I

103D CONGRESS

1ST SESSION H. R. 1398

To amend the Internal Revenue Code of 1986 and the Social Security Act

to provide for health insurance coverage for workers and the public

in a manner that contains the costs of health care in the United States.

IN THE HOUSE OF REPRESENTATIVES

MARCH 18, 1993

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

Committees on Energy and Commerce, Ways and Means, and Education

and Labor

A BILL

To amend the Internal Revenue Code of 1986 and the Social

Security Act to provide for health insurance coverage

for workers and the public in a manner that contains

the costs of health care in the United States.

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 ‘‘Flexible Medical Access and Cost Containment Act of

6 1993’’.

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

8 this Act is as follows:
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Sec. 1. Short title; table of contents.

TITLE I—REQUIRING EMPLOYERS TO PROVIDE HEALTH

INSURANCE COVERAGE FOR EMPLOYEES AND DEPENDENTS

Sec. 101. Requirement.

Sec. 102. Meeting requirement through enrollment of employees and families

under qualified employer health plans.

‘‘TITLE XXI—REQUIREMENT FOR ENROLLMENT OF EMPLOYEES

UNDER A QUALIFIED EMPLOYER HEALTH PLAN

‘‘Sec. 2100. Relation to Internal Revenue Code requirement.

‘‘PART A—EMPLOYER REQUIREMENT TO ENROLL EMPLOYEES AND FAMILIES

IN A QUALIFIED EMPLOYER HEALTH PLAN

‘‘Sec. 2101. Application to full-time employees.

‘‘Sec. 2102. Application to part-time employees.

‘‘Sec. 2103. Application to seasonal and temporary employees.

‘‘Sec. 2104. Treatment of all family members as a unit; uniform treatment

of full-time employees and of part-time employees.

‘‘Sec. 2105. Application of requirement to employers of different sizes.

‘‘Sec. 2106. Timing of enrollment; period of coverage.

‘‘PART B—REQUIREMENTS FOR QUALIFIED EMPLOYER HEALTH PLANS

‘‘Sec. 2121. Qualified employer health plan defined.

‘‘Sec. 2122. Requirements relating to employee premiums and cost-sharing.

‘‘PART C—STANDARDS FOR QUALIFIED HEALTH PLANS

‘‘Sec. 2151. Certification of qualified health plans.

‘‘Sec. 2152. Treatment of family as a unit; coverage period; health plan

cards.

‘‘Sec. 2153. Requirements respecting basic benefits.

‘‘Sec. 2154. Requirements respecting limits on pre-existing condition exclusions and coverage standards for basic health services.

‘‘Sec. 2155. Requirements respecting limits on cost-sharing.

‘‘Sec. 2156. Use of payment rates.

‘‘Sec. 2157. Coordination and portability of health coverage under qualified health plans.

‘‘Sec. 2158. Consumer protections.

‘‘Sec. 2159. Preemption of certain state and federal requirements.

‘‘Sec. 2160. Use of uniform claims forms; uniform information reporting.

‘‘PART D—DEFINITIONS AND MISCELLANEOUS

‘‘Sec. 2181. Definitions.

‘‘Sec. 2182. Nonapplication to residents of Puerto Rico and territories.

Sec. 103. Repeal of COBRA continuation requirements.

TITLE II—PROVISION OF HEALTH INSURANCE THROUGH A

PUBLIC HEALTH PLAN

Sec. 201. Public health plan.
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‘‘TITLE XXII—PUBLIC HEALTH PLAN

‘‘PART A—ELIGIBILITY AND ENROLLMENT

‘‘Sec. 2201. Eligibility to enroll for health insurance benefits and to apply

for low-income assistance.

‘‘Sec. 2202. Application for enrollment.

‘‘Sec. 2203. Coverage period; termination of enrollment.

‘‘Sec. 2204. Requirement of health insurance coverage.

‘‘PART B—HEALTH INSURANCE BENEFITS

‘‘Sec. 2211. Required health services.

‘‘PART C—PAYMENTS FOR BENEFITS; DEDUCTIBLES, COINSURANCE, AND

STOP-LOSS PROTECTION FOR REQUIRED HEALTH SERVICES

‘‘Sec. 2221. Payments for benefits.

‘‘Sec. 2222. Deductible for required health services.

‘‘Sec. 2223. Coinsurance for required health services.

‘‘Sec. 2224. Limit on cost-sharing for required health services.

‘‘Sec. 2225. Exclusions; coordination.

‘‘Sec. 2226. Application of particular qualified health plan requirements.

‘‘PART D—PREMIUMS, PUBLIC HEALTH TRUST FUND

‘‘Sec. 2231. Premiums.

‘‘Sec. 2232. Collection of premiums.

‘‘Sec. 2233. Public Health Trust Fund.

‘‘Sec. 2234. Transfer payments in the case of multiple employers.

‘‘Sec. 2235. Use of uniform claims forms; uniform information reporting.

‘‘PART E—ASSISTANCE FOR LOW-INCOME INDIVIDUALS

‘‘Sec. 2241. Assistance for individuals with income below the poverty line

enrolled on a non-employment basis.

‘‘Sec. 2242. Assistance for individuals with income below twice the poverty

line enrolled on a non-employment basis.

‘‘Sec. 2243. Assistance for individuals covered under qualified employer

health plans.

‘‘Sec. 2244. Applications for assistance.

‘‘Sec. 2245. Reconciliation of premium assistance through use of income

statements.

‘‘Sec. 2246. Treatment of certain cash assistance recipients.

‘‘Sec. 2247. Computation of family adjusted total income.

‘‘PART F—ADMINISTRATIVE PROVISIONS

‘‘Sec. 2261. Agreements with hospitals; participating physicians; treatment

of Indian Health Service facilities.

‘‘Sec. 2262. Health maintenance organizations.

‘‘Sec. 2263. Use of fiscal agents.

‘‘Sec. 2264. General administration.

‘‘Sec. 2265. Determinations; appeals; Provider Reimbursement Review

Board.

‘‘Sec. 2266. Program integrity; miscellaneous provisions.

‘‘Sec. 2267. Information by telephone.

‘‘Sec. 2268. Demonstration project authority.
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‘‘Sec. 2269. Incorporation of miscellaneous medicare provisions.

‘‘PART G—[RESERVED]

‘‘PART H—DEFINITIONS AND MISCELLANEOUS

‘‘Sec. 2281. Incorporation of certain definitions used in other health-related titles.

‘‘Sec. 2282. Definitions relating to families.

‘‘Sec. 2283. Other definitions.

‘‘Sec. 2284. Authorizing reciprocal coverage of foreign nationals.

‘‘Sec. 2285. Nonapplication to residents of Puerto Rico and territories.

TITLE III—COST CONTAINMENT

Subtitle A—Health Care Spending Amounts

Sec. 301. Specification of overall health care spending amounts.

Sec. 302. Establishment of Federal Health Care Cost Containment Commission.

Sec. 303. State Health Rate Commissions.

Sec. 304. Standard for payment rates.

Sec. 305. Application of rates under medicare and public programs.

Subtitle B—Administrative Simplification

Sec. 321. Requirement for uniform health claims cards.

Sec. 322. Requirement for entitlement verification system.

Sec. 323. Requirements for uniform claims and electronic claims data set.

Sec. 324. Electronic medical records and reporting.

Sec. 325. Uniform hospital cost reporting.

Sec. 326. Definitions.

Subtitle C—Malpractice Reform

Sec. 331. Malpractice reform.

TITLE IV—GROUP HEALTH INSURANCE REFORM

Sec. 401. Excise tax on premiums received on health insurance policies which

do not meet certain requirements.

Sec. 402. Group health insurance standards.

‘‘TITLE XXIII—GROUP HEALTH INSURANCE STANDARDS

‘‘PART 1—GENERAL STANDARDS; DEFINITIONS

‘‘Sec. 2301. Application of requirements to employment-related health

plans.

‘‘Sec. 2302. Establishment of standards.

‘‘Sec. 2303. Requirements applicable to all employment-related health

plans.

‘‘Sec. 2304. Definitions.

‘‘Sec. 2305. Notice of plans meetings requirements.

‘‘PART 2—SMALL EMPLOYER HEALTH INSURANCE REFORM

‘‘Sec. 2311. Enrollment practice and guaranteed renewability requirements

for small employer health plans.
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‘‘Sec. 2312. Rating practices for small employer health plans.

‘‘Sec. 2313. Basic benefit package for small employer health plans.

‘‘Sec. 2314. Miscellaneous disclosure and record-keeping requirements for

small employer health plans.

‘‘Sec. 2315. Payment of commissions.

‘‘Sec. 2316. Nonapplication in Puerto Rico and the territories.

TITLE V—CHANGES IN MEDICARE PROGRAM

Sec. 501. Coverage of colorectal screening.

Sec. 502. Coverage of certain immunizations.

Sec. 503. Coverage of well-child care.

Sec. 504. Annual screening mammography.

Sec. 505. Demonstration projects for coverage of other preventive services.

Sec. 506. OTA study of process for review of medicare coverage of preventive

services.

Sec. 507. Phased-in requirement of part B enrollment.

Sec. 508. Changes in participation agreements.

Sec. 509. Assuring coordination of enrollment with qualified health plans.

TITLE VI—FINANCING PROVISIONS

Subtitle A—General Provisions

Sec. 601. Increase in wage base for hospital insurance tax.

Subtitle B—Deductibility of Certain Health Insurance Costs

Sec. 611. Indefinite extension of deduction for health insurance costs of selfemployed individuals.

Sec. 612. Increase in amount of deduction for self-employed individuals.

Sec. 613. Deduction for premiums paid by small employers for insurance providing qualified health coverage.

Subtitle C—State Maintenance of Effort

Sec. 621. State maintenance of effort.

TITLE VII—MEDICAID PROVISIONS

Sec. 701. Coordination with public health plan.
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1 TITLE I—REQUIRING EMPLOY2 ERS TO PROVIDE HEALTH IN3 SURANCE COVERAGE FOR

4 EMPLOYEES AND DEPEND5 ENTS

6 SEC. 101. REQUIREMENT.

7 (a) IN GENERAL.—Chapter 47 of the Internal Reve8 nue Code of 1986 is amended by adding at the end thereof

9 the following new section:

10 ‘‘SEC. 5000A. FAILURE TO COVER EMPLOYEES AND DE11 PENDENTS UNDER A QUALIFIED EMPLOYER

12 HEALTH PLAN.

13 ‘‘(a) IMPOSITION OF TAX.—In addition to other

14 taxes, if an employee of any employer is not covered under

15 a qualified employer health plan of such employer, there

16 is hereby imposed on such employer a tax.

17 ‘‘(b) AMOUNT OF TAX.—

18 ‘‘(1) IN GENERAL.—The amount of the tax im19 posed by subsection (a) on any failure with respect

20 to an employee shall be $100 for each day in the

21 noncompliance period with respect to such failure.

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

23 of this section, the term ‘noncompliance period’

24 means, with respect to any failure, the period—
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1 ‘‘(A) beginning on the date such failure

2 first occurs, and

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

4 corrected.

5 ‘‘(c) LIABILITY FOR TAX.—The employer shall be lia6 ble for the tax imposed by subsection (a).

7 ‘‘(d) EXCEPTIONS.—

8 ‘‘(1) TRANSITION.—The taxes imposed by this

9 section shall not take effect before the date on which

10 the requirements of part A of title XXI of the Social

11 Security Act apply with respect to the employer

12 under section 2105(a) of such Act.

13 ‘‘(2) EMPLOYEES COVERED BY FEDERAL

14 HEALTH PLAN.—The taxes imposed by this section

15 shall not apply to any employee of the United States

16 if, by reason of such employment (or the employ17 ment of a family member), the employee—

18 ‘‘(A) is enrolled in a health benefits plan

19 under chapter 89 of title 5, United States Code,

20 or

21 ‘‘(B) is provided medical and dental bene22 fits under chapter 55 of title 10 of such Code.

23 ‘‘(3) TAX NOT TO APPLY WHERE FAILURE NOT

24 DISCOVERED EXERCISING REASONABLE DILI25 GENCE.—No tax shall be imposed by subsection (a)
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1 on any failure during any period for which it is es2 tablished to the satisfaction of the Secretary that the

3 employer did not know, and exercising reasonable

4 diligence would not have known, that such failure

5 existed.

6 ‘‘(4) TAX NOT TO APPLY TO FAILURE COR7 RECTED WITHIN 30 DAYS.—No tax shall be imposed

8 by subsection (a) on any failure if—

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

10 cause and not to willful neglect, and

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

12 first 30 days of the noncompliance period with

13 respect to such failure.

14 ‘‘(5) WAIVER BY SECRETARY.—In the case of a

15 failure which is due to reasonable cause and not to

16 willful neglect, the Secretary may waive part of all

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

18 that the payment of such tax would be unduly bur19 densome relative to the failure involved.

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

21 ‘‘(1) EMPLOYEE; EMPLOYER.—The terms ‘em22 ployee’ and ‘employer’ have the same meanings as

23 such terms have for purposes of chapter 21.

24 ‘‘(2) QUALIFIED EMPLOYER HEALTH PLAN.—

25 The term ‘qualified employer health plan’ means a
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1 plan meeting the requirements of title XXI of the

2 Social Security Act.

3 ‘‘(3) COVERED.—An employee is not considered

4 to be ‘covered’ under a qualified employer health

5 plan if a dependent of the employee, whose coverage

6 is provided for under title XXI of the Social Security

7 Act, is not covered under such plan.’’.

8 (b) DEFICIENCY PROCEDURES TO APPLY TO CHAP9 TER 47.—

10 (1) The following provisions of the Internal

11 Revenue Code of 1986 are each amended by striking

12 ‘‘or 44’’ each place it appears and inserting ‘‘44, or

13 47’’.

