I

103D CONGRESS

2D SESSION H. R. 3698

To provide Americans with secure, portable health insurance benefits and

greater choice of health insurance plans, and for other purposes.

IN THE HOUSE OF REPRESENTATIVES

NOVEMBER 22, 1993

Mr. STEARNS (for himself, Mr. ARMEY, Mr. HASTERT, Mr. BAKER of California, Mr. CUNNINGHAM, Mr. DELAY, Mr. GINGRICH, Mr. RAMSTAD, Mr.

GRAMS, Mr. HANCOCK, Mr. HYDE, Mr. TALENT, Mrs. VUCANOVICH, Mr.

HUTCHINSON, Mr. DORNAN, Mr. HUNTER, Mr. GEKAS, and Mr. DUNCAN) introduced the following bill; which was referred jointly to the Committees on Energy and Commerce, Ways and Means, Education and

Labor, the Judiciary, and Rules

MARCH 1, 1994

Additional sponsors: Mr. GOSS, Mr. CRAMER, Mr. CRANE, Mr. SMITH of

Michigan, and Mr. LINDER

A BILL

To provide Americans with secure, portable health insurance

benefits and greater choice of health insurance plans,

and for other purposes.

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

3 SECTION 1. SHORT TITLE AND TABLE OF CONTENTS.

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

5 ‘‘Consumer Choice Health Security Act of 1993’’.
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1 (b) TABLE OF CONTENTS.—The table of contents for

2 this Act is as follows:

Sec. 1. Short title and table of contents.

Sec. 2. Purposes.

TITLE I—TAX AND INSURANCE PROVISIONS

Subtitle A—Tax Treatment of Health Care Expenses

Sec. 101. Refundable health care expenses tax credit.

Sec. 102. Medical savings accounts.

Sec. 103. Other tax provisions.

Subtitle B—Insurance Provisions

PART I—FEDERALLY QUALIFIED HEALTH INSURANCE PLAN

Sec. 111. Federally qualified health insurance plan.

Sec. 112. Family security benefits package.

Sec. 113. Rating practices.

Sec. 114. Guaranteed issue.

Sec. 115. Guaranteed renewability.

PART II—CERTIFICATION OF FEDERALLY QUALIFIED HEALTH INSURANCE

PLANS

Sec. 117. Establishment of regulatory program for certification of plans.

Sec. 118. Standards for regulatory programs.

Subtitle C—Employer Provisions

Sec. 121. General provisions relating to employers.

Sec. 122. Conversion of non-self-insured plans.

Sec. 123. Provisions relating to existing self-insured plans.

Sec. 124. Continuation of employer-provided health coverage required until effective date of new coverage under this Act.

Sec. 125. Requirements with respect to cashing out employer-sponsored plans.

Sec. 126. Enforcement.

Subtitle D—State Plan Requirements

Sec. 131. State plan requirements.

Subtitle E—Federal Preemption

Sec. 141. Federal preemption of certain State laws.

TITLE II—MEDICARE AND MEDICAID REFORMS

Subtitle A—Medicare

Sec. 201. Study of medicare private health insurance program.

Sec. 202. Elimination of medicare hospital disproportionate share adjustment

payments.

Sec. 203. Reduction in adjustment for indirect medical education.

Sec. 204. Imposition of copayment for skilled nursing facility services.
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Sec. 205. Shift payment updates to January for all payment rates under hospital insurance program.

Sec. 206. Acceleration of transition to prospective rates for facility costs in hospital outpatient departments.

Subtitle B—Medicaid

Sec. 211. Cap on Federal payments made for acute medical services under the

medicaid program.

Sec. 212. Waivers for the furnishing of acute medical services under the medicaid program.

Sec. 213. Termination of disproportionate share payments.

Sec. 214. Grants for health insurance coverage, acute medical services, preventive care, and disease prevention.

TITLE III—HEALTH CARE LIABILITY REFORM

Sec. 301. Short title.

Sec. 302. Definitions.

Sec. 303. Health care malpractice.

Sec. 304. Health care product liability of manufacturer or seller.

Sec. 305. General provisions relating to health care liability.

Sec. 306. Punitive damages.

Sec. 307. Exceptions.

Sec. 308. Rules of construction.

TITLE IV—ADMINISTRATIVE COST SAVINGS

Subtitle A—Standardization of Claims Processing

Sec. 401. Adoption of data elements, uniform claims, and uniform electronic

transmission standards.

Sec. 402. Application of standards.

Sec. 403. Periodic review and revision of standards.

Sec. 404. Health insurance plan defined.

Subtitle B—Electronic Medical Data Standards

Sec. 411. Medical data standards for hospitals and other providers.

Sec. 412. Application of electronic data standards to certain hospitals.

Sec. 413. Electronic transmission to Federal agencies.

Sec. 414. Limitation on data requirements where standards in effect.

Sec. 415. Advisory commission.

Subtitle C—Development and Distribution of Comparative Value Information

Sec. 421. State comparative value information programs for health care purchasing.

Sec. 422. Federal implementation.

Sec. 423. Comparative value information concerning Federal programs.

Subtitle D—Preemption of State Quill Pen Laws

Sec. 431. Preemption of State quill pen laws.

TITLE V—ANTI-FRAUD

Subtitle A—Criminal Prosecution of Health Care Fraud
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Sec. 501. Penalties for health care fraud.

Sec. 502. Rewards for information leading to prosecution and conviction.

Subtitle B—Coordination of Health Care Anti-Fraud and Abuse Activities

Sec. 511. Application of Federal health anti-fraud and abuse sanctions to all

fraud and abuse against any health insurance plan.

TITLE VI—ANTITRUST PROVISIONS

Sec. 601. Exemption from antitrust laws for certain competitive and collaborative activities.

Sec. 602. Safe harbors.

Sec. 603. Designation of additional safe harbors.

Sec. 604. Certificates of review.

Sec. 605. Notifications providing reduction in certain penalties under antitrust

law for health care cooperative ventures.

Sec. 606. Review and reports on safe harbors and certificates of review.

Sec. 607. Rules, regulations, and guidelines.

Sec. 608. Definitions.

TITLE VII—LONG-TERM CARE

Sec. 701. Exclusion from gross income for amounts withdrawn from individual

retirement plans or 401(k) plans for long-term care insurance.

Sec. 702. Certain exchanges of life insurance contracts for long-term care insurance contracts not taxable.

Sec. 703. Tax treatment of accelerated death benefits under life insurance contracts.

Sec. 704. Effective date.

TITLE VIII—WELFARE RESTRICTIONS FOR ALIENS

Sec. 801. Ineligibility of aliens for public welfare assistance.

Sec. 802. State AFDC agencies required to provide information on illegal aliens

to the Immigration and Naturalization Service.

TITLE IX—INCREASE IN ASSISTANCE TO COMMUNITY AND

MIGRANT HEALTH CENTERS FROM RESIDUAL SAVINGS

Sec. 901. Grant program to promote primary health care services for underserved populations.

1 SEC. 2. PURPOSES.

2 The purposes of this Act are to—

3 (1) provide Americans with secure, portable

4 health insurance benefits and greater choice of

5 health insurance plans,

6 (2) make the American health care system re7 sponsive to consumer needs and encourage the provi-
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1 sion of quality medical care at reasonable prices

2 through enhanced competition,

3 (3) provide more equitable tax treatment of

4 health insurance and medical care expenses, and

5 (4) assist low-income and uninsured Americans

6 in purchasing health insurance and receiving pri7 mary medical care.

8 TITLE I—TAX AND INSURANCE

9 PROVISIONS

10 Subtitle A—Tax Treatment of

11 Health Care Expenses

12 SEC. 101. REFUNDABLE HEALTH CARE EXPENSES TAX

13 CREDIT.

14 (a) IN GENERAL.—Subpart C of part IV of sub15 chapter A of chapter 1 of the Internal Revenue Code of

16 1986 (relating to refundable personal credits) is amended

17 by inserting after section 34 the following new section:

18 ‘‘SEC. 34A. HEALTH CARE EXPENSES.

19 ‘‘(a) ALLOWANCE OF CREDIT.—In the case of a

20 qualified individual, there shall be allowed as a credit

21 against the tax imposed by this subtitle for the taxable

22 year an amount equal to the applicable percentage of the

23 sum of—

24 ‘‘(1) 25 percent of the sum of the qualified

25 health insurance premiums and the unreimbursed
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1 expenses for medical care paid by such individual

2 during the taxable year which does not exceed 10

3 percent of the adjusted gross income of such individ4 ual for such year, plus

5 ‘‘(2) 50 percent of the sum of such premiums

6 and such unreimbursed expenses so paid which ex7 ceeds 10 percent but does not exceed 20 percent of

8 such adjusted gross income, plus

9 ‘‘(3) 75 percent of the sum of such premiums

10 and such unreimbursed expenses so paid which ex11 ceeds 20 percent of such adjusted gross income.

12 ‘‘(b) QUALIFIED INDIVIDUALS.—For purposes of this

13 section—

14 ‘‘(1) IN GENERAL.—The term ‘qualified individ15 ual’ means the taxpayer, the spouse of the taxpayer,

16 and each dependent of the taxpayer (as defined in

17 section 152) who is enrolled in a federally qualified

18 health insurance plan.

19 ‘‘(2) FEDERALLY COVERED INDIVIDUALS.—The

20 term ‘qualified individual’ does not include any indi21 vidual whose medical care is covered under—

22 ‘‘(A) title XVIII or XIX of the Social Se23 curity Act,

24 ‘‘(B) chapter 55 of title 10, United States

25 Code,
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1 ‘‘(C) chapter 17 of title 38, United States

2 Code, or

3 ‘‘(D) the Indian Health Care Improvement

4 Act.

5 ‘‘(3) SPECIAL RULE IN THE CASE OF CHILD OF

6 DIVORCED PARENTS, ETC.—Any child to whom sec7 tion 152(e) applies shall be treated as a dependent

8 of both parents.

9 ‘‘(4) MARRIAGE RULES.—The determination of

10 whether an individual is married at any time during

11 the taxable year shall be made in accordance with

12 the provisions of section 6013(d) (relating to deter13 mination of status as husband and wife).

14 ‘‘(c) APPLICABLE PERCENTAGE.—For purposes of

15 subsection (a), the applicable percentage for any taxable

16 year is determined by the number of whole months in such

17 year in which the taxpayer is a qualified individual.

18 ‘‘(d) QUALIFIED HEALTH INSURANCE PREMIUMS.—

19 For purposes of this section, the term ‘qualified health in20 surance premiums’ means premiums for—

21 ‘‘(1) a federally qualified health insurance plan,

22 and

23 ‘‘(2) any other benefits or plans supplementary

24 to such a federally qualified health insurance plan.
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1 ‘‘(e) FEDERALLY QUALIFIED HEALTH INSURANCE

2 PLAN.—For purposes of this section, the term ‘federally

3 qualified health insurance plan’ means a health insurance

4 plan which is described in section 111 of the Consumer

5 Choice Health Security Act of 1993.

6 ‘‘(f) MEDICAL CARE.—For purposes of this section—

7 ‘‘(1) IN GENERAL.—The term ‘medical care’

8 means amounts paid—

9 ‘‘(A) for the diagnosis, cure, mitigation,

10 treatment, or prevention of disease, or for the

11 purpose of affecting any structure or function

12 of the body, and

13 ‘‘(B) for transportation primarily for and

14 essential to medical care referred to in subpara15 graph (A).

16 ‘‘(2) AMOUNTS PAID FOR CERTAIN LODGING

17 AWAY FROM HOME TREATED AS PAID FOR MEDICAL

18 CARE.—Amounts paid for lodging (not lavish or ex19 travagant under the circumstances) while away from

20 home primarily for and essential to medical care re21 ferred to in paragraph (1)(A) shall be treated as

22 amounts paid for medical care if—

23 ‘‘(A) the medical care referred to in para24 graph (1)(A) is provided by a physician in a li25 censed hospital (or in a medical care facility
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1 which is related to, or the equivalent of, a li2 censed hospital), and

3 ‘‘(B) there is no significant element of per4 sonal pleasure, recreation, or vacation in the

5 travel away from home.

6 The amount taken into account under the preceding

7 sentence shall not exceed $50 for each night for each

8 individual.

9 ‘‘(3) COSMETIC SURGERY.—

10 ‘‘(A) IN GENERAL.—The term ‘medical

11 care’ does not include cosmetic surgery or other

12 similar procedures, unless the surgery or proce13 dure is necessary to ameliorate a deformity

14 arising from, or directly related to, a congenital

15 abnormality, a personal injury resulting from

16 an accident or trauma, or disfiguring disease.

17 ‘‘(B) COSMETIC SURGERY DEFINED.—For

18 purposes of this paragraph, the term ‘cosmetic

19 surgery’ means any procedure which is directed

20 at improving the patient’s appearance and does

21 not meaningfully promote the proper function

22 of the body or prevent or treat illness or dis23 ease.
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1 ‘‘(4) PHYSICIAN.—The term ‘physician’ has the

2 meaning given to such term by section 1861(r) of

3 the Social Security Act (42 U.S.C. 1395x(r)).

4 ‘‘(g) SPECIAL RULES.—For purposes of this sec5 tion—

6 ‘‘(1) LIMITATION WITH RESPECT TO MEDICINE

7 AND DRUGS.—

8 ‘‘(A) IN GENERAL.—An amount paid dur9 ing the taxable year for medicine or a drug

10 shall be taken into account under subsection (a)

11 only if such medicine or drug is a prescribed

12 drug or is insulin.

13 ‘‘(B) PRESCRIBED DRUG.—The term ‘pre14 scribed drug’ means a drug or biological which

15 requires a prescription of a physician for its use

16 by an individual.

17 ‘‘(2) SPECIAL RULE FOR DECEDENTS.—

18 ‘‘(A) TREATMENT OF EXPENSES PAID

19 AFTER DEATH.—Expenses for the medical care

20 of the taxpayer which are paid out of the tax21 payer’s estate during the 1-year period begin22 ning with the day after the date of the tax23 payer’s death shall be treated as paid by the

24 taxpayer at the time incurred.
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1 ‘‘(B) LIMITATION.—Subparagraph (A)

2 shall not apply if the amount paid is allowable

3 under section 2053 as a deduction in computing

4 the taxable estate of the decedent, but this sub5 paragraph shall not apply if (within the time

6 and in the manner and form prescribed by the

7 Secretary) there is filed—

8 ‘‘(i) a statement that such amount

9 has not been allowed as a deduction under

10 section 2053, and

11 ‘‘(ii) a waiver of the right to have

12 such amount allowed at any time as a de13 duction under section 2053.

14 ‘‘(3) FORM OF INSURANCE CONTRACT.—In the

15 case of an insurance contract under which amounts

16 are payable for other than medical care—

17 ‘‘(A) no amount shall be treated as paid

18 for insurance to which subsection (a) applies

19 unless the charge for such insurance is either

20 separately stated in the contract, or furnished

21 to the policyholder by the insurance company in

22 a separate statement,

23 ‘‘(B) the amount taken into account as the

24 amount paid for such insurance shall not exceed

25 such charge, and
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1 ‘‘(C) no amount shall be treated as paid

2 for such insurance if the amount specified in

3 the contract (or furnished to the policyholder by

4 the insurance company in a separate statement)

5 as the charge for such insurance is unreason6 ably large in relation to the total charges under

7 the contract.

8 ‘‘(4) EXCLUSION OF AMOUNTS ALLOWED FOR

9 CARE OF CERTAIN DEPENDENTS.—Any expense al10 lowed as a credit under section 21 shall not be treat11 ed as an expense paid for medical care.

12 ‘‘(5) COORDINATION WITH ADVANCE PAYMENT

13 AND MINIMUM TAX.—Rules similar to the rules of

14 subsections (g) and (h) of section 32 shall apply to

15 any credit to which this section applies.

16 ‘‘(6) SUBSIDIZED EXPENSES.—No expense shall

17 be taken into account under subsection (a), if—

18 ‘‘(A) such expense is paid, reimbursed, or

19 subsidized (whether by being disregarded for

20 purposes of another program or otherwise) by

21 the Federal Government, a State or local gov22 ernment, or any agency or instrumentality

23 thereof, and
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1 ‘‘(B) the payment, reimbursement, or sub2 sidy of such expense is not includable in the

3 gross income of the recipient.

4 ‘‘(7) COORDINATION WITH MEDICAL SAVINGS

5 ACCOUNTS.—The amount otherwise taken into ac6 count under subsection (a) shall be reduced by the

7 amount (if any) of the distributions from any medi8 cal savings account of the taxpayer during the tax9 able year which is not includible in gross income by

10 reason of being used for qualified medical expenses

11 (as defined in section 25A(c)(2)).

12 ‘‘(h) REGULATIONS.—The Secretary shall prescribe

13 such regulations as may be necessary to carry out the pur14 poses of this section.’’.

15 (b) ADVANCE PAYMENT OF CREDIT.—Chapter 25 of

16 the Internal Revenue Code of 1986 (relating to general

17 provisions relating to employment taxes) is amended by

18 inserting after section 3507 the following new section:

19 ‘‘SEC. 3507A. ADVANCE PAYMENT OF HEALTH EXPENSES

20 CREDIT.

21 ‘‘(a) GENERAL RULE.—Except as otherwise provided

22 in this section, every employer making payment of wages

23 with respect to whom a health care expenses eligibility cer24 tificate is in effect shall, at the time of paying such wages,
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1 make an additional payment equal to such employee’s

2 health care expenses advance amount.

3 ‘‘(b) HEALTH CARE EXPENSES ELIGIBILITY CER4 TIFICATE.—For purposes of this title, a health care ex5 penses eligibility certificate is a statement furnished by an

6 employee to the employer which—

7 ‘‘(1) certifies that the employee will be eligible

8 to receive the credit provided by section 34A for the

9 taxable year,

10 ‘‘(2) certifies that the employee does not have

11 a health care expenses eligibility certificate in effect

12 for the calendar year with respect to the payment of

13 wages by another employer,

14 ‘‘(3) states whether or not the employee’s

15 spouse has a health care expenses eligibility certifi16 cate in effect, and

17 ‘‘(4) estimates the amount of premiums for a

18 federally qualified health insurance plan and unreim19 bursed expenses for medical care (as defined in sec20 tion 34A) for the calendar year.

21 For purposes of this section, a certificate shall be treated

22 as being in effect with respect to a spouse if such a certifi23 cate will be in effect on the first status determination date

24 following the date on which the employee furnishes the

25 statement in question.
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1 ‘‘(c) HEALTH CARE EXPENSES ADVANCE

2 AMOUNT.—

3 ‘‘(1) IN GENERAL.—For purposes of this title,

4 the term ‘health expenses advance amount’ means,

5 with respect to any payroll period, the amount deter6 mined—

7 ‘‘(A) on the basis of the employee’s wages

8 from the employer for such period,

9 ‘‘(B) on the basis of the employee’s esti10 mated premiums for a federally qualified health

11 insurance plan and unreimbursed expenses for

12 medical care included in the health care ex13 penses eligibility certificate, and

14 ‘‘(C) in accordance with tables provided by

15 the Secretary.

16 ‘‘(2) ADVANCE AMOUNT TABLES.—The tables

17 referred to in paragraph (1)(C) shall be similar in

18 form to the tables prescribed under section 3402

19 and, to the maximum extent feasible, shall be coordi20 nated with such tables and the tables prescribed

21 under section 3507(c).

22 ‘‘(d) OTHER RULES.—For purposes of this section,

23 rules similar to the rules of subsections (d) and (e) of sec24 tion 3507 shall apply.
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1 ‘‘(e) REGULATIONS.—The Secretary shall prescribe

2 such regulations as may be necessary to carry out the pur3 poses of this section.’’.

4 (c) CLERICAL AMENDMENTS.—

5 (1) The table of sections for subpart A of part

6 IV of subchapter A of chapter 1 of the Internal Rev7 enue Code of 1986 is amended by inserting after the

8 item relating to section 34 the following new item:

‘‘Sec. 34A. Health care expenses.’’.

9 (2) The table of sections for chapter 25 of such

10 Code is amended by adding after the item relating

11 to section 3507 the following new item:

‘‘Sec. 3507A. Advance payment of health care expenses credit.’’.

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

13 this section shall apply to taxable years beginning after

14 December 31, 1996.

15 SEC. 102. MEDICAL SAVINGS ACCOUNTS.

16 (a) IN GENERAL.—Subpart A of part IV of sub17 chapter A of chapter 1 of the Internal Revenue Code of

18 1986 (relating to nonrefundable personal credits) is

19 amended by inserting after section 25 the following new

20 section:

21 ‘‘SEC. 25A. MEDICAL SAVINGS ACCOUNTS.

22 ‘‘(a) ALLOWANCE OF CREDIT.—In the case of an in23 dividual, there shall be allowed as a credit against the tax

24 imposed by this subtitle for the taxable year an amount
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1 equal to 25 percent of the amount paid in cash during

2 such year by or on behalf of such individual to a medical

3 savings account.

4 ‘‘(b) LIMITATIONS.—For purposes of this section—

5 ‘‘(1) ONLY 1 ACCOUNT PER FAMILY.—No credit

6 shall be allowed under subsection (a) for amounts

7 paid to any medical savings account for the benefit

8 of an individual, such individual’s spouse, or any de9 pendent (as defined in section 152) of such individ10 ual if such individual, spouse, or dependent is a ben11 eficiary of any other medical savings account.

12 ‘‘(2) DOLLAR LIMITATION.—The aggregate

13 amount of contributions which may be taken into ac14 count under subsection (a) with respect to any indi15 vidual for any taxable year shall not exceed the sum

16 of—

17 ‘‘(A) $3,000, plus

18 ‘‘(B) $500 for each individual who is a de19 pendent (as so defined) of the individual for

20 whose benefit the account is established.

21 ‘‘(c) DEFINITIONS AND SPECIAL RULES.—For pur22 poses of this section—

23 ‘‘(1) MEDICAL SAVINGS ACCOUNT.—

24 ‘‘(A) IN GENERAL.—The term ‘medical

25 savings account’ means a trust created or orga-
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1 nized in the United States exclusively for the

2 purpose of paying the qualified medical ex3 penses of the individual for whose benefit the

4 trust is established, but only if the written gov5 erning instrument creating the trust meets the

6 following requirements:

7 ‘‘(i) No contribution will be accepted

8 unless it is in cash and contributions will

9 not be accepted for any taxable year in ex10 cess of the amount determined under sub11 section (b)(1).

12 ‘‘(ii) The trustee is a bank (as defined

13 in section 408(n)) or another person who

14 demonstrates to the satisfaction of the Sec15 retary that the manner in which such per16 son will administer the trust will be con17 sistent with the requirements of this sec18 tion.

19 ‘‘(iii) No part of the trust assets will

20 be invested in life insurance contracts.

21 ‘‘(iv) The assets of the trust will not

22 be commingled with other property except

23 in a common trust fund or common invest24 ment fund.
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1 ‘‘(v) The interest of an individual in

2 the balance in such individual’s account is

3 nonforfeitable.

4 ‘‘(vi) Under regulations prescribed by

5 the Secretary, rules similar to the rules of

6 section 401(a)(9) shall apply to the dis7 tribution of the entire interest of bene8 ficiaries of such trust.

9 ‘‘(B) TREATMENT OF COMPARABLE AC10 COUNTS HELD BY INSURANCE COMPANIES.—An

11 account held by an insurance company in the

12 United States shall be treated as a medical sav13 ings account (and such company shall be treat14 ed as a bank) if—

15 ‘‘(i) such account is part of a federally

16 qualified health insurance plan (as defined

17 in section 34A(e)),

18 ‘‘(ii) such account is exclusively for

19 the purpose of paying the medical expenses

20 of the beneficiaries of such account who

21 are covered under such health insurance

22 plan, and

23 ‘‘(iii) the written instrument govern24 ing the account meets the requirements of
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1 clauses (i), (v), and (vi) of subparagraph

2 (A).

3 ‘‘(2) QUALIFIED MEDICAL EXPENSES.—The

4 term ‘qualified medical expenses’ means amounts

5 paid by the individual for whose benefit the account

6 was established for premiums for a federally quali7 fied health insurance plan (as so defined) and the

8 unreimbursed expenses for medical care (as deter9 mined under section 34A) of such individual, the

10 spouse of such individual, and any dependent (as so

11 defined) of such individual.

12 ‘‘(3) TIME WHEN CONTRIBUTIONS DEEMED

13 MADE.—A contribution shall be deemed to be made

14 on the last day of the preceding taxable year if the

15 contribution is made on account of such taxable year

16 and is made not later than the time prescribed by

17 law for filing the return for such taxable year (not

18 including extensions thereof).

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

20 ‘‘(1) IN GENERAL.—Except as otherwise pro21 vided in this subsection, any amount paid or distrib22 uted out of a medical savings account shall be in23 cluded in the gross income of the individual for

24 whose benefit such account was established unless
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1 such amount is used exclusively to pay the qualified

2 medical expenses of such individual.

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

5 not apply to the distribution of any contribution paid

6 during a taxable year to a medical savings account

7 to the extent that such contribution exceeds the

8 amount allowable under subsection (b) if—

9 ‘‘(A) such distribution is received on or be10 fore the day prescribed by law (including exten11 sions of time) for filing such individual’s return

12 for such taxable year,

13 ‘‘(B) no credit is allowed under subsection

14 (a) with respect to such excess contribution,

15 and

16 ‘‘(C) such distribution is accompanied by

17 the amount of net income attributable to such

18 excess contribution.

19 Any net income described in subparagraph (C) shall

20 be included in the gross income of the individual for

21 the taxable year in which it is received.

22 ‘‘(3) PENALTY FOR DISTRIBUTIONS NOT USED

23 FOR MEDICAL EXPENSES.—The tax imposed by this

24 chapter for any taxable year in which there is a pay25 ment or distribution from a medical savings account
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1 which is not used to pay the medical expenses of the

2 individual for whose benefit the account was estab3 lished, shall be increased by 10 percent of the

4 amount of such payment or distribution which is in5 cludible in gross income under paragraph (1).

6 ‘‘(4) ROLLOVERS.—Paragraph (1) shall not

7 apply to any amount paid or distributed out of a

8 medical savings account to the individual for whose

9 benefit the account is maintained, if the entire

10 amount received (including money and any other

11 property) is paid into another medical savings ac12 count for the benefit of such individual not later

13 than the 60th day after the day on which the indi14 vidual received the payment or distribution.

15 ‘‘(e) TAX TREATMENT OF ACCOUNTS.—

16 ‘‘(1) EXEMPTION FROM TAX.—Any medical sav17 ings account is exempt from taxation under this sub18 title unless such account has ceased to be a medical

19 savings account by reason of paragraph (2) or (3).

20 Notwithstanding the preceding sentence, any such

21 account shall be subject to the taxes imposed by sec22 tion 511 (relating to imposition of tax on unrelated

23 business income of charitable, etc. organizations).
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1 ‘‘(2) LOSS OF EXEMPTION OF ACCOUNT WHERE

2 INDIVIDUAL ENGAGES IN PROHIBITED TRANS3 ACTION.—

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

5 year of the individual for whose benefit the

6 medical savings account was established, such

7 individual engages in any transaction prohibited

8 by section 4975 with respect to the account, the

9 account ceases to be a medical savings account

10 as of the first day of that taxable year.

11 ‘‘(B) ACCOUNT TREATED AS DISTRIBUTING

12 ALL ITS ASSETS.—In any case in which any ac13 count ceases to be a medical savings account by

14 reason of subparagraph (A) on the first day of

15 any taxable year, paragraph (1) of subsection

16 (d) applies as if there were a distribution on

17 such first day in an amount equal to the fair

18 market value (on such first day) of all assets in

19 the account (on such first day) and no portion

20 of such distribution were used to pay qualified

21 medical expenses.

22 ‘‘(3) EFFECT OF PLEDGING ACCOUNT AS SECU23 RITY.—If, during any taxable year, the individual for

24 whose benefit a medical savings account was estab25 lished uses the account or any portion thereof as se-
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1 curity for a loan, the portion so used is treated as

2 distributed to that individual and not used to pay

3 qualified medical expenses.

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

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

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

7 bank (as defined in section 408(n)) or another per8 son who demonstrates to the satisfaction of the Sec9 retary that the manner in which he will administer

10 the account will be consistent with the requirements

11 of this section, and

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

13 fact that it is not a trust, constitute a medical sav14 ings account described in subsection (c).

