I

103D CONGRESS

1ST SESSION H. R. 30

To provide for universal access to basic group health benefits coverage and

to remove barriers and provide incentives in order to make such coverage

more affordable, to improve and make more efficient the provision of

medical and health insurance information, and to improve enforcement

of requirements relating to multiple employer welfare arrangements.

IN THE HOUSE OF REPRESENTATIVES

JANUARY 5, 1993

Mr. GRANDY (for himself, Mr. GOODLING, Mr. HENRY, and Mr.

CUNNINGHAM) introduced the following bill; which was referred jointly to

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

Ways and Means

A BILL

To provide for universal access to basic group health benefits

coverage and to remove barriers and provide incentives

in order to make such coverage more affordable, to improve and make more efficient the provision of medical

and health insurance information, and to improve enforcement of requirements relating to multiple employer

welfare arrangements.

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

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

3 ‘‘Universal Health Benefits Empowerment and Partner4 ship Act of 1993’’.

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

6 this Act is as follows:

Sec. 1. Short title and table of contents.

Sec. 2. Findings and declaration of policy.

TITLE I—UNIVERSAL ACCESS TO HEALTH COVERAGE

Sec. 101. Universal access to coverage under group health plans and accessible

health benefits systems.

‘‘PART 6—UNIVERSAL ACCESS TO COVERAGE UNDER GROUP HEALTH PLANS

AND ACCESSIBLE HEALTH BENEFITS SYSTEMS

‘‘Subpart A—General Provisions

‘‘Sec. 601. Definitions and special rules.

‘‘Subpart B—Required Coverage Options; Group Health Payroll Deduction

Plans

‘‘Sec. 611. Coverage for eligible individuals under basic group health plans

or group health payroll deduction plans.

‘‘Sec. 612. Group health payroll deduction plans.

‘‘Sec. 613. Availability of coverage under accessible health benefits systems.

‘‘Subpart C—Accessible Health Benefits Systems

‘‘Sec. 621. General requirements.

‘‘Sec. 622. Reporting requirements.

‘‘Sec. 623. Participation requirements.

‘‘Sec. 624. Benefits requirements.

‘‘Sec. 625. Contribution requirements.

‘‘Sec. 626. Reciprocity and reliance by accessible health benefits systems

on other such systems.

‘‘Sec. 627. Regulatory authority of Secretary of Health and Human

Services.

‘‘Subpart D—Coverage for Uninsurable Risks and Material Pre-Existing

Conditions

‘‘Sec. 631. Coverage for uninsurable risks and pre-existing conditions.

‘‘Sec. 632. Participation requirements for uninsurable risks and material

pre-existing conditions.

‘‘Sec. 633. Benefits requirements for uninsurable risks and material preexisting conditions.
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‘‘Sec. 634. Regulatory authority of Secretary of Health and Human

Services.’’.

Sec. 102. Establishment of State-based system in absence of State-wide access

to coverage; substitute systems.

Sec. 103. Continuation coverage and accessible health benefits systems or substitute systems.

Sec. 104. Preemption of State law to provide for more affordable health care

coverage.

Sec. 105. Encouragement of multiple employer arrangements providing basic

health benefits.

Sec. 106. Treatment practice guidelines and outcomes research for all

Americans.

‘‘PART A—ESTABLISHMENT AND GENERAL DUTIES

‘‘Sec. 901. Establishment.

‘‘Sec. 902. General authorities and duties.

‘‘PART B—FORUM FOR QUALITY AND EFFECTIVENESS IN HEALTH CARE

‘‘Sec. 911. Establishment of office.

‘‘Sec. 912. Duties.

Sec. 107. Federal Advisory Council on Health Care Coverage and Costs.

Sec. 108. Increase in deduction for health insurance costs of self-employed individuals from 25 percent to 100 percent.

Sec. 109. Effective dates.

TITLE II—MEDICAL AND HEALTH INSURANCE INFORMATION

REFORM

Sec. 201. Short title.

Sec. 202. Medical and health insurance information reform.

‘‘TITLE XXII—MEDICAL AND HEALTH INSURANCE INFORMATION

REFORM

‘‘PART A—COMPARATIVE VALUE INFORMATION

‘‘Sec. 2200. Comparative value information programs for health care purchasing.

‘‘Sec. 2201. Grants for the development of State programs.

‘‘PART B—STORAGE AND TRANSMISSION OF MEDICAL AND HEALTH

INSURANCE INFORMATION AND PRIORITY OF PAYMENT

‘‘Sec. 2210. Preemption of State quill pen laws.

‘‘Sec. 2211. Promulgation of requirements by Secretary.

‘‘Sec. 2212. State programs.

‘‘Sec. 2213. Application of Federal requirements.

‘‘Sec. 2214. Health insurance information privacy and confidentiality protection.

‘‘Sec. 2215. Identification numbers.

‘‘Sec. 2216. Standards and requirements for the receipt and transmission

of health insurance information.

‘‘Sec. 2217. Health insurance claim forms.

‘‘Sec. 2218. Priority among insurers.

‘‘Sec. 2219. Furnishing of information among insurers.

‘‘Sec. 2220. Noncompliance with Federal requirements.
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‘‘Sec. 2221. No effect on scope of benefits covered.

‘‘PART C—MEDICAL DATA REQUIREMENTS

‘‘Sec. 2230. Promulgation of requirements by Secretary.

‘‘Sec. 2231. Medicare requirements for hospitals.

‘‘Sec. 2232. Electronic transmission to Federal agencies.

‘‘PART D—GENERAL PROVISIONS

‘‘Sec. 2240. Definitions.’’.

Sec. 203. Conforming amendment.

Sec. 204. Failure to satisfy certain health insurance requirements.

TITLE III—MEWA ENFORCEMENT IMPROVEMENTS

Sec. 301. Short title.

Sec. 302. Amendment to definition of employee welfare benefit plan.

Sec. 303. Amendment to definition of multiple employer welfare arrangement.

Sec. 304. Coverage.

Sec. 305. Registration requirement.

Sec. 306. Enforcement and civil penalties.

Sec. 307. Exemption procedure.

Sec. 308. Clarification of States’ ability to obtain information.

Sec. 309. Effective date.

1 SEC. 2. FINDINGS AND DECLARATION OF POLICY.

2 (a) FINDINGS.—The Congress finds that—

3 (1) the health care delivery system of the Unit4 ed States provides most Americans with a level of

5 access and quality of care that is unsurpassed;

6 (2) for a significant minority of Americans, the

7 system works less well because they cannot obtain or

8 otherwise do not have basic health care coverage

9 under either public or private programs;

10 (3) these individuals represent a diversity of sit11 uations for which there is no single solution;

12 (4) assuring access to basic health care cov13 erage and quality care for these individuals is a com-
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1 pelling national priority that will require commit2 ments from both the private and public sectors;

3 (5) the most practical and effective solutions for

4 these access problems are ones that—

5 (A) preserve the pluralistic base of the

6 health care delivery system of the United

7 States;

8 (B) emphasize incentives, innovation, and

9 the removal of current barriers to access; and

10 (C) recognize that both the complexity of

11 the problem and the existence of fiscal con12 straints means that responsibility must be

13 shared among employers, employees, insurers,

14 providers, and patients, as well as Federal,

15 State, and local governments;

16 (6) Federal efforts need to be closely coordi17 nated with others who share in the responsibility for

18 improving access to basic health care services;

19 (7) Federal efforts need to reflect not only the

20 diversity of interested parties but also the diversity

21 of areas where action is appropriate, including public

22 health, basic group health coverage, State initiatives,

23 medical malpractice laws, Medicaid, and tax incen24 tives; and
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1 (8) improving access requires dealing with

2 many of the most difficult problems in the health

3 system, including—

4 (A) the escalating costs, State mandated

5 health benefits, and other factors that have

6 made health care coverage less affordable for

7 many employers and individuals, especially the

8 near poor who need more creative workplace

9 and public options to be able to obtain basic

10 health care coverage; and

11 (B) the inability of many individuals to

12 protect themselves against catastrophic health

13 care expenses because preexisting conditions

14 make them ‘‘uninsurable’’.

15 (b) PURPOSES.—Therefore the Congress declares the

16 purposes of this Act to be to provide a sound, flexible,

17 and workable Federal framework to simultaneously ad18 dress the issues of access to basic health care coverage

19 and the affordability of such coverage, with an emphasis

20 on improving health care quality by—

21 (1) empowering employers, employees, and

22 other individuals to obtain more affordable basic

23 health care coverage, and
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1 (2) providing incentives for private and public2 private partnership arrangements to be established

3 for such purposes.

4 (c) DECLARATION OF POLICY.—In carrying out such

5 purposes, it is the policy of this Act to—

6 (1) provide universal access to basic group

7 health coverage for all Americans under plans of8 fered by employers or, in the case in which such cov9 erage is unavailable to employees and other individ10 uals from private sources or existing public pro11 grams, under accessible health benefits systems;

12 (2) make such basic health coverage more af13 fordable—

14 (A) by removing barriers and encouraging

15 ‘‘group’’ plans and arrangements to spread risk

16 and lower expenses;

17 (B) by preempting State health benefit

18 mandates, thereby encouraging group health

19 coverage providers to offer lower cost basic cov20 erage to the uninsured;

21 (C) by preempting State barriers to the

22 providing of managed care, thereby encouraging

23 competition, innovation of cost-control ap24 proaches, and quality review;
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1 (D) by encouraging the development of

2 treatment practice guidelines and outcomes re3 search to aid in reducing unnecessary services,

4 increasing quality care, and reducing mal5 practice costs;

6 (E) by eliminating tax inequities and bar7 riers—

8 (i) to the full deductibility of contribu9 tions to health plans covering the self-em10 ployed, and

11 (ii) to the establishment of soundly fi12 nanced multiple employer basic group

13 health plans;

14 (3) improve and make more efficient the provi15 sion of medical and health insurance information;

16 and

17 (4) improve enforcement of requirements relat18 ing to multiple employer welfare arrangements.
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1 TITLE I—UNIVERSAL ACCESS TO

2 HEALTH COVERAGE

3 SEC. 101. UNIVERSAL ACCESS TO COVERAGE UNDER

4 GROUP HEALTH PLANS AND ACCESSIBLE

5 HEALTH BENEFITS SYSTEMS.

6 (a) IN GENERAL.—Subtitle B of title I of the Em7 ployee Retirement Income Security Act of 1974 is amend8 ed—

9 (1) by striking the heading for part 6 and in10 serting the following:

11 ‘‘Subpart E—Continuation Coverage Requirements’’;

12 (2) by redesignating sections 601 through 608

13 as sections 641 through 648, respectively; and

14 (3) by inserting after part 5 the following:

15 ‘‘PART 6—UNIVERSAL ACCESS TO COVERAGE UNDER GROUP

16 HEALTH PLANS AND ACCESSIBLE HEALTH BENEFITS SYSTEMS

17 ‘‘Subpart A—General Provisions

18 ‘‘SEC. 601. DEFINITIONS AND SPECIAL RULES.

19 ‘‘(a) IN GENERAL.—For purposes of this part—

20 ‘‘(1) GROUP HEALTH PLAN.—The term ‘group

21 health plan’ means an employee welfare benefit plan

22 providing medical care (as defined in section 213(d)

23 of the Internal Revenue Code of 1986) to partici24 pants or beneficiaries directly or through insurance,

25 reimbursement, or otherwise.
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1 ‘‘(2) BASIC GROUP HEALTH PLAN.—

2 ‘‘(A) IN GENERAL.—The term ‘basic group

3 health plan’ means a group health plan, or any

4 combination of two or more group health plans,

5 which includes at least a basic health benefits

6 provision.

7 ‘‘(B) TREATMENT OF UNINSURABLE

8 RISKS.—A plan which excludes from coverage

9 under a basic health benefits provision any indi10 vidual (who would otherwise be eligible for cov11 erage) solely because the individual is an unin12 surable risk shall not be treated as a basic

13 group health plan, unless the requirements of

14 subparagraph (D) are met for purposes of this

15 subparagraph with respect to such individual.

16 ‘‘(C) TREATMENT OF MATERIAL PRE-EX17 ISTING CONDITIONS.—A plan which provides

18 coverage to any individual under a basic health

19 benefits provision subject to a substantial re20 striction based on a material pre-existing condi21 tion shall not be treated as a basic group health

22 plan, unless the requirements of subparagraph

23 (D) are met for purposes of this subparagraph

24 with respect to such individual.
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1 ‘‘(D) EXEMPTION WHERE ADEQUATE AC2 CESSIBLE HEALTH BENEFITS SYSTEM OR SUB3 STITUTE SYSTEM IS AVAILABLE.—The require4 ments of this subparagraph are met with re5 spect to any individual—

6 ‘‘(i) for purposes of subparagraph

7 (B), if such individual is eligible for cov8 erage under an accessible health benefits

9 system established and maintained in ac10 cordance with subpart C (and subpart D

11 as applicable) (or under any substitute

12 basic health benefits system with respect to

13 which the Secretary of Health and Human

14 Services has made a determination pursu15 ant to section 102(b) of the Universal

16 Health Benefits Empowerment and Part17 nership Act of 1993 relating to the element

18 of coverage described in section

19 102(b)(2)(B)(i) of such Act (relating to

20 treatment of individuals as uninsurable

21 risks)), or

22 ‘‘(ii) for purposes of subparagraph

23 (C), if such individual is eligible for cov24 erage for the material pre-existing condi25 tion referred to in subparagraph (C) under
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1 an accessible health benefits system estab2 lished and maintained in accordance with

3 subpart C (and subpart D as applicable)

4 (or under any substitute basic health bene5 fits system with respect to which the Sec6 retary of Health and Human Services has

7 made a determination pursuant to section

8 102(b) of the Universal Health Benefits

9 Empowerment and Partnership Act of

10 1993 relating to the element of coverage

11 described in section 102(b)(2)(B)(ii) of

12 such Act (relating to treatment of material

13 preexisting conditions)).