14 (A) Subsections (a) and (b)(2) of section

15 6211.

16 (B) Section 6212(a).

17 (C) Subsections (a) and (g) of section

18 6213.

19 (D) Subsections (c) and (d) of section

20 6214.

21 (E) Section 6161(b)(1).

22 (F) Section 6344(a)(1).

23 (G) Subsections (a) and (b)(1) of section

24 6512.

25 (H) Section 7422(e).
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1 (2) Sections 6211(a) and 6862(a) of such Code

2 are each amended by striking ‘‘and 44’’ and insert3 ing ‘‘44, and 47’’.

4 (3) Paragraph (1) of section 6212(b) of such

5 Code is amended—

6 (A) by striking ‘‘or chapter 44’’ and insert7 ing ‘‘chapter 44, or chapter 47’’, and

8 (B) by striking ‘‘chapter 44, and this chap9 ter’’ and inserting ‘‘chapter 44, chapter 47, and

10 this chapter’’.

11 (4) Paragraph (1) of section 6212(c) of such

12 Code is amended by striking ‘‘or of chapter 44 tax

13 for the same taxable period’’ and inserting ‘‘, of

14 chapter 44 tax for the same taxable period, or of

15 chapter 47 for each act or failure to act to which the

16 petition relates’’.

17 (c) CLERICAL AMENDMENTS.—

18 (1) So much of chapter 47 of such Code as pre19 cedes subsection (a) of section 5000 is amended to

20 read as follows:

21 ‘‘CHAPTER 47—TAXES RELATING TO

22 GROUP HEALTH PLANS

‘‘Sec. 5000. Contributions to nonconforming large group health

plans.

‘‘Sec. 5000A. Failure to cover employees and dependents under

a qualified employer health plan.
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1 ‘‘SEC. 5000. CONTRIBUTIONS TO NONCONFORMING LARGE

2 GROUP HEALTH PLANS.’’

3 (2) The table of chapters for subtitle D of such

4 Code is amended by striking the item relating to

5 chapter 47 and inserting the following:

‘‘Chapter 47. Taxes relating to group health plans.’’

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

7 this section shall apply to failures occurring after Decem8 ber 31, 1993.

9 SEC. 102. MEETING REQUIREMENT THROUGH ENROLL10 MENT OF EMPLOYEES AND FAMILIES UNDER

11 QUALIFIED EMPLOYER HEALTH PLANS.

12 The Social Security Act is amended by adding at the

13 end the following new title:

14 ‘‘TITLE XXI—REQUIREMENT FOR ENROLL15 MENT OF EMPLOYEES UNDER A QUALI16 FIED EMPLOYER HEALTH PLAN

17 ‘‘SEC. 2100. RELATION TO INTERNAL REVENUE CODE RE18 QUIREMENT.

19 ‘‘(a) IN GENERAL.—If an employer fails to enroll em20 ployees (and family members) under a qualified employer

21 health plan in accordance with this title, the employer is

22 liable for payment of an excise tax under section 5000A(a)

23 of the Internal Revenue Code of 1986.

24 ‘‘(b) TREATMENT OF SMALL EMPLOYERS.—A small

25 employer may meet such requirements through purchase
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1 of coverage under the public plan provided under title

2 XXII.

3 ‘‘PART A—EMPLOYER REQUIREMENT TO ENROLL EM4 PLOYEES AND FAMILIES IN A QUALIFIED EM5 PLOYER HEALTH PLAN

6 ‘‘SEC. 2101. APPLICATION TO FULL-TIME EMPLOYEES.

7 ‘‘(a) UNMARRIED EMPLOYEES.—

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

9 part, each employer shall, in accordance with this

10 title, enroll each of its full-time employees who is un11 married in a qualified employer health plan.

12 ‘‘(2) MULTIPLE FULL-TIME EMPLOYMENT.—

13 ‘‘(A) EACH OFFERS QUALIFIED PLAN.—In

14 the case of an unmarried individual who is a

15 full-time employee of more than 1 employer, if

16 more than 1 such employer offers the employee

17 enrollment under a qualified employer health

18 plan—

19 ‘‘(i) the individual shall elect (in a

20 manner specified by the Secretary) the

21 qualified employer health plan under which

22 the individual (and family members) will

23 be enrolled;

24 ‘‘(ii) a nonenrolling employer—
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1 ‘‘(I) is not obligated to enroll the

2 employee (and family members) under

3 its qualified employer health plan (if

4 any) and may not charge the individ5 ual any premiums for required cov6 erage under the qualified employer

7 health plan, and

8 ‘‘(II) is not liable for any tax

9 under section 3151(a)(1) of the Inter10 nal Revenue Code of 1986 but is lia11 ble for a nonenrolling employer pre12 mium under section 2234(a)(1)(A);

13 and

14 ‘‘(iii) the enrolling employer is eligible

15 for an enrolling employer subsidy under

16 section 2234(a)(1)(B).

17 ‘‘(B) ONLY 1 OFFERS QUALIFIED PLAN.—

18 In the case of an unmarried individual who is

19 a full-time employee of more than 1 employer,

20 if only 1 employer offers the employee enroll21 ment under a qualified employer health plan—

22 ‘‘(i) the individual shall be enrolled

23 under such plan and, pursuant to sub24 section (c)(2) of section 3151 of the Inter25 nal Revenue Code of 1986, is not subject
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1 to taxes under subsection (a)(2) of such

2 section with respect to employment with

3 nonenrolling employers, and

4 ‘‘(ii) the enrolling employer is eligible

5 for an enrolling employer subsidy under

6 section 2234(a)(1)(B).

7 ‘‘(b) MARRIED EMPLOYEES.—

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

9 part, each employer shall, in accordance with this

10 title, enroll each of its full-time employees who is

11 married in a qualified employer health plan.

12 ‘‘(2) BOTH FULL-TIME EMPLOYEES.—In the

13 case of married individuals, if both are full-time em14 ployees of 1 or more employers, rules established by

15 the Secretary based on the rules under subsection

16 (a)(2) for multiple employment of unmarried individ17 uals shall apply.

18 ‘‘(c) CONSTRUCTION.—Nothing in this section shall

19 be construed as preventing the nonenrolling plan from

20 supplementing the benefits of the enrolling plan.

21 ‘‘(d) DEFINITIONS.—In this section, the terms ‘en22 rolling employer’ and ‘enrolling plan’ mean, with respect

23 to an individual or a married couple, the employer that

24 offers the qualified employer health plan in which the indi25 vidual or couple is enrolled under subsection (a)(2)(A)(i)
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1 or (b)(2)(A)(i) and such plan, respectively, and the terms

2 ‘nonenrolling employer’ and ‘nonenrolling plan’ mean the

3 other employer and other qualified employer health plan,

4 respectively.

5 ‘‘SEC. 2102. APPLICATION TO PART-TIME EMPLOYEES.

6 ‘‘(a) APPLICATION OF FULL-TIME EMPLOYEE

7 RULES.—Subject to subsection (b), the provisions of sec8 tion 2101 shall apply to part-time employees in the same

9 manner as they apply to full-time employees.

10 ‘‘(b) SEPARATE TREATMENT OF PART-TIME AND

11 FULL-TIME EMPLOYEES UNDER QUALIFIED EMPLOYER

12 HEALTH PLANS.—For rule regarding separate, but uni13 form, treatment of full-time and part-time employees (and

14 family members), see section 2104(b).

15 ‘‘SEC. 2103. APPLICATION TO SEASONAL AND TEMPORARY

16 EMPLOYEES.

17 ‘‘(a) ENROLLMENT UNDER QUALIFIED EMPLOYER

18 HEALTH PLAN NOT AFFECTING APPLICATION OF EXCISE

19 TAX.—The enrolling by an employer of an employee des20 ignated under subsection (b) as a seasonal or temporary

21 employee (as defined in section 2181(b)(3)), whether a

22 part-time or full-time employee, under the qualified em23 ployer health plan of the employer shall not be considered,

24 for purposes of section 3151 of the Internal Revenue Code
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1 of 1986, coverage of the employee under a qualified em2 ployer health plan.

3 ‘‘(b) DESIGNATION OF SEASONAL OR TEMPORARY

4 EMPLOYEES.—Each employer shall designate, at the time

5 of initial employment and in a manner specified by the

6 Secretary, if the individual is to be treated under this title

7 and title XXII as a seasonal or temporary employee.

8 ‘‘SEC. 2104. TREATMENT OF ALL FAMILY MEMBERS AS A

9 UNIT; UNIFORM TREATMENT OF FULL-TIME

10 EMPLOYEES AND OF PART-TIME EMPLOYEES.

11 ‘‘(a) TREATMENT OF ALL FAMILY MEMBERS AS A

12 UNIT.—

13 ‘‘(1) IN GENERAL.—In accordance with section

14 2152(a), enrollment of an employee in a qualified

15 employer health plan shall include enrollment of the

16 other family members of the employee.

17 ‘‘(2) TREATMENT OF CHILDREN.—In the case

18 of an individual who is a child, the employer of the

19 child is not required to enroll the child in a qualified

20 employer health plan by virtue of the part-time or

21 full-time employment of the child (whether or not

22 the parent of the child is a full-time or part-time

23 employee). However, the employer is liable for taxes

24 under section 3151(a)(1) of the Internal Revenue

25 Code of 1986 (or payment of a nonenrolling em-
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1 ployer premium under section 2234(a)(1)(A)) with

2 respect to such employment, and the child is, subject

3 to section 3151(c)(2) of such Code, liable for taxes

4 under section 3151(a)(2) of such Code.

5 ‘‘(b) UNIFORM TREATMENT OF FULL-TIME EMPLOY6 EES AND OF PART-TIME EMPLOYEES.—Except as author7 ized under sections 2101 and 2102 (with respect to per8 mitting certain multiple-employed individuals to elect cov9 erage under qualified employer health plans) and as pro10 vided under section 2103 and subsection (a)(2) of this sec11 tion, an employer health plan is not a qualified employer

12 health plan if the plan—

13 ‘‘(1) enrolls some (but not all) full-time employ14 ees (and family members) required to be enrolled

15 under this part, or

16 ‘‘(2) enrolls some (but not all) part-time em17 ployees (and family members) required to be enrolled

18 under this part.

19 However, a plan may be a qualified employer health plan

20 and enroll only full-time employees (and family members),

21 but not part-time employees (and family members).

22 ‘‘SEC. 2105. APPLICATION OF REQUIREMENT TO EMPLOY23 ERS OF DIFFERENT SIZES.

24 ‘‘(a) IN GENERAL.—Except as provided in subsection

25 (b), the requirements of this part apply—
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1 ‘‘(1) as of January 1, 1994, to very large em2 ployers;

3 ‘‘(2) as of January 1, 1995, to large employers;

4 ‘‘(3) as of January 1, 1996, to medium-size em5 ployers; and

6 ‘‘(4) as of January 1, 1997, to small employers.

7 ‘‘(b) TRANSITION FOR COLLECTIVE BARGAINING

8 AGREEMENTS.—The requirements of this part shall not

9 apply to employers with respect to their employees, insofar

10 as such employees are covered under a collective bargain11 ing agreement ratified before the date of the enactment

12 of this title, earlier than the date of termination of such

13 agreement (determined without regard to any extension

14 thereof agreed to after the date of the enactment of this

15 title).

16 ‘‘SEC. 2106. TIMING OF ENROLLMENT; PERIOD OF COV17 ERAGE.

18 ‘‘(a) TIMING OF ENROLLMENT; NOTICES.—

19 ‘‘(1) IN GENERAL.—Enrollment under this part

20 shall occur not later than the date on which the em21 ployment, for which such enrollment is required

22 under this part, commences.

23 ‘‘(2) REFERENCE TO DISCLOSURE REQUIRE24 MENT.—For requirement for disclosure to employees

25 of information respecting the availability of low-in-
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1 come assistance under part E of title XXII, see sec2 tion 2158(a)(1).

3 ‘‘(b) PERIOD OF COVERAGE.—

4 ‘‘(1) BEGINNING OF COVERAGE.—Coverage

5 under a qualified employer health plan shall begin in

6 accordance with section 2152(b).

7 ‘‘(2) TERMINATION OF COVERAGE.—

8 ‘‘(A) IN GENERAL.—If an enrollment is ef9 fected under this part on the basis of employ10 ment, coverage under such enrollment may be

11 terminated, subject to subparagraph (B), on the

12 last day of the month (or of any subsequent

13 month) during which such employment is termi14 nated.

15 ‘‘(B) NOTICE REQUIRED.—Effective on the

16 date specified in section 2157(b)(2), coverage

17 under a qualified employer health plan shall not

18 be terminated unless notice has been provided

19 to the Secretary, as required in section

20 2157(b)(1), of such termination at least 7 days

21 before the last day of the month in which em22 ployment is terminated (or any subsequent

23 month).

24 ‘‘(3) TREATMENT OF FAMILY MEMBERS.—Sub25 ject to section 2152, the period of coverage for fam-
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1 ily members of an employee shall be the same as the

2 period of coverage for the employee.

3 ‘‘PART B—REQUIREMENTS FOR QUALIFIED EMPLOYER

4 HEALTH PLANS

5 ‘‘SEC. 2121. QUALIFIED EMPLOYER HEALTH PLAN DEFINED.

