I 

111TH CONGRESS 

1ST SESSION H. R. 1200 

To provide for health care for every American and to control the cost and 

enhance the quality of the health care system. 

IN THE HOUSE OF REPRESENTATIVES 

FEBRUARY 25, 2009 

Mr. MCDERMOTT (for himself, Mr. ENGEL, Mr. FARR, Mr. HINCHEY, Mr. 

KUCINICH, Mr. DICKS, Ms. LEE of California, and Mr. OLVER) introduced the following bill; which was referred to the Committee on Energy 

and Commerce, and in addition to the Committees on Ways and Means, 

Oversight and Government Reform, and Armed Services, for a period to 

be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee 

concerned 

A BILL 

To provide for health care for every American and to control 

the cost and enhance the quality of the health care system. 

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

3 SECTION 1. SHORT TITLE; TABLE OF CONTENTS. 

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

5 ‘‘American Health Security Act of 2009’’. 

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

7 this Act is as follows: 

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Sec. 1. Short title; table of contents. 

TITLE I—ESTABLISHMENT OF A STATE-BASED AMERICAN 

HEALTH SECURITY PROGRAM; UNIVERSAL ENTITLEMENT; ENROLLMENT 

Sec. 101. Establishment of a State-based American Health Security Program. 

Sec. 102. Universal entitlement. 

Sec. 103. Enrollment. 

Sec. 104. Portability of benefits. 

Sec. 105. Effective date of benefits. 

Sec. 106. Relationship to existing Federal health programs. 

TITLE II—COMPREHENSIVE BENEFITS, INCLUDING PREVENTIVE 

BENEFITS AND BENEFITS FOR LONG-TERM CARE 

Sec. 201. Comprehensive benefits. 

Sec. 202. Definitions relating to services. 

Sec. 203. Special rules for home and community-based long-term care services. 

Sec. 204. Exclusions and limitations. 

Sec. 205. Certification; quality review; plans of care. 

TITLE III—PROVIDER PARTICIPATION 

Sec. 301. Provider participation and standards. 

Sec. 302. Qualifications for providers. 

Sec. 303. Qualifications for comprehensive health service organizations. 

Sec. 304. Limitation on certain physician referrals. 

TITLE IV—ADMINISTRATION 

Subtitle A—General Administrative Provisions 

Sec. 401. American Health Security Standards Board. 

Sec. 402. American Health Security Advisory Council. 

Sec. 403. Consultation with private entities. 

Sec. 404. State health security programs. 

Sec. 405. Complementary conduct of related health programs. 

Subtitle B—Control Over Fraud and Abuse 

Sec. 411. Application of Federal sanctions to all fraud and abuse under American Health Security Program. 

Sec. 412. Requirements for operation of State health care fraud and abuse control units. 

TITLE V—QUALITY ASSESSMENT 

Sec. 501. American Health Security Quality Council. 

Sec. 502. Development of certain methodologies, guidelines, and standards. 

Sec. 503. State quality review programs. 

Sec. 504. Elimination of utilization review programs; transition. 

TITLE VI—HEALTH SECURITY BUDGET; PAYMENTS; COST 

CONTAINMENT MEASURES 

Subtitle A—Budgeting and Payments to States 

Sec. 601. National health security budget. 

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Sec. 602. Computation of individual and State capitation amounts. 

Sec. 603. State health security budgets. 

Sec. 604. Federal payments to States. 

Sec. 605. Account for health professional education expenditures. 

Subtitle B—Payments by States to Providers 

Sec. 611. Payments to hospitals and other facility-based services for operating 

expenses on the basis of approved global budgets. 

Sec. 612. Payments to health care practitioners based on prospective fee schedule. 

Sec. 613. Payments to comprehensive health service organizations. 

Sec. 614. Payments for community-based primary health services. 

Sec. 615. Payments for prescription drugs. 

Sec. 616. Payments for approved devices and equipment. 

Sec. 617. Payments for other items and services. 

Sec. 618. Payment incentives for medically underserved areas. 

Sec. 619. Authority for alternative payment methodologies. 

Subtitle C—Mandatory Assignment and Administrative Provisions 

Sec. 631. Mandatory assignment. 

Sec. 632. Procedures for reimbursement; appeals. 

TITLE VII—PROMOTION OF PRIMARY HEALTH CARE; DEVELOPMENT OF HEALTH SERVICE CAPACITY; PROGRAMS TO ASSIST 

THE MEDICALLY UNDERSERVED 

Subtitle A—Promotion and Expansion of Primary Care Professional Training 

Sec. 701. Role of Board; establishment of primary care professional output 

goals. 

Sec. 702. Establishment of Advisory Committee on Health Professional Education. 

Sec. 703. Grants for health professions education, nurse education, and the National Health Service Corps. 

Subtitle B—Direct Health Care Delivery 

Sec. 711. Set-aside for public health. 

Sec. 712. Set-aside for primary health care delivery. 

Sec. 713. Primary care service expansion grants. 

Subtitle C—Primary Care and Outcomes Research 

Sec. 721. Set-aside for outcomes research. 

Sec. 722. Office of Primary Care and Prevention Research. 

Subtitle D—School-Related Health Services 

Sec. 731. Authorizations of appropriations. 

Sec. 732. Eligibility for development and operation grants. 

Sec. 733. Preferences. 

Sec. 734. Grants for development of projects. 

Sec. 735. Grants for operation of projects. 

Sec. 736. Federal administrative costs. 

Sec. 737. Definitions. 

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TITLE VIII—FINANCING PROVISIONS; AMERICAN HEALTH 

SECURITY TRUST FUND 

Sec. 800. Amendment of 1986 code; Section 15 not to apply. 

Subtitle A—American Health Security Trust Fund 

Sec. 801. American Health Security Trust Fund. 

Subtitle B—Taxes Based on Income and Wages 

Sec. 811. Payroll tax on employers. 

Sec. 812. Health care income tax. 

TITLE IX—CONFORMING AMENDMENTS TO THE EMPLOYEE 

RETIREMENT INCOME SECURITY ACT OF 1974 

Sec. 901. ERISA inapplicable to health coverage arrangements under State 

health security programs. 

Sec. 902. Exemption of State health security programs from ERISA preemption. 

Sec. 903. Prohibition of employee benefits duplicative of benefits under State 

health security programs; coordination in case of workers’ compensation. 

Sec. 904. Repeal of continuation coverage requirements under ERISA and certain other requirements relating to group health plans. 

Sec. 905. Effective date of title. 

TITLE X—ADDITIONAL CONFORMING AMENDMENTS 

Sec. 1001. Repeal of certain provisions in Internal Revenue Code of 1986. 

Sec. 1002. Repeal of certain provisions in the Employee Retirement Income Security Act of 1974. 

Sec. 1003. Repeal of certain provisions in the Public Health Service Act and 

related provisions. 

Sec. 1004. Effective date of title. 

1 TITLE I—ESTABLISHMENT OF A 

2 STATE-BASED AMERICAN 

3 HEALTH SECURITY PRO4 GRAM; UNIVERSAL ENTITLE5 MENT; ENROLLMENT 

6 SEC. 101. ESTABLISHMENT OF A STATE-BASED AMERICAN 

7 HEALTH SECURITY PROGRAM. 

8 (a) IN GENERAL.—There is hereby established in the 

9 United States a State-Based American Health Security 

10 Program to be administered by the individual States in 

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1 accordance with Federal standards specified in, or estab2 lished under, this Act. 

3 (b) STATE HEALTH SECURITY PROGRAMS.—In order 

4 for a State to be eligible to receive payment under section 

5 604, a State must establish a State health security pro6 gram in accordance with this Act. 

7 (c) STATE DEFINED.— 

8 (1) IN GENERAL.—In this Act, subject to para9 graph (2), the term ‘‘State’’ means each of the 50 

10 States and the District of Columbia. 

11 (2) ELECTION.—If the Governor of Puerto 

12 Rico, the Virgin Islands, Guam, American Samoa, or 

13 the Northern Mariana Islands certifies to the Presi14 dent that the legislature of the Commonwealth or 

15 territory has enacted legislation desiring that the 

16 Commonwealth or territory be included as a State 

17 under the provisions of this Act, such Common18 wealth or territory shall be included as a ‘‘State’’ 

19 under this Act beginning January 1 of the first year 

20 beginning 90 days after the President receives the 

21 notification. 

22 SEC. 102. UNIVERSAL ENTITLEMENT. 

23 (a) IN GENERAL.—Every individual who is a resident 

24 of the United States and is a citizen or national of the 

25 United States or lawful resident alien (as defined in submstockstill on PROD1PC66 with BILLS

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1 section (d)) is entitled to benefits for health care services 

2 under this Act under the appropriate State health security 

3 program. In this section, the term ‘‘appropriate State 

4 health security program’’ means, with respect to an indi5 vidual, the State health security program for the State in 

6 which the individual maintains a primary residence. 

7 (b) TREATMENT OF CERTAIN NONIMMIGRANTS.— 

8 (1) IN GENERAL.—The American Health Secu9 rity Standards Board (in this Act referred to as the 

10 ‘‘Board’’) may make eligible for benefits for health 

11 care services under the appropriate State health se12 curity program under this Act such classes of aliens 

13 admitted to the United States as nonimmigrants as 

14 the Board may provide. 

15 (2) CONSIDERATION.—In providing for eligi16 bility under paragraph (1), the Board shall consider 

17 reciprocity in health care services offered to United 

18 States citizens who are nonimmigrants in other for19 eign states, and such other factors as the Board de20 termines to be appropriate. 

21 (c) TREATMENT OF OTHER INDIVIDUALS.— 

22 (1) BY BOARD.—The Board also may make eli23 gible for benefits for health care services under the 

24 appropriate State health security program under this 

25 Act other individuals not described in subsection (a) 

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1 or (b), and regulate the nature of the eligibility of 

2 such individuals, in order— 

3 (A) to preserve the public health of com4 munities; 

5 (B) to compensate States for the addi6 tional health care financing burdens created by 

7 such individuals; and 

8 (C) to prevent adverse financial and med9 ical consequences of uncompensated care, 

10 while inhibiting travel and immigration to the 

11 United States for the sole purpose of obtaining 

12 health care services. 

13 (2) BY STATES.—Any State health security pro14 gram may make individuals described in paragraph 

15 (1) eligible for benefits at the expense of the State. 

16 (d) LAWFUL RESIDENT ALIEN DEFINED.—For pur17 poses of this section, the term ‘‘lawful resident alien’’ 

18 means an alien lawfully admitted for permanent residence 

19 and any other alien lawfully residing permanently in the 

20 United States under color of law, including an alien with 

21 lawful temporary resident status under section 210, 210A, 

22 or 234A of the Immigration and Nationality Act (8 U.S.C. 

23 1160, 1161, or 1255a). 

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1 SEC. 103. ENROLLMENT. 

2 (a) IN GENERAL.—Each State health security pro3 gram shall provide a mechanism for the enrollment of indi4 viduals entitled or eligible for benefits under this Act. The 

5 mechanism shall— 

6 (1) include a process for the automatic enroll7 ment of individuals at the time of birth in the 

8 United States and at the time of immigration into 

9 the United States or other acquisition of lawful resi10 dent status in the United States; 

11 (2) provide for the enrollment, as of January 1, 

12 2011, of all individuals who are eligible to be en13 rolled as of such date; and 

14 (3) include a process for the enrollment of indi15 viduals made eligible for health care services under 

16 subsections (b) and (c) of section 102. 

17 (b) AVAILABILITY OF APPLICATIONS.—Each State 

18 health security program shall make applications for enroll19 ment under the program available— 

20 (1) at employment and payroll offices of em21 ployers located in the State; 

22 (2) at local offices of the Social Security Ad23 ministration; 

24 (3) at social services locations; 

25 (4) at out-reach sites (such as provider and 

26 practitioner locations); and 

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1 (5) at other locations (including post offices 

2 and schools) accessible to a broad cross-section of in3 dividuals eligible to enroll. 

4 (c) ISSUANCE OF HEALTH SECURITY CARDS.—In 

5 conjunction with an individual’s enrollment for benefits 

6 under this Act, the State health security program shall 

7 provide for the issuance of a health security card that shall 

8 be used for purposes of identification and processing of 

9 claims for benefits under the program. The State health 

10 security program may provide for issuance of such cards 

11 by employers for purposes of carrying out enrollment pur12 suant to subsection (a)(2). 

13 SEC. 104. PORTABILITY OF BENEFITS. 

14 (a) IN GENERAL.—To ensure continuous access to 

15 benefits for health care services covered under this Act, 

16 each State health security program— 

17 (1) shall not impose any minimum period of 

18 residence in the State, or waiting period, in excess 

19 of 3 months before residents of the State are enti20 tled to, or eligible for, such benefits under the pro21 gram; 

22 (2) shall provide continuation of payment for 

23 covered health care services to individuals who have 

24 terminated their residence in the State and estab25 lished their residence in another State, for the duramstockstill on PROD1PC66 with BILLS

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1 tion of any waiting period imposed in the State of 

2 new residency for establishing entitlement to, or eli3 gibility for, such services; and 

4 (3) shall provide for the payment for health 

5 care services covered under this Act provided to indi6 viduals while temporarily absent from the State 

7 based on the following principles: 

8 (A) Payment for such health care services 

9 is at the rate that is approved by the State 

10 health security program in the State in which 

11 the services are provided, unless the States con12 cerned agree to apportion the cost between 

13 them in a different manner. 

14 (B) Payment for such health care services 

15 provided outside the United States is made on 

16 the basis of the amount that would have been 

17 paid by the State health security program for 

18 similar services rendered in the State, with due 

19 regard, in the case of hospital services, to the 

20 size of the hospital, standards of service, and 

21 other relevant factors. 

22 (b) CROSS-BORDER ARRANGEMENTS.—A State 

23 health security program for a State may negotiate with 

24 such a program in an adjacent State a reciprocal arrangemstockstill on PROD1PC66 with BILLS

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1 ment for the coverage under such other program of health 

2 care services to enrollees residing in the border region. 

3 SEC. 105. EFFECTIVE DATE OF BENEFITS. 

4 Benefits shall first be available under this Act for 

5 items and services furnished on or after January 1, 2011. 

6 SEC. 106. RELATIONSHIP TO EXISTING FEDERAL HEALTH 

7 PROGRAMS. 

8 (a) MEDICARE, MEDICAID AND STATE CHILDREN’S

9 HEALTH INSURANCE PROGRAM (SCHIP).— 

10 (1) IN GENERAL.—Notwithstanding any other 

11 provision of law, subject to paragraph (2)— 

12 (A) no benefits shall be available under 

13 title XVIII of the Social Security Act for any 

14 item or service furnished after December 31, 

15 2010; 

16 (B) no individual is entitled to medical as17 sistance under a State plan approved under 

18 title XIX of such Act for any item or service 

19 furnished after such date; 

20 (C) no individual is entitled to medical as21 sistance under an SCHIP plan under title XXI 

22 of such Act for any item or service furnished 

23 after such date; and 

24 (D) no payment shall be made to a State 

25 under section 1903(a) or 2105(a) of such Act 

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1 with respect to medical assistance or child 

2 health assistance for any item or service fur3 nished after such date. 

4 (2) TRANSITION.—In the case of inpatient hos5 pital services and extended care services during a 

6 continuous period of stay which began before Janu7 ary 1, 2011, and which had not ended as of such 

8 date, for which benefits are provided under title 

9 XVIII, under a State plan under title XIX, or a 

10 State child health plan under title XXI, of the Social 

11 Security Act, the Secretary of Health and Human 

12 Services and each State plan, respectively, shall pro13 vide for continuation of benefits under such title or 

14 plan until the end of the period of stay. 

15 (b) FEDERAL EMPLOYEES HEALTH BENEFITS PRO16 GRAM.—No benefits shall be made available under chapter 

17 89 of title 5, United States Code, for any part of a cov18 erage period occurring after December 31, 2010. 

19 (c) CHAMPUS.—No benefits shall be made available 

20 under sections 1079 and 1086 of title 10, United States 

21 Code, for items or services furnished after December 31, 

22 2010. 

23 (d) TREATMENT OF BENEFITS FOR VETERANS AND

24 NATIVE AMERICANS.—Nothing in this Act shall affect the 

25 eligibility of veterans for the medical benefits and services 

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1 provided under title 38, United States Code, or of Indians 

2 for the medical benefits and services provided by or 

3 through the Indian Health Service. 

4 TITLE II—COMPREHENSIVE BEN5 EFITS, INCLUDING PREVEN6 TIVE BENEFITS AND BENE7 FITS FOR LONG-TERM CARE 

8 SEC. 201. COMPREHENSIVE BENEFITS. 

9 (a) IN GENERAL.—Subject to the succeeding provi10 sions of this title, individuals enrolled for benefits under 

11 this Act are entitled to have payment made under a State 

12 health security program for the following items and serv13 ices if medically necessary or appropriate for the mainte14 nance of health or for the diagnosis, treatment, or rehabili15 tation of a health condition: 

16 (1) HOSPITAL SERVICES.—Inpatient and out17 patient hospital care, including 24-hour-a-day emer18 gency services. 

19 (2) PROFESSIONAL SERVICES.—Professional 

20 services of health care practitioners authorized to 

21 provide health care services under State law, includ22 ing patient education and training in self-manage23 ment techniques. 

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1 (3) COMMUNITY-BASED PRIMARY HEALTH

2 SERVICES.—Community-based primary health serv3 ices (as defined in section 202(a)). 

4 (4) PREVENTIVE SERVICES.—Preventive serv5 ices (as defined in section 202(b)). 

6 (5) LONG-TERM, ACUTE, AND CHRONIC CARE

7 SERVICES.— 

8 (A) Nursing facility services. 

9 (B) Home health services. 

10 (C) Home and community-based long-term 

11 care services (as defined in section 202(c)) for 

12 individuals described in section 203(a). 

13 (D) Hospice care. 

14 (E) Services in intermediate care facilities 

15 for individuals with mental retardation. 

16 (6) PRESCRIPTION DRUGS, BIOLOGICALS, INSU17 LIN, MEDICAL FOODS.— 

18 (A) Outpatient prescription drugs and bio19 logics, as specified by the Board consistent with 

20 section 615. 

21 (B) Insulin. 

22 (C) Medical foods (as defined in section 

23 202(e)). 

24 (7) DENTAL SERVICES.—Dental services (as de25 fined in section 202(h)). 

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1 (8) MENTAL HEALTH AND SUBSTANCE ABUSE

2 TREATMENT SERVICES.—Mental health and sub3 stance abuse treatment services (as defined in sec4 tion 202(f)). 

5 (9) DIAGNOSTIC TESTS.—Diagnostic tests. 

6 (10) OTHER ITEMS AND SERVICES.— 

7 (A) OUTPATIENT THERAPY.—Outpatient 

8 physical therapy services, outpatient speech pa9 thology services, and outpatient occupational 

10 therapy services in all settings. 

11 (B) DURABLE MEDICAL EQUIPMENT.—Du12 rable medical equipment. 

13 (C) HOME DIALYSIS.—Home dialysis sup14 plies and equipment. 

15 (D) AMBULANCE.—Emergency ambulance 

16 service. 

17 (E) PROSTHETIC DEVICES.—Prosthetic de18 vices, including replacements of such devices. 

19 (F) ADDITIONAL ITEMS AND SERVICES.— 

20 Such other medical or health care items or serv21 ices as the Board may specify. 

22 (b) COST-SHARING.— 

23 (1) IN GENERAL.—Except as provided in this 

24 subsection, there are no deductibles, coinsurance, or 

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1 copayments applicable to acute care and preventive 

2 benefits provided under this title. 

3 (2) COST-SHARING FOR LONG-TERM CARE

4 SERVICES.— 

5 (A) IN GENERAL.— 

6 (i) payments for home and commu7 nity-based long-term care services are sub8 ject to coinsurance of 20 percent; and 

9 (ii) payments for nursing facility serv10 ices are subject to coinsurance of 35 per11 cent. 

12 (B) EXCEPTION.—With respect to the co13 insurance established under subparagraph 

14 (A)— 

15 (i) such coinsurance shall not apply to 

16 an individual with income (as defined by 

17 the Secretary) of not more than 100 per18 cent of the income official poverty line ap19 plicable to a family of the size involved; 

20 and 

21 (ii) in the case of an individual with 

22 such income that exceeds 100 percent, but 

23 is less than 200 percent, of such applicable 

24 poverty line, the coinsurance shall be re25 duced in the same proportion as the promstockstill on PROD1PC66 with BILLS

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1 portion of such income is less than 200 

2 percent of such applicable poverty line. 

3 (c) PROHIBITION OF BALANCE BILLING.—As pro4 vided in section 531, no person may impose a charge for 

5 covered services for which benefits are provided under this 

6 Act. 

7 (d) NO DUPLICATE HEALTH INSURANCE.—Each 

8 State health security program shall prohibit the sale of 

9 health insurance in the State if payment under the insur10 ance duplicates payment for any items or services for 

11 which payment may be made under such a program. 

12 (e) STATE PROGRAM MAY PROVIDE ADDITIONAL

13 BENEFITS.—Nothing in this Act shall be construed as 

14 limiting the benefits that may be made available under a 

15 State health security program to residents of the State 

16 at the expense of the State. 

17 (f) EMPLOYERS MAY PROVIDE ADDITIONAL BENE18 FITS.—Nothing in this Act shall be construed as limiting 

19 the additional benefits that an employer may provide to 

20 employees or their dependents, or to former employees or 

21 their dependents. 

22 SEC. 202. DEFINITIONS RELATING TO SERVICES. 

23 (a) COMMUNITY-BASED PRIMARY HEALTH SERV24 ICES.—In this title, the term ‘‘community-based primary 

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1 health services’’ means ambulatory health services fur2 nished— 

3 (1) by a rural health clinic; 

4 (2) by a federally qualified health center (as de5 fined in section 1905(l)(2)(B) of the Social Security 

6 Act), and which, for purposes of this Act, include 

7 services furnished by State and local health agencies; 

8 (3) in a school-based setting; 

9 (4) by public educational agencies and other 

10 providers of services to children entitled to assist11 ance under the Individuals with Disabilities Edu12 cation Act for services furnished pursuant to a writ13 ten Individualized Family Services Plan or Indi14 vidual Education Plan under such Act; and 

15 (5) public and private nonprofit entities receiv16 ing Federal assistance under the Public Health 

17 Service Act. 

18 (b) PREVENTIVE SERVICES.— 

19 (1) IN GENERAL.—In this title, the term ‘‘pre20 ventive services’’ means items and services— 

21 (A) which— 

22 (i) are specified in paragraph (2); or 

23 (ii) the Board determines to be effec24 tive in the maintenance and promotion of 

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1 health or minimizing the effect of illness, 

2 disease, or medical condition; and 

3 (B) which are provided consistent with the 

4 periodicity schedule established under para5 graph (3). 

6 (2) SPECIFIED PREVENTIVE SERVICES.—The 

7 services specified in this paragraph are as follows: 

8 (A) Basic immunizations. 

9 (B) Prenatal and well-baby care (for in10 fants under 1 year of age). 

11 (C) Well-child care (including periodic 

12 physical examinations, hearing and vision 

13 screening, and developmental screening and ex14 aminations) for individuals under 18 years of 

15 age. 

16 (D) Periodic screening mammography, Pap 

17 smears, and colorectal examinations and exami18 nations for prostate cancer. 

19 (E) Physical examinations. 

20 (F) Family planning services. 