15 For purposes of this title, in the case of a custodial ac16 count treated as a trust by reason of the preceding sen17 tence, the custodian of such account shall be treated as

18 the trustee thereof.

19 ‘‘(g) INFLATION ADJUSTMENT.—

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

21 year beginning in a calendar year after 1997, each

22 applicable dollar amount shall be increased by an

23 amount equal to—

24 ‘‘(A) such dollar amount, multiplied by
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1 ‘‘(B) the cost-of-living adjustment for the

2 calendar year in which the taxable year begins.

3 ‘‘(2) COST-OF-LIVING ADJUSTMENT.—For pur4 poses of paragraph (1), the cost-of-living adjustment

5 for any calendar year is the percentage (if any) by

6 which—

7 ‘‘(A) the deemed average total wages (as

8 defined in section 209(k) of the Social Security

9 Act) for the preceding calendar year, exceeds

10 ‘‘(B) the deemed average total wages (as

11 so defined) for calendar year 1996.

12 ‘‘(3) APPLICABLE DOLLAR AMOUNT.—For pur13 poses of paragraph (1), the term ‘applicable dollar

14 amount’ means the $3,000 and $500 amounts in

15 subsection (b)(2).

16 ‘‘(4) ROUNDING.—If any amount as adjusted

17 under paragraph (1) is not a multiple of $10, such

18 amount shall be rounded to the nearest multiple of

19 $10 (or, if such amount is a multiple of $5 and not

20 of $10, such amount shall be rounded to the next

21 highest multiple of $10).

22 ‘‘(h) REPORTS.—The trustee of a medical savings ac23 count shall make such reports regarding such account to

24 the Secretary and to the individual for whose benefit the

25 account is maintained with respect to contributions, dis-
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1 tributions, and such other matters as the Secretary may

2 require under regulations. The reports required by this

3 subsection shall be filed at such time and in such manner

4 and furnished to such individuals at such time and in such

5 manner as may be required by those regulations.’’.

6 (b) TAX ON EXCESS CONTRIBUTIONS.—Section 4973

7 of the Internal Revenue Code of 1986 (relating to tax on

8 excess contributions to individual retirement accounts, cer9 tain section 403(b) contracts, and certain individual re10 tirement annuities) is amended—

11 (1) by inserting ‘‘MEDICAL SAVINGS AC12 COUNTS,’’ after ‘‘ACCOUNTS,’’ in the heading of

13 such section,

14 (2) by redesignating paragraph (2) of sub15 section (a) as paragraph (3) and by inserting after

16 paragraph (1) the following:

17 ‘‘(2) a medical savings account (within the

18 meaning of section 25A(c)(1)),’’,

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

20 (1) of subsection (a), and

21 (4) by adding at the end thereof the following

22 new subsection:

23 ‘‘(d) EXCESS CONTRIBUTIONS TO MEDICAL SAVINGS

24 ACCOUNTS.—For purposes of this section, in the case of

25 a medical savings account (within the meaning of section
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1 25A(c)(1)), the term ‘excess contributions’ means the

2 amount by which the amount contributed for the taxable

3 year to the account exceeds the amount allowable under

4 section 25A(b)(2) for such taxable year. For purposes of

5 this subsection, any contribution which is distributed out

6 of the medical savings account and a distribution to which

7 section 25A(d)(2) applies shall be treated as an amount

8 not contributed.’’.

9 (c) TAX ON PROHIBITED TRANSACTIONS.—Section

10 4975 of the Internal Revenue Code of 1986 (relating to

11 prohibited transactions) is amended—

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

13 following new paragraph:

14 ‘‘(4) SPECIAL RULE FOR MEDICAL SAVINGS AC15 COUNTS.—An individual for whose benefit a medical

16 savings account (within the meaning of section

17 25A(c)(1)) is established shall be exempt from the

18 tax imposed by this section with respect to any

19 transaction concerning such account (which would

20 otherwise be taxable under this section) if, with re21 spect to such transaction, the account ceases to be

22 a medical savings account by reason of the applica23 tion of section 25A(e)(2)(A) to such account.’’, and
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1 (2) by inserting ‘‘or a medical savings account

2 described in section 25A(c)(1)’’ in subsection (e)(1)

3 after ‘‘described in section 408(a)’’.

4 (d) FAILURE TO PROVIDE REPORTS ON MEDICAL

5 SAVINGS ACCOUNTS.—Section 6693 of the Internal Reve6 nue Code of 1986 (relating to failure to provide reports

7 on individual retirement account or annuities) is amend8 ed—

9 (1) by inserting ‘‘OR ON MEDICAL SAVINGS

10 ACCOUNTS’’ after ‘‘ANNUITIES’’ in the heading of

11 such section, and

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

13 following: ‘‘The person required by section 25A(h) to

14 file a report regarding a medical savings account at

15 the time and in the manner required by such section

16 shall pay a penalty of $50 for each failure unless it

17 is shown that such failure is due to reasonable

18 cause.’’.

19 (e) CLERICAL AMENDMENTS.—

20 (1) The table of sections for subpart A of part

21 IV of subchapter A of chapter 1 of the Internal Rev22 enue Code of 1986 is amended by inserting after the

23 item relating to section 25 the following:

‘‘Sec. 25A. Medical savings accounts.’’.
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1 (2) The table of sections for chapter 43 of such

2 Code is amended by striking the item relating to sec3 tion 4973 and inserting the following:

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

accounts, medical savings accounts, certain 403(b)

contracts, and certain individual retirement annuities.’’.

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

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

6 on medical savings accounts’’ after ‘‘annuities’’ in

7 the item relating to section 6693.

8 (g) EFFECTIVE DATE.—The amendments made by

9 this section shall apply to taxable years beginning after

10 December 31, 1996.

11 SEC. 103. OTHER TAX PROVISIONS.

12 (a) EXEMPTION AMOUNT DISALLOWED FOR UNIN13 SURED INDIVIDUALS.—

14 (1) IN GENERAL.—Subsection (d) of section

15 151 of the Internal Revenue Code of 1986 (relating

16 to allowance of deductions for personal exemptions)

17 is amended by adding at the end thereof the follow18 ing new paragraph:

19 ‘‘(5) EXEMPTION AMOUNT DISALLOWED FOR

20 UNINSURED INDIVIDUALS.—The exemption amount

21 for any individual for such individual’s taxable year

22 shall be zero, unless the individual includes the pol23 icy number of the federally qualified health insur-
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1 ance plan or an enrollment code regarding a State

2 program described in section 131(b) of the

3 Consumer Choice Health Security Act of 1993 for

4 such individual in the return claiming such exemp5 tion amount for such individual.’’.

6 (2) EMPLOYER ROLE.—Section 3402 of the In7 ternal Revenue Code of 1986 (relating to income tax

8 collected at source) is amended—

9 (A) by striking ‘‘section 151(d)(2)’’ in sub10 section (f)(1)(A) and inserting ‘‘paragraph (2)

11 or (5) of section 151(d)’’, and

12 (B) by adding at the end the following new

13 subsection:

14 ‘‘(t) DETERMINATION OF STANDARD DEDUCTION

15 STATUS.—For purposes of applying the tables in sub16 sections (a) and (c) to a payment of wages, the employer

17 shall treat the employee as having an exemption amount

18 of zero unless there is in effect with respect to such pay19 ment of wages a withholding exemption certificate fur20 nished to the employer by the employee by April 1, indicat21 ing the policy number of the federally qualified health in22 surance plan or an enrollment code regarding a State pro23 gram described in section 131(b) of the Consumer Choice

24 Health Security Act of 1993 for such individual.’’.
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1 (c) EFFECTIVE DATE.—The amendments made by

2 this section shall apply to taxable years beginning after

3 December 31, 1996.

4 (b) TERMINATION OF MEDICAL EXPENSE DEDUC5 TION.—Section 213 of the Internal Revenue Code of 1986

6 (relating to medical, dental, etc., expenses) is amended by

7 adding at the end thereof the following new subsection:

8 ‘‘(g) TERMINATION.—No amount paid after Decem9 ber 31, 1996, shall be treated as an expense paid for medi10 cal care.’’.

11 (c) TERMINATION OF DEDUCTION FOR HEALTH IN12 SURANCE COSTS OF SELF-EMPLOYED INDIVIDUALS.—

13 (1) IN GENERAL.—Section 162(l) of the Inter14 nal Revenue Code of 1986 (relating to special rules

15 for health insurance costs of self-employed individ16 uals) is amended by striking paragraph (6).

17 (2) EFFECTIVE DATE.—The amendment made

18 by paragraph (1) shall apply to taxable years begin19 ning after December 31, 1996.

20 (d) TERMINATION OF EXCLUSION FOR EMPLOYER21 PROVIDED HEALTH INSURANCE.—Section 106 of the In22 ternal Revenue Code of 1986 (relating to contributions by

23 employer to accident and health plans) is amended by add24 ing at the end the following new sentence: ‘‘The preceding
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1 sentence shall not apply to any amount paid after Decem2 ber 31, 1996.’’.

3 Subtitle B—Insurance Provisions

4 PART I—FEDERALLY QUALIFIED HEALTH

5 INSURANCE PLAN

6 SEC. 111. FEDERALLY QUALIFIED HEALTH INSURANCE

7 PLAN.

8 (a) IN GENERAL.—A federally qualified health insur9 ance plan is a health insurance plan offered, issued, or

10 renewed on or after January 1, 1997, which is certified

11 by the applicable regulatory authority as meeting, at a

12 minimum, the requirements of sections 112, 113, 114, and

13 115, and the regulatory program described in section 117.

14 (b) GENERAL DEFINITIONS.—As used in this Act—

15 (1) HEALTH INSURANCE PLAN.—The term

16 ‘‘health insurance plan’’ means any hospital or medi17 cal service policy or certificate, hospital or medical

18 service plan contract, or health maintenance organi19 zation group contract and, in States which have dis20 tinct licensure requirements, a multiple employer

21 welfare arrangement, but does not include any of the

22 following offered by an insurer:

23 (A) Accident only, dental only, disability

24 only, or long-term care only insurance.
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1 (B) Coverage issued as a supplement to li2 ability insurance.

3 (C) Workers’ compensation or similar in4 surance.

5 (D) Automobile medical-payment insur6 ance.

7 (2) APPLICABLE REGULATORY AUTHORITY.—

8 The term ‘applicable regulatory authority’ means—

9 (A) in the case of a State with a program

10 described in section 117, the State commis11 sioner or superintendent of insurance or other

12 State authority responsible for regulation of

13 health insurance; or

14 (B) if the State has not established such a

15 program or such program has been decertified

16 under section 117(b), the Secretary.

17 (3) SECRETARY.—The term ‘‘Secretary’’ means

18 the Secretary of Health and Human Services.

19 (4) STATE.—The term ‘‘State’’ means each of

20 the several States of the United States, the District

21 of Columbia, the Commonwealth of Puerto Rico, the

22 United States Virgin Islands, Guam, America

23 Samoa, and the Commonwealth of the Northern

24 Mariana Islands.
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1 SEC. 112. FAMILY SECURITY BENEFITS PACKAGE.

2 (a) IN GENERAL.—The requirements of this section

3 are met, if the health insurance plan—

4 (1) provides coverage for all medically necessary

5 acute medical care described in subsection (b),

6 (2) does not exclude coverage for selected ill7 nesses or selected treatments if consistent with

8 medically accepted practices, and

9 (3) meets the patient cost sharing requirements

10 of subsection (c).

11 (b) ACUTE MEDICAL CARE.—Coverage for all medi12 cally necessary acute medical care is described in this sub13 section if such coverage includes—

14 (1) physician services,

15 (2) inpatient, outpatient, and emergency hos16 pital services and appropriate alternatives to hos17 pitalization, and

18 (3) inpatient and outpatient prescription drugs.

19 Nothing in this subsection may be construed to require

20 the inclusion of abortion services.

21 (c) COST SHARING REQUIREMENTS.—The require22 ments of this subsection are as follows:

23 (1) LIMITATION ON DEDUCTIBLES.—A health

24 insurance plan shall not provide a deductible amount

25 for benefits provided in any plan year that exceeds—
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1 (A) with respect to benefits payable for

2 items and services furnished to a single individ3 ual enrolled under the plan, for a plan year be4 ginning in—

5 (i) a calendar year prior to 1998,

6 $1,000; or

7 (ii) for a subsequent calendar year,

8 the limitation specified in this subpara9 graph for the previous calendar year in10 creased by the percentage increase in the

11 consumer price index for all urban consum12 ers (United States city average, as pub13 lished by the Bureau of Labor Statistics)

14 for the 12-month period ending on Septem15 ber 30 of the preceding calendar year; and

16 (B) with respect to benefits payable for

17 items and services furnished to a family en18 rolled under the plan, for a plan year beginning

19 in—

20 (i) a calendar year prior to 1998,

21 $2,000 per family; or

22 (ii) for a subsequent calendar year,

23 the limitation specified in this subpara24 graph for the previous calendar year in25 creased by such percentage increase.
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1 If the limitation computed under subparagraph

2 (A)(ii) or (B)(ii) is not a multiple of $10, it shall be

3 rounded to the next highest multiple of $10.

4 (2) LIMITATION ON COPAYMENTS AND COIN5 SURANCE.—

6 (A) IN GENERAL.—A health insurance

7 plan may not require the payment of any

8 copayment or coinsurance for an item or service

9 for which coverage is required under this sec10 tion after an individual or a family covered

11 under the plan has incurred out-of-pocket ex12 penses under the plan that are equal to the out13 of-pocket limit for a plan year.

14 (B) LIMIT ON OUT-OF-POCKET EX15 PENSES.—As used in this paragraph—

16 (i) OUT-OF-POCKET EXPENSES DE17 FINED.—The term ‘‘out-of-pocket ex18 penses’’ means, with respect to an individ19 ual or a family in a plan year, amounts

20 payable under the plan as deductibles and

21 coinsurance with respect to items and serv22 ices provided under the plan and furnished

23 in the plan year on behalf of the individual

24 or the family covered under the plan.
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1 (ii) OUT-OF-POCKET LIMIT DE2 FINED.—The term ‘‘out-of-pocket limit’’

3 means for a plan year beginning in—

4 (I) a calendar year prior to 1998,

5 $5,000; or

6 (II) for a subsequent calendar

7 year, the limit specified in this clause

8 for the previous calendar year in9 creased by the percentage increase in

10 the consumer price index for all urban

11 consumers (United States city aver12 age, as published by the Bureau of

13 Labor Statistics) for the 12-month pe14 riod ending on September 30 of the

15 preceding calendar year.

16 If the limit computed under subclause (II)

17 is not a multiple of $10, it shall be round18 ed to the next highest multiple of $10.

19 SEC. 113. RATING PRACTICES.

20 (a) IN GENERAL.—The requirements of this section

21 are met, if, except as provided in subsection (b), the health

22 insurance plan provides for—

23 (1) a variation in premium rates only on the

24 basis of age, sex, and geography, and
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1 (2) a charge of the same premium rates to new

2 applicants and existing policyholders with the same

3 age, sex, and geographic characteristics.

4 (b) INCENTIVE DISCOUNTS.—A plan may discount

5 an individual’s premium rate as an incentive for partici6 pating in a program, approved by the applicable regulatory

7 authority to be offered in conjunction with the coverage,

8 which has as its objective, 1 or more of the following:

9 (1) To promote healthy behavior.

10 (2) To prevent or delay the onset of illness.

11 (3) To provide for screening or early detection

12 of illness.

13 SEC. 114. GUARANTEED ISSUE.

14 (a) IN GENERAL.—Except as provided in paragraph

15 (2), in the case of applications made on and after January

16 1, 1998, the following rules apply:

17 (1) IN GENERAL.—The requirements of this

18 section are met, if, except as provided in paragraph

19 (2), the health insurance plan—

20 (A) provides guaranteed issue at standard

21 rates to all applicants, and

22 (B) does not exclude from coverage, or

23 limit coverage for, any preexisting medical con24 dition of any applicant who, on the date the ap25 plication is made, has been continuously insured
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1 for a period of at least 1 year prior to the date

2 of the application under 1 or more of the fol3 lowing health insurance plans or programs:

4 (i) Another federally qualified health

5 insurance plan.

6 (ii) An employer-sponsored group

7 health insurance plan in effect before the

8 date of the enactment of this Act.

9 (iii) An individual health insurance

10 plan in effect before such date.

11 (iv) A program described in—

12 (I) title XVIII or XIX of the So13 cial Security Act,

14 (II) chapter 55 of title 10, Unit15 ed States Code,

16 (III) chapter 17 of title 38, Unit17 ed States Code,

18 (IV) chapter 89 of title 5, United

19 States Code, or

20 (V) the Indian Health Care Im21 provement Act.

22 (2) BREAK IN COVERAGE.—In the case of an

23 applicant who has not been continuously insured for

24 a period of 1 year prior to the date the application

25 is made, the health insurance plan may exclude from
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1 coverage, or limit coverage for, any preexisting medi2 cal condition for a period no greater than the lesser

3 of—

4 (A) the number of months immediately

5 prior to the date of the application during

6 which the individual was not insured since the

7 illness or condition in question was first diag8 nosed, or

9 (B) 1 year.

10 (b) TRANSITION RULE.—In the case of applications

11 made in 1997, the requirements of this section are met,

12 if the health insurance plan—

13 (1) provides guaranteed issue at standard rates

14 to all applicants, and

15 (2) does not exclude from coverage, or limit

16 coverage for, any preexisting medical condition of

17 any applicant.

18 SEC. 115. GUARANTEED RENEWABILITY.

19 The requirements of this section are met, if the

20 health insurance plan provides the policyholder with a con21 tractual right to renew the coverage which stipulates that

22 the insurer cannot cancel or refuse to renew the coverage

23 except for cases of—

24 (1) nonpayment of premiums by the policy25 holder, or
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1 (2) fraud or misrepresentation by the policy2 holder.

3 PART II—CERTIFICATION OF FEDERALLY

4 QUALIFIED HEALTH INSURANCE PLANS

5 SEC. 117. ESTABLISHMENT OF REGULATORY PROGRAM

6 FOR CERTIFICATION OF PLANS.

7 (a) IN GENERAL.—Each State shall establish no later

8 than January 1, 1997, a regulatory program which meets

9 the standards referred to in section 118.

10 (b) PERIODIC SECRETARIAL REVIEW OF STATE REG11 ULATORY PROGRAM.—The Secretary periodically shall re12 view each State regulatory program to determine if such

13 program continues to meet and enforce the standards re14 ferred to in section 118. If the Secretary initially deter15 mines that a State regulatory program no longer meets

16 and enforces such standards, the Secretary shall provide

17 the State an opportunity to adopt a plan of correction that

18 would bring such program into compliance with such

19 standards. If the Secretary makes a final determination

20 that the State regulatory program fails to meet and en21 force such standards after such an opportunity, the Sec22 retary shall decertify such program and assume respon23 sibility with respect to health insurance plans in the State.
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1 SEC. 118. STANDARDS FOR REGULATORY PROGRAMS.

2 (a) IN GENERAL.—The Secretary, in consultation

3 with the National Association of Insurance Commissioners

4 (hereafter in this section referred to as ‘‘NAIC’’) shall de5 velop by not later than 1 year after the date of the enact6 ment of this Act, in the form of model Acts and model

7 regulations, State regulatory program standards which in8 clude—

9 (1) procedures for certifying that the require10 ments of part I of this subtitle have been met by a

11 health insurance plan applying for certification as a

12 federally qualified health insurance plan,

13 (2) the requirements described in subsections

14 (b), (c), and (d),

15 (3) requirements with respect to solvency stand16 ards and guaranty funds for carriers of federally

17 qualified health insurance plans, and

18 (4) reporting requirements under which carriers

19 report to the Internal Revenue Service regarding the

20 acquisition and termination by individuals of cov21 erage under federally qualified health insurance

22 plans.

23 (b) PASSBACK OF CLAIMS AND PREMIUMS.—The re24 quirements of this subsection are met, if, in the case of

25 an applicant who has been continuously insured, as de26 scribed in section 114(b)(1)(B), and is at the time of the
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1 application receiving treatment for a preexisting medical

2 condition—

3 (1) the federally qualified health insurance plan

4 is allowed to pass back to the applicant’s previous

5 plan any claims relating to such condition, together

6 with a portion of the premium, and

7 (2) such previous plan is required to pay such

8 claims and premium incurred during the lesser of—

9 (A) the duration of the course of the treat10 ment or spell of illness, or

11 (B) 2 years from the date at which cov12 erage commenced under the federally qualified

13 health insurance plan.

14 (c) MARKETING PRACTICES.—The requirements of

15 this subsection are met, if the carrier offering the federally

16 qualified health insurance plan retains the right to select

17 agents with whom such plan contracts and to determine

18 the amount and form of compensation to such agents, ex19 cept that—

20 (1) if the carrier chooses to contract with an

21 agent, the carrier may not terminate or refuse to

22 renew the agency contract for any reason related to

23 the age, sex, health status, claims experience, occu24 pation, or geographic location of the insureds placed

25 by the agent with such plan, and
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1 (2) the carrier may not, directly or indirectly,

2 enter into any contract, agreement, or arrangement

3 with an agent that provides for, or results in, any

4 consideration provided to such agent for the issu5 ance or renewal of such a plan to vary on account

6 of the age, sex, health status, claims experience, oc7 cupation, or geographic location of the insureds

8 placed by the agent with such plan.

9 (d) RISK ADJUSTMENT OR REINSURANCE PRO10 GRAMS.—The requirements of this subsection are met, if

11 the carrier offering the federally qualified health insurance

12 plan participates in a State-administered risk adjustment

13 program (or, at the option of the State, a reinsurance pro14 gram) designed to compensate for the potential occurrence

15 of grossly disproportionate distributions of above-standard

16 or below-standard insured risks among federally qualified

17 health insurance plans.

18 (e) NONBINDING STANDARDS.—The Secretary, in

19 consultation with NAIC, shall also develop within the 1-

20 year period described in subsection (a), nonbinding stand21 ards for premium rating practices and guaranteed renew22 ability of coverage which, if the insurer so elects, is more

23 generous (additional benefits or lower cost sharing or

24 both) than the requirements under part I of this subtitle

25 for federally qualified health insurance plans.
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1 Subtitle C—Employer Provisions

2 SEC. 121. GENERAL PROVISIONS RELATING TO EMPLOY3 ERS.

4 (a) PREMIUMS WITHHELD.—Each employer shall—

5 (1) withhold from each employee’s wages the

6 amount of the employee’s health insurance premium

7 and remit, directly or indirectly, such premium to

8 the insurance plan of the employee’s choice accord9 ing to an agreed upon schedule, and

10 (2) within the first 30 days of any calendar

11 year or the date of the hire of an employee, notify

12 each employee of the employee’s right to claim an

13 advance refundable tax credit for such premium

14 under section 34A of the Internal Revenue Code of

15 1986.

16 (b) EFFECTIVE DATE.—The requirements under

17 subsection (a) shall apply with respect to calendar year

18 1997 and thereafter.

19 SEC. 122. CONVERSION OF NON-SELF-INSURED PLANS.

20 In the case of an employer-sponsored health insur21 ance plan in force on the date of the enactment of this

22 Act, and which is not a self-insured plan, the insurer from

23 whom the plan was purchased (or, in the event such in24 surer refuses, any new subsidiary, corporation, insurer,
46

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1 union, cooperative, or association willing to become the

2 new sponsor of the plan) shall—

3 (1) notify, not later than October 1, 1996, all

4 of the primary insured beneficiaries of the employer5 sponsored plan of their rights to convert their insur6 ance coverage to a federally qualified health insur7 ance plan (as defined in section 111) offered by the

8 insurer with benefits identical to, or actuarially

9 equivalent to, those of the employer-sponsored plan

10 and the rates of that coverage, and provide such

11 beneficiaries 60 additional days to decline or accept

12 the new coverage, and

13 (2) offer such coverage beginning January 1,

14 1997, at premium rates which vary only by age, sex,

15 and geography, except that the combined total of the

16 new rates charged separately to the various bene17 ficiaries may not exceed the total group rate paid by

18 the employer or employees or both under the em19 ployer-sponsored plan on the last day it is, or was,

20 in force.

21 SEC. 123. PROVISIONS RELATING TO EXISTING SELF-IN22 SURED PLANS.

23 (a) IN GENERAL.—In the case of an employer-spon24 sored health insurance plan in force on the date of the

25 enactment of this Act, and which is a self-insured plan,
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1 the employer sponsoring the plan may, at anytime follow2 ing such date sell, transfer, or assign the plan to any exist3 ing or new, subsidiary, corporation, insurer, union, cooper4 ative or association, willing to become the new sponsor of

5 the plan, except that—

6 (1) such sale, transfer, or assignment may not

7 take effect unless first approved by a two-thirds ma8 jority vote of all the primary-insured beneficiaries of

9 the plan, and

10 (2) the terms or conditions and benefits or cov11 erage of the plan, and the eligibility criteria for par12 ticipation in the plan, may not be altered before

13 such date.

14 (b) PROVISIONS GOVERNING PLAN.—As of the date

15 of the enactment of this Act, the sponsor of the plan de16 scribed in subsection (a) becomes subject to all laws gov17 erning the operation of a corporation selling health insur18 ance in the applicable State or States and to the provisions

19 of section 122.

20 SEC. 124. CONTINUATION OF EMPLOYER-PROVIDED

21 HEALTH COVERAGE REQUIRED UNTIL EF22 FECTIVE DATE OF NEW COVERAGE UNDER

23 THIS ACT.

24 (a) IN GENERAL.—Clause (i) of section

25 4980B(f)(2)(B) of the Internal Revenue Code of 1986 (re-
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1 lating to period of coverage) is amended by inserting after

2 subclause (V) the following new subclause:

3 ‘‘(VI) QUALIFYING EVENT IN4 VOLVING END OF PLAN.—In the case

5 of an event described in paragraph

6 (3)(G), December 31, 1996.’’.

7 (b) QUALIFYING EVENT INVOLVING END OF

8 PLAN.—Paragraph (3) of section 4980B(f) of the Internal

9 Revenue Code of 1986 (defining qualifying event) is

10 amended by inserting after subparagraph (F) the follow11 ing new subparagraph:

12 ‘‘(G) The termination by the employer of

13 the group health plan after the date of the en14 actment of the Consumer Choice Health Secu15 rity Act of 1993.’’.

16 (c) CONFORMING AMENDMENT.—Clause (ii) of sec17 tion 4980B(f)(2)(B) of the Internal Revenue Code of 1986

18 is amended by striking ‘‘The date’’ and inserting ‘‘Except

19 in the case of a qualifying event described in paragraph

20 (3)(G), the date’’.

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

22 this section shall apply to qualifying events occurring after

23 the date of the enactment of this Act.
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1 SEC. 125. REQUIREMENTS WITH RESPECT TO CASHING OUT

2 EMPLOYER-SPONSORED PLANS.

3 (a) NON-FEDERAL EMPLOYERS.—

4 (1) IN GENERAL.—Each employer contributing

5 in whole or in part to an employer-sponsored health

6 insurance plan on December 1, 1996, shall, within

7 30 days after such date—

8 (A) notify each employee participating in

9 the plan of the amount spent by the employer

10 on the employee’s health insurance, as deter11 mined under paragraph (2),

12 (B) add such amount to the cash wages of

13 the employee commencing with pay periods be14 ginning on and after January 1, 1997, and

15 (C) hold each employee harmless for the

16 employer’s share of any payroll taxes due under

17 chapter 31 of the Internal Revenue Code of

18 1986 on such amount.

19 (2) AMOUNT OF INCLUSION.—The amount de20 scribed in paragraph (1)(A) shall equal the actuarial

21 value of the employer’s contribution for group health

22 issuance coverage apportioned to the plan’s bene23 ficiaries according to the new premiums for individ24 ual and family coverage determined by the insurer.

25 (3) PRIOR TERMINATION.—Any beneficiary of

26 an employer-sponsored health insurance plan who
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•HR 3698 SC

1 voluntarily terminates coverage under such a plan

2 before December 1, 1996, forfeits the right to re3 ceive the value of the beneficiary’s coverage in cash.

