH PLAN; AHP.—The

15 terms ‘‘accountable health plan’’ and ‘‘AHP’’ are de16 fined in section 1701(b)(1).

17 APPLICABLE FEDERAL ASSISTANCE AMOUNT.—

18 The term ‘‘applicable Federal assistance amount’’ is

19 defined in section 2009(c)(1).

20 APPLICABLE LOW-INCOME PREMIUM

21 AMOUNT.—The term ‘‘applicable low-income pre22 mium amount’’ is defined in section 2009(c)(2).

23 BASE FEDERAL PREMIUM AMOUNT.—The ‘‘base

24 Federal premium amount’’ is defined in section

25 2005(a)(1).
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1 BASE INDIVIDUAL PREMIUM.—The term ‘‘base

2 individual premium’’ is defined in section

3 2009(c)(3).

4 BENEFITS, EVALUATIONS, AND DATA STAND5 ARDS BOARD.—The term ‘‘Benefits, Evaluations,

6 and Data Standards Board’’ refers to the Board es7 tablished under section 1303.

8 CLOSED AND OPEN PLANS.—The terms

9 ‘‘closed’’ and ‘‘open’’ are defined, with respect to a

10 health plan, under section 1701(b)(4).

11 COMMISSION.—The term ‘‘Commission’’ is de12 fined in section 1701(b)(2).

13 ELIGIBLE EMPLOYEE.—The term ‘‘eligible em14 ployee’’ is defined in section 1701(a)(2).

15 ELIGIBLE FAMILY MEMBER.—The term ‘‘eligi16 ble family member’’ is defined in section 1701(a)(3).

17 ELIGIBLE INDIVIDUAL.—The term ‘‘eligible in18 dividual’’ is defined in section 1701(a)(1).

19 ELIGIBLE RESIDENT.—The term ‘‘eligible resi20 dent’’ is defined in section 1701(a)(4).

21 ENROLLEE UNIT.—The term ‘‘enrollee unit’’ is

22 defined in section 1701(a)(5).

23 FAMILY ADJUSTED TOTAL INCOME.—The term

24 ‘‘family adjusted total income’’ is defined in section

25 2009(b)(1).
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1 HEALTH CARE JOINT VENTURE.—The term

2 ‘‘health care joint venture’’ is defined in section

3 1232(i)(3).

4 HEALTH OUTCOME.—The term ‘‘health out5 come’’ is defined in section 1302(b)(5)(B).

6 HEALTH PLAN STANDARDS BOARD.—The term

7 ‘‘Health Plan Standards Board’’ refers to the Board

8 established under section 1304.

9 HEALTH PLAN.—The term ‘‘health plan’’ is de10 fined in section 1701(c)(1).

11 HPPC; HEALTH PLAN PURCHASING COOPERA12 TIVE.—The terms ‘‘health plan purchasing coopera13 tive’’ and ‘‘HPPC’’ are defined in section

14 1701(b)(3).

15 INDIVIDUAL RESPONSIBILITY PERCENTAGE.—

16 The term ‘‘individual responsibility percentage’’ is

17 defined in section 2009(c)(5).

18 INVESTIGATIONAL TREATMENT.—The term ‘‘in19 vestigational treatment’’ is defined in section

20 1302(b)(4)(B).

21 LOW-INCOME INDIVIDUAL.—The term ‘‘low-in22 come individual’’ is defined in section 2009(a)(1).

23 MEDICALLY APPROPRIATE.—The term ‘‘medi24 cally appropriate’’ is defined in section 1302(b)(1).
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1 MEDICARE BENEFICIARY.—The term ‘‘medicare

2 beneficiary’’ is defined in section 1701(a)(6).

3 MEDICARE-ELIGIBLE INDIVIDUAL.—The term

4 ‘‘medicare-eligible individual’’ is defined in section

5 1701(a)(6).

6 MODERATELY LOW-INCOME INDIVIDUAL.—The

7 term ‘‘moderately low-income individual’’ is defined

8 in section 2009(a)(2).

9 MODIFIED FAMILY INCOME.—The term ‘‘modi10 fied family income’’ is defined in section 2009(b)(2).

11 NETWORK PLAN.—The term ‘‘network plan’’ is

12 defined in section 1208(b)(3)(D) and in section

13 1222(b)(1).

14 PARTICIPATING PROVIDER.—The term ‘‘partici15 pating provider’’ is defined in section 1222(b)(2).

16 PHYSICIAN INCENTIVE PLAN.—The term ‘‘phy17 sician incentive plan’’ is defined in section

18 1207(b)(2).

19 POVERTY LINE.—The term ‘‘poverty line’’ is

20 defined in section 2009(c)(4).

21 PRE-EXISTING CONDITION.—The term ‘‘pre-ex22 isting condition’’ is defined in section

23 1204(b)(2)(B)(ii).

24 PREMIUM CLASS.—The term ‘‘premium class’’

25 is defined in section 1701(c)(3).
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1 REFERENCE PREMIUM RATE.—The term ‘‘ref2 erence premium rate’’ is defined in section

3 2009(c)(4).

4 SECRETARY.—The term ‘‘Secretary’’ is defined

5 in section 1701(c)(4).

6 SMALL EMPLOYER; LARGE EMPLOYER.—The

7 terms ‘‘small employer’’ and ‘‘large employer’’ are

8 defined in section 1701(c)(2).

9 SPECIALIZED CENTER OF CARE.—The term

10 ‘‘specialized center of care’’ is defined in section

11 1308(d).

12 STATE-ADJUSTED POVERTY LEVEL DEFINED.—

13 The term ‘‘State-adjusted poverty level’’ is defined

14 in section 2009(b)(3)(A).

15 STATE.—The term ‘‘State’’ is defined in section

16 1701(c)(5).

17 TREATMENT.—The term ‘‘treatment’’ is defined

18 in section 1302(b)(5)(A).

19 TYPE OF ENROLLMENT.—The term ‘‘type of

20 enrollment’’ is defined in section 1701(c)(6).

21 UNIFORM SET OF EFFECTIVE BENEFITS.—The

22 term ‘‘uniform set of effective benefits’’ is defined in

23 section 1701(c)(7).
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1 UTILIZATION REVIEW PROGRAM.—The term

2 ‘‘utilization review program’’ is defined in section

3 1223(b).

4 VERY LOW-INCOME INDIVIDUAL.—The term

5 ‘‘very low-income individual’’ is defined in section

6 2009(a)(3).

7 TITLE I—MANAGED COMPETI8 TION IN EMPLOYER-BASED

9 HEALTH PLANS: INCENTIVES

10 TO CONTROL COSTS

11 Subtitle A—Use of Tax Incentives

12 to Purchase Cost-Effective Plans

13 SEC. 1001. UNIFORM TAX DISINCENTIVE TO EFFECTIVELY

14 LIMIT DEDUCTIBILITY OF EXCESS EMPLOYER

15 HEALTH PLAN EXPENSES.

16 (a) IN GENERAL.—Chapter 43 of the Internal Reve17 nue Code of 1986 (relating to qualified pension plans, etc.)

18 is amended by adding at the end thereof the following new

19 section:

20 ‘‘SEC. 4980C. EMPLOYER HEALTH PLAN EXPENSES IN EX21 CESS OF ACCOUNTABLE HEALTH PLAN

22 COSTS.

23 ‘‘(a) GENERAL RULE.—There is hereby imposed a

24 tax equal to the product of the rate of tax specified in
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1 section 11(b)(1)(C) and the amount of the excess health

2 plan expenses of any employer.

3 ‘‘(b) EXCESS HEALTH PLAN EXPENSES.—For pur4 poses of this section—

5 ‘‘(1) IN GENERAL.—The term ‘excess health

6 plan expenses’ means health plan expenses paid or

7 incurred by the employer for any month with respect

8 to any covered individual to the extent such expenses

9 do not meet the requirements of paragraphs (2), (3),

10 and (4).

11 ‘‘(2) LIMIT TO ACCOUNTABLE HEALTH

12 PLANS.—Health plan expenses meet the require13 ments of this paragraph only if—

14 ‘‘(A) the expenses are attributable to cov15 erage of the covered individual under an ac16 countable health plan, and

17 ‘‘(B) in the case of a small employer, the

18 expenses are attributable to payment to a

19 health plan purchasing cooperative for coverage

20 under an accountable health plan.

21 ‘‘(3) LIMIT ON PER INDIVIDUAL CONTRIBU22 TION.—

23 ‘‘(A) IN GENERAL.—Health plan expenses

24 with respect to any covered individual meet the

25 requirements of this paragraph for any month
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1 only to the extent that the amount of such ex2 penses does not exceed the reference premium

3 rate (as defined in section 2009(c)(4) of the

4 Managed Competition Act of 1993) for the

5 month.

6 ‘‘(B) USE OF COMMUNITY RATE WITHIN

7 TYPE OF ENROLLMENT OR ACROSS HPPC AREAS

8 IN PLACE OF REFERENCE PREMIUM RATE FOR

9 LARGE EMPLOYERS.—In the case of an em10 ployer that is not a small employer and which

11 maintains a closed AHP (as defined in section

12 1701(b)(4)(A)) that elects certain rules to apply

13 under section 1205(b)(3) of the Managed Com14 petition Act of 1993, the reference premium

15 rate amount for a covered individual shall be

16 computed based on the weighted average of

17 such amounts within the type of enrollment or

18 across HPPC areas, as elected under such sec19 tion.

20 ‘‘(C) TREATMENT OF HEALTH PLANS OUT21 SIDE THE UNITED STATES.—For purposes of

22 subparagraph (A), in the case of a covered indi23 vidual residing outside the United States, there

24 shall be substituted for the reference premium

25 rate such reasonable amounts as the Health
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1 Care Standards Commission determines to be

2 comparable to the limit imposed under subpara3 graph (A) or subparagraph (B) (if applicable).

4 ‘‘(4) REQUIREMENT OF LEVEL CONTRIBU5 TION.—Health plan expenses meet the requirements

6 of this paragraph for any month only if the amount

7 of the employer contribution (for a premium class)

8 does not vary based on the accountable health plan

9 selected.

10 ‘‘(c) EXCEPTION FOR MEDICARE-ELIGIBLE RETIR11 EES.—Subsections (a) and (b) shall not apply to health

12 plan expenses with respect to an individual who is eligible

13 for benefits under part A of title XVIII of the Social Secu14 rity Act if such expenses are for a health plan that is not

15 a primary payor under section 1862(b) of such Act.

16 ‘‘(d) SPECIAL RULES.—

17 ‘‘(1) TREATMENT OF SELF-INSURED PLANS.—

18 In the case of a self-insured health plan, the amount

19 of contributions per employee shall be determined

20 for purposes of subsection (b)(3) in accordance with

21 rules established by the Health Care Standards

22 Commission which are based on the principles of

23 section 4980B(f)(4)(B) (as in effect before the date

24 of the enactment of this Act).
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1 ‘‘(2) CONTRIBUTIONS TO CAFETERIA PLANS.—

2 Contributions under a cafeteria plan on behalf of an

3 employee that are used for a group health plan cov4 erage shall be treated for purposes of this section as

5 health plan expenses paid or incurred by the em6 ployer.

7 ‘‘(e) EMPLOYEES HELD HARMLESS.—Nothing in

8 this section shall be construed as affecting the exclusion

9 from gross income of an employee under section 106.

10 ‘‘(f) OTHER DEFINITIONS.—For purposes of this sec11 tion—

12 ‘‘(1) COVERED INDIVIDUAL.—The term ‘cov13 ered individual’ means any beneficiary of a group

14 health plan.

15 ‘‘(2) GROUP HEALTH PLAN.—The term ‘group

16 health plan’ has the meaning given such term by

17 section 5000(b)(1), but does not include, as defined

18 by the Health Care Standards Commission, health

19 coverage under a disability or accident policy or

20 under a workers’ compensation plan.

21 ‘‘(3) HEALTH PLAN EXPENSES.—

22 ‘‘(A) IN GENERAL.—The term ‘health plan

23 expenses’ means employer expenses for any

24 group health plan, including expenses for pre-
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1 miums as well as payment of deductibles and

2 coinsurance that would otherwise be applicable.

3 ‘‘(B) EXCLUSION OF CERTAIN DIRECT EX4 PENSES.—Such term does not include expenses

5 for direct services which are determined by the

6 Health Care Standards Commission to be pri7 marily aimed at workplace health care and

8 health promotion or related population-based

9 preventive health activities.

10 ‘‘(4) SMALL EMPLOYER.—The term ‘small em11 ployer’ means, for a taxable year, an employer that

12 is a small employer (within the meaning of section

13 1701(c)(2) of the Managed Competition Act of

14 1993) for the most recent calendar year ending be15 fore the end of the taxable year.

16 ‘‘(5) TYPE OF ENROLLMENT.—The term ‘type

17 of enrollment’ is described in section 1701(c)(6) of

18 the Managed Competition Act of 1993.’’

19 (b) CLERICAL AMENDMENT.—The table of sections

20 for such chapter 43 is amended by adding at the end

21 thereof the following new section:

‘‘Sec. 4980C. Employer health plan expenses in excess of accountable health plan costs.’’

22 (c) EFFECTIVE DATE.—

23 (1) IN GENERAL.—Except as otherwise pro24 vided in this subsection, the amendments made by
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1 this section shall apply to expenses incurred for the

2 provision of health services for periods after Decem3 ber 31, 1994.

4 (2) TRANSITION FOR COLLECTIVE BARGAINING

5 AGREEMENTS.—The amendments made by this sec6 tion shall not apply to employers with respect to

7 their employees, insofar as such employees are cov8 ered under a collective bargaining agreement ratified

9 before the date of the enactment of this Act, earlier

10 than the date of termination of such agreement (de11 termined without regard to any extension thereof

12 agreed to after the date of the enactment of this

13 Act), or January 1, 1997, whichever is earlier.

14 SEC. 1002. INCREASE IN DEDUCTION FOR HEALTH PLAN

15 PREMIUM EXPENSES OF SELF-EMPLOYED IN16 DIVIDUALS.

17 (a) INCREASING DEDUCTION TO 100 PERCENT.—

18 Paragraph (1) of section 162(l) of the Internal Revenue

19 Code of 1986 is amended by striking ‘‘25 percent of’’.

20 (b) MAKING PROVISION PERMANENT.—Subsection

21 (l) of section 162 of such Code (relating to special rules

22 for health insurance costs of self-employed individuals) is

23 amended by striking paragraph (6).

24 (c) LIMITATION TO ACCOUNTABLE HEALTH

25 PLANS.—Paragraph (2) of section 162(l) of such Code is
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1 amended by adding at the end thereof the following new

2 paragraph:

3 ‘‘(3) DEDUCTION LIMITED TO ACCOUNTABLE

4 HEALTH PLAN COSTS.—No deduction shall be al5 lowed under this section for any amount which

6 would be excess health plan expenses (as defined in

7 section 4980C(b), determined without regard to

8 paragraph (4) thereof) if the taxpayer were a small

9 employer.’’

10 (d) EFFECTIVE DATE.—

11 (1) IN GENERAL.—Except as otherwise pro12 vided in this subsection, the amendments made by

13 this section shall apply to taxable years beginning

14 after December 31, 1994.

15 (2) EXCEPTION.—The amendment made by

16 subsection (c) shall apply to expenses for periods of

17 coverage beginning on or after January 1, 1995.

18 SEC. 1003. DEDUCTION FOR HEALTH PLAN PREMIUM EX19 PENSES OF INDIVIDUALS.

20 (a) IN GENERAL.—Section 213 of the Internal Reve21 nue Code of 1986 (relating to medical, dental, etc., ex22 penses) is amended by adding at the end the following new

23 subsection:

24 ‘‘(g) SPECIAL RULES FOR HEALTH PLAN PREMIUM

25 EXPENSES.—
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1 ‘‘(1) IN GENERAL.—The deduction under sub2 section (a) shall be determined without regard to the

3 limitation based on adjusted gross income with re4 spect to amounts paid for premiums for coverage

5 under an accountable health plan.

6 ‘‘(2) LIMITS.—

7 ‘‘(A) LIMIT IN AMOUNT.—The amount al8 lowed as a deduction under paragraph (1) with

9 respect to the cost of providing coverage for any

10 individual shall not exceed the applicable limit

11 specified in section 4980C(b)(3) reduced by the

12 aggregate amount paid by all other entities (in13 cluding any employer or any level of govern14 ment) for coverage of such individual under any

15 health plan.

16 ‘‘(B) LIMIT TO HPPC PLANS.—

17 ‘‘(i) IN GENERAL.—The deduction

18 under this subsection shall be allowed only

19 in the case of an individual who obtains

20 coverage under an accountable health plan

21 through a health plan purchasing coopera22 tive.

23 ‘‘(ii) EXCEPTION FOR EMPLOYEES OF

24 LARGE EMPLOYERS.—Clause (i) shall not

25 apply to an individual who obtains cov-
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1 erage in an accountable health plan by vir2 tue of the individual’s (or other person’s)

3 employment by a large employer.

4 ‘‘(3) DEDUCTION ALLOWED AGAINST GROSS IN5 COME.—The deduction under this subsection shall

6 be taken into account in determining adjusted gross

7 income under section 62(a).

8 ‘‘(4) TREATMENT OF MEDICARE PROGRAM.—

9 Coverage under part A or part B of title XVIII of

10 the Social Security Act shall not be considered for

11 purposes of this subsection to be coverage under an

12 accountable health plan.’’

13 (b) EFFECTIVE DATE.—The amendment made by

14 subsection (a) shall apply to amounts paid after December

15 31, 1994, and taxable years ending after such date.

16 SEC. 1004. EXCLUSION FROM GROSS INCOME FOR CON17 TRIBUTIONS BY A PARTNERSHIP OR S COR18 PORATION TO A HEALTH PLAN COVERING ITS

19 PARTNERS OR SHAREHOLDERS.

20 (a) S CORPORATIONS.—Section 1372 of the Internal

21 Revenue Code of 1986 (relating to partnership rules to

22 apply for fringe benefit purposes) is amended by adding

23 at the end thereof the following new subsection:

24 ‘‘(c) EXCEPTION FOR COVERAGE PROVIDED UNDER

25 SUBSIDIZED ACCIDENT OR HEALTH PLAN.—This section
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1 shall not apply to coverage under a subsidized accident

2 or health plan maintained by the S corporation for its em3 ployees.’’

4 (b) PARTNERSHIPS.—Section 707 of such Code (re5 lating to transactions between partner and partnership)

6 is amended by adding at the end thereof the following new

7 subsection:

8 ‘‘(d) EXCLUSION FOR COVERAGE PROVIDED UNDER

9 SUBSIDIZED ACCIDENT OR HEALTH PLAN.—In the case

10 of coverage under a subsidized accident or health plan

11 maintained by a partnership for its partners, for purposes

12 of sections 104, 105, 106, and 162(l)(2)(B), the partner13 ship shall be treated as the employer of each partner who

14 is an employee within the meaning of section 401(c)(1).’’

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

16 this section shall apply to taxable years beginning after

17 December 31, 1994.

18 SEC. 1005. EMPLOYER OBLIGATIONS.

19 (a) SMALL EMPLOYERS.—Each small employer (as

20 defined in section 1701(c)(2)) shall—

21 (1) have in effect an agreement described in

22 section 1103 with the health plan purchasing cooper23 ative (requiring the offering to employees of cov24 erage through accountable health plans) for the
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1 HPPC area in which the employer has its principal

2 place of business, and

3 (2) comply with such agreement.

4 (b) OTHER EMPLOYERS.—

5 (1) IN GENERAL.—Each employer that is not a

6 small employer shall—

7 (A) offer to each employee (in a time and

8 manner specified by the Health Care Standards

9 Commission) enrollment in a qualifying ac10 countable health plan (as defined in paragraph

11 (3)) both on an individual basis, and, if applica12 ble and at the employee’s option, on a family

13 basis; and

14 (B) provide, at the option of the employee,

15 for deduction from wages or other compensa16 tion (in the manner specified in section

17 1103(c)) of amount of any premiums due for

18 such enrollment (taking into account the

19 amount of any employer contribution).

20 (2) OPEN ENROLLMENT PERIODS.—For pur21 poses of paragraph (1)(A), the Commission shall

22 provide for—

23 (A) initial enrollment periods (of not less

24 than 30 days) during which newly employed in-
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1 dividuals are offered enrollment under a quali2 fying accountable health plan;

3 (B) an annual open enrollment period (of

4 not less than 30 days) in which employees are

5 offered enrollment under a qualifying account6 able health plan (and, if there is a choice

7 among such plans, the opportunity to change

8 the plan in which the employee is enrolled); and

9 (C) special enrollment periods during

10 which, because of a change in family situation

11 (such as marriage, birth or adoption of a child,

12 divorce, separation, or death), the employee is

13 offered the opportunity to change the type of

14 enrollment provided.

15 (3) QUALIFYING ACCOUNTABLE HEALTH

16 PLAN.—For purposes of this subsection, the term

17 ‘‘qualifying accountable health plan’’ means, with re18 spect to an employee, an accountable health plan—

19 (A) that serves the area in which the em20 ployee resides, and

21 (B) for which the premium charged to the

22 employee for a premium class does not exceed

23 (except as provided in paragraph (4)) the pre24 mium of the least expensive accountable health

25 plan offered to individuals by a health plan pur-
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1 chasing cooperative in the HPPC area in which

2 the employee resides for that premium class.

3 Nothing in this subsection shall be construed as pre4 venting an employer from offering, or an employee

5 from electing enrollment in, a health plan that

6 serves the area in which the employee is employed,

7 rather than the area in which the employee resides.

8 (4) SPECIAL RULE FOR CERTAIN CLOSED AHPS

9 ELECTING SPECIAL COMMUNITY RATING.—In the

10 case of a closed AHP offered to an employee, if the

11 plan has made an election described in section

12 1205(b)(3), paragraph (3)(B) shall be applied to the

13 plan based on the weighted average of premiums de14 termined without regard to age, HPPC area, or both

15 (as elected under such section), rather than on the

16 basis of premium class.

17 (c) NONDISCRIMINATION UNDER GROUP HEALTH

18 PLANS.—

19 (1) APPLICATION OF RULES SIMILAR TO MEDI20 CARE NONDISCRIMINATION RULES.—Subject to

21 paragraph (2), the provisions of paragraphs (1)(A),

22 (1)(D), (1)(E), (3)(A), and (3)(C) of section

23 1862(b) of the Social Security Act shall apply to an

24 individual eligible for low-income assistance under

25 subtitle A of title II in the same manner as such
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1 provisions apply to an individual age 65 or over who

2 is entitled to benefits under title XVIII of such Act

3 under section 226(a) of such Act.

4 (2) RULES OF APPLICATION.—In applying

5 paragraph (1) under this Act—

6 (A) in applying clauses (ii) and (iii) of sec7 tion 1862(b)(1)(A) of the Social Security Act,

8 any reference to ‘‘20 or more employees’’ is

9 deemed a reference to ‘‘5 or more employees’’;

10 (B) clause (iv) of section 1862(b)(1)(A) of

11 such Act shall not apply; and

12 (C) any reference to title XVIII of such

13 Act is deemed a reference to assistance under

14 subtitle A of title II of this Act.

15 (d) ENFORCEMENT.—

16 (1) CIVIL MONEY PENALTIES.—

17 (A) SMALL EMPLOYER AGREEMENTS.—

18 Failure to have in effect or comply with an

19 agreement under subsection (a)(1)(A) is subject

20 to a civil monetary penalty (not to exceed $500)

21 for each day in which the violation continues.

22 (B) FAILURE TO OFFER COVERAGE OR

23 PROVIDE FOR WAGE DEDUCTION.—Failure to

24 offer coverage or provide for deduction from

25 wages required under subsection (b)(1) is sub-
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1 ject to a civil monetary penalty (not to exceed

2 $500) for each day in which the violation con3 tinues.

4 (C) VIOLATION OF NONDISCRIMINATION

5 REQUIREMENTS.—Failure to comply with the

6 requirement of subsection (c) is subject to a

7 civil monetary penalty (not to exceed $500) for

8 each day for each individual with respect to

9 which the failure occurs.

10 (2) DIRECT ENFORCEMENT.—

11 (A) HPPC AGREEMENT.—An agreement in

12 effect between a small employer and a HPPC is

13 directly enforceable by civil action by the HPPC

14 or by an employee (as a third-party beneficiary

15 of the agreement). In any such action, if the

16 HPPC or employee substantially prevails, the

17 HPPC or employee is entitled to reasonable at18 torneys’ fees.

19 (B) OFFER.—The obligation to offer cov20 erage under subsection (b) with respect to an

21 employee is directly enforceable by civil action

22 by the employee. In any such action, if the em23 ployee substantially prevails, the employee is

24 entitled to reasonable attorneys’ fees.
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1 SEC. 1006. ENCOURAGING GROUP PURCHASING FOR LARGE

2 EMPLOYER BY ELIMINATING COMMONALITY

3 OF INTEREST OR GEOGRAPHIC LOCATION

4 REQUIREMENT FOR TAX EXEMPT TRUST STA5 TUS.

6 (a) IN GENERAL.—Paragraph (9) of section 501(c)

7 of the Internal Revenue Code of 1986 (relating to exempt

8 organizations) is amended—

9 (1) by inserting ‘‘(A)’’ after ‘‘(9)’’; and

10 (2) by adding at the end the following:

11 ‘‘(B) Any determination of whether a health

12 plan maintained by one or more large employers

13 (within the meaning of section 1701(c)(2) of the

14 Managed Competition Act of 1993) is a voluntary

15 employees’ beneficiary association meeting the re16 quirements of this paragraph shall be made without

17 regard to any determination of commonality of inter18 est or geographic location if the plan is an account19 able health plan (as defined in section 1701(b)(1) of

20 such Act).’’

21 (b) EFFECTIVE DATE.—The amendments made by

22 subsection (a) shall apply with respect to determinations

23 made on or after January 1, 1994.
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1 SEC. 1007. SIMPLIFYING FILING OF REPORTS BY PERMIT2 TING SINGLE ANNUAL FILING FOR ALL EM3 PLOYERS COVERED UNDER AN INSURED

4 MULTIPLE EMPLOYER HEALTH PLAN.

5 (a) IN GENERAL.—Section 110 of the Employee Re6 tirement Income Security Act of 1974 (29 U.S.C. 1030)

7 is amended by adding at the end the following new sub8 section:

9 ‘‘(c) The Secretary shall prescribe by regulation or

10 otherwise an alternative method providing for the filing

11 of a single annual report (as referred to in section

12 104(a)(1)(A)) with respect to all employers who are cov13 ered under the same fully insured multiple employer wel14 fare arrangement under which benefits consist solely of

15 medical care described in section 607(1) (disregarding

16 such incidental benefits as the Secretary shall specify by

17 regulations).’’.

18 (b) EFFECTIVE DATE.—The amendment made by

19 subsection (a) shall take effect on the date of the enact20 ment of this Act. The Secretary of Labor shall prescribe

21 the alternative method referred to in section 110(c) of the

22 Employee Retirement Income Security Act of 1974, as

23 added by such amendment, within 90 days after the date

24 of the enactment of this Act.
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1 Subtitle B—Health Plan

2 Purchasing Cooperatives (HPPCs)

3 SEC. 1101. ESTABLISHMENT AND ORGANIZATION; HPPC

4 AREAS.

5 (a) HPPC AREAS.—

6 (1) IN GENERAL.—For purposes of carrying out

7 this title, subject to paragraphs (2) and (3), each

8 State shall be considered a HPPC area.

9 (2) ALTERNATIVE, INTRASTATE AREAS.—Each

10 State may provide for the division of the State into

11 HPPC areas so long as—

12 (A) all portions of each metropolitan sta13 tistical area in a State are within the same

14 HPPC area, and

15 (B) the number of eligible individuals re16 siding within a HPPC area is not less than

17 250,000.

18 (3) ALTERNATIVE, INTERSTATE AREAS.—In ac19 cordance with rules established by the Health Care

20 Standards Commission, one or more contiguous

21 States may provide for the establishment of a HPPC

22 area that includes adjoining portions of the States

23 so long as such area, if it includes any part of a

24 metropolitan statistical area, includes all of such

25 area. In the case of a HPPC serving a multi-state
34

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1 area, section 1701(c)(2)(C) shall only apply to the

2 area if all the States encompassed in the area by law

3 agree to the number to be substituted.

4 (b) ESTABLISHMENT OF HPPCS.—

5 (1) IN GENERAL.—Each State shall provide, by

6 legislation or otherwise, for the establishment by not

7 later than July 1, 1994, as a not-for-profit corpora8 tion, with respect to each HPPC area (specified

9 under subsection (a)) of a health plan purchasing

10 cooperative (each in this title referred to as a

11 ‘‘HPPC’’).

12 (2) INTERSTATE HPPC AREAS.—HPPCs with

13 respect to interstate areas specified under subsection

14 (a)(3) shall be established in accordance with rules

15 of the Health Care Standards Commission.

16 (c) COOPERATIVE BOARD.—

17 (1) ESTABLISHMENT.—Each HPPC shall be

18 governed by a Cooperative Board which shall be ini19 tially appointed by the Governor or other chief exec20 utive officer of the State (or as otherwise provided

21 under State law or by the Health Care Standards

22 Commission in the case of a HPPC described in sub23 section (b)(2)). The Cooperative Board for a HPPC

24 shall be responsible for ensuring the performance of

25 the duties of the HPPC under subsection (d).
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1 (2) ELECTION.—By not later than January 1,

2 1996, each HPPC shall provide under State law (or

3 in the case of a HPPC described in subsection

4 (b)(2), under rules established by the Health Care

5 Standards Commission) for the election of members

6 to the Cooperative Board from among eligible indi7 viduals who are enrolled in an accountable health

8 plan offered by the HPPC and who do not receive

9 remuneration from the HPPC or any such account10 able health plan for any services provided.

11 (3) LIMITATION ON COMPENSATION.—A HPPC

12 shall not provide compensation to members of the

13 Cooperative Board other than reimbursement for

14 reasonable and necessary expenses incurred in the

15 performance of their duties as members of the Coop16 erative Board.

17 (d) DUTIES OF HPPCS.—

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

19 each HPPC shall—

20 (A) enter into agreements with accountable

21 health plans under section 1102;

22 (B) enter into agreements with small em23 ployers under section 1103;
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1 (C) offer enrollment and enroll individuals

2 under accountable health plans, in accordance

3 with section 1104;

4 (D) charge, receive, and forward adjusted

5 premiums, in accordance with section 1105, in6 cluding reconciling low-income assistance

7 among accountable health plans;

8 (E) provide for coordination with other

9 HPPCs, in accordance with section 1106;

10 (F) provide for establishment of a com11 plaint process and appointment of an ombuds12 man, in accordance with section 1107;

13 (G) conduct and analyze surveys of en14 rollee satisfaction and monitor enrollee

15 disenrollment, in accordance with section 1108;

16 and

17 (H) carry out other functions provided for

18 under this title.

19 (2) LIMITATION ON ACTIVITIES.—A HPPC

20 shall not—

21 (A) perform any activity (including review,

22 approval, or enforcement) relating to payment

23 rates for providers;

24 (B) except as specifically provided under

25 sections 1102, 1105, or 1106(c), perform any
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1 activity (including review, approval, or enforce2 ment) relating to premium rates for health

3 plans;

4 (C) perform any activity (including reg5 istration or enforcement) relating to compliance

6 of accountable health plans with the require7 ments of part 1 of subtitle C (other than as re8 quired to carry out its specific duties under this

9 subtitle or under section 1305(c)(2));

10 (D) discriminate among such plans, other

11 than on the basis of the performance of such

12 plans under this title, as determined in accord13 ance with standards established by the Health

14 Care Standards Commission under this title;

15 (E) assume financial risk in relation to any

16 such plan; or

17 (F) perform other activities identified by

18 the Health Care Standards Commission as

19 being inconsistent with the performance of its

20 duties under paragraph (1).

21 (e) PERFORMANCE OF DUTIES.—

22 (1) IN GENERAL.—If the Health Care Stand23 ards Commission finds that a HPPC is not carrying

24 out its duties as required under subsection (d), the

25 Commission shall notify the Cooperative Board of
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1 the HPPC, and the Governor (or other chief execu2 tive officer) of each State in which the HPPC oper3 ates, of such finding and permit the Board an op4 portunity to take such action as may be necessary

5 for the HPPC to carry out such duties.

6 (2) CORRECTIVE ACTION.—If, after such an op7 portunity, the deficiency has not been corrected, the

8 Health Care Standards Commission may—

9 (A) order the HPPC to hold a new election

10 for members of the Cooperative Board, and

11 (B) take such other action as may be ap12 propriate in order to assure the performance of

13 such duties.

14 (3) PERFORMANCE CRITERIA.—

15 (A) DEVELOPMENT.—The Health Care

16 Standards Commission shall develop criteria re17 lating to HPPC performance of duties. Such

18 criteria shall include criteria relating to the fol19 lowing:

20 (i) OVERHEAD.—The HPPC overhead

21 percentage (computed under section

22 1105(b)(2)) for the HPPC.

23 (ii) FLOAT.—The average period (de24 scribed in section 1102(d)(2)) between the
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1 HPPC’s receipt and payment of funds re2 ceived.

3 (iii) SATISFACTION OF ELIGIBLE INDI4 VIDUALS.—The satisfaction of eligible indi5 viduals with the performance of the HPPC

6 (as measured under surveys under section

7 1108).

8 (iv) ENROLLMENT OF AT RISK INDI9 VIDUALS.—The effectiveness of the

10 HPPC’s activities under section

11 1102(b)(3) in enrolling individuals who are

12 eligible for low-income assistance or who

13 reside in medically underserved areas.

14 (B) REPORT.—Each HPPC shall report to

15 the Health Care Standards Commission, at

16 such time and in such manner as the Commis17 sion specifies, such information as the Commis18 sion may require in order to evaluate the per19 formance of the HPPC in accordance with the

20 criteria developed under subparagraph (A).

21 (C) PUBLICATION.—The Health Care

22 Standards Commission shall publish annually a

23 report that provides a comparison of the rel24 ative performance of each HPPC, based on

25 such criteria.
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1 (f) EDUCATION AND DEVELOPMENT GRANTS.—

2 There are authorized to be appropriated $25,000,000 for

3 fiscal year 1994 for grants to assist States in the develop4 ment of HPPCs.

5 SEC. 1102. AGREEMENTS WITH ACCOUNTABLE HEALTH

6 PLANS (AHPS).

7 (a) AGREEMENTS.—

8 (1) OPEN AHPS.—Each HPPC for a HPPC

9 area shall enter into an agreement under this section

10 with each open accountable health plan (described in

11 section 1701(b)(4)(B)) that serves residents of the

12 area. Each such agreement under this section shall

13 include (as specified by the Health Care Standards

14 Commission) provisions consistent with the require15 ments of the succeeding subsections of this section.

16 A HPPC may not terminate such an agreement ex17 cept as provided in paragraph (3)(A).

18 (2) CLOSED AHPS.—Each HPPC for a HPPC

19 area shall enter into a special agreement under this

20 paragraph with each closed AHP that serves resi21 dents of the area, in order to carry out subsection

22 (e). Except as otherwise specifically provided, any

23 reference in this Act to an agreement under this sec24 tion shall not be considered to be a reference to an

25 agreement under this paragraph.
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1 (3) TERMINATION OF AGREEMENT.—In accord2 ance with regulations of the Health Care Standards

3 Commission—

4 (A) the HPPC may terminate an agree5 ment under paragraph (1) or (2) if—

6 (i) the AHP’s registration under part

7 1 of subtitle C is revoked, or

8 (ii) the AHP is determined (in accord9 ance with rules established by the Commis10 sion) substantially to have violated the con11 ditions of such agreement; and

12 (B) the AHP may terminate either such

13 agreement only upon sufficient notice in order

14 to provide for the orderly enrollment of enroll15 ees under other AHPs.

16 The Commission shall establish a process for the

17 termination of agreements under this paragraph.

18 (b) OFFER OF ENROLLMENT OF INDIVIDUALS.—

19 (1) IN GENERAL.—Under an agreement under

20 this section between an AHP and a HPPC, the

21 HPPC shall offer, on behalf of the AHP, enrollment

22 in the AHP to eligible individuals (as defined in sec23 tion 1701(a)(1)) at the applicable monthly premium

24 rates (specified under section 1105(a)).
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1 (2) TIMING OF OFFER.—The offer of enroll2 ment shall be available—

3 (A) to eligible individuals who are employ4 ees of small employers, during the 30-day pe5 riod beginning on the date of commencement of

6 employment, and

7 (B) to other eligible individuals, at such

8 time (including an annual open enrollment pe9 riod specified by the Health Care Standards

10 Commission) as the HPPC shall specify, con11 sistent with section 1104(b).

12 (3) OUTREACH.—In carrying out the respon13 sibilities under paragraph (1), a HPPC shall per14 form such activities, including outreach, as may be

15 necessary to seek actively the enrollment of eligible

16 individuals, including individuals who are eligible for

17 low-income assistance or who reside in medically un18 derserved areas.

19 (c) RECEIPT OF GROSS PREMIUMS.—

20 (1) IN GENERAL.—Under an agreement under

21 this section between a HPPC and an AHP, payment

22 of premiums shall be made, by individuals or em23 ployers on their behalf, directly to the HPPC for the

24 benefit of the AHP.
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1 (2) TIMING OF PAYMENT OF PREMIUMS.—Pre2 miums shall be payable on a monthly basis (or, at

3 the option of an eligible individual described in para4 graph (2)(B), on a quarterly basis). The HPPC may

5 provide for penalties and grace periods for late pay6 ment.

7 (3) AHPS RETAIN RISK OF NONPAYMENT.—

8 Nothing in this subsection shall be construed as

9 placing upon a HPPC any risk associated with fail10 ure to make prompt payment of premiums (other

11 than the portion of the premium representing the

12 HPPC overhead amount). Each eligible individual

13 who enrolls with an AHP through the HPPC is lia14 ble to the AHP for premiums.

15 (d) FORWARDING OF ADJUSTED PREMIUMS.—

16 (1) IN GENERAL.—Under an agreement under

17 this section between an AHP and a HPPC, subject

18 to section 1205(c), the HPPC shall forward to each

19 AHP in which an eligible individual in an enrollee

20 unit has been enrolled an amount equal to the sum

21 of—

22 (A) the standard premium rate (estab23 lished under section 1205) received for the pre24 mium class, and
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1 (B) the product of (i) the lowest standard

2 premium rate offered by an open AHP for the

3 premium class, and (ii) a risk-adjustment factor

4 (determined and adjusted in accordance with

5 section 1306(b)) for the enrollee unit.

