I

103D CONGRESS

1ST SESSION H. R. 3115

To improve access, affordability, and competition in health care, through

the implementation of flexible savings accounts and malpractice reform,

and for other purposes.

IN THE HOUSE OF REPRESENTATIVES

SEPTEMBER 22, 1993

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

Committees on Ways and Means, Energy and Commerce, and the Judiciary

A BILL

To improve access, affordability, and competition in health

care, through the implementation of flexible savings accounts and malpractice reform, and for other purposes.

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

3 SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

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

5 ‘‘Competitive Affordable Health Care Act of 1993’’.

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

7 this Act is as follows:

Sec. 1. Short title; table of contents.

TITLE I—TAX PROVISIONS ENCOURAGING LOW-COST HEALTH

PLANS AND HEALTH CARE SAVINGS ACCOUNTS
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Sec. 101. Refundable tax credit for individuals not covered under employer-provided health plan.

Sec. 102. Limitation on exclusion for employer-provided health coverage.

Sec. 103. Health care savings accounts.

TITLE II—HEALTH CARE COST CONTAINMENT

Subtitle A—Health Care Liability Reform

Sec. 201. Federal reform of health care liability actions.

Sec. 202. Statute of limitations.

Sec. 203. Requirement for initial resolution of actions in Federal court through

alternative dispute resolution.

Sec. 204. Calculation and payment of damages.

Sec. 205. Treatment of attorney’s fees.

Sec. 206. Joint and several liability.

Sec. 207. Mandatory offsets for damages paid by a collateral source.

Sec. 208. Preemption.

Sec. 209. Definitions.

Sec. 210. Effective date.

Subtitle B—Limit on Self-Referrals by Health Care Provider

Sec. 221. Limitation on self-referrals by health care providers.

Subtitle C—Administrative Cost Savings

Sec. 230. Definitions.

PART 1—STANDARDIZATION OF CLAIMS PROCESSING

Sec. 231. Adoption of data elements, uniform claims, and uniform electronic

transmission standards.

Sec. 232. Application of standards.

Sec. 233. Periodic review and revision of standards.

PART 2—ELECTRONIC MEDICAL DATA STANDARDS

Sec. 241. Medical data standards for hospitals and other providers.

Sec. 242. Application of electronic data standards to certain hospitals.

Sec. 243. Electronic transmission to Federal agencies.

Sec. 244. Advisory commission.

PART 3—DEVELOPMENT AND DISTRIBUTION OF COMPARATIVE VALUE

INFORMATION

Sec. 251. State comparative value information programs for health care purchasing.

Sec. 252. Comparative value information concerning Federal programs.

Sec. 253. Development of model systems.

PART 4—ADDITIONAL STANDARDS AND REQUIREMENTS

Sec. 261. Standards relating to use of medicare and medicaid magnetized

health benefit cards; secondary payer data bank.

Sec. 262. Preemption of State quill pen laws.

Sec. 263. Use of standard identification numbers.
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Subtitle D—Limitation of Antitrust Recovery for Certain Hospital Joint

Ventures

Sec. 271. Purpose.

Sec. 272. Definitions.

Sec. 273. Limitation on damages for antitrust violations.

Sec. 274. Disclosure of hospital joint venture.

Subtitle E—Medicaid Program Flexibility

Sec. 281. Modification of Federal requirements to allow States more flexibility

in contracting for coordinated care services under medicaid.

Sec. 282. Period of certain waivers.

TITLE III—REFUNDABLE CREDIT FOR COSTS OF PROVIDING

EMERGENCY INDIGENT CARE

Sec. 301. Refundable credit for costs of providing emergency indigent care.

1 TITLE I—TAX PROVISIONS EN2 COURAGING LOW-COST

3 HEALTH PLANS AND HEALTH

4 CARE SAVINGS ACCOUNTS

5 SEC. 101. REFUNDABLE TAX CREDIT FOR INDIVIDUALS NOT

6 COVERED UNDER EMPLOYER-PROVIDED

7 HEALTH PLAN.

8 (a) REFUNDABLE CREDIT.—Subpart C of part IV of

9 subchapter A of chapter 1 of the Internal Revenue Code

10 of 1986 (relating to refundable credits) is amended by re11 designating section 35 as section 37 and by inserting after

12 section 34 the following new section:

13 ‘‘SEC. 35. QUALIFIED HEALTH CARE COSTS.

14 ‘‘(a) ALLOWANCE OF CREDIT.—In the case of an eli15 gible individual, there shall be allowed as a credit against

16 the tax imposed by this subtitle an amount equal to 15

17 percent of the lesser of—
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1 ‘‘(1) the health care expenses of the taxpayer,

2 or

3 ‘‘(2) the maximum health care expense amount.

4 ‘‘(b) MAXIMUM HEALTH CARE EXPENSE AMOUNT.—

5 The maximum health care expense amount for any taxable

6 year is—

7 ‘‘(1) $1,250 in the case of a taxpayer who is al8 lowed only 1 exemption amount under section 151,

9 ‘‘(2) $2,500 in the case of a taxpayer who is al10 lowed only 2 exemption amounts under section 151,

11 and

12 ‘‘(3) $4,750 in the case of a taxpayer who is al13 lowed 3 or more exemption amounts under section

14 151.

15 ‘‘(c) DEFINITIONS.—For purposes of this section—

16 ‘‘(1) ELIGIBLE INDIVIDUAL.—The term ‘eligible

17 individual’ means any individual who is not covered

18 under any employer-provided health plan. Such term

19 shall not include an individual for whom an election

20 under section 220 is in effect for the taxable year.

21 ‘‘(2) HEALTH CARE EXPENSES.—The term

22 ‘health care expenses’ means the amount paid dur23 ing the taxable year which would be allowable as a

24 deduction for the taxable year under section 213 but
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1 for the threshold based on adjusted gross income

2 and subsection (e) of this section.

3 ‘‘(d) DOLLAR AMOUNTS ADJUSTED FOR INFLA4 TION.—

5 ‘‘(1) IN GENERAL.—In the case of any taxable

6 year beginning in a calendar year beginning after

7 the date of the enactment of this section, each dollar

8 amount in subsection (b) shall be increased by an

9 amount equal to—

10 ‘‘(A) such dollar amount, multiplied by

11 ‘‘(B) the cost-of-living adjustment deter12 mined under section 1(f)(3) for the calendar

13 year in the taxable year begins, by substituting

14 the calendar year which includes the date of the

15 enactment of this section for the calendar year

16 referred to in subparagraph (B) thereof.

17 ‘‘(2) ROUNDING.—If any dollar amount as in18 creased under paragraph (1) is not a multiple of

19 $10, such dollar amount shall be rounded to the

20 nearest multiple of $10 (or, if such dollar amount is

21 a multiple of $5 and not of $10, such dollar amount

22 shall be increased to the nearest multiple of $10).

23 ‘‘(e) DENIAL OF MEDICAL EXPENSE DEDUCTION

24 FOR CREDITED AMOUNTS.—Any amount for which a cred25 it is allowed under this section shall not be taken into ac-
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1 count in computing the amount allowable as a deduction

2 under section 213(a).’’

3 (b) ALTERNATIVE DEDUCTION.—

4 (1) IN GENERAL.—Part VII of subchapter B of

5 chapter 1 of such Code is amended by redesignating

6 section 220 as section 221 and by inserting after

7 section 219 the following new section:

8 ‘‘SEC. 220. QUALIFIED HEALTH CARE COSTS.

9 ‘‘(a) ALLOWANCE OF DEDUCTION.—At the election

10 of an eligible individual for the taxable year, there shall

11 be allowed as a deduction for the taxable year an amount

12 equal to the lesser of—

13 ‘‘(1) the health care expenses of the taxpayer,

14 or

15 ‘‘(2) the maximum health care expense amount.

16 ‘‘(b) DEFINITIONS.—For purposes of this section,

17 terms used in this section which are also used in section

18 35 shall have the respective meanings given such terms

19 in section 35.

20 ‘‘(c) DENIAL OF MEDICAL EXPENSE DEDUCTION

21 FOR DEDUCTED AMOUNTS.—Any amount for which a de22 duction is allowed under this section shall not be taken

23 into account in computing the amount allowable as a de24 duction under section 213(a).’’
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1 (2) DEDUCTION ALLOWABLE WHETHER OR NOT

2 INDIVIDUAL ITEMIZES OTHER DEDUCTIONS.—Sub3 section (a) of section 62 of such Code is amended

4 by adding after paragraph (15) the following new

5 paragraph:

6 ‘‘(16) HEALTH INSURANCE COSTS.—The deduc7 tion allowed by section 220.’’

8 (c) REPEAL OF SEPARATE DEDUCTION FOR SELF9 EMPLOYED INDIVIDUALS.—Subsection (l) of section 162

10 of such Code is hereby repealed.

11 (d) CLERICAL AMENDMENTS.—

12 (1) Subpart C of part IV of subchapter A of

13 chapter 1 of such Code is amended by striking the

14 last item and inserting the following new item:

‘‘Sec. 35. Qualified health care costs.

‘‘Sec. 36. Overpayments of tax.’’

15 (2) Part VII of subchapter B of chapter 1 of

16 such Code is amended by striking the last item and

17 inserting the following new items:

‘‘Sec. 220. Qualified health care costs.

‘‘Sec. 221. Cross reference.’’

18 SEC. 102. LIMITATION ON EXCLUSION FOR EMPLOYER-PRO19 VIDED HEALTH COVERAGE.

20 (a) IN GENERAL.—The text of section 106 of the In21 ternal Revenue Code of 1986 (relating to contributions by

22 employer to accident and health plans) is amended to read

23 as follows:
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1 ‘‘(a) IN GENERAL.—Gross income of an employee

2 does not include employer-provided coverage under an ac3 cident or health plan.

4 ‘‘(b) LIMITATION.—The amount excludable from

5 gross income under subsection (a) shall not exceed the

6 value of the coverage under the lowest-cost available mar7 ket health plan (as defined in section 137(c)(4)) available

8 to the employer.’’

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

10 this section shall apply to taxable years beginning after

11 the date of the enactment of this Act.

12 SEC. 103. HEALTH CARE SAVINGS ACCOUNTS.

13 (a) IN GENERAL.—Part III of subchapter B of chap14 ter 1 of the Internal Revenue Code of 1986 is amended

15 by redesignating section 137 as section 138 and by insert16 ing after section 136 the following new section:

17 ‘‘SEC. 137. HEALTH CARE SAVINGS ACCOUNTS.

18 ‘‘(a) EXCLUSION.—Gross income of an employee

19 shall not include any amount contributed during the tax20 able year by the employer to a health care savings account

21 of such employee.

22 ‘‘(b) LIMITATIONS.—

23 ‘‘(1) MAXIMUM EXCLUSION.—Subsection (a)

24 shall not apply to the extent that the amount con25 tributed to a health care savings account for the tax-
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1 able year exceeds the cost of the lowest cost avail2 able market health plan.

3 ‘‘(2) EMPLOYEE MUST HAVE CATASTROPHIC

4 COVERAGE.—

5 ‘‘(A) IN GENERAL.—Subsection (a) shall

6 not apply to any employee unless such employee

7 has minimum catastrophic coverage throughout

8 such taxable year for such employee, such em9 ployee’s spouse, and each dependent (as defined

10 in section 152) of such employee.

11 ‘‘(B) MINIMUM CATASTROPHIC COV12 ERAGE.—For purposes of subparagraph (A),

13 the term ‘minimum catastrophic coverage’

14 means an insurance plan which pay a minimum

15 of 80 percent of all emergency care expenses

16 per year to the extent such expenses incurred

17 during such year exceed $4,000.

18 ‘‘(3) EXCLUSION LIMITED TO EMPLOYEES

19 WITHOUT OTHER EMPLOYER-PROVIDED HEALTH

20 BENEFITS.—This section shall not apply to any em21 ployee for the taxable year if any amount is exclud22 able from the gross income of such employee under

23 section 106 for such taxable year.

24 ‘‘(c) DEFINITIONS.—For purposes of this section—
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1 ‘‘(1) HEALTH CARE SAVINGS ACCOUNT.—The

2 term ‘health care savings account’ means a trust

3 created or organized in the United States exclusively

4 for the purpose of paying the health care expenses

5 of the account beneficiary, but only if the written

6 governing instrument creating the trust meets the

7 following requirements:

8 ‘‘(A) No contribution will be accepted un9 less it is in cash.

10 ‘‘(B) The trustee is a bank (as defined in

11 section 408(n)) or another person who dem12 onstrates to the satisfaction of the Secretary

13 that the manner in which such person will ad14 minister the trust will be consistent with the re15 quirements of this section.

16 ‘‘(C) The assets of the trust will not be

17 commingled with other property except in a

18 common trust fund or common investment

19 fund.