4 (b) COMMISSION ON CASHING OUT FEHBP BENE5 FITS.—

6 (1) ESTABLISHMENT.—

7 (A) IN GENERAL.—There is established an

8 independent board to be known as the ‘‘Bene9 fits Cash Out Commission’’ (in this subtitle, re10 ferred to as the ‘‘Commission’’).

11 (B) DUTIES.—The Commission shall study

12 and propose a procedure under which individ13 uals may cash out health benefits under chapter

14 89 of title 5, United States Code, and pay

15 scales and retirement benefits would be ad16 justed accordingly. The Commission shall report

17 to Congress regarding such study and proposal

18 not later than 1 year after the date of the en19 actment of this Act.

20 (C) MEMBERSHIP.—

21 (i) IN GENERAL.—The Commission

22 shall be composed of 13 members ap23 pointed by the President by and with the

24 advice and consent of the Senate.
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•HR 3698 SC

1 (ii) CONSULTATION.—In selecting in2 dividuals for nominations for appointments

3 for the Commission, the President should

4 consult with—

5 (I) the Speaker of the House of

6 Representatives concerning the ap7 pointment of 3 members;

8 (II) the Majority Leader of the

9 Senate concerning the appointment of

10 3 members;

11 (III) the Minority Leader of the

12 House of Representatives concerning

13 the appointment of 3 members; and

14 (IV) the Minority Leader of the

15 Senate concerning the appointment of

16 3 members.

17 (iii) CHAIR.—The President shall des18 ignate 1 individual described in clause (ii)

19 who shall serve as Chair of the Commis20 sion.

21 (iv) COMPOSITION OF COMMISSION.—

22 The membership of the Commission shall

23 include individuals with national recogni24 tion for expertise in the valuation of health
52

•HR 3698 SC

1 insurance benefits and of Federal civilian

2 pay and retirement benefits.

3 (D) ADMINISTRATIVE PROVISIONS.—

4 (i) MEETINGS.—Each meeting of the

5 Commission shall be open to the public.

6 (ii) PAY AND TRAVEL EXPENSES.—

7 (I) IN GENERAL.—Each member,

8 other than the Chair, shall be paid at

9 a rate equal to the daily equivalent of

10 the minimum annual rate of basic pay

11 payable for level IV of the Executive

12 Schedule under section 5315 of title

13 5, United States Code, for each day

14 (including travel time) during which

15 the member is engaged in the actual

16 performance of duties vested in the

17 Commission.

18 (II) CHAIR.—The Chair shall be

19 paid for each day referred to in

20 subclause (I) at a rate equal to the

21 daily equivalent of the minimum an22 nual rate of basic pay payable for

23 level III of the Executive Schedule

24 under section 5314 of title 5, United

25 States Code.
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•HR 3698 SC

1 (III) TRAVEL EXPENSES.—Mem2 bers shall receive travel expenses, in3 cluding per diem in lieu of subsist4 ence, in accordance with sections

5 5702 and 5703 of title 5, United

6 States Code.

7 (iii) STAFF.—

8 (I) IN GENERAL.—Subject to

9 subclauses (II) and (III), the Chair,

10 with the approval of the Commission,

11 may appoint and fix the pay of addi12 tional personnel.

13 (II) PAY.—The Chair may make

14 such appointments without regard to

15 the provisions of title 5, United States

16 Code, governing appointments in the

17 competitive service, and any personnel

18 so appointed may be paid without re19 gard to the provisions of chapter 51

20 and subchapter III of chapter 53 of

21 such title, relating to classification

22 and General Schedule pay rates, ex23 cept that an individual so appointed

24 may not receive pay in excess of 120

25 percent of the annual rate of basic
54

•HR 3698 SC

1 pay payable for GS–15 of the General

2 Schedule.

3 (III) DETAILED PERSONNEL.—

4 Upon request of the Chair, the head

5 of any Federal department or agency

6 may detail any of the personnel of

7 that department or agency to the

8 Commission to assist the Commission

9 in carrying out its duties under this

10 Act.

11 (iv) OTHER AUTHORITY.—

12 (I) CONTRACT SERVICES.—The

13 Commission may procure by contract,

14 to the extent funds are available, the

15 temporary or intermittent services of

16 experts or consultants pursuant to

17 section 3109 of title 5, United States

18 Code.

19 (II) LEASES, ETC.—The Com20 mission may lease space and acquire

21 personal property to the extent funds

22 are available.

23 (2) CONSIDERATION.—

24 (A) IN GENERAL.—The proposal described

25 in paragraph (1)(B) shall be considered by the
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•HR 3698 SC

1 Congress under the procedures for consider2 ation of an ‘‘approval resolution’’ as described

3 in subparagraph (D).

4 (B) EFFECTIVE DATE OF IMPLEMENTA5 TION.—The provisions of the proposal shall be6 come effective on January 1, 1997.

7 (C) PERIOD FOR RESUBMISSION OF PRO8 POSAL IN CASE OF NONAPPROVAL.—If the pro9 posal of the Commission described in subpara10 graph (A) is not approved by Congress, the

11 Commission shall by not later than January 1,

12 1996, submit a new proposal to Congress.

13 (D) RULES GOVERNING CONGRESSIONAL

14 CONSIDERATION.—

15 (i) RULES OF HOUSE OF REPRESENT16 ATIVES AND SENATE.—This subparagraph

17 is enacted by the Congress—

18 (I) as an exercise of the rule19 making power of the House of Rep20 resentatives and the Senate, respec21 tively, and as such is deemed a part

22 of the rules of each House, respec23 tively, but applicable only with respect

24 to the procedure to be followed in that

25 House in the case of approval resolu-
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•HR 3698 SC

1 tions described in clause (ii), and su2 persedes other rules only to the extent

3 that such rules are inconsistent there4 with; and

5 (II) with full recognition of the

6 constitutional right of either House to

7 change the rules (so far as relating to

8 the procedure of that House) at any

9 time, in the same manner and to the

10 same extent as in the case of any

11 other rule of that House.

12 (ii) TERMS OF THE RESOLUTION.—

13 For purposes of subparagraph (A), the

14 term ‘‘approval resolution’’ means only a

15 joint resolution of the 2 Houses of the

16 Congress, providing in—

17 (I) the matter after the resolving

18 clause of which is as follows: ‘‘That

19 the Congress approves the rec20 ommendations of the Benefits Cash

21 Out Commission as submitted by the

22 Commission on lllllll’’, the

23 blank space being filled in with the

24 appropriate date; and
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•HR 3698 SC

1 (II) the title of which is as fol2 lows: ‘‘Joint Resolution approving the

3 recommendation of the Benefits Cash

4 Out Commission’’.

5 (iii) INTRODUCTION AND REFER6 RAL.—On the day on which the rec7 ommendation of the Commission is trans8 mitted to the House of Representatives

9 and the Senate, an approval resolution

10 with respect to such recommendation shall

11 be introduced (by request) in the House of

12 Representatives by the Majority Leader of

13 the House, for himself or herself and the

14 Minority Leader of the House, or by Mem15 bers of the House designated by the Ma16 jority Leader and Minority Leader of the

17 House; and shall be introduced (by re18 quest) in the Senate by the Majority Lead19 er of the Senate, for himself or herself and

20 the Minority Leader of the Senate, or by

21 Members of the Senate designated by the

22 Majority Leader and Minority Leader of

23 the Senate. If either House is not in ses24 sion on the day on which such rec25 ommendation is transmitted, the approval
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•HR 3698 SC

1 resolution with respect to such rec2 ommendation shall be introduced in the

3 House, as provided in the preceding sen4 tence, on the first day thereafter on which

5 the House is in session. The approval reso6 lution introduced in the House of Rep7 resentatives and the Senate shall be re8 ferred to the appropriate committees of

9 each House.

10 (iv) AMENDMENTS PROHIBITED.—No

11 amendment to an approval resolution shall

12 be in order in either the House of Rep13 resentatives or the Senate; and no motion

14 to suspend the application of this clause

15 shall be in order in either House, nor shall

16 it be in order in either House for the Pre17 siding Officer to entertain a request to sus18 pend the application of this clause by

19 unanimous consent.

20 (v) PERIOD FOR COMMITTEE AND

21 FLOOR CONSIDERATION.—

22 (I) IN GENERAL.—Except as pro23 vided in subclause (II), if the commit24 tee or committees of either House to

25 which an approval resolution has been
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•HR 3698 SC

1 referred have not reported it at the

2 close of the 30th day after its intro3 duction, such committee or commit4 tees shall be automatically discharged

5 from further consideration of the ap6 proval resolution and it shall be

7 placed on the appropriation calendar.

8 A vote on final passage of the ap9 proval resolution shall be taken in

10 each House on or before the close of

11 the 30th day after the approval reso12 lution is reported by the committees

13 or committee of that House to which

14 it was referred, or after such commit15 tee or committees have been dis16 charged from further consideration of

17 the approval resolution. If prior to the

18 passage by 1 House of an approval

19 resolution of that House, that House

20 receives the same approval resolution

21 from the other House then the proce22 dure in that House shall be the same

23 as if no approval resolution had been

24 received from the other House, but

25 the vote on final passage shall be on
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1 the approval resolution of the other

2 House.

3 (II) COMPUTATION OF DAYS.—

4 For purposes of subclause (I), in com5 puting a number of days in either

6 House, there shall be excluded any

7 day on which the House is not in ses8 sion.

9 (vi) FLOOR CONSIDERATION IN THE

10 HOUSE OF REPRESENTATIVES.—

11 (I) MOTION TO PROCEED.—A

12 motion in the House of Representa13 tives to proceed to the consideration

14 of an approval resolution shall be

15 highly privileged and not debatable.

16 An amendment to the motion shall

17 not be in order, nor shall it be in

18 order to move to reconsider the vote

19 by which the motion is agreed to or

20 disagreed to.

21 (II) DEBATE.—Debate in the

22 House of Representatives on an ap23 proval resolution shall be limited to

24 not more than 20 hours, which shall

25 be divided equally between those fa-
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•HR 3698 SC

1 voring and those opposing the bill or

2 resolution. A motion further to limit

3 debate shall not be debatable. It shall

4 not be in order to move to recommit

5 an approval resolution or to move to

6 reconsider the vote by which an ap7 proval resolution is agreed to or dis8 agreed to.

9 (III) MOTION TO POSTPONE.—

10 Motions to postpone, made in the

11 House of Representatives with respect

12 to the consideration of an approval

13 resolution, and motions to proceed to

14 the consideration of other business,

15 shall be decided without debate.

16 (IV) APPEALS.—All appeals from

17 the decisions of the Chair relating to

18 the application of the Rules of the

19 House of Representatives to the pro20 cedure relating to an approval resolu21 tion shall be decided without debate.

22 (V) GENERAL RULES APPLY.—

23 Except to the extent specifically pro24 vided in the preceding provisions of

25 this clause, consideration of an ap-
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•HR 3698 SC

1 proval resolution shall be governed by

2 the Rules of the House of Representa3 tives applicable to other bills and reso4 lutions in similar circumstances.

5 (vii) FLOOR CONSIDERATION IN THE

6 SENATE.—

7 (I) MOTION TO PROCEED.—A

8 motion in the Senate to proceed to the

9 consideration of an approval resolu10 tion shall be privileged and not debat11 able. An amendment to the motion

12 shall not be in order, nor shall it be

13 in order to move to reconsider the

14 vote by which the motion is agreed to

15 or disagreed to.

16 (II) GENERAL DEBATE.—Debate

17 in the Senate on an approval resolu18 tion, and all debatable motions and

19 appeals in connection therewith, shall

20 be limited to not more than 20 hours.

21 The time shall be equally divided be22 tween, and controlled by, the Majority

23 Leader and the Minority Leader or

24 their designees.
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•HR 3698 SC

1 (III) DEBATE OF MOTIONS AND

2 APPEALS.—Debate in the Senate on

3 any debatable motion or appeal in

4 connection with an approval resolution

5 shall be limited to not more than 1

6 hour, to be equally divided between,

7 and controlled by, the mover and the

8 manager of the approval resolution,

9 except that in the event the manager

10 of the approval resolution is in favor

11 of any such motion or appeal, the

12 time in opposition thereto, shall be

13 controlled by the Minority Leader or

14 his designee. Such leaders, or either of

15 them, may, from time under their

16 control on the passage of an approval

17 resolution, allot additional time to any

18 Senator during the consideration of

19 any debatable motion or appeal.

20 (IV) OTHER MOTIONS.—A mo21 tion in the Senate to further limit de22 bate is not debatable. A motion to re23 commit an approval resolution is not

24 in order.
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•HR 3698 SC

1 SEC. 126. ENFORCEMENT.

2 (a) IN GENERAL.—Chapter 47 of the Internal Reve3 nue Code of 1986 (relating to excise taxes on qualified

4 pension, etc. plans) is amended by inserting after section

5 5000 the following new sections:

6 ‘‘SEC. 5000A. FAILURE OF EMPLOYERS WITH RESPECT TO

7 HEALTH INSURANCE.

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

9 tax on the failure of any person to comply with the re10 quirements of sections 121 and 125(a) of the Consumer

11 Choice Health Security Act of 1993 with respect to any

12 employee of the person.

13 ‘‘(b) AMOUNT OF TAX.—

14 ‘‘(1) IN GENERAL.—The amount of the tax im15 posed by subsection (a) on any failure with respect

16 to an employee shall be $50 for each day in the non17 compliance period with respect to such failure.

18 ‘‘(2) NONCOMPLIANCE PERIOD.—For purposes

19 of this section, the term ‘noncompliance period’

20 means, with respect to any failure, the period—

21 ‘‘(A) beginning on the date such failure

22 first occurs, and

23 ‘‘(B) ending on the date such failure is

24 corrected.

25 ‘‘(3) CORRECTION.—A failure of a person to

26 comply with the requirements of section 121 or
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•HR 3698 SC

1 125(a) of the Consumer Choice Health Security Act

2 of 1993 with respect to any employee of the person

3 shall be treated as corrected if—

4 ‘‘(A) such failure is retroactively undone to

5 the extent possible, and

6 ‘‘(B) the employee is placed in a financial

7 position which is as good as such employee

8 would have been in had such failure not oc9 curred.

10 ‘‘(c) LIMITATIONS ON AMOUNT OF TAX.—

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

12 DISCOVERED EXERCISING REASONABLE DILI13 GENCE.—No tax shall be imposed by subsection (a)

14 on any failure during any period for which it is es15 tablished to the satisfaction of the Secretary that

16 none of the persons referred to in subsection (d)

17 knew, or exercising reasonable diligence would have

18 known, that such failure existed.

19 ‘‘(2) TAX NOT TO APPLY TO FAILURES COR20 RECTED WITHIN 30 DAYS.—No tax shall be imposed

21 by subsection (a) on any failure if—

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

23 cause and not to willful neglect, and

24 ‘‘(B) such failure is corrected during the

25 30-day period beginning on the first date any of
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•HR 3698 SC

1 the persons referred to in subsection (d) knew,

2 or exercising reasonable diligence would have

3 known, that such failure existed.

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

5 failure which is due to reasonable cause and not to

6 willful neglect, the Secretary may waive part or all

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

8 that the payment of such tax would be excessive rel9 ative to the failure involved.

10 ‘‘(d) LIABILITY FOR TAX.—

11 ‘‘(1) IN GENERAL.—Except as otherwise pro12 vided in this subsection, the following shall be liable

13 for the tax imposed by subsection (a) on a failure:

14 ‘‘(A) In the case of a health insurance plan

15 other than a multiemployer plan, the employer.

16 ‘‘(B) In the case of a multiemployer plan,

17 the plan.

18 ‘‘(C) Each person who is responsible (other

19 than in a capacity as an employee) for admin20 istering or providing benefits under the health

21 insurance plan and whose act or failure to act

22 caused (in whole or in part) the failure.

23 ‘‘(2) SPECIAL RULES FOR PERSONS DESCRIBED

24 IN PARAGRAPH (1)(C).—A person described in sub25 paragraph (C) (and not in subparagraphs (A) and
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•HR 3698 SC

1 (B)) of paragraph (1) shall be liable for the tax im2 posed by subsection (a) on any failure only if such

3 person assumed (under a legally enforceable written

4 agreement) responsibility for the performance of the

5 act to which the failure relates.

6 ‘‘SEC. 5000B. FAILURE OF CARRIERS WITH RESPECT TO

7 HEALTH INSURANCE.

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

9 tax on the failure of any carrier offering any health insur10 ance plan to comply with the requirements of sections 122

11 and 123 of the Consumer Choice Health Security Act of

12 1993.

13 ‘‘(b) AMOUNT OF TAX.—

14 ‘‘(1) IN GENERAL.—The amount of tax imposed

15 by subsection (a) by reason of 1 or more failures

16 during a taxable year shall be equal to 50 percent

17 of the gross premiums received during such taxable

18 year with respect to all health insurance plans issued

19 by the carrier on whom such tax is imposed.

20 ‘‘(2) GROSS PREMIUMS.—For purposes of para21 graph (1), gross premiums shall include any consid22 eration received with respect to any health insurance

23 contract.

24 ‘‘(3) CONTROLLED GROUPS.—For purposes of

25 paragraph (1)—
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•HR 3698 SC

1 ‘‘(A) CONTROLLED GROUP OF CORPORA2 TIONS.—All corporations which are members of

3 the same controlled group of corporations shall

4 be treated as 1 carrier. For purposes of the pre5 ceding sentence, the term ‘controlled group of

6 corporations’ has the meaning given to such

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

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

9 substituted for ‘at least 80 percent’ each

10 place it appears in section 1563(a)(1), and

11 ‘‘(ii) the determination shall be made

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

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

14 ‘‘(B) PARTNERSHIPS, PROPRIETORSHIPS,

15 ETC., WHICH ARE UNDER COMMON CONTROL.—

16 Under regulations prescribed by the Secretary,

17 all trades or business (whether or not incor18 porated) which are under common control shall

19 be treated as 1 carrier. The regulations pre20 scribed under this subparagraph shall be based

21 on principles similar to the principles which

22 apply in the case of subparagraph (A).

23 ‘‘(c) LIMITATION ON TAX.—

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

25 DISCOVERED EXERCISING REASONABLE DILI-
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•HR 3698 SC

1 GENCE.—No tax shall be imposed by subsection (a)

2 with respect to any failure for which it is established

3 to the satisfaction of the Secretary that the carrier

4 on whom the tax is imposed did not know, and exer5 cising reasonable diligence would not have known,

6 that such failure existed.

7 ‘‘(2) TAX NOT TO APPLY WHERE FAILURES

8 CORRECTED WITHIN 30 DAYS.—No tax shall be im9 posed by subsection (a) with respect to any failure

10 if—

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

12 cause and not to willful neglect, and

13 ‘‘(B) such failure is corrected during the

14 30-day period beginning on the 1st date any of

15 the carriers on whom the tax is imposed knew,

16 or exercising reasonable diligence would have

17 known, that such failure existed.

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

19 failure which is due to reasonable cause and not to

20 willful neglect, the Secretary may waive part or all

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

22 that the payment of such tax would be excessive rel23 ative to the failure involved.’’.
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•HR 3698 SC

1 (b) CLERICAL AMENDMENTS.—The table of sections

2 for such chapter 47 is amended by adding at the end

3 thereof the following new items:

‘‘Sec. 5000A. Failure of employers with respect to health insurance.

‘‘Sec. 5000B. Failure of carriers with respect to health insurance.’’.

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

5 this section shall take effect on January 1, 1997.

6 Subtitle D—State Plan

7 Requirements

8 SEC. 131. STATE PLAN REQUIREMENTS.

9 (a) IN GENERAL.—As a condition of receiving Fed10 eral funds for health care programs after December 31,

11 1996, each State shall meet the requirements of the fol12 lowing subsections.

13 (b) HEALTH PLANS FOR UNINSURED.—The require14 ment of this subsection is met, if the State establishes a

15 program to provide health insurance coverage at least

16 equal to that of the federally qualified health insurance

17 plans (as defined in section 111) to any resident (other

18 than a federally covered individual (within the meaning

19 on section 34A(b)(2) of the Internal Revenue Code of

20 1986) who refuses to voluntarily purchase such insurance

21 coverage privately. Such coverage may be through—

22 (1) the State’s program under title XIX of the

23 Social Security Act,
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•HR 3698 SC

1 (2) an existing or new State health care pro2 gram, including a State program established under

3 section 1933 of the Social Security Act,

4 (3) any private insurer the State contracts with

5 for this purpose, or

6 (4) any health insurance plan available to the

7 resident.

8 (c) ENROLLMENT IN PLAN.—The requirement of this

9 subsection is met, if—

10 (1) in the case of any uninsured individual de11 scribed in subsection (b) who is eligible for assist12 ance under a State program established under sec13 tion 1933 of the Social Security Act, such individual

14 is identified by the State and provided with assist15 ance through such a program, and

16 (2) in the case of any uninsured individual de17 scribed in subsection (b) who is not eligible for such

18 assistance, such individual is identified by the State

19 and automatically enrolled in the program described

20 in subsection (b), except that—

21 (A) the State may charge such individual

22 a premium for coverage under the program

23 which the State deems appropriate given the

24 cost of coverage and the individual’s ability to

25 pay, and
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•HR 3698 SC

1 (B) such individual may, upon submitting

2 proof of having purchased a federally qualified

3 health insurance plan (as so defined), terminate

4 coverage under the State program without pen5 alty.

6 (d) MONITORING.—The requirement of this sub7 section is met, if the State designates or creates an office

8 of the State government to monitor the health insurance

9 coverage status of workers and their dependents residing

10 in the State for the purposes of determining eligibility for

11 State health care assistance programs.

12 Subtitle E—Federal Preemption

13 SEC. 141. FEDERAL PREEMPTION OF CERTAIN STATE LAWS.

14 All State laws in existence on January 1, 1997, in

15 the following areas are preempted:

16 (1) MANDATED INSURANCE BENEFIT LAWS.—

17 Laws requiring health insurance policies to cover

18 specific diseases, services, or providers.

19 (2) ANTI-MANAGED CARE LAWS.—Laws re20 stricting the ability of managed care plans to selec21 tively contract with providers of their choice.

22 (3) MANDATED COST-SHARING LAWS.—Laws

23 restricting the extent to which insurers may require

24 enrollee cost sharing as part of their plans, or re25 stricting the extent to which managed care plans
73

•HR 3698 SC

1 may impose different levels of cost sharing on en2 rollee claims for treatment by providers not partici3 pating in the plan.

4 TITLE II—MEDICARE AND

5 MEDICAID REFORMS

6 Subtitle A—Medicare

7 SEC. 201. STUDY OF MEDICARE PRIVATE HEALTH INSUR8 ANCE PROGRAM.

9 (a) STUDY.—The Secretary shall conduct a study of

10 the feasibility of permitting future medicare beneficiaries

11 to elect, upon attaining medicare eligibility, to retain pri12 vate health insurance coverage and receive, in lieu of the

13 medicare benefits such beneficiaries would otherwise be

14 entitled to, certificates for use in purchasing private health

15 insurance coverage. The study shall recommend—

16 (1) certificate amounts which—

17 (A) provide the maximum assistance pos18 sible to eligible individuals,

19 (B) are adjusted for different classes of

20 beneficiaries on the basis of age, sex, and geog21 raphy to reflect actuarial differences in the cost

22 of insurance, and

23 (C) will not further jeopardize the future

24 solvency of the medicare program, as projected
74

•HR 3698 SC

1 by the trustees of the medicare trust funds as

2 of the date of the report of the study,

3 (2) a mechanism for annually adjusting such

4 amounts, and

5 (3) legislative, regulatory, and administrative

6 reforms necessary or desirable for establishing such

7 a program.

8 (b) REPORT.—The Secretary shall submit a report

9 regarding the study described in subsection (a) to the Con10 gress no later than January 1, 1996.

11 SEC. 202. ELIMINATION OF MEDICARE HOSPITAL DIS12 PROPORTIONATE SHARE ADJUSTMENT PAY13 MENTS.

14 Section 1886(d)(5)(F)(i) of the Social Security Act

15 (42 U.S.C. 1395ww(d)(5)(F)(i)) is amended by inserting

16 ‘‘and before September 30, 1994,’’ after ‘‘1986,’’.

17 SEC. 203. REDUCTION IN ADJUSTMENT FOR INDIRECT MED18 ICAL EDUCATION.

19 Section 1886(d)(5)(B)(ii) of the Social Security Act

20 (42 U.S.C. 1395ww(d)(5)(B)(ii)) is amended to read as

21 follows:

22 ‘‘(ii) For purposes of clause (i)(II), the indirect

23 teaching adjustment factor is equal to c * (((1+r)

24 to the nth power) - 1), where ‘r’ is the ratio of the

25 hospital’s full-time equivalent interns and residents
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•HR 3698 SC

1 to beds and ‘n’ equals .405. For discharges occur2 ring on or after—

3 ‘‘(I) May 1, 1986, and before October 1,

4 1994, ‘c’ is equal to 1.89,

5 ‘‘(II) October 1, 1994, and before October

6 1, 1995, ‘c’ is equal to 1.395, and

7 ‘‘(III) October 1, 1995, ‘c’ is equal to

8 0.74.’’.

9 SEC. 204. IMPOSITION OF COPAYMENT FOR SKILLED NURS10 ING FACILITY SERVICES.

11 (a) IN GENERAL.—Paragraph (3) of section 1813(b)

12 of the Social Security Act (42 U.S.C. 1395e(b)) is amend13 ed to read as follows:

14 ‘‘(3) The amount payable for post-hospital extended

15 care services furnished an individual during any spell of

16 illness shall be reduced by a copayment amount equal to

17 20 percent of the average of all per day costs for such

18 services furnished under this title (as determined by the

19 Secretary on a prospective basis for services furnished

20 during a calendar year).’’.

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

22 subsection (a) shall apply to post-hospital extended care

23 services furnished on or after October 1, 1994.
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1 SEC. 205. SHIFT PAYMENT UPDATES TO JANUARY FOR ALL

2 PAYMENT RATES UNDER HOSPITAL INSUR3 ANCE PROGRAM.

4 (a) PPS HOSPITALS.—

5 (1) IN GENERAL.—Section 1886(b)(3)(B)(i) of

6 the Social Security Act (42 U.S.C.

7 1395ww(b)(3)(B)(i)) is amended—

8 (A) in the matter preceding subclause (I),

9 by striking ‘‘fiscal year’’ and inserting ‘‘particu10 lar time period’’,

11 (B) in subclause (IX), by striking ‘‘fiscal

12 year 1994’’, and inserting ‘‘the 15-month pe13 riod beginning on October 1, 1993’’,

14 (C) in subclauses (X), (XI), and (XII), by

15 striking ‘‘fiscal year’’, and

16 (D) in subclause (XIII), by striking ‘‘fiscal

17 year 1998 and each subsequent fiscal year’’ and

18 inserting ‘‘1998 and each subsequent calendar

19 year’’.

20 (2) OTHER HOSPITALS.—

21 (A) IN GENERAL.—Section

22 1886(b)(3)(B)(ii) of such Act (42 U.S.C.

23 1395ww(b)(3)(B)(ii)) is amended—

24 (A) in subclause (V)—

25 (i) by striking ‘‘fiscal years 1994

26 through 1997’’ and inserting ‘‘the 15-
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1 month period beginning on October 1,

2 1993,’’, and

3 (ii) by striking ‘‘and’’ at the end, and

4 (B) by striking subclause (VI) and insert

5 the following:

6 ‘‘(VI) 1995 through 1997, is the market basket

7 percentage increase minus the applicable reduction

8 (as defined in clause (vi)(II)), or in the case of a

9 hospital for a calendar year for which the hospital’s

10 update adjustment percentage (as defined in clause

11 (vi)(I)) is at least 10 percent, the market basket per12 centage increase, and

13 ‘‘(VII) subsequent calendar years is the market

14 basket percentage increase.’’.

15 (B) CONFORMING AMENDMENT.—Section

16 1886(b)(3)(B) of such Act (42 U.S.C.