21 (G) Routine eye examinations, eyeglasses, 

22 and contact lenses. 

23 (H) Hearing aids, but only upon a deter24 mination of a certified audiologist or physician 

25 that a hearing problem exists and is caused by 

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1 a condition that can be corrected by use of a 

2 hearing aid. 

3 (3) SCHEDULE.—The Board shall establish, in 

4 consultation with experts in preventive medicine and 

5 public health and taking into consideration those 

6 preventive services recommended by the Preventive 

7 Services Task Force and published as the Guide to 

8 Clinical Preventive Services, a periodicity schedule 

9 for the coverage of preventive services under para10 graph (1). Such schedule shall take into consider11 ation the cost-effectiveness of appropriate preventive 

12 care and shall be revised not less frequently than 

13 once every 5 years, in consultation with experts in 

14 preventive medicine and public health. 

15 (c) HOME AND COMMUNITY-BASED LONG-TERM

16 CARE SERVICES.—In this title, the term ‘‘home and com17 munity-based long-term care services’’ means the following 

18 services provided to an individual to enable the individual 

19 to remain in such individual’s place of residence within 

20 the community: 

21 (1) Home health aide services. 

22 (2) Adult day health care, social day care or 

23 psychiatric day care. 

24 (3) Medical social work services. 

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1 (4) Care coordination services, as defined in 

2 subsection (g)(1). 

3 (5) Respite care, including training for informal 

4 caregivers. 

5 (6) Personal assistance services, and home6 maker services (including meals) incidental to the 

7 provision of personal assistance services. 

8 (d) HOME HEALTH SERVICES.— 

9 (1) IN GENERAL.—The term ‘‘home health 

10 services’’ means items and services described in sec11 tion 1861(m) of the Social Security Act and includes 

12 home infusion services. 

13 (2) HOME INFUSION SERVICES.—The term 

14 ‘‘home infusion services’’ includes the nursing, phar15 macy, and related services that are necessary to con16 duct the home infusion of a drug regimen safely and 

17 effectively under a plan established and periodically 

18 reviewed by a physician and that are provided in 

19 compliance with quality assurance requirements es20 tablished by the Secretary. 

21 (e) MEDICAL FOODS.—In this title, the term ‘‘med22 ical foods’’ means foods which are formulated to be con23 sumed or administered enterally under the supervision of 

24 a physician and which are intended for the specific dietary 

25 management of a disease or condition for which distinctive 

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1 nutritional requirements, based on recognized scientific 

2 principles, are established by medical evaluation. 

3 (f) MENTAL HEALTH AND SUBSTANCE ABUSE

4 TREATMENT SERVICES.— 

5 (1) SERVICES DESCRIBED.—In this title, the 

6 term ‘‘mental health and substance abuse treatment 

7 services’’ means the following services related to the 

8 prevention, diagnosis, treatment, and rehabilitation 

9 of mental illness and promotion of mental health: 

10 (A) INPATIENT HOSPITAL SERVICES.—In11 patient hospital services furnished primarily for 

12 the diagnosis or treatment of mental illness or 

13 substance abuse for up to 60 days during a 

14 year, reduced by a number of days determined 

15 by the Secretary so that the actuarial value of 

16 providing such number of days of services 

17 under this paragraph to the individual is equal 

18 to the actuarial value of the days of inpatient 

19 residential services furnished to the individual 

20 under subparagraph (B) during the year after 

21 such services have been furnished to the indi22 vidual for 120 days during the year (rounded to 

23 the nearest day), but only if (with respect to 

24 services furnished to an individual described in 

25 section 204(b)(1)) such services are furnished 

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1 in conformity with the plan of an organized sys2 tem of care for mental health and substance 

3 abuse services in accordance with section 

4 204(b)(2). 

5 (B) INTENSIVE RESIDENTIAL SERVICES.— 

6 Intensive residential services (as defined in 

7 paragraph (2)) furnished to an individual for 

8 up to 120 days during any calendar year, ex9 cept that— 

10 (i) such services may be furnished to 

11 the individual for additional days during 

12 the year if necessary for the individual to 

13 complete a course of treatment to the ex14 tent that the number of days of inpatient 

15 hospital services described in subparagraph 

16 (A) that may be furnished to the individual 

17 during the year (as reduced under such 

18 subparagraph) is not less than 15; and 

19 (ii) reduced by a number of days de20 termined by the Secretary so that the actu21 arial value of providing such number of 

22 days of services under this paragraph to 

23 the individual is equal to the actuarial 

24 value of the days of intensive community25 based services furnished to the individual 

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1 under subparagraph (D) during the year 

2 after such services have been furnished to 

3 the individual for 90 days (or, in the case 

4 of services described in subparagraph 

5 (D)(ii), for 180 days) during the year 

6 (rounded to the nearest day). 

7 (C) OUTPATIENT SERVICES.—Outpatient 

8 treatment services of mental illness or sub9 stance abuse (other than intensive community10 based services under subparagraph (D)) for an 

11 unlimited number of days during any calendar 

12 year furnished in accordance with standards es13 tablished by the Secretary for the management 

14 of such services, and, in the case of services fur15 nished to an individual described in section 

16 204(b)(1) who is not an inpatient of a hospital, 

17 in conformity with the plan of an organized sys18 tem of care for mental health and substance 

19 abuse services in accordance with section 

20 204(b)(2). 

21 (D) INTENSIVE COMMUNITY-BASED SERV22 ICES.—Intensive community-based services (as 

23 described in paragraph (3))— 

24 (i) for an unlimited number of days 

25 during any calendar year, in the case of 

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1 services described in section 1861(ff)(2)(E) 

2 that are furnished to an individual who is 

3 a seriously mentally ill adult, a seriously 

4 emotionally disturbed child, or an adult or 

5 child with serious substance abuse disorder 

6 (as determined in accordance with criteria 

7 established by the Secretary); 

8 (ii) in the case of services described in 

9 section 1861(ff)(2)(C), for up to 180 days 

10 during any calendar year, except that such 

11 services may be furnished to the individual 

12 for a number of additional days during the 

13 year equal to the difference between the 

14 total number of days of intensive residen15 tial services which the individual may re16 ceive during the year under part A (as de17 termined under subparagraph (B)) and the 

18 number of days of such services which the 

19 individual has received during the year; or 

20 (iii) in the case of any other such 

21 services, for up to 90 days during any cal22 endar year, except that such services may 

23 be furnished to the individual for the num24 ber of additional days during the year de25 scribed in clause (ii). 

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1 (2) INTENSIVE RESIDENTIAL SERVICES DE2 FINED.— 

3 (A) IN GENERAL.—Subject to subpara4 graphs (B) and (C), the term ‘‘intensive resi5 dential services’’ means inpatient services pro6 vided in any of the following facilities: 

7 (i) Residential detoxification centers. 

8 (ii) Crisis residential programs or 

9 mental illness residential treatment pro10 grams. 

11 (iii) Therapeutic family or group 

12 treatment homes. 

13 (iv) Residential centers for substance 

14 abuse treatment. 

15 (B) REQUIREMENTS FOR FACILITIES.—No 

16 service may be treated as an intensive residen17 tial service under subparagraph (A) unless the 

18 facility at which the service is provided— 

19 (i) is legally authorized to provide 

20 such service under the law of the State (or 

21 under a State regulatory mechanism pro22 vided by State law) in which the facility is 

23 located or is certified to provide such serv24 ice by an appropriate accreditation entity 

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1 approved by the State in consultation with 

2 the Secretary; and 

3 (ii) meets such other requirements as 

4 the Secretary may impose to assure the 

5 quality of the intensive residential services 

6 provided. 

7 (C) SERVICES FURNISHED TO AT-RISK

8 CHILDREN.—In the case of services furnished 

9 to an individual described in section 204(b)(1), 

10 no service may be treated as an intensive resi11 dential service under this subsection unless the 

12 service is furnished in conformity with the plan 

13 of an organized system of care for mental 

14 health and substance abuse services in accord15 ance with section 204(b)(2). 

16 (D) MANAGEMENT STANDARDS.—No serv17 ice may be treated as an intensive residential 

18 service under subparagraph (A) unless the serv19 ice is furnished in accordance with standards 

20 established by the Secretary for the manage21 ment of such services. 

22 (3) INTENSIVE COMMUNITY-BASED SERVICES

23 DEFINED.— 

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

25 community-based services’’ means the items 

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1 and services described in subparagraph (B) pre2 scribed by a physician (or, in the case of serv3 ices furnished to an individual described in sec4 tion 204(b)(1), by an organized system of care 

5 for mental health and substance abuse services 

6 in accordance with such section) and provided 

7 under a program described in subparagraph 

8 (D) under the supervision of a physician (or, to 

9 the extent permitted under the law of the State 

10 in which the services are furnished, a non-phy11 sician mental health professional) pursuant to 

12 an individualized, written plan of treatment es13 tablished and periodically reviewed by a physi14 cian (in consultation with appropriate staff par15 ticipating in such program) which sets forth the 

16 physician’s diagnosis, the type, amount, fre17 quency, and duration of the items and services 

18 provided under the plan, and the goals for 

19 treatment under the plan, but does not include 

20 any item or service that is not furnished in ac21 cordance with standards established by the Sec22 retary for the management of such services. 

23 (B) ITEMS AND SERVICES DESCRIBED.— 

24 The items and services described in this sub25 paragraph are— 

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1 (i) partial hospitalization services con2 sisting of the items and services described 

3 in subparagraph (C); 

4 (ii) psychiatric rehabilitation services; 

5 (iii) day treatment services for indi6 viduals under 19 years of age; 

7 (iv) in-home services; 

8 (v) case management services, includ9 ing collateral services designated as such 

10 case management services by the Sec11 retary; 

12 (vi) ambulatory detoxification services; 

13 and 

14 (vii) such other items and services as 

15 the Secretary may provide (but in no event 

16 to include meals and transportation), 

17 that are reasonable and necessary for the diag18 nosis or active treatment of the individual’s 

19 condition, reasonably expected to improve or 

20 maintain the individual’s condition and func21 tional level and to prevent relapse or hos22 pitalization, and furnished pursuant to such 

23 guidelines relating to frequency and duration of 

24 services as the Secretary shall by regulation es25 tablish (taking into account accepted norms of 

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1 medical practice and the reasonable expectation 

2 of patient improvement). 

3 (C) ITEMS AND SERVICES INCLUDED AS

4 PARTIAL HOSPITALIZATION SERVICES.—For 

5 purposes of subparagraph (B)(i), partial hos6 pitalization services consist of the following: 

7 (i) Individual and group therapy with 

8 physicians or psychologists (or other men9 tal health professionals to the extent au10 thorized under State law). 

11 (ii) Occupational therapy requiring 

12 the skills of a qualified occupational thera13 pist. 

14 (iii) Services of social workers, trained 

15 psychiatric nurses, behavioral aides, and 

16 other staff trained to work with psychiatric 

17 patients (to the extent authorized under 

18 State law). 

19 (iv) Drugs and biologicals furnished 

20 for therapeutic purposes (which cannot, as 

21 determined in accordance with regulations, 

22 be self-administered). 

23 (v) Individualized activity therapies 

24 that are not primarily recreational or di25 versionary. 

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1 (vi) Family counseling (the primary 

2 purpose of which is treatment of the indi3 vidual’s condition). 

4 (vii) Patient training and education 

5 (to the extent that training and edu6 cational activities are closely and clearly 

7 related to the individual’s care and treat8 ment). 

9 (viii) Diagnostic services. 

10 (D) PROGRAMS DESCRIBED.—A program 

11 described in this subparagraph is a program 

12 (whether facility-based or freestanding) which is 

13 furnished by an entity— 

14 (i) legally authorized to furnish such a 

15 program under State law (or the State reg16 ulatory mechanism provided by State law) 

17 or certified to furnish such a program by 

18 an appropriate accreditation entity ap19 proved by the State in consultation with 

20 the Secretary; and 

21 (ii) meeting such other requirements 

22 as the Secretary may impose to assure the 

23 quality of the intensive community-based 

24 services provided. 

25 (g) CARE COORDINATION SERVICES.— 

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1 (1) IN GENERAL.—In this title, the term ‘‘care 

2 coordination services’’ means services provided by 

3 care coordinators (as defined in paragraph (2)) to 

4 individuals described in paragraph (3) for the co5 ordination and monitoring of home and community6 based long term care services to ensure appropriate, 

7 cost-effective utilization of such services in a com8 prehensive and continuous manner, and includes— 

9 (A) transition management between inpa10 tient facilities and community-based services, 

11 including assisting patients in identifying and 

12 gaining access to appropriate ancillary services; 

13 and 

14 (B) evaluating and recommending appro15 priate treatment services, in cooperation with 

16 patients and other providers and in conjunction 

17 with any quality review program or plan of care 

18 under section 205. 

19 (2) CARE COORDINATOR.— 

20 (A) IN GENERAL.—In this title, the term 

21 ‘‘care coordinator’’ means an individual or non22 profit or public agency or organization which 

23 the State health security program determines— 

24 (i) is capable of performing directly, 

25 efficiently, and effectively the duties of a 

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1 care coordinator described in paragraph 

2 (1); and 

3 (ii) demonstrates capability in estab4 lishing and periodically reviewing and re5 vising plans of care, and in arranging for 

6 and monitoring the provision and quality 

7 of services under any plan. 

8 (B) INDEPENDENCE.—State health secu9 rity programs shall establish safeguards to as10 sure that care coordinators have no financial in11 terest in treatment decisions or placements. 

12 Care coordination may not be provided through 

13 any structure or mechanism through which 

14 quality review is performed. 

15 (3) ELIGIBLE INDIVIDUALS.—An individual de16 scribed in this paragraph is an individual described 

17 in section 203 (relating to individuals qualifying for 

18 long term and chronic care services). 

19 (h) DENTAL SERVICES.— 

20 (1) IN GENERAL.—In this title, subject to sub21 section (b), the term ‘‘dental services’’ means the 

22 following: 

23 (A) Emergency dental treatment, including 

24 extractions, for bleeding, pain, acute infections, 

25 and injuries to the maxillofacial region. 

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1 (B) Prevention and diagnosis of dental dis2 ease, including examinations of the hard and 

3 soft tissues of the oral cavity and related struc4 tures, radiographs, dental sealants, fluorides, 

5 and dental prophylaxis. 

6 (C) Treatment of dental disease, including 

7 non-cast fillings, periodontal maintenance serv8 ices, and endodontic services. 

9 (D) Space maintenance procedures to pre10 vent orthodontic complications. 

11 (E) Orthodontic treatment to prevent se12 vere malocclusions. 

13 (F) Full dentures. 

14 (G) Medically necessary oral health care. 

15 (H) Any items and services for special 

16 needs patients that are not described in sub17 paragraphs (A) through (G) and that— 

18 (i) are required to provide such pa19 tients the items and services described in 

20 subparagraphs (A) through (G); 

21 (ii) are required to establish oral func22 tion (including general anesthesia for indi23 viduals with physical or emotional limita24 tions that prevent the provision of dental 

25 care without such anesthesia); 

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1 (iii) consist of orthodontic care for se2 vere dentofacial abnormalities; or 

3 (iv) consist of prosthetic dental de4 vices for genetic or birth defects or fitting 

5 for such devices. 

6 (I) Any dental care for individuals with a 

7 seizure disorder that is not described in sub8 paragraphs (A) through (H) and that is re9 quired because of an illness, injury, disorder, or 

10 other health condition that results from such 

11 seizure disorder. 

12 (2) LIMITATIONS.—Dental services are subject 

13 to the following limitations: 

14 (A) PREVENTION AND DIAGNOSIS.— 

15 (i) EXAMINATIONS AND PROPHY16 LAXIS.—The examinations and prophylaxis 

17 described in paragraph (1)(B) are covered 

18 only consistent with a periodicity schedule 

19 established by the Board, which schedule 

20 may provide for special treatment of indi21 viduals less than 18 years of age and of 

22 special needs patients. 

23 (ii) DENTAL SEALANTS.—The dental 

24 sealants described in such paragraph are 

25 not covered for individuals 18 years of age 

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1 or older. Such sealants are covered for in2 dividuals less than 10 years of age for pro3 tection of the 1st permanent molars. Such 

4 sealants are covered for individuals 10 

5 years of age or older for protection of the 

6 2d permanent molars. 

7 (B) TREATMENT OF DENTAL DISEASE.— 

8 Prior to January 1, 2016, the items and serv9 ices described in paragraph (1)(C) are covered 

10 only for individuals less than 18 years of age 

11 and special needs patients. On or after such 

12 date, such items and services are covered for all 

13 individuals enrolled for benefits under this Act, 

14 except that endodontic services are not covered 

15 for individuals 18 years of age or older. 

16 (C) SPACE MAINTENANCE.—The items and 

17 services described in paragraph (1)(D) are cov18 ered only for individuals at least 3 years of age, 

19 but less than 13 years of age and— 

20 (i) are limited to posterior teeth; 

21 (ii) involve maintenance of a space or 

22 spaces for permanent posterior teeth that 

23 would otherwise be prevented from normal 

24 eruption if the space were not maintained; 

25 and 

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1 (iii) do not include a space maintainer 

2 that is placed within 6 months of the ex3 pected eruption of the permanent posterior 

4 tooth concerned. 

5 (D) ORTHODONTIC TREATMENT.—Prior to 

6 January 1, 2016, the items and services de7 scribed in paragraph (1)(E) are covered only 

8 for individuals at least 6 years of age, but less 

9 than 12 years of age, who have severe 

10 dentofacial abnormalities. On or after such 

11 date, such items and services are covered only 

12 for individuals at least 6 years of age, but less 

13 than 12 years of age. 

14 (E) DENTURES.—Prior to January 1, 

15 2016, the dentures described in paragraph 

16 (1)(F) are not covered, except for special needs 

17 patients. On or after such date, dentures are 

18 covered for an individual consistent with a peri19 odicity schedule established by the Board, ex20 cept that the limitation of periodicity provided 

21 in such schedule shall not apply to a special 

22 needs patient. 

23 (3) DEFINITIONS.—For purposes of this title: 

24 (A) MEDICALLY NECESSARY ORAL HEALTH

25 CARE.—The term ‘‘medically necessary oral 

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1 health care’’ means oral health care that is re2 quired as a direct result of, or would have a di3 rect impact on, an underlying medical condi4 tion. Such term includes oral health care di5 rected toward control or elimination of pain, in6 fection, or reestablishment of oral function. 

7 (B) SPECIAL NEEDS PATIENT.—The term 

8 ‘‘special needs patient’’ includes an individual 

9 with a genetic or birth defect, a developmental 

10 disability, or an acquired medical disability. 

11 (i) NURSING FACILITY; NURSING FACILITY SERV12 ICES.—Except as may be provided by the Board, the 

13 terms ‘‘nursing facility’’ and ‘‘nursing facility services’’ 

14 have the meanings given such terms in sections 1919(a) 

15 and 1905(f), respectively, of the Social Security Act. 

16 (j) SERVICES IN INTERMEDIATE CARE FACILITIES

17 FOR INDIVIDUALS WITH MENTAL RETARDATION.—Ex18 cept as may be provided by the Board— 

19 (1) the term ‘‘intermediate care facility for indi20 viduals with mental retardation’’ has the meaning 

21 specified in section 1905(d) of the Social Security 

22 Act (as in effect before the enactment of this Act); 

23 and 

24 (2) the term ‘‘services in intermediate care fa25 cilities for individuals with mental retardation’’ 

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1 means services described in section 1905(a)(15) of 

2 such Act (as so in effect) in an intermediate care fa3 cility for individuals with mental retardation to an 

4 individual determined to require such services in ac5 cordance with standards specified by the Board and 

6 comparable to the standards described in section 

7 1902(a)(31)(A) of such Act (as so in effect). 

8 (k) OTHER TERMS.—Except as may be provided by 

9 the Board, the definitions contained in section 1861 of the 

10 Social Security Act shall apply. 

11 SEC. 203. SPECIAL RULES FOR HOME AND COMMUNITY12 BASED LONG-TERM CARE SERVICES. 

13 (a) QUALIFYING INDIVIDUALS.—For purposes of sec14 tion 201(a)(5)(C), individuals described in this subsection 

15 are the following individuals: 

16 (1) ADULTS.—Individuals 18 years of age or 

17 older determined (in a manner specified by the 

18 Board)— 

19 (A) to be unable to perform, without the 

20 assistance of an individual, at least 2 of the fol21 lowing 5 activities of daily living (or who has a 

22 similar level of disability due to cognitive im23 pairment)— 

24 (i) bathing; 

25 (ii) eating; 

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1 (iii) dressing; 

2 (iv) toileting; and 

3 (v) transferring in and out of a bed or 

4 in and out of a chair; 

5 (B) due to cognitive or mental impair6 ments, to require supervision because the indi7 vidual behaves in a manner that poses health or 

8 safety hazards to himself or herself or others; 

9 or 

10 (C) due to cognitive or mental impair11 ments, to require queuing to perform activities 

12 of daily living. 

13 (2) CHILDREN.—Individuals under 18 years of 

14 age determined (in a manner specified by the Board) 

15 to meet such alternative standard of disability for 

16 children as the Board develops. Such alternative 

17 standard shall be comparable to the standard for 

18 adults and appropriate for children. 

19 (b) LIMIT ON SERVICES.— 

20 (1) IN GENERAL.—The aggregate expenditures 

21 by a State health security program with respect to 

22 home and community-based long-term care services 

23 in a period (specified by the Board) may not exceed 

24 65 percent (or such alternative ratio as the Board 

25 establishes under paragraph (2)) of the average of 

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1 the amount of payment that would have been made 

2 under the program during the period if all the home3 based long-term care beneficiaries had been resi4 dents of nursing facilities in the same area in which 

5 the services were provided. 

6 (2) ALTERNATIVE RATIO.—The Board may es7 tablish for purposes of paragraph (1) an alternative 

8 ratio (of payments for home and community-based 

9 long term care services to payments for nursing fa10 cility services) as the Board determines to be more 

11 consistent with the goal of providing cost-effective 

12 long-term care in the most appropriate and least re13 strictive setting. 

14 SEC. 204. EXCLUSIONS AND LIMITATIONS. 

15 (a) IN GENERAL.—Subject to section 201(e), benefits 

16 for service are not available under this Act unless the serv17 ices meet the standards specified in section 201(a). 

18 (b) SPECIAL DELIVERY REQUIREMENTS FOR MEN19 TAL HEALTH AND SUBSTANCE ABUSE TREATMENT SERV20 ICES PROVIDED TO AT-RISK CHILDREN.— 

21 (1) REQUIRING SERVICES TO BE PROVIDED

22 THROUGH ORGANIZED SYSTEMS OF CARE.—A State 

23 health security program shall ensure that mental 

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1 ices are furnished through an organized system of 

2 care, as described in paragraph (2), if— 

3 (A) the services are provided to an indi4 vidual less than 22 years of age; 

5 (B) the individual has a serious emotional 

6 disturbance or a substance abuse disorder; and 

7 (C) the individual is, or is at imminent risk 

8 of being, subject to the authority of, or in need 

9 of the services of, at least 1 public agency that 

10 serves the needs of children, including an agen11 cy involved with child welfare, special education, 

12 juvenile justice, or criminal justice. 