6 ‘‘(a) IN GENERAL.—In this title and title XXII, sub7 ject to subsection (b), the term ‘qualified employer health

8 plan’ means an employment-related health plan (as de9 fined in section 2304(a)(2)) that—

10 ‘‘(1) is a qualified health plan (as defined in

11 section 2151(a)),

12 ‘‘(2) except as provided in section 2122, does

13 not impose premiums, deductibles, or copayments on

14 employees (and family members) required to be en15 rolled in a qualified employer health plan under part

16 A, and

17 ‘‘(3) meets the requirements of section

18 2243(c)(3) (relating to coordination of low-income

19 assistance for deductibles).

20 ‘‘(b) TYPES OF QUALIFIED EMPLOYER HEALTH

21 PLANS.—

22 ‘‘(1) LARGE EMPLOYERS.—A very large or

23 large employer may meet the requirements of this

24 title through a qualified employer health plan that is

25 an insured plan or that is a self-insured plan.
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1 ‘‘(2) MEDIUM-SIZE AND SMALL EMPLOYERS.—

2 A medium-size or small employer may meet the re3 quirements of this title only through a qualified em4 ployer health plan that is an insured plan or through

5 the public health plan under title XXII.

6 ‘‘(3) INSURED PLAN DEFINED.—The term ‘in7 sured plan’ has the meaning given the term ‘applica8 ble accident and health insurance contract’ in sec9 tion 5000B(e)(1) of the Internal Revenue Code of

10 1986.

11 ‘‘SEC. 2122. REQUIREMENTS RELATING TO EMPLOYEE PRE12 MIUMS AND COST-SHARING.

13 ‘‘(a) ENROLLEE PREMIUMS AND COST-SHARING

14 PERMITTED.—

15 ‘‘(1) IN GENERAL.—A qualified employer health

16 plan may require an enrollee to pay for—

17 ‘‘(A) premiums for coverage under the

18 plan, but only if the premiums do not exceed

19 the limitations imposed under this section, and

20 ‘‘(B) cost-sharing amounts for coverage

21 under the plan, but only if the cost-sharing does

22 not exceed the limitations on deductibles,

23 copayments, and coinsurance imposed with re24 spect to qualified health plans under section

25 2155.
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1 ‘‘(2) TREATMENT OF ADDITIONAL, REQUIRED

2 COVERAGE.—If a qualified employer health plan pro3 vides benefits in addition to the benefits required

4 under this title and the employee is not permitted

5 the option of not accepting such additional benefits,

6 the plan—

7 ‘‘(A) may not impose a premium, for such

8 required and additional benefits, that exceeds

9 the premiums that may be imposed for the

10 basic benefits, and

11 ‘‘(B) shall assure that cost-sharing is not

12 imposed with respect to required health services

13 once the cost-sharing limit has been reached in

14 a year with respect to benefits for such services.

15 ‘‘(3) NONDISCRIMINATION IN PREMIUM

16 AMOUNTS.—Under a qualified employer health plan,

17 no employee may be charged a different premium for

18 similar benefits in the same employer health plan for

19 the same beneficiary class based on the age or sex

20 of the employee.

21 ‘‘(b) LIMITATION ON PREMIUMS.—

22 ‘‘(1) MONTHLY PREMIUM LIMITED TO 20 PER23 CENT OF ACTUARIAL RATE.—
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1 ‘‘(A) IN GENERAL.—A qualified employer

2 health plan may not require an employee to pay

3 a premium—

4 ‘‘(i) for coverage for a period of longer

5 than one month, or

6 ‘‘(ii) the amount of which on a month7 ly basis exceeds 20 percent of the monthly

8 actuarial rate (as defined under subpara9 graph (B)).

10 ‘‘(B) MONTHLY ACTUARIAL RATE DE11 FINED.—For purposes of this subsection, the

12 term ‘monthly actuarial rate’ means, with re13 spect to a qualified employer health plan in a

14 plan year, the average monthly per enrollee

15 amount that the plan estimates, for enrollees

16 under the plan during the year, would be nec17 essary to pay for the total benefits required

18 during the year under the plan (with respect to

19 required health services), including admin20 istrative costs for the provision of such benefits

21 and an appropriate amount for a contingency

22 margin.

23 ‘‘(C) APPLICATION ON BASIS OF FAMILY

24 STATUS.—For purposes of subparagraph (B), a

25 qualified employer health plan may provide for
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1 the premium to be applied, and the monthly ac2 tuarial rate described in such subparagraph to

3 be estimated, for required health services based

4 on the beneficiary classes described in section

5 2231(d)(1) or on such other beneficiary classi6 fications, consistent with subsection (a), as the

7 employer or plan may specify.

8 ‘‘(3) LIABILITY FOR PAYMENT OF PREMIUMS.—

9 An employee enrolled under a qualified employer

10 health plan is liable for payment of premiums re11 quired under that plan in accordance with this sub12 section. In no case shall an employee be liable for

13 premiums with respect to a qualified employer

14 health plan, other than the portion of the premium

15 which may be imposed on the employee consistent

16 with this section.

17 ‘‘(4) WITHHOLDING PERMITTED.—No provision

18 of State law shall prevent an employer of an em19 ployee enrolled under a qualified employer health

20 plan from withholding the amount of any premium

21 due by the employee under this subsection from the

22 wages paid the employee.

23 ‘‘(5) CONSTRUCTION.—Nothing in this section

24 shall be construed—
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•HR 1398 IH

1 ‘‘(A) as preventing an employer from pay2 ing part or all of the employee premium for re3 quired health services or other health services,

4 or

5 ‘‘(B) subject to subsection (a), from re6 quiring an employee to pay for all or part of the

7 premium for benefits for services other than re8 quired health services.

9 ‘‘PART C—STANDARDS FOR QUALIFIED HEALTH PLANS

10 ‘‘SEC. 2151. CERTIFICATION OF QUALIFIED HEALTH PLANS.

11 ‘‘(a) QUALIFIED HEALTH PLAN DEFINED.—For

12 purposes of this title, the term ‘qualified health plan’

13 means a health plan that the Secretary certifies, upon ap14 plication by the plan, to meet the requirements of this

15 part.

16 ‘‘(b) REVIEW AND RECERTIFICATION.—The Sec17 retary shall establish procedures for the periodic review

18 and recertification of plans as qualified health plans.

19 ‘‘(c) TERMINATION OF CERTIFICATION.—The Sec20 retary shall terminate the certification of a qualified

21 health plan if the Secretary determines that the plan no

22 longer meets the requirements for certification. Before

23 effecting a termination, the Secretary shall provide the

24 plan notice and opportunity for a hearing on the proposed

25 termination.
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1 ‘‘SEC. 2152. TREATMENT OF FAMILY AS A UNIT; COVERAGE

2 PERIOD; HEALTH PLAN CARDS.

3 ‘‘(a) TREATMENT OF FAMILY AS A UNIT.—

4 ‘‘(1) IN GENERAL.—Subject to paragraph (2),

5 enrollment of an individual in a qualified health plan

6 shall include enrollment of the other family members

7 (as defined in section 2282(1)) of the individual.

8 ‘‘(2) TREATMENT OF INELIGIBLE INDIVID9 UALS.—Nothing in paragraph (1) shall be construed

10 as requiring a qualified health plan (or permitting

11 the public health plan) to enroll individuals who are

12 not eligible individuals (as defined in section

13 2201(d)).

14 ‘‘(b) BEGINNING OF COVERAGE.—

15 ‘‘(1) IN GENERAL.—In the case of an individual

16 enrolled under any qualified health plan, subject to

17 subsection (c), the benefits under the plan shall first

18 become available for services furnished beginning on

19 the first day of the month following the month of

20 enrollment.

21 ‘‘(2) SPECIAL RULES.—The Secretary shall pro22 vide for such standards as may be necessary to pro23 vide for the allocation of responsibility among quali24 fied health plans (including the public health plan

25 under title XXII) in the case of an inpatient hospital

26 stay, or in the case in which a single payment
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1 amount if made for other services provided over a

2 period of time, that begins during the period of cov3 erage under one qualified health plan and ends dur4 ing a period of coverage under another qualified

5 health plan.

6 ‘‘(c) STANDARDS TO REFLECT CHANGES IN FAMILY

7 AND EMPLOYMENT STATUS.—

8 ‘‘(1) IN GENERAL.—Under standards estab9 lished by the Secretary consistent with this sub10 section, qualified health plans shall provide for ap11 propriate changes in the coverage of family members

12 to take into account—

13 ‘‘(A) changes in family composition or sta14 tus, including marriage, divorce (or legal sepa15 ration), birth or adoption of children, and the

16 aging of children into adulthood, and

17 ‘‘(B) changes in employment status.

18 ‘‘(2) MONTHLY CHANGES.—Except as specifi19 cally provided in this subsection, such standards

20 shall be designed—

21 ‘‘(A) to effect a change in enrollment (or

22 status of enrollment) as of the first day of the

23 first month (or, in order to provide for notice

24 and an opportunity for coordination among
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•HR 1398 IH

1 plans, a later month) following the date of the

2 event causing the change,

3 ‘‘(B) to prevent any periods of noncoverage

4 under any qualified health plans, and

5 ‘‘(C) to provide, in the case of a change of

6 family status such as marriage, divorce, or legal

7 separation, for accounting and crediting of cost8 sharing among family members (described in

9 section 2157(c)) in an equitable and admin10 istrable manner.

11 ‘‘(3) TREATMENT OF NEWBORNS.—

12 ‘‘(A) BIRTH TO WOMAN DURING PERIOD

13 OF COVERAGE.—Any child born to a woman

14 during the period of coverage under a qualified

15 health plan shall, as of the date of birth, be

16 automatically enrolled and covered for benefits

17 under the plan.

18 ‘‘(B) BIRTH TO WOMAN WITHOUT COV19 ERAGE.—Any child born in the United States to

20 a woman who is not, at the time of birth, en21 rolled under a qualified health plan shall be

22 automatically enrolled and covered for benefits

23 under this title as of the date of birth if an ap24 plication for such enrollment is made not later
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•HR 1398 IH

1 than 60 days after the date of birth or, if later,

2 the end of the year in which the child is born.

3 ‘‘(4) ADOPTION.—

4 ‘‘(i) TREATMENT OF VOLUNTARY RELIN5 QUISHMENT.—Any child who is voluntarily re6 linquished to a public or private agency shall,

7 upon the application by the agency, be enrolled

8 under this title and covered as of the date of

9 the relinquishment, until the date of the child’s

10 placement for adoption.

11 ‘‘(ii) TREATMENT OF ADOPTED CHIL12 DREN.—Any child who is placed for adoption

13 with an individual during the period the individ14 ual is enrolled and covered under a qualified

15 health plan shall, as of the date of the place16 ment for adoption, be treated as the child of the

17 individual and be automatically enrolled and

18 covered under such plan.

19 ‘‘(5) PLACEMENT IN CUSTODY OF PUBLIC

20 AGENCY PURSUANT TO COURT ORDER OR OTHER21 WISE.—Any child who is removed from the family

22 and placed in the temporary custody of a public

23 agency pursuant to a court order or otherwise shall,

24 upon application by the public agency on or after the

25 date of the removal and placement with the public
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•HR 1398 IH

1 agency, be deemed to be automatically enrolled and

2 covered for benefits under this title as of the date

3 of the application, until the child is returned to the

4 family or placed for adoption.

5 ‘‘(6) TREATMENT OF LEGAL WARDS, FOSTER

6 CHILDREN, ETC.—In cases not described in para7 graphs (4) or (5), the Secretary shall establish

8 standards relating to the time an individual de9 scribed in section 2282(5)(B)(ii) is treated as the

10 child of the person with custody and such other

11 standards as may be necessary to assure the proper

12 coordination of enrollment of children and other in13 dividuals among qualified health plans.

14 ‘‘(d) HEALTH PLAN CARDS.—In conjunction with en15 rollment of individuals under a qualified health plan, the

16 plan shall provide for the issuance of a card which may

17 be used for purposes of identification of such enrollment

18 and the processing of claims for benefits under the plan.

19 Such card shall—

20 ‘‘(1) identify (as appropriate) the types of bene21 fits to which the individual is entitled under the

22 plan, and

23 ‘‘(2) contain such other information as the Sec24 retary (and the plan) shall specify.
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1 ‘‘SEC. 2153. REQUIREMENTS RESPECTING BASIC BENEFITS.

2 ‘‘(a) IN GENERAL.—Each qualified health plan must

3 provide for benefits for at least all required health services

4 (as defined in section 2211(a)(2)).

5 ‘‘(b) TREATMENT OF ADDITIONAL BENEFITS.—

6 Nothing in this section shall be construed as preventing

7 a qualified health plan from including benefits in addition

8 to benefits for required health services.

9 ‘‘SEC. 2154. REQUIREMENTS RESPECTING LIMITS ON PRE10 EXISTING CONDITION EXCLUSIONS AND COV11 ERAGE STANDARDS FOR BASIC HEALTH

12 SERVICES.

13 ‘‘(a) IN GENERAL.—Except as provided under sub14 section (b), a qualified health plan—

15 ‘‘(1) may not deny, limit, or condition the cov16 erage under (or benefits of) the plan with respect to

17 basic health services based on the health status,

18 claims experience, receipt of health care, medical his19 tory, or lack of evidence of insurability, of an indi20 vidual, and

21 ‘‘(2) may not provide for exclusions from cov22 erage for basic health services that are more restric23 tive than the exclusions for such services under this

24 title.

25 ‘‘(b) TREATMENT OF PRE-EXISTING CONDITION EX26 CLUSIONS FOR ALL SERVICES.—
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1 ‘‘(1) IN GENERAL.—Subject to the succeeding

2 provisions of this subsection, a qualified health plan

3 (other than the public health plan) may exclude cov4 erage with respect to services related to treatment of

5 a pre-existing condition, but the period of such ex6 clusion may not exceed 6 months.