6 (2) PAYMENTS.—Payments shall be made by

7 the HPPC under this subsection within a period

8 (specified by the Health Care Standards Commission

9 and not to exceed 3 business days) after the time of

10 receipt of the premium from the employer of the eli11 gible individual or the eligible individual, as the case

12 may be, based on estimates of applicable risk-adjust13 ment factors. Subsequent payments shall be ad14 justed as appropriate to reflect differences between

15 the payments that were made based on estimates

16 and the payments that should have been made based

17 on reported (and audited) information.

18 (3) ADJUSTMENTS FOR DIFFERENCES IN

19 NONPAYMENT RATES.—In accordance with rules es20 tablished by the Health Care Standards Commis21 sion, each agreement between an AHP and a HPPC

22 under this section shall provide that, if a HPPC de23 termines that the rates of nonpayment of premiums

24 during grace periods established under subsection

25 (c)(2) vary appreciably among AHPs, the HPPC
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1 shall provide for such adjustments in the payments

2 made under this subsection as will place each AHP

3 in the same position as if the rates of nonpayment

4 were the same.

5 (e) RECONCILIATION OF LOW-INCOME ASSISTANCE

6 AMONG ACCOUNTABLE HEALTH PLANS.—

7 (1) IN GENERAL.—Each agreement between an

8 AHP and a HPPC under this section (including a

9 special agreement entered into under subsection

10 (a)(2)) shall provide for such payments from the

11 AHP to the HPPC, and such payments from the

12 HPPC to the AHP, as the Health Care Standards

13 Commission determines is necessary in order to as14 sure the equitable distribution among all AHPs, na15 tionwide, of reductions in premiums and cost-sharing

16 under section 1205(c) and section 1202(c), respec17 tively.

18 (2) INTER-HPPC COORDINATION.—For inter19 HPPC coordination of reconciliation processes under

20 paragraph (1), see section 1106(c).

21 (f) NOTICE OF DISENROLLMENT.—Within 3 business

22 days after receiving a notice of disenrollment of an individ23 ual from an AHP offered by a HPPC, the HPPC shall

24 notify the AHP of such notice.
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1 (g) LIMITATION ON EMPLOYMENT.—An AHP agrees

2 not to employ (or enter into a consulting or similar con3 tract with) any individual who was, within the previous

4 2 years, an employee of the HPPC with which the AHP

5 has an agreement in effect under this section.

6 (h) STANDARDS FOR OPERATIONAL SOFTWARE.—

7 The Health Care Standards Commission shall establish

8 standards for operational software that may be used by

9 HPPCs and AHPs in carrying out agreements under this

10 section.

11 SEC. 1103. AGREEMENTS WITH SMALL EMPLOYERS.

12 (a) IN GENERAL.—Each HPPC for a HPPC area

13 shall enter into an agreement under this section with each

14 small employer that employs individuals in the area. Each

15 agreement under this section, between a small employer

16 and a HPPC shall include (as specified by the Health Care

17 Standards Commission) provisions consistent with the re18 quirements specified in the succeeding subsections of this

19 section.

20 (b) FORWARDING INFORMATION ON ELIGIBLE EM21 PLOYEES.—

22 (1) IN GENERAL.—Under an agreement under

23 this section between a small employer and a HPPC,

24 the employer must forward to the appropriate

25 HPPC the name and address (and other identifying
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1 information required by the HPPC) of each em2 ployee (including part-time and seasonal employees).

3 (2) APPROPRIATE HPPC.—In this subsection,

4 the term ‘‘appropriate HPPC’’ means the HPPC for

5 the principal place of business of the employer or (at

6 the option of an employee) the HPPC serving the

7 place of residence of the employee.

8 (c) PAYROLL DEDUCTION.—

9 (1) IN GENERAL.—Under an agreement under

10 this section between a small employer and a HPPC,

11 if the HPPC notifies the employer that an eligible

12 employee is enrolled in an AHP through the HPPC,

13 the employer shall provide for—

14 (A) the deduction, from the employee’s

15 wages or other compensation, of the amount of

16 the premium due (less the amount of any em17 ployer contribution), and

18 (B) payment of such amount (including

19 any such contribution) to the HPPC.

20 In the case of an employee who is paid wages or

21 other compensation on a monthly or more frequent

22 basis, an employer shall not be required to provide

23 for payment of amounts to a HPPC other than at

24 the same time at which the amounts are deducted

25 from wages or other compensation. In the case of an
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1 employee who is paid wages or other compensation

2 less frequently than monthly, an employer may be

3 required to provide for payment of amounts to a

4 HPPC on a monthly basis.

5 (2) ADDITIONAL PREMIUMS.—If the sum of the

6 amount of the employer contribution and the

7 amount withheld under paragraph (1) is not suffi8 cient to cover the entire cost of the premiums, the

9 employee shall be responsible for paying directly to

10 the HPPC the difference between the amount of

11 such premiums and such sum.

12 (d) LIMITED EMPLOYER OBLIGATIONS.—Nothing in

13 this section shall be construed as—

14 (1) requiring an employer to provide directly for

15 enrollment of eligible employees under an account16 able health plan or other health plan,

17 (2) requiring an employer to make, or prevent18 ing an employer from making, information about

19 such plans available to such employees, or

20 (3) requiring an employer to make, or prevent21 ing an employer from making, an employer contribu22 tion for coverage of such individuals under such a

23 plan.
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1 SEC. 1104. ENROLLING INDIVIDUALS IN ACCOUNTABLE

2 HEALTH PLANS THROUGH A HPPC.

3 (a) OFFER OF ENROLLMENT.—

4 (1) IN GENERAL.—Each HPPC shall offer in

5 accordance with this section eligible individuals the

6 opportunity to enroll in an AHP for the HPPC area

7 in which the individual resides.

8 (2) FREEZING ENROLLMENT IN INSOLVENT

9 PLANS.—If a State superintendent of insurance,

10 State insurance commissioner, or other State official

11 with regulatory authority over an AHP has deter12 mined that the AHP is insolvent, a HPPC may dis13 continue offering enrollment in the AHP to individ14 uals not previously enrolled in the plan.

15 (b) ENROLLMENT PROCESS.—

16 (1) IN GENERAL.—Each HPPC shall establish

17 an enrollment (and disenrollment) process in accord18 ance with rules established by the Health Care

19 Standards Commission consistent with this sub20 section.

21 (2) INITIAL ENROLLMENT PERIOD.—For each

22 eligible individual, at the time the individual first be23 comes an eligible individual in a HPPC area of a

24 HPPC, there shall be an initial enrollment period (of

25 not less than 30 days) during which the individual

26 may enroll in an AHP.
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1 (3) GENERAL ENROLLMENT PERIOD.—Each

2 HPPC shall establish an annual period, of not less

3 than 30 days, during which eligible individuals may

4 enroll in an AHP or change the AHP in which the

5 individual is enrolled.

6 (4) SPECIAL ENROLLMENT PERIODS.—In the

7 case of individuals who—

8 (A) through marriage, divorce, birth or

9 adoption of a child, or similar circumstances,

10 experience a change in family composition, or

11 (B) experience a change in employment

12 status (including a significant change in the

13 terms and conditions of employment),

14 each HPPC shall provide for a special enrollment

15 period in which the individual is permitted to change

16 the individual or family basis of coverage or the

17 AHP in which the individual is enrolled. The cir18 cumstances under which such special enrollment pe19 riods are required and the duration of such periods

20 shall be specified by the Health Care Standards

21 Commission.

22 (5) TRANSITIONAL ENROLLMENT PERIOD.—

23 Each HPPC shall provide for a special transitional

24 enrollment period (during a period beginning in the

25 Fall of 1994 specified by the Health Care Standards
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1 Commission) during which eligible individuals may

2 first enroll.

3 (6) NO DUPLICATE ENROLLMENT.—No HPPC

4 shall permit an individual to be enrolled in more

5 than one AHP at a time.

6 (7) INDIVIDUAL ENROLLMENT OF FAMILY MEM7 BERS PERMITTED.—Nothing in this section shall be

8 construed as preventing an eligible individual who is

9 an eligible family member of an eligible employee or

10 other principal enrollee from electing to enroll on an

11 individual basis in a plan.

12 (c) ANALYSIS AND DISTRIBUTION OF COMPARATIVE

13 INFORMATION.—

14 (1) ANALYSIS OF INFORMATION.—Each HPPC

15 shall analyze the information reported under section

16 1203(a) on AHPs for which the HPPC is offering

17 enrollment (and may analyze such information on

18 closed AHPs serving residents of the HPPC area) in

19 order to distribute the information under paragraph

20 (2) in a form, consistent with section 1307(a)(2),

21 that permits the direct comparison of different

22 AHPs on the basis of the ability of the AHPs—

23 (A) to maintain and improve clinical

24 health, functional status, and well-being, and

25 (B) to satisfy enrolled individuals.
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1 Such comparison may also be made to show changes

2 in the performance of AHPs over time.

3 (2) DISTRIBUTION OF INFORMATION.—

4 (A) IN GENERAL.—Each HPPC shall dis5 tribute, to eligible individuals and employers,

6 information, in comparative form, on the prices,

7 health outcomes, and enrollee satisfaction of the

8 different AHPs for which it is offering enroll9 ment and may provide other information per10 taining to the quality of such AHPs. Such dis11 tribution shall occur at least annually before

12 each general enrollment period. Each HPPC

13 also shall make such information available to

14 other interested persons.

15 (B) ADDITIONAL INFORMATION.—Such in16 formation shall include—

17 (i) a summary of the analysis of infor18 mation collected under paragraph (1) and

19 information collected under section

20 1108(a)(2), and

21 (ii) a breakdown of the portion of

22 AHP premiums attributable to the HPPC

23 overhead amount (specified under section

24 1105(b)(3)).

25 (d) PERIOD OF COVERAGE.—
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1 (1) INITIAL ENROLLMENT PERIOD.—In the case

2 of an eligible individual who enrolls with an AHP

3 through a HPPC during an initial enrollment period,

4 coverage under the plan shall begin on such date

5 (not later than the first day of the first month that

6 begins at least 15 days after the date of enrollment)

7 as the Health Care Standards Commission shall

8 specify.

9 (2) GENERAL ENROLLMENT PERIODS.—In the

10 case of an eligible individual who enrolls with an

11 AHP through a HPPC during a general enrollment

12 period, coverage under the plan shall begin on the

13 first day of the first month beginning at least 15

14 days after the end of such period.

15 (3) SPECIAL ENROLLMENT PERIODS.—

16 (A) IN GENERAL.—In the case of an eligi17 ble individual who enrolls with an AHP during

18 a special enrollment period described in sub19 section (b)(4), coverage under the plan shall

20 begin on such date (not later than the first day

21 of the first month that begins at least 15 days

22 after the date of enrollment) as the Commission

23 shall specify, except that coverage of family

24 members shall begin as soon as possible on or
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1 after the date of the event that gives rise to the

2 special enrollment period.

3 (B) TRANSITIONAL SPECIAL ENROLLMENT

4 PERIOD.—In the case of an eligible individual

5 who enrolls with an AHP during the transi6 tional special enrollment period described in

7 subsection (b)(5), coverage under the plan shall

8 begin on January 1, 1995.

9 (4) MINIMUM PERIOD OF ENROLLMENT.—In

10 order to avoid adverse selection, each HPPC may re11 quire, consistent with rules of the Health Care

12 Standards Commission, that enrollments with AHPs

13 be for not less than a specified minimum enrollment

14 period (with exceptions permitted for such excep15 tional circumstances as the Commission may recog16 nize).

17 SEC. 1105. RECEIPT OF PREMIUMS.

18 (a) ENROLLMENT CHARGE.—The amount charged by

19 a HPPC for coverage under an AHP in a HPPC area

20 is equal to the sum of—

21 (1) the amount of the premium applicable to

22 the individual under section 1205(a)(1)(B) for such

23 coverage, and
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1 (2) the HPPC overhead amount established

2 under subsection (b)(3) for enrollment of individuals

3 in the HPPC area.

4 (b) HPPC OVERHEAD AMOUNT.—

5 (1) HPPC BUDGET.—Each HPPC shall estab6 lish a budget for each year for each HPPC area in

7 accordance with regulations established by the

8 Health Care Standards Commission.

9 (2) HPPC OVERHEAD PERCENTAGE.—The

10 HPPC shall compute for each HPPC area an over11 head percentage which, when applied for each en12 rollee unit (whether enrolled on a family or individ13 ual basis) to the weighted average of the standard

14 premium amounts for premium classes for enroll15 ment on an individual basis (taking into account any

16 reduction in premiums attributable to low-income as17 sistance under section 2002), will provide for reve18 nues equal to the budget for the HPPC area for the

19 year. Such percentage may in no case exceed 1 per20 centage point.

21 (3) HPPC OVERHEAD AMOUNT.—The HPPC

22 overhead amount for enrollment, whether on an indi23 vidual or family basis, in an AHP for a HPPC area

24 for a month is equal to the applicable HPPC over25 head percentage (computed under paragraph (2))
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1 multiplied by the weighted average of the standard

2 premium amounts for premium classes for enroll3 ment on an individual basis under the AHP for the

4 month (taking into account any reduction in pre5 miums attributable to low-income assistance under

6 section 2002).

7 SEC. 1106. COORDINATION AMONG HPPCS.

8 (a) IN GENERAL.—The Health Care Standards Com9 mission shall establish rules consistent with this section

10 for—

11 (1) coordination among HPPCs in cases where

12 small employers are located in one HPPC area and

13 their employees reside in a different HPPC area

14 (and are eligible for enrollment with AHPs located

15 in the other area), and

16 (2) coordination among HPPCs in the low-in17 come assistance reconciliation processes under sec18 tion 1102(e)(1).

19 The Commission shall establish standards for operational

20 software in order to promote coordination among HPPCs

21 under this title.

22 (b) COORDINATION RULES.—Under the rules estab23 lished under subsection (a)(1)—
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1 (1) HPPC FOR EMPLOYER.—The HPPC for

2 the principal place of business of a small employer

3 shall be responsible—

4 (A) for providing information to the em5 ployer’s employees on AHPs for areas in which

6 employees reside;

7 (B)(i) for enrolling employees under the

8 AHP selected (even if the AHP selected is not

9 in the same HPPC area as the HPPC) and (ii)

10 if the AHP chosen is not in the same HPPC

11 area as the HPPC, for forwarding the enroll12 ment information to the HPPC for the area in

13 which the AHP selected is located; and

14 (C) in the case of premiums to be paid

15 through payroll deduction, or employer con16 tribution, or both, to receive such premiums

17 and forward them to the HPPC for the area in

18 which the AHP selected is located.

19 (2) HPPC FOR EMPLOYEE RESIDENCE.—The

20 HPPC for the HPPC area in which an employee re21 sides shall be responsible for providing other HPPCs

22 with information concerning AHPs being offered in

23 such HPPC area.

24 (c) COORDINATION OF RECONCILIATION OF LOW-IN25 COME ASSISTANCE.—Under the rules established under
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1 subsection (a)(2), the Commission shall provide for such

2 payments among the different HPPCs as the Commission

3 determines is necessary in order to assure the equitable

4 distribution among AHPs in different HPPC areas of ad5 justments in premiums and cost-sharing under section

6 1205(c) and section 1202(c), respectively.

7 SEC. 1107. COMPLAINT PROCESS; OMBUDSMAN.

8 (a) COMPLAINT PROCESS.—Each HPPC shall estab9 lish a process for the receipt and disposition of complaints

10 regarding the performance of its duties.

11 (b) OMBUDSMAN.—

12 (1) IN GENERAL.—Each HPPC shall provide—

13 (A) for the appointment of an ombudsman,

14 and

15 (B) for a reasonable salary and staff for

16 the ombudsman.

17 (2) DUTIES AND AUTHORITIES.—Each ombuds18 man shall have the duty and authority to do the fol19 lowing:

20 (A) RELATING TO HPPCS.—(i) To inves21 tigate complaints regarding the failure of a

22 HPPC to perform its duties.

23 (ii) To assist AHPs and eligible individuals

24 in resolving grievances with the HPPC.
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1 (iii) To issue public reports and reports to

2 the Health Care Standards Commission on the

3 HPPC’s performance of such duties.

4 (B) RELATING TO AHPS.—(i) To inves5 tigate complaints concerning the failure of an

6 AHP to meet the applicable requirements of

7 part 1 of subtitle C.

8 (ii) To assist enrollees in AHPs in resolv9 ing grievances with such plans.

10 (iii) To issue public reports and reports to

11 the Health Care Standards Commission on any

12 finding that an AHP has failed to meet the ap13 plicable requirements of part 1 of subtitle C.

14 (3) ACCESS TO INFORMATION.—The HPPC

15 shall provide the ombudsman and the ombudsman’s

16 staff with access to such information as may be nec17 essary to carry out such duties.

18 SEC. 1108. ENROLLEE SATISFACTION SURVEYS; MONITOR19 ING ENROLLEE DISENROLLMENT.

20 (a) ENROLLEE SATISFACTION SURVEYS.—

21 (1) IN GENERAL.—Each HPPC, using a stand22 ard survey instrument prescribed by the Health Care

23 Standards Commission, shall collect information on

24 the satisfaction of eligible individuals with—

25 (A) the performance of the HPPC, and
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1 (B) the performance of the AHP in which

2 they are enrolled.

3 (2) ANALYSIS.—Each HPPC shall—

4 (A) analyze the information collected under

5 paragraph (1),

6 (B) submit to the Health Care Standards

7 Commission an annual report that summarizes

8 such analysis, and

9 (C) make a summary of such analysis

10 available to enrollees under section 1104(c)(2).

11 (b) MONITORING ENROLLEE DISENROLLMENT.—

12 Each HPPC shall monitor enrollee disenrollment from

13 AHPs in order to determine whether there is a pattern

14 of disenrollment which does not reflect the distribution of

15 age, income, health condition, place of residence, and other

16 potential risk characteristics of their enrollees. If a HPPC

17 determines that such a pattern exists, the HPPC shall

18 provide the Health Care Standards Commission with such

19 information on such pattern as the Commission may speci20 fy and may petition under section 1305(c)(2) for the rev21 ocation of the registration of the AHP.
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1 Subtitle C—Accountable Health

2 Plans (AHPs)

3 PART 1—REQUIREMENTS FOR ACCOUNTABLE

4 HEALTH PLANS

5 SEC. 1201. REGISTRATION PROCESS; QUALIFICATIONS.

6 (a) IN GENERAL.—The Health Care Standards Com7 mission shall provide a process whereby a health plan (as

8 defined in section 1701(c)(1)) may be registered with the

9 Commission by its sponsor as an accountable health plan.

10 Such a registered AHP is authorized to allocate its re11 sources (except as otherwise specifically required under

12 this subtitle) to maximize the health of its enrollees.

13 (b) QUALIFICATIONS.—In order to be eligible to be

14 registered, a plan must—

15 (1) provide, in accordance with section 1202,

16 for coverage of the uniform set of effective benefits

17 specified by the Commission, for adjustments in

18 cost-sharing in the case of low-income individuals,

19 and for meeting quality standards established by the

20 Commission;

21 (2) provide, in accordance with section 1203,

22 for the collection and provision to the Commission

23 and HPPCs of certain information regarding its en24 rollees and provision of services;
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1 (3) not discriminate in enrollment or benefits,

2 as required under section 1204;

3 (4) establish standard premiums for the uni4 form set of effective benefits, in accordance with sec5 tion 1205;

6 (5) meet financial solvency requirements, in ac7 cordance with section 1206;

8 (6) meet requirements relating to grievance pro9 cedures, physician incentive plans, advance direc10 tives, and agent commissions, in accordance with

11 section 1207;

12 (7) in the case of an open plan (as defined in

13 section 1701(b)(4)(B)), meet certain additional re14 quirements under section 1208 (relating to offering

15 of plans, acceptance of enrollees, and participation

16 as a plan under the medicare program and under

17 the Federal employees health benefits program);

18 (8) provide for coordination of benefits with

19 low-income assistance under subtitle A of title II, in

20 accordance with section 1209;

21 (9) provide for any required medicare adjust22 ment payments, in accordance with section 1210;

23 (10) pay certain premiums to the National

24 Medical Education Fund, in accordance with section

25 1211; and
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1 (11) pay registration fees imposed under sec2 tions 1303(d)(1) and 1304(d).

3 (c) MINIMUM SIZE FOR CLOSED PLANS.—No plan

4 may be registered as a closed AHP under this section un5 less the plan covers at least a number of employees greater

6 than the applicable number of employees specified in or

7 under section 1701(c)(2).

8 SEC. 1202. SPECIFIED UNIFORM SET OF EFFECTIVE BENE9 FITS; REDUCTION IN COST-SHARING FOR

10 LOW-INCOME INDIVIDUALS; QUALITY STAND11 ARDS.

12 (a) BENEFITS.—The Health Care Standards Com13 mission shall not accept the registration of a health plan

14 as an AHP unless, subject to subsection (b), the plan—

15 (1) offers only the uniform set of effective bene16 fits, established under section 1302(a)(1);

17 (2) has entered into arrangements with a suffi18 cient number, distribution, and variety of providers

19 to assure that the uniform set of effective benefits

20 is—

21 (A) available and accessible to each en22 rollee, within the area served by the plan, with

23 reasonable promptness and in a manner which

24 assures continuity, and
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1 (B) when medically necessary, available

2 and accessible twenty-four hours a day and

3 seven days a week,

4 without imposing cost-sharing in excess of the cost5 sharing described in paragraph (4);

6 (3) provides for the application of coverage

7 standards, with respect to the uniform set of effec8 tive benefits, which are disclosed by the plan to plan

9 enrollees (in a manner specified by the Commission)

10 and which are consistent with coverage criteria

11 under section 1302(b) (as interpreted by the Com12 mission);

13 (4) if it is a network plan (as defined in section

14 1222(b)(1)), (A) selects providers of each type of

15 good or service offered by the plan based on a com16 petitive criteria, including price, quality, and services

17 offered, and (B) publicizes and makes available,

18 upon request, before the selection of participating

19 providers such competitiive criteria;

20 (5)(A) provides, subject to subsection (c), for

21 imposition of uniform cost-sharing, specified under

22 such section as part of such set of benefits; and

23 (B) does not permit providers participating in

24 the plan under paragraph (2) to charge for services
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1 included in the uniform set of effective benefits serv2 ices amounts in excess of such cost-sharing; and

3 (6) does not accept enrollment of an individual

4 who is enrolled under another AHP unless, as of the

5 effective date of the enrollment, the enrollment

6 under the other plan will be terminated.

7 (b) TREATMENT OF ADDITIONAL BENEFITS.—

8 (1) IN GENERAL.—Subject to paragraphs (2)

9 and (3), subsection (a) shall not be construed as

10 preventing an AHP from offering benefits in addi11 tion to the uniform set of effective benefits, if such

12 additional benefits are offered, and priced, sepa13 rately from the benefits described in subsection (a).

14 (2) NO DUPLICATIVE BENEFITS OR COVERAGE

15 OF COST-SHARING.—An AHP or other entity may

16 not offer under paragraph (1) or otherwise any addi17 tional benefits or plan that has the effect—

18 (A) of duplicating the benefits required

19 under subsection (a), or

20 (B) of reducing the cost-sharing below the

21 uniform cost-sharing.

22 The Health Care Standards Commission may file an

23 action, in any appropriate court, to enjoin an entity

24 (other than an AHP) that violates this paragraph.
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1 (c) REDUCTION IN COST-SHARING FOR LOW-INCOME

2 INDIVIDUALS.—In the case of a low-income individual (as

3 defined in section 2009(a)(1)) eligible for cost-sharing as4 sistance under section 2003(a) and enrolled with an AHP,

5 the AHP shall reduce the cost-sharing otherwise applica6 ble to amounts that are nominal (as specified for purposes

7 of section 2003(a)(1)).

8 (d) LIMITATION ON IMPOSITION OF COST-SHAR9 ING.—In order to assure that providers of services for

10 which benefits are available through an AHP do not im11 pose cost-sharing in excess of that permitted under sub12 section (a)(5), each AHP may not provide payment for

13 services (other than emergency services) furnished by a

14 provider with an arrangement described in subsection

15 (a)(2) to meet the uniform set of effective benefits unless

16 the provider has agreed (in a manner specified by the

17 Health Care Standards Commission) not to impose cost18 sharing in excess of that so specified.

19 (e) QUALITY STANDARDS.—The Health Care Stand20 ards Commission shall establish standards relating to the

21 minimum level of acceptable quality for an AHP’s provi22 sion of the uniform set of effective benefits. In order for

23 a plan to be registered under this subtitle, the plan must

24 agree to provide benefits in a manner that complies with

25 such standards.
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1 SEC. 1203. COLLECTION AND PROVISION OF STANDARD2 IZED INFORMATION.

3 (a) PROVISION OF INFORMATION.—

4 (1) IN GENERAL.—Each AHP must provide the

5 applicable HPPC and the Health Care Standards

6 Commission (at a time, not less frequently than an7 nually, and in an electronic, standardized form and

8 manner specified by the Commission) such informa9 tion as the Commission determines to be necessary,

10 consistent with this subsection and sections 1104(c)

11 and 1307, to forward payments to AHPs under sec12 tion 1102(d) and to evaluate the performance of the

13 AHP in providing the uniform set of effective bene14 fits to enrollees in each HPPC area.

15 (2) INFORMATION TO BE INCLUDED.—Subject

16 to paragraph (3), information to be provided under

17 this subsection shall include at least the following:

18 (A) Information on the characteristics of

19 enrollees that may affect their need for or use

20 of health services and the determination of risk21 adjustment factors for enrollee units.

22 (B) Information on the types of treatments

23 and outcomes of treatments with respect to the

24 clinical health, functional status, and well-being

25 of enrollees.
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1 (C) Information on health care expendi2 tures, volume and prices of procedures, and use

3 of specialized centers of care (for which infor4 mation is submitted under section 1308).

5 (D) Information on the flexibility per6 mitted by plans to enrollees in their selection of

7 providers.

8 (3) SPECIAL TREATMENT.—The Commission

9 may waive the provision of such information under

10 paragraph (2), or require such other information, as

11 the Commission finds appropriate in the case of a

12 newly established AHP for which such information

13 is not available.

14 (b) CONDITIONING CERTAIN PROVIDER PAY15 MENTS.—

16 (1) IN GENERAL.—In order to assure the collec17 tion of all information required from the direct pro18 viders of services for which benefits are available

19 through an AHP, each AHP may not provide pay20 ment for services (other than emergency services)

21 furnished by a provider to meet the uniform set of

22 effective benefits unless the provider has given the

23 AHP (or has given directly to the Health Care

24 Standards Commission and the applicable HPPC)
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1 standard information (specified by the Commission)

2 respecting the services.

3 (2) FORWARDING INFORMATION.—If informa4 tion under paragraph (1) is given to the AHP, the

5 AHP is responsible for forwarding the information

6 to the Commission and the applicable HPPC.

7 (c) AUDITING.—Each AHP shall provide, in accord8 ance with standards established by the Commission, for

9 the auditing of information provided under this section.

10 SEC. 1204. PROHIBITION OF DISCRIMINATION BASED ON

11 HEALTH STATUS FOR CERTAIN CONDITIONS;

12 LIMITATION ON PRE-EXISTING CONDITION

13 EXCLUSIONS.

14 (a) IN GENERAL.—Except as provided under sub15 section (b), an AHP may not deny, limit, or condition the

16 coverage under (or benefits of) the plan based on the

17 health status of an individual, claims experience of an indi18 vidual, receipt of health care by an individual, medical his19 tory of an individual, receipt of public subsidies by an indi20 vidual, lack of evidence of insurability of an individual, or

21 any other characteristic of the individual that may relate

22 to the need for health care services.

23 (b) TREATMENT OF PREEXISTING CONDITION EX24 CLUSIONS FOR SERVICES.—
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1 (1) IN GENERAL.—Subject to the succeeding

2 provisions of this subsection, an AHP may exclude

3 coverage with respect to services related to treat4 ment of a preexisting condition, but the period of

5 such exclusion may not exceed 6 months beginning

6 on the date of coverage under the plan. The exclu7 sion of coverage shall not apply to services furnished

8 to newborns and to pregnant women.

9 (2) CREDITING OF PREVIOUS COVERAGE.—

10 (A) IN GENERAL.—An AHP shall provide

11 that if an enrollee is in a period of continuous

12 coverage (as defined in subparagraph (B)(i)) as

13 of the date of initial coverage under such plan,

14 any period of exclusion of coverage with respect

15 to a preexisting condition for such services or

16 type of services shall be reduced by 1 month for

17 each month in the period of continuous cov18 erage.

19 (B) DEFINITIONS.—As used in this para20 graph:

21 (i) PERIOD OF CONTINUOUS COV22 ERAGE.—

23 (I) IN GENERAL.—The term ‘‘pe24 riod of continuous coverage’’ means

25 the period beginning on the date an
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1 individual is enrolled under an AHP

2 and ends on the date the individual is

3 not so enrolled for a continuous period

4 of more than 3 months.

5 (II) TRANSITIONAL AMNESTY AT

6 TIME OF INITIAL ENROLLMENT.—For

7 purposes of this clause, each individ8 ual who enrolls in an AHP before

9 July 1, 1995, is considered to have

10 had a period of continuous coverage

11 during the 6 months ending January

12 1, 1995.

13 (ii) PREEXISTING CONDITION.—The

14 term ‘‘preexisting condition’’ means, with

15 respect to coverage under an AHP, a con16 dition which has been diagnosed or treated

17 during the 3-month period ending on the

18 day before the first date of such coverage

19 (without regard to any waiting period).

20 (3) LIMITATION TO UNIFORM SET OF EFFEC21 TIVE BENEFITS.—This subsection shall not apply to

22 treatment which is not within the uniform set of ef23 fective benefits.

24 (4) SPECIAL RULE FOR CERTAIN HEALTH

25 MAINTENANCE ORGANIZATIONS.—A health mainte-
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1 nance organization that is an AHP shall not be con2 sidered as failing to meet the requirements of sec3 tion 1301 of the Public Health Service Act notwith4 standing that it provides for an exclusion of the type

5 described in paragraph (1) so long as such exclusion

6 is applied consistent with the previous provisions of

7 this subsection.

8 SEC. 1205. USE OF STANDARD PREMIUMS.

9 (a) STANDARD PREMIUMS FOR OPEN AHPS.—

10 (1) IN GENERAL.—

11 (A) ESTABLISHMENT.—Subject to sub12 section (c), each open AHP shall establish a

13 standard premium for the uniform set of effec14 tive benefits within each HPPC area in which

15 the plan is offered.

16 (B) APPLICABLE PREMIUM.—The amount

17 of premium applicable for all individuals within

18 a premium class (established under paragraph

19 (2)) is the standard premium amount multiplied

20 by the premium class factor specified by the

21 Commission for that class under paragraph

22 (2)(B).

23 (C) UNIFORMITY WITHIN A YEAR.—Within

24 a HPPC area for individuals within a premium

25 class for months in a calendar year, the stand-
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1 ard premium for all individuals in the class for

2 each month shall be the same.

3 (2) PREMIUM CLASSES.—

4 (A) IN GENERAL.—The Health Care

5 Standards Commission shall establish premium

6 classes—

7 (i) based on types of enrollment (de8 scribed in section 1701(c)(6)), and

9 (ii) within each type of enrollment,

10 based on the age of the principal enrollee

11 (or based on the age of another family

12 member of such enrollee in such cases as

13 the Commission may provide).

14 In carrying out clause (ii), the Commission

15 shall establish reasonable age bands within

16 which premium amounts will not vary for a type

17 of enrollment.

18 (B) PREMIUM CLASS FACTORS.—

19 (i) IN GENERAL.—For each premium

20 class established under subparagraph (A),

21 the Health Care Standards Commission

22 shall establish a premium class factor that

23 reflects, subject to clause (ii), the relative

24 actuarial value of benefits for that class

25 compared to the actuarial value of benefits
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1 for an average class. The weighted average

2 of the premium class factors shall be 1.

3 Such premium class factors shall be com4 puted based on the actuarial value of bene5 fits for such population group within the

6 class (which shall include the population el7 igible to enroll with open AHPs through

8 HPPCs) as the Commission determines to

9 be appropriate.

10 (ii) LIMIT ON VARIATION IN PREMIUM

11 CLASS FACTORS WITHIN A TYPE OF EN12 ROLLMENT.—The highest premium class

13 factor within a type of enrollment may not

14 exceed twice the lowest premium class fac15 tor for that type of enrollment. The pre16 vious sentence shall not apply to premiums

17 imposed pursuant to a risk-sharing con18 tract under section 1876 of the Social Se19 curity Act.

20 (3) METHODOLOGY.—The amount of premiums

21 forwarded to AHPs is adjusted in accordance with

22 section 1102(d)(1).

23 (b) STANDARD PREMIUMS FOR CLOSED AHPS.—

24 (1) ESTABLISHMENT.—Subject to subsection

25 (c) and paragraph (3), each closed AHP shall estab-
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1 lish a standard premium for the uniform set of ef2 fective benefits within each HPPC area in which the

3 plan is offered.

4 (2) APPLICATION BY PREMIUM CLASS.—Subject

5 to paragraph (3)—

6 (A) the amount of premium applicable for

7 all individuals within a premium class is the

8 standard premium amount multiplied by the

9 premium class factor specified by the Commis10 sion for that class under subsection (a)(2)(B),

11 and

12 (B) within a HPPC area for individuals

13 within a premium class, the standard premium

14 for all individuals in the premium class shall be

15 the same.

16 (3) COMMUNITY RATING PERMITTED.—

17 (A) SAME RATES WITHIN TYPE OF EN18 ROLLMENT WITHOUT REGARD TO AGE.—A

19 closed AHP may elect (in a manner specified by

20 the Health Care Standards Commission) to

21 apply this subsection on the basis of type of en22 rollment rather than premium class. In such

23 case, all references in this subsection to pre24 mium class are deemed a reference to type of

25 enrollment and the reference to premium class
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1 factor (for a type of enrollment) is the weighted

2 average of such factors for the plan within the

3 type of enrollment.

4 (B) COMMUNITY RATING ACROSS HPPC

5 AREAS.—A closed AHP may elect (in a manner

6 specified by the Commission) to apply this sub7 section by treating two or more HPPC areas as

8 a single HPPC area. In such case, subject to

9 subparagraph (A), the premium class factor to

10 be applied shall be the weighted average of such

11 factors for the plan for the HPPC areas in12 volved.

13 (c) ADJUSTMENT OF PREMIUMS FOR LOW-INCOME

14 INDIVIDUALS.—

15 (1) VERY LOW-INCOME INDIVIDUALS.—In the

16 case of a very low-income individual (as defined in

17 section 2009(a)(3)) eligible for premium assistance

18 under section 2002 and enrolled with an AHP—

19 (A) the AHP shall adjust the premium

20 otherwise applicable so that the premium does

21 not exceed the sum of—

22 (i) the base Federal premium amount

23 (as defined in section 2005(a)(1)) for en24 rollment under the plan, and
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1 (ii) 10 percent of the amount (if any)

2 by which (I) the premium for the AHP in

3 which the individual is enrolled exceeds

4 (II) the reference premium rate (as defined

5 in section 2009(c)(4)); and

6 (B) the AHP shall credit against the pre7 mium owed the applicable Federal assistance

8 amount (as defined in section 2009(c)(1)) pro9 vided the plan under section 2002(a)(1)(B).

10 (2) MODERATELY LOW-INCOME INDIVIDUALS.—

11 In the case of a moderately low-income individual

12 (as defined in section 2009(a)(2)) eligible for pre13 mium assistance under section 2002 and enrolled

14 with an AHP—

15 (A) the AHP shall adjust the premium

16 otherwise applicable so that the premium does

17 not exceed the sum of—

18 (i) applicable low-income premium

19 amount (as defined in section 2009(c)(2))

20 for enrollment under the plan, plus

21 (ii) the individual responsibility per22 centage (as defined in section 2009(c)(5),

23 or 10 percentage points, whichever is

24 greater) of the amount by which (I) the

25 premium for the AHP in which the individ-
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1 ual is enrolled exceeds (II) the reference

2 premium rate (as defined in section

3 2009(c)(4)) for the individual; and

4 (B) the AHP shall credit against the pre5 mium owed the applicable Federal assistance

6 amount (as defined in section 2009(c)(1)) pro7 vided the plan under section 2002(a)(2)(B).

8 If the premium reduction under subparagraph (A) is

9 not a multiple of $1, the Commission may provide

10 for the rounding of such reduction to a multiple of

11 $1.

12 SEC. 1206. FINANCIAL SOLVENCY REQUIREMENTS.

13 (a) SOLVENCY PROTECTION.—

14 (1) FOR INSURED PLANS.—In the case of an

15 AHP that is an insured plan (as defined by the

16 Health Care Standards Commission) and is issued

17 in a State, in order for the plan to be registered

18 under this subtitle the Commission must find that

19 the State has established satisfactory protection of

20 enrollees with respect to potential insolvency of the

21 plan.

22 (2) FOR OTHER PLANS.—In the case of an

23 AHP that is not an insured plan, the Commission

24 may require the plan to provide for such bond or

25 provide other satisfactory assurances that enrollees
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1 under the plan are protected with respect to poten2 tial insolvency of the plan.

3 (b) PROTECTION AGAINST PROVIDER CLAIMS.—In

4 the case of a failure of an AHP to make payments with

5 respect to the uniform set of effective benefits, under

6 standards established by the Commission, an individual

7 who is enrolled under the plan is not liable to any health

8 care provider or practitioner with respect to the provision

9 of health services within such uniform set for payments

10 in excess of the amount for which the enrollee would have

11 been liable if the plan were to have made payments in a

12 timely manner.

13 SEC. 1207. GRIEVANCE MECHANISMS; ENROLLEE PROTEC14 TIONS; WRITTEN POLICIES AND PROCE15 DURES RESPECTING ADVANCE DIRECTIVES;

16 AGENT COMMISSIONS.

17 (a) EFFECTIVE GRIEVANCE PROCEDURES.—

18 (1) IN GENERAL.—Each AHP shall provide for

19 effective procedures for hearing and resolving griev20 ances between the plan and individuals enrolled

21 under the plan, which procedures meet standards

22 specified by the Health Care Standards Commission.