13 (2) REQUIREMENTS FOR SYSTEM OF CARE.—In 

14 this subsection, an ‘‘organized system of care’’ is a 

15 community-based service delivery network, which 

16 may consist of public and private providers, that 

17 meets the following requirements: 

18 (A) The system has established linkages 

19 with existing mental health services and sub20 stance abuse treatment service delivery pro21 grams in the plan service area (or is in the 

22 process of developing or operating a system 

23 with appropriate public agencies in the area to 

24 coordinate the delivery of such services to indi25 viduals in the area). 

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1 (B) The system provides for the participa2 tion and coordination of multiple agencies and 

3 providers that serve the needs of children in the 

4 area, including agencies and providers involved 

5 with child welfare, education, juvenile justice, 

6 criminal justice, health care, mental health, and 

7 substance abuse prevention and treatment. 

8 (C) The system provides for the involve9 ment of the families of children to whom mental 

10 health services and substance abuse treatment 

11 services are provided in the planning of treat12 ment and the delivery of services. 

13 (D) The system provides for the develop14 ment and implementation of individualized 

15 treatment plans by multidisciplinary and multi16 agency teams, which are recognized and fol17 lowed by the applicable agencies and providers 

18 in the area. 

19 (E) The system ensures the delivery and 

20 coordination of the range of mental health serv21 ices and substance abuse treatment services re22 quired by individuals under 22 years of age who 

23 have a serious emotional disturbance or a sub24 stance abuse disorder. 

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1 (F) The system provides for the manage2 ment of the individualized treatment plans de3 scribed in subparagraph (D) and for a flexible 

4 response to changes in treatment needs over 

5 time. 

6 (c) TREATMENT OF EXPERIMENTAL SERVICES.—In 

7 applying subsection (a), the Board shall make national 

8 coverage determinations with respect to those services that 

9 are experimental in nature. Such determinations shall be 

10 made consistent with a process that provides for input 

11 from representatives of health care professionals and pa12 tients and public comment. 

13 (d) APPLICATION OF PRACTICE GUIDELINES.—In 

14 the case of services for which the American Health Secu15 rity Quality Council (established under section 501) has 

16 recognized a national practice guideline, the services are 

17 considered to meet the standards specified in section 

18 201(a) if they have been provided in accordance with such 

19 guideline or in accordance with such guidelines as are pro20 vided by the State health security program consistent with 

21 title V. For purposes of this subsection, a service shall 

22 be considered to have been provided in accordance with 

23 a practice guideline if the health care provider providing 

24 the service exercised appropriate professional discretion to 

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1 deviate from the guideline in a manner authorized or an2 ticipated by the guideline. 

3 (e) SPECIFIC LIMITATIONS.— 

4 (1) LIMITATIONS ON EYEGLASSES, CONTACT

5 LENSES, HEARING AIDS, AND DURABLE MEDICAL

6 EQUIPMENT.—Subject to section 201(e), the Board 

7 may impose such limits relating to the costs and fre8 quency of replacement of eyeglasses, contact lenses, 

9 hearing aids, and durable medical equipment to 

10 which individuals enrolled for benefits under this Act 

11 are entitled to have payment made under a State 

12 health security program as the Board deems appro13 priate. 

14 (2) OVERLAP WITH PREVENTIVE SERVICES.— 

15 The coverage of services described in section 201(a) 

16 (other than paragraph (3)) which also are preventive 

17 services are required to be covered only to the extent 

18 that they are required to be covered as preventive 

19 services. 

20 (3) MISCELLANEOUS EXCLUSIONS FROM COV21 ERED SERVICES.—Covered services under this Act 

22 do not include the following: 

23 (A) Surgery and other procedures (such as 

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1 poses (as defined in regulations) and hospital or 

2 other services incident thereto, unless— 

3 (i) required to correct a congenital 

4 anomaly; 

5 (ii) required to restore or correct a 

6 part of the body which has been altered as 

7 a result of accidental injury, disease, or 

8 surgery; or 

9 (iii) otherwise determined to be medi10 cally necessary and appropriate under sec11 tion 201(a). 

12 (B) Personal comfort items or private 

13 rooms in inpatient facilities, unless determined 

14 to be medically necessary and appropriate 

15 under section 201(a). 

16 (C) The services of a professional practi17 tioner if they are furnished in a hospital or 

18 other facility which is not a participating pro19 vider. 

20 (f) NURSING FACILITY SERVICES AND HOME

21 HEALTH SERVICES.—Nursing facility services and home 

22 health services (other than post-hospital services, as de23 fined by the Board) furnished to an individual who is not 

24 described in section 203(a) are not covered services unless 

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1 fied in section 201(a) and, with respect to nursing facility 

2 services, to be provided in the least restrictive and most 

3 appropriate setting. 

4 SEC. 205. CERTIFICATION; QUALITY REVIEW; PLANS OF 

5 CARE. 

6 (a) CERTIFICATIONS.—State health security pro7 grams may require, as a condition of payment for institu8 tional health care services and other services of the type 

9 described in such sections 1814(a) and 1835(a) of the So10 cial Security Act, periodic professional certifications of the 

11 kind described in such sections. 

12 (b) QUALITY REVIEW.—For requirement that each 

13 State health security program establish a quality review 

14 program that meets the requirements for such a program 

15 under title V, see section 404(b)(1)(H). 

16 (c) PLAN OF CARE REQUIREMENTS.—A State health 

17 security program may require, consistent with standards 

18 established by the Board, that payment for services ex19 ceeding specified levels or duration be provided only as 

20 consistent with a plan of care or treatment formulated by 

21 one or more providers of the services or other qualified 

22 professionals. Such a plan may include, consistent with 

23 subsection (b), case management at specified intervals as 

24 a further condition of payment for services. 

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1 TITLE III—PROVIDER 

2 PARTICIPATION 

3 SEC. 301. PROVIDER PARTICIPATION AND STANDARDS. 

4 (a) IN GENERAL.—An individual or other entity fur5 nishing any covered service under a State health security 

6 program under this Act is not a qualified provider unless 

7 the individual or entity— 

8 (1) is a qualified provider of the services under 

9 section 302; 

10 (2) has filed with the State health security pro11 gram a participation agreement described in sub12 section (b); and 

13 (3) meets such other qualifications and condi14 tions as are established by the Board or the State 

15 health security program under this Act. 

16 (b) REQUIREMENTS IN PARTICIPATION AGREE17 MENT.— 

18 (1) IN GENERAL.—A participation agreement 

19 described in this subsection between a State health 

20 security program and a provider shall provide at 

21 least for the following: 

22 (A) Services to eligible persons will be fur23 nished by the provider without discrimination 

24 on the ground of race, national origin, income, 

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1 ability, handicapping condition, or (subject to 

2 the professional qualifications of the provider) 

3 illness. Nothing in this subparagraph shall be 

4 construed as requiring the provision of a type 

5 or class of services which services are outside 

6 the scope of the provider’s normal practice. 

7 (B) No charge will be made for any cov8 ered services other than for payment authorized 

9 by this Act. 

10 (C) The provider agrees to furnish such in11 formation as may be reasonably required by the 

12 Board or a State health security program, in 

13 accordance with uniform reporting standards 

14 established under section 401(g)(1), for— 

15 (i) quality review by designated enti16 ties; 

17 (ii) the making of payments under 

18 this Act (including the examination of 

19 records as may be necessary for the 

20 verification of information on which pay21 ments are based); 

22 (iii) statistical or other studies re23 quired for the implementation of this Act; 

24 and 

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1 (iv) such other purposes as the Board 

2 or State may specify. 

3 (D) The provider agrees not to bill the pro4 gram for any services for which benefits are not 

5 available because of section 204(d). 

6 (E) In the case of a provider that is not 

7 an individual, the provider agrees not to employ 

8 or use for the provision of health services any 

9 individual or other provider who or which has 

10 had a participation agreement under this sub11 section terminated for cause. 

12 (F) In the case of a provider paid under a 

13 fee-for-service basis under section 612, the pro14 vider agrees to submit bills and any required 

15 supporting documentation relating to the provi16 sion of covered services within 30 days (or such 

17 shorter period as a State health security pro18 gram may require) after the date of providing 

19 such services. 

20 (2) TERMINATION OF PARTICIPATION AGREE21 MENTS.— 

22 (A) IN GENERAL.—Participation agree23 ments may be terminated, with appropriate no24 tice— 

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1 (i) by the Board or a State health se2 curity program for failure to meet the re3 quirements of this title; or 

4 (ii) by a provider. 

5 (B) TERMINATION PROCESS.—Providers 

6 shall be provided notice and a reasonable oppor7 tunity to correct deficiencies before the Board 

8 or a State health security program terminates 

9 an agreement unless a more immediate termi10 nation is required for public safety or similar 

11 reasons. 

12 SEC. 302. QUALIFICATIONS FOR PROVIDERS. 

13 (a) IN GENERAL.—A health care provider is consid14 ered to be qualified to provide covered services if the pro15 vider is licensed or certified and meets— 

16 (1) all the requirements of State law to provide 

17 such services; 

18 (2) applicable requirements of Federal law to 

19 provide such services; and 

20 (3) any applicable standards established under 

21 subsection (b). 

22 (b) MINIMUM PROVIDER STANDARDS.— 

23 (1) IN GENERAL.—The Board shall establish, 

24 evaluate, and update national minimum standards to 

25 assure the quality of services provided under this 

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1 Act and to monitor efforts by State health security 

2 programs to assure the quality of such services. A 

3 State health security program may also establish ad4 ditional minimum standards which providers must 

5 meet. 

6 (2) NATIONAL MINIMUM STANDARDS.—The na7 tional minimum standards under paragraph (1) shall 

8 be established for institutional providers of services, 

9 individual health care practitioners, and comprehen10 sive health service organizations. Except as the 

11 Board may specify in order to carry out this title, 

12 a hospital, nursing facility, or other institutional 

13 provider of services shall meet standards for such a 

14 facility under the medicare program under title 

15 XVIII of the Social Security Act. Such standards 

16 also may include, where appropriate, elements relat17 ing to— 

18 (A) adequacy and quality of facilities; 

19 (B) training and competence of personnel 

20 (including continuing education requirements); 

21 (C) comprehensiveness of service; 

22 (D) continuity of service; 

23 (E) patient satisfaction (including waiting 

24 time and access to services); and 

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1 (F) performance standards (including or2 ganization, facilities, structure of services, effi3 ciency of operation, and outcome in palliation, 

4 improvement of health, stabilization, cure, or 

5 rehabilitation). 

6 (3) TRANSITION IN APPLICATION.—If the 

7 Board provides for additional requirements for pro8 viders under this subsection, any such additional re9 quirement shall be implemented in a manner that 

10 provides for a reasonable period during which a pre11 viously qualified provider is permitted to meet such 

12 an additional requirement. 

13 (4) EXCHANGE OF INFORMATION.—The Board 

14 shall provide for an exchange, at least annually, 

15 among State health security programs of informa16 tion with respect to quality assurance and cost con17 tainment. 

18 SEC. 303. QUALIFICATIONS FOR COMPREHENSIVE HEALTH 

19 SERVICE ORGANIZATIONS. 

20 (a) IN GENERAL.—For purposes of this Act, a com21 prehensive health service organization (in this section re22 ferred to as a ‘‘CHSO’’) is a public or private organization 

23 which, in return for a capitated payment amount, under24 takes to furnish, arrange for the provision of, or provide 

25 payment with respect to— 

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1 (1) a full range of health services (as identified 

2 by the Board), including at least hospital services 

3 and physicians services; and 

4 (2) out-of-area coverage in the case of urgently 

5 needed services; 

6 to an identified population which is living in or near a 

7 specified service area and which enrolls voluntarily in the 

8 organization. 

9 (b) ENROLLMENT.— 

10 (1) IN GENERAL.—All eligible persons living in 

11 or near the specified service area of a CHSO are eli12 gible to enroll in the organization; except that the 

13 number of enrollees may be limited to avoid over14 taxing the resources of the organization. 

15 (2) MINIMUM ENROLLMENT PERIOD.—Subject 

16 to paragraph (3), the minimum period of enrollment 

17 with a CHSO shall be twelve months, unless the en18 rolled individual becomes ineligible to enroll with the 

19 organization. 

20 (3) WITHDRAWAL FOR CAUSE.—Each CHSO 

21 shall permit an enrolled individual to disenroll from 

22 the organization for cause at any time. 

23 (c) REQUIREMENTS FOR CHSOS.— 

24 (1) ACCESSIBLE SERVICES.—Each CHSO, to 

25 the maximum extent feasible, shall make all services 

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1 readily and promptly accessible to enrollees who live 

2 in the specified service area. 

3 (2) CONTINUITY OF CARE.—Each CHSO shall 

4 furnish services in such manner as to provide con5 tinuity of care and (when services are furnished by 

6 different providers) shall provide ready referral of 

7 patients to such services and at such times as may 

8 be medically appropriate. 

9 (3) BOARD OF DIRECTORS.—In the case of a 

10 CHSO that is a private organization— 

11 (A) CONSUMER REPRESENTATION.—At 

12 least one-third of the members of the CHSO’s 

13 board of directors must be consumer members 

14 with no direct or indirect, personal or family fi15 nancial relationship to the organization. 

16 (B) PROVIDER REPRESENTATION.—The 

17 CHSO’s board of directors must include at 

18 least one member who represents health care 

19 providers. 

20 (4) PATIENT GRIEVANCE PROGRAM.—Each 

21 CHSO must have in effect a patient grievance pro22 gram and must conduct regularly surveys of the sat23 isfaction of members with services provided by or 

24 through the organization. 

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1 (5) MEDICAL STANDARDS.—Each CHSO must 

2 provide that a committee or committees of health 

3 care practitioners associated with the organization 

4 will promulgate medical standards, oversee the pro5 fessional aspects of the delivery of care, perform the 

6 functions of a pharmacy and drug therapeutics com7 mittee, and monitor and review the quality of all 

8 health services (including drugs, education, and pre9 ventive services). 

10 (6) PREMIUMS.—Premiums or other charges by 

11 a CHSO for any services not paid for under this Act 

12 must be reasonable. 

13 (7) UTILIZATION AND BONUS INFORMATION.— 

14 Each CHSO must— 

15 (A) comply with the requirements of sec16 tion 1876(i)(8) of the Social Security Act (re17 lating to prohibiting physician incentive plans 

18 that provide specific inducements to reduce or 

19 limit medically necessary services); and 

20 (B) make available to its membership utili21 zation information and data regarding financial 

22 performance, including bonus or incentive pay23 ment arrangements to practitioners. 

24 (8) PROVISION OF SERVICES TO ENROLLEES AT

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1 ETS.—The organization shall arrange to reimburse 

2 for hospital services and other facility-based services 

3 (as identified by the Board) for services provided to 

4 members of the organization in accordance with the 

5 global operating budget of the hospital or facility ap6 proved under section 611. 

7 (9) BROAD MARKETING.—Each CHSO must 

8 provide for the marketing of its services (including 

9 dissemination of marketing materials) to potential 

10 enrollees in a manner that is designed to enroll indi11 viduals representative of the different population 

12 groups and geographic areas included within its 

13 service area and meets such requirements as the 

14 Board or a State health security program may speci15 fy. 

16 (10) ADDITIONAL REQUIREMENTS.—Each 

17 CHSO must meet— 

18 (A) such requirements relating to min19 imum enrollment; 

20 (B) such requirements relating to financial 

21 solvency; 

22 (C) such requirements relating to quality 

23 and availability of care; and 

24 (D) such other requirements, 

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1 as the Board or a State health security program 

2 may specify. 

3 (d) PROVISION OF EMERGENCY SERVICES TO NON4 ENROLLEES.—A CHSO may furnish emergency services 

5 to persons who are not enrolled in the organization. Pay6 ment for such services, if they are covered services to eligi7 ble persons, shall be made to the organization unless the 

8 organization requests that it be made to the individual 

9 provider who furnished the services. 

10 SEC. 304. LIMITATION ON CERTAIN PHYSICIAN REFERRALS. 

11 (a) APPLICATION TO AMERICAN HEALTH SECURITY

12 PROGRAM.—Section 1877 of the Social Security Act, as 

13 amended by subsections (b) and (c), shall apply under this 

14 Act in the same manner as it applies under title XVIII 

15 of the Social Security Act; except that in applying such 

16 section under this Act any references in such section to 

17 the Secretary or title XVIII of the Social Security Act are 

18 deemed references to the Board and the American Health 

19 Security Program under this Act, respectively. 

20 (b) EXPANSION OF PROHIBITION TO CERTAIN ADDI21 TIONAL DESIGNATED SERVICES.—Section 1877(h)(6) of 

22 the Social Security Act (42 U.S.C. 1395nn(h)(6)) is 

23 amended by adding at the end the following: 

24 ‘‘(M) Ambulance services. 

25 ‘‘(N) Home infusion therapy services.’’. 

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1 (c) CONFORMING AMENDMENTS.—Section 1877 of 

2 such Act is further amended— 

3 (1) in subsection (a)(1)(A), by striking ‘‘for 

4 which payment otherwise may be made under this 

5 title’’ and inserting ‘‘for which a charge is imposed’’; 

6 (2) in subsection (a)(1)(B), by striking ‘‘under 

7 this title’’; 

8 (3) by amending paragraph (1) of subsection 

9 (g) to read as follows: 

10 ‘‘(1) DENIAL OF PAYMENT.—No payment may 

11 be made under a State health security program for 

12 a designated health service for which a claim is pre13 sented in violation of subsection (a)(1)(B). No indi14 vidual, third party payor, or other entity is liable for 

15 payment for designated health services for which a 

16 claim is presented in violation of such subsection.’’; 

17 and 

18 (4) in subsection (g)(3), by striking ‘‘for which 

19 payment may not be made under paragraph (1)’’ 

20 and inserting ‘‘for which such a claim may not be 

21 presented under subsection (a)(1)’’. 

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1 TITLE IV—ADMINISTRATION 

2 Subtitle A—General Administrative 

3 Provisions 

4 SEC. 401. AMERICAN HEALTH SECURITY STANDARDS 

5 BOARD. 

6 (a) ESTABLISHMENT.—There is hereby established 

7 an American Health Security Standards Board. 

8 (b) APPOINTMENT AND TERMS OF MEMBERS.— 

9 (1) IN GENERAL.—The Board shall be com10 posed of— 

11 (A) the Secretary of Health and Human 

12 Services; and 

13 (B) 6 other individuals (described in para14 graph (2)) appointed by the President with the 

15 advice and consent of the Senate. 

16 The President shall first nominate individuals under 

17 subparagraph (B) on a timely basis so as to provide 

18 for the operation of the Board by not later than 

19 January 1, 2010. 

20 (2) SELECTION OF APPOINTED MEMBERS.— 

21 With respect to the individuals appointed under 

22 paragraph (1)(B): 

23 (A) They shall be chosen on the basis of 

24 backgrounds in health policy, health economics, 

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1 the healing professions, and the administration 

2 of health care institutions. 

3 (B) They shall provide a balanced point of 

4 view with respect to the various health care in5 terests and at least 2 of them shall represent 

6 the interests of individual consumers. 

7 (C) Not more than 3 of them shall be from 

8 the same political party. 

9 (D) To the greatest extent feasible, they 

10 shall represent the various geographic regions 

11 of the United States and shall reflect the racial, 

12 ethnic, and gender composition of the popu13 lation of the United States. 

14 (3) TERMS OF APPOINTED MEMBERS.—Individ15 uals appointed under paragraph (1)(B) shall serve 

16 for a term of 6 years, except that the terms of 5 of 

17 the individuals initially appointed shall be, as des18 ignated by the President at the time of their ap19 pointment, for 1, 2, 3, 4, and 5 years. During a 

20 term of membership on the Board, no member shall 

21 engage in any other business, vocation or employ22 ment. 

23 (c) VACANCIES.— 

24 (1) IN GENERAL.—The President shall fill any 

25 vacancy in the membership of the Board in the same 

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1 manner as the original appointment. The vacancy 

2 shall not affect the power of the remaining members 

3 to execute the duties of the Board. 

4 (2) VACANCY APPOINTMENTS.—Any member 

5 appointed to fill a vacancy shall serve for the re6 mainder of the term for which the predecessor of the 

7 member was appointed. 

8 (3) REAPPOINTMENT.—The President may re9 appoint an appointed member of the Board for a 

10 second term in the same manner as the original ap11 pointment. A member who has served for 2 consecu12 tive 6-year terms shall not be eligible for reappoint13 ment until 2 years after the member has ceased to 

14 serve. 

15 (4) REMOVAL FOR CAUSE.—Upon confirmation, 

16 members of the Board may not be removed except 

17 by the President for cause. 

18 (d) CHAIR.—The President shall designate 1 of the 

19 members of the Board, other than the Secretary, to serve 

20 at the will of the President as Chair of the Board. 

21 (e) COMPENSATION.—Members of the Board (other 

22 than the Secretary) shall be entitled to compensation at 

23 a level equivalent to level II of the Executive Schedule, 

24 in accordance with section 5313 of title 5, United States 

25 Code. 

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1 (f) GENERAL DUTIES OF THE BOARD.— 

2 (1) IN GENERAL.—The Board shall develop 

3 policies, procedures, guidelines, and requirements to 

4 carry out this Act, including those related to— 

5 (A) eligibility; 

6 (B) enrollment; 

7 (C) benefits; 

8 (D) provider participation standards and 

9 qualifications, as defined in title III; 

10 (E) national and State funding levels; 

11 (F) methods for determining amounts of 

12 payments to providers of covered services, con13 sistent with subtitle B of title VI; 

14 (G) the determination of medical necessity 

15 and appropriateness with respect to coverage of 

16 certain services; 

17 (H) assisting State health security pro18 grams with planning for capital expenditures 

19 and service delivery; 

20 (I) planning for health professional edu21 cation funding (as specified in title VI); 

22 (J) allocating funds provided under title 

23 VII; and 

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1 (K) encouraging States to develop regional 

2 planning mechanisms (described in section 

3 404(a)(3)). 

4 (2) REGULATIONS.—Regulations authorized by 

5 this Act shall be issued by the Board in accordance 

6 with the provisions of section 553 of title 5, United 

7 States Code. 

8 (g) UNIFORM REPORTING STANDARDS; ANNUAL RE9 PORT; STUDIES.— 

10 (1) UNIFORM REPORTING STANDARDS.— 

11 (A) IN GENERAL.—The Board shall estab12 lish uniform reporting requirements and stand13 ards to ensure an adequate national data base 

14 regarding health services practitioners, services 

15 and finances of State health security programs, 

16 approved plans, providers, and the costs of fa17 cilities and practitioners providing services. 

18 Such standards shall include, to the maximum 

19 extent feasible, health outcome measures. 

20 (B) REPORTS.—The Board shall analyze 

21 regularly information reported to it, and to 

22 State health security programs pursuant to 

23 such requirements and standards. 

24 (2) ANNUAL REPORT.—Beginning January 1, 

25 of the second year beginning after the date of the 

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1 enactment of this Act, the Board shall annually re2 port to Congress on the following: 

3 (A) The status of implementation of the 

4 Act. 

5 (B) Enrollment under this Act. 

6 (C) Benefits under this Act. 

7 (D) Expenditures and financing under this 

8 Act. 

9 (E) Cost-containment measures and 

10 achievements under this Act. 

11 (F) Quality assurance. 

12 (G) Health care utilization patterns, in13 cluding any changes attributable to the pro14 gram. 

15 (H) Long-range plans and goals for the de16 livery of health services. 

17 (I) Differences in the health status of the 

18 populations of the different States, including in19 come and racial characteristics. 

20 (J) Necessary changes in the education of 

21 health personnel. 

22 (K) Plans for improving service to medi23 cally underserved populations. 