7 ‘‘(2) NONAPPLICATION TO NEWBORNS AND

8 SUNSET OF PRE-EXISTING CONDITION EXCLUSIONS

9 FOR BASIC HEALTH SERVICES.—The exclusion of

10 coverage permitted under paragraph (1) shall not

11 apply to—

12 ‘‘(A) services furnished to newborns, or

13 ‘‘(B) basic health services furnished on or

14 after July 1 of the 4th year beginning after the

15 date of the enactment of this title.

16 ‘‘(3) CREDITING OF PREVIOUS COVERAGE.—

17 ‘‘(A) IN GENERAL.—If an individual is in

18 a period of continuous coverage (as defined in

19 subparagraph (B)(i)) with respect to particular

20 services as of the date of initial coverage under

21 a plan, any period of exclusion of coverage with

22 respect to a pre-existing condition for such serv23 ices or type of services shall be reduced by 1

24 month for each month in the period of continu25 ous coverage.
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1 ‘‘(B) DEFINITIONS.—In this paragraph:

2 ‘‘(i) PERIOD OF CONTINUOUS COV3 ERAGE.—The term ‘period of continuous

4 coverage’ means, with respect to particular

5 services, the period beginning on the date

6 an individual is enrolled under a health

7 plan or program (including a qualified

8 health plan, a Federal health plan, the

9 medicare program, a State plan under title

10 XIX, or a State general medical assistance

11 program) which provides the same or sub12 stantially similar benefits with respect to

13 such services and ends on the date the in14 dividual is not so enrolled for a continuous

15 period of more than 3 months.

16 ‘‘(ii) PRE-EXISTING CONDITION.—The

17 term ‘pre-existing condition’ means, with

18 respect to coverage under a plan, a condi19 tion which has been diagnosed or treated

20 during the 3-month period ending on the

21 day before the first date of such coverage,

22 except that such term does not include a

23 condition which was first diagnosed or

24 treated during a period of continuous

25 coverage.
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1 ‘‘(C) STANDARDS FOR SIMILAR BENE2 FITS.—The Secretary shall establish such cri3 teria for determining if benefits are substan4 tially similar as may be necessary to carry out

5 this subsection.

6 ‘‘SEC. 2155. REQUIREMENTS RESPECTING LIMITS ON COST7 SHARING.

8 ‘‘(a) IN GENERAL.—A qualified health plan may not

9 impose deductibles, copayments, or coinsurance with re10 spect to required health services in excess of the deductible

11 and coinsurance permitted under part C of title XXII with

12 respect to such services (not taking into account any low13 income assistance provided under part E of title XXII).

14 ‘‘(b) CONSTRUCTION.—Nothing in this section shall

15 be construed as preventing a qualified health plan from

16 providing for deductibles, coinsurance, and copayments or

17 other restrictions with respect to services other than re18 quired health services that are different from those per19 mitted with respect to required health services.

20 ‘‘SEC. 2156. USE OF PAYMENT RATES.

21 ‘‘A qualified health plan shall establish adequate pay22 ment rates for required health services using the payment

23 rates approved under title III of the Health Insurance

24 Coverage and Cost Containment Act of 1993.
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1 ‘‘SEC. 2157. COORDINATION AND PORTABILITY OF HEALTH

2 COVERAGE UNDER QUALIFIED HEALTH

3 PLANS.

4 ‘‘(a) IN GENERAL.—Each qualified health plan shall

5 provide for coordination of—

6 ‘‘(1) enrollment and termination of enrollment

7 among the qualified health plans, the public health

8 plan, and title XVIII, and

9 ‘‘(2) application of deductibles and limitations

10 on cost-sharing among such plans,

11 in accordance with standards established by the Secretary

12 consistent with this section.

13 ‘‘(b) REQUIREMENT OF NOTICES WITH RESPECT TO

14 COVERAGE.—

15 ‘‘(1) IN GENERAL.—Each qualified health plan

16 shall provide notice at the time an individual’s cov17 erage under the plan begins or is terminated. Such

18 notice shall be provided (in a form and manner and

19 at a time specified by the Secretary)—

20 ‘‘(A) to the individual (or in the case of en21 rollment only of a child or children, to the par22 ent enrolling the child or children), and

23 ‘‘(B) effective (on the date specified in

24 paragraph (2)) to the Secretary.
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1 The notice under this paragraph shall include the

2 names and other identifying information of family

3 members whose coverage is affected by the change.

4 ‘‘(2) DATE OF REQUIREMENT FOR NOTICE TO

5 PUBLIC HEALTH PLAN.—The date specified in this

6 paragraph is January 1, 1994, or, with respect to a

7 qualified employer health plan of an employer, the

8 date the requirements of part A apply with respect

9 to the employer under section 2105(a).

10 ‘‘(3) NOTICE TO BENEFICIARY AND OTHER

11 QUALIFIED HEALTH PLANS UPON OBTAINING COV12 ERAGE.—In the case of an individual who begins

13 coverage under a qualified employer health plan (or

14 under this title on an employment basis), when the

15 Secretary receives notice under paragraph (1)(B)—

16 ‘‘(A) if, at the time of obtaining such cov17 erage, the individual is enrolled on a non-em18 ployment basis in the public health plan, the

19 Secretary shall notify the individual that cov20 erage for such services on such a basis or for

21 such benefits shall be terminated effective on

22 the date of coverage under such a plan, and

23 ‘‘(B) the Secretary shall provide for notice

24 to any other qualified health plan in which the
37

•HR 1398 IH

1 Secretary knows the individual is enrolled of the

2 fact of such new coverage.

3 ‘‘(4) NOTICES OF TERMINATION.—Each notice

4 of termination under paragraph (1) shall include—

5 ‘‘(A) the effective date of the termination,

6 ‘‘(B) in the case of notice to the Secretary,

7 sufficient information to permit enrollment of

8 the individuals affected under the public health

9 plan, and

10 ‘‘(C) in the case of an individual whose

11 coverage under the plan is terminated other

12 than at the end of a calendar year, the account13 ing statement produced under subsection (c)(2).

14 ‘‘(c) ACCOUNTING FOR COST-SHARING.—

15 ‘‘(1) IN GENERAL.—Each qualified health plan

16 shall provide for an ongoing accounting, for each en17 rollee (and enrolled family members) on a calendar

18 year basis, of expenses incurred for required health

19 services that are counted towards the deductible es20 tablished under section 2222 and that are counted

21 towards the cost-sharing limit established under sec22 tion 2224. The amount credited for each account

23 shall be determined in accordance with standards es24 tablished by the Secretary in order to provide con25 sistency among qualified health plans and to pro-
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1 mote portability of benefits across qualified health

2 plans.

3 ‘‘(2) STATEMENT OF ACCOUNT BALANCE.—In

4 the case of an individual whose coverage under the

5 plan is terminated other than at the end of a cal6 endar year, the qualified health plan shall produce

7 an accounting statement (in a uniform manner es8 tablished by the Secretary) of the amounts that are

9 credited under the plan towards such deductible and

10 cost-sharing limitations for the year for each enrollee

11 (and family members) involved, in accordance with

12 the accounting under paragraph (1).

13 ‘‘(3) CREDITING OF PREVIOUS EXPENSES TO14 WARDS DEDUCTIBLES AND COINSURANCE.—Each

15 qualified health plan shall, in the case of an individ16 ual who is enrolled under the plan after the begin17 ning of a year, credit, against the deductible and

18 cost-sharing limit for required health services under

19 its plan, the amounts previously accounted against

20 the deductible and cost-sharing limit under another

21 qualified health plan for the calendar year. The

22 credit under this subparagraph shall be based on the

23 accounting statement produced under paragraph (2).

24 ‘‘(d) COVERAGE UNDER PUBLIC HEALTH PLAN.—
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1 ‘‘(1) IN GENERAL.—Except as provided in this

2 subsection, the public health plan under title XXII

3 shall enroll each eligible individual whose coverage

4 under another qualified health plan or under title

5 XVIII is terminated, effective on the date following

6 the effective date of termination of coverage under

7 such plan.

8 ‘‘(2) TREATMENT OF MEDICARE-ELIGIBLE INDI9 VIDUALS.—Except as provided in paragraphs (3)

10 and (4), in the case of an individual who—

11 ‘‘(A) is eligible for enrollment under part

12 B of title XVIII,

13 ‘‘(B) is not so enrolled because of enroll14 ment under a qualified health plan, but

15 ‘‘(C) whose enrollment under such a plan

16 is terminated,

17 the Secretary shall provide, upon the effective date

18 of such termination, for enrollment of the individual

19 under such part.

20 ‘‘(3) OBTAINING ALTERNATE COVERAGE.—

21 Paragraphs (1) and (2) shall not apply if the indi22 vidual provides satisfactory evidence that the individ23 ual has obtained coverage through another qualified

24 health plan or is a medicare beneficiary enrolled

25 under part B of title XVIII.
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1 ‘‘(4) NO AUTOMATIC ENROLLMENT DURING

2 TRANSITION.—Paragraphs (1) and (2) shall not

3 apply to terminations occurring before January 1,

4 1997. During the period before January 1, 1997, be5 fore an individual described in paragraph (1) enrolls

6 under this title, the Secretary shall provide the indi7 vidual with a notice of the minimum enrollment pe8 riod required under section 2202(a)(3).

9 ‘‘(e) PROVISION OF INFORMATION ON ENROLLEES.—

10 Each qualified health plan shall provide the Secretary with

11 such information as the Secretary may require in order

12 to ascertain whether (and the amount of) any transfer

13 payments to be made under section 2234.

14 ‘‘SEC. 2158. CONSUMER PROTECTIONS.

15 ‘‘(a) DISCLOSURE REQUIREMENTS FOR EMPLOYER

16 PLANS.—

17 ‘‘(1) NOTICE OF AVAILABILITY OF LOW-INCOME

18 ASSISTANCE.—At the time of enrollment of an em19 ployee under a qualified employer health plan, the

20 plan (directly or through the employer) shall provide

21 the employee with a notice (in a form specified by

22 the Secretary) of the low-income assistance available

23 under part E of title XXII with respect to enroll24 ment under the plan.
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1 ‘‘(2) FOR SMALL EMPLOYER PLANS.—In the

2 case of a qualified employer health plan that is of3 fered to a small employer, the plan may not be is4 sued or sold to the employer unless the employer has

5 been provided, in addition to any information re6 quired to be disclosed under paragraph (1), the fol7 lowing information:

8 ‘‘(A) A description of the benefits covered

9 in the plan and cost-sharing required with re10 spect to such benefits.

11 ‘‘(B) A comparison of the benefits and

12 cost-sharing described in subparagraph (A) with

13 the benefits and cost-sharing available under

14 the public health plan (not taking into account

15 any low-income assistance under part E of title

16 XXII).

17 ‘‘(3) STANDARD FORMAT.—The disclosures

18 under paragraphs (1) and (2) shall be made in a

19 uniform format established by the Secretary.

20 ‘‘(4) VIOLATIONS.—Any entity that issues or

21 sells a qualified health plan in violation of paragraph

22 (1) or (2) is subject to a civil money penalty of an

23 amount not to exceed $5,000 with respect to each

24 such issuance or sale. The provisions of section

25 1128A (other than the first sentence of subsection
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1 (a) and other than subsection (b)) shall apply to a

2 civil money penalty under the previous sentence in

3 the same manner as such provisions apply to a pen4 alty or proceeding under section 1128A(a).

5 ‘‘(b) EFFECTIVE GRIEVANCE PROCEDURES.—Each

6 qualified health plan shall provide for effective procedures

7 for hearing and resolving grievances between the plan and

8 individuals enrolled under the plan.

9 ‘‘(c) RESTRICTION ON CERTAIN PHYSICIAN INCEN10 TIVE PLANS.—

11 ‘‘(1) IN GENERAL.—A health plan is not a

12 qualified health plan if it operates a physician incen13 tive plan (as defined in paragraph (2)) unless the re14 quirements specified in clauses (i) through (iii) of

15 section 1876(i)(8)(A) are met (in the same manner

16 as they apply to eligible organizations under section

17 1876).

18 ‘‘(2) PHYSICIAN INCENTIVE PLAN DEFINED.—

19 In this subsection, the term ‘physician incentive

20 plan’ means any compensation or other financial ar21 rangement between the qualified health plan and a

22 physician or physician group that may directly or in23 directly have the effect of reducing or limiting serv24 ices provided with respect to individuals enrolled

25 under the plan.
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1 ‘‘(d) ENROLLEE FINANCIAL PROTECTION.—

2 ‘‘(1) SOLVENCY PROTECTION FOR INSURED

3 PLANS.—In the case of a qualified health plan that

4 is an insured plan (as defined by the Secretary) and

5 is issued in a State, in order for the plan to be cer6 tified under this part the Secretary must find that

7 the State has established satisfactory protection of

8 enrollees with respect to potential insolvency.

9 ‘‘(2) PROTECTION AGAINST PROVIDER

10 CLAIMS.—In the case of a failure of a qualified

11 health plan to make payments with respect to re12 quired health services, under standards established

13 by the Secretary, an individual who is enrolled under

14 the plan is not liable to any health care provider or

15 practitioner with respect to the provision of required

16 health services for payments in excess of the amount

17 for which the enrollee would have been liable if the

18 plan were to have made payments in a timely

19 manner.