20 ‘‘(2) HEALTH CARE EXPENSES.—The term

21 ‘health care expenses’ means, with respect to the ac22 count beneficiary, the amount paid by such bene23 ficiary during the taxable year which would be allow24 able as a deduction for the taxable year under sec-
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1 tion 213 but for the threshold based on adjusted

2 gross income.

3 ‘‘(3) ACCOUNT BENEFICIARY.—The term ‘ac4 count beneficiary’ means the employee for whose

5 benefit the health care savings account is estab6 lished.

7 ‘‘(4) LOWEST COST AVAILABLE MARKET

8 HEALTH PLAN.—The term ‘lowest cost available

9 market health plan’ means the regional price of the

10 lowest cost health insurance plan containing a mini11 mum level of health care benefits (as determined by

12 the Secretary of Health and Human Services).

13 ‘‘(d) TAX TREATMENT OF DISTRIBUTIONS.—

14 ‘‘(1) IN GENERAL.—Any amount paid or dis15 tributed out of a health care savings account shall

16 be included in the gross income of the individual for

17 whose benefit such account was established unless

18 such amount is used exclusively to pay the health

19 care expenses of such individual.

20 ‘‘(2) PENALTY FOR AMOUNTS INCLUDED IN IN21 COME BEFORE THE CLOSE OF CALENDAR YEAR.—If

22 any amount is includible in the gross income of the

23 account beneficiary before the last business day dur24 ing the taxable year, such beneficiary’s tax imposed
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1 by this chapter shall be increased by 10 percent of

2 the amount so includible.

3 ‘‘(3) EXCESS CONTRIBUTIONS RETURNED BE4 FORE DUE DATE OF RETURN.—Paragraph (1) shall

5 not apply to the distribution of any contribution paid

6 during a taxable year to a health care savings ac7 count to the extent that such contribution exceeds

8 the amount excludable under subsection (a) if—

9 ‘‘(A) such distribution is received by the

10 individual on or before the last day prescribed

11 by law (including extensions of time) for filing

12 such individual’s return for such taxable year,

13 and

14 ‘‘(B) such distribution is accompanied by

15 the amount of net income attributable to such

16 excess contribution.

17 Any net income described in subparagraph (B) shall

18 be included in the gross income of the individual for

19 the taxable year in which it is received.

20 ‘‘(e) TAX TREATMENT OF ACCOUNTS.—

21 ‘‘(1) ACCOUNT TAXED AS GRANTOR TRUST.—

22 The individual for whose benefit a health care sav23 ings account is established shall be treated for pur24 poses of this title as the owner thereof and shall be

25 subject to tax thereon in accordance with subpart E
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1 of part I of subchapter J of this chapter (relating

2 to grantors and others treated as substantial own3 ers).

4 ‘‘(2) ACCOUNT TERMINATES IF INDIVIDUAL EN5 GAGES IN PROHIBITED TRANSACTION.—

6 ‘‘(A) IN GENERAL.—If, during any taxable

7 year of the individual for whose benefit the

8 health care savings account was established,

9 such individual engages in any transaction pro10 hibited by section 4975 with respect to the ac11 count, the account ceases to be a health care

12 savings account as of the first day of that tax13 able year.

14 ‘‘(B) ACCOUNT TREATED AS DISTRIBUTING

15 ALL ITS ASSETS.—In any case in which any ac16 count ceases to be a health care savings account

17 by reason of subparagraph (A) on the first day

18 of any taxable year, paragraph (1) of subsection

19 (h) shall be applied as if there were a distribu20 tion on such first day in an amount equal to

21 the fair market value (on such first day) of all

22 assets in the account (on such first day) and no

23 portion of such distribution were used to pay

24 health care expenses.
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1 ‘‘(3) EFFECT OF PLEDGING ACCOUNT AS SECU2 RITY.—If, during any taxable year, the individual for

3 whose benefit a health care savings account was es4 tablished uses the account or any portion thereof as

5 security for a loan, the portion so used is treated as

6 distributed to that individual and not used to pay

7 health care expenses.

8 ‘‘(f) CUSTODIAL ACCOUNTS.—For purposes of this

9 section, a custodial account shall be treated as a trust if—

10 ‘‘(1) the assets of such account are held by a

11 bank (as defined in section 408(n)) or another per12 son who demonstrates to the satisfaction of the Sec13 retary that the manner in which he will administer

14 the account will be consistent with the requirements

15 of this section, and

16 ‘‘(2) the custodial account would, except for the

17 fact that it is not a trust, constitute a health care

18 savings account described in subsection (g).

19 For purposes of this title, in the case of a custodial ac20 count treated as a trust by reason of the preceding sen21 tence, the custodian of such account shall be treated as

22 the trustee thereof.

23 ‘‘(g) REPORTS.—The trustee of a health care savings

24 account shall make such reports regarding such account

25 to the Secretary and to the individual for whose benefit
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1 the account is maintained with respect to contributions,

2 distributions, and such other matters as the Secretary

3 may require under regulations. The reports required by

4 this subsection shall be filed at such time and in such

5 manner and furnished to such individuals at such time and

6 in such manner as may be required by those regulations.

7 ‘‘(h) OTHER DEFINITIONS.—For purposes of this

8 section—

9 ‘‘(1) EMPLOYER.—The term ‘employer’ includes

10 persons treated as an employer under section

11 401(c)(4).

12 ‘‘(2) EMPLOYEE.—The term ‘employee’ in13 cludes—

14 ‘‘(A) an individual who is an employee

15 within the meaning of section 401(c)(1), and

16 ‘‘(B) former employees.

17 ‘‘(3) TYPE OF COVERAGE.—The types of cov18 erage are—

19 ‘‘(A) self-only coverage, and

20 ‘‘(B) coverage other than self-only cov21 erage.

22 ‘‘(4) HEALTH INSURANCE PLAN.—The term

23 ‘health insurance plan’ means any contract or ar24 rangement under which an insurer bears all or part

25 of the cost or risk of providing health care items and
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1 services, including a hospital or medical expense in2 curred policy or certificate, hospital or medical serv3 ice plan contract, or health maintenance subscriber

4 contract (including any self-insured health insurance

5 plan), but does not include—

6 ‘‘(A) coverage only for accident, dental, vi7 sion, disability, or long term care, medicare

8 supplemental health insurance, or any combina9 tion thereof,

10 ‘‘(B) coverage issued as a supplement to li11 ability insurance,

12 ‘‘(C) workers’ compensation or similar in13 surance, or

14 ‘‘(D) automobile medical-payment insur15 ance.’’

16 (b) EXCLUSION APPLIES FOR EMPLOYMENT TAX

17 PURPOSES.—

18 (1) SOCIAL SECURITY TAXES.—

19 (A) Paragraph (20) of section 3121(a) of

20 such Code is amended by striking ‘‘or 132’’ and

21 inserting ‘‘132, or 137’’.

22 (B) Paragraph (17) of section 209(a) of

23 the Social Security Act is amended by striking

24 ‘‘or 132’’ and inserting ‘‘132, or 137’’.
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1 (2) RAILROAD RETIREMENT TAX.—Paragraph

2 (5) of section 3231(e) of such Code is amended by

3 striking ‘‘or 132’’ and inserting ‘‘132, or 137’’.

4 (3) UNEMPLOYMENT TAX.—Paragraph (16) of

5 section 3306(b) of such Code is amended by striking

6 ‘‘or 132’’ and inserting ‘‘132, or 137’’.

7 (4) WITHHOLDING TAX.—Paragraph (19) of

8 section 3401(a) of such Code is amended by striking

9 ‘‘or 132’’ and inserting ‘‘, 132, or 137’’.

10 (c) TAX ON EXCESS CONTRIBUTIONS.—Section 4973

11 of such Code (relating to tax on excess contributions to

12 individual retirement accounts, certain section 403(b) con13 tracts, and certain individual retirement annuities) is

14 amended—

15 (1) by inserting ‘‘HEALTH CARE SAVINGS

16 ACCOUNTS,’’ after ‘‘ACCOUNTS,’’ in the heading

17 of such section,

18 (2) by redesignating paragraph (2) of sub19 section (a) as paragraph (3) and by inserting after

20 paragraph (1) the following:

21 ‘‘(2) a health care savings account (within the

22 meaning of section 137(g)),’’,

23 (3) by striking ‘‘or’’ at the end of paragraph

24 (1) of subsection (a), and
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1 (4) by adding at the end thereof the following

2 new subsection:

3 ‘‘(d) EXCESS CONTRIBUTIONS TO HEALTH CARE

4 SAVINGS ACCOUNTS.—For purposes of this section, in the

5 case of a health care savings account (within the meaning

6 of section 137(g)), the term ‘excess contributions’ means

7 the amount by which the amount contributed for the tax8 able year to the account exceeds the amount excludable

9 from gross income under section 137 for such taxable

10 year. For purposes of this subsection, any contribution

11 which is distributed out of the health care savings account

12 in a distribution to which section 137(h)(2) applies shall

13 be treated as an amount not contributed.’’

14 (d) TAX ON PROHIBITED TRANSACTIONS.—Section

15 4975 of such Code (relating to prohibited transactions)

16 is amended—

17 (1) by adding at the end of subsection (c) the

18 following new paragraph:

19 ‘‘(4) SPECIAL RULE FOR HEALTH CARE SAV20 INGS ACCOUNTS.—An individual for whose benefit a

21 health care savings account (within the meaning of

22 section 137(g)) is established shall be exempt from

23 the tax imposed by this section with respect to any

24 transaction concerning such account (which would

25 otherwise be taxable under this section) if, with re-
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1 spect to such transaction, the account ceases to be

2 a health care savings account by reason of the appli3 cation of section 137(h)(2)(A) to such account.’’,

4 and

5 (2) by inserting ‘‘or a health care savings ac6 count described in section 137(g)’’ in subsection

7 (e)(1) after ‘‘described in section 408(a)’’.

8 (e) FAILURE TO PROVIDE REPORTS ON HEALTH

9 CARE SAVINGS ACCOUNTS.—Section 6693 of such Code

10 (relating to failure to provide reports on individual retire11 ment account or annuities) is amended—

12 (1) by inserting ‘‘OR ON HEALTH CARE SAV13 INGS ACCOUNTS’’ after ‘‘ANNUITIES’’ in the

14 heading of such section, and

15 (2) by adding at the end of subsection (a) the

16 following: ‘‘The person required by section 137(g) to

17 file a report regarding a health care savings account

18 at the time and in the manner required by such sec19 tion shall pay a penalty of $50 for each failure un20 less it is shown that such failure is due to reasonable

21 cause.’’

22 (f) HEALTH CARE SAVINGS ACCOUNT CONTRIBU23 TIONS NOT SUBJECT TO WELFARE BENEFIT FUND

24 RULES.—Paragraph (2) of section 419(e) of such Code

25 (defining welfare benefit) is amended by striking ‘‘or’’ at
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1 the end of subparagraph (B), by striking the period at

2 the end of subparagraph (C) and inserting ‘‘, or’’, and by

3 adding at the end thereof the following new subparagraph:

4 ‘‘(D) section 137 applies.’’

5 (g) CLERICAL AMENDMENTS.—

6 (1) The table of sections for part III of sub7 chapter B of chapter 1 of such Code is amended by

8 striking the last item and inserting the following:

‘‘Sec. 137. Health care savings accounts.

‘‘Sec. 138. Cross references to other Acts.’’

9 (2) The table of sections for chapter 43 of such

10 Code is amended by striking the item relating to sec11 tion 4973 and inserting the following:

‘‘Sec. 4973. Tax on excess contributions to individual retirement

accounts, health care savings accounts, certain

403(b) contracts, and certain individual retirement

annuities.’’

12 (3) The table of sections for subchapter B of

13 chapter 68 of such Code is amended by inserting ‘‘or

14 on health care savings accounts’’ after ‘‘annuities’’

15 in the item relating to section 6693.

16 (h) EFFECTIVE DATE.—The amendments made by

17 this section shall apply to taxable years beginning after

18 the close of the calendar year which includes the date of

19 the enactment of this Act.
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1 TITLE II—HEALTH CARE COST

2 CONTAINMENT

3 Subtitle A—Health Care Liability

4 Reform

5 SEC. 201. FEDERAL REFORM OF HEALTH CARE LIABILITY

6 ACTIONS.

7 (a) APPLICABILITY.—This subtitle shall apply with

8 respect to any health care liability claim and to any health

9 care liability action brought in any State or Federal court

10 (except as provided in section 203), except that this sub11 title shall not apply to a claim or action for damages aris12 ing from a vaccine-related injury or death to the extent

13 that title XXI of the Public Health Service Act applies

14 to the action.

15 (b) PREEMPTION OF STATE LAW.—Subject to section

16 208, this subtitle supersedes State law only to the extent

17 that State law differs from any provision of law estab18 lished by or under this subtitle. Any issue that is not gov19 erned by any provision of law established by or under this

20 subtitle shall be governed by otherwise applicable State or

21 Federal law.

22 (c) FEDERAL COURT JURISDICTION NOT ESTAB23 LISHED ON FEDERAL QUESTION GROUNDS.—Nothing in

24 this subtitle shall be construed to establish any jurisdiction

25 in the district courts of the United States over health care
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1 liability actions on the basis of sections 1331 or 1337 of

2 title 28, United States Code.