24 (L) Transition problems as a result of im25 plementation of this Act. 

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1 (M) Opportunities for improvements under 

2 this Act. 

3 (3) STATISTICAL ANALYSES AND OTHER STUD4 IES.—The Board may, either directly or by con5 tract— 

6 (A) make statistical and other studies, on 

7 a nationwide, regional, state, or local basis, of 

8 any aspect of the operation of this Act, includ9 ing studies of the effect of the Act upon the 

10 health of the people of the United States and 

11 the effect of comprehensive health services upon 

12 the health of persons receiving such services; 

13 (B) develop and test methods of providing 

14 through payment for services or otherwise, ad15 ditional incentives for adherence by providers to 

16 standards of adequacy, access, and quality; 

17 methods of consumer and peer review and peer 

18 control of the utilization of drugs, of laboratory 

19 services, and of other services; and methods of 

20 consumer and peer review of the quality of serv21 ices; 

22 (C) develop and test, for use by the Board, 

23 records and information retrieval systems and 

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1 tion, and develop and test model systems for 

2 use by providers of services; 

3 (D) develop and test, for use by providers 

4 of services, records and information retrieval 

5 systems useful in the furnishing of preventive 

6 or diagnostic services; 

7 (E) develop, in collaboration with the phar8 maceutical profession, and test, improved ad9 ministrative practices or improved methods for 

10 the reimbursement of independent pharmacies 

11 for the cost of furnishing drugs as a covered 

12 service; and 

13 (F) make such other studies as it may con14 sider necessary or promising for the evaluation, 

15 or for the improvement, of the operation of this 

16 Act. 

17 (4) REPORT ON USE OF EXISTING FEDERAL

18 HEALTH CARE FACILITIES.—Not later than 1 year 

19 after the date of the enactment of this Act, the 

20 Board shall recommend to the Congress one or more 

21 proposals for the treatment of health care facilities 

22 of the Federal Government. 

23 (h) EXECUTIVE DIRECTOR.— 

24 (1) APPOINTMENT.—There is hereby estab25 lished the position of Executive Director of the 

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1 Board. The Director shall be appointed by the 

2 Board and shall serve as secretary to the Board and 

3 perform such duties in the administration of this 

4 title as the Board may assign. 

5 (2) DELEGATION.—The Board is authorized to 

6 delegate to the Director or to any other officer or 

7 employee of the Board or, with the approval of the 

8 Secretary of Health and Human Services (and sub9 ject to reimbursement of identifiable costs), to any 

10 other officer or employee of the Department of 

11 Health and Human Services, any of its functions or 

12 duties under this Act other than— 

13 (A) the issuance of regulations; or 

14 (B) the determination of the availability of 

15 funds and their allocation to implement this 

16 Act. 

17 (3) COMPENSATION.—The Executive Director 

18 of the Board shall be entitled to compensation at a 

19 level equivalent to level III of the Executive Sched20 ule, in accordance with section 5314 of title 5, 

21 United States Code. 

22 (i) INSPECTOR GENERAL.—The Inspector General 

23 Act of 1978 (5 U.S.C. App.) is amended— 

24 (1) in section 12(1), by inserting after ‘‘Cor25 poration;’’ the first place it appears the following: 

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1 ‘‘the Chair of the American Health Security Stand2 ards Board;’’; 

3 (2) in section 12(2), by inserting after ‘‘Resolu4 tion Trust Corporation,’’ the following: ‘‘the Amer5 ican Health Security Standards Board,’’; and 

6 (3) by inserting before section 9 the following: 

7 ‘‘SPECIAL PROVISIONS CONCERNING AMERICAN HEALTH

8 SECURITY STANDARDS BOARD

9 ‘‘SEC. 8M. The Inspector General of the American 

10 Health Security Standards Board, in addition to the other 

11 authorities vested by this Act, shall have the same author12 ity, with respect to the Board and the American Health 

13 Security Program under this Act, as the Inspector General 

14 for the Department of Health and Human Services has 

15 with respect to the Secretary of Health and Human Serv16 ices and the medicare and medicaid programs, respec17 tively.’’. 

18 (j) STAFF.—The Board shall employ such staff as the 

19 Board may deem necessary. 

20 (k) ACCESS TO INFORMATION.—The Secretary of 

21 Health and Human Services shall make available to the 

22 Board all information available from sources within the 

23 Department or from other sources, pertaining to the du24 ties of the Board. 

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1 SEC. 402. AMERICAN HEALTH SECURITY ADVISORY COUN2 CIL. 

3 (a) IN GENERAL.—The Board shall provide for an 

4 American Health Security Advisory Council (in this sec5 tion referred to as the ‘‘Council’’) to advise the Board on 

6 its activities. 

7 (b) MEMBERSHIP.—The Council shall be composed 

8 of— 

9 (1) the Chair of the Board, who shall serve as 

10 Chair of the Council; and 

11 (2) twenty members, not otherwise in the em12 ploy of the United States, appointed by the Board 

13 without regard to the provisions of title 5, United 

14 States Code, governing appointments in the competi15 tive service. 

16 The appointed members shall include, in accordance with 

17 subsection (e), individuals who are representative of State 

18 health security programs, public health professionals, pro19 viders of health services, and of individuals (who shall con20 stitute a majority of the Council) who are representative 

21 of consumers of such services, including a balanced rep22 resentation of employers, unions, consumer organizations, 

23 and population groups with special health care needs. To 

24 the greatest extent feasible, the membership of the Council 

25 shall represent the various geographic regions of the 

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1 United States and shall reflect the racial, ethnic, and gen2 der composition of the population of the United States. 

3 (c) TERMS OF MEMBERS.—Each appointed member 

4 shall hold office for a term of 4 years, except that— 

5 (1) any member appointed to fill a vacancy oc6 curring during the term for which the member’s 

7 predecessor was appointed shall be appointed for the 

8 remainder of that term; and 

9 (2) the terms of the members first taking office 

10 shall expire, as designated by the Board at the time 

11 of appointment, 5 at the end of the first year, 5 at 

12 the end of the second year, 5 at the end of the third 

13 year, and 5 at the end of the fourth year after the 

14 date of enactment of this Act. 

15 (d) VACANCIES.— 

16 (1) IN GENERAL.—The Board shall fill any va17 cancy in the membership of the Council in the same 

18 manner as the original appointment. The vacancy 

19 shall not affect the power of the remaining members 

20 to execute the duties of the Council. 

21 (2) VACANCY APPOINTMENTS.—Any member 

22 appointed to fill a vacancy shall serve for the re23 mainder of the term for which the predecessor of the 

24 member was appointed. 

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1 (3) REAPPOINTMENT.—The Board may re2 appoint an appointed member of the Council for a 

3 second term in the same manner as the original ap4 pointment. 

5 (e) QUALIFICATIONS.— 

6 (1) PUBLIC HEALTH REPRESENTATIVES.— 

7 Members of the Council who are representative of 

8 State health security programs and public health 

9 professionals shall be individuals who have extensive 

10 experience in the financing and delivery of care 

11 under public health programs. 

12 (2) PROVIDERS.—Members of the Council who 

13 are representative of providers of health care shall 

14 be individuals who are outstanding in fields related 

15 to medical, hospital, or other health activities, or 

16 who are representative of organizations or associa17 tions of professional health practitioners. 

18 (3) CONSUMERS.—Members who are represent19 ative of consumers of such care shall be individuals, 

20 not engaged in and having no financial interest in 

21 the furnishing of health services, who are familiar 

22 with the needs of various segments of the population 

23 for personal health services and are experienced in 

24 dealing with problems associated with the consump25 tion of such services. 

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1 (f) DUTIES.— 

2 (1) IN GENERAL.—It shall be the duty of the 

3 Council— 

4 (A) to advise the Board on matters of gen5 eral policy in the administration of this Act, in 

6 the formulation of regulations, and in the per7 formance of the Board’s duties under section 

8 401; and 

9 (B) to study the operation of this Act and 

10 the utilization of health services under it, with 

11 a view to recommending any changes in the ad12 ministration of the Act or in its provisions 

13 which may appear desirable. 

14 (2) REPORT.—The Council shall make an an15 nual report to the Board on the performance of its 

16 functions, including any recommendations it may 

17 have with respect thereto, and the Board shall 

18 promptly transmit the report to the Congress, to19 gether with a report by the Board on any rec20 ommendations of the Council that have not been fol21 lowed. 

22 (g) STAFF.—The Council, its members, and any com23 mittees of the Council shall be provided with such secre24 tarial, clerical, or other assistance as may be authorized 

25 by the Board for carrying out their respective functions. 

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1 (h) MEETINGS.—The Council shall meet as fre2 quently as the Board deems necessary, but not less than 

3 4 times each year. Upon request by 7 or more members 

4 it shall be the duty of the Chair to call a meeting of the 

5 Council. 

6 (i) COMPENSATION.—Members of the Council shall 

7 be reimbursed by the Board for travel and per diem in 

8 lieu of subsistence expenses during the performance of du9 ties of the Board in accordance with subchapter I of chap10 ter 57 of title 5, United States Code. 

11 (j) FACA NOT APPLICABLE.—The provisions of the 

12 Federal Advisory Committee Act shall not apply to the 

13 Council. 

14 SEC. 403. CONSULTATION WITH PRIVATE ENTITIES. 

15 The Secretary and the Board shall consult with pri16 vate entities, such as professional societies, national asso17 ciations, nationally recognized associations of experts, 

18 medical schools and academic health centers, consumer 

19 groups, and labor and business organizations in the for20 mulation of guidelines, regulations, policy initiatives, and 

21 information gathering to assure the broadest and most in22 formed input in the administration of this Act. Nothing 

23 in this Act shall prevent the Secretary from adopting 

24 guidelines developed by such a private entity if, in the Sec25 retary’s and Board’s judgment, such guidelines are genmstockstill on PROD1PC66 with BILLS

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1 erally accepted as reasonable and prudent and consistent 

2 with this Act. 

3 SEC. 404. STATE HEALTH SECURITY PROGRAMS. 

4 (a) SUBMISSION OF PLANS.— 

5 (1) IN GENERAL.—Each State shall submit to 

6 the Board a plan for a State health security pro7 gram for providing for health care services to the 

8 residents of the State in accordance with this Act. 

9 (2) REGIONAL PROGRAMS.—A State may join 

10 with 1 or more neighboring States to submit to the 

11 Board a plan for a regional health security program 

12 instead of separate State health security programs. 

13 (3) REGIONAL PLANNING MECHANISMS.—The 

14 Board shall provide incentives for States to develop 

15 regional planning mechanisms to promote the ration16 al distribution of, adequate access to, and efficient 

17 use of, tertiary care facilities, equipment, and serv18 ices. 

19 (b) REVIEW AND APPROVAL OF PLANS.— 

20 (1) IN GENERAL.—The Board shall review 

21 plans submitted under subsection (a) and determine 

22 whether such plans meet the requirements for ap23 proval. The Board shall not approve such a plan un24 less it finds that the plan (or State law) provides, 

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1 consistent with the provisions of this Act, for the fol2 lowing: 

3 (A) Payment for required health services 

4 for eligible individuals in the State in accord5 ance with this Act. 

6 (B) Adequate administration, including the 

7 designation of a single State agency responsible 

8 for the administration (or supervision of the ad9 ministration) of the program. 

10 (C) The establishment of a State health se11 curity budget. 

12 (D) Establishment of payment methodolo13 gies (consistent with subtitle B of title VII). 

14 (E) Assurances that individuals have the 

15 freedom to choose practitioners and other 

16 health care providers for services covered under 

17 this Act. 

18 (F) A procedure for carrying out long-term 

19 regional management and planning functions 

20 with respect to the delivery and distribution of 

21 health care services that— 

22 (i) ensures participation of consumers 

23 of health services and providers of health 

24 services; and 

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1 (ii) gives priority to the most acute 

2 shortages and maldistributions of health 

3 personnel and facilities and the most seri4 ous deficiencies in the delivery of covered 

5 services and to the means for the speedy 

6 alleviation of these shortcomings. 

7 (G) The licensure and regulation of all 

8 health providers and facilities to ensure compli9 ance with Federal and State laws and to pro10 mote quality of care. 

11 (H) Establishment of a quality review sys12 tem in accordance with section 503. 

13 (I) Establishment of an independent om14 budsman for consumers to register complaints 

15 about the organization and administration of 

16 the State health security program and to help 

17 resolve complaints and disputes between con18 sumers and providers. 

19 (J) Publication of an annual report on the 

20 operation of the State health security program, 

21 which report shall include information on cost, 

22 progress towards achieving full enrollment, pub23 lic access to health services, quality review, 

24 health outcomes, health professional training, 

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1 and the needs of medically underserved popu2 lations. 

3 (K) Provision of a fraud and abuse preven4 tion and control unit that the Inspector General 

5 determines meets the requirements of section 

6 412(a). 

7 (L) Prohibit payment in cases of prohib8 ited physician referrals under section 304. 

9 (2) CONSEQUENCES OF FAILURE TO COMPLY.— 

10 If the Board finds that a State plan submitted 

11 under paragraph (1) does not meet the requirements 

12 for approval under this section or that a State 

13 health security program or specific portion of such 

14 program, the plan for which was previously ap15 proved, no longer meets such requirements, the 

16 Board shall provide notice to the State of such fail17 ure and that unless corrective action is taken within 

18 a period specified by the Board, the Board shall 

19 place the State health security program (or specific 

20 portions of such program) in receivership under the 

21 jurisdiction of the Board. 

22 (c) STATE HEALTH SECURITY ADVISORY COUN23 CILS.— 

24 (1) IN GENERAL.—For each State, the Gov25 ernor shall provide for appointment of a State 

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1 Health Security Advisory Council to advise and 

2 make recommendations to the Governor and State 

3 with respect to the implementation of the State 

4 health security program in the State. 

5 (2) MEMBERSHIP.—Each State Health Security 

6 Advisory Council shall be composed of at least 11 in7 dividuals. The appointed members shall include indi8 viduals who are representative of the State health 

9 security program, public health professionals, pro10 viders of health services, and of individuals (who 

11 shall constitute a majority) who are representative of 

12 consumers of such services, including a balanced 

13 representation of employers, unions and consumer 

14 organizations. To the greatest extent feasible, the 

15 membership of each State Health Security Advisory 

16 Council shall represent the various geographic re17 gions of the State and shall reflect the racial, ethnic, 

18 and gender composition of the population of the 

19 State. 

20 (3) DUTIES.— 

21 (A) IN GENERAL.—Each State Health Se22 curity Advisory Council shall review, and sub23 mit comments to the Governor concerning the 

24 implementation of the State health security pro25 gram in the State. 

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1 (B) ASSISTANCE.—Each State Health Se2 curity Advisory Council shall provide assistance 

3 and technical support to community organiza4 tions and public and private non-profit agencies 

5 submitting applications for funding under ap6 propriate State and Federal public health pro7 grams, with particular emphasis placed on as8 sisting those applicants with broad consumer 

9 representation. 

10 (d) STATE USE OF FISCAL AGENTS.— 

11 (1) IN GENERAL.—Each State health security 

12 program, using competitive bidding procedures, may 

13 enter into such contracts with qualified entities, such 

14 as voluntary associations, as the State determines to 

15 be appropriate to process claims and to perform 

16 other related functions of fiscal agents under the 

17 State health security program. 

18 (2) RESTRICTION.—Except as the Board may 

19 provide for good cause shown, in no case may more 

20 than 1 contract described in paragraph (1) be en21 tered into under a State health security program. 

22 SEC. 405. COMPLEMENTARY CONDUCT OF RELATED 

23 HEALTH PROGRAMS. 

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1 mental health, disability insurance, vocational rehabilita2 tion, the regulation of food and drugs, and all other mat3 ters pertaining to health, the Secretary of Health and 

4 Human Services shall direct all activities of the Depart5 ment of Health and Human Services toward contributions 

6 to the health of the people complementary to this Act. 

7 Subtitle B—Control Over Fraud 

8 and Abuse 

9 SEC. 411. APPLICATION OF FEDERAL SANCTIONS TO ALL 

10 FRAUD AND ABUSE UNDER AMERICAN 

11 HEALTH SECURITY PROGRAM. 

12 The following sections of the Social Security Act shall 

13 apply to State health security programs in the same man14 ner as they apply to State medical assistance plans under 

15 title XIX of such Act (except that in applying such provi16 sions any reference to the Secretary is deemed a reference 

17 to the Board): 

18 (1) Section 1128 (relating to exclusion of indi19 viduals and entities). 

20 (2) Section 1128A (civil monetary penalties). 

21 (3) Section 1128B (criminal penalties). 

22 (4) Section 1124 (relating to disclosure of own23 ership and related information). 

24 (5) Section 1126 (relating to disclosure of cer25 tain owners). 

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1 SEC. 412. REQUIREMENTS FOR OPERATION OF STATE 

2 HEALTH CARE FRAUD AND ABUSE CONTROL 

3 UNITS. 

4 (a) REQUIREMENT.—In order to meet the require5 ment of section 404(b)(1)(K), each State health security 

6 program must establish and maintain a health care fraud 

7 and abuse control unit (in this section referred to as a 

8 ‘‘fraud unit’’) that meets requirements of this section and 

9 other requirements of the Board. Such a unit may be a 

10 State medicaid fraud control unit (described in section 

11 1903(q) of the Social Security Act). 

12 (b) STRUCTURE OF UNIT.—The fraud unit must— 

13 (1) be a single identifiable entity of the State 

14 government; 

15 (2) be separate and distinct from the State 

16 agency with principal responsibility for the adminis17 tration of the State health security program; and 

18 (3) meet 1 of the following requirements: 

19 (A) It must be a unit of the office of the 

20 State Attorney General or of another depart21 ment of State government which possesses 

22 statewide authority to prosecute individuals for 

23 criminal violations. 

24 (B) If it is in a State the constitution of 

25 which does not provide for the criminal prosecu26 tion of individuals by a statewide authority and 

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1 has formal procedures, approved by the Board, 

2 that— 

3 (i) assure its referral of suspected 

4 criminal violations relating to the State 

5 health insurance plan to the appropriate 

6 authority or authorities in the States for 

7 prosecution; and 

8 (ii) assure its assistance of, and co9 ordination with, such authority or authori10 ties in such prosecutions. 

11 (C) It must have a formal working rela12 tionship with the office of the State Attorney 

13 General and have formal procedures (including 

14 procedures for its referral of suspected criminal 

15 violations to such office) which are approved by 

16 the Board and which provide effective coordina17 tion of activities between the fraud unit and 

18 such office with respect to the detection, inves19 tigation, and prosecution of suspected criminal 

20 violations relating to the State health insurance 

21 plan. 

22 (c) FUNCTIONS.—The fraud unit must— 

23 (1) have the function of conducting a statewide 

24 program for the investigation and prosecution of vio25 lations of all applicable State laws regarding any 

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1 and all aspects of fraud in connection with any as2 pect of the provision of health care services and ac3 tivities of providers of such services under the State 

4 health security program; 

5 (2) have procedures for reviewing complaints of 

6 the abuse and neglect of patients of providers and 

7 facilities that receive payments under the State 

8 health security program, and, where appropriate, for 

9 acting upon such complaints under the criminal laws 

10 of the State or for referring them to other State 

11 agencies for action; and 

12 (3) provide for the collection, or referral for col13 lection to a single State agency, of overpayments 

14 that are made under the State health security pro15 gram to providers and that are discovered by the 

16 fraud unit in carrying out its activities. 

17 (d) RESOURCES.—The fraud unit must— 

18 (1) employ such auditors, attorneys, investiga19 tors, and other necessary personnel; 

20 (2) be organized in such a manner; and 

21 (3) provide sufficient resources (as specified by 

22 the Board), 

23 as is necessary to promote the effective and efficient con24 duct of the unit’s activities. 

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1 (e) COOPERATIVE AGREEMENTS.—The fraud unit 

2 must have cooperative agreements (as specified by the 

3 Board) with— 

4 (1) similar fraud units in other States; 

5 (2) the Inspector General; and 

6 (3) the Attorney General of the United States. 

7 (f) REPORTS.—The fraud unit must submit to the 

8 Inspector General an application and annual reports con9 taining such information as the Inspector General deter10 mines to be necessary to determine whether the unit meets 

11 the previous requirements of this section. 

12 TITLE V—QUALITY ASSESSMENT 

13 SEC. 501. AMERICAN HEALTH SECURITY QUALITY COUNCIL. 

14 (a) ESTABLISHMENT.—There is hereby established 

15 an American Health Security Quality Council (in this title 

16 referred to as the ‘‘Council’’). 

17 (b) DUTIES OF THE COUNCIL.—The Council shall 

18 perform the following duties: 

19 (1) PRACTICE GUIDELINES.—The Council shall 

20 review and evaluate each practice guideline devel21 oped under part B of title IX of the Public Health 

22 Service Act. The Council shall determine whether 

23 the guideline should be recognized as a national 

24 practice guideline to be used under section 204(d) 

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1 for purposes of determining payments under a State 

2 health security program. 

3 (2) STANDARDS OF QUALITY, PERFORMANCE

4 MEASURES, AND MEDICAL REVIEW CRITERIA.—The 

5 Council shall review and evaluate each standard of 

6 quality, performance measure, and medical review 

7 criterion developed under part B of title IX of the 

8 Public Health Service Act. The Council shall deter9 mine whether the standard, measure, or criterion is 

10 appropriate for use in assessing or reviewing the 

11 quality of services provided by State health security 

12 programs, health care institutions, or health care 

13 professionals. 

14 (3) CRITERIA FOR ENTITIES CONDUCTING

15 QUALITY REVIEWS.—The Council shall develop min16 imum criteria for competence for entities that can 

17 qualify to conduct ongoing and continuous external 

18 quality review for State quality review programs 

19 under section 503. Such criteria shall require such 

20 an entity to be administratively independent of the 

21 individual or board that administers the State health 

22 security program and shall ensure that such entities 

23 do not provide financial incentives to reviewers to 

24 favor one pattern of practice over another. The 

25 Council shall ensure coordination and reporting by 

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1 such entities to assure national consistency in qual2 ity standards. 

3 (4) REPORTING.—The Council shall report to 

4 the Board annually on the conduct of activities 

5 under such title and shall report to the Board annu6 ally specifically on findings from outcomes research 

7 and development of practice guidelines that may af8 fect the Board’s determination of coverage of serv9 ices under section 401(f)(1)(G). 

10 (5) OTHER FUNCTIONS.—The Council shall 

11 perform the functions of the Council described in 

12 section 502. 

13 (c) APPOINTMENT AND TERMS OF MEMBERS.— 

14 (1) IN GENERAL.—The Council shall be com15 posed of 10 members appointed by the President. 

16 The President shall first appoint individuals on a 

17 timely basis so as to provide for the operation of the 

18 Council by not later than January 1, 2010. 

19 (2) SELECTION OF MEMBERS.—Each member 

20 of the Council shall be a member of a health profes21 sion. Five members of the Council shall be physi22 cians. Individuals shall be appointed to the Council 

23 on the basis of national reputations for clinical and 

24 academic excellence. To the greatest extent feasible, 

25 the membership of the Council shall represent the 

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1 various geographic regions of the United States and 

2 shall reflect the racial, ethnic, and gender composi3 tion of the population of the United States. 

4 (3) TERMS OF MEMBERS.—Individuals ap5 pointed to the Council shall serve for a term of 5 

6 years, except that the terms of 4 of the individuals 

7 initially appointed shall be, as designated by the 

8 President at the time of their appointment, for 1, 2, 

9 3, and 4 years. 