17 1395ww(b)(3)(B)) is amended by adding at the

18 end the following new clause:

19 ‘‘(vi) For purposes of clause (ii)(VI)—

20 ‘‘(I) a hospital’s ‘update adjustment percentage’

21 for a calendar year is the percentage by which the

22 hospital’s allowable operating cost of inpatient hos23 pital services recognized under this title for the cost

24 reporting period beginning in fiscal year 1990 ex25 ceeds the hospital’s target amount (as determined
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1 under subparagraph (A)) for such cost reporting pe2 riod, increased for each calendar year (beginning

3 with 1995) by the sum of any of the hospital’s appli4 cable reductions under subclause (VI) for previous

5 years; and

6 ‘‘(II) the ‘applicable reduction’ with respect to

7 a hospital for a calendar year is the lesser of 1 per8 centage point or the percentage point difference be9 tween 10 percent and the hospital’s update adjust10 ment percentage for the calendar year.’’.

11 (3) SOLE COMMUNITY AND MEDICARE-DEPEND12 ENT, SMALL RURAL HOSPITALS.—

13 (A) IN GENERAL.—Section

14 1886(b)(3)(B)(iv) of such Act (42 U.S.C.

15 1395ww(b)(3)(B)(iv)) is amended—

16 (i) in subclause (II), by striking ‘‘fis17 cal year 1994’’ and inserting ‘‘the 15-

18 month period beginning on October 1,

19 1993’’,

20 (ii) in subclause (III), by striking ‘‘fis21 cal year’’, and

22 (iii) in subclause (IV), by striking

23 ‘‘fiscal year 1996 and each subsequent fis24 cal year’’ and inserting ‘‘1996 and each

25 subsequent calendar year’’.
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1 (B) TARGET AMOUNT ADJUSTMENT.—Sec2 tion 1886(b)(3)(C) of such Act (42 U.S.C.

3 1395ww(b)(3)(C)) is amended—

4 (i) in clause (iii), by inserting ‘‘or por5 tion of a cost reporting period occurring

6 before December 31, 1994,’’ before ‘‘the

7 target amount’’, and

8 (ii) in clause (iv), by striking ‘‘fiscal

9 year 1995 and each subsequent fiscal

10 year’’ and inserting ‘‘1995 and each subse11 quent year’’.

12 (C) EXTENSION OF REGIONAL FLOOR.—

13 Section 1886(d)(1)(A)(iii)(II) of such Act (42

14 U.S.C. 1395ww(d)(1)(A)(iii)(II)) is amended—

15 (i) by striking ‘‘for discharges occur16 ring during a fiscal year ending on or be17 fore September 30, 1996’’ and inserting

18 ‘‘for discharges occurring during the 15-

19 month period beginning on October 1,

20 1993, and during any calendar year ending

21 on or before December 31, 1996’’, and

22 (ii) by striking ‘‘such fiscal year’’ and

23 inserting ‘‘such 15-month period or such

24 calendar year, as the case may be’’.

25 (4) CONFORMING AMENDMENTS.—
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1 (A) Section 1886(b)(3)(B)(iii) of such Act

2 (42 U.S.C. 1395ww(b)(3)(B)(iii)) is amended—

3 (i) by inserting ‘‘beginning in’’ after

4 ‘‘cost reporting periods’’,

5 (ii) by striking ‘‘fiscal year’’ the first

6 place it appears and inserting ‘‘particular

7 time period’’,

8 (iii) by striking ‘‘or fiscal year’’ the

9 first and second place it appears, and

10 (iv) by striking ‘‘cost reporting period

11 or fiscal year’’ and inserting ‘‘period’’.

12 (B) Section 1886(d)(1)(A) of such Act (42

13 U.S.C. 1395ww(d)(1)(A)) is amended in the

14 matter preceding clause (i) by inserting ‘‘or cal15 endar’’ after ‘‘fiscal’’.

16 (C) Section 1886(d)(2)(D) of such Act (42

17 U.S.C. 1395ww(d)(2)(D)) is amended by insert18 ing ‘‘or calendar’’ after ‘‘fiscal’’ each place it

19 appears.

20 (D) Section 1886(d)(3) of such Act (42

21 U.S.C. 1395ww(d)(3)) is amended in the first

22 sentence by inserting ‘‘or calendar’’ after ‘‘fis23 cal’’ the first place it appears and by inserting

24 ‘‘for each fiscal year through 1994’’ after ‘‘in

25 the United States, and’’.
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1 (E) Section 1886(d)(3)(A)(ii) of such Act

2 (42 U.S.C. 1395ww(d)(3)(A)(ii)) is amended—

3 (i) by striking ‘‘1994,’’ and inserting

4 ‘‘1993, and occurring in the 15-month pe5 riod beginning on October 1, 1993,’’, and

6 (ii) by striking ‘‘fiscal year’’ the sec7 ond and last place it appears and inserting

8 ‘‘time period’’.

9 (F) Section 1886(d)(3)(A)(iii) of such Act

10 (42 U.S.C. 1395ww(d)(3)(A)(iii)) is amended

11 by striking ‘‘the fiscal year beginning on Octo12 ber 1, 1994’’ and inserting ‘‘1995’’.

13 (G) Section 1886(d)(3)(A)(iv) of such Act

14 (42 U.S.C. 1395ww(d)(3)(A)(iv)) is amended—

15 (i) by striking ‘‘fiscal year beginning

16 on or after October 1, 1995’’ and inserting

17 ‘‘year beginning on or after January 1,

18 1996’’,

19 (ii) by striking ‘‘and within each re20 gion’’, and

21 (iii) by striking ‘‘fiscal’’ each place it

22 appears.

23 (H) Section 1886(d)(3)(D) of such Act (42

24 U.S.C. 1395ww(d)(3)(D)) is amended—
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1 (i) by inserting ‘‘or calendar’’ after

2 ‘‘fiscal’’ each place it appears, and

3 (ii) by inserting ‘‘for each fiscal year

4 through 1994’’ after ‘‘and shall establish’’.

5 (I) Section 1886(d)(3)(E) of such Act (42

6 U.S.C. 1395ww(d)(3)(E)) is amended—

7 (i) in the second sentence, by striking

8 ‘‘at least every 12 months thereafter’’ and

9 inserting ‘‘beginning January 1, 1995, at

10 least every 12 months thereafter’’, and

11 (ii) in the last sentence, by inserting

12 ‘‘or calendar’’ after ‘‘fiscal’’ the first and

13 last place it appears.

14 (J)(i) Section 1886(d)(4)(C)(iii) of such

15 Act (42 U.S.C. 1395ww(d)(4)(C)(iii)) is amend16 ed—

17 (I) by inserting ‘‘or calendar’’ after

18 ‘‘fiscal’’ the first place it appears, and

19 (II) by deleting ‘‘fiscal’’ the last place

20 it appears.

21 (ii) The requirements of paragraphs (3)(E)

22 and (4)(C)(iii) of section 1886(d) of the Social

23 Security Act (42 U.S.C. 1395ww(d)(4)(C)(iii))

24 shall be applied on a 15-month basis for the pe-
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1 riod beginning on October 1, 1993, and ending

2 on December 31, 1994.

3 (K)(i) Section 1886(d)(5)(A) of such Act

4 (42 U.S.C. 1395ww(d)(5)(A)) is amended—

5 (I) in clause (i), by striking ‘‘fiscal

6 years ending on or before September 30,

7 1997’’ and inserting ‘‘calendar years end8 ing on or before December 31, 1997’’,

9 (II) in clause (ii), by striking ‘‘fiscal

10 years beginning on or after October 1,

11 1994’’ and inserting ‘‘calendar years begin12 ning on or after January 1, 1995’’,

13 (III) in clause (iv), by inserting ‘‘or

14 calendar’’ after ‘‘fiscal’’,

15 (IV) in clause (v), by striking ‘‘fiscal

16 year’’ each place it appears, and

17 (V) in clause (vi), by striking ‘‘fiscal’’

18 and inserting ‘‘calendar’’.

19 (ii) The requirement of section

20 1886(d)(5)(A)(iv) of the Social Security Act

21 (42 U.S.C. 1395ww(d)(5)(A)(iv)) shall be ap22 plied on a 15-month basis for the period begin23 ning on October 1, 1993, and ending on De24 cember 31, 1994.
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1 (L) Section 1886(d)(5)(E)(ii) of such Act

2 (42 U.S.C. 1395ww(d)(5)(E)(ii)) is amended by

3 inserting ‘‘or calendar’’ after ‘‘fiscal’’.

4 (M) Section 1886(d)(6) of such Act (42

5 U.S.C. 1395ww(d)(6)) is amended by inserting

6 ‘‘or December 1 of each calendar year (begin7 ning with calendar year 1995)’’ after ‘‘1984)’’.

8 (N) Section 1886(d)(9)(A) of such Act (42

9 U.S.C. 1395ww(d)(9)(A)) is amended in the

10 matter preceding clause (i) by striking ‘‘fiscal

11 year’’ and inserting ‘‘particular time period’’.

12 (O) Section 1886(d)(9)(C)(i) of such Act

13 (42 U.S.C. 1395ww(d)(9)(C)(i)) is amended—

14 (i) by striking ‘‘fiscal year’’ the first

15 place it appears and inserting ‘‘time pe16 riod’’,

17 (ii) by striking ‘‘for fiscal year 1989’’,

18 and

19 (iii) by striking ‘‘fiscal years’’ and in20 serting ‘‘time periods’’.

21 (P) Section 1886(d)(10)(C) of such Act

22 (42 U.S.C. 1395ww(d)(10)(C)) is amended—

23 (i) in clause (i), by striking ‘‘fiscal

24 year’’ and inserting ‘‘particular time pe25 riod’’, and
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1 (ii) in clause (ii), by inserting ‘‘or cal2 endar’’ after ‘‘fiscal’’ the first place it ap3 pears and striking ‘‘fiscal’’ the last place it

4 appears.

5 (Q) Section 1886(e)(2) of such Act (42

6 U.S.C. 1395ww(e)(2)) is amended—

7 (i) in subparagraph (A), by striking

8 ‘‘fiscal years’’ and inserting ‘‘particular

9 time periods’’, and

10 (ii) in subparagraph (B), by striking

11 ‘‘fiscal year’’ each place it appears and in12 serting ‘‘particular time period’’.

13 (R) Section 1886(e)(3) of such Act (42

14 U.S.C. 1395ww(e)(3)) is amended—

15 (i) in subparagraph (A)—

16 (I) by striking ‘‘before the begin17 ning of each fiscal year (beginning

18 with fiscal year 1986)’’, and

19 (II) by striking ‘‘that fiscal year’’

20 and inserting ‘‘the succeeding year’’,

21 and

22 (ii) in subparagraph (B)—

23 (I) by striking ‘‘before the begin24 ning of each fiscal year (beginning

25 with fiscal year 1989)’’, and
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1 (II) by striking ‘‘that fiscal year’’

2 and inserting ‘‘the succeeding year’’.

3 (S) Section 1886(e)(4)(A) of such Act (42

4 U.S.C. 1395ww(e)(4)(A)) is amended in the

5 first sentence by striking ‘‘fiscal’’ the first and

6 last place it appears and by striking ‘‘(begin7 ning with fiscal year 1988)’’.

8 (T) Section 1886(e)(4)(B) of such Act (42

9 U.S.C. 1395ww(e)(4)(B)) is amended by strik10 ing ‘‘fiscal’’ the first place it appears and by

11 striking ‘‘(beginning with fiscal year 1992)’’.

12 (U) Section 1886(e)(5) of such Act (42

13 U.S.C. 1395ww(e)(5)) is amended—

14 (i) in subparagraph (A), by striking

15 ‘‘the May 1 before each fiscal year (begin16 ning with fiscal year 1986) and inserting

17 ‘‘May 1’’ and by striking ‘‘that fiscal year’’

18 and inserting ‘‘the succeeding year’’, and

19 (ii) in subparagraph (B), by striking

20 ‘‘fiscal’’.

21 (V) The second and third sentences of sec22 tion 1886(e)(5) of such Act (42 U.S.C.

23 1395ww(e)(5)) are each amended by striking

24 ‘‘fiscal’’ each place it appears.
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1 (W) Section 1886(g)(1)(A) of such Act (42

2 U.S.C. 1395ww(g)(1)(A)) is amended—

3 (i) by striking ‘‘fiscal years 1992,

4 through 1995’’ and inserting ‘‘fiscal years

5 1992 and 1993, the 15-month period be6 ginning on October 1, 1993, and calendar

7 year 1995’’, and

8 (ii) by striking ‘‘such fiscal year’’ and

9 inserting ‘‘such period’’.

10 (5) CLERICAL AMENDMENTS CONCERNING

11 TRANSITIONAL PAYMENTS FOR A RECLASSIFIED

12 HOSPITAL.—

13 (A) Section 1886(d)(8)(A) of such Act (42

14 U.S.C. 1395ww(d)(8)(A)) is amended in the

15 matter preceding clause (i), by striking ‘‘cost

16 reporting periods’’ and inserting ‘‘years’’.

17 (B) Section 1886(d)(8)(A)(i) of such Act

18 (42 U.S.C. 1395ww(d)(8)(A)(i)) is amended—

19 (i) in the matter preceding subclause

20 (I), by striking ‘‘cost reporting period’’ and

21 inserting ‘‘year’’ and by striking ‘‘reporting

22 period’’ and inserting ‘‘year’’,

23 (ii) in subclause (I), by striking ‘‘re24 porting period’’ and inserting ‘‘year’’, and
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1 (iii) in subclause (II), by striking ‘‘re2 porting period’’ and inserting ‘‘year’’.

3 (C) Section 1886(d)(8)(A)(ii) of such Act

4 (42 U.S.C. 1395ww(d)(8)(A)(ii)) is amended—

5 (i) in the matter preceding subclause

6 (I), by striking ‘‘cost reporting period’’ and

7 inserting ‘‘year’’ and by striking ‘‘reporting

8 period’’ and inserting ‘‘year’’,

9 (ii) in subclause (I), by striking ‘‘re10 porting period’’ and inserting ‘‘year’’, and

11 (iii) in subclause (II), by striking ‘‘re12 porting period’’ and inserting ‘‘year’’.

13 (b) HOME HEALTH AGENCIES.—Clause (iii) of sec14 tion 1861(v)(1)(L) of such Act (42 U.S.C.

15 1395x(v)(1)(L)) is amended by striking ‘‘July 1, 1991,

16 and annually thereafter (but not for cost reporting periods

17 beginning on and after July 1, 1994, and before July 1,

18 1996)’’ and inserting ‘‘July 1 of 1991, 1992, and 1993

19 (but not for cost reporting periods beginning on and after

20 July 1, 1994, and before January 1, 1997), and annually

21 thereafter’’.

22 (c) HOSPICE CARE.—

23 (1) IN GENERAL.—Clause (ii) of section

24 1814(i)(1)(C) of such Act (42 U.S.C.

25 1395f(i)(1)(C)) is amended—
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1 (A) in subclause (II), by striking ‘‘fiscal

2 year 1994’’ and inserting ‘‘the 15-month period

3 beginning on October 1, 1993’’, and

4 (B) in subclauses (III), (IV), (V), and

5 (VI), by striking ‘‘fiscal year’’ each place it ap6 pears and inserting ‘‘calendar year’’.

7 (2) CONFORMING AMENDMENT.—Section

8 1814(i)(2) of such Act (42 U.S.C. 1395f(i)(2)) is

9 amended by adding at the end the following new

10 subparagraph:

11 ‘‘(D) For purposes of subparagraph (A), the term

12 ‘accounting year’ means—

13 ‘‘(i) fiscal years 1985 through 1993,

14 ‘‘(ii) the 15-month period beginning on October

15 1, 1993, and

16 ‘‘(iii) calendar years beginning on or after Jan17 uary 1, 1995.’’.

18 (d) SKILLED NURSING FACILITY SERVICES.—

19 (1) IN GENERAL.—The last sentence of section

20 1888(a) of such Act (42 U.S.C. 1395yy(b)) is

21 amended by striking ‘‘October 1, 1995’’ and insert22 ing ‘‘January 1, 1996’’.

23 (2) CONFORMING AMENDMENTS.—
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1 (A) Section 1888(d)(4) of such Act (42

2 U.S.C. 1395yy(d)(4)) is amended by striking

3 ‘‘fiscal’’ each place it appears.

4 (B) Subsections (a)(1) and (b) of section

5 13503 of the Omnibus Budget Reconciliation

6 Act of 1993 are amended by striking ‘‘fiscal

7 years 1994 and 1995’’ each place it appears

8 and inserting ‘‘the 15-month period beginning

9 on October 1, 1993, and calendar year 1995’’.

10 SEC. 206. ACCELERATION OF TRANSITION TO PROSPEC11 TIVE RATES FOR FACILITY COSTS IN HOS12 PITAL OUTPATIENT DEPARTMENTS.

13 (a) OUTPATIENT SURGERY.—Section

14 1833(i)(3)(B)(ii) of the Social Security Act (42 U.S.C.

15 1395l(i)(3)(B)(ii)) is amended—

16 (1) in subclause (I)—

17 (A) by striking ‘‘and 42 percent’’ and in18 serting ‘‘42 percent’’, and

19 (B) by striking ‘‘1991’’ and inserting

20 ‘‘1991, and beginning on or before September

21 30, 1994, 25 percent for portions of cost re22 porting periods beginning in fiscal year 1995,

23 and 0 percent for portions of cost reporting pe24 riods beginning on or after October 1, 1995’’,

25 and
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1 (2) in subclause (II)—

2 (A) by striking ‘‘and 58 percent’’ and in3 serting ‘‘58 percent’’, and

4 (B) by striking ‘‘1991’’ and inserting

5 ‘‘1991, and beginning on or before September

6 30, 1994, 75 percent for portions of cost re7 porting periods beginning in fiscal year 1995,

8 and 100 percent for portions of cost reporting

9 periods beginning on or after October 1, 1995’’.

10 (b) OUTPATIENT RADIOLOGY AND DIAGNOSTIC

11 SERVICES.—Section 1833(n)(1)(B)(ii)(I) of the Social Se12 curity Act (42 U.S.C. 1395l(n)(1)(B)(ii)(I)) is amended

13 by striking ‘‘January 1, 1991.’’ and inserting ‘‘January

14 1, 1991, and beginning on or before September 30, 1994.

15 The term means 25 percent for portions of cost reporting

16 periods beginning in fiscal year 1995 and 0 percent for

17 portions of cost reporting periods beginning on or after

18 October 1, 1995.’’.

19 Subtitle B—Medicaid

20 SEC. 211. CAP ON FEDERAL PAYMENTS MADE FOR ACUTE

21 MEDICAL SERVICES UNDER THE MEDICAID

22 PROGRAM.

23 (a) IN GENERAL.—Title XIX of the Social Security

24 Act (42 U.S.C. 1396 et seq.) is amended by redesignating
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1 section 1931 as section 1932 and by inserting after section

2 1930 the following new section:

3 ‘‘CAP ON FEDERAL PAYMENT MADE FOR ACUTE MEDICAL

4 SERVICES FURNISHED UNDER THE MEDICAID PROGRAM

5 ‘‘SEC. 1931. (a) ANNUAL FEDERAL CAP.—For pur6 poses of furnishing acute medical services to eligible indi7 viduals, the Secretary shall pay to a State for a fiscal year

8 under section 1903 an amount that does not exceed the

9 State’s total funding amount for such fiscal year deter10 mined under subsection (b).

11 ‘‘(b) STATE TOTAL FUNDING AMOUNT.—

12 ‘‘(1) IN GENERAL.—A State’s total funding

13 amount for a fiscal year is an amount equal to the

14 lesser of—

15 ‘‘(A) the sum of—

16 ‘‘(i) the product of—

17 ‘‘(I) the per-adult funding

18 amount for the State for such fiscal

19 year, and

20 ‘‘(II) the total number of eligible

21 individuals who are at least 21 years

22 of age who will receive acute medical

23 services in the State during the fiscal

24 year; and

25 ‘‘(ii) the product of—
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1 ‘‘(I) the per-child funding

2 amount for the State for such fiscal

3 year, and

4 ‘‘(II) the total number of eligible

5 individuals who are under 21 years of

6 age who will receive acute medical

7 services in the State during the fiscal

8 year; or

9 ‘‘(B) the maximum Federal amount for

10 such State (as determined under paragraph

11 (3)).

12 ‘‘(2) PER-ADULT AND PER-CHILD FUNDING

13 AMOUNTS.—The Secretary shall calculate for each

14 State a per-adult funding amount and a per-child

15 funding amount for each fiscal year as follows:

16 ‘‘(A) IN GENERAL.—

17 ‘‘(i) FISCAL YEAR 1995.—For fiscal

18 year 1995—

19 ‘‘(I) the per-adult funding

20 amount for a State shall be an

21 amount equal to the base per-adult

22 funding amount determined under

23 subparagraph (B) increased by 20

24 percent of such amount; and
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1 ‘‘(II) the per-child funding

2 amount for the State shall be an

3 amount equal to the base per-child

4 funding amount for the State deter5 mined under subparagraph (C) in6 creased by 20 percent of such amount.

7 ‘‘(ii) SUBSEQUENT FISCAL YEARS.—

8 For fiscal year 1996 and subsequent fiscal

9 years, the per-adult funding amount for a

10 State and the per-child funding amount for

11 a State, respectively, shall be an amount

12 equal to the amount determined under this

13 subparagraph for the previous fiscal year

14 updated, through the midpoint of the pe15 riod, by the estimated percentage change

16 in the Consumer Price Index during the

17 12-month period ending at that midpoint,

18 with appropriate adjustments to reflect

19 previous underestimations or overesti20 mations under this clause in the projected

21 percentage change in the Consumer Price

22 Index, plus 1 percentage point.

23 ‘‘(B) BASE PER-ADULT FUNDING

24 AMOUNT.—The base per-adult funding amount

25 for a State is an amount equal to—
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1 ‘‘(i) the total amount of Federal funds

2 paid to such State under section 1903(a)

3 for fiscal year 1993 for providing acute

4 medical services to eligible individuals who

5 were at least 21 years of age; divided by

6 ‘‘(ii) the total number of eligible indi7 viduals who were at least 21 years of age

8 who received acute medical services in such

9 State during fiscal year 1993.

10 ‘‘(C) BASE PER-CHILD FUNDING

11 AMOUNT.—The base per-child funding amount

12 for a State is an amount equal to—

13 ‘‘(i) the total amount of Federal funds

14 paid to such State under section 1903(a)

15 for fiscal year 1993 for providing acute

16 medical services to eligible individuals who

17 were under 21 years of age; divided by

18 ‘‘(ii) the total number of eligible indi19 viduals who were under 21 years of age

20 who received acute medical services in such

21 State during fiscal year 1993.

22 ‘‘(3) MAXIMUM FEDERAL AMOUNT.—The Sec23 retary shall calculate for each State a maximum

24 Federal amount for each fiscal year as follows:

25 ‘‘(A) IN GENERAL.—
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1 ‘‘(i) FISCAL YEAR 1995.—For fiscal

2 year 1995, the maximum Federal amount

3 for a State shall be an amount equal to the

4 base maximum Federal amount determined

5 under subparagraph (C) increased by 20

6 percent of such amount.

7 ‘‘(ii) SUBSEQUENT FISCAL YEARS.—

8 For fiscal year 1996 and subsequent fiscal

9 years, the maximum Federal amount for a

10 State shall be an amount equal to the

11 amount determined under this subpara12 graph for the previous fiscal year updated,

13 through the midpoint of the period, by the

14 estimated percentage change in the

15 Consumer Price Index during the 12-

16 month period ending at that midpoint,

17 with appropriate adjustments to reflect

18 previous underestimations or overesti19 mations under this clause in the projected

20 percentage change in the Consumer Price

21 Index, plus 2.5 percentage points.

22 ‘‘(B) BASE MAXIMUM FEDERAL

23 AMOUNT.—

24 ‘‘(i) IN GENERAL.—The base maxi25 mum Federal amount for a State is an
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1 amount equal to the State’s applicable per2 centage (as determined under clause (ii))

3 of the State’s total maximum amount (as

4 determined under clause (iii)).

5 ‘‘(ii) STATE’S APPLICABLE PERCENT6 AGE.—A State’s applicable percentage de7 termined under this clause is a percentage

8 equal to the quotient of—

9 ‘‘(I) the amount of Federal funds

10 paid to the State for the furnishing of

11 acute medical services to eligible indi12 viduals and the provision of adminis13 trative services to such individuals in

14 fiscal year 1993, divided by

15 ‘‘(II) the amount of Federal

16 funds paid to all States for the fur17 nishing of acute medical services to el18 igible individuals and the provision of

19 administrative services to such indi20 viduals in fiscal year 1993.

21 ‘‘(iii) STATE’S TOTAL MAXIMUM

22 AMOUNT.—A State’s total maximum

23 amount determined under this clause is an

24 amount equal to the applicable percentage

25 of the total amount of Federal funds paid
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1 to all States for the furnishing of acute

2 medical services to eligible individuals and

3 the provision of administrative services to

4 such individuals in fiscal year 1993.

5 ‘‘(c) MINIMUM EXPENDITURE BY STATES.—

6 ‘‘(1) IN GENERAL.—For the purpose of furnish7 ing acute medical services to eligible individuals and

8 providing administrative services to such individuals

9 in a fiscal year, a State shall incur expenditures

10 which are at least equal to the product of—

11 ‘‘(A) the State’s updated per capita

12 amount, and

13 ‘‘(B) the total number of eligible individ14 ual’s receiving acute medical services in the

15 State during such fiscal year.

16 ‘‘(2) UPDATED PER CAPITA AMOUNT.—For pur17 poses of paragraph (1)(A)—

18 ‘‘(A) IN GENERAL.—The updated per cap19 ita amount for a State shall be—

20 ‘‘(i) for fiscal year 1995, an amount

21 equal to the State’s base per capita

22 amount, and

23 ‘‘(ii) for fiscal year 1996 and each

24 succeeding fiscal year, an amount equal to

25 the amount determined under this sub-
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1 paragraph for the first preceding fiscal

2 year updated by the percentage change in

3 the consumer price index between such

4 first preceding fiscal year and the second

5 preceding fiscal year (as determined by the

6 Secretary of Commerce).

7 ‘‘(B) BASE PER CAPITA AMOUNT.—The

8 base per capita amount for a State shall be an

9 amount equal to the quotient of—

10 ‘‘(i) the total amount of State expend11 itures in fiscal year 1993 for the furnish12 ing of acute medical services to eligible in13 dividuals and the provision of administra14 tive services to such individuals, divided by

15 ‘‘(ii) the total number of eligible indi16 viduals receiving acute medical services

17 during fiscal year 1993.

18 ‘‘(d) DEFINITIONS.—For purposes of this section—

19 ‘‘(1) ACUTE MEDICAL SERVICES.—The term

20 ‘acute medical services’ means all of the care and

21 services furnished to individuals eligible under a

22 State plan under this title except the following:

23 ‘‘(A) Nursing facility services (as defined

24 in section 1905(f)).
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1 ‘‘(B) Intermediate care facility for the

2 mentally retarded services (as defined in section

3 1905(d)).

4 ‘‘(C) Personal care services (as described

5 in section 1905(a)(24)).

6 ‘‘(D) Private duty nursing services (as re7 ferred to in section 1905(a)(8)).

8 ‘‘(E) Home or community-based services

9 furnished under a waiver granted under sub10 section (c), (d), or (e) of section 1915.

11 ‘‘(F) Home and community care furnished

12 to functionally disabled elderly individuals

13 under section 1929.

14 ‘‘(G) Community supported living arrange15 ments services under section 1930.

16 ‘‘(H) Case-management services (as de17 scribed in section 1915(g)(2)).

18 ‘‘(I) Home health care services (as referred

19 to in section 1905(a)(7)).

20 ‘‘(J) Hospice care (as defined in section

21 1905(o)).

22 ‘‘(2) ELIGIBLE INDIVIDUAL.—The term ‘eligible

23 individual’ means an individual who is eligible to re24 ceive medical assistance under the State plan under

25 this title.
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1 ‘‘(3) FEDERAL FUNDS.—The term ‘Federal

2 funds’ means funds paid to a State under section

3 1903, excluding funds paid under such section with

4 respect to expenditures by such State in the form of

5 payment adjustments made by such State in order

6 to comply with the requirement under section

7 1902(a)(13)(A) (as in effect on the date of the en8 actment of this section) that payments to hospitals

9 to take into account the situation of hospitals which

10 serve a disproportionate number of low income pa11 tients with special needs.