14 ‘‘(3) BASIC HEALTH BENEFITS PROVISION.—

15 The term ‘basic health benefits provision’ means,

16 with respect to any plan, combination of plans, or

17 health benefit system, an arrangement which—

18 ‘‘(A) provides to individuals provided cov19 erage under such plan, combination of plans, or

20 system, directly or through insurance, reim21 bursement, or otherwise, medical care (as de22 fined in section 213(d) of the Internal Revenue

23 Code of 1986)—

24 ‘‘(i) which consists of services deter25 mined by the Secretary of Health and
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1 Human Services, under regulations pre2 scribed by such Secretary, to consist of

3 basic health care services (including physi4 cian’s, inpatient hospital, and outpatient

5 hospital services which are prevalent under

6 group health plans and other services

7 which may be necessary for basic health

8 care), and

9 ‘‘(ii) which consists of coverage at a

10 percentage of cost determined by such Sec11 retary under such regulations (by means of

12 deductibles, coinsurance, and other limits

13 on covered services) to be not less than a

14 percentage which is, taking into account

15 the population covered and the extent of

16 cost currently covered under group health

17 plans, adequate to meet basic health care

18 needs, and

19 ‘‘(B) in the case of any individual de20 scribed in paragraph (2)(B) or (C) in relation

21 to a basic group health plan maintained by the

22 employer of such individual (or of the person of

23 whom such individual is a dependent), requires

24 contributions by the employer of not less than

25 the amount provided under the plan with re-
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1 spect to individuals covered under such plan

2 who are similarly situated, disregarding any

3 condition under the plan relating to uninsurable

4 risks (in the case of an individual described in

5 paragraph (2)(B)) or to material pre-existing

6 conditions (in the case of an individual de7 scribed in paragraph (2)(C)).

8 In issuing regulations referred to in this paragraph

9 (including any revisions thereof), the Secretary of

10 Health and Human Services shall take into account

11 recommendations submitted to such Secretary by the

12 Federal Advisory Council on Health Care Coverage

13 and Costs pursuant to section 107(d)(2) of the Uni14 versal Health Benefits Empowerment and Partner15 ship Act of 1993.

16 ‘‘(4) DEPENDENT.—The term ‘dependent’

17 means, with respect to any individual, any person

18 who—

19 ‘‘(A) is the spouse or surviving spouse of

20 the individual, or

21 ‘‘(B) is, under regulations of the Secretary,

22 a child of such individual who—

23 ‘‘(i) is under 18 years of age,

24 ‘‘(ii) is under 23 years of age and a

25 full-time student, or
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1 ‘‘(iii) is otherwise dependent on such

2 individual.

3 ‘‘(5) EMPLOYER.—The term ‘employer’ shall

4 have the meaning applicable under section 3(5), ex5 cept that such term shall include any State (or polit6 ical subdivision thereof), or any agency or instru7 mentality of one or more of the foregoing.

8 ‘‘(6) ELIGIBLE INDIVIDUAL.—The term ‘eligible

9 individual’ means any employee or dependent there10 of, unless such employee or dependent—

11 ‘‘(A) was eligible for coverage under a

12 basic group health plan which is maintained by

13 the employer and to which the employer makes

14 contributions but such coverage was declined

15 under such plan, or

16 ‘‘(B) is excluded from coverage under such

17 a plan as an uninsurable risk but is eligible for

18 uninsurable risk coverage under an accessible

19 health benefits system in accordance with sub20 part C (and subpart D as applicable) (or any

21 substitute basic health benefits system with re22 spect to which the Secretary of Health and

23 Human Services has made a determination pur24 suant to section 102 of the Universal Health

25 Benefits Empowerment and Partnership Act of
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1 1993 relating to the element of coverage de2 scribed in section 102(b)(2)(B)(i) of such Act

3 (relating to treatment of individuals as uninsur4 able risks)).

5 ‘‘(7) UNINSURABLE RISK.—An individual shall

6 be deemed to have been excluded from coverage

7 under a basic health benefits provision as an ‘unin8 surable risk’ if such denial of coverage is provided—

9 ‘‘(A) in such terms, or

10 ‘‘(B) in such other terms or under such

11 circumstances as are, subject to such regula12 tions as the Secretary of Health and Human

13 Services may prescribe, reasonably equivalent to

14 such a denial.

15 ‘‘(8) MATERIAL PRE-EXISTING CONDITION.—An

16 individual shall be deemed to have been provided

17 coverage by a basic health benefits provision subject

18 to a restriction based on a ‘material pre-existing

19 condition’ if, subject to such regulations as the Sec20 retary of Health and Human Services may prescribe,

21 under such provision—

22 ‘‘(A) benefits (which would otherwise be

23 payable) are not paid solely on the basis of a

24 material pre-existing condition, or
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1 ‘‘(B) the costs for coverage of the individ2 ual with a material pre-existing condition, to ei3 ther an employer or to the individual, are at a

4 rate materially greater than costs for coverage

5 of similarly situated individuals without such a

6 material pre-existing condition, to the extent

7 such costs are payable to a third party.

8 ‘‘(b) CROSS-REFERENCES.—

9 ‘‘(1) GENERAL RULE.—Except as otherwise

10 provided in this part, for definitions of terms used

11 in this part, see section 3.

12 ‘‘(2) SECRETARY.—Except with respect to ref13 erences specifically to the Secretary of Health and

14 Human Services, for the definition of ‘Secretary’,

15 see section 3(13).

16 ‘‘(3) REGULATIONS.—Except with respect to

17 provisions for which regulatory authority is specifi18 cally provided to the Secretary of Health and

19 Human Services, for provisions governing regulatory

20 authority under this part, see section 505.
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1 ‘‘Subpart B—Required Coverage Options; Group

2 Health Payroll Deduction Plans

3 ‘‘SEC. 611. COVERAGE FOR ELIGIBLE INDIVIDUALS UNDER

4 BASIC GROUP HEALTH PLANS OR GROUP

5 HEALTH PAYROLL DEDUCTION PLANS.

6 ‘‘(a) REQUIREMENT THAT EMPLOYERS OFFER COV7 ERAGE FOR ELIGIBLE INDIVIDUALS UNDER BASIC GROUP

8 HEALTH PLANS OR GROUP HEALTH PAYROLL DEDUC9 TION PLANS.—Each employer shall maintain with respect

10 to each eligible individual—

11 ‘‘(1) a basic group health plan under which cov12 erage of such individual may be elected, or

13 ‘‘(2) a group health payroll deduction plan (as

14 defined in section 612).

15 ‘‘(b) SPECIAL RULES.—

16 ‘‘(1) EXCLUSION OF CERTAIN EMPLOYERS.—

17 ‘‘(A) IN GENERAL.—This section shall not

18 apply to any employer for any plan year if, as

19 of the beginning of such plan year—

20 ‘‘(i) such employer (including any

21 predecessor thereof) has been an employer

22 for less than 2 years,

23 ‘‘(ii) such employer has no more than

24 2 individuals in such employer’s employ, or
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1 ‘‘(iii) no more than 2 individuals in

2 such employer’s employ are not covered

3 under any basic group health plan.

4 ‘‘(B) EXCLUSION OF FAMILY MEMBERS.—

5 Under such procedures as the Secretary may

6 prescribe, any relative of an employer may be,

7 at the election of the employer, excluded from

8 consideration as an employee for purposes of

9 this paragraph. In the case of an employer that

10 is not an individual, an employee who is a rel11 ative of a key employee (as defined in section

12 416(i)(1) of the Internal Revenue Code of

13 1986) of the employer may, at the election of

14 the key employee, be considered a relative ex15 cludible under this subparagraph.

16 ‘‘(2) EXCLUSION OF CERTAIN TEMPORARY EM17 PLOYEES.—A plan shall not be treated as failing to

18 meet the requirements of this section solely because

19 a period of service by an employee of not more than

20 60 days is required under the plan for coverage of

21 such employee or any dependent thereof under the

22 plan.

23 ‘‘SEC. 612. GROUP HEALTH PAYROLL DEDUCTION PLANS.

24 ‘‘(a) GENERAL RULE.—For purposes of this subpart,

25 the term ‘group health payroll deduction plan’ means a
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1 basic group health plan under which amounts are de2 ducted by the employer from the employee’s wages pursu3 ant to an election by the employee and paid as a contribu4 tion to such plan in accordance with such regulations as

5 the Secretary may prescribe relating to withholding proce6 dures and timely payment of premiums.

7 ‘‘(b) ELECTIONS.—

8 ‘‘(1) IN GENERAL.—Any election by an em9 ployee under a group health payroll deduction plan

10 shall specify the amount which is to be deducted in

11 relation to the benefits provided under the plan. Any

12 such election may be revoked or changed by the em13 ployee under the terms of the plan.

14 ‘‘(2) MANNER FOR MAKING OR REVOKING

15 ELECTIONS.—Any election under a group health

16 payroll deduction plan (and any revocation or

17 change of such an election) shall be made in such

18 form and in such manner as the Secretary may by

19 regulations prescribe.

20 ‘‘SEC. 613. AVAILABILITY OF COVERAGE UNDER ACCES21 SIBLE HEALTH BENEFITS SYSTEMS.

22 ‘‘In any case in which there is in effect, as of the

23 beginning of a plan year of any group health payroll de24 duction plan, an entity determined by the Secretary of

25 Health and Human Services to be an accessible health
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1 benefits system established and maintained in accordance

2 with subpart C (and subpart D as applicable) with respect

3 to the employee, such plan shall not be treated as failing

4 to meet the requirements of section 612(a) for such plan

5 solely because the amounts deducted are, under such plan,

6 paid for such plan year or the succeeding plan year as

7 a contribution to such a system accepting coverage of such

8 employee rather than to such plan, if a provider of group

9 health plan coverage with respect to the plan rejects an

10 individual otherwise eligible for coverage under such plan

11 because of a requirement that a certain number or per12 centage of individuals otherwise eligible for coverage under

13 the plan are not covered.

14 ‘‘Subpart C—Accessible Health Benefits Systems

15 ‘‘SEC. 621. GENERAL REQUIREMENTS.

16 ‘‘For purposes of this part, an accessible health bene17 fits system established and maintained in accordance with

18 this subpart is any system which, with respect to any

19 group of individuals residing in a defined geographic

20 area—

21 ‘‘(1) meets the reporting requirements of sec22 tion 622,

23 ‘‘(2) meets the participation requirements of

24 section 623 with respect to residents of the State,
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1 ‘‘(3) meets the benefit requirements of section

2 624,

3 ‘‘(4) meets the contribution requirements of

4 section 625, and

5 ‘‘(5) provides coverage in accordance with sub6 part D (relating to uninsurable risks and material

7 pre-existing conditions) as applicable.

8 ‘‘SEC. 622. REPORTING REQUIREMENTS.

9 ‘‘(a) IN GENERAL.—A health benefits system meets

10 the reporting requirements of this section if the system

11 maintains a program under which the system provides,

12 upon the request of group health payroll deduction plans

13 under which amounts are paid from such plans to the sys14 tem, such information held by the system as the plans re15 quire to meet the requirements of part 1 of subtitle B of

16 title I.

17 ‘‘(b) FORM OF REQUESTS.—Each system shall be re18 quired to process requests made under this section only

19 if such requests are made in such form and manner as

20 may be prescribed in regulations of the Secretary.

21 ‘‘SEC. 623. PARTICIPATION REQUIREMENTS.

22 ‘‘A health benefits system meets the participation re23 quirements of this section if the system provides that an

24 individual within the group referred to in section 621 is

25 provided coverage under the system if such individual—
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1 ‘‘(1) is an eligible individual (as defined in sec2 tion 601(a)(6)),

3 ‘‘(2) is an individual required to be provided

4 coverage under subpart E of this part or under title

5 XXII of the Public Health Service Act,

6 ‘‘(3) is an individual described in section 632,

7 or

8 ‘‘(4) is an individual (other than an individual

9 described in paragraph (1), (2), or (3)) who is not

10 covered under any arrangement providing basic

11 health care services described in section

12 601(a)(3)(A),

13 and is not otherwise eligible for coverage under a basic

14 group health plan or under a plan for medical assistance

15 under title XIX of the Social Security Act.

16 ‘‘SEC. 624. BENEFITS REQUIREMENTS.

17 ‘‘(a) IN GENERAL.—Except as otherwise provided in

18 this section, a health benefits system meets the benefits

19 requirements of this section if the system provides medical

20 care (as defined in section 213(d) of the Internal Revenue

21 Code of 1986), directly or through insurance, reimburse22 ment, or otherwise, in the form of at least the following

23 options, available at the election of the individual provided

24 coverage:
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1 ‘‘(1) BASIC AND CATASTROPHIC BENEFITS.—

2 Coverage under a basic health benefits provision.

3 ‘‘(2) CATASTROPHIC ONLY COVERAGE.—Cata4 strophic coverage with respect to basic health care

5 services.

6 ‘‘(3) SUPPLEMENTAL BENEFITS.—Coverage

7 consisting of coverage described in paragraph (1)

8 and such supplemental coverage as the Secretary of

9 Health and Human Services may by regulation pre10 scribe.

11 ‘‘(b) COST CONTAINMENT AND QUALITY OF CARE.—

12 A health benefits system does not meet the requirements

13 of this section unless such system, to the maximum extent

14 determined practicable under regulations of the Secretary

15 of Health and Human Services, taking into account qual16 ity of care, provides for a hospital precertification utiliza17 tion review program, constraint of costs to the extent prac18 ticable through the use of appropriately managed care,

19 and such other cost containment procedures as may from

20 time to time be proven effective.

21 ‘‘(c) TREATMENT OF UNINSURABLE RISKS AND MA22 TERIAL PRE-EXISTING CONDITIONS.—In any case in

23 which the requirements of section 633 are met with re24 spect to any individual with respect to whom the system

25 meets the requirements of section 631, the requirements
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1 of subsection (a) shall be treated as satisfied with respect

2 to such individual.

3 ‘‘(d) DURATION OF COVERAGE.—A health benefits

4 system does not meet the requirements of this section if

5 coverage under such system terminates solely by reason

6 of the termination of a period of coverage required under

7 subpart E of this part or title XXII of the Public Health

8 Service Act.

9 ‘‘(e) COVERAGE UNDER ACCESSIBLE HEALTH BENE10 FITS SYSTEM SECONDARY TO COVERAGE UNDER EM11 PLOYEE BENEFIT PLANS.—A health benefits system does

12 not meet the requirements of this section unless, under

13 the terms of such system, coverage under such system

14 with respect to any claim is secondary to coverage pro15 vided under any employee benefit plan with respect to such

16 claim.

17 ‘‘SEC. 625. CONTRIBUTION REQUIREMENTS.

18 ‘‘(a) IN GENERAL.—Except as otherwise provided in

19 this section, a health benefits system meets the contribu20 tion requirements of this section if the system does not

21 require, for coverage of individuals described in para22 graphs (1) and (2) of section 623(a), contributions in ex23 cess of levels determined—
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1 ‘‘(1) on the basis of its own experience with re2 spect to covered individuals described in such para3 graphs (1) and (2), and

4 ‘‘(2) without regard to any coverage provided

5 under the system to individuals who are not de6 scribed in such paragraphs (1) and (2).