20 ‘‘SEC. 2159. PREEMPTION OF CERTAIN STATE AND FEDERAL

21 REQUIREMENTS.

22 ‘‘(a) BENEFIT AND COVERAGE RULES.—Effective as

23 of January 1, 1994, no State shall establish or enforce

24 any law or regulation that—
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1 ‘‘(1) requires the offering, as part of a qualified

2 employer health plan, of any services, category of

3 care, or services of any class or type of provider that

4 is different from the benefits required to be provided

5 under section 2153,

6 ‘‘(2) specifies the individuals to be covered

7 under a qualified employer health plan or the dura8 tion of such coverage, or

9 ‘‘(3) requires a right of conversion from a quali10 fied employer health plan to an individual qualified

11 health plan.

12 ‘‘(b) STATE DEFINED.—In this section, the term

13 ‘State’ means the 50 States and the District of Columbia.

14 ‘‘SEC. 2160. USE OF UNIFORM CLAIMS FORMS; UNIFORM IN15 FORMATION REPORTING.

16 ‘‘Each qualified health plan shall provide for—

17 ‘‘(1) submission of claims in accordance with

18 section 323 of the Health Insurance Coverage and

19 Cost Containment Act of 1993, and

20 ‘‘(2) reporting to the Commission of informa21 tion on required health services provided under the

22 plan pursuant to standards promulgated under sec23 tion 324 of such Act.
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1 ‘‘PART D—DEFINITIONS AND MISCELLANEOUS

2 ‘‘SEC. 2181. DEFINITIONS.

3 ‘‘(a) WAGES, EMPLOYMENT, ETC.—In this title—

4 ‘‘(1) WAGES.—The term ‘wages’ has the mean5 ing given such term by section 3121(a) of the Inter6 nal Revenue Code of 1986 except that—

7 ‘‘(A) the modifications of subsection (b)

8 shall apply in determining whether any service

9 is employment, and

10 ‘‘(B) the applicable contribution base

11 under section 3121(x)(2) of such Code (relating

12 to hospital insurance) shall be used under sec13 tion 3121(a)(1) for purposes of this title.

14 ‘‘(2) EMPLOYMENT.—

15 ‘‘(A) IN GENERAL.—Except as modified in

16 subparagraph (B), the term ‘employment’ has

17 the meaning given such term by section

18 3121(b) of the Internal Revenue Code of 1986.

19 ‘‘(B) MODIFICATIONS.—The modifications

20 referred to in this paragraph are that—

21 ‘‘(i) paragraphs (5), (6), (7), (8), and

22 (9) of section 3121(b) of such Code shall

23 not apply, and

24 ‘‘(ii) subsections (r) and (w) of section

25 3121 of such Code shall not apply.
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1 ‘‘(C) TREATMENT OF FEDERAL EMPLOY2 MENT.—In applying subparagraph (A), the

3 term ‘employment’ shall not be considered to

4 include service performed in the employ of the

5 United States if, in connection with the per6 formance of such service (or the service of a

7 family member), the individual—

8 ‘‘(i) is enrolled in a health benefits

9 plan under chapter 89 of title 5, United

10 States Code, or

11 ‘‘(ii) is provided medical and dental

12 benefits under chapter 55 of title 10, Unit13 ed States Code.

14 ‘‘(3) EMPLOYEE; EMPLOYER.—The terms ‘em15 ployee’ and ‘employer’ have the same meanings as

16 such terms have for purposes of chapter 21 of the

17 Internal Revenue Code of 1986.

18 ‘‘(b) DEFINITIONS RELATING TO EMPLOYEES.—In

19 this title:

20 ‘‘(1) FULL-TIME EMPLOYEE.—The term ‘full21 time employee’ means, with respect to an employer,

22 an employee who normally performs on a monthly

basis at least 171 23 ⁄2 hours of service per week for

24 that employer.
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1 ‘‘(2) PART-TIME EMPLOYEE.—The term ‘part2 time employee’ means, with respect to an employer,

3 an employee who is not a full-time employee.

4 ‘‘(3) SEASONAL OR TEMPORARY EMPLOYEE.—

5 The term ‘seasonal or temporary employee’ means,

6 with respect to an employer, an employee who is em7 ployed by the employer for not more than 4 months

8 in any 12 month period; except that the Secretary

9 may extend such period for up to 6 months in any

10 12 month period in the case of employment that is

11 sporadic, irregular, and seasonal in nature.

12 ‘‘(4) TREATMENT OF CONSULTANTS AND CON13 TRACTORS.—The term ‘employee’ includes an indi14 vidual who is a consultant or contractor of an em15 ployer if the Secretary determines that the consult16 ing arrangement or contract was entered into to

17 avoid the requirements of this title.

18 ‘‘(5) EXCLUSION OF FOREIGN EMPLOYMENT.—

19 The term ‘employee’ does not include an individ20 ual—

21 ‘‘(A) who is not a citizen or resident of the

22 United States with respect to service performed

23 outside the United States, or

24 ‘‘(B) who is a citizen or resident of the

25 United States with respect to services per-
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•HR 1398 IH

1 formed outside the United States for an em2 ployer other than an American employer (as de3 fined in section 3121(h) of the Internal Reve4 nue Code of 1986).

5 ‘‘(c) DEFINITIONS RELATING TO SIZE OF EM6 PLOYER.—In this title:

7 ‘‘(1) SMALL EMPLOYER.—The term ‘small em8 ployer’ means, with respect to a calendar year, an

9 employer that normally employs fewer than 50 em10 ployees on a typical business day during the cal11 endar year.

12 ‘‘(2) MEDIUM-SIZE EMPLOYER.—The term ‘me13 dium-size employer’ means, with respect to a cal14 endar year, an employer that normally employs at

15 least 50, but fewer than 101, employees on a typical

16 business day during the calendar year.

17 ‘‘(3) LARGE EMPLOYER.—The term ‘large em18 ployer’ means, with respect to a calendar year, an

19 employer that normally employs at least 100, but

20 fewer than 250, employees on a typical business day

21 during the calendar year.

22 ‘‘(4) VERY LARGE EMPLOYER.—The term ‘very

23 large employer’ means, with respect to a calendar

24 year, an employer that normally employs at least
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•HR 1398 IH

1 250 employees on a typical business day during the

2 calendar year.

3 ‘‘(4) APPLICATION OF CONTROLLED GROUP

4 RULES.—For purposes of determining if an em5 ployer is a small, medium-size, large, or very large

6 employer or the number of hours an individual is

7 normally employed with respect to an employer,

8 rules similar to the rules of subsection (b) and (c)

9 of section 414 of the Internal Revenue Code of 1986

10 shall apply.

11 ‘‘(d) INCORPORATION OF DEFINITIONS.—Except as

12 otherwise provided in this title, the terms defined in sec13 tion 2282 and 2283 shall apply under this title in the

14 same manner as they apply under title XXII.

15 ‘‘SEC. 2182. NONAPPLICATION TO RESIDENTS OF PUERTO

16 RICO AND TERRITORIES.

17 ‘‘The provisions of this title shall not apply with re18 spect to an employee who is not a resident of one of the

19 50 States or the District of Columbia.’’.

20 SEC. 103. REPEAL OF COBRA CONTINUATION REQUIRE21 MENTS.

22 (a) INTERNAL REVENUE CODE PROVISIONS.—

23 (1) IN GENERAL.—Section 4980B of the Inter24 nal Revenue Code of 1986 is repealed.
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1 (2) CONFORMING AMENDMENTS.—Section 414

2 of such Code is amended—

3 (A) in subsection (n)(3)(C), by striking

4 ‘‘505, and 4980B’’ and inserting ‘‘and 505’’,

5 and

6 (B) in subsection (t)(2), by striking ‘‘505,

7 or 4980B’’ and inserting ‘‘or 505’’.

8 (b) ERISA.—

9 (1) IN GENERAL.—Part 6 of subtitle B of title

10 I of the Employee Retirement Income Security Act

11 of 1974 is repealed.

12 (2) CONFORMING AMENDMENT.—Section

13 502(c)(1) of such Act (29 U.S.C. 1132(c)(1)) is

14 amended by striking ‘‘paragraph (1) or (4) of sec15 tion 606 or’’.

16 (c) PUBLIC HEALTH SERVICE ACT.—Title XXII of

17 the Public Health Service Act is repealed.

18 (d) EFFECTIVE DATE.—The repeals and amend19 ments made by this section shall apply to health plans of

20 employers as of the date specified with respect to employ21 ers of that size under section 2105 of the Social Security

22 Act.

23 (e) NOTICE OF BENEFITS UNDER PUBLIC HEALTH

24 PLAN.—In the case of continuation coverage which is in

25 effect on the date of a repeal under this section but which
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1 is to be discontinued after such date (and before the date

2 required under law in effect before the date of the enact3 ment of this Act) such continuation may not be discon4 tinued without 30-days notice to the individual of such dis5 continuation. Such notice shall include such information

6 respecting continuation of coverage through enrollment

7 under the public health plan under title XXII of the Social

8 Security Act as the Secretary of Health and Human Serv9 ices shall specify.

10 TITLE II—PROVISION OF

11 HEALTH INSURANCE

12 THROUGH A PUBLIC HEALTH

13 PLAN

14 SEC. 201. PUBLIC HEALTH PLAN.

15 The Social Security Act is amended by adding after

16 the title added by section 101 the following new title:

17 ‘‘TITLE XXII—PUBLIC HEALTH PLAN

18 ‘‘PART A—ELIGIBILITY AND ENROLLMENT

19 ‘‘SEC. 2201. ELIGIBILITY TO ENROLL FOR HEALTH INSUR20 ANCE BENEFITS AND TO APPLY FOR LOW-IN21 COME ASSISTANCE.

22 ‘‘(a) ELIGIBILITY TO ENROLL FOR HEALTH INSUR23 ANCE BENEFITS.—

24 ‘‘(1) IN GENERAL.—Subject to paragraph (2),

25 each eligible individual (as defined in subsection (d))
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•HR 1398 IH

1 who is not a medicare beneficiary and who is not en2 rolled under a qualified employer health plan pursu3 ant to title XXI or under a Federal health plan (as

4 defined in section 2204(f)) is eligible to enroll under

5 this title for health insurance benefits.

6 ‘‘(2) ENROLLMENT BY ELECTING SMALL OR

7 MEDIUM-SIZE EMPLOYERS.—In order to meet the re8 quirements of title XXI, a small or medium-size em9 ployer may provide for the enrollment of full-time

10 employees (and family members) in the plan under

11 this title in a manner specified by the Secretary, but

12 only if—

13 ‘‘(A) the employer complies with the re14 quirements of section 2122 with respect to the

15 plan under this title as if the plan under this

16 title were a qualified employer health plan; and

17 ‘‘(B) provides for payment of premiums (in

18 the amounts specified in section 2231) in a

19 manner specified by the Secretary.

20 ‘‘(3) EFFECTIVE DATE.—No health insurance

21 benefits are available under this title for items and

22 services furnished before January 1, 1994, or, for

23 individuals enrolled under this title as employees (or

24 dependents) of medium-size or small employers, be25 fore January 1, 1996, or 1997, respectively.
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1 ‘‘(b) ELIGIBILITY TO APPLY FOR LOW-INCOME AS2 SISTANCE.—

3 ‘‘(1) IN GENERAL.—Subject to paragraph (2),

4 each eligible individual who—

5 ‘‘(A) is enrolled in the public health plan

6 under this title, whether on a non-employment

7 basis or on an employment basis,

8 ‘‘(B) is enrolled under a qualified employer

9 health plan, or

10 ‘‘(C) is a medicare beneficiary,

11 is eligible to apply for low-income assistance under

12 part E.

13 ‘‘(2) EFFECTIVE DATE.—No low-income assist14 ance is available for premiums for months before

15 January 1997 or for expenses incurred for any items

16 or services furnished before January 1, 1997.

17 ‘‘(c) ENROLLMENT TERMS.—

18 ‘‘(1) ENROLLMENT UNDER TITLE ON AN EM19 PLOYMENT AND NON-EMPLOYMENT BASIS DE20 FINED.—An eligible individual is considered, for pur21 poses of this title, to be enrolled under this title—

22 ‘‘(A) on an ‘employment basis’ only if the

23 individual is enrolled by a small employer pur24 suant to the requirement of section 5000A of

25 the Internal Revenue Code of 1986, or
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•HR 1398 IH

1 ‘‘(B) on a ‘non-employment basis’ in any

2 other case.

3 ‘‘(2) ENROLLMENT UNDER A QUALIFIED EM4 PLOYER HEALTH PLAN DEFINED.—An individual is

5 considered, for purposes of this title, to be ‘enrolled

6 under a qualified employer health plan’ if—

7 ‘‘(A) the individual is enrolled under a

8 qualified employer health plan (as defined in

9 section 2281(b)(8)) as an employee (or family

10 member of an employee),

11 ‘‘(B) the employer is required to provide

12 for such enrollment under part A of title XXI,

13 and

14 ‘‘(C) the amount of the employee share of

15 the premium is limited under section 2122(b).

16 ‘‘(d) ELIGIBLE INDIVIDUAL DEFINED.—In this sec17 tion, the term ‘eligible individual’ means an individual who

18 is—

19 ‘‘(1)(A) a citizen or national of the United

20 States, (B) an alien lawfully admitted for permanent

21 residence, or (C) an alien otherwise residing perma22 nently in the United States under color of law, and

23 ‘‘(2) a resident of the United States.
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1 ‘‘SEC. 2202. APPLICATION FOR ENROLLMENT.

2 ‘‘(a) PERIOD OF APPLICATION.—Individuals eligible

3 to enroll under this title may apply to enroll at any time

4 at which they are so eligible.