3 SEC. 202. STATUTE OF LIMITATIONS.

4 (a) IN GENERAL.—No health care liability claim may

5 be brought against any party after the expiration of the

6 10-year period that begins on the date the party commit7 ted the action which caused the alleged injury that is the

8 subject of the claim.

9 (b) EXCEPTION FOR CLAIMS BASED ON INTEN10 TIONAL ACTION.—Subsection (a) shall not apply to a

11 claim brought against a party if the claimant’s sole allega12 tion is an allegation of an intentional tort.

13 SEC. 203. REQUIREMENT FOR INITIAL RESOLUTION OF AC14 TIONS IN FEDERAL COURT THROUGH ALTER15 NATIVE DISPUTE RESOLUTION.

16 (a) REQUIREMENT.—

17 (1) IN GENERAL.—No health care liability ac18 tion may be brought in any Federal court during a

19 calendar year unless the health care liability claim

20 that is the subject of the action has been initially re21 solved under the alternative dispute resolution sys22 tem established by the Secretary under subsection

23 (b).

24 (2) INITIAL RESOLUTION OF CLAIMS UNDER

25 ADR.—For purposes of paragraph (1), an action is
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1 ‘‘initially resolved’’ under an alternative dispute res2 olution system if—

3 (A) the ADR reaches a decision on wheth4 er the defendant is liable to the plaintiff for

5 damages; and

6 (B) if the ADR determines that the de7 fendant is liable, the ADR reaches a decision on

8 the amount of damages assessed against the de9 fendant.

10 (3) EXCLUSION OF COURTS OF DISTRICT OF

11 COLUMBIA.—For purposes of paragraph (1), the

12 term ‘‘Federal court’’ does not include the Superior

13 Court of the District of Columbia or the District of

14 Columbia Court of Appeals.

15 (b) ESTABLISHMENT OF SYSTEM.—

16 (1) IN GENERAL.—The Attorney General shall

17 establish an alternative dispute resolution system

18 that meets the requirements of paragraph (2) for

19 the resolution of health care liability claims under

20 the jurisdiction of the Federal courts.

21 (2) REQUIREMENTS DESCRIBED.—The ADR

22 system established by the Attorney General under

23 paragraph (1) meets the requirements of this para24 graph if the system—
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1 (A) applies to all health care liability

2 claims under the jurisdiction of the Federal

3 courts;

4 (B) requires that a written opinion resolv5 ing the dispute be issued not later than 6

6 months after the date by which each party

7 against whom the claim is filed has received no8 tice of the claim (other than in exceptional

9 cases for which a longer period is required for

10 the issuance of such an opinion), and that the

11 opinion contain—

12 (i) findings of fact relating to the dis13 pute, and

14 (ii) a description of the costs incurred

15 in resolving the dispute under the system

16 (including any fees paid to the individuals

17 hearing and resolving the claim), together

18 with an appropriate assessment of the

19 costs against any of the parties;

20 (C) provides that claims brought under the

21 system shall be heard and resolved by arbitra22 tors appointed by the Secretary in consultation

23 with the Attorney General;

24 (D) requires all parties to present (or to

25 make all reasonable efforts to present) all rel-
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1 evant information relating to the claim to the

2 arbitrator, and permits the arbitrator to request

3 the court of relevant jurisdiction to impose

4 criminal penalties against any party that know5 ingly or intentionally fails to present (or to

6 make all reasonable efforts to present) such in7 formation;

8 (E) provides for the transmittal to the

9 State agency responsible for monitoring or dis10 ciplining health care professionals and health

11 care providers of any findings made under the

12 system that such a professional or provider

13 committed malpractice, unless, during the 90-

14 day period beginning on the date the system re15 solves the claim against the professional or pro16 vider, the professional or provider brings a

17 health care liability action contesting the deci18 sion made under the system; and

19 (F) provides for the regular transmittal to

20 the Administrator for Health Care Policy and

21 Research of information on disputes resolved

22 under the system, in a manner that assures

23 that the identity of the parties to a dispute

24 shall not be revealed.
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1 (c) APPLICATION OF HEALTH CARE LIABILITY

2 STANDARDS TO ALTERNATIVE DISPUTE RESOLUTION.—

3 The provisions of this subtitle shall apply with respect to

4 claims brought under the alternative dispute resolution

5 system established under this section in the same manner

6 as such provisions apply with respect to health care liabil7 ity actions.

8 (d) RULES FOR HEALTH CARE LIABILITY ACTIONS

9 CONTESTING ADR RULING.—

10 (1) REQUIRING PARTY CONTESTING ADR RUL11 ING TO PAY ATTORNEY’S FEES AND OTHER COSTS.—

12 (A) IN GENERAL.—In each health care li13 ability action brought in a Federal court, the

14 court shall require the party that contested the

15 ruling of the alternative dispute resolution sys16 tem with respect to the health care liability

17 claim that is the subject of the action to pay to

18 the opposing party the costs incurred by the op19 posing party under the action, including attor20 ney’s fees, fees paid to expert witnesses, and

21 other litigation expenses (but not including any

22 fees or costs associated with the resolution of

23 the claim under the alternative dispute resolu24 tion system).
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1 (B) EXCEPTIONS.—Subparagraph (A)

2 shall not apply if—

3 (i) the party contesting the ruling

4 made under the previous alternative dis5 pute resolution system shows that—

6 (I) the ruling was procured by

7 corruption, fraud, or undue means,

8 (II) there was partiality or cor9 ruption under the system,

10 (III) there was other misconduct

11 under the system that materially prej12 udiced the party’s rights, or

13 (IV) the ruling was based on an

14 error of law;

15 (ii) the party contesting the ruling

16 made under the previous alternative dis17 pute resolution system presents new evi18 dence before the trier of fact that was not

19 available for presentation under the ADR

20 system; or

21 (iii) the court finds that the applica22 tion of such paragraph to a party would

23 constitute an undue hardship, and issues

24 an order waiving or modifying the applica-
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1 tion of such paragraph that specifies the

2 grounds for the court’s decision.

3 (2) RESTRICTIONS ON EVIDENCE PRE4 SENTED.—In any health care liability action brought

5 in a Federal court, no party may present any evi6 dence to the court that the party did not present

7 during the previous proceeding under the alternative

8 dispute resolution system unless the court finds

9 that—

10 (A) the party could not reasonably have

11 been aware of the existence of such evidence or

12 its availability for presentation at the time of

13 the ADR proceeding; or

14 (B) the restriction against the ability of

15 the party to present such evidence would con16 stitute an undue hardship against the party.

17 (e) ESTABLISHMENT OF MODEL STATE SYSTEM.—

18 Not later than 4 years after the date of the enactment

19 of this Act, the Secretary (in consultation with the Attor20 ney General) shall establish a model alternative dispute

21 resolution system that a State may (at its option) apply

22 to health care liability claims under the jurisdiction of its

23 courts.

24 SEC. 204. CALCULATION AND PAYMENT OF DAMAGES.

25 (a) LIMITATION ON NONECONOMIC DAMAGES.—
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1 (1) IN GENERAL.—Subject to paragraph (2),

2 the total amount of noneconomic damages that may

3 be awarded to a plaintiff and the members of the

4 plaintiff’s family for losses resulting from the injury

5 which is the subject of a health care liability action

6 may not exceed $250,000, regardless of the number

7 of parties against whom the action is brought or the

8 number of actions brought with respect to the in9 jury.

10 (2) MAXIMUM LIABILITY.—The maximum

11 amount of the liability of any defendant for any

12 event, action, or product with respect to all plaintiffs

13 (and potential plaintiffs) in a health care liability ac14 tion for noneconomic damages may not exceed

15 $1,000,000.

16 (b) ALLOCATION OF PUNITIVE DAMAGES TO UNIN17 SURED RISK POOL.—Of the total amount of punitive dam18 ages imposed under a health care liability action—

19 (1) 15 percent shall be paid to the plaintiff; and

20 (2) 85 percent shall be paid to the United

21 States for the deposit into the Treasury as mis22 cellaneous revenues (for the purpose of financing of

23 tax credits provided under section 35 of the Internal

24 Revenue Code of 1986).
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1 SEC. 205. TREATMENT OF ATTORNEY’S FEES.

2 If the plaintiff in a health care liability action has

3 entered into an agreement with the plaintiff’s attorney to

4 pay the attorney’s fees on a contingency basis, the attor5 ney’s fees for the action may not exceed—

6 (1) 30 percent of the first $100,000 of any

7 award or settlement paid to the plaintiff;

8 (2) 20 percent of the next $100,000 of such

9 award or settlement paid to the plaintiff; or

10 (3) 10 percent of any additional amounts paid

11 to the plaintiff.

12 SEC. 206. JOINT AND SEVERAL LIABILITY.

13 The liability of each defendant in a health care liabil14 ity action shall be several only and shall not be joint, and

15 each defendant shall be liable only for the amount of dam16 ages allocated to the defendant in direct proportion to the

17 defendant’s percentage of responsibility (as determined by

18 the trier of fact).

19 SEC. 207. MANDATORY OFFSETS FOR DAMAGES PAID BY A

20 COLLATERAL SOURCE.

21 (a) IN GENERAL.—The total amount of damages re22 ceived by a plaintiff in a health care liability action shall

23 be reduced (in accordance with subsection (b)) by any

24 other payment that has been or will be made to the indi25 vidual to compensate the plaintiff for the injury that was

26 the subject of the action, including payment under—
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1 (1) Federal or State disability or sickness pro2 grams;

3 (2) Federal, State, or private health insurance

4 programs;

5 (3) private disability insurance programs;

6 (4) employer wage continuation programs; and

7 (5) any other source of payment intended to

8 compensate the plaintiff for such injury.

9 (b) AMOUNT OF REDUCTION.—The amount by which

10 an award of damages to a plaintiff shall be reduced under

11 subsection (a) shall be—

12 (1) the total amount of any payments (other

13 than such award) that have been made or that will

14 be made to the plaintiff to compensate the plaintiff

15 for the injury that was the subject of the action;

16 minus

17 (2) the amount paid by the plaintiff (or by the

18 spouse, parent, or legal guardian of the plaintiff) to

19 secure the payments described in paragraph (1).

20 SEC. 208. PREEMPTION.

21 (a) IN GENERAL.—This subtitle supersedes any State

22 law only to the extent that State law—

23 (1) permits the recovery of a greater amount of

24 damages by a plaintiff;
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1 (2) permits the collection of a greater amount

2 of attorneys’ fees by a plaintiff’s attorney; or

3 (3) establishes a longer period during which a

4 health care liability claim may be initiated.

5 (b) EFFECT ON SOVEREIGN IMMUNITY AND CHOICE

6 OF LAW OR VENUE.—Nothing in subsection (a) shall be

7 construed to—

8 (1) waive or affect any defense of sovereign im9 munity asserted by any State under any provision of

10 law;

11 (2) waive or affect any defense of sovereign im12 munity asserted by the United States;

13 (3) affect the applicability of any provision of

14 the Foreign Sovereign Immunities Act of 1976;

15 (4) preempt State choice-of-law rules with re16 spect to claims brought by a foreign nation or a citi17 zen of a foreign nation; or

18 (5) affect the right of any court to transfer

19 venue or to apply the law of a foreign nation or to

20 dismiss a claim of a foreign nation or of a citizen

21 of a foreign nation on the ground of inconvenient

22 forum.

23 SEC. 209. DEFINITIONS.

24 As used in this subtitle:
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1 (1) ALTERNATIVE DISPUTE RESOLUTION SYS2 TEM; ADR.—The term ‘‘alternative dispute resolution

3 system’’ or ‘‘ADR’’ means the system established by

4 the Attorney General under section 203 that pro5 vides for the resolution of health care liability claims

6 under the jurisdiction of the Federal courts in a

7 manner other than through health care liability ac8 tions.

9 (2) CLAIMANT.—The term ‘‘claimant’’ means

10 any person who alleges a health care liability claim,

11 or, in the case of an individual who is deceased, in12 competent, or a minor, the person on whose behalf

13 such a claim is alleged.

14 (3) ECONOMIC DAMAGES.—The term ‘‘economic

15 damages’’ means damages paid to compensate an in16 dividual for losses for hospital and other medical ex17 penses, lost wages, lost employment, and other pecu18 niary losses.

19 (4) HEALTH CARE LIABILITY ACTION.—The

20 term ‘‘health care liability action’’ means a civil ac21 tion (other than an action in which the plaintiff’s

22 sole allegation is an allegation of an intentional tort)

23 brought in a State or Federal court against a health

24 care provider or health care professional (regardless

25 of the theory of liability on which the action is
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1 based) in which the plaintiff alleges a health care li2 ability claim, and includes an action in which the

3 plaintiff alleges harm arising from the use of a med4 ical product.

