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[Congressional Bills 103th Congress]
[From the U.S. Government Publishing Office]
[H.R. 101 Introduced in House (IH)]

103d CONGRESS
  1st Session
                                H. R. 101

 To improve access to health insurance and contain health care costs, 
                        and for other purposes.

_______________________________________________________________________

                    IN THE HOUSE OF REPRESENTATIVES

                            January 5, 1993

 Mr. Michel (for himself, Mr. Gingrich, Mr. Hunter, Mr. McCollum, Mr. 
 Archer, Mr. Crapo, Mr. Kasich, Mr. McDade, Mr. McMillan, Mr. Solomon, 
  Mr. Bilirakis, Mr. Bliley, Mr. Goss, Mr. Gradison, Mr. Grandy, Mr. 
 Gunderson, Mr. Hastert, Mr. Hobson, Mrs. Johnson of Connecticut, Mr. 
 Roberts, Mr. Walker, Mr. Baker of Louisiana, Mr. Barrett of Nebraska, 
 Mr. Doolittle, Mrs. Fowler, Mr. Gekas, Mr. Gillmor, Mr. Goodling, Mr. 
Kolbe, Mr. McCrery, Mr. McHugh, Mr. Moorhead, Mr. Oxley, Mr. Petri, Mr. 
Santorum, Mr. Sensenbrenner, Mr. Shaw, Mr. Shays, Mr. Smith of Oregon, 
Ms. Snowe, Mr. Taylor of North Carolina, Mr. Thomas of Wyoming, and Mr. 
Wolf) introduced the following bill; which was referred jointly to the 
Committees on Energy and Commerce, Ways and Means, Education and Labor, 
                           and the Judiciary

                             March 24, 1993

   Additional sponsors: Mr. Houghton, Mr. Sundquist, Mr. Ewing, Mr. 
   Gallegly, Mr. Inglis of South Carolina, Mr. Skeen, Mr. Franks of 
 Connecticut, Mr. Manzullo, Mr. Ballenger, Mr. Cunningham, Mr. Linder, 
 Mr. Quinn, Mr. Bartlett of Maryland, Mrs. Meyers of Kansas, Mr. Lewis 
of Florida, Mr. Sam Johnson of Texas, Mr. Calvert, Mr. Upton, Mr. Young 
 of Alaska, Mr. Grams, Mr. Barton of Texas, Mr. Roth, Mr. Kyl, and Mr. 
                                Hancock

_______________________________________________________________________

                                 A BILL

 
 To improve access to health insurance and contain health care costs, 
                        and for other purposes.

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

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Action Now Health 
Care Reform Act of 1993''.
    (b) Table of Contents.--The table of contents of this Act is as 
follows:

Sec. 1. Short title; table of contents.
      TITLE I--IMPROVED ACCESS TO AFFORDABLE HEALTH CARE COVERAGE

   Subtitle A--Increased Affordability and Availability for Employees

Sec. 101. Establishment and enforcement of standards for health benefit 
                            plans.
Sec. 102. Preemption of State benefit mandates for small employer 
                            health benefit plans that meet consumer 
                            protection standards.
Sec. 103. Requirement for small employer carrier offering of MedAccess 
                            plans.
Sec. 104. Limitation on pre-existing condition clauses; assurance of 
                            continuity of coverage.
Sec. 105. Limits on premiums and miscellaneous consumer protections.
Sec. 106. Requirements relating to renewability generally.
Sec. 107. Limitation on annual premium increases.
Sec. 108. Establishment of reinsurance or allocation of risk mechanisms 
                            for high risk individuals.
Sec. 109. Registration of all health benefit plans.
Sec. 110. Office of Private Health Care Coverage; annual reports on 
                            evaluation of health care coverage reform.
Sec. 111. Research and demonstration projects; development of a health 
                            risk pooling model.
Sec. 112. General definitions.
  Subtitle B--Improved Small Employer Purchasing Power of Affordable 
                            Health Insurance

Sec. 121. Preemption from insurance mandates for qualified small 
                            employer purchasing groups.
                 Subtitle C--Health Deduction Fairness

Sec. 131. Permanent extension and increase in health insurance tax 
                            deduction for self-employed individuals.
        Subtitle D--Improved Access to Community Health Services

   Part 1--Increased Authorization for Community and Migrant Health 
                                Centers

Sec. 141. Grant program to promote primary health care services for 
                            underserved populations.
   Part 2--Grants for Projects for Coordinating Delivery of Services

Sec. 151. Projects for coordinating delivery of outpatient primary 
                            health services.
          Subtitle E--Improved Access to Rural Health Services

          Part 1--Rural Emergency Medical Services Amendments

Sec. 171. Office of Emergency Medical Services.
Sec. 172. State offices of emergency medical services.
Sec. 173. Programs for rural areas.
Sec. 174. Funding.
Sec. 175. Conforming amendments.
Sec. 176. Effective date.
     Part 2--Air Transport for Rural Victims of Medical Emergencies

Sec. 181. Grants to States regarding aircraft for transporting rural 
                            victims of medical emergencies.
 Part 3--Extension of Special Treatment Rules for Medicare-dependent, 
                         Small Rural Hospitals

Sec. 191. Extension of special treatment rules for medicare-dependent, 
                            small rural hospitals.
     TITLE II--HEALTH CARE COST CONTAINMENT AND QUALITY ENHANCEMENT

            Subtitle A--Medical Malpractice Liability Reform

                       Part 1--General Provisions

Sec. 201. Federal reform of medical malpractice liability actions.
Sec. 202. Definitions.
Sec. 203. Effective date.
  Part 2--Uniform Standards for Medical Malpractice Liability Actions

Sec. 211. Statute of limitations.
Sec. 212. Requirement for initial resolution of action through 
                            alternative dispute resolution.
Sec. 213. Establishment of process for resolution of claims against 
                            United States.
Sec. 214. Mandatory pre-trial settlement conference.
Sec. 215. Calculation and payment of damages.
Sec. 216. Treatment of attorney's fees and other costs.
Sec. 217. Joint and several liability.
Sec. 218. Uniform standard for determining negligence.
Sec. 219. Application of medical practice guidelines in malpractice 
                            liability actions.
Sec. 220. Special provision for certain obstetric services.
Sec. 221. Preemption.
 Part 3--Requirements for Alternative Dispute Resolution Systems (ADR)

Sec. 231. Basic requirements for ADR.
Sec. 232. Certification of State systems; applicability of alternative 
                            Federal system.
Sec. 233. Reports on implementation and effectiveness of alternative 
                            dispute resolution systems.
                Part 4--Other Requirements and Programs

Sec. 241. Facilitating development and use of medical practice 
                            guidelines.
Sec. 242. Permitting State professional societies to participate in 
                            disciplinary activities.
Sec. 243. Requirements for risk management programs.
Sec. 244. Grants for medical safety promotion.
Sec. 245. Study of barriers to voluntary service by physicians.
                Subtitle B--Administrative Cost Savings

              Part 1--Standardization of Claims Processing

Sec. 251. Adoption of data elements, uniform claims, and uniform 
                            electronic transmission standards.
Sec. 252. Application of standards.
Sec. 253. Periodic review and revision of standards.
Sec. 254. Health benefit plan defined.
               Part 2--Electronic Medical Data Standards

Sec. 261. Medical data standards for hospitals and other providers.
Sec. 262. Application of electronic data standards to certain 
                            hospitals.
Sec. 263. Electronic transmission to Federal agencies.
Sec. 264. Limitation on data requirements where standards in effect.
Sec. 265. Advisory commission.
 Part 3--Development and Distribution of Comparative Value Information

Sec. 271. State comparative value information programs for health care 
                            purchasing.
Sec. 272. Federal implementation.
Sec. 273. Comparative value information concerning Federal programs.
Sec. 274. Development of model systems.
      Part 4--Additional Standards and Requirements; Research and 
                             Demonstrations

Sec. 281. Standards relating to use of Medicare and Medicaid magnetized 
                            health benefit cards; secondary payor data 
                            bank.
Sec. 282. Preemption of State quill pen laws.
Sec. 283. Use of standard identification numbers.
Sec. 284. Coordination of benefit standards.
Sec. 285. Research and demonstrations.
            Subtitle C--Medical Savings Accounts (Medisave)

Sec. 291. Medical savings accounts.
                Subtitle D--Medicaid Program Flexibility

Sec. 301. Modification of Federal requirements to allow States more 
                            flexibility in contracting for coordinated 
                            care services under medicaid.
Sec. 302. Period of certain waivers.
          Subtitle E--Limitations on Physician Self-Referrals

Sec. 311. Extension of physician self-referral limitations to all 
                            payors.
Sec. 312. Extension of physician self-referral limitations to certain 
                            additional services.
Sec. 313. Changes in exceptions.
Sec. 314. Study and report on changes in costs.
Sec. 315. Effective date.
           Subtitle F--Removing Restrictions on Managed Care

Sec. 321. Removing restrictions on managed care.
                  Subtitle G--Medicare Payment Changes

Sec. 331. Revisions to methodology for determining updates to Medicare 
                            hospital payments.
Sec. 332. Reduction in Medicare payment for clinical diagnostic 
                            laboratory tests.
Subtitle H--Limitation of Antitrust Recovery for Certain Hospital Joint 
                                Ventures

Sec. 341. Purpose.
Sec. 342. Definitions.
Sec. 343. Limitation on damages for antitrust violations.
Sec. 344. Disclosure of hospital joint venture.
Sec. 345. Interagency committee on competition, antitrust policy, and 
                            health care.
    Subtitle I--Encouraging Enforcement Activities of Medical Self-
                          Regulatory Entities

   Part 1--Application of the Clayton Act to Medical Self-regulatory 
                                Entities

Sec. 351. Antitrust exemption for medical self-regulatory entities.
Sec. 352. Definitions.
                Part 2--Consultation by Federal Agencies

Sec. 357. Consultation with medical self-regulatory entities respecting 
                            medical professional guidelines and 
                            standards.

      TITLE I--IMPROVED ACCESS TO AFFORDABLE HEALTH CARE COVERAGE

   Subtitle A--Increased Affordability and Availability for Employees

SEC. 101. ESTABLISHMENT AND ENFORCEMENT OF STANDARDS FOR HEALTH BENEFIT 
              PLANS.

    (a) Establishment of General Standards.--
            (1) Role of naic.--The Secretary of Health and Human 
        Services shall request the National Association of Insurance 
        Commissioners (in this subtitle referred to as the ``NAIC'') to 
        develop, within 9 months after the date of the enactment of 
        this Act, model regulations that specify standards with respect 
        to each of the following:
                    (A) MedAccess standards.--(i) The requirement, 
                under section 103(a), that small employer carriers make 
                available MedAccess plans.
                    (ii) The uniform benefit levels to be included in 
                MedAccess basic and standard plans under section 
                103(b).
                    (iii) The requirements of guaranteed availability 
                of MedAccess plans to small employers under section 
                103(c).
                    (B) Consumer protection standards.--(i) The 
                requirements of section 104 (relating to limitations on 
                treatment of pre-existing conditions and assurance of 
                continuity of coverage).
                    (ii) The requirements of section 105 (relating to 
                limits on premiums and miscellaneous consumer 
                protections).
                    (iii) The requirements of section 106 (relating to 
                renewability generally).
                    (iv) The requirement of section 107 (relating to 
                limitation on annual premium increases).
        If the NAIC develops recommended regulations specifying such 
        standards within such period, the Secretary shall review the 
        standards. Such review shall be completed within 60 days after 
        the date the regulations are developed. Unless the Secretary 
        determines within such period that the standards do not meet 
        the requirements, such standards shall serve as the standards 
        under this section, with such amendments as the Secretary deems 
        necessary.
            (2) Contingency.--If the NAIC does not develop such model 
        regulations within such period or the Secretary determines that 
        such regulations do not specify standards that meet the 
        requirements described in paragraph (1), the Secretary shall 
        specify, within 15 months after the date of the enactment of 
        this Act, standards to carry out those requirements.
            (3) Effective dates.--
                    (A) MedAccess standards.--The MedAccess standards 
                (as defined in section 112(8)) shall apply to carriers 
                in a State on or after the date the standards are 
                implemented in the State under subsection (b).
                    (B) Consumer protection standards.--For employer 
                health benefit plans other than MedAccess plans, the 
                consumer protection standards (as defined in section 
                112(2)) shall apply to plans offered or renewed on or 
                after 4 years after the date such standards are 
                implemented in the State under subsection (b).
    (b) Application of Standards Through States.--
            (1) Application of medaccess standards.--
                    (A) In general.--Each State shall submit to the 
                Secretary, by the deadline specified in subparagraph 
                (B), a report on steps the State is taking to implement 
                and enforce the MedAccess standards with respect to 
                small employer carriers, and small employer health 
                benefit plans offered, not later than such deadline.
                    (B) Deadline for report.--
                            (i) 1 year after standards established.--
                        Subject to clause (ii), the deadline under this 
                        subparagraph is 1 year after the date the 
                        MedAccess standards are established under 
                        subsection (a).
                            (ii) Exception for legislation.--In the 
                        case of a State which the Secretary identifies, 
                        in consultation with the NAIC, as--
                                    (I) requiring State legislation 
                                (other than legislation appropriating 
                                funds) in order for carriers and health 
                                benefit plans offered to small 
                                employers to meet the MedAccess 
                                standards established under subsection 
                                (a), but
                                    (II) having a legislature which is 
                                not scheduled to meet in 1994 in a 
                                legislative session in which such 
                                legislation may be considered,
                        the date specified in this subparagraph is the 
                        first day of the first calendar quarter 
                        beginning after the close of the first 
                        legislative session of the State legislature 
                        that begins on or after January 1, 1996. For 
                        purposes of the previous sentence, in the case 
                        of a State that has a 2-year legislative 
                        session, each year of such session shall be 
                        deemed to be a separate regular session of the 
                        State legislature.
            (2) Application of consumer protection standards to non-
        medaccess employer health benefit plans.--Each State shall 
        submit to the Secretary, by not later than 4 years after the 
        date consumer protection standards are established under 
        subsection (a), a report on steps the State is taking to 
        implement and enforce the consumer protection standards with 
        respect to all employer health benefit plans (other than 
        MedAccess plans) which are subject to regulation by the State 
        and which are offered or renewed not later than 4 years after 
        the date the standards were established.
            (3) Federal role.--
                    (A) Secretarial authority.--
                            (i) In general.--If the Secretary 
                        determines that a State has failed to submit a 
                        report by the deadline specified under 
                        paragraph (1) or (2) or finds that the State 
                        has not implemented and provided adequate 
                        enforcement of the MedAccess standards or 
                        consumer protection standards under the 
                        respective paragraph, the Secretary shall 
                        notify the State and provide the State a period 
                        of 60 days in which to submit such report or to 
                        implement and enforce such standards under the 
                        respective paragraph. If, after such 60-day 
                        period, the Secretary finds that such a failure 
                        has not been corrected, the Secretary shall 
                        provide for such mechanism for the 
                        implementation and enforcement of the 
                        applicable standards in the State as the 
                        Secretary determines to be appropriate. Such 
                        implementation and enforcement shall take 
                        effect with respect to carriers, and health 
                        benefit plans offered or renewed, on or after 3 
                        months after the date of the Secretary's 
                        finding under the previous sentence, and until 
                        the date the Secretary finds that such a 
                        failure has been corrected. In exercising 
                        authority under this subparagraph, the 
                        Secretary shall determine whether the use of a 
                        risk-allocation mechanism, described in section 
                        103(d), would be more consistent with the small 
                        employer group health coverage market in the 
                        State than the guaranteed availability 
                        provisions of section 103(c).
                            (ii) Non-state regulated entities.--In the 
                        case of carriers that are not subject to State 
                        regulation, the Secretary shall be responsible 
                        for implementation and enforcement of standards 
                        under this subtitle.
                    (B) Enforcement through excise tax.--
                            (i) In general.--Chapter 43 of the Internal 
                        Revenue Code of 1986 (relating to qualified 
                        pension, etc., plans) is amended by adding at 
                        the end thereof the following new section:

``SEC. 4980C. FAILURE TO COMPLY WITH EMPLOYER HEALTH BENEFIT PLAN 
              STANDARDS.

    ``(a) Imposition of Tax.--
            ``(1) In general.--There is hereby imposed a tax on the 
        failure of a carrier or an employer health benefit plan to 
        comply with the applicable standards established under section 
        101(a) of the Action Now Health Care Reform Act of 1993.
            ``(2) Exception.--Paragraph (1) shall not apply to a 
        failure by a small employer carrier or plan in a State if the 
        Secretary of Health and Human Services determines that the 
        State has in effect a regulatory enforcement mechanism that 
        provides adequate sanctions with respect to such a failure by 
        such a carrier or of such a plan.
    ``(b) Amount of Tax.--
            ``(1)  In general.--Subject to paragraph (2), the tax 
        imposed by subsection (a) shall be an amount not to exceed 25 
        percent of the amounts received by the carrier or under the 
        plan for coverage during the period such failure persists.
            ``(2) Limitation in case of individual failures.--In the 
        case of a failure that only relates to specified individuals or 
        employers (and not to the plan generally), the amount of the 
        tax imposed by subsection (a) shall not exceed the aggregate of 
        $100 for each day during which such failure persists for each 
        individual to which such failure relates. A rule similar to the 
        rule of section 4980B(b)(3) shall apply for purposes of this 
        section.
    ``(c) Liability for Tax.--The tax imposed by this section shall be 
paid by the carrier.
    ``(d) Exceptions.--
            ``(1) Corrections within 30 days.--No tax shall be imposed 
        by subsection (a) by reason of any failure if--
                    ``(A) such failure was due to reasonable cause and 
                not to willful neglect, and
                    ``(B) such failure is corrected within the 30-day 
                period beginning on earliest date the carrier knew, or 
                exercising reasonable diligence would have known, that 
                such failure existed.
            ``(2) Waiver by secretary.--In the case of a failure which 
        is due to reasonable cause and not to willful neglect, the 
        Secretary may waive part or all of the tax imposed by 
        subsection (a) to the extent that payment of such tax would be 
        excessive relative to the failure involved.
    ``(e) Definitions.--For purposes of this section, the terms 
`carrier', `employer health benefit plan', and `small employer carrier' 
have the respective meanings given such terms in section 112 of the 
Action Now Health Care Reform Act of 1993.''
                            (ii) Clerical amendment.--The table of 
                        sections for chapter 43 of such Code is amended 
                        by adding at the end thereof the following new 
                        items:

                              ``Sec. 4980C. Failure to comply with 
                                        employer health plan 
                                        standards.''.
                            (iii) Effective date.--The amendments made 
                        by this subparagraph shall apply to plan years 
                        beginning after December 31, 1993.

SEC. 102. PREEMPTION OF STATE BENEFIT MANDATES FOR SMALL EMPLOYER 
              HEALTH BENEFIT PLANS THAT MEET CONSUMER PROTECTION 
              STANDARDS.

    (a) Finding.--Congress finds that health benefit plans offered with 
respect to small employers affect interstate commerce.
    (b) Preemption.--In the case of a MedAccess plan or other small 
employer health benefit plan that meets the consumer protection 
standards, no provision of State law shall apply that requires the 
offering, as part of the health benefit plan with respect to such an 
employer, of any services, category of care, or services of any class 
or type of provider.

SEC. 103. REQUIREMENT FOR SMALL EMPLOYER CARRIER OFFERING OF MEDACCESS 
              PLANS.

    (a) In General.--
            (1) In general.--Each carrier that makes available in a 
        State any small employer health benefit plan shall make 
        available to each small employer in the State--
                    (A) a MedAccess basic plan, and
                    (B) a MedAccess standard plan.
            (2) Exception if alternate plan in a state.--Paragraph (1) 
        shall not apply to a carrier in a State if the State is 
        providing access to each small employer in the State to a 
        MedAccess basic plan and to a MedAccess standard plan under a 
        risk allocation mechanism described in subsection (d).
    (b) MedAccess Plan Defined.--In this subtitle:
            (1) In general.--The term ``MedAccess plan'' means a health 
        benefits plan (whether a managed-care plan, indemnity plan, or 
        other plan) that--
                    (A) subject to paragraph (3)--
                            (i) is designed to provide benefits typical 
                        of the benefits offered in the small employer 
                        health coverage market, or
                            (ii)(I) is designed to provide only 
                        benefits for essential preventive and medical 
                        services and (II) has an average actuarial 
                        value (in the overall small employer group 
                        market for the same type of coverage) which 
                        does not exceed 60 percent of the average 
                        actuarial value of the benefits described in 
                        clause (i) for such type of coverage;
                    (B) meets the applicable requirements of subsection 
                (c) (relating to guaranteed issue); and
                    (C) meets the consumer protection standards.
            (2) MedAccess basic and standard plans.--The terms 
        ``MedAccess basic plan'' and ``MedAccess standard plan'' mean a 
        MedAccess plan that provides for benefit levels described in 
        clause (ii) or clause (i), respectively, of paragraph (1)(A).
            (3) Special rules for health maintenance organizations.--
        With respect to a carrier that--
                    (A) is a Federally qualified health maintenance 
                organization (as defined in section 1301(a) of the 
                Public Health Service Act), the benefits required under 
                paragraphs (1)(A) or (2)(A) shall be modified to the 
                extent required to be consistent with the requirements 
                for the plans of such an organization under title XIII 
                of such Act, or
                    (B) is not such an organization but is recognized 
                under State law as a health maintenance organization, 
                the benefits required under paragraph (1)(A) shall be 
                modified to the extent required to be consistent with 
                the requirements for the plans of such an organization 
                under State law.
            (4) Review of benefit standards.--The NAIC is requested to 
        periodically review the standards for benefits described in 
        paragraph (1)(A). The NAIC is requested to submit to the 
        Secretary and the Congress its recommendations on changes that 
        should be made in such standards.
    (c) Guaranteed Availability of MedAccess Plans.--Subject to 
subsection (d)--
            (1) In general.--Subject to paragraph (2), each MedAccess 
        plan in a State--
                    (A) must accept every small employer in the State 
                that applies for coverage under the plan; and
                    (B) must accept for enrollment every eligible 
                individual (as defined in paragraph (4)) who applies 
                for enrollment on a timely basis (consistent with 
                paragraph (3)) and may not place any restriction on the 
                eligibility of an individual to enroll so long as such 
                individual is an eligible individual.
            (2) Special rules for health maintenance organizations.--In 
        the case of a plan offered by a health maintenance 
        organization, the plan shall--
                    (A) limit the employers that may apply for coverage 
                to those with eligible individuals residing in the 
                service area of the plan,
                    (B) limit the individuals who may be enrolled under 
                the plan to those who reside in the service area of the 
                plan, and
                    (C) within the service area of the plan, deny 
                coverage to such employers if the plan demonstrates 
                that--
                            (i) it will not have the capacity to 
                        deliver services adequately to enrollees of any 
                        additional groups because of its obligations to 
                        existing group contract holders and enrollees, 
                        and
                            (ii) it is applying this subparagraph 
                        uniformly to all employers without regard to 
                        the health status, claims experience, or 
                        duration of coverage of those employers and 
                        their employees.
            (3) Clarification of timely enrollment.--
                    (A) General initial enrollment requirement.--Except 
                as provided in this paragraph, a MedAccess plan may 
                consider enrollment of an eligible individual not to be 
                timely if the eligible employee or dependent fails to 
                enroll in the plan during an initial enrollment period, 
                if such period is at least 30 days long.
                    (B) Enrollment due to loss of previous employer 
                coverage.--Enrollment in a MedAccess plan is considered 
                to be timely in the case of an eligible individual 
                who--
                            (i) was covered under another employer 
                        health benefit plan at the time of the 
                        individual's initial enrollment period,
                            (ii) stated at the time of initial 
                        enrollment period that coverage under another 
                        employer health benefit plan was the reason for 
                        declining enrollment,
                            (iii) lost coverage under another employer 
                        health benefit plan (as a result of the 
                        termination of the other plan's coverage, 
                        termination or reduction of employment, or 
                        other reason), and
                            (iv) requests enrollment within 30 days 
                        after termination of coverage under another 
                        employer health benefit plan.
                    (C) Requirement applies during open enrollment 
                periods.--Each MedAccess plan shall provide for at 
                least one period (of not less than 30 days) each year 
                during which enrollment under the plan shall be 
                considered to be timely.
                    (D) Exception for court orders.--Enrollment of 
                spouse or minor child of an employee shall be 
                considered to be timely if--
                            (i) a court has ordered that coverage be 
                        provided for the spouse or child under a 
                        covered employee's health benefit plan, and
                            (ii) a request for enrollment is made 
                        within 30 days after the date the court issues 
                        the order.
                    (E) Enrollment of spouses and dependents.--
                            (i) In general.--Enrollment of the spouse 
                        (including a child of the spouse) and any child 
                        (including an adopted child) of an eligible 
                        employee shall be considered to be timely if a 
                        request for enrollment is made either--
                                    (I) within 30 days of the date of 
                                the marriage or of the date of the 
                                birth or adoption of a child, if family 
                                coverage is available as of such date, 
                                or
                                    (II) within 30 days of the date 
                                family coverage is first made 
                                available.
                            (ii) Coverage.--If a plan makes family 
                        coverage available and enrollment is made under 
                        the plan on a timely basis under clause (i)(I), 
                        the coverage shall become effective not later 
                        than the first day of the first month beginning 
                        after the date of the marriage or the date of 
                        birth or adoption of the child (as the case may 
                        be).
            (4) Eligible individual defined.--In this subsection, the 
        term ``eligible individual'' means, with respect to a small 
        employer--
                    (A) an individual who is a full-time employee of 
                the employer, and
                    (B) if family coverage is offered, the employee's 
                spouse and the employee's dependents who are under 19 
                years of age or who are full-time students and under 25 
                years of age.
    (d) State Option of Guaranteed Availability Through Allocation of 
Risk (Rather than Through Guaranteed Issue).--The requirement of 
subsection (c) shall not apply in a State if the State has provided (in 
accordance with standards established under this subtitle) a mechanism 
under which--
            (1) each carrier offering a health benefit plan to a small 
        employer in the State must participate in a program for 
        assigning high-risk small employer groups (or individuals 
        within such a group) among some or all such carriers, and
            (2) the carriers to which such high-risk small employer 
        groups or individuals are so assigned complies with the 
        requirement of subsection (c).

SEC. 104. LIMITATION ON PRE-EXISTING CONDITION CLAUSES; ASSURANCE OF 
              CONTINUITY OF COVERAGE.

    (a) Limitations on Treatment of Pre-Existing Conditions.--A carrier 
may not impose (or require an employer to impose through a waiting 
period for coverage under a health benefit policy or similar 
requirement) a limitation or exclusion of benefits under an employer 
health benefit plan relating to treatment of a condition based on the 
fact that the condition pre-existed the effectiveness of the policy 
if--
            (1) the condition relates to a condition that was not 
        diagnosed or treated within 3 months before the date of 
        coverage under the plan;
            (2) the limitation or exclusion extends over more than 6 
        months after the date of coverage under the plan;
            (3) the limitation or exclusion applies to an individual 
        who, as of the date of birth, was covered under the plan; or
            (4) the limitation or exclusion relates to pregnancy.
In the case of an individual who is eligible for coverage under an 
employer health benefit plan but for a waiting period imposed by the 
employer, in applying paragraphs (1) and (2), the individual shall be 
treated as have been covered under the plan as of the earliest date of 
the beginning of the waiting period.
    (b) Assurance of Continuity of Coverage Through Previous 
Satisfaction of Pre-existing Condition Requirement.--
            (1) In general.--Each carrier shall waive any period 
        applicable to a preexisting condition for similar benefits with 
        respect to an individual to the extent that the individual was 
        covered for the condition under any health benefit plan (as 
        defined in paragraph (3)) that was in effect before the date of 
        the enrollment under the carrier's plan.
            (2) Continuous coverage required.--
                    (A) In general.--Paragraph (1) shall no longer 
                apply if there is a continuous period of more than 60 
                days (or, in the case of an individual described in 
                subparagraph (C), 6 months) on which the individual was 
                not covered under an health benefit plan.
                    (B) Treatment of waiting periods.--In applying 
                subparagraph (A), any waiting period imposed by an 
                employer before an employee is eligible to be covered 
                under a policy shall be treated as a period in which 
                the employee was covered under a health benefit plan.
                    (C) Job termination.--An individual is described in 
                this subparagraph if the individual loses coverage 
                under an employer health plan due to termination of 
                employment.
            (3) Exclusion of cash-only and dread disease policies.--In 
        this subsection, the term ``health benefit plan'' does not 
        include any insurance which is offered primarily to provide--
                    (A) coverage for a specified disease or illness, or
                    (B) hospital or fixed indemnity policy, unless the 
                Secretary (or in the case of a plan in a State, the 
                State) determines that such a policy provides 
                sufficiently comprehensive coverage of a benefit so 
                that it should be treated as a health benefit plan 
                under this subsection.