10 (d) VACANCIES.— 

11 (1) IN GENERAL.—The President shall fill any 

12 vacancy in the membership of the Council in the 

13 same manner as the original appointment. The va14 cancy shall not affect the power of the remaining 

15 members to execute the duties of the Council. 

16 (2) VACANCY APPOINTMENTS.—Any member 

17 appointed to fill a vacancy shall serve for the re18 mainder of the term for which the predecessor of the 

19 member was appointed. 

20 (3) REAPPOINTMENT.—The President may re21 appoint a member of the Council for a second term 

22 in the same manner as the original appointment. A 

23 member who has served for 2 consecutive 5-year 

24 terms shall not be eligible for reappointment until 2 

25 years after the member has ceased to serve. 

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1 (e) CHAIR.—The President shall designate 1 of the 

2 members of the Council to serve at the will of the Presi3 dent as Chair of the Council. 

4 (f) COMPENSATION.—Members of the Council who 

5 are not employees of the Federal Government shall be en6 titled to compensation at a level equivalent to level II of 

7 the Executive Schedule, in accordance with section 5313 

8 of title 5, United States Code. 

9 SEC. 502. DEVELOPMENT OF CERTAIN METHODOLOGIES, 

10 GUIDELINES, AND STANDARDS. 

11 (a) PROFILING OF PATTERNS OF PRACTICE; IDENTI12 FICATION OF OUTLIERS.—The Council shall adopt meth13 odologies for profiling the patterns of practice of health 

14 care professionals and for identifying outliers (as defined 

15 in subsection (e)). 

16 (b) CENTERS OF EXCELLENCE.—The Council shall 

17 develop guidelines for certain medical procedures des18 ignated by the Board to be performed only at tertiary care 

19 centers which can meet standards for frequency of proce20 dure performance and intensity of support mechanisms 

21 that are consistent with the high probability of desired pa22 tient outcome. Reimbursement under this Act for such a 

23 designated procedure may only be provided if the proce24 dure was performed at a center that meets such stand25 ards. 

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1 (c) REMEDIAL ACTIONS.—The Council shall develop 

2 standards for education and sanctions with respect to 

3 outliers so as to assure the quality of health care services 

4 provided under this Act. The Council shall develop criteria 

5 for referral of providers to the State licensing board if edu6 cation proves ineffective in correcting provider practice be7 havior. 

8 (d) DISSEMINATION.—The Council shall disseminate 

9 to the State— 

10 (1) the methodologies adopted under subsection 

11 (a); 

12 (2) the guidelines developed under subsection 

13 (b); and 

14 (3) the standards developed under subsection 

15 (c); 

16 for use by the States under section 503. 

17 (e) OUTLIER DEFINED.—In this title, the term 

18 ‘‘outlier’’ means a health care provider whose pattern of 

19 practice, relative to applicable practice guidelines, suggests 

20 deficiencies in the quality of health care services being pro21 vided. 

22 SEC. 503. STATE QUALITY REVIEW PROGRAMS. 

23 (a) REQUIREMENT.—In order to meet the require24 ment of section 404(b)(1)(H), each State health security 

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1 duct quality reviews of persons providing covered services 

2 under the program, in accordance with standards estab3 lished under subsection (b)(1) (except as provided in sub4 section (b)(2)) and subsection (d). 

5 (b) FEDERAL STANDARDS.— 

6 (1) IN GENERAL.—The Council shall establish 

7 standards with respect to— 

8 (A) the adoption of practice guidelines 

9 (whether developed by the Federal Government 

10 or other entities); 

11 (B) the identification of outliers (con12 sistent with methodologies adopted under sec13 tion 502(a)); 

14 (C) the development of remedial programs 

15 and monitoring for outliers; and 

16 (D) the application of sanctions (consistent 

17 with the standards developed under section 

18 502(c)). 

19 (2) STATE DISCRETION.—A State may apply 

20 under subsection (a) standards other than those es21 tablished under paragraph (1) so long as the State 

22 demonstrates to the satisfaction of the Council on an 

23 annual basis that the standards applied have been as 

24 efficacious in promoting and achieving improved 

25 quality of care as the application of the standards 

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1 established under paragraph (1). Positive improve2 ments in quality shall be documented by reductions 

3 in the variations of clinical care process and im4 provement in patient outcomes. 

5 (c) QUALIFICATIONS.—An entity is not qualified to 

6 conduct quality reviews under subsection (a) unless the 

7 entity satisfies the criteria for competence for such entities 

8 developed by the Council under section 501(b)(3). 

9 (d) INTERNAL QUALITY REVIEW.—Nothing in this 

10 section shall preclude an institutional provider from estab11 lishing its own internal quality review and enhancement 

12 programs. 

13 SEC. 504. ELIMINATION OF UTILIZATION REVIEW PRO14 GRAMS; TRANSITION. 

15 (a) INTENT.—It is the intention of this title to re16 place by January 1, 2013, random utilization controls with 

17 a systematic review of patterns of practice that com18 promise the quality of care. 

19 (b) SUPERSEDING CASE REVIEWS.— 

20 (1) IN GENERAL.—Subject to the succeeding 

21 provisions of this subsection, the program of quality 

22 review provided under the previous sections of this 

23 title supersede all existing Federal requirements for 

24 utilization review programs, including requirements 

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1 quiring pre-certification of medical procedures on a 

2 case-by-case basis. 

3 (2) TRANSITION.—Before January 1, 2013, the 

4 Board and the States may employ existing utiliza5 tion review standards and mechanisms as may be 

6 necessary to effect the transition to pattern of prac7 tice-based reviews. 

8 (3) CONSTRUCTION.—Nothing in this sub9 section shall be construed— 

10 (A) as precluding the case-by-case review 

11 of the provision of care— 

12 (i) in individual incidents where the 

13 quality of care has significantly deviated 

14 from acceptable standards of practice; and 

15 (ii) with respect to a provider who has 

16 been determined to be an outlier; or 

17 (B) as precluding the case management of 

18 catastrophic, mental health, or substance abuse 

19 cases or long-term care where such manage20 ment is necessary to achieve appropriate, cost21 effective, and beneficial comprehensive medical 

22 care, as provided for in section 204. 

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1 TITLE VI—HEALTH SECURITY 

2 BUDGET; PAYMENTS; COST 

3 CONTAINMENT MEASURES 

4 Subtitle A—Budgeting and 

5 Payments to States 

6 SEC. 601. NATIONAL HEALTH SECURITY BUDGET. 

7 (a) NATIONAL HEALTH SECURITY BUDGET.— 

8 (1) IN GENERAL.—By not later than September 

9 1 before the beginning of each year (beginning with 

10 2010), the Board shall establish a national health 

11 security budget, which— 

12 (A) specifies the total expenditures (includ13 ing expenditures for administrative costs) to be 

14 made by the Federal Government and the 

15 States for covered health care services under 

16 this Act; and 

17 (B) allocates those expenditures among the 

18 States consistent with section 604. 

19 Pursuant to subsection (b), such budget for a year 

20 shall not exceed the budget for the preceding year 

21 increased by the percentage increase in gross domes22 tic product. 

23 (2) DIVISION OF BUDGET INTO COMPONENTS.— 

24 The national health security budget shall consist of 

25 at least 4 components: 

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1 (A) A component for quality assessment 

2 activities (described in title V). 

3 (B) A component for health professional 

4 education expenditures. 

5 (C) A component for administrative costs. 

6 (D) A component (in this title referred to 

7 as the ‘‘operating component’’) for operating 

8 and other expenditures not described in sub9 paragraphs (A) through (C), consisting of 

10 amounts not included in the other components. 

11 A State may provide for the allocation of this 

12 component between capital expenditures and 

13 other expenditures. 

14 (3) ALLOCATION AMONG COMPONENTS.—Tak15 ing into account the State health security budgets 

16 established and submitted under section 603, the 

17 Board shall allocate the national health security 

18 budget among the components in a manner that— 

19 (A) assures a fair allocation for quality as20 sessment activities (consistent with the national 

21 health security spending growth limit); and 

22 (B) assures that the health professional 

23 education expenditure component is sufficient 

24 to provide for the amount of health professional 

25 education expenditures sufficient to meet the 

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1 need for covered health care services (consistent 

2 with the national health security spending 

3 growth limit under subsection (b)(2)). 

4 (b) BASIS FOR TOTAL EXPENDITURES.— 

5 (1) IN GENERAL.—The total expenditures speci6 fied in such budget shall be the sum of the capita7 tion amounts computed under section 602(a) and 

8 the amount of Federal administrative expenditures 

9 needed to carry out this Act. 

10 (2) NATIONAL HEALTH SECURITY SPENDING

11 GROWTH LIMIT.—For purposes of this subtitle, the 

12 national health security spending growth limit de13 scribed in this paragraph for a year is (A) zero, or, 

14 if greater, (B) the average annual percentage in15 crease in the gross domestic product (in current dol16 lars) during the 3-year period beginning with the 

17 first quarter of the fourth previous year to the first 

18 quarter of the previous year minus the percentage 

19 increase (if any) in the number of eligible individuals 

20 residing in any State the United States from the 

21 first quarter of the second previous year to the first 

22 quarter of the previous year. 

23 (c) DEFINITIONS.—In this title: 

24 (1) CAPITAL EXPENDITURES.—The term ‘‘cap25 ital expenditures’’ means expenses for the purchase, 

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1 lease, construction, or renovation of capital facilities 

2 and for equipment and includes return on equity 

3 capital. 

4 (2) HEALTH PROFESSIONAL EDUCATION EX5 PENDITURES.—The term ‘‘health professional edu6 cation expenditures’’ means expenditures in hospitals 

7 and other health care facilities to cover costs associ8 ated with teaching and related research activities. 

9 SEC. 602. COMPUTATION OF INDIVIDUAL AND STATE CAPI10 TATION AMOUNTS. 

11 (a) CAPITATION AMOUNTS.— 

12 (1) INDIVIDUAL CAPITATION AMOUNTS.—In es13 tablishing the national health security budget under 

14 section 601(a) and in computing the national aver15 age per capita cost under subsection (b) for each 

16 year, the Board shall establish a method for com17 puting the capitation amount for each eligible indi18 vidual residing in each State. The capitation amount 

19 for an eligible individual in a State classified within 

20 a risk group (established under subsection (d)(2)) is 

21 the product of— 

22 (A) a national average per capita cost for 

23 all covered health care services (computed 

24 under subsection (b)); 

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1 (B) the State adjustment factor (estab2 lished under subsection (c)) for the State; and 

3 (C) the risk adjustment factor (established 

4 under subsection (d)) for the risk group. 

5 (2) STATE CAPITATION AMOUNT.— 

6 (A) IN GENERAL.—For purposes of this 

7 title, the term ‘‘State capitation amount’’ 

8 means, for a State for a year, the sum of the 

9 capitation amounts computed under paragraph 

10 (1) for all the residents of the State in the year, 

11 as estimated by the Board before the beginning 

12 of the year involved. 

13 (B) USE OF STATISTICAL MODEL.—The 

14 Board may provide for the computation of 

15 State capitation amounts based on statistical 

16 models that fairly reflect the elements that com17 prise the State capitation amount described in 

18 subparagraph (A). 

19 (C) POPULATION INFORMATION.—The Bu20 reau of the Census shall assist the Board in de21 termining the number, place of residence, and 

22 risk group classification of eligible individuals. 

23 (b) COMPUTATION OF NATIONAL AVERAGE PER CAP24 ITA COST.— 

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1 (1) FOR 2010.—For 2010, the national average 

2 per capita cost under this paragraph is equal to— 

3 (A) the average per capita health care ex4 penditures in the United States in 2008 (as es5 timated by the Board); 

6 (B) increased to 2009 by the Board’s esti7 mate of the actual amount of such per capita 

8 expenditures during 2009; and 

9 (C) updated to 2010 by the national health 

10 security spending growth limit specified in sec11 tion 601(b)(2) for 2010. 

12 (2) FOR SUCCEEDING YEARS.—For each suc13 ceeding year, the national average per capita cost 

14 under this subsection is equal to the national aver15 age per capita cost computed under this subsection 

16 for the previous year increased by the national 

17 health security spending growth limit (specified in 

18 section 601(b)(2)) for the year involved. 

19 (c) STATE ADJUSTMENT FACTORS.— 

20 (1) IN GENERAL.—Subject to the succeeding 

21 paragraphs of this subsection, the Board shall de22 velop for each State a factor to adjust the national 

23 average per capita costs to reflect differences be24 tween the State and the United States in— 

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1 (A) average labor and nonlabor costs that 

2 are necessary to provide covered health services; 

3 (B) any social, environmental, or geo4 graphic condition affecting health status or the 

5 need for health care services, to the extent such 

6 a condition is not taken into account in the es7 tablishment of risk groups under subsection (d); 

8 (C) the geographic distribution of the 

9 State’s population, particularly the proportion 

10 of the population residing in medically under11 served areas, to the extent such a condition is 

12 not taken into account in the establishment of 

13 risk groups under subsection (d); and 

14 (D) any other factor relating to operating 

15 costs required to assure equitable distribution 

16 of funds among the States. 

17 (2) MODIFICATION OF HEALTH PROFESSIONAL

18 EDUCATION COMPONENT.—With respect to the por19 tion of the national health security budget allocated 

20 to expenditures for health professional education, the 

21 Board shall modify the State adjustment factors so 

22 as to take into account— 

23 (A) differences among States in health 

24 professional education programs in operation as 

25 of the date of the enactment of this Act; and 

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1 (B) differences among States in their rel2 ative need for expenditures for health profes3 sional education, taking into account the health 

4 professional education expenditures proposed in 

5 State health security budgets under section 

6 603(a). 

7 (3) BUDGET NEUTRALITY.—The State adjust8 ment factors, as modified under paragraph (2), shall 

9 be applied under this subsection in a manner that 

10 results in neither an increase nor a decrease in the 

11 total amount of the Federal contributions to all 

12 State health security programs under subsection (b) 

13 as a result of the application of such factors. 

14 (4) PHASE-IN.—In applying State adjustment 

15 factors under this subsection during the 5-year pe16 riod beginning with 2010, the Board shall phase-in, 

17 over such period, the use of factors described in 

18 paragraph (1) in a manner so that the adjustment 

19 factor for a State is based on a blend of such factors 

20 and a factor that reflects the relative actual average 

21 per capita costs of health services of the different 

22 States as of the time of enactment of this Act. 

23 (5) PERIODIC ADJUSTMENT.—In establishing 

24 the national health security budget before the begin25 ning of each year, the Board shall provide for appromstockstill on PROD1PC66 with BILLS

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1 priate adjustments in the State adjustment factors 

2 under this subsection. 

3 (d) ADJUSTMENTS FOR RISK GROUP CLASSIFICA4 TION.— 

5 (1) IN GENERAL.—The Board shall develop an 

6 adjustment factor to the national average per capita 

7 costs computed under subsection (b) for individuals 

8 classified in each risk group (as designated under 

9 paragraph (2)) to reflect the difference between the 

10 average national average per capita costs and the 

11 national average per capita cost for individuals clas12 sified in the risk group. 

13 (2) RISK GROUPS.—The Board shall designate 

14 a series of risk groups, determined by age, health in15 dicators, and other factors that represent distinct 

16 patterns of health care services utilization and costs. 

17 (3) PERIODIC ADJUSTMENT.—In establishing 

18 the national health security budget before the begin19 ning of each year, the Board shall provide for appro20 priate adjustments in the risk adjustment factors 

21 under this subsection. 

22 SEC. 603. STATE HEALTH SECURITY BUDGETS. 

23 (a) ESTABLISHMENT AND SUBMISSION OF BUDG24 ETS.— 

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1 (1) IN GENERAL.—Each State health security 

2 program shall establish and submit to the Board for 

3 each year a proposed and a final State health secu4 rity budget, which specifies the following: 

5 (A) The total expenditures (including ex6 penditures for administrative costs) to be made 

7 under the program in the State for covered 

8 health care services under this Act, consistent 

9 with subsection (b), broken down as follows: 

10 (i) By the 4 components (described in 

11 section 601(a)(2)), consistent with sub12 section (b). 

13 (ii) Within the operating component— 

14 (I) expenditures for operating 

15 costs of hospitals and other facility16 based services in the State; 

17 (II) expenditures for payment to 

18 comprehensive health service organiza19 tions; 

20 (III) expenditures for payment of 

21 services provided by health care prac22 titioners; and 

23 (IV) expenditures for other cov24 ered items and services. 

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1 Amounts included in the operating compo2 nent include amounts that may be used by 

3 providers for capital expenditures. 

4 (B) The total revenues required to meet 

5 the State health security expenditures. 

6 (2) PROPOSED BUDGET DEADLINE.—The pro7 posed budget for a year shall be submitted under 

8 paragraph (1) not later than June 1 before the year. 

9 (3) FINAL BUDGET.—The final budget for a 

10 year shall— 

11 (A) be established and submitted under 

12 paragraph (1) not later than October 1 before 

13 the year, and 

14 (B) take into account the amounts estab15 lished under the national health security budget 

16 under section 601 for the year. 

17 (4) ADJUSTMENT IN ALLOCATIONS PER18 MITTED.— 

19 (A) IN GENERAL.—Subject to subpara20 graphs (B) and (C), in the case of a final budg21 et, a State may change the allocation of 

22 amounts among components. 

23 (B) NOTICE.—No such change may be 

24 made unless the State has provided prior notice 

25 of the change to the Board. 

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1 (C) DENIAL.—Such a change may not be 

2 made if the Board, within such time period as 

3 the Board specifies, disapproves such change. 

4 (b) EXPENDITURE LIMITS.— 

5 (1) IN GENERAL.—The total expenditures speci6 fied in each State health security budget under sub7 section (a)(1) shall take into account Federal con8 tributions made under section 604. 

9 (2) LIMIT ON CLAIMS PROCESSING AND BILL10 ING EXPENDITURES.—Each State health security 

11 budget shall provide that State administrative ex12 penditures, including expenditures for claims proc13 essing and billing, shall not exceed 3 percent of the 

14 total expenditures under the State health security 

15 program, unless the Board determines, on a case-by16 case basis, that additional administrative expendi17 tures would improve health care quality and cost ef18 fectiveness. 

19 (3) WORKER ASSISTANCE.—A State health se20 curity program may provide that, for budgets for 

21 years before 2013, up to 1 percent of the budget 

22 may be used for purposes of programs providing as23 sistance to workers who are currently performing 

24 functions in the administration of the health insur25 ance system and who may experience economic dismstockstill on PROD1PC66 with BILLS

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1 location as a result of the implementation of the pro2 gram. 

3 (c) APPROVAL PROCESS FOR CAPITAL EXPENDI4 TURES PERMITTED.—Nothing in this title shall be con5 strued as preventing a State health security program from 

6 providing for a process for the approval of capital expendi7 tures based on information derived from regional planning 

8 agencies. 

9 SEC. 604. FEDERAL PAYMENTS TO STATES. 

10 (a) IN GENERAL.—Each State with an approved 

11 State health security program is entitled to receive, from 

12 amounts in the American Health Security Trust Fund, on 

13 a monthly basis each year, of an amount equal to one14 twelfth of the product of— 

15 (1) the State capitation amount (computed 

16 under section 602(a)(2)) for the State for the year; 

17 and 

18 (2) the Federal contribution percentage (estab19 lished under subsection (b)). 

20 (b) FEDERAL CONTRIBUTION PERCENTAGE.—The 

21 Board shall establish a formula for the establishment of 

22 a Federal contribution percentage for each State. Such 

23 formula shall take into consideration a State’s per capita 

24 income and revenue capacity and such other relevant eco25 nomic indicators as the Board determines to be appromstockstill on PROD1PC66 with BILLS

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1 priate. In addition, during the 5-year period beginning 

2 with 2010, the Board may provide for a transition adjust3 ment to the formula in order to take into account current 

4 expenditures by the State (and local governments thereof) 

5 for health services covered under the State health security 

6 program. The weighted-average Federal contribution per7 centage for all States shall equal 86 percent and in no 

8 event shall such percentage be less than 81 percent nor 

9 more than 91 percent. 

10 (c) USE OF PAYMENTS.—All payments made under 

11 this section may only be used to carry out the State health 

12 security program. 

13 (d) EFFECT OF SPENDING EXCESS OR SURPLUS.— 

14 (1) SPENDING EXCESS.—If a State exceeds it’s 

15 budget in a given year, the State shall continue to 

16 fund covered health services from its own revenues. 

17 (2) SURPLUS.—If a State provides all covered 

18 health services for less than the budgeted amount 

19 for a year, it may retain its Federal payment for 

20 that year for uses consistent with this Act. 

21 SEC. 605. ACCOUNT FOR HEALTH PROFESSIONAL EDU22 CATION EXPENDITURES. 

23 (a) SEPARATE ACCOUNT.—Each State health secu24 rity program shall— 

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1 (1) include a separate account for health pro2 fessional education expenditures; and 

3 (2) specify the general manner, consistent with 

4 subsection (b), in which such expenditures are to be 

5 distributed among different types of institutions and 

6 the different areas of the State. 

7 (b) DISTRIBUTION RULES.—The distribution of 

8 funds to hospitals and other health care facilities from the 

9 account must conform to the following principles: 

10 (1) The disbursement of funds must be con11 sistent with achievement of the national and pro12 gram goals (specified in section 701(b)) within the 

13 State health security program and the distribution 

14 of funds from the account must be conditioned upon 

15 the receipt of such reports as the Board may require 

16 in order to monitor compliance with such goals. 

17 (2) The distribution of funds from the account 

18 must take into account the potentially higher costs 

19 of placing health professional students in clinical 

20 education programs in health professional shortage 

21 areas. 

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1 Subtitle B—Payments by States to 

2 Providers 

3 SEC. 611. PAYMENTS TO HOSPITALS AND OTHER FACILITY4 BASED SERVICES FOR OPERATING EXPENSES 

5 ON THE BASIS OF APPROVED GLOBAL BUDG6 ETS. 

7 (a) DIRECT PAYMENT UNDER GLOBAL BUDGET.— 

8 Payment for operating expenses for institutional and facil9 ity-based care, including hospital services and nursing fa10 cility services, under State health security programs shall 

11 be made directly to each institution or facility by each 

12 State health security program under an annual prospec13 tive global budget approved under the program. Such a 

14 budget shall include payment for outpatient care and non15 facility-based care that is furnished by or through the fa16 cility. In the case of a hospital that is wholly owned (or 

17 controlled) by a comprehensive health service organization 

18 that is paid under section 614 on the basis of a global 

19 budget, the global budget of the organization shall include 

20 the budget for the hospital. 

21 (b) ANNUAL NEGOTIATIONS; BUDGET APPROVAL.— 

22 (1) IN GENERAL.—The prospective global budg23 et for an institution or facility shall— 

24 (A) be developed through annual negotia25 tions between— 

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1 (i) a panel of individuals who are ap2 pointed by the Governor of the State and 

3 who represent consumers, labor, business, 

4 and the State government; and 

5 (ii) the institution or facility; and 

6 (B) be based on a nationally uniform sys7 tem of cost accounting established under stand8 ards of the Board. 

9 (2) CONSIDERATIONS.—In developing a budget 

10 through negotiations, there shall be taken into ac11 count at least the following: 

12 (A) With respect to inpatient hospital serv13 ices, the number, and classification by diag14 nosis-related group, of discharges. 