7 ‘‘(b) VARIANCES IN RATE LEVEL.—

8 ‘‘(1) SEPARATE SCHEDULE REQUIRED FOR

9 CHILDREN-ONLY COVERAGE.—A health benefits sys10 tem does not meet the contribution requirements of

11 this section unless the system provides for a sepa12 rate schedule of contributions with respect to chil13 dren-only coverage.

14 ‘‘(2) OTHER VARIANCES PERMITTED.—A health

15 benefits system shall not be treated as failing to

16 meet the requirements of this section solely because

17 the system otherwise provides for differing rates of

18 contributions to reflect the age, family composition,

19 or income of the covered individual and the location

20 at which the covered individual is expected to nor21 mally receive medical care.

22 ‘‘(c) CERTAIN STATE AND OTHER CONTRIBUTIONS

23 PERMITTED.—A health benefits system shall not be treat24 ed as failing to meet the requirements of this section solely

25 because the system provides for—
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1 ‘‘(1) payment by any State or any other entity

2 of part or all of the contribution with respect to any

3 covered individual,

4 ‘‘(2) varying the amount of such payment based

5 on the individual’s income or any other basis, or

6 ‘‘(3) payment by any State or any other entity

7 of all or part of monthly premiums for purposes of

8 enrollment under section 1818 or 1818A of the So9 cial Security Act, or of premiums under section

10 1916(c) of such Act.

11 ‘‘(d) MAXIMIZED PARTICIPATION.—A health benefits

12 system does not meet the requirements of this section if

13 the Secretary of Health and Human Services determines,

14 under regulations prescribed by such Secretary and on the

15 basis of past experience, that, under such system, con16 tributions are not established and maintained in such form

17 and manner as to be promotive of participation in the

18 system.

19 ‘‘SEC. 626. RECIPROCITY AND RELIANCE BY ACCESSIBLE

20 HEALTH BENEFITS SYSTEMS ON OTHER

21 SUCH SYSTEMS.

22 ‘‘The requirements of the preceding provisions of this

23 subpart may be met with respect to any health benefits

24 system by means of reciprocity agreements between such
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1 system and any other such system with respect to which

2 such requirements are met.

3 ‘‘SEC. 627. REGULATORY AUTHORITY OF SECRETARY OF

4 HEALTH AND HUMAN SERVICES.

5 ‘‘The Secretary of Health and Human Services shall

6 prescribe such regulations as such Secretary considers

7 necessary to carry out the provisions of this subpart (other

8 than section 622).

9 ‘‘Subpart D—Coverage for Uninsurable Risks and

10 Material Pre-Existing Conditions

11 ‘‘SEC. 631. COVERAGE FOR UNINSURABLE RISKS AND PRE12 EXISTING CONDITIONS.

13 ‘‘A health benefits system provides coverage in ac14 cordance with this subpart if such system, such system

15 in combination with one or more other health benefits sys16 tems, or such system under voluntary participation in a

17 program established by or under State law—

18 ‘‘(1) meets the participation requirements of

19 section 632,

20 ‘‘(2) meets the benefits requirements of section

21 633, and

22 ‘‘(3) to the extent practicable and actuarially

23 sound, provides for separate accounting for such

24 coverage so as to separately account at least for in-
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1 dividuals described in section 632(1)(A) and for in2 dividuals described in section 632(2)(A).

3 ‘‘SEC. 632. PARTICIPATION REQUIREMENTS FOR UNINSUR4 ABLE RISKS AND MATERIAL PRE-EXISTING

5 CONDITIONS.

6 ‘‘A health benefits system meets the participation re7 quirements of this section if the system meets the follow8 ing requirements:

9 ‘‘(1) COVERAGE FOR UNINSURABLE RISKS.—

10 The system provides that an individual is provided

11 coverage under the system if—

12 ‘‘(A) such individual is an employee (or a

13 dependent thereof) who has been excluded as an

14 uninsurable risk from coverage under a basic

15 health benefits provision included in the system

16 or in a basic group health plan maintained by

17 the employer, or

18 ‘‘(B) such individual is not an employee

19 (or dependent) described in subparagraph (A),

20 and—

21 ‘‘(i) would, in accordance with section

22 623 (except section 623(a)(3)), be subject

23 to exclusion from coverage under a basic

24 health benefits provision included in the

25 system, or
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1 ‘‘(ii) in the case of an individual not

2 otherwise eligible for coverage under a

3 basic health benefits provision included in

4 the system or in a basic group health plan

5 or coverage under title XIX of the Social

6 Security Act, is rejected for coverage under

7 any policy of insurance which provides at

8 least basic health care services described in

9 section 601(a)(3)(A),

10 but would be eligible for such coverage but for

11 the exclusion of such individual from coverage

12 as an uninsurable risk.

13 ‘‘(2) COVERAGE FOR MATERIAL PRE-EXISTING

14 CONDITIONS.—The system provides that an individ15 ual is provided coverage under the system for any

16 material pre-existing condition if—

17 ‘‘(A) such individual is an employee (or a

18 dependent thereof) who is provided coverage

19 under a basic health benefits provision included

20 in the system or in a basic group health plan,

21 subject to a substantial restriction based on

22 such material pre-existing condition, or

23 ‘‘(B) such individual is not an employee

24 (or dependent) described in subparagraph (A),

25 and—
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1 ‘‘(i) is provided coverage under a basic

2 health benefits provision included in the

3 system under subpart C, or

4 ‘‘(ii) in the case of an individual not

5 otherwise eligible for coverage under a

6 basic health benefits provision included in

7 the system or in a basic group health plan

8 or coverage under title XIX of the Social

9 Security Act, is provided coverage under a

10 policy of insurance which provides at least

11 basic health care services,

12 but such coverage is provided subject to such a

13 substantial restriction.

14 ‘‘SEC. 633. BENEFITS REQUIREMENTS FOR UNINSURABLE

15 RISKS AND MATERIAL PRE-EXISTING CONDI16 TIONS.

17 ‘‘A health benefits system meets the benefits require18 ments of this section if the system provides, directly or

19 through insurance, reinsurance, or otherwise—

20 ‘‘(1) in the case of individuals described in sec21 tion 632(1), benefits described in section 624(a),

22 and

23 ‘‘(2) in the case of individuals described in sec24 tion 632(2), coverage of the material pre-existing

25 condition which is not otherwise covered to the ex-
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1 tent necessary to constitute basic health care serv2 ices described in section 601(a)(3)(A) with respect

3 to such condition, in accordance with such regula4 tions as the Secretary of Health and Human Serv5 ices may prescribe.

6 ‘‘SEC. 634. REGULATORY AUTHORITY OF SECRETARY OF

7 HEALTH AND HUMAN SERVICES.

8 ‘‘The Secretary of Health and Human Services shall

9 prescribe such regulations as such Secretary considers

10 necessary to carry out the provisions of this subpart.’’.

11 (b) REGULATIONS FOR DEFINING BASIC HEALTH

12 CARE PROVISIONS.—

13 (1) INITIAL REGULATIONS.—Not later

14 than July 1, 1994, the Secretary of Health and

15 Human Services shall publish in the Federal Reg16 ister proposed regulations referred to in section

17 601(a)(3) of the Employee Retirement Income Secu18 rity Act of 1974 (as amended by subsection (a)). In

19 prescribing such proposed regulations, the Secretary

20 shall take into account recommendations submitted

21 to the Secretary by the Federal Advisory Council on

22 Health Care Coverage and Costs pursuant to section

23 107(d)(1) of this Act.

24 (2) INTERIM REVIEW PERIOD BEFORE ISSU25 ANCE OF FINAL REGULATIONS.—The Secretary of
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1 Health and Human Services shall not issue the reg2 ulations referred to in section 601(a)(3) of the Em3 ployee Retirement Income Security Act of 1974 in

4 final form before July 1, 1995.

5 (c) ENFORCEMENT OF CERTAIN PROVISIONS BY SEC6 RETARY OF HEALTH AND HUMAN SERVICES.—Section

7 502(a) of the Employee Retirement Income Security Act

8 of 1974 (29 U.S.C. 1132(a)) is amended by adding at the

9 end, after and below paragraph (6), the following new

10 flush sentence:

11 ‘‘With respect to provisions of subparts C and D of part

12 6 (other than section 622), the references to ‘Secretary’

13 in paragraph (5), and in other provisions of this part relat14 ing to actions brought under such paragraph, shall be

15 deemed a reference to the Secretary of Health and Human

16 Services.’’.

17 (d) CLERICAL AMENDMENT.—The table of contents

18 in section 1 of such Act is amended by striking the items

19 relating to part 6 of subtitle B of title I and inserting

20 the following new items:

‘‘PART 6—UNIVERSAL ACCESS TO COVERAGE UNDER GROUP HEALTH PLANS

AND STATE HEALTH BENEFITS SYSTEMS

‘‘Subpart A—General Provisions

‘‘Sec. 601. Definitions and special rules.

‘‘Subpart B—Required Coverage Options; Group Health Payroll Deduction

Plans

‘‘Sec. 611. Coverage for eligible individuals under basic group health plans or

group health payroll deduction plans.

‘‘Sec. 612. Group health payroll deduction plans.
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‘‘Sec. 613. Availability of coverage under accessible health benefits systems.

‘‘Subpart C—Accessible Health Benefits Systems

‘‘Sec. 621. General requirements.

‘‘Sec. 622. Reporting requirements.

‘‘Sec. 623. Participation requirements.

‘‘Sec. 624. Benefits requirements.

‘‘Sec. 625. Contribution requirements.

‘‘Sec. 626. Reciprocity and reliance by accessible health benefits systems on

other such systems.

‘‘Sec. 627. Regulatory Authority of Secretary of Health and Human Services.

‘‘Subpart D—Coverage for Uninsurable Risks and Material Pre-Existing

Conditions

‘‘Sec. 631. Coverage for uninsurable risks and material pre-existing conditions.

‘‘Sec. 632. Participation requirements for uninsurable risks and material preexisting conditions.

‘‘Sec. 633. Benefit requirements for uninsurable risks and material pre-existing

conditions.

‘‘Sec. 634. Regulatory authority of Secretary of Health and Human Services.

‘‘Subpart E—Continuation Coverage Requirements

‘‘Sec. 641. Plans must provide continuation coverage to certain individuals.

‘‘Sec. 642. Continuation coverage.

‘‘Sec. 643. Qualifying event.

‘‘Sec. 644. Applicable premium.

‘‘Sec. 645. Election.

‘‘Sec. 646. Notice requirements.

‘‘Sec. 647. Definitions.

‘‘Sec. 648. Regulations.’’.

1 SEC. 102. ESTABLISHMENT OF STATE-BASED SYSTEM IN AB2 SENCE OF STATE-WIDE ACCESS TO COV3 ERAGE; SUBSTITUTE SYSTEMS.

4 (a) STATE-BASED SYSTEMS.—

5 (1) IN GENERAL.—If, as of January 1, 1996,

6 one or more residents of any State (as defined in

7 section 3(10) of the Employee Retirement Income

8 Security Act of 1974 (29 U.S.C. 1002(10))) are—

9 (A) individuals described in section 623(a)

10 of such Act (as amended by this Act), and
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1 (B) are eligible for coverage under none of

2 the following:

3 (i) a basic group health plan (as de4 fined in section 601(a)(2) of such Act (as

5 amended by this Act)),

6 (ii) an accessible health benefits sys7 tem meeting the requirements of subpart C

8 (and subpart D as applicable) of part 6 of

9 subtitle B of title I of such Act, and

10 (iii) a substitute health benefits sys11 tem (as defined in subsection (b)(2)(A)),

12 then such State may establish and maintain a health

13 benefits system covering such residents to the extent

14 that such system is an accessible health benefits sys15 tem established and maintained in accordance with

16 this subsection and such subpart C (and such sub17 part D as applicable).

18 (2) GOVERNANCE OF SYSTEM.—The system

19 shall not be treated as meeting the requirements of

20 this subsection unless such system—

21 (A) is administered by a nonprofit corpora22 tion which is established by and regulated

23 under the laws of such State,

24 (B) such corporation is governed by a

25 Board of Directors whose membership includes
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1 representatives of at least employers, employee

2 organizations, and providers of group health

3 plan coverage, and

4 (C) such corporation is subject under State

5 law to the supervision of an agency of the State

6 which is responsible for the regulation of pro7 viders of group health plan coverage.

8 (3) EXCLUSIONS.—The system shall not be

9 treated as meeting the requirements of this sub10 section unless the system excludes from coverage—

11 (A) except to the extent permitted under

12 section 625(c)(3) of the Employee Retirement

13 Income Security Act of 1974 (as amended by

14 this Act), individuals entitled to benefits under

15 title XVIII or XIX of the Social Security Act,

16 or

17 (B) inmates of public institutions.

18 (b) SUBSTITUTE BASIC HEALTH BENEFITS SYS19 TEMS.—

20 (1) IN GENERAL.—If, at any time before the ef21 fective date for the amendments made by section

22 101, the Secretary of Health and Human Services

23 determines, under regulations prescribed by the Sec24 retary—
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1 (A) that there is in effect, with respect to

2 any group of individuals, an arrangement which

3 is a substitute basic health benefits system, and

4 (B) that, with respect to such group of in5 dividuals, such system meets requirements (pro6 vided in such regulations) for a specified ele7 ment of coverage which are substantially equiv8 alent to the requirements of the specified

9 ERISA provision which is applicable to such

10 specified element of coverage,

11 then the requirements of such specified ERISA pro12 vision shall be treated as met with respect to such

13 individuals until such Secretary nullifies such deter14 mination under such regulations.

15 (2) DEFINITIONS AND SPECIAL RULES.—For

16 purposes of this subsection—

17 (A) SUBSTITUTE BASIC HEALTH BENEFITS

18 SYSTEM.—The term ‘‘substitute basic health

19 benefits system’’ means, with respect to any

20 group of individuals, any arrangement (other

21 than an accessible health benefits system estab22 lished and maintained in accordance with sub23 part C (and subpart D as applicable) of part 6

24 of subtitle B of title I of ERISA) which—
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1 (i) includes at least a basic health

2 benefits provision (as defined in section

3 601(a)(3) of ERISA), and

4 (ii) meets, with respect to such indi5 viduals, the reporting requirements of sec6 tion 622 of ERISA, the participation re7 quirements of section 623 of ERISA, the

8 benefits requirements of section 624 of

9 ERISA, and the contribution requirements

10 of section 625 of ERISA.