23 (2) ACCESS OF OMBUDSMAN TO INFORMA24 TION.—Each AHP shall provide the ombudsman,

25 appointed under section 1107(b) for the HPPC area
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1 in which the AHP operates, and the ombudsman’s

2 staff with access to such information as may be nec3 essary for the ombudsman to carry out duties under

4 such section.

5 (b) RESTRICTION ON CERTAIN PHYSICIAN INCEN6 TIVE PLANS.—

7 (1) IN GENERAL.—A health plan may not be

8 registered as an AHP if it operates a physician in9 centive plan (as defined in paragraph (2)) unless the

10 requirements specified in clauses (i) through (iii) of

11 section 1876(i)(8)(A) of the Social Security Act are

12 met (in the same manner as they apply to eligible

13 organizations under section 1876 of such Act).

14 (2) PHYSICIAN INCENTIVE PLAN DEFINED.—In

15 this subsection, the term ‘‘physician incentive plan’’

16 means any compensation or other financial arrange17 ment between the AHP and a physician or physician

18 group that may directly or indirectly have the effect

19 of reducing or limiting services provided with respect

20 to individuals enrolled under the plan.

21 (c) WRITTEN POLICIES AND PROCEDURES RESPECT22 ING ADVANCE DIRECTIVES.—A health plan may not be

23 registered as an AHP unless the plan meets the require24 ments of section 1866(f) of the Social Security Act (relat25 ing to maintaining written policies and procedures respect-
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1 ing advance directives), insofar as such requirements

2 would apply to the plan if the plan were an eligible organi3 zation.

4 (d) PAYMENT OF AGENT COMMISSIONS.—An AHP—

5 (1) may pay a commission or other remunera6 tion to an agent or broker in marketing the plan to

7 individuals or groups, but

8 (2) may not vary such remuneration based, di9 rectly or indirectly, on the anticipated or actual

10 claims experience associated with the group or indi11 viduals to which the plan was sold.

12 SEC. 1208. ADDITIONAL REQUIREMENTS OF OPEN AHPS.

13 (a) REQUIREMENT OF AGREEMENT WITH HPPC.—

14 In the case of a health plan which is an open plan (as

15 defined in section 1701(b)(4)(B)), in order to be reg16 istered as an AHP the plan must have in effect an agree17 ment (described in section 1102) with each HPPC for

18 each HPPC area in which it is offered.

19 (b) REQUIREMENT OF OPEN ENROLLMENT.—

20 (1) IN GENERAL.—In the case of a health plan

21 which is an open health plan, in order to be reg22 istered as an AHP the plan must, subject to para23 graph (3), not reject the enrollment of any eligible

24 individual whom a HPPC is authorized to enroll

25 under an agreement referred to in subsection (a) if
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1 the individual applies for enrollment during an en2 rollment period.

3 (2) LIMITATION ON TERMINATION.—Subject to

4 paragraph (3), coverage of eligible individuals under

5 an open AHP may not be refused nor terminated ex6 cept for—

7 (A) nonpayment of premiums,

8 (B) fraud or misrepresentation, or

9 (C) termination of the plan at the end of

10 a year (after notice and in accordance with

11 standards established by the Health Care

12 Standards Commission).

13 (3) TREATMENT OF NETWORK PLANS.—

14 (A) GEOGRAPHIC LIMITATIONS.—

15 (i) IN GENERAL.—An AHP which is a

16 network plan (as defined in subparagraph

17 (D)) may deny coverage under the plan to

18 an eligible individual who is located outside

19 a service area of the plan, but only if such

20 denial is applied uniformly, without regard

21 to health status or insurability of individ22 uals.

23 (ii) SERVICE AREAS.—The Health

24 Care Standards Commission shall establish

25 standards for the designation by network
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1 plans of service areas in order to prevent

2 discrimination based on health status of

3 individuals or their need for health serv4 ices.

5 (B) SIZE LIMITS.—Subject to subpara6 graph (C), an AHP which is a network plan

7 may apply to the Commission to cease enrolling

8 eligible individuals under the AHP (or in a

9 service area of the plan) if—

10 (i) it ceases to enroll any new eligible

11 individuals, and

12 (ii) it can demonstrate that its finan13 cial or administrative capacity to serve pre14 viously covered groups or individuals (and

15 additional individuals who will be expected

16 to enroll because of affiliation with such

17 previously covered groups or individuals)

18 will be impaired if it is required to enroll

19 other eligible individuals.

20 (C) FIRST-COME-FIRST-SERVED.—A net21 work plan is only eligible to exercise the limita22 tions provided for in subparagraphs (A) and

23 (B) if it provides for enrollment of eligible indi24 viduals on a first-come-first-served basis, except

25 that the plan, under rules of the Commission,
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1 shall provide preference for eligible individuals

2 who are not eligible to enroll in another net3 work plan.

4 (D) NETWORK PLAN.—In this paragraph,

5 the term ‘‘network plan’’ means an eligible or6 ganization (as defined in section 1876(b) of the

7 Social Security Act) and includes a similar or8 ganization, specified in regulations of the Com9 mission, that requires a limitation on enroll10 ment of employer groups or individuals due to

11 the manner in which the organization provides

12 health care services.

13 (c) REQUIREMENT OF PARTICIPATION IN MEDICARE

14 RISK-BASED CONTRACTING.—

15 (1) IN GENERAL.—In the case of a health plan

16 which is an open health plan and which is an eligible

17 organization (as defined in section 1876(b) of the

18 Social Security Act), in order to be registered as an

19 AHP the plan must enter into a risk-sharing con20 tract under section 1876 of the Social Security Act

21 for the offering of benefits to medicare beneficiaries

22 in accordance with such section.

23 (2) EXPANSION OF MEDICARE SELECT PRO24 GRAM.—Subsection (c) of section 4358 of the Omni25 bus Budget Reconciliation Act of 1990 (104 Stat.
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1 1388–137) is amended by striking ‘‘only apply in 15

2 States’’ and all that follows through the end and in3 serting ‘‘on and after January 1, 1992.’’.

4 (3) ELIGIBILITY FOR PAYMENT.—An AHP that

5 meets the requirement of paragraph (1) is eligible to

6 receive adjustment payments under section 1210(b).

7 (d) PARTICIPATION IN FEHBP.—

8 (1) IN GENERAL.—In the case of a health plan

9 which is an open health plan, in order to be reg10 istered as an AHP the plan must have entered into

11 an agreement with the Office of Personnel Manage12 ment to offer a health plan to Federal employees

13 and annuitants, and family members, under the

14 Federal Employees Health Benefits Program under

15 chapter 89 of title 5, United States Code, under the

16 same terms and conditions (other than the amount

17 of premiums) offered by the AHP for enrollment of

18 eligible individuals through HPPCs.

19 (2) CHANGE IN CONTRIBUTION AND OTHER

20 FEHBP RULES.—Notwithstanding any other provi21 sion of law, effective January 1, 1995—

22 (A) enrollment shall not be permitted

23 under a health benefits plan under chapter 89

24 of title 5, United States Code, unless the plan

25 is an AHP; and
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1 (B) the amount of the Federal Government

2 contribution under such chapter—

3 (i) for any premium class shall be the

4 same for all AHPs in a HPPC area,

5 (ii) for any individual in a premium

6 class shall not exceed the base individual

7 premium (as defined in section

8 2009(c)(3)), and

9 (iii) in the aggregate for any fiscal

10 year shall be equal to the aggregate

11 amount of Government contributions that

12 would have been made but for this sub13 section.

14 SEC. 1209. COORDINATION OF BENEFITS WITH LOW-IN15 COME ASSISTANCE.

16 (a) IN GENERAL.—Each AHP shall provide for—

17 (1) acceptance of information, electronically,

18 from the Health Care Standards Commission on the

19 eligibility of individuals (and family members) for

20 low-income assistance under subtitle A of title II,

21 (2) an adjustment, in accordance with sections

22 1202(c) and 1205(c), in the cost-sharing or pre23 mium amounts otherwise imposed to reflect the cost24 sharing and premium assistance provided under

25 such subtitle, and
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1 (3) such reconciliation payments as may be re2 quired under section 1102(e).

3 (b) REQUIREMENT OF SPECIAL AGREEMENTS FOR

4 NON-OPEN PLANS.—In the case of a health plan which

5 is not an open health plan, in order to be registered as

6 an AHP the plan must have in effect a special agreement

7 (described in section 1102(a)(2)) with each HPPC for

8 each HPPC area in which it is offered.

9 SEC. 1210. ADDITIONAL REQUIREMENT OF CERTAIN AHPS.

10 (a) MEDICARE ADJUSTMENT PAYMENT RE11 QUIRED.—Each AHP which is not described in section

12 1208(c)(1) shall provide for payment to the Health Care

13 Standards Commission of such amounts as may be re14 quired as to put the plan in the same financial position

15 as the AHP would be in if it was required to meet the

16 requirement of such section.

17 (b) REDISTRIBUTION OF PAYMENTS TO PLANS.—

18 The Commission shall provide for the distribution of

19 amounts to be paid under subsection (a) among AHPs

20 meeting the requirement of section 1208(c)(1) in such

21 manner as reflects the relative financial impact of such

22 requirement among such plans.
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1 SEC. 1211. FUNDING FOR APPROVED MEDICAL RESIDENCY

2 TRAINING PROGRAMS AND PHYSICIAN RE3 TRAINING PROGRAMS.

4 (a) REQUIREMENT.—Each AHP shall provide for

5 payment of 1 percent of gross premium receipts (as de6 fined in subsection (c)) to the National Medical Education

7 Fund established under section 3005.

8 (b) PAYMENT METHOD.—

9 (1) OPEN AHPS.—In the case of an open AHP,

10 the payment under subsection (a) shall be made

11 through a reduction of 1 percent in the payments

12 made by each HPPC to the AHP.

13 (2) CLOSED AHPS.—In the case of a closed

14 AHP, the payment under subsection (a) shall be

15 made on a monthly (or other basis) as specified by

16 the Commission. Failure of a closed AHP to make

17 such a payment on a timely basis is grounds for rev18 ocation of the registration of the AHP under this

19 part.

20 (c) GROSS PREMIUM RECEIPTS DEFINED.—In this

21 section, the term ‘‘gross premium receipts’’ means, with

22 respect to—

23 (1) an open AHP, the payment amounts other24 wise payable by a HPPC to the AHP, or

25 (2) a closed AHP, an actuarial equivalent value

26 (as established in accordance with rules of the Com-
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1 mission, similar to the rules established for purposes

2 of section 4980C(d)(1) of the Internal Revenue Code

3 of 1986).

4 PART 2—PREEMPTION OF STATE LAWS FOR

5 ACCOUNTABLE HEALTH PLANS

6 SEC. 1221. PREEMPTION FROM STATE BENEFIT MANDATES.

7 Effective as of January 1, 1995, no State shall estab8 lish or enforce any law or regulation that—

9 (1) requires the offering, as part of an AHP, of

10 any services, category of care, or services of any

11 class or type of provider that is different from the

12 uniform set of effective benefits;

13 (2) specifies the individuals to be covered under

14 an AHP or the duration of such coverage; or

15 (3) requires a right of conversion from a group

16 health plan that is an AHP to an individual health

17 plan.

18 SEC. 1222. PREEMPTION OF STATE LAW RESTRICTIONS ON

19 NETWORK PLANS.

20 (a) LIMITATION ON RESTRICTIONS ON NETWORK

21 PLANS.—Effective as of January 1, 1995—

22 (1) a State may not prohibit or limit a network

23 plan from including incentives for enrollees to use

24 the services of participating providers;
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1 (2) a State may not prohibit or limit a network

2 plan from limiting coverage of services to those pro3 vided by a participating provider;

4 (3) a State may not prohibit or limit the nego5 tiation of rates and forms of payments for providers

6 under a network plan;

7 (4) a State may not prohibit or limit a network

8 plan from limiting the number of participating pro9 viders;

10 (5) a State may not prohibit or limit a network

11 plan from requiring that services be provided (or au12 thorized) by a practitioner selected by the enrollee

13 from a list of available participating providers; and

14 (6) a State may not prohibit or limit the cor15 porate practice of medicine.

16 (b) DEFINITIONS.—In this section:

17 (1) NETWORK PLAN.—The term ‘‘network

18 plan’’ means an AHP—

19 (A) which—

20 (i) limits coverage of the uniform set

21 of effective benefits to those provided by

22 participating providers, or

23 (ii) provides, with respect to such

24 services provided by persons who are not

25 participating providers, for cost-sharing
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1 which are in excess of those permitted

2 under the uniform set of effective benefits

3 for participating providers;

4 (B) which has a sufficient number and dis5 tribution of participating providers to assure

6 that the uniform set of effective benefits (i) is

7 available and accessible to each enrollee, within

8 the area served by the plan, with reasonable

9 promptness and in a manner which assures con10 tinuity, and (ii) when medically necessary, is

11 available and accessible twenty-four hours a day

12 and seven days a week; and

13 (C) which provides benefits for the uniform

14 set of effective benefits not furnished by partici15 pating providers if the services are medically

16 necessary and immediately required because of

17 an unforeseen illness, injury, or condition.

18 (2) PARTICIPATING PROVIDER.—The term

19 ‘‘participating provider’’ means an entity or individ20 ual which provides, sells, or leases health care serv21 ices under a contract with a network plan, which

22 contract does not permit—

23 (A) cost-sharing in excess of the cost-shar24 ing permitted under the uniform set of effective

25 benefits, and
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1 (B) any enrollee charges (for such services

2 covered under such set) in excess of such cost3 sharing.

4 SEC. 1223. PREEMPTION OF STATE LAWS RESTRICTING UTI5 LIZATION REVIEW PROGRAMS.

6 (a) IN GENERAL.—Effective January 1, 1995, no

7 State law or regulation shall prohibit or regulate activities

8 under a utilization review program (as defined in sub9 section (b)).

10 (b) UTILIZATION REVIEW PROGRAM DEFINED.—In

11 this section, the term ‘‘utilization review program’’ means

12 a system of reviewing the medical necessity and appro13 priateness of patient services (which may include inpatient

14 and outpatient services) using specified guidelines. Such

15 a system may include preadmission certification, the appli16 cation of practice guidelines, continued stay review, dis17 charge planning, preauthorization of ambulatory proce18 dures, and retrospective review.

19 PART 3—ANTITRUST PROVISIONS

20 SEC. 1231. PUBLICATION OF GUIDELINES FOR ACCOUNT21 ABLE HEALTH PLANS.

22 (a) IN GENERAL.—The President shall provide for

23 the development and publication of explicit guidelines on

24 the application of Federal antitrust laws to AHPs. The
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1 guidelines shall be designed to facilitate AHP development

2 and operation, consistent with the Federal antitrust laws.

3 (b) REVIEW PROCESS.—The Attorney General shall

4 establish a review process under which an AHP (or organi5 zation that proposes to establish an AHP) may obtain a

6 prompt opinion from the Department of Justice on the

7 plan’s conformity with the Federal antitrust laws.

8 (c) ANTITRUST LAWS DEFINED.—In this section, the

9 term ‘‘antitrust laws’’ has the meaning given it in sub10 section (a) of the first section of the Clayton Act (15

11 U.S.C. 12(a)), except that such term includes section 5

12 of the Federal Trade Commission Act (15 U.S.C. 45) to

13 the extent such section applies to unfair methods of com14 petition.

15 SEC. 1232. ISSUANCE OF HEALTH CARE CERTIFICATES OF

16 PUBLIC ADVANTAGE.

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

18 Attorney General, after consultation with the Secretary,

19 shall issue in accordance with this section a certificate of

20 public advantage to each eligible health care joint venture

21 that complies with the requirements in effect under this

22 section on or after the expiration of the 1-year period that

23 begins on the date of the enactment of this Act (without

24 regard to whether or not the Attorney General has pro25 mulgated regulations to carry out this section by such
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1 date). Such venture, and the parties to such venture, shall

2 not be liable under any of the antitrust laws for conduct

3 described in such certificate and engaged in by such ven4 ture if such conduct occurs while such certificate is in ef5 fect.

6 (b) REQUIREMENTS APPLICABLE TO ISSUANCE OF

7 CERTIFICATES.—

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

9 General shall issue a certificate to an eligible health

10 care joint venture if the Attorney General finds

11 that—

12 (A) the benefits that are likely to result

13 from carrying out the venture outweigh the re14 duction in competition (if any) that is likely to

15 result from the venture, and

16 (B) such reduction in competition is rea17 sonably necessary to obtain such benefits.

18 (2) FACTORS TO BE CONSIDERED.—

19 (A) WEIGHING OF BENEFITS AGAINST RE20 DUCTION IN COMPETITION.—For purposes of

21 making the finding described in paragraph

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

23 whether the venture is likely —

24 (i) to maintain or to increase the

25 quality of health care,
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1 (ii) to increase access to health care,

2 (iii) to achieve cost efficiencies that

3 will be passed on to health care consumers,

4 such as economies of scale, reduced trans5 action costs, and reduced administrative

6 costs,

7 (iv) to preserve the operation of

8 health care facilities located in underserved

9 geographical areas,

10 (v) to improve utilization of health

11 care resources, and

12 (vi) to reduce inefficient health care

13 resource duplication.

14 (B) NECESSITY OF REDUCTION IN COM15 PETITION.—For purposes of making the finding

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

17 General shall consider—

18 (i) the ability of the providers of

19 health care services that are (or likely to

20 be) affected by the health care joint ven21 ture and the entities responsible for mak22 ing payments to such providers to nego23 tiate societally optimal payment and serv24 ice arrangements,
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1 (ii) the effects of the health care joint

2 venture on premiums and other charges

3 imposed by the entities described in clause

4 (i), and

5 (iii) the availability of equally effi6 cient, less restrictive alternatives to achieve

7 the benefits that are intended to be

8 achieved by carrying out the venture.

9 (c) ESTABLISHMENT OF CRITERIA AND PROCE10 DURES.—Subject to subsections (d) and (e), not later than

11 1 year after the date of the enactment of this Act, the

12 Attorney General and the Secretary shall establish jointly

13 by rule the criteria and procedures applicable to the issu14 ance of certificates under subsection (a). The rules shall

15 specify the form and content of the application to be sub16 mitted to the Attorney General to request a certificate,

17 the information required to be submitted in support of

18 such application, the procedures applicable to denying and

19 to revoking a certificate, and the procedures applicable to

20 the administrative appeal (if such appeal is authorized by

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

22 information may include the terms of the health care joint

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

24 time of the application) and implementation plan for the

25 joint venture.
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1 (d) ELIGIBLE HEALTH CARE JOINT VENTURE.—To

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

3 section, a health care joint venture shall submit to the At4 torney General an application that complies with the rules

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

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

7 that the venture will not foreclose competition by en8 tering into contracts that prevent health care provid9 ers from providing health care in competition with

10 the venture,

11 (2) an agreement that the venture will submit

12 to the Attorney General annually a report that de13 scribes the operations of the venture and informa14 tion regarding the impact of the venture on health

15 care and on competition in health care, and

16 (3) an agreement that the parties to the ven17 ture will notify the Attorney General and the Sec18 retary of the termination of the venture not later

19 than 30 days after such termination occurs.

20 (e) REVIEW OF APPLICATIONS FOR CERTIFICATES.—

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

22 venture submits to the Attorney General an application

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

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

25 or deny the issuance of such certificate. If, before the expi-
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1 ration of such 30-day period, the Attorney General fails

2 to issue or deny the issuance of such certificate, the Attor3 ney General shall be deemed to have issued such certifi4 cate.

5 (f) REVOCATION OF CERTIFICATE.—Whenever the

6 Attorney General finds that a health care joint venture

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

8 meet the standards specified in subsection (b), the Attor9 ney General shall revoke such certificate.

10 (g) WRITTEN REASONS; JUDICIAL REVIEW.—

11 (1) DENIAL AND REVOCATION OF CERTIFI12 CATES.—If the Attorney General denies an applica13 tion for a certificate or revokes a certificate, the At14 torney General shall include in the notice of denial

15 or revocation a statement of the reasons relied upon

16 for the denial or revocation of such certificate.

17 (2) JUDICIAL REVIEW.—

18 (A) AFTER ADMINISTRATIVE PROCEED19 ING.—(i) If the Attorney General denies an ap20 plication submitted or revokes a certificate is21 sued under this section after an opportunity for

22 hearing on the record, then any party to the

23 health care joint venture involved may com24 mence a civil action, not later than 60 days

25 after receiving notice of the denial or revoca-
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1 tion, in an appropriate district court of the

2 United States for review of the record of such

3 denial or revocation.

4 (ii) As part of the Attorney General’s an5 swer, the Attorney General shall file in such

6 court a certified copy of the record on which

7 such denial or revocation is based. The findings

8 of fact of the Attorney General may be set aside

9 only if found to be unsupported by substantial

10 evidence in such record taken as a whole.

11 (B) DENIAL OR REVOCATION WITHOUT AD12 MINISTRATIVE PROCEEDING.—If the Attorney

13 General denies an application submitted or re14 vokes a certificate issued under this section

15 without an opportunity for hearing on the

16 record, then any party to the health care joint

17 venture involved may commence a civil action,

18 not later than 60 days after receiving notice of

19 the denial or revocation, in an appropriate dis20 trict court of the United States for de novo re21 view of such denial or revocation.

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

23 any of the antitrust laws for conduct necessary—
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1 (1) to prepare, agree to prepare, or attempt to

2 agree to prepare an application to request a certifi3 cate under this section, or

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

5 joint venture with respect to which such a certificate

6 is in effect.

7 (i) DEFINITIONS.—In this section:

8 (1) The term ‘‘antitrust laws’’—

9 (A) has the meaning given it in subsection

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

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

12 section 5 of the Federal Trade Commission Act

13 (15 U.S.C. 45) to the extent such section ap14 plies to unfair methods of competition; and

15 (B) includes any State law similar to the

16 laws referred to in subparagraph (A).

17 (2) The term ‘‘certificate’’ means a certificate

18 of public advantage authorized to be issued under

19 subsection (a).

20 (3) The term ‘‘health care joint venture’’ means

21 an agreement (whether existing or proposed) be22 tween 2 or more providers of health care services

23 that is entered into solely for the purpose of sharing

24 in the provision of health care services and that in25 volves substantial integration or financial risk-shar-
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1 ing between the parties, but does not include the ex2 changing of information, the entering into of any

3 agreement, or the engagement in any other conduct

4 that is not reasonably required to carry out such

5 agreement.

6 (4) The term ‘‘health care services’’ includes

7 services related to the delivery or administration of

8 health care services.

9 (5) The term ‘‘liable’’ means liable for any civil

10 or criminal violation of the antitrust laws.

11 (6) The term ‘‘provider of health care services’’

12 means any individual or entity that is engaged in the

13 delivery of health care services in a State and that

14 is required by State law or regulation to be licensed

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

16 such services in the State.

17 Subtitle D—Health Care Standards

18 Commission

19 SEC. 1301. ESTABLISHMENT OF HEALTH CARE STANDARDS

20 COMMISSION.

21 (a) IN GENERAL.—There is hereby established, as an

22 independent agency in the Executive Branch, a Health

23 Care Standards Commission (in this title referred to as

24 the ‘‘Commission’’).

25 (b) COMPOSITION AND TERMS.—
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1 (1) APPOINTMENT.—The Commission shall be

2 composed of 5 members appointed by the President

3 by and with the advice and consent of the Senate.

4 In appointing members to the Commission, the

5 President shall provide that all members shall dem6 onstrate experience with and knowledge of the health

7 care system.

8 (2) CHAIRMAN.—The President shall designate

9 one of the members to be Chairman of the Commis10 sion.

11 (3) TERMS.—Each member of the Commission

12 shall be appointed for a term of 7 years, except that,

13 of the members first appointed, 1 shall each be ap14 pointed for terms of 3, 4, 5, 6, and 7 years, as des15 ignated by the President at the time of appointment.

16 Members appointed to fill vacancies shall serve for

17 the remainder of the terms of the vacating members.

18 (4) PARTY AFFILIATION.—Not more than 3

19 members of the Commission shall be of the same po20 litical party.

21 (5) OTHER EMPLOYMENT PROHIBITED.—A

22 member of the Commission may not, during the

23 term as a member, engage in any other business, vo24 cation, profession, or employment.
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1 (6) QUORUM.—Three members of the Commis2 sion shall constitute a quorum, except that 2 mem3 bers may hold hearings.

4 (7) MEETINGS.—The Commission shall meet at

5 the call of the Chairman or 3 members of the Com6 mission.

7 (8) COMPENSATION.—Each member of the

8 Commission shall be entitled to compensation at the

9 rate provided for level II of the Executive Schedule,

10 subject to such amounts as are provided in advance

11 in appropriation Acts.

12 (c) PERSONNEL.—

13 (1) IN GENERAL.—The Commission shall ap14 point an Executive Director and such additional offi15 cers and employees as it considers necessary to carry

16 out its functions under this Act. Except as otherwise

17 provided in any other provision of law, such officers

18 and employees shall be appointed, and their com19 pensation shall be fixed, in accordance with title 5,

20 United States Code.

21 (2) EXPERTS AND CONSULTANTS.—The Com22 mission may procure the services of experts and con23 sultants in accordance with the provisions of section

24 3109 of title 5, United States Code.
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1 (d) USE OF U.S. MAIL.—The Commission may use

2 the United States mails in the same manner and under

3 the same conditions as other departments and agencies of

4 the United States.

5 SEC. 1302. SPECIFICATION OF UNIFORM SET OF EFFECTIVE

6 BENEFITS.

7 (a) SPECIFICATION OF UNIFORM SET OF EFFECTIVE

8 BENEFITS; CONGRESSIONAL CONSIDERATION.—

9 (1) TRANSMITTAL OF RECOMMENDATIONS TO

10 CONGRESS.—

11 (A) FOR 1995.—The Commission shall

12 transmit to Congress, by not later than July 1,

13 1994, recommendations for the uniform set of

14 effective benefits to apply under this title for

15 1995 and, subject to subparagraph (B), subse16 quent years.

17 (B) LATER YEARS.—The Commission may

18 transmit to Congress, by not later than July 1

19 of a subsequent year, recommendations for

20 changes in the uniform set of effective benefits

21 to apply under this title for the following year

22 (and, subject to this subparagraph, subsequent

23 years).

24 (C) CONGRESSIONAL CONSIDERATION.—
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1 (i) IN GENERAL.—Recommendations

2 transmitted under subparagraph (A) or

3 (B) shall apply under this title unless a

4 joint resolution (described in clause (ii))

5 disapproving such recommendations is en6 acted, in accordance with the provisions of

7 clause (iii), before the end of the 44-day

8 period beginning on the date on which

9 such recommendations were transmitted.

10 For purposes of applying the preceding

11 sentence and clauses (ii) and (iii), the days

12 on which either House of Congress is not

13 in session because of an adjournment of

14 more than three days to a day certain shall

15 be excluded in the computation of a period.

16 (ii) JOINT RESOLUTION OF DIS17 APPROVAL.—A joint resolution described in

18 this clause means only a joint resolution

19 which is introduced within the 10-day pe20 riod beginning on the date on which the

21 Commission transmits recommendations

22 under subparagraph (A) or (B) and—

23 (I) which does not have a pre24 amble;
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1 (II) the matter after the resolv2 ing clause of which is as follows:

3 ‘‘That Congress disapproves the rec4 ommendations of the Health Care

5 Standards Commission concerning the

6 uniform set of effective benefits as

7 transmitted by the Commission on

8 lllllll.’’, the blank space

9 being filled in with the appropriate

10 date; and

11 (III) the title of which is as fol12 lows: ‘‘Joint resolution disapproving

13 the recommendations of the Health

14 Care Standards Commission concern15 ing the uniform set of effective bene16 fits as transmitted by the Commission

17 on lllllll.’’, the blank

18 space being filled in with the appro19 priate date.

20 (iii) PROCEDURES FOR CONSIDER21 ATION OF RESOLUTION OF DIS22 APPROVAL.—Subject to clause (iv), the

23 provisions of section 2908 (other than sub24 section (a)) of the Defense Base Closure

25 and Realignment Act of 1990 shall apply
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1 to the consideration of a joint resolution

2 described in clause (ii) in the same manner

3 as such provisions apply to a joint resolu4 tion described in section 2908(a) of such

5 Act.

6 (iv) SPECIAL RULES.—For purposes

7 of applying clause (iii) with respect to such

8 provisions—

9 (I) any reference to the Commit10 tee on Armed Services of the House of

11 Representatives shall be deemed a ref12 erence to the Committee on Energy

13 and Commerce of the House of Rep14 resentatives and any reference to the

15 Committee on Armed Services of the

16 Senate shall be deemed a reference to

17 the Committee on Finance of the Sen18 ate; and

19 (II) any reference to the date on

20 which the President transmits a re21 port shall be deemed a reference to

22 the date on which the Commission

23 transmits a recommendation under

24 subparagraph (A) or (B).

25 (D) TREATMENT OF DISAPPROVAL.—
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1 (i) FOR 1995.—If recommendations

2 transmitted under subparagraph (A) are

3 disapproved by joint resolution under sub4 paragraph (C), then the Commission shall

5 transmit to Congress, by not later than 15

6 days after the date of adoption of the reso7 lution, recommendations for the uniform

8 set of effective benefits to apply under this

9 title for 1995 and, subject to subparagraph

10 (B), subsequent years. The provisions of

11 subparagraph (C) shall apply to such new

12 recommendations in the same manner as

13 they applied to the recommendations pre14 viously transmitted under subparagraph

15 (A), except that any time period specified

16 in such subparagraph shall be half the pe17 riod otherwise provided.

18 (ii) FOR SUBSEQUENT YEARS.—If rec19 ommendations transmitted under subpara20 graph (B) are disapproved by joint resolu21 tion under subparagraph (C), then such

22 recommendations shall not take effect and

23 the recommendations not previously dis24 approved under this paragraph shall con25 tinue in effect until otherwise changed.
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1 (2) SPECIFICATION OF ALL MEDICALLY APPRO2 PRIATE TREATMENTS.—

3 (A) MEDICALLY APPROPRIATE TREAT4 MENTS.—The uniform set of effective benefits

5 submitted under paragraph (1) shall include

6 such categories of health care services that the

7 Commission determines will provide for the de8 livery of medically appropriate treatment by

9 AHPs.

10 (B) COVERAGE OF CLINICAL PREVENTIVE

11 SERVICES.—Such benefits shall include the full

12 range of effective clinical preventive services

13 (including appropriate screening, counseling,

14 and immunization and chemoprophylaxis), spec15 ified by the Commission, appropriate to age and

16 other risk factors.

17 (C) COVERAGE OF DIAGNOSTIC SERV18 ICES.—Such benefits shall include a full range

19 of diagnostic services not covered under sub20 paragraph (B).

21 (D) GUIDELINES.—Nothing in this para22 graph shall prohibit the Commission from devel23 oping guidelines that would specify the appro24 priate uses of treatment in greater detail.
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1 (D) ADDITIONAL COVERAGE.—Nothing in

2 this paragraph shall be construed as preventing

3 a plan from providing coverage of treatment

4 that has not been determined (under subsection

5 (b)) by the Commission to be medically appro6 priate for purposes of this paragraph.

7 (3) COST-SHARING.—

8 (A) IN GENERAL.—Subject to subpara9 graph (B), such set shall include uniform cost10 sharing associated with such benefits consistent

11 with subsection (c).

12 (B) TREATMENT OF NETWORK PLANS.—In

13 the case of a network plan (as defined in sec14 tion 1222(b)), the plan may provide for charg15 ing cost-sharing in excess of the uniform cost16 sharing under subparagraph (A) in the case of

17 services provided by providers that are not par18 ticipating providers (as defined in such section).

19 (b) CRITERIA FOR DETERMINATION OF MEDICALLY

20 APPROPRIATENESS FOR BENEFIT COVERAGE.—

21 (1) IN GENERAL.—An AHP is required to pro22 vide for coverage of the uniform set of effective ben23 efits only for treatments and diagnostic procedures

24 that are medically appropriate. Subject to the suc25 ceeding provision of this subsection, for purposes of
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1 this section, a treatment (as defined in paragraph

2 (6)(A)) or diagnostic procedure is considered to be

3 ‘‘medically appropriate’’ if the following criteria are

4 met (as interpreted by the Commission):

5 (A) TREATMENT OR DIAGNOSIS OF MEDI6 CAL CONDITION.—

7 (i) IN GENERAL.—The treatment or

8 diagnostic procedure is for a medical con9 dition.

10 (ii) MEDICAL CONDITION DEFINED.—

11 The term ‘‘medical condition’’ means a dis12 ease, illness, injury, or biological or psycho13 logical condition or status for which treat14 ment is indicated to improve, maintain, or

15 stabilize a health outcome (as defined in

16 paragraph (6)(B)) or which, in the absence

17 of treatment, could lead to an adverse

18 change in a health outcome.

19 (iii) ADVERSE CHANGE IN HEALTH

20 OUTCOME DEFINED.—In clause (ii), an ad21 verse change in a health outcome occurs if

22 there is a biological or psychological

23 decremental change in a health status or if

24 the original endowment for a feature lies

25 outside the normal range.
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1 (B) NOT INVESTIGATIONAL.—There must

2 be sufficient evidence on which to base conclu3 sions about the existence and magnitude of the

4 change in health outcome resulting from the

5 treatment or diagnostic procedure compared

6 with the best available alternative (or with no

7 treatment or diagnostic procedure if no alter8 native treatment or procedure is available).

9 (C) EFFECTIVE AND SAFE.—The evidence

10 must demonstrate that the treatment or diag11 nostic procedure can reasonably be expected to

12 produce the intended health result or provide

13 intended health information and is safe and the

14 treatment or diagnostic procedure provides a

15 clinically meaningful benefit with respect to

16 safety and effectiveness in comparison to other

17 available alternatives.

18 (2) TREATMENT OR DIAGNOSTIC PROCEDURE

19 CONSISTENT WITH PRACTICE GUIDELINES.—A treat20 ment or diagnostic procedure that is provided con21 sistent with a practice guideline established by the

22 Agency for Clinical Evaluations, established under

23 section 1309, (or its predecessor) is deemed to be

24 medically appropriate.

25 (3) RELATIONSHIP TO FDA REVIEW.—
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1 (A) APPROVED DRUGS, BIOLOGICALS, AND

2 MEDICAL DEVICES.—

3 (i) DRUGS.—A drug that has been

4 found to be safe and effective under sec5 tion 505 of the Federal Food, Drug, and

6 Cosmetic Act is deemed to meet the re7 quirements of paragraphs (1)(B) and

8 (1)(C) (relating to not investigational and

9 safety and effectiveness).

10 (ii) BIOLOGICALS.—A biological that

11 has been found to be safe and effective

12 under section 351 of the Public Health

13 Service Act is deemed to meet the require14 ments of paragraphs (1)(B) and (1)(C)

15 (relating to not investigational and safety

16 and effectiveness).

17 (iii) MEDICAL DEVICES.—A medical

18 device that is marketed after the provision

19 of a notice under section 510(k) of the

20 Federal Food, Drug, and Cosmetic Act or

21 that has an application for premarket ap22 proval approved under section 515 of such

23 Act is deemed to meet the requirements of

24 paragraphs (1)(B) and (1)(C) (relating to
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1 not investigational and safety and effec2 tiveness).

3 (B) OTHER DRUGS, BIOLOGICALS, AND DE4 VICES.—A drug, biological, or medical device

5 not described in subparagraph (A) shall be con6 sidered to be investigational. Nothing shall pro7 hibit a AHP from covering such drugs,

8 biologicals, and medical devices, including treat9 ment investigational new drugs (IND).

10 (C) OFF-LABEL USE.—An off-label use for

11 a drug described in subparagraph (A)(i) is pre12 sumed to meet the requirements of paragraph

13 (1)(C) if the medical indication for which it is

14 used is listed in one of the following 3 compen15 dia: the American Hospital Formulary Service16 Drug Information, the American Medical Asso17 ciation Drug Evaluations, and the United

18 States Pharmacopeia-Drug Information.

19 (4) COVERAGE OF INVESTIGATIONAL TREAT20 MENTS IN APPROVED RESEARCH TRIALS.—

21 (A) IN GENERAL.—Coverage of the routine

22 medical costs (as defined in subparagraph (C))

23 associated with the delivery of investigational

24 treatments (as defined in subparagraph (B))

25 shall be considered to be medically appropriate
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1 only if the treatment is part of an approved re2 search trial (as defined in subparagraph (D)).

3 (B) INVESTIGATIONAL TREATMENT DE4 FINED.—In subparagraph (A), the term ‘‘inves5 tigational treatment’’ means a treatment for

6 which there is not sufficient evidence to deter7 mine the health outcome of the treatment com8 pared with the best available alternative treat9 ment (or with no treatment if there is no alter10 native treatment).

11 (C) ROUTINE MEDICAL COSTS DEFINED.—

12 In subparagraph (A), the term ‘‘routine medical

13 costs’’ means the cost of health services re14 quired to provide treatment according to the de15 sign of the trial, except those costs normally

16 paid for by other funding sources (as defined by

17 the Commission). Such costs do not include the

18 cost of the investigational agent, devices or pro19 cedures themselves, the costs of any nonhealth

20 services that might be required for a person to

21 receive the treatment, or the costs of managing

22 the research.

23 (D) APPROVED RESEARCH TRIAL DE24 FINED.—In subparagraph (A), the term ‘‘ap25 proved research trial’’ means a trial—
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1 (i) conducted for the primary purpose

2 of determining the safety, effectiveness, ef3 ficacy, or health outcomes of a treatment,

4 compared with the best available alter5 native treatment, and

6 (ii) approved by the Secretary of

7 Health and Human Services.

8 A trial is deemed to be approved under clause

9 (ii) if it is approved by the National Institutes

10 of Health, the Food and Drug Administration

11 (through an investigational new drug exemp12 tion), the Department of Veterans Affairs, or

13 by a qualified nongovernmental research entity

14 (as identified in guidelines issued by one or

15 more of the National Institutes of Health).

16 (5) DOCUMENTATION.—

17 (A) IN GENERAL.—Each AHP is respon18 sible for maintaining documentary evidence sup19 porting the plan’s decisions to cover or to deny

20 coverage based on the criteria specified in this

21 subsection.

22 (B) REFERENCES.—The evidence that may

23 be used in making such coverage decisions in24 cludes—

25 (i) published peer-reviewed literature,
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1 (ii) opinions of medical specialty

2 groups and other medical experts,

3 (iii) evidence of general acceptance by

4 the medical community, and

5 (iv) recommendations of the Commis6 sion.