15 (B) An institution’s or facility’s past ex16 penditures. 

17 (C) The extent to which debt service for 

18 capital expenditures has been included in the 

19 proposed operating budget. 

20 (D) The extent to which capital expendi21 tures are financed directly or indirectly through 

22 reductions in direct care to patients, including 

23 (but not limited to) reductions in registered 

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1 gency room or primary care services or avail2 ability. 

3 (E) Change in the consumer price index 

4 and other price indices. 

5 (F) The cost of reasonable compensation 

6 to health care practitioners. 

7 (G) The compensation level of the institu8 tion’s or facility’s work force. 

9 (H) The extent to which the institution or 

10 facility is providing health care services to meet 

11 the needs of residents in the area served by the 

12 institution or facility, including the institution’s 

13 or facility’s occupancy level. 

14 (I) The institution’s or facility’s previous 

15 financial and clinical performance, based on uti16 lization and outcomes data provided under this 

17 Act. 

18 (J) The type of institution or facility, in19 cluding whether the institution or facility is 

20 part of a clinical education program or serves 

21 a health professional education, research or 

22 other training purpose. 

23 (K) Technological advances or changes. 

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1 (L) Costs of the institution or facility asso2 ciated with meeting Federal and State regula3 tions. 

4 (M) The costs associated with necessary 

5 public outreach activities. 

6 (N) In the case of a for-profit facility, a 

7 reasonable rate of return on equity capital, 

8 independent of those operating expenses nec9 essary to fulfill the objectives of this Act. 

10 (O) Incentives to facilities that maintain 

11 costs below previous reasonable budgeted levels 

12 without reducing the care provided. 

13 (P) With respect to facilities that provide 

14 mental health services and substance abuse 

15 treatment services, any additional costs involved 

16 in the treatment of dually diagnosed individ17 uals. 

18 The portion of such a budget that relates to expendi19 tures for health professional education shall be con20 sistent with the State health security budget for 

21 such expenditures. 

22 (3) PROVISION OF REQUIRED INFORMATION; DI23 AGNOSIS-RELATED GROUP.—No budget for an insti24 tution or facility for a year may be approved unless 

25 the institution or facility has submitted on a timely 

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1 basis to the State health security program such in2 formation as the program or the Board shall specify, 

3 including in the case of hospitals information on dis4 charges classified by diagnosis-related group. 

5 (c) ADJUSTMENTS IN APPROVED BUDGETS.— 

6 (1) ADJUSTMENTS TO GLOBAL BUDGETS THAT

7 CONTRACT WITH COMPREHENSIVE HEALTH SERVICE

8 ORGANIZATIONS.—Each State health security pro9 gram shall develop an administrative mechanism for 

10 reducing operating funds to institutions or facilities 

11 in proportion to payments made to such institutions 

12 or facilities for services contracted for by a com13 prehensive health service organization. 

14 (2) AMENDMENTS.—In accordance with stand15 ards established by the Board, an operating and 

16 capital budget approved under this section for a year 

17 may be amended before, during, or after the year if 

18 there is a substantial change in any of the factors 

19 relevant to budget approval. 

20 (d) DONATIONS PERMISSIBLE.—The States health 

21 security programs may permit institutions and facilities 

22 to raise funds from private sources to pay for newly con23 structed facilities, major renovations, and equipment. The 

24 expenditure of such funds, whether for operating or cap25 ital expenditures, does not obligate the State health secumstockstill on PROD1PC66 with BILLS

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1 rity program to provide for continued support for such ex2 penditures unless included in an approved global budget. 

3 SEC. 612. PAYMENTS TO HEALTH CARE PRACTITIONERS 

4 BASED ON PROSPECTIVE FEE SCHEDULE. 

5 (a) FEE FOR SERVICE.— 

6 (1) IN GENERAL.—Every independent health 

7 care practitioner is entitled to be paid, for the provi8 sion of covered health services under the State 

9 health security program, a fee for each billable cov10 ered service. 

11 (2) GLOBAL FEE PAYMENT METHODOLOGIES.— 

12 The Board shall establish models and encourage 

13 State health security programs to implement alter14 native payment methodologies that incorporate glob15 al fees for related services (such as all outpatient 

16 procedures for treatment of a condition) or for a 

17 basic group of services (such as primary care serv18 ices) furnished to an individual over a period of 

19 time, in order to encourage continuity and efficiency 

20 in the provision of services. Such methodologies shall 

21 be designed to ensure a high quality of care. 

22 (3) BILLING DEADLINES; ELECTRONIC BILL23 ING.—A State health security program may deny 

24 payment for any service of an independent health 

25 care practitioner for which it did not receive a bill 

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1 and appropriate supporting documentation (which 

2 had been previously specified) within 30 days after 

3 the date the service was provided. Such a program 

4 may require that bills for services for which payment 

5 may be made under this section, or for any class of 

6 such services, be submitted electronically. 

7 (b) PAYMENT RATES BASED ON NEGOTIATED PRO8 SPECTIVE FEE SCHEDULES.—With respect to any pay9 ment method for a class of services of practitioners, the 

10 State health security program shall establish, on a pro11 spective basis, a payment schedule. The State health secu12 rity program may establish such a schedule after negotia13 tions with organizations representing the practitioners in14 volved. Such fee schedules shall be designed to provide in15 centives for practitioners to choose primary care medicine, 

16 including general internal medicine and pediatrics, over 

17 medical specialization. Nothing in this section shall be con18 strued as preventing a State from adjusting the payment 

19 schedule amounts on a quarterly or other periodic basis 

20 depending on whether expenditures under the schedule will 

21 exceed the budgeted amount with respect to such expendi22 tures. 

23 (c) BILLABLE COVERED SERVICE DEFINED.—In this 

24 section, the term ‘‘billable covered service’’ means a service 

25 covered under section 201 for which a practitioner is entimstockstill on PROD1PC66 with BILLS

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1 tled to compensation by payment of a fee determined 

2 under this section. 

3 SEC. 613. PAYMENTS TO COMPREHENSIVE HEALTH SERV4 ICE ORGANIZATIONS. 

5 (a) IN GENERAL.—Payment under a State health se6 curity program to a comprehensive health service organi7 zation to its enrollees shall be determined by the State— 

8 (1) based on a global budget described in sec9 tion 611; or 

10 (2) based on the basic capitation amount de11 scribed in subsection (b) for each of its enrollees. 

12 (b) BASIC CAPITATION AMOUNT.— 

13 (1) IN GENERAL.—The basic capitation amount 

14 described in this subsection for an enrollee shall be 

15 determined by the State health security program on 

16 the basis of the average amount of expenditures that 

17 is estimated would be made under the State health 

18 security program for covered health care services for 

19 an enrollee, based on actuarial characteristics (as de20 fined by the State health security program). 

21 (2) ADJUSTMENT FOR SPECIAL HEALTH

22 NEEDS.—The State health security program shall 

23 adjust such average amounts to take into account 

24 the special health needs, including a disproportionate 

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1 number of medically underserved individuals, of pop2 ulations served by the organization. 

3 (3) ADJUSTMENT FOR SERVICES NOT PRO4 VIDED.—The State health security program shall ad5 just such average amounts to take into account the 

6 cost of covered health care services that are not pro7 vided by the comprehensive health service organiza8 tion under section 303(a). 

9 SEC. 614. PAYMENTS FOR COMMUNITY-BASED PRIMARY 

10 HEALTH SERVICES. 

11 (a) IN GENERAL.—In the case of community-based 

12 primary health services, subject to subsection (b), pay13 ments under a State health security program shall— 

14 (1) be based on a global budget described in 

15 section 611; 

16 (2) be based on the basic primary care capita17 tion amount described in subsection (c) for each in18 dividual enrolled with the provider of such services; 

19 or 

20 (3) be made on a fee-for-service basis under 

21 section 612. 

22 (b) PAYMENT ADJUSTMENT.—Payments under sub23 section (a) may include, consistent with the budgets devel24 oped under this title— 

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1 (1) an additional amount, as set by the State 

2 health security program, to cover the costs incurred 

3 by a provider which serves persons not covered by 

4 this Act whose health care is essential to overall 

5 community health and the control of communicable 

6 disease, and for whom the cost of such care is other7 wise uncompensated; 

8 (2) an additional amount, as set by the State 

9 health security program, to cover the reasonable 

10 costs incurred by a provider that furnishes case 

11 management services (as defined in section 

12 1915(g)(2) of the Social Security Act), transpor13 tation services, and translation services; and 

14 (3) an additional amount, as set by the State 

15 health security program, to cover the costs incurred 

16 by a provider in conducting health professional edu17 cation programs in connection with the provision of 

18 such services. 

19 (c) BASIC PRIMARY CARE CAPITATION AMOUNT.— 

20 (1) IN GENERAL.—The basic primary care capi21 tation amount described in this subsection for an en22 rollee with a provider of community-based primary 

23 health services shall be determined by the State 

24 health security program on the basis of the average 

25 amount of expenditures that is estimated would be 

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1 made under the State health security program for 

2 such an enrollee, based on actuarial characteristics 

3 (as defined by the State health security program). 

4 (2) ADJUSTMENT FOR SPECIAL HEALTH

5 NEEDS.—The State health security program shall 

6 adjust such average amounts to take into account 

7 the special health needs, including a disproportionate 

8 number of medically underserved individuals, of pop9 ulations served by the provider. 

10 (3) ADJUSTMENT FOR SERVICES NOT PRO11 VIDED.—The State health security program shall ad12 just such average amounts to take into account the 

13 cost of community-based primary health services 

14 that are not provided by the provider. 

15 (d) COMMUNITY-BASED PRIMARY HEALTH SERVICES

16 DEFINED.—In this section, the term ‘‘community-based 

17 primary health services’’ has the meaning given such term 

18 in section 202(a). 

19 SEC. 615. PAYMENTS FOR PRESCRIPTION DRUGS. 

20 (a) ESTABLISHMENT OF LIST.— 

21 (1) IN GENERAL.—The Board shall establish a 

22 list of approved prescription drugs and biologicals 

23 that the Board determines are necessary for the 

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1 ability or self-management and eligible for coverage 

2 under this Act. 

3 (2) EXCLUSIONS.—The Board may exclude re4 imbursement under this Act for ineffective, unsafe, 

5 or over-priced products where better alternatives are 

6 determined to be available. 

7 (b) PRICES.—For each such listed prescription drug 

8 or biological covered under this Act, for insulin, and for 

9 medical foods, the Board shall from time to time deter10 mine a product price or prices which shall constitute the 

11 maximum to be recognized under this Act as the cost of 

12 a drug to a provider thereof. The Board may conduct ne13 gotiations, on behalf of State health security programs, 

14 with product manufacturers and distributors in deter15 mining the applicable product price or prices. 

16 (c) CHARGES BY INDEPENDENT PHARMACIES.— 

17 Each State health security program shall provide for pay18 ment for a prescription drug or biological or insulin fur19 nished by an independent pharmacy based on the drug’s 

20 cost to the pharmacy (not in excess of the applicable prod21 uct price established under subsection (b)) plus a dis22 pensing fee. In accordance with standards established by 

23 the Board, each State health security program, after con24 sultation with representatives of the pharmaceutical pro25 fession, shall establish schedules of dispensing fees, demstockstill on PROD1PC66 with BILLS

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1 signed to afford reasonable compensation to independent 

2 pharmacies after taking into account variations in their 

3 cost of operation resulting from regional differences, dif4 ferences in the volume of prescription drugs dispensed, dif5 ferences in services provided, the need to maintain expend6 itures within the budgets established under this title, and 

7 other relevant factors. 

8 SEC. 616. PAYMENTS FOR APPROVED DEVICES AND EQUIP9 MENT. 

10 (a) ESTABLISHMENT OF LIST.—The Board shall es11 tablish a list of approved durable medical equipment and 

12 therapeutic devices and equipment (including eyeglasses, 

13 hearing aids, and prosthetic appliances), that the Board 

14 determines are necessary for the maintenance or restora15 tion of health or of employability or self-management and 

16 eligible for coverage under this Act. 

17 (b) CONSIDERATIONS AND CONDITIONS.—In estab18 lishing the list under subsection (a), the Board shall take 

19 into consideration the efficacy, safety, and cost of each 

20 item contained on such list, and shall attach to any item 

21 such conditions as the Board determines appropriate with 

22 respect to the circumstances under which, or the frequency 

23 with which, the item may be prescribed. 

24 (c) PRICES.—For each such listed item covered under 

25 this Act, the Board shall from time to time determine a 

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1 product price or prices which shall constitute the max2 imum to be recognized under this Act as the cost of the 

3 item to a provider thereof. The Board may conduct nego4 tiations, on behalf of State health security programs, with 

5 equipment and device manufacturers and distributors in 

6 determining the applicable product price or prices. 

7 (d) EXCLUSIONS.—The Board may exclude from cov8 erage under this Act ineffective, unsafe, or overpriced 

9 products where better alternatives are determined to be 

10 available. 

11 SEC. 617. PAYMENTS FOR OTHER ITEMS AND SERVICES. 

12 In the case of payment for other covered health serv13 ices, the amount of payment under a State health security 

14 program shall be established by the program— 

15 (1) in accordance with payment methodologies 

16 which are specified by the Board, after consultation 

17 with the American Health Security Advisory Coun18 cil, or methodologies established by the State under 

19 section 620; and 

20 (2) consistent with the State health security 

21 budget. 

22 SEC. 618. PAYMENT INCENTIVES FOR MEDICALLY UNDER23 SERVED AREAS. 

24 (a) MODEL PAYMENT METHODOLOGIES.—In addi25 tion to the payment amounts otherwise provided in this 

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1 title, the Board shall establish model payment methodolo2 gies and other incentives that promote the provision of 

3 covered health care services in medically underserved 

4 areas, particularly in rural and inner-city underserved 

5 areas. 

6 (b) CONSTRUCTION.—Nothing in this title shall be 

7 construed as limiting the authority of State health security 

8 programs to increase payment amounts or otherwise pro9 vide additional incentives, consistent with the State health 

10 security budget, to encourage the provision of medically 

11 necessary and appropriate services in underserved areas. 

12 SEC. 619. AUTHORITY FOR ALTERNATIVE PAYMENT METH13 ODOLOGIES. 

14 A State health security program, as part of its plan 

15 under section 404(a), may use a payment methodology 

16 other than a methodology required under this subtitle so 

17 long as— 

18 (1) such payment methodology does not affect 

19 the entitlement of individuals to coverage, the 

20 weighting of fee schedules to encourage an increase 

21 in the number of primary care providers, the ability 

22 of individuals to choose among qualified providers, 

23 the benefits covered under the program, or the com24 pliance of the program with the State health security 

25 budget under subtitle A; and 

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1 (2) the program submits periodic reports to the 

2 Board showing the operation and effectiveness of the 

3 alternative methodology, in order for the Board to 

4 evaluate the appropriateness of applying the alter5 native methodology to other States. 

6 Subtitle C—Mandatory Assignment 

7 and Administrative Provisions 

8 SEC. 631. MANDATORY ASSIGNMENT. 

9 (a) NO BALANCE BILLING.—Payments for benefits 

10 under this Act shall constitute payment in full for such 

11 benefits and the entity furnishing an item or service for 

12 which payment is made under this Act shall accept such 

13 payment as payment in full for the item or service and 

14 may not accept any payment or impose any charge for 

15 any such item or service other than accepting payment 

16 from the State health security program in accordance with 

17 this Act. 

18 (b) ENFORCEMENT.—If an entity knowingly and will19 fully bills for an item or service or accepts payment in 

20 violation of subsection (a), the Board may apply sanctions 

21 against the entity in the same manner as sanctions could 

22 have been imposed under section 1842(j)(2) of the Social 

23 Security Act for a violation of section 1842(j)(1) of such 

24 Act. Such sanctions are in addition to any sanctions that 

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1 a State may impose under its State health security pro2 gram. 

3 SEC. 632. PROCEDURES FOR REIMBURSEMENT; APPEALS. 

4 (a) PROCEDURES FOR REIMBURSEMENT.—In accord5 ance with standards issued by the Board, a State health 

6 security program shall establish a timely and administra7 tively simple procedure to assure payment within 60 days 

8 of the date of submission of clean claims by providers 

9 under this Act. 

10 (b) APPEALS PROCESS.—Each State health security 

11 program shall establish an appeals process to handle all 

12 grievances pertaining to payment to providers under this 

13 title. 

14 TITLE VII—PROMOTION OF PRI15 MARY HEALTH CARE; DEVEL16 OPMENT OF HEALTH SERV17 ICE CAPACITY; PROGRAMS TO 

18 ASSIST THE MEDICALLY UN19 DERSERVED 

20 Subtitle A—Promotion and Expan21 sion of Primary Care Profes22 sional Training 

23 SEC. 701. ROLE OF BOARD; ESTABLISHMENT OF PRIMARY 

24 CARE PROFESSIONAL OUTPUT GOALS. 

25 (a) IN GENERAL.—The Board is responsible for— 

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1 (1) coordinating health professional education 

2 policies and goals, in consultation with the Secretary 

3 of Health and Human Services (in this title referred 

4 to as the ‘‘Secretary’’), to achieve the national goals 

5 specified in subsection (b); 

6 (2) overseeing the health professional education 

7 expenditures of the State health security programs 

8 from the account established under section 602(c); 

9 (3) developing and maintaining, in cooperation 

10 with the Secretary, a system to monitor the number 

11 and specialties of individuals through their health 

12 professional education, any postgraduate training, 

13 and professional practice; and 

14 (4) developing, coordinating, and promoting 

15 other policies that expand the number of primary 

16 care practitioners. 

17 (b) NATIONAL GOALS.—The national goals specified 

18 in this subsection are as follows: 

19 (1) GRADUATE MEDICAL EDUCATION.—By not 

20 later than 5 years after the date of the enactment 

21 of this Act, at least 50 percent of the residents in 

22 medical residency education programs (as defined in 

23 subsection (e)(1)) are primary care residents (as de24 fined in subsection (e)(3)). 

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1 (2) MIDLEVEL PRIMARY CARE PRACTI2 TIONERS.—To assure an adequate supply of primary 

3 care practitioners, there shall be a number, specified 

4 by the Board, of midlevel primary care practitioners 

5 (as defined in subsection (e)(2)) employed in the 

6 health care system as of January 1, 2013. 

7 (c) METHOD FOR ATTAINMENT OF NATIONAL GOAL

8 FOR GRADUATE MEDICAL EDUCATION; PROGRAM

9 GOALS.— 

10 (1) IN GENERAL.—The Board shall establish a 

11 method of applying the national goal in subsection 

12 (b)(1) to program goals for each medical residency 

13 education program or to medical residency education 

14 consortia. 

15 (2) CONSIDERATION.—The program goals 

16 under paragraph (1) shall be based on the distribu17 tion of medical schools and other teaching facilities 

18 within each State health security program, and the 

19 number of positions for graduate medical education. 

20 (3) MEDICAL RESIDENCY EDUCATION CONSOR21 TIUM.—In this subsection, the term ‘‘medical resi22 dency education consortium’’ means a consortium of 

23 medical residency education programs in a contig24 uous geographic area (which may be an interstate 

25 area) if the consortium— 

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1 (A) includes at least 1 medical school with 

2 a teaching hospital and related teaching set3 tings; and 

4 (B) has an affiliation with qualified com5 munity-based primary health service providers 

6 described in section 202(a) and with at least 1 

7 comprehensive health service organization es8 tablished under section 303. 

9 (4) ENFORCEMENT THROUGH STATE HEALTH

10 SECURITY BUDGETS.—The Board shall develop a 

11 formula for reducing payments to State health secu12 rity programs (that provide for payments to a med13 ical residency education program) that failed to meet 

14 the goal for the program established under this sub15 section. 

16 (d) METHOD FOR ATTAINMENT OF NATIONAL GOAL

17 FOR MIDLEVEL PRIMARY CARE PRACTITIONERS.—To as18 sist in attaining the national goal identified in subsection 

19 (b)(2), the Board shall— 

20 (1) advise the Public Health Service on alloca21 tions of funding under titles VII and VIII of the 

22 Public Health Service Act, the National Health 

23 Service Corps, and other programs in order to in24 crease the supply of midlevel primary care practi25 tioners; and 

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1 (2) commission a study of the potential benefits 

2 and disadvantages of expanding the scope of practice 

3 authorized under State laws for any class of midlevel 

4 primary care practitioners. 

5 (e) DEFINITIONS.—In this title: 

6 (1) MEDICAL RESIDENCY EDUCATION PRO7 GRAM.—The term ‘‘medical residency education pro8 gram’’ means a program that provides education 

9 and training to graduates of medical schools in order 

10 to meet requirements for licensing and certification 

11 as a physician, and includes the medical school su12 pervising the program and includes the hospital or 

13 other facility in which the program is operated. 

14 (2) MIDLEVEL PRIMARY CARE PRACTI15 TIONER.—The term ‘‘midlevel primary care practi16 tioner’’ means a clinical nurse practitioner, certified 

17 nurse midwife, physician assistance, or other non18 physician practitioner, specified by the Board, as au19 thorized to practice under State law. 

20 (3) PRIMARY CARE RESIDENT.—The term ‘‘pri21 mary care resident’’ means (in accordance with cri22 teria established by the Board) a resident being 

23 trained in a distinct program of family practice med24 icine, general practice, general internal medicine, or 

25 general pediatrics. 

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1 SEC. 702. ESTABLISHMENT OF ADVISORY COMMITTEE ON 

2 HEALTH PROFESSIONAL EDUCATION. 

3 (a) IN GENERAL.—The Board shall provide for an 

4 Advisory Committee on Health Professional Education (in 

5 this section referred to as the ‘‘Committee’’) to advise the 

6 Board on its activities under section 701. 

7 (b) MEMBERSHIP.—The Committee shall be com8 posed of— 

9 (1) the Chair of the Board, who shall serve as 

10 Chair of the Committee; and 

11 (2) 12 members, not otherwise in the employ of 

12 the United States, appointed by the Board without 

13 regard to the provisions of title 5, United States 

14 Code, governing appointments in the competitive 

15 service. 

16 The appointed members shall provide a balanced point of 

17 view with respect to health professional education, primary 

18 care disciplines, and health care policy and shall include 

19 individuals who are representative of medical schools, 

20 other health professional schools, residency programs, pri21 mary care practitioners, teaching hospitals, professional 

22 associations, public health organizations, State health se23 curity programs, and consumers. 

24 (c) TERMS OF MEMBERS.—Each appointed member 

25 shall hold office for a term of 5 years, except that— 

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1 (1) any member appointed to fill a vacancy oc2 curring during the term for which the member’s 

3 predecessor was appointed shall be appointed for the 

4 remainder of that term; and 

5 (2) the terms of the members first taking office 

6 shall expire, as designated by the Board at the time 

7 of appointment, 2 at the end of the second year, 2 

8 at the end of the third year, 2 at the end of the 

9 fourth year, and 3 at the end of the fifth year after 

10 the date of enactment of this Act. 

11 (d) VACANCIES.— 

12 (1) IN GENERAL.—The Board shall fill any va13 cancy in the membership of the Committee in the 

14 same manner as the original appointment. The va15 cancy shall not affect the power of the remaining 

16 members to execute the duties of the Committee. 

17 (2) VACANCY APPOINTMENTS.—Any member 

18 appointed to fill a vacancy shall serve for the re19 mainder of the term for which the predecessor of the 

20 member was appointed. 

21 (3) REAPPOINTMENT.—The Board may re22 appoint an appointed member of the Committee for 

23 a second term in the same manner as the original 

24 appointment. 