SEC. 105. LIMITS ON PREMIUMS AND MISCELLANEOUS CONSUMER PROTECTIONS.

    (a) Limits on Premiums.--
            (1) Limit on variation of index rates between classes of 
        business.--
                    (A) In general.--As a standard under section 
                101(a)(1)(B)(ii), the index rate for a rating period 
                for any class of business of a small employer carrier 
                may not exceed by more than 20 percent the index rate 
                for any other class of business.
                    (B) Exceptions.--The limitation of subparagraph (A) 
                shall not apply to a class of business if--
                            (i) the class is one for which the carrier 
                        does not reject, and never has rejected, small 
                        employers included within the definition of 
                        employers eligible for the class of business or 
                        otherwise eligible employees and dependents who 
                        enroll on a timely basis, based upon their 
                        claim experience or health status,
                            (ii) the carrier does not involuntarily 
                        transfer, and never has involuntarily 
                        transferred, a health benefit plan into or out 
                        of the class of business, and
                            (iii) the class of business is currently 
                        available for purchase.
            (2) Limit on variation of premium rates within a class of 
        business.--For a class of business of a small employer carrier, 
        as a standard under section 101(a)(1)(B)(ii), the premium rates 
        charged during a rating period to small employers with similar 
        demographic or other objective characteristics (not relating to 
        claims experience, health status, or duration of coverage) for 
        the same or similar coverage, or the rates which could be 
        charged to such employers under the rating system for that 
        class of business, shall not vary from the index rate by more 
        than 25 percent of the index rate.
            (3) Objective basis for differences in premiums for 
        standard and basic medaccess plans.--The difference between the 
        index rate for the MedAccess basic plan and the index rate for 
        the MedAccess standard plan shall be reasonable and shall 
        reflect the difference in plan design and shall not take into 
        account differences due to the nature of the groups assumed to 
        select particular health plans.
            (4) Limit on transfer of employers among classes of 
        business.--As a standard under section 101(a)(1)(B)(ii), a 
        small employer carrier may not involuntarily transfer a small 
        employer into or out of a class of business. A small employer 
        carrier may not offer to transfer a small employer into or out 
        of a class of business unless such offer is made to transfer 
        all small employers in the class of business without regard to 
        demographic characteristics, claim experience, health status, 
        or duration since issue.
            (5) Definitions.--In this subsection:
                    (A) Base premium rate.--The term ``base premium 
                rate'' means, for each class of business for each 
                rating period, the lowest premium rate charged or which 
                could have been charged under a rating system for that 
                class of business by the small employer carrier to 
                small employers with similar demographic or other 
                objective characteristics (not relating to claims 
                experience, health status, or duration of coverage) for 
                health benefit plans with the same or similar coverage.
                    (B) Class of business.--The term ``class of 
                business'' means, with respect to a carrier, all (or a 
                distinct group of) small employers as shown on the 
                records of the carrier.
                    (C) Rules for establishing classes of business.--
                For purposes of subparagraph (B)--
                            (i) a carrier may establish, subject to 
                        clause (ii), a distinct group of small 
                        employers on the basis that the applicable 
                        health benefit plans either--
                                    (I) are marketed and sold through 
                                individuals and organizations which are 
                                not participating in the marketing or 
                                sale of other distinct groups of small 
                                employers for the carrier,
                                    (II) have been acquired from 
                                another carrier as a distinct group, or
                                    (III) are provided through an 
                                association that has a membership of 
                                not less than 100 small employers and 
                                that has been formed for purposes other 
                                than obtaining health coverage;
                            (ii) a carrier may not establish more than 
                        2 groupings under each class of business based 
                        on the carrier's use of managed-care techniques 
                        if the techniques are expected to produce 
                        substantial variation in health care costs; and
                            (iii) notwithstanding clauses (i) and (ii), 
                        a State commissioner of Insurance of a State, 
                        upon application and if authorized under State 
                        law, may approve additional distinct groups 
                        upon a finding that such approval would enhance 
                        the efficiency and fairness of the small 
                        employer marketplace.
                    (D) Index rate.--The term ``index rate'' means, 
                with respect to a class of business, the arithmetic 
                average of the applicable base premium rate and the 
                corresponding highest premium rate for the class.
                    (E) Demographic characteristics.--Except as 
                otherwise permitted under the standard under section 
                101(b)(1)(B)(ii), the term ``demographic 
                characteristics'' means age, gender, industry, 
                geographic area, family composition, and group size.
    (b) Full Disclosure of Rating Practices.--At the time a carrier 
offers a health benefit plan to a small employer, the carrier shall 
fully disclose to the employer rating practices for small employer 
health benefit plans, including rating practices for different 
industries, populations, and benefit designs.
    (c) Actuarial Certification.--Each carrier shall file annually with 
the State commissioner of insurance a written statement by a member of 
the American Academy of Actuaries (or other individual acceptable to 
the commissioner) that, based upon an examination by the individual 
which includes a review of the appropriate records and of the actuarial 
assumptions of the carrier and methods used by the carrier in 
establishing premium rates for applicable small employer health benefit 
plans--
            (1) the carrier is in compliance with the applicable 
        provisions of this section, and
            (2) the rating methods are actuarially sound.
Each carrier shall retain a copy of such statement for examination at 
its principal place of business.
    (d) Registration and Reporting.--Each carrier that issues any small 
employer health benefit plan in a State shall be registered or licensed 
with the State commissioner of insurance and shall comply with any 
reporting requirements of the commissioner relating to such a plan.
    (e) Use of Minimum Participation Requirement.--A carrier may 
condition issuance, or renewal, of a health benefit plan to a small 
employer on the enrollment of a minimum number (or percentage) of its 
full-time employees, only in accordance with standards established to 
carry out this section. Such standards shall require that any such 
conditions be imposed uniformly on employers of the same size.

SEC. 106. REQUIREMENTS RELATING TO RENEWABILITY GENERALLY.

    (a) In General.--A carrier may not cancel an employer health 
benefit plan or deny renewal of coverage under such a plan other than--
            (1) for nonpayment of premiums,
            (2) for fraud or other misrepresentation by the insured,
            (3) for noncompliance with plan provisions,
            (4) for failure to maintain (in accordance with standards 
        established under section 105(e)) the number of enrollees under 
        the plan at the number (or percentage) required under the plan,
            (5) for misuse of a provider network provision, or
            (6) because the carrier is ceasing to provide any employer 
        health benefit plan in a State, or, in the case of a health 
        maintenance organization, in a geographic area.
    (b) Limitation on Market Reentry.--If a carrier terminates the 
offering of employer health benefit plans in an area, the carrier may 
not offer such a health benefit plan to any employer in the area until 
5 years have elapsed since the date of the termination.

SEC. 107. LIMITATION ON ANNUAL PREMIUM INCREASES.

    A carrier may not provide for an increase in the premium charged a 
small employer for a small employer health benefit plan in a percentage 
that exceeds the percentage change in the premium charged under the 
plan for a newly covered employer within the same class of business 
rate plus 15 percentage points.

SEC. 108. ESTABLISHMENT OF REINSURANCE OR ALLOCATION OF RISK MECHANISMS 
              FOR HIGH RISK INDIVIDUALS.

    (a) Establishment of Standards.--
            (1) Role of naic.--The Secretary of Health and Human 
        Services shall request the NAIC to develop, within 9 months 
        after the date of the enactment of this Act, models for 
        reinsurance or allocation of risk mechanisms (each in this 
        section referred to as a ``reinsurance or allocation of risk 
        mechanism'') for individuals and small employers who are 
        enrolled under a small employer health benefit plan that meets 
        the consumer protection standards and for whom a carrier is at 
        risk of incurring high costs under the plan. If the NAIC 
        develops such models within such period, the Secretary shall 
        review such models to determine if they provide for an 
        effective reinsurance or allocation of risk mechanism. Such 
        review shall be completed within 30 days after the date the 
        models are developed. Unless the Secretary determines within 
        such period that such a model is not an effective reinsurance 
        or allocation of risk mechanism, such remaining models shall 
        serve as the models under this section, with such amendments as 
        the Secretary deems necessary.
            (2) Contingency.--If the NAIC does not develop such models 
        within such period or the Secretary determines that all such 
        models do not provide for an effective reinsurance or 
        allocation of risk mechanism, the Secretary shall specify, 
        within 15 months after the date of the enactment of this Act, 
        models to carry out this section.
    (b) Implementation of Reinsurance or Allocation of Risk 
Mechanisms.--
            (1) By states.--Each State shall establish and fund one or 
        more reinsurance or allocation of risk mechanisms that are 
        consistent with a model established under subsection (a) by not 
        later than the deadline specified in section 101(b)(1)(B). In 
        order to assure the financial solvency of the mechanism, the 
        State may, notwithstanding any provision of law to the 
        contrary, impose charges on any entity providing employee-
        related health benefits, so long as such charges do not 
        discriminate with respect to entities that would (but for this 
        provision) not be subject to such charges.
            (2) Federal role.--
                    (A) In general.--If the Secretary determines that a 
                State has failed to establish a reinsurance or 
                allocation of risk mechanism in accordance with 
                paragraph (1), the Secretary shall establish such a 
                reinsurance or allocation of risk mechanism meeting the 
                requirements of this paragraph.
                    (B) Reinsurance mechanism.--Unless the Secretary 
                determines under subparagraph (C) that an allocation of 
                risk mechanism is the appropriate mechanism to use in a 
                State under this paragraph, the Secretary shall 
                establish for use under this section for each State an 
                appropriate reinsurance mechanism.
                    (C) Allocation of risk mechanism.--If the Secretary 
                determines that, due to the nature of the health 
                coverage market in the State (including a relatively 
                small number of small employer health benefit plans 
                offered or a relatively small number of uninsurable 
                small employers or individuals), an allocation of risk 
                mechanism would be a better mechanism than a 
                reinsurance mechanism, the Secretary shall establish 
                for use under this section for a State an allocation of 
                risk mechanism under which uninsurable individuals and 
                small employers would be equitably assigned among small 
                employer health benefit plans.
                    (D) Financing deficit for reinsurance mechanisms.--
                            (i) In general.--Chapter 43 of the Internal 
                        Revenue Code of 1986 (relating to qualified 
                        pension plans, etc.) is amended by adding at 
                        the end thereof the following new section:

``SEC. 4980D. ADDITIONAL TAX TO FUND REINSURANCE IN STATES UNDER 
              FEDERAL REINSURANCE.

    ``(a) Imposition of Tax.--There is hereby imposed a tax on the 
providing of any health benefit plan which covers any employee in a 
Federal reinsurance State.
    ``(b) Amount of Tax.--
            ``(1) In general.--The tax imposed by subsection (a) shall 
        be equal to the applicable percentage of the amount received by 
        the carrier for providing such plan in such Federal reinsurance 
        State.
            ``(2) Applicable percentage.--For purposes of paragraph 
        (1), the term `applicable percentage' means, with respect to 
        any State for any period, the lowest percentage estimated by 
        the Secretary as generating sufficient revenues to carry out 
        section 108(b)(2) of the Action Now Health Care Reform Act of 
        1993 in such State for such period.
    ``(c) Liability for Tax.--The tax imposed by this section shall be 
paid by the carrier.
    ``(d) Definitions.--For purposes of this section--
            ``(1) Carrier.--The term `carrier' has the meaning given 
        such term in section 112(2) of the Action Now Health Care 
        Reform Act of 1993.
            ``(2) Federal reinsurance state.--The term `Federal 
        reinsurance State' means any State with respect to which a 
        determination is in effect under section 108(b)(2) of the 
        Action Now Health Care Reform Act of 1993 and for which the 
        Secretary of Health and Human Services has established a 
        reinsurance mechanism under subparagraph (B) of such section 
        for the State.''
                            (ii) Clerical amendment.--The table of 
                        sections for chapter 43 of such Code is amended 
                        by adding at the end thereof the following new 
                        item:

                              ``Sec. 4980D. Additional tax to fund 
                                        reinsurance in States under 
                                        Federal reinsurance.''
    (c) Construction.--Nothing in this section shall be construed to 
prohibit reinsurance or allocation of risk arrangements, whether on a 
State or regional basis, not required under this section.

SEC. 109. REGISTRATION OF ALL HEALTH BENEFIT PLANS.

    (a) In General.--Notwithstanding any other provision of law, each 
State commissioner of insurance may, under State law, require each 
employer health benefit plan (including a self-insured plan)--
            (1) to be registered with such official, if the plan is not 
        otherwise required to be registered or licensed with the 
        official under section 105(d), and
            (2) to provide the official with such information on the 
        plan as may be necessary to carry out section 108.
Insofar as the Secretary is exercising authority under section 
108(b)(2), the Secretary may impose the requirement under the previous 
sentence in the same manner as a State commissioner of insurance may 
impose the requirement.
    (b) Provision of List to Secretary.--By not later than the deadline 
specified in section 101(b)(1)(B), each State shall provide the 
Secretary with a list of all employer health benefit plans registered 
in the State under subsection (a).

SEC. 110. OFFICE OF PRIVATE HEALTH CARE COVERAGE; ANNUAL REPORTS ON 
              EVALUATION OF HEALTH CARE COVERAGE REFORM.

    (a) In General.--In order to carry out the responsibilities of the 
Secretary under this subtitle, the Secretary shall establish an Office 
of Private Health Care Coverage, to be headed by a Director appointed 
by the Secretary.
    (b) Annual Report.--
            (1) In general.--The Director shall submit to Congress an 
        annual report on the implementation of this subtitle.
            (2) Information to be included.--Each annual report shall 
        include information concerning at least the following:
                    (A) Implementation and enforcement of the 
                applicable MedAccess standards and consumer protection 
                standards under this subtitle by the States and by the 
                Secretary.
                    (B) An evaluation of the impact of the reforms 
                under this subtitle on the availability of affordable 
                health coverage for small employers that purchase group 
                health coverage and for their employees, and, in 
                particular, the impact of--
                            (i) guaranteed availability of health 
                        coverage,
                            (ii) limitations of restrictions from 
                        coverage of preexisting conditions,
                            (iii) requirement for continuity of 
                        coverage,
                            (iv) risk-management mechanisms for health 
                        coverage,
                            (v) limits on premium variations,
                            (vi) limits on annual premium increases, 
                        and
                            (vii) preemption of State benefit mandates.
                In performing such evaluation, the Secretary shall seek 
                to discount the effect of the insurance cycle on health 
                insurance premiums.
                    (C) An assessment of the implications of the 
                reforms on adverse selection among small employer 
                health benefit plans and the distribution of risk among 
                small employer health benefit plans.
    (c) Advisory Committee.--The Secretary shall provide for 
appointment of an advisory committee to advise the Director concerning 
activities of the Office under this subtitle. Membership on the 
committee shall consist of 17 individuals and shall include individuals 
from the general public, small and large business, labor, insurance and 
other health benefit plans, and health care providers, and shall 
include experts in the fields of the actuarial science, health 
economics, and health services research. The Secretary may include, as 
additional, ex officio members of the committee, such representatives 
of government agencies as the Secretary deems appropriate. The 
chairperson of the committee shall not be a health care provider or 
receive any direct or indirect compensation from an insurer, health 
benefit plan, or a health care provider.

SEC. 111. RESEARCH AND DEMONSTRATION PROJECTS; DEVELOPMENT OF A HEALTH 
              RISK POOLING MODEL.

    (a) Research and Demonstrations.--The Director is authorized, 
directly, by contract, and through grants and cooperative agreements 
within the Department of Health and Human Services and outside the 
Department--
            (1) to conduct research on the the impact of this subtitle 
        on the availability of affordable health coverage for employees 
        and dependents in the small employers group health care 
        coverage market and other topics described in section 110(b), 
        and
            (2) to conduct demonstration projects relating to such 
        topics.
    (b) Development of Methods of Measuring Relative Health Risk.--
            (1) In general.--The Director shall develop methods for 
        measuring, in terms of the expected costs of providing benefits 
        under small employer health benefit plans and, in particular, 
        MedAccess plans, the relative health risks of eligible 
        individuals.
            (2) Methodology.--The methods--
                    (A) shall rely on diagnosis or other health-related 
                information that is predictive of individual health 
                care needs,
                    (B) may rely upon information routinely collected 
                in the process of making payments under health benefit 
                plans, and
                    (C) may provide for such random, sample audits of 
                records as may be necessary to verify the accuracy of 
                measurements.
    (c) Development of a Health Risk Pooling Model.--
            (1) In general.--The Director shall develop a model, based 
        on the methods of measuring risks under subsection (b), for 
        equitably distributing health risks among carriers in the small 
        employer health care coverage market.
            (2) Redistribution of risk.--Under such model, carriers 
        with below average health risks would be required to contribute 
        to a common fund for payment to carriers with above average 
        health risks, each in relation to the degree of their favorable 
        or adverse risk selection.
            (3) Incentives.--Such model shall include incentives to 
        encourage continuous coverage of eligible individuals and small 
        employers.
    (d) Consultation.--The methods and model under this section shall 
be developed in consultation with the NAIC and the advisory committee 
established under section 110(c).
    (e) Report.--By not later than January 1, 1995, the Director shall 
submit to Congress a report on the methods and model developed under 
this section (as well as on research and demonstration projects 
conducted under subsection (a)). The Director shall include in the 
report such recommendations respecting the application of the model to 
small employer carriers (and, in particular, to MedAccess plans) under 
this subtitle as the Director deems appropriate.
    (f) Authorization of Appropriations.--There are authorized to be 
appropriated to carry out this section, $5,000,000 in each of fiscal 
years 1994 through 1998.

SEC. 112. GENERAL DEFINITIONS.

    In this subtitle:
            (1) The term ``carrier'' means any entity which provides 
        health insurance or health benefits in a State, and includes a 
        licensed insurance company, a prepaid hospital or medical 
        service plan, a health maintenance organization, the plan 
        sponsor of a multiple employer welfare arrangement or an 
        employee benefit plan (as defined under the Employee Retirement 
        Income Security Act of 1974), or any other entity providing a 
        plan of health insurance subject to State insurance regulation, 
        but such term does not include for purposes of section 103 an 
        entity that provides health insurance or health benefits under 
        a multiple employer welfare arrangement.
            (2) The term ``consumer protection standards'' means the 
        standards established under section 101(a) to carry out the 
        requirements of the following sections:
                    (A) Section 104 (relating to limitation on pre-
                existing condition clauses; assurance of continuity of 
                coverage).
                    (B) Section 106 (relating to renewability 
                generally).
                    (C) With respect only to small employer health 
                benefit plans--
                            (i) section 105 (relating to limits on 
                        premiums and other requirements for initial 
                        writing of plans), and
                            (ii) section 107 (relating to limits on 
                        annual premium increases).
            (3) The term ``Director'' means the Director of the Office 
        of Private Health Care Coverage established under section 
        110(a).
            (4)(A) Subject to subparagraph (B), the term ``employer 
        health benefit plan'' means a health benefit plan (including an 
        employee welfare benefit plan, as defined in section 3(1) of 
        the Employee Retirement Income Security Act of 1974) which is 
        offered to employees through an employer and for which the 
        employer provides for any contribution to such plan or any 
        premium for such plan are deducted by the employer from 
        compensation to the employee.
            (B) A State may provide (for a plan in a State) that the 
        term ``employer health benefit plan'' does not include an 
        association plan (as defined in subparagraph (C)) for purposes 
        of some or all of the provisions of this subtitle.
            (C) For purposes of subparagraph (B), the term 
        ``association plan'' means a health benefit plan offered by an 
        organization to its members if the organization was formed 
        other than for purposes of purchasing insurance.
            (5) The term ``full-time employee'' means, with respect to 
        an employer, an individual who normally is employed for at 
        least 30 hours per week by the employer.
            (6) The term ``health benefit plan'' means any hospital or 
        medical expense incurred policy or certificate, hospital or 
        medical service plan contract, or health maintenance subscriber 
        contract, or a multiple employer welfare arrangement or 
        employee benefit plan (as defined under the Employee Retirement 
        Income Security Act of 1974) which provides benefits with 
        respect to health care services, but does not include--
                    (A) coverage only for accident, dental, vision, 
                disability income, or long-term care insurance, or any 
                combination thereof,
                    (B) medicare supplemental health insurance,
                    (C) coverage issued as a supplement to liability 
                insurance,
                    (D) worker's compensation or similar insurance, or
                    (E) automobile medical-payment insurance,
        or any combination thereof.
            (7) The term ``health maintenance organization'' includes, 
        as defined in standards established under section 101, a 
        carrier that meets specified standards and that offers to 
        provide health services on a prepaid, at-risk basis primarily 
        through a defined set of providers.
            (8) The term ``MedAccess standards'' means the standards 
        established under section 101(a)(1)(A) relating to the 
        requirements of section 103, and includes the consumer 
        protection standards insofar as such standards apply to 
        MedAccess plans.
            (9) The term ``Secretary'' means the Secretary of Health 
        and Human Services.
            (10) The term ``small employer'' means an entity actively 
        engaged in business which, on at least 50 percent of its 
        working days during the preceding year, employed at least 2, 
        but fewer than 36, full-time employees. For purposes of 
        determining if an employer is a small employer, rules similar 
        to the rules of subsection (b) and (c) of section 414 of the 
        Internal Revenue Code of 1986 shall apply.
            (11) The term ``small employer carrier'' means a carrier 
        with respect to the issuance of a small employer health benefit 
        plan.
            (12) The term ``small employer health benefit plan'' means 
        an employer health benefit plan which provides coverage to one 
        or more full-time employees of a small employer.
            (13) The term ``State'' means the 50 States, the District 
        of Columbia, Puerto Rico, the Virgin Islands, Guam, and 
        American Samoa.
            (14) The term ``State commissioner of insurance'' includes 
        a State superintendent of insurance.

  Subtitle B--Improved Small Employer Purchasing Power of Affordable 
                            Health Insurance

SEC. 121. PREEMPTION FROM INSURANCE MANDATES FOR QUALIFIED SMALL 
              EMPLOYER PURCHASING GROUPS.

    (a) Qualified Small Employer Purchasing Group Defined.--For 
purposes of this section, an association is a qualified small employer 
purchasing group if--
            (1) the association submits an application to the Secretary 
        of Health and Human Services at such time and in such form as 
        the Secretary may require; and
            (2) on the basis of information contained in the 
        application and any other information the Secretary may 
        require, the Secretary determines that--
                    (A) the association is administered solely under 
                the authority and control of its member employers,
                    (B) the association's membership consists solely of 
                employers with not more than 100 employees (except that 
                an employer member of the group may retain its 
                membership in the group if, after the Secretary 
                determines that the association meets the requirements 
                of this paragraph, the number of employees of the 
                employer member increases to more than 100),
                    (C) with respect to each State in which its members 
                are located, the association consists of not fewer than 
                100 employers, and
                    (D) at the time the association submits its 
                application, the health benefit plans with respect to 
                the employer members of the association are in 
                compliance with applicable State laws relating to 
                health benefit plans.
    (b) Preemption From Insurance Mandates.--
            (1) Finding.--Congress finds that employer purchasing 
        groups organized for the purpose of obtaining health insurance 
        for employer members affect interstate commerce.
            (2) Preemption of state mandates.--In the case of a 
        qualified small employer purchasing group described in 
        subsection (a), no provision of State law shall apply that 
        requires the offering, as part of the health benefit plan with 
        respect to an employer member of such a group, of any services, 
        category of care, or services of any class or type of provider.
            (3) Preemption of provisions prohibiting employer groups 
        from purchasing health insurance.--In the case of a qualified 
        small employer purchasing group described in subsection (a), no 
        provision of State or local law shall apply that prohibits a 
        group of employers from purchasing health insurance with 
        respect to member employers of the group or their employees.
    (c) Effective Date.--This section shall take effect 60 days after 
the date of the enactment of this Act.

                 Subtitle C--Health Deduction Fairness

SEC. 131. PERMANENT EXTENSION AND INCREASE IN HEALTH INSURANCE TAX 
              DEDUCTION FOR SELF-EMPLOYED INDIVIDUALS.

    (a) Permanent Extension of Deduction.--
            (1) In general.--Subsection (l) of section 162 of the 
        Internal Revenue Code of 1986 (relating to special rules for 
        health insurance costs of self-employed individuals) is amended 
        by striking paragraph (6).
            (2) Conforming amendment.--Paragraph (2) of section 110(a) 
        of the Tax Extension Act of 1991 is hereby repealed.
            (3) Effective date.--The amendments made by this subsection 
        shall apply to taxable years beginning after December 31, 1991.
    (b) Increase in Amount of Deduction.--
            (1) In general.--Paragraph (1) of section 162(l) of such 
        Code is amended by striking ``25 percent of'' and inserting 
        ``100 percent (50 percent in the case of taxable years 
        beginning in 1995 or 1996) of''.
            (2) Effective date.--The amendment made by paragraph (1) 
        shall apply to taxable years beginning after December 31, 1994.

        Subtitle D--Improved Access to Community Health Services

   Part 1--Increased Authorization for Community and Migrant Health 
                                Centers

SEC. 141. GRANT PROGRAM TO PROMOTE PRIMARY HEALTH CARE SERVICES FOR 
              UNDERSERVED POPULATIONS.

    (a) Authorization.--The Secretary of Health and Human Services 
shall provide for a program of grants to migrant and community health 
centers (receiving grants or contracts under section 329, 330, or 340 
of the Public Health Service Act) in order to promote the provision of 
primary health care services for underserved individuals. Such grants 
may be used--
            (1) to promote the provision of off-site services (through 
        means such as mobile medical clinics);
            (2) to improve birth outcomes in areas with high infant 
        mortality and morbidity;
            (3) to establish primary care clinics in areas identified 
        as in need of such clinics; and
            (4) for recruitment and training costs of necessary 
        providers and operating costs for unreimbursed services.
    (b) Conditions.--(1) Grants under this subsection shall only be 
made upon application, approved by the Secretary.
    (2) The amount of grants made under this section shall be 
determined by the Secretary.
    (c) Authorization of Appropriations.--There are authorized to be 
appropriated--
            (1) in fiscal year 1994, $100,000,000,
            (2) in fiscal year 1995, $200,000,000,
            (3) in fiscal year 1996, $300,000,000,
            (4) in fiscal year 1997, $400,000,000, and
            (5) in fiscal year 1998, $500,000,000,
to carry out this section. Of the amounts appropriated each fiscal year 
under this section, at least 10 percent shall be used for grants 
described in subsection (a)(1) and at least 10 percent shall be used 
for grants described in subsection (a)(2).
    (d) Study and Report.--The Secretary shall conduct a study of the 
impact of the grants made under this section to migrant and community 
health centers on access to health care, birth outcomes, and the use of 
emergency room services. Not later than 2 years after the date of the 
enactment of this Act, the Secretary shall submit to Congress a report 
on such study and on recommendations for changes in the programs under 
this section in order to promote the appropriate use of cost-effective 
outpatient services.

   Part 2--Grants for Projects for Coordinating Delivery of Services

SEC. 151. PROJECTS FOR COORDINATING DELIVERY OF OUTPATIENT PRIMARY 
              HEALTH SERVICES.