11 (B) SPECIFIED ELEMENT OF COVERAGE.—

12 The term ‘‘specified element of coverage’’

13 means any of the following:

14 (i) TREATMENT OF UNINSURABLE

15 RISKS.—Exclusion from coverage of an in16 dividual as an uninsurable risk under a

17 basic health benefits provision included in

18 a plan, within the meaning of section

19 601(a)(7) of ERISA.

20 (ii) TREATMENT OF MATERIAL PRE21 EXISTING CONDITIONS.—Coverage of an

22 individual under a basic health benefits

23 provision included in a plan subject to a

24 restriction based on a material pre-existing
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1 condition, within the meaning of section

2 601(a)(8) of ERISA.

3 (iii) PROVISION OF CONTINUATION

4 COVERAGE.—Provision of coverage by a

5 plan to qualified beneficiaries required

6 under subpart E of part 6 of subtitle B of

7 title I of ERISA or under title XXII of the

8 Public Health Service Act.

9 (C) SPECIFIED ERISA PROVISIONS.—

10 (i) TREATMENT OF UNINSURABLE

11 RISKS.—The ‘‘specified ERISA provision’’

12 applicable to the specified element of cov13 erage described in subparagraph (B)(i) is

14 section 601(a)(2)(D)(i) of ERISA.

15 (ii) TREATMENT OF MATERIAL PRE16 EXISTING CONDITIONS.—The ‘‘specified

17 ERISA provision’’ applicable to the speci18 fied element of coverage described in sub19 paragraph (B)(ii) is section

20 601(a)(2)(D)(ii) of ERISA.

21 (iii) PROVISION OF CONTINUATION

22 COVERAGE.—The ‘‘specified ERISA provi23 sions’’ applicable to the specified element

24 of coverage described in subparagraph

25 (B)(iii) are section 641(b) of ERISA, sec-
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1 tion 4980B(f)(8) of the Internal Revenue

2 Code of 1986, and section 2201(b) of the

3 Public Health Service Act.

4 (D) STATE.—The term ‘‘State’’ has the

5 meaning provided in section 3(10) of ERISA.

6 (E) ERISA.—The term ‘‘ERISA’’ means

7 the Employee Retirement Income Security Act

8 of 1974, as amended by this Act.

9 (c) FEDERAL ASSISTANCE IN ESTABLISHMENT OF

10 UNIVERSAL ACCESS TO COVERAGE.—

11 (1) GRANT PROGRAM.—The Secretary of

12 Health and Human Services shall establish by regu13 lation a program of monetary assistance in the form

14 of grants to accessible health benefits systems estab15 lished and maintained in accordance with subpart C

16 (and subpart D as applicable) of part 6 of subtitle

17 B of title I of the Employee Retirement Income Se18 curity Act of 1974 pursuant to the amendments

19 made by this Act. Grants to any system shall be in

20 such amount as such Secretary considers appro21 priate to facilitate the effectuation of the policies of

22 this Act.

23 (2) AUTHORIZATION OF APPROPRIATIONS.—

24 There is authorized to be appropriated for the De25 partment of Health and Human Services, for the
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1 purpose of carrying out the provisions of paragraph

2 (1), $200,000,000 for each of the fiscal years 1994,

3 1995, and 1996.

4 SEC. 103. CONTINUATION COVERAGE AND ACCESSIBLE

5 HEALTH BENEFITS SYSTEMS OR SUBSTITUTE

6 SYSTEMS.

7 (a) AMENDMENT TO ERISA.—Section 641(b) of the

8 Employee Retirement Income Security Act of 1974 (as re9 designated by section 102) is amended to read as follows:

10 ‘‘(b) SUBSTITUTION OF ACCESSIBLE HEALTH BENE11 FITS SYSTEM OR SUBSTITUTE SYSTEM.—The require12 ments of this subpart may be met by providing, as an op13 tion to qualified beneficiaries or otherwise, for coverage

14 of them under an accessible health benefits system estab15 lished and maintained in accordance with subpart C (and

16 subpart D as applicable), or under a substitute health ben17 efits system providing continuation coverage in accordance

18 with section 102 of the Universal Health Benefits

19 Empowerment and Partnership Act of 1993, in lieu of cov20 erage as otherwise required under this subpart.’’.

21 (b) CONFORMING AMENDMENT TO INTERNAL REVE22 NUE CODE.—Section 4980B of the Internal Revenue Code

23 of 1986 (relating to excise tax for failure to satisfy con24 tinuation coverage requirements of group health plans) is

25 amended—
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1 (1) in subsection (d), by striking paragraph (1)

2 and redesignating paragraphs (2) and (3) as para3 graphs (1) and (2), respectively; and

4 (2) by adding at the end of subsection (f) the

5 following new paragraph:

6 ‘‘(8) SUBSTITUTION OF ACCESSIBLE HEALTH

7 BENEFITS SYSTEM OR SUBSTITUTE SYSTEM.—The

8 requirements of this subsection may be met by pro9 viding, as an option to qualified beneficiaries or oth10 erwise, for coverage of them under an accessible

11 health benefits system established and maintained in

12 accordance with subpart C (and subpart D as appli13 cable) of part 6 of subtitle B of title I of the Em14 ployee Retirement Income Security Act of 1974, or

15 under a substitute health benefits system providing

16 continuation coverage in accordance with section 102

17 of the Universal Health Benefits Empowerment and

18 Partnership Act of 1993, in lieu of coverage as oth19 erwise required under this subsection.’’.

20 (c) CONFORMING AMENDMENT TO PUBLIC HEALTH

21 SERVICE ACT.—Section 2201 of the Public Health Service

22 Act is amended by striking subsection (b) and inserting

23 the following new subsection:

24 ‘‘(b) SUBSTITUTION OF ACCESSIBLE HEALTH BENE25 FITS SYSTEM OR SUBSTITUTE SYSTEM.—The require-
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1 ments of this title may be met by providing, as an option

2 to qualified beneficiaries or otherwise, for coverage of

3 them under an accessible health benefits system estab4 lished and maintained in accordance with subpart C (and

5 subpart D as applicable) of part 6 of subtitle B of title

6 I of the Employee Retirement Income Security Act of

7 1974, or under a substitute health benefits system provid8 ing continuation coverage in accordance with section 102

9 of the Universal Health Benefits Empowerment and Part10 nership Act of 1993, in lieu of coverage as otherwise re11 quired under this title.’’.

12 SEC. 104. PREEMPTION OF STATE LAW TO PROVIDE FOR

13 MORE AFFORDABLE HEALTH CARE COV14 ERAGE.

15 (a) IN GENERAL.—Section 514(b)(2)(B) of the Em16 ployee Retirement Income Security Act of 1974 (29

17 U.S.C. 1144(b)(2)(B)) is amended—

18 (1) by inserting ‘‘(i)’’ after ‘‘(B)’’; and

19 (2) by adding at the end the following new

20 clause:

21 ‘‘(ii) A provision of State law which provides that one

22 or more specific benefits must be provided or made avail23 able by a contract or policy of health insurance issued to

24 an employee benefit plan, or which provides that services

25 rendered by one or more particular classes of health care
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1 providers must be covered under such a contract or policy,

2 is a law which relates to an employee benefit plan within

3 the meaning of subsection (a) and is not a law which regu4 lates insurance within the meaning of subparagraph (A).’’.

5 (b) PREEMPTION OF CERTAIN STATE LAWS RE6 STRICTING MANAGED CARE UNDER EMPLOYEE WELFARE

7 BENEFIT PLANS.—Section 514(b) of such Act is amended

8 by adding at the end the following new paragraph:

9 ‘‘(9) For purposes of this section, a provision of State

10 law which in any manner restricts managed care under

11 an employee welfare benefit plan providing medical care

12 (as defined in section 213(d) of the Internal Revenue Code

13 of 1986) to participants or beneficiaries directly or

14 through insurance, reimbursement, or otherwise, by re15 stricting the ability to negotiate provider reimbursement

16 rates or to set such rates for any provider, limiting the

17 number or type of providers, or restricting utilization or

18 quality review in connection with such plan shall be

19 deemed a law which relates to an employee benefit plan

20 within the meaning of subsection (a) and not a law which

21 regulates insurance within the meaning of paragraph

22 (2)(A).’’.
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1 SEC. 105. ENCOURAGEMENT OF MULTIPLE EMPLOYER AR2 RANGEMENTS PROVIDING BASIC HEALTH

3 BENEFITS.

4 Paragraph (9) of section 501(c) of the Internal Reve5 nue Code of 1986 (relating to exempt organizations) is

6 amended—

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

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

9 ‘‘(B) Any determination of whether a multiple

10 employer welfare arrangement (as defined in section

11 3(25) of the Employee Retirement Income Security

12 Act of 1974) is a voluntary employees’ beneficiary

13 association meeting the requirements of this para14 graph shall be made without regard to any deter15 mination of commonality of interest or geographic

16 location if—

17 ‘‘(i) such arrangement provides at least

18 basic health care services described in section

19 601(a)(3)(A) of the Employee Retirement In20 come Security Act of 1974, and

21 ‘‘(I) such arrangement is fully in22 sured, or

23 ‘‘(II) meets the requirements

24 enforcible under section 514(b)(6)(B)(i) of

25 such Act, and
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1 ‘‘(ii) meets reporting requirements which

2 shall be prescribed by the Secretary and are

3 similar to the requirements of section 622 of

4 such Act.’’.

5 SEC. 106. TREATMENT PRACTICE GUIDELINES AND OUT6 COMES RESEARCH FOR ALL AMERICANS.

7 (a) AGENCY FOR HEALTH CARE POLICY AND RE8 SEARCH.—So much of part A of title IX of the Public

9 Health Service Act as precedes section 902(c) is amended

10 to read as follows:

11 ‘‘PART A—ESTABLISHMENT AND GENERAL DUTIES

12 ‘‘SEC. 901. ESTABLISHMENT.

13 ‘‘(a) IN GENERAL.—There is established within the

14 Service an agency to be known as the Agency for Health

15 Care Policy and Research.

16 ‘‘(b) PURPOSE.—The purpose of the Agency is to en17 hance the quality, appropriateness, and effectiveness of

18 health care services for all Americans, and access to such

19 services, through the establishment of a broad base of sci20 entific research and through the promotion of improve21 ments in clinical practice and in the organization, financ22 ing, and delivery of health care services.

23 ‘‘(c) APPOINTMENT OF ADMINISTRATOR.—There

24 shall be at the head of the Agency an official to be known

25 as the Administrator for Health Care Policy and Re-
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1 search. The Administrator shall be appointed by the Sec2 retary. The Secretary, acting through the Administrator,

3 shall carry out the authorities and duties established in

4 this title.

5 ‘‘SEC. 902. GENERAL AUTHORITIES AND DUTIES.

6 ‘‘(a) IN GENERAL.—In carrying out section 901(b),

7 the Administrator shall conduct and support research,

8 demonstration projects, evaluations, training, guideline de9 velopment, and the dissemination of information, on

10 health care services and on systems for the delivery of

11 such services to all Americans, including activities with re12 spect to—

13 ‘‘(1) the effectiveness, efficiency, and quality of

14 health care services;

15 ‘‘(2) subject to subsection (d), the outcomes of

16 health care services and procedures;

17 ‘‘(3) clinical practice, including primary care

18 and practice-oriented research;

19 ‘‘(4) health care technologies, facilities, and

20 equipment;

21 ‘‘(5) health care costs, productivity, and market

22 forces;

23 ‘‘(6) health promotion and disease prevention;

24 ‘‘(7) health statistics and epidemiology; and

25 ‘‘(8) medical liability.
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1 ‘‘(b) REQUIREMENTS WITH RESPECT TO RURAL

2 AREAS AND UNDERSERVED POPULATIONS.—In carrying

3 out subsection (a), the Administrator shall undertake and

4 support research, demonstration projects, and evaluations

5 with respect to—

6 ‘‘(1) the delivery of health care services in rural

7 areas (including frontier areas) to Americans of all

8 ages; and

9 ‘‘(2) the health of low-income groups, minority

10 groups, and the elderly.’’.

11 (b) FORUM FOR QUALITY AND EFFECTIVENESS IN

12 HEALTH CARE.—So much of part B of title IX of the

13 Public Health Service Act as precedes section 912(c) is

14 amended to read as follows:

15 ‘‘PART B—FORUM FOR QUALITY AND EFFECTIVENESS

16 IN HEALTH CARE

17 ‘‘SEC. 911. ESTABLISHMENT OF OFFICE.

18 ‘‘There is established within the Agency an office to

19 be known as the Office of the Forum for Quality and Ef20 fectiveness in Health Care. The office shall be headed by

21 a director, who shall be appointed by the Administrator.

22 ‘‘SEC. 912. DUTIES.

23 ‘‘(a) ESTABLISHMENT OF FORUM PROGRAM.—The

24 Administrator, acting through the Director, shall establish

25 a program to be known as the Forum for Quality and Ef-
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1 fectiveness in Health Care. For the purpose of promoting

2 the quality, appropriateness, and effectiveness of health

3 care, the Director, using the process set forth in section

4 913, shall arrange for the development and periodic review

5 and updating of—

6 ‘‘(1) clinically relevant guidelines that may be

7 used by physicians, educators, and health care prac8 titioners to assist in determining how diseases, dis9 orders, and other health conditions can most effec10 tively and appropriately be prevented, diagnosed,

11 treated, and managed clinically; and

12 ‘‘(2) standards of quality, performance meas13 ures, and medical review criteria through which

14 health care providers and other appropriate entities

15 may assess or review the provision of health care

16 and assure the quality of such care.