12 ‘‘(4) STATE EXPENDITURES.—The term ‘State

13 expenditures’ means expenditures by a State under

14 its plan under this title, excluding expenditures in

15 the form of payment adjustments made by such

16 State in order to comply with the requirement under

17 section 1902(a)(13)(A) (as in effect on the date of

18 the enactment of this section) that payments made

19 by the State to hospitals take into account the situa20 tion of hospitals which serve a disproportionate

21 number of low income patients with special needs.’’.

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

23 subsection (a) shall be effective with respect to fiscal years

24 beginning after September 30, 1994.
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1 SEC. 212. WAIVERS FOR THE FURNISHING OF ACUTE MEDI2 CAL SERVICES UNDER THE MEDICAID PRO3 GRAM.

4 (a) IN GENERAL.—Title XIX of the Social Security

5 Act (42 U.S.C. 1396 et seq.) is amended by redesignating

6 section 1932 as section 1933 and by inserting after section

7 1931 the following new section:

8 ‘‘WAIVERS FOR THE FURNISHING OF ACUTE MEDICAL

9 SERVICES UNDER THE MEDICAID PROGRAM

10 ‘‘SEC. 1932. (a) IN GENERAL.—The Secretary shall

11 establish a process under which a State with a State plan

12 approved under this title may apply for waivers of any

13 of the requirements under this title in order to establish

14 innovative and cost effective programs for furnishing acute

15 medical services (as defined in section 1931(d)(1)) to eligi16 ble individuals (as defined in section 1931(d)(2)).

17 ‘‘(b) APPLICATION FOR WAIVERS.—

18 ‘‘(1) IN GENERAL.—In order to receive a waiver

19 under subsection (a), a State shall submit an appli20 cation to the Secretary at such time and containing

21 such information as the Secretary determines appro22 priate.

23 ‘‘(2) APPROVAL OF APPLICATION.—

24 ‘‘(A) INITIAL REVIEW.—Within 60 days

25 after an application is submitted by the State

26 under this subsection, the Secretary shall review
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1 and approve such application or provide the

2 State with a list of the modifications that are

3 necessary for such application to be approved.

4 ‘‘(B) ADDITIONAL REVIEW.—Within 60

5 days after a State resubmits any application

6 under this subsection, the Secretary shall review

7 and approve such application or provide the

8 State with a summary of which items included

9 on the list provided to the State under subpara10 graph (A) remain unsatisfied. A State may re11 submit an application under this subparagraph

12 as many times as necessary to gain approval.

13 ‘‘(c) DURATION OF WAIVERS.—Except as provided in

14 subsection (d), any waiver under this section shall be

15 granted for a period of 5 years, and renewed for subse16 quent 5-year periods, unless the Secretary determines that

17 the State has failed to furnish acute medical services in

18 accordance with the terms of the waiver and any provi19 sions of this title with respect to which the Secretary has

20 not granted a waiver.

21 ‘‘(d) TERMINATION OF WAIVERS.—The Secretary

22 may terminate a waiver granted under this section at any

23 time if the Secretary determines that the State has failed

24 to furnish acute medical services in accordance with the
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1 terms of the waiver and any provisions of this title with

2 respect to which the Secretary has not granted a waiver.

3 ‘‘(e) REPORTS.—

4 ‘‘(1) IN GENERAL.—The State shall, through

5 an independent entity, evaluate the programs oper6 ated under a waiver granted under this section and

7 submit interim and final reports to the Secretary at

8 such times and containing such information as the

9 Secretary shall require.

10 ‘‘(2) REPORT TO CONGRESS.—Not later than

11 60 days after the receipt of a final report by the

12 State regarding a waiver granted under this section,

13 the Secretary shall submit a report to Congress.’’.

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

15 subsection (a) shall be effective with respect to fiscal years

16 beginning after September 30, 1994.

17 SEC. 213. TERMINATION OF DISPROPORTIONATE SHARE

18 PAYMENTS.

19 (a) IN GENERAL.—

20 (1) ELIMINATION OF STATE PLAN REQUIRE21 MENT.—Section 1902(a)(13) of the Social Security

22 Act (42 U.S.C. 1396a(a)(13)) is amended by strik23 ing ‘‘which, in the case of hospitals, take into ac24 count the situation of hospitals which serve a dis-
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1 proportionate number of low income patients with

2 special needs and’’.

3 (2) CONFORMING AMENDMENTS.—(A) Section

4 1923 of such Act (42 U.S.C. 1396r–4) is repealed.

5 (B) Section 1902(a)(55) of such Act (42 U.S.C.

6 1396a(a)(55)) is amended by striking ‘‘facilities de7 fined as disproportionate share hospitals under sec8 tion 1923(a)(1)(A) and’’.

9 (C) Section 1902(s) of such Act (42 U.S.C.

10 1396a(s)) is amended by striking ‘‘, and to children

11 who have not attained the age of 6 years and who

12 receive such services in a disproportionate share hos13 pital described in section 1923(b)(1),’’.

14 (D) Section 1903(a)(1) of such Act (42 U.S.C.

15 1396b(a)(1)) is amended by striking ‘‘and sub16 section 1923(f)’’.

17 (E) Section 1903(d)(6) of such Act (42 U.S.C.

18 1396b(d)(6)) is amended—

19 (i) by striking ‘‘(6)(A)’’ and inserting

20 ‘‘(6)’’,

21 (ii) by striking ‘‘(i)’’ and ‘‘(ii)’’ and insert22 ing ‘‘(A)’’ and ‘‘(B)’’, respectively, and

23 (iii) by striking subparagraph (B).
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1 (b) EFFECTIVE DATE.—The amendments made by

2 this section shall be effective on and after October 1,

3 1996.

4 SEC. 214. GRANTS FOR HEALTH INSURANCE COVERAGE,

5 ACUTE MEDICAL SERVICES, PREVENTIVE

6 CARE, AND DISEASE PREVENTION.

7 (a) IN GENERAL.—Title XIX of the Social Security

8 Act (42 U.S.C. 1396 et seq.) is amended by redesignating

9 section 1933 as section 1934 and by inserting after section

10 1932 the following new section:

11 ‘‘GRANTS FOR HEALTH INSURANCE COVERAGE, ACUTE

12 MEDICAL SERVICES, PREVENTIVE CARE, AND DIS13 EASE PREVENTION

14 ‘‘SEC. 1933. (a) IN GENERAL.—The Secretary shall

15 provide grants to States for the purpose of conducting

16 State programs under which individuals with incomes

17 below 150 percent of the income official poverty line are

18 provided health insurance coverage, acute medical serv19 ices, preventive care, and disease prevention services. A

20 State receiving a grant under this section shall conduct

21 a program described in this section in consultation with

22 the Secretary and in any manner determined appropriate

23 by the State which is in accordance with subsection (b).

24 ‘‘(b) REQUIREMENTS ON PROGRAMS.—
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1 ‘‘(1) PRIORITY OF BENEFITS.—A State pro2 gram conducted under this section shall give priority

3 to individuals who—

4 ‘‘(A) are ineligible for benefits under a

5 State plan under title XIX of the Social Secu6 rity Act,

7 ‘‘(B) are eligible for the tax credit estab8 lished under section 34A of the Internal Reve9 nue Code of 1986, and

10 ‘‘(C) has unreimbursed expenses for health

11 insurance coverage and medical care—

12 ‘‘(i) exceeding 5 percent of the indi13 vidual’s adjusted gross income, and

14 ‘‘(ii) not otherwise taken into account

15 in determining the credit under section

16 34A of the Internal Revenue Code of 1986

17 for such individual.

18 ‘‘(2) SERVICES.—

19 ‘‘(A) MANDATORY.—A State program con20 ducted under this section shall provide financial

21 assistance as determined by the State for pur22 chasing health insurance coverage and paying

23 medical bills to individuals described in para24 graph (1).
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1 ‘‘(B) OPTIONAL.—A State program con2 ducted under this section may provide—

3 ‘‘(i) medical services directly to eligi4 ble individuals,

5 ‘‘(ii) primary and preventive care serv6 ices to underserved populations,

7 ‘‘(iii) funding for community and mi8 grant health centers,

9 ‘‘(iv) delivery of outpatient primary

10 and preventive health services,

11 ‘‘(v) improvements to the availability

12 and quality of emergency medical services

13 and trauma care,

14 ‘‘(vi) transportation of victims of med15 ical emergencies, including air transpor16 tation for victims of medical emergencies

17 in rural areas, and

18 ‘‘(vii) telecommunications systems be19 tween rural medical facilities and other

20 medical facilities which have expertise in

21 certain areas or equipment that can be uti22 lized by rural facilities through such sys23 tems.

24 ‘‘(c) FEDERAL FUNDS AVAILABLE FOR GRANTS.—
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1 ‘‘(1) IN GENERAL.—The total amount of Fed2 eral funds available under this title for grants to

3 States under this section shall be—

4 ‘‘(A) $14,200,000,000 for fiscal year 1997,

5 ‘‘(B) $15,800,000,000 for fiscal year 1998,

6 ‘‘(C) $17,400,000,000 for fiscal year 1999,

7 ‘‘(D) $20,000,000,000 for fiscal year

8 2000, and

9 ‘‘(E) for each fiscal year thereafter, the

10 amount for the preceding fiscal year increased

11 by 7.5 percent of such amount.

12 ‘‘(2) FORMULA FOR DISTRIBUTION OF

13 GRANTS.—

14 ‘‘(A) IN GENERAL.—The Secretary shall

15 pay to each State conducting a program under

16 this section for a fiscal year an amount equal

17 to the State’s percentage (as determined under

18 subparagraph (B)) of the total amount available

19 for grants under this section as provided in

20 paragraph (1).

21 ‘‘(B) STATE PERCENTAGE.—

22 ‘‘(i) IN GENERAL.—A State’s percent23 age determined under this subparagraph

24 for a fiscal year is a percentage equal to

25 the quotient of—
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1 ‘‘(I) the number of individuals in

2 the State’s needy population (as de3 fined in clause (ii)) for such fiscal

4 year, divided by

5 ‘‘(II) the total number of individ6 uals in the needy populations of all

7 States for the fiscal year.

8 ‘‘(ii) STATE NEEDY POPULATION.—

9 The term ‘‘State’s needy population’’

10 means, with respect to a fiscal year, the

11 number of individuals equal to the product

12 of—

13 ‘‘(I) the average number of indi14 viduals in the State with incomes

15 below the income official poverty line

16 during the 3 preceding fiscal years (as

17 determined by the Secretary), and

18 (II) the State’s Federal percent19 age (as determined under clause (iii)).

20 ‘‘(iii) STATE FEDERAL PERCENT21 AGE.—

22 ‘‘(I) IN GENERAL.—A State’s

23 Federal percentage for a fiscal year is

24 the greater of—
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1 ‘‘(aa) 1 minus the percent2 age determined under subclause

3 (II), or

4 ‘‘(bb) 40 percent.

5 ‘‘(II) PERCENTAGE DETER6 MINED.—The percentage determined

7 under this subclause is the product

8 of—

9 ‘‘(aa) .40, and

10 ‘‘(bb) the product of the

11 amount determined under

12 subclause (III) multiplied by it13 self.

14 ‘‘(III) AMOUNT DETERMINED.—

15 The amount determined under this

16 subclause is the quotient of—

17 ‘‘(aa) the State’s share of

18 total taxable resources, divided

19 by

20 ‘‘(bb) the State’s share of

21 need.

22 ‘‘(d) STATE EXPENDITURES.—

23 ‘‘(1) IN GENERAL.—For a fiscal year, a State

24 shall expend for purposes of conducting the State
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1 program described in subsection (a) an amount at

2 least equal to—

3 ‘‘(A) for fiscal year 1997, the base year

4 DSH payment for the State (as defined in

5 paragraph (2)) updated by the percentage

6 change in the consumer price index between fis7 cal year 1996 and fiscal year 1995 (as deter8 mined by the Secretary of Commerce), and

9 ‘‘(B) for fiscal year 1998 and each suc10 ceeding fiscal year, an amount equal to the

11 amount determined under this clause for the

12 first preceding fiscal year updated by the per13 centage change in the consumer price index be14 tween such first preceding fiscal year and the

15 second preceding fiscal year (as determined by

16 the Secretary of Commerce).

17 ‘‘(2) BASE YEAR DSH PAYMENT.—For purposes

18 of paragraph (1), the term ‘base year DSH pay19 ment’ means the amount of expenditures made by

20 the State in fiscal year 1996 in the form of payment

21 adjustments in order to comply with the requirement

22 under section 1902(a)(13)(A) (as in effect on the

23 date of the enactment of this section) that payments

24 made by the State to hospitals take into account the
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1 situation of hospitals which serve a disproportionate

2 number of low income patients with special needs.

3 ‘‘(e) OTHER DEFINITIONS.—

4 ‘‘(1) INCOME OFFICIAL POVERTY LINE.—For

5 purposes of this section, the term ‘income official

6 poverty line’ means the income official poverty line

7 (as defined by the Office of Management and Budg8 et, and revised annually in accordance with section

9 673(2) of the Omnibus Budget Reconciliation Act of

10 1981).

11 ‘‘(2) STATE’S SHARE OF TOTAL TAXABLE RE12 SOURCES.—

13 ‘‘(A) IN GENERAL.—Except as provided in

14 subparagraph (B), the term ‘State share of

15 total taxable resources’ for a fiscal year means

16 an amount equal to the quotient of—

17 ‘‘(i) the average of total taxable re18 sources for the State (as determined by the

19 Secretary of the Treasury based on data

20 available for the 3 most recent calendar

21 years), divided by

22 ‘‘(ii) the average of the total taxable

23 resources for all States (as determined by

24 the Secretary of the Treasury based on
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1 data available for the 3 most recent cal2 endar years).

3 ‘‘(B) SPECIAL RULE FOR THE DISTRICT OF

4 COLUMBIA.—Notwithstanding subparagraph

5 (A), with respect to the District of Columbia,

6 the term ‘State share of total taxable resources’

7 for a fiscal year means an amount equal to the

8 quotient of—

9 ‘‘(i) the average of the total personal

10 income in such District for the 3 preceding

11 calendar years (as determined by the Sec12 retary of Commerce), divided by

13 ‘‘(ii) the average of the total personal

14 income for all States for the 3 preceding

15 calendar years (as determined by the Sec16 retary of Commerce).

17 ‘‘(3) STATE’S SHARE OF NEED.—The term

18 ‘State’s share of need’ for a fiscal year means the

19 quotient of—

20 ‘‘(A) the average number of individuals in

21 the State with incomes below the income official

22 poverty line for the 3 preceding fiscal years (as

23 determined by the Secretary), divided by

24 ‘‘(B) the average number of individuals in

25 all States with incomes below the income offi-
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1 cial poverty line for the 3 preceding fiscal years

2 (as determined by the Secretary).’’.

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

4 subsection (a) shall be effective with respect to fiscal years

5 beginning after September 30, 1996.

6 TITLE III—HEALTH CARE

7 LIABILITY REFORM

8 SEC. 301. SHORT TITLE.

9 This title may be cited as the ‘‘Health Care Liability

10 Reform Act of 1993’’.

11 SEC. 302. DEFINITIONS.

12 For purposes of this title the term—

13 (1) ‘‘approved by the Food and Drug Adminis14 tration’’ means, with respect to a health care prod15 uct, that the health care product—

16 (A) was subject to premarket approval by

17 the Food and Drug Administration with respect

18 to the safety of the formulation or performance

19 of the aspect of such drug or device which

20 caused the claimant’s harm or the adequacy of

21 the packaging or labeling of such drug or de22 vice, and such drug or device was approved by

23 the Food and Drug Administration; or

24 (B) is generally recognized as safe and ef25 fective under conditions established by the Food
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1 and Drug Administration and applicable regula2 tions, including packaging and labeling regula3 tions;

4 (2) ‘‘arbitration’’ means a dispute resolution

5 process in which the parties submit the dispute out6 side of a Federal or State civil justice system for

7 resolution by a person or panel of persons;

8 (3) ‘‘economic losses’’ means losses for hospital

9 and medical expenses, lost wages, lost employment,

10 and other pecuniary losses;

11 (4) ‘‘health care malpractice action’’ means a

12 civil action alleging a health care malpractice claim

13 against a health care provider or health care profes14 sional;

15 (5) ‘‘health care malpractice claim’’ means any

16 claim relating to the provision of (or the failure to

17 provide) health care services based on negligence or

18 gross negligence, breach of express or implied war19 ranty or contract, or failure to discharge a duty to

20 warn or instruct to obtain consent;

21 (6) ‘‘health care product’’ means a drug, as de22 fined under section 201(g)(1) of the Federal Food,

23 Drug, and Cosmetic Act (21 U.S.C. 321(g)(1)) or a

24 medical device, as defined under section 201(h) of
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1 the Federal Food, Drug, and Cosmetic Act (21

2 U.S.C. 321(h)), or any combination thereof;

3 (7) ‘‘health care product liability action’’ means

4 a civil action alleging a health care product liability

5 claim against a manufacturer or seller of a health

6 care product or against a health care provider or

7 health care professional;

8 (8) ‘‘health care product liability claim’’ means

9 any claim relating to harm alleged to have been

10 caused by a health care product;

11 (9) ‘‘health care professional’’ means any indi12 vidual who provides health care services in a State

13 and who is required by State law or regulation to be

14 licensed or certified by the State to provide such

15 services in the State, including a physician, nurse,

16 chiropractor, nurse midwife, physical therapist, so17 cial worker, or physician assistant;

18 (10) ‘‘health care provider’’ means any organi19 zation or institution that is engaged in the delivery

20 of health care services in a State and that is re21 quired by State law or regulation to be licensed or

22 certified by the State to engage in the delivery of

23 such services in the State;
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1 (11) ‘‘injury’’ means any injury, illness, disease,

2 or other harm that is the subject of a health care

3 malpractice claim; and

4 (12) ‘‘noneconomic losses’’ means losses for

5 physical and emotional pain, suffering, inconven6 ience, physical impairment, mental anguish, dis7 figurement, loss of enjoyment of life, and other

8 nonpecuniary losses.

9 SEC. 303. HEALTH CARE MALPRACTICE.

10 (a) APPLICATION.—The provisions of this section

11 shall apply to any health care malpractice action filed in

12 any Federal or State court and any health care mal13 practice claim resolved through arbitration.

14 (b) PAYMENTS.—No person may be required to pay

15 more than $100,000 in a single payment in damages for

16 expenses to be incurred in the future, but such person

17 shall be permitted to make such payments on a periodic

18 basis. The periods for such payments shall be determined

19 by the court, based on projections of when expenses are

20 likely to be incurred.

21 (c) DAMAGES.—(1) The total amount of damages re22 ceived by an individual shall be reduced, in accordance

23 with paragraph (2), by any other payment which has been

24 made or which will be made to such individual to com-
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1 pensate such individual for an injury, including payments

2 under—

3 (A) Federal or State disability or sickness pro4 grams;

5 (B) Federal, State, or private health insurance

6 programs;

7 (C) private disability insurance programs;

8 (D) employer wage continuation programs; and

9 (E) any other source of payment intended to

10 compensate such individual for such injury.

11 (2) The amount by which an award of damages to

12 an individual for an injury shall be reduced under para13 graph (1) shall be—

14 (A) the total amount of any payments (other

15 than such award) which have been made or which

16 will be made to such individual to compensate such

17 individual for such injury; minus

18 (B) the amount paid by such individual (or by

19 the spouse, parent, or legal guardian of such individ20 ual) to secure the payments described under sub21 paragraph (A).

22 (d) STATUTE OF LIMITATIONS.—(1) Except as pro23 vided under paragraph (2), no health care malpractice

24 claim may be initiated after the expiration of the 2-year

25 period that begins on the date the alleged injury should
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1 reasonably have been discovered, or the expiration of the

2 4-year period that begins on the date the alleged injury

3 occurred, whichever is later.

4 (2) In the case of an alleged injury suffered by a

5 minor who has not attained 6 years of age, no health care

6 malpractice claim may be initiated after the expiration of

7 the 2-year period that begins on the date the alleged injury

8 should reasonably have been discovered, or the date on

9 which the minor attains 10 years of age, whichever is

10 later.

11 (e) ATTORNEYS’ FEES.—With respect to any health

12 care malpractice action or any health care malpractice

13 claim, attorneys’ fees may not exceed

14 (1) 40 percent of the first $50,000 of any

15 award or settlement under such action or claim;

(2) 331 16 ⁄3 percent of the next $50,000 of any

17 award or settlement under such action or claim;

18 (3) 25 percent of the next $500,000 of any

19 award or settlement under such action or claim; and

20 (4) 15 percent of any additional amounts.

21 SEC. 304. HEALTH CARE PRODUCT LIABILITY OF MANUFAC22 TURER OR SELLER.

23 (a) NONAPPLICATION OF STRICT LIABILITY.—A

24 manufacturer or seller of a health care product approved
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1 by the Food and Drug Administration shall not be strictly

2 liable for any injury alleged to have resulted from—

3 (1) a defect in the design of the health care

4 product; or

5 (2) a failure to warn or instruct regarding a

6 risk posed by the health care product that was nei7 ther known nor reasonably knowable at the time the

8 health care product left the control of the manufac9 turer or seller.

10 (b) DUTY TO WARN.—(1) A manufacturer or seller

11 of a health care product that is to be prescribed by, or

12 used at the direction of, a health care professional shall

13 not be liable for harm allegedly caused by a failure to warn

14 or instruct the ultimate user or recipient of the product

15 about a risk if the manufacturer or seller provided ade16 quate warning or instruction to the user’s or recipient’s

17 health care professional.

18 (2) This subsection shall not apply to any health care

19 product to which the Food and Drug Administration spe20 cifically provides that a warning or instruction regarding

21 such product shall be given by the manufacturer or seller

22 directly to the ultimate user or recipient.
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1 SEC. 305. GENERAL PROVISIONS RELATING TO HEALTH

2 CARE LIABILITY.

3 (a) LIMITATION ON NONECONOMIC DAMAGES.—(1)

4 Except as provided under paragraph (2), the total amount

5 of damages which may be awarded to an individual and

6 the family members of such individual for noneconomic

7 losses resulting from an injury which is the subject of a

8 health care malpractice claim or a health care product li9 ability claim may not exceed $250,000, regardless of the

10 number of defendants against whom the claim is brought,

11 the number of claims brought with respect to the injury,

12 or the number of actions brought with respect to the in13 jury.

14 (2)(A) In any jury trial, the jury shall not be in15 formed of the limitation established under paragraph (1).

16 If the jury awards an amount for noneconomic damages

17 that exceeds $250,000, the court shall reduce the award

18 to $250,000 unless the court finds that special cir19 cumstances (such as egregious injury) would make such

20 reduction unjust.

21 (B) In any case in which the court finds a reduction

22 under subparagraph (A) would be unjust, the court may—

23 (i) decline to reduce such award; or

24 (ii) reduce such award by a lesser amount than

25 provided for under subparagraph (A).
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1 (b) SEVERAL LIABILITY FOR NONECONOMIC LOSS.—

2 (1) In any health care malpractice action or health care

3 product liability action the liability of each defendant for

4 noneconomic loss and for punitive damages shall be sev5 eral only and shall not be joint. Each defendant shall be

6 liable only for the amount of noneconomic loss and puni7 tive damages allocated to such defendant in direct propor8 tion to such defendant’s percentage of responsibility as de9 termined under paragraph (2). A separate judgment shall

10 be rendered against such defendant for that amount.

11 (2) For purposes of this subsection, the trier of fact

12 shall determine the proportion of responsibility of each

13 party for the claimant’s harm.

14 SEC. 306. PUNITIVE DAMAGES.

15 (a) IN GENERAL.—Punitive damages may, if other16 wise permitted by applicable law, be awarded against a

17 defendant in a health care malpractice action or a health

18 care product liability action only if the claimant estab19 lishes by clear and convincing evidence that the harm suf20 fered by the claimant was the result of conduct manifest21 ing conscious, flagrant indifference to the health of the

22 claimant or to the health of those persons who might be

23 harmed by the health care product.

24 (b) DETERMINATION OF AMOUNT.—The amount of

25 any punitive damages award shall be determined (subject
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1 to appellate review as permitted by applicable law) by the

2 trial judge.

3 (c) LIMITATION CONCERNING CERTAIN HEALTH

4 CARE PRODUCTS.—Punitive damages shall not be award5 ed against a manufacturer or seller of a health care prod6 uct approved by the Food and Drug Administration where

7 that health care product caused the claimant’s harm.

8 SEC. 307. EXCEPTIONS.

9 The provisions of sections 304(a) and 306(c) shall

10 not apply in any case in which—

11 (1) the defendant, before or after premarket ap12 proval of a drug or device, withheld from or mis13 represented to the Food and Drug Administration or

14 any other agency or official of the Federal Govern15 ment required information that is material and rel16 evant to the performance of such drug or device and

17 is causally related to the harm which the claimant

18 allegedly suffered; or

19 (2) the defendant made an illegal payment to

20 an official of the Food and Drug Administration for

21 the purpose of either securing or maintaining ap22 proval of such drug or device.

23 SEC. 308. RULES OF CONSTRUCTION.

24 Nothing in this title shall be construed to—
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1 (1) waive or affect any defense of sovereign im2 munity asserted by any State under any provision of

3 law;

4 (2) waive or affect any defense of sovereign im5 munity asserted by the United States;

6 (3) affect the applicability of any provision of

7 the Foreign Sovereign Immunities Act of 1976;

8 (4) preempt State choice-of-law rules with re9 spect to claims brought by a foreign nation or a citi10 zen of a foreign nation;

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

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

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

14 of a foreign nation on the grounds of inconvenient

15 forum;

16 (6) restrict or limit the preemptive effect of any

17 other Federal law; or

18 (7) create any cause of action under Federal

19 law.
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1 TITLE IV—ADMINISTRATIVE

2 COST SAVINGS

3 Subtitle A—Standardization of

4 Claims Processing

5 SEC. 401. ADOPTION OF DATA ELEMENTS, UNIFORM

6 CLAIMS, AND UNIFORM ELECTRONIC TRANS7 MISSION STANDARDS.

8 (a) IN GENERAL.—The Secretary shall adopt stand9 ards relating to each of the following:

10 (1) Data elements for use in paper and elec11 tronic claims processing under health insurance

12 plans, as well as for use in utilization review and

13 management of care (including data fields, formats,

14 and medical nomenclature, and including plan bene15 fit and insurance information).

16 (2) Uniform claims forms (including uniform

17 procedure and billing codes for uses with such forms

18 and including information on other health insurance

19 plans that may be liable for benefits).

20 (3) Uniform electronic transmission of the data

21 elements (for purposes of billing and utilization re22 view).

23 Standards under paragraph (3) relating to electronic

24 transmission of data elements for claims for services shall

25 supersede (to the extent specified in such standards) the
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1 standards adopted under paragraph (2) relating to the

2 submission of paper claims for such services. Standards

3 under paragraph (3) shall include protections to assure

4 the confidentiality of patient-specific information and to

5 protect against the unauthorized use and disclosure of in6 formation.

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

8 under this section—

9 (1) the Secretary shall take into account the

10 recommendations of current task forces, including at

11 least the Workgroup on Electronic Data Inter12 change, National Uniform Billing Committee, the

13 Uniform Claim Task Force, and the Computer-based

14 Patient Record Institute;

15 (2) the Secretary shall consult with the Na16 tional Association of Insurance Commissioners (and,

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

18 the American National Standards Institute); and

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

20 practicable, seek to make the standards consistent

21 with any uniform clinical data sets which have been

22 adopted and are widely recognized.

23 (c) DEADLINES FOR PROMULGATION.—The Sec24 retary shall promulgate the standards under—
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1 (1) subsection (a)(1) relating to claims process2 ing data, by not later than 12 months after the date

3 of the enactment of this Act;

4 (2) subsection (a)(2) (relating to uniform

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

6 date of the enactment of this Act; and

7 (3)(A) subsection (a)(3) relating to trans8 mission of information concerning hospital and phy9 sicians services, by not later than 24 months after

10 the date of the enactment of this Act, and

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

12 of information on other services, by such later date

13 as the Secretary may determine it to be feasible.

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

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

16 shall report to Congress recommendations regarding re17 structuring the medicare peer review quality assurance

18 program given the availability of hospital data in elec19 tronic form.