5 (5) HEALTH CARE LIABILITY CLAIM.—The

6 term ‘‘health care liability claim’’ means a claim in

7 which the claimant alleges that injury was caused by

8 the provision of (or the failure to provide) health

9 care services or the use of a medical product.

10 (6) HEALTH CARE PROFESSIONAL.—The term

11 ‘‘health care professional’’ means any individual who

12 provides health care services in a State and who is

13 required by State law or regulation to be licensed or

14 certified by the State to provide such services in the

15 State.

16 (7) HEALTH CARE PROVIDER.—The term

17 ‘‘health care provider’’ means any organization or

18 institution that is engaged in the delivery of health

19 care services in a State and that is required by State

20 law or regulation to be licensed or certified by the

21 State to engage in the delivery of such services in

22 the State.

23 (8) INJURY.—The term ‘‘injury’’ means any ill24 ness, disease, or other harm that is the subject of

25 a health care liability action or claim.
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1 (9) MEDICAL PRODUCT.—The term ‘‘medical

2 product’’ means a device (as defined in section

3 201(h) of the Federal Food, Drug, and Cosmetic

4 Act) or a drug (as defined in section 201(g)(1) of

5 the Federal Food, Drug, and Cosmetic Act).

6 (10) NONECONOMIC DAMAGES.—The term

7 ‘‘noneconomic damages’’ means damages paid to

8 compensate an individual for losses for physical and

9 emotional pain, suffering, inconvenience, physical

10 impairment, mental anguish, disfigurement, loss of

11 enjoyment of life, loss of consortium, and other

12 nonpecuniary losses, but does not include punitive

13 damages.

14 (11) SECRETARY.—The term ‘‘Secretary’’

15 means the Secretary of Health and Human Services.

16 (12) STATE.—The term ‘‘State’’ means each of

17 the several States, the District of Columbia, the

18 Commonwealth of Puerto Rico, the Virgin Islands,

19 Guam, and American Samoa.

20 SEC. 210. EFFECTIVE DATE.

21 This subtitle shall apply with respect to claims accru22 ing or actions brought on or after the expiration of the

23 1-year period that begins on the date of the enactment

24 of this Act.
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1 Subtitle B—Limit on Self-Referrals

2 by Health Care Provider

3 SEC. 221. LIMITATION ON SELF-REFERRALS BY HEALTH

4 CARE PROVIDERS.

5 (a) IN GENERAL.—If a health care provider refers

6 a patient to any facility in which the provider (or a family

7 member) has a financial interest for the performance of

8 any health care service, the provider—

9 (1) must disclose to the patient the nature of

10 such interest;

11 (2) must present the patient with a list of the

12 3 closest reasonably known available facilities which

13 perform the service; and

14 (3) may not place undue pressure on the pa15 tient to obtain the service from the facility in which

16 the provider (or a family member) has a financial in17 terest.

18 (b) ENFORCEMENT.—

19 (1) INITIAL VIOLATION.—If a health care pro20 vider violates a requirement of subsection (a) and

21 has not previously been subject to a sanction under

22 this subsection, the provider is subject to a civil

23 money penalty in an amount specified under sub24 section (c).
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1 (2) SECOND VIOLATION.—If a health care pro2 vider violates a requirement of subsection (a) and

3 has previously been subject to a sanction under this

4 subsection, the provider is subject to—

5 (A) a civil money penalty in an amount

6 specified under subsection (c), and

7 (B) a suspension of the right of the pro8 vider to provide health care services for a period

9 of time specified under subsection (c).

10 (3) THIRD VIOLATION.—If a health care pro11 vider violates a requirement of subsection (a), and

12 has previously been subject to a suspension under

13 this subsection—

14 (A) the provider is subject to a civil money

15 penalty in an amount specified under subsection

16 (c), and

17 (B) the provider’s right to provide health

18 care services is permanently revoked.

19 (c) AMOUNT OF CIVIL MONEY PENALTY AND PERIOD

20 OF SUSPENSION.—The amount of a civil money penalty

21 under subsection (b) and the period of any suspension of

22 the right to provide health care services under subsection

23 (b) shall be established by the Secretary of Health and

24 Human Services based upon the recommendations of the
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1 National Association of Insurance Commissioners and

2 other health care representatives.

3 (d) ENFORCEMENT PROCESS.—The Secretary of

4 Health and Human Services shall establish a process for

5 the imposition of sanctions under subsection (b).

6 (e) DEFINITIONS.—In this section:

7 (1) The term ‘‘Secretary’’ means the Secretary

8 of Health and Human Services.

9 (2) The term ‘‘financial interest’’ includes any

10 ownership, income rights, or other pecuniary inter11 est.

12 (3) The term ‘‘family member’’ includes the

13 spouse, child, grandchild, parent, or sibling, or

14 spouse of such a child, grandchild, parent, or sibling.

15 (f) EFFECTIVE DATE.—This section shall apply to

16 referrals made later than 1 year after the date of the en17 actment of this Act.

18 Subtitle C—Administrative Cost

19 Savings

20 SEC. 230. DEFINITIONS.

21 For purposes of this subtitle:

22 (1) HEALTH BENEFIT PLAN.—The term

23 ‘‘health benefit plan’’ means any hospital or medical

24 expense incurred policy or certificate, hospital or

25 medical service plan contract, or health maintenance
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1 subscriber contract, or a multiple employer welfare

2 arrangement or employee benefit plan (as defined

3 under the Employee Retirement Income Security Act

4 of 1974) which provides benefits with respect to

5 health care services. The term includes the medicare

6 program (under title XVIII of the Social Security

7 Act), medicare supplemental health insurance, and a

8 State medicaid plan (approved under title XIX of

9 such Act). The term does not include—

10 (A) coverage only for accident, dental, vi11 sion, disability income, or long-term care insur12 ance, or any combination thereof,

13 (B) coverage issued as a supplement to li14 ability insurance,

15 (C) worker’s compensation or similar in16 surance, or

17 (D) automobile medical-payment insur18 ance,

19 or any combination thereof.

20 (2) SECRETARY.—The term ‘‘Secretary’’ means

21 the Secretary of Health and Human Services.

22 (3) STATE.—The term ‘‘State’’ means any of

23 the several States, the District of Columbia, the

24 Commonwealth of Puerto Rico, the Virgin Islands,

25 Guam, and American Samoa.
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1 PART 1—STANDARDIZATION OF CLAIMS PROCESSING

2 SEC. 231. ADOPTION OF DATA ELEMENTS, UNIFORM

3 CLAIMS, AND UNIFORM ELECTRONIC TRANS4 MISSION STANDARDS.

5 (a) IN GENERAL.—The Secretary shall adopt stand6 ards relating to each of the following:

7 (1) Data elements for use in paper and elec8 tronic claims processing under health benefit plans,

9 as well as for use in utilization review and manage10 ment of care (including data fields, formats, and

11 medical nomenclature, and including plan benefit

12 and insurance information).

13 (2) Uniform claims forms (including uniform

14 procedure and billing codes for uses with such forms

15 and including information on other health benefit

16 plans that may be liable for benefits).

17 (3) Uniform electronic transmission of the data

18 elements (for purposes of billing and utilization re19 view).

20 Standards under paragraph (3) relating to electronic

21 transmission of data elements for claims for services shall

22 supersede (to the extent specified in such standards) the

23 standards adopted under paragraph (2) relating to the

24 submission of paper claims for such services. Standards

25 under paragraph (3) shall include protections to assure
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1 the confidentiality of patient-specific information and to

2 protect against the unauthorized use and disclosure of in3 formation.

4 (b) USE OF TASK FORCES.—In adopting standards

5 under this section—

6 (1) the Secretary shall take into account the

7 recommendations of current taskforces, including at

8 least the Workgroup on Electronic Data Inter9 change, National Uniform Billing Committee, the

10 Uniform Claim Task Force, and the Computer-based

11 Patient Record Institute;

12 (2) the Secretary shall consult with the Na13 tional Association of Insurance Commissioners (and,

14 with respect to standards under subsection (a)(3),

15 the American National Standards Institute); and

16 (3) the Secretary shall, to the maximum extent

17 practicable, seek to make the standards consistent

18 with any uniform clinical data sets which have been

19 adopted and are widely recognized.

20 (c) DEADLINES FOR PROMULGATION.—The Sec21 retary shall promulgate the standards under—

22 (1) subsection (a)(1) relating to claims process23 ing data, by not later than 12 months after the date

24 of the enactment of this Act;
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1 (2) subsection (a)(2) (relating to uniform

2 claims forms) by not later than 12 months after the

3 date of the enactment of this Act; and

4 (3)(A) subsection (a)(3) relating to trans5 mission of information concerning hospital and phy6 sicians services, by not later than 24 months after

7 the date of the enactment of this Act, and

8 (B) subsection (a)(3) relating to transmission

9 of information on other services, by such later date

10 as the Secretary may determine it to be feasible.

11 (d) REPORT TO CONGRESS.—Not later than 3 years

12 after the date of the enactment of this Act, the Secretary

13 shall report to Congress recommendations regarding re14 structuring the medicare peer review quality assurance

15 program given the availability of hospital data in elec16 tronic form.

17 SEC. 232. APPLICATION OF STANDARDS.

18 (a) IN GENERAL.—If the Secretary determines, at

19 the end of the 2-year period beginning on the date that

20 standards are adopted under section 231 with respect to

21 classes of services, that a significant number of claims for

22 benefits for such services under health benefit plans are

23 not being submitted in accordance with such standards,

24 the Secretary may require, after notice in the Federal

25 Register of not less than 6 months, that all providers of
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1 such services must submit claims to health benefit plans

2 in accordance with such standards. The Secretary may

3 waive the application of such a requirement in such cases

4 as the Secretary finds that the imposition of the require5 ment would not be economically practicable.

6 (b) SIGNIFICANT NUMBER.—The Secretary shall

7 make an affirmative determination described in subsection

8 (a) for a class of services only if the Secretary finds that

9 there would be a significant, measurable additional gain

10 in efficiencies in the health care system that would be ob11 tained by imposing the requirement described in such

12 paragraph with respect to such services.

13 (c) APPLICATION OF REQUIREMENT.—

14 (1) IN GENERAL.—If the Secretary imposes the

15 requirement under subsection (a)—

16 (A) in the case of a requirement that im17 poses the standards relating to electronic trans18 mission of claims for a class of services, each

19 health care provider that furnishes such services

20 for which benefits are payable under a health

21 benefit plan shall transmit electronically and di22 rectly to the plan on behalf of the beneficiary

23 involved a claim for such services in accordance

24 with such standards;
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1 (B) any health benefit plan may reject any

2 claim subject to the standards adopted under

3 section 231 but which is not submitted in ac4 cordance with such standards;

5 (C) it is unlawful for a health benefit plan

6 (i) to reject any such claim on the basis of the

7 form in which it is submitted if it is submitted

8 in accordance with such standards or (ii) to re9 quire, for the purpose of utilization review or as

10 a condition of providing benefits under the plan,

11 a provider to transmit medical data elements

12 that are inconsistent with the standards estab13 lished under section 231(a)(1); and

14 (D) the Secretary may impose a civil

15 money penalty on any provider that knowingly

16 and repeatedly submits claims in violation of

17 such standards or on any health benefit plan

18 (other than a health benefit plan described in

19 paragraph (2)) that knowingly and repeatedly

20 rejects claims in violation of subparagraph (B),

21 in an amount not to exceed $100 for each such

22 claim.

23 The provisions of section 1128A of the Social Secu24 rity Act (other than the first sentence of subsection

25 (a) and other than subsection (b)) shall apply to a
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1 civil money penalty under subparagraph (D) in the

2 same manner as such provisions apply to a penalty

3 or proceeding under section 1128A(a) of such Act.

4 (2) PLANS SUBJECT TO EFFECTIVE STATE REG5 ULATION.—A plan described in this paragraph is a

6 health benefit plan—

7 (A) that is subject to regulation by a

8 State; and

9 (B) with respect to which the Secretary

10 finds that—

11 (i) the State provides for application

12 of the standards established under section

13 231, and

14 (ii) the State regulatory program pro15 vides for the appropriate and effective en16 forcement of such standards.

17 (d) TREATMENT OF REJECTIONS.—If a plan rejects

18 a claim pursuant to subsection (c)(1), the plan shall per19 mit the person submitting the claim a reasonable oppor20 tunity to resubmit the claim on a form or in an electronic

21 manner that meets the requirements for acceptance of the

22 claim under such subsection.

23 SEC. 233. PERIODIC REVIEW AND REVISION OF STAND24 ARDS.

25 (a) IN GENERAL.—The Secretary shall—
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1 (1) provide for the ongoing receipt and review

2 of comments and suggestions for changes in the

3 standards adopted and promulgated under section

4 231;

5 (2) establish a schedule for the periodic review

6 of such standards; and

7 (3) based upon such comments, suggestions,

8 and review, revise such standards and promulgate

9 such revisions.