7 (C) DISCLOSURE.—Each AHP shall dis8 close to its members, in a manner specified by

9 the Commission, its coverage decisions and

10 must submit information on such decisions to

11 the Benefits, Evaluations, and Data Standards

12 Board.

13 (6) TREATMENT AND HEALTH OUTCOME DE14 FINED.—In this subsection (and subsection (a)(2)):

15 (A) IN GENERAL.—The term ‘‘treatment’’

16 means any health care intervention undertaken,

17 with respect to a specific indication, to improve,

18 maintain, or stabilize a health outcome or to

19 prevent or mitigate an adverse change in a

20 health outcome.

21 (B) HEALTH OUTCOME DEFINED.—The

22 term ‘‘health outcome’’ means an outcome that

23 affects the length or quality of an enrollee’s life.
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1 (c) BASIS FOR COST-SHARING.—In establishing cost2 sharing that is part of the uniform set of effective benefits,

3 the Commission shall—

4 (1) include only such cost-sharing as will re5 strain consumers from seeking unnecessary services,

6 (2) not impose cost-sharing for covered clinical

7 preventive services,

8 (3) balance the effect of the cost-sharing in re9 ducing premiums and in affecting utilization of ap10 propriate services,

11 (4) establish a limit on the total cost-sharing

12 that may be incurred by an individual (or enrollee

13 unit) in a year, and

14 (5) incorporate, consistent with the previous

15 provisions, incentives for individuals to control their

16 utilization of health care services and shall (for this

17 purpose) consider incorporating the concepts of med18 ical savings accounts and wellness dividends.

19 To the extent consistent with the previous provisions, the

20 Commission shall design such cost-sharing in a manner

21 so to maintain overall utilization levels at a level no higher

22 than current overall utilization levels.

23 (d) AUTHORITY RESPECTING PROVIDERS.—

24 (1) NO AUTHORITY TO RESTRICT USE OF PRO25 VIDERS.—In the case of treatment included in the
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1 uniform set of effective benefits, the Commission is

2 not authorized—

3 (A) to restrict the coverage of such treat4 ment only to, or

5 (B) to require an AHP to provide coverage

6 of such treatment by,

7 a particular class (or classes) of providers, among

8 the providers that are legally authorized to provide

9 such treatment.

10 (2) AUTHORITY WITH RESPECT TO SCOPE OF

11 PRACTICE OF QUALIFIED PROVIDERS.—A State may

12 not prohibit or limit the scope of practice of a pro13 vider of health services, with respect to the provision

14 of the uniform set of effective benefits by an AHP,

15 to the extent that the Commission finds that such

16 prohibition or limitation restricts the utilization of

17 qualified providers.

18 SEC. 1303. BENEFITS, EVALUATIONS, AND DATA STAND19 ARDS BOARD.

20 (a) ESTABLISHMENT.—The Commission shall pro21 vide for the initial organization, as a nonprofit corporation

22 in the District of Columbia, of the Benefits, Evaluations,

23 and Data Standards Board (in this section referred to as

24 the ‘‘BEDS Board’’), under the direction of a board of

25 directors consisting of 5 directors.
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1 (b) APPOINTMENT OF DIRECTORS.—

2 (1) SOLICITATION.—The Commission shall so3 licit nominations for the initial board of directors of

4 the BEDS Board from organizations that represent

5 the various groups with an interest in the health

6 care system and the functions of the Board.

7 (2) CONTINUATION.—The by-laws of the BEDS

8 Board shall provide for the board of directors subse9 quently to be appointed by the board in a manner

10 that ensures a broad range of representation of

11 through groups with an interest in providing and

12 purchasing health care.

13 (3) TERMS OF DIRECTORS.—The term of each

14 member of the board of directors shall be for 7

15 years, except that in order to provide for staggered

16 terms, the terms of the members initially appointed

17 shall be for 3, 4, 5, 6, and 7 years. In the case of

18 a vacancy by death or resignation, the replacement

19 shall be appointed for the remainder of the term. No

20 individual may serve as a director of the board for

21 more than 14 years.

22 (c) FUNCTIONS.—

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

24 make recommendations to the Commission concern25 ing each of the following:
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1 (A) The uniform set of effective benefits.

2 (B) The standards for information to be

3 provided by AHPs.

4 (C) Auditing standards to ensure the accu5 racy of such information.

6 (D) Aggregate data on coverage decisions

7 made by AHPs and recommendations for eval8 uations of particular technologies.

9 Before making recommendations described in sub10 paragraphs (B) and (D), the BEDS Board shall

11 consult with the Agency for Clinical Evaluations re12 garding the need for information in performing its

13 activities.

14 (2) EVALUATIONS.—The BEDS Board shall

15 advise the Commission on—

16 (A) matters related to the evaluation of

17 health care services, including information from

18 clinical and epidemiological studies, and

19 (B) information provided by AHPs, includ20 ing AHP-specific information on clinical health,

21 functional status, well-being, and plan satisfac22 tion of enrolled individuals.

23 (3) NATIONAL HEALTH DATA SYSTEM.—The

24 BEDS Board shall provide the Commission with its
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1 assistance in the development of the standards for

2 the national health data system under section 1307.

3 (d) FUNDING.—

4 (1) IN GENERAL.—In order to provide funding

5 for the BEDS Board, the Health Care Standards

6 Commission shall establish an annual registration

7 fee for AHPs which is imposed on a per-covered-in8 dividual-basis and is sufficient, in the aggregate, to

9 provide each year for not more than the amount

10 specified in paragraph (2) for the operation of the

11 BEDS Board.

12 (2) AMOUNT OF FUNDS.—The amount specified

13 in this paragraph for each of fiscal years 1994 and

14 1995, is $50,000,000, and, for each succeeding fis15 cal year, is $25,000,000.

16 SEC. 1304. HEALTH PLAN STANDARDS BOARD.

17 (a) ESTABLISHMENT.—The Commission shall pro18 vide for the initial organization, as a nonprofit corporation

19 in the District of Columbia, of the Health Plan Standards

20 Board (in this section referred to as the ‘‘Plan Standards

21 Board’’), under the direction of a board of directors con22 sisting of 5 directors.

23 (b) APPOINTMENT OF DIRECTORS.—

24 (1) SOLICITATION.—The Commission shall so25 licit nominations for the initial board of directors of
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1 the Plan Standards Board from organizations that

2 represent the various groups with an interest in the

3 health care system and the functions of the Board.

4 (2) CONTINUATION.—The by-laws of the Plan

5 Standards Board shall provide for the board of di6 rectors subsequently to be appointed by the board in

7 a manner that ensures a broad range of representa8 tion of through groups with an interest in providing

9 and purchasing health care.

10 (3) TERMS OF DIRECTORS.—The term of each

11 member of the board of directors shall be for 7

12 years, except that in order to provide for staggered

13 terms, the terms of the members initially appointed

14 shall be for 3, 4, 5, 6, and 7 years. In the case of

15 a vacancy by death or resignation, the replacement

16 shall be appointed for the remainder of the term. No

17 individual may serve as a director of the board for

18 more than 12 years.

19 (c) FUNCTIONS.—

20 (1) IN GENERAL.—The Plan Standards Board

21 shall make recommendations to the Commission con22 cerning the standards for AHPs (other than stand23 ards relating to the uniform set of effective benefits

24 and the national health data system) and for

25 HPPCs.
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1 (2) ASSESSMENT OF RISK-ADJUSTMENT FAC2 TORS.—The Plan Standards Board shall provide the

3 Commission with its assessment of the risk-adjust4 ment factors under section 1306.

5 (d) FUNDING.—In order to provide funding for the

6 Plan Standards Board, the Health Care Standards Com7 mission shall establish an annual registration fee for

8 AHPs which is imposed on a per-covered-individual-basis

9 and is sufficient, in the aggregate, to provide each year

10 for not more than 60 percent of the amount specified in

11 section 1303(d)(2) for the operation of the Plan Stand12 ards Board.

13 SEC. 1305. REGISTRATION OF ACCOUNTABLE HEALTH

14 PLANS.

15 (a) IN GENERAL.—The Commission shall register

16 those health plans that meet the standards under part 1

17 of subtitle C.

18 (b) TREATMENT OF STATE CERTIFICATION.—If (and

19 so long as) the Commission determines that a State super20 intendent of insurance, State insurance commissioner, or

21 other State official provides for the imposition of stand22 ards that the Commission finds are equivalent to the

23 standards established under part 1 of subtitle C for reg24 istration of a health plan as an AHP, the Commission may

25 provide for registration as AHPs of health plans that such
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1 official certifies as meeting the standards for registration.

2 Nothing in this subsection shall require a health plan to

3 be certified by such an official in order to be registered

4 by the Commission.

5 (c) REVOCATION OF REGISTRATION.—

6 (1) IN GENERAL.—The Commission shall pro7 vide for a process for revocation of such registration

8 in cases where the Commission finds, after notice to

9 the plan and appropriate due process specified by

10 the Commission, that a health plan no longer sub11 stantially meets the standards for such registration

12 or has failed to comply with a requirement under

13 section 1402(a).

14 (2) INITIATION OF PROCESS.—Such process

15 may be initiated upon the petition of a HPPC, the

16 ombudsman for a HPPC, or by the Commission it17 self. If the process is not initiated by a HPPC or

18 ombudsman, the Commission shall notify each

19 HPPC involved that such a process has been initi20 ated. A HPPC may provide notice to enrollees of an

21 AHP at the time such a process is initiated with re22 spect to the AHP.

23 (3) NOTICE TO HPPC AND ENROLLEES.—No

24 registration of an AHP may be revoked unless the
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1 Commission has provided for appropriate notice to

2 the HPPC and enrollees involved.

3 SEC. 1306. SPECIFICATION OF RISK-ADJUSTMENT FAC4 TORS.

5 (a) IN GENERAL.—The Commission shall establish

6 rules for the process of risk-adjustment of premiums

7 among AHPs by HPPCs under section 1102(d)(1).

8 (b) PROCESS.—

9 (1) IDENTIFICATION OF RELATIVE RISK.—The

10 Commission shall determine risk-adjustment factors

11 for types of enrollment that are correlated with in12 creased or diminished risk for consumption of the

13 type of health services included in the uniform set

14 of effective benefits, taking into account differences

15 in utilization resulting from low-income cost-sharing

16 assistance provided under section 2003. To the max17 imum extent practicable, such factors shall be deter18 mined without regard to the methodology used by in19 dividual AHPs in the provision of such benefits. In

20 determining such factors, with respect to an individ21 ual (in an enrollee unit) identified as having—

22 (A) a lower-than-average risk for consump23 tion of the services, the factor shall be a num24 ber, less than zero, reflecting the degree of such

25 lower risk;
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1 (B) an average risk for consumption of the

2 services, the factor shall be zero; or

3 (C) a higher-than-average risk for con4 sumption of the services, the factor shall be a

5 number, greater than zero, reflecting the degree

6 of such higher risk.

7 For an enrollee unit, the factor to be applied (pursu8 ant to section 1402(b)) shall reflect the factors ap9 plicable to all covered individuals in the unit.

10 (2) ADJUSTMENT OF FACTORS.—In applying

11 under section 1102(d)(1)(B) the risk-adjustment

12 factors determined under paragraphs (1) and (3),

13 each HPPC shall adjust such factors, in accordance

14 with a methodology established by the Commission,

15 so that the sum of such factors is zero for all en16 rollee units in each HPPC area for which a premium

17 payment is forwarded under section 1102(d) for

18 each premium payment period.

19 (3) SPECIAL RISK-ADJUSTMENT FACTORS FOR

20 UNDERSERVED AREAS.—The Commission shall de21 termine the special risk-adjustment factors that may

22 be applied in the case of individuals residing in areas

23 designated as rural or urban underserved areas

24 under section 1401.
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1 SEC. 1307. NATIONAL HEALTH DATA SYSTEM.

2 (a) STANDARDIZATION OF INFORMATION.—

3 (1) IN GENERAL.—The Commission shall estab4 lish standards for the periodic provision by AHPs of

5 information under section 1203(a) and the auditing

6 of the information so provided.

7 (2) PATIENT CONFIDENTIALITY.—The stand8 ards shall be established in a manner that protects

9 the confidentiality of individual enrollees, but may

10 provide for the disclosure of information which dis11 closes particular providers within an AHP.

12 (b) ANALYSIS OF INFORMATION.—

13 (1) IN GENERAL.—The Commission shall ana14 lyze the information provided to the Commission

15 under section 1203(a) with respect to AHPs for

16 which a HPPC is not performing an analysis under

17 section 1104(c)(1).

18 (2) CENTRAL ACCESS.—The Commission shall

19 make available, in a central location and consistent

20 with subsection (a)(2), all of such analyses.

21 (3) DISTRIBUTION OF ANALYSES.—The Com22 mission shall distribute the analyses in a form, con23 sistent with subsection (a)(2), that reports, on a na24 tional, State, and community basis, the levels and

25 trends of health care expenditures, the rates and

26 trends in the provision of individual procedures, and
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1 (to the extent such procedures are priced separately)

2 the price levels and rates of price change for such

3 procedures. The reports shall include both aggregate

4 and per capita measures for areas and shall include

5 comparative data for different areas.

6 (c) DISTRIBUTION OF INFORMATION.—

7 (1) ANNUAL REPORT ON EXPENDITURES.—The

8 Commission shall publish annually (beginning with

9 1996) a report on expenditures on procedures, vol10 umes of procedures, and, to the extent such proce11 dures are priced separately, the prices of procedures.

12 Such report shall be distributed to each AHP, each

13 HPPC, each Governor, and each State legislature.

14 (2) ANNUAL REPORTS.—The Commission shall

15 also publish an annual report, based on analyses

16 under this section, that identifies—

17 (A) procedures for which, as reflected in

18 variations in use or rates of increase, there ap19 pear to be the greatest need to develop valid

20 clinical protocols for clinical decision-making

21 and review,

22 (B) procedures for which, as reflected in

23 price variations and price inflation, there ap24 pear to be the greatest need for strengthening

25 competitive purchasing, and
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1 (C) States and localities for which, as re2 flected in expenditure levels and rates of in3 crease, there appear to be the greatest need for

4 additional cost control measures.

5 (3) SPECIAL DISTRIBUTIONS.—The Commission

6 may, whenever it deems appropriate, provide for the

7 distribution—

8 (A) to an AHP of such information relat9 ing to the plan as may be appropriate in order

10 to encourage the plan to improve its delivery of

11 care, and

12 (B) to business, consumer, and other

13 groups and individuals of such information as

14 may improve their ability to effect improve15 ments in the outcomes, quality, and efficiency

16 of health services.

17 (4) ACCESS BY AGENCY FOR HEALTH CARE

18 POLICY AND RESEARCH.—The Commission shall

19 make available to the Agency for Clinical Evalua20 tions information obtained under section 1203(a) in

21 a manner consistent with subsection (a)(2).

22 SEC. 1308. MEASURES OF QUALITY OF CARE OF SPECIAL23 IZED CENTERS OF CARE.

24 (a) COLLECTION OF INFORMATION.—The Commis25 sion shall provide a process whereby a specialized center
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1 of care (as defined in subsection (d)) may submit to the

2 Commission such clinical and other information bearing

3 on the quality of care provided with respect to the uniform

4 set of effective benefits at the center as the Commission

5 may specify. Such information shall include sufficient in6 formation to take into account outcomes and the risk fac7 tors associated with individuals receiving care through the

8 center. Such information shall be provided at such fre9 quency (not less often than annually) as the Commission

10 specifies.

11 (b) MEASURES OF QUALITY.—Using information

12 submitted under subsection (a) and information reported

13 under section 1307, the Commission shall—

14 (1) analyze the performance of such centers

15 with respect to the quality of care provided,

16 (2) rate the performance of such a center with

17 respect to a class of services relative to the perform18 ance of other specialized centers of care and relative

19 to the performance of AHPs generally, and

20 (3) publish such ratings.

21 (c) USE OF SERVICE MARK FOR SPECIALIZED CEN22 TERS OF CARE.—The Commission may establish a service

23 mark for specialized centers of care the performance of

24 which has been rated under subsection (b). Such service

25 mark shall be registrable under the Trademark Act of
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1 1946, and the Commission shall apply for the registration

2 of such service mark under such Act. For purposes of such

3 Act, such service mark shall be deemed to be used in com4 merce. For purposes of this subsection, the ‘‘Trademark

5 Act of 1946’’ refers to the Act entitled ‘‘An Act to provide

6 for the registration and protection of trademarks used in

7 commerce, to carry out the provisions of international con8 ventions, and for other purposes’’, approved July 5, 1946

9 (15 U.S.C. 1051 and following).

10 (d) SPECIALIZED CENTER OF CARE DEFINED.—In

11 this section, the term ‘‘specialized center of care’’ means

12 an institution or other organized system for the provision

13 of specific services, which need not be multi-disciplinary,

14 and does not include (except as the Commission may pro15 vide) individual practitioners.

16 SEC. 1309. AGENCY FOR CLINICAL EVALUATIONS.

17 (a) ESTABLISHMENT.—There is established within

18 the Department of Health and Human Services an agency

19 to be known as the Agency for Clinical Evaluations (in

20 this section referred to as the ‘‘Agency’’).

21 (b) APPOINTMENT OF ADMINISTRATOR.—There shall

22 be at the head of the Agency an official to be known as

23 the Administrator for Clinical Evaluations (in this section

24 referred to as the ‘‘Administrator’’). The Administrator
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1 shall be appointed by the President, by and with the advice

2 and consent of the Senate.

3 (c) DUTIES.—

4 (1) IN GENERAL.—The Administrator shall as5 sume the following responsibilities:

6 (A) Responsibilities of the Administrator

7 for Health Care Policy and Research, under

8 title IX of the Public Health Service Act and

9 under section 1142 of the Social Security Act.

10 (B) Responsibilities of the Director of the

11 National Center for Health Statistics (under

12 section 306 of the Public Health Service Act).

13 (C) Responsibilities of the Director of the

14 Office of Medical Applications of Research at

15 the National Institutes of Health.

16 (D) Responsibilities of the Director of the

17 Office of Research and Demonstrations of the

18 Health Care Financing Administration, insofar

19 as such responsibilities relate to clinical evalua20 tions.

21 (2) SPECIFIC DUTIES.—In carrying out respon22 sibilities under paragraph (1), the Administrator

23 shall—

24 (A) set priorities for the research commu25 nity to strengthen the research base;
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1 (B) support research and evaluation (both

2 on a contract and investigator-initiated basis)

3 on medical effectiveness through technology as4 sessment, consensus development, outcomes re5 search practice guidelines, and other appro6 priate activities;

7 (C) conduct effectiveness trials in collabo8 ration with medical specialty societies, medical

9 educators, and AHPs;

10 (D) maintain a clearinghouse and other

11 registries on clinical trials and outcomes re12 search data;

13 (E) assure the systematic evaluation of ex14 isting as well as new treatments and diagnostic

15 technologies in a constant, continuous effort to

16 upgrade the knowledge base for clinical deci17 sionmaking and policy choice; and

18 (F) design a computerized dissemination

19 system for providers to provide an interactive

20 system of information on outcomes research,

21 practice guidelines, and other information.

22 (3) ASSISTANCE.—The Administrator shall pro23 vide the Benefits, Evaluations, and Data Standards

24 Board with such information, on evaluations related

25 to the uniform set of effective benefits and any other
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1 information developed in the scope of carrying out

2 the Administrator’s responsibilities, as may be ap3 propriate.

4 (4) COOPERATION WITH OTHER AGENCIES.—In

5 carrying out responsibilities under this subsection,

6 the Administrator shall cooperate and consult with

7 the Director of the National Institutes of Health,

8 the Commissioner of Food and Drugs, the Secretary

9 of Veterans Affairs, and the heads of any other in10 terested Federal department or agency.

11 (d) REFERENCES.—Any reference in any law to the

12 Administrator for Health Care Policy and Research or to

13 the Agency for Health Care Policy and Research is

14 deemed a reference to the Administrator and Agency, re15 spectively, under this section.

16 (e) TRANSFERS.—There are hereby transferred to

17 the Agency the staff, funds, and other assets of the agen18 cies for which the Agency is assuming responsibilities

19 under subsection (c)(1).

20 (f) ADDITIONAL AUTHORIZATION OF APPROPRIA21 TIONS.—In addition to the amounts transferred under

22 subsection (e), there are authorized to be appropriated to

23 the Agency $250,000 for each fiscal year (beginning with

24 fiscal year 1995).
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1 SEC. 1310. REPORT AND RECOMMENDATIONS ON ACHIEV2 ING UNIVERSAL COVERAGE.

3 (a) FACTORS AFFECTING COVERAGE.—

4 (1) COLLECTION OF INFORMATION.—The Com5 mission, on a continuing basis, shall collect informa6 tion concerning and analyze the number and charac7 teristics of eligible individuals (as defined in sub8 section (c)) who are not enrolled with AHPs com9 pared to such number and characteristics of individ10 uals enrolled. Such characteristics shall include age,

11 sex, race, ethnicity, family status, employment sta12 tus, whether the individual is an eligible employee,

13 income, health status, health risk factors, geography,

14 whether the individual resides in a rural or medically

15 underserved area, and such other factors as may af16 fect the election of an eligible individual to obtain

17 health coverage.

18 (2) REPORT.—By not later than April 1 of each

19 year (beginning with 1996), the Commission shall

20 submit to Congress a report analyzing the informa21 tion collected under paragraph (1). Such report shall

22 include a description of the primary factors contrib23 uting to lack of coverage of identifiable groups of eli24 gible individuals.

25 (b) RECOMMENDATIONS FOR INCREASING COV26 ERAGE.—
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1 (1) IN GENERAL.—By not later than January

2 1, 1997, the Commission shall submit to Congress

3 recommendations on the feasibility, cost-effective4 ness, and the economic impact of using different vol5 untary and other methods for increasing the cov6 erage of eligible individuals.

7 (2) INDIVIDUAL MANDATE.—The Commission

8 shall specifically make recommendations under para9 graph (1) regarding establishing a requirement that

10 all eligible individuals obtain health coverage

11 through enrollment with an AHP.

12 (c) ELIGIBLE INDIVIDUAL DEFINED.—In this sec13 tion, the term ‘‘eligible individual’’—

14 (1) includes individuals who would be eligible

15 individuals but for section 1701(a)(4)(B), but

16 (2) does not include individuals eligible to enroll

17 for benefits under part B of title XVIII of the Social

18 Security Act.

19 SEC. 1311. NO AUTHORITY TO IMPOSE CONTROLS RELAT20 ING TO HEALTH CARE SPENDING.

21 The Commission is not authorized to establish or en22 force any controls (such as global budgets, price controls,

23 or premium limitations) on health care spending.
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1 SEC. 1312. MONITORING REINSURANCE MARKET.

2 (a) IN GENERAL.—The Commission shall monitor

3 the reinsurance market for AHPs.

4 (b) PERIODIC REPORTS.—The Commission shall pe5 riodically report to Congress respecting the availability of

6 reinsurance for AHPs at reasonable rates and the impact

7 of such availability on the establishment of new plans and

8 on the financial solvency of current plans.

9 SEC. 1313. AUTHORIZATION OF APPROPRIATIONS; SUNSET.

10 (a) AUTHORIZATION OF APPROPRIATIONS.—There

11 are authorized to be appropriated to the Health Care

12 Standards Commission for each of fiscal years 1994

13 through 2000 such sums as may be necessary to carry

14 out activities under this Act.

15 (b) SUNSET.—Unless otherwise provided by law, the

16 Health Care Standards Commission shall terminate on

17 December 31, 1999.

18 Subtitle E—Managed Competition

19 in Rural and Urban Under20 served Areas

21 PART 1—SPECIAL TREATMENT OF DESIGNATED

22 UNDERSERVED AREAS

23 SEC. 1401. DESIGNATION OF UNDERSERVED AREAS.

24 (a) IN GENERAL.—The Governor of any State may,

25 subject to subsection (b), designate rural and urban areas

26 of a State as underserved areas for purposes of this part.
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1 In designating such areas, the Governor shall take into

2 account—

3 (1) financial and geographic access to AHPs by

4 residents of such areas, and

5 (2) the availability, adequacy, and quality of

6 qualified providers and health care facilities in such

7 areas.

8 (b) REVIEW BY COMMISSION.—No designation under

9 subsection (a) shall take effect under this subsection un10 less the Commission—

11 (1) has been notified of the proposed designa12 tion, and

13 (2) has not, within 60 days after the date of re14 ceipt of the notice, disapproved the designation.

15 (c) CONSTRUCTION.—An area need not be designated

16 as a medically underserved area (under section 330(b)(3)

17 of the Public Health Service Act) or as a health profes18 sional shortage area (under section 332(a) of such Act)

19 in order to be designated as an underserved area under

20 this section.

21 (d) PERIOD OF DESIGNATION.—A designation under

22 this section shall be effective for a period, specified by the

23 Governor, of not longer than 3 years, except that such des24 ignation may be extended for additional 3-year periods.
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1 SEC. 1402. SPECIAL TREATMENT.

2 (a) INCLUSION IN PLAN SERVICE AREA.—The

3 HPPC serving an area designated under section 1401 may

4 require AHPs, offered by the HPPC and with a service

5 area adjoining such area, to include the area as part of

6 their service area. The Commission may revoke under sec7 tion 1305(c) registration of an AHP that fails to comply

8 with such requirement.

9 (b) APPLICATION OF SPECIAL RISK ADJUSTMENT

10 FACTORS.—In accordance with rules established by the

11 Commission, for eligible individuals residing in an area

12 designated under section 1401 and enrolled with an AHP,

13 the HPPC may apply special risk-adjustment factors (de14 termined under section 1306(b)(3)) in order to increase

15 the compensation available to AHPs serving such individ16 uals.

17 (c) DIRECT STATE SUBSIDIES.—The HPPC shall in18 crease the amount of the payments made to AHPs serving

19 individuals residing in an area designated under section

20 1401 by such amounts as the State makes available for

21 this purpose.

22 (d) TECHNICAL ASSISTANCE IN ANTITRUST MAT23 TERS.—The Department of Justice shall provide ongoing

24 technical assistance to organizations in relation to the ap25 plication of the Federal antitrust laws to the establishment

26 of an AHP in an area designated under section 1401.
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1 Such assistance shall be in addition to the review process

2 provided under section 1231(b).

3 PART 2—TRANSITIONAL SUPPORT FOR DEVEL4 OPMENT OF ACCOUNTABLE HEALTH PLANS

5 IN UNDERSERVED AREAS

6 SEC. 1411. TECHNICAL ASSISTANCE FUNDING.

7 (a) IN GENERAL.—The Secretary of Health and

8 Human Services shall make funds available under this sec9 tion to provide technical assistance and advice for entities

10 (including Federally qualified health centers and rural

11 health clinics) seeking to establish a network plan (as de12 fined in section 1222(b)(1)) in an underserved rural or

13 urban area.

14 (b) USE OF FUNDS.—Funds made available under

15 this section may be used for—

16 (1) assistance in network development, utilizing

17 existing local providers and facilities where appro18 priate;

19 (2) advice on obtaining the proper balance of

20 primary and secondary facilities for the local popu21 lation;

22 (3) assistance in coordinating arrangements for

23 tertiary care;

24 (4) assistance in recruitment and retention of

25 health care professionals; and
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1 (5) assistance in coordinating the delivery of

2 emergency services with the provision of services by

3 an AHP.

4 (c) USE OF RURAL HEALTH OFFICES.—In carrying

5 out this section with respect to entities in rural areas—

6 (1) the Secretary shall make funds available

7 through the Office of Rural Health Policy, and

8 (2) priority shall be given to making funds

9 available to State Offices of Rural Health.

10 (d) AUTHORIZATION OF APPROPRIATIONS.—There

11 are authorized to be appropriated $5,000,000 for each of

12 fiscal years 1995 through 1999 to carry out this section.

13 Of the amounts appropriated to carry out this section,

14 one-half of such amounts shall be made available to enti15 ties for the establishment of network plans in rural areas

16 and one-half of such amounts shall be made available to

17 entities for the establishment of network plans in urban

18 areas. Amounts appropriated under this section shall be

19 available until expended.

20 SEC. 1412. RURAL DEVELOPMENT GRANTS.

21 (a) IN GENERAL.—The Secretary of Health and

22 Human Services shall provide financial assistance to eligi23 ble entities in order to provide for the development and

24 implementation of AHPs in rural areas.

25 (b) ELIGIBLE ENTITIES.—
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1 (1) IN GENERAL.—An entity is eligible to re2 ceive financial assistance under this section only if

3 the entity—

4 (A) is based in a rural area, and

5 (B) is undertaking to develop and imple6 ment an AHP in a rural area with the active

7 participation of at least 3 health care providers

8 or facilities in the area.

9 (2) FEDERALLY QUALIFIED HEALTH CENTERS

10 AND RURAL HEALTH CLINICS.—Nothing in this sec11 tion shall be construed as preventing a Federally

12 qualified health center or rural health clinic from

13 qualifying for financial assistance under this section.

14 (c) USE OF FUNDS.—

15 (1) IN GENERAL.—Financial assistance made

16 available to eligible entities under this section may

17 only be used for the following:

18 (A) For development and implementation.

19 (B) For information systems, including

20 telecommunications.

21 (C) For meeting solvency requirements for

22 an AHP.

23 (D) For recruiting health care providers.
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1 (2) LIMITATIONS.—Financial assistance made

2 available under this section may not be used for any

3 of the following:

4 (A) For a telecommunications system un5 less such system is coordinated with, and does

6 not duplicate, such a system existing in the

7 area.

8 (B) For construction or remodeling of

9 health care facilities.

10 (d) APPLICATION.—

11 (1) IN GENERAL.—No financial assistance shall

12 be provided under this section to an entity unless

13 the entity has submitted to the Secretary, in a time

14 and manner specified by the Secretary, and had ap15 proved by the Secretary an application.

16 (2) INFORMATION TO BE INCLUDED.—Each

17 such application shall include—

18 (A) a description of the proposed AHP, in19 cluding service area and capacity,

20 (B) a plan for providing the continuum of

21 services included in the uniform set of effective

22 benefits, and

23 (C) a description of how the proposed

24 AHP will utilize existing health care facilities in

25 a manner that avoids unnecessary duplication.
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1 (e) AUTHORIZATION OF APPROPRIATIONS.—

2 (1) IN GENERAL.—There are authorized to be

3 appropriated $75,000,000 for each of fiscal years

4 1995 through 1999 to carry out this section.

5 Amounts appropriated under this section shall be

6 available until expended.

7 (2) INTEGRATION OF OTHER AUTHORIZA8 TIONS.—In order to provide for the authorization of

9 appropriations under paragraph (1), notwithstanding

10 any other provision of law, no funds are authorized

11 to be appropriated to carry out the following pro12 grams in fiscal years after fiscal year 1994:

13 (A) The rural health transition grant pro14 gram (under section 4005(e) of the Omnibus

15 Budget Reconciliation Act of 1987).

16 (B) The rural health outreach program

17 (for which appropriations were annually pro18 vided under the Departments of Labor, Health

19 and Human Services, and Education, and Re20 lated Agencies Appropriation Acts).

21 SEC. 1413. MIGRANT HEALTH CENTERS.

22 Section 329(h) of the Public Health Service Act (42

23 U.S.C. 254b(h)) is amended—

24 (1) in paragraph (1)(A), by striking ‘‘through

25 1994’’ and inserting ‘‘through 1999’’,
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1 (2) in paragraph (2)(A), by striking ‘‘through

2 1994’’ and inserting ‘‘through 1999’’, and

3 (3) by redesignating paragraph (3) as para4 graph (4) and by inserting after paragraph (2) the

5 following new paragraph:

6 ‘‘(3)(A) For the purpose of carrying out subpara7 graph (B), there are authorized to be appropriated

8 $11,500,000 for each of the fiscal years 1995 through

9 1999.

10 ‘‘(B) The Secretary may make grants to migrant

11 health centers for the purpose of assisting such centers

12 in integrating with AHPs and in providing (and coordinat13 ing the provision of) the uniform set of effective benefits

14 under such a plan.’’.

15 SEC. 1414. COMMUNITY HEALTH CENTERS.

16 Section 330(g) of the Public Health Service Act (42

17 U.S.C. 254c(g)) is amended—

18 (1) in paragraph (1)(A), by striking ‘‘through

19 1994’’ and inserting ‘‘through 1999’’,

20 (2) in paragraph (2)(A), by striking ‘‘through

21 1994’’ and inserting ‘‘through 1999’’, and

22 (3) by redesignating paragraph (3) as para23 graph (4) and by inserting after paragraph (2) the

24 following new paragraph:
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1 ‘‘(3)(A) For the purpose of carrying out subpara2 graph (B), there are authorized to be appropriated

3 $88,500,000 for each of the fiscal years 1995 through

4 1999.

5 ‘‘(B) The Secretary may make grants to community

6 health centers for the purpose of assisting such centers

7 in developing and integrating with accountable health

8 plans and in providing (and coordinating the provision of)

9 the uniform set of effective benefits under such a plan.’’.

10 PART 3—ESTABLISHMENT OF RURAL

11 EMERGENCY ACCESS CARE HOSPITALS

12 SEC. 1421. RURAL EMERGENCY ACCESS CARE HOSPITALS

13 DESCRIBED.

14 Section 1861 of the Social Security Act (42 U.S.C.

15 1395x) is amended by adding at the end the following new

16 subsection:

17 ‘‘Rural Emergency Access Care Hospital; Rural

18 Emergency Access Care Hospital Services

19 ‘‘(oo)(1) The term ‘rural emergency access care hos20 pital’ means, for a fiscal year, a facility with respect to

21 which the Secretary finds the following:

22 ‘‘(A) The facility is located in a rural area (as

23 defined in section 1886(d)(2)(D)).
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1 ‘‘(B) The facility was a hospital under this title

2 at any time during the 5-year period that ends on

3 the date of the enactment of this subsection.

4 ‘‘(C) The facility is in danger of closing due to

5 low inpatient utilization rates and negative operating

6 losses, and the closure of the facility would limit the

7 access of individuals residing in the facility’s service

8 area to emergency services.

9 ‘‘(D) The facility has entered into (or plans to

10 enter into) an agreement with a hospital with a par11 ticipation agreement in effect under section 1866(a),

12 and under such agreement the hospital shall accept

13 patients transferred to the hospital from the facility

14 and receive data from and transmit data to the facil15 ity.

16 ‘‘(E) There is a practitioner who is qualified to

17 provide advanced cardiac life support services (as de18 termined by the State in which the facility is lo19 cated) on-site at the facility on a 24-hour basis.

20 ‘‘(F) A physician is available on-call to provide

21 emergency medical services on a 24-hour basis.

22 ‘‘(G) The facility meets such staffing require23 ments as would apply under section 1861(e) to a

24 hospital located in a rural area, except that—
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1 ‘‘(i) the facility need not meet hospital

2 standards relating to the number of hours dur3 ing a day, or days during a week, in which the

4 facility must be open, except insofar as the fa5 cility is required to provide emergency care on

6 a 24-hour basis under subparagraphs (E) and

7 (F) of this paragraph; and

8 ‘‘(ii) the facility may provide any services

9 otherwise required to be provided by a full-time,

10 on-site dietician, pharmacist, laboratory techni11 cian, medical technologist, or radiological tech12 nologist on a part-time, off-site basis.

13 ‘‘(H) The facility meets the requirements appli14 cable to clinics and facilities under subparagraphs

15 (C) through (J) of paragraph (2) of section

16 1861(aa) and of clauses (ii) and (iv) of the second

17 sentence of such paragraph (or, in the case of the

18 requirements of subparagraph (E), (F), or (J) of

19 such paragraph, would meet the requirements if any

20 reference in such subparagraph to a ‘nurse practi21 tioner’ or to ‘nurse practitioners’ was deemed to be

22 a reference to a ‘nurse practitioner or nurse’ or to

23 ‘nurse practitioners or nurses’); except that in deter24 mining whether a facility meets the requirements of

25 this subparagraph, subparagraphs (E) and (F) of
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1 that paragraph shall be applied as if any reference

2 to a ‘physician’ is a reference to a physician as de3 fined in section 1861(r)(1).

4 ‘‘(2) The term ‘rural emergency access care hospital

5 services’ means medical and other health services fur6 nished by a rural emergency access care hospital.’’.

7 SEC. 1422. COVERAGE OF AND PAYMENT FOR SERVICES.

8 (a) COVERAGE UNDER PART B.—Section 1832(a)(2)

9 of the Social Security Act (42 U.S.C. 1395k(a)(2)) is

10 amended—

11 (1) by striking ‘‘and’’ at the end of subpara12 graph (I);

13 (2) by striking the period at the end of sub14 paragraph (J) and inserting ‘‘; and’’; and

15 (3) by adding at the end the following new sub16 paragraph:

17 ‘‘(K) rural emergency access care hospital

18 services (as defined in section 1861(oo)(2)).’’.

19 (b) PAYMENT BASED ON PAYMENT FOR OUTPATIENT

20 RURAL PRIMARY CARE HOSPITAL SERVICES.—

21 (1) IN GENERAL.—Section 1833(a)(6) of the

22 Social Security Act (42 U.S.C. 1395l(a)(6)) is

23 amended by striking ‘‘services,’’ and inserting ‘‘serv24 ices and rural emergency access care hospital serv25 ices,’’.
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1 (2) PAYMENT METHODOLOGY DESCRIBED.—

2 Section 1834(g) of such Act (42 U.S.C. 1395m(g))

3 is amended—

4 (A) in the heading, by striking ‘‘SERV5 ICES’’ and inserting ‘‘SERVICES AND RURAL

6 EMERGENCY ACCESS CARE HOSPITAL SERV7 ICES’’;

8 (B) in paragraph (1), by striking ‘‘during

9 a year before 1993’’ and inserting ‘‘during a

10 year before the prospective payment system de11 scribed in paragraph (2) is in effect’’;

12 (C) in paragraph (1), by adding at the end

13 the following:

14 ‘‘The amount of payment shall be determined under

15 either method without regard to the amount of the

16 customary or other charge.’’;

17 (D) in paragraph (2), by striking ‘‘Janu18 ary 1, 1993,’’ and inserting ‘‘January 1,

19 1996,’’; and

20 (E) by adding at the end the following new

21 paragraph:

22 ‘‘(3) APPLICATION OF METHODS TO PAYMENT

23 FOR RURAL EMERGENCY ACCESS CARE HOSPITAL

24 SERVICES.—The amount of payment for rural emer25 gency access care hospital services provided during
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1 a year shall be determined using the applicable

2 method provided under this subsection for determin3 ing payment for outpatient rural primary care hos4 pital services during the year.’’.