5 ‘‘(b) APPLICATION PROCESS.—

6 ‘‘(1) IN GENERAL.—The filing of an application

7 for enrollment under this title shall (except as the

8 Secretary may provide) constitute enrollment under

9 this title. Such an application may be filed with the

10 Secretary by mail or at such locations as the Sec11 retary may specify.

12 ‘‘(2) AVAILABILITY OF APPLICATIONS.—The

13 Secretary shall make applications for enrollment

14 under this title available—

15 ‘‘(A) at local offices of the Social Security

16 Administration,

17 ‘‘(B) at out-reach sites (such as provider

18 and practitioner locations), and

19 ‘‘(C) at other locations (including post of20 fices) accessible to a broad cross-section of indi21 viduals eligible to enroll.

22 ‘‘(3) APPLICATION FOR LOW-INCOME ASSIST23 ANCE.—An application for enrollment under this

24 section may (but need not) be accompanied by an

25 application for low-income assistance under part E.
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1 ‘‘(4) RESTRICTION ON USE OF AGENTS.—The

2 Secretary may not provide for receipt or processing

3 of applications for enrollment under this title—

4 ‘‘(A) by any non-Federal entity which is

5 directly or indirectly involved in the administra6 tion of title IV, XVI, or XIX of this Act, or

7 ‘‘(B) by any entity which does not meet

8 such standards as the Secretary establishes to

9 assure the confidentiality of information col10 lected in the enrollment process.

11 ‘‘SEC. 2203. COVERAGE PERIOD; TERMINATION OF ENROLL12 MENT.

13 ‘‘(a) BEGINNING OF COVERAGE.—The provisions of

14 section 2152(b) shall apply to the public health plan in

15 the same manner as they apply to qualified health plans.

16 ‘‘(b) TERMINATION OF ENROLLMENT DURING TRAN17 SITION PERIOD.—

18 ‘‘(1) IN GENERAL.—Before January 1, 1997,

19 except as provided in paragraph (3)—

20 ‘‘(A) an individual enrolled under this title

21 may terminate enrollment on a non-employment

22 basis by providing written notice to the Sec23 retary that the individual—

24 ‘‘(i) no longer wishes to be enrolled in

25 the public health plan, or
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•HR 1398 IH

1 ‘‘(ii) is enrolled under a qualified em2 ployer health plan or is a medicare bene3 ficiary; and

4 ‘‘(B) the Secretary may terminate enroll5 ment on a non-employment basis of an individ6 ual, after providing the individual (or the indi7 vidual’s representative) with written notice, for

8 failure to pay premiums required with respect

9 to such enrollment.

10 The termination of enrollment of an individual

11 (other than due to the individual becoming a medi12 care beneficiary) shall terminate the enrollment of

13 other family members enrolled with the individual.

14 ‘‘(2) EFFECTIVE DATE OF TERMINATION.—A

15 termination of enrollment under paragraph (1)(A)

16 shall take effect at the close of the month following

17 the month in which the notice is filed. A termination

18 of enrollment under paragraph (1)(B) shall take ef19 fect on a date (determined under regulations) after

20 the date written notice of such termination has been

21 provided to the enrollee (or the enrollee’s representa22 tive). Such regulations shall provide a grace period

23 of at least 1 month after the date of written notice

24 in which overdue premiums may be paid and cov25 erage continued.
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•HR 1398 IH

1 ‘‘(3) MINIMUM PERIOD OF ENROLLMENT DUR2 ING TRANSITION.—Subject to paragraph (4), before

3 January 1, 1997—

4 ‘‘(A) IN GENERAL.—An individual (other

5 than a pregnant woman or newborn) who is en6 rolled under this title on a non-employment

7 basis may not terminate enrollment less than

8 12 months after the date of the enrollment.

9 ‘‘(B) PREGNANT WOMEN AND

10 NEWBORNS.—In the case of a pregnant woman

11 who is enrolled under this title on a non-em12 ployment basis—

13 ‘‘(i) the enrollment of the woman may

14 not be terminated earlier than the end of

15 the month in which the 60-day period, be16 ginning on the last day of the pregnancy,

17 ends; and

18 ‘‘(ii) the newborn child shall be

19 deemed enrolled under this title as of the

20 date of birth, and such enrollment may not

21 be terminated earlier than the end of the

22 month in which the child’s first birthday

23 occurs.

24 ‘‘(4) TERMINATION PERMITTED IF COVERED

25 UNDER QUALIFIED EMPLOYER HEALTH PLAN.—The
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1 minimum period of enrollment under paragraph (3)

2 shall not apply if, at the time of termination of en3 rollment, the individual is immediately covered under

4 a qualified employer health plan which will provide

5 coverage during the minimum period for which en6 rollment is otherwise required under such para7 graph.

8 ‘‘(c) TERMINATION OF ENROLLMENT AFTER TRAN9 SITION PERIOD.—For limitations on termination of enroll10 ment under this title on or after January 1, 1997, see

11 section 2204(c).

12 ‘‘SEC. 2204. REQUIREMENT OF HEALTH INSURANCE COV13 ERAGE.

14 ‘‘(a) REQUIREMENT FOR ALL ELIGIBLE INDIVID15 UALS.—

16 ‘‘(1) IN GENERAL.—Effective on and after the

17 date specified in subsection (e), each eligible individ18 ual (as defined in section 2201(d)) who is not an ex19 cepted individual (as defined in paragraph (2)), is

20 deemed to have enrolled under this title on the date

21 before such date or as soon thereafter as the individ22 ual is not an excepted individual. If such an individ23 ual has not filed an application for enrollment under

24 this title by such date, the Secretary shall provide a
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1 means to collect information sufficient to effect such

2 enrollment as soon as possible after such date.

3 ‘‘(2) EXCEPTED INDIVIDUALS.—For purposes

4 of paragraph (1), the term ‘excepted individual’

5 means an individual who—

6 ‘‘(A) is a medicare beneficiary,

7 ‘‘(B) is enrolled under a qualified employer

8 health plan, or

9 ‘‘(C) demonstrates (in a manner specified

10 by the Secretary) enrollment under a Federal

11 health plan (as defined in subsection (f)).

12 ‘‘(b) AUTOMATIC CONTINUING ENROLLMENT.—For

13 provisions relating to coordination of enrollment among

14 qualified health plans and assuring continuous coverage

15 for required health services (and portability of health in16 surance benefits among such plans), see section 2157.

17 ‘‘(c) LIMITATION ON TERMINATION OF ENROLL18 MENT.—Effective on the date specified in subsection (e)—

19 ‘‘(1) EMPLOYMENT-BASED ENROLLMENT.—An

20 individual enrolled under this title on an employment

21 basis may not elect to terminate such enrollment.

22 ‘‘(2) NON-EMPLOYMENT BASIS.—An individual

23 enrolled under this title on a non-employment basis

24 may not terminate such enrollment unless—
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1 ‘‘(A) the individual is no longer eligible to

2 be enrolled under this title because of a change

3 of immigration or residency status, or

4 ‘‘(B) the individual demonstrates to the

5 satisfaction of the Secretary that the individual

6 is a medicare beneficiary or is enrolled under a

7 qualified employer health plan.

8 ‘‘(d) ENFORCEMENT.—

9 ‘‘(1) MONITORING OF INDIVIDUAL TAX RE10 TURNS.—The Secretary of the Treasury shall re11 quire the filing of such information as may be nec12 essary to establish compliance with subsection (a).

13 ‘‘(2) RETROACTIVE ENROLLMENT.—If such an

14 individual has not provided evidence of enrollment in

15 a qualified employer health plan or Federal health

16 plan, the Secretary—

17 ‘‘(A) shall enroll the individual pursuant to

18 the filing of such return, and

19 ‘‘(B) shall require the payment of twice the

20 amounts of premiums that would have been

21 paid if the person had been enrolled on a timely

22 basis, unless the individual has established to

23 the satisfaction of the Secretary good cause for

24 the failure to enroll on a timely basis.
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1 ‘‘(e) EFFECTIVE DATE OF REQUIREMENT.—The

2 date specified in this subsection is January 1, 1997.

3 ‘‘(f) FEDERAL HEALTH PLAN DEFINED.—In this

4 section, the term ‘Federal health plan’ means a health

5 plan of, or contributed to by, the Federal Government on

6 behalf of its employees, retirees, and their family mem7 bers, and includes—

8 ‘‘(1) the Federal employees health insurance

9 program under chapter 89 of title 5, United States

10 Code,

11 ‘‘(2) the program for the provision of medical

12 and dental benefits under chapter 55 of title 10,

13 United States Code, and

14 ‘‘(3) the program for the provision of hospital

15 care and medical services by the Department of Vet16 erans’ Affairs under chapter 17 of title 38, United

17 States Code.

18 ‘‘PART B—HEALTH INSURANCE BENEFITS

19 ‘‘SEC. 2211. REQUIRED HEALTH SERVICES.

20 ‘‘(a) MEDICARE BENEFITS.—

21 ‘‘(1) IN GENERAL.—Except as provided in the

22 succeeding provisions of this part and part C, the

23 health insurance benefits provided to an individual

24 enrolled under this title (whether on an employment

25 basis or a non-employment basis) shall consist of en-
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1 titlement to the same benefits as are provided under

2 title XVIII to individuals entitled to benefits under

3 part A, and enrolled under part B, of title XVIII.

4 ‘‘(2) REQUIRED HEALTH SERVICES DEFINED.—

5 In this title and title XXI, the term ‘required health

6 services’ means the services provided under this title

7 (including services described in subsections (b) and

8 (c)).

9 ‘‘(b) UNLIMITED INPATIENT HOSPITAL SERVICES

10 FOR CHILDREN.—For children, required health benefits

11 also shall include payment for inpatient hospital services

12 without regard to any day limitations under subsections

13 (a)(1) and (b)(1) of section 1812.

14 ‘‘(c) PREGNANCY-RELATED SERVICES.—

15 ‘‘(1) IN GENERAL.—In the case of a pregnant

16 woman (as defined in section 2283(3)), benefits

17 under this title shall include entitlement to have pay18 ment made for the following, subject to the periodic19 ity schedule established with respect to the services

20 under paragraph (2) and prior authorization of cer21 tain services under paragraph (3):

22 ‘‘(A) Prenatal care, including care for all

23 complications of pregnancy.

24 ‘‘(B) Inpatient labor and delivery services.

25 ‘‘(C) Postnatal care.
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1 ‘‘(D) Postnatal family planning services.

2 ‘‘(2) PERIODICITY SCHEDULE.—The Secretary,

3 in consultation with the American College of Obstet4 rics and Gynecology, shall establish a schedule of pe5 riodicity which reflects the general, appropriate fre6 quency with which services listed in paragraph (1)

7 should be provided to pregnant women without com8 plications of pregnancy.

9 ‘‘(3) PRIOR AUTHORIZATION REQUIRED FOR

10 CERTAIN SERVICES.—

11 ‘‘(A) IN GENERAL.—Except in the case of

12 items and services specified under subpara13 graph (B), benefits are not available with re14 spect to an item or service under paragraph (1)

15 unless the provision of the item or service has

16 been approved by a utilization and quality con17 trol peer review organization before the provi18 sion of the item or service.

19 ‘‘(B) EXCEPTION FOR ROUTINE OR COM20 MON ITEMS AND SERVICES.—Subparagraph (A)

21 shall not apply to items and services which the

22 Secretary has specified on a list as being ei23 ther—

24 ‘‘(i) related to normal pregnancy, or
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1 ‘‘(ii) related to a highly prevalent

2 complication of pregnancy,

3 or in the case of emergency services.

4 ‘‘(d) PREVENTIVE SERVICES DEFINED.—In this title,

5 the term ‘preventive services’ means the following items

6 and services furnished in accordance with any applicable

7 periodicity schedules:

8 ‘‘(1) Pregnancy-related services (described in

9 subsection (c)(1)).

10 ‘‘(2) Well-child care (as defined in section

11 1861(ll)(1)).

12 ‘‘(3) Screening mammography (as defined in

13 section 1861(jj)).

14 ‘‘(4) Screening pap smear (as defined in section

15 1861(nn)).

16 ‘‘(5) Colorectal cancer screening services.

17 ‘‘(6) Immunization services described in section

18 1862(a)(1)(H).

19 The services referred to in paragraph (5) are screening

20 fecal-occult blood tests and screening flexible

21 sigmoidoscopies provided for the purpose of early detection

22 of colon cancer.
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1 ‘‘PART C—PAYMENTS FOR BENEFITS; DEDUCTIBLES,

2 COINSURANCE, AND STOP-LOSS PROTECTION FOR

3 REQUIRED HEALTH SERVICES

4 ‘‘SEC. 2221. PAYMENTS FOR BENEFITS.

5 ‘‘(a) USE OF MEDICARE PAYMENT RULES.—

6 ‘‘(1) IN GENERAL.—Except as otherwise pro7 vided in this title—

8 ‘‘(A) payment of benefits under this title

9 with respect to services shall be made, subject

10 to adjustment in payment rates under sub11 section (b), in the same amounts and on the

12 same basis as payment may be made with re13 spect to such services under title XVIII, and

14 ‘‘(B) the provisions of sections 1814, 1815,

15 1833, 1834, 1835, 1842, 1848, 1886, 1887

16 shall apply to payment of benefits (and provi17 sion of services and charges thereon) under this

18 title in the same manner as they apply to bene19 fits, services, and charges under title XVIII.