20 SEC. 402. APPLICATION OF STANDARDS.

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

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

23 standards are adopted under section 401 with respect to

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

25 benefits for such services under health insurance plans are
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1 not being submitted in accordance with such standards,

2 the Secretary may require, after notice in the Federal

3 Register of not less than 6 months, that all providers of

4 such services must submit claims to health insurance plans

5 in accordance with such standards. The Secretary may

6 waive the application of such a requirement in such cases

7 as the Secretary finds that the imposition of the require8 ment would not be economically practicable.

9 (b) SIGNIFICANT NUMBER.—The Secretary shall

10 make an affirmative determination described in subsection

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

12 there would be a significant, measurable additional gain

13 in efficiencies in the health care system that would be ob14 tained by imposing the requirement described in such

15 paragraph with respect to such services.

16 (c) APPLICATION OF REQUIREMENT.—

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

18 requirement under subsection (a)—

19 (A) in the case of a requirement that im20 poses the standards relating to electronic trans21 mission of claims for a class of services, each

22 health care provider that furnishes such services

23 for which benefits are payable under a health

24 insurance plan shall transmit electronically and

25 directly to the plan on behalf of the beneficiary
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1 involved a claim for such services in accordance

2 with such standards;

3 (B) any health insurance plan may reject

4 any claim subject to the standards adopted

5 under section 401 but which is not submitted in

6 accordance with such standards;

7 (C) it is unlawful for a health insurance

8 plan (i) to reject any such claim on the basis

9 of the form in which it is submitted if it is sub10 mitted in accordance with such standards or (ii)

11 to require, for the purpose of utilization review

12 or as a condition of providing benefits under

13 the plan, a provider to transmit medical data

14 elements that are inconsistent with the stand15 ards established under section 401(a)(1); and

16 (D) the Secretary may impose a civil

17 money penalty on any provider that knowingly

18 and repeatedly submits claims in violation of

19 such standards or on any health insurance plan

20 (other than a health insurance plan described in

21 paragraph (2)) that knowingly and repeatedly

22 rejects claims in violation of subparagraph (B),

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

24 claim.
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1 The provisions of section 1128A of the Social Secu2 rity Act (other than the first sentence of subsection

3 (a) and other than subsection (b)) shall apply to a

4 civil money penalty under subparagraph (D) in the

5 same manner as such provisions apply to a penalty

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

7 (2) PLANS SUBJECT TO EFFECTIVE STATE REG8 ULATION.—A plan described in this paragraph is a

9 health insurance plan—

10 (A) that is subject to regulation by a

11 State, and

12 (B) with respect to which the Secretary

13 finds that—

14 (i) the State provides for application

15 of the standards established under section

16 401, and

17 (ii) the State regulatory program pro18 vides for the appropriate and effective en19 forcement of such standards.

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

21 a claim pursuant to subsection (c)(1), the plan shall per22 mit the person submitting the claim a reasonable oppor23 tunity to resubmit the claim on a form or in an electronic

24 manner that meets the requirements for acceptance of the

25 claim under such subsection.
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1 SEC. 403. PERIODIC REVIEW AND REVISION OF STAND2 ARDS.

3 (a) IN GENERAL.—The Secretary shall—

4 (1) provide for the ongoing receipt and review

5 of comments and suggestions for changes in the

6 standards adopted and promulgated under section

7 401;

8 (2) establish a schedule for the periodic review

9 of such standards; and

10 (3) based upon such comments, suggestions,

11 and review, revise such standards and promulgate

12 such revisions.

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

14 Secretary under subsection (a) revises the standards de15 scribed in 401, then, in the case of any claim for benefits

16 submitted under a health insurance plan more than the

17 minimum period (of not less than 6 months specified by

18 the Secretary) after the date the revision is promulgated

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

20 section 402 instead of the standards previously promul21 gated.

22 SEC. 404. HEALTH INSURANCE PLAN DEFINED.

23 In this title, the term ‘‘health insurance plan’’ has

24 the meaning given such term in section 111(b) and in25 cludes—
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1 (1) the medicare program (under title XVIII of

2 the Social Security Act) and medicare supplemental

3 health insurance, and

4 (2) a State medicaid plan (approved under title

5 XIX of such Act).

6 Subtitle B—Electronic Medical

7 Data Standards

8 SEC. 411. MEDICAL DATA STANDARDS FOR HOSPITALS AND

9 OTHER PROVIDERS.

10 (a) PROMULGATION OF HOSPITAL DATA STAND11 ARDS.—

12 (1) IN GENERAL.—Between July 1, 1995, and

13 January 1, 1996, the Secretary shall promulgate

14 standards described in subsection (b) for hospitals

15 concerning electronic medical data.

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

17 to time revise the standards promulgated under this

18 subsection.

19 (b) CONTENTS OF DATA STANDARDS.—The stand20 ards promulgated under subsection (a) shall include at

21 least the following:

22 (1) A definition of a standard set of data ele23 ments for use by utilization and quality control peer

24 review organizations.
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1 (2) A definition of the set of comprehensive

2 data elements, which set shall include for hospitals

3 the standard set of data elements defined under

4 paragraph (1).

5 (3) Standards for an electronic patient care in6 formation system with data obtained at the point of

7 care, including standards to protect against the un8 authorized use and disclosure of information.

9 (4) A specification of, and manner of presen10 tation of, the individual data elements of the sets

11 and system under this subsection.

12 (5) Standards concerning the transmission of

13 electronic medical data.

14 (6) Standards relating to confidentiality of pa15 tient-specific information.

16 The standards under this section shall be consistent with

17 standards for data elements established under section 401.

18 (c) OPTIONAL DATA STANDARDS FOR OTHER PRO19 VIDERS.—

20 (1) IN GENERAL.—The Secretary may promul21 gate standards described in paragraph (2) concern22 ing electronic medical data for providers that are not

23 hospitals. The Secretary may from time to time re24 vise the standards promulgated under this sub25 section.
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1 (2) CONTENTS OF DATA STANDARDS.—The

2 standards promulgated under paragraph (1) for non3 hospital providers may include standards comparable

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

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

6 (d) CONSULTATION.—In promulgating and revising

7 standards under this section, the Secretary shall—

8 (1) consult with the American National Stand9 ards Institute, hospitals, with the advisory commis10 sion established under section 415, and with other

11 affected providers, health insurance plans, and other

12 interested parties, and

13 (2) take into consideration, in developing stand14 ards under subsection (b)(1), the data set used by

15 the utilization and quality control peer review pro16 gram under part B of title XI of the Social Security

17 Act.

18 SEC. 412. APPLICATION OF ELECTRONIC DATA STANDARDS

19 TO CERTAIN HOSPITALS.

20 (a) MEDICARE REQUIREMENT FOR SHARING OF

21 HOSPITAL INFORMATION.—As of January 1, 1996, sub22 ject to paragraph (2), each hospital, as a requirement of

23 each participation agreement under section 1866 of the

24 Social Security Act, shall—
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1 (1) maintain clinical data included in the set of

2 comprehensive data elements under section

3 411(b)(2) in electronic form on all inpatients,

4 (2) upon request of the Secretary or of a utili5 zation and quality control peer review organization

6 (with which the Secretary has entered into a con7 tract under part B of title XI of such Act), transmit

8 electronically the data set, and

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

10 intermediary or carrier, transmit electronically any

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

12 in accordance with the standards promulgated under sec13 tion 411(a).

14 (b) WAIVER AUTHORITY.—Until January 1, 2000:

15 (1) The Secretary may waive the application of

16 the requirements of subsection (a) for a hospital

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

18 hospital demonstrates compliance with such require19 ments would constitute an undue financial hardship.

20 (2) The Secretary may waive the application of

21 the requirements of subsection (a) for a hospital

22 that is in the process of developing a system to pro23 vide the required data set and executes agreements

24 with its fiscal intermediary and its utilization and

25 quality control peer review organization that the hos-
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1 pital will meet the requirements of subsection (a) by

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

3 (3) The Secretary may waive the application of

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

5 that agrees to obtain from its records the data ele6 ments that are needed to meet the requirements of

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

8 to subject its data transfer process to a quality as9 surance program specified by the Secretary.

10 (c) APPLICATION TO HOSPITALS OF THE DEPART11 MENT OF VETERANS AFFAIRS.—

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

13 Affairs shall provide that each hospital of the De14 partment of Veterans Affairs shall comply with the

15 requirements of subsection (a) in the same manner

16 as such requirements would apply to the hospital if

17 it were participating in the Medicare program.

18 (2) WAIVER.—The Secretary of Veterans Af19 fairs may waive the application of such requirements

20 to a hospital in the same manner as the Secretary

21 of Health and Human Services may waive under

22 subsection (b) the application of the requirements of

23 subsection (a).
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1 SEC. 413. ELECTRONIC TRANSMISSION TO FEDERAL AGEN2 CIES.

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

4 provider is required under a Federal program to transmit

5 a data element that is subject to a presentation or trans6 mission standard (as defined in subsection (b)), the head

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

8 otherwise authorized) is authorized to require the provider

9 to present and transmit the data element electronically in

10 accordance with such a standard.

11 (b) PRESENTATION OR TRANSMISSION STANDARD

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

13 transmission standard’’ means a standard, promulgated

14 under subsection (b) or (c) of section 411, described in

15 paragraph (4) or (5) of section 411(b).

16 SEC. 414. LIMITATION ON DATA REQUIREMENTS WHERE

17 STANDARDS IN EFFECT.

18 (a) IN GENERAL.—If standards with respect to data

19 elements are promulgated under section 411 with respect

20 to a class of provider, a health insurance plan may not

21 require, for the purpose of utilization review or as a condi22 tion of providing benefits under the plan, that a provider

23 in the class—

24 (1) provide any data element not in the set of

25 comprehensive data elements specified under such

26 standards, or
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1 (2) transmit or present any such data element

2 in a manner inconsistent with the applicable stand3 ards for such transmission or presentation.

4 (b) COMPLIANCE.—

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

6 civil money penalty on any health insurance plan

7 (other than a health insurance plan described in

8 paragraph (2)) that fails to comply with subsection

9 (a) in an amount not to exceed $100 for each such

10 failure. The provisions of section 1128A of the So11 cial Security Act (other than the first sentence of

12 subsection (a) and other than subsection (b)) shall

13 apply to a civil money penalty under this paragraph

14 in the same manner as such provisions apply to a

15 penalty or proceeding under section 1128A(a) of

16 such Act.

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

19 health insurance plan that is subject to regulation by

20 a State, if the Secretary finds that—

21 (A) the State provides for application of

22 the requirement of subsection (a), and

23 (B) the State regulatory program provides

24 for the appropriate and effective enforcement of

25 such requirement with respect to such plans.
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1 SEC. 415. ADVISORY COMMISSION.

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

3 advisory commission including hospital executives, hospital

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

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

9 for Health Care Policy and Research, the Secretary of

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

12 (b) FUNCTIONS.—The advisory commission shall

13 monitor and advise the Secretary concerning—

14 (1) the standards established under this sub15 title, and

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

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

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

20 to assist the advisory commission in its activities under

21 this section.

22 (d) AUTHORIZATION OF APPROPRIATIONS.—There

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

24 fiscal years 1995 through 2000 to carry out this section.
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1 Subtitle C—Development and Dis2 tribution of Comparative Value

3 Information

4 SEC. 421. STATE COMPARATIVE VALUE INFORMATION PRO5 GRAMS FOR HEALTH CARE PURCHASING.

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

7 comparative value information to purchasers of health

8 care in each State, the Secretary shall determine whether

9 each State is developing and implementing a health care

10 value information program that meets the criteria and

11 schedule set forth in subsection (b).

12 (b) CRITERIA AND SCHEDULE FOR STATE PRO13 GRAMS.—The criteria and schedule for a State health care

14 value information program in this subsection shall be spec15 ified by the Secretary as follows:

16 (1) The State begins promptly after enactment

17 of this Act to develop (directly or through contrac18 tual or other arrangements with 1 or more States,

19 coalitions of health insurance purchasers, other enti20 ties, or any combination of such arrangements) in21 formation systems regarding comparative health val22 ues.

23 (2) The information contained in such systems

24 covers at least the average prices of common health

25 care services (as defined in subsection (d)) and
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1 health insurance plans, and, where available, meas2 ures of the variability of these prices within a State

3 or other market areas.

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

5 is made available within the State beginning not

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

7 this Act, and is revised as frequently as reasonably

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

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

10 enactment of this Act the State has developed infor11 mation systems that provide comparative costs, qual12 ity, and outcomes data with respect to health insur13 ance plans and hospitals and made the information

14 broadly available within the relevant market areas.

15 Nothing in this section shall preclude a State from provid16 ing additional information, such as information on prices

17 and benefits of different health insurance plans, available.

18 (c) GRANTS TO STATES FOR THE DEVELOPMENT OF

19 STATE PROGRAMS.—

20 (1) GRANT AUTHORITY.—The Secretary may

21 make grants to each State to enable such State to

22 plan the development of its health care value infor23 mation program and, if necessary, to initiate the im24 plementation of such program. Each State seeking

25 such a grant shall submit an application therefor,
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1 containing such information as the Secretary finds

2 necessary to assure that the State is likely to de3 velop and implement a program in accordance with

4 the criteria and schedule in subsection (b).

5 (2) OFFSET AUTHORITY.—If, at any time with6 in the 3-year period following the receipt by a State

7 of a grant under this subsection, the Secretary is re8 quired by section 422 to implement a health care in9 formation program in the State, the Secretary may

10 recover the amount of the grant under this sub11 section by offset against any other amount payable

12 to the State under the Social Security Act. The

13 amount of the offset shall be made available (from

14 the appropriation account with respect to which the

15 offset was taken) to the Secretary to carry out such

16 section.

17 (3) AUTHORIZATION OF APPROPRIATIONS.—

18 There are authorized to be appropriated such sums

19 as are necessary to make grants under this sub20 section, to remain available until expended.

21 (d) COMMON HEALTH CARE SERVICES DEFINED.—

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

23 includes such procedures as the Secretary may specify and

24 any additional health care services which a State may wish

25 to include in its comparative value information program.
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1 (e) STATE DEFINED.—In this title, the term ‘‘State’’

2 includes the District of Columbia, Puerto Rico, the Virgin

3 Islands, Guam, and American Samoa.

4 SEC. 422. FEDERAL IMPLEMENTATION.

5 (a) IN GENERAL.—If the Secretary finds, at any

6 time, that a State has failed to develop or to continue to

7 implement a health care value information program in ac8 cordance with the criteria and schedule in section 421(b),

9 the Secretary shall take the actions necessary, directly or

10 through grants or contract, to implement a comparable

11 program in the State.

12 (b) FEES.—Fees may be charged by the Secretary

13 for the information materials provided pursuant to a pro14 gram under this section. Any amounts so collected shall

15 be deposited in the appropriation account from which the

16 Secretary’s costs of providing such materials were met,

17 and shall remain available for such purposes until ex18 pended.

19 SEC. 423. COMPARATIVE VALUE INFORMATION CONCERN20 ING FEDERAL PROGRAMS.

21 (a) DEVELOPMENT.—The head of each Federal agen22 cy with responsibility for the provision of health insurance

23 or of health care services to individuals shall promptly de24 velop health care value information relating to each pro25 gram that such head administers and covering the same
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1 types of data that a State program meeting the criteria

2 of section 421(b) would provide.

3 (b) DISSEMINATION OF INFORMATION.—Such infor4 mation shall be made generally available to States and to

5 providers and consumers of health care services.

6 Subtitle D—Preemption of State

7 Quill Pen Laws

8 SEC. 431. PREEMPTION OF STATE QUILL PEN LAWS.

9 (a) IN GENERAL.—Effective January 1, 1996, no ef10 fect shall be given to any provision of State law that re11 quires medical or health insurance records (including bill12 ing information) to be maintained in written, rather than

13 electronic form.

14 (b) SECRETARIAL AUTHORITY.—The Secretary may

15 issue regulations to carry out subsection (a). Such regula16 tions may provide for such exceptions to subsection (a)

17 as the Secretary determines to be necessary to prevent

18 fraud and abuse, with respect to controlled substances,

19 and in such other cases as the Secretary deems appro20 priate.
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1 TITLE V—ANTI-FRAUD

2 Subtitle A—Criminal Prosecution

3 of Health Care Fraud

4 SEC. 501. PENALTIES FOR HEALTH CARE FRAUD.

5 (a) IN GENERAL.—Chapter 63 of title 18, United

6 States Code, is amended by adding at the end the follow7 ing:

8 ‘‘§ 1347. Health care fraud

9 ‘‘(a) OFFENSE.—Whoever, being a health care pro10 vider, knowingly engages in any scheme or artifice to de11 fraud any person in connection with the provision of

12 health care shall be fined under this title or imprisoned

13 not more than 5 years, or both.

14 ‘‘(b) DEFINITION.—In this section, the term ‘health

15 care provider’ means—

16 ‘‘(1) a physician, nurse, dentist, therapist, phar17 macist, or other professional provider of health care;

18 and

19 ‘‘(2) a hospital, health maintenance organiza20 tion, pharmacy, laboratory, clinic, or other health

21 care facility or a provider of medical services, medi22 cal devices, medical equipment, or other medical sup23 plies.

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

25 at the beginning of chapter 63 of title 18, United States
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1 Code, is amended by adding at the end the following new

2 item:

‘‘1347. Health care fraud.’’.

3 SEC. 502. REWARDS FOR INFORMATION LEADING TO PROS4 ECUTION AND CONVICTION.

5 Section 3059 of title 18, United States Code, is

6 amended by adding at the end the following new sub7 section:

8 ‘‘(c)(1) In special circumstances and in the Attorney

9 General’s sole discretion, the Attorney General may make

10 a payment of up to $10,000 to a person who furnishes

11 information unknown to the Government relating to a pos12 sible prosecution under section 1101.

13 ‘‘(2) A person is not eligible for a payment under

14 paragraph (1) if—

15 ‘‘(A) the person is a current or former officer

16 or employee of a Federal or State government agen17 cy or instrumentality who furnishes information dis18 covered or gathered in the course of government em19 ployment;

20 ‘‘(B) the person knowingly participated in the

21 offense;

22 ‘‘(C) the information furnished by the person

23 consists of allegations or transactions that have been

24 disclosed to the public—
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1 ‘‘(i) in a criminal, civil, or administrative

2 proceeding;

3 ‘‘(ii) in a congressional, administrative or

4 General Accounting Office report, hearing,

5 audit, or investigation; or

6 ‘‘(iii) by the news media, unless the person

7 is the original source of the information; or

8 ‘‘(D) when, in the judgment of the Attorney

9 General, it appears that a person whose illegal ac10 tivities are being prosecuted or investigated could

11 benefit from the award.

12 ‘‘(3) For the purposes of paragraph (2)(C)(iii), the

13 term ‘original source’ means a person who has direct and

14 independent knowledge of the information that is fur15 nished and has voluntarily provided the information to the

16 Government prior to disclosure by the news media.

17 ‘‘(4) Neither the failure of the Attorney General to

18 authorize a payment under paragraph (1) nor the amount

19 authorized shall be subject to judicial review.’’.
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1 Subtitle B—Coordination of Health

2 Care Anti-Fraud and Abuse Ac3 tivities

4 SEC. 511. APPLICATION OF FEDERAL HEALTH ANTI-FRAUD

5 AND ABUSE SANCTIONS TO ALL FRAUD AND

6 ABUSE AGAINST ANY HEALTH INSURANCE

7 PLAN.

8 (a) CIVIL MONETARY PENALTIES.—Section 1128A

9 of the Social Security Act (42 U.S.C. 1320a–7a) is amend10 ed as follows:

11 (1) In subsection (a)(1), in the matter before

12 subparagraph (A), by inserting ‘‘or of any health in13 surance plan,’’ after ‘‘subsection (i)(1)),’’.

14 (2) In subsection (b)(1)(A), by inserting ‘‘or

15 under a health insurance plan’’ after ‘‘title XIX’’.

16 (3) In subsection (f)—

17 (A) by redesignating paragraph (3) as

18 paragraph (4); and

19 (B) by inserting after paragraph (2) the

20 following new paragraph:

21 ‘‘(3) With respect to amounts recovered arising

22 out of a claim under a health insurance plan, the

23 portion of such amounts as is determined to have

24 been paid by the plan shall be repaid to the plan.’’.

25 (4) In subsection (i)—
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1 (A) in paragraph (2), by inserting ‘‘or

2 under a health insurance plan’’ before the pe3 riod at the end, and

4 (B) in paragraph (5), by inserting ‘‘or

5 under a health insurance plan’’ after ‘‘or XX’’.

6 (b) CRIMES.—

7 (1) SOCIAL SECURITY ACT.—Section 1128B of

8 such Act (42 U.S.C. 1320a–7b) is amended as fol9 lows:

10 (A) In the heading, by adding at the end

11 the following: ‘‘OR HEALTH INSURANCE PLANS’’.

12 (B) In subsection (a)(1)—

13 (i) by striking ‘‘title XVIII or’’ and

14 inserting ‘‘title XVIII,’’, and

15 (ii) by adding at the end the follow16 ing: ‘‘or a health insurance plan (as de17 fined in section 1128(i)),’’.

18 (C) In subsection (a)(5), by striking ‘‘title

19 XVIII or a State health care program’’ and in20 serting ‘‘title XVIII, a State health care pro21 gram, or a health insurance plan’’.

22 (D) In the second sentence of subsection

23 (a)—
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1 (i) by inserting after ‘‘title XIX’’ the

2 following: ‘‘or a health insurance plan’’,

3 and

4 (ii) by inserting after ‘‘the State’’ the

5 following: ‘‘or the plan’’.

6 (E) In subsection (b)(1), by striking ‘‘title

7 XVIII or a State health care program’’ each

8 place it appears and inserting ‘‘title XVIII, a

9 State health care program, or a health insur10 ance plan’’.

11 (F) In subsection (b)(2), by striking ‘‘title

12 XVIII or a State health care program’’ each

13 place it appears and inserting ‘‘title XVIII, a

14 State health care program, or a health insur15 ance plan’’.

16 (G) In subsection (b)(3), by striking ‘‘title

17 XVIII or a State health care program’’ each

18 place it appears in subparagraphs (A) and (C)

19 and inserting ‘‘title XVIII, a State health care

20 program, or a health insurance plan’’.

21 (H) In subsection (d)(2)—

22 (i) by striking ‘‘title XIX,’’ and insert23 ing ‘‘title XIX or under a health insurance

24 plan,’’, and
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1 (ii) by striking ‘‘State plan,’’ and in2 serting ‘‘State plan or the health insurance

3 plan,’’.

4 (2) TREBLE DAMAGES FOR CRIMINAL SANC5 TIONS.—Section 1128B of such Act (42 U.S.C.

6 1320a–7b) is amended by adding at the end the fol7 lowing new subsection:

8 ‘‘(f) In addition to the fines that may be imposed

9 under subsection (a), (b), or (c), any individual found to

10 have violated the provisions of any of such subsections

11 may be subject to treble damages.’’.

12 (3) IDENTIFICATION OF COMMUNITY SERVICE

13 OPPORTUNITIES.—Section 1128B of such Act (42

14 U.S.C. 1320a–7b) is further amended by adding at

15 the end the following new subsection:

16 ‘‘(g) The Secretary shall—

17 ‘‘(1) in consultation with State and local health

18 care officials, identify opportunities for the satisfac19 tion of community service obligations that a court

20 may impose upon the conviction of an offense under

21 this section, and

22 ‘‘(2) make information concerning such oppor23 tunities available to Federal and State law enforce24 ment officers and State and local health care offi25 cials.’’.
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1 (c) HEALTH INSURANCE PLAN DEFINED.—Section

2 1128 of such Act (42 U.S.C. 1320a–7) is amended by re3 designating subsection (i) as subsection (j) and by insert4 ing after subsection (h) the following new subsection:

5 ‘‘(i) HEALTH INSURANCE PLAN DEFINED.—For pur6 poses of sections 1128A and 1128B, the term ‘health in7 surance plan’ means a health insurance program other

8 than the medicare program, the medicaid program, or a

9 State health care program.’’.

10 (d) CONFORMING AMENDMENT.—Section

11 1128(b)(8)(B)(ii) of such Act (42 U.S.C. 1320a–

12 7(b)(8)(B)(ii)) is amended by striking ‘‘1128A’’ and in13 serting ‘‘1128A (other than a penalty arising from a

14 health insurance plan, as defined in subsection (i))’’.

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

16 this section shall take effect January 1, 1995.

17 TITLE VI—ANTITRUST

18 PROVISIONS

19 SEC. 601. EXEMPTION FROM ANTITRUST LAWS FOR CER20 TAIN COMPETITIVE AND COLLABORATIVE

21 ACTIVITIES.

22 (a) EXEMPTION DESCRIBED.—An activity relating to

23 the provision of health care services shall be exempt from

24 the antitrust laws if—
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1 (1) the activity is within one of the categories

2 of safe harbors described in section 602;

3 (2) the activity is within an additional safe har4 bor designated by the Attorney General under sec5 tion 603; or

6 (3) the activity is specified in and in compliance

7 with the terms of a certificate of review issued by

8 the Attorney General under section 604 and the ac9 tivity occurs—

10 (A) while the certificate is in effect, or

11 (B) in the case of a certificate issued dur12 ing the 2-year period beginning on the date of

13 the enactment of this Act, at any time on or

14 after the first day of the 2-year period that

15 ends on the date the certificate takes effect.

16 (b) AWARD OF ATTORNEY’S FEES AND COSTS OF

17 SUIT.—

18 (1) IN GENERAL.—If any person brings an ac19 tion alleging a claim under the antitrust laws and

20 the activity on which the claim is based is found by

21 the court to be exempt from such laws under sub22 section (a), the court shall, at the conclusion of the

23 action—
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1 (A) award to a substantially prevailing

2 claimant the cost of suit attributable to such

3 claim, including a reasonable attorney’s fee, or

4 (B) award to a substantially prevailing

5 party defending against such claim the cost of

6 such suit attributable to such claim, including

7 reasonable attorney’s fee, if the claim, or the

8 claimant’s conduct during litigation of the

9 claim, was frivolous, unreasonable, without

10 foundation, or in bad faith.

11 (2) OFFSET IN CASES OF BAD FAITH.—The

12 court may reduce an award made pursuant to para13 graph (1) in whole or in part by an award in favor

14 of another party for any part of the cost of suit (in15 cluding a reasonable attorney’s fee) attributable to

16 conduct during the litigation by any prevailing party

17 that the court finds to be frivolous, unreasonable,

18 without foundation, or in bad faith.

19 SEC. 602. SAFE HARBORS.

20 The following activities are safe harbors for purposes

21 of section 601(a)(1):

22 (1) COMBINATIONS WITH MARKET SHARE

23 BELOW THRESHOLD.—Activities relating to health

24 care services of any combination of health care pro25 viders if the number of each type or specialty of pro-
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1 vider in question does not exceed 20 percent of the

2 total number of such type or specialty of provider in

3 the relevant market area.

4 (2) ACTIVITIES OF MEDICAL SELF-REGULATORY

5 ENTITIES.—

6 (A) IN GENERAL.—Subject to subpara7 graph (B), any activity of a medical self-regu8 latory entity relating to standard setting or

9 standard enforcement activities that are de10 signed to promote the quality of health care

11 provided to patients.

12 (B) EXCEPTION.—No activity of a medical

13 self-regulatory entity may be deemed to fall

14 under the safe harbor established under this

15 paragraph if the activity is conducted for pur16 poses of financial gain.

17 (3) PARTICIPATION IN SURVEYS.—The partici18 pation of a provider of health care services in a writ19 ten survey of the prices of services, reimbursement

20 levels, or the compensation and benefits of employ21 ees and personnel, but only if—

22 (A) the survey is conducted by a third

23 party, such as a purchaser of health care serv24 ices, governmental entity, institution of higher

25 education, or trade association;
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1 (B) the information provided by partici2 pants in the survey is based on prices charged,

3 reimbursements received, or compensation and

4 benefits paid prior to the third month preceding

5 the month in which the information is provided;

6 and

7 (C) if the results of the survey are dissemi8 nated, the results are aggregated in a manner

9 that ensures that no recipient of the results

10 may identify the prices charged, reimbursement

11 received, or compensation and benefits paid by

12 any particular provider.