17 ‘‘(b) CERTAIN REQUIREMENTS.—Guidelines, stand18 ards, performance measures, and review criteria under

19 subsection (a) shall—

20 ‘‘(1) be based on the best available research and

21 professional judgment regarding the effectiveness

22 and appropriateness of health care services and pro23 cedures;

24 ‘‘(2) be presented—
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1 ‘‘(A) in formats appropriate for use by

2 physicians, health care practitioners, providers,

3 medical educators, and medical review organiza4 tions,

5 ‘‘(B) in formats appropriate for use by

6 group health plans (as defined in section

7 601(a)(1) of the Employee Retirement Income

8 Security Act of 1974), health benefits systems

9 established and maintained by States in accord10 ance with subpart C of part 6 of subtitle B of

11 title I of the Employee Retirement Income Se12 curity Act of 1974, and substitute basic health

13 benefits systems with respect to which the Sec14 retary has made a determination pursuant to

15 section 4 of the Universal Health Benefits

16 Empowerment and Partnership Act of 1990 re17 lating to an element of coverage described in

18 section 4(a)(2)(B) of such Act, and

19 ‘‘(C) in formats appropriate for use by

20 consumers of health care; and

21 ‘‘(3) include treatment-specific or condition-spe22 cific practice guidelines for clinical treatments and

23 conditions in forms appropriate for use in clinical

24 practice, for use in educational programs, and for
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1 use in reviewing quality and appropriateness of med2 ical care.’’.

3 (c) DISSEMINATION OF STANDARDS, CRITERIA,

4 ETC.—Section 914(c) of the Public Health Service Act is

5 amended to read as follows:

6 ‘‘(c) DISSEMINATION.—

7 ‘‘(1) IN GENERAL.—The Director shall promote

8 and support the dissemination of the guidelines,

9 standards, performance measures, and review cri10 teria described in section 912(a).

11 ‘‘(2) ORGANIZATIONS UTILIZED.—Such dissemi12 nation shall be carried out through—

13 ‘‘(1) organizations representing health care

14 providers;

15 ‘‘(2) group health plans (as defined in sec16 tion 601(a)(1) of the Employee Retirement In17 come Security Act of 1974);

18 ‘‘(3) accessible health benefits systems es19 tablished and maintained in accordance with

20 subpart C (and subpart D as applicable) of part

21 6 of subtitle B of title I of the Employee Re22 tirement Income Security Act of 1974;

23 ‘‘(4) organizations representing health care

24 consumers;

25 ‘‘(5) peer review organizations;
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1 ‘‘(6) accrediting bodies; and

2 ‘‘(7) other appropriate entities.’’.

3 (d) STUDY OF ROLE OF PRACTICE GUIDELINES IN

4 REDUCING MALPRACTICE COSTS.—As soon as practicable

5 after the date of the enactment of this Act, the Federal

6 Advisory Council on Health Care Coverage and Costs shall

7 undertake a study of the manner in which practice guide8 lines may be used in reducing medical malpractice costs.

9 The Council shall submit the results of such study to10 gether with any recommendations to the Secretary of

11 Health and Human Services.

12 (e) AUTHORIZATION OF ADDITIONAL APPROPRIA13 TIONS.—Section 926(a) of the Public Health Service Act

14 is amended by adding at the end the following: ‘‘In addi15 tion to amounts otherwise authorized by this subsection,

16 for the purpose of carrying out the amendments made by

17 section 8 of the Universal Health Benefits Empowerment

18 and Partnership Act of 1993, there are authorized to be

19 appropriated $10,000,000 for fiscal year 1994,

20 $15,000,000 for fiscal year 1995, and $20,000,000 for fis21 cal year 1996.’’.

22 SEC. 107. FEDERAL ADVISORY COUNCIL ON HEALTH CARE

23 COVERAGE AND COSTS.

24 (a) IN GENERAL.—There is hereby established a

25 Federal Advisory Council on Health Care Coverage and
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1 Costs for the purpose of reviewing, overseeing, and making

2 recommendations relating to the implementation of the

3 provisions of this Act and studying the causes of changes

4 in the costs of health care coverage and delivery.

5 (b) MEMBERSHIP.—The Council shall consist of a

6 Chairman and 12 other persons, appointed by the Sec7 retary of Health and Human Services with the concur8 rence of the Secretary of Labor and without regard to the

9 provisions of title 5, United States Code, governing ap10 pointments in the competitive service. The appointed

11 members shall, to the extent possible, represent organiza12 tions of small and large employers, employee organiza13 tions, health care providers, providers of group health plan

14 coverage, State and local governments, the field of actuar15 ial counseling, and the general public.

16 (c) EXPENSES.—

17 (1) SERVICES AND ASSISTANCE.—The Council

18 is authorized to engage such technical assistance, in19 cluding actuarial services, as may be required to

20 carry out its functions, and the Secretary of Health

21 and Human Services and the Secretary of Labor

22 shall, in addition, make available to the Council such

23 secretarial, clerical, and other assistance as it may

24 require to carry out such functions. The Secretary of

25 Health and Human Services and the Secretary of
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1 Labor shall, in addition, make available to the Coun2 cil such actuarial and other pertinent data prepared

3 by the Department of Health and Human Services,

4 the Department of Labor, or other agencies of the

5 Government as it may require to carry out such

6 functions.

7 (2) TRAVEL AND PER DIEM.—Appointed mem8 bers of the Council, while serving on the business of

9 the Council (inclusive of travel time), while so serv10 ing away from their homes or regular places of busi11 ness, may be allowed travel expenses, including per

12 diem in lieu of subsistence, as authorized by section

13 5703 of title 5, United States Code, for persons in

14 the Government employed intermittently.

15 (d) FUNCTIONS.—The Council shall—

16 (1) make timely recommendations to the Sec17 retary of Health and Human Services for purposes

18 of the issuance of initial regulations under section

19 101(b)(1),

20 (2) make recommendations to the Secretary of

21 Health and Human Services relating to appropriate

22 mechanisms for and the frequency of revisions of

23 regulations under section 601(a)(3) of the Employee

24 Retirement Income Security Act of 1974 (as amend25 ed by this Act),
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1 (3) otherwise advise the Secretary of Health

2 and Human Services and the Secretary of Labor

3 with respect to the implementation of the amend4 ments made by this Act,

5 (4) offer States and other entities advice re6 garding health benefits systems and implementation

7 of the amendments made by this Act,

8 (5) serve as a forum for exchange of advice,

9 recommendations, and information regarding the

10 amendments made by this Act, their implementation,

11 and health benefits systems established and main12 tained by States, and otherwise foster cooperation

13 between States and other entities in implementing

14 such amendments,

15 (6) make from time to time such recommenda16 tions as it considers appropriate relating to possible

17 improvements relating to the financing and afford18 ability of health care coverage for individuals eligible

19 for coverage under health benefits systems estab20 lished and maintained by States and other entities,

21 and

22 (7) make from time to time such recommenda23 tions to the Secretary of Health and Human Serv24 ices and to the Congress as it considers appropriate
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1 relating to changes in the costs of health care cov2 erage and delivery.

3 (e) REPORTS.—The Council shall, at least annually,

4 submit a report to the Secretary of Health and Human

5 Services and the Secretary of Labor of any findings or

6 recommendations relating to matters considered by the

7 Council, and such reports shall thereupon be transmitted

8 to the Congress.

9 (f) FINAL REPORT AND TERMINATION.—Upon the

10 request of the Secretary of Health and Human Services,

11 the Council shall submit a final report to such Secretary

12 and the Secretary of Labor. The Council shall terminate

13 upon the submission of such final report.

14 SEC. 108. INCREASE IN DEDUCTION FOR HEALTH INSUR15 ANCE COSTS OF SELF-EMPLOYED INDIVID16 UALS FROM 25 PERCENT TO 100 PERCENT.

17 (a) IN GENERAL.—Paragraph (1) of section 162(l)

18 of the Internal Revenue Code of 1986 (relating to special

19 rules for health insurance costs of self-employed individ20 uals) is amended by striking ‘‘25 percent’’ and inserting

21 ‘‘the applicable percentage’’.

22 (b) APPLICABLE PERCENTAGE.—Paragraph (6) of

23 section 162(l) of such Code is amended to read as follows:

24 ‘‘(6) APPLICABLE PERCENTAGE.—For purposes

25 of paragraph (1)—
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In the case of taxable

years beginning in The applicable

calendar year: percentage is:

1992, 1993, 1994, or 1995 ....................................... 25 percent

1996 or 1997 ............................................................. 50 percent

1998 or thereafter ..................................................... 100 percent.’’

1 SEC. 109. EFFECTIVE DATES.

2 (a) SECTIONS 101 AND 103.—The amendments made

3 by section 101 shall take effect January 1, 1996, and the

4 amendments made by section 103 shall apply with respect

5 to plan years beginning on or after such date.

6 (b) SECTION 102.—The provisions of section 102

7 shall take effect on the date of the enactment of this Act.

8 (c) SECTION 104.—The amendments made by section

9 104(b) shall take effect January 1, 1994. The amend10 ments made by section 104(a) shall take effect January

11 1, 1994, except that with respect to plans in effect on the

12 date of the enactment of this Act, such amendments shall

13 take effect on the effective date of section 101.

14 (d) SECTION 105.—The amendments made by sec15 tion 105 shall apply with respect to determinations made

16 on or after January 1, 1994.

17 (e) SECTION 106.—The amendments made by section

18 106 shall take effect January 1, 1994.

19 (f) SECTION 107.—The provisions of section 107

20 shall take effect on the date of the enactment of this Act.
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1 (g) SECTION 108.—The amendments made by sec2 tion 108 shall apply with respect to taxable years begin3 ning on or after January 1, 1992.

4 TITLE II—MEDICAL AND HEALTH

5 INSURANCE INFORMATION

6 REFORM

7 SEC. 201. SHORT TITLE.

8 This title may be cited as the ‘‘Medical and Health

9 Insurance Information Reform Act of 1993’’.

10 SEC. 202. MEDICAL AND HEALTH INSURANCE INFORMA11 TION REFORM.

12 The Social Security Act, as amended by section 202,

13 is further amended by adding at the end the following new

14 title:

15 ‘‘TITLE XXII—MEDICAL AND HEALTH

16 INSURANCE INFORMATION REFORM

17 ‘‘PART A—COMPARATIVE VALUE INFORMATION

18 ‘‘COMPARATIVE VALUE INFORMATION PROGRAMS FOR

19 HEALTH CARE PURCHASING

20 ‘‘SEC. 2200. (a) PURPOSE.—In order to assure the

21 availability of comparative value information to purchasers

22 of health care in each State, the Secretary shall determine

23 whether each State is developing and implementing a

24 health care value information program that meets the cri25 teria and the schedule see out in subsection (b).
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1 ‘‘(b) CRITERIA FOR STATE PROGRAMS.—A State’s

2 health care value information program shall be determined

3 by the Secretary to meet the criteria and the schedule of

4 this subsection if—

5 ‘‘(1) the State begins promptly after enactment

6 of this section to develop (directly or through con7 tractual or other arrangements with coalitions of

8 health care purchasers, one or more States, other

9 entities, or any combination of such arrangements)

10 information systems regarding comparative health

11 care values;

12 ‘‘(2) the information contained in such systems

13 covers at least the average prices of common health

14 care services (as defined in subsection (c)) and infor15 mation related to the value of each health insurance

16 plan available in the State, including premium costs

17 and the value of benefits, and, where available,

18 measures of the variability of those prices within the

19 State or other market areas;

20 ‘‘(3) the information described in paragraph (2)

21 is made available within the State beginning not

22 later than one year after enactment of this section,

23 and is revised as frequently as reasonably necessary,

24 but at intervals of no greater than one year; and
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1 ‘‘(4) not later than four years following the en2 actment of this section, the State has developed in3 formation systems that provide comparative quality

4 and outcomes data with respect to health insurance

5 plans and hospitals and made the information broad6 ly available within the relevant market areas.

7 ‘‘(c) DEFINITION.—For purposes of this section,

8 ‘common health care services’ includes such procedures as

9 the Secretary may specify and any additional health care

10 services which a State may wish to include in its compara11 tive value information program.

12 ‘‘(d) FEDERAL IMPLEMENTATION.—If the Secretary

13 finds, at any time, that a State has not developed a health

14 care value information program, or has failed to imple15 ment it (on a continuing basis) in accordance with the cri16 teria and schedule set out in subsection (b), he shall take

17 the actions necessary, directly or through grant or con18 tract, to implement a comparable program in such State.

19 Fees may be charged by the Secretary for the informa20 tional materials provided pursuant to such program. Any

21 amounts so collected shall be deposited in the appropria22 tion account from which the Secretary’s costs of develop23 ing and providing such materials were met, and shall re24 main available for such purposes until expended.
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1 ‘‘(e) COMPARATIVE VALUE INFORMATION CONCERN2 ING FEDERAL PROGRAMS.—The head of each Federal

3 agency with responsibility for the provision of health in4 surance, or of health care services, to individuals shall

5 promptly develop health care value information relating to

6 each program that he administers, and covering types of

7 data comparative to the types of data that a State pro8 gram meeting the criteria of this part would provide. Such

9 information shall be made generally available to States

10 and to providers and consumers of health care services.

11 ‘‘(f) INFORMATION FOR RESEARCH FROM INSUR12 ERS.—

13 ‘‘(1) The Secretary, after consulting with insur14 ers, providers, and others, shall promulgate (and

15 may modify from time to time) requirements for the

16 periodic submission by insurers to the Secretary on

17 a sample basis of health care data relevant to re18 search concerning health care services, and shall

19 promulgate an effective date for those requirements,

20 to be at least one year after their promulgation.

21 ‘‘(2) Each insurer shall comply with the re22 quirements specified by the Secretary under para23 graph (1) by the effective date specified by the Sec24 retary.
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1 ‘‘(3) For provisions imposing an excise tax with

2 respect to noncompliance with Federal requirements

3 under this subsection, see section 5000A of the In4 ternal Revenue Code of 1986.

5 ‘‘(g) RELEASE OF MEDICARE INFORMATION.—

6 ‘‘(1) The Department of Health and Human

7 Services shall make available, under section 552 of

8 title 5, United States Code, all records of claims

9 filed under the programs established by title XVIII

10 of the Social Security Act, without regard to the

11 consent of the physician or other individual who fur12 nished the item or service in question.

13 ‘‘(2)(A) Paragraph (1) shall not affect any pro14 hibition against disclosure under section 552a of

15 title 5, United States Code, with respect to any indi16 vidual to whom an item or service was furnished.

17 ‘‘(B) The requirement of paragraph (1) does

18 not apply to information received by the Department

19 of Health and Human Services, or by any of its con20 tractors, before the date of enactment of the Medical

21 and Health Insurance Information Reform Act of

22 1994.

23 ‘‘(h) DEVELOPMENT OF MODEL SYSTEMS.—

24 ‘‘(1) The Secretary shall, directly or through

25 grant or contract, develop model systems to facilitate
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1 gathering of health care cost, quality, and outcomes

2 data and analyzing such data in a manner that will

3 permit the valid comparison of such data cost, qual4 ity, and outcomes among providers and among

5 health plans. The Secretary shall support experimen6 tation with different approaches to achieve the objec7 tives of the preceding sentence in the most cost ef8 fective manner (relative to the accuracy and timeli9 ness of the data secured) and shall evaluate the var10 ious methods to determine their relative success.