    Part D of title III of the Public Health Service Act (42 U.S.C. 
254b et seq.) is amended by adding at the end the following new 
subpart:

                  ``Subpart VII--Delivery of Services

            ``projects for coordinating delivery of services

    ``Sec. 340E. (a) Authority for Grants.--
            ``(1) In general.--The Secretary may make grants to public 
        and nonprofit private entities to carry out demonstration 
        projects for the purpose of increasing access to outpatient 
        primary health services in geographic areas described in 
        subsection (b) through coordinating the delivery of such 
        services under Federal, State, local, and private programs.
            ``(2) Requirement regarding plan.--The Secretary may make a 
        grant under paragraph (1) only if--
                    ``(A) the applicant involved has received a grant 
                under subsection (l) and the Secretary has approved the 
                plan developed with such grant; and
                    ``(B) the applicant agrees to carry out the project 
                under paragraph (1) in accordance with the plan.
    ``(b) Qualified Health Service Areas.--
            ``(1) In general.--A geographic area described in this 
        subsection is a geographic area that--
                    ``(A) is a rational area for the delivery of health 
                services;
                    ``(B) has a population of not more than 500,000 
                individuals; and
                    ``(C)(i) has been designated by the Secretary as an 
                area with a shortage of personal health services; or
                    ``(ii) has a significant number of individuals who 
                have low incomes or who have insufficient insurance 
                regarding health care.
            ``(2) Authority regarding multiple political 
        subdivisions.--The Secretary shall make a determination of 
        whether a geographic area is a geographic area described in 
        paragraph (1) without regard to whether the area is a political 
        subdivision, without regard to whether the area is located in 2 
        or more political subdivisions or States, and without regard to 
        whether the area encompasses 2 or more political subdivisions.
    ``(c) Preferences in Making Grants.--In making grants under 
subsection (a), the Secretary shall give preference to applicants 
demonstrating that, with respect to the outpatient primary health 
services that will be the subject of the project conducted by the 
applicant under such subsection--
            ``(1)(A) the project will result in the reduction of 
        administrative expenses associated with such services by 
        increasing the efficiency of the administrative processes of 
        the providers participating in the project, and (B) the 
        resulting savings will be expended for the direct provision of 
        such services for the designated population; or
            ``(2) the services that will be the subject of the project 
        will be provided in facilities that are underutilized.
    ``(d) Activities of Project Must Serve Designated Population.--The 
Secretary may make a grant under subsection (a) to an applicant only if 
the applicant demonstrates that carrying out the project under such 
subsection will increase access to outpatient primary health services 
for a significant segment of the designated population.
    ``(e)  Matching Funds.--
            ``(1) In general.--With respect to the costs of the project 
        to be carried out under subsection (a) by an applicant, the 
        Secretary may make a grant under such subsection only if the 
        applicant agrees to make available (directly or through 
        donations from public or private entities) non-Federal 
        contributions toward such costs in an amount that is not less 
        than 50 percent of such costs.
            ``(2) Determination of amount contributed.--Non-Federal 
        contributions required in paragraph (1) may be in cash or in 
        kind, fairly evaluated, including plant, equipment, or 
        services. Amounts provided by the Federal Government, or 
        services assisted or subsidized to any significant extent by 
        the Federal Government, may not be included in determining the 
        amount of such non-Federal contributions.
    ``(f) Certain Limitations Regarding Grants.--
            ``(1) Provision of health services; construction of 
        facilities.--The Secretary may make a grant under subsection 
        (a) only if the applicant involved agrees that the grant will 
        not be expended for the direct provision of any health service 
        or for the construction or renovation of facilities.
            ``(2) Duration and amount of grant.--The period during 
        which payments are made for a project under subsection (a) may 
        not exceed 4 years, and the aggregate amount of such payments 
        for the period may not exceed $200,000. The provision of such 
        payments shall be subject to annual approval by the Secretary 
        of the payments and subject to the availability of 
        appropriations for the fiscal year involved to make the 
        payments.
            ``(3) Financial capacity for continuation of project after 
        termination of grant.--The Secretary may make a grant under 
        subsection (a) only if the Secretary determines that there is a 
        reasonable basis for believing that, after termination of 
        payments under such subsection pursuant to paragraph (2), the 
        project under such subsection will have the financial capacity 
        to continue operating.
    ``(g) Agreements Among Participants in Projects.--
            ``(1) Required participants.--The Secretary may make a 
        grant under subsection (a) only if the applicant for the grant 
        has, for purposes of carrying out a project under such 
        subsection, entered into agreements with--
                    ``(A) the chief public health officers, and the 
                chief health officers for the elementary and secondary 
                schools, of each of the political subdivisions of the 
                qualified health service area in which the project 
                under such subsection is to be carried out (or, in the 
                case of a political subdivision that does not have such 
                an official, with another appropriate official of such 
                subdivision);
                    ``(B) each hospital in the qualified health service 
                area;
                    ``(C) representatives of entities in such area that 
                provide outpatient primary health services under 
                Federal, State, local, or private programs;
                    ``(D) representatives of businesses in such area, 
                including small businesses; and
                    ``(E) representatives of nonprofit private entities 
                in such area.
            ``(2) Optional participants.--With respect to compliance 
        with this section, a grantee under subsection (a) may, for 
        purposes of carrying out a project under such subsection, enter 
        into such agreements with public and private entities in the 
        qualified health service area involved (in addition to the 
        entities specified in paragraph (1)) as the grantee may elect.
    ``(h) Expenditures of Grant.--With respect to a project under 
subsection (a), the purposes for which a grant under such subsection 
may be expended include (but are not limited to) expenditures to 
increase the efficiency of the administrative processes of providers 
participating in the project, paying the costs of hiring and 
compensating staff, obtaining computers and other equipment (including 
vehicles to transport individuals to programs providing outpatient 
primary health services), and developing and operating provider 
networks.
    ``(i) Maintenance of Effort.--In the case of services and 
populations that are the subject of a project under subsection (a), the 
Secretary may make such a grant for a fiscal year only if the applicant 
involved agrees that the applicant, and each entity making an agreement 
under subsection (g), will maintain expenditures of non-Federal amounts 
for such services and populations at a level that is not less than the 
level of such expenditures maintained by the applicant and the entity, 
respectively, for the fiscal year preceding the first fiscal year for 
which the applicant receives such a grant.
    ``(j) Reports to Secretary.--The Secretary may make a grant under 
subsection (a) only if the applicant involved agrees to submit to the 
Secretary such reports on the project carried out under such subsection 
as the Secretary may require.
    ``(k) Evaluations and Dissemination of Information.--The Secretary 
shall provide for evaluations of projects carried out under subsection 
(a), and for the collection and dissemination of information developed 
as a result of such projects and as a result of similar projects.
    ``(l) Planning Grants.--
            ``(1) In general.--The Secretary may make grants to public 
        and nonprofit private entities for the purpose of developing 
        plans to carry out projects under subsection (a). Such a grant 
        may be made only if the applicant involved submits to the 
        Secretary information--
                    ``(A) providing a detailed statement of the 
                proposal of the applicant for carrying out the project;
                    ``(B) identifying the geographic area in which the 
                project is to be carried out; and
                    ``(C) demonstrating that the area is a qualified 
                health service area and that the proposal otherwise is 
                in accordance with the requirements established in this 
                section for the receipt of a grant under subsection 
                (a).
            ``(2) Duration and amount of grant.--The period during 
        which payments are made under paragraph (1) for the development 
        of a plan under such paragraph may not exceed 1 year, and the 
        amount of such payments may not exceed $100,000.
    ``(m) Application for Grant.--The Secretary may make a grant under 
subsection (a) or (l) only if the applicant for the grant submits an 
application to the Secretary that--
            ``(1) contains any agreements, assurances, and information 
        required in this section with respect to the grant; and
            ``(2) is in such form, is made in such manner, and contains 
        such other agreements, assurances, and information as the 
        Secretary determines to be necessary to carry out the purpose 
        for which the grant is to be provided.
    ``(n) Definitions.--For purposes of this section:
            ``(1) The term ``designated population'' means individuals 
        described in subsection (b)(1)(C)(ii).
            ``(2) The term `primary health services' includes 
        preventive health services.
            ``(3) The term `qualified health service area' means a 
        geographic area described in subsection (b).
    ``(o) Authorization of Appropriations.--
            ``(1) Planning for projects.--For the purpose of grants 
        under subsection (l), there is authorized to be appropriated 
        $5,000,000 for fiscal year 1994, to remain available until 
        expended.
            ``(2) Operation of projects.--For the purpose of grants 
        under subsection (a), there is authorized to be appropriated an 
        aggregate $10,000,000 for the fiscal years 1995 through 
        1998.''.

          Subtitle E--Improved Access to Rural Health Services

          Part 1--Rural Emergency Medical Services Amendments

SEC. 171. OFFICE OF EMERGENCY MEDICAL SERVICES.

    Title XII of the Public Health Service Act (42 U.S.C. 300d et seq.) 
is amended--
            (1) in the heading for the title, by striking ``TRAUMA 
        CARE'' and inserting ``EMERGENCY MEDICAL SERVICES'';
            (2) in the heading for part A, by striking ``General'' and 
        all that follows and inserting ``General Authorities and 
        Duties''; and
            (3) by amending section 1201 to read as follows:

``SEC. 1201. OFFICE OF EMERGENCY MEDICAL SERVICES.

    ``(a) Establishment.--The Secretary shall establish an office to be 
known as the Office of Emergency Medical Services, which shall be 
headed by a director appointed by the Secretary. The Secretary shall 
carry out this title acting through the Director of such Office.
    ``(b) General Authorities and Duties.--With respect to emergency 
medical services (including trauma care), the Secretary shall--
            ``(1) conduct and support research, training, evaluations, 
        and demonstration projects;
            ``(2) foster the development of appropriate, modern systems 
        of such services through the sharing of information among 
        agencies and individuals involved in the study and provision of 
        such services;
            ``(3) sponsor workshops and conferences;
            ``(4) as appropriate, disseminate to public and private 
        entities information obtained in carrying out paragraphs (1) 
        through (3);
            ``(5) provide technical assistance to State and local 
        agencies;
            ``(6) coordinate activities of the Department of Health and 
        Human Services; and
            ``(7) as appropriate, coordinate activities of such 
        Department with activities of other Federal agencies.
    ``(c) Certain Requirements.--With respect to emergency medical 
services (including trauma care), the Secretary shall ensure that 
activities under subsection (b) are carried out regarding--
            ``(1) maintaining an adequate number of health 
        professionals with expertise in the provision of the services, 
        including hospital-based professionals and prehospital-based 
        professionals;
            ``(2) developing, periodically reviewing, and revising as 
        appropriate, in collaboration with appropriate public and 
        private entities, guidelines for the provision of such services 
        (including, for various typical circumstances, guidelines on 
        the number and variety of professionals, on equipment, and on 
        training);
            ``(3) the appropriate use of available technologies, 
        including communications technologies; and
            ``(4) the unique needs of underserved inner-city areas and 
        underserved rural areas.
    ``(d) Grants, Cooperative Agreements, and Contracts.--In carrying 
out subsections (b) and (c), the Secretary may make grants and enter 
into cooperative agreements and contracts.
    ``(e) Definitions.--For purposes of this part:
            ``(1) The term `hospital-based professional' means a health 
        professional (including an allied health professional) who has 
        expertise in providing one or more emergency medical services 
        and who normally provides the services at a medical facility.
            ``(2) The term `prehospital-based professional' means a 
        health professional (including an allied health professional) 
        who has expertise in providing one or more emergency medical 
        services and who normally provides the services at the site of 
        the medical emergency or during transport to a medical 
        facility.''.

SEC. 172. STATE OFFICES OF EMERGENCY MEDICAL SERVICES.

    (a) Technical Amendments to Facilitate Establishment of Program.--
            (1) In general.--Title XII of the Public Health Service Act 
        (42 U.S.C. 300d et seq.) is amended--
                    (A) by redesignating section 1232 as section 1251;
                    (B) by redesignating sections 1231 and 1233 as 
                sections 1241 and 1242, respectively; and
                    (C) by redesignating sections 1211 through 1222 as 
                sections 1221 through 1232, respectively.
            (2) Modifications in format of title xii.--Title XII of the 
        Public Health Service Act, as amended by paragraph (1) of this 
        subsection, is amended--
                    (A) by striking ``Part B'' and all that follows 
                through ``State Plans'' and inserting the following:

  ``Subpart II--Formula Grants With Respect to Modifications of State 
                                Plans'';

                    (B) by striking ``Part C--General Provisions'' and 
                inserting the following:

                  ``Subpart III--General Provisions'';

                    (C) by redesignating sections 1202 and 1203 as 
                sections 1211 and 1212, respectively; and
                    (D) by inserting before section 1211 (as so 
                redesignated) the following:

                         ``Part B--Trauma Care

            ``Subpart I--Advisory Council; Clearinghouse''.

    (b) State Offices.--Title XII of the Public Health Service Act, as 
amended by subsection (a) of this section, is amended by inserting 
after section 1201 the following new section:

``SEC. 1202. STATE OFFICES OF EMERGENCY MEDICAL SERVICES.

    ``(a) Program of Grants.--The Secretary may make grants to States 
for the purpose of improving the availability and quality of emergency 
medical services through the operation of State offices of emergency 
medical services.
    ``(b) Requirement of Matching Funds.--
            ``(1) In general.--The Secretary may not make a grant under 
        subsection (a) unless the State involved agrees, with respect 
        to the costs to be incurred by the State in carrying out the 
        purpose described in such subsection, to provide non-Federal 
        contributions toward such costs in an amount that--
                    ``(A) for the first fiscal year of payments under 
                the grant, is not less than $1 for each $3 of Federal 
                funds provided in the grant;
                    ``(B) for any second fiscal year of such payments, 
                is not less than $1 for each $1 of Federal funds 
                provided in the grant; and
                    ``(C) for any third fiscal year of such payments, 
                is not less than $3 for each $1 of Federal funds 
                provided in the grant.
            ``(2) Determination of amount of non-federal 
        contribution.--
                    ``(A) Subject to subparagraph (B), non-Federal 
                contributions required in paragraph (1) may be in cash 
                or in kind, fairly evaluated, including plant, 
                equipment, or services. Amounts provided by the Federal 
                Government, or services assisted or subsidized to any 
                significant extent by the Federal Government, may not 
                be included in determining the amount of such non-
                Federal contributions.
                    ``(B) The Secretary may not make a grant under 
                subsection (a) unless the State involved agrees that--
                            ``(i) for the first fiscal year of payments 
                        under the grant, 100 percent or less of the 
                        non-Federal contributions required in paragraph 
                        (1) will be provided in the form of in-kind 
                        contributions;
                            ``(ii) for any second fiscal year of such 
                        payments, not more than 50 percent of such non-
                        Federal contributions will be provided in the 
                        form of in-kind contributions; and
                            ``(iii) for any third fiscal year of such 
                        payments, such non-Federal contributions will 
                        be provided solely in the form of cash.
    ``(c) Certain Required Activities.--The Secretary may not make a 
grant under subsection (a) unless the State involved agrees that 
activities carried out by an office operated pursuant to such 
subsection will include--
            ``(1) coordinating the activities carried out in the State 
        that relate to emergency medical services;
            ``(2) activities regarding the matters described in 
        paragraphs (1) through (4) section 1201(b); and
            ``(3) identifying Federal and State programs regarding 
        emergency medical services and providing technical assistance 
        to public and nonprofit private entities regarding 
        participation in such programs.
    ``(d) Requirement Regarding Annual Budget for Office.--The 
Secretary may not make a grant under subsection (a) unless the State 
involved agrees that, for any fiscal year for which the State receives 
such a grant, the office operated pursuant to subsection (a) will be 
provided with an annual budget of not less than $50,000.
    ``(e) Certain Uses of Funds.--
            ``(1) Restrictions.--The Secretary may not make a grant 
        under subsection (a) unless the State involved agrees that--
                    ``(A) if research with respect to emergency medical 
                services is conducted pursuant to the grant, not more 
                than 10 percent of the grant will be expended for such 
                research; and
                    ``(B) the grant will not be expended to provide 
                emergency medical services (including providing cash 
                payments regarding such services).
            ``(2) Establishment of office.--Activities for which a 
        State may expend a grant under subsection (a) include paying 
        the costs of establishing an office of emergency medical 
        services for purposes of such subsection.
    ``(f) Reports.--The Secretary may not make a grant under subsection 
(a) unless the State involved agrees to submit to the Secretary reports 
containing such information as the Secretary may require regarding 
activities carried out under this section by the State.
    ``(g) Requirement of Application.--The Secretary may not make a 
grant under subsection (a) unless an application for the grant is 
submitted to the Secretary and the application is in such form, is made 
in such manner, and contains such agreements, assurances, and 
information as the Secretary determines to be necessary to carry out 
this section.''.

SEC. 173. PROGRAMS FOR RURAL AREAS.

    (a) In General.--Title XII of the Public Health Service Act, as 
amended by section 172 of this Act, is amended--
            (1) by transferring section 1204 to part A;
            (2) by redesignating such section as section 1203;
            (3) by inserting such section after section 1202; and
            (4) in section 1203 (as so redesignated)--
                    (A) by redesignating subsection (c) as subsection 
                (d); and
                    (B) by inserting after subsection (b) the following 
                new subsection:
    ``(c) Demonstration Program Regarding Telecommunications.--
            ``(1) Linkages for rural facilities.--Projects under 
        subsection (a)(1) shall include demonstration projects to 
        establish telecommunications between rural medical facilities 
        and medical facilities that have expertise or equipment that 
        can be utilized by the rural facilities through the 
        telecommunications.
            ``(2) Modes of communication.--The Secretary shall ensure 
        that the telecommunications technologies demonstrated under 
        paragraph (1) include (interactive) video telecommunications, 
        (static video imaging transmitted through the telephone 
        system), and facsimiles transmitted through such system.''.
    (b) Conforming Amendment.--Section 1203 of the Public Health 
Service Act, as redesignated by subsection (a)(2) of this section, is 
amended in the heading for the section by striking ``establishment'' 
and all that follows and inserting ``programs for rural areas.''.

SEC. 174. FUNDING.

    Title XII of the Public Health Service Act, as amended by the 
preceding provisions of this part, is amended--
            (1) by adding at the end the following new part:

                          ``Part C--Funding'';

            (2) by transferring section 1251 to part C (as so added); 
        and
            (3) in such section, by striking subsections (a) and (b) 
        and inserting the following:
    ``(a) Emergency Medical Services Generally.--
            ``(1) In general.--For the purpose of carrying out section 
        1201 other than with respect to trauma care, there are 
        authorized to be appropriated $2,000,000 for fiscal year 1994, 
        and such sums as may be necessary for each of the fiscal years 
        1995 and 1996.
            ``(2) State offices.--For the purpose of carrying out 
        section 1202, there are authorized to be appropriated 
        $3,000,000 for fiscal year 1994, and such sums as may be 
        necessary for each of the fiscal years 1995 and 1996.
            ``(3) Certain telecommunications demonstrations.--For the 
        purpose of carrying out section 1203(c), there are authorized 
        to be appropriated $10,000,000 for fiscal year 1994, and such 
        sums as may be necessary for each of the fiscal years 1995 and 
        1996.
    ``(b) Trauma Care and Certain Other Activities.--
            ``(1) In general.--For the purpose of carrying out part B, 
        section 1201 with respect to trauma care, and section 1203 
        (other than subsection (c) of such section), there are 
        authorized to be appropriated $60,000,000 for fiscal year 1994, 
        and such sums as may be necessary for each of the fiscal years 
        1995 and 1996.
            ``(2) Allocation of funds by secretary.--
                    ``(A) For the purpose of carrying out subpart I of 
                part B, section 1201 with respect to trauma care, and 
                section 1203 (other than subsection (c) of such 
                section), the Secretary shall make available 10 percent 
                of the amounts appropriated for a fiscal year under 
                paragraph (1).
                    ``(B) For the purpose of carrying out section 1203 
                (other than subsection (c) of such section), the 
                Secretary shall make available 10 percent of the 
                amounts appropriated for a fiscal year under paragraph 
                (1).
                    ``(C)(i) For the purpose of making allotments under 
                section 1221(a), the Secretary shall, subject to 
                subsection (c), make available 80 percent of the 
                amounts appropriated for a fiscal year under paragraph 
                (1).
                    ``(ii) Amounts paid to a State under section 
                1221(a) for a fiscal year shall, for the purposes for 
                which the amounts were paid, remain available for 
                obligation until the end of the fiscal year immediately 
                following the fiscal year for which the amounts were 
                paid.''.

SEC. 175. CONFORMING AMENDMENTS.

    Title XII of the Public Health Service Act, as amended by the 
preceding provisions of this part, is amended--
            (1) in section 1203(b), by striking ``1214(c)(1)'' and 
        inserting ``1224(c)(1)'';
            (2) in section 1211(b)(3), by striking ``1213(c)'' and 
        inserting ``1223(c)'';
            (3) in section 1221--
                    (A) in subsection (a)--
                            (i) by striking ``1218'' and inserting 
                        ``1228''; and
                            (ii) by striking ``1217'' and inserting 
                        ``1227''; and
                    (B) in subsection (b)--
                            (i) by striking ``1233'' and inserting 
                        ``1242''; and
                            (ii) by striking ``1213'' and inserting 
                        ``1223'';
            (4) in section 1222--
                    (A) in subsection (a)--
                            (i) in paragraph (1), by striking 
                        ``1211(a)'' and inserting ``1221(a)''; and
                            (ii) in paragraph (2)(A), by striking 
                        ``1211(c)'' and inserting ``1221(c)''; and
                    (B) in subsection (b), by striking ``1211(a)'' and 
                inserting ``1221(a)'';
            (5) in section 1223--
                    (A) in subsection (a), by striking ``1211(b)'' and 
                inserting ``1221(b)'';
                    (B) in subsection (b)--
                            (i) in paragraph (1), by striking 
                        ``1211(a)'' and inserting ``1221(a)''; and
                            (ii) in paragraph (3), by striking 
                        ``1211(a)'' and inserting ``1221(a)''; and
                    (C) in subsection (d), by striking ``1211(a)'' and 
                inserting ``1221(a)'';
            (6) in section 1224--
                    (A) in each of subsections (a) through (c), by 
                striking ``1211(a)'' and inserting ``1221(a)''; and
                    (B) in subsection (b), by striking ``1213(a)(7)'' 
                and inserting ``1223(a)(7)'';
            (7) in section 1225--
                    (A) in subsection (a)--
                            (i) by striking ``1211(a)'' and inserting 
                        ``1221(a)''; and
                            (ii) by striking ``1233'' and inserting 
                        ``1242''; and
                    (B) in subsection (b), by striking ``1211(b)'' and 
                inserting ``1221(b)'';
            (8) in section 1226, in each of subsections (a) through 
        (c), by striking ``1211(a)'' and inserting ``1221(a)'';
            (9) in section 1227--
                    (A) by striking ``1211(a)'' and inserting 
                ``1221(a)''; and
                    (B) by striking ``1214'' and inserting ``1224'';
            (10) in section 1228--
                    (A) in each of subsections (a) through (c), by 
                striking ``1211(a)'' each place such term appears and 
                inserting ``1221(a)'';
                    (B) in subsection (b), in each of paragraphs (2)(A) 
                and (3)(A), by striking ``1232(a)'' and inserting 
                ``1251(a)''; and
                    (C) in subsection (c)(2)--
                            (i) by striking ``1232(b)(3)'' and 
                        inserting ``1251(b)(3)''; and
                            (ii) by striking ``1217'' and inserting 
                        ``1227'';
            (11) in section 1229(a), by striking ``1211(a)'' each place 
        such term appears and inserting ``1221(a)'';
            (12) in section 1230(a), by striking ``1211(a)'' each place 
        such term appears and inserting ``1221(a)'';
            (13) in section 1231--
                    (A) in each of subsections (a) and (b), by striking 
                ``1211(a)'' each place such term appears and inserting 
                ``1221(a)''; and
                    (B) in each of subsections (a) and (b), by striking 
                ``1211(b)'' and inserting ``1221(b)'';
            (14) in section 1232, by striking ``1211'' and inserting 
        ``1221'';
            (15) in section 1241--
                    (A) in the matter preceding paragraph (1), by 
                striking ``this title'' and inserting ``this part''; 
                and
                    (B) in paragraph (1), by striking ``1213'' and 
                inserting ``1223'';
            (16) in section 1242--
                    (A) in each of subsections (a) and (b), by striking 
                ``1211'' each place such term appears and inserting 
                ``1221'';
                    (B) in subsection (b)--
                            (i) by striking ``part B'' and inserting 
                        ``subpart II''; and
                            (ii) by striking ``1214(c)(1)'' and 
                        inserting ``1224(c)(1)''; and
                    (C) in subsection (c), by striking ``1213'' and 
                inserting ``1223''; and
            (17) in section 1251(c)(1)--
                    (A) by striking ``1211(a)'' and inserting 
                ``1221(a)'';
                    (B) by striking ``1218(a)(2)'' and inserting 
                ``1228(a)(2)''; and
                    (C) by striking ``part B'' and inserting ``subpart 
                II''.

SEC. 176. EFFECTIVE DATE.

    The amendments made by this part shall take effect October 1, 1993, 
or upon the date of the enactment of this Act, whichever occurs later.

     Part 2--Air Transport for Rural Victims of Medical Emergencies

SEC. 181. GRANTS TO STATES REGARDING AIRCRAFT FOR TRANSPORTING RURAL 
              VICTIMS OF MEDICAL EMERGENCIES.

    Title XII of the Public Health Service Act (42 U.S.C. 300d et 
seq.), as amended by part 1, is amended by adding at the end thereof 
the following new part:

        ``Part D--Miscellaneous Grant Programs and Requirements

``SEC. 1261. GRANTS FOR SYSTEMS TO TRANSPORT RURAL VICTIMS OF MEDICAL 
              EMERGENCIES.

    ``(a) In General.--The Secretary shall make grants to States to 
assist such States in the creation or enhancement of air medical 
transport systems that provide victims of medical emergencies in rural 
areas with access to treatments for the injuries or other conditions 
resulting from such emergencies.
    ``(b) Application and Plan.--
            ``(1) Application.--To be eligible to receive a grant under 
        subsection (a), a State shall prepare and submit to the 
        Secretary an application in such form, made in such manner, and 
        containing such agreements, assurances, and information, 
        including a State plan as required in paragraph (2), as the 
        Secretary determines to be necessary to carry out this section.
            ``(2) State plan.--An application submitted under paragraph 
        (1) shall contain a State plan that shall--
                    ``(A) describe the intended uses of the grant 
                proceeds and the geographic areas to be served;
                    ``(B) demonstrates that the geographic areas to be 
                served, as described under subparagraph (A), are rural 
                in nature;
                    ``(C) demonstrate that there is a lack of 
                facilities available and equipped to deliver advanced 
                levels of medical care in the geographic areas to be 
                served;
                    ``(D) demonstrate that in utilizing the grant 
                proceeds for the establishment or enhancement of air 
                medical services the State would be making a cost-
                effective improvement to existing ground-based or air 
                emergency medical service systems;
                    ``(E) demonstrate that the State will not utilize 
                the grant proceeds to duplicate the capabilities of 
                existing air medical systems that are effectively 
                meeting the emergency medical needs of the populations 
                they serve;
                    ``(F) demonstrate that in utilizing the grant 
                proceeds the State is likely to achieve a reduction in 
                the morbidity and mortality rates of the areas to be 
                served, as determined by the Secretary;
                    ``(G) demonstrate that the State, in utilizing the 
                grant proceeds, will--
                            ``(i) maintain the expenditures of the 
                        State for air and ground medical transport 
                        systems at a level equal to not less than the 
                        level of such expenditures maintained by the 
                        State for the fiscal year preceding the fiscal 
                        year for which the grant is received; and
                            ``(ii) ensure that recipients of direct 
                        financial assistance from the State under such 
                        grant will maintain expenditures of such 
                        recipients for such systems at a level at least 
                        equal to the level of such expenditures 
                        maintained by such recipients for the fiscal 
                        year preceding the fiscal year for which the 
                        financial assistance is received;
                    ``(H) demonstrate that persons experienced in the 
                field of air medical service delivery were consulted in 
                the preparation of the State plan; and
                    ``(I) contain such other information as the 
                Secretary may determine appropriate.
    ``(c) Considerations in Awarding Grants.--In determining whether to 
award a grant to a State under this section, the Secretary shall--
            ``(1) consider the rural nature of the areas to be served 
        with the grant proceeds and the services to be provided with 
        such proceeds, as identified in the State plan submitted under 
        subsection (b); and
            ``(2) give preference to States with State plans that 
        demonstrate an effective integration of the proposed air 
        medical transport systems into a comprehensive network or plan 
        for regional or statewide emergency medical service delivery.
    ``(d) State Administration and Use of Grant.--
            ``(1) In general.--The Secretary may not make a grant to a 
        State under subsection (a) unless the State agrees that such 
        grant will be administered by the State agency with principal 
        responsibility for carrying out programs regarding the 
        provision of medical services to victims of medical emergencies 
        or trauma.
            ``(2) Permitted uses.--A State may use amounts received 
        under a grant awarded under this section to award subgrants to 
        public and private entities operating within the State.
            ``(3) Opportunity for public comment.--The Secretary may 
        not make a grant to a State under subsection (a) unless that 
        State agrees that, in developing and carrying out the State 
        plan under subsection (b)(2), the State will provide public 
        notice with respect to the plan (including any revisions 
        thereto) and facilitate comments from interested persons.
    ``(e) Number of Grants.--The Secretary shall award grants under 
this section to not less than 7 States.
    ``(f) Reports.--
            ``(1) Requirement.--A State that receives a grant under 
        this section shall annually (during each year in which the 
        grant proceeds are used) prepare and submit to the Secretary a 
        report that shall contain--
                    ``(A) a description of the manner in which the 
                grant proceeds were utilized;
                    ``(B) a description of the effectiveness of the air 
                medical transport programs assisted with grant 
                proceeds; and
                    ``(C) such other information as the Secretary may 
                require.
            ``(2) Termination of funding.--In reviewing reports 
        submitted under paragraph (1), if the Secretary determines that 
        a State is not using amounts provided under a grant awarded 
        under this section in accordance with the State plan submitted 
        by the State under subsection (b), the Secretary may terminate 
        the payment of amounts under such grant to the State until such 
        time as the Secretary determines that the State comes into 
        compliance with such plan.
    ``(g) Definition.--As used in this section, the term `rural areas' 
means geographic areas that are located outside of standard 
metropolitan statistical areas, as identified by the Secretary.
    ``(h) Authorization of Appropriations.--There are authorized to be 
appropriated to make grants under this section, $15,000,000 for fiscal 
year 1994, and such sums as may be necessary for each of the fiscal 
years 1995 and 1996.''.