5 SEC. 1423. EFFECTIVE DATE.

6 The amendments made by this part shall apply to fis7 cal years beginning on or after October 1, 1994.

8 PART 4—TRANSITIONAL ASSISTANCE FOR

9 SAFETY NET HOSPITALS

10 SEC. 1431. PAYMENTS TO HOSPITALS.

11 (a) IN GENERAL.—The Secretary of Health and

12 Human Services shall make payments for transitional as13 sistance to eligible hospitals whose applications for assist14 ance have been approved under this part.

15 (b) GENERAL ELIGIBILITY REQUIREMENTS FOR AS16 SISTANCE.—

17 (1) HOSPITALS DESCRIBED.—

18 (A) IN GENERAL.—A hospital shall be gen19 erally eligible for assistance under this part if

20 the hospital—

21 (i) receives an additional payment

22 under section 1886(d)(5)(F) of the Social

23 Security Act and is described in clause

24 (i)(II) or clause (vii)(I) of such section, or

25 is deemed a disproportionate share hospital
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1 under a State plan for medical assistance

2 under title XIX of such Act on the basis

3 described in section 1923(b)(1) of such

4 Act; or

5 (ii) is a hospital that the Secretary

6 otherwise determines to be an appropriate

7 recipient of assistance under this part on

8 the basis of the existence of a patient care

9 operating deficit, a demonstrated inability

10 to secure or repay financing for a qualify11 ing project on reasonable terms, or such

12 other criteria as the Secretary considers

13 appropriate.

14 (B) DEVELOPMENT OF CRITERIA.—For

15 purposes of subparagraph (A)(ii), with respect

16 to rural hospitals which are at risk or critical

17 to health care access, the Prospective Payment

18 Review Commission, not later than 6 months

19 after the date of the enactment of this Act,

20 shall develop criteria to assist the Secretary in

21 deciding which such hospitals deserve assist22 ance.

23 (2) OWNERSHIP REQUIREMENTS.—In order to

24 qualify for assistance under this part, a hospital

25 must—
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1 (A) be owned or operated by a unit of

2 State or local government;

3 (B) be a quasi-public corporation, defined

4 as a private, nonprofit corporation or public

5 benefit corporation which is formally granted

6 one or more governmental powers by legislative

7 action through (or is otherwise partially funded

8 by) the State legislature, city or county council;

9 or

10 (C) be a private nonprofit hospital which

11 has contracted with, or is otherwise funded by,

12 a governmental agency to provide health care

13 services to low income individuals not eligible

14 for benefits under title XVIII or title XIX of

15 the Social Security Act, where revenue from

16 such contracts constitute at least 10 percent of

17 the hospital’s operating revenues over the prior

18 3 fiscal years.

19 (c) MEETING ADDITIONAL SPECIFIC CRITERIA.—

20 Hospitals that are generally eligible for assistance under

21 this part under subsection (b) may apply for the specific

22 programs described in this part and must meet any addi23 tional criteria for participation in such programs.
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1 SEC. 1432. APPLICATION FOR ASSISTANCE.

2 (a) IN GENERAL.—No hospital may receive assist3 ance for a project under this part unless the hospital—

4 (1) has filed with the Secretary, in a form and

5 manner specified by the Secretary an application for

6 assistance under this part;

7 (2) establishes in its application (for its most

8 recent cost reporting period) that it meets the cri9 teria for general eligibility under this part;

10 (3) includes a description of the project, includ11 ing the community in which it is located, and de12 scribes utilization and services characteristics of the

13 project and the hospital, and the patient population

14 that is to be served;

15 (4) describes the extent to which the project

16 will include the financial participation of State and

17 local governments, and all other sources of financing

18 sought for the project; and

19 (5) establishes, to the satisfaction of the Sec20 retary, that the project meets the additional criteria

21 for assistance under this part.

22 (b) CRITERIA FOR APPROVAL.—The Secretary shall

23 determine for each application for assistance under this

24 part—

25 (1) whether the hospital meets the general eligi26 bility criteria under section 1431(b);
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1 (2) whether the hospital meets any additional

2 eligibility criteria;

3 (3) whether the project for which assistance is

4 being requested meets the requirements of this part;

5 and

6 (4) whether funds are available, pursuant to the

7 limitations of each program, to fully fund the re8 quest for assistance.

9 SEC. 1433. PUBLIC SERVICE RESPONSIBILITIES.

10 (a) IN GENERAL.—Any hospital accepting assistance

11 under this part shall agree—

12 (1) to make the services of the facility or por13 tion thereof to be constructed, acquired, or modern14 ized available to all persons residing in the territorial

15 area of the applicant; and

16 (2) to provide a significant volume of services to

17 persons unable to pay therefore, consistent with

18 other provisions of this Act.

19 (b) ENFORCEMENT.—The Director of the Office of

20 Civil Rights of the Department of Health and Human

21 Services shall be given the power to enforce the public

22 service responsibilities described in this section.
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1 SEC. 1434. AUTHORIZATION OF APPROPRIATIONS.

2 There is authorized to be appropriated $50,000,000

3 for each of the fiscal years 1995 through 1999 to carry

4 out this part.

5 Subtitle F—Treatment of

6 Chronically Underserved Areas

7 SEC. 1501. PROMOTING STATE ACTION.

8 (a) STANDARDS FOR IDENTIFICATION OF CHRON9 ICALLY UNDERSERVED AREAS.—The Health Care Stand10 ards Commission shall develop, not later than 2 years

11 after the date of the enactment of this Act, standards for

12 the identification of chronically underserved areas in

13 which the special treatment provided under subsection (b)

14 may be appropriate. Such standards shall be based on—

15 (1) inadequate access in an area to services in16 cluded within the uniform set of effective benefits,

17 (2) insufficient price competition for such serv18 ices in an area, and

19 (3) poor quality of such services in an area.

20 (b) STATE IDENTIFICATION OF AREAS AND PLAN.—

21 On and after 3 years after the date of the enactment of

22 this Act, a State may submit to the Commission—

23 (1) a finding that an area within the State

24 meets the standards developed under subsection (a)

25 to be identified as a chronically underserved area,

26 and
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1 (2) a plan for addressing the problem of health

2 care delivery in such area.

3 No plan may be submitted under paragraph (2) for an

4 area unless the plan has been developed in cooperation

5 with each HPPC serving any portion of the area.

6 (c) CONTENTS OF PLAN.—A plan under subsection

7 (b)(2) for a chronically underserved area may provide for

8 the limitation of agreements under section 1102 to a sin9 gle AHP, with such contract awarded on a competitive

10 basis.

11 (d) REVIEW.—With respect to submissions under

12 subsection (b), the Commission shall review—

13 (1) each finding described in subsection (b)(1),

14 and

15 (2) each plan submitted under subsection

16 (b)(2).

17 The Commission shall approve or disapprove such a find18 ing and such a plan within 60 days of the date of its sub19 mission and shall notify the State of its decision. If the

20 Commission disapproves the finding or the plan, the Com21 mission shall provide the State with the reasons for the

22 disapproval. If the Commission does not act within such

23 period, the Commission is deemed to have approved the

24 finding and the plan.
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1 Subtitle G—Repeal of COBRA

2 Continuation Requirements

3 SEC. 1601. REPEAL OF COBRA CONTINUATION REQUIRE4 MENTS.

5 (a) INTERNAL REVENUE CODE PROVISIONS.—

6 (1) IN GENERAL.—Section 4980B of the Inter7 nal Revenue Code of 1986 is repealed.

8 (2) CONFORMING AMENDMENTS.—Section 414

9 of such Code is amended—

10 (A) in subsection (n)(3)(C), by striking

11 ‘‘505, and 4980B’’ and inserting ‘‘and 505’’,

12 and

13 (B) in subsection (t)(2), by striking ‘‘505,

14 or 4980B’’ and inserting ‘‘or 505’’.

15 (b) ERISA.—

16 (1) IN GENERAL.—Part 6 of subtitle B of title

17 I of the Employee Retirement Income Security Act

18 of 1974 is amended—

19 (A) by striking sections 601 through 606,

20 and

21 (B) in section 609, as added by section

22 4301 of the Omnibus Budget Reconciliation Act

23 of 1993, by striking subsection (d).

24 (2) CONFORMING AMENDMENT.—Section

25 502(c)(1) of such Act (29 U.S.C. 1132(c)(1)) is
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1 amended by striking ‘‘paragraph (1) or (4) of sec2 tion 606 or’’.

3 (c) PUBLIC HEALTH SERVICE ACT.—Title XXII of

4 the Public Health Service Act is repealed.

5 (d) EFFECTIVE DATE.—The repeals and amend6 ments made by this section shall apply to health plans of

7 employers as of the January 1, 1995.

8 (e) NOTICE OF BENEFITS.—In the case of continu9 ation coverage which is in effect on January 1, 1995,

10 under a provision of law repealed by this section, such con11 tinuation may not be discontinued without 30-day notice

12 to the individual of such discontinuation. Such notice shall

13 include such information with respect to continuation of

14 coverage through a health plan purchasing cooperative as

15 the Health Care Standards Commission shall specify.

16 Subtitle H—Definitions

17 SEC. 1701. DEFINITIONS.

18 (a) ELIGIBILITY.—In this title and title II:

19 (1) ELIGIBLE INDIVIDUAL.—The term ‘‘eligible

20 individual’’ means, with respect to a HPPC area, an

21 individual who—

22 (A) is an eligible employee,

23 (B) is an eligible resident, or

24 (C) an eligible family member of an eligible

25 employee or eligible resident.
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1 (2) ELIGIBLE EMPLOYEE.—The term ‘‘eligible

2 employee’’ means, with respect to a HPPC area, an

3 individual residing in the area who is the employee

4 of a small employer.

5 (3) ELIGIBLE FAMILY MEMBER.—The term ‘‘el6 igible family member’’ means, with respect to an eli7 gible employee or other principal enrollee, an individ8 ual who—

9 (A)(i) is the spouse of the employee or

10 principal enrollee, or

11 (ii) is an unmarried dependent child under

12 22 years of age, including—

13 (I) an adopted child or recognized

14 natural child, and

15 (II) a stepchild or foster child but

16 only if the child lives with the employee or

17 principal enrollee in a regular parent-child

18 relationship,

19 or such an unmarried dependent child regard20 less of age who is incapable of self-support be21 cause of mental or physical disability which ex22 isted before age 22;

23 (B) is a citizen or national of the United

24 States, an alien lawfully admitted to the United

25 States for permanent residence, or an alien oth-
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1 erwise lawfully residing permanently in the

2 United States under color of law; and

3 (C) with respect to an eligible resident, is

4 not a medicare-eligible individual.

5 (4) ELIGIBLE RESIDENT.—

6 (A) IN GENERAL.—The term ‘‘eligible resi7 dent’’ means, with respect to a HPPC area, an

8 individual who is not an eligible employee, is re9 siding in the area, and is a citizen or national

10 of the United States, an alien lawfully admitted

11 for permanent residence, and an alien granted

12 asylum, admitted as a refugee, or whose depor13 tation has been withheld.

14 (B) EXCLUSION OF CERTAIN INDIVIDUALS

15 OFFERED COVERAGE THROUGH A LARGE EM16 PLOYER.—

17 (i) IN GENERAL.—The term ‘‘eligible

18 resident’’ does not include an individual

19 who—

20 (I) is covered under an AHP pur21 suant to an offer made under section

22 1005(b)(1)(A), or

23 (II) subject to clause (ii), could

24 be covered under an AHP as the prin-
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1 cipal enrollee pursuant to such an

2 offer if such offer had been accepted.

3 (ii) EXCEPTION FOR PART-TIME, SEA4 SONAL, AND TEMPORARY EMPLOYEES.—

5 Subclause (II) of clause (i) shall not apply

6 to an individual who is offered coverage

7 under an AHP by an employer and who is

8 only a part-time, seasonal, or temporary

9 employee of that employer. For purposes of

10 the previous sentence, the term ‘‘part11 time’’ means employment for an average of

12 less than 25 hours a week on a monthly

13 basis and an employee who is employed for

14 more than 8 weeks in a 12-month period

15 for an employer shall not be considered to

16 be seasonal or temporary employee.

17 (C) TREATMENT OF MEDICARE BENE18 FICIARIES.—The term ‘‘eligible resident’’ does

19 not include a medicare-eligible beneficiary.

20 (5) ENROLLEE UNIT.—The term ‘‘enrollee

21 unit’’ means one unit in the case of coverage on an

22 individual basis or in the case of coverage on a fam23 ily basis.

24 (6) MEDICARE BENEFICIARY.—The term ‘‘med25 icare beneficiary’’ means an individual who is enti-
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1 tled to benefits under part A of title XVIII of the

2 Social Security Act, including an individual who is

3 entitled to such benefits pursuant to an enrollment

4 under section 1818 or 1818A of such Act.

5 (7) MEDICARE-ELIGIBLE INDIVIDUAL.—The

6 term ‘‘medicare-eligible individual’’ means an indi7 vidual who—

8 (A) is a medicare beneficiary, or

9 (B) is not a medicare beneficiary but is eli10 gible to enroll under part A or part B of title

11 XVIII of the Social Security Act.

12 (b) ABBREVIATIONS.—In this Act, except as other13 wise provided:

14 (1) AHP; ACCOUNTABLE HEALTH PLAN.—The

15 terms ‘‘accountable health plan’’ and ‘‘AHP’’ mean

16 a health plan registered with the Commission under

17 section 1201(a).

18 (2) COMMISSION.—The term ‘‘Commission’’

19 means the Health Care Standards Commission es20 tablished under subtitle D.

21 (3) HPPC; HEALTH PLAN PURCHASING COOP22 ERATIVE.—The terms ‘‘health plan purchasing coop23 erative’’ and ‘‘HPPC’’ mean a health plan purchas24 ing cooperative established under subtitle B.

25 (4) CLOSED AND OPEN PLANS.—
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1 (A) CLOSED.—

2 (i) IN GENERAL.—A plan is ‘‘closed’’

3 if the plan is limited by structure or law to

4 one or more large employers.

5 (ii) GRANDFATHER FOR TAFT-HART6 LEY PLANS.—A plan not described in

7 clause (i) that is maintained pursuant to

8 one or more collective bargaining agree9 ments between one or more employee orga10 nizations and one or more employers and

11 that was established as of September 7,

12 1993, shall be considered to be a closed

13 plan.

14 (iii) UNIVERSITY PLANS.—Nothing in

15 this subparagraph shall be construed as

16 preventing a university from offering en17 rollment, in a closed plan maintained by a

18 university, to students matriculating at the

19 university.

20 (iv) SMALL EMPLOYERS.—Subject to

21 clause (ii), a plan is not a ‘‘closed’’ plan if

22 the plan was formed by one or more small

23 employers or for the benefit of employees

24 of such an employer.
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1 (B) OPEN.—A plan is ‘‘open’’ if the plan

2 is not closed (within the meaning of subpara3 graph (A)).

4 (c) OTHER TERMS.—In this title and titles II and

5 VI:

6 (1) HEALTH PLAN.—The term ‘‘health plan’’

7 means a plan that provides health benefits, whether

8 through directly, through insurance, or otherwise,

9 and includes a policy of health insurance, a contract

10 of a service benefit organization, or a membership

11 agreement with a health maintenance organization

12 or other prepaid health plan, and also includes an

13 employee welfare benefit plan or a multiple employer

14 welfare plan (as such terms are defined in section 3

15 of the Employee Retirement Income Security Act of

16 1974).

17 (2) SMALL EMPLOYER; LARGE EMPLOYER.—

18 (A) IN GENERAL.—Subject to subpara19 graph (B), the term ‘‘small employer’’ means

20 an employer that normally employed fewer than

21 101 employees during a typical business day in

22 the previous year and the term ‘‘large em23 ployer’’ means an employer that is not a small

24 employer.
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1 (B) SPECIAL RULE FOR LARGE EMPLOY2 ERS.—Subject to subparagraph (C), the Com3 mission shall provide a procedure by which, in

4 the case of an employer that is not a small em5 ployer but normally employs fewer than 101

6 employees (or, in the case of a State making an

7 election described in subparagraph (C)(i), the

8 number of employees specified under the State

9 law) in a HPPC area (or other locality identi10 fied by the Commission) during a typical busi11 ness day, the employer, upon application, would

12 be considered to be a small employer with re13 spect to such employees in the HPPC area (or

14 other locality). Such procedure shall be de15 signed so as to prevent the adverse selection of

16 employees with respect to which the previous

17 sentence is applied.

18 (C) STATE ELECTION.—

19 (i) IN GENERAL.—Subject to section

20 1101(a)(3) and clause (ii), a State may by

21 law, with respect to employers in the State,

22 substitute for ‘‘101’’ in subparagraphs (A)

23 and (B) any greater number, so long as—

24 (I) such number is applied uni25 formly to all employers (other than
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1 employers described in clause (ii)) in

2 a State, and

3 (II) the State demonstrates, to

4 the satisfaction of the Commission,

5 that as of the time of enactment of

6 the State law not more than 50 per7 cent of all employees in the State are

8 employees of small employers (as de9 termined based upon such substi10 tution).

11 (ii) EXCEPTION FOR CERTAIN LARGE

12 MULTI-STATE EMPLOYERS.—Clause (i)

13 shall not apply to an employer that nor14 mally employed at least 500 employees

15 during a typical business day in the pre16 vious year in each of at least 2 different

17 States.

18 (3) PREMIUM CLASS.—The term ‘‘premium

19 class’’ means a class established under section

20 1205(a)(2).

21 (4) SECRETARY.—The term ‘‘Secretary’’ means

22 the Secretary of Health and Human Services.

23 (5) STATE.—The term ‘‘State’’ includes the

24 District of Columbia, Puerto Rico, the Virgin Is-
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1 lands, Guam, American Samoa, and the Northern

2 Mariana Islands.

3 (6) TYPE OF ENROLLMENT.—There are 4

4 ‘‘types of enrollment’’:

5 (A) Coverage only of an individual (re6 ferred to in this title as enrollment ‘‘on an indi7 vidual basis’’).

8 (B) Coverage of an individual and the indi9 vidual’s spouse.

10 (C) Coverage of an individual and one

11 child.

12 (D) Coverage of an individual and more

13 than one eligible family member.

14 The types of coverage described in subparagraphs

15 (B) through (D) are collectively referred to in this

16 title as enrollment ‘‘on a family basis’’.

17 (7) UNIFORM SET OF EFFECTIVE BENEFITS.—

18 The term ‘‘uniform set of effective benefits’’ means,

19 for a year, such set of benefits as recommended by

20 the Commission under section 1302(a), if not dis21 approved under such section.
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1 TITLE II—LOW-INCOME ASSIST2 ANCE FOR HEALTH COV3 ERAGE

4 Subtitle A—Low-Income Assistance

5 SEC. 2001. ELIGIBILITY.

6 (a) ENROLLEES UNDER ACCOUNTABLE HEALTH

7 PLANS.—Each low-income individual (as defined in sec8 tion 2009(a)(1)(A)) who is not a medicare-eligible individ9 ual is eligible—

10 (1) for assistance under section 2002(a) with

11 respect to premiums,

12 (2) for assistance under section 2003(a) with

13 respect to cost-sharing otherwise imposed by the

14 plan, and

15 (3) in the case of a very low-income individual,

16 for assistance under section 2004 with respect to

17 certain items and services.

18 (b) MEDICARE-ELIGIBLE INDIVIDUALS.—Each medi19 care-eligible individual who is a low-income individual is

20 eligible—

21 (1) for assistance under section 2002(b) with

22 premiums under the medicare program, and

23 (2) in the case of a very low-income individual,

24 for assistance under section 2003(b) with respect to

25 other medicare cost-sharing and for assistance under
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1 section 2004 with respect to certain items and serv2 ices.

3 SEC. 2002. PREMIUM ASSISTANCE.

4 (a) IN GENERAL.—

5 (1) VERY LOW-INCOME INDIVIDUALS.—In the

6 case of a very low-income individual (as defined in

7 section 2009(a)(3)) who is enrolled in an AHP, the

8 premium assistance under this section consists of—

9 (A) an adjustment in premiums charged

10 the individual under the plan, in accordance

11 with section 1205(c)(1); and

12 (B) payment to the accountable health

13 plan (on behalf of the individual and family

14 members) of the applicable Federal assistance

15 amount (as defined in section 2009(c)(1)) for

16 enrollment under the plan.

17 (2) MODERATELY LOW-INCOME INDIVIDUALS.—

18 In the case of a moderately low-income individual

19 (as defined in section 2009(a)(2)) who is enrolled in

20 an AHP, the premium assistance under this section

21 consists of—

22 (A) an adjustment in premiums charged

23 the individual under the plan, in accordance

24 with section 1205(c)(2); and
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1 (B) payment to the accountable health

2 plan (on behalf of the individual and family

3 members) of the applicable Federal assistance

4 amount (as defined in section 2009(c)(1)) for

5 enrollment under the plan.

6 (b) MEDICARE-ELIGIBLE INDIVIDUALS.—In the case

7 of a medicare-eligible individual described in section

8 2001(b), the premium assistance under this subsection

9 shall consist of payment for premiums imposed under part

10 A (if any) or part B of title XVIII of the Social Security

11 Act. Such assistance shall be provided in a manner so that

12 no such premium amount is deducted from monthly bene13 fits or transfers under section 1818 or 1840 of such Act.

14 SEC. 2003. COST-SHARING ASSISTANCE.

15 (a) NOMINAL COST-SHARING FOR LOW-INCOME IN16 DIVIDUALS.—

17 (1) IN GENERAL.—In the case of a low-income

18 individual described in section 2001(a) who is en19 rolled in an AHP in an enrollee unit, the cost-shar20 ing assistance under this subsection shall consist

21 of—

22 (A) an accountable health plan’s reduction,

23 in accordance with section 1202(c), in the cost24 sharing otherwise imposed to amounts that are
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1 nominal (as specified by the Commission, con2 sistent with paragraph (2)); and

3 (B) payment to the accountable health

4 plan (on behalf of the individual and family

5 members) by the Commission of the adjusted

6 per enrollee cost-sharing assistance amount de7 termined under paragraph (3).

8 (2) NOMINAL.—In establishing what is ‘‘nomi9 nal’’ for purposes of paragraph (1), the Commission

10 shall consider regulations established to carry out

11 section 1916(a)(3) of the Social Security Act (as in

12 effect before the date of the enactment of this Act).

13 (3) ADJUSTED PER ENROLLEE COST-SHARING

14 ASSISTANCE AMOUNT.—

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

16 section, the term ‘‘adjusted per enrollee cost17 sharing assistance amount’’ means, for a year,

18 the product of—

19 (i) the amount determined under sub20 paragraph (B)(i), divided by the number

21 determined under subparagraph (B)(ii);

22 and

23 (ii) the premium class assistance fac24 tor established under subparagraph (C).
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1 (B) DETERMINATION OF AVERAGE PER

2 ENROLLEE COST-SHARING AMOUNT.—Before

3 the beginning of each year the Commission

4 shall estimate—

5 (i) the total amount of cost-sharing

6 assistance to be provided under this section

7 to enrollee units in the year, and

8 (ii) the average number of enrollee

9 units (as defined in section 1701(a)(5)) to

10 be provided such assistance in the year.

11 (C) PREMIUM CLASS ASSISTANCE FAC12 TOR.—The Commission shall establish a factor,

13 for each premium class, that reflects the ratio

14 of the—

15 (i) the average value of the cost-shar16 ing assistance furnished under this section

17 to individuals within the premium class, to

18 (ii) the average value of the cost-shar19 ing assistance furnished under this sub20 section to individuals within all the pre21 mium classes.

22 (b) CERTAIN MEDICARE-ELIGIBLE INDIVIDUALS.—

23 In the case of a very low-income individual described in

24 section 2001(b), the cost-sharing assistance under this
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1 subsection shall consist of payment being made under title

2 XVIII of the Social Security Act—

3 (1) without regard to coinsurance under such

4 title (including coinsurance described in section 1813

5 of such title);

6 (2) without regard to deductibles established

7 under such title (including those described in section

8 1813 and section 1833(b) of such title); and

9 (3) as though any reference to ‘‘80 percent’’ in

10 section 1833(a) of such title were a reference to

11 ‘‘100 percent’’.

12 (c) APPROPRIATION TO COVER PART A ASSIST13 ANCE.—Section 1817(a) of the Social Security Act (42

14 U.S.C. 1395i(a)) is amended by adding at the end the fol15 lowing new sentence: ‘‘In addition to the amounts appro16 priated under this subsection, there are hereby appro17 priated to the Trust Fund, out of any moneys in the

18 Treasury not otherwise appropriated, amounts equivalent

19 to the reductions in the deductibles and coinsurance estab20 lished under section 1813 effected under section 2003(b)

21 of the Managed Competition Act of 1993.’’.

22 SEC. 2004. ASSISTANCE FOR CERTAIN ITEMS AND SERV23 ICES.

24 (a) IN GENERAL.—In the case of a very low-income

25 individual, the special assistance under this section con-
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1 sists of payment under this section with respect to items

2 and services described in subsection (b), subject to sub3 section (c).

4 (b) ITEMS AND SERVICES COVERED.—

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

6 the items and services described in this subsection

7 are—

8 (A) prescription drugs,

9 (B) eyeglasses and hearing aids, and

10 (C) such other items and services as the

11 Commission determines were commonly pro12 vided to individuals described in section

13 1902(a)(10)(A)(i) of the Social Security Act

14 under State medicaid plans under title XIX of

15 such Act (as in effect as of the date of the en16 actment of this Act).

17 (2) EXCLUSIONS.—Items and services described

18 in this subsection shall not include—

19 (A) items and services included in the uni20 form set of effective benefits, and

21 (B) services described in section

22 2101(c)(1)(A) and similar services.

23 (c) NOMINAL COPAYMENTS.—The Commission shall

24 provide for cost-sharing under this section in an amount

25 that is nominal (within the meaning of section 1916(a)(3)
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1 of the Social Security Act, as in effect as of the date of

2 the enactment of this Act).

3 (d) PAYMENT RULES.—The Commission shall pro4 vide for such rules relating to—

5 (1) qualifications of providers of items and serv6 ices, and

7 (2) use of carriers in the administration of this

8 section,

9 as may be appropriate to carry out this section.

10 SEC. 2005. COMPUTATION OF BASE FEDERAL PREMIUM

11 AMOUNT.

12 (a) FORMULA.—

13 (1) IN GENERAL.—For purposes of this Act,

14 the ‘‘base Federal premium amount’’ for an individ15 ual residing in a HPPC area is equal to the product

16 of—

17 (A) reference premium rate (as defined in

18 section 2009(c)(4)) for the individual, and

19 (B) the national subsidy percentage (com20 puted under paragraph (2)).

21 (2) NATIONAL SUBSIDY PERCENTAGE.—In

22 paragraph (1)(B), the term ‘‘national subsidy per23 centage’’ means, for a year—

24 (A) the amount specified under subsection

25 (b)(1), divided by
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1 (B) the total amount of low-income assist2 ance that would be provided if the national sub3 sidy percentage were equal to 100 percent;

4 expressed as a percentage.

5 (b) COMPUTATION OF TOTAL FEDERAL AMOUNT

6 AVAILABLE FOR LOW-INCOME ASSISTANCE.—

7 (1) IN GENERAL.—The amount specified in this

8 paragraph for a year is—

9 (A) the sum determined under paragraph

10 (2) for the year, reduced by

11 (B) the total amount of reductions under

12 paragraph (3) for the year.

13 (2) AVAILABLE FEDERAL FUNDS.—

14 (A) 1995 THROUGH 1999.—The Health

15 Care Standards Commission shall compute, in

16 consultation with the Secretary of Health and

17 Human Services and the Director of the Office

18 of Management and Budget, before the begin19 ning of each of years 1995, 1996, 1997, 1998,

20 and 1999, the sum of—

21 (i) the total dollar amount of Federal

22 financial participation that would have

23 been payable to States under section 1903

24 of the Social Security Act (including such

25 a plan operating under a waiver under sec-
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1 tion 1115 of such Act) for calendar quar2 ters during the year, based on their plans

3 in effect as of the date of the enactment of

4 this Act, taking into account changes

5 scheduled to occur in such a plan as of

6 such date; and

7 (ii) subject to paragraph (4)(A), the

8 total net amount of additional revenues es9 timated by the Secretary of the Treasury

10 to be received during the year due to the

11 amendments made by subtitle A of title I

12 and subtitle C of this title.

13 (B) AFTER 1999.—The Health Care Stand14 ards Commission shall compute, in consultation

15 with the Secretary of Health and Human Serv16 ices and the Director of the Office of Manage17 ment and Budget, before the beginning of 2000

18 and each subsequent year the sum of—

19 (i) the total dollar amount computed

20 under subparagraph (A)(i) (or this clause)

21 for the previous year, increased by the per22 centage increase in the gross domestic

23 product (as determined by the Secretary of

24 Commerce) for the 4-quarter period ending

25 in June of the previous year; and
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1 (ii) subject to paragraph (4)(A), the

2 total net amount of additional revenues es3 timated by the Secretary of the Treasury

4 to be received during the year due to the

5 amendments made by subtitle A of title I

6 and subtitle C of this title.

7 (3) REDUCTIONS.—Subject to paragraph

8 (4)(B), the total amount of reductions described in

9 this paragraph for a year are the sum of the follow10 ing:

11 (A) LONG-TERM CARE PHASE-DOWN AS12 SISTANCE.—The total amount of long-term care

13 phase-down assistance to which States are enti14 tled under section 2101 for calendar quarters

15 during the year.

16 (B) MEDICARE LOW-INCOME ASSIST17 ANCE.—The total amount, estimated by the

18 Commission, of the assistance to be provided

19 under sections 2002(b) and 2003(b) during the

20 year.

21 (C) COST-SHARING.—The total amount,

22 estimated by the Commission, of the cost-shar23 ing assistance to be provided under section

24 2003(a) during the year.
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1 (D) SPECIAL LOW-INCOME ASSISTANCE.—

2 The total amount, estimated by the Commis3 sion, of the special assistance to be provided

4 under section 2004 during the year.

5 (E) GRANTS AND OTHER EXPENDI6 TURES.—In order to provide for grants under

7 section 2006(g) and additional expenditures

8 under subtitle E of title I, subtitle B of title

9 III, subtitle A of title IV, and title V,

10 $523,000,000.

11 (4) ADJUSTMENT FOR OVER- AND UNDER-ESTI12 MATES.—

13 (A) FUNDS AVAILABLE.—The amounts de14 termined under subparagraphs (A)(ii) and

15 (B)(ii) of paragraph (2) for a year shall be in16 creased or decreased by the amount by which

17 the amount estimated under such respective

18 subparagraph for the preceding year was below,

19 or above, the actual amount of revenues for

20 such year.

21 (B) REDUCTIONS.—The amounts specified

22 in subparagraphs (A) through (D) of paragraph

23 (3) for a year shall be increased or decreased

24 by the amount by which the respective amount

25 estimated under such subparagraph for the pre-
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1 ceding year was below, or above, the actual

2 amount described in such subparagraph for

3 such year.

4 SEC. 2006. APPLICATIONS FOR ASSISTANCE.

5 (a) IN GENERAL.—Subject to section 2008, any indi6 vidual who seeks assistance under this subtitle (with re7 spect to himself or herself or a family member) shall sub8 mit a written application, by person or mail, to the Com9 mission.

10 (b) BASIS FOR DETERMINATION.—Subject to section

11 2008 and reconciliation under section 2007(b), eligibility

12 for assistance under this subtitle shall be based on 4 times

13 the family adjusted total income (as defined in section

14 2009(b)(1)) during the 3 months preceding the month in

15 which the application is filed.

16 (c) FORM AND CONTENTS.—An application for as17 sistance under this subtitle shall be in a form and manner

18 specified by the Commission and shall require—

19 (1) the provision of information necessary to

20 make the determinations described in subsection (b),

21 (2) the provision of information respecting the

22 AHP in which the individual is enrolled (or is in the

23 process of enrolling), and

24 (3) the individual to assign rights to assistance

25 under section 2003 to such plan.
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1 Such form also shall include notice that the subsidies

2 under this subtitle will be made as a direct reduction of

3 premiums and cost-sharing under the AHP involved.

4 (d) FREQUENCY OF APPLICATIONS.—

5 (1) IN GENERAL.—An application for assistance

6 under this subtitle may be filed at any time during

7 the year and may be resubmitted (but, except as

8 provided in paragraph (3), not more frequently than

9 once every 3 months) based upon a change of in10 come or family composition.

11 (2) NEED TO REAPPLY.—In the case of an indi12 vidual who—

13 (A) is entitled to assistance under this sub14 title in September of a year, and

15 (B) wishes to remain eligible for assistance

16 for months beginning with January of the fol17 lowing year,

18 the individual (or a family member) must file with

19 the Commission in October of that preceding year a

20 new application for assistance. If a new application

21 under this paragraph is not filed with respect to an

22 individual, an application for such assistance with

23 respect to the individual may not be filed during No24 vember or December of that preceding year.
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1 (3) CORRECTION OF INCOME.—Nothing in

2 paragraph (1) shall be construed as preventing an

3 individual or family from, at any time, submitting an

4 application to reduce the amount of assistance under

5 this subtitle based upon an increase in income from

6 that stated in the previous application.

7 (e) TIMING OF ASSISTANCE.—

8 (1) IN GENERAL.—If an application for assist9 ance under this subtitle is filed—

10 (A) on or before the 15th day of a month,

11 assistance under this subtitle shall be available

12 for premiums for months after such month and,

13 with respect to the cost-sharing, for expenses

14 incurred after such month, and, with respect to

15 special assistance, for items and services fur16 nished after such month; or

17 (B) after the 15th day of a month, assist18 ance under this subtitle shall be available for

19 premiums for months after the month following

20 such month and, with respect to the cost-shar21 ing, for expenses incurred after such following

22 month, and, with respect to special assistance,

23 for items and services furnished after such fol24 lowing month.
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1 (2) WELFARE RECIPIENTS.—In the case of an

2 individual or family with respect to whom an appli3 cation for assistance is not required because of sec4 tion 2008, in applying paragraph (1), the date of ap5 proval of aid or benefits described in such section

6 shall be considered the date of filing of an applica7 tion for assistance under this subtitle.

8 (f) VERIFICATION.—The Commission shall provide

9 for verification, on a sample basis or other basis, of the

10 information supplied in applications under this subtitle.

11 This verification shall be separate from the reconciliation

12 provided under section 2007.

13 (g) HELP IN COMPLETING APPLICATIONS.—The

14 Commission shall provide, from funds appropriated to

15 carry out this subtitle, for grants to public or private non16 profit entities that will make available assistance to indi17 viduals and families in filing applications for assistance

18 under this subtitle. The Commission shall make grants in

19 a manner that provides such assistance at a variety of

20 sites (such as low-income housing projects and shelters for

21 homeless individuals) that are readily accessible to individ22 uals and families eligible for assistance under this subtitle.

23 The total amount of the funds provided in any fiscal year

24 under grants under this subsection may not exceed

25 $10,000,000.
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1 (h) PENALTIES FOR INACCURATE INFORMATION.—

2 (1) INTEREST FOR UNDERSTATEMENTS.—Each

3 individual who knowingly understates income re4 ported in an application for assistance under this

5 subtitle or otherwise makes a material misrepresen6 tation of information in such an application shall be

7 liable to the Health Care Standards Commission for

8 excess payments made based on such understate9 ment or misrepresentation, and for interest on such

10 excess payments at a rate specified by the Commis11 sion.

12 (2) PENALTIES FOR MISREPRESENTATION.—

13 Each individual who knowingly misrepresents mate14 rial information in an application for assistance

15 under this subtitle shall be liable to the Health Care

16 Standards Commission for $1,000 or, if greater,

17 three times the excess payments made based on such

18 misrepresentation.

19 (i) FILING OF APPLICATION DEFINED.—Except as

20 provided in subsection (e)(2), for purposes of this subtitle,

21 an application under this subtitle is considered to be

22 ‘‘filed’’ on the date on which the complete application, in23 cluding all documentation required to act on the applica24 tion, has been filed with the Commission.
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1 SEC. 2007. RECONCILIATION OF PREMIUM ASSISTANCE

2 THROUGH USE OF INCOME STATEMENTS.

3 (a) REQUIREMENT FOR FILING OF INCOME STATE4 MENT.—

5 (1) IN GENERAL.—Subject to section 2008, in

6 the case of a family which is receiving low-income

7 assistance under this subtitle for any month in a

8 year, a member of the family shall file with the

9 Commission, by not later than April 15 of the fol10 lowing year, a statement that verifies the family’s

11 total adjusted family income for the taxable year

12 ending during the previous year. Such a statement

13 shall provide information necessary to determine the

14 family adjusted total income during the year and the

15 number of family members in the family as of the

16 last day of the year.

17 (2) USE OF INCOME TAX RETURN.—The Com18 mission shall provide a process under which the fil19 ing of a Federal income tax return shall constitute

20 the filing of a income statement under paragraph

21 (2).

22 (3) EXTENSION.—The Commission shall permit

23 the extension of the filing deadline under paragraph

24 (1) in such cases as the Commission determines to

25 be appropriate. The Commission shall take into ac-
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1 count the extensions permitted for the filing of Fed2 eral income tax returns.

3 (b) RECONCILIATION OF PREMIUM ASSISTANCE

4 BASED ON ACTUAL INCOME.—Based on and using the in5 come reported in the statement filed under subsection (a)

6 with respect to a family or individual, subject to section

7 2008, the Commission shall compute the amount of assist8 ance that should have been provided under section 2002

9 with respect to premiums for the family in the year in10 volved. If the amount of such assistance computed is—

11 (1) greater than the amount of premium assist12 ance provided, the Commission shall provide for pay13 ment to the family or individual involved of an

14 amount equal to the amount of the deficit, or

15 (2) less than the amount of assistance provided,

16 the Commission shall require the family or individ17 ual to pay to the Commission (to the credit of the

18 program under this subtitle) an amount equal to the

19 amount of the excess payment.