20 ‘‘(2) IDENTIFICATION OF COMPARABLE PAY21 MENT METHODS FOR NEW SERVICES.—In the case

22 of services for which there is not a payment basis es23 tablished under title XVIII, the Secretary shall es24 tablish payment rules that are similar to the pay25 ment rules for similar services under such title.
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1 ‘‘(3) NO JUDICIAL OR ADMINISTRATION RE2 VIEW.—There shall be no administrative or judicial

3 review of the payment rates or rules under this sec4 tion (including adjustments made under subsection

5 (b)).

6 ‘‘(b) PAYMENT BASED ON APPROVED RATES.—

7 ‘‘(1) IN GENERAL.—Payments for services

8 under this title shall be based on rates approved by

9 the Federal Health Care Cost Containment Commis10 sion under title III of the Health Insurance Cov11 erage and Cost Containment Act of 1993.

12 ‘‘(2) PAYMENT FOR OBSTETRICAL SERVICES.—

13 ‘‘(A) GLOBAL FEE.—In making payment

14 under this title with respect to the group of ob15 stetrical services typical of treatment through16 out a course of pregnancy, the Secretary shall

17 establish a global fee schedule with respect to

18 such group of services.

19 ‘‘(B) DISINCENTIVE FOR CESAREAN SEC20 TIONS.—The fee schedule amount otherwise es21 tablished with respect to a cesarean section

22 shall be 95 percent of the fee schedule amount

23 otherwise established.

24 ‘‘(c) USE OF TRUST FUND.—In applying the provi25 sions described in subsection (a)(1)(B) in carrying out this
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1 section, any reference in title XVIII to a trust fund shall

2 be treated as a reference to the Public Health Trust Fund

3 established under section 2233.

4 ‘‘(d) WITHHOLDING OF PAYMENTS FOR CERTAIN

5 MEDICARE AND MEDICAID PROVIDERS.—The provisions

6 of section 1885 (relating to withholding of payments for

7 certain medicaid providers) shall apply under this title in

8 the same manner as they apply under title XVIII, except

9 that for this purpose any reference in such section to title

10 XIX shall be deemed to include a reference to title XVIII.

11 ‘‘SEC. 2222. DEDUCTIBLE FOR REQUIRED HEALTH SERV12 ICES.

13 ‘‘(a) DEDUCTIBLE.—

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

15 section and part E, the amount of expenses for re16 quired health services with respect to which an indi17 vidual is entitled to have payment made under this

18 title for any year shall first be reduced by a deduct19 ible of $250.

20 ‘‘(2) FAMILY LIMIT OF $500.—In the case of a

21 family, the deductible under paragraph (1) shall not

22 apply in a year after members of the family (who

23 are not medicare beneficiaries) have collectively had

24 expended $500 towards such deductible.
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1 ‘‘(3) APPLICATION OF DEDUCTIBLE IN PLACE

2 OF MEDICARE DEDUCTIBLES.—Under this title, the

3 deductible established under this subsection shall be

4 applied instead of applying the deductible for inpa5 tient hospital services under the first sentence of

6 section 1813(a)(1) and the deductible under section

7 1833(b).

8 ‘‘(4) INDEXING OF DOLLAR AMOUNTS OF DE9 DUCTIBLE.—The dollar amounts specified in para10 graphs (1) and (2) shall each be increased each year

11 (beginning with second year after the year in which

12 this title is enacted) by a percentage equal to the

13 percentage increase in the contribution and benefit

14 base (determined under section 230) from the year

15 before the year in which this title is enacted to the

16 year before the year involved. Any such increase

17 shall be rounded to the nearest multiple of $5.

18 ‘‘(b) DEDUCTIBLE DOES NOT APPLY TO PREVEN19 TIVE SERVICES.—The deductible established under sub20 section (a) does not apply to preventive services provided

21 consistent with any applicable periodicity schedules.

22 ‘‘SEC. 2223. COINSURANCE FOR REQUIRED HEALTH SERV23 ICES.

24 ‘‘(a) COINSURANCE RATES.—Subject to subsections

25 (b) and (c) and part E, the coinsurance rates applicable
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1 to required health services under title XVIII shall apply

2 in the administration of this title.

3 ‘‘(b) NO COINSURANCE FOR PREVENTIVE SERV4 ICES.—There shall be no coinsurance under this title in

5 the case of preventive services provided consistent with

6 any applicable periodicity schedules.

7 ‘‘(c) NO COINSURANCE FOR INPATIENT HOSPITAL

8 SERVICES FOR CHILDREN.—There shall be no coinsur9 ance under this title in the case of inpatient hospital serv10 ices furnished to children.

11 ‘‘SEC. 2224. LIMIT ON COST-SHARING FOR REQUIRED

12 HEALTH SERVICES.

13 ‘‘(a) LIMITATION.—

14 ‘‘(1) IN GENERAL.—Whenever in a calendar

15 year an individual’s or family’s expenses for the de16 ductible and coinsurance with respect to required

17 health services covered under this title and furnished

18 during the year equals $2,500 or $3,000, respec19 tively, payment of benefits under this title for the in20 dividual or family for required health services fur21 nished during the remainder of the year shall be

22 paid without the application of any coinsurance.

23 ‘‘(2) INDEXING OF DOLLAR AMOUNT OF

24 LIMIT.—The dollar amounts specified in paragraph

25 (1) shall be increased each year (beginning with the
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1 second year after the year in which this title is en2 acted) by a percentage equal to the percentage in3 crease in the contribution and benefit base (deter4 mined under section 230) from the year before the

5 year in which this title is enacted to the year before

6 the year involved. Any such increase shall be round7 ed to the nearest multiple of $5.

8 ‘‘(b) CREDITING FOR EXPENSES INCURRED UNDER

9 QUALIFIED EMPLOYER HEALTH PLANS.—Cost sharing

10 incurred under a qualified employer health plan for re11 quired health services shall be credited under this section

12 against the limits contained in subsection (a).

13 ‘‘SEC. 2225. EXCLUSIONS; COORDINATION.

14 ‘‘(a) EXCLUSIONS.—

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

16 section, section 1862 shall apply to expenses in17 curred for items and services provided under this

18 title the same manner as such section applies to

19 items and services provided under title XVIII.

20 ‘‘(2) PREVENTIVE SERVICES.—In the case of

21 preventive services provided consistent with the ap22 plicable periodicity schedule—

23 ‘‘(A) such services shall be considered to be

24 reasonable and medically necessary, and
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1 ‘‘(B) shall not be subject to exclusion

2 through the operation of paragraph (1), (7), or

3 (12) of section 1862(a) (as incorporated under

4 paragraph (1)).

5 ‘‘(3) USE OF SAME NATIONAL COVERAGE DECI6 SION REVIEW PROCESS.—The provisions of section

7 1869(b)(3) shall apply under this title in the same

8 manner as they apply under title XVIII. Any deter9 mination under such title that, under paragraph (1),

10 would apply under this title shall not be subject to

11 review under this paragraph.

12 ‘‘(b) RELATIONSHIP TO MEDICARE IN CASE OF EM13 PLOYMENT-BASED ENROLLMENT.—In the case of enroll14 ment of a medicare beneficiary on an employment basis

15 under this title, in applying section 1862(b) (pursuant to

16 subsection (a)(2) of this section), the public health plan

17 shall be treated as a large group health plan (described

18 in section 1862(b)).

19 ‘‘SEC. 2226. APPLICATION OF PARTICULAR QUALIFIED

20 HEALTH PLAN REQUIREMENTS.

21 ‘‘Section 2152 (relating treatment of family members

22 as a unit; coverage period; and health plan cards) and sec23 tion 2157 (relating to coordination and portability of

24 health coverage under qualified health plans) shall apply
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1 to the public health plan in the same manner as they apply

2 to a qualified health plan.

3 ‘‘PART D—PREMIUMS, PUBLIC HEALTH TRUST FUND

4 ‘‘SEC. 2231. PREMIUMS.

5 ‘‘(a) AMOUNT OF PREMIUMS.—

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

7 section (and section 2234 with respect to

8 nonenrolling employer premiums), the premium to

9 be charged for enrollment under this title of any in10 dividual in a beneficiary class (as defined in sub11 section (d)) in any community (as defined in sub12 section (e)) is the actuarial rate established under

13 paragraph (2) with respect to such class and com14 munity.

15 ‘‘(2) CREDIT FOR EMPLOYMENT TAXES PAID

16 FOR PART-TIME AND SEASONAL OR TEMPORARY EM17 PLOYEES.—

18 ‘‘(A) IN GENERAL.—Subject to subpara19 graph (C), in the case of an individual who is

20 a covered employee (as defined in subparagraph

21 (B)), the premium to be charged for enrollment

22 under this title on a non-employment basis is—

23 ‘‘(i) the actuarial rate otherwise appli24 cable under paragraph (1), less the amount

25 of the taxes paid by the individual and all
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1 employers with respect to the employee

2 (and family members of the employee)

3 under section 3151(a) of the Internal Rev4 enue Code of 1986, or

5 ‘‘(ii) 20 percent of such actuarial rate,

6 whichever is greater.

7 ‘‘(B) COVERED EMPLOYEE DEFINED.—In

8 subparagraph (A), the term ‘covered employee’

9 means an individual—

10 ‘‘(i) who is employed by one or more

11 employers as a part-time employee or as a

12 seasonal or temporary employee, and

13 ‘‘(ii) none of whose employers is en14 rolling part-time employees or seasonal or

15 temporary employees, respectively, under a

16 qualified employer health plan, but all of

17 which are required to pay a tax with re18 spect to such employees under section

19 3151(a)(1) of the Internal Revenue Code

20 of 1986,

21 and includes the family members of such an

22 employee.

23 ‘‘(C) LIMIT ON PREMIUM WHERE PREMIUM

24 SUBSIDY.—In no case shall the premium under

25 subparagraph (A) exceed—
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1 ‘‘(i) the beneficiary actuarial rate oth2 erwise applicable under paragraph (1), re3 duced by

4 ‘‘(ii) the amount of any premium sub5 sidy under part E.

6 ‘‘(b) DETERMINATION OF ACTUARIAL RATES.—

7 ‘‘(1) IN GENERAL.—In September of each year,

8 beginning with 1993, the Secretary shall determine

9 and publish the actuarial rate for each beneficiary

10 class (as specified in subsection (d)) for each com11 munity (designated under subsection (e)) for health

12 insurance benefits in the following year.

13 ‘‘(2) BASIS FOR ACTUARIAL RATES.—Each such

14 actuarial rate shall be established in a manner so

15 that if all eligible individuals in the class were en16 rolled under this title for the benefit package in the

17 community, the aggregate of the rates would be

18 equal to the total expenditures (including adminis19 trative expenses) with respect to that class and com20 munity under this title in that following year. Each

21 such actuarial rate shall be uniform within each ben22 eficiary class and community, and shall not vary

23 among such individuals by age, sex, health, or other

24 risk characteristics.
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1 ‘‘(3) PUBLIC STATEMENT.—Whenever the Sec2 retary publishes actuarial rates under this sub3 section, the Secretary shall, at the time of such pub4 lication, include a public statement setting forth the

5 actuarial assumptions and bases employed in arriv6 ing at the amount of the actuarial rates.

7 ‘‘(c) NO JUDICIAL OR ADMINISTRATION REVIEW.—

8 There shall be no administrative or judicial review of the

9 actuarial rates determined under this section.

10 ‘‘(d) BENEFICIARY CLASSES.—For purposes of this

11 section, the beneficiary classes are as follows:

12 ‘‘(1) 1 adult.

13 ‘‘(2) A married couple without children.

14 ‘‘(3) A married couple with 1 or more children,

15 or 1 adult with 1 or more children.

16 ‘‘(e) COMMUNITY.—For purposes of this section, the

17 term ‘community’ means a geographic area designated by

18 the Secretary as—

19 ‘‘(1) encompassing one or more adjacent metro20 politan statistical areas, or

21 ‘‘(2) the remaining area within each State (that

22 is not designated within any community under para23 graph (1));

24 except that the Secretary may designate an entire State

25 as a community if such a designation would better carry
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1 out the purposes of this title and title XXIII. The Sec2 retary from time to time may change the boundaries of

3 communities designated under paragraph (1) or (2) for

4 such purposes. There shall be no administrative or judicial

5 review of the designation of communities under this sub6 section.

7 ‘‘SEC. 2232. COLLECTION OF PREMIUMS.

8 ‘‘(a) INDIVIDUAL ENROLLMENT.—

9 ‘‘(1) IN GENERAL.—In the case of individuals

10 enrolled on a non-employment basis under this title,

11 the Secretary shall provide for the payment of pre12 miums on a monthly or quarterly basis. To the max13 imum extent feasible, the Secretary shall arrange for

14 payment of such premiums through automatic with15 holding from income sources or accounts with finan16 cial institutions. In the case of a part-time employee

17 or seasonal or temporary worker, the amount of the

18 premiums owed under this section shall be reduced

19 by the amount of excise taxes paid under section

20 3151(a) of the Internal Revenue Code of 1986 with

21 respect to such employment.

22 ‘‘(2) COLLECTION OF UNPAID PREMIUMS.—

23 ‘‘(A) TRANSMISSION OF INFORMATION TO

24 SECRETARY OF THE TREASURY.—In the case of

25 premium amounts owing and unpaid under this
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1 subsection, the Secretary shall inform the Sec2 retary of the Treasury of individuals or individ3 uals owing such amounts and the amounts

4 owed.