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1 (e) DUTIES.—It shall be the duty of the Committee 

2 to advise the Board concerning graduate medical edu3 cation policies under this title. 

4 (f) STAFF.—The Committee, its members, and any 

5 committees of the Committee shall be provided with such 

6 secretarial, clerical, or other assistance as may be author7 ized by the Board for carrying out their respective func8 tions. 

9 (g) MEETINGS.—The Committee shall meet as fre10 quently as the Board deems necessary, but not less than 

11 4 times each year. Upon request by 4 or more members 

12 it shall be the duty of the Chair to call a meeting of the 

13 Committee. 

14 (h) COMPENSATION.—Members of the Committee 

15 shall be reimbursed by the Board for travel and per diem 

16 in lieu of subsistence expenses during the performance of 

17 duties of the Board in accordance with subchapter I of 

18 chapter 57 of title 5, United States Code. 

19 (i) FACA NOT APPLICABLE.—The provisions of the 

20 Federal Advisory Committee Act shall not apply to the 

21 Committee. 

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1 SEC. 703. GRANTS FOR HEALTH PROFESSIONS EDUCATION, 

2 NURSE EDUCATION, AND THE NATIONAL 

3 HEALTH SERVICE CORPS. 

4 (a) TRANSFERS TO PUBLIC HEALTH SERVICE.— 

5 From the amounts provided under subsection (c), the 

6 Board shall make transfers from the American Health Se7 curity Trust Fund to the Public Health Service under sub8 part II of part D of title III, title VII, and title VIII of 

9 the Public Health Service Act for the support of the Na10 tional Health Service Corps, health professions education, 

11 and nursing education, including education of clinical 

12 nurse practitioners, certified registered nurse anesthetists, 

13 certified nurse midwives, and physician assistants. Of the 

14 amounts so transferred in each year, not less than 50 per15 cent shall be expended for the support of the National 

16 Health Service Corps. 

17 (b) RANGE OF FUNDS.—The amount of transfers 

18 under subsection (a) for any fiscal year shall be an amount 

(specified by the Board each year) not less than 4 19 ⁄100 percent and not to exceed 6 20 ⁄100 percent of the amounts the 

21 Board estimates will be expended from the Trust Fund 

22 in the fiscal year. 

23 (c) FUNDS SUPPLEMENTAL TO OTHER FUNDS.—The 

24 funds provided under this section with respect to provision 

25 of services are in addition to, and not in replacement of, 

26 funds made available under the provisions referred to in 

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1 subsection (a) and shall be administered in accordance 

2 with the terms of such provisions. The Board shall make 

3 no transfer of funds under this section for any fiscal year 

4 for which the total appropriations for the programs au5 thorized by such provisions are less than the total amount 

6 appropriated for such programs in fiscal year 2008. 

7 Subtitle B—Direct Health Care 

8 Delivery 

9 SEC. 711. SET-ASIDE FOR PUBLIC HEALTH. 

10 (a) TRANSFERS TO PUBLIC HEALTH SERVICE.— 

11 From the amounts provided under subsection (c), the 

12 Board shall make transfers from the American Health Se13 curity Trust Fund to the Public Health Service for the 

14 following purposes (other than payment for services cov15 ered under title II): 

16 (1) For payments to States under the maternal 

17 and child health block grants under title V of the 

18 Social Security Act. 

19 (2) For prevention and treatment of tuber20 culosis under section 317 of the Public Health Serv21 ice Act. 

22 (3) For the prevention and treatment of sexu23 ally transmitted diseases under section 318 of the 

24 Public Health Service Act. 

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1 (4) Preventive health block grants under part A 

2 of title XIX of the Public Health Service Act. 

3 (5) Grants to States for community mental 

4 health services under subpart I of part B of title 

5 XIX of the Public Health Service Act. 

6 (6) Grants to States for prevention and treat7 ment of substance abuse under subpart II of part B 

8 of title XIX of the Public Health Service Act. 

9 (7) Grants for HIV health care services under 

10 parts A, B, and C of title XXVI of the Public 

11 Health Service Act. 

12 (8) Public health formula grants described in 

13 subsection (d). 

14 (b) RANGE OF FUNDS.—The amount of transfers 

15 under subsection (a) for any fiscal year shall be an amount 

(specified by the Board each year) not less than 1 16 ⁄10 percent and not to exceed 14 17 ⁄100 percent of the amounts the 

18 Board estimates will be expended from the Trust Fund 

19 in the fiscal year. 

20 (c) FUNDS SUPPLEMENTAL TO OTHER FUNDS.—The 

21 funds provided under this section with respect to provision 

22 of services are in addition to, and not in replacement of, 

23 funds made available under the programs referred to in 

24 subsection (a) and shall be administered in accordance 

25 with the terms of such programs. 

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1 (d) REQUIRED REPORTS ON HEALTH STATUS.—The 

2 Secretary shall require each State receiving funds under 

3 this section to submit annual reports to the Secretary on 

4 the health status of the population and measurable objec5 tives for improving the health of the public in the State. 

6 Such reports shall include the following: 

7 (1) A comparison of the measures of the State 

8 and local public health system compared to relevant 

9 objectives set forth in ‘‘Healthy People 2000’’ or 

10 subsequent national objectives set by the Secretary. 

11 (2) A description of health status measures to 

12 be improved within the State (at the State and local 

13 levels) through expanded public health functions and 

14 health promotion and disease prevention programs. 

15 (3) Measurable outcomes and process objectives 

16 for improving health status, and a report on out17 comes from the previous year. 

18 (4) Information regarding how Federal funding 

19 has improved population-based prevention activities 

20 and programs. 

21 (5) A description of the core public health func22 tions to be carried out at the local level. 

23 (6) A description of the relationship between 

24 the State’s public health system, community-based 

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1 health promotion and disease prevention providers, 

2 and the State health security program. 

3 (e) LIMITATION ON FUND TRANSFERS.—The Board 

4 shall make no transfer of funds under this section for any 

5 fiscal year for which the total appropriations for such pro6 grams are less than the total amount appropriated for 

7 such programs in fiscal year 2008. 

8 (f) PUBLIC HEALTH FORMULA GRANTS.—The Sec9 retary shall provide stable funds to States through for10 mula grants for the purpose of carrying out core public 

11 health functions to monitor and protect the health of com12 munities from communicable diseases and exposure to 

13 toxic environmental pollutants, occupational hazards, 

14 harmful products, and poor health outcomes. Such func15 tions include the following: 

16 (1) Data collection, analysis, and assessment of 

17 public health data, vital statistics, and personal 

18 health data to assess community health status and 

19 outcomes reporting. This function includes the ac20 quisition and installation of hardware and software, 

21 and personnel training and technical assistance to 

22 operate and support automated and integrated infor23 mation systems. 

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1 (2) Activities to protect the environment and to 

2 assure the safety of housing, workplaces, food, and 

3 water. 

4 (3) Investigation and control of adverse health 

5 conditions, and threats to the health status of indi6 viduals and the community. This function includes 

7 the identification and control of outbreaks of infec8 tious disease, patterns of chronic disease and injury, 

9 and cooperative activities to reduce the levels of vio10 lence. 

11 (4) Health promotion and disease prevention 

12 activities for which there is a significant need and a 

13 high priority of the Public Health Service. 

14 (5) The provision of public health laboratory 

15 services to complement private clinical laboratory 

16 services, including— 

17 (A) screening tests for metabolic diseases 

18 in newborns; 

19 (B) toxicology assessments of blood lead 

20 levels and other environmental toxins; 

21 (C) tuberculosis and other diseases requir22 ing partner notification; and 

23 (D) testing for infectious and food-borne 

24 diseases. 

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1 (6) Training and education for the public 

2 health professions. 

3 (7) Research on effective and cost-effective pub4 lic health practices. This function includes the devel5 opment, testing, evaluation, and publication of re6 sults of new prevention and public health control 

7 interventions. 

8 (8) Integration and coordination of the preven9 tion programs and services of community-based pro10 viders, local and State health departments, and 

11 other sectors of State and local government that af12 fect health. 

13 SEC. 712. SET-ASIDE FOR PRIMARY HEALTH CARE DELIV14 ERY. 

15 (a) TRANSFERS TO PUBLIC HEALTH SERVICE.— 

16 From the amounts provided under subsection (c), the 

17 Board shall make transfers from the American Health Se18 curity Trust Fund to the Public Health Service for the 

19 program of primary care service expansion grants under 

20 subpart V of part D of title III of the Public Health Serv21 ice Act (as added by section 713 of this Act). 

22 (b) RANGE OF FUNDS.—The amount of transfers 

23 under subsection (a) for any fiscal year shall be an amount 

(specified by the Board each year) not less than 6 24 ⁄100 percent and not to exceed 1 25 ⁄10 percent of the amounts the 

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1 Board estimates will be expended from the Trust Fund 

2 in the fiscal year. 

3 (c) FUNDS SUPPLEMENTAL TO OTHER FUNDS.—The 

4 funds provided under this section with respect to provision 

5 of services are in addition to, and not in replacement of, 

6 funds made available under the sections 329, 330, 340, 

7 340A, 1001, and 2655 of the Public Health Service Act. 

8 The Board shall make no transfer of funds under this sec9 tion for any fiscal year for which the total appropriations 

10 for such sections are less than the total amount appro11 priated under such sections in fiscal year 2008. 

12 SEC. 713. PRIMARY CARE SERVICE EXPANSION GRANTS. 

13 Part D of title III of the Public Health Service Act 

14 (42 U.S.C. 254b et seq.) is amended by adding at the end 

15 thereof the following new subpart: 

16 ‘‘Subpart XI—Primary Care Expansion 

17 ‘‘SEC. 340H. EXPANDING PRIMARY CARE DELIVERY CAPAC18 ITY IN URBAN AND RURAL AREAS. 

19 ‘‘(a) GRANTS FOR PRIMARY CARE CENTERS.—From 

20 the amounts described in subsection (c), the American 

21 Health Security Standards Board shall make grants to 

22 public and nonprofit private entities for projects to plan 

23 and develop primary care centers which will serve medi24 cally underserved populations (as defined in section 

25 330(b)(3)) in urban and rural areas and to deliver primary 

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1 care services to such populations in such areas. The funds 

2 provided under such a grant may be used for the same 

3 purposes for which a grant may be made under subsection 

4 (c), (e), (f), (g), (h), or (i) of section 330. 

5 ‘‘(b) PROCESS OF AWARDING GRANTS.—The provi6 sions of subsection (k)(1) of section 330 shall apply to 

7 a grant under this section in the same manner as they 

8 apply to a grant under the corresponding subsection of 

9 such section. The provisions of subsection (r)(2)(A) of 

10 such section shall apply to grants for projects to plan and 

11 develop primary care centers under this section in the 

12 same manner as they apply to grants under such section. 

13 ‘‘(c) FUNDING AS SET-ASIDE FROM TRUST FUND.— 

14 Funds in the American Health Security Trust Fund (es15 tablished under section 801 of the act) shall be available 

16 to carry out this section. 

17 ‘‘(d) PRIMARY CARE CENTER DEFINED.—In this sec18 tion, the term ‘primary care center’ means— 

19 ‘‘(1) a health center (as defined in section 

20 330(a)(1)); 

21 ‘‘(2) an entity qualified to receive a grant under 

22 section 330, 1001, or 2651; or 

23 ‘‘(3) a Federally-qualified health center (as de24 fined in section 1905(l)(2)(B) of the Social Security 

25 Act).’’. 

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1 Subtitle C—Primary Care and 

2 Outcomes Research 

3 SEC. 721. SET-ASIDE FOR OUTCOMES RESEARCH. 

4 (a) GRANTS FOR OUTCOMES RESEARCH.—The 

5 Board shall make transfers from the American Health Se6 curity Trust Fund to the Agency for Health Care Policy 

7 and Research under title IX of the Public Health Service 

8 Act for the purpose of carrying out activities under such 

9 title. The Secretary shall assure that there is a special em10 phasis placed on pediatric outcomes research. 

11 (b) RANGE OF FUNDS.—The amount of transfers 

12 under subsection (a) for any fiscal year shall be an amount 

(specified by the Board each year) not less than 1 13 ⁄100 percent and not to exceed 2 14 ⁄100 percent of the amounts the 

15 Board estimates will be expended from the Trust Fund 

16 in the fiscal year. 

17 (c) FUNDS SUPPLEMENTAL TO OTHER FUNDS.—The 

18 funds provided under this section with respect to provision 

19 of services are in addition to, and not in replacement of, 

20 funds made available to the Agency for Health Care Policy 

21 and Research under 937 of the Public Health Service Act. 

22 The Board shall make no transfer of funds under this sec23 tion for any fiscal year for which the total appropriations 

24 under such section are less than the total amount appro25 priated under such section and title in fiscal year 2008. 

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1 (d) CONFORMING AMENDMENT.—Section 937(b) of 

2 the Public Health Service Act (42 U.S.C. 299c–6(b)) is 

3 amended by inserting after ‘‘of the fiscal years 2001 

4 through 2005’’ the following: ‘‘and of fiscal year 2010 and 

5 each subsequent year’’. 

6 SEC. 722. OFFICE OF PRIMARY CARE AND PREVENTION RE7 SEARCH. 

8 (a) IN GENERAL.—Title IV of the Public Health 

9 Service Act is amended— 

10 (1) by redesignating parts G through I as parts 

11 H through J, respectively; and 

12 (2) by inserting after part F the following new 

13 part: 

14 ‘‘PART G—RESEARCH ON PRIMARY CARE AND 

15 PREVENTION 

16 ‘‘SEC. 486E. OFFICE OF PRIMARY CARE AND PREVENTION 

17 RESEARCH. 

18 ‘‘(a) ESTABLISHMENT.—There is established within 

19 the Office of the Director of NIH an office to be known 

20 as the Office of Primary Care and Prevention Research 

21 (in this part referred to as the ‘Office’). The Office shall 

22 be headed by a director, who shall be appointed by the 

23 Director of NIH. 

24 ‘‘(b) PURPOSE.—The Director of the Office shall— 

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1 ‘‘(1) identify projects of research on primary 

2 care and prevention, for children as well as adults, 

3 that should be conducted or supported by the na4 tional research institutes, with particular emphasis 

5 on— 

6 ‘‘(A) clinical patient care, with special em7 phasis on pediatric clinical care and diagnosis; 

8 ‘‘(B) diagnostic effectiveness; 

9 ‘‘(C) primary care education; 

10 ‘‘(D) health and family planning services; 

11 ‘‘(E) medical effectiveness outcomes of pri12 mary care procedures and interventions; and 

13 ‘‘(F) the use of multidisciplinary teams of 

14 health care practitioners; 

15 ‘‘(2) identify multidisciplinary research related 

16 to primary care and prevention that should be so 

17 conducted; 

18 ‘‘(3) promote coordination and collaboration 

19 among entities conducting research identified under 

20 any of paragraphs (1) and (2); 

21 ‘‘(4) encourage the conduct of such research by 

22 entities receiving funds from the national research 

23 institutes; 

24 ‘‘(5) recommend an agenda for conducting and 

25 supporting such research; 

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1 ‘‘(6) promote the sufficient allocation of the re2 sources of the national research institutes for con3 ducting and supporting such research; and 

4 ‘‘(7) prepare the report required in section 

5 486G. 

6 ‘‘(c) PRIMARY CARE AND PREVENTION RESEARCH

7 DEFINED.—For purposes of this part, the term ‘primary 

8 care and prevention research’ means research on improve9 ment of the practice of family medicine, general internal 

10 medicine, and general pediatrics, and includes research re11 lating to— 

12 ‘‘(1) obstetrics and gynecology, dentistry, or 

13 mental health or substance abuse treatment when 

14 provided by a primary care physician or other pri15 mary care practitioner; and 

16 ‘‘(2) primary care provided by multidisciplinary 

17 teams. 

18 ‘‘SEC. 486F. NATIONAL DATA SYSTEM AND CLEARINGHOUSE 

19 ON PRIMARY CARE AND PREVENTION RE20 SEARCH. 

21 ‘‘(a) DATA SYSTEM.—The Director of NIH, in con22 sultation with the Director of the Office, shall establish 

23 a data system for the collection, storage, analysis, re24 trieval, and dissemination of information regarding pri25 mary care and prevention research that is conducted or 

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1 supported by the national research institutes. Information 

2 from the data system shall be available through informa3 tion systems available to health care professionals and pro4 viders, researchers, and members of the public. 

5 ‘‘(b) CLEARINGHOUSE.—The Director of NIH, in 

6 consultation with the Director of the Office and with the 

7 National Library of Medicine, shall establish, maintain, 

8 and operate a program to provide, and encourage the use 

9 of, information on research and prevention activities of the 

10 national research institutes that relate to primary care 

11 and prevention research. 

12 ‘‘SEC. 486G. BIENNIAL REPORT. 

13 ‘‘(a) IN GENERAL.—With respect to primary care 

14 and prevention research, the Director of the Office shall, 

15 not later than 1 year after the date of the enactment of 

16 this part, and biennially thereafter, prepare a report— 

17 ‘‘(1) describing and evaluating the progress 

18 made during the preceding 2 fiscal years in research 

19 and treatment conducted or supported by the Na20 tional Institutes of Health; 

21 ‘‘(2) summarizing and analyzing expenditures 

22 made by the agencies of such Institutes (and by 

23 such Office) during the preceding 2 fiscal years; and 

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1 ‘‘(3) making such recommendations for legisla2 tive and administrative initiatives as the Director of 

3 the Office determines to be appropriate. 

4 ‘‘(b) INCLUSION IN BIENNIAL REPORT OF DIRECTOR

5 OF NIH.—The Director of the Office shall submit each 

6 report prepared under subsection (a) to the Director of 

7 NIH for inclusion in the report submitted to the President 

8 and the Congress under section 403. 

9 ‘‘SEC. 486H. AUTHORIZATION OF APPROPRIATIONS. 

10 ‘‘For the Office of Primary Care and Prevention Re11 search, there are authorized to be appropriated 

12 $150,000,000 for fiscal year 2010, $180,000,000 for fis13 cal year 2011, and $216,000,000 for fiscal year 2012.’’. 

14 (b) REQUIREMENT OF SUFFICIENT ALLOCATION OF

15 RESOURCES OF INSTITUTES.—Section 402(b) of the Pub16 lic Health Service Act (42 U.S.C. 282(b)) is amended— 

17 (1) in paragraph (22), by striking ‘‘and’’ after 

18 the semicolon at the end; 

19 (2) in paragraph (23), by striking the period at 

20 the end and inserting ‘‘; and’’; and 

21 (3) by inserting after paragraph (23) the fol22 lowing new paragraph: 

23 ‘‘(24) after consultation with the Director of 

24 the Office of Primary Care and Prevention Re25 search, shall ensure that resources of the National 

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1 Institutes of Health are sufficiently allocated for 

2 projects on primary care and prevention research 

3 that are identified under section 486E(b).’’. 

4 Subtitle D—School-Related Health 

5 Services 

6 SEC. 731. AUTHORIZATIONS OF APPROPRIATIONS. 

7 (a) FUNDING FOR SCHOOL-RELATED HEALTH SERV8 ICES.—For the purpose of carrying out this subtitle, there 

9 are authorized to be appropriated $100,000,000 for fiscal 

10 year 2012, $275,000,000 for fiscal year 2013, 

11 $350,000,000 for fiscal year 2014, and $400,000,000 for 

12 each of the fiscal years 2015 and 2016. 

13 (b) RELATION TO OTHER FUNDS.—The authoriza14 tions of appropriations established in subsection (a) are 

15 in addition to any other authorizations of appropriations 

16 that are available for the purpose described in such sub17 section. 

18 SEC. 732. ELIGIBILITY FOR DEVELOPMENT AND OPER19 ATION GRANTS. 

20 (a) IN GENERAL.—Entities eligible to apply for and 

21 receive grants under section 734 or 735 are the following: 

22 (1) State health agencies that apply on behalf 

23 of local community partnerships and other commu24 nities in need of health services for school-aged chil25 dren within the State. 

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1 (2) Local community partnerships in States in 

2 which health agencies have not applied. 

3 (b) LOCAL COMMUNITY PARTNERSHIPS.— 

4 (1) IN GENERAL.—A local community partner5 ship under subsection (a)(2) is an entity that, at a 

6 minimum, includes— 

7 (A) a local health care provider with expe8 rience in delivering services to school-aged chil9 dren; 

10 (B) 1 or more local public schools; and 

11 (C) at least 1 community based organiza12 tion located in the community to be served that 

13 has a history of providing services to school14 aged children in the community who are at-risk. 

15 (2) PARTICIPATION.—A partnership described 

16 in paragraph (1) shall, to the maximum extent fea17 sible, involve broad based community participation 

18 from parents and adolescent children to be served, 

19 health and social service providers, teachers and 

20 other public school and school board personnel, de21 velopment and service organizations for adolescent 

22 children, and interested business leaders. Such par23 ticipation may be evidenced through an expanded 

24 partnership, or an advisory board to such partner25 ship. 

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1 (c) DEFINITIONS REGARDING CHILDREN.—For pur2 poses of this subtitle: 

3 (1) The term ‘‘adolescent children’’ means 

4 school-aged children who are adolescents. 

5 (2) The term ‘‘school-aged children’’ means in6 dividuals who are between the ages of 4 and 19 (in7 clusive). 

8 SEC. 733. PREFERENCES. 

9 (a) IN GENERAL.—In making grants under sections 

10 734 and 735, the Secretary shall give preference to appli11 cants whose communities to be served show the most sub12 stantial level of need for such services among school-aged 

13 children, as measured by indicators of community health 

14 including the following: 

15 (1) High levels of poverty. 

16 (2) The presence of a medically underserved 

17 population. 

18 (3) The presence of a health professional short19 age area. 

20 (4) High rates of indicators of health risk 

21 among school-aged children, including a high propor22 tion of such children receiving services through the 

23 Individuals with Disabilities Education Act, adoles24 cent pregnancy, sexually transmitted disease (includ25 ing infection with the human immunodeficiency 

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1 virus), preventable disease, communicable disease, 

2 intentional and unintentional injuries, community 

3 and gang violence, unemployment among adolescent 

4 children, juvenile justice involvement, and high rates 

5 of drug and alcohol exposure. 

6 (b) LINKAGE TO COMMUNITY HEALTH CENTERS.— 

7 In making grants under sections 734 and 735, the Sec8 retary shall give preference to applicants that demonstrate 

9 a linkage to community health centers. 

10 SEC. 734. GRANTS FOR DEVELOPMENT OF PROJECTS. 

11 (a) IN GENERAL.—The Secretary may make grants 

12 to State health agencies or to local community partner13 ships to develop school health service sites. 

14 (b) USE OF FUNDS.—A project for which a grant 

15 may be made under subsection (a) may include but not 

16 be limited to the cost of the following: 

17 (1) Planning for the provision of school health 

18 services. 

19 (2) Recruitment, compensation, and training of 

20 health and administrative staff. 

21 (3) The development of agreements, and the ac22 quisition and development of equipment and infor23 mation services, necessary to support information 

24 exchange between school health service sites and 

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1 health plans, health providers, and other entities au2 thorized to collect information under this Act. 

3 (4) Other activities necessary to assume oper4 ational status. 