20 (c) DISQUALIFICATION FOR FAILURE TO FILE.—

21 Subject to section 2008, in the case of any individual with

22 respect to whom an information statement under sub23 section (a) is required to be filed in a year and that fails

24 to file such a statement by the deadline specified in such

25 subsection, the individual is not eligible for assistance
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1 under this subtitle after May 1 of such year. The Commis2 sion shall waive the application of this subsection if there

3 is established, to the satisfaction of the Commission, good

4 cause for the failure to file the statement on a timely

5 basis.

6 (d) PENALTIES FOR FALSE INFORMATION.—Any in7 dividual that provides false information in a statement

8 under subsection (a) is subject to a criminal penalty to

9 the same extent as a criminal penalty may be imposed

10 under section 1128B(a) of the Social Security Act with

11 respect to a person described in clause (ii) of such section.

12 (e) NOTICE OF REQUIREMENT.—The Commission

13 shall provide for written notice, in March of each year,

14 of the requirement of subsection (a) to each family which

15 received assistance under this subtitle in any month dur16 ing the preceding year and to which such requirement ap17 plies.

18 (f) TRANSMITTAL OF INFORMATION.—The Commis19 sion of the Treasury shall transmit annually to the Com20 mission such information relating to the adjusted total in21 come of individuals for the taxable year ending in the pre22 vious year as may be necessary to verify the reconciliation

23 of assistance under this section.

24 (g) CONSTRUCTION.—Nothing in this section shall be

25 construed as authorizing reconciliation of assistance pro-
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1 vided with respect to cost-sharing assistance under section

2 2003 or special assistance under section 2004.

3 SEC. 2008. TREATMENT OF CERTAIN CASH ASSISTANCE RE4 CIPIENTS.

5 In the case of a family that has been determined to

6 be eligible for aid under part A or E of title IV of the

7 Social Security Act or an individual who has been deter8 mined to be eligible for supplemental security income ben9 efits under title XVI of such Act—

10 (1) the family or individual is deemed, without

11 the need to file an application for assistance under

12 section 2006, to have adjusted total income below

13 100 percent of the State-adjusted poverty level for

14 the State,

15 (2) the family or individual need not file a

16 statement under section 2007(a), and

17 (3) the assistance received by the family is not

18 subject to reconciliation under section 2007(b).

19 SEC. 2009. DEFINITIONS.

20 (a) DEFINITIONS RELATING TO LOW-INCOME INDI21 VIDUALS.—In this subtitle:

22 (1) LOW-INCOME INDIVIDUAL.—

23 (A) IN GENERAL.—The term ‘‘low-income

24 individual’’ means, in the case of—
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1 (i) a medicare-eligible individual resid2 ing in a State, such an individual whose

3 family adjusted total income (as defined in

4 subsection (b)(1)) is less than 120 percent

5 of the State-adjusted poverty level for the

6 State; or

7 (ii) an individual who is not a medi8 care-eligible individual and who resides in

9 a State, an eligible individual (as defined

10 in section 1701(a)(1)) whose family ad11 justed total income is less than 200 per12 cent of the State-adjusted poverty level for

13 the State.

14 (2) MODERATELY LOW-INCOME INDIVIDUAL.—

15 The term ‘‘moderately low-income individual’’ means

16 a low-income individual (as defined in paragraph

17 (1)) who is not a very low-income individual (as de18 fined in paragraph (3).

19 (3) VERY LOW-INCOME INDIVIDUAL.—The term

20 ‘‘very low-income individual’’ means, with respect to

21 an individual residing in a State, a low-income indi22 vidual whose family adjusted total income is less

23 than 100 percent of the State-adjusted poverty level

24 for the State.
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1 (b) DEFINITIONS RELATING TO INCOME AND POV2 ERTY LINE.—In this subtitle:

3 (1) FAMILY ADJUSTED TOTAL INCOME.—The

4 term ‘‘family adjusted total income’’ means, with re5 spect to an individual, the sum of the modified total

6 income for the individual and all the other eligible

7 family members.

8 (2) MODIFIED FAMILY INCOME.—The term

9 ‘‘modified family income’’ means the sum of—

10 (A) the adjusted gross income (as defined

11 in section 62(a) of the Internal Revenue Code

12 of 1986) of the taxpayer and family members

13 for the taxable year determined without regard

14 to sections 911, 931, and 933 of such Code, de15 termined without the application of paragraphs

16 (6) and (7) of section 62(a) of such Code and

17 without the application of section 162(l) of such

18 Code, plus

19 (B) the interest received or accrued by the

20 taxpayer and family members during such tax21 able year which is exempt from income, plus

22 (C) the amount of social security benefits

23 (described in section 86(d) of such Code) which

24 is not includable in gross income of the tax-
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1 payer and family members under section 86 of

2 such Code.

3 (3) STATE-ADJUSTED POVERTY LEVEL DE4 FINED.—

5 (A) IN GENERAL.—The term ‘‘State-ad6 justed poverty level’’ means, with respect to an

7 individual resident in a State, the poverty line

8 (as defined in paragraph (4)) multiplied by the

9 State adjustment factor (established under sub10 paragraph (B)) for the State.

11 (B) STATE ADJUSTMENT FACTORS.—The

12 Health Care Standards Commission shall estab13 lish, for each State, a State adjustment factor

14 that reflects the relative cost-of-living in the

15 State compared to the cost-of-living in the con16 tinental United States (including Alaska) and

17 Hawaii. The weighted average of such factors

18 shall be 1. Such factors shall be updated annu19 ally.

20 (4) POVERTY LINE.—The term ‘‘poverty line’’

21 means the income official poverty line as defined by

22 the Office of Management and Budget, and revised

23 annually in accordance with section 673(2) of the

24 Omnibus Budget Reconciliation Act of 1981.
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1 (5) FAMILY SIZE.—The family size to be ap2 plied under this subtitle, with respect to family ad3 justed total income, is the number of eligible family

4 members (as defined in section 1701(a)(3)).

5 (c) DEFINITIONS RELATING TO ASSISTANCE AND

6 PREMIUM AMOUNTS.—In this Act:

7 (1) APPLICABLE FEDERAL ASSISTANCE

8 AMOUNT.—The term ‘‘applicable Federal assistance

9 amount’’ means, with respect to—

10 (A) a very low-income individual, the base

11 Federal premium amount (as determined under

12 section 2005(a)(1)), or

13 (B) a moderately low-income individual,

14 the amount by which (i) the applicable low-in15 come premium amount (as defined in para16 graph (2)), exceeds (ii) the base individual pre17 mium (as defined in paragraph (3)),

18 reduced by the amount of any contribution made by

19 an employer with respect to coverage of the individ20 ual.

21 (2) APPLICABLE LOW-INCOME PREMIUM

22 AMOUNT.—The term ‘‘applicable low-income pre23 mium amount’’ means, with respect to a low-income

24 individual, the base Federal premium amount (deter-
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1 mined under section 2005(a)(1)) plus the product

2 of—

3 (A) the individual responsibility percentage

4 (as defined in paragraph (5)), and

5 (B) the amount by which (i) the reference

6 premium rate (as defined in paragraph (4)), ex7 ceeds (ii) the base Federal premium amount.

8 (3) BASE INDIVIDUAL PREMIUM.—The term

9 ‘‘base individual premium’’ means, with respect to

10 an individual, the product of—

11 (A) the individual responsibility percentage

12 (as defined in paragraph (5)), and

13 (B) the reference premium rate (as defined

14 in paragraph (4)).

15 (4) REFERENCE PREMIUM RATE.—The term

16 ‘‘reference premium rate’’ means, with respect to an

17 individual residing in a HPPC area, the lowest pre18 mium—

19 (A) established by an open AHP which en20 rolls at least such proportion of eligible individ21 uals in the HPPC area as the Commission shall

22 specify, and

23 (B) offered in the area for the premium

24 class applicable to such individual (including
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1 the HPPC overhead amount established under

2 section 1105(b)(3)).

3 (5) INDIVIDUAL RESPONSIBILITY PERCENT4 AGE.—The term ‘‘individual responsibility percent5 age’’ means—

6 (A) with respect to a very low-income indi7 vidual, 0 percentage points,

8 (B) with respect to a moderately low-in9 come individual, the number of percentage

10 points by which the family’s family adjusted

11 total income (expressed as a percent of the ap12 plicable poverty line) exceeds 100 percentage

13 points, and

14 (C) with respect to any other individual,

15 100 percentage points.

16 Subtitle B—Long-Term Care Phase17 Down Assistance to States

18 SEC. 2101. LONG-TERM CARE PHASE-DOWN ASSISTANCE.

19 (a) IN GENERAL.—Subject to subsection (b), if the

20 excess percentage (as defined in subsection (c)(3)) for a

21 State is greater than 0 percentage points, the State is en22 titled for each calendar quarter in 1995 through 1998 to

payment equal to 1 23 ⁄4 of the product of—

24 (1) such excess percentage,
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1 (2) the applicable phase-down percentage for

2 the year, described in subsection (c)(4)), and

(3) 1 3 ⁄2 of the amount described in subsection

4 (c)(1)(B).

5 (b) MAINTENANCE OF EFFORT REQUIRED.—A State

6 is not eligible for assistance under subsection (a) for a

7 calendar quarter unless the State provides assurances sat8 isfactory to the Commission that the State is incurring

9 expenses (for services described in subsection (c)(1)(A))

10 in an amount not less than the sum of—

11 (1) the amount of assistance under subsection

12 (a), and

(2) 1 13 ⁄4 of the product of—

14 (A) the State’s effective State medicaid

15 percentage (as defined in subsection (c)(2)),

16 and

(B) 1 17 ⁄2 of the amount described in sub18 section (c)(1)(B).

19 (c) DEFINITIONS.—For purposes of this section:

20 (1) LONG-TERM CARE PERCENTAGE.—The

21 ‘‘long-term care percentage’’ for a State is—

22 (A) the portion of the amount described in

23 subparagraph (B) that is are attributable to

24 medical assistance for nursing facility services,

25 intermediate care facility services for the men-
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1 tally retarded, home health care services, and

2 home and community-based services, divided by

3 (B) the total amount of Federal and State

4 expenditures for medical assistance under the

5 State plan under title XIX of the Social Secu6 rity Act for calendar quarters during fiscal

7 years 1992 and 1993;

8 expressed as a percentage.

9 (2) EFFECTIVE STATE MEDICAID PERCENT10 AGE.—The ‘‘effective State medicaid percentage’’ for

11 a State is—

12 (A)(i) the amount described in subpara13 graph (B), reduced by (ii) the sum of the

14 amount of the Federal financial participation

15 under section 1903(a) of the Social Security

16 Act paid to the State for calendar quarters dur17 ing fiscal years 1992 and 1993 and the amount

18 of health-care related taxes (as defined in sec19 tion 1903(w)(3)(A) of such Act) received by the

20 State during such fiscal years, divided by

21 (B) the total amount of the Federal and

22 State expenditures under its plan under title

23 XIX of the Social Security Act during calendar

24 quarters in fiscal years 1992 and 1993.
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1 (3) EXCESS PERCENTAGE.—The term ‘‘excess

2 percentage’’ means, for a State, percentage by which

3 (A) the long-term care percentage (as defined in

4 paragraph (1)) exceeds (B) 2 percentage points plus

5 the effective State medicaid percentage (as defined

6 in paragraph (2)).

7 (4) APPLICABLE PHASE-DOWN PERCENTAGE.—

8 The ‘‘applicable phase-down percentage’’ for—

9 (A) 1995, is 80 percent,

10 (B) 1996, is 60 percent,

11 (C) 1997, is 40 percent, and

12 (D) 1998, is 20 percent.

13 Subtitle C—Financing

14 PART 1—MEDICARE SAVINGS

15 SEC. 2201. REDUCTION IN UPDATE FOR INPATIENT HOS16 PITAL SERVICES.

17 (a) PPS HOSPITALS.—Section 1886(b)(3)(B)(i) of

18 the Social Security Act (42 U.S.C. 1395ww(b)(3)(B)(i)),

19 as amended by section 13501(a)(1) of the Omnibus Budg20 et Reconciliation Act of 1993 (hereafter in this part re21 ferred to as ‘‘OBRA–1993’’), is amended—

22 (1) in subclause (XII), by striking ‘‘fiscal year

23 1997, the market basket percentage increase minus

24 0.5 percentage point’’ and inserting ‘‘each of the fis25 cal years 1997, 1998, and 1999, the market basket
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1 percentage increase minus 2.5 percentage points’’;

2 and

3 (2) in subclause (XIII), by striking ‘‘fiscal year

4 1998’’ and inserting ‘‘fiscal year 2000’’.

5 (b) PPS-EXEMPT HOSPITALS.—Section

6 1886(b)(3)(B)(ii)(V) of such Act (42 U.S.C.

7 1395ww(b)(3)(B)(ii)(V)), as amended by section

8 13502(a)(1) of OBRA–1993, is amended by striking

9 ‘‘through 1997’’ and inserting ‘‘through 1999’’.

10 SEC. 2202. REDUCTION IN CONVERSION FACTOR FOR PHY11 SICIAN FEE SCHEDULE FOR NON-PRIMARY

12 CARE SERVICES.

13 Section 1848(d)(3)(A) of the Social Security Act (42

14 U.S.C. 1395w–4(d)(3)(A)), as amended by section

15 13511(a)(1) of OBRA–1993, is amended—

16 (1) in clause (i), by striking ‘‘through (v)’’ and

17 inserting ‘‘through (vi)’’;

18 (2) in clause (vi), by striking ‘‘(iv) and (v)’’ and

19 inserting ‘‘(iv), (v), and (vi)’’;

20 (3) by redesignating clause (vi) as clause (vii);

21 and

22 (4) by inserting after clause (v) the following

23 new clause:

24 ‘‘(vi) ADJUSTMENT IN PERCENTAGE

25 INCREASE FOR YEARS FROM 1996
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1 THROUGH 1999.—In applying clause (i) for

2 services furnished during the period begin3 ning January 1, 1996, and ending Decem4 ber 31, 1999, the percentage increase in

5 the appropriate update index shall be re6 duced by such percent as the Secretary de7 termines will result in a reduction in ag8 gregate payments for physicians’ services

9 under this part during such period of at

10 least $6,300,000,000 from the amount of

11 aggregate payments for such services that

12 would otherwise have been made during

13 the period.’’.

14 SEC. 2203. REDUCTION IN HOSPITAL OUTPATIENT SERV15 ICES THROUGH ESTABLISHMENT OF PRO16 SPECTIVE PAYMENT SYSTEM.

17 (a) IN GENERAL.—Section 1833(a)(2)(B) of the So18 cial Security Act (42 U.S.C. 1395l(a)(2)(B)) is amended

19 by striking ‘‘section 1886)—’’ and all that follows and in20 serting the following: ‘‘section 1886), an amount equal to

21 a prospectively determined payment rate established by

22 the Secretary that provides for payments for such items

23 and services to be based upon a national rate adjusted

24 to take into account the relative costs of furnishing such

25 items and services in various geographic areas, except that
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1 for items and services furnished during cost reporting pe2 riods (or portions thereof) in years beginning with 1995,

3 such amount shall be equal to 90 percent of the amount

4 that would otherwise have been determined;’’.

5 (b) ESTABLISHMENT OF PROSPECTIVE PAYMENT

6 SYSTEM.—Not later than July 1, 1994, the Secretary of

7 Health and Human Services shall establish the prospective

8 payment system for hospital outpatient services necessary

9 to carry out section 1833(a)(2)(B) of the Social Security

10 Act (as amended by subsection (a)).

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

12 subsection (a) shall apply to items and services furnished

13 on or after January 1, 1995.

14 SEC. 2204. INCREASE IN MEDICARE PART B PREMIUM FOR

15 INDIVIDUALS WITH HIGH INCOME.

16 (a) IN GENERAL.—Subchapter A of chapter 1 of the

17 Internal Revenue Code of 1986 is amended by adding at

18 the end thereof the following new part:

19 ‘‘PART VIII—MEDICARE PART B PREMIUMS FOR

20 HIGH-INCOME INDIVIDUALS

‘‘Sec. 59B. Medicare part B premium tax.

21 ‘‘SEC. 59B. MEDICARE PART B PREMIUM TAX.

22 ‘‘(a) IMPOSITION OF TAX.—In the case of an individ23 ual to whom this section applies for the taxable year, there

24 is hereby imposed (in addition to any other tax imposed
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1 by this subtitle) a tax for such taxable year equal to the

2 aggregate of the Medicare part B premium taxes for each

3 of the months during such year that such individual is

4 covered by Medicare part B.

5 ‘‘(b) INDIVIDUALS TO WHOM SECTION APPLIES.—

6 This section shall apply to any individual for any taxable

7 year if—

8 ‘‘(1) such individual is covered under Medicare

9 part B for any month during such year, and

10 ‘‘(2) the modified adjusted gross income of the

11 taxpayer for such taxable year exceeds the threshold

12 amount.

13 ‘‘(c) MEDICARE PART B PREMIUM TAX FOR

14 MONTH.—

15 ‘‘(1) IN GENERAL.—The Medicare part B pre16 mium tax for any month is the applicable percentage

17 (as defined in paragraph (2)) of the amount equal

18 to the excess of—

19 ‘‘(A) 150 percent of the monthly actuarial

20 rate for enrollees age 65 and over determined

21 for that calendar year under section 1839(b) of

22 the Social Security Act, over

23 ‘‘(B) the total monthly premium under sec24 tion 1839 of the Social Security Act (deter-
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1 mined without regard to subsections (b) and (f)

2 of section 1839 of such Act).

3 ‘‘(2) PHASE-IN OF TAX.—If the modified ad4 justed gross income of the taxpayer for any taxable

5 years exceeds the threshold amount by—

6 ‘‘(A) less than $25,000, the applicable percentage under this paragraph is 331 7 ⁄3 percent;

8 ‘‘(B) at least $25,000, but less than

9 $50,000, the applicable percentage under this

paragraph is 662 10 ⁄3 percent,

11 ‘‘(C) at least $50,000, but less than

12 $75,000, the applicable percentage under this

13 paragraph is 65/75 (expressed as a percent), or

14 ‘‘(D) at least $75,000, the applicable per15 centage under this paragraph is 100 percent.

16 ‘‘(d) OTHER DEFINITIONS AND SPECIAL RULES.—

17 For purposes of this section—

18 ‘‘(1) THRESHOLD AMOUNT.—The term ‘thresh19 old amount’ means—

20 ‘‘(A) except as otherwise provided in this

21 paragraph, $75,000,

22 ‘‘(B) $100,000 in the case of a joint re23 turn, and

24 ‘‘(C) zero in the case of a taxpayer who—
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1 ‘‘(i) is married at the close of the tax2 able year but does not file a joint return

3 for such year, and

4 ‘‘(ii) does not live apart from his

5 spouse at all times during the taxable year.

6 ‘‘(2) MODIFIED ADJUSTED GROSS INCOME.—

7 The term ‘modified adjusted gross income’ means

8 adjusted gross income—

9 ‘‘(A) determined without regard to sections

10 135, 911, 931, and 933, and

11 ‘‘(B) increased by the amount of interest

12 received or accrued by the taxpayer during the

13 taxable year which is exempt from tax.

14 ‘‘(3) MEDICARE PART B COVERAGE.—An indi15 vidual shall be treated as covered under Medicare

16 part B for any month if a premium is paid under

17 part B of title XVIII of the Social Security Act for

18 the coverage of the individual under such part for

19 the month.

20 ‘‘(4) MARRIED INDIVIDUAL.—The determina21 tion of whether an individual is married shall be

22 made in accordance with section 7703.’’.

23 (b) CLERICAL AMENDMENT.—The table of parts for

24 subchapter A of chapter 1 of such Code is amended by

25 adding at the end thereof the following new item:
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‘‘Part VIII. Medicare Part B Premiums For High-Income Individuals.’’.

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

2 this section shall apply to months after December 1993

3 in taxable years ending after December 31, 1993.

4 SEC. 2205. PHASED-IN ELIMINATION OF MEDICARE HOS5 PITAL DISPROPORTIONATE SHARE ADJUST6 MENT PAYMENTS.

7 Section 1886(d)(5)(F) of the Social Security Act (42

8 U.S.C. 1395ww(d)(5)(F)) is amended—

9 (1) in clause (i), by inserting ‘‘and before Sep10 tember 30, 1998,’’ after ‘‘1986,’’;

11 (2) in clause (ii), by striking ‘‘The amount of

12 such payment’’ and inserting ‘‘Subject to clause (ix),

13 the amount of such payment’’; and

14 (3) by adding at the end the following new

15 clause:

16 ‘‘(ix) The amount of the additional payment made

17 under this paragraph for a discharge shall be equal to—

18 ‘‘(I) for discharges occurring during fiscal year

19 1995, 80 percent of the amount otherwise deter20 mined for the discharge under clause (ii);

21 ‘‘(II) for discharges occurring during fiscal year

22 1996, 60 percent of the amount otherwise deter23 mined for the discharge under clause (ii);
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1 ‘‘(III) for discharges occurring during fiscal

2 year 1997, 40 percent of the amount otherwise de3 termined for the discharge under clause (ii); and

4 ‘‘(IV) for discharges occurring during fiscal

5 year 1998, 20 percent of the amount otherwise de6 termined for the discharge under clause (ii).’’.

7 SEC. 2206. REDUCTION IN ROUTINE COST LIMITS FOR

8 HOME HEALTH SERVICES.

9 Section 1861(v)(1)(L)(i) of the Social Security Act

10 (42 U.S.C. 1395x(v)(1)(L)(i)) is amended—

11 (1) in subclause (II), by striking ‘‘or’’ at the

12 end;

13 (2) in subclause (III)—

14 (A) by inserting ‘‘and before July 1,

15 1995,’’ after ‘‘1977,’’, and

16 (B) by adding ‘‘or’’ at the end; and

17 (3) by inserting after subclause (III) the follow18 ing new subclause:

19 ‘‘(IV) July 1, 1995, 103 percent,’’.

20 SEC. 2207. REDUCTION IN ROUTINE COST LIMITS FOR EX21 TENDED CARE SERVICES.

22 (a) IN GENERAL.—Section 1888(a) of the Social Se23 curity Act (42 U.S.C. 1395yy(a)) is amended—

24 (1) by striking ‘‘112 percent’’ and inserting

25 ‘‘102 percent’’ each place it appears.
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1 (b) EFFECTIVE DATE.—The amendments made by

2 subsection (a) shall apply to cost reporting periods begin3 ning on or after October 1, 1994.

4 SEC. 2208. REDUCTIONS IN PAYMENTS FOR HOSPICE SERV5 ICES.

6 Section 1814(i)(1)(C)(ii) of the Social Security Act

7 (42 U.S.C. 1395f(i)(1)(C)(ii)), as amended by section

8 13504 of OBRA–1993, is amended—

9 (1) in subclause (III), by striking ‘‘1.5 percent10 age points’’ and inserting ‘‘2.5 percentage points’’;

11 (2) in subclause (IV), by striking ‘‘1.5 percent12 age points’’ and inserting ‘‘2.5 percentage points’’;

13 (3) in subclause (V), by striking ‘‘0.5 percent14 age point’’ and inserting ‘‘1.5 percentage points’’

15 and by striking ‘‘and’’ at the end;

16 (4) by redesignating subclause (VI) as

17 subclause (VIII) ; and

18 (5) by inserting after subclause (V) the follow19 ing new subclauses:

20 ‘‘(VI) for fiscal year 1998, the market basket

21 percentage increase for the fiscal year minus 1.0

22 percentage point;

23 ‘‘(VII) for fiscal year 1999, the market basket

24 percentage increase for the fiscal year minus 1.0

25 percentage point; and’’.
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1 PART 2—OTHER SAVINGS

2 SEC. 2211. REQUIREMENT THAT CERTAIN AGENCIES

3 PREFUND GOVERNMENT HEALTH BENEFITS

4 CONTRIBUTIONS FOR THEIR ANNUITANTS.

5 (a) DEFINITIONS.—For the purpose of this section—

6 (1) the term ‘‘agency’’ means any agency or

7 other instrumentality within the executive branch of

8 the Government, the receipts and disbursements of

9 which are not generally included in the totals of the

10 budget of the United States Government submitted

11 by the President;

12 (2) the term ‘‘health benefits plan’’ means, with

13 respect to an agency, a health benefits plan, estab14 lished by or under Federal law, in which employees

15 or annuitants of such agency may participate;

16 (3) the term ‘‘health-benefits coverage’’ means

17 coverage under a health benefits plan’’;

18 (4) an individual shall be considered to be an

19 ‘‘annuitant of an agency’’ if such individual is enti20 tled to an annuity, under a retirement system estab21 lished by or under Federal law, by virtue of—

22 (A) such individual’s service with, and sep23 aration from, such agency; or

24 (B) being the survivor of an annuitant

25 under subparagraph (A) or of an individual who

26 died while employed by such agency; and
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1 (5) the term ‘‘Office’’ means the Office of Per2 sonnel Management.

3 (b) PREFUNDING REQUIREMENT.—

4 (1) IN GENERAL.—Effective as of October 1,

5 1994, each agency (or February 1, 1995, in the case

6 of the agency with the greatest number of employ7 ees, as determined by the Office) shall be required

8 to prepay the Government contributions which are

9 or will be required in connection with providing

10 health-benefits coverage for annuitants of such agen11 cy.

12 (2) REGULATIONS.—The Office shall prescribe

13 such regulations as may be necessary to carry out

14 this section. The regulations shall be designed to en15 sure at least the following:

16 (A) Amounts paid by each agency shall be

17 sufficient to cover the amounts which would

18 otherwise be payable by such agency (on a

19 ‘‘pay-as-you-go’’ basis), on or after the applica20 ble effective date under paragraph (1), on be21 half of—

22 (i) individuals who are annuitants of

23 the agency as of such effective date; and

24 (ii) individuals who are employed by

25 the agency as of such effective date, or
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1 who become employed by the agency after

2 such effective date, after such individuals

3 have become annuitants of the agency (in4 cluding their survivors).

5 (B)(i) For purposes of determining any

6 amounts payable by an agency—

7 (I) this section shall be treated as if

8 it had taken effect at the beginning of the

9 20-year period which ends on the effective

10 date applicable under paragraph (1) with

11 respect to such agency; and

12 (II) in addition to any amounts pay13 able under subparagraph (A), each agency

14 shall also be responsible for paying any

15 amounts for which it would have been re16 sponsible, with respect to the 20-year pe17 riod described in subclause (I), in connec18 tion with any individuals who are annu19 itants or employees of the agency as of the

20 applicable effective date under paragraph

21 (1).

22 (ii) Any amounts payable under this sub23 paragraph for periods preceding the applicable

24 effective date under paragraph (1) shall be pay-
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1 able in equal installments over the 20-year pe2 riod beginning on such effective date.

3 (c) FASB STANDARDS.—Regulations under sub4 section (b) shall be in conformance with the provisions of

5 standard 106 of the Financial Accounting Standards

6 Board, issued in December 1990.

7 (d) CLARIFICATION.—Nothing in this section shall be

8 considered to permit or require duplicative payments on

9 behalf of any individuals.

10 (e) DRAFT LEGISLATION.—The Office shall prepare

11 and submit to Congress any draft legislation which may

12 be necessary in order to carry out this section.

13 Subtitle D—Repeal of Medicaid

14 Program

15 SEC. 2301. REPEAL OF MEDICAID PROGRAM.

16 (a) IN GENERAL.—Title XIX of the Social Security

17 Act is repealed.

18 (b) REPORT ON CONFORMING CHANGES.—By not

19 later than May 1, 1994, the Health Care Standards Com20 mission shall submit to Congress a report on—

21 (1) changes in laws that should be made in

22 order to conform those laws to the repeal in the

23 medicaid program effected under subsection (a), and

24 (2) the need for any special or transitional pro25 visions that should be made in order to ensure con-
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1 tinuous assistance for the medical needs of the med2 icaid population.

3 (c) EFFECTIVE DATE.—The repeal made by sub4 section (a) shall apply to items and service furnished on

5 or after January 1, 1995.

6 TITLE III—TRAINING AND EDU7 CATION OF HEALTH CARE

8 PROFESSIONALS

9 Subtitle A—Reform of Federal

10 Funding for Medical Residency

11 Training

12 SEC. 3001. DEFINITIONS.

13 In this subtitle, the following definitions shall apply:

14 (1) The term ‘‘entry position’’ means, with re15 spect to a medical residency training program, a po16 sition as a resident in the initial year of study in the

17 program.

18 (2) The term ‘‘Fund’’ means the National Med19 ical Education Fund established under section 3005.

20 (3) The term ‘‘medical residency training pro21 gram’’ means a residency or other postgraduate

22 medical training program participation in which may

23 be counted toward certification in a specialty or sub24 specialty and includes formal postgraduate training
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1 programs in geriatric medicine approved by the

2 Health Care Standards Commission.

3 (4) The term ‘‘primary care resident’’ means a

4 resident enrolled in a medical residency training pro5 gram in family medicine, general internal medicine,

6 general pediatrics, preventive medicine, geriatric

7 medicine, or osteopathic general practice.

8 (5) The term ‘‘resident’’ includes any partici9 pant in a medical residency training program (or,

10 for purposes of section 3003, a physician retraining

11 program).

12 (6) The term ‘‘United States medical graduate’’

13 means a resident who is a graduate of —

14 (A) a school of medicine accredited by the

15 Liaison Committee on Medical Education of the

16 American Medical Association (or approved by

17 such Committee as meeting the standards nec18 essary for such accreditation); or

19 (B) a school of osteopathy accredited by

20 the American Osteopathic Association (or ap21 proved by such Association as meeting the

22 standards necessary for such accreditation).
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1 SEC. 3002. APPROVAL OF MEDICAL RESIDENCY TRAINING

2 POSITIONS.

3 (a) IN GENERAL.—The Health Care Standards Com4 mission shall approve a resident training position in a

5 medical residency training program for purposes of fund6 ing under section 3003(a) if—

7 (1) the program submits an application for ap8 proval of the position to the Commission (at such

9 time and in such manner as the Commission may re10 quire); and

11 (2) the Commission determines that the entry

12 position relating to such resident training position in

13 the program has been allocated to the program

14 under subsection (b).

15 (b) ALLOCATION OF ENTRY POSITIONS AMONG PRO16 GRAMS.—

17 (1) IN GENERAL.—For purposes of subsection

18 (a)(2), the Commission shall establish a process for

19 the allocation of entry positions among medical resi20 dency training programs consistent with this sub21 section.

22 (2) TOTAL NUMBER OF FUNDED POSITIONS.—

23 (A) IN GENERAL.—In consultation with ac24 countable health plans, medical societies, and

25 medical specialty societies, the Commission

26 shall determine the appropriate total number of
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1 entry positions that will be allocated to medical

2 residency training programs under this sub3 section in the United States for each residency

4 year. In this subsection, the term ‘‘residency

5 year’’ means a 12-month period beginning with

6 July of the year in which the program begins.

7 (B) BASIS FOR TOTAL NUMBER OF ENTRY

8 POSITIONS.—Subject to subparagraph (C), such

9 total number of entry positions shall be based

10 on the need for health care professionals to pro11 vide cost effective health care services in the

12 United States. In determining such number the

13 Commission shall take into account the popu14 lation-to-physician ratio, consistent with de15 mand for health care services.

16 (C) LIMIT ON TOTAL NUMBER OF ENTRY

17 POSITIONS.—The total number of entry posi18 tions determined under this paragraph for any

19 residency year shall not exceed 110 percent of

20 the number of United States medical graduates

21 who complete undergraduate medical education

22 in the previous year.

23 (D) NO APPLICATION TO RESIDENTS WHO

24 HAVE COMPLETED ANOTHER TRAINING PRO25 GRAM.—The total number determined under
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1 this paragraph shall only apply to residents who

2 may enroll in a program without having pre3 viously completed another medical residency

4 training program.

5 (3) GENERAL DISTRIBUTION OF POSITIONS

6 AMONG SPECIALITIES.—

7 (A) IN GENERAL.—In consultation with ac8 countable health plans, medical societies, and

9 medical specialty societies, the Commission

10 shall determine the appropriate distribution of

11 the total number of entry positions determined

12 under paragraph (2) among the various medical

13 specialties.

14 (B) BASIS FOR DISTRIBUTION.—Such dis15 tribution shall be based on the need for health

16 care professionals in different medical speciali17 ties to provide cost effective health care services

18 in the United States. In determining such dis19 tribution the Commission shall take into ac20 count the population-to-physician ratio with re21 spect to each medical specialty, consistent with

22 demand for health care services, and the spe23 cific needs of accountable health plans.

24 (4) ALLOCATION AMONG PROGRAMS.—
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1 (A) IN GENERAL.—The Commission shall

2 allocate entry positions, distributed among med3 ical specialties under paragraph (3), among spe4 cific medical residency training programs.

5 (B) BASIS FOR ALLOCATION.—Such alloca6 tion shall be based on the recommendations (if

7 any) submitted by the Accreditation Council for

8 Graduate Medical Education and the Residency

9 Review Committees of such Council and the fol10 lowing objectives:

11 (i) Allocating positions among pro12 grams on the basis of quality.

13 (ii) Allocating positions among pro14 grams to avoid an inappropriate geo15 graphic distribution of physicians.

16 (iii) Allocating positions among pro17 grams to assure a sufficient number of

18 residents in outpatient settings.

19 SEC. 3003. FUNDING FOR APPROVED MEDICAL RESIDENCY

20 TRAINING PROGRAMS AND PHYSICIAN RE21 TRAINING PROGRAMS.

22 (a) IN GENERAL.—In the case of an entry position

23 in a medical residency training program that is approved

24 by the Commission under section 3002(a) and in the case

25 of an entry position in a physician retraining program de-
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1 scribed in subsection (d)(1) for a residency year, the Com2 mission shall provide a payment to the program on the

3 first day of each month of the year from the National

4 Medical Education Fund established under section 3005

5 in the amount determined under subsection (b). This sub6 section constitutes budget authority in advance of appro7 priations Acts, and represents the obligation of the Fed8 eral Government to make payments to such programs in

9 accordance with this subtitle. No payment shall be made

10 under this subsection for a month before July 1995.

11 (b) PAYMENT AMOUNT.—

12 (1) IN GENERAL.—Subject to subsection (e),

13 the amount of payment made to an approved medi14 cal residency training program or a physician re15 training program for each approved entry position

16 for a full-time equivalent resident, shall be equal to

17 the applicable percentage (as defined in paragraph

18 (3)) of the base per resident amount established by

19 the Commission for the year under paragraph (2)

20 for that resident.

21 (2) BASE PER RESIDENT AMOUNT.—The Com22 mission shall establish a base per resident amount

23 for each year (beginning with 1995) that reflects an

24 appropriate measure of the salary and benefits paid

25 to residents in medical residency training programs
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1 during the year. The Commission may vary such

2 amount for residents to take into account—

3 (A) increases provided in the salaries and

4 benefits of residents on the basis of the length

5 of service in the program; and

6 (B) the relative wages and other costs of

7 goods and services among the various geo8 graphic areas in which such programs are oper9 ated.

10 (3) APPLICABLE PERCENTAGE DEFINED.—In

11 paragraph (1), the ‘‘applicable percentage’’ with re12 spect to a resident is equal to—

13 (A) 175 percent, in the case of a primary

14 care resident; and

15 (B) 150 percent, in the case of a resident

16 who is not a primary care resident.

17 (c) LIMIT ON LENGTH OF SERVICE OF RESIDENT.—

18 (1) IN GENERAL.—No payment shall be made

19 under subsection (a) for any resident who has com20 pleted 4 years of medical residency training in any

21 program.

22 (2) EXCEPTION.—Paragraph (1) shall not

23 apply to a resident enrolled in a physician retraining

24 program described in subsection (d)(1).
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1 (d) FUNDING OF PHYSICIAN RETRAINING PRO2 GRAMS.—

3 (1) PROGRAM DESCRIBED.—A physician re4 training program described in this paragraph is a

5 program that—

6 (A) provides training over a period of not

7 to exceed 2 years for primary care residents for

8 physicians who have completed training in a

9 medical residency training program (other than

10 as a primary care resident); and

11 (B) meets such other requirements as the

12 Commission (in consultation with the Accredita13 tion Council for Graduate Medical Education)

14 may impose.

15 (2) FUNDING FOR PILOT PROGRAMS.—The

16 Health Care Standards Commission shall make pay17 ments from the Fund to assist the development of

18 physician retraining programs described in para19 graph (1).

20 (e) LIMIT ON EXPENDITURES FOR PROGRAMS.—The

21 amounts otherwise payable under this section shall be re22 duced, in a pro rata manner, to the extent necessary to

23 assure that the total amount expended by the Health Care

24 Standards Commission during a year for payments under

25 this section do not exceed the Commission’s estimate of
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1 the amount of funds available for expenditure from the

2 Fund in the year.

3 SEC. 3004. FINANCING.

4 (a) ASSESSMENT AGAINST PREMIUMS OF ACCOUNT5 ABLE HEALTH PLANS.—For requirement of payment by

6 accountable health plans to the National Medical Edu7 cation Fund of 1 percent of gross premium receipts, see

8 section 1211.

9 (b) PAYMENTS FROM MEDICARE.—Title XVIII of

10 the Social Security Act (42 U.S.C. 1395 et seq.) is amend11 ed by inserting after section 1889 the following new

12 section:

13 ‘‘PAYMENTS TO NATIONAL MEDICAL EDUCATION FUND

14 ‘‘SEC. 1890. (a) ANNUAL PAYMENT REQUIRED.—

15 For each month (beginning with July 1995), the Secretary

16 shall make a payment to the National Medical Education

17 Fund established under section 3005 of the Managed

18 Competition Act of 1993 in an amount that is equal, for

a month in a fiscal year, to 1 19 ⁄12 of 1 percent of the Sec20 retary’s estimate of the total expenditures made by the

21 Secretary under this title during the preceding fiscal year,

22 adjusted to the extent of any overpayment or

23 underpayment which the Secretary determines was made

24 under this section for any prior fiscal year and with re25 spect to which adjustment has not already been made

26 under this subsection.
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1 ‘‘(b) ALLOCATION AMONG TRUST FUNDS.—The Sec2 retary shall provide for an allocation of the payment made

3 under subsection (a) between the Federal Hospital Insur4 ance Trust Fund and the Federal Supplementary Medical

5 Insurance Trust Fund in a proportion that reasonably re6 flects the proportion of medical education costs of hos7 pitals for which payment was made under this title for

8 cost reporting periods during fiscal year 1993 that are as9 sociated with the provision of services under part A and

10 part B.’’.