13 (4) JOINT VENTURES FOR HIGH TECHNOLOGY

14 AND COSTLY EQUIPMENT AND SERVICES.—Any ac15 tivity of a health care cooperative venture relating to

16 the purchase, operation, or marketing of high tech17 nology or other expensive medical equipment, or the

18 provision of high cost or complex services, but only

19 if the number of participants in the venture does not

20 exceed the lowest number needed to support the ven21 ture. Other providers may be included in the ven22 ture, but only if such other providers could not pur23 chase, operate, or market such equipment or provide

24 a competing service either alone or through the for25 mation of a competing venture.
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1 (5) HOSPITAL MERGERS.—Activities relating to

2 a merger of 2 hospitals if, during the 3-year period

3 preceding the merger, one of the hospitals had an

4 average of 150 or fewer operational beds and an av5 erage daily inpatient census of less than 50 percent

6 of such beds.

7 (6) JOINT PURCHASING ARRANGEMENTS.—Any

8 joint purchasing arrangement among health care

9 providers if—

10 (A) the purchases under the arrangement

11 represent less than 35 percent of the total sales

12 of the product or service purchased in the rel13 evant market; and

14 (B) the cost of the products and services

15 purchased jointly accounts for less than 20 per16 cent of the total revenues from all products or

17 services sold by each participant in the joint

18 purchasing arrangement.

19 (7) NEGOTIATIONS.—Activities consisting of

20 good faith negotiations to carry out any activity—

21 (A) described in this section,

22 (B) within an additional safe harbor des23 ignated by the Attorney General under section

24 603,
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1 (C) that is the subject of an application for

2 a certificate of review under section 604, or

3 (D) that is deemed a submission of a noti4 fication under section 605(a)(2)(B),

5 without regard to whether such an activity is carried

6 out.

7 SEC. 603. DESIGNATION OF ADDITIONAL SAFE HARBORS.

8 (a) IN GENERAL.—

9 (1) SOLICITATION OF PROPOSALS.—Not later

10 than 30 days after the date of the enactment of this

11 Act, the Attorney General shall publish a notice in

12 the Federal Register soliciting proposals for addi13 tional safe harbors.

14 (2) REVIEW AND REPORT ON PROPOSED SAFE

15 HARBORS.—Not later than 180 days after the date

16 of the enactment of this Act, the Attorney General

17 (in consultation with the Secretary of Health and

18 Human Services and the Chair of the Federal Trade

19 Commission) shall—

20 (A) review the proposed safe harbors sub21 mitted under paragraph (1); and

22 (B) submit a report to Congress describing

23 the proposals to be included in the publication

24 of additional safe harbors described in para-
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1 graph (3) and the proposals that are not to be

2 so included, together with explanations therefor.

3 (3) PUBLICATION OF ADDITIONAL SAFE HAR4 BORS.—Not later than 180 days after the date of

5 the enactment of this Act, the Attorney General (in

6 consultation with the Secretary of Health and

7 Human Services and the Chair of the Federal Trade

8 Commission) shall publish in the Federal Register

9 proposed additional safe harbors for purposes of sec10 tion 601(a)(2) for providers of health care services.

11 Not later than 180 days after publishing such pro12 posed safe harbors in the Federal Register, the At13 torney General shall issue final rules establishing

14 such safe harbors.

15 (b) CRITERIA FOR SAFE HARBORS.—In establishing

16 safe harbors under subsection (a), the Attorney General

17 shall take into account the following:

18 (1) The extent to which a competitive or col19 laborative activity will accomplish any of the follow20 ing:

21 (A) An increase in access to health care

22 services.

23 (B) The enhancement of the quality of

24 health care services.
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1 (C) The establishment of cost efficiencies

2 that will be passed on to consumers, including

3 economies of scale and reduced transaction and

4 administrative costs.

5 (D) An increase in the ability of health

6 care facilities to provide services in medically

7 underserved areas or to medically underserved

8 populations.

9 (E) An improvement in the utilization of

10 health care resources or the reduction in the in11 efficient duplication of the use of such re12 sources.

13 (2) Whether the designation of an activity as a

14 safe harbor under subsection (a) will result in the

15 following outcomes:

16 (A) Health plans and other health care in17 surers, consumers of health care services, and

18 health care providers will be better able to ne19 gotiate payment and service arrangements

20 which will reduce costs to consumers.

21 (B) Taking into consideration the charac22 teristics of the particular purchasers and pro23 viders involved, competition will not be unduly

24 restricted.
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1 (C) Equally efficient and less restrictive al2 ternatives do not exist to meet the criteria de3 scribed in paragraph (1).

4 (D) The activity will not unreasonably

5 foreclose competition by denying competitors a

6 necessary element of competition.

7 SEC. 604. CERTIFICATES OF REVIEW.

8 (a) ESTABLISHMENT OF PROGRAM.—In consultation

9 with the Secretary and the Chair, the Attorney General

10 shall (not later than 180 days after the date of the enact11 ment of this Act) issue certificates of review in accordance

12 with this section for providers of health care services and

13 advise and assist any person with respect to applying for

14 such a certificate of review.

15 (b) PROCEDURES FOR APPLICATION FOR CERTIFI16 CATE.—

17 (1) FORM; CONTENT.—To apply for a certifi18 cate of review, a person shall submit to the Attorney

19 General a written application which—

20 (A) specifies the activities relating to the

21 provision of health care services which satisfy

22 the criteria described in section 603(b) and

23 which will be included in the certificate; and

24 (B) is in a form and contains any informa25 tion, including information pertaining to the
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1 overall market in which the applicant operates,

2 required by rule or regulation promulgated

3 under section 607.

4 (2) PUBLICATION OF NOTICE IN FEDERAL REG5 ISTER.—Within 10 days after an application submit6 ted under paragraph (1) is received by the Attorney

7 General, the Attorney General shall publish in the

8 Federal Register a notice that announces that an

9 application for a certificate of review has been sub10 mitted, identifies each person submitting the appli11 cation, and describes the conduct for which the ap12 plication is submitted.

13 (3) ESTABLISHMENT OF PROCEDURES FOR IS14 SUANCE OF CERTIFICATE.—In consultation with the

15 Chair and the Secretary, the Attorney General shall

16 establish procedures to be used in applying for and

17 in determining whether to approve an application for

18 a certificate of review under this title. Under such

19 procedures the Attorney General shall approve an

20 application if the Attorney General determines that

21 the activities to be covered under the certificate will

22 satisfy the criteria described in section 603(b) for

23 additional safe harbors designated under such sec24 tion and that the benefits of the issuance of the cer-
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1 tificate will outweigh any disadvantages that may re2 sult from reduced competition.

3 (4) TIMING FOR DECISION ON APPLICATION.—

4 (A) IN GENERAL.—Within 90 days after

5 the Attorney General receives an application for

6 a certificate of review, the Attorney General

7 shall determine whether the applicant’s health

8 care market activities are in accordance with

9 the procedures described in paragraph (3). If

10 the Attorney General, with the concurrence of

11 the Secretary, determines that such procedures

12 are met, the Attorney General shall issue to the

13 applicant a certificate of review. The certificate

14 of review shall specify—

15 (i) the health care market activities to

16 which the certificate applies,

17 (ii) the person to whom the certificate

18 of review is issued, and

19 (iii) any terms and conditions the At20 torney General or the Secretary deems nec21 essary to assure compliance with the appli22 cable procedures described in paragraph

23 (3).

24 (B) APPLICATIONS DEEMED APPROVED.—

25 If the Attorney General does not reject an ap-
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1 plication before the expiration of the 90-period

2 beginning on the date the Attorney General re3 ceives the application, the Attorney General

4 shall be deemed to have approved the applica5 tion and to have issued a certificate of review

6 relating to the applicant’s health care market

7 activities covered under the application.

8 (5) EXPEDITED ACTION.—If the applicant indi9 cates a special need for prompt disposition, the At10 torney General and the Secretary may expedite ac11 tion on the application, except that no certificate of

12 review may be issued within 30 days of publication

13 of notice in the Federal Register under subsection

14 (b)(2).

15 (6) ACTIONS UPON DENIAL.—

16 (A) NOTIFICATION.—If the Attorney Gen17 eral denies in whole or in part an application

18 for a certificate, the Attorney General shall no19 tify the applicant of the Attorney General’s de20 termination and the reasons for it.

21 (B) REQUEST FOR RECONSIDERATION.—

22 An applicant may, within 30 days of receipt of

23 notification that the application has been denied

24 in whole or in part, request the Attorney Gen25 eral to reconsider the determination. The Attor-
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1 ney General, with the concurrence of the Sec2 retary, shall notify the applicant of the deter3 mination upon reconsideration within 30 days

4 of receipt of the request.

5 (C) RETURN OF DOCUMENTS.—If the At6 torney General denies an application for the is7 suance of a certificate of review and thereafter

8 receives from the applicant a request for the re9 turn of documents submitted by the applicant

10 in connection with the application for the cer11 tificate, the Attorney General and the Secretary

12 shall return to the applicant, not later than 30

13 days after receipt of the request, the documents

14 and all copies of the documents available to the

15 Attorney General and the Secretary, except to

16 the extent that the information has been made

17 public under an exception to the rule against

18 public disclosure described in subsection

19 (g)(2)(B).

20 (7) FRAUDULENT PROCUREMENT.—A certifi21 cate of review shall be void ab initio with respect to

22 any health care market activities for which the cer23 tificate was procured by fraud.

24 (c) AMENDMENT AND REVOCATION OF CERTIFI25 CATES.—
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1 (1) NOTIFICATION OF CHANGES.—Any appli2 cant who receives a certificate of review—

3 (A) shall promptly report to the Attorney

4 General any change relevant to the matters

5 specified in the certificate; and

6 (B) may submit to the Attorney General

7 an application to amend the certificate to re8 flect the effect of the change on the conduct

9 specified in the certificate.

10 (2) AMENDMENT TO CERTIFICATE.—An appli11 cation for an amendment to a certificate of review

12 shall be treated as an application for the issuance of

13 a certificate. The effective date of an amendment

14 shall be the date on which the application for the

15 amendment is submitted to the Attorney General.

16 (3) REVOCATION.—

17 (A) GROUNDS FOR REVOCATION.—In ac18 cordance with this paragraph, the Attorney

19 General may revoke in whole or in part a cer20 tificate of review issued under this section. The

21 following shall be considered grounds for the

22 revocation of a certificate:

23 (i) After the expiration of the 2-year

24 period beginning on the date a person’s

25 certificate is issued, the activities of the
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1 person have not substantially accomplished

2 the purposes for the issuance of the certifi3 cate.

4 (ii) The person has failed to comply

5 with any of the terms or conditions im6 posed under the certificate by the Attorney

7 General or the Secretary under subsection

8 (b)(4).

9 (iii) The activities covered under the

10 certificate no longer satisfy the criteria set

11 forth in section 603(b).

12 (B) REQUEST FOR COMPLIANCE INFORMA13 TION.—If the Attorney General or Secretary

14 has reason to believe that any of the grounds

15 for revocation of a certificate of review de16 scribed in subparagraph (A) may apply to a

17 person holding the certificate, the Attorney

18 General shall request such information from

19 such person as the Attorney General or the Sec20 retary deems necessary to resolve the matter of

21 compliance. Failure to comply with such request

22 shall be grounds for revocation of the certificate

23 under this paragraph.

24 (C) PROCEDURES FOR REVOCATION.—If

25 the Attorney General or the Secretary deter-
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1 mines that any of the grounds for revocation of

2 a certificate of review described in subpara3 graph (A) apply to a person holding the certifi4 cate, or that such person has failed to comply

5 with a request made under subparagraph (B),

6 the Attorney General shall give written notice of

7 the determination to such person. The notice

8 shall include a statement of the circumstances

9 underlying, and the reasons in support of, the

10 determination. In the 60-day period beginning

11 30 days after the notice is given, the Attorney

12 General shall revoke the certificate or modify it

13 as the Attorney General or the Secretary deems

14 necessary to cause the certificate to apply only

15 to activities that meet the procedures for the is16 suance of certificates described in subsection

17 (b)(2).

18 (D) INVESTIGATION AUTHORITY.—For

19 purposes of carrying out this paragraph, the

20 Attorney General may conduct investigations in

21 the same manner as the Attorney General con22 ducts investigations under section 3 of the Anti23 trust Civil Process Act, except that no civil in24 vestigative demand may be issued to a person
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1 to whom a certificate of review is issued if such

2 person is the target of such investigation.

3 (d) REVIEW OF DETERMINATIONS.—

4 (1) AVAILABILITY OF REVIEW FOR CERTAIN AC5 TIONS.—If the Attorney General denies, in whole or

6 in part, an application for a certificate of review or

7 for an amendment to a certificate, or revokes or

8 modifies a certificate pursuant to paragraph (3), the

9 applicant or certificate holder (as the case may be)

10 may, within 30 days of the denial or revocation,

11 bring an action in any appropriate district court of

12 the United States to set aside the determination on

13 the ground that such determination is erroneous

14 based on the preponderance of the evidence.

15 (2) NO OTHER REVIEW PERMITTED.—Except

16 as provided in paragraph (1), no action by the At17 torney General or the Secretary pursuant to this

18 title shall be subject to judicial review.

19 (3) EFFECT OF REJECTED APPLICATION.—If

20 the Attorney General denies, in whole or in part, an

21 application for a certificate of review or for an

22 amendment to a certificate, or revokes or amends a

23 certificate, neither the negative determination nor

24 the statement of reasons therefore shall be admissi25 ble in evidence, in any administrative or judicial pro-
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1 ceeding, concerning any claim under the antitrust

2 laws.

3 (e) PUBLICATION OF DECISIONS.—The Attorney

4 General shall publish a notice in the Federal Register on

5 a timely basis of each decision made with respect to an

6 application for a certificate of review under this section

7 or the amendment or revocation of such a certificate, in

8 a manner that protects the confidentiality of any propri9 etary information relating to the application.

10 (f) ANNUAL REPORTS.—Every person to whom a cer11 tificate of review is issued shall submit to the Attorney

12 General an annual report, in such form and at such time

13 as the Attorney General may require, that contains any

14 necessary updates to the information required under sub15 section (b) and a description of the activities of the holder

16 under the certificate during the preceding year.

17 (g) RESTRICTIONS ON DISCLOSURE OF INFORMA18 TION.—

19 (1) WAIVER OF DISCLOSURE REQUIREMENTS

20 UNDER ADMINISTRATIVE PROCEDURE ACT.—Infor21 mation submitted by any person in connection with

22 the issuance, amendment, or revocation of a certifi23 cate of review shall be exempt from disclosure under

24 section 552 of title 5, United States Code.
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1 (2) RESTRICTIONS ON DISCLOSURE OF COM2 MERCIAL OR FINANCIAL INFORMATION.—

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

4 subparagraph (B), no officer or employee of the

5 United States shall disclose commercial or fi6 nancial information submitted in connection

7 with the issuance, amendment, or revocation of

8 a certificate of review if the information is priv9 ileged or confidential and if disclosure of the in10 formation would cause harm to the person who

11 submitted the information.

12 (B) EXCEPTIONS.—Subparagraph (A)

13 shall not apply with respect to information dis14 closed—

15 (i) upon a request made by the Con16 gress or any committee of the Congress,

17 (ii) in a judicial or administrative pro18 ceeding, subject to appropriate protective

19 orders,

20 (iii) with the consent of the person

21 who submitted the information,

22 (iv) in the course of making a deter23 mination with respect to the issuance,

24 amendment, or revocation of a certificate

25 of review, if the Attorney General deems
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1 disclosure of the information to be nec2 essary in connection with making the de3 termination,

4 (v) in accordance with any require5 ment imposed by a statute of the United

6 States, or

7 (vi) in accordance with any rule or

8 regulation promulgated under subsection

9 (i) permitting the disclosure of the infor10 mation to an agency of the United States

11 or of a State on the condition that the

12 agency will disclose the information only

13 under the circumstances specified in

14 clauses (i) through (v).

15 (3) PROHIBITION AGAINST USE OF INFORMA16 TION TO SUPPORT OR ANSWER CLAIMS UNDER ANTI17 TRUST LAWS.—Any information disclosed in an ap18 plication for a certificate of review under this section

19 shall only be admissible into evidence in a judicial or

20 administrative proceeding for the sole purpose of es21 tablishing that a person is entitled to the protections

22 provided by such a certificate.
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1 SEC. 605. NOTIFICATIONS PROVIDING REDUCTION IN CER2 TAIN PENALTIES UNDER ANTITRUST LAW

3 FOR HEALTH CARE COOPERATIVE VEN4 TURES.

5 (a) NOTIFICATIONS DESCRIBED.—

6 (1) SUBMISSION OF NOTIFICATION BY VEN7 TURE.—Any party to a health care cooperative ven8 ture, acting on such venture’s behalf, may, not later

9 than 90 days after entering into a written agreement

10 to form such venture or not later than 90 days after

11 the date of the enactment of this Act, whichever is

12 later, file with the Attorney General a written notifi13 cation disclosing—

14 (A) the identities of the parties to such

15 venture,

16 (B) the nature and objectives of such ven17 ture, and

18 (C) such additional information as the At19 torney General may require by regulation.

20 (2) ACTIVITIES DEEMED SUBMISSION OF NOTI21 FICATION.—The following health care cooperative

22 ventures shall be deemed to have filed a written noti23 fication with respect to the venture under paragraph

24 (1):

25 (A) SUBMISSION OF APPLICATION FOR

26 CERTIFICATE OF REVIEW.—Any health care co-
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1 operative venture for which an application for a

2 certificate of review is filed with the Attorney

3 General under section 603.

4 (B) CERTAIN VENTURES.—Any health care

5 cooperative venture meeting the following re6 quirements:

7 (i) The venture consists of a network

8 of non-institutional providers not greater

9 than—

10 (I) in the case of a nonexclusive

11 network in which the participating

12 members are permitted to create or

13 join other competing networks, 50

14 percent of the providers of health care

15 services in the relevant geographic

16 area and 50 percent of the members

17 of the provider specialty group in the

18 relevant market; or

19 (II) in the case of an exclusive

20 network in which the participating

21 members are not permitted to create

22 or join other competing networks, 35

23 percent of the providers of health care

24 services in the relevant geographic

25 area and 35 percent of the members
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1 of the provider specialty group in the

2 relevant market.

3 (ii) Each member of the venture as4 sumes substantial financial risk for the op5 eration of the venture through risk-sharing

6 arrangements, including (but not limited

7 to)—

8 (I) the acceptance of capitation

9 contracts;

10 (II) the acceptance of contracts

11 with fee withholding mechanisms re12 lating to the ability to meet estab13 lished goals for utilization review and

14 management; and

15 (III) the holding by members of

16 significant ownership or equity inter17 ests in the venture, where the capital

18 contributed by the members is used to

19 fund the operational costs of the ven20 ture such as administration, market21 ing, and computer-operated medical

22 information, if the venture develops

23 and operates comprehensive programs

24 for utilization management and qual25 ity assurance that include controls
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1 over the use of institutional, special2 ized, and ancillary medical services.

3 (3) SUBMISSION OF ADDITIONAL INFORMA4 TION.—

5 (A) REQUEST OF ATTORNEY GENERAL.—

6 At any time after receiving a notification filed

7 under paragraph (1), the Attorney General may

8 require the submission of additional information

9 or documentary material relevant to the pro10 posed health care cooperative venture.

11 (B) PARTIES TO VENTURE.—Any party to

12 a health care cooperative venture may submit

13 such additional information on the venture’s be14 half as may be appropriate to ensure that the

15 venture will receive the protections provided

16 under subsection (b).

17 (C) REQUIRED SUBMISSION OF INFORMA18 TION ON CHANGES TO VENTURE.—A health

19 care cooperative venture for which a notification

20 is in effect under this section shall submit infor21 mation on any change in the membership of the

22 venture not later than 90 days after such

23 change occurs.

24 (4) PUBLICATION OF NOTIFICATION.—
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1 (A) INFORMATION MADE PUBLICLY AVAIL2 ABLE.—Not later than 30 days after receiving

3 a notification with respect to a venture under

4 paragraph (1), the Attorney General shall pub5 lish in the Federal Register a notice with re6 spect to the venture that identifies the parties

7 to the venture and generally describes the pur8 pose and planned activity of the venture. Prior

9 to its publication, the contents of the notice

10 shall be made available to the parties to the

11 venture.

12 (B) RESTRICTION ON DISCLOSURE OF

13 OTHER INFORMATION.—All information and

14 documentary material submitted pursuant to

15 this section and all information obtained by the

16 Attorney General in the course of any investiga17 tion or case with respect to a potential violation

18 of the antitrust laws by the health care coopera19 tive venture (other than information and mate20 rial described in subparagraph (A)) shall be ex21 empt from disclosure under section 552 of title

22 5, United States Code, and shall not be made

23 publicly available by any agency of the United

24 States to which such section applies except in
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1 a judicial proceeding in which such information

2 and material is subject to any protective order.

3 (5) WITHDRAWAL OF NOTIFICATION.—Any per4 son who files a notification pursuant to this section

5 may withdraw such notification before a publication

6 by the Attorney General pursuant to paragraph (4).

7 Any person who is deemed to have filed a notifica8 tion under paragraph (2)(A) shall be deemed to have

9 withdrawn the notification if the certificate of review

10 in question is revoked or withdrawn under section

11 604.

12 (6) NO JUDICIAL REVIEW PERMITTED.—Any

13 action taken or not taken by the Attorney General

14 with respect to notifications filed pursuant to this

15 subsection shall not be subject to judicial review.

16 (b) PROTECTIONS FOR VENTURES SUBJECT TO NO17 TIFICATION.—

18 (1) IN GENERAL.—

19 (A) PROTECTIONS DESCRIBED.—The pro20 visions of paragraphs (2), (3), (4), and (5) shall

21 apply with respect to any action under the anti22 trust laws challenging conduct within the scope

23 of a notification which is in effect pursuant to

24 subsection (a)(1).
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1 (B) TIMING OF PROTECTIONS.—The pro2 tections described in this subsection shall apply

3 to the venture that is the subject of a notifica4 tion under subsection (a)(1) as of the earlier

5 of—

6 (i) the date of the publication in the

7 Federal Register of the notice published

8 with respect to the notification; or

9 (ii) if such notice is not published dur10 ing the period required under subsection

11 (a)(4), the expiration of the 30-day period

12 that begins on the date the Attorney Gen13 eral receives any necessary information re14 quired to be submitted under subsection

15 (a)(1) or any additional information re16 quired by the Attorney General under sub17 section (a)(3)(A).

18 (2) APPLICABILITY OF RULE OF REASON

19 STANDARD.—In any action under the antitrust laws,

20 the conduct of any person which is within the scope

21 of a notification filed under subsection (a) shall not

22 be deemed illegal per se, but shall be judged on the

23 basis of its reasonableness, taking into account all

24 relevant factors affecting competition, including, but
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1 not limited to, effects on competition in relevant

2 markets.

3 (3) LIMITATION ON RECOVERY TO ACTUAL

4 DAMAGES AND INTEREST.—Notwithstanding section

5 4 of the Clayton Act, any person who is entitled to

6 recovery under the antitrust laws for conduct that is

7 within the scope of a notification filed under sub8 section (a) shall recover the actual damages sus9 tained by such person and interest calculated at the

10 rate specified in section 1961 of title 28, United

11 States Code, for the period beginning on the earliest

12 date for which injury can be established and ending

13 on the date of judgment, unless the court finds that

14 the award of all or part of such interest is unjust

15 under the circumstances.

16 (4) AWARD OF ATTORNEY’S FEES AND COSTS

17 OF SUIT.—

18 (A) IN GENERAL.—In any action under the

19 antitrust laws brought against a health care co20 operative venture for conduct that is within the

21 scope of a notification filed under subsection

22 (a), the court shall, at the conclusion of the ac23 tion—

24 (i) award to a substantially prevailing

25 claimant the cost of suit attributable to
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1 such claim, including a reasonable attor2 ney’s fee, or

3 (ii) award to a substantially prevailing

4 party defending against such claim the

5 cost of such suit attributable to such claim,

6 including reasonable attorney’s fee, if the

7 claim, or the claimant’s conduct during

8 litigation of the claim, was frivolous, un9 reasonable, without foundation, or in bad

10 faith.

11 (B) OFFSET IN CASES OF BAD FAITH.—

12 The court may reduce an award made pursuant

13 to subparagraph (A) in whole or in part by an

14 award in favor of another party for any part of

15 the cost of suit (including a reasonable attor16 ney’s fee) attributable to conduct during the

17 litigation by any prevailing party that the court

18 finds to be frivolous, unreasonable, without

19 foundation, or in bad faith.

20 (5) RESTRICTIONS ON ADMISSIBILITY OF IN21 FORMATION.—

22 (A) IN GENERAL.—Any information dis23 closed in a notification submitted under sub24 section (a)(1) and the fact of the publication of

25 a notification by the Attorney General under
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1 subsection (a)(4) shall only be admissible into

2 evidence in a judicial or administrative proceed3 ing for the sole purpose of establishing that a

4 party to a health care cooperative venture is en5 titled to the protections described in this sub6 section.

7 (B) ACTIONS OF ATTORNEY GENERAL.—

8 No action taken by the Attorney General pursu9 ant to this section shall be admissible into evi10 dence in any judicial or administrative proceed11 ing for the purpose of supporting or answering

12 any claim under the antitrust laws.

13 SEC. 606. REVIEW AND REPORTS ON SAFE HARBORS AND

14 CERTIFICATES OF REVIEW.

15 (a) IN GENERAL.—The Attorney General (in con16 sultation with the Secretary and the Chair) shall periodi17 cally review the safe harbors described in section 602, the

18 additional safe harbors designated under section 603, and

19 the certificates of review issued under section 604, and—

20 (1) with respect to the safe harbors described in

21 section 602, submit such recommendations to Con22 gress as the Attorney General considers appropriate

23 for modifications of such safe harbors;

24 (2) with respect to the additional safe harbors

25 under designated under section 603, issue proposed
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1 revisions to such activities and publish the revisions

2 in the Federal Register; and

3 (3) with respect to the certificates of review,

4 submit a report to Congress on the issuance of such

5 certificates, and shall include in the report a descrip6 tion of the effect of such certificates on increasing

7 access to high quality health care services at reduced

8 costs.

9 (b) RECOMMENDATIONS FOR LEGISLATION.—The

10 Attorney General shall include in the reports submitted

11 under subsection (a)(3) any recommendations of the At12 torney General for legislation to improve the program for

13 the issuance of certificates of review established under this

14 title.

15 SEC. 607. RULES, REGULATIONS, AND GUIDELINES.

16 (a) SAFE HARBORS, CERTIFICATES, AND NOTIFICA17 TIONS.—The Attorney General, with the concurrence of

18 the Secretary, shall promulgate such rules, regulations,

19 and guidelines as are necessary to carry out sections 602,

20 603, 604, and 605, including guidelines defining or relat21 ing to relevant geographic and product markets for health

22 care services and providers of health care services.

23 (b) GUIDANCE FOR PROVIDERS.—

24 (1) IN GENERAL.—To promote greater cer25 tainty regarding the application of the antitrust laws
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1 to activities in the health care market, the Attorney

2 General, in consultation with the Secretary and the

3 Chair, shall (not later than 1 year after the date of

4 the enactment of this Act), taking into account the

5 criteria used to designate additional safe harbors

6 under section 603 and grant certificates of review

7 under section 604, publish guidelines—

8 (A) to assist providers of health care serv9 ices in analyzing whether the activities of such

10 providers may be subject to a safe harbor under

11 sections 602 or 603; and

12 (B) describing specific types of activities

13 which would meet the requirements for a cer14 tificate of review under section 604, and sum15 marizing the factual and legal bases on which

16 the activities would meet the requirements.

17 (2) PERIODIC UPDATE.—The Attorney General

18 shall periodically update the guidelines published

19 under paragraph (1) as the Attorney General consid20 ers appropriate.

21 (3) WAIVER OF ADMINISTRATIVE PROCEDURE

22 ACT.—Section 553 of title 5, United States Code,

23 shall not apply to the issuance of guidelines under

24 paragraph (1).
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1 SEC. 608. DEFINITIONS.