 Part 3--Extension of Special Treatment Rules for Medicare-Dependent, 
                         Small Rural Hospitals

SEC. 191. EXTENSION OF SPECIAL TREATMENT RULES FOR MEDICARE-DEPENDENT, 
              SMALL RURAL HOSPITALS.

    (a) In General.--
            (1) Determination of payment amount.--Section 1886(b)(3)(D) 
        of the Social Security Act (42 U.S.C. 1395ww(b)(3)(D)) is 
        amended by striking ``March 31, 1993,'' and inserting ``March 
        31, 1994,''.
            (2) Eligibility for designation.--Section 1886(d)(5)(G)(i) 
        of such Act (42 U.S.C. 1395ww(d)(5)(G)(i)) is amended by 
        striking ``March 31, 1993,'' and inserting ``March 31, 1994,''.
    (b) Effective Date.--The amendments made by subsection (a) shall 
take effect as if included in the enactment of section 6003(f) of the 
Omnibus Budget Reconciliation Act of 1989.

     TITLE II--HEALTH CARE COST CONTAINMENT AND QUALITY ENHANCEMENT

            Subtitle A--Medical Malpractice Liability Reform

                       Part 1--General Provisions

SEC. 201. FEDERAL REFORM OF MEDICAL MALPRACTICE LIABILITY ACTIONS.

    (a) Congressional Findings.--
            (1) Effect on interstate commerce.--Congress finds that the 
        health care and insurance industries are industries affecting 
        interstate commerce and the medical malpractice litigation 
        systems existing throughout the United States affect interstate 
        commerce by contributing to the high cost of health care and 
        premiums for malpractice insurance purchased by health care 
        providers.
            (2) Effect on federal spending.--Congress finds that the 
        medical malpractice litigation systems existing throughout the 
        United States have a significant effect on the amount, 
        distribution, and use of Federal funds because of--
                    (A) the large number of individuals who receive 
                health care benefits under programs operated or 
                financed by the Federal Government;
                    (B) the large number of individuals who benefit 
                because of the exclusion from Federal taxes of the 
                amounts spent by their employers to provide them with 
                health insurance benefits;
                    (C) the large number of health care providers and 
                health care professionals who provide items or services 
                for which the Federal Government makes payments; and
                    (D) the large number of such providers and 
                professionals who have received direct or indirect 
                financial assistance from the Federal Government 
                because of their status as such professionals or 
                providers.
    (b) Applicability.--This subtitle shall apply with respect to any 
medical malpractice liability claim and to any medical malpractice 
liability action brought in any State or Federal court, except that 
this subtitle shall not apply to--
            (1) a claim or action for damages arising from a vaccine-
        related injury or death to the extent that title XXI of the 
        Public Health Service Act applies to the action; or
            (2) a claim or action in which the plaintiff's sole 
        allegation is an allegation of an injury arising from the use 
        of a medical product.
    (c) Preemption of State Law.--Subject to section 221, this subtitle 
supersedes State law only to the extent that State law differs from any 
provision of law established by or under this subtitle. Any issue that 
is not governed by any provision of law established by or under this 
subtitle shall be governed by otherwise applicable State or Federal 
law.
    (d) Federal Court Jurisdiction Not Established on Federal Question 
Grounds.--Nothing in this subtitle shall be construed to establish any 
jurisdiction in the district courts of the United States over medical 
malpractice liability actions on the basis of sections 1331 or 1337 of 
title 28, United States Code.

SEC. 202. DEFINITIONS.

    As used in this subtitle:
            (1) Alternative dispute resolution system; ADR.--The term 
        ``alternative dispute resolution system'' or ``ADR'' means a 
        system established by a State that provides for the resolution 
        of medical malpractice liability claims in a manner other than 
        through medical malpractice liability actions.
            (2) Claimant.--The term ``claimant'' means any person who 
        alleges a medical malpractice liability claim, or, in the case 
        of an individual who is deceased, incompetent, or a minor, the 
        person on whose behalf such a claim is alleged.
            (3) Economic damages.--The term ``economic damages'' means 
        damages paid to compensate an individual for losses for 
        hospital and other medical expenses, lost wages, lost 
        employment, and other pecuniary losses.
            (4) Health care professional.--The term ``health care 
        professional'' means any individual who provides health care 
        services in a State and who is required by State law or 
        regulation to be licensed or certified by the State to provide 
        such services in the State.
            (5) Health care provider.--The term ``health care 
        provider'' means any organization or institution that is 
        engaged in the delivery of health care services in a State and 
        that is required by State law or regulation to be licensed or 
        certified by the State to engage in the delivery of such 
        services in the State.
            (6) Injury.--The term ``injury'' means any illness, 
        disease, or other harm that is the subject of a medical 
        malpractice liability action or claim.
            (7) Medical malpractice liability action.--The term 
        ``medical malpractice liability action'' means a civil action 
        (other than an action in which the plaintiff's sole allegation 
        is an allegation of an intentional tort) brought in a State or 
        Federal court against a health care provider or health care 
        professional (regardless of the theory of liability on which 
        the action is based) in which the plaintiff alleges a medical 
        malpractice liability claim.
            (8) Medical malpractice liability claim.--The term 
        ``medical malpractice liability claim'' means a claim in which 
        the claimant alleges that injury was caused by the provision of 
        (or the failure to provide) health care services.
            (9) Medical product.--The term ``medical product'' means a 
        device (as defined in section 201(h) of the Federal Food, Drug, 
        and Cosmetic Act) or a drug (as defined in section 201(g)(1) of 
        the Federal Food, Drug, and Cosmetic Act).
            (10) Noneconomic damages.--The term ``noneconomic damages'' 
        means damages paid to compensate an individual for losses for 
        physical and emotional pain, suffering, inconvenience, physical 
        impairment, mental anguish, disfigurement, loss of enjoyment of 
        life, loss of consortium, and other nonpecuniary losses, but 
        does not include punitive damages.
            (11) Secretary.--The term ``Secretary'' means the Secretary 
        of Health and Human Services.
            (12) State.--The term ``State'' means each of the several 
        States, the District of Columbia, the Commonwealth of Puerto 
        Rico, the Virgin Islands, Guam, and American Samoa.

SEC. 203. EFFECTIVE DATE.

    (a) In General.--Except as provided in subsection (b) and sections 
219, 242, and 243, this subtitle shall apply with respect to claims 
accruing or actions brought on or after the expiration of the 3-year 
period that begins on the date of the enactment of this Act.
    (b) Exception for States Requesting Earlier Implementation of 
Reforms.--
            (1) Application.--A State may submit an application to the 
        Secretary requesting the early implementation of this subtitle 
        with respect to claims or actions brought in the State.
            (2) Decision by secretary.--The Secretary shall issue a 
        response to a State's application under paragraph (1) not later 
        than 90 days after receiving the application. If the Secretary 
        determines that the State meets the requirements of this 
        subtitle at the time of submitting its application, the 
        Secretary shall approve the State's application, and this 
        subtitle shall apply with respect to actions brought in the 
        State on or after the expiration of the 90-day period that 
        begins on the date the Secretary issues the response. If the 
        Secretary denies the State's application, the Secretary shall 
        provide the State with a written explanation of the grounds for 
        the decision.

  Part 2--Uniform Standards For Medical Malpractice Liability Actions

SEC. 211. STATUTE OF LIMITATIONS.

    (a) In General.--No medical malpractice liability claim may be 
brought after the expiration of the 2-year period that begins on the 
date the alleged injury that is the subject of the action should 
reasonably have been discovered, but in no event after the expiration 
of the 4-year period that begins on the date the alleged injury 
occurred.
    (b) Exception for Minors.--In the case of an alleged injury 
suffered by a minor who has not attained 6 years of age, no medical 
malpractice liability claim may be brought after the expiration of the 
2-year period that begins on the date the alleged injury that is the 
subject of the action should reasonably have been discovered, but in no 
event after the date on which the minor attains 10 years of age.

SEC. 212. REQUIREMENT FOR INITIAL RESOLUTION OF ACTION THROUGH 
              ALTERNATIVE DISPUTE RESOLUTION.

    (a) In General.--No medical malpractice liability action may be 
brought in any State court during a calendar year unless the medical 
malpractice liability claim that is the subject of the action has been 
initially resolved under an alternative dispute resolution system 
certified for the year by the Secretary under section 232(a), or, in 
the case of a State in which such a system is not in effect for the 
year, under the alternative Federal system established under section 
232(b).
    (b) Initial Resolution of Claims Under ADR.--For purposes of 
subsection (a), an action is ``initially resolved'' under an 
alternative dispute resolution system if--
            (1) the ADR reaches a decision on whether the defendant is 
        liable to the plaintiff for damages; and
            (2) if the ADR determines that the defendant is liable, the 
        ADR reaches a decision on the amount of damages assessed 
        against the defendant.
    (c) Procedures for Filing Actions.--
            (1) Notice of intent to contest decision.--Not later than 
        60 days after a decision is issued with respect to a medical 
        malpractice liability claim under an alternative dispute 
        resolution system, each party affected by the decision shall 
        submit a sealed statement to a court of competent jurisdiction 
        indicating whether or not the party intends to contest the 
        decision.
            (2) Deadline for filing action.--No medical malpractice 
        liability action may be brought unless the action is filed in a 
        court of competent jurisdiction not later than 90 days after 
        the decision resolving the medical malpractice liability claim 
        that is the subject of the action is issued under the 
        applicable alternative dispute resolution system.
            (3) Court of competent jurisdiction.--For purposes of this 
        subsection, the term ``court of competent jurisdiction'' 
        means--
                    (A) with respect to actions filed in a State court, 
                the appropriate State trial court; and
                    (B) with respect to actions filed in a Federal 
                court, the appropriate United States district court.
    (d) Effect of ADR Decision on Burden of Proof in Subsequent 
Action.--In any medical malpractice liability action, the trier of fact 
shall uphold the decision made under the previous alternative dispute 
resolution system with respect to the claim that is the subject of the 
action unless the party contesting the decision proves by a 
preponderance of the evidence that the decision was incorrect.
    (e) Legal Effect of Uncontested ADR Decision.--The decision reached 
under an alternative dispute resolution system shall, for purposes of 
enforcement by a court of competent jurisdiction, have the same status 
in the court as the verdict of a medical malpractice liability action 
adjudicated in a State or Federal trial court. The previous sentence 
shall not apply to a decision that is contested by a party affected by 
the decision pursuant to subsection (c)(1).

SEC. 213. ESTABLISHMENT OF PROCESS FOR RESOLUTION OF CLAIMS AGAINST 
              UNITED STATES.

    The Attorney General shall establish an alternative dispute 
resolution process for the resolution of tort claims consisting of 
medical malpractice liability claims brought against the United States 
under the Federal Tort Claims Act. Under such process, the resolution 
of the claim shall occur after the completion of the administrative 
claim process applicable to the claim under section 2675 of title 28, 
United States Code.

SEC. 214. MANDATORY PRE-TRIAL SETTLEMENT CONFERENCE.

    (a) In General.--Before the beginning of the trial phase of any 
medical malpractice liability action, the parties shall attend a 
conference called by the court for purposes of determining whether 
grounds exist upon which the parties may negotiate a settlement for the 
action.
    (b) Requiring Parties to Submit Settlement Offers.--At the 
conference called pursuant to subsection (a), each party to a medical 
malpractice liability action shall present an offer of settlement for 
the action.

SEC. 215. CALCULATION AND PAYMENT OF DAMAGES.

    (a) Limitation on Noneconomic Damages.--The total amount of 
noneconomic damages that may be awarded to a plaintiff and the members 
of the plaintiff's family for losses resulting from the injury which is 
the subject of a medical malpractice liability action may not exceed 
$250,000, regardless of the number of parties against whom the action 
is brought or the number of actions brought with respect to the injury.
    (b) Treatment of Punitive Damages.--
            (1) Limitation on amount.--The total amount of punitive 
        damages that may be imposed under a medical malpractice 
        liability action may not exceed twice the total of the damages 
        awarded to the plaintiff and the members of the plaintiff's 
        family.
            (2) Payments to state for medical quality assurance 
        activities.--
                    (A) In general.--Any punitive damages imposed under 
                a medical malpractice liability action shall be paid to 
                the State in which the action is brought.
                    (B) Activities described.--A State shall use amount 
                paid pursuant to subparagraph (A) to carry out 
                activities to assure the safety and quality of health 
                care services provided in the State, including (but not 
                limited to)--
                            (i) licensing or certifying health care 
                        professionals and health care providers in the 
                        State;
                            (ii) operating alternative dispute 
                        resolution systems;
                            (iii) carrying out public education 
                        programs relating to medical malpractice and 
                        the availability of alternative dispute 
                        resolution systems in the State; and
                            (iv) carrying out programs to reduce 
                        malpractice-related costs for retired providers 
                        or other providers volunteering to provide 
                        services in medically underserved areas.
                    (C) Maintenance of effort.--A State shall use any 
                amounts paid pursuant to subparagraph (A) to supplement 
                and not to replace amounts spent by the State for the 
                activities described in subparagraph (B).
    (c) Periodic Payments for Future Losses.--If more than $100,000 in 
damages for expenses to be incurred in the future is awarded to the 
plaintiff in a medical malpractice liability action, the defendant 
shall provide for payment for such damages on a periodic basis 
determined appropriate by the court (based upon projections of when 
such expenses are likely to be incurred), unless the court determines 
that it is not in the plaintiff's best interest to receive payments for 
such damages on such a periodic basis.
    (d) Mandatory Offsets for Damages Paid by a Collateral Source.--
            (1) In general.--The total amount of damages received by a 
        plaintiff in a medical malpractice liability action shall be 
        reduced (in accordance with paragraph (2)) by any other payment 
        that has been or will be made to the individual to compensate 
        the plaintiff for the injury that was the subject of the 
        action, including payment under--
                    (A) Federal or State disability or sickness 
                programs;
                    (B) Federal, State, or private health insurance 
                programs;
                    (C) private disability insurance programs;
                    (D) employer wage continuation programs; and
                    (E) any other source of payment intended to 
                compensate the plaintiff for such injury.
            (2) Amount of reduction.--The amount by which an award of 
        damages to a plaintiff shall be reduced under paragraph (1) 
        shall be--
                    (A) the total amount of any payments (other than 
                such award) that have been made or that will be made to 
                the plaintiff to compensate the plaintiff for the 
                injury that was the subject of the action; minus
                    (B) the amount paid by the plaintiff (or by the 
                spouse, parent, or legal guardian of the plaintiff) to 
                secure the payments described in subparagraph (A).

SEC. 216. TREATMENT OF ATTORNEY'S FEES AND OTHER COSTS.

    (a) Limitation on Attorney's Fees.--If the plaintiff in a medical 
malpractice liability action has entered into an agreement with the 
plaintiff's attorney to pay the attorney's fees on a contingency basis, 
the attorney's fees for the action may not exceed--
            (1) 25 percent of the first $150,000 of any award or 
        settlement paid to the plaintiff; or
            (2) 15 percent of any additional amounts paid to the 
        plaintiff.
    (b) Requiring Party Contesting ADR Ruling to Pay Attorney's Fees 
and Other Costs.--
            (1) In general.--The court in a medical malpractice 
        liability action shall require the party that (pursuant to 
        section 212(c)(1)) contested the ruling of the alternative 
        dispute resolution system with respect to the medical 
        malpractice liability claim that is the subject of the action 
        to pay to the opposing party the costs incurred by the opposing 
        party under the action, including attorney's fees, fees paid to 
        expert witnesses, and other litigation expenses (but not 
        including court costs, filing fees, or other expenses paid 
        directly by the party to the court, or any fees or costs 
        associated with the resolution of the claim under the 
        alternative dispute resolution system), but only if--
                    (A) in the case of an action in which the party 
                that contested the ruling is the plaintiff, the amount 
                of damages awarded to the party under the action does 
                not exceed the amount of damages awarded to the party 
                under the ADR system by at least 10 percent; and
                    (B) in the case of an action in which the party 
                that contested the ruling is the defendant, the amount 
                of damages assessed against the party under the action 
                is not at least 10 percent less than the amount of 
                damages assessed under the ADR system.
            (2) Exceptions.--Paragraph (1) shall not apply if--
                    (A) the party contesting the ruling made under the 
                previous alternative dispute resolution system shows 
                that--
                            (i) the ruling was procured by corruption, 
                        fraud, or undue means,
                            (ii) there was partiality or corruption 
                        under the system,
                            (iii) there was other misconduct under the 
                        system that materially prejudiced the party's 
                        rights, or
                            (iv) the ruling was based on an error of 
                        law;
                    (B) the party contesting the ruling made under the 
                previous alternative dispute resolution system presents 
                new evidence before the trier of fact that was not 
                available for presentation under the ADR system;
                    (C) the medical malpractice liability action raised 
                a novel issue of law; or
                    (D) the court finds that the application of such 
                paragraph to a party would constitute an undue 
                hardship, and issues an order waiving or modifying the 
                application of such paragraph that specifies the 
                grounds for the court's decision.

SEC. 217. JOINT AND SEVERAL LIABILITY.

    The liability of each defendant in a medical malpractice liability 
action shall be several only and shall not be joint, and each defendant 
shall be liable only for the amount of damages allocated to the 
defendant in direct proportion to the defendant's percentage of 
responsibility (as determined by the trier of fact).

SEC. 218. UNIFORM STANDARD FOR DETERMINING NEGLIGENCE.

    Except as provided in subsection (b), a defendant in a medical 
malpractice liability action may not be found to have acted negligently 
unless the defendant's conduct at the time of providing the health care 
services that are the subject of the action was not reasonable.

SEC. 219. APPLICATION OF MEDICAL PRACTICE GUIDELINES IN MALPRACTICE 
              LIABILITY ACTIONS.

    (a) Use of Guidelines as Affirmative Defense.--In any medical 
malpractice liability action, it shall be a complete defense to any 
allegation that the defendant was negligent that, in the provision of 
(or the failure to provide) the services that are the subject of the 
action, the defendant followed the appropriate practice guideline.
    (b) Restriction on Guidelines Considered Appropriate.--
            (1) Guidelines sanctioned by secretary.--For purposes of 
        subsection (a), a practice guideline may not be considered 
        appropriate with respect to actions brought during a year 
        unless the Secretary has sanctioned the use of the guideline 
        for purposes of an affirmative defense to medical malpractice 
        liability actions brought during the year in accordance with 
        paragraph (2) or (3).
            (2) Process for sanctioning guidelines.--Not less 
        frequently than October 1 of each year (beginning with 1994), 
        the Secretary shall review the practice guidelines and 
        standards developed by the Administrator for Health Care Policy 
        and Research pursuant to section 1142 of the Social Security 
        Act, and shall sanction those guidelines which the Secretary 
        considers appropriate for purposes of an affirmative defense to 
        medical malpractice liability actions brought during the next 
        calendar year as appropriate practice guidelines for purposes 
        of subsection (a).
            (3) Use of state guidelines.--Upon the application of a 
        State, the Secretary may sanction practice guidelines selected 
        by the State for purposes of an affirmative defense to medical 
        malpractice liability actions brought in the State as 
        appropriate practice guidelines for purposes of subsection (a) 
        if the guidelines meet such requirements as the Secretary may 
        impose.
    (c) Prohibiting Application of Failure to Follow Guidelines as 
Prima Facie Evidence of Negligence.--No plaintiff in a medical 
malpractice liability action may be deemed to have presented prima 
facie evidence that a defendant was negligent solely by showing that 
the defendant failed to follow the appropriate practice guideline.

SEC. 220. SPECIAL PROVISION FOR CERTAIN OBSTETRIC SERVICES.

    (a) Imposition of Higher Standard of Proof.--
            (1) In general.--In the case of a medical malpractice 
        liability action relating to services provided during labor or 
        the delivery of a baby, if the defendant health care 
        professional did not previously treat the plaintiff for the 
        pregnancy, the trier of fact may not find that the defendant 
        committed malpractice and may not assess damages against the 
        defendant unless the malpractice is proven by clear and 
        convincing evidence.
            (2) Applicability to group practices or agreements among 
        providers.--For purposes of paragraph (1), a health care 
        professional shall be considered to have previously treated an 
        individual for a pregnancy if the professional is a member of a 
        group practice whose members previously treated the individual 
        for the pregnancy or is providing services to the individual 
        during labor or the delivery of a baby pursuant to an agreement 
        with another professional.
    (b) Clear and Convincing Evidence Defined.--In subsection (a), the 
term ``clear and convincing evidence'' is that measure or degree of 
proof that will produce in the mind of the trier of fact a firm belief 
or conviction as to the truth of the allegations sought to be 
established, except that such measure or degree of proof is more than 
that required under preponderance of the evidence, but less than that 
required for proof beyond a reasonable doubt.
    (c) Effective Date.--This section shall apply to claims accruing or 
actions brought on or after the expiration of the 2-year period that 
begins on the date of the enactment of this Act.

SEC. 221. PREEMPTION.

    (a) In General.--This part supersedes any State law only to the 
extent that State law--
            (1) permits the recovery of a greater amount of damages by 
        a plaintiff;
            (2) permits the collection of a greater amount of 
        attorneys' fees by a plaintiff's attorney;
            (3) establishes a longer period during which a medical 
        malpractice liability claim may be initiated; or
            (4) establishes a stricter standard for determining whether 
        a defendant was negligent or for determining the liability of 
        defendants described in section 220(a) in actions described in 
        such section.
    (b) Effect on Sovereign Immunity and Choice of Law or Venue.--
Nothing in subsection (a) shall be construed to--
            (1) waive or affect any defense of sovereign immunity 
        asserted by any State under any provision of law;
            (2) waive or affect any defense of sovereign immunity 
        asserted by the United States;
            (3) affect the applicability of any provision of the 
        Foreign Sovereign Immunities Act of 1976;
            (4) preempt State choice-of-law rules with respect to 
        claims brought by a foreign nation or a citizen of a foreign 
        nation; or
            (5) affect the right of any court to transfer venue or to 
        apply the law of a foreign nation or to dismiss a claim of a 
        foreign nation or of a citizen of a foreign nation on the 
        ground of inconvenient forum.

 Part 3--Requirements For Alternative Dispute Resolution Systems (ADR)

SEC. 231. BASIC REQUIREMENTS.

    (a) In General.--A State's alternative dispute resolution system 
meets the requirements of this section if the system--
            (1) applies to all medical malpractice liability claims 
        under the jurisdiction of the State courts;
            (2) requires that a written opinion resolving the dispute 
        be issued not later than 6 months after the date by which each 
        party against whom the claim is filed has received notice of 
        the claim (other than in exceptional cases for which a longer 
        period is required for the issuance of such an opinion), and 
        that the opinion contain--
                    (A) findings of fact relating to the dispute, and
                    (B) a description of the costs incurred in 
                resolving the dispute under the system (including any 
                fees paid to the individuals hearing and resolving the 
                claim), together with an appropriate assessment of the 
                costs against any of the parties;
            (3) requires individuals who hear and resolve claims under 
        the system to meet such qualifications as the State may require 
        (in accordance with regulations of the Secretary);
            (4) is approved by the State or by local governments in the 
        State;
            (5) with respect to a State system that consists of 
        multiple dispute resolution procedures--
                    (A) permits the parties to a dispute to select the 
                procedure to be used for the resolution of the dispute 
                under the system, and
                    (B) if the parties do not agree on the procedure to 
                be used for the resolution of the dispute, assigns a 
                particular procedure to the parties;
            (6) provides for the transmittal to the State agency 
        responsible for monitoring or disciplining health care 
        professionals and health care providers of any findings made 
        under the system that such a professional or provider committed 
        malpractice, unless, during the 90-day period beginning on the 
        date the system resolves the claim against the professional or 
        provider, the professional or provider brings a medical 
        malpractice liability action contesting the decision made under 
        the system; and
            (7) provides for the regular transmittal to the 
        Administrator for Health Care Policy and Research of 
        information on disputes resolved under the system, in a manner 
        that assures that the identity of the parties to a dispute 
        shall not be revealed.
    (b) Application of Malpractice Liability Standards to Alternative 
Dispute Resolution.--The provisions of part 2 shall apply with respect 
to claims brought under a State alternative dispute resolution system 
or the alternative Federal system in the same manner as such provisions 
apply with respect to medical malpractice liability actions brought in 
the State.

SEC. 232. CERTIFICATION OF STATE SYSTEMS; APPLICABILITY OF ALTERNATIVE 
              FEDERAL SYSTEM.

    (a) Certification.--
            (1) In general.--Not later than October 1 of each year 
        (beginning with 1994), the Secretary, in consultation with the 
        Attorney General, shall determine whether a State's alternative 
        dispute resolution system meets the requirements of this part 
        for the following calendar year.
            (2) Basis for certification.--The Secretary shall certify a 
        State's alternative dispute resolution system under this 
        subsection for a calendar year if the Secretary determines 
        under paragraph (1) that the system meets the requirements of 
        section 231.
    (b) Applicability of Alternative Federal System.--
            (1) Establishment and applicability.--Not later than 
        October 1, 1994, the Secretary, in consultation with the 
        Attorney General, shall establish by rule an alternative 
        Federal ADR system for the resolution of medical malpractice 
        liability claims during a calendar year in States that do not 
        have in effect an alternative dispute resolution system 
        certified under subsection (a) for the year.
            (2) Requirements for system.--Under the alternative Federal 
        ADR system established under paragraph (1)--
                    (A) paragraphs (1), (2), (6), and (7) of section 
                231(a) shall apply to claims brought under the system;
                    (B) claims brought under the system shall be heard 
                and resolved by arbitrators appointed by the Secretary 
                in consultation with the Attorney General; and
                    (C) with respect to a State in which the system is 
                in effect, the Secretary may (at the State's request) 
                modify the system to take into account the existence of 
                dispute resolution procedures in the State that affect 
                the resolution of medical malpractice liability claims.

SEC. 233. REPORTS ON IMPLEMENTATION AND EFFECTIVENESS OF ALTERNATIVE 
              DISPUTE RESOLUTION SYSTEMS.

    (a) In General.--Not later than 5 years after the date of the 
enactment of this Act, the Secretary shall prepare and submit to 
Congress a report describing and evaluating State alternative dispute 
resolution systems operated pursuant to this part and the alternative 
Federal system established under section 232(b).
    (b) Contents of Report.--The Secretary shall include in the report 
prepared and submitted under subsection (a)--
            (1) information on--
                    (A) the effect of such systems on the cost of 
                health care within each State,
                    (B) the impact of such systems on the access of 
                individuals to health care within the State, and
                    (C) the effect of such systems on the quality of 
                health care provided within the State; and
            (2) to the extent that such report does not provide 
        information on no-fault systems operated by States as 
        alternative dispute resolution systems pursuant to this part, 
        an analysis of the feasibility and desirability of establishing 
        a system under which medical malpractice liability claims shall 
        be resolved on a no-fault basis.

                Part 4--Other Requirements and Programs

SEC. 241. FACILITATING DEVELOPMENT AND USE OF MEDICAL PRACTICE 
              GUIDELINES.