10 (b) APPLICATION OF REVISED STANDARDS.—If the

11 Secretary under subsection (a) revises the standards de12 scribed in 231, then, in the case of any claim for benefits

13 submitted under a health benefit plan more than the mini14 mum period (of not less than 6 months specified by the

15 Secretary) after the date the revision is promulgated

16 under subsection (a)(3), such standards shall apply under

17 section 232 instead of the standards previously promul18 gated.

19 PART 2—ELECTRONIC MEDICAL DATA STANDARDS

20 SEC. 241. MEDICAL DATA STANDARDS FOR HOSPITALS AND

21 OTHER PROVIDERS.

22 (a) PROMULGATION OF HOSPITAL DATA STAND23 ARDS.—

24 (1) IN GENERAL.—Between July 1, 1994, and

25 January 1, 1995, the Secretary shall promulgate
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1 standards described in subsection (b) for hospitals

2 concerning electronic medical data.

3 (2) REVISION.—The Secretary may from time

4 to time revise the standards promulgated under this

5 subsection.

6 (b) CONTENTS OF DATA STANDARDS.—The stand7 ards promulgated under subsection (a) shall include at

8 least the following:

9 (1) A definition of a standard set of data ele10 ments for use by utilization and quality control peer

11 review organizations.

12 (2) A definition of the set of comprehensive

13 data elements, which set shall include for hospitals

14 the standard set of data elements defined under

15 paragraph (1).

16 (3) Standards for an electronic patient care in17 formation system with data obtained at the point of

18 care, including standards to protect against the un19 authorized use and disclosure of information.

20 (4) A specification of, and manner of presen21 tation of, the individual data elements of the sets

22 and system under this subsection.

23 (5) Standards concerning the transmission of

24 electronic medical data.
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1 (6) Standards relating to confidentiality of pa2 tient-specific information.

3 The standards under this section shall be consistent with

4 standards for data elements established under section 231.

5 (c) OPTIONAL DATA STANDARDS FOR OTHER PRO6 VIDERS.—

7 (1) IN GENERAL.—The Secretary may promul8 gate standards described in paragraph (2) concern9 ing electronic medical data for providers that are not

10 hospitals. The Secretary may from time to time re11 vise the standards promulgated under this sub12 section.

13 (2) CONTENTS OF DATA STANDARDS.—The

14 standards promulgated under paragraph (1) for non15 hospital providers may include standards comparable

16 to the standards described in paragraphs (2), (4),

17 and (5) of subsection (b) for hospitals.

18 (d) CONSULTATION.—In promulgating and revising

19 standards under this section, the Secretary shall—

20 (1) consult with the American National Stand21 ards Institute, hospitals, with the advisory commis22 sion established under section 244, and with other

23 affected providers, health benefit plans, and other

24 interested parties, and
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1 (2) take into consideration, in developing stand2 ards under subsection (b)(1), the data set used by

3 the utilization and quality control peer review pro4 gram under part B of title XI of the Social Security

5 Act.

6 SEC. 242. APPLICATION OF ELECTRONIC DATA STANDARDS

7 TO CERTAIN HOSPITALS.

8 (a) MEDICARE REQUIREMENT FOR SHARING OF

9 HOSPITAL INFORMATION.—As of January 1, 1996, sub10 ject to paragraph (2), each hospital, as a requirement of

11 each participation agreement under section 1866 of the

12 Social Security Act, shall—

13 (1) maintain clinical data included in the set of

14 comprehensive data elements under section

15 241(b)(2) in electronic form on all inpatients,

16 (2) upon request of the Secretary or of a utili17 zation and quality control peer review organization

18 (with which the Secretary has entered into a con19 tract under part B of title XI of such Act), transmit

20 electronically the data set, and

21 (3) upon request of the Secretary, or of a fiscal

22 intermediary or carrier, transmit electronically any

23 data (with respect to a claim) from such data set,

24 in accordance with the standards promulgated under sec25 tion 241(a).
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1 (b) WAIVER AUTHORITY.—Until January 1, 2000:

2 (1) The Secretary may waive the application of

3 the requirements of subsection (a) for a hospital

4 that is a small rural hospital, for such period as the

5 hospital demonstrates compliance with such require6 ments would constitute an undue financial hardship.

7 (2) The Secretary may waive the application of

8 the requirements of subsection (a) for a hospital

9 that is in the process of developing a system to pro10 vide the required data set and executes agreements

11 with its fiscal intermediary and its utilization and

12 quality control peer review organization that the hos13 pital will meet the requirements of subsection (a) by

14 a specified date (not later than January 1, 2000).

15 (3) The Secretary may waive the application of

16 the requirement of subsection (a)(1) for a hospital

17 that agrees to obtain from its records the data ele18 ments that are needed to meet the requirements of

19 paragraphs (2) and (3) of subsection (a) and agrees

20 to subject its data transfer process to a quality as21 surance program specified by the Secretary.

22 (c) APPLICATION TO HOSPITALS OF THE DEPART23 MENT OF VETERANS AFFAIRS.—

24 (1) IN GENERAL.—The Secretary of Veterans

25 Affairs shall provide that each hospital of the De-
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1 partment of Veterans Affairs shall comply with the

2 requirements of subsection (a) in the same manner

3 as such requirements would apply to the hospital if

4 it were participating in the Medicare program.

5 (2) WAIVER.—Such Secretary may waive the

6 application of such requirements to a hospital in the

7 same manner as the Secretary of Health and

8 Human Services may waive under subsection (b) the

9 application of the requirements of subsection (a).

10 SEC. 243. ELECTRONIC TRANSMISSION TO FEDERAL AGEN11 CIES.

12 (a) IN GENERAL.—Effective January 1, 2000, if a

13 provider is required under a Federal program to transmit

14 a data element that is subject to a presentation or trans15 mission standard (as defined in subsection (b)), the head

16 of the Federal agency responsible for such program (if not

17 otherwise authorized) is authorized to require the provider

18 to present and transmit the data element electronically in

19 accordance with such a standard.

20 (b) PRESENTATION OR TRANSMISSION STANDARD

21 DEFINED.—In subsection (a), the term ‘‘presentation or

22 transmission standard’’ means a standard, promulgated

23 under subsection (b) or (c) of section 241, described in

24 paragraph (4) or (5) of section 241(b).
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1 SEC. 244. ADVISORY COMMISSION.

2 (a) IN GENERAL.—The Secretary shall establish an

3 advisory commission including hospital executives, hospital

4 data base managers, physicians, health services research5 ers, and technical experts in collection and use of data

6 and operation of data systems. Such commission shall in7 clude, as ex officio members, a representative of the Direc8 tor of the National Institutes of Health, the Administrator

9 for Health Care Policy and Research, the Secretary of

10 Veterans Affairs, and the Director of the Centers for Dis11 ease Control.

12 (b) FUNCTIONS.—The advisory commission shall

13 monitor and advise the Secretary concerning—

14 (1) the standards established under this part,

15 and

16 (2) operational concerns about the implementa17 tion of such standards under this part.

18 (c) STAFF.—From the amounts appropriated under

19 subsection (d), the Secretary shall provide sufficient staff

20 to assist the advisory commission in its activities under

21 this section.

22 (d) AUTHORIZATION OF APPROPRIATIONS.—There

23 are authorized to be appropriated $2,000,000 for each of

24 fiscal years 1994 through 1999 to carry out this section.
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1 PART 3—DEVELOPMENT AND DISTRIBUTION OF

2 COMPARATIVE VALUE INFORMATION

3 SEC. 251. STATE COMPARATIVE VALUE INFORMATION PRO4 GRAMS FOR HEALTH CARE PURCHASING.

5 (a) PURPOSE.—In order to assure the availability of

6 comparative value information to purchasers of health

7 care in each State, the Secretary shall determine whether

8 each State is developing and implementing a health care

9 value information program that meets the criteria and

10 schedule set forth in subsection (b).

11 (b) CRITERIA AND SCHEDULE FOR STATE PRO12 GRAMS.—The criteria and schedule for a State health care

13 value information program in this subsection shall be spec14 ified by the Secretary as follows:

15 (1) The State begins promptly after enactment

16 of this Act to develop (directly or through contrac17 tual or other arrangements with one or more States,

18 coalitions of health insurance purchasers, other enti19 ties, or any combination of such arrangements) in20 formation systems regarding comparative health val21 ues.

22 (2) The information contained in such systems

23 covers at least the average prices of common health

24 care services (as defined in subsection (d)) and

25 health insurance plans, and, where available, meas-
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1 ures of the variability of these prices within a State

2 or other market areas.

3 (3) The information described in paragraph (2)

4 is made available within the State beginning not

5 later than 1 year after the date of the enactment of

6 this Act, and is revised as frequently as reasonably

7 necessary, but at intervals of no greater than 1 year.

8 (4) Not later than 6 years after the date of the

9 enactment of this Act the State has developed infor10 mation systems that provide comparative costs, qual11 ity, and outcomes data with respect to health insur12 ance plans and hospitals and made the information

13 broadly available within the relevant market areas.

14 Nothing in this section shall preclude a State from provid15 ing additional information, such as information on prices

16 and benefits of different health benefit plans, available.

17 (c) GRANTS TO STATES FOR THE DEVELOPMENT OF

18 STATE PROGRAMS.—

19 (1) GRANT AUTHORITY.—The Secretary may

20 make grants to each State to enable such State to

21 plan the development of its health care value infor22 mation program and, if necessary, to initiate the im23 plementation of such program. Each State seeking

24 such a grant shall submit an application therefore,

25 containing such information as the Secretary finds
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1 necessary to assure that the State is likely to de2 velop and implement a program in accordance with

3 the criteria and schedule in subsection (b).

4 (2) AUTHORIZATION OF APPROPRIATIONS.—

5 There are authorized to be appropriated such sums

6 as are necessary to make grants under this sub7 section, to remain available until expended.

8 (d) COMMON HEALTH CARE SERVICES DEFINED.—

9 In this section, the term ‘‘common health care services’’

10 includes such procedures as the Secretary may specify and

11 any additional health care services which a State may wish

12 to include in its comparative value information program.

13 SEC. 252. COMPARATIVE VALUE INFORMATION CONCERN14 ING FEDERAL PROGRAMS.

15 (a) DEVELOPMENT.—The head of each Federal agen16 cy with responsibility for the provision of health insurance

17 or of health care services to individuals shall promptly de18 velop health care value information relating to each pro19 gram that such head administers and covering the same

20 types of data that a State program meeting the criteria

21 of section 251(b) would provide.

22 (b) DISSEMINATION OF INFORMATION.—Such infor23 mation shall be made generally available to States and to

24 providers and consumers of health care services.
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1 SEC. 253. DEVELOPMENT OF MODEL SYSTEMS.

2 (a) IN GENERAL.—The Secretary shall, directly or

3 through grant or contract, develop model systems to facili4 tate—

5 (1) the gathering of data on health care cost,

6 quality, and outcome described in section 251(b)(4),

7 and

8 (2) analyzing such data in a manner that will

9 permit the valid comparison of such data among

10 providers and among health plans.

11 (b) EXPERIMENTATION.—The Secretary shall sup12 port experimentation with different approaches to achieve

13 the objectives of subsection (a) in the most cost effective

14 manner (relative to the accuracy and timeliness of the

15 data secured) and shall evaluate the various methods to

16 determine their relative success.

17 (c) STANDARDS.—When the Secretary considers it

18 appropriate, the Secretary may establish standards for the

19 collection and reporting of data on health care cost, qual20 ity and outcomes in order to facilitate analysis and com21 parisons among States and nationally.

22 (d) REPORT.—By not later than 3 years after the

23 date of the enactment of this Act, the Secretary shall re24 port to the Congress and the States on the models devel25 oped, and experiments conducted, under this section.
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1 (e) AUTHORIZATION OF APPROPRIATIONS.—There

2 are authorized to be appropriated such sums as are nec3 essary for each fiscal year beginning with fiscal year 1994

4 to enable the Secretary to carry out this section, including

5 evaluation of the different approaches tested under sub6 section (b) and their relative cost effectiveness.

7 PART 4—ADDITIONAL STANDARDS AND REQUIREMENTS

8 SEC. 261. STANDARDS RELATING TO USE OF MEDICARE

9 AND MEDICAID MAGNETIZED HEALTH BENE10 FIT CARDS; SECONDARY PAYER DATA BANK.

11 (a) MAGNETIZED IDENTIFICATION CARDS UNDER

12 MEDICARE PROGRAM.—The Secretary shall adopt stand13 ards relating to the design and use of magnetized medi14 care identification cards in order to assist health care pro15 viders providing medicare covered services to individuals—

16 (1) in determining whether individuals are eligi17 ble for benefits under the medicare program, and

18 (2) in billing the medicare program for such

19 services provided to eligible individuals.