11 When he considers it appropriate, the Secretary may

12 establish standards for the collection and reporting

13 of health care cost, quality, and outcomes data in

14 order to facilitate analysis and comparisons among

15 States and nationally.

16 ‘‘(2) There are authorized to be appropriated

17 such sums as are necessary for each fiscal year be18 ginning with fiscal year 1994, to enable the Sec19 retary to conduct the activities required by para20 graph (1), including evaluation of the different ap21 proaches tested under such paragraph and their rel22 ative cost effectiveness.

23 ‘‘GRANTS FOR THE DEVELOPMENT OF STATE PROGRAMS

24 ‘‘SEC. 2201. (a) GRANT AUTHORITY.—The Secretary

25 may make grants to each State to enable such State to

26 plan the development of its health care value information
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1 program described in section 2200, and if necessary, to

2 initiate the implementation of such program. Each State

3 seeking such a grant shall submit an application therefor,

4 containing such information as the Secretary finds nec5 essary to assure that the State is likely to develop and

6 implement a program in accordance with the criteria and

7 schedule of section 2200(b).

8 ‘‘(b) OFFSET AUTHORITY.—If, at any time within the

9 three year period following the receipt by a State of a

10 grant pursuant to subsection (a), the Secretary is required

11 by section 2200(d) to implement a health care information

12 program in such State, he may recover the amount of the

13 grant under subsection (a) by offset against any other

14 amount payable to such State under this Act. The amount

15 of the offset shall be made available (from the appropria16 tion account with respect to which the offset was taken)

17 to the Secretary to carry out section 2200(d) in such

18 State.

19 ‘‘(c) AUTHORIZATION OF APPROPRIATIONS.—There

20 are authorized to be appropriated such sums as are nec21 essary to carry out this section, to remain available until

22 expended.
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1 ‘‘PART B—STORAGE AND TRANSMISSION OF MEDICAL

2 AND HEALTH INSURANCE INFORMATION AND PRI3 ORITY OF PAYMENT

4 ‘‘PREEMPTION OF STATE QUILL PEN LAWS

5 ‘‘SEC. 2210. After 1994, no effect shall be given to

6 any provision of State law that requires medical or health

7 insurance records (including billing information) to be

8 maintained in written, rather than electronic, form.

9 ‘‘PROMULGATION OF REQUIREMENTS BY SECRETARY

10 ‘‘SEC. 2211. (a) HEALTH INSURANCE INFORMATION

11 PRIVACY AND CONFIDENTIALITY PROTECTION.—

12 ‘‘(1) The Secretary, after taking into consider13 ation the Insurance Information and Privacy Protec14 tion Model Act of the NAIC, shall promulgate by

15 January 1, 1994, (and may modify from time to

16 time) requirements concerning health insurance in17 formation privacy and confidentiality protection for

18 individuals. There shall be included a requirement

19 that information that identifies individuals shall not

20 be redisclosed (with such limited exceptions as the

21 Secretary may provide) except to the extent nec22 essary to carry out the purpose for which the infor23 mation was collected.

24 ‘‘(2) The Secretary, in promulgating require25 ments under paragraph (1), shall take into consider-
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1 ation the following principles concerning information

2 that identifies individuals:

3 ‘‘(A) Such information should be collected

4 only to the extent necessary to carry out the

5 purpose for which the information is collected.

6 ‘‘(B) Such information collected for one

7 purpose should not be used for another purpose

8 without the individual’s informed consent.

9 ‘‘(C) Such information should be disposed

10 of when no longer necessary to carry out the

11 purpose for which it was collected.

12 ‘‘(D) Methods to ensure the accuracy, reli13 ability, relevance, completeness, and timeliness

14 of such information should be instituted.

15 ‘‘(E) Individuals should be notified (in ad16 vance of the collection of such information) as

17 to whether the furnishing of such information is

18 mandatory or voluntary, as to what the record

19 keeping practices are concerning such informa20 tion, and as to what uses will be made of such

21 information.

22 ‘‘(F) Individuals should be permitted to in23 spect and correct such information concerning

24 themselves.
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1 ‘‘(b) STANDARDS AND REQUIREMENTS FOR THE

2 ELECTRONIC RECEIPT AND TRANSMISSION OF HEALTH

3 INSURANCE INFORMATION.—

4 ‘‘(1) By January 1, 1995, the Secretary shall

5 determine whether problems relating to standards

6 for the electronic receipt and transmission of health

7 insurance information cause significant administra8 tive costs. If the Secretary determines that such

9 problems do cause significant administrative costs,

10 the Secretary, after consulting with the Accredited

11 Standards Committee X–12 of the American Na12 tional Standards Institute, insurers, providers, and

13 others, shall promulgate (and may modify from time

14 to time) standards concerning the electronic receipt

15 and transmission of claims, payment, eligibility, and

16 enrollment information (including requirements, con17 sistent with those promulgated under subsection (a),

18 to protect privacy and confidentiality), and shall pro19 mulgate an effective date for those standards, to be

20 at least one year after the promulgation of the

21 standards.

22 ‘‘(2) By January 1, 1995, the Secretary shall

23 determine whether problems relating to the receipt

24 and transmission of health insurance eligibility ver25 ification cause significant administrative costs. If the
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1 Secretary determines that such problems do cause

2 significant administrative costs, the Secretary, after

3 consulting with the Accredited Standards Committee

4 X–12 of the American National Standards Institute,

5 insurers, providers, and others, shall promulgate

6 (and may modify from time to time) requirements

7 concerning the receipt and transmission of health in8 surance eligibility verification, and shall promulgate

9 an effective date for those requirements, to be at

10 least one year after the promulgation of the require11 ment.

12 ‘‘(3) By January 1, 1995, the Secretary shall

13 determine whether the proportion of health insur14 ance claims and payment information received and

15 transmitted by paper will continue to cause signifi16 cant administrative costs. If the Secretary deter17 mines that the proportion will continue to cause sig18 nificant administrative costs, the Secretary, after

19 consulting with the Accredited Standards Committee

20 X–12 of the American National Standards Institute,

21 insurers, providers, and others, shall promulgate

22 (and may modify from time to time) a requirement

23 that insurers receive and transmit a specified pro24 portion of (or all) health insurance claims and pay25 ment information electronically (with such excep-
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1 tions as the Secretary may specify from time to

2 time), and shall promulgate an effective date for

3 that requirement, to be at least one year after the

4 promulgation of the requirement.

5 ‘‘(c) HEALTH INSURANCE CLAIM FORMS.—

6 ‘‘(1) By January 1, 1995, the Secretary, after

7 consulting with insurers, providers, and others, shall

8 promulgate (and may modify from time to time) re9 quirements for the format and content of basic claim

10 forms under health insurance plans.

11 ‘‘(2) The Secretary shall determine whether the

12 variety of information requested by insurers (in ad13 dition to the information requested in basic claim

14 forms) causes administrative costs that are dis15 proportionate to the benefits derived from that infor16 mation. If the Secretary determines that the variety

17 of information requested does cause such costs, the

18 Secretary, after consulting with insurers, providers,

19 and others, shall publish (and may modify from time

20 to time) recommendations concerning what addi21 tional information should be allowed to be requested

22 and in what format.

23 ‘‘(d) PRIORITY AMONG INSURERS.—By January 1,

24 1995, but after June 30, 1994, the Secretary, after con25 sulting with the NAIC, shall promulgate (and may modify
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1 from time to time) rules for determining the liability of

2 insurers when benefits are payable under two or more

3 health insurance plans.

4 ‘‘(e) FURNISHING OF INFORMATION AMONG INSUR5 ERS.—By January 1, 1996, but after June 30, 1995, the

6 Secretary shall determine whether problems relating to the

7 availability of information among insurers when benefits

8 are payable under two or more health insurance plans

9 cause significant mistaken benefit payments or adminis10 trative costs. If the Secretary determines that such prob11 lems do cause significant mistaken benefit payments or

12 administrative costs, the Secretary shall promulgate (and

13 may modify from time to time) requirements concerning

14 the transfer among insurers (and annual updating) of ap15 propriate information (which may include requirements

16 for the use of unique identifiers, and for the listing of all

17 individuals covered under a health insurance plan), and

18 shall promulgate an effective date for those requirements

19 (to be not earlier than one year after the promulgation

20 of the requirements).

21 ‘‘STATE PROGRAMS

22 ‘‘SEC. 2212. The Secretary shall determine from time

23 to time, for each State, whether—

24 ‘‘(1) the State has in effect standards, require25 ments, and rules (for insurers other than adminis26 trators of self-insured employee plans) substantially
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1 the same (or, for section 2214, at least as protective

2 of privacy and confidentiality) as those described in

3 sections 2214 through 2219, and

4 ‘‘(2) the State maintains an effective enforce5 ment mechanism for those State requirements.

6 ‘‘APPLICATION OF FEDERAL REQUIREMENTS

7 ‘‘SEC. 2213. (a) ADMINISTRATORS OF SELF-INSURED

8 EMPLOYEE PLANS.—The provisions in each of sections

9 2214 through 2219 apply to administrators of self-insured

10 employee plans.

11 (b) OTHER INSURERS.—The provisions in each of

12 sections 2214 through 2219 apply to activities (of insurers

13 other than administrators of self-insured employee plans)

14 in a State only if—

15 ‘‘(1) with respect to a section, the Secretary de16 termines that the State does not meet the require17 ments of section 2212, or

18 ‘‘(2) with respect to a section, the State fails to

19 provide such information from time to time as re20 quested by the Secretary to enable the Secretary to

21 make a determination under section 2212.

22 ‘‘HEALTH INSURANCE INFORMATION PRIVACY AND

23 CONFIDENTIALITY PROTECTION

24 ‘‘SEC. 2214. As of January 1, 1995, each insurer

25 shall comply with the requirements promulgated by the

26 Secretary under section 2211(a).
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1 ‘‘IDENTIFICATION NUMBERS

2 ‘‘SEC. 2215. As of January 1, 1995, each insurer

3 shall—

4 ‘‘(1) for each of its beneficiaries that has a so5 cial security number, use that number, and

6 ‘‘(2) for each provider that has a unique identi7 fier for purposes of title XVIII and that furnishes

8 health care items or services to a beneficiary under

9 a health insurance plan of that insurer, use that

10 identifier.

11 ‘‘STANDARDS AND REQUIREMENTS FOR THE RECEIPT

12 AND TRANSMISSION OF HEALTH INSURANCE INFOR13 MATION

14 ‘‘SEC. 2216. If the Secretary promulgates standards

15 or requirements under section 2211(b), each insurer, by

16 the effective date specified by the Secretary for those

17 standards or requirements, shall comply with them.

18 ‘‘HEALTH INSURANCE CLAIM FORMS

19 ‘‘SEC. 2217. As of January 1, 1996, each insurer

20 shall comply with the requirements promulgated by the

21 Secretary under section 2211(c)(1).

22 ‘‘PRIORITY AMONG INSURERS

23 ‘‘SEC. 2218. As of January 1, 1996, each insurer

24 shall comply with the rules promulgated by the Secretary

25 under section 2211(d).
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1 ‘‘FURNISHING OF INFORMATION AMONG INSURERS

2 ‘‘SEC. 2219. If the Secretary promulgates require3 ments under section 2211(e), each insurer, by the effective

4 date specified by the Secretary for those requirements,

5 shall comply with them.

6 ‘‘NONCOMPLIANCE WITH FEDERAL REQUIREMENTS

7 ‘‘SEC. 2220. For provisions imposing an excise tax

8 with respect to noncompliance with Federal requirements

9 under this part, see section 5000A of the Internal Revenue

10 Code of 1986.

11 ‘‘NO EFFECT ON SCOPE OF BENEFITS COVERED

12 ‘‘SEC. 2221. Nothing in this part shall be construed

13 to specify what items and services are covered under a

14 health insurance plan.

15 ‘‘PART C—MEDICAL DATA REQUIREMENTS

16 ‘‘PROMULGATION OF REQUIREMENTS BY SECRETARY

17 ‘‘SEC. 2230. (a) PROMULGATION OF REQUIREMENTS

18 FOR HOSPITALS.—

19 ‘‘(1) By January 1, 1996, but after June 30,

20 1995, the Secretary shall promulgate requirements

21 for hospitals concerning electronic medical data. In

22 developing the requirements, the Secretary shall con23 sult with the American National Standards Insti24 tute, insurers, hospitals, and other interested parties

25 (and shall take into consideration, in developing re26 quirements under paragraph (2)(A), the data set
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1 used by the utilization and quality control peer re2 view program under part B of title XI).

3 ‘‘(2) The requirements promulgated under

4 paragraph (1) shall include—

5 ‘‘(A) the definition of a standard set of

6 data elements for use by utilization and quality

7 control peer review organizations,

8 ‘‘(B) the definition of a set of data ele9 ments for use by intermediaries and carriers

10 under the programs established by title XVIII

11 (that shall include the standard set of data ele12 ments defined under subparagraph (A)),

13 ‘‘(C) standards for an electronic patient

14 care information system with data obtained at

15 the point of care (including requirements, con16 sistent with those promulgated under section

17 2211(a), to protect privacy and confidentiality),

18 ‘‘(D) the specification of, and manner of

19 presentation of, the individual data elements of

20 the sets and system under the preceding sub21 paragraph, and

22 ‘‘(E) standards concerning the trans23 mission of electronic medical data.

24 ‘‘(3) The Secretary may from time to time

25 (after consulting with the American National Stand-
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1 ards Institute, insurers, hospitals, and other inter2 ested parties) modify the requirements promulgated

3 under the preceding paragraphs.

4 ‘‘(b) PROMULGATION OF REQUIREMENTS FOR

5 OTHER HEALTH CARE PROVIDERS.—

6 ‘‘(1) The Secretary may promulgate require7 ments concerning electronic medical data for provid8 ers that are not hospitals. In developing the require9 ments, the Secretary shall consult with the American

10 National Standards Institute, insurers, providers

11 other than hospitals, and other interested parties.

12 ‘‘(2) The requirements promulgated under

13 paragraph (1) may include—

14 ‘‘(A) the definition of a set of data ele15 ments for use by intermediaries and carriers

16 under the programs established by title XVIII,

17 ‘‘(B) the specification of, and manner of

18 presentation of, the individual data elements of

19 the set under subparagraph (A), and

20 ‘‘(C) standards concerning the trans21 mission of electronic medical data.