    (a) Increase in Authorization of Appropriations.--Section 
1142(i)(1) of the Social Security Act (42 U.S.C. 1320b-12(i)(1)) is 
amended by striking ``and'' at the end of subparagraph (D) and by 
striking subparagraph (E) and inserting the following:
                    ``(E) $195,000,000 for fiscal year 1994 (of which 
                $10,000,000 shall be used for sanctioning practice 
                guidelines for purposes of an affirmative defense in 
                medical malpractice liability actions); and
                    ``(F) $20,000,000 for each of fiscal year 1995 and 
                1996, to be used for sanctioning practice guidelines 
                for purposes of an affirmative defense in medical 
                malpractice liability actions.''.
    (b) Consideration of Malpractice Liability Data in Developing and 
Updating Guidelines.--Section 1142(c)(5) of such Act (42 U.S.C. 1320b-
12(c)(5)) is amended by striking ``claims data'' and all that follows 
through ``patients'' and inserting the following: ``claims data, data 
on clinical and functional status of patients, and data on medical 
malpractice liability actions''.
    (c) Development of Reporting Forms for State ADR Systems.--The 
Secretary, in consulation with the Administrator for Health Care Policy 
and Research, shall develop a standard reporting form to be used by 
State alternative dispute resolution systems in transmitting 
information to the Administrator pursuant to section 231(a)(6) on 
disputes resolved under such systems.
    (d) Study of Effect of Guidelines on Medical Malpractice.--
            (1) Study.--The Secretary shall conduct a study of the 
        effect of the use of the medical practice guidelines developed 
        by the Administrator for Health Care Policy and Research on the 
        incidence of and the costs associated with medical malpractice.
            (2) Reports.--(A) Not later than 1 year after the date of 
        the enactment of this Act, the Secretary shall submit an 
        interim report to Congress describing the availability and use 
        of medical practice guidelines and the aggregate costs 
        associated with medical malpractice.
            (B) Not later than 5 years after the date of the enactment 
        of this Act, the Secretary shall submit a report to Congress on 
        the study conducted under paragraph (1), together with 
        recommendations regarding expanding the use of medical practice 
        guidelines for determining the liability of health care 
        professionals and health care providers for medical 
        malpractice.

SEC. 242. PERMITTING STATE PROFESSIONAL SOCIETIES TO PARTICIPATE IN 
              DISCIPLINARY ACTIVITIES.

    (a) Role of Professional Societies.--Notwithstanding any other 
provision of State or Federal law, a State agency responsible for the 
conduct of disciplinary actions for a type of health care practitioner 
may enter into agreements with State or county professional societies 
of such type of health care practitioner to permit such societies to 
participate in the licensing of such health care practitioner, and to 
review any health care malpractice action, health care malpractice 
claim or allegation, or other information concerning the practice 
patterns of any such health care practitioner. Any such agreement shall 
comply with subsection (b).
    (b) Requirements of Agreements.--Any agreement entered into under 
subsection (a) for licensing activities or the review of any health 
care malpractice action, health care malpractice claim or allegation, 
or other information concerning the practice patterns of a health care 
practitioner shall provide that--
            (1) the health care professional society conducts such 
        activities or review as expeditiously as possible;
            (2) after the completion of such review, such society shall 
        report its findings to the State agency with which it entered 
        into such agreement;
            (3) the conduct of such activities or review and the 
        reporting of such findings be conducted in a manner which 
        assures the preservation of confidentiality of health care 
        information and of the review process; and
            (4) no individual affiliated with such society is liable 
        for any damages or injury directly caused by the individual's 
        actions in conducting such activities or review.
    (c) Agreements Not Mandatory.--Nothing in this section may be 
construed to require a State to enter into agreements with societies 
described in subsection (a) to conduct the activities described in such 
subsection.
    (d) Effective Date.--This section shall take effect 2 years after 
the date of the enactment of this Act.

SEC. 243. REQUIREMENTS FOR RISK MANAGEMENT PROGRAMS.

    (a) Requirements for Providers.--Each State shall require each 
health care professional and health care provider providing services in 
the State to participate in a risk management program to prevent and 
provide early warning of practices which may result in injuries to 
patients or which otherwise may endanger patient safety.
    (b) Requirements for Insurers.--Each State shall require each 
entity which provides health care professional or provider liability 
insurance to health care professionals and health care providers in the 
State to--
            (1) establish risk management programs based on data 
        available to such entity or sanction programs of risk 
        management for health care professionals and health care 
        providers provided by other entities; and
            (2) require each such professional or provider, as a 
        condition of maintaining insurance, to participate in one 
        program described in paragraph (1) at least once in each 3-year 
        period.
    (c) Effective Date.--This section shall take effect 2 years after 
the date of the enactment of this Act.

SEC. 244. GRANTS FOR MEDICAL SAFETY PROMOTION.

    (a) Research on Medical Injury Prevention and Compensation.--
            (1) In general.--The Secretary shall make grants for the 
        conduct of basic research in the prevention of and compensation 
        for injuries resulting from health care professional or health 
        care provider malpractice, and research of the outcomes of 
        health care procedures.
            (2) Preference for research on certain activities.--In 
        making grants under paragraph (1), the Secretary shall give 
        preference to applications for grants to conduct research on 
        the behavior of health care providers and health care 
        professionals in carrying out their professional duties and of 
        other participants in systems for compensating individuals 
        injured by medical malpractice, the effects of financial and 
        other incentives on such behavior, the determinants of 
        compensation system outcomes, and the costs and benefits of 
        alternative compensation policy options.
            (3) Application.--The Secretary may not make a grant under 
        paragraph (1) unless an applicant submits an application to the 
        Secretary at such time, in such form, in such manner, and 
        containing such information as the Secretary may require.
    (b) Grants for Licensing and Disciplinary Activities.--
            (1) In general.--The Secretary shall make grants to States 
        to assist States in improving the States' ability to license 
        and discipline health care professionals.
            (2) Uses for grants.--A State may use a grant awarded under 
        subsection (a) to develop and implement improved mechanisms for 
        monitoring the practices of health care professionals or for 
        conducting disciplinary activities.
            (3) Technical assistance.--The Secretary shall provide 
        technical assistance to States receiving grants under paragraph 
        (1) to assist them in evaluating their medical practice acts 
        and procedures and to encourage the use of efficient and 
        effective early warning systems and other mechanisms for 
        detecting practices which endanger patient safety and for 
        disciplining health care professionals.
            (4) Applications.--The Secretary may not make a grant under 
        paragraph (1) unless the applicant submits an application to 
        the Secretary at such time, in such form, in such manner, and 
        containing such information as the Secretary shall require.
    (c) Grants for Public Education Programs.--
            (1) In general.--The Secretary shall make grants to States 
        and to local governments, private nonprofit organizations, and 
        health professional schools (as defined in paragraph (3)) for--
                    (A) educating the general public about the 
                appropriate use of health care and realistic 
                expectations of medical intervention;
                    (B) educating the public about the resources and 
                role of health care professional licensing and 
                disciplinary boards in investigating claims of 
                incompetence or health care malpractice; and
                    (C) developing programs of faculty training and 
                curricula for educating health care professionals in 
                quality assurance, risk management, and medical injury 
                prevention.
            (2) Applications.--The Secretary may not make a grant under 
        paragraph (1) unless the applicant submits an application to 
        the Secretary at such time, in such form, in such manner, and 
        containing such information as the Secretary shall require.
            (3) Health professional school defined.--In paragraph (1), 
        the term ``health professional school'' means a school of 
        nursing (as defined in section 853(2) of the Public Health 
        Service Act) or an institution described in section 701(4) of 
        such Act.
    (d) Authorization of Appropriations.--There are authorized to be 
appropriated not more than $15,000,000 for each of the first 5 fiscal 
years beginning on or after the date of the enactment of this Act for 
grants under this section.

SEC. 245. STUDY OF BARRIERS TO VOLUNTARY SERVICE BY PHYSICIANS.

    (a) Study.--The Secretary shall conduct a study to determine the 
factors preventing or discouraging physicians (whether practicing or 
retired) from volunteering to provide health care services in medically 
underserved areas.
    (b) Reports.--(1) Not later than 1 year after the date of the 
enactment of this Act, the Secretary shall submit an interim report to 
Congress on the study conducted under subsection (a), together with the 
Secretary's recommendations for actions to increase the number of 
physicians volunteering to provide health care services in medically 
underserved areas.
    (2) Not later than 5 years after the date of the enactment of this 
Act, the Secretary shall submit a final report to Congress on the study 
conducted under subsection (a) (taking into account the effects of this 
subtitle on the incidence and costs of medical malpractice), together 
with the Secretary's recommendations for actions to increase the number 
of physicians volunteering to provide health care services in medically 
underserved areas.

                Subtitle B--Administrative Cost Savings

              Part 1--Standardization of Claims Processing

SEC. 251. ADOPTION OF DATA ELEMENTS, UNIFORM CLAIMS, AND UNIFORM 
              ELECTRONIC TRANSMISSION STANDARDS.

    (a) In General.--The Secretary of Health and Human Services (in 
this subtitle referred to as the ``Secretary'') shall adopt standards 
relating to each of the following:
            (1) Data elements for use in paper and electronic claims 
        processing under health benefit plans, as well as for use in 
        utilization review and management of care (including data 
        fields, formats, and medical nomenclature, and including plan 
        benefit and insurance information).
            (2) Uniform claims forms (including uniform procedure and 
        billing codes for uses with such forms and including 
        information on other health benefit plans that may be liable 
        for benefits).
            (3) Uniform electronic transmission of the data elements 
        (for purposes of billing and utilization review).
Standards under paragraph (3) relating to electronic transmission of 
data elements for claims for services shall supersede (to the extent 
specified in such standards) the standards adopted under paragraph (2) 
relating to the submission of paper claims for such services. Standards 
under paragraph (3) shall include protections to assure the 
confidentiality of patient-specific information and to protect against 
the unauthorized use and disclosure of information.
    (b) Use of Task Forces.--In adopting standards under this section--
            (1) the Secretary shall take into account the 
        recommendations of current taskforces, including at least the 
        Workgroup on Electronic Data Interchange, National Uniform 
        Billing Committee, the Uniform Claim Task Force, and the 
        Computer-based Patient Record Institute;
            (2) the Secretary shall consult with the National 
        Association of Insurance Commissioners (and, with respect to 
        standards under subsection (a)(3), the American National 
        Standards Institute); and
            (3) the Secretary shall, to the maximum extent practicable, 
        seek to make the standards consistent with any uniform clinical 
        data sets which have been adopted and are widely recognized.
    (c) Deadlines for Promulgation.--The Secretary shall promulgate the 
standards under--
            (1) subsection (a)(1) relating to claims processing data, 
        by not later than 12 months after the date of the enactment of 
        this Act;
            (2) subsection (a)(2) (relating to uniform claims forms) by 
        not later than 12 months after the date of the enactment of 
        this Act; and
            (3)(A) subsection (a)(3) relating to transmission of 
        information concerning hospital and physicians services, by not 
        later than 24 months after the date of the enactment of this 
        Act, and
            (B) subsection (a)(3) relating to transmission of 
        information on other services, by such later date as the 
        Secretary may determine it to be feasible.
    (d) Report to Congress.--Not later than 3 years after the date of 
the enactment of this Act, the Secretary shall report to Congress 
recommendations regarding restructuring the medicare peer review 
quality assurance program given the availability of hospital data in 
electronic form.

SEC. 252. APPLICATION OF STANDARDS.

    (a) In General.--If the Secretary determines, at the end of the 2-
year period beginning on the date that standards are adopted under 
section 251 with respect to classes of services, that a significant 
number of claims for benefits for such services under health benefit 
plans are not being submitted in accordance with such standards, the 
Secretary may require, after notice in the Federal Register of not less 
than 6 months, that all providers of such services must submit claims 
to health benefit plans in accordance with such standards. The 
Secretary may waive the application of such a requirement in such cases 
as the Secretary finds that the imposition of the requirement would not 
be economically practicable.
    (b) Significant Number.--The Secretary shall make an affirmative 
determination described in subsection (a) for a class of services only 
if the Secretary finds that there would be a significant, measurable 
additional gain in efficiencies in the health care system that would be 
obtained by imposing the requirement described in such paragraph with 
respect to such services.
    (c) Application of Requirement.--
            (1) In general.--If the Secretary imposes the requirement 
        under subsection (a)--
                  (A) in the case of a requirement that imposes the 
                standards relating to electronic transmission of claims 
                for a class of services, each health care provider that 
                furnishes such services for which benefits are payable 
                under a health benefit plan shall transmit 
                electronically and directly to the plan on behalf of 
                the beneficiary involved a claim for such services in 
                accordance with such standards;
                    (B) any health benefit plan may reject any claim 
                subject to the standards adopted under section 251 but 
                which is not submitted in accordance with such 
                standards;
                    (C) it is unlawful for a health benefit plan (i) to 
                reject any such claim on the basis of the form in which 
                it is submitted if it is submitted in accordance with 
                such standards or (ii) to require, for the purpose of 
                utilization review or as a condition of providing 
                benefits under the plan, a provider to transmit medical 
                data elements that are inconsistent with the standards 
                established under section 251(a)(1); and
                    (D) the Secretary may impose a civil money penalty 
                on any provider that knowingly and repeatedly submits 
                claims in violation of such standards or on any health 
                benefit plan (other than a health benefit plan 
                described in paragraph (2)) that knowingly and 
                repeatedly rejects claims in violation of subparagraph 
                (B), in an amount not to exceed $100 for each such 
                claim.
        The provisions of section 1128A of the Social Security Act 
        (other than the first sentence of subsection (a) and other than 
        subsection (b)) shall apply to a civil money penalty under 
        subparagraph (D) in the same manner as such provisions apply to 
        a penalty or proceeding under section 1128A(a) of such Act.
            (2) Plans subject to effective state regulation.--A plan 
        described in this paragraph is a health benefit plan--
                    (A) that is subject to regulation by a State, and
                    (B) with respect to which the Secretary finds 
                that--
                            (i) the State provides for application of 
                        the standards established under section 251, 
                        and
                            (ii) the State regulatory program provides 
                        for the appropriate and effective enforcement 
                        of such standards.
    (d) Treatment of Rejections.--If a plan rejects a claim pursuant to 
subsection (c)(1), the plan shall permit the person submitting the 
claim a reasonable opportunity to resubmit the claim on a form or in an 
electronic manner that meets the requirements for acceptance of the 
claim under such subsection.

SEC. 253. PERIODIC REVIEW AND REVISION OF STANDARDS.

    (a) In General.--The Secretary shall--
            (1) provide for the ongoing receipt and review of comments 
        and suggestions for changes in the standards adopted and 
        promulgated under section 251;
            (2) establish a schedule for the periodic review of such 
        standards; and
            (3) based upon such comments, suggestions, and review, 
        revise such standards and promulgate such revisions.
    (b) Application of Revised Standards.--If the Secretary under 
subsection (a) revises the standards described in 251, then, in the 
case of any claim for benefits submitted under a health benefit plan 
more than the minimum period (of not less than 6 months specified by 
the Secretary) after the date the revision is promulgated under 
subsection (a)(3), such standards shall apply under section 252 instead 
of the standards previously promulgated.

SEC. 254. HEALTH BENEFIT PLAN DEFINED.

    In this subtitle, the term ``health benefit plan'' has the meaning 
given such term in section 112(6) and includes--
            (1) the medicare program (under title XVIII of the Social 
        Security Act) and medicare supplemental health insurance, and
            (2) a State medicaid plan (approved under title XIX of such 
        Act).

               Part 2--Electronic Medical Data Standards

SEC. 261. MEDICAL DATA STANDARDS FOR HOSPITALS AND OTHER PROVIDERS.

    (a) Promulgation of Hospital Data Standards.--
            (1) In general.--Between July 1, 1994, and January 1, 1995, 
        the Secretary shall promulgate standards described in 
        subsection (b) for hospitals concerning electronic medical 
        data.
            (2) Revision.--The Secretary may from time to time revise 
        the standards promulgated under this subsection.
    (b) Contents of Data Standards.--The standards promulgated under 
subsection (a) shall include at least the following:
            (1) A definition of a standard set of data elements for use 
        by utilization and quality control peer review organizations.
            (2) A definition of the set of comprehensive data elements, 
        which set shall include for hospitals the standard set of data 
        elements defined under paragraph (1).
            (3) Standards for an electronic patient care information 
        system with data obtained at the point of care, including 
        standards to protect against the unauthorized use and 
        disclosure of information.
            (4) A specification of, and manner of presentation of, the 
        individual data elements of the sets and system under this 
        subsection.
            (5) Standards concerning the transmission of electronic 
        medical data.
            (6) Standards relating to confidentiality of patient-
        specific information.
The standards under this section shall be consistent with standards for 
data elements established under section 251.
    (c) Optional Data Standards for Other Providers.--
            (1) In general.--The Secretary may promulgate standards 
        described in paragraph (2) concerning electronic medical data 
        for providers that are not hospitals. The Secretary may from 
        time to time revise the standards promulgated under this 
        subsection.
            (2) Contents of data standards.--The standards promulgated 
        under paragraph (1) for non-hospital providers may include 
        standards comparable to the standards described in paragraphs 
        (2), (4), and (5) of subsection (b) for hospitals.
    (d) Consultation.--In promulgating and revising standards under 
this section, the Secretary shall--
            (1) consult with the American National Standards Institute, 
        hospitals, with the advisory commission established under 
        section 265, and with other affected providers, health benefit 
        plans, and other interested parties, and
            (2) take into consideration, in developing standards under 
        subsection (b)(1), the data set used by the utilization and 
        quality control peer review program under part B of title XI of 
        the Social Security Act.

SEC. 262. APPLICATION OF ELECTRONIC DATA STANDARDS TO CERTAIN 
              HOSPITALS.

    (a) Medicare Requirement for Sharing of Hospital Information.--As 
of January 1, 1996, subject to paragraph (2), each hospital, as a 
requirement of each participation agreement under section 1866 of the 
Social Security Act, shall--
            (1) maintain clinical data included in the set of 
        comprehensive data elements under section 261(b)(2) in 
        electronic form on all inpatients,
            (2) upon request of the Secretary or of a utilization and 
        quality control peer review organization (with which the 
        Secretary has entered into a contract under part B of title XI 
        of such Act), transmit electronically the data set, and
            (3) upon request of the Secretary, or of a fiscal 
        intermediary or carrier, transmit electronically any data (with 
        respect to a claim) from such data set,
in accordance with the standards promulgated under section 261(a).
    (b) Waiver Authority.--Until January 1, 2000:
            (1) The Secretary may waive the application of the 
        requirements of subsection (a) for a hospital that is a small 
        rural hospital, for such period as the hospital demonstrates 
        compliance with such requirements would constitute an undue 
        financial hardship.
            (2) The Secretary may waive the application of the 
        requirements of subsection (a) for a hospital that is in the 
        process of developing a system to provide the required data set 
        and executes agreements with its fiscal intermediary and its 
        utilization and quality control peer review organization that 
        the hospital will meet the requirements of subsection (a) by a 
        specified date (not later than January 1, 2000).
            (3) The Secretary may waive the application of the 
        requirement of subsection (a)(1) for a hospital that agrees to 
        obtain from its records the data elements that are needed to 
        meet the requirements of paragraphs (2) and (3) of subsection 
        (a) and agrees to subject its data transfer process to a 
        quality assurance program specified by the Secretary.
    (c) Application to Hospitals of the Department of Veterans 
Affairs.--
            (1) In general.--The Secretary of Veterans Affairs shall 
        provide that each hospital of the Department of Veterans 
        Affairs shall comply with the requirements of subsection (a) in 
        the same manner as such requirements would apply to the 
        hospital if it were participating in the Medicare program.
            (2) Waiver.--Such Secretary may waive the application of 
        such requirements to a hospital in the same manner as the 
        Secretary of Health and Human Services may waive under 
        subsection (b) the application of the requirements of 
        subsection (a).

SEC. 263. ELECTRONIC TRANSMISSION TO FEDERAL AGENCIES.

    (a) In General.--Effective January 1, 2000, if a provider is 
required under a Federal program to transmit a data element that is 
subject to a presentation or transmission standard (as defined in 
subsection (b)), the head of the Federal agency responsible for such 
program (if not otherwise authorized) is authorized to require the 
provider to present and transmit the data element electronically in 
accordance with such a standard.
    (b) Presentation or Transmission Standard Defined.--In subsection 
(a), the term ``presentation or transmission standard'' means a 
standard, promulgated under subsection (b) or (c) of section 261, 
described in paragraph (4) or (5) of section 261(b).

SEC. 264. LIMITATION ON DATA REQUIREMENTS WHERE STANDARDS IN EFFECT.

    (a) In General.--If standards with respect to data elements are 
promulgated under section 261 with respect to a class of provider, a 
health benefit plan may not require, for the purpose of utilization 
review or as a condition of providing benefits under the plan, that a 
provider in the class--
            (1) provide any data element not in the set of 
        comprehensive data elements specified under such standards, or
            (2) transmit or present any such data element in a manner 
        inconsistent with the applicable standards for such 
        transmission or presentation.
    (b) Compliance.--
            (1) In general.--The Secretary may impose a civil money 
        penalty on any health benefit plan (other than a health benefit 
        plan described in paragraph (2)) that fails to comply with 
        subsection (a) in an amount not to exceed $100 for each such 
        failure. The provisions of section 1128A of the Social Security 
        Act (other than the first sentence of subsection (a) and other 
        than subsection (b)) shall apply to a civil money penalty under 
        this paragraph in the same manner as such provisions apply to a 
        penalty or proceeding under section 1128A(a) of such Act.
            (2) Plans subject to effective state regulation.--A plan 
        described in this paragraph is a health benefit plan that is 
        subject to regulation by a State, if the Secretary finds that--
                    (A) the State provides for application of the 
                requirement of subsection (a), and
                    (B) the State regulatory program provides for the 
                appropriate and effective enforcement of such 
                requirement with respect to such plans.

SEC. 265. ADVISORY COMMISSION.

    (a) In General.--The Secretary shall establish an advisory 
commission including hospital executives, hospital data base managers, 
physicians, health services researchers, and technical experts in 
collection and use of data and operation of data systems. Such 
commission shall include, as ex officio members, a representative of 
the Director of the National Institutes of Health, the Administrator 
for Health Care Policy and Research, the Secretary of Veterans Affairs, 
and the Director of the Centers for Disease Control.
    (b) Functions.--The advisory commission shall monitor and advise 
the Secretary concerning--
            (1) the standards established under this part, and
            (2) operational concerns about the implementation of such 
        standards under this part.
    (c) Staff.--From the amounts appropriated under subsection (d), the 
Secretary shall provide sufficient staff to assist the advisory 
commission in its activities under this section.
    (d) Authorization of Appropriations.--There are authorized to be 
appropriated $2,000,000 for each of fiscal years 1994 through 1999 to 
carry out this section.

 Part 3--Development and Distribution of Comparative Value Information

SEC. 271. STATE COMPARATIVE VALUE INFORMATION PROGRAMS FOR HEALTH CARE 
              PURCHASING.

    (a) Purpose.--In order to assure the availability of comparative 
value information to purchasers of health care in each State, the 
Secretary shall determine whether each State is developing and 
implementing a health care value information program that meets the 
criteria and schedule set forth in subsection (b).
    (b) Criteria and Schedule for State Programs.--The criteria and 
schedule for a State health care value information program in this 
subsection shall be specified by the Secretary as follows:
            (1) The State begins promptly after enactment of this Act 
        to develop (directly or through contractual or other 
        arrangements with one or more States, coalitions of health 
        insurance purchasers, other entities, or any combination of 
        such arrangements) information systems regarding comparative 
        health values.
            (2) The information contained in such systems covers at 
        least the average prices of common health care services (as 
        defined in subsection (d)) and health insurance plans, and, 
        where available, measures of the variability of these prices 
        within a State or other market areas.
            (3) The information described in paragraph (2) is made 
        available within the State beginning not later than one year 
        after the date of the enactment of this Act, and is revised as 
        frequently as reasonably necessary, but at intervals of no 
        greater than one year.
            (4) Not later than 6 years after the date of the enactment 
        of this Act the State has developed information systems that 
        provide comparative costs, quality, and outcomes data with 
        respect to health insurance plans and hospitals and made the 
        information broadly available within the relevant market areas.
Nothing in this section shall preclude a State from providing 
additional information, such as information on prices and benefits of 
different health benefit plans, available.
    (c) Grants to States for the Development of State Programs.--
            (1) Grant authority.--The Secretary may make grants to each 
        State to enable such State to plan the development of its 
        health care value information program and, if necessary, to 
        initiate the implementation of such program. Each State seeking 
        such a grant shall submit an application therefore, containing 
        such information as the Secretary finds necessary to assure 
        that the State is likely to develop and implement a program in 
        accordance with the criteria and schedule in subsection (b).
            (2) Offset authority.--If, at any time within the 3-year 
        period following the receipt by a State of a grant under this 
        subsection, the Secretary is required by section 272 to 
        implement a health care information program in the State, the 
        Secretary may recover the amount of the grant under this 
        subsection by offset against any other amount payable to the 
        State under the Social Security Act. The amount of the offset 
        shall be made available (from the appropriation account with 
        respect to which the offset was taken) to the Secretary to 
        carry out such section.
            (3) Authorization of appropriations.--There are authorized 
        to be appropriated such sums as are necessary to make grants 
        under this subsection, to remain available until expended.
    (d) Common Health Care Services Defined.--In this section, the term 
``common health care services'' includes such procedures as the 
Secretary may specify and any additional health care services which a 
State may wish to include in its comparative value information program.
    (e) State Defined.--In this subtitle, the term ``State'' includes 
the District of Columbia, Puerto Rico, the Virgin Islands, Guam, and 
American Samoa.

SEC. 272. FEDERAL IMPLEMENTATION.

    (a) In General.--If the Secretary finds, at any time, that a State 
has failed to develop or to continue to implement a health care value 
information program in accordance with the criteria and schedule in 
section 271(b), the Secretary shall take the actions necessary, 
directly or through grants or contract, to implement a comparable 
program in the State.
    (b) Fees.--Fees may be charged by the Secretary for the information 
materials provided pursuant to a program under this section. Any 
amounts so collected shall be deposited in the appropriation account 
from which the Secretary's costs of providing such materials were met, 
and shall remain available for such purposes until expended.

SEC. 273. COMPARATIVE VALUE INFORMATION CONCERNING FEDERAL PROGRAMS.

    (a) Development.--The head of each Federal agency with 
responsibility for the provision of health insurance or of health care 
services to individuals shall promptly develop health care value 
information relating to each program that such head administers and 
covering the same types of data that a State program meeting the 
criteria of section 271(b) would provide.
    (b) Dissemination of Information.--Such information shall be made 
generally available to States and to providers and consumers of health 
care services.

SEC. 274. DEVELOPMENT OF MODEL SYSTEMS.

    (a) In General.--The Secretary shall, directly or through grant or 
contract, develop model systems to facilitate--
            (1) the gathering of data on health care cost, quality, and 
        outcome described in section 271(b)(4), and
            (2) analyzing such data in a manner that will permit the 
        valid comparison of such data among providers and among health 
        plans.
    (b) Experimentation.--The Secretary shall support experimentation 
with different approaches to achieve the objectives of subsection (a) 
in the most cost effective manner (relative to the accuracy and 
timeliness of the data secured) and shall evaluate the various methods 
to determine their relative success.
    (c) Standards.--When the Secretary considers it appropriate, the 
Secretary may establish standards for the collection and reporting of 
data on health care cost, quality and outcomes in order to facilitate 
analysis and comparisons among States and nationally.
    (e) Report.--By not later than 3 years after the date of the 
enactment of this Act, the Secretary shall report to the Congress and 
the States on the models developed, and experiments conducted, under 
this section.
    (e) Authorization of Appropriations.--There are authorized to be 
appropriated such sums as are necessary for each fiscal year beginning 
with fiscal year 1993 to enable the Secretary to carry out this 
section, including evaluation of the different approaches tested under 
subsection (b) and their relative cost effectiveness.

      Part 4--Additional Standards and Requirements; Research and 
                             Demonstrations

SEC. 281. STANDARDS RELATING TO USE OF MEDICARE AND MEDICAID MAGNETIZED 
              HEALTH BENEFIT CARDS; SECONDARY PAYOR DATA BANK.