11 SEC. 3005. NATIONAL MEDICAL EDUCATION FUND.

12 (a) ESTABLISHMENT.—There is hereby established in

13 the Treasury of the United States a fund to be known

14 as the ‘‘National Medical Education Fund’’, which shall

15 consist of—

16 (1) amounts paid into the Fund by (or on be17 half of) accountable health plans pursuant to section

18 1211;

19 (2) amounts paid into the Fund by the Sec20 retary of Health and Human Services under section

21 1890 of the Social Security Act (as added by section

22 3004(b)); and

23 (3) such other amounts that may otherwise be

24 deposited in or appropriated to the Fund.
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1 (b) USE OF AMOUNTS IN FUND.—Amounts in the

2 Fund shall be used by the Health Care Standards Com3 mission to make payments to medical residency training

4 programs and physician retraining programs under sec5 tion 3003(b).

6 (c) MANAGEMENT OF FUND.—

7 (1) IN GENERAL; REPORTS ON OPERATION.—

8 The Secretary of the Treasury shall, in consultation

9 with the Health Care Standards Commission, man10 age the Fund, and shall report to Congress each

11 year on the financial condition and the results of the

12 operation of the Fund during the preceding year and

13 on the expected condition and operations of the

14 Fund during the next 5 years.

15 (2) INVESTMENT.—The Secretary of the Treas16 ury shall invest the portion of the Fund that is not,

17 in the judgment of the Secretary and of the Health

18 Care Standards Commission, required to meet cur19 rent withdrawals. Any investments of monies in the

20 Fund may be made only in interest-bearing obliga21 tions of the United States.

22 SEC. 3006. REPEAL OF SEPARATE MEDICAL EDUCATION

23 PAYMENTS UNDER MEDICARE.

24 (a) PROHIBITING RECOGNITION OF MEDICAL EDU25 CATION COSTS UNDER PART B.—Section 1861(v)(1) of
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1 the Social Security Act (42 U.S.C. 1395x(v)(1)) is amend2 ed by adding at the end the following new subparagraph:

3 ‘‘(T) In determining such reasonable costs, the Sec4 retary may not include any costs incurred by a provider

5 for graduate medical education.’’.

6 (b) REPEAL OF ADJUSTMENT FOR INDIRECT MEDI7 CAL EDUCATION COSTS.—Section 1886(d)(5) of such Act

8 (42 U.S.C. 1395ww(d)(5)) is amended by striking sub9 paragraph (B).

10 (c) REPEAL OF PAYMENTS FOR DIRECT GRADUATE

11 MEDICAL EDUCATION COSTS.—Section 1886 of such Act

12 (42 U.S.C. 1395ww) is amended by striking subsection (h)

13 and redesignating subsection (i) as subsection (h).

14 (d) CONFORMING AMENDMENTS.—Section 1886(d)

15 of such Act (42 U.S.C. 1395ww(d)) is amended—

16 (1) in paragraph (3)(C)(ii)—

17 (A) by inserting ‘‘and before October 1,

18 1994,’’ after ‘‘September 30, 1986,’’; and

19 (B) by inserting ‘‘and on or before Sep20 tember 30, 1994,’’ after ‘‘October 1, 1986,’’;

21 and

22 (2) in paragraph (9)(D), by striking clause (ii)

23 and redesignating clauses (iii) and (iv) as clauses (ii)

24 and (iii).

25 (e) EFFECTIVE DATES.—
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1 (1) REASONABLE COSTS.—The amendment

2 made by subsection (a) shall apply to costs incurred

3 on or after July 1, 1995.

4 (2) INDIRECT MEDICAL EDUCATION ADJUST5 MENT.—The amendments made by subsections (b)

6 and (d) shall apply to discharges occurring on or

7 after July 1, 1995.

8 (3) DIRECT MEDICAL EDUCATION.—The

9 amendment made by subsection (c) shall apply to

10 portions of cost reporting periods beginning on or

11 after July 1, 1995.

12 Subtitle B—Other Medical

13 Education Grants and Programs

14 SEC. 3101. SCHOLARSHIP AND LOAN REPAYMENT PRO15 GRAMS OF NATIONAL HEALTH SERVICE

16 CORPS.

17 Section 338H(b)(1) of the Public Health Service Act

18 (42 U.S.C. 254q(b)(1)) is amended—

19 (1) by striking ‘‘and’’ after ‘‘1991,’’; and

20 (2) by striking ‘‘through 2000.’’ and inserting

21 ‘‘through 1994, $150,000,000 for fiscal year 1995,

22 $175,000,000 for fiscal year 1996, $200,000,000 for

23 fiscal year 1997, $225,000,000 for fiscal year 1998,

24 and $250,000,000 for fiscal year 1999.’’.
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1 SEC. 3102. AREA HEALTH EDUCATION CENTERS.

2 Section 746(i)(1)(A) of the Public Health Service Act

3 (42 U.S.C. 293j(i)(1)(A)) is amended by striking

4 ‘‘through 1995’’ and inserting ‘‘through 1994 and

5 $30,000,000 for each of the fiscal years 1995 through

6 1999’’.

7 SEC. 3103. PUBLIC HEALTH AND PREVENTIVE MEDICINE.

8 Section 765(a) of the Public Health Service Act (42

9 U.S.C. 294c(a)) is amended by striking ‘‘through 1995’’

10 and inserting ‘‘through 1999’’.

11 SEC. 3104. FAMILY MEDICINE.

12 Section 747(d)(1) of the Public Health Service Act

13 (42 U.S.C. 293k(d)(1)) is amended by striking ‘‘through

14 1995’’ and inserting ‘‘through 1999’’.

15 SEC. 3105. GENERAL INTERNAL MEDICINE AND PEDIAT16 RICS.

17 Section 748(c) of the Public Health Service Act (42

18 U.S.C. 293l(c)) is amended by striking ‘‘through 1995’’

19 and inserting ‘‘through 1999’’.

20 SEC. 3106. PHYSICIAN ASSISTANTS.

21 Section 750(d)(1) of the Public Health Service Act

22 (42 U.S.C. 293n(d)(1)) is amended by striking ‘‘through

23 1995’’ and inserting ‘‘through 1999’’.
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1 SEC. 3107. ALLIED HEALTH PROJECT GRANTS AND CON2 TRACTS.

3 Section 767(d) of the Public Health Service Act (42

4 U.S.C. 294e(d)) is amended by striking ‘‘through 1995’’

5 and inserting ‘‘through 1999’’.

6 SEC. 3108. NURSE ALLIED HEALTH PROJECT GRANTS AND

7 CONTRACTS.

8 Section 767(d) of the Public Health Service Act (42

9 U.S.C. 294e(d)) is amended by striking ‘‘through 1995’’

10 and inserting ‘‘through 1999’’.

11 SEC. 3109. NURSE PRACTITIONER AND NURSE MIDWIFE

12 PROGRAMS.

13 Section 822(d) of the Public Health Service Act (42

14 U.S.C. 296m(d)) is amended by striking ‘‘and 1994’’ and

15 inserting ‘‘through 1999’’.

16 SEC. 3110. USE OF HEALTH CARE POLICY AND RESEARCH

17 FUNDS FOR PRIMARY CARE.

18 Section 926 of the Public Health Service Act (42

19 U.S.C. 299c–5), as amended by section 10 of Public Law

20 102–410 (106 Stat. 2101), is amended by adding at the

21 end the following subsection:

22 ‘‘(f) ALLOCATION REGARDING PRIMARY CARE.—Of

23 the amounts made available for a fiscal year for carrying

24 out this title, the Secretary shall obligate not less than

25 15 percent for carrying out section 902 with respect to

26 primary care.’’.
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1 TITLE IV—PREVENTIVE HEALTH

2 AND INDIVIDUAL RESPON3 SIBILITY

4 Subtitle A—Expansion of Public

5 Health Programs

6 SEC. 4001. IMMUNIZATIONS AGAINST VACCINE-PREVENT7 ABLE DISEASES.

8 Section 317(j)(1)(A) of the Public Health Service Act

9 (42 U.S.C. 247b(j)(1)(A)) is amended by striking

10 ‘‘through 1995’’ and inserting ‘‘through 1999’’.

11 SEC. 4002. PREVENTION, CONTROL, AND ELIMINATION OF

12 TUBERCULOSIS.

13 Section 317(j)(2) of the Public Health Service Act

14 (42 U.S.C. 247b(j)(2)) is amended by striking ‘‘through

15 1995’’ and inserting ‘‘through 1999’’.

16 SEC. 4003. LEAD POISONING PREVENTION.–

17 Section 317A(l)(1) of the Public Health Service Act

18 (42 U.S.C. 247b–1(l)(1)) is amended by striking ‘‘through

19 1997’’ and inserting ‘‘through 1999’’.

20 SEC. 4004. PREVENTIVE HEALTH MEASURES WITH RE21 SPECT TO BREAST AND CERVICAL CANCERS.

22 Section 1509(a) of the Public Health Service Act (42

23 U.S.C. 300n–5(a)) is amended—

24 (1) by striking ‘‘and’’ after ‘‘1991,’’, and
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1 (2) by striking ‘‘1993.’’ and inserting ‘‘1993,

2 $100,000,000 for each of the fiscal years 1994

3 through 1996, and such sums as may be necessary

4 for each of the fiscal years 1997 through 1999.’’.

5 SEC. 4005. OFFICE OF DISEASE PREVENTION AND HEALTH

6 PROMOTION.

7 (a) IN GENERAL.—Section 1701(b) of the Public

8 Health Service Act (42 U.S.C. 300u(b)) is amended by

9 striking ‘‘through 1996’’ and inserting ‘‘through 1999’’.

10 (b) PROMOTION OF INDIVIDUAL RESPONSIBILITY.—

11 Section 1701(a)(11) of such Act (42 U.S.C. 300u(a)(11))

12 is amended—

13 (1) by striking ‘‘and’’ at the end of subpara14 graph (C),

15 (2) by redesignating subparagraph (D) as sub16 paragraph (E), and

17 (3) by inserting after subparagraph (C) the fol18 lowing new subparagraph:

19 ‘‘(D) promote individual responsibility in

20 personal health care and in the use of valuable

21 health care resources; and’’.

22 (c) MINORITY HEALTH.—Section 1707(f) of such Act

23 (42 U.S.C. 300u–6(f)) is amended by striking ‘‘1993.’’

24 and inserting ‘‘1993, $35,000,000 for each of the fiscal
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1 years 1994 through 1996, and such sums as may be nec2 essary for each of the fiscal years 1997 through 1999.’’.

3 SEC. 4006. PREVENTIVE HEALTH AND HEALTH SERVICES

4 BLOCK GRANT.

5 Section 1901(a) of the Public Health Service Act (42

6 U.S.C. 300w(a)) is amended by striking ‘‘through 1997’’

7 and inserting ‘‘through 1999’’.

8 SEC. 4007. CATEGORICAL GRANTS FOR EARLY INTERVEN9 TION REGARDING ACQUIRED IMMUNE DEFI10 CIENCY SYNDROME.

11 Section 2655 of the Public Health Service Act (42

12 U.S.C. 300ff–55) is amended by striking ‘‘through 1995’’

13 and inserting ‘‘through 1999’’.

14 SEC. 4008. PROGRAMS OF OFFICE OF SMOKING AND

15 HEALTH.

16 In addition to any other authorization of appropria17 tions that is available for programs of the Centers for Dis18 ease Control regarding the smoking of tobacco products,

19 there is authorized to be appropriated for such programs

20 $10,000,000 for each of the fiscal years 1995 through

21 1999.
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1 Subtitle B—Medicare

2 PART 1—COVERAGE OF PREVENTIVE SERVICES

3 SEC. 4101. COVERAGE OF COLORECTAL SCREENING.

4 (a) IN GENERAL.—Section 1834 of the Social Secu5 rity Act (42 U.S.C. 1395m) is amended by inserting after

6 subsection (c) the following new subsection:

7 ‘‘(d) FREQUENCY AND PAYMENT LIMITS FOR

8 SCREENING FECAL-OCCULT BLOOD TESTS AND SCREEN9 ING FLEXIBLE SIGMOIDOSCOPIES.—

10 ‘‘(1) SCREENING FECAL-OCCULT BLOOD

11 TESTS.—

12 ‘‘(A) PAYMENT LIMIT.—In establishing fee

13 schedules under section 1833(h) with respect to

14 screening fecal-occult blood tests provided for

15 the purpose of early detection of colon cancer,

16 except as provided by the Secretary under para17 graph (3)(A), the payment amount established

18 for tests performed—

19 ‘‘(i) in 1995 shall not exceed $5; and

20 ‘‘(ii) in a subsequent year, shall not

21 exceed the limit on the payment amount

22 established under this subsection for such

23 tests for the preceding year, adjusted by

24 the applicable adjustment under section

25 1833(h) for tests performed in such year.
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1 ‘‘(B) FREQUENCY LIMIT.—Subject to revi2 sion by the Secretary under paragraph (3)(B),

3 no payment may be made under this part for

4 a screening fecal-occult blood test provided to

5 an individual for the purpose of early detection

6 of colon cancer—

7 ‘‘(i) if the individual is under 50 years

8 of age; or

9 ‘‘(ii) if the test is performed within

10 the 11 months after a previous screening

11 fecal-occult blood test.

12 ‘‘(2) SCREENING FLEXIBLE SIGMOIDOS13 COPIES.—

14 ‘‘(A) PAYMENT AMOUNT.—The Secretary

15 shall establish a payment amount under section

16 1848 with respect to screening flexible

17 sigmoidoscopies provided for the purpose of

18 early detection of colon cancer that is consistent

19 with payment amounts under such section for

20 similar or related services, except that such

21 payment amount shall be established without

22 regard to subsection (a)(2)(A) of such section.

23 ‘‘(B) FREQUENCY LIMIT.—Subject to revi24 sion by the Secretary under paragraph (3)(B),

25 no payment may be made under this part for
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1 a screening flexible sigmoidoscopy provided to

2 an individual for the purpose of early detection

3 of colon cancer—

4 ‘‘(i) if the individual is under 50 years

5 of age; or

6 ‘‘(ii) if the procedure is performed

7 within the 59 months after a previous

8 screening flexible sigmoidoscopy.

9 ‘‘(3) REDUCTIONS IN PAYMENT LIMIT AND RE10 VISION OF FREQUENCY.—

11 ‘‘(A) REDUCTIONS IN PAYMENT LIMIT.—

12 The Secretary shall review from time to time

13 the appropriateness of the amount of the pay14 ment limit established for screening fecal-occult

15 blood tests under paragraph (1)(A). The Sec16 retary may, with respect to tests performed in

17 a year after 1997, reduce the amount of such

18 limit as it applies nationally or in any area to

19 the amount that the Secretary estimates is re20 quired to assure that such tests of an appro21 priate quality are readily and conveniently

22 available during the year.

23 ‘‘(B) REVISION OF FREQUENCY.—

24 ‘‘(i) REVIEW.—The Secretary, in con25 sultation with the Director of the National
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1 Cancer Institute, shall review periodically

2 the appropriate frequency for performing

3 screening fecal-occult blood tests and

4 screening flexible sigmoidoscopies based on

5 age and such other factors as the Sec6 retary believes to be pertinent.

7 ‘‘(ii) REVISION OF FREQUENCY.—The

8 Secretary, taking into consideration the re9 view made under clause (i), may revise

10 from time to time the frequency with

11 which such tests and procedures may be

12 paid for under this subsection, but no such

13 revision shall apply to tests or procedures

14 performed before January 1, 1998.

15 ‘‘(4) LIMITING CHARGES OF NONPARTICIPATING

16 PHYSICIANS.—

17 ‘‘(A) IN GENERAL.—In the case of a

18 screening flexible sigmoidoscopy provided to an

19 individual for the purpose of early detection of

20 colon cancer for which payment may be made

21 under this part, if a nonparticipating physician

22 provides the procedure to an individual enrolled

23 under this part, the physician may not charge

24 the individual more than the limiting charge (as
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1 defined in subparagraph (B), or, if less, as de2 fined in section 1848(g)(2)).

3 ‘‘(B) LIMITING CHARGE DEFINED.—In

4 subparagraph (A), the term ‘limiting charge’

5 means 115 percent of the payment limit estab6 lished under paragraph (2)(A).

7 ‘‘(C) ENFORCEMENT.—If a physician or

8 supplier knowing and willfully imposes a charge

9 in violation of subparagraph (A), the Secretary

10 may apply sanctions against such physician or

11 supplier in accordance with section

12 1842(j)(2).’’.

13 (b) CONFORMING AMENDMENTS.—(1) Paragraphs

14 (1)(D) and (2)(D) of section 1833(a) of such Act (42

15 U.S.C. 1395l(a)) are each amended by striking ‘‘sub16 section (h)(1),’’ and inserting ‘‘subsection (h)(1) or section

17 1834(d)(1),’’.

18 (2) Section 1833(h)(1)(A) of such Act (42 U.S.C.

19 1395l(h)(1)(A)) is amended by striking ‘‘The Secretary’’

20 and inserting ‘‘Subject to paragraphs (1) and (3)(A) of

21 section 1834(d), the Secretary’’.

22 (3) Clauses (i) and (ii) of section 1848(a)(2)(A) of

23 such Act (42 U.S.C. 1395w–4(a)(2)(A)) are each amended

24 by striking ‘‘a service’’ and inserting ‘‘a service (other

25 than a screening flexible sigmoidoscopy provided to an in-
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1 dividual for the purpose of early detection of colon can2 cer)’’.

3 (4) Section 1862(a) of such Act (42 U.S.C. 1395y(a))

4 is amended—

5 (A) in paragraph (1)—

6 (i) in subparagraph (E), by striking ‘‘and’’

7 at the end,

8 (ii) in subparagraph (F), by striking the

9 semicolon at the end and inserting ‘‘, and’’, and

10 (iii) by adding at the end the following new

11 subparagraph:

12 ‘‘(G) in the case of screening fecal-occult blood

13 tests and screening flexible sigmoidoscopies provided

14 for the purpose of early detection of colon cancer,

15 which are performed more frequently than is covered

16 under section 1834(d);’’; and

17 (B) in paragraph (7), by striking ‘‘paragraph

18 (1)(B) or under paragraph (1)(F)’’ and inserting

19 ‘‘subparagraphs (B), (F), or (G) of paragraph (1)’’.

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

21 this section shall apply to screening fecal-occult blood tests

22 and screening flexible sigmoidoscopies performed on or

23 after January 1, 1995.
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1 SEC. 4102. COVERAGE OF CERTAIN IMMUNIZATIONS.

2 (a) IN GENERAL.—Section 1861(s)(10) of the Social

3 Security Act (42 U.S.C. 1395x(s)(10)) is amended—

4 (1) in subparagraph (A)—

5 (A) by striking ‘‘, subject to section

6 4071(b) of the Omnibus Budget Reconciliation

7 Act of 1987,’’, and

8 (B) by striking ‘‘; and’’ and inserting a

9 comma;

10 (2) in subparagraph (B), by striking the semi11 colon at the end and inserting ‘‘, and’’; and

12 (3) by adding at the end the following new sub13 paragraph:

14 ‘‘(C) tetanus-diphtheria booster and its admin15 istration;’’.

16 (b) LIMITATION ON FREQUENCY.—Section

17 1862(a)(1) of such Act (42 U.S.C. 1395y(a)(1)), as

18 amended by section 4101(b)(4)(A) of this Act, is amend19 ed—

20 (1) in subparagraph (F), by striking ‘‘and’’ at

21 the end;

22 (2) in subparagraph (G), by striking the semi23 colon at the end and inserting ‘‘, and’’; and

24 (3) by adding at the end the following new sub25 paragraph:
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1 ‘‘(H) in the case of an influenza vaccine, which

2 is administered within the 11 months after a pre3 vious influenza vaccine, and, in the case of a teta4 nus-diphtheria booster, which is administered within

5 the 119 months after a previous tetanus-diphtheria

6 booster;’’.

7 (c) CONFORMING AMENDMENT.—Section 1862(a)(7)

8 of such Act (42 U.S.C. 1395y(a)(7)), as amended by sec9 tion 4101(b)(4)(B) of this Act, is amended by striking ‘‘or

10 (G)’’ and inserting ‘‘(G), or (H)’’.

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

12 this section shall apply to influenza vaccines and tetanus13 diphtheria boosters administered on or after January 1,

14 1995.

15 SEC. 4103. COVERAGE OF WELL-CHILD CARE.

16 (a) IN GENERAL.—Section 1861(s)(2) of the Social

17 Security Act (42 U.S.C. 1395x(s)(2)), as amended by sec18 tion 13553(a) of the Omnibus Budget Reconciliation Act

19 of 1993, is amended—

20 (1) by striking ‘‘and’’ at the end of subpara21 graph (P);

22 (2) by striking the semicolon at the end of sub23 paragraph (Q) and inserting ‘‘; and’’; and

24 (3) by adding at the end the following new sub25 paragraph:
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1 ‘‘(R) well-child services (as defined in sub2 section (ll)(1)) provided to an individual entitled to

3 benefits under this title who is under 7 years of

4 age;’’.

5 (b) SERVICES DEFINED.—Section 1861 of such Act

6 (42 U.S.C. 1395x) is amended—

7 (1) by redesignating the subsection (jj) added

8 by section 4156(a)(2) of the Omnibus Budget Rec9 onciliation Act of 1990 as subsection (kk); and

10 (2) by inserting after subsection (kk) (as so re11 designated) the following new subsection:

12 ‘‘Well-Child Services

13 ‘‘(ll)(1) The term ‘well-child services’ means well14 child care, including routine office visits, routine immuni15 zations (including the vaccine itself), routine laboratory

16 tests, and preventive dental care, provided in accordance

17 with the periodicity schedule established with respect to

18 the services under paragraph (2).

19 ‘‘(2) The Secretary, in consultation with the Amer20 ican Academy of Pediatrics, the Advisory Committee on

21 Immunization Practices, and other entities considered ap22 propriate by the Secretary, shall establish a schedule of

23 periodicity which reflects the appropriate frequency with

24 which the services referred to in paragraph (1) should be

25 provided to healthy children.’’.
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1 (c) CONFORMING AMENDMENTS.—(1) Section

2 1861(s)(2)(O) of such Act (42 U.S.C. 1395x(s)(2)(O)) is

3 amended by striking ‘‘subsection (jj)’’ and inserting ‘‘sub4 section (kk)’’.

5 (2) Section 1862(a)(1) of such Act (42 U.S.C.

6 1395y(a)(1)), as amended by sections 4101(b)(4)(A) and

7 4102(b) of this Act, is amended—

8 (A) in subparagraph (G), by striking ‘‘and’’ at

9 the end;

10 (B) in subparagraph (H), by striking the semi11 colon at the end and inserting ‘‘, and’’; and

12 (C) by adding at the end the following new sub13 paragraph:

14 ‘‘(I) in the case of well-child services, which are

15 provided more frequently than is provided under the

16 schedule of periodicity established by the Secretary

17 under section 1861(ll)(2) for such services;’’.

18 (3) Section 1862(a)(7) of such Act (42 U.S.C.

19 1395y(a)(7)), as amended by sections 4101(b)(4)(B) and

20 4102(c) of this Act, is amended by striking ‘‘or (H)’’ and

21 inserting ‘‘(H), or (I)’’.

22 (d) EFFECTIVE DATE.—The amendments made by

23 this section shall apply to well-child services provided on

24 or after January 1, 1995.
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1 SEC. 4104. ANNUAL SCREENING MAMMOGRAPHY.

2 (a) ANNUAL SCREENING MAMMOGRAPHY FOR

3 WOMEN OVER AGE 64.—Section 1834(c)(2)(A) of the So4 cial Security Act (42 U.S.C. 1395m(b)(2)(A)) is amend5 ed—

6 (1) in clause (iv), by striking ‘‘but under 65

7 years of age,’’, and

8 (2) by striking clause (v).

9 (b) EFFECTIVE DATE.—The amendments made by

10 subsection (a) shall apply to screening mammography per11 formed on or after January 1, 1995.

12 SEC. 4105. FINANCING OF ADDITIONAL BENEFITS.

13 (a) PREMIUM FOR 1995.—Section 1839(e)(1)(B)(v)

14 of the Social Security Act (42 U.S.C. 1395r(e)(1)(B)(v))

15 is amended by striking ‘‘$46.10’’ and inserting ‘‘$47.50’’.

16 (b) PREMIUMS FOR 1996–1998.—(1) Section 1839 of

17 such Act (42 U.S.C. 1395r) is amended by adding at the

18 end the following new subsection:

19 ‘‘(g) Except as provided in subsections (b) and (f),

20 the monthly premium otherwise determined, without re21 gard to this subsection, for each individual enrolled under

22 this part shall be increased by $1.40 for each month in

23 1996, 1997, and 1998.’’.

24 (2) Section 1839 of such Act (42 U.S.C. 1395r) is

25 amended—
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1 (A) in subsection (a)(2), by striking ‘‘(b) and

2 (e)’’ and inserting ‘‘(b), (e), and (g)’’,

3 (B) in subsection (a)(3), by striking ‘‘subsection

4 (e)’’ and inserting ‘‘subsections (e) and (g)’’, and

5 (C) in subsection (b), by striking ‘‘determined

6 under subsection (a) or (e)’’ and inserting ‘‘other7 wise determined under this section (without regard

8 to subsection (f))’’.

9 PART 2—NOTICE OF ADVANCE DIRECTIVE

10 RIGHTS

11 SEC. 4111. PROVIDING NOTICE OF RIGHTS REGARDING

12 MEDICAL CARE TO INDIVIDUALS ENTERING

13 MEDICARE.

14 (a) IN GENERAL.—Section 1804 of the Social Secu15 rity Act (42 U.S.C. 1395b–2) is amended—

16 (1) in paragraph (2), by striking ‘‘and’’ at the

17 end;

18 (2) in paragraph (3), by striking the period at

19 the end and inserting ‘‘, and’’; and

20 (3) by inserting after paragraph (3) the follow21 ing new paragraph:

22 ‘‘(4) a description of an individual’s rights

23 under State law to make decisions concerning medi24 cal care, including the right to accept or refuse med25 ical or surgical treatment and the right to formulate
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1 advance directives (as defined in section

2 1866(f)(3)).’’.

3 (b) EFFECTIVE DATE.—The amendments made by

4 subsection (a) shall apply to notices provided under section

5 1804 of the Social Security Act on or after January 1

6 of the first year beginning after the date of the enactment

7 of this Act.

8 TITLE V—MALPRACTICE

9 REFORM

10 Subtitle A—Findings; Purpose;

11 Definitions

12 SEC. 5001. FINDINGS; PURPOSE.

13 (a) FINDINGS.—Congress finds that—

14 (1) the health care and insurance industries are

15 industries affecting interstate commerce and the

16 medical malpractice litigation systems existing

17 throughout the United States affect interstate com18 merce by contributing to the high cost of health care

19 and premiums for malpractice insurance purchased

20 by health care providers; and

21 (2) the Federal Government has a major inter22 est in health care as a direct provider of health care

23 and as a source of payment for health care, and has

24 a demonstrated interest in assessing the quality of
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1 care, access to care, and the costs of care through

2 the evaluative activities of several Federal agencies.

3 (b) PURPOSE.—It is the purpose of this title to—

4 (1) provide grants to States to develop alter5 native dispute resolution procedures to attain a more

6 efficient, expeditious, and equitable resolution of

7 health care malpractice disputes;

8 (2) enhance general knowledge concerning the

9 benefits of different forms of alternative dispute res10 olution mechanisms; and

11 (3) establish uniformity and curb excesses in

12 the State-based medical liability systems through

13 Federally-mandated reforms.

14 SEC. 5002. DEFINITIONS.

15 As used in this title:

16 (1) ALTERNATIVE DISPUTE RESOLUTION SYS17 TEM.—The term ‘‘alternative dispute resolution sys18 tem’’ means a system that is enacted or adopted by

19 a State to resolve medical malpractice claims other

20 than through a medical malpractice liability action.

21 (2) CLAIMANT.—The term ‘‘claimant’’ means

22 any person who brings a health care liability action

23 and, in the case of an individual who is deceased, in24 competent, or a minor, the person on whose behalf

25 such an action is brought.
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1 (3) CLEAR AND CONVINCING EVIDENCE.—The

2 term ‘‘clear and convincing evidence’’ is that meas3 ure or degree of proof that will produce in the mind

4 of the trier of fact a firm belief or conviction as to

5 the truth of the allegations sought to be established,

6 except that such measure or degree of proof is more

7 than that required under preponderance of the evi8 dence, but less than that required for proof beyond

9 a reasonable doubt.

10 (4) ECONOMIC DAMAGES.—The term ‘‘economic

11 damages’’ means damages paid to compensate an in12 dividual for losses for hospital and other medical ex13 penses, lost wages, lost employment, and other pecu14 niary losses.

15 (5) HEALTH CARE PROFESSIONAL.—The term

16 ‘‘health care professional’’ means any individual who

17 provides health care services in a State and who is

18 required by State law or regulation to be licensed or

19 certified by the State to provide such services in the

20 State.

21 (6) HEALTH CARE PROVIDER.—The term

22 ‘‘health care provider’’ means any organization or

23 institution that is engaged in the delivery of health

24 care services in a State that is required by State law

25 or regulation to be licensed or certified by the State
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1 to engage in the delivery of such services in the

2 State.

3 (7) INJURY.—The term ‘‘injury’’ means any ill4 ness, disease, or other harm that is the subject of

5 a medical malpractice claim.

6 (8) MEDICAL MALPRACTICE LIABILITY AC7 TION.—The term ‘‘medical malpractice liability ac8 tion’’ means any civil action brought pursuant to

9 State law in which a plaintiff alleges a medical mal10 practice claim against a health care provider or

11 health care professional, but does not include any

12 action in which the plaintiff’s sole allegation is an al13 legation of an intentional tort.

14 (9) MEDICAL MALPRACTICE CLAIM.—The term

15 ‘‘medical malpractice claim’’ means any claim relat16 ing to the provision of (or the failure to provide)

17 health care services or the use of a medical product,

18 without regard to the theory of liability asserted,

19 and includes any third-party claim, cross-claim,

20 counterclaim, or contribution claim in a medical

21 malpractice liability action.

22 (10) MEDICAL PRODUCT.—

23 (A) IN GENERAL.—The term ‘‘medical

24 product’’ means, with respect to the allegation

25 of a claimant, a drug (as defined in section
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1 201(g)(1) of the Federal Food, Drug, and Cos2 metic Act (21 U.S.C. 321(g)(1)) or a medical

3 device (as defined in section 201(h) of the Fed4 eral Food, Drug, and Cosmetic Act (21 U.S.C.

5 321(h)) if—

6 (i) such drug or device was subject to

7 premarket approval under section 505,

8 507, or 515 of the Federal Food, Drug,

9 and Cosmetic Act (21 U.S.C. 355, 357, or

10 360e) or section 351 of the Public Health

11 Service Act (42 U.S.C. 262) with respect

12 to the safety of the formulation or per13 formance of the aspect of such drug or de14 vice which is the subject of the claimant’s

15 allegation or the adequacy of the packag16 ing or labeling of such drug or device, and

17 such drug or device is approved by the

18 Food and Drug Administration; or

19 (ii) the drug or device is generally rec20 ognized as safe and effective under regula21 tions issued by the Secretary of Health

22 and Human Services under section 201(p)

23 of the Federal Food, Drug, and Cosmetic

24 Act (21 U.S.C. 321(p)).
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1 (B) EXCEPTION IN CASE OF MISREPRE2 SENTATION OR FRAUD.—Notwithstanding sub3 paragraph (A), the term ‘‘medical product’’

4 shall not include any product described in such

5 subparagraph if the claimant shows that the

6 product is approved by the Food and Drug Ad7 ministration for marketing as a result of with8 held information, misrepresentation, or an ille9 gal payment by manufacturer of the product.

10 (11) NONECONOMIC DAMAGES.—The term

11 ‘‘noneconomic damages’’ means damages paid to

12 compensate an individual for losses for physical and

13 emotional pain, suffering, inconvenience, physical

14 impairment, mental anguish, disfigurement, loss of

15 enjoyment of life, loss of consortium, and other

16 nonpecuniary losses, but does not include punitive

17 damages.

18 (12) PUNITIVE DAMAGES.—The term ‘‘punitive

19 damages’’ means compensation, in addition to com20 pensation for actual harm suffered, that is awarded

21 for the purpose of punishing a person for conduct

22 deemed to be malicious, wanton, willful, or exces23 sively reckless.

24 (13) SECRETARY.—The term ‘‘Secretary’’

25 means the Secretary of Health and Human Services.
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1 (14) STATE.—The term ‘‘State’’ means each of

2 the several States, the District of Columbia, the

3 Commonwealth of Puerto Rico, the Virgin Islands,

4 and Guam.

5 Subtitle B—Uniform Standards for

6 Malpractice Claims

7 SEC. 5101. APPLICABILITY.

8 Except as provided in section 5111, this subtitle shall

9 apply to any medical malpractice liability action brought

10 in a Federal or State court, and to any medical mal11 practice claim subject to an alternative dispute resolution

12 system, that is initiated on or after January 1, 1995.

13 SEC. 5102. REQUIREMENT FOR INITIAL RESOLUTION OF AC14 TION THROUGH ALTERNATIVE DISPUTE RES15 OLUTION.

16 (a) IN GENERAL.—

17 (1) STATE CASES.—A medical malpractice li18 ability action may not be brought in any State court

19 during a calendar year unless the medical mal20 practice liability claim that is the subject of the ac21 tion has been initially resolved under an alternative

22 dispute resolution system certified for the year by

23 the Secretary under section 5202(a), or, in the case

24 of a State in which such a system is not in effect
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1 for the year, under the alternative Federal system

2 established under section 5202(b).

3 (2) FEDERAL DIVERSITY ACTIONS.—A medical

4 malpractice liability action may not be brought in

5 any Federal court under section 1332 of title 28,

6 United States Code, during a calendar year unless

7 the medical malpractice liability claim that is the

8 subject of the action has been initially resolved

9 under the alternative dispute resolution system re10 ferred to in paragraph (1) that applied in the State

11 whose law applies in such action.

12 (3) CLAIMS AGAINST UNITED STATES.—

13 (A) ESTABLISHMENT OF PROCESS FOR

14 CLAIMS.—The Attorney General shall establish

15 an alternative dispute resolution process for the

16 resolution of tort claims consisting of medical

17 malpractice liability claims brought against the

18 United States under chapter 171 of title 28,

19 United States Code. Under such process, the

20 resolution of a claim shall occur after the com21 pletion of the administrative claim process ap22 plicable to the claim under section 2675 of such

23 title.

24 (B) REQUIREMENT FOR INITIAL RESOLU25 TION UNDER PROCESS.—A medical malpractice
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1 liability action based on a medical malpractice

2 liability claim described in subparagraph (A)

3 may not be brought in any Federal court unless

4 the claim has been initially resolved under the

5 alternative dispute resolution process estab6 lished by the Attorney General under such sub7 paragraph.

8 (b) INITIAL RESOLUTION OF CLAIMS UNDER

9 ADR.—For purposes of subsection (a), an action is ‘‘ini10 tially resolved’’ under an alternative dispute resolution

11 system if—

12 (1) the ADR reaches a decision on whether the

13 defendant is liable to the plaintiff for damages; and

14 (2) if the ADR determines that the defendant

15 is liable, the ADR reaches a decision on the amount

16 of damages assessed against the defendant.

17 (c) PROCEDURES FOR FILING ACTIONS.—

18 (1) NOTICE OF INTENT TO CONTEST DECI19 SION.—Not later than 60 days after a decision is is20 sued with respect to a medical malpractice liability

21 claim under an alternative dispute resolution system,

22 each party affected by the decision shall submit a

23 sealed statement to a court of competent jurisdiction

24 indicating whether or not the party intends to con25 test the decision.
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1 (2) DEADLINE FOR FILING ACTION.—A medical

2 malpractice liability action may not be brought by a

3 party unless—

4 (A) the party has filed the notice of intent

5 required by paragraph (1); and

6 (B) the party files the action in a court of

7 competent jurisdiction not later than 90 days

8 after the decision resolving the medical mal9 practice liability claim that is the subject of the

10 action is issued under the applicable alternative

11 dispute resolution system.

12 (3) COURT OF COMPETENT JURISDICTION.—

13 For purposes of this subsection, the term ‘‘court of

14 competent jurisdiction’’ means—

15 (A) with respect to actions filed in a State

16 court, the appropriate State trial court; and

17 (B) with respect to actions filed in a Fed18 eral court, the appropriate United States dis19 trict court.

20 (d) LEGAL EFFECT OF UNCONTESTED ADR DECI21 SION.—The decision reached under an alternative dispute

22 resolution system shall, for purposes of enforcement by a

23 court of competent jurisdiction, have the same status in

24 the court as the verdict of a medical malpractice liability

25 action adjudicated in a State or Federal trial court. The
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1 previous sentence shall not apply to a decision that is con2 tested by a party affected by the decision pursuant to sub3 section (c)(1).

4 SEC. 5103. PROCEDURAL REQUIREMENTS FOR FILING OF

5 ACTIONS.

6 (a) CERTIFICATE OF MERIT.—

7 (1) IN GENERAL.—Each individual who files a

8 medical malpractice liability action shall, not later

9 than 90 days after filing the action—

10 (A) submit a certificate of merit described

11 in subsection (b); or

12 (B) post a surety (or equivalent security)

13 bond of $4,000 (or, during the 45-day period

14 that begins on the date the action is filed, a

15 cost bond of $2,000) with the court.

16 (2) EXTENSION OF DEADLINE.—On the motion

17 of any party to the action or upon a written agree18 ment of the parties filed with the court, the court

19 may extend the deadline specified in paragraph (1)

20 for a period not to exceed 30 days.

21 (3) DISMISSAL FOR FAILURE TO MEET RE22 QUIREMENT.—If an individual filing a medical mal23 practice liability action fails to meet the require24 ments of paragraph (1)—
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1 (A) the court shall dismiss the action with2 out prejudice to the refiling of the action by the

3 individual; and

4 (B) require the individual to pay any court

5 costs incurred by the defendants as a result of

6 the filing of the action.

7 (4) WAIVER FOR GOOD CAUSE.—The court may

8 waive the application of paragraph (1) to a plaintiff

9 if the plaintiff shows good cause that such para10 graph should not apply.