20 Such cards shall be designed to be compatible with ma21 chines currently employed to transmit information on

22 credit cards. Such cards also shall be designed to be able

23 to be used with respect to the provision of benefits under

24 medicare supplemental policies.

25 (b) ADOPTION UNDER MEDICAID PLANS.—
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1 (1) IN GENERAL.—The Secretary shall take

2 such steps as may be necessary to encourage and as3 sist States to design and use magnetized medicaid

4 identification cards that meet such standards, for

5 use under their medicaid plans.

6 (2) LIMITATION ON MMIS FUNDS.—In applying

7 section 1903(a)(3) of the Social Security Act, the

8 Secretary may determine that Federal financial par9 ticipation is not available under that section to a

10 State which has provided for a magnetized card sys11 tem that is inconsistent with the standards adopted

12 under subsection (a).

13 (c) MEDICARE AND MEDICAID SECONDARY PAYER

14 DATA BANK.—The Secretary shall establish a medicare

15 and medicaid information system which is designed to pro16 vide information on those group health plans and other

17 health benefit plans that are primary payers to the medi18 care program and medicaid program under section

19 1862(b) or section 1905(a)(25) of the Social Security Act.

20 (d) AUTHORIZATION OF APPROPRIATIONS.—There

21 are authorized to be appropriated, in equal proportions

22 from the Federal Hospital Insurance Trust Fund and

23 from the Federal Supplementary Medical Insurance Trust

24 Fund, a total of $25,000,000 to carry out subsections (a)
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1 and (c), including the issuance of magnetized cards to

2 medicare beneficiaries.

3 SEC. 262. PREEMPTION OF STATE QUILL PEN LAWS.

4 (a) IN GENERAL.—Effective January 1, 1994, no ef5 fect shall be given to any provision of State law that re6 quires medical or health insurance records (including bill7 ing information) to be maintained in written, rather than

8 electronic form.

9 (b) SECRETARIAL AUTHORITY.—The Secretary may

10 issue regulations to carry out subsection (a). Such regula11 tions may provide for such exceptions to subsection (a)

12 as the Secretary determines to be necessary to prevent

13 fraud and abuse, with respect to controlled substances,

14 and in such other cases as the Secretary deems appro15 priate.

16 SEC. 263. USE OF STANDARD IDENTIFICATION NUMBERS.

17 (a) IN GENERAL.—Effective January 1, 1994, each

18 health benefit plan shall—

19 (1) for each of its beneficiaries that has a social

20 security account number, use that number as the

21 personal identifier for claims processing and related

22 purposes, and

23 (2) for each provider that has a unique identi24 fier for purposes of title XVIII of the Social Security

25 Act and that furnishes health care items or services
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1 to a beneficiary under the plan, use that identifier

2 as the identifier of that provider for claims process3 ing and related purposes.

4 (b) COMPLIANCE.—

5 (1) IN GENERAL.—The Secretary may impose a

6 civil money penalty on any health benefit plan (other

7 than a health benefit plan described in paragraph

8 (2)) that fails to comply with standards established

9 under subsection (a) in an amount not to exceed

10 $100 for each such failure. The provisions of section

11 1128A of the Social Security Act (other than the

12 first sentence of subsection (a) and other than sub13 section (b)) shall apply to a civil money penalty

14 under this paragraph in the same manner as such

15 provisions apply to a penalty or proceeding under

16 section 1128A(a) of such Act.

17 (2) PLANS SUBJECT TO EFFECTIVE STATE REG18 ULATION.—A plan described in this paragraph is a

19 health benefit plan that is subject to regulation by

20 a State, if the Secretary finds that—

21 (A) the State provides for application of

22 the requirement of subsection (a), and

23 (B) the State regulatory program provides

24 for the appropriate and effective enforcement of

25 such requirement with respect to such plans.
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1 Subtitle D—Limitation of Antitrust

2 Recovery for Certain Hospital

3 Joint Ventures

4 SEC. 271. PURPOSE.

5 The purpose of this subtitle is to encourage coopera6 tion among hospitals in order to contain costs and achieve

7 a more efficient health care delivery system through the

8 elimination of unnecessary duplication and proliferation of

9 expensive high technology equipment, medical services, or

10 ancillary services.

11 SEC. 272. DEFINITIONS.

12 For the purposes of this subtitle:

13 (1) The term ‘‘antitrust laws’’ has the meaning

14 given it in subsection (a) of the first section of the

15 Clayton Act (15 U.S.C. 12(a)), except that such

16 term includes—

17 (A) section 5 of the Federal Trade Com18 mission Act (15 U.S.C. 45) to the extent such

19 section applies to unfair methods of competi20 tion, and

21 (B) any State law similar to the antitrust

22 laws.

23 (2) The term ‘‘high technology equipment’’

24 means equipment and devices utilized in medical
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1 care, and the technical support systems for them,

2 that—

3 (A) have acquisition costs greater than

4 $1,000,000 or annual operating costs greater

5 than $500,000, and

6 (B) use technologies with respect to which

7 there is a reasonable expectation that shared

8 ownership will avoid a significant degree of ac9 tual or anticipated excess capacity of service in

10 the geographical area to be served.

11 (3) The term ‘‘medical services’’ means services

12 that are involved in providing medical care to pa13 tients and that—

14 (A) have annual operating costs greater

15 than $1,000,000, and

16 (B) with respect to which there is a rea17 sonable expectation that shared ownership will

18 avoid a significant degree of the actual or an19 ticipated excess capacity of such services in the

20 geographical area to be served,

21 and may include mobile services.

22 (4) The term ‘‘ancillary services’’ means sup23 port functions associated with operating a hospital

24 (laundry, billing, patient transportation, data proc25 essing, and other similar services) the predominant
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1 function of which does not involve the provision of

2 medical treatment to patients.

3 (5) The term ‘‘hospital’’ means a hospital

4 that—

5 (A) has entered into, and has in effect a

6 participation agreement under section 1866(a)

7 of the Social Security Act (42 U.S.C.

8 1395cc(a)), or

9 (B) has in effect a participation agreement

10 under title XIX of such Act (42 U.S.C. 1396 et

11 seq.) with the State in which the hospital is lo12 cated.

13 (6) The term ‘‘hospital joint venture’’ means an

14 agreement between 2 or more hospitals that is en15 tered into solely for the purpose of sharing in the

16 purchase or operation of high technology equipment,

17 medical services, or ancillary services, and that in18 volves substantial integration or financial risk-shar19 ing between the parties. The term excludes—

20 (A) exchanging information among com21 petitors relating to costs, sales, profitability,

22 prices, marketing, or distribution of any prod23 uct, process, or service that is not reasonably

24 required to carry out such agreement,
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1 (B) entering into any arrangement or en2 gaging in any other conduct to restrict, require,

3 or otherwise involve the marketing by any party

4 to such agreement of any product, process, or

5 service that is not reasonably required to carry

6 out such agreement, and

7 (C) entering into any arrangement or en8 gaging in any other conduct to restrict or re9 quire the participation by any party to such

10 agreement in conduct that is not reasonably re11 quired to carry out such agreement.

12 (7) The term ‘‘Attorney General’’ means the

13 Attorney General of the United States.

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

15 of Health and Human Services.

16 (9) The term ‘‘Commission’’ means the Federal

17 Trade Commission.

18 SEC. 273. LIMITATION ON DAMAGES FOR ANTITRUST VIO19 LATIONS.

20 Monetary recovery on a claim in any action brought

21 under the antitrust laws against a hospital that is a party

22 to a hospital joint venture shall be limited to actual dam23 ages if—

24 (1) the hospitals forming such venture meet the

25 notification requirements specified in section 274,
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1 (2) the claim results from conduct that is with2 in the scope of the notification filed under section

3 274, and

4 (3) the action is filed after such notification be5 comes effective pursuant to section 274(c).

6 SEC. 274. DISCLOSURE OF HOSPITAL JOINT VENTURE.

7 (a) WRITTEN NOTIFICATIONS; FILING.—Any hos8 pital that is a party to a hospital joint venture, acting on

9 the venture’s behalf, not later than 90 days after entering

10 into a written agreement to form the venture, or not later

11 than 90 days after, the date of the enactment of this Act,

12 whichever is later, may file simultaneously with the Attor13 ney General, the Secretary, and the Commission, a written

14 notification disclosing—

15 (1) the identities of the parties to the venture,

16 and

17 (2) the nature, objectives, and planned activity

18 of the venture.

19 Any hospital that is a party to a hospital joint venture,

20 acting on the venture’s behalf, may file additional disclo21 sure notifications pursuant to this section as are appro22 priate to extend the protections of section 273. In order

23 to maintain the protections of section 273, the venture,

24 not later than 90 days after a change in its membership

25 or its planned activity, shall file simultaneously with the
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1 Attorney General, the Secretary, and the Commission a

2 written notification disclosing such change.

3 (b) PUBLICATION; FEDERAL REGISTER; NOTICE.—

4 Not later than 30 days after receiving a notification filed

5 under subsection (a), the Secretary, after consultation

6 with the Attorney General and the Commission, shall pub7 lish in the Federal Register a notice with respect to the

8 hospital joint venture that identifies the parties to the ven9 ture and that describes the planned activity of the venture.

10 Prior to its publication, the contents of such notice shall

11 be made available to the parties to the venture.

12 (c) EFFECT OF THE NOTICE.—If with respect to a

13 notification filed under subsection (a) of this section, no14 tice is published in the Federal Register, then such notifi15 cation shall operate to convey the protections of section

16 273 as of the earlier of—

17 (1) the date of the publication of notice under

18 subsection (b), or

19 (2) if such notice is not so published within the

20 time required by subsection (b) of this section, after

21 the expiration of the 30-day period beginning on the

22 date that the Attorney General, the Secretary, or the

23 Commission receives the applicable information de24 scribed in subsection (a).
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1 (d) EXEMPTION; DISCLOSURE; INFORMATION.—Ex2 cept with respect to the information published pursuant

3 to subsection (b)—

4 (1) all information and documentary material

5 submitted as part of a notification filed pursuant to

6 this section, and

7 (2) all other information obtained by the Attor8 ney General, the Secretary, or the Commission in

9 the course of any investigation, administrative pro10 ceeding, or case, with respect to a potential violation

11 of the antitrust laws by the joint venture with re12 spect to which such notification was filed,

13 shall be exempt from disclosure under section 552 of title

14 5, United States Code, and shall not be made publicly

15 available by any agency of the United States to which such

16 section applies, except as relevant to a law enforcement

17 investigation or in a judicial or administrative proceeding

18 in which such information and material is subject to any

19 protective order.

20 (e) WITHDRAWAL OF NOTIFICATION.—Any party

21 that files a notification pursuant to this section may with22 draw such notification before notice of the hospital joint

23 venture involved is published under subsection (b) of this

24 section. Any notification so withdrawn shall not be subject
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1 to subsection (b) and shall not confer the protections of

2 section 273.

3 (f) JUDICIAL REVIEW: INAPPLICABLE WITH RE4 SPECT TO NOTIFICATIONS.—Any action taken or not

5 taken by the Attorney General, the Secretary, or the Com6 mission with respect to notifications filed pursuant to this

7 section shall not be subject to judicial review.

8 (g) ADMISSIBILITY INTO EVIDENCE: DISCLOSURE OF

9 CONDUCT; PUBLICATION OF NOTICE; SUPPORTING OR

10 ANSWERING CLAIMS UNDER ANTITRUST LAWS.—

11 (1) Except as provided in paragraph (2), the

12 fact of disclosure of conduct under subsection (a)

13 and the fact of publication of a notice under sub14 section (b) shall be admissible into evidence in any

15 judicial or administrative proceeding for the sole

16 purpose of establishing that a person is entitled to

17 the protections of section 273.

18 (2) No action by the Attorney General, the Sec19 retary, or the Commission taken pursuant to this

20 section shall be admissible into evidence in any pro21 ceeding for the purpose of supporting or answering

22 any claim under the antitrust laws.
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1 Subtitle E—Medicaid Program

2 Flexibility

3 SEC. 281. MODIFICATION OF FEDERAL REQUIREMENTS TO

4 ALLOW STATES MORE FLEXIBILITY IN CON5 TRACTING FOR COORDINATED CARE SERV6 ICES UNDER MEDICAID.

7 (a) IN GENERAL.—Section 1903(m) of the Social Se8 curity Act (42 U.S.C. 1396b(m)) is amended—

9 (1) by striking all that precedes paragraph (4)

10 and inserting the following:

11 ‘‘(m) COORDINATED CARE.—

12 ‘‘(1) PAYMENT CONDITIONED ON COMPLI13 ANCE.—

14 ‘‘(A) GENERAL RULE.—No payment shall

15 be made under this title to a State with respect

16 to expenditures incurred by it for payment to a

17 risk contracting entity or primary care case

18 management entity (as defined in subparagraph

19 (B)), or with respect to an undertaking de20 scribed in paragraph (6), unless the State and

21 the entity or undertaking meet the applicable

22 requirements of this subsection. For purposes

23 of determining whether payment may be made

24 under this section, the Secretary may reject a
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1 State’s determination of compliance with any

2 provision of this subsection.