    (a) Magnetized Identification Cards Under Medicare Program.--The 
Secretary shall adopt standards relating to the design and use of 
magnetized medicare identification cards in order to assist health care 
providers providing medicare covered services to individuals--
            (1) in determining whether individuals are eligible for 
        benefits under the medicare program, and
            (2) in billing the medicare program for such services 
        provided to eligible individuals.
Such cards shall be designed to be compatible with machines currently 
employed to transmit information on credit cards. Such cards also shall 
be designed to be able to be used with respect to the provision of 
benefits under medicare supplemental policies.
    (b) Adoption Under Medicaid Plans.--
            (1) In general.--The Secretary shall take such steps as may 
        be necessary to encourage and assist States to design and use 
        magnetized medicaid identification cards that meet such 
        standards, for use under their medicaid plans.
            (2) Limitation on mmis funds.--In applying section 
        1903(a)(3) of the Social Security Act, the Secretary may 
        determine that Federal financial participation is not available 
        under that section to a State which has provided for a 
        magnetized card system that is inconsistent with the standards 
        adopted under subsection (a).
    (c) Medicare and Medicaid Secondary Payor Data Bank.--The Secretary 
shall establish a medicare and medicaid information system which is 
designed to provide information on those group health plans and other 
health benefit plans that are primary payors to the medicare program 
and medicaid program under section 1862(b) or section 1905(a)(25) of 
the Social Security Act.
    (d) Authorization of Appropriations.--There are authorized to be 
appropriated, in equal proportions from the Federal Hospital Insurance 
Trust Fund and from the Federal Supplementary Medical Insurance Trust 
Fund, a total of $25,000,000 to carry out subsections (a) and (c), 
including the issuance of magnetized cards to medicare beneficiaries.

SEC. 282. PREEMPTION OF STATE QUILL PEN LAWS.

    (a) In General.--Effective January 1, 1994, no effect shall be 
given to any provision of State law that requires medical or health 
insurance records (including billing information) to be maintained in 
written, rather than electronic form.
    (b) Secretarial Authority.--The Secretary of Health and Human 
Services may issue regulations to carry out subsection (a). Such 
regulations may provide for such exceptions to subsection (a) as the 
Secretary determines to be necessary to prevent fraud and abuse, with 
respect to controlled substances, and in such other cases as the 
Secretary deems appropriate.

SEC. 283. USE OF STANDARD IDENTIFICATION NUMBERS.

    (a) In General.--Effective January 1, 1994, each health benefit 
plan shall--
            (1) for each of its beneficiaries that has a social 
        security account number, use that number as the personal 
        identifier for claims processing and related purposes, and
            (2) for each provider that has a unique identifier for 
        purposes of title XVIII of the Social Security Act and that 
        furnishes health care items or services to a beneficiary under 
        the plan, use that identifier as the identifier of that 
        provider for claims processing and related purposes.
    (b) Compliance.--
            (1) In general.--The Secretary may impose a civil money 
        penalty on any health benefit plan (other than a health benefit 
        plan described in paragraph (2)) that fails to comply with 
        standards established under subsection (a) in an amount not to 
        exceed $100 for each such failure. The provisions of section 
        1128A of the Social Security Act (other than the first sentence 
        of subsection (a) and other than subsection (b)) shall apply to 
        a civil money penalty under this paragraph in the same manner 
        as such provisions apply to a penalty or proceeding under 
        section 1128A(a) of such Act.
            (2) Plans subject to effective state regulation.--A plan 
        described in this paragraph is a health benefit plan that is 
        subject to regulation by a State, if the Secretary finds that--
                    (A) the State provides for application of the 
                requirement of subsection (a), and
                    (B) the State regulatory program provides for the 
                appropriate and effective enforcement of such 
                requirement with respect to such plans.

SEC. 284. COORDINATION OF BENEFIT STANDARDS.

    (a) Review of Coordination of Benefit Problems.--Between July 1, 
1994, and January 1, 1995, the Secretary shall determine whether 
problems relating to--
            (1) the rules for determining the liability of health 
        benefit plans when benefits are payable under two or more such 
        plans, or
            (2) the availability of information among such health 
        benefit plans when benefits are so payable,
cause significant administrative costs.
    (b) Contingent Promulgation of Standards.--
            (1) In general.--If the Secretary determines that such 
        problems do cause significant administrative costs that could 
        be significantly reduced through the implementation of 
        standards, the Secretary shall promulgate standards 
        concerning--
                    (A) the liability of health benefit plans when 
                benefits are payable under two or more such plans, and
                    (B) the transfer among health benefit plans of 
                appropriate information (which may include standards 
                for the use of unique identifiers, and for the listing 
                of all individuals covered under a health benefit plan) 
                in determining liability in cases when benefits are 
                payable under two or more such plans.
            (2) Effective date.--The standards promulgated under 
        paragraph (1) shall become effective on a date specified by the 
        Secretary, which date shall be not earlier than one year after 
        the date of promulgation of the standards.
    (c) Compliance.--
            (1) In general.--The Secretary may impose a civil money 
        penalty on any health benefit plan (other than a health benefit 
        plan described in paragraph (2)) that fails to comply with 
        standards promulgated under subsection (b) in an amount not to 
        exceed $100 for each such failure. The provisions of section 
        1128A of the Social Security Act (other than the first sentence 
        of subsection (a) and other than subsection (b)) shall apply to 
        a civil money penalty under this paragraph in the same manner 
        as such provisions apply to a penalty or proceeding under 
        section 1128A(a) of such Act.
            (2) Plans subject to effective state regulation.--A plan 
        described in this paragraph is a health benefit plan that is 
        subject to regulation by a State, if the Secretary finds that--
                    (A) the State provides for application of the 
                standards established under subsection (b), and
                    (B) the State regulatory program provides for the 
                appropriate and effective enforcement of such standards 
                with respect to such plans.
    (d) Revision of Standards.--If the Secretary establishes standards 
under subsection (b), the Secretary may revise such standards from time 
to time and such revised standards shall be applied under subsection 
(c) on or after such date (not earlier than 6 months after the date the 
revision is promulgated) as the Secretary shall specify.

SEC. 285. RESEARCH AND DEMONSTRATIONS.

    (a) Demonstrations and Research on Monitoring and Improving Patient 
Care.--
            (1) The Secretary shall provide grants to qualified 
        entities to demonstrate (and conduct research concerning) the 
        application of comprehensive information systems--
                    (A) in continuously monitoring patient care, and
                    (B) in improving patient care.
            (2) To make grants under this subsection, there are 
        authorized to be appropriated from the Federal Hospital 
        Insurance Trust Fund $10,000,000 for each fiscal year 
        (beginning with fiscal year 1994 and ending with fiscal year 
        1998).
    (b) Communication Links.--
            (1) The Secretary may make grants to at least two, but not 
        more than five, community organizations, or coalitions of 
        health care providers, health benefit plans, and purchasers, to 
        establish and document the efficacy of communication links 
        between the information systems of health benefit plans and of 
        health care providers.
            (2) To make grants under this subsection, there are 
        authorized to be appropriated such sums as may be necessary for 
        fiscal year 1994, to remain available until expended.
    (c) Regional or Community Based Clinical Information Systems.--
            (1) The Secretary may make grants to at least two, but not 
        more than five, public or private non-profit entities for the 
        development of regional or community-based clinical information 
        systems.
            (2) To make grants under this subsection, there are 
        authorized to be appropriated such sums as may be necessary for 
        fiscal year 1994, to remain available until expended.
    (d) Ambulatory Care Data Sets.--
            (1) The Secretary may make grants to public or private non-
        profit entities to develop and test, for electronic medical 
        data generated by physicians and other entities (other than 
        hospitals) that provide health care services--
                    (A) the definition of a comprehensive set of data 
                elements, and
                    (B) the specification of, and manner of 
                presentation of, the individual data elements of the 
                set under subparagraph (A).
            (2) To make grants under this subsection, there are 
        authorized to be appropriated such sums as may be necessary for 
        fiscal year 1994, to remain available until expended.

            Subtitle C--Medical Savings Accounts (Medisave)

SEC. 291. MEDICAL SAVINGS ACCOUNTS.

    (a) In General.--Part III of subchapter B of chapter 1 of the 
Internal Revenue Code of 1986 (relating to items specifically excluded 
from gross income) is amended by redesignating section 136 as section 
137 and by inserting after section 135 the following new section:

``SEC. 136. MEDICAL SAVINGS ACCOUNTS.

    ``(a) Exclusion.--Gross income of an employee shall not include any 
amount contributed during the taxable year by the employer to a medical 
savings account of such employee pursuant to a qualified medical 
savings account plan.
    ``(b) Limitation.--The amount contributed by an employer which may 
be excluded under subsection (a) by any employee for any taxable year 
shall not exceed the excess (if any) of--
            ``(1) the applicable limit for such taxable year with 
        respect to such employer, over
            ``(2) the employer health plan contributions as defined in 
        subsection (e), if any, by such employer with respect to such 
        employee for such taxable year.
    ``(c) Applicable Limit.--For purposes of this section--
            ``(1) Employers making health plan contributions for prior 
        period.--
                    ``(A) In general.--In the case of an employer to 
                whom this paragraph applies, the applicable limit for 
                any taxable year is the least of--
                            ``(i) the adjusted base year employer 
                        health plan contributions with respect to the 
                        employee,
                            ``(ii) the amount equal to the 70th 
                        percentile of the per employee health plan 
                        expenditures (for the calendar year in which 
                        such taxable year begins) for the type of 
                        coverage applicable to such employee estimated 
                        by the Secretary of Health and Human Services 
                        based on a broad, representative survey, or
                            ``(iii) the participation adjusted 
                        contribution limit (as defined in subparagraph 
                        (E)).
                    ``(B) Employers to whom paragraph applies.--This 
                paragraph shall apply to an employer if--
                            ``(i) for a period of consecutive calendar 
                        years (but not less than 3) during each of 
                        which--
                                    ``(I) the employer made employer 
                                health plan contributions for any 
                                employee for coverage throughout the 
                                calendar year, and
                                    ``(II) no employee of the employer 
                                participated in any medical savings 
                                account plan of the employer, and
                            ``(ii) there has not been a period of 3 
                        consecutive calendar years after the close of 
                        such period during each of which the 
                        requirements of both subclauses (I) and (II) of 
                        clause (i) were not met.
                    ``(C) Adjusted base year employer health plan 
                contributions.--For purposes of subparagraph (A), the 
                adjusted base year employer health plan contributions 
                with respect to an employee are, with respect to the 
                taxable year, the sum of--
                            ``(i) the employer health plan 
                        contributions with respect to a similarly 
                        situated employee for the base year, plus
                            ``(ii) the product of such amount and the 
                        cost-of-living adjustment for the calendar year 
                        in which such taxable year begins, determined 
                        under section 1(f)(3) by substituting the 
                        calendar year in which the base year begins for 
                        the calendar year specified in section 
                        1(f)(3)(B) (and, in the case of a taxable year 
                        which is not a calendar year, by substituting 
                        the last day of the 8th month of such taxable 
                        year for `August 31').
                    ``(D) Base year.--For purposes of this section, the 
                term `base year' means the last calendar year of the 
                period described in subparagraph (B)(i) (or, if later, 
                the last calendar year ending before the date of the 
                enactment of this section).
                    ``(E) Participation adjusted contribution limit.--
                            ``(i) In general.--For purposes of 
                        subparagraph (A), the participation adjusted 
                        contribution limit is the adjusted base year 
                        employer health plan contributions (as defined 
                        in subparagraph (C)) multiplied by the ratio 
                        of--
                                    ``(I) the participation rate for 
                                the base year, to
                                    ``(II) the participation rate for 
                                the taxable year for which the 
                                determination under subsection (a) is 
                                being made.
                            ``(ii) Participation rate.--For purposes of 
                        clause (i), the participation rate for a year 
                        is--
                                    ``(I) the average number of 
                                employees receiving employer-provided 
                                health plan coverage (including 
                                coverage provided under a cafeteria 
                                plan, as defined in section 125) for 
                                the year, divided by
                                    ``(II) the average total number of 
                                employees for the year.
            ``(2) Other employers.--In the case of an employer to whom 
        paragraph (1) does not apply--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), the applicable limit is the amount 
                described in paragraph (1)(A)(ii), determined by 
                substituting `50th percentile' for `70th percentile'.
                    ``(B) Employees of new employers, etc. ineligible 
                for 3 years.--The applicable limit shall be zero for 
                any taxable year before the later of--
                            ``(i) the 4th calendar year beginning after 
                        the date of the enactment of this section, or
                            ``(ii) the 4th calendar year of the 
                        earliest 4-year period throughout which the 
                        employer is actively engaged in a trade or 
                        business.
    ``(d) Qualified Medical Savings Account Plan.--
            ``(1) In general.--For purposes of this section, a 
        qualified medical savings account plan is a separate written 
        plan of the employer for the exclusive benefit of his employees 
        and their beneficiaries to provide contributions to medical 
        savings accounts of such employees, but only if such plan meets 
        the requirements of paragraphs (2) through (4).
            ``(2) Eligibility.--
                    ``(A) In general.--A plan meets the requirements of 
                this paragraph only if--
                            ``(i) all employees who participate in the 
                        plan are also participants in a health 
                        insurance plan maintained by the employer, and
                            ``(ii) the employer does not offer to any 
                        employee who is eligible to participate in a 
                        qualified medical savings account plan any 
                        health insurance plan that does not involve 
                        medical savings accounts.
                    ``(B) Collective bargaining units.--The 
                requirements of this paragraph shall be applied 
                separately to--
                            ``(i) employees covered by an agreement 
                        which the Secretary of Labor finds to be a 
                        collective bargaining agreement between 
                        employee representatives and one or more 
                        employers, and
                            ``(ii) other employees.
            ``(3) Alternatives must have same actuarial value.--If an 
        employer offers more than 1 health plan, a plan of such 
        employer meets the requirements of this paragraph only if--
                    ``(A) the value of the employer-provided coverage 
                (not including contributions to medical savings 
                accounts) under all such plans is the same for all 
                employees electing the same type of coverage under such 
                plans, and
                    ``(B) the value of the employer-provided coverage 
                (including contributions to medical savings accounts) 
                under all such plans is the same for all employees 
                electing the same type of coverage under such plans.
            ``(4) Notification of employees.--A plan meets the 
        requirements of this paragraph if reasonable notification of 
        the availability and terms of the plan is provided to eligible 
        employees.
            ``(5) Treatment under erisa.--A qualified medical savings 
        account plan shall be treated as an employee welfare benefit 
        plan and not as an employee pension benefit plan for purposes 
        of the Employee Retirement Income Security Act of 1974.
    ``(e) Employer Health Plan Contributions.--For purposes of this 
section--
            ``(1) Base year.--
                    ``(A) In general.--The term `employer health plan 
                contributions' means, with respect to any employee for 
                the base year, the average cost per covered employee of 
                employer-provided health plan coverage (including 
                coverage provided under a cafeteria plan (as defined in 
                section 125)).
                    ``(B) Special rule for small employers.--If fewer 
                than 100 individuals were employed by the employer at 
                any time during the base year, subparagraph (A) shall 
                be applied by substituting for the amount described 
                therein such amount as is determined by the Secretary 
                of Health and Human Services to reflect actuarially 
                determined values of costs of similar employer health 
                plans for employers who employ fewer than 100 
                individuals.
            ``(2) Current year.--The term `employer health plan 
        contributions' means, with respect to an employee for the 
        taxable year for which the determination under subsection (a) 
        is being made, the sum of--
                    ``(A) the average cost per covered employee of 
                employer-provided health plan coverage (other than 
                coverage provided under a cafeteria plan (as defined in 
                section 125)) for such year under each health plan for 
                such employer's employees, their spouses, and 
                dependents (as defined in section 152), plus
                    ``(B) the cost of employer-provided health plan 
                coverage for such employee for such year provided under 
                a cafeteria plan (within the meaning of section 125).
            ``(3) Separate determinations for categories of employees 
        and separate lines of business.--Employer health plan 
        contributions shall be separately determined (both for the base 
        year and the current taxable year) on the basis of:
                    ``(A) Types of coverage.
                    ``(B) Averages for employees described in each of 
                the following clauses:
                            ``(i) Reasonable classifications of 
                        employees based on normal work hours per week.
                            ``(ii) Retired employees.
                            ``(iii) Former employees, other than 
                        retired employees.
                            ``(iv) Employees covered by an agreement 
                        which the Secretary of Labor finds to be a 
                        collective bargaining agreement between 
                        employee representatives and one or more 
                        employers, if there is evidence that medical 
                        savings account benefits were the subject of 
                        good faith bargaining between such employee 
                        representatives and such employer or employers. 
                        Employees described in this clause shall be 
                        treated as not described in any other clause of 
                        this subparagraph.
                    ``(C) Employees in separate lines of business 
                (within the meaning of section 414(r)).
            ``(4) Predecessors.--An employer shall be treated as making 
        the health plan contributions made by any predecessor of such 
        employer (determined under rules similar to the rules 
        applicable under section 414(a)).
    ``(f) Other Definitions.--For purposes of this section--
            ``(1) Employer.--The term `employer' includes persons 
        treated as an employer under section 401(c)(4).
            ``(2) Employee.--The term `employee' includes--
                    ``(A) an individual who is an employee within the 
                meaning of section 401(c)(1), and
                    ``(B) former employees.
            ``(3) Type of coverage.--The types of coverage are--
                    ``(A) self-only coverage, and
                    ``(B) coverage other than self-only coverage.
            ``(4) Health insurance plan.--The term `health insurance 
        plan' means any contract or arrangement under which an insurer 
        bears all or part of the cost or risk of providing health care 
        items and services, including a hospital or medical expense 
        incurred policy or certificate, hospital or medical service 
        plan contract, or health maintenance subscriber contract 
        (including any self-insured health insurance plan), but does 
        not include--
                    ``(A) coverage only for accident, dental, vision, 
                disability, or long term care, medicare supplemental 
                health insurance, or any combination thereof,
                    ``(B) coverage issued as a supplement to liability 
                insurance,
                    ``(C) workers' compensation or similar insurance, 
                or
                    ``(D) automobile medical-payment insurance.
    ``(g) Definitions and Special Rules Relating to Medical Savings 
Accounts.--For purposes of this section--
            ``(1) Medical savings account.--The term `medical savings 
        account' means a trust created or organized in the United 
        States exclusively for the purpose of paying the medical 
        expenses (as defined in paragraph (2)) with respect to the 
        individual for whose benefit the trust is established, but only 
        if the written governing instrument creating the trust meets 
        the following requirements:
                    ``(A) Except in the case of a rollover contribution 
                described in subsection (h)(5), no contribution will be 
                accepted unless it is in cash and unless it is made by 
                an employer of such individual pursuant to a qualified 
                medical savings account plan of such employer.
                    ``(B) The trustee is a bank (as defined in section 
                408(n)) or another person who demonstrates to the 
                satisfaction of the Secretary that the manner in which 
                such person will administer the trust will be 
                consistent with the requirements of this section.
                    ``(C) No part of the trust assets will be invested 
                in life insurance contracts.
                    ``(D) The assets of the trust will not be 
                commingled with other property except in a common trust 
                fund or common investment fund.
                    ``(E) The interest of an individual in the balance 
                in his account is nonforfeitable.
            ``(2) Medical expenses.--The term `medical expenses' means, 
        with respect to an individual, amounts paid or incurred by the 
        individual for whose benefit the account was established for 
        medical care (as defined in section 213), or long-term care (as 
        defined in paragraph (3)), of such individual, the spouse of 
        such individual, and any dependent (as defined in section 152) 
        of such individual, but only to the extent such amounts are not 
        compensated for by insurance or otherwise.
            ``(3) Long-term care.--
                    ``(A) In general.--The term `long-term care' means 
                diagnostic, preventive, therapeutic, rehabilitative, 
                maintenance, or personal care services which are 
                required by, and provided to, a chronically ill 
                individual, which have as their primary purpose the 
                direct provision of needed assistance with 1 or more 
                activities of daily living (or the alleviation of the 
                conditions necessitating such assistance) that the 
                individual is certified under subparagraph (B) as being 
                unable to perform, and which are provided in a setting 
                other than an acute care unit of a hospital pursuant to 
                a continuing plan of care prescribed by a physician or 
                registered professional nurse. Such term does not 
                include food or lodging provided in an institutional or 
                other setting, or basic living services associated with 
                the maintenance of a household or participation in 
                community life, such as case management, transportation 
                or legal services, or the performance of home 
                maintenance or household chores.
                    ``(B) Chronically ill individual.--The term 
                `chronically ill individual' means an individual who is 
                certified by a physician or registered professional 
                nurse as being unable to perform at least 3 activities 
                of daily living without substantial assistance from 
                another individual. For purposes of this paragraph, the 
                term `activities of daily living' means bathing, 
                dressing, eating, toileting, transferring, and walking.
            ``(4) Time when contributions deemed made.--A contribution 
        shall be deemed to be made on the last day of the preceding 
        taxable year if the contribution is made on account of such 
        taxable year and is made not later than the time prescribed by 
        law for filing the return for such taxable year (not including 
        extensions thereof).
    ``(h) Tax Treatment of Distributions.--
            ``(1) In general.--Any amount paid or distributed out of a 
        medical savings account shall be included in the gross income 
        of the individual for whose benefit such account was 
        established unless--
                    ``(A) such amount is used exclusively to pay the 
                medical expenses with respect to such individual, or
                    ``(B) such amount is treated as a payment or 
                distribution of amounts which are, or have been, 
                includible in the gross income of the individual under 
                subsection (i).
            ``(2) Excess contributions returned before due date of 
        return.--Paragraph (1) shall not apply to the distribution of 
        any contribution paid during a taxable year to a medical 
        savings account to the extent that such contribution exceeds 
        the amount excludable under subsection (a) if--
                    ``(A) such distribution is received by the 
                individual on or before the last day prescribed by law 
                (including extensions of time) for filing such 
                individual's return for such taxable year, and
                    ``(B) such distribution is accompanied by the 
                amount of net income attributable to such excess 
                contribution.
        Any net income described in subparagraph (B) shall be included 
        in the gross income of the individual for the taxable year in 
        which it is received.
            ``(3) Penalty for distributions not used for medical 
        expenses.--The tax imposed by this chapter for any taxable year 
        in which there is a payment or distribution from a medical 
        savings account which is not used to pay the medical expenses 
        with respect to the individual for whose benefit the account 
        was established shall be increased by 10 percent of the amount 
        of such payment or distribution which is includible in gross 
        income under paragraph (1).
            ``(4) Ordering rule.--
                    ``(A) Distributions for medical expenses.--Any 
                payment or distribution from a medical savings account 
                which is used exclusively to pay the medical expenses 
                with respect to the individual for whose benefit such 
                account was established shall be treated as first 
                attributable to untaxed amounts and then to previously 
                taxed amounts.
                    ``(B) Distributions not for medical expenses.--Any 
                payment or distribution from a medical savings account 
                which is not used exclusively to pay the medical 
                expenses with respect to the individual for whose 
                benefit such account was established shall be treated 
                as first attributable to previously taxed amounts and 
                then to untaxed amounts.
                    ``(C) Definitions.--For purposes of this 
                paragraph--
                            ``(i) the term `previously taxed amount' 
                        means any amount which is or was includible 
                        under subsection (i) in the gross income of the 
                        individual for whose benefit such account was 
                        established, and
                            ``(ii) the term `untaxed amount' means any 
                        amount which is not a previously taxed amount.
            ``(5) Rollovers.--Paragraph (1) shall not apply to any 
        amount paid or distributed out of a medical savings account to 
        the individual for whose benefit the account is maintained if 
        the entire amount received (including money and any other 
        property) is paid into another medical savings account for the 
        benefit of such individual not later than the 60th day after 
        the day on which he received the payment or distribution.
    ``(i) Tax Treatment of Accounts.--
            ``(1) Account taxed as grantor trust.--The individual for 
        whose benefit a medical savings account is established shall be 
        treated for purposes of this title as the owner thereof and 
        shall be subject to tax thereon in accordance with subpart E of 
        part I of subchapter J of this chapter (relating to grantors 
        and others treated as substantial owners).
            ``(2) Account terminates if individual engages in 
        prohibited transaction.--
                    ``(A) In general.--If, during any taxable year of 
                the individual for whose benefit the medical savings 
                account was established, such individual engages in any 
                transaction prohibited by section 4975 with respect to 
                the account, the account ceases to be a medical savings 
                account as of the first day of that taxable year.
                    ``(B) Account treated as distributing all its 
                assets.--In any case in which any account ceases to be 
                a medical savings account by reason of subparagraph (A) 
                on the first day of any taxable year, paragraph (1) of 
                subsection (h) shall be applied as if there were a 
                distribution on such first day in an amount equal to 
                the fair market value (on such first day) of all assets 
                in the account (on such first day) and no portion of 
                such distribution were used to pay medical expenses.
            ``(3) Effect of pledging account as security.--If, during 
        any taxable year, the individual for whose benefit a medical 
        savings account was established uses the account or any portion 
        thereof as security for a loan, the portion so used is treated 
        as distributed to that individual and not used to pay medical 
        expenses.
    ``(j) Custodial Accounts.--For purposes of this section, a 
custodial account shall be treated as a trust if--
            ``(1) the assets of such account are held by a bank (as 
        defined in section 408(n)) or another person who demonstrates 
        to the satisfaction of the Secretary that the manner in which 
        he will administer the account will be consistent with the 
        requirements of this section, and
            ``(2) the custodial account would, except for the fact that 
        it is not a trust, constitute a medical savings account 
        described in subsection (g).
For purposes of this title, in the case of a custodial account treated 
as a trust by reason of the preceding sentence, the custodian of such 
account shall be treated as the trustee thereof.
    ``(k) Reports.--The trustee of a medical savings account shall make 
such reports regarding such account to the Secretary and to the 
individual for whose benefit the account is maintained with respect to 
contributions, distributions, and such other matters as the Secretary 
may require under regulations. The reports required by this subsection 
shall be filed at such time and in such manner and furnished to such 
individuals at such time and in such manner as may be required by those 
regulations.''
    (b) Exclusion Applies for Employment Tax Purposes.--
            (1) Social security taxes.--
                    (A) Paragraph (20) of section 3121(a) of such Code 
                is amended by striking ``or 132'' and inserting ``132, 
                or 136''.
                    (B) Paragraph (17) of section 209(a) of the Social 
                Security Act is amended by striking ``or 132'' and 
                inserting ``132, or 136''.
            (2) Railroad retirement tax.--Paragraph (5) of section 
        3231(e) of such Code is amended by striking ``or 132'' and 
        inserting ``132, or 136''.
            (3) Unemployment tax.--Paragraph (16) of section 3306(b) of 
        such Code is amended by striking ``or 132'' and inserting 
        ``132, or 136''.
            (4) Withholding tax.--Paragraph (19) of section 3401(a) of 
        such Code is amended by striking ``or 132'' and inserting ``, 
        132, or 136''.
    (c) Tax on Excess Contributions.--Section 4973 of such Code 
(relating to tax on excess contributions to individual retirement 
accounts, certain section 403(b) contracts, and certain individual 
retirement annuities) is amended--
            (1) by inserting ``medical savings accounts,'' after 
        ``accounts,'' in the heading of such section,
            (2) by redesignating paragraph (2) of subsection (a) as 
        paragraph (3) and by inserting after paragraph (1) the 
        following:
            ``(2) a medical savings account (within the meaning of 
        section 136(g)),'',
            (3) by striking ``or'' at the end of paragraph (1) of 
        subsection (a), and
            (4) by adding at the end thereof the following new 
        subsection:
    ``(d) Excess Contributions to Medical Savings Accounts.--For 
purposes of this section, in the case of a medical savings account 
(within the meaning of section 136(g)), the term `excess contributions' 
means the amount by which the amount contributed for the taxable year 
to the account exceeds the amount excludable from gross income under 
section 136 for such taxable year. For purposes of this subsection, any 
contribution which is distributed out of the medical savings account in 
a distribution to which section 136(h)(2) applies shall be treated as 
an amount not contributed.''
    (d) Tax on Prohibited Transactions.--Section 4975 of such Code 
(relating to prohibited transactions) is amended--
            (1) by adding at the end of subsection (c) the following 
        new paragraph:
            ``(4) Special rule for medical savings accounts.--An 
        individual for whose benefit a medical savings account (within 
        the meaning of section 136(g)) is established shall be exempt 
        from the tax imposed by this section with respect to any 
        transaction concerning such account (which would otherwise be 
        taxable under this section) if, with respect to such 
        transaction, the account ceases to be a medical savings account 
        by reason of the application of section 136(h)(2)(A) to such 
        account.'', and
            (2) by inserting ``or a medical savings account described 
        in section 136(g)'' in subsection (e)(1) after ``described in 
        section 408(a)''.
    (e) Failure To Provide Reports on Medical Savings Accounts.--
Section 6693 of such Code (relating to failure to provide reports on 
individual retirement account or annuities) is amended--
            (1) by inserting ``or on medical savings accounts'' after 
        ``annuities'' in the heading of such section, and
            (2) by adding at the end of subsection (a) the following: 
        ``The person required by section 136(k) to file a report 
        regarding a medical savings account at the time and in the 
        manner required by such section shall pay a penalty of $50 for 
        each failure unless it is shown that such failure is due to 
        reasonable cause.''
    (f) Medical Savings Accounts Not Treated as Welfare Benefit 
Funds.--Paragraph (3)(B) of section 419(e) of such Code (defining a 
fund) is amended by inserting ``other than a medical savings account 
within the meaning of section 136'' after ``this chapter''.
    (g) Clerical Amendments.--
            (1) The table of sections for part III of subchapter B of 
        chapter 1 of such Code is amended by striking the last item and 
        inserting the following:

                              ``Sec. 136. Medical savings accounts.
                              ``Sec. 137. Cross references to other 
                                        Acts.''
            (2) The table of sections for chapter 43 of such Code is 
        amended by striking the item relating to section 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.''
            (3) The table of sections for subchapter B of chapter 68 of 
        such Code is amended by inserting ``or on medical savings 
        accounts'' after ``annuities'' in the item relating to section 
        6693.
    (h) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 1993.