11 (5) CERTIFICATE OF MERIT DESCRIBED.—In

12 paragraph (1), a ‘‘certificate of merit’’ is, with re13 spect to an individual filing a medical malpractice li14 ability action, an affidavit declaring that the individ15 ual (or the individual’s attorney) has obtained a

16 written opinion from a medical expert who is knowl17 edgeable of the relevant medical issues involved in

18 the action that the defendant was negligent and the

19 defendant’s conduct was a proximate cause of the al20 leged injury that is the subject of the action.

21 (b) RESPONSE TO STANDARD INTERROGATORIES

22 AND REQUESTS FOR DOCUMENTS.—
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1 (1) DEADLINE.—Each party to a medical mal2 practice liability action shall respond to the standard

3 set of interrogatories and requests for production of

4 documents developed pursuant to paragraph (4) as

5 follows:

6 (A) In the case of a plaintiff, the party

7 shall provide the defendant (or the defendant’s

8 attorney) with full and complete responses not

9 later than 45 days after filing the action.

10 (B) In the case of a defendant, the party

11 shall provide the plaintiff (or the plaintiff’s at12 torney) with full and complete responses not

13 later than 45 days after receiving the plaintiff’s

14 responses under subparagraph (A).

15 (C) In the case of a party who is added to

16 the action after the action is filed, the party

17 shall provide all other parties (or such parties’

18 attorneys) with full and complete responses not

19 later than 45 days after the date of the filing

20 of the pleading by which the party is added to

21 the action.

22 (2) EXTENSION OF DEADLINE.—On the motion

23 of any party to the action that is supported by good

24 cause, or upon a written agreement of the parties

25 filed with the court, the court shall extend the dead-
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1 line specified in paragraph (1) for a period not to

2 exceed 30 days.

3 (3) IMPOSITION OF SANCTIONS FOR FAILURE

4 TO RESPOND.—If a party to a medical malpractice

5 liability action fails to respond to the standard set

6 of interrogatories and requests for production of

7 documents as required under paragraph (1), the

8 party shall be subject to sanctions by the court

9 under any applicable laws, rules, and regulations

10 governing the imposition of sanctions by the court.

11 (4) DEVELOPMENT OF STANDARD INTERROG12 ATORIES AND REQUESTS.—

13 (A) APPOINTMENT OF EXPERT PANELS.—

14 The Governor of each State shall appoint a

15 panel to develop the standard set of interrog16 atories and requests for production of docu17 ments that will be used for purposes of this

18 subsection in the courts of the State. The set

19 shall be comprehensive and designed to expedite

20 the discovery process in the courts. The Attor21 ney General shall appoint a panel to develop

22 such set that will be used for purposes of this

23 subsection in the Federal courts.

24 (B) COMPOSITION.—Each panel appointed

25 pursuant to subparagraph (A) shall consist of
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1 not less than 6 and not more than 12 members,

2 of whom an equal number shall be attorneys

3 who customarily represent plaintiffs in medical

4 malpractice liability actions and attorneys who

5 customarily represent defendants in such ac6 tions.

7 (C) DEADLINES.—Not later than October

8 1, 1994, each panel appointed pursuant to sub9 paragraph (A) shall complete and publish the

10 standard set of interrogatories and requests for

11 production of documents.

12 SEC. 5104. TREATMENT OF NONECONOMIC AND PUNITIVE

13 DAMAGES.

14 (a) LIMITATION ON NONECONOMIC DAMAGES.—The

15 total amount of noneconomic damages that may be award16 ed to a claimant and the members of the claimant’s family

17 for losses resulting from the injury which is the subject

18 of a medical malpractice liability action may not exceed

19 $250,000, regardless of the number of parties against

20 whom the action is brought or the number of actions

21 brought with respect to the injury.

22 (b) NO AWARD OF PUNITIVE DAMAGES AGAINST

23 MANUFACTURER OF MEDICAL PRODUCT.—In the case of

24 a medical malpractice liability action in which the plaintiff

25 alleges a claim against the manufacturer of a medical
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1 product, no punitive or exemplary damages may be award2 ed against such manufacturer.

3 (c) SEVERAL LIABILITY FOR NONECONOMIC DAM4 AGES.—The liability of each defendant for noneconomic

5 damages shall be several only and shall not be joint, and

6 each defendant shall be liable only for the amount of non7 economic damages allocated to the defendant in direct pro8 portion to the defendant’s percentage of responsibility (as

9 determined by the trier of fact).

10 (d) ALLOCATION OF PUNITIVE DAMAGE AWARDS

11 FOR PROVIDER LICENSING AND DISCIPLINARY ACTIVI12 TIES.—

13 (1) IN GENERAL.—The total amount of any pu14 nitive damages awarded in a medical malpractice li15 ability action shall be paid to the State in which the

16 action is brought (or, in a case brought in Federal

17 court, in the State in which the health care services

18 that caused the injury that is the subject of the ac19 tion were provided) for the purposes of carrying out

20 the activities described in paragraph (2).

21 (2) ACTIVITIES DESCRIBED.—A State shall use

22 amounts paid pursuant to paragraph (1) to carry

23 out activities to assure the safety and quality of

24 health care services provided in the State, including

25 (but not limited to)—
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1 (A) licensing or certifying health care pro2 fessionals and health care providers in the

3 State;

4 (B) implementing health care quality as5 surance programs;

6 (C) carrying out public education programs

7 to increase awareness of the availability of com8 parative quality information on accountable

9 health plans;

10 (D) carrying out programs to reduce mal11 practice-related costs for providers volunteering

12 to provide services in medically underserved

13 areas; and

14 (E) implementing and operating a State

15 alternative dispute resolution system certified

16 by the Secretary under section 5202.

17 (3) MAINTENANCE OF EFFORT.—A State shall

18 use any amounts paid pursuant to paragraph (1) to

19 supplement and not to replace amounts spent by the

20 State for the activities described in paragraph (2).

21 (e) DEVELOPMENT OF ALTERNATIVE LIMITS ON

22 NONECONOMIC DAMAGES.—

23 (1) IN GENERAL.—Not later than 1 year after

24 the date of the enactment of this Act, the Health

25 Care Standards Commission shall develop and trans-
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1 mit to Congress alternative limits on the amount of

2 noneconomic damages that may be awarded with re3 spect to medical malpractice liability claims, together

4 with legislative specifications necessary to replace

5 the limit imposed under subsection (a) on the

6 amount of such damages with such alternative lim7 its. The purpose of the development of the limits is

8 to provide certainty and fairness in malpractice

9 awards and to avoid unwarranted disparities among

10 health care providers and health care professionals

11 who have engaged in similar conduct.

12 (2) ESTABLISHMENT OF SEPARATE LIMITS FOR

13 CATEGORIES OF INJURIES.—In developing limits

14 under paragraph (1), the Commission shall establish

15 separate limits for noneconomic damages resulting

16 from each of the following categories of injuries:

17 (A) Non-physical injuries.

18 (B) Insignificant physical injuries.

19 (C) Temporary minor physical injuries.

20 (D) Temporary major physical injuries.

21 (E) Permanent minor physical injuries.

22 (F) Permanent substantial physical inju23 ries.

24 (G) Permanent major physical injuries.

25 (H) Permanent grave physical injuries.
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1 (I) Death.

2 (3) FACTORS CONSIDERED.—In developing lim3 its under paragraph (1) for each of the categories

4 described in paragraph (2), the Commission shall—

5 (A) examine the most recent available data

6 on the amount of damages awarded with re7 spect to such claims; and

8 (B) set specific limits that reasonably com9 pensate most injured parties at the level of

10 compensation currently provided, excluding

11 those levels of compensation that the Commis12 sion finds unreasonably large.

13 (4) CONSULTATION.—In developing limits

14 under this subsection, the Commission shall consult

15 with representatives of each of the following:

16 (A) Attorneys who represent plaintiffs in

17 medical malpractice liability actions.

18 (B) Attorneys who represent health care

19 professionals and health care providers in medi20 cal malpractice liability actions.

21 (C) Physicians and other health care pro22 fessionals and providers.

23 (D) Individuals who have suffered injury

24 as a result of medical malpractice.
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1 (E) Judges who preside over medical mal2 practice liability actions.

3 (F) Medical ethicists.

4 (G) Health care economists.

5 (H) Liability insurers.

6 (5) GUIDANCE TO ENTITIES RESOLVING

7 CLAIMS.—If Congress enacts legislation that imposes

8 the limits developed by the Commission under this

9 subsection on the amount of noneconomic damages

10 that may be awarded with respect to medical mal11 practice liability claims, the Commission shall pre12 pare and disseminate guidelines to assist courts and

13 other entities resolving such claims in the determina14 tion of the particular category of injury specified in

15 paragraph (2) to which a claimant’s injury shall be

16 assigned for purposes of applying the appropriate

17 limit on such damages.

18 SEC. 5105. PERIODIC PAYMENTS FOR FUTURE LOSSES.

19 (a) IN GENERAL.—In any medical malpractice liabil20 ity action in which the damages awarded for future eco21 nomic loss exceeds $100,000, a defendant may not be re22 quired to pay such damages in a single, lump-sum pay23 ment, but may be permitted to make such payments on

24 a periodic basis. The periods for such payments shall be
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1 determined by the court, based upon projections of when

2 such expenses are likely to be incurred.

3 (b) WAIVER.—A court may waive the application of

4 subsection (a) with respect to a defendant if the court de5 termines that it is not in the best interests of the plaintiff

6 to receive payments for damages on such a periodic basis.

7 SEC. 5106. TREATMENT OF ATTORNEY’S FEES AND OTHER

8 COSTS.

9 (a) LIMITATION ON AMOUNT OF CONTINGENCY

10 FEES.—

11 (1) IN GENERAL.—An attorney who represents,

12 on a contingency fee basis, a claimant in a medical

13 malpractice liability claim may not charge, demand,

14 receive, or collect for services rendered in connection

15 with such claim in excess of the following amount re16 covered by judgment or settlement under such claim:

17 (A) 25 percent of the first $150,000 (or

18 portion thereof) recovered, plus

19 (B) 10 percent of any amount in excess of

20 $150,000 recovered.

21 (2) CALCULATION OF PERIODIC PAYMENTS.—In

22 the event that a judgment or settlement includes

23 periodic or future payments of damages, the amount

24 recovered for purposes of computing the limitation

25 on the contingency fee under paragraph (1) shall be
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1 based on the cost of the annuity or trust established

2 to make the payments. In any case in which an an3 nuity or trust is not established to make such pay4 ments, such amount shall be based on the present

5 value of the payments.

6 (b) REQUIRING PARTY CONTESTING ADR RULING

7 TO PAY ATTORNEY’S FEES AND OTHER COSTS.—

8 (1) IN GENERAL.—The court in a medical mal9 practice liability action shall require the party that

10 (pursuant to section 5102(c)(1)) contested the ruling

11 of the alternative dispute resolution system with re12 spect to the medical malpractice liability claim that

13 is the subject of the action to pay to the opposing

14 party the costs incurred by the opposing party under

15 the action, including attorney’s fees, fees paid to ex16 pert witnesses, and other litigation expenses (but not

17 including court costs, filing fees, or other expenses

18 paid directly by the party to the court, or any fees

19 or costs associated with the resolution of the claim

20 under the alternative dispute resolution system), but

21 only if—

22 (A) in the case of an action in which the

23 party that contested the ruling is the claimant,

24 the amount of damages awarded to the party

25 under the action is not greater than the amount
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1 of damages awarded to the party under the

2 ADR system; and

3 (B) in the case of an action in which the

4 party that contested the ruling is the defendant,

5 the amount of damages assessed against the

6 party under the action is not less than the

7 amount of damages assessed under the ADR

8 system.

9 (2) EXCEPTIONS.—Paragraph (1) shall not

10 apply if—

11 (A) the party contesting the ruling made

12 under the previous alternative dispute resolu13 tion system shows that—

14 (i) the ruling was procured by corrup15 tion, fraud, or undue means,

16 (ii) there was partiality or corruption

17 under the system,

18 (iii) there was other misconduct under

19 the system that materially prejudiced the

20 party’s rights, or

21 (iv) the ruling was based on an error

22 of law;

23 (B) the party contesting the ruling made

24 under the alternative dispute resolution system

25 presents new evidence before the trier of fact
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1 that was not available for presentation under

2 the ADR system;

3 (C) the medical malpractice liability action

4 raised a novel issue of law; or

5 (D) the court finds that the application of

6 such paragraph to a party would constitute an

7 undue hardship, and issues an order waiving or

8 modifying the application of such paragraph

9 that specifies the grounds for the court’s deci10 sion.

11 (3) LIMIT ON ATTORNEY’S FEES PAID.—Attor12 neys’ fees that are required to be paid under para13 graph (1) by the contesting party shall not exceed

14 the amount of the attorneys’ fees incurred by the

15 contesting party in the action. If the attorneys’ fees

16 of the contesting party are based on a contingency

17 fee agreement, the amount of attorneys’ fees for

18 purposes of the preceding sentence shall not exceed

19 the reasonable value of those services.

20 (4) RECORDS.—In order to receive attorneys’

21 fees under paragraph (1), counsel of record in the

22 medical malpractice liability action involved shall

23 maintain accurate, complete records of hours worked

24 on the action, regardless of the fee arrangement

25 with the client involved.
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1 (c) CONTINGENCY FEE DEFINED.—As used in this

2 section, the term ‘‘contingency fee’’ means any fee for pro3 fessional legal services which is, in whole or in part, con4 tingent upon the recovery of any amount of damages,

5 whether through judgment or settlement.

6 SEC. 5107. UNIFORM STATUTE OF LIMITATIONS.

7 (a) IN GENERAL.—No medical malpractice claim

8 may be initiated after the expiration of the 2-year period

9 that begins on the date on which the alleged injury that

10 is the subject of such claim was discovered or the date

11 on which such injury should reasonably have been discov12 ered, whichever is earlier.

13 (b) EXCEPTION FOR MINORS.—In the case of an al14 leged injury suffered by a minor who has not attained 6

15 years of age, a medical malpractice claim may be initiated

16 after the expiration of the period described in subsection

17 (a) if the claim is initiated before the minor attains 8

18 years of age.

19 SEC. 5108. SPECIAL PROVISION FOR CERTAIN OBSTETRIC

20 SERVICES.

21 (a) IN GENERAL.—In the case of a medical mal22 practice claim relating to services provided during labor

23 or the delivery of a baby, if the health care professional

24 or health care provider against whom the claim is brought

25 did not previously treat the claimant for the pregnancy,
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1 the trier of fact may not find that such professional or

2 provider committed malpractice and may not assess dam3 ages against such professional or provider unless the mal4 practice is proven by clear and convincing evidence.

5 (b) APPLICABILITY TO GROUP PRACTICES OR

6 AGREEMENTS AMONG PROVIDERS.—For purposes of sub7 section (a), a health care professional shall be considered

8 to have previously treated an individual for a pregnancy

9 if the professional is a member of a group practice whose

10 members previously treated the individual for the preg11 nancy or is providing services to the individual during

12 labor or the delivery of a baby pursuant to an agreement

13 with another professional.

14 SEC. 5109. UNIFORM STANDARD FOR DETERMINING LIABIL15 ITY IN ACTIONS BASED ON NEGLIGENCE.

16 (a) STANDARD OF REASONABLENESS.—Except as

17 provided in subsection (b), a defendant in a medical mal18 practice liability action may not be found to have commit19 ted malpractice unless the defendant’s conduct at the time

20 of providing the health care services that are the subject

21 of the action was not reasonable.

22 (b) ACTIONS BROUGHT UNDER STRICT LIABILITY.—

23 Subsection (a) shall not apply with respect to a medical

24 malpractice action if (in accordance with applicable State
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1 law) the theory of liability upon which the action is based

2 is a theory of strict liability.

3 SEC. 5110. JURISDICTION OF FEDERAL COURTS.

4 Nothing in this subtitle shall be construed to estab5 lish jurisdiction over any medical malpractice liability ac6 tion in the district courts of the United States on the basis

7 of sections 1331 or 1337 of title 28, United States Code.

8 SEC. 5111. PREEMPTION.

9 (a) IN GENERAL.—This subtitle supersedes any State

10 law only to the extent that the State law permits the recov11 ery by a claimant or the assessment against a defendant

12 of a greater amount of damages or establishes a less strict

13 standard of proof for determining whether a defendant has

14 committed malpractice, than the provisions of this sub15 title.

16 (b) EFFECT ON SOVEREIGN IMMUNITY AND CHOICE

17 OF LAW OR VENUE.—Nothing in this subtitle shall be con18 strued to—

19 (1) waive or affect any defense of sovereign im20 munity asserted by any State under any provision of

21 law;

22 (2) waive or affect any defense of sovereign im23 munity asserted by the United States;

24 (3) affect the applicability of any provision of

25 the Foreign Sovereign Immunities Act of 1976;
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1 (4) preempt State choice-of-law rules with re2 spect to claims brought by a foreign nation or a citi3 zen of a foreign nation; or

4 (5) affect the right of any court to transfer

5 venue or to apply the law of a foreign nation or to

6 dismiss a claim of a foreign nation or of a citizen

7 of a foreign nation on the ground in inconvenient

8 forum.

9 Subtitle C—Requirements for State

10 Alternative Dispute Resolution

11 Systems (ADR)

12 SEC. 5201. BASIC REQUIREMENTS.

13 (a) IN GENERAL.—A State’s alternative dispute reso14 lution system meets the requirements of this section if the

15 system—

16 (1) applies to all medical malpractice liability

17 claims under the jurisdiction of the courts of that

18 State;

19 (2) requires that a written opinion resolving the

20 dispute be issued not later than 6 months after the

21 date by which each party against whom the claim is

22 filed has received notice of the claim (other than in

23 exceptional cases for which a longer period is re24 quired for the issuance of such an opinion), and that

25 the opinion contain—
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1 (A) findings of fact relating to the dispute,

2 and

3 (B) a description of the costs incurred in

4 resolving the dispute under the system (includ5 ing any fees paid to the individuals hearing and

6 resolving the claim), together with an appro7 priate assessment of the costs against any of

8 the parties;

9 (3) requires individuals who hear and resolve

10 claims under the system to meet such qualifications

11 as the State may require (in accordance with regula12 tions of the Secretary);

13 (4) is approved by the State or by local govern14 ments in the State;

15 (5) with respect to a State system that consists

16 of multiple dispute resolution procedures—

17 (A) permits the parties to a dispute to se18 lect the procedure to be used for the resolution

19 of the dispute under the system, and

20 (B) if the parties do not agree on the pro21 cedure to be used for the resolution of the dis22 pute, assigns a particular procedure to the par23 ties;

24 (6) provides for the transmittal to the State

25 agency responsible for monitoring or disciplining
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1 health care professionals and health care providers

2 of any findings made under the system that such a

3 professional or provider committed malpractice, un4 less, during the 90-day period beginning on the date

5 the system resolves the claim against the profes6 sional or provider, the professional or provider

7 brings an action contesting the decision made under

8 the system; and

9 (7) provides for the regular transmittal to the

10 Administrator for Health Care Policy and Research

11 of information on disputes resolved under the sys12 tem, in a manner that assures that the identity of

13 the parties to a dispute shall not be revealed.

14 (b) APPLICATION OF MALPRACTICE LIABILITY

15 STANDARDS TO ALTERNATIVE DISPUTE RESOLUTION.—

16 The provisions of subtitle B (other than sections 5102 and

17 5103) shall apply with respect to claims brought under

18 a State alternative dispute resolution system or the alter19 native Federal system in the same manner as such provi20 sions apply with respect to medical malpractice liability

21 actions brought in the State.

22 SEC. 5202. CERTIFICATION OF STATE SYSTEMS; APPLICA23 BILITY OF ALTERNATIVE FEDERAL SYSTEM.

24 (a) CERTIFICATION.—
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1 (1) IN GENERAL.—Not later than October 1 of

2 each year (beginning with 1994), the Secretary, in

3 consultation with the Attorney General, shall deter4 mine whether a State’s alternative dispute resolution

5 system meets the requirements of this part for the

6 following calendar year.

7 (2) BASIS FOR CERTIFICATION.—The Secretary

8 shall certify a State’s alternative dispute resolution

9 system under this subsection for a calendar year if

10 the Secretary determines under paragraph (1) that

11 the system meets the requirements of section 5201.

12 (b) APPLICABILITY OF ALTERNATIVE FEDERAL SYS13 TEM.—

14 (1) ESTABLISHMENT AND APPLICABILITY.—

15 Not later than October 1, 1994, the Secretary, in

16 consultation with the Attorney General, shall estab17 lish by rule an alternative Federal ADR system for

18 the resolution of medical malpractice liability claims

19 during a calendar year in States that do not have

20 in effect an alternative dispute resolution system

21 certified under subsection (a) for the year.

22 (2) REQUIREMENTS FOR SYSTEM.—Under the

23 alternative Federal ADR system established under

24 paragraph (1)—
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1 (A) paragraphs (1), (2), (6), and (7) of

2 section 5201(a) shall apply to claims brought

3 under the system;

4 (B) if the system provides for the resolu5 tion of claims through arbitration, the claims

6 brought under the system shall be heard and

7 resolved by arbitrators appointed by the Sec8 retary in consultation with the Attorney Gen9 eral; and

10 (C) with respect to a State in which the

11 system is in effect, the Secretary may (at the

12 State’s request) modify the system to take into

13 account the existence of dispute resolution pro14 cedures in the State that affect the resolution

15 of medical malpractice liability claims.

16 (3) TREATMENT OF STATES WITH ALTER17 NATIVE SYSTEM IN EFFECT.—If the alternative Fed18 eral ADR system established under this subsection is

19 applied with respect to a State for a calendar year,

20 the State shall make a payment to the United States

21 (at such time and in such manner as the Secretary

22 may require) in an amount equal to 110 percent of

23 the costs incurred by the United States during the

24 year as a result of the application of the system with

25 respect to the State.
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1 SEC. 5203. GRANTS TO STATES.

2 (a) IN GENERAL.—The Secretary shall make grants

3 to States for a 2-year period to assist States in implement4 ing and operating alternative dispute resolution systems

5 that meet the requirements of section 5201.

6 (b) ELIGIBILITY.—A State is eligible to receive a

7 grant under this section if the Secretary has certified the

8 State’s alternative dispute resolution system under section

9 5202(b).

10 (c) LIMITATION ON AMOUNT OF GRANT.—The

11 amount of funds provided to a State under a grant under

12 this section may not exceed $5,000,000 during the 2-year

13 period of the grant.

14 SEC. 5204. REPORTS ON IMPLEMENTATION AND EFFEC15 TIVENESS OF ALTERNATIVE DISPUTE RESO16 LUTION SYSTEMS.

17 (a) IN GENERAL.—Not later than 5 years after the

18 date of the enactment of this Act, the Secretary shall pre19 pare and submit to the Congress a report describing and

20 evaluating State alternative dispute resolution systems op21 erated pursuant to this subtitle and the alternative Fed22 eral system established under section 5202(b).

23 (b) CONTENTS OF REPORT.—The Secretary shall in24 clude in the report prepared and submitted under sub25 section (a)—

26 (1) information on—
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1 (A) the effect of the alternative dispute

2 resolution systems on the cost of health care

3 within each State,

4 (B) the impact of such systems on the ac5 cess of individuals to health care within the

6 State, and

7 (C) the effect of such systems on the qual8 ity of health care provided within the State; and

9 (2) to the extent that such report does not pro10 vide information on no-fault systems operated by

11 States as alternative dispute resolution systems pur12 suant to this part, an analysis of the feasibility and

13 desirability of establishing a system under which

14 medical malpractice liability claims shall be resolved

15 on a no-fault basis.

16 Subtitle D—Grants to States for

17 Development of Practice Guide18 lines

19 SEC. 5301. GRANTS TO STATES.

20 (a) IN GENERAL.—The Secretary shall make grants

21 to States for a 2-year period for the development of medi22 cal practice guidelines for health care professionals (in23 cluding mid-level practitioners) that may be applied to re24 solve medical malpractice liability claims and actions in

25 the State.
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1 (b) ELIGIBILITY.—A State is eligible to receive a

2 grant under this section if the State submits to the Sec3 retary an application at such time, in such form, and con4 taining such information and assurances as the Secretary

5 may require, including assurances that the State will sub6 mit such periodic reports on the development and applica7 tion of the State’s medical practice guidelines as the Sec8 retary may require.

9 (c) NUMBER OF GRANTS.—

10 (1) IN GENERAL.—Except as provided in para11 graph (2), the Secretary shall award not less than

12 10 grants under this section.

13 (2) EXCEPTION.—Notwithstanding paragraph

14 (1), the Secretary may award less than 10 grants

15 under this section if the Secretary determines that

16 there are an inadequate number of applications sub17 mitted that meet the eligibility and approval require18 ments of this section.

19 (d) LIMITATION ON AMOUNT OF GRANT.—The

20 amount of funds provided to a State under a grant under

21 this section may not exceed $5,000,000 during the 2-year

22 period of the grant.
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1 TITLE VI—PAPERWORK REDUC2 TION AND ADMINISTRATIVE

3 SIMPLIFICATION

4 SEC. 6001. PREEMPTION OF STATE QUILL PEN LAWS.

5 After 1994, no effect shall be given to any provision

6 of State law that requires medical or health insurance

7 records (including billing information) to be maintained

8 in written, rather than electronic, form.

9 SEC. 6002. CONFIDENTIALITY OF ELECTRONIC HEALTH

10 CARE INFORMATION.

11 (a) PROMULGATION OF REQUIREMENTS.—

12 (1) IN GENERAL.—The Health Care Standards

13 Commission shall promulgate, and may modify from

14 time to time, requirements to facilitate and ensure

15 the uniform, confidential treatment of individually

16 identifiable health care information in electronic en17 vironments.

18 (2) ITEMS TO BE INCLUDED.—The require19 ments under this subsection shall—

20 (A) provide for the preservation of con21 fidentiality and privacy rights in electronic

22 health care claims processing and payment;

23 (B) apply to the collection, storage, han24 dling, and transmission of individually identifi25 able health care data (including initial and sub-
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1 sequent disclosures) in electronic form by all ac2 countable health plans, public and private third3 party payers, providers of health care, and all

4 other entities involved in the transactions;

5 (C) not apply to public health reporting re6 quired under State or Federal law;

7 (D) delineate protocols for securing elec8 tronic storage, processing, and transmission of

9 health care data;

10 (E) specify fair information practices that

11 assure a proper balance between required dis12 closures and use of data, including—

13 (i) creating a proper balance between

14 what an individual is expected to divulge to

15 a record-keeping organization and what the

16 individual seeks in return,

17 (ii) minimizing the extent to which in18 formation concerning an individual is itself

19 a source of unfairness in any decision

20 made on the basis of such information, and

21 (iii) creating and defining obligations

22 respecting the uses and disclosures that

23 will be made of recorded information about

24 an individual;
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1 (F) require publication of the existence of

2 health care data banks;

3 (G) establish appropriate protections for

4 highly sensitive data (such as data concerning

5 mental health, substance abuse, and commu6 nicable and genetic diseases);

7 (H) encourage the use of alternative dis8 pute resolution mechanisms (where appro9 priate); and

10 (I) provide for the deletion of information

11 that is no longer needed to carry out the pur12 pose for which it was collected.

13 (3) CONSULTATION WITH WORKING GROUP.—In

14 promulgating and modifying requirements under this

15 subsection, the Commission shall consult with a

16 working group of knowledgeable individuals rep17 resenting all interested parties (including third-party

18 payers, providers, consumers, employers, information

19 managers, and technical experts).

20 (4) DEADLINE.—The Commission shall first

21 promulgate requirements under this subsection by

22 not later than six months after the date of the en23 actment of this Act.

24 (b) APPLICATION OF REQUIREMENTS.—
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1 (1) STATE ENFORCEMENT OF SIMILAR RE2 QUIREMENTS.—The requirements promulgated

3 under subsection (a) shall not apply to health care

4 information in a State if—

5 (A) the State has applied to the Health

6 Care Standards Commission for a determina7 tion that the State has in effect a law that pro8 vides for the application of requirements with

9 respect to such information (and enforcement

10 provisions with respect to such requirements)

11 consistent with such requirements (and with the

12 enforcement provisions of subsection (c)), and

13 (B) the Commission determines that the

14 State has such a law in effect.

15 (2) APPLICATION TO CURRENT INFORMA16 TION.—The Health Care Standards Commission

17 shall specify the extent to which (and manner in

18 which) the requirements promulgated under sub19 section (a) apply to information collected before the

20 effective date of the requirements.

21 (c) DEFENSE FOR PROPER DISCLOSURES.—An en22 tity that establishes that is has disclosed health care infor23 mation in accordance with the requirements promulgated

24 under subsection (a) has established a defense in an action

25 brought for improper disclosure of such information.
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1 (d) PENALTIES FOR VIOLATIONS.—An entity that

2 collects, stores, handles, transmits, or discloses health care

3 information in violation of the requirements promulgated

4 under subsection (a) is liable for civil damages, equitable

5 remedies, and attorneys’ fees (if appropriate), in accord6 ance with regulations of the Health Care Standards Com7 mission.

8 SEC. 6003. STANDARDIZATION FOR THE ELECTRONIC RE9 CEIPT AND TRANSMISSION OF HEALTH PLAN

10 INFORMATION.

11 (a) GOALS.—The Health Care Standards Commis12 sion shall establish national goals, and time frameworks,

13 respecting the progress to be made by the health care in14 dustry in eliminating unnecessary paperwork and achiev15 ing appropriate standardization in the areas of electronic

16 receipt and transmission of health care claims and health

17 plan information and eligibility verification (consistent

18 with the requirements promulgated under section

19 6002(a)).

20 (b) CONTINGENT REQUIREMENTS.—If the Commis21 sion determines that the health care industry has failed

22 to meet the goals established under subsection (a) by the

23 deadlines established by the Commission under such sub24 section, the Commission shall promulgate (and may, from

25 time to time, modify) standards and requirements con-
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1 cerning the electronic receipt and transmission of health

2 plan claims forms and other health plan information.

3 (c) CONSULTATION.—The Commission shall conduct

4 activities under this section in consultation with the Ac5 credited Standards Committee X–12 of the American Na6 tional Standards Institute, insurers, providers, and others.

7 SEC. 6004. USE OF UNIFORM HEALTH CLAIMS FORMS AND

8 IDENTIFICATION NUMBERS.

9 (a) GOALS.—The Health Care Standards Commis10 sion shall establish national goals, and time frameworks,

11 respecting the progress to be made by the health care in12 dustry in achieving uniformity—

13 (1) in the format and content of basic claims

14 forms under health plans, and

15 (2) in the use of common identification num16 bers for beneficiaries and providers of health care

17 items or services under health plans.

18 (b) CONTINGENT REQUIREMENTS.—If the Commis19 sion determines that the health care industry has failed

20 to meet the goals established under subsection (a) by the

21 deadlines established by the Commission under such sub22 section, the Commission shall promulgate (and may, from

23 time to time, modify) standards and requirements con24 cerning—
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1 (1) the format and content of basic claims

2 forms under health plans, and

3 (2) the common identification numbers to be

4 used by health plans to identify health plan bene5 ficiaries and health care providers.

6 (c) CONSULTATION.—The Commission shall conduct

7 activities under this section in consultation with the

8 Workgroup for Electronic Data Interchange and with in9 surers, providers, and others.

10 SEC. 6005. PRIORITY AMONG INSURERS.

11 (a) GOALS.—The Health Care Standards Commis12 sion shall establish national goals, and time frameworks,

13 respecting the progress to be made by the health care in14 dustry in achieving uniformity in the rules for determining

15 the liability of insurers when benefits are payable under

16 two or more health plans.

17 (b) CONTINGENT REQUIREMENTS.—If the Commis18 sion determines that the health care industry has failed

19 to meet the goals established under subsection (a) by the

20 deadlines established by the Commission under such sub21 section, the Commission shall promulgate (and may, from

22 time to time, modify) rules for determining the liability

23 of health plans when benefits are payable under two or

24 more health plans.
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1 (c) CONSULTATION.—The Commission shall conduct

2 activities under this section in consultation with health

3 plans.

4 SEC. 6006. FURNISHING OF INFORMATION AMONG HEALTH

5 PLANS.

6 (a) GOALS.—The Health Care Standards Commis7 sion shall establish national goals, and time frameworks,

8 respecting the progress to be made by the health care in9 dustry in achieving uniformity in the availability of infor10 mation among health plans when benefits are payable

11 under two or more health plans.

12 (b) CONTINGENT REQUIREMENTS.—If the Commis13 sion determines that the health care industry has failed

14 to meet the goals established under subsection (a) by the

15 deadlines established by the Commission under such sub16 section, the Commission shall promulgate (and may, from

17 time to time, modify) requirements concerning the trans18 fer among health plans (and annual updating) of appro19 priate information (which may include requirements for

20 the use of unique identifiers, and for the listing of all indi21 viduals covered under a health plan).

22 (c) CONSULTATION.—The Commission shall conduct

23 activities under this section in consultation with health

24 plans.
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1 SEC. 6007. FAILURE TO SATISFY CERTAIN HEALTH PLAN

2 REQUIREMENTS.

3 (a) IN GENERAL.—Chapter 47 of the Internal Reve4 nue Code of 1986 (relating to taxes on group health plans)

5 is amended by adding at the end the following new section:

6 ‘‘SEC. 5000A. FAILURE TO SATISFY CERTAIN HEALTH PLAN

7 REQUIREMENTS.

8 ‘‘(a) GENERAL RULE.—There is hereby imposed, on

9 any administrator of a health plan, a tax on any failure

10 to comply with an applicable requirement of sections 6003

11 through 6006 of the Managed Competition Act of 1993.

12 The Health Care Standards Commission shall determine

13 whether any such administrator meets the requirements

14 of those sections.

15 ‘‘(b) AMOUNT OF TAX.—The amount of tax imposed

16 by subsection (a) for a taxable year in which an adminis17 trator fails to comply with a requirement described in that

18 subsection shall be equal to $100 for each such failure.

19 ‘‘(c) CONTROLLED GROUPS.—

20 ‘‘(1) EMPLOYERS.—In the case of an adminis21 trator that is an employer, for purposes of this sec22 tion all persons that are treated as part of the same

23 employer (within the meaning of section 414) as the

24 administrator shall be treated as the same person.
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1 ‘‘(2) OTHER ADMINISTRATORS.—In the case of

2 an administrator that is not an employer, for pur3 poses of this section—

4 ‘‘(A) CONTROLLED GROUP OF CORPORA5 TIONS.—All corporations which are members of

6 the same controlled group of corporations shall

7 be treated as 1 person. For purposes of the pre8 ceding sentence, the term ‘controlled group of

9 corporations’ has the meaning given to such

10 term by section 1563(a), except that—

11 ‘‘(i) ‘more than 50 percent’ shall be

12 substituted for ‘at least 80 percent’ each

13 place it appears in section 1563(a)(1), and

14 ‘‘(ii) the determination shall be made

15 without regard to subsections (a)(4) and

16 (e)(3)(C) of section 1563.

17 ‘‘(B) PARTNERSHIPS, PROPRIETORSHIPS,

18 ETC., WHICH ARE UNDER COMMON CONTROL.—

19 Under regulations prescribed by the Secretary,

20 all trades or businesses (whether or not incor21 porated) which are under common control shall

22 be treated as 1 person. The regulations pre23 scribed under this subparagraph shall be based

24 on principles similar to the principles which

25 apply in the case of subparagraph (A).
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1 ‘‘(d) LIMITATIONS ON TAX.—

2 ‘‘(1) TAX NOT TO APPLY WHERE FAILURE NOT

3 DISCOVERED EXERCISING REASONABLE DILI4 GENCE.—No tax shall be imposed by subsection (a)

5 with respect to any failure for which it is established

6 to the satisfaction of the Secretary that the person

7 liable for tax did not know, and by exercising rea8 sonable diligence would not have known, that the

9 failure existed.

10 ‘‘(2) TAX NOT TO APPLY TO FAILURES COR11 RECTED WITHIN 30 DAYS.—No tax shall be imposed

12 by subsection (a) on any failure if—

13 ‘‘(A) the failure was due to reasonable

14 cause and not to willful neglect, and

15 ‘‘(B) the failure is corrected during the 30-

16 day period beginning on the 1st date the person

17 liable for the tax knew, or by exercising reason18 able diligence would have known, that the fail19 ure existed.

20 ‘‘(3) 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 the payment of that tax would be excessive rel25 ative to the failure involved.’’
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1 (b) NONDEDUCTIBILITY OF TAX.—Paragraph (6) of

2 section 275(a) of that Code (relating to nondeductibility

3 of certain taxes) is amended by inserting ‘‘47,’’ after

4 ‘‘46,’’.

5 (c) CLERICAL AMENDMENTS.—The table of sections

6 for chapter 47 of that Code is amended by adding at the

7 end the following new item:

‘‘5000A. Failure to satisfy certain health plan requirements.’’.

8 SEC. 6008. DEFINITIONS.

9 For purposes of this title—

10 (1) The term ‘‘health plan’’ means any contract

11 or arrangement under which an entity bears all or

12 part of the cost of providing health care items and

13 services, including a hospital or medical expense in14 curred policy or certificate, hospital or medical serv15 ice plan contract, or health maintenance subscriber

16 contract (including any closed accountable health

17 plan), but does not include (except for purposes of

18 sections 6005 and 6006)—

19 (A) coverage only for accident, dental, vi20 sion, disability, or long term care, medicare

21 supplemental health insurance, or any combina22 tion thereof,

23 (B) coverage issued as a supplement to li24 ability insurance,
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1 (C) workers’ compensation or similar in2 surance, or

3 (D) automobile medical-payment insur4 ance.

5 (2) The term ‘‘provider’’ means a physician,

6 hospital, pharmacy, laboratory, or other person li7 censed or otherwise authorized under applicable

8 State laws to furnish health care items or services.

9 TITLE VII—ADDITIONAL BENE10 FITS ON A PAY-AS-YOU-GO

11 BASIS

12 SEC. 7001. SENSE OF CONGRESS.

13 It is the sense of Congress that additional benefits

14 should be provided by the Federal Government to the ex15 tent that additional financing is made available for such

16 benefits on a pay-as-you-go basis, including the following

17 benefits:

18 (1) Providing tax preferences for expenses for

19 long-term care, including tax deductibility of em20 ployer contributions for long-term care insurance.

21 (2) Providing direct Federal subsidies for ex22 penses for long-term care.

23 (3) Expanding coverage under the medicare

24 program, including coverage of outpatient prescrip25 tion drugs and coverage of long-term care services.
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1 (4) Increasing the income threshold for eligi2 bility for premium assistance (under section 2002).

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