3 ‘‘(B) GENERAL DEFINITIONS.—For pur4 poses of this title—

5 ‘‘(i) RISK CONTRACTING ENTITY.—

6 The term ‘risk contracting entity’ means

7 an entity that has a contract with the

8 State agency under which the entity—

9 ‘‘(I) provides or arranges for the

10 provision of health care items or serv11 ices to individuals eligible for medical

12 assistance under the State plan under

13 this title, and

14 ‘‘(II) is at risk (as defined in

15 clause (iv)) for part or all of the cost

16 of such items or services furnished to

17 such individuals.

18 ‘‘(ii) PRIMARY CARE CASE MANAGE19 MENT PROGRAM.—The term ‘primary care

20 case management program’ means a State

21 program under which individuals eligible

22 for medical assistance under the State plan

23 under this title are enrolled with primary

24 care case management entities, and are en25 titled to receive specified health care items
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1 and services covered under such plan only

2 as arranged for and approved by such enti3 ties.

4 ‘‘(iii) AT RISK.—An entity is ‘at risk’,

5 for purposes of this subparagraph, if it has

6 a contract with the State agency under

7 which it is paid a fixed amount for provid8 ing or arranging for the provision of speci9 fied health care items or services to an in10 dividual eligible for medical assistance and

11 enrolled with the entity, regardless of

12 whether such items or services are fur13 nished to such individual, and is liable for

14 all or part of the cost of furnishing such

15 items or services, regardless of whether or

16 the extent to which such cost exceeds such

17 fixed payment.

18 ‘‘(iv) PRIMARY CARE CASE MANAGE19 MENT ENTITY.—The term ‘primary care

20 case management entity’ means a health

21 care provider (whether an individual or an

22 entity) that, under a State primary care

23 case management program meeting the re24 quirements of paragraph (7), has a con25 tract with the State agency under which
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1 the entity arranges for or authorizes the

2 provision of health care items and services

3 to individuals eligible for medical assist4 ance under the State plan under this title,

5 but is not at risk (as defined in clause (iv))

6 for the cost of such items or services pro7 vided to such individuals.

8 ‘‘(2) GENERAL REQUIREMENTS FOR RISK CON9 TRACTING ENTITIES.—

10 ‘‘(A) FEDERAL OR STATE QUALIFICA11 TION.—Subject to paragraph (3), a risk con12 tracting entity meets the requirements of this

13 subsection only if it either—

14 ‘‘(i) is a qualified health maintenance

15 organization as defined in section 1310(d)

16 of the Public Health Service Act, as deter17 mined by the Secretary pursuant to section

18 1312 of that Act, or

19 ‘‘(ii) is an entity which the State

20 agency has determined—

21 ‘‘(I) affords, to individuals eligi22 ble for medical assistance under the

23 State plan and enrolled with the en24 tity, access to health care items and

25 services furnished by the entity, with-
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1 in the area served by the entity, at

2 least equivalent to the access such in3 dividuals would have to such health

4 care items and services in such area if

5 not enrolled with the entity, and

6 ‘‘(II) has made adequate provi7 sion against the risk of insolvency,

8 and assures that individuals eligible

9 for medical assistance under this title

10 are not held liable for the entity’s

11 debts in case of the entity’s insol12 vency.

13 ‘‘(B) CONTRACT WITH STATE AGENCY.—

14 Subject to paragraph (3), a risk contracting en15 tity meets the requirements of this subsection

16 only if the entity has a written contract with

17 the State agency that provides—

18 ‘‘(i) that the entity will comply with

19 all applicable provisions of this subsection;

20 ‘‘(ii) for a payment methodology based

21 on experience rating or another actuarially

22 sound methodology approved by the Sec23 retary, which guarantees (as demonstrated

24 by such models or formulas as the Sec25 retary may approve) that payments to the
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1 entity under the contract shall not exceed

2 100 percent of expenditures that would

3 have been made by the State agency in the

4 absence of the contract;

5 ‘‘(iii) that the Secretary and the State

6 (or any person or organization designated

7 by either) shall have the right to audit and

8 inspect any books and records of the entity

9 (and of any subcontractor) that pertain—

10 ‘‘(I) to the ability of the entity to

11 bear the risk of potential financial

12 losses, or

13 ‘‘(II) to services performed or de14 terminations of amounts payable

15 under the contract;

16 ‘‘(iv) that in the entity’s reenrollment

17 or disenrollment of individuals eligible for

18 medical assistance under this title and eli19 gible to reenroll or disenroll with the entity

20 pursuant to the contract, the entity will

21 not discriminate among such individuals on

22 the basis of their health status or require23 ments for health care services;

24 ‘‘(v)(I) that individuals eligible for

25 medical assistance under the State plan
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1 who have enrolled with the entity are per2 mitted to terminate such enrollment with3 out cause as of the beginning of the first

4 calendar month following a full calendar

5 month after the request is made for such

6 termination (or at such times as required

7 pursuant to paragraph (8)), and

8 ‘‘(II) for notification of each such in9 dividual, at the time of the individual’s en10 rollment, of the right to terminate enroll11 ment;

12 ‘‘(vi) for reimbursement, either by the

13 entity or by the State agency, for medically

14 necessary services provided—

15 ‘‘(I) to an individual eligible for

16 medical assistance under the State

17 plan and enrolled with the entity, and

18 ‘‘(II) other than through the en19 tity because the services were imme20 diately required due to an unforeseen

21 illness, injury, or condition;

22 ‘‘(vii) for disclosure of information in

23 accordance with paragraph (4) and section

24 1124;
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1 ‘‘(viii) in the case of an entity that

2 has entered into a contract with a Feder3 ally-qualified health center for the provi4 sion of services of such center—

5 ‘‘(I) that rates of prepayment

6 from the State are adjusted to reflect

7 fully the rates of payment specified in

8 section 1902(a)(13)(E), and

9 ‘‘(II) that, at the election of such

10 center, payments made by the entity

11 to such center for services described

12 in section 1905(a)(2)(C) are made at

13 the rates of payment specified in sec14 tion 1902(a)(13)(E);

15 ‘‘(ix) that any physician incentive plan

16 that the entity operates meets the require17 ments of section 1876(i)(8);

18 ‘‘(x) for maintenance of sufficient pa19 tient encounter data to identify the physi20 cian who delivers services to patients; and

21 ‘‘(xi) that the entity complies with the

22 requirement of section 1902(w) with re23 spect to each enrollee.

24 ‘‘(3) EXCEPTIONS TO REQUIREMENTS FOR RISK

25 CONTRACTING ENTITIES.—The requirements of
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1 paragraph (2) (other than subparagraph (B)(viii))

2 do not apply to an entity that—

3 ‘‘(A)(i) received a grant of at least

4 $100,000 in the fiscal year ending June 30,

5 1976, under section 329(d)(1)(A) or 330(d)(1)

6 of the Public Health Service Act, and for the

7 period beginning July 1, 1976, and ending on

8 the expiration of the period for which payments

9 are to be made under this title, has been the re10 cipient of a grant under either such section;

11 and

12 ‘‘(ii) provides to its enrollees, on a prepaid

13 capitation or other risk basis, all of the services

14 described in paragraphs (1), (2), (3), (4)(C),

15 and (5) of section 1905(a) and, to the extent

16 required by section 1902(a)(10)(D) to be pro17 vided under the State plan, the services de18 scribed in section 1905(a)(7);

19 ‘‘(B) is a nonprofit primary health care en20 tity located in a rural area (as defined by the

21 Appalachian Regional Commission)—

22 ‘‘(i) which received in the fiscal year

23 ending June 30, 1976, at least $100,000

24 (by grant, subgrant, or subcontract) under
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1 the Appalachian Regional Development Act

2 of 1965), and

3 ‘‘(ii) for the period beginning July 1,

4 1976, and ending on the expiration of the

5 period for which payments are to be made

6 under this title either has been the recipi7 ent of a grant, subgrant, or subcontract

8 under such Act or has provided services

9 under a contract (initially entered into dur10 ing a year in which the entity was the re11 cipient of such a grant, subgrant, or sub12 contract) with a State agency under this

13 title on a prepaid capitation or other risk

14 basis; or

15 ‘‘(C) which has contracted with the State

16 agency for the provision of services (but not in17 cluding inpatient hospital services) to persons

18 eligible for medical assistance under this title

19 on a prepaid risk basis prior to 1970.’’; and

20 (2) by adding after paragraph (6) the following

21 new paragraphs:

22 ‘‘(7) GENERAL REQUIREMENTS FOR PRIMARY

23 CARE CASE MANAGEMENT.—A State that elects in

24 its State plan under this title to implement a pri25 mary care case management program under this
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1 subsection shall include in the plan methods for the

2 selection and monitoring of participating primary

3 care case management entities to ensure that—

4 ‘‘(A) the numbers, geographic locations,

5 hours of operation, and other relevant charac6 teristics of such entities are sufficient to afford

7 individuals eligible for medical assistance rea8 sonable access to and choice among such enti9 ties;

10 ‘‘(B) such entities and their professional

11 personnel are qualified to provide health care

12 case management services, through methods in13 cluding ongoing monitoring of compliance with

14 applicable requirements for licensing of health

15 care providers, providing training and certifi16 cation of primary care case managers, and pro17 viding information and technical assistance; and

18 ‘‘(C) such entities are making timely and

19 appropriate decisions with respect to enrollees’

20 need for health care items and services, and are

21 giving timely approval and referral to providers

22 of adequate quality where such items and serv23 ices are determined to be medically necessary.

24 ‘‘(8) STATE OPTIONS WITH RESPECT TO EN25 ROLLMENT AND DISENROLLMENT.—
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1 ‘‘(A) MANDATORY ENROLLMENT OP2 TION.—A State plan may require an individual

3 eligible for medical assistance under the State

4 plan (other than a medicare qualified bene5 ficiary) to enroll with a risk contracting entity

6 or primary care case management entity, with7 out regard to the requirement of section

8 1902(a)(1) (concerning Statewideness), the re9 quirements of section 1902(a)(10)(B) (concern10 ing comparability of benefits), or the require11 ments of section 1902(a)(23) (concerning free12 dom of choice of provider), if the individual is

13 permitted a choice—

14 ‘‘(i) between or among two or more

15 risk contracting entities,

16 ‘‘(ii) between a risk contracting entity

17 and a primary care case management en18 tity, or

19 ‘‘(iii) between or among two or more

20 primary care case management entities.

21 ‘‘(B)(i) RESTRICTIONS ON

22 DISENROLLMENT WITHOUT CAUSE.—A State

23 plan may restrict the period in which individ24 uals enrolled with a qualifying risk contracting

25 entity (as defined in clause (ii)) may terminate
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1 such enrollment without cause to the first

2 month of each period of enrollment (as defined

3 in clause (iii)), but only if the State provides

4 notification, at least once during each such en5 rollment period, to individuals enrolled with

6 such entity of the right to terminate such en7 rollment and the restriction on the exercise of

8 this right. Such restriction shall not apply to

9 requests for termination of enrollment for

10 cause.

11 ‘‘(ii) For purposes of this subparagraph,

12 the term ‘qualifying risk contracting entity’

13 means a risk contracting entity that is—

14 ‘‘(I) a qualified health maintenance

15 organization as defined in section 1310(d)

16 of the Public Health Service Act;

17 ‘‘(II) an eligible organization with a

18 contract under section 1876;

19 ‘‘(III) an entity that is receiving (and

20 has received during the previous 2 years)

21 a grant of at least $100,000 under section

22 329(d)(1)(A) or 330(d)(1) of the Public

23 Health Service Act;

24 ‘‘(IV) an entity that is receiving (and

25 has received during the previous 2 years)
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1 at least $100,000 (by grant, subgrant, or

2 subcontract) under the Appalachian Re3 gional Development Act of 1965;

4 ‘‘(V) a program pursuant to an under5 taking described in paragraph (6) in which

6 at least 25 percent of the membership en7 rolled on a prepaid basis are individuals

8 who (I) are not insured for benefits under

9 part B of title XVIII or eligible for medical

10 assistance under this title, and (II) (in the

11 case of such individuals whose prepay12 ments are made in whole or in part by any

13 government entity) had the opportunity at

14 the time of enrollment in the program to

15 elect other coverage of health care costs

16 that would have been paid in whole or in

17 part by any governmental entity; or

18 ‘‘(VI) an entity that, on the date of

19 enactment of this provision, had a contract

20 with the State agency under a waiver

21 under section 1115 or 1915(b) and was

22 not subject to a requirement under this

23 subsection to permit disenrollment without

24 cause.
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1 ‘‘(iii) For purposes of this subparagraph,

2 the term ‘period of enrollment’ means—

3 ‘‘(I) a period not to exceed 6 months

4 in duration, or

5 ‘‘(II) a period not to exceed one year

6 in duration, in the case of a State that, on

7 the effective date of this subparagraph,

8 had in effect a waiver under section 1115

9 of requirements under this title under

10 which the State could establish a 1-year

11 minimum period of enrollment with risk

12 contracting entities.