2 In this title, the following definitions shall apply:

3 (1) The term ‘‘antitrust laws’’—

4 (A) has the meaning given it in subsection

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

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

7 section 5 of the Federal Trade Commission Act

8 (15 U.S.C. 45) to the extent such section ap9 plies to unfair methods of competition; and

10 (B) includes any State law similar to the

11 laws referred to in subparagraph (A).

12 (2) The term ‘‘Chair’’ means the Chair of the

13 Federal Trade Commission.

14 (3) The term ‘‘health insurance plan’’ has the

15 meaning given such term in section 111(b).

16 (4) The term ‘‘health care cooperative venture’’

17 means any activities, including attempts to enter

18 into or perform a contract or agreement, carried out

19 by 2 or more persons for the purpose of providing

20 health care services.

21 (5) The term ‘‘health care services’’ means any

22 services for which payment may be made under a

23 health insurance plan, including services related to

24 the delivery or administration of such services.

25 (6) The term ‘‘medical self-regulatory entity’’

26 means a medical society or association, a specialty
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1 board, a recognized accrediting agency, or a hospital

2 medical staff, and includes the members, officers,

3 employees, consultants, and volunteers or commit4 tees of such an entity.

5 (7) The term ‘‘person’’ includes a State or unit

6 of local government.

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

8 means any individual or entity that is engaged in the

9 delivery of health care services in a State and that

10 is required by State law or regulation to be licensed

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

12 such services in the State.

13 (9) The term ‘‘specialty group’’ means a medi14 cal specialty or subspecialty in which a provider of

15 health care services may be licensed to practice by

16 a State (as determined by the Secretary in consulta17 tion with the certification boards for such specialties

18 and subspecialties).

19 (10) The term ‘‘standard setting and enforce20 ment activities’’ means—

21 (A) accreditation of health care practition22 ers, health care providers, medical education in23 stitutions, or medical education programs,

24 (B) technology assessment and risk man25 agement activities,
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1 (C) the development and implementation of

2 practice guidelines or practice parameters, or

3 (D) official peer review proceedings under4 taken by a hospital medical staff (or committee

5 thereof) or a medical society or association for

6 purposes of evaluating the professional conduct

7 or quality of health care provided by a medical

8 professional.

9 TITLE VII—LONG-TERM CARE

10 SEC. 701. EXCLUSION FROM GROSS INCOME FOR AMOUNTS

11 WITHDRAWN FROM INDIVIDUAL RETIRE12 MENT PLANS OR 401(k) PLANS FOR LONG13 TERM CARE INSURANCE.

14 (a) IN GENERAL.—Part III of subchapter B of chap15 ter 1 of the Internal Revenue Code of 1986 (relating to

16 items specifically excluded from gross income) is amended

17 by redesignating section 137 as section 138 and by insert18 ing after section 136 the following new section:

19 ‘‘SEC. 137. DISTRIBUTIONS FROM INDIVIDUAL RETIREMENT

20 ACCOUNTS AND SECTION 401(k) PLANS FOR

21 LONG-TERM CARE INSURANCE.

22 ‘‘(a) GENERAL RULE.—The amount includible in the

23 gross income of an individual for the taxable year by rea24 son of qualified distributions during such taxable year

25 shall not exceed the excess of—
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1 ‘‘(1) the amount which would (but for this sec2 tion) be so includible by reason of such distributions,

3 over

4 ‘‘(2) the aggregate premiums paid by such indi5 vidual during such taxable year for any long-term

6 care insurance contract for the benefit of such indi7 vidual or the spouse of such individual.

8 ‘‘(b) QUALIFIED DISTRIBUTION.—For purposes of

9 this section, the term ‘qualified distribution’ means any

10 distribution to an individual from an individual retirement

11 account or a section 401(k) plan if such individual has

attained age 591 12 ⁄2 on or before the date of the distribution

13 (and, in the case of a distribution used to pay premiums

14 for the benefit of the spouse of such individual, such

spouse has attained age 591 15 ⁄2 on or before the date of the

16 distribution).

17 ‘‘(c) DEFINITIONS AND SPECIAL RULES RELATING

18 TO LONG-TERM INSURANCE CONTRACTS.—

19 ‘‘(1) LONG-TERM CARE INSURANCE CON20 TRACT.—

21 ‘‘(A) IN GENERAL.—For purposes of this

22 section, the term ‘long-term care insurance con23 tract’ means any insurance contract issued if—

24 ‘‘(i) the only insurance protection pro25 vided under such contract is coverage of
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1 qualified long-term care services and bene2 fits incidental to such coverage,

3 ‘‘(ii) the maximum benefit under the

4 policy for expenses incurred for any day

5 does not exceed $200,

6 ‘‘(iii) such contract does not cover ex7 penses incurred for services or items to the

8 extent that such expenses are reimbursable

9 under title XVIII of the Social Security

10 Act or would be so reimbursable but for

11 the application of a deductible or coinsur12 ance amount,

13 ‘‘(iv) such contract is guaranteed re14 newable,

15 ‘‘(v) such contract does not have any

16 cash surrender value, and

17 ‘‘(vi) all refunds of premiums, and all

18 policyholder dividends or similar amounts,

19 under such contract are to be applied as a

20 reduction in future premiums or to in21 crease future benefits.

22 ‘‘(B) SPECIAL RULES.—

23 ‘‘(i) PER DIEM, ETC. PAYMENTS PER24 MITTED.—A contract shall not fail to be

25 treated as described in subparagraph
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1 (A)(i) by reason of payments being made

2 on a per diem or other periodic basis with3 out regard to the expenses incurred during

4 the period to which the payments relate.

5 ‘‘(ii) CONTRACT MAY COVER MEDI6 CARE REIMBURSABLE EXPENSES WHERE

7 MEDICARE IS SECONDARY PAYOR.—Sub8 paragraph (A)(iii) shall not apply to ex9 penses which are reimbursable under title

10 XVIII of the Social Security Act only as a

11 secondary payor.

12 ‘‘(iii) REFUNDS OF PREMIUMS.—Sub13 paragraph (A)(vi) shall not apply to any

14 refund of premiums on surrender or can15 cellation of the contract.

16 ‘‘(2) QUALIFIED LONG-TERM CARE SERVICES.—

17 For purposes of this subsection—

18 ‘‘(A) IN GENERAL.—The term ‘qualified

19 long-term care services’ means necessary diag20 nostic, preventive, therapeutic, and rehabilita21 tive services, and maintenance or personal care

22 services, which—

23 ‘‘(i) are required by a chronically ill

24 individual in a qualified facility, and
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1 ‘‘(ii) are provided pursuant to a plan

2 of care prescribed by a licensed health care

3 practitioner.

4 ‘‘(B) CHRONICALLY ILL INDIVIDUAL.—

5 ‘‘(i) IN GENERAL.—The term ‘chron6 ically ill individual’ means any individual

7 who has been certified by a licensed health

8 care practitioner as—

9 ‘‘(I) being unable to perform

10 (without substantial assistance from

11 another individual) at least 2 activi12 ties of daily living (as defined in

13 clause (ii)) for a period of at least 90

14 days due to a loss of functional capac15 ity, or having a similar level of disabil16 ity (as determined by the Secretary in

17 consultation with the Secretary of

18 Health and Human Services), or

19 ‘‘(II) having a similar level of

20 disability due to cognitive impairment.

21 ‘‘(ii) ACTIVITIES OF DAILY LIVING.—

22 For purposes of clause (i), each of the fol23 lowing is an activity of daily living:

24 ‘‘(I) MOBILITY.—The process of

25 walking or wheeling on a level surface
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1 which may include the use of an

2 assistive device such as a cane, walk3 er, wheelchair, or brace.

4 ‘‘(II) DRESSING.—The overall

5 complex behavior of getting clothes

6 from closets and drawers and then

7 getting dressed.

8 ‘‘(III) TOILETING.—The act of

9 going to the toilet room for bowel and

10 bladder function, transferring on and

11 off the toilet, cleaning after elimi12 nation, and arranging clothes or the

13 ability to voluntarily control bowel and

14 bladder function, or in the event of in15 continence, the ability to maintain a

16 reasonable level of personal hygiene.

17 ‘‘(IV) TRANSFER.—The process

18 of getting in and out of bed or in and

19 out of a chair or wheelchair.

20 ‘‘(V) EATING.—The process of

21 getting food from a plate or its equiv22 alent into the mouth.

23 ‘‘(C) QUALIFIED FACILITY.—The term

24 ‘qualified facility’ means—
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1 ‘‘(i) a nursing, rehabilitative, hospice,

2 or adult day care facility (including a hos3 pital, retirement home, nursing home,

4 skilled nursing facility, intermediate care

5 facility, or similar institution)—

6 ‘‘(I) which is licensed under

7 State law, or

8 ‘‘(II) which is a certified facility

9 for purposes of title XVIII or XIX of

10 the Social Security Act, or

11 ‘‘(ii) an individual’s home if a licensed

12 health care practitioner certifies that with13 out home care the individual would have to

14 be cared for in a facility described in

15 clause (i).

16 ‘‘(D) MAINTENANCE OR PERSONAL CARE

17 SERVICES.—The term ‘maintenance or personal

18 care services’ means any care the primary pur19 pose of which is to provide needed assistance

20 with any of the activities of daily living de21 scribed in subparagraph (B)(ii).

22 ‘‘(E) LICENSED HEALTH CARE PRACTI23 TIONER.—The term ‘licensed health care practi24 tioner’ means any physician (as defined in sec25 tion 1861(r) of the Social Security Act) and
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1 any registered professional nurse, licensed social

2 worker, or other individual who meets such re3 quirements as may be prescribed by the Sec4 retary.

5 ‘‘(3) INFLATION ADJUSTMENT OF $200 BENE6 FIT LIMIT.—

7 ‘‘(A) IN GENERAL.—In the case of a cal8 endar year after 1995, the $200 amount con9 tained in paragraph (1)(A)(ii) shall be in10 creased for such calendar year by the medical

11 care cost adjustment for such calendar year. If

12 any increase determined under the preceding

13 sentence is not a multiple of $10, such increase

14 shall be rounded to the nearest multiple of $10.

15 ‘‘(B) MEDICAL CARE COST ADJUST16 MENT.—For purposes of subparagraph (A), the

17 medical care cost adjustment for any calendar

18 year is the percentage (if any) by which—

19 ‘‘(i) the medical care component of

20 the Consumer Price Index (as defined in

21 section 1(f)(5)) for August of the preced22 ing calendar year, exceeds

23 ‘‘(ii) such component for August of

24 1994.’’
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1 ‘‘(d) OTHER DEFINITIONS.—For purposes of this

2 section—

3 ‘‘(1) INDIVIDUAL RETIREMENT ACCOUNT.—The

4 term ‘individual retirement account’ has the mean5 ing given such term by section 408(a).

6 ‘‘(2) SECTION 401(k) PLAN.—The term ‘section

7 401(k) plan’ means any employer plan which meets

8 the requirements of section 401(a) and which in9 cludes a qualified cash or deferred arrangement (as

10 defined in section 401(k)).

11 ‘‘(e) SPECIAL RULES FOR SECTION 401(k) PLANS.—

12 ‘‘(1) WITHDRAWALS CANNOT EXCEED ELEC13 TIVE CONTRIBUTIONS UNDER QUALIFIED CASH OR

14 DEFERRED ARRANGEMENT.—This section shall not

15 apply to any distribution from a section 401(k) plan

16 to the extent the aggregate amount of such distribu17 tions for the use described in subsection (a) exceeds

18 the aggregate employer contributions made pursuant

19 to the employee’s election under section 401(k)(2).

20 ‘‘(2) WITHDRAWALS NOT TO CAUSE DISQUALI21 FICATION.—A plan shall not be treated as failing to

22 satisfy the requirements of section 401, and an ar23 rangement shall not be treated as failing to be a

24 qualified cash or deferred arrangement (as defined

25 in section 401(k)(2)), merely because under the plan
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1 or arrangement distributions are permitted which

2 are excludable from gross income by reason of this

3 section.’’

4 (b) CONFORMING AMENDMENTS.—

5 (1) Section 401(k) of such Code is amended by

6 adding at the end the following new paragraph:

7 ‘‘(11) CROSS REFERENCE.—

‘‘For provision permitting tax-free withdrawals

for payment of long-term care premiums, see section

137.’’

8 (2) Section 408(d) of such Code is amended by

9 adding at the end the following new paragraph:

10 ‘‘(8) CROSS REFERENCE.—

‘‘For provision permitting tax-free withdrawals

from individual retirement accounts for payment of

long-term care premiums, see section 137.’’

11 (3) The table of sections for such part III is

12 amended by striking the last item and inserting the

13 following new items:

‘‘Sec. 137. Distributions from individual retirement accounts and

section 401(k) plans for long-term care insurance.

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

14 SEC. 702. CERTAIN EXCHANGES OF LIFE INSURANCE CON15 TRACTS FOR LONG-TERM CARE INSURANCE

16 CONTRACTS NOT TAXABLE.

17 Subsection (a) of section 1035 of the Internal Reve18 nue Code of 1986 (relating to certain exchanges of insur19 ance contracts) is amended by striking the period at the
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1 end of paragraph (3) and inserting ‘‘; or’’, and by adding

2 at the end thereof the following new paragraph:

3 ‘‘(4) a contract of life insurance or an endow4 ment or annuity contract for a long-term care insur5 ance contract (as defined in section 137(c)(1)).’’

6 SEC. 703. TAX TREATMENT OF ACCELERATED DEATH BENE7 FITS UNDER LIFE INSURANCE CONTRACTS.

8 Section 101 of the Internal Revenue Code of 1986

9 (relating to certain death benefits) is amended by adding

10 at the end thereof the following new subsection:

11 ‘‘(g) TREATMENT OF CERTAIN ACCELERATED

12 DEATH BENEFITS.—

13 ‘‘(1) IN GENERAL.—For purposes of this sec14 tion, any amount paid or advanced to an individual

15 under a life insurance contract on the life of an in16 sured—

17 ‘‘(A) who is a terminally ill individual, or

18 ‘‘(B) who is a chronically ill individual (as

19 defined in section 137(c)(2)(B)) who is confined

20 to a qualified facility (as defined in section

21 137(c)(2)(C)(i)),

22 shall be treated as an amount paid by reason of the

23 death of such insured.

24 ‘‘(2) TERMINALLY ILL INDIVIDUAL.—For pur25 poses of this subsection, the term ‘terminally ill indi-
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1 vidual’ means an individual who has been certified

2 by a physician as having an illness or physical condi3 tion which can reasonably be expected to result in

4 death in 12 months or less.

5 ‘‘(3) PHYSICIAN.—For purposes of this sub6 section, the term ‘physician’ has the meaning given

7 to such term by section 137(c)(2)(E).’’

8 SEC. 704. EFFECTIVE DATE.

9 The amendments made by this subtitle shall apply to

10 taxable years beginning after December 31, 1994.

11 TITLE VI—WELFARE

12 RESTRICTIONS FOR ALIENS

13 SEC. 801. INELIGIBILITY OF ALIENS FOR PUBLIC WELFARE

14 ASSISTANCE.

15 (a) IN GENERAL.—Notwithstanding any other provi16 sion of law and except as provided in subsections (b) and

17 (c), no alien shall be eligible for any program referred to

18 in subsection (d).

19 (b) EXCEPTIONS.—

20 (1) REFUGEE EXCEPTION.—Subsection (a)

21 shall not apply to an alien admitted to the United

22 States as a refugee under section 207 of the Immi23 gration and Nationality Act until 6 years after the

24 date of such alien’s arrival into the United States.
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1 (2) AGED EXCEPTION.—Subsection (a) shall

2 not apply to an alien who—

3 (A) has been lawfully admitted to the

4 United States for permanent residence;

5 (B) is over 75 years of age; and

6 (C) has resided in the United States for at

7 least 5 years.

8 (3) CURRENT RESIDENT EXCEPTION.—Sub9 section (a) shall not apply to the eligibility of an

10 alien for a program referred to in subsection (d)

11 until 1 year after the date of the enactment of this

12 Act if, on such date of enactment, the alien is resid13 ing in the United States and is eligible for the pro14 gram.

15 (c) PROGRAMS FOR WHICH ALIENS MAY BE ELIGI16 BLE.—The limitation under subsection (a) shall not apply

17 to the following programs:

18 (1) Medical assistance with respect to emer19 gency services (as defined for purposes of section

20 1916(a)(2)(D) of the Social Security Act).

21 (d) PROGRAMS FOR WHICH ALIENS ARE INELI22 GIBLE.—The programs referred to in this subsection are

23 the following:
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1 (1) The program of medical assistance under

2 title XIX of the Social Security Act, except emer3 gency services as provided in subsection (c).

4 (2) The Maternal and Child Health Services

5 Block Grant Program under title V of the Social Se6 curity Act.

7 (3) The program established in section 330 of

8 the Public Health Service Act (relating to commu9 nity health centers).

10 (4) The program established in section 1001 of

11 the Public Health Service Act (relating to family

12 planning methods and services).

13 (5) The program established in section 329 of

14 the Public Health Service Act (relating to migrant

15 health centers).

16 (6) The program of aid and services to needy

17 families with children under part A of title IV of the

18 Social Security Act.

19 (7) The child welfare services program under

20 part B of title IV of the Social Security Act.

21 (8) The supplemental security income program

22 under title XVI of the Social Security Act.

23 (9) The program of foster care and adoption

24 assistance under part E of title IV of the Social Se25 curity Act.
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1 (10) The food stamp program, as defined in

2 section 3(h) of the Food Stamp Act of 1977 (7

3 U.S.C. 2012(h)).

4 (11) The school lunch program carried out

5 under the National School Lunch Act (42 U.S.C.

6 1751 et seq.).

7 (12) The special supplemental food program for

8 women, infants, and children carried out under sec9 tion 17 of the Child Nutrition Act of 1966 (42

10 U.S.C. 1786).

11 (13) The nutrition programs carried out under

12 part C of title III of the Older Americans Act of

13 1965 (42 U.S.C. 3030e et seq.).

14 (14) The school breakfast program carried out

15 under section 4 of the Child Nutrition Act of 1966

16 (42 U.S.C. 1773).

17 (15) The child and adult care food program

18 carried out under section 17 of the National School

19 Lunch Act (42 U.S.C. 1766).

20 (16) The Emergency Food Assistance Act of

21 1983 (7 U.S.C. 612c note).

22 (17) The summer food service program for chil23 dren carried out under section 13 of the National

24 School Lunch Act (42 U.S.C. 1761).
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1 (18) The commodity supplemental food pro2 gram authorized by section 4(a) of the Agriculture

3 and Consumer Protection Act of 1973 (7 U.S.C.

4 612c note).

5 (19) The special milk program carried out

6 under section 3 of the Child Nutrition Act of 1966

7 (42 U.S.C. 1772).

8 (20) The program of rental assistance on behalf

9 of low-income families provided under section 8 of

10 the United States Housing Act of 1937 (42 U.S.C.

11 1437f).

12 (21) The program of assistance to public hous13 ing under title I of the United States Housing Act

14 of 1937 (42 U.S.C. 1437 et seq.).

15 (22) The loan program under section 502 of the

16 Housing Act of 1949 (42 U.S.C. 1472).

17 (23) The program of interest reduction pay18 ments pursuant to contracts entered into by the Sec19 retary of Housing and Urban Development under

20 section 236 of the National Housing Act (12 U.S.C.

21 1715z–1).

22 (24) The program of loans for rental and coop23 erative housing under section 515 of the Housing

24 Act of 1949 (42 U.S.C. 1485).
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1 (25) The program of rental assistance pay2 ments pursuant to contracts entered into under sec3 tion 521(a)(2)(A) of the Housing Act of 1949 (42

4 U.S.C. 1490a(a)(2)(A)).

5 (26) The program of assistance payments on

6 behalf of homeowners under section 235 of the Na7 tional Housing Act (12 U.S.C. 1715z).

8 (27) The program of rent supplement payments

9 on behalf of qualified tenants pursuant to contracts

10 entered into under section 101 of the Housing and

11 Urban Development Act of 1965 (12 U.S.C. 1701s).

12 (28) The loan and grant programs under sec13 tion 504 of the Housing Act of 1949 (42 U.S.C.

14 1474) for repairs and improvements to rural dwell15 ings.

16 (29) The loan and assistance programs under

17 sections 514 and 516 of the Housing Act of 1949

18 (42 U.S.C. 1484, 1486) for housing for farm labor.

19 (30) The program of grants for preservation

20 and rehabilitation of housing under section 533 of

21 the Housing Act of 1949 (42 U.S.C. 1490m).

22 (31) The program of grants and loans for mu23 tual and self-help housing and technical assistance

24 under section 523 of the Housing Act of 1949 (42

25 U.S.C. 1490c).
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1 (32) The program of site loans under section

2 524 of the Housing Act of 1949 (42 U.S.C. 1490d).

3 (33) The program under part B of title IV of

4 the Higher Education Act of 1965.

5 (34) The program under subpart 1 of part A of

6 title IV of the Higher Education Act of 1965.

7 (35) The program under part C of title IV of

8 the Higher Education Act of 1965.

9 (36) The program under subpart 3 of part A of

10 title IV of the Higher Education Act of 1965.

11 (37) The program under part E of title IV of

12 the Higher Education Act of 1965.

13 (38) The program under subpart 4 of part A of

14 title IV of the Higher Education Act of 1965.

15 (39) The program under title IX of the Higher

16 Education Act of 1965.

17 (40) The program under subpart 5 of part A of

18 title IV of the Higher Education Act of 1965.

19 (41) The programs established in sections 338A

20 and 338B of the Public Health Service Act and the

21 programs established in part A of title VII of such

22 Act (relating to loans and scholarships for education

23 in the health professions).

24 (42) The program established in section

25 317(j)(1) of the Public Health Service Act (relating
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1 to grants for immunizations against vaccine-prevent2 able diseases).

3 (43) The program established in section 317A

4 of the Public Health Service Act (relating to grants

5 for screening, referrals, and education regarding

6 lead poisoning in infants and children).

7 (44) The program established in part A of title

8 XIX of the Public Health Service Act (relating to

9 block grants for preventive health and health serv10 ices).

11 (45) The programs established in subparts I

12 and II of part B of title XIX of the Public Health

13 Service Act.

14 (46)(A) The program of training for disadvan15 taged adults and youth under part A of title II of

16 the Job Training Partnership Act (29 U.S.C. 1601

17 et seq.), as in effect before July 1, 1993.

18 (B)(i) The program of training for disadvan19 taged adults under part A of title II of the Job

20 Training Partnership Act (29 U.S.C. 1601 et seq.),

21 as in effect on and after July 1, 1993.

22 (ii) The program of training for disadvantaged

23 youth under part C of title II of the Job Training

24 Partnership Act (29 U.S.C. 1641 et seq.), as in ef25 fect on and after July 1, 1993.
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1 (47) The Job Corps program under part B of

2 title IV of the Job Training Partnership Act (29

3 U.S.C. 1692 et seq.).

4 (48) The summer youth employment and train5 ing programs under part B of title II of the Job

6 Training Partnership Act (29 U.S.C. 1630 et seq.).

7 (49) The programs carried out under the Older

8 American Community Service Employment Act (42

9 U.S.C. 3001 et seq.).

10 (50) The programs under title III of the Older

11 Americans Act of 1965.

12 (51) The programs carried out under part B of

13 title II of the Domestic Volunteer Service Act of

14 1973 (42 U.S.C. 5011–5012).

15 (52) The programs carried out under part C of

16 title II of the Domestic Volunteer Service Act of

17 1973 (42 U.S.C. 5013).

18 (53) The program under the Low-Income En19 ergy Assistance Act of 1981 (42 U.S.C. 8621 et

20 seq.).

21 (54) The weatherization assistance program

22 under title IV of the Energy Conservation and Pro23 duction Act (42 U.S.C. 6851).
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1 (55) The program of block grants to States for

2 social services under title XX of the Social Security

3 Act.

4 (56) The programs carried out under the Com5 munity Services Block Grant Act (42 U.S.C. 9901

6 et seq.).

7 (57) The program of legal assistance to eligible

8 clients and other programs under the Legal Services

9 Corporation Act (42 U.S.C. 2996 et seq.).

10 (58) The program for emergency food and shel11 ter grants under title III of the Stewart B. McKin12 ney Homeless Assistance Act (42 U.S.C. 11331 et

13 seq.).

14 (59) The programs carried out under the Child

15 Care and Development Block Grant Act of 1990 (42

16 U.S.C. 9858 et seq.).

17 (60) A State program for providing child care

18 under section 402(i) of the Social Security Act.

19 (61) The program of State legalization impact20 assistance grants (SLIAG) under section 204 of the

21 Immigration Reform and Control Act of 1986.

22 (e) NOTIFICATION OF ALIENS.—Any Federal agency

23 that administers a program referred to in subsection (d)

24 shall, directly or through the States, notify each alien re-
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1 ceiving benefits under the program whose eligibility for the

2 program is or will be terminated by reason of this section.

3 SEC. 802. STATE AFDC AGENCIES REQUIRED TO PROVIDE

4 INFORMATION ON ILLEGAL ALIENS TO THE

5 IMMIGRATION AND NATURALIZATION SERV6 ICE.

7 Section 402(a) of the Social Security Act (42 U.S.C.

8 602(a)) is amended—

9 (1) by striking ‘‘and’’ at the end of paragraph

10 (44);

11 (2) by striking the period at the end of para12 graph (45) and inserting ‘‘; and’’; and

13 (3) by inserting after paragraph (45) the fol14 lowing:

15 ‘‘(46) require the State agency to provide to the

16 Immigration and Naturalization Service the name,

17 address, and other identifying information that the

18 agency has with respect to any individual unlawfully

19 in the United States any of whose children is a citi20 zen of the United States.’’.
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1 TITLE IX—INCREASE IN ASSIST2 ANCE TO COMMUNITY AND

3 MIGRANT HEALTH CENTERS

4 FROM RESIDUAL SAVINGS

5 SEC. 901. GRANT PROGRAM TO PROMOTE PRIMARY

6 HEALTH CARE SERVICES FOR UNDERSERVED

7 POPULATIONS.

8 (a) AUTHORIZATION.—The Secretary of Health and

9 Human Services shall provide for a program of grants to

10 migrant and community health centers (receiving grants

11 or contracts under section 329, 330, or 340 of the Public

12 Health Service Act) in order to promote the provision of

13 primary health care services for underserved individuals.

14 Such grants may be used—

15 (1) to promote the provision of off-site services

16 (through means such as mobile medical clinics);

17 (2) to improve birth outcomes in areas with

18 high infant mortality and morbidity;

19 (3) to establish primary care clinics in areas

20 identified as in need of such clinics; and

21 (4) for recruitment and training costs of nec22 essary providers and operating costs for unreim23 bursed services.
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1 (b) CONDITIONS.—(1) Grants under this subsection

2 shall only be made upon application, approved by the Sec3 retary.

4 (2) The amount of grants made under this section

5 shall be determined by the Secretary.

6 (c) AUTHORIZATION OF APPROPRIATIONS.—

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

8 there are authorized to be appropriated for each fis9 cal year, in the 5-fiscal-year period beginning with

10 fiscal year 1995, such amounts as the Secretary esti11 mates, in consultation with the Director of the Of12 fice of Management and Budget, reflects the net

13 savings to the Federal Government in the fiscal year

14 of the enactment of this Act.

15 (2) LIMITATION.—The total amount of funds

16 made available under this section in such 5-fiscal17 year period may not exceed $13,100,000,000.

18 (3) USE OF FUNDS.—Of the amounts appro19 priated each fiscal year under this section, at least

20 10 percent shall be used for grants described in sub21 section (a)(1) and at least 10 percent shall be used

22 for grants described in subsection (a)(2). The Sec23 retary may use not to exceed 50 percent of the

24 amounts appropriated to carry out this section for

25 the purpose of making new grants or contracts
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1 under sections 329, 330, and 340 of the Public

2 Health Service Act.

3 (d) STUDY AND REPORT.—The Secretary shall con4 duct a study of the impact of the grants made under this

5 section to migrant and community health centers on ac6 cess to health care, birth outcomes, and the use of emer7 gency room services. Not later than 2 years after the date

8 of the enactment of this Act, the Secretary shall submit

9 to Congress a report on such study and on recommenda10 tions for changes in the programs under this section in

11 order to promote the appropriate use of cost-effective out12 patient services.

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