22 ‘‘(3) The Secretary may from time to time

23 modify the requirements promulgated under para24 graph (1).
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1 ‘‘MEDICARE REQUIREMENTS FOR HOSPITALS

2 ‘‘SEC. 2231. (a) GENERAL RULE.—As of January 1,

3 1997, each hospital that has entered into an agreement

4 under section 1866 shall (except as otherwise provided by

5 subsection (b))—

6 ‘‘(1) maintain an electronic patient care infor7 mation system that meets the requirements of sub8 paragraphs (C) and (D) of section 2230(a)(2);

9 ‘‘(2) upon request of the Secretary or of a utili10 zation and quality control peer review organization

11 (with which the Secretary has entered into a con12 tract under part B of title XI), transmit electroni13 cally the data set specified under subparagraphs (A)

14 and (D) of section 2230(a)(2) with respect to a

15 specified discharge;

16 ‘‘(3) upon request of the Secretary, or of a fis17 cal intermediary or carrier (as defined in both cases

18 in title XVIII), transmit electronically any data

19 (with respect to a claim) from the data set specified

20 under subparagraphs (B) and (D) of section

21 2230(a)(2); and

22 ‘‘(4) transmit the data specified under para23 graphs (2) and (3) in accordance with the require24 ments of section 2230(a)(2)(E).

25 ‘‘(b) WAIVERS.—
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1 ‘‘(1) The Secretary may waive the requirements

2 of subsection (a) until January 1, 1999, for a hos3 pital that—

4 ‘‘(A) is in the process of developing a sys5 tem specified under section 2230(a)(2)(C) and

6 that executes agreements with its fiscal

7 intermediary and its utilization and quality con8 trol peer review organization that the hospital

9 will meet the requirements of subsection (a) by

10 a specified date (not later than January 1,

11 1999), or

12 ‘‘(B) is a small rural hospital (as defined

13 by the Secretary).

14 ‘‘(2) The Secretary may waive the requirements

15 of subsection (a)(1) for a hospital that—

16 ‘‘(A) agrees to obtain from its records the

17 data elements that are needed to meet the re18 quirements of paragraphs (2) and (3) of sub19 section (a), and

20 ‘‘(B) agrees to subject its data transfer

21 process to a quality assurance program speci22 fied by the Secretary.

23 ‘‘ELECTRONIC TRANSMISSION TO FEDERAL AGENCIES

24 ‘‘SEC. 2232. As of January 1, 1999, the head of any

25 Federal agency may require any provider that is required

26 to transmit a data element (utilized by that agency in car-
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1 rying out health care or research programs) specified

2 under section 2230(a)(2)(D) or 2230(b)(2)(B)—

3 ‘‘(1) to transmit the data element electronically

4 in accordance with the requirements of section

5 2230(a)(2)(E) or 2230(b)(2)(C), as applicable, and

6 ‘‘(2) to present the data element in the manner

7 prescribed under section 2230(a)(2)(D) or

8 2230(b)(2)(B), as applicable.

9 ‘‘PART D—GENERAL PROVISIONS

10 ‘‘DEFINITIONS

11 ‘‘SEC. 2240. For purposes of this title—

12 ‘‘(1) The term ‘administrator’ has the meaning

13 given that term in section 3(16)(A) of the Employee

14 Retirement Income Security Act of 1974.

15 ‘‘(2) The term ‘employee welfare benefit plan’

16 has the meaning given that term in section 3(1) of

17 the Employee Retirement Income Security Act of

18 1974.

19 ‘‘(3) The term ‘health insurance plan’ means

20 any contract or arrangement under which an entity

21 bears all or part of the cost of providing health care

22 items and services, including a hospital or medical

23 expense incurred policy or certificate, hospital or

24 medical service plan contract, or health maintenance

25 subscriber contract (including any self-insured
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1 health insurance plan), but does not include (except

2 for purposes of sections 2211(d), 2211(e), 2218, and

3 2219)—

4 ‘‘(A) coverage only for accident, dental, vi5 sion, disability, or long-term care, medicare

6 supplemental health insurance, or any combina7 tion thereof,

8 ‘‘(B) coverage issued as a supplement to li9 ability insurance,

10 ‘‘(C) workers’ compensation or similar in11 surance, or

12 ‘‘(D) automobile medical-payment insur13 ance.

14 ‘‘(4) The term ‘insurer’ means any entity that

15 offers a health insurance plan under which that en16 tity is at risk for all or part of the cost of benefits

17 under the plan, and includes any agent of that en18 tity.

19 ‘‘(5) The term ‘NAIC’ means the National As20 sociation of Insurance Commissioners.

21 ‘‘(6) The term ‘provider’ means a physician,

22 hospital, pharmacy, laboratory, or other person li23 censed or otherwise authorized under applicable

24 State laws to furnish health care items or services.
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1 ‘‘(7) The term ‘administrator of a self-insured

2 employee plan’ means an insurer that is an adminis3 trator of an employee welfare benefit plan.

4 ‘‘(8) The term ‘utilization review’ means review

5 of the medical necessity, appropriateness, and qual6 ity of health care items and services.’’.

7 SEC. 203. CONFORMING AMENDMENT.

8 The first sentence of section 1866(a)(1) of the Social

9 Security Act is amended—

10 (1) by striking ‘‘and’’ at the end of subpara11 graph (P),

12 (2) by striking the period at the end of sub13 paragraph (Q) and inserting a comma and ‘‘and’’,

14 and

15 (3) by adding at the end the following:

16 ‘‘(R) in the case of hospitals, to comply with

17 the requirements of section 2231.’’.

18 SEC. 204. FAILURE TO SATISFY CERTAIN HEALTH INSUR19 ANCE REQUIREMENTS.

20 (a) IN GENERAL.—Chapter 47 of the Internal Reve21 nue Code of 1986 (relating to taxes on group health plans)

22 is amended by adding at the end the following new section:

23 ‘‘SEC. 5000B. FAILURE TO SATISFY CERTAIN HEALTH IN24 SURANCE REQUIREMENTS.

25 ‘‘(a) GENERAL RULE.—
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1 ‘‘(1) ADMINISTRATORS OF SELF-INSURED EM2 PLOYEE PLANS.—There is hereby imposed, on any

3 administrator of a self-insured employee plan, a tax

4 on any failure to comply with a requirement under

5 section 2214, 2215, 2216, 2217, 2218, or 2219 of

6 that Act. The Secretary of Health and Human Serv7 ices, in consultation with the Secretary of Labor,

8 shall determine whether any administrator of a self9 insured employee plan meets the requirements of

10 those sections.

11 ‘‘(2) OTHER INSURERS.—There is hereby im12 posed, on any insurer other than an administrator of

13 a self-insured employee plan, a tax on any failure to

14 comply with a requirement under section 2214,

15 2215, 2216, 2217, 2218, or 2219 of that Act with

16 respect to an activity in a State that is subject to

17 Federal regulation pursuant to section 2213(b) of

18 the Social Security Act. The Secretary of Health

19 and Human Services shall determine whether any in20 surer meets the requirements of those sections.

21 ‘‘(3) RESEARCH DATA REQUIREMENTS.—There

22 is hereby imposed on any insurer a tax on any fail23 ure to comply with a requirement under paragraph

24 (2) of section 2200(f) of the Social Security Act.

25 The Secretary of Health and Human Services shall
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1 determine whether any insurer meets the require2 ments of that paragraph.

3 ‘‘(b) AMOUNT OF TAX.—The amount of tax imposed

4 by subsection (a) for a taxable year in which an insurer

5 fails to comply with a requirement described in that sub6 section shall be equal to $100 for each such failure.

7 ‘‘(c) CONTROLLED GROUPS.—

8 ‘‘(1) EMPLOYERS.—In the case of an insurer

9 that is an employer, for purposes of this section all

10 persons that are treated as part of the same em11 ployer (within the meaning of section 414) as the in12 surer shall be treated as the same person.

13 ‘‘(2) OTHER INSURERS.—In the case of an in14 surer that is not an employer, for purposes of this

15 section—

16 ‘‘(A) CONTROLLED GROUP OF CORPORA17 TIONS.—All corporations which are members of

18 the same controlled group of corporations shall

19 be treated as one person. For purposes of the

20 preceding sentence, the term ‘controlled group

21 of corporations’ has the meaning given to such

22 term by section 1563(a), except that—

23 ‘‘(i) ‘more than 50 percent’ shall be

24 substituted for ‘at least 80 percent’ each

25 place it appears in section 1563(a)(1), and
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1 ‘‘(ii) the determination shall be made

2 without regard to subsections (a)(4) and

3 (e)(3)(C) of section 1563.

4 ‘‘(B) PARTNERSHIPS, PROPRIETORSHIPS,

5 ETC., WHICH ARE UNDER COMMON CONTROL.—

6 Under regulations prescribed by the Secretary,

7 all trades or businesses (whether or not incor8 porated) which are under common control shall

9 be treated as one person. The regulations pre10 scribed under this subparagraph shall be based

11 on principles similar to the principles which

12 apply in the case of subparagraph (A).

13 ‘‘(d) LIMITATIONS ON TAX.—

14 ‘‘(1) TAX NOT TO APPLY WHERE FAILURE NOT

15 DISCOVERED EXERCISING REASONABLE DILI16 GENCE.—No tax shall be imposed by subsection (a)

17 with respect to any failure for which it is established

18 to the satisfaction of the Secretary that the person

19 liable for tax did not know, and by exercising rea20 sonable diligence would not have known, that the

21 failure existed.

22 ‘‘(2) TAX NOT TO APPLY TO FAILURES COR23 RECTED WITHIN THIRTY DAYS.—No tax shall be im24 posed by subsection (a) on any failure if—
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1 ‘‘(A) the failure was due to reasonable

2 cause and not to willful neglect, and

3 ‘‘(B) the failure is corrected during the

4 thirty-day period beginning on the 1st date the

5 person liable for the tax knew, or by exercising

6 reasonable diligence would have known, that the

7 failure existed.

8 ‘‘(3) WAIVER BY SECRETARY.—In the case of a

9 failure which is due to reasonable cause and not to

10 willful neglect, the Secretary may waive part or all

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

12 that the payment of that tax would be excessive rel13 ative to the failure involved.

14 ‘‘(e) DEFINITIONS.—For purposes of this section—

15 ‘‘(1) the terms ‘insurer’ and ‘administrator of a

16 self-insured employee plan’ have the meanings given

17 to those terms by section 2230 of the Social Security

18 Act, and

19 ‘‘(2) the term ‘State’ has the meaning given to

20 that term by section 1101(1) of the Social Security

21 Act.’’.

22 (b) NONDEDUCTIBILITY OF TAX.—Paragraph (6) of

23 section 275(a) of that Code (relating to nondeductibility

24 of certain taxes) is amended by inserting ‘‘47,’’ after

25 ‘‘46,’’.
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1 (c) CLERICAL AMENDMENTS.—The table of sections

2 for chapter 47 of that Code is amended by adding at the

3 end the following new item:

‘‘Sec. 5000B. Failure to satisfy certain health insurance requirements.’’

4 EFFECTIVE DATE.—The amendments made by this

5 section shall take effect on January 1, 1995.

6 TITLE III—MEWA ENFORCEMENT

7 IMPROVEMENTS

8 SEC. 301. SHORT TITLE.

9 This title may be cited as the ‘‘Multiple Employer

10 Welfare Arrangements Enforcement Improvements Act of

11 1993’’.

12 SEC. 302. AMENDMENT TO DEFINITION OF EMPLOYEE WEL13 FARE BENEFIT PLAN.

14 Section 3(1) of the Employee Retirement Income Se15 curity Act of 1974 (29 U.S.C. 1002(1)) is amended—

16 (1) by redesignating clauses (A) and (B) as

17 clauses (i) and (ii), respectively;

18 (2) by inserting ‘‘(A)’’ after ‘‘(1)’’; and

19 (3) by adding at the end the following new sub20 paragraphs:

21 ‘‘(B) Notwithstanding subparagraph (A), a plan,

22 fund, or program shall not fail to be an ‘employee welfare

23 benefit plan’ solely because the plan, fund, or program

24 covers individuals who are not employees or former em-
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1 ployees of the employer (or members or former members

2 of the employee organization) which established or main3 tains the plan, or their beneficiaries, if at no time during

4 the plan year the number of such individuals exceeds five

5 percent of the aggregate number of individuals covered

6 under the plan.

7 ‘‘(C) A plan, fund, or program shall not fail to be

8 an ‘employee welfare benefit plan’ solely because the plan,

9 fund, or program is established or maintained by a fran10 chise network (as defined in paragraph (40)(B)(vi)).

11 ‘‘(D) A plan, fund, or program shall not fail to be

12 an ‘employee welfare benefit plan’ solely because the plan,

13 fund, or program is established or maintained by two or

14 more trades or businesses, whether or not incorporated,

15 that are within the same control group or were within the

16 same control group at any time during the period com17 mencing with the preceding one-year period. For purposes

18 of this subparagraph, the term ‘control group’ shall have

19 the meaning provided in clauses (ii) and (iii) of paragraph

20 (40)(B).’’.