13 ‘‘(C) REENROLLMENT OF INDIVIDUALS

14 WHO REGAIN ELIGIBILITY.—In the case of an

15 individual who—

16 ‘‘(i) in a month is eligible for medical

17 assistance under the State plan and en18 rolled with a risk contracting entity with a

19 contract under this subsection,

20 ‘‘(ii) in the next month (or next 2

21 months) is not eligible for such medical as22 sistance, but

23 ‘‘(iii) in the succeeding month is again

24 eligible for such benefits,
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1 the State plan may enroll the individual for

2 that succeeding month with such entity, if the

3 entity continues to have a contract with the

4 State agency under this subsection.’’.

5 (b) STATE OPTION TO GUARANTEE MEDICAID ELIGI6 BILITY.—Section 1902(e)(2) of such Act (42 U.S.C.

7 1396a(e)(2)) is amended—

8 (A) in subparagraph (A), by striking all

9 that precedes ‘‘(but for this paragraph)’’ and

10 inserting ‘‘In the case of an individual who is

11 enrolled—

12 ‘‘(i) with a risk contracting entity (as

13 defined in section 1903(m)(1)(B)(i)) re14 sponsible for the provision of inpatient hos15 pital services and any other service de16 scribed in paragraphs (2), (3), (4), (5),

17 and (7) of section 1905(a),

18 ‘‘(ii) with any risk contracting entity

19 (as so defined) in a State that, on the ef20 fective date of this provision, had in effect

21 a waiver under section 1115 of require22 ments under this title under which the

23 State could extend eligibility for medical

24 assistance for enrollees of such entity, or
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1 ‘‘(iii) with an eligible organization

2 with a contract under section 1876 and

3 who would’’, and

4 (B) in subparagraph (B), by striking ‘‘or5 ganization or’’ each place it appears.

6 (c) CONFORMING AMENDMENTS.—

7 (1) Section 1128(b)(6)(C)(i) of such Act (42

8 U.S.C. 1320a–7(b)(6)(C)(i)) is amended by striking

9 ‘‘health maintenance organization’’ and inserting

10 ‘‘risk contracting entity’’.

11 (2) Section 1902(a)(57) of such Act (42 U.S.C.

12 1396a(a)(57)) is amended by striking ‘‘or health

13 maintenance organization’’ and inserting ‘‘or risk

14 contracting entity’’.

15 (3) Section 1902(a) of such Act (42 U.S.C.

16 1396a(a)) is amended—

17 (A) by striking ‘‘and’’ at the end of para18 graph (54);

19 (B) in the paragraph (55) inserted by sec20 tion 4602(a)(3) of Public Law 101–508, by

21 striking the period at the end and inserting a

22 semicolon;

23 (C) by redesignating the paragraph (55)

24 inserted by section 4604(b)(3) of Public Law

25 101–508 as paragraph (56), by transferring
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1 and inserting it after the paragraph (55) in2 serted by section 4602(a)(3) of such Act, and

3 by striking the period at the end and inserting

4 a semicolon;

5 (D) by placing paragraphs (57) and (58),

6 inserted by section 4751(a)(1)(C) of Public

7 Law 101–508, immediately after paragraph

8 (56), as redesignated by paragraph (3);

9 (E) in the paragraph (58) inserted by sec10 tion 4751(a)(1)(C) of Public Law 101–508, by

11 striking the period at the end and inserting a

12 semicolon;

13 (F) by redesignating the paragraph (58)

14 inserted by section 4752(c)(1)(C) of Public Law

15 101–508 as paragraph (59), by transferring

16 and inserting it after the paragraph (58) in17 serted by section 4751(a)(1)(C) of such Act,

18 and by striking the period at the end and in19 serting ‘‘; and’’; and

20 (G) by inserting after such paragraph (59)

21 the following new paragraph:

22 ‘‘(60) at State option, provide for a primary

23 care case management program in accordance with

24 section 1903(m)(7).’’.
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1 (4) Section 1902(p)(2) of such Act (42 U.S.C.

2 1396a(p)(2)) is amended by striking ‘‘health mainte3 nance organization’’ and inserting ‘‘risk contracting

4 entity’’.

5 (5) Section 1902(w) of such Act (42 U.S.C.

6 1396a(w)) is amended—

7 (A) in paragraph (1), by striking ‘‘section

8 1903(m)(1)(A)’’ and inserting ‘‘section

9 1903(m)(2)(C)(xi)’’, and

10 (B) in paragraph (2)(E), by striking

11 ‘‘health maintenance organization’’ and ‘‘the or12 ganization’’ and inserting ‘‘risk contracting en13 tity’’ and ‘‘the entity’’, respectively.

14 (6) Section 1903(k) of such Act (42 U.S.C.

15 1396b(k)) is amended by striking ‘‘health mainte16 nance organization’’ and inserting ‘‘risk contracting

17 entity’’.

18 (7) Section 1903(m)(4)(A) of such Act (42

19 U.S.C. 1396b(m)(4)(A)) is amended—

20 (A) in the first sentence, by striking ‘‘Each

21 health maintenance organization’’ and inserting

22 ‘‘Each risk contracting entity’’,

23 (B) in the first sentence, by striking ‘‘the

24 organization’’ each place it appears and insert25 ing ‘‘the entity’’, and
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1 (C) in the second sentence, by striking ‘‘an

2 organization’’ and ‘‘the organization’’ and in3 serting ‘‘a risk contracting entity’’ and ‘‘the

4 risk contracting entity’’, respectively.

5 (8) Section 1903(m)(4)(B) of such Act (42

6 U.S.C. 1396b(m)(4)(B)) is amended by striking ‘‘or7 ganization’’ and inserting ‘‘risk contracting entity’’.

8 (9) Section 1903(m)(5) of such Act (42 U.S.C.

9 1396b(m)(5)) is amended in paragraphs (A)(iii) and

10 (B)(ii) by striking ‘‘organization’’ and inserting ‘‘en11 tity’’.

12 (10) Section 1903(w)(7)(A)(viii) of such Act

13 (42 U.S.C. 1396b(w)(7)(A)(viii)) is amended by

14 striking ‘‘health maintenance organizations (and

15 other organizations with contracts under section

16 1903(m))’’ and inserting ‘‘risk contracting entities

17 with contracts under section 1903(m)’’.

18 (11) Section 1905(a) of such Act (42 U.S.C.

19 1396d(a)) is amended, in the matter preceding

20 clause (i), by inserting ‘‘(which may be on a prepaid

21 capitation or other risk basis)’’ after ‘‘payment’’ the

22 first place it appears.

23 (12) Section 1916(b)(2)(D) of such Act (42

24 U.S.C. 1396o(b)(2)(D)) is amended by striking
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1 ‘‘health maintenance organization’’ and inserting

2 ‘‘risk contracting entity’’.

3 (13) Section 1925(b)(4)(D)(iv) of such Act (42

4 U.S.C. 1396r–6(b)(4)(D)(iv)) is amended—

5 (A) in the heading, by striking ‘‘HMO’’ and

6 inserting ‘‘RISK CONTRACTING ENTITY’’,

7 (B) by striking ‘‘health maintenance orga8 nization’’ and inserting ‘‘risk contracting en9 tity’’ each place it appears, and

10 (C) by striking ‘‘section 1903(m)(1)(A)’’

11 and inserting ‘‘section 1903(m)(1)(B)(i)’’.

12 (14) Paragraphs (1) and (2) of section 1926(a)

13 of such Act (42 U.S.C. 1396r–7(a)) are each amend14 ed by striking ‘‘health maintenance organizations’’

15 and inserting ‘‘risk contracting entities’’.

16 (15) Section 1927(j)(1) of such Act (42 U.S.C.

17 1396s(j)(1)) is amended by striking ‘‘*** Health

18 Maintenance Organizations, including those organi19 zations’’ and inserting ‘‘risk contracting entities’’.

20 (d) EFFECTIVE DATE.—The amendments made by

21 this section shall become effective with respect to calendar

22 quarters beginning on or after January 1, 1994.

23 SEC. 282. PERIOD OF CERTAIN WAIVERS.

24 (a) IN GENERAL.—Section 1915(h) of the Social Se25 curity Act (42 U.S.C. 1396n(h)) is amended by striking
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1 ‘‘No waiver’’ and all that follows through ‘‘unless the Sec2 retary’’ and inserting ‘‘A waiver under this section (other

3 than under subsection (c), (d), or (e)) shall be for an ini4 tial term of 3 years and, upon the request of a State, shall

5 be extended for additional 5 year periods unless the Sec6 retary’’.

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

8 subsection (a) shall apply to waivers pursuant to applica9 tions which are approved, and with respect to continu10 ations of waivers for which requests are made, later than

11 30 days after the date of the enactment of this Act.

12 TITLE III—REFUNDABLE CREDIT

13 FOR COSTS OF PROVIDING

14 EMERGENCY INDIGENT CARE

15 SEC. 301. REFUNDABLE CREDIT FOR COSTS OF PROVIDING

16 EMERGENCY INDIGENT CARE.

17 (a) IN GENERAL.—Subpart C of part IV of sub18 chapter A of chapter 1 of the Internal Revenue Code of

19 1986 (relating to refundable credits) is amended by redes20 ignating section 35 as section 36 and by inserting after

21 section 34 the following new section:

22 ‘‘SEC. 35. COSTS OF PROVIDING EMERGENCY INDIGENT

23 CARE.

24 ‘‘(a) ALLOWANCE OF CREDIT.—There shall be al25 lowed as a credit against the tax imposed by this subtitle
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1 for the taxable year an amount equal to 15 percent of the

2 unreimbursed eligible costs incurred by the taxpayer in

3 providing emergency health care services.

4 ‘‘(b) DEFINITIONS.—For purposes of this section—

5 ‘‘(1) UNREIMBURSED ELIGIBLE COSTS.—The

6 term ‘unreimbursed eligible costs’ means costs—

7 ‘‘(A) which are recognized as reasonable

8 for purposes of payment under title XVIII of

9 the Social Security Act, and

10 ‘‘(B) for which the taxpayer (other than as

11 an employee) is entitled to reimbursement.

12 ‘‘(2) EMERGENCY HEALTH CARE SERVICES.—

13 The term ‘emergency health care services’ means

14 medical screening, examination, and treatment pro15 vided to an individual pursuant to the requirements

16 of subsections (a) and (b)(1) of section 1867 of the

17 Social Security Act but only if the individual has no

18 coverage under a health insurance or health benefit

19 plan with respect to the screening, examination, or

20 treatment.

21 ‘‘(c) SPECIAL RULES.—For purposes of this sec22 tion—

23 ‘‘(1) UNREIMBURSED COSTS.—Costs shall be

24 treated as unreimbursed not earlier than the time

25 such costs would be allowable as a deduction under
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1 section 166 were the obligation to pay such costs a

2 debt to which section 166 applies.

3 ‘‘(2) NO CREDIT FOR DEDUCTIBLE WORTHLESS

4 DEBTS.—No credit shall be allowed under this sec5 tion for any debt which would be allowable as a de6 duction under section 166 if the debt became worth7 less.

8 ‘‘(d) PAYMENTS TO TAX-EXEMPT ENTITIES.—

9 ‘‘(1) IN GENERAL.—In the case of a tax-exempt

10 entity, in lieu of the credit under subsection (a), the

11 Secretary shall pay the amount determined under

12 this section if claim therefor is filed at such time

13 and in such manner as the Secretary may prescribe.

14 ‘‘(2) TAX-EXEMPT ENTITY.—For purposes of

15 paragraph (1), the term ‘tax-exempt entity’ means—

16 ‘‘(A) a State, a political subdivision of a

17 State, the District of Columbia, any possession

18 of the United States, and an agency or instru19 mentality of 1 or more of the foregoing, and

20 ‘‘(B) an organization exempt from tax

21 under section 501(a) (other than an organiza22 tion required to make a return of tax imposed

23 under this subtitle).’’
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1 (b) CLERICAL AMENDMENT.—The table of sections

2 for such subpart C is amended by striking the last item

3 and inserting the following new items:

‘‘Sec. 35. Costs of providing emergency indigent care.

‘‘Sec. 36. Overpayments of tax.’’

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

5 this section shall apply to costs incurred with respect to

6 emergency health care services provided on or after the

7 1st day of the 1st calendar month which begins more than

8 60 days after the date of the enactment of this Act in

9 taxable years ending after such date.

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