5 (c) APPLICATION FOR GRANT.— 

6 (1) IN GENERAL.—Applicants shall submit ap7 plications in a form and manner prescribed by the 

8 Secretary. 

9 (2) APPLICATIONS BY STATE HEALTH AGEN10 CIES.— 

11 (A) In the case of applicants that are State 

12 health agencies, the application shall contain 

13 assurances that the State health agency is ap14 plying for funds— 

15 (i) on behalf of at least 1 local com16 munity partnership; and 

17 (ii) on behalf of at least 1 other com18 munity identified by the State as in need 

19 of the services funded under this subtitle 

20 but without a local community partnership. 

21 (B) In the case of the communities identi22 fied in applications submitted by State health 

23 agencies that do not yet have local community 

24 partnerships (including the community identi25 fied under subparagraph (A)(ii)), the State 

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1 shall describe the steps that will be taken to aid 

2 the communities in developing a local commu3 nity partnership. 

4 (C) A State applying on behalf of local 

5 community partnerships and other communities 

6 may retain not more than 10 percent of grants 

7 awarded under this subtitle for administrative 

8 costs. 

9 (d) CONTENTS OF APPLICATION.—In order to receive 

10 a grant under this section, an applicant must include in 

11 the application the following information: 

12 (1) An assessment of the need for school health 

13 services in the communities to be served, using the 

14 latest available health data and health goals and ob15 jectives established by the Secretary. 

16 (2) A description of how the applicant will de17 sign the proposed school health services to reach the 

18 maximum number of school-aged children who are at 

19 risk. 

20 (3) An explanation of how the applicant will in21 tegrate its services with those of other health and 

22 social service programs within the community. 

23 (4) A description of a quality assurance pro24 gram which complies with standards that the Sec25 retary may prescribe. 

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1 (e) NUMBER OF GRANTS.—Not more than 1 planning 

2 grant may be made to a single applicant. A planning grant 

3 may not exceed 2 years in duration. 

4 SEC. 735. GRANTS FOR OPERATION OF PROJECTS. 

5 (a) IN GENERAL.—The Secretary may make grants 

6 to State health agencies or to local community partner7 ships for the cost of operating school health service sites. 

8 (b) USE OF GRANT.—The costs for which a grant 

9 may be made under this section include but are not limited 

10 to the following: 

11 (1) The cost of furnishing health services that 

12 are not otherwise covered under this Act or by any 

13 other public or private insurer. 

14 (2) The cost of furnishing services whose pur15 pose is to increase the capacity of individuals to uti16 lize available health services, including transpor17 tation, community and patient outreach, patient 

18 education, translation services, and such other serv19 ices as the Secretary determines to be appropriate in 

20 carrying out such purpose. 

21 (3) Training, recruitment and compensation of 

22 health professionals and other staff. 

23 (4) Outreach services to school-aged children 

24 who are at risk and to the parents of such children. 

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1 (5) Linkage of individuals to health plans, com2 munity health services and social services. 

3 (6) Other activities deemed necessary by the 

4 Secretary. 

5 (c) APPLICATION FOR GRANT.—Applicants shall sub6 mit applications in a form and manner prescribed by the 

7 Secretary. In order to receive a grant under this section, 

8 an applicant must include in the application the following 

9 information: 

10 (1) A description of the services to be furnished 

11 by the applicant. 

12 (2) The amounts and sources of funding that 

13 the applicant will expend, including estimates of the 

14 amount of payments the applicant will receive from 

15 sources other than the grant. 

16 (3) Such other information as the Secretary de17 termines to be appropriate. 

18 (d) ADDITIONAL CONTENTS OF APPLICATION.—In 

19 order to receive a grant under this section, an applicant 

20 must meet the following conditions: 

21 (1) The applicant furnishes the following serv22 ices: 

23 (A) Diagnosis and treatment of simple ill24 nesses and minor injuries. 

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1 (B) Preventive health services, including 

2 health screenings. 

3 (C) Services provided for the purpose de4 scribed in subsection (b)(2). 

5 (D) Referrals and followups in situations 

6 involving illness or injury. 

7 (E) Health and social services, counseling 

8 services, and necessary referrals, including re9 ferrals regarding mental health and substance 

10 abuse. 

11 (F) Such other services as the Secretary 

12 determines to be appropriate. 

13 (2) The applicant is a participating provider in 

14 the State’s program for medical assistance under 

15 title XIX of the Social Security Act. 

16 (3) The applicant does not impose charges on 

17 students or their families for services (including col18 lection of any cost-sharing for services under the 

19 comprehensive benefit package that otherwise would 

20 be required). 

21 (4) The applicant has reviewed and will periodi22 cally review the needs of the population served by 

23 the applicant in order to ensure that its services are 

24 accessible to the maximum number of school-aged 

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1 tent possible, barriers to access to services of the ap2 plicant are removed (including barriers resulting 

3 from the area’s physical characteristics, its eco4 nomic, social and cultural grouping, the health care 

5 utilization patterns of such children, and available 

6 transportation). 

7 (5) In the case of an applicant which serves a 

8 population that includes a substantial proportion of 

9 individuals of limited English speaking ability, the 

10 applicant has developed a plan to meet the needs of 

11 such population to the extent practicable in the lan12 guage and cultural context most appropriate to such 

13 individuals. 

14 (6) The applicant will provide non-Federal con15 tributions toward the cost of the project in an 

16 amount determined by the Secretary. 

17 (7) The applicant will operate a quality assur18 ance program consistent with section 734(d). 

19 (e) DURATION OF GRANT.—A grant under this sec20 tion shall be for a period determined by the Secretary. 

21 (f) REPORTS.—A recipient of funding under this sec22 tion shall provide such reports and information as are re23 quired in regulations of the Secretary. 

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1 SEC. 736. FEDERAL ADMINISTRATIVE COSTS. 

2 Of the amounts made available under section 731, the 

3 Secretary may reserve not more than 5 percent for admin4 istrative expenses regarding this subtitle. 

5 SEC. 737. DEFINITIONS. 

6 For purposes of this subtitle: 

7 (1) The term ‘‘adolescent children’’ has the 

8 meaning given such term in section 732(c). 

9 (2) The term ‘‘at risk’’ means at-risk with re10 spect to health. 

11 (3) The term ‘‘community health center’’ has 

12 the meaning given such term in section 330 of the 

13 Public Health Service Act. 

14 (4) The term ‘‘health professional shortage 

15 area’’ means a health professional shortage area des16 ignated under section 332 of the Public Health Serv17 ice Act. 

18 (5) The term ‘‘medically underserved popu19 lation’’ has the meaning given such term in section 

20 330 of the Public Health Service Act. 

21 (6) The term ‘‘school-aged children’’ has the 

22 meaning given such term in section 732(c). 

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1 TITLE VIII—FINANCING PROVI2 SIONS; AMERICAN HEALTH 

3 SECURITY TRUST FUND 

4 SEC. 800. AMENDMENT OF 1986 CODE; SECTION 15 NOT TO 

5 APPLY. 

6 (a) AMENDMENT OF 1986 CODE.—Except as other7 wise expressly provided, whenever in this title an amend8 ment or repeal is expressed in terms of an amendment 

9 to, or repeal of, a section or other provision, the reference 

10 shall be considered to be made to a section or other provi11 sion of the Internal Revenue Code of 1986. 

12 (b) SECTION 15 NOT TO APPLY.—The amendments 

13 made by subtitle B shall not be treated as a change in 

14 a rate of tax for purposes of section 15 of the Internal 

15 Revenue Code of 1986. 

16 Subtitle A—American Health 

17 Security Trust Fund 

18 SEC. 801. AMERICAN HEALTH SECURITY TRUST FUND. 

19 (a) IN GENERAL.—There is hereby created on the 

20 books of the Treasury of the United States a trust fund 

21 to be known as the American Health Security Trust Fund 

22 (in this section referred to as the ‘‘Trust Fund’’). The 

23 Trust Fund shall consist of such gifts and bequests as 

24 may be made and such amounts as may be deposited in, 

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1 or appropriated to, such Trust Fund as provided in this 

2 Act. 

3 (b) APPROPRIATIONS INTO TRUST FUND.— 

4 (1) TAXES.—There are hereby appropriated to 

5 the Trust Fund for each fiscal year (beginning with 

6 fiscal year 2011), out of any moneys in the Treasury 

7 not otherwise appropriated, amounts equivalent to 

8 100 percent of the aggregate increase in tax liabil9 ities under the Internal Revenue Code of 1986 which 

10 is attributable to the application of the amendments 

11 made by this title. The amounts appropriated by the 

12 preceding sentence shall be transferred from time to 

13 time (but not less frequently than monthly) from the 

14 general fund in the Treasury to the Trust Fund, 

15 such amounts to be determined on the basis of esti16 mates by the Secretary of the Treasury of the taxes 

17 paid to or deposited into the Treasury; and proper 

18 adjustments shall be made in amounts subsequently 

19 transferred to the extent prior estimates were in ex20 cess of or were less than the amounts that should 

21 have been so transferred. 

22 (2) CURRENT PROGRAM RECEIPTS.—Notwith23 standing any other provision of law, there are hereby 

24 appropriated to the Trust Fund for each fiscal year 

25 (beginning with fiscal year 2011) the amounts that 

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1 would otherwise have been appropriated to carry out 

2 the following programs: 

3 (A) The medicare program, under parts A, 

4 B, and D of title XVIII of the Social Security 

5 Act (other than amounts attributable to any 

6 premiums under such parts). 

7 (B) The medicaid program, under State 

8 plans approved under title XIX of such Act. 

9 (C) The Federal employees health benefit 

10 program, under chapter 89 of title 5, United 

11 States Code. 

12 (D) The TRICARE program (formerly 

13 known as the CHAMPUS program), under 

14 chapter 55 of title 10, United States Code. 

15 (E) The maternal and child health pro16 gram (under title V of the Social Security Act), 

17 vocational rehabilitation programs, programs 

18 for drug abuse and mental health services 

19 under the Public Health Service Act, programs 

20 providing general hospital or medical assistance, 

21 and any other Federal program identified by 

22 the Board, in consultation with the Secretary of 

23 the Treasury, to the extent the programs pro24 vide for payment for health services the pay25 ment of which may be made under this Act. 

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1 (c) INCORPORATION OF PROVISIONS.—The provisions 

2 of subsections (b) through (i) of section 1817 of the Social 

3 Security Act shall apply to the Trust Fund under this Act 

4 in the same manner as they applied to the Federal Hos5 pital Insurance Trust Fund under part A of title XVIII 

6 of such Act, except that the American Health Security 

7 Standards Board shall constitute the Board of Trustees 

8 of the Trust Fund. 

9 (d) TRANSFER OF FUNDS.—Any amounts remaining 

10 in the Federal Hospital Insurance Trust Fund or the Fed11 eral Supplementary Medical Insurance Trust Fund after 

12 the settlement of claims for payments under title XVIII 

13 have been completed, shall be transferred into the Amer14 ican Health Security Trust Fund. 

15 Subtitle B—Taxes Based on Income 

16 and Wages 

17 SEC. 811. PAYROLL TAX ON EMPLOYERS. 

18 (a) IN GENERAL.—Section 3111 (relating to tax on 

19 employers) is amended by redesignating subsection (c) as 

20 subsection (d) and inserting after subsection (b) the fol21 lowing new subsection: 

22 ‘‘(c) HEALTH CARE.—In addition to other taxes, 

23 there is hereby imposed on every employer an excise tax, 

24 with respect to having individuals in his employ, equal to 

25 8.7 percent of the wages (as defined in section 3121(a)) 

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1 paid by him with respect to employment (as defined in 

2 section 3121(b)).’’. 

3 (b) SELF-EMPLOYMENT INCOME.—Section 1401 (re4 lating to rate of tax on self-employment income) is amend5 ed by redesignating subsection (c) as subsection (d) and 

6 inserting after subsection (b) the following new subsection: 

7 ‘‘(c) HEALTH CARE.—In addition to other taxes, 

8 there shall be imposed for each taxable year, on the self9 employment income of every individual, a tax equal to 8.7 

10 percent of the amount of the self-employment income for 

11 such taxable year.’’. 

12 (c) COMPARABLE TAXES FOR RAILROAD SERV13 ICES.— 

14 (1) TAX ON EMPLOYERS.—Section 3221 is 

15 amended by redesignating subsection (c) as sub16 sections (d) and inserting after subsection (b) the 

17 following new subsection: 

18 ‘‘(c) HEALTH CARE.—In addition to other taxes, 

19 there is hereby imposed on every employer an excise tax, 

20 with respect to having individuals in his employ, equal to 

21 8.7 percent of the compensation paid by such employer 

22 for services rendered to such employer.’’. 

23 (2) TAX ON EMPLOYEE REPRESENTATIVES.— 

24 Section 3211 (relating to tax on employee represent25 atives) is amended by redesignating subsection (c) as 

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1 subsection (d) and inserting after subsection (b) the 

2 following new paragraph: 

3 ‘‘(c) HEALTH CARE.—In addition to other taxes, 

4 there is hereby imposed on the income of each employee 

5 representative a tax equal to 8.7 percent of the compensa6 tion received during the calendar year by such employee 

7 representative for services rendered by such employee rep8 resentative.’’. 

9 (3) NO APPLICABLE BASE.—Subparagraph (A) 

10 of section 3231(e)(2) is amended by adding at the 

11 end thereof the following new clause: 

12 ‘‘(iv) HEALTH CARE TAXES.—Clause 

13 (i) shall not apply to the taxes imposed by 

14 sections 3221(c) and 3211(c).’’. 

15 (4) TECHNICAL AMENDMENT.— 

16 (A) Subsection (d) of section 3211, as re17 designated by paragraph (2), is amended by 

18 striking ‘‘and (b)’’ and inserting ‘‘, (b), and 

19 (c)’’. 

20 (B) Subsection (d) of section 3221, as re21 designated by paragraph (1), is amended by 

22 striking ‘‘and (b)’’ and inserting ‘‘, (b), and 

23 (c)’’. 

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

2 this section shall apply to remuneration paid after Decem3 ber 31, 2010. 

4 SEC. 812. HEALTH CARE INCOME TAX. 

5 (a) GENERAL RULE.—Subchapter A of chapter 1 (re6 lating to determination of tax liability) is amended by add7 ing at the end thereof the following new part: 

8 ‘‘PART VIII—HEALTH CARE INCOME TAX ON 

9 INDIVIDUALS 

‘‘Sec. 59B. Health care income tax. 

10 ‘‘SEC. 59B. HEALTH CARE INCOME TAX. 

11 ‘‘(a) IMPOSITION OF TAX.—In the case of an indi12 vidual, there is hereby imposed a tax (in addition to any 

13 other tax imposed by this subtitle) equal to 2.2 percent 

14 of the taxable income of the taxpayer for the taxable year. 

15 ‘‘(b) NO CREDITS AGAINST TAX; NO EFFECT ON

16 MINIMUM TAX.—The tax imposed by this section shall not 

17 be treated as a tax imposed by this chapter for purposes 

18 of determining— 

19 ‘‘(1) the amount of any credit allowable under 

20 this chapter, or 

21 ‘‘(2) the amount of the minimum tax imposed 

22 by section 55. 

23 ‘‘(c) SPECIAL RULES.— 

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1 ‘‘(1) TAX TO BE WITHHELD, ETC.—For pur2 poses of this title, the tax imposed by this section 

3 shall be treated as imposed by section 1. 

4 ‘‘(2) REIMBURSEMENT OF TAX BY EMPLOYER

5 NOT INCLUDIBLE IN GROSS INCOME.—The gross in6 come of an employee shall not include any payment 

7 by his employer to reimburse the employee for the 

8 tax paid by the employee under this section. 

9 ‘‘(3) OTHER RULES.—The rules of section 

10 59A(d) shall apply to the tax imposed by this sec11 tion.’’. 

12 (b) CLERICAL AMENDMENT.—The table of parts for 

13 subchapter A of chapter 1 is amended by adding at the 

14 end the following new item: 

‘‘PART VIII. HEALTH CARE INCOME TAX ON INDIVIDUALS’’. 

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

16 this section shall apply to taxable years beginning after 

17 December 31, 2010. 

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1 TITLE IX—CONFORMING AMEND2 MENTS TO THE EMPLOYEE 

3 RETIREMENT INCOME SECU4 RITY ACT OF 1974 

5 SEC. 901. ERISA INAPPLICABLE TO HEALTH COVERAGE AR6 RANGEMENTS UNDER STATE HEALTH SECU7 RITY PROGRAMS. 

8 Section 4 of the Employee Retirement Income Secu9 rity Act of 1974 (29 U.S.C. 1003) is amended— 

10 (1) in subsection (a), by striking ‘‘(b) or (c)’’ 

11 and inserting ‘‘(b), (c), or (d)’’; and 

12 (2) by adding at the end the following new sub13 section: 

14 ‘‘(d) The provisions of this title shall not apply to 

15 any arrangement forming a part of a State health security 

16 program established pursuant to section 101(b) of the 

17 American Health Security Act of 2009.’’. 

18 SEC. 902. EXEMPTION OF STATE HEALTH SECURITY PRO19 GRAMS FROM ERISA PREEMPTION. 

20 Section 514(b) of the Employee Retirement Income 

21 Security Act of 1974 (29 U.S.C. 1144(b)) (as amended 

22 by sections 904(b)(3)(B) and 1002(b) of this Act) is 

23 amended by adding at the end the following new para24 graph: 

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1 ‘‘(8) Subsection (a) of this section shall not apply to 

2 State health security programs established pursuant to 

3 section 101(b) of the American Health Security Act of 

4 2009.’’. 

5 SEC. 903. PROHIBITION OF EMPLOYEE BENEFITS DUPLICA6 TIVE OF BENEFITS UNDER STATE HEALTH 

7 SECURITY PROGRAMS; COORDINATION IN 

8 CASE OF WORKERS’ COMPENSATION. 

9 (a) IN GENERAL.—Part 5 of subtitle B of title I of 

10 the Employee Retirement Income Security Act of 1974 is 

11 amended by adding at the end the following new section: 

12 ‘‘PROHIBITION OF EMPLOYEE BENEFITS DUPLICATIVE OF

13 STATE HEALTH SECURITY PROGRAM BENEFITS; CO14 ORDINATION IN CASE OF WORKERS’ COMPENSATION

15 ‘‘SEC. 519. (a) Subject to subsection (b), no employee 

16 benefit plan may provide benefits which duplicate payment 

17 for any items or services for which payment may be made 

18 under a State health security program established pursu19 ant to section 101(b) of the American Health Security Act 

20 of 2009. 

21 ‘‘(b)(1) Each workers compensation carrier that is 

22 liable for payment for workers compensation services fur23 nished in a State shall reimburse the State health security 

24 plan for the State in which the services are furnished for 

25 the cost of such services. 

26 ‘‘(2) In this subsection: 

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1 ‘‘(A) The term ‘workers compensation carrier’ 

2 means an insurance company that underwrites work3 ers compensation medical benefits with respect to 1 

4 or more employers and includes an employer or fund 

5 that is financially at risk for the provision of work6 ers compensation medical benefits. 

7 ‘‘(B) The term ‘workers compensation medical 

8 benefits’ means, with respect to an enrollee who is 

9 an employee subject to the workers compensation 

10 laws of a State, the comprehensive medical benefits 

11 for work-related injuries and illnesses provided for 

12 under such laws with respect to such an employee. 

13 ‘‘(C) The term ‘workers compensation services’ 

14 means items and services included in workers com15 pensation medical benefits and includes items and 

16 services (including rehabilitation services and long17 term-care services) commonly used for treatment of 

18 work-related injuries and illnesses.’’. 

19 (b) CONFORMING AMENDMENT.—Section 4(b) of 

20 such Act (29 U.S.C. 1003(b)) is amended by adding at 

21 the end the following: ‘‘Paragraph (3) shall apply subject 

22 to section 519(b) (relating to reimbursement of State 

23 health security plans by workers compensation carriers).’’. 

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1 (c) CLERICAL AMENDMENT.—The table of contents 

2 in section 1 of such Act is amended by inserting after the 

3 item relating to section 518 the following new items: 

‘‘Sec. 519. Prohibition of employee benefits duplicative of state health security 

program benefits; coordination in case of workers’ compensation.’’. 

4 SEC. 904. REPEAL OF CONTINUATION COVERAGE REQUIRE5 MENTS UNDER ERISA AND CERTAIN OTHER 

6 REQUIREMENTS RELATING TO GROUP 

7 HEALTH PLANS. 

8 (a) IN GENERAL.—Part 6 of subtitle B of title I of 

9 the Employee Retirement Income Security Act of 1974 

10 (29 U.S.C. 1161 et seq.) is repealed. 

11 (b) CONFORMING AMENDMENTS.— 

12 (1) Section 502(a) of such Act (29 U.S.C. 

13 1132(a)) is amended— 

14 (A) by striking paragraph (7); and 

15 (B) by redesignating paragraphs (8), (9), 

16 and (10) as paragraphs (7), (8), and (9), re17 spectively. 

18 (2) Section 502(c)(1) of such Act (29 U.S.C. 

19 1132(c)(1)) is amended by striking ‘‘paragraph (1) 

20 or (4) of section 606,’’. 

21 (3) Section 514(b) of such Act (29 U.S.C. 

22 1144(b)) is amended— 

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

2 206(d)(3)(B)(i)),’’ and all that follows and in3 serting ‘‘section 206(d)(3)(B)(i)).’’; and 

4 (B) by striking paragraph (8). 

5 (4) The table of contents in section 1 of the 

6 Employee Retirement Income Security Act of 1974 

7 is amended by striking the items relating to part 6 

8 of subtitle B of title I of such Act. 

9 SEC. 905. EFFECTIVE DATE OF TITLE. 

10 The amendments made by this title shall take effect 

11 January 1, 2012. 

12 TITLE X—ADDITIONAL 

13 CONFORMING AMENDMENTS 

14 SEC. 1001. REPEAL OF CERTAIN PROVISIONS IN INTERNAL 

15 REVENUE CODE OF 1986. 

16 The provisions of titles III and IV of the Health In17 surance Portability and Accountability Act of 1996, other 

18 than subtitles D and H of title III and section 342, are 

19 repealed and the provisions of law that were amended or 

20 repealed by such provisions are hereby restored as if such 

21 provisions had not been enacted. 

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1 SEC. 1002. REPEAL OF CERTAIN PROVISIONS IN THE EM2 PLOYEE RETIREMENT INCOME SECURITY 

3 ACT OF 1974. 

4 (a) IN GENERAL.—Part 7 of subtitle B of title I of 

5 the Employee Retirement Income Security Act of 1974 is 

6 repealed and the items relating to such part in the table 

7 of contents in section 1 of such Act are repealed. 

8 (b) CONFORMING AMENDMENT.—Section 514(b) of 

9 such Act (29 U.S.C. 1144(b)) is amended by striking 

10 paragraph (9). 

11 SEC. 1003. REPEAL OF CERTAIN PROVISIONS IN THE PUB12 LIC HEALTH SERVICE ACT AND RELATED 

13 PROVISIONS. 

14 (a) IN GENERAL.—Titles XXII and XXVII of the 

15 Public Health Service Act are repealed. 

16 (b) ADDITIONAL AMENDMENTS.— 

17 (1) Section 1301(b) of such Act (42 U.S.C. 

18 300e(b)) is amended by striking paragraph (6). 

19 (2) Sections 104 and 191 of the Health Insur20 ance Portability and Accountability Act of 1996 are 

21 repealed. 

22 SEC. 1004. EFFECTIVE DATE OF TITLE. 

23 The amendments made by this title shall take effect 

24 January 1, 2013. 

Æ 

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