                Subtitle D--Medicaid Program Flexibility

SEC. 301. MODIFICATION OF FEDERAL REQUIREMENTS TO ALLOW STATES MORE 
              FLEXIBILITY IN CONTRACTING FOR COORDINATED CARE SERVICES 
              UNDER MEDICAID.

    (a) In General.--Section 1903(m) of the Social Security Act (42 
U.S.C. 1396b(m)) is amended--
            (1) by striking all that precedes paragraph (4) and 
        inserting the following:
    ``(m) Coordinated Care.--
            ``(1) Payment conditioned on compliance.--
                    ``(A) General rule.--No payment shall be made under 
                this title to a State with respect to expenditures 
                incurred by it for payment to a risk contracting entity 
                or primary care case management entity (as defined in 
                subparagraph (B)), or with respect to an undertaking 
                described in paragraph (6), unless the State and the 
                entity or undertaking meet the applicable requirements 
                of this subsection. For purposes of determining whether 
                payment may be made under this section, the Secretary 
                may reject a State's determination of compliance with 
                any provision of this subsection.
                    ``(B) General definitions.--For purposes of this 
                title--
                            ``(i) Risk contracting entity.--The term 
                        `risk contracting entity' means an entity that 
                        has a contract with the State agency under 
                        which the entity--
                                    ``(I) provides or arranges for the 
                                provision of health care items or 
                                services to individuals eligible for 
                                medical assistance under the State plan 
                                under this title, and
                                    ``(II) is at risk (as defined in 
                                clause (iv)) for part or all of the 
                                cost of such items or services 
                                furnished to such individuals.
                            ``(ii) Primary care case management 
                        program.--The term `primary care case 
                        management program' means a State program under 
                        which individuals eligible for medical 
                        assistance under the State plan under this 
                        title are enrolled with primary care case 
                        management entities, and are entitled to 
                        receive specified health care items and 
                        services covered under such plan only as 
                        arranged for and approved by such entities.
                            ``(iii) At risk.--An entity is `at risk', 
                        for purposes of this subparagraph, if it has a 
                        contract with the State agency under which it 
                        is paid a fixed amount for providing or 
                        arranging for the provision of specified health 
                        care items or services to an individual 
                        eligible for medical assistance and enrolled 
                        with the entity, regardless of whether such 
                        items or services are furnished to such 
                        individual, and is liable for all or part of 
                        the cost of furnishing such items or services, 
                        regardless of whether or the extent to which 
                        such cost exceeds such fixed payment.
                            ``(iv) Primary care case management 
                        entity.--The term `primary care case management 
                        entity' means a health care provider (whether 
                        an individual or an entity) that, under a State 
                        primary care case management program meeting 
                        the requirements of paragraph (7), has a 
                        contract with the State agency under which the 
                        entity arranges for or authorizes the provision 
                        of health care items and services to 
                        individuals eligible for medical assistance 
                        under the State plan under this title, but is 
                        not at risk (as defined in clause (iv)) for the 
                        cost of such items or services provided to such 
                        individuals.
            ``(2) General requirements for risk contracting entities.--
                    ``(A) Federal or state qualification.--Subject to 
                paragraph (3), a risk contracting entity meets the 
                requirements of this subsection only if it either--
                            ``(i) is a qualified health maintenance 
                        organization as defined in section 1310(d) of 
                        the Public Health Service Act, as determined by 
                        the Secretary pursuant to section 1312 of that 
                        Act, or
                            ``(ii) is an entity which the State agency 
                        has determined--
                                    ``(I) affords, to individuals 
                                eligible for medical assistance under 
                                the State plan and enrolled with the 
                                entity, access to health care items and 
                                services furnished by the entity, 
                                within the area served by the entity, 
                                at least equivalent to the access such 
                                individuals would have to such health 
                                care items and services in such area if 
                                not enrolled with the entity, and
                                    ``(II) has made adequate provision 
                                against the risk of insolvency, and 
                                assures that individuals eligible for 
                                medical assistance under this title are 
                                not held liable for the entity's debts 
                                in case of the entity's insolvency.
                    ``(B) Internal quality assurance.--Subject to 
                paragraph (3), a risk contracting entity meets the 
                requirements of this subsection only if it has in 
                effect an internal quality assurance program that meets 
                the requirements of paragraph (9).
                    ``(C) Contract with state agency.--Subject to 
                paragraph (3), a risk contracting entity meets the 
                requirements of this subsection only if the entity has 
                a written contract with the State agency that 
                provides--
                            ``(i) that the entity will comply with all 
                        applicable provisions of this subsection;
                            ``(ii) for a payment methodology based on 
                        experience rating or another actuarially sound 
                        methodology approved by the Secretary, which 
                        guarantees (as demonstrated by such models or 
                        formulas as the Secretary may approve) that 
                        payments to the entity under the contract shall 
                        not exceed 100 percent of expenditures that 
                        would have been made by the State agency in the 
                        absence of the contract;
                            ``(iii) that the Secretary and the State 
                        (or any person or organization designated by 
                        either) shall have the right to audit and 
                        inspect any books and records of the entity 
                        (and of any subcontractor) that pertain--
                                    ``(I) to the ability of the entity 
                                to bear the risk of potential financial 
                                losses, or
                                    ``(II) to services performed or 
                                determinations of amounts payable under 
                                the contract;
                            ``(iv) that in the entity's enrollment, 
                        reenrollment, or disenrollment of individuals 
                        eligible for medical assistance under this 
                        title and eligible to enroll, reenroll, or 
                        disenroll with the entity pursuant to the 
                        contract, the entity will not discriminate 
                        among such individuals on the basis of their 
                        health status or requirements for health care 
                        services;
                            ``(v)(I) that individuals eligible for 
                        medical assistance under the State plan who 
                        have enrolled with the entity are permitted to 
                        terminate such enrollment without cause as of 
                        the beginning of the first calendar month 
                        following a full calendar month after the 
                        request is made for such termination (or at 
                        such times as required pursuant to paragraph 
                        (8)), and
                            ``(II) for notification of each such 
                        individual, at the time of the individual's 
                        enrollment, of the right to terminate 
                        enrollment;
                            ``(vi) for reimbursement, either by the 
                        entity or by the State agency, for medically 
                        necessary services provided--
                                    ``(I) to an individual eligible for 
                                medical assistance under the State plan 
                                and enrolled with the entity, and
                                    ``(II) other than through the 
                                entity because the services were 
                                immediately required due to an 
                                unforeseen illness, injury, or 
                                condition;
                            ``(vii) for disclosure of information in 
                        accordance with paragraph (4) and section 1124;
                            ``(viii) in the case of an entity that has 
                        entered into a contract with a Federally-
                        qualified health center for the provision of 
                        services of such center--
                                    ``(I) that rates of prepayment from 
                                the State are adjusted to reflect fully 
                                the rates of payment specified in 
                                section 1902(a)(13)(E), and
                                    ``(II) that, at the election of 
                                such center, payments made by the 
                                entity to such center for services 
                                described in section 1905(a)(2)(C) are 
                                made at the rates of payment specified 
                                in section 1902(a)(13)(E);
                            ``(ix) that any physician incentive plan 
                        that the entity operates meets the requirements 
                        of section 1876(i)(8);
                            ``(x) for maintenance of sufficient patient 
                        encounter data to identify the physician who 
                        delivers services to patients; and
                            ``(xi) that the entity complies with the 
                        requirement of section 1902(w) with respect to 
                        each enrollee.
            ``(3) Exceptions to requirements for risk contracting 
        entities.--The requirements of paragraph (2) (other than 
        subparagraph (C)(viii)) do not apply to an entity that--
                    ``(A)(i) received a grant of at least $100,000 in 
                the fiscal year ending June 30, 1976, under section 
                329(d)(1)(A) or 330(d)(1) of the Public Health Service 
                Act, and for the period beginning July 1, 1976, and 
                ending on the expiration of the period for which 
                payments are to be made under this title, has been the 
                recipient of a grant under either such section; and
                    ``(ii) provides to its enrollees, on a prepaid 
                capitation or other risk basis, all of the services 
                described in paragraphs (1), (2), (3), (4)(C), and (5) 
                of section 1905(a) and, to the extent required by 
                section 1902(a)(10)(D) to be provided under the State 
                plan, the services described in section 1905(a)(7);
                    ``(B) is a nonprofit primary health care entity 
                located in a rural area (as defined by the Appalachian 
                Regional Commission)--
                            ``(i) which received in the fiscal year 
                        ending June 30, 1976, at least $100,000 (by 
                        grant, subgrant, or subcontract) under the 
                        Appalachian Regional Development Act of 1965), 
                        and
                            ``(ii) for the period beginning July 1, 
                        1976, and ending on the expiration of the 
                        period for which payments are to be made under 
                        this title either has been the recipient of a 
                        grant, subgrant, or subcontract under such Act 
                        or has provided services under a contract 
                        (initially entered into during a year in which 
                        the entity was the recipient of such a grant, 
                        subgrant, or subcontract) with a State agency 
                        under this title on a prepaid capitation or 
                        other risk basis; or
                    ``(C) which has contracted with the State agency 
                for the provision of services (but not including 
                inpatient hospital services) to persons eligible for 
                medical assistance under this title on a prepaid risk 
                basis prior to 1970.''; and
            (2) by adding after paragraph (6) the following new 
        paragraphs:
            ``(7) General requirements for primary care case 
        management.--A State that elects in its State plan under this 
        title to implement a primary care case management program under 
        this subsection shall include in the plan methods for the 
        selection and monitoring of participating primary care case 
        management entities to ensure that--
                    ``(A) the numbers, geographic locations, hours of 
                operation, and other relevant characteristics of such 
                entities are sufficient to afford individuals eligible 
                for medical assistance reasonable access to and choice 
                among such entities;
                    ``(B) such entities and their professional 
                personnel are qualified to provide health care case 
                management services, through methods including ongoing 
                monitoring of compliance with applicable requirements 
                for licensing of health care providers, providing 
                training and certification of primary care case 
                managers, and providing information and technical 
                assistance; and
                    ``(C) such entities are making timely and 
                appropriate decisions with respect to enrollees' need 
                for health care items and services, and are giving 
                timely approval and referral to providers of adequate 
                quality where such items and services are determined to 
                be medically necessary.
            ``(8) State options with respect to enrollment and 
        disenrollment.--
                    ``(A) Mandatory enrollment option.--A State plan 
                may require an individual eligible for medical 
                assistance under the State plan (other than a medicare 
                qualified beneficiary) to enroll with a risk 
                contracting entity or primary care case management 
                entity, without regard to the requirement of section 
                1902(a)(1) (concerning Statewideness), the requirements 
                of section 1902(a)(10)(B) (concerning comparability of 
                benefits), or the requirements of section 1902(a)(23) 
                (concerning freedom of choice of provider), if the 
                individual is permitted a choice--
                            ``(i) between or among two or more risk 
                        contracting entities,
                            ``(ii) between a risk contracting entity 
                        and a primary care case management entity, or
                            ``(iii) between or among two or more 
                        primary care case management entities.
                    ``(B)(i) Restrictions on disenrollment without 
                cause.--A State plan may restrict the period in which 
                individuals enrolled with a qualifying risk contracting 
                entity (as defined in clause (ii)) may terminate such 
                enrollment without cause to the first month of each 
                period of enrollment (as defined in clause (iii)), but 
                only if the State provides notification, at least once 
                during each such enrollment period, to individuals 
                enrolled with such entity of the right to terminate 
                such enrollment and the restriction on the exercise of 
                this right. Such restriction shall not apply to 
                requests for termination of enrollment for cause.
                    ``(ii) For purposes of this subparagraph, the term 
                `qualifying risk contracting entity' means a risk 
                contracting entity that is--
                            ``(I) a qualified health maintenance 
                        organization as defined in section 1310(d) of 
                        the Public Health Service Act;
                            ``(II) an eligible organization with a 
                        contract under section 1876;
                            ``(III) an entity that is receiving (and 
                        has received during the previous 2 years) a 
                        grant of at least $100,000 under section 
                        329(d)(1)(A) or 330(d)(1) of the Public Health 
                        Service Act;
                            ``(IV) an entity that is receiving (and has 
                        received during the previous 2 years) at least 
                        $100,000 (by grant, subgrant, or subcontract) 
                        under the Appalachian Regional Development Act 
                        of 1965;
                            ``(V) a program pursuant to an undertaking 
                        described in paragraph (6) in which at least 25 
                        percent of the membership enrolled on a prepaid 
                        basis are individuals who (I) are not insured 
                        for benefits under part B of title XVIII or 
                        eligible for medical assistance under this 
                        title, and (II) (in the case of such 
                        individuals whose prepayments are made in whole 
                        or in part by any government entity) had the 
                        opportunity at the time of enrollment in the 
                        program to elect other coverage of health care 
                        costs that would have been paid in whole or in 
                        part by any governmental entity; or
                            ``(VI) an entity that, on the date of 
                        enactment of this provision, had a contract 
                        with the State agency under a waiver under 
                        section 1115 or 1915(b) and was not subject to 
                        a requirement under this subsection to permit 
                        disenrollment without cause.
                    ``(iii) For purposes of this subparagraph, the term 
                `period of enrollment' means--
                            ``(I) a period not to exceed 6 months in 
                        duration, or
                            ``(II) a period not to exceed one year in 
                        duration, in the case of a State that, on the 
                        effective date of this subparagraph, had in 
                        effect a waiver under section 1115 of 
                        requirements under this title under which the 
                        State could establish a 1-year minimum period 
                        of enrollment with risk contracting entities.
                    ``(C) Reenrollment of individuals who regain 
                eligibility.--In the case of an individual who--
                            ``(i) in a month is eligible for medical 
                        assistance under the State plan and enrolled 
                        with a risk contracting entity with a contract 
                        under this subsection,
                            ``(ii) in the next month (or next 2 months) 
                        is not eligible for such medical assistance, 
                        but
                            ``(iii) in the succeeding month is again 
                        eligible for such benefits,
                the State plan may enroll the individual for that 
                succeeding month with such entity, if the entity 
                continues to have a contract with the State agency 
                under this subsection.
            ``(9) Requirements for internal quality assurance 
        programs.--The requirements for an internal quality assurance 
        program of a risk contracting entity are that program is 
        written and the program--
                    ``(A) specifies a systematic process including 
                ongoing monitoring, corrective action, and other 
                appropriate activities to achieve specified and 
                measurable goals and objectives for quality of care, 
                and including annual evaluation of the program;
                    ``(B) identifies the organizational units 
                responsible for performing specific quality assurance 
                functions, and ensure that they are accountable to the 
                governing body of the entity and that they have 
                adequate supervision, staff, and other necessary 
                resources to perform these functions effectively;
                    ``(C) if any quality assistance functions are 
                delegated to other entities, ensures that the risk 
                contracting entity remains accountable for all quality 
                assurance functions, and has mechanisms to ensure that 
                all quality assurance activities are carried out;
                    ``(D) includes methods to ensure that physicians 
                and other health care professionals under contract with 
                the entity are qualified to perform the services they 
                provide, and that these qualifications are ensured 
                through appropriate credentialing and recredentialing 
                procedures;
                    ``(E) includes policies addressing enrollee rights 
                and responsibilities, including grievance mechanisms 
                and mechanisms to inform enrollees about access to and 
                use of services provided by the entity;
                    ``(F) provides for continuous monitoring of the 
                delivery of health care, including--
                            ``(i) identification of clinical areas to 
                        be monitored,
                            ``(ii) use of quality indicators and 
                        standards for assessing care delivered, 
                        including availability and accessibility of 
                        care,
                            ``(iii) monitoring, through use of 
                        epidemiological data or chart review, the care 
                        of individuals, as appropriate, and patterns of 
                        care overall, and
                            ``(iv) implementation of corrective 
                        actions; and
                    ``(G) meets any other requirements prescribed by 
                the Secretary after consultation with States.
            ``(10) Independent review and quality assurance.--
                    ``(A) State grievance procedure.--A State 
                contracting with a risk contracting entity or primary 
                care case management entity under this subsection shall 
                provide for a grievance procedure for enrollees of such 
                entity with at least the following elements:
                            ``(i) A toll-free telephone number for 
                        enrollee questions and grievances.
                            ``(ii) A State-operated enrollee grievance 
                        procedure.
                            ``(iii) Periodic notification of enrollees 
                        of their rights with respect to such entity or 
                        program.
                            ``(iv) Periodic sample reviews of 
                        grievances registered with such entity or 
                        program or with the State.
                            ``(v) Periodic survey and analysis of 
                        enrollee satisfaction with such entity or 
                        program.
                    ``(B) State monitoring of risk contracting 
                entities' quality assurance programs.--A State 
                contracting with a risk contracting entity under this 
                subsection shall periodically review such entity's 
                quality assurance program to ensure that it meets the 
                requirements of paragraph (9).
                    ``(C) External independent review of internal 
                quality assurance.--A State contracting with a risk 
                contracting entity under this subsection shall provide 
                for annual external independent review (by a 
                utilization control and peer review organization with a 
                contract under section 1153, or another organization 
                unaffiliated with the State government approved by the 
                Secretary) of such entity's internal quality assurance 
                activities. Such independent review shall include--
                            ``(i) review of the entity's medical care, 
                        through sampling of medical records or other 
                        appropriate methods, for indications of 
                        inappropriate utilization and treatment,
                            ``(ii) review of enrollee inpatient and 
                        ambulatory data, through sampling of medical 
                        records or other appropriate methods, to 
                        determine quality trends,
                            ``(iii) review of the entity's internal 
                        quality assurance activities, and
                            ``(iv) notification of the entity and the 
                        State, and appropriate followup activities, 
                        when the review under this subparagraph 
                        indicates inappropriate care or treatment.''.
    (b) State Option to Guarantee Medicaid Eligibility.--Section 
1902(e)(2) of such Act (42 U.S.C. 1396a(e)(2)) is amended--
                    (A) in subparagraph (A), by striking all that 
                precedes ``(but for this paragraph)'' and inserting 
                ``In the case of an individual who is enrolled--
                            ``(i) with a risk contracting entity (as 
                        defined in section 1903(m)(1)(B)(i)) 
                        responsible for the provision of inpatient 
                        hospital services and any other service 
                        described in paragraphs (2), (3), (4), (5), and 
                        (7) of section 1905(a),
                            ``(ii) with any risk contracting entity (as 
                        so defined) in a State that, on the effective 
                        date of this provision, had in effect a waiver 
                        under section 1115 of requirements under this 
                        title under which the State could extend 
                        eligibility for medical assistance for 
                        enrollees of such entity, or
                            ``(iii) with an eligible organization with 
                        a contract under section 1876 and who would'', 
                        and
                    (B) in subparagraph (B), by striking ``organization 
                or'' each place it appears.
    (c) Conforming Amendments.--
            (1) Section 1128(b)(6)(C)(i) of such Act (42 U.S.C. 1320a-
        7(b)(6)(C)(i)) is amended by striking ``health maintenance 
        organization'' and inserting ``risk contracting entity''.
            (2) Section 1902(a)(30)(C) of such Act (42 U.S.C. 
        1396a(a)(30)(C)) is amended by striking all that precedes 
        ``with the results'' and inserting ``provide for independent 
        review and quality assurance of entities with contracts under 
        section 1903(m), in accordance with paragraph (10) of such 
        section,''.
            (3) Section 1902(a)(57) of such Act (42 U.S.C. 
        1396a(a)(57)) is amended by striking ``or health maintenance 
        organization'' and inserting ``or risk contracting entity''.
            (4) Section 1902(a) of such Act (42 U.S.C. 1396a(a)) is 
        amended--
                    (A) by striking ``and'' at the end of paragraph 
                (54);
                    (B) in the paragraph (55) inserted by section 
                4602(a)(3) of Public Law 101-508, by striking the 
                period at the end and inserting a semicolon;
                    (C) by redesignating the paragraph (55) inserted by 
                section 4604(b)(3) of Public Law 101-508 as paragraph 
                (56), by transferring and inserting it after the 
                paragraph (55) inserted by section 4602(a)(3) of such 
                Act, and by striking the period at the end and 
                inserting a semicolon;
                    (D) by placing paragraphs (57) and (58), inserted 
                by section 4751(a)(1)(C) of Public Law 101-508, 
                immediately after paragraph (56), as redesignated by 
                paragraph (3);
                    (E) in the paragraph (58) inserted by section 
                4751(a)(1)(C) of Public Law 101-508, by striking the 
                period at the end and inserting a semicolon;
                    (F) by redesignating the paragraph (58) inserted by 
                section 4752(c)(1)(C) of Public Law 101-508 as 
                paragraph (59), by transferring and inserting it after 
                the paragraph (58) inserted by section 4751(a)(1)(C) of 
                such Act, and by striking the period at the end and 
                inserting ``; and''; and
                    (G) by inserting after such paragraph (59) the 
                following new paragraph:
            ``(60) at State option, provide for a primary care case 
        management program in accordance with section 1903(m)(7).''.
            (5) Section 1902(p)(2) of such Act (42 U.S.C. 1396a(p)(2)) 
        is amended by striking ``health maintenance organization'' and 
        inserting ``risk contracting entity''.
            (6) Section 1902(w) of such Act (42 U.S.C. 1396a(w)) is 
        amended--
                    (A) in paragraph (1), by striking ``section 
                1903(m)(1)(A)'' and inserting ``section 
                1903(m)(2)(C)(xi)'', and
                    (B) in paragraph (2)(E), by striking ``health 
                maintenance organization'' and ``the organization'' and 
                inserting ``risk contracting entity'' and ``the 
                entity'', respectively.
            (7) Section 1903(k) of such Act (42 U.S.C. 1396b(k)) is 
        amended by striking ``health maintenance organization'' and 
        inserting ``risk contracting entity''.
            (8) Section 1903(m)(4)(A) of such Act (42 U.S.C. 
        1396b(m)(4)(A)) is amended--
                    (A) in the first sentence, by striking ``Each 
                health maintenance organization'' and inserting ``Each 
                risk contracting entity'',
                    (B) in the first sentence, by striking ``the 
                organization'' each place it appears and inserting 
                ``the entity'', and
                    (C) in the second sentence, by striking ``an 
                organization'' and ``the organization'' and inserting 
                ``a risk contracting entity'' and ``the risk 
                contracting entity'', respectively.
            (9) Section 1903(m)(4)(B) of such Act (42 U.S.C. 
        1396b(m)(4)(B)) is amended by striking ``organization'' and 
        inserting ``risk contracting entity''.
            (10) Section 1903(m)(5) of such Act (42 U.S.C. 1396b(m)(5)) 
        is amended in paragraphs (A)(iii) and (B)(ii) by striking 
        ``organization'' and inserting ``entity''.
            (11) Section 1903(w)(7)(A)(viii) of such Act (42 U.S.C. 
        1396b(w)(7)(A)(viii)) is amended by striking ``health 
        maintenance organizations (and other organizations with 
        contracts under section 1903(m))'' and inserting ``risk 
        contracting entities with contracts under section 1903(m)''.
            (12) Section 1905(a) of such Act (42 U.S.C. 1396d(a)) is 
        amended, in the matter preceding clause (i), by inserting 
        ``(which may be on a prepaid capitation or other risk basis)'' 
        after ``payment'' the first place it appears.
            (13) Section 1916(b)(2)(D) of such Act (42 U.S.C. 
        1396o(b)(2)(D)) is amended by striking ``health maintenance 
        organization'' and inserting ``risk contracting entity''.
            (14) Section 1925(b)(4)(D)(iv) of such Act (42 U.S.C. 
        1396r-6(b)(4)(D)(iv)) is amended--
                    (A) in the heading, by striking ``hmo'' and 
                inserting ``risk contracting entity'',
                    (B) by striking ``health maintenance organization'' 
                and inserting ``risk contracting entity'' each place it 
                appears, and
                    (C) by striking ``section 1903(m)(1)(A)'' and 
                inserting ``section 1903(m)(1)(B)(i)''.
            (15) Paragraphs (1) and (2) of section 1926(a) of such Act 
        (42 U.S.C. 1396r-7(a)) are each amended by striking ``health 
        maintenance organizations'' and inserting ``risk contracting 
        entities''.
            (16) Section 1927(j)(1) of such Act (42 U.S.C. 1396s(j)(1)) 
        is amended by striking ``*** Health Maintenance Organizations, 
        including those organizations'' and inserting ``risk 
        contracting entities''.
    (d) Effective Date.--The amendments made by this section shall 
become effective with respect to calendar quarters beginning on or 
after January 1, 1994.

SEC. 302. PERIOD OF CERTAIN WAIVERS.

    (a) In General.--Section 1915(h) of the Social Security Act (42 
U.S.C. 1396n(h)) is amended by striking ``No waiver'' and all that 
follows through ``unless the Secretary'' and inserting ``A waiver under 
this section (other than under subsection (c), (d), or (e)) shall be 
for an initial term of 3 years and, upon the request of a State, shall 
be extended for additional 5 year periods unless the Secretary''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to waivers pursuant to applications which are approved, and with 
respect to continuations of waivers for which requests are made, later 
than 30 days after the date of the enactment of this Act.

          Subtitle E--Limitations on Physician Self-Referrals

SEC. 311. EXTENSION OF PHYSICIAN SELF-REFERRAL LIMITATIONS TO ALL 
              PAYORS.

    Section 1877 of the Social Security Act (42 U.S.C. 1395nn) is 
amended--
            (1) in subsection (a)--
                    (A) in paragraph (1)(A), by striking ``for which 
                payment otherwise may be made under this title'' and 
                inserting ``for which a charge is imposed'', and
                    (B) in paragraph (1)(B), by striking ``under this 
                title'';
            (2) by amending paragraph (1) of subsection (g) to read as 
        follows:
            ``(1) Denial of payment.--No payment may be made under this 
        title, under another Federal health care program, or under a 
        State health care program (as defined in section 1128(h)) for a 
        designated health service for which a claim is presented in 
        violation of subsection (a)(1)(B). No individual, third party 
        payor, or other entity is liable for payment for designated 
        health services for which a claim is presented in violation of 
        such subsection.''; and
            (3) in subsection (g)(3), by striking ``for which payment 
        may not be made under paragraph (1)'' and inserting ``for which 
        such a claim may not be presented under subsection (a)(1)''.

SEC. 312. EXTENSION OF PHYSICIAN SELF-REFERRAL LIMITATIONS TO CERTAIN 
              ADDITIONAL SERVICES.