21 SEC. 303. AMENDMENT TO DEFINITION OF MULTIPLE EM22 PLOYER WELFARE ARRANGEMENT.

23 Section 3(40) of the Employee Retirement Income

24 Security Act of 1974 (29 U.S.C. 1002(40)) is amended—
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1 (1) in subparagraph (A), by striking clause (i)

2 and inserting the following:

3 ‘‘(i) pursuant to one or more collective bargain4 ing agreements, if, under such arrangements, cov5 erage under such arrangements is limited to—

6 ‘‘(I) employees covered by a collective bar7 gaining agreement,

8 ‘‘(II) employees of the plan,

9 ‘‘(III) employees of an employee organiza10 tion which is a party to such collective bargain11 ing agreement, and

12 ‘‘(IV) beneficiaries of participants de13 scribed in subclauses (I), (II), and (III), or’’;

14 (2) in subparagraph (A), by striking ‘‘or’’ at

15 the end of clause (ii), by striking the period at the

16 end of clause (iii) and inserting a comma, and by

17 adding after clause (iii) the following new clauses:

18 ‘‘(iv) by a franchise network, or

19 ‘‘(v) by an insurer (as defined in section

20 401(b)(2)(A)) or by a health maintenance organiza21 tion, if such insurer or organization is licensed to do

22 business in a State.’’;

23 (3) in subparagraph (B)(i), by striking ‘‘if such

24 trades or businesses are within the same control

25 group’’ and inserting ‘‘for any plan year of any such
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1 plan, or any fiscal year of any other arrangement,

2 if such trades or businesses are within the same con3 trol group during such year or at any time during

4 the preceding one-year period.’’; and

5 (4) in subparagraph (B), by redesignating

6 clauses (iv) and (v) as clauses (viii) and (ix), respec7 tively, and by inserting after clause (iii) the follow8 ing new clauses:

9 ‘‘(iv) the term ‘employee’ includes any former

10 employee who is receiving benefits under the plan or

11 under part 6 of subtitle B,

12 ‘‘(v) the term ‘collective bargaining agreement’

13 means a written agreement between an employer or

14 a group of employers and one or more employee or15 ganizations which has been negotiated through a

16 process of arm’s length, good faith bargaining, pur17 suant to the National Labor Relations Act or other

18 applicable law, where a broad range of matters per19 taining to the employment relationship such as

20 wages, rates of pay, hours of employment, griev21 ances, and conditions of employment, in addition to

22 employee benefits, have been negotiated,

23 ‘‘(vi) the term ‘franchise network’ means a

24 group or association of franchisees (which may in25 clude the franchisor), if each of such franchisees is
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1 a party to a franchise with the same franchisor, ex2 cept that, for purposes of this clause—

3 ‘‘(I) the terms ‘franchise’, ‘franchisor’, and

4 ‘franchisee’ shall have the meanings provided

5 such terms in the regulations of the Federal

6 Trade Commission, as in effect on January 1,

7 1991, under paragraphs (1) and (2) of section

8 436.2(a) of title 16 of the Code of Federal Reg9 ulations, without regard to paragraph (5) of

10 such section 436.2(a), if the franchise has as its

11 primary economic basis a business activity in

12 fact apart from the provision of health care

13 benefits to employees of the franchisees,

14 ‘‘(II) a franchise that is exempted from the

15 provisions of part 436 of title 16 of the Code

16 of Federal Regulations pursuant to section

17 436.2(a)(3) of such title 16, or is an arrange18 ment that is excluded under section 436.2(a)(4)

19 of such title 16, is not a franchise for purposes

20 of this part, and

21 ‘‘(III) the Secretary may by regulation

22 amend the definition of ‘franchise network’ for

23 purposes of maintaining consistency with any

24 changes in the definition of ‘franchise’ adopted
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1 by the Federal Trade Commission under the

2 Federal Trade Commission Act,

3 ‘‘(vii) an employee welfare benefit plan which is

4 maintained by a single employer shall not be deemed

5 to be a multiple employer welfare arrangement for

6 any plan year solely because the plan covers individ7 uals who are not employees or former employees of

8 the employer, or their beneficiaries, if, at no time

9 during the plan year, the number of such individuals

10 exceeds five percent of the aggregate number of indi11 viduals covered under the plan,’’.

12 SEC. 304. COVERAGE.

13 Section 4 of the Employee Retirement Income Secu14 rity Act of 1974 (29 U.S.C. 1003) is amended by adding

15 at the end the following new subsection:

16 ‘‘(c) Except as provided in subsection (b), this title

17 shall apply to any multiple employer welfare arrangement

18 engaged in commerce or in any industry or activity affect19 ing commerce.’’.

20 SEC. 305. REGISTRATION REQUIREMENT.

21 Section 101 of the Employee Retirement Income Se22 curity Act of 1974 (29 U.S.C. 1021) is amended—

23 (1) by redesignating subsection (f) as sub24 section (g); and
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1 (2) by inserting after subsection (e) the follow2 ing new subsections:

3 ‘‘(f) REGISTRATION OF MULTIPLE EMPLOYER WEL4 FARE ARRANGEMENTS.—

5 ‘‘(1) EXISTING ARRANGEMENTS.—The person

6 or persons responsible under paragraph (4), with re7 spect to each multiple employer welfare arrangement

8 which provides benefits of medical care (within the

9 meaning of section 213(d) of the Internal Revenue

10 Code of 1986) and which have commenced oper11 ations as of 180 days after the date of the enact12 ment of the Multiple Employer Welfare Arrange13 ments Enforcement Improvements Act of 1993, shall

14 file with the Secretary—

15 ‘‘(A) a registration statement described in

16 paragraph (3) covering the current fiscal year

17 or any part thereof, within 30 days after the

18 180-day period following the date of enactment

19 of such Act, and

20 ‘‘(B) a registration statement described in

21 paragraph (3) for each fiscal year thereafter,

22 within 30 days after the end of each fiscal year.

23 ‘‘(2) NEW ARRANGEMENTS.—The person or

24 persons responsible under paragraph (4), with re25 spect to each multiple employer welfare arrangement
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1 which provides benefits of medical care (within the

2 meaning of section 213(d) of the Internal Revenue

3 Code of 1986) and which have not commenced oper4 ations as of 180 days after the date of the enact5 ment of the Multiple Employer Welfare Arrange6 ments Enforcement Improvements Act of 1993, shall

7 file with the Secretary a registration statement de8 scribed in paragraph (3)—

9 ‘‘(A) at least 60 days before the date on

10 which the multiple employer welfare arrange11 ment commences operations, and

12 ‘‘(B) within 30 days after the end of each

13 fiscal year.

14 ‘‘(3) REGISTRATION STATEMENTS.—A registra15 tion statement filed under this subsection shall—

16 ‘‘(A) be filed in such form, and contain

17 such information concerning the multiple em18 ployer welfare arrangement, as shall be pro19 vided in regulations promulgated by the Sec20 retary, including information disclosing the

21 names and addresses of any person involved in

22 its operation, the address of the arrangement,

23 the fiscal year of the arrangement, and a list of

24 States in which the arrangement conducts busi-
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1 ness or intends to conduct business within the

2 following 12-month period,

3 ‘‘(B) contain a certification that copies of

4 such registration statement have been filed with

5 the Insurance Commissioner (or other similar

6 official) of each State in which the multiple em7 ployer welfare arrangement currently offers or

8 provides benefits, or intends to offer or provide

9 benefits during the following 12-month period,

10 and

11 ‘‘(C) indicate whether the multiple em12 ployer welfare arrangement has obtained, ap13 plied for, or intends to apply for an exemption

14 from State regulation under section

15 514(b)(6)(B).

16 ‘‘(4) PERSONS RESPONSIBLE FOR FILING.—The

17 person or persons responsible for filing the annual

18 registration statement with respect to a multiple em19 ployer welfare arrangement are—

20 ‘‘(A) the trustee or trustees so designated

21 by the terms of the instrument under which the

22 multiple employer welfare arrangement is estab23 lished or maintained, or

24 ‘‘(B) in the case of a multiple employer

25 welfare arrangement for which the trustee or
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1 trustees cannot be identified, the person or per2 sons actually responsible for the acquisition,

3 disposition, control, or management of the cash

4 or property of the multiple employer welfare ar5 rangement, irrespective of whether such acquisi6 tion, disposition, control, or management is ex7 ercised directly by such person or persons or

8 through an agent designated by such person or

9 persons.’’.

10 SEC. 306. ENFORCEMENT AND CIVIL PENALTIES.

11 (a) IN GENERAL.—Section 502 of the Employee Re12 tirement Income Security Act of 1974 (29 U.S.C. 1132)

13 is amended—

14 (1) in subsection (a)(6), by inserting ‘‘or

15 (c)(4)’’ after ‘‘(c)(2)’’; and

16 (2) in subsection (c), by adding at the end the

17 following new paragraph:

18 ‘‘(4) The Secretary may assess, against the person

19 or persons responsible for filing with the Secretary an an20 nual registration statement with respect to a multiple em21 ployer welfare arrangement as required under section

22 101(f), a civil penalty of up to $1,000 a day from the date

23 of such person’s or persons’ failure or refusal to timely

24 file such statement. For purposes of this paragraph, an

25 annual registration statement which the Secretary deter-
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1 mines to be materially incomplete, and which is not refiled

2 in a manner satisfactory to the Secretary within 45 days

3 after the Secretary makes such determination, shall not

4 be treated as having been filed with the Secretary.’’.

5 (b) COURT ORDERS.—Section 502 of such Act is fur6 ther amended by adding at the end the following new sub7 section:

8 ‘‘(m)(1) Upon application by the Secretary showing

9 the operation, promotion, or marketing of a multiple em10 ployer welfare arrangement that—

11 ‘‘(A) offers or provides benefits to participants

12 covered by an employee welfare benefit plan, and

13 ‘‘(B) is neither—

14 ‘‘(i) licensed, registered, or otherwise ap15 proved under the insurance laws of all States in

16 which the arrangement offers or provides bene17 fits, nor

18 ‘‘(ii) operating in accordance with the

19 terms of an exemption granted by the Secretary

20 pursuant to section 514(b)(6)(B),

21 a district court of the United States shall enter an order

22 requiring that the arrangement cease activities.

23 ‘‘(2) Paragraph (1) shall not apply if it is shown that

24 the arrangement—
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1 ‘‘(A) is fully insured, within the meaning of sec2 tion 514(b)(6)(D),

3 ‘‘(B) meets the requirements of paragraph

4 (2)(A), except to the extent that all or some of the

5 States in which the arrangement offers or provides

6 benefits do not require licensing, registration, or ap7 proval of fully-insured multiple employer welfare ar8 rangements, and

9 ‘‘(C) with respect to such States, is operating in

10 accordance with applicable State insurance laws that

11 are not superseded pursuant to section 514.

12 The court may grant such additional equitable or remedial

13 relief, including any relief available under this title, as it

14 deems necessary to protect the interests of the public and

15 of persons having claims for benefits against the arrange16 ment.’’.

17 SEC. 307. EXEMPTION PROCEDURE.

18 (a) IN GENERAL.—Section 514(b)(6) of the Em19 ployee Retirement Income Security Act of 1974 (29

20 U.S.C. 1144(b)(6)) is amended—

21 (1) in subparagraph (A)(i), by striking ‘‘(or

22 which is a multiple employer welfare arrangement

23 subject to an exemption under subparagraph (B))’’;

24 (2) by subparagraph (A)(ii), by striking ‘‘the

25 preceding sections of’’;
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1 (3) in subparagraph (B), by striking ‘‘(B) The

2 Secretary’’ and all that follows through the end of

3 the first sentence and inserting the following:

4 ‘‘(B)(i) The Secretary may exempt from subpara5 graph (A), for a period not to exceed three years, in6 dividually or by class, multiple employer welfare ar7 rangements which are not fully insured and which

8 provide benefits of medical care (within the meaning

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

10 1986). This exemption may be renewed by the Sec11 retary upon application.’’; and

12 (4) by adding at the end of subparagraph (B)

13 the following new clauses:

14 ‘‘(ii) The Secretary may not grant an exemption

15 under this subparagraph unless the Secretary finds that

16 such exemption is—

17 ‘‘(I) administratively feasible,

18 ‘‘(II) not adverse to the interests of the partici19 pants and beneficiaries of the employee welfare ben20 efit plan which is a multiple employer welfare ar21 rangement, and

22 ‘‘(III) protective of the rights and benefits of

23 such participants and beneficiaries.

24 ‘‘(iii) Before granting an exemption under this sub25 paragraph, the Secretary shall—
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1 ‘‘(I) publish notice in the Federal Register of

2 the pendency of the exemption,

3 ‘‘(II) require that adequate notice be given to

4 interested persons, including the insurance commis5 sioner (or similar official having jurisdiction over the

6 offering or sale of insurance) of each State in which

7 the multiple employer welfare arrangement offers or

8 provides, or intends to offer or provide, benefits, and

9 ‘‘(III) afford interested persons opportunity to

10 present views.

11 The Secretary may not grant an exemption under this

12 subparagraph unless the Secretary affords an opportunity

13 for a hearing and makes a determination on the record

14 with respect to the findings required by clauses (I), (II),

15 and (III) of clause (ii).

16 ‘‘(iv) Any determination made by the Secretary under

17 this subparagraph shall be in the Secretary’s sole discre18 tion.’’.

19 (b) TRANSITIONAL RULE.—During the 540-day pe20 riod commencing with the date of the enactment of this

21 Act, section 514(b)(6)(A) of the Employee Retirement In22 come Security Act of 1974 (29 U.S.C. 1144(b)(6)(A))

23 shall not apply to any multiple employer welfare arrange24 ment which, as of such date, is an employee welfare bene25 fit plan which provides benefits for medical care (within
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1 the meaning of section 213(d) of the Internal Revenue

2 Code of 1986) to participants and beneficiaries, if—

3 (1) an application for an exemption with re4 spect to such arrangement is filed pursuant to sec5 tion 514(b)(6)(B)(i) of the Employee Retirement In6 come Security Act of 1974 (as amended by this Act)

7 during the 180-day period following the date of the

8 enactment of this Act, and

9 (2) as of 90 days after receipt of the exemption

10 application, the Secretary of Labor has not found

11 such application to be materially deficient.

12 If the Secretary determines, at any time after the date

13 of the enactment of this Act, that such exemption from

14 such section 514(b)(6)(A) would be detrimental to the in15 terests of participants or beneficiaries of a multiple em16 ployer welfare arrangement, such exclusion shall cease as

17 of the date of the determination. Any determination made

18 by the Secretary under this subsection shall be in the Sec19 retary’s sole discretion.

20 SEC. 308. CLARIFICATION OF STATES’ ABILITY TO OBTAIN

21 INFORMATION.

22 Section 514(b) of the Employee Retirement Income

23 Security Act of 1974 (29 U.S.C. 1144(b)) is amended by

24 adding at the end the following new paragraph:
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1 ‘‘(9) Notwithstanding any other provision of this sec2 tion, in the case of an employee welfare benefit plan, any

3 law of any State which regulates insurance may apply to

4 such plan to the extent that such law, in connection with

5 an investigation to determine whether or not a person has

6 violated or is about to violate a provision of such law, gives

7 the State the ability to require disclosure of information

8 necessary to determine whether such plan—

9 ‘‘(A) is a multiple employer welfare arrange10 ment,

11 ‘‘(B) is in compliance with an exemption grant12 ed by the Secretary under paragraph (6)(B)(i), or

13 ‘‘(C) is in compliance with paragraph

14 (6)(B)(ii).’’.

15 SEC. 309. EFFECTIVE DATE.

16 The amendments made by this title shall take effect

17 upon the date of enactment of this Act.

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