    (a) In General.--Section 1877 of the Social Security Act is further 
amended--
            (1) by striking ``clinical laboratory services'' and 
        ``clinical laboratory services'' and inserting ``designated 
        health services'' and ``designated health services'', 
        respectively, each place either appears in subsections (a)(1), 
        (b)(2)(A)(ii)(I), (b)(4), (d)(1), (d)(2), and (d)(3), and
            (2) by adding at the end the following new subsection:
    ``(i) Designated Health Services Defined.--In this section, the 
term `designated health services' means--
            ``(1) clinical laboratory services,
            ``(2) physical therapy services,
            ``(3) radiology and diagnostic imaging services,
            ``(4) radiation therapy services, and
            ``(5) the furnishing of durable medical equipment.''.
    (b) Conforming Amendments.--Section 1877 of such Act is further 
amended--
            (1) in subsection (d)(2), by striking ``laboratory'' and 
        inserting ``entity'',
            (2) in subsection (g)(1), by striking ``clinical laboratory 
        service'' and inserting ``designated health service'', and
            (3) in subsection (h)(7)(B), by striking ``clinical 
        laboratory service'' and inserting ``designated health 
        service''.

SEC. 313. CHANGES IN EXCEPTIONS.

    (a) Health Maintenance Organizations and Managed Care Plans.--
Paragraph (3) of section 1877(b) of the Social Security Act is amended 
to read as follows:
            ``(3) Health maintenance organizations and managed care 
        plans.--
                    ``(A) Health maintenance organizations.--In the 
                case of services furnished by a health maintenance 
                organization to an individual enrolled with the health 
                maintenance organization, including services furnished 
                by--
                            ``(i) an eligible organization (as defined 
                        in section 1876(b));
                            ``(ii) an organization described in section 
                        1833(a)(1)(A);
                            ``(iii) an organization receiving payments 
                        on a prepaid basis under a demonstration 
                        project under section 402(a) of the Social 
                        Security Amendments of 1967 or under section 
                        222(a) of the Social Security Amendments of 
                        1972; and
                            ``(iv) any other entity designated by the 
                        Secretary as a health maintenance organization 
                        for purposes of this subparagraph.
                    ``(B) Certain managed care plans.--In the case of 
                services furnished by a managed care plan (as defined 
                by the Secretary) to an individual enrolled under the 
                plan if--
                            ``(i) the plan selectively contracts with 
                        physicians and with providers of designated 
                        health services; and
                            ``(ii) under the plan physicians bear a 
                        significant financial risk for the cost of 
                        designated health services furnished upon 
                        referral.''.
    (b) Exception for Shared Facility Services.--Section 1877 of such 
Act is amended--
            (1) in subsection (b), by redesignating paragraphs (3), 
        (4), and (5) as paragraphs (4), (6), and (7), respectively, and 
        by inserting after paragraph (2) the following new paragraph:
            ``(3) Shared facility services.--
                    ``(A) In general.--In the case of shared facility 
                services of a shared facility--
                            ``(i) that are furnished--
                                    ``(I) personally by the referring 
                                physician who is a shared facility 
                                physician or personally by an 
                                individual supervised by such a 
                                physician or by another shared facility 
                                physician and employed under the shared 
                                facility arrangement,
                                    ``(II) by a shared facility in a 
                                building in which the referring 
                                physician furnishes physician's 
                                services unrelated to the furnishing of 
                                shared facility services, and
                                    ``(III) to a patient of a shared 
                                facility physician;
                            ``(ii) that are billed by the referring 
                        physician or by an entity that is wholly owned 
                        by such physician; and
                            ``(iii) with respect to the referral for 
                        which the disclosure requirements of 
                        subparagraph (B) are met.
                    ``(B) Conflict of interest disclosure 
                requirements.--A shared facility meets the disclosure 
                requirements of this subparagraph, with respect to a 
                referral of an individual for the furnishing of shared 
                facility services, if at the time of the referral (and 
                before the provision of shared facility services under 
                the referral) and in a form and manner specified by the 
                Secretary--
                            ``(i) the individual (I) is given 
                        information on the financial relationship 
                        between the referring physician and the shared 
                        facility, and (II) is informed that a list of 
                        alternative providers (if any) that are 
                        available to provide such services will be 
                        given upon request,
                            ``(ii) the individual is given, upon 
                        request, a list of alternative providers (if 
                        any) that are available to provide such 
                        services, and
                            ``(iii) the individual is informed that (I) 
                        the individual has the option to use any of the 
                        alternative providers and (II) the referring 
                        physician will not treat the individual 
                        differently if an alternative provider is 
                        selected to provide the designated health 
                        services.
                    ``(C) Construction.--Nothing in subparagraph (B) 
                shall be construed to limit the information that a 
                shared facility or shared facility physician may 
                provide to an individual.''; and
            (2) in subsection (h), by adding at the end the following 
        new paragraph:
            ``(8) Shared facility related definitions.--
                    ``(A) Shared facility services.--The term `shared 
                facility services' means, with respect to a shared 
                facility, a type of designated health services which is 
                furnished by the facility to patients of shared 
                facility physicians.
                    ``(B) Shared facility.--The term `shared facility' 
                means an entity that furnishes shared facility services 
                under a shared facility arrangement.
                    ``(C) Shared facility physician.--The term `shared 
                facility physician' means, with respect to a shared 
                facility, a physician who has a financial relationship 
                under a shared facility arrangement with the facility.
                    ``(D) Shared facility arrangement.--The term 
                `shared facility arrangement' means, with respect to 
                the provision of a type of designated health services 
                by a shared facility in a building, a financial 
                arrangement--
                            ``(i) which is only between physicians who 
                        are providing services (unrelated to shared 
                        facility services) in the same building,
                            ``(ii) which makes one or more of the 
                        shared facility physicians responsible for the 
                        provision of shared facility services by the 
                        facility,
                            ``(iii) in which the overhead expenses of 
                        the facility are shared, in accordance with 
                        methods previously determined by the physicians 
                        in the arrangement, among the physicians in the 
                        arrangement, and
                            ``(iv) which, in the case of a corporation, 
                        is wholly owned and controlled by shared 
                        facility physicians.''.
    (c) Exception for Valuable Community Services.--Section 1877(b) of 
such Act is further amended by inserting after paragraph (4), as 
redesignated by subsection (b)(1), the following new paragraph:
            ``(5) Valuable community services.--
                    ``(A) In general.--In the case of services 
                furnished by an entity to individuals in a community if 
                the Secretary determines that--
                            ``(i) individuals in the community will be 
                        deprived of adequate health care services 
                        without an exception under this paragraph for 
                        the entity and the services, and
                            ``(ii) the requirements of subparagraph (B) 
                        are met.
                    ``(B) Requirements.--The requirements of this 
                subparagraph for an exception under subparagraph (A), 
                for the furnishing of designated health services by an 
                entity, are as follows:
                            ``(i) Equal investment opportunity.--(I) 
                        Individuals who are not referring physicians 
                        must be given a bona fide opportunity to invest 
                        in the entity on the same terms that are 
                        offered to referring physicians.
                            ``(II) The terms on which investment 
                        interests are offered to physicians must not be 
                        related to the past or expected volume of 
                        referrals or other business from the 
                        physicians.
                            ``(III) The return on investment for 
                        interested investors must be tied to the 
                        investor's equity in the entity and not be 
                        related to the volume of referrals attributable 
                        to the investor.
                            ``(IV) There is no requirement that any 
                        interested or other investor make referrals to 
                        the entity or otherwise generate business as a 
                        condition for remaining an investor.
                            ``(V) The entity must not loan funds or 
                        guarantee a loan for interested investors or 
                        physicians in a position to refer to the 
                        entity.
                            ``(VI) The entity must not market or 
                        furnish its items or services to interested 
                        investors differently from other investors.
                            ``(ii) Prohibition of noncompetition 
                        clauses.--Investment contracts must not include 
                        a `noncompetition clause' that prevents 
                        physicians or interested investors from 
                        investing in other entities furnishing such 
                        services.
                            ``(iii) Disclosure requirements.--(I) The 
                        disclosure requirements of paragraph (3)(B) 
                        must be met.
                            ``(II) The financial relationship with the 
                        referring physician must be disclosed, when 
                        required, to any third-party payor.
                            ``(iv) Internal utilization review.--There 
                        must be in operation an internal utilization 
                        review program to ensure that physicians who 
                        are interested investors do not exploit their 
                        patients in any way through inappropriate 
                        utilization or otherwise.
                    ``(C) Review.--In the case of any exception 
                provided an entity under this paragraph, the Secretary 
                shall periodically review the entity to determine if 
                the requirements of subparagraph (B) continue to be 
                met.
                    ``(D) Termination of exception.--The Secretary 
                shall, after notice and opportunity for a hearing, 
                terminate an exception granted an entity under this 
                paragraph if the Secretary determines that--
                            ``(i) there was a misrepresentation of 
                        material fact in the application for the 
                        exception; or
                            ``(ii) the entity has failed to comply 
                        substantially with the requirements of 
                        subparagraph (B).
                    ``(E) Community defined.--In this paragraph, the 
                term `community' means--
                            ``(i) part or all of a metropolitan 
                        statistical area (or equivalent area), or
                            ``(ii) a county (or equivalent area) 
                        outside such a metropolitan statistical area 
                        (or equivalent area).''.
    (d) Exception for Hospitals.--Subparagraph (A) of subsection (d)(3) 
of such section is amended to read as follows:
                    ``(A) at the time the services are furnished, the 
                hospital has a participation agreement in effect under 
                section 1866, and''.

SEC. 314. STUDY AND REPORT ON CHANGES IN COSTS.

    The Secretary of Health and Human Services shall conduct a study in 
order to estimate the changes in aggregate costs for designated health 
services, under the medicare program and other health plans, which will 
result from the implementation of the amendments made by this subtitle. 
Not later than 2 years after the date of the enactment of this Act the 
Secretary shall submit to Congress a report on such study.

SEC. 315. EFFECTIVE DATE.

    (a) In General.--Subject to subsection (b), the amendments made by 
this subtitle shall apply with respect to a referral by a physician for 
designated health services (as described in section 1877(i) of the 
Social Security Act) made on or after the first day of the first month 
beginning 6 months after the date of the enactment of this Act.
    (b) Time-Limited Exception for Current Financial Relationships.--
            (1) In general.--Subject to paragraph (3), the amendments 
        made by this subtitle shall not apply in the case of a patient 
        referral with respect to which a prohibited financial 
        relationship (described in paragraph (3)) existed as of the 
        date of the enactment of this Act if, at the time of the 
        referral (and before the receipt of services under the 
        referral), the patient is provided information on the 
        prohibited financial relationship. Such information shall be 
        disclosed in the same manner information must be disclosed 
        under section 1877(b)(3)(B) of the Social Security Act (as 
        amended by this subtitle). If such information is not so 
        provided, the referral shall be subject to such amendments (as 
        provided in subsection (a)).
            (2) Prohibited financial relationship.--A prohibited 
        financial relationship described in this paragraph is a 
        financial relationship described in subsection (a)(2) of 
        section 1877 of the Social Security Act for which an exception 
        described in subsection (b), (c), (d), or (e) of such section 
        (as amended by this subtitle) does not apply.
            (3) Time limit.--Paragraph (1) shall only apply to 
        referrals made before the first day of the first month 
        beginning 4 years after the date of the enactment of this Act.

           Subtitle F--Removing Restrictions on Managed Care

SEC. 321. REMOVING RESTRICTIONS ON MANAGED CARE.

    (a) Preemption of State Law Provisions.--Subject to subsection (c), 
the following provisions of State law are preempted and may not be 
enforced:
            (1) Restrictions on reimbursement rates or selective 
        contracting.--Any law that restricts the ability of a carrier 
        to negotiate reimbursement rates with providers or to contract 
        selectively with one provider or a limited number of providers.
            (2) Restrictions on differential financial incentives.--Any 
        law that limits the financial incentives that a health benefit 
        plan may require a beneficiary to pay when a non-plan provider 
        is used on a non-emergency basis.
            (3) Restrictions on utilization review methods.--Any law 
        that--
                    (A) prohibits utilization review of any or all 
                treatments and conditions,
                    (B) requires that such review be made (i) by a 
                resident of the State in which the treatment is to be 
                offered or by an individual licensed in such State, or 
                (ii) by a physician in any particular specialty or with 
                any board certified specialty of the same medical 
                specialty as the provider whose services are being 
                reviewed,
                    (C) requires the use of specified standards of 
                health care practice in such reviews or requires the 
                disclosure of the specific criteria used in such 
                reviews,
                    (D) requires payments to providers for the expenses 
                of responding to utilization review requests, or
                    (E) imposes liability for delays in performing such 
                review.
        Nothing in subparagraph (B) shall be construed as prohibiting a 
        State from (i) requiring that utilization review be conducted 
        by a licensed health care professional or (ii) requiring that 
        any appeal from such a review be made by a licensed physician 
        or by a licensed physician in any particular specialty or with 
        any board certified specialty of the same medical specialty as 
        the provider whose services are being reviewed.
    (b) GAO Study.--
            (1) In general.--The Comptroller General shall conduct a 
        study of the benefits and cost effectiveness of the use of 
        managed care in the delivery of health services.
            (2) Report.--By not later than 4 years after the date of 
        the enactment of this Act, the Comptroller General shall submit 
        a report to Congress on the study conducted under paragraph (1) 
        and shall include in the report such recommendations (including 
        whether the provisions of subsection (a) should be extended) as 
        may be appropriate.
    (c) Sunset.--Unless otherwise provided, subsection (a) shall not 
apply 5 years after the date of the enactment of this Act.

                  Subtitle G--Medicare Payment Changes

SEC. 331. REVISIONS TO METHODOLOGY FOR DETERMINING UPDATES TO MEDICARE 
              HOSPITAL PAYMENTS.

    (a) Updates for PPS Hospitals on Calendar Year Basis.--
            (1) In general.--Section 1886(b)(3)(B)(i) of the Social 
        Security Act (42 U.S.C. 1395ww(b)(3)(B)(i)) is amended--
                    (A) in the matter preceding subclause (i), by 
                striking ``fiscal year'' and inserting ``particular 
                time period'';
                    (B) in subclause (VIII), by striking ``1993,'' and 
                inserting ``1993 and the first 3 months of fiscal year 
                1994''; and
                    (C) in subclause (XI) through (X), by striking 
                ``fiscal year'' each place it appears and inserting 
                ``calendar year''.
            (2) Updates to standardized amounts.--Section 1886(d)(3)(A) 
        of such Act (42 U.S.C. 1395ww(d)(3)(A)) is amended--
                    (A) in clause (ii)--
                            (i) by striking ``1994,'' and inserting the 
                        following: ``1992, a 15-month period beginning 
                        October 1, 1992, and calendar year 1994'', and
                            (ii) by striking ``fiscal year'' the second 
                        and third place it appears and inserting 
                        ``fiscal year, particular time period, or 
                        calendar year'';
                    (B) in clause (iii), by striking ``the fiscal year 
                beginning on October 1, 1994,'' and inserting 
                ``calendar year 1995,''; and
                    (C) in clause (iv)--
                            (i) by striking ``a fiscal year beginning 
                        on or after October 1, 1995,'' and inserting 
                        ``a calendar year beginning on or after January 
                        1, 1996,'', and
                            (ii) by striking ``fiscal year'' each place 
                        it appears and inserting ``calendar year''.
            (3) Conforming amendments.--Section 1886(b)(3)(B)(iii) of 
        such Act (42 U.S.C. 1395ww(b)(3)(B)(iii)) is amended--
                    (A) by striking ``fiscal year'' the first place it 
                appears and inserting ``particular time period'',
                    (B) by striking ``period or fiscal year'' the first 
                place it appears and inserting ``cost reporting period 
                or particular time period'', and
                    (C) by striking ``for the period or fiscal year'' 
                and inserting ``for the cost reporting period or fiscal 
                year ending in the particular time period''.
    (b) Reduction in Updates for Non-PPS Hospitals.--Section 
1886(b)(3)(B)(ii) of such Act (42 U.S.C. 1395ww(b)(3)(B)(ii)) is 
amended--
            (1) by redesignating subclause (IV) and subclause (VI); and
            (2) by striking ``and'' at the end of subclause (III) and 
        by inserting after subclause (III) the following:
            ``(IV) fiscal years 1989, 1990, 1991, 1992, and 1993, the 
        market basket percentage increase,
            ``(V) fiscal year 1994, 75 percent of the market basket 
        percentage increase, and''.

SEC. 332. REDUCTION IN MEDICARE PAYMENT FOR CLINICAL DIAGNOSTIC 
              LABORATORY TESTS.

    (a) Lowering Cap on Payment Amount.--Section 1833(h)(4)(B) of the 
Social Security Act (42 U.S.C. 1395l(h)(4)(B)) is amended--
            (1) by striking ``and'' at the end of clause (iii);
            (2) in clause (iv), by inserting ``and before October 1, 
        1993,'' after ``1990,'';
            (3) by striking the period at the end of clause (iv) and 
        inserting ``, and''; and
            (4) by adding at the end the following:
            ``(v) after September 30, 1993, is equal to 76 percent of 
        the median of all the fee schedules established for that test 
        for that laboratory setting under paragraph (1).''.
    (b) Repeal of Annual Update in Payments for Clinical Diagnostic 
Laboratory Tests.--Section 1833(h)(2)(A)(ii) of such Act (42 U.S.C. 
1395l(h)(2)(A)(ii)) is amended--
            (1) by striking ``and'' at the end of subclause (II);
            (2) in subclause (III), by striking the period at the end 
        and inserting a semicolon; and
            (3) by adding at the end the following:
            ``(IV) no annual adjustment in the fee schedules shall be 
        made under clause (i) for any of the years 1994 through 
        1998.''.

Subtitle H--Limitation of Antitrust Recovery for Certain Hospital Joint 
                                Ventures

SEC. 341. PURPOSE.

    The purpose of this subtitle is to encourage cooperation among 
hospitals in order to contain costs and achieve a more efficient health 
care delivery system through the elimination of unnecessary duplication 
and proliferation of expensive high technology equipment, medical 
services, or ancillary services.

SEC. 342. DEFINITIONS.

    For the purposes of this subtitle:
            (1) The term ``antitrust laws'' has the meaning given it in 
        subsection (a) of the first section of the Clayton Act (15 
        U.S.C. 12(a)), except that such term includes--
                    (A) section 5 of the Federal Trade Commission Act 
                (15 U.S.C. 45) to the extent such section applies to 
                unfair methods of competition, and
                    (B) any State law similar to the antitrust laws.
            (2) The term ``high technology equipment'' means equipment 
        and devices utilized in medical care, and the technical support 
        systems for them, that--
                    (A) have acquisition costs greater than $1,000,000 
                or annual operating costs greater than $500,000, and
                    (B) use technologies with respect to which there is 
                a reasonable expectation that shared ownership will 
                avoid a significant degree of actual or anticipated 
                excess capacity of service in the geographical area to 
                be served.
            (3) The term ``medical services'' means services that are 
        involved in providing medical care to patients and that--
                    (A) have annual operating costs greater than 
                $1,000,000, and
                    (B) with respect to which there is a reasonable 
                expectation that shared ownership will avoid a 
                significant degree of the actual or anticipated excess 
                capacity of such services in the geographical area to 
                be served,
        and may include mobile services.
            (4) The term ``ancillary services'' means support functions 
        associated with operating a hospital (laundry, billing, patient 
        transportation, data processing, and other similar services) 
        the predominant function of which does not involve the 
        provision of medical treatment to patients.
            (5) The term ``hospital'' means a hospital that--
                    (A) has entered into, and has in effect a 
                participation agreement under section 1866(a) of the 
                Social Security Act (42 U.S.C. 1395cc(a)), or
                    (B) has in effect a participation agreement under 
                title XIX of such Act (42 U.S.C. 1396 et seq.) with the 
                State in which the hospital is located.
            (6) The term ``hospital joint venture'' means an agreement 
        between 2 or more hospitals that is entered into solely for the 
        purpose of sharing in the purchase or operation of high 
        technology equipment, medical services, or ancillary services, 
        and that involves substantial integration or financial risk-
        sharing between the parties. The term excludes--
                    (A) exchanging information among competitors 
                relating to costs, sales, profitability, prices, 
                marketing, or distribution of any product, process, or 
                service that is not reasonably required to carry out 
                such agreement,
                    (B) entering into any arrangement or engaging in 
                any other conduct to restrict, require, or otherwise 
                involve the marketing by any party to such agreement of 
                any product, process, or service that is not reasonably 
                required to carry out such agreement, and
                    (C) entering into any arrangement or engaging in 
                any other conduct to restrict or require the 
                participation by any party to such agreement in conduct 
                that is not reasonably required to carry out such 
                agreement.
            (7) The term ``Attorney General'' means the Attorney 
        General of the United States.
            (8) The term ``Secretary'' means the Secretary of Health 
        and Human Services.
            (9) The term ``Commission'' means the Federal Trade 
        Commission.

SEC. 343. LIMITATION ON DAMAGES FOR ANTITRUST VIOLATIONS.

    Monetary recovery on a claim in any action brought under the 
antitrust laws against a hospital that is a party to a hospital joint 
venture shall be limited to actual damages if--
            (1) the hospitals forming such venture meet the 
        notification requirements specified in section 344,
            (2) the claim results from conduct that is within the scope 
        of the notification filed under section 344, and
            (3) the action is filed after such notification becomes 
        effective pursuant to section 344(c).

SEC. 344. DISCLOSURE OF HOSPITAL JOINT VENTURE.

    (a) Written Notifications; Filing.--Any hospital that is a party to 
a hospital joint venture, acting on the venture's behalf, not later 
than 90 days after entering into a written agreement to form the 
venture, or not later than 90 days after, the date of the enactment of 
this Act, whichever is later, may file simultaneously with the Attorney 
General, the Secretary, and the Commission, a written notification 
disclosing--
            (1) the identities of the parties to the venture, and
            (2) the nature, objectives, and planned activity of the 
        venture.
Any hospital that is a party to a hospital joint venture, acting on the 
venture's behalf, may file additional disclosure notifications pursuant 
to this section as are appropriate to extend the protections of section 
343. In order to maintain the protections of section 343, the venture, 
not later than 90 days after a change in its membership or its planned 
activity, shall file simultaneously with the Attorney General, the 
Secretary, and the Commission a written notification disclosing such 
change.
    (b) Publication; Federal Register; Notice.--Not later than 30 days 
after receiving a notification filed under subsection (a), the 
Secretary, after consultation with the Attorney General and the 
Commission, shall publish in the Federal Register a notice with respect 
to the hospital joint venture that identifies the parties to the 
venture and that describes the planned activity of the venture. Prior 
to its publication, the contents of such notice shall be made available 
to the parties to the venture.
    (c) Effect of the Notice.--If with respect to a notification filed 
under subsection (a) of this section, notice is published in the 
Federal Register, then such notification shall operate to convey the 
protections of section 343 as of the earlier of--
            (1) the date of the publication of notice under subsection 
        (b), or
            (2) if such notice is not so published within the time 
        required by subsection (b) of this section, after the 
        expiration of the 30-day period beginning on the date that the 
        Attorney General, the Secretary, or the Commission receives the 
        applicable information described in subsection (a).
    (d) Exemption; Disclosure; Information.--Except with respect to the 
information published pursuant to subsection (b)--
            (1) all information and documentary material submitted as 
        part of a notification filed pursuant to this section, and
            (2) all other information obtained by the Attorney General, 
        the Secretary, or the Commission in the course of any 
        investigation, administrative proceeding, or case, with respect 
        to a potential violation of the antitrust laws by the joint 
        venture with respect to which such notification was filed,
shall be exempt from disclosure under section 552 of title 5, United 
States Code, and shall not be made publicly available by any agency of 
the United States to which such section applies, except as relevant to 
a law enforcement investigation or in a judicial or administrative 
proceeding in which such information and material is subject to any 
protective order.
    (e) Withdrawal of Notification.--Any party that files a 
notification pursuant to this section may withdraw such notification 
before notice of the hospital joint venture involved is published under 
subsection (b) of this section. Any notification so withdrawn shall not 
be subject to subsection (b) and shall not confer the protections of 
section 343.
    (f) Judicial Review: Inapplicable With Respect to Notifications.--
Any action taken or not taken by the Attorney General, the Secretary, 
or the Commission with respect to notifications filed pursuant to this 
section shall not be subject to judicial review.
    (g) Admissibility Into Evidence: Disclosure of Conduct; Publication 
of Notice; Supporting or Answering Claims Under Antitrust Laws.--
            (1) Except as provided in paragraph (2), the fact of 
        disclosure of conduct under subsection (a) and the fact of 
        publication of a notice under subsection (b) shall be 
        admissible into evidence in any judicial or administrative 
        proceeding for the sole purpose of establishing that a person 
        is entitled to the protections of section 343.
            (2) No action by the Attorney General, the Secretary, or 
        the Commission taken pursuant to this section shall be 
        admissible into evidence in any proceeding for the purpose of 
        supporting or answering any claim under the antitrust laws.

SEC. 345. INTERAGENCY COMMITTEE ON COMPETITION, ANTITRUST POLICY, AND 
              HEALTH CARE.

    (a) Establishment.--There is hereby established the Interagency 
Committee on Competition, Antitrust Policy, and Health Care 
(hereinafter in this section referred to as the ``Committee''). The 
Committee shall be composed of--
            (1) the Secretary of Health and Human Services (or the 
        designee of the Secretary),
            (2) the Attorney General (or the designee of the Attorney 
        General)
            (3) the Director of the Office of Management and Budget (or 
        the designee of the Director), and
            (4) a representative of the Federal Trade Commission.
    (b) Duties.--The Duties of the Committee are--
            (1) to discuss and evaluate competition and antitrust 
        policy, and their implications with respect to the performance 
        of health care markets, and
            (2) to make such recommendations to the Congress not later 
        than 1 year after the date of the enactment of this Act, and 
        thereafter as the Committee considers to be appropriate, 
        regarding achieving both health-care cost containment and 
        greater access to quality health care through cooperation among 
        health care providers.

    Subtitle I--Encouraging Enforcement Activities of Medical Self-
                          Regulatory Entities

   Part 1--Application of the Clayton Act to Medical Self-Regulatory 
                                Entities

SEC. 351. ANTITRUST EXEMPTION FOR MEDICAL SELF-REGULATORY ENTITIES.

    (a) In General.--(1) Except as provided in paragraph (2), no 
damages, interest on damages, cost of suit, or attorney's fee may be 
recovered under section 4, 4A, or 4C of the Clayton Act (15 U.S.C. 15, 
15a, 15c), or under any State law similar to such section, from any 
medical self-regulatory entity (including its members, officers, 
employees, consultants, and volunteers or committees thereof) as a 
result of engaging in standard setting or enforcement activities that 
are--
            (A) designed to promote the quality of health care provided 
        to patients, and
            (B) not conducted for purposes of financial gain.
    (2) Paragraph (1) shall not prohibit the recovery of actual 
damages, interest on damages, the cost of suit, or a reasonable 
attorney's fee under section 4 or 4A of the Clayton Act (15 U.S.C. 15, 
15a), or under any State law similar to such section, by a State or the 
United States from a medical self-regulatory entity (including its 
members, officers, employees, consultants, and volunteers or committees 
thereof) for injury sustained as a result of engaging in the conduct 
described in such paragraph.
    (b) Fees.--In any action under section 4, 4C, or 16 of the Clayton 
Act (15 U.S.C. 15, 15c, 26), or under a similar State law, brought 
against any medical self-regulatory entity (including its members, 
officers, employees, consultants, and volunteers or committees thereof) 
as a result of engaging in conduct described in subsection (a)(1), the 
court shall award the cost of suit, including a reasonable attorney's 
fee, to a substantially prevailing defendant.

SEC. 352. DEFINITIONS.

    For purposes of this subtitle:
            (1) The term ``medical self-regulatory entity'' means a 
        medical society or association, a specialty board, a recognized 
        accrediting agency, or a hospital medical staff.
            (2) The term ``standard setting and enforcement 
        activities'' means--
                    (A) accreditation of health care practitioners, 
                health care providers, medical education institutions, 
                or medical education programs,
                    (B) technology assessment and risk management 
                activities,
                    (C) the development and implementation of practice 
                guidelines or practice parameters, or
                    (D) official peer review proceedings undertaken by 
                a hospital medical staff (or committee thereof) for 
                purposes of evaluating the quality of health care 
                provided by a medical professional.

                Part 2--Consultation by Federal Agencies

SEC. 357. CONSULTATION WITH MEDICAL SELF-REGULATORY ENTITIES RESPECTING 
              MEDICAL PROFESSIONAL GUIDELINES AND STANDARDS.

    Any Federal agency engaged in the establishment of medical 
professional standards shall consult with appropriate medical societies 
or associations, specialty boards, or recognized accrediting agencies, 
if available, in carrying out medical professional standard setting and 
guidelines or standards relating to the practice of medicine.

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