5 ‘‘(B) COLLECTION.—The Secretary of the

6 Treasury shall assess and collect the amounts

7 referred to in subparagraph (A) in the same

8 manner as taxes imposed by subtitle C of the

9 Internal Revenue Code of 1986.

10 ‘‘(b) NONENROLLING EMPLOYER PREMIUMS.—

11 ‘‘(1) EMPLOYER PREMIUMS.—In the case of an

12 individual enrolled under this title on an employment

13 basis, the employer shall provide for payment of pre14 miums on a monthly or quarterly basis.

15 ‘‘(2) NONENROLLING EMPLOYER PREMIUMS.—

16 In the case of nonenrolling employer premiums owed

17 under section 2234, the Secretary shall require pay18 ment of premiums on a monthly or quarterly basis.

19 ‘‘(3) COLLECTION OF UNPAID PREMIUMS.—

20 ‘‘(A) TRANSMISSION OF INFORMATION TO

21 SECRETARY OF THE TREASURY.—In the case of

22 premium amounts owing and unpaid under this

23 subsection, the Secretary shall inform the Sec24 retary of the Treasury of the employers owing

25 such amounts and the amounts owed.
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1 ‘‘(B) COLLECTION.—The Secretary of the

2 Treasury shall assess and collect the amounts

3 referred to in subparagraph (A) in the same

4 manner as taxes imposed by subtitle C of the

5 Internal Revenue Code of 1986.

6 ‘‘(c) DEPOSIT.—Premiums collected under this sec7 tion shall be deposited to the credit of the Public Health

8 Trust Fund (established under section 2233).

9 ‘‘SEC. 2233. PUBLIC HEALTH TRUST FUND.

10 ‘‘(a) ESTABLISHMENT.—

11 ‘‘(1) IN GENERAL.—There is hereby created on

12 the books of the Treasury of the United States a

13 trust fund to be known as the ‘Public Health Trust

14 Fund’ (in this section referred to as the ‘Trust

15 Fund’). The Trust Fund shall consist of such gifts

16 and bequests as may be made as provided in para17 graph (3) and such amounts as may be deposited in,

18 or appropriated to, such Trust Fund as provided in

19 this part.

20 ‘‘(2) DEPOSIT OF TAXES.—There are hereby

21 appropriated to the Trust Fund amounts equivalent

22 to 100 percent of the taxes imposed by—

23 ‘‘(A) part VIII of subchapter A of chapter

24 1 of the Internal Revenue Code of 1986, and
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1 ‘‘(B) sections 3151, 5000A, and 5000B of

2 such Code.

3 The amounts appropriated by the preceding sentence

4 shall be transferred from time to time from the gen5 eral fund in the Treasury to the Trust Fund, such

6 amounts to be determined on the basis of estimates

7 by the Secretary of the Treasury of the taxes, paid

8 to or deposited into the Treasury; and proper adjust9 ments shall be made in amounts subsequently trans10 ferred to the extent prior estimates were in excess

11 of or were less than the taxes specified in such

12 sentence.

13 ‘‘(3) AUTHORIZATION TO ACCEPT GIFTS.—The

14 Managing Trustee of the Trust Fund is authorized

15 to accept on behalf of the United States money gifts

16 and bequests made unconditionally to the Trust

17 Fund, for the benefit of the Trust Fund, or any ac18 tivity financed through the Trust Fund.

19 ‘‘(b) INCORPORATION OF PROVISIONS.—

20 ‘‘(1) IN GENERAL.—Subject to paragraph (2),

21 the provisions of subsections (b) through (j) of sec22 tion 1817 shall apply to the Trust Fund in the same

23 manner as they apply to the Federal Hospital Insur24 ance Trust Fund.
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1 ‘‘(2) EXCEPTIONS.—In applying paragraph

2 (1)—

3 ‘‘(A) the Board of Trustees and Managing

4 Trustee of the Trust Fund shall be composed of

5 the members of the Board of Trustees and the

6 Managing Trustee, respectively, of the Federal

7 Hospital Insurance Trust Fund; and

8 ‘‘(B) any reference in section 1817 to the

9 Federal Hospital Insurance Trust Fund, to title

10 XVIII (or part A thereof), or (in subsection

11 (f)(1)) to section 3102(b) of the Internal Reve12 nue Code of 1986 is deemed a reference to the

13 Trust Fund under this section, this title, and to

14 section 3151(a)(2) of such Code, respectively.

15 ‘‘(3) TRANSFERS TO HOSPITAL INSURANCE

16 TRUST FUND.—There shall be transferred periodi17 cally (but not less often than monthly) from the

18 Trust Fund to the Federal Hospital Insurance Trust

19 Fund, amounts equivalent to the premium, deduct20 ible, and coinsurance subsidies provided under part

21 E of this title with respect to premiums, deductibles,

22 and coinsurance under part A of title XVIII.

23 ‘‘(4) TRANSFERS TO SMI TRUST FUND.—There

24 shall be transferred periodically (but not less often

25 than monthly) from the Trust Fund to the Federal
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1 Supplementary Medical Insurance Trust Fund,

2 amounts equivalent to the sum of—

3 ‘‘(A) to the premium, deductible, and coin4 surance subsidies provided under part E of this

5 title with respect to premiums, deductibles, and

6 coinsurance under part B of title XVIII;

7 ‘‘(B) the net additional expenditures under

8 part B of such title resulting from the amend9 ments made by sections 501 through 504 and

10 507 of the Health Insurance Coverage and Cost

11 Containment Act of 1993.

12 ‘‘SEC. 2234. TRANSFER PAYMENTS IN THE CASE OF MUL13 TIPLE EMPLOYERS.

14 ‘‘(a) TREATMENT OF MULTIPLE EMPLOYMENT

15 WHERE EMPLOYEE COVERED UNDER A QUALIFIED EM16 PLOYER HEALTH PLAN.—

17 ‘‘(1) IN GENERAL.—In the case of a multiple18 employed individual (as defined in subsection (d)(1))

19 who is covered under a qualified employer health

20 plan of an employer—

21 ‘‘(A) each nonenrolling employer (as de22 fined in subsection (d)(2)) that offers coverage

23 under a qualified employer health plan shall pay

24 to the Public Insurance Trust Fund the
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1 nonenrolling employer premium specified in

2 subsection (b);

3 ‘‘(B) the enrolling employer is entitled to

4 receive from such Trust Fund the enrolling em5 ployer subsidy specified in subsection (c); and

6 ‘‘(C) there will be no tax imposed on the

7 wages of the individual under section

8 3151(a)(2) of the Internal Revenue Code of

9 1986 with respect to wages paid during the pe10 riod of such coverage.

11 ‘‘(2) APPLICATION ON A MONTHLY BASIS.—The

12 premiums and subsidies provided under this sub13 section shall be paid with respect to a monthly pe14 riod of coverage.

15 ‘‘(b) AMOUNT OF NONENROLLING EMPLOYER PRE16 MIUM.—

17 ‘‘(1) IN GENERAL.—The amount of the

18 nonenrolling employer premium described in this

19 subsection is the applicable percent of the actuarial

20 rate (specified in section 2226(b)) for the beneficiary

21 class in the community in which the employee is

22 enrolled.

23 ‘‘(2) APPLICABLE PERCENT DEFINED.—For

24 purposes of paragraph (1), the term ‘applicable per25 cent’ means, with respect to an employee who is—
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1 ‘‘(A) a full-time employee of the employer,

2 40 percent, or

3 ‘‘(B) a part-time employee of the employer,

4 20 percent.

5 ‘‘(c) AMOUNT OF ENROLLING EMPLOYER SUB6 SIDY.—

7 ‘‘(1) IN GENERAL.—The amount of the enroll8 ing employer subsidy described in this subsection is

9 the applicable percent of the actuarial rate (specified

10 in section 2226(b)) for the beneficiary class in the

11 community in which the employee is enrolled.

12 ‘‘(2) APPLICABLE PERCENT DEFINED.—For

13 purposes of paragraph (1), the term ‘applicable per14 cent’ means, with respect to a multiple-employee

15 who (or whose spouse) is—

16 ‘‘(A) a full-time employee of a nonenrolling

17 employer, 40 percent, or

18 ‘‘(B) not a full-time employee of a

19 nonenrolling employer, but is a part-time em20 ployee of a nonenrolling employer, 20 percent.

21 In no case shall the applicable percent with respect

22 to a multiple-employed employee (including the em23 ployee’s spouse) exceed 40 percent.

24 ‘‘(d) DEFINITIONS.—In this section:
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1 ‘‘(1) MULTIPLE-EMPLOYED INDIVIDUAL.—The

2 term ‘multiple-employed individual’ means an indi3 vidual who in a month is an employee (whether part4 time or full-time) and—

5 ‘‘(A) who is also employed (whether part6 time or full-time) by 1 or more other employer,

7 or

8 ‘‘(B) whose spouse or parent is also an em9 ployee (whether part-time or full-time) of 1 or

10 more employers.

11 ‘‘(2) NONENROLLING EMPLOYER.—The term

12 ‘nonenrolling employer’ means, with respect to a

13 multiple-employed individual who is enrolled under a

14 qualified employer health plan of an employer, any

15 employer of such individual other than such em16 ployer.

17 ‘‘SEC. 2235. USE OF UNIFORM CLAIMS FORMS; UNIFORM IN18 FORMATION REPORTING.

19 ‘‘The Secretary shall provide for—

20 ‘‘(1) submission of claims under this title (and

21 title XVIII) in accordance with section 323 of the

22 Health Insurance Coverage and Cost Containment

23 Act of 1993, and

24 ‘‘(2) reporting to the Commission of informa25 tion on required health services provided under this
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1 title (or title XVIII) pursuant to standards promul2 gated under section 324 of such Act.

3 ‘‘PART E—ASSISTANCE FOR LOW-INCOME INDIVIDUALS

4 ‘‘SEC. 2241. ASSISTANCE FOR INDIVIDUALS WITH INCOME

5 BELOW THE POVERTY LINE ENROLLED ON A

6 NON-EMPLOYMENT BASIS.

7 ‘‘In the case of an individual—

8 ‘‘(1) who is enrolled under this title on a non9 employment basis,

10 ‘‘(2) who is not a medicare beneficiary, and

11 ‘‘(3) whose family adjusted total income (as de12 fined in section 2247) does not exceed 100 percent

13 of the official poverty line (as defined in section

14 2283(2)),

15 the low-income assistance under this part shall consist of

16 waiver of the premiums imposed under section 2231(a)

17 and of any deductibles or coinsurance under this title for

18 the individual and the individual’s family.

19 ‘‘SEC. 2242. ASSISTANCE FOR INDIVIDUALS WITH INCOME

20 BELOW TWICE THE POVERTY LINE EN21 ROLLED ON A NON-EMPLOYMENT BASIS.

22 ‘‘(a) NON-MEDICARE POPULATION.—In the case of

23 an individual who is not a medicare beneficiary, who is

24 enrolled under this title on a non-employment basis, and

25 whose family adjusted total income exceeds 100 percent
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1 but is less than 200 percent, of the official poverty line,

2 the low-income assistance under this part shall consist of

3 the following:

4 ‘‘(1) PREMIUMS.—The premium amount under

5 section 2231(a) shall be reduced by the subsidy per6 centage (as defined in subsection (b)) of the pre7 mium amount otherwise applied. Any reduction in

8 premium under this paragraph shall be rounded to

9 the nearest multiple of $5.

10 ‘‘(2) DEDUCTIBLE.—The deductibles under sec11 tion 2222 shall be reduced by the subsidy percentage

12 of the deductibles otherwise applied. Any reduction

13 in a deductible under this paragraph shall be round14 ed to the nearest multiple of $10.

15 ‘‘(3) COINSURANCE.—The percentage coinsur16 ance applied under section 2223 shall be reduced by

17 the subsidy percentage multiplied by the percentage

18 coinsurance otherwise applied.

19 ‘‘(b) SUBSIDY PERCENTAGE DEFINED.—

20 ‘‘(1) IN GENERAL.—In this section and section

21 2243, the term ‘subsidy percentage’ means the num22 ber of percentage points by which the family’s ad23 justed total income (expressed as a percent of the

24 applicable official poverty line) is less than 200 per25 cent.
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1 ‘‘(2) ROUNDING FOR COINSURANCE.—For pur2 poses of subsection (a)(3), the subsidy percentage

3 (as applied to the coinsurance percentage) shall be

4 rounded to the nearest multiple of 5 percent.

5 ‘‘SEC. 2243. ASSISTANCE FOR INDIVIDUALS COVERED

6 UNDER QUALIFIED EMPLOYER HEALTH

7 PLANS.

8 ‘‘(a) IN GENERAL.—In the case of an eligible individ9 ual who is enrolled under a qualified employer health plan

10 or is enrolled under this title on an employment basis, low11 income assistance under this part shall consist of—

12 ‘‘(1) payment (in a manner specified by the

13 Secretary) of the amount of the premium subsidy

14 under subsection (b) to the individual or another

15 family member, or, in the case described in sub16 section (b)(4), the employer, and

17 ‘‘(2) payment to the plan of the amount of the

18 deductible and coinsurance subsidy under subsection

19 (c).

20 Such subsidies shall apply to premiums, deductibles, and

21 coinsurance for the individual and family member covered

22 on an employment basis under the plan or under this title.

23 ‘‘(b) PREMIUM SUBSIDY.—In the case of an eligible

24 individual who is enrolled under a qualified employer

25 health plan—
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1 ‘‘(1) TREATMENT UNDER QUALIFIED EM2 PLOYER HEALTH PLAN.—

3 ‘‘(A) AMOUNT.—The amount of the pre4 mium subsidy under this subsection is the sub5 sidy percentage (as defined in section 2242(c))

6 of the employee share of the premium. Any pre7 mium subsidy under this paragraph which is

8 not a multiple of $5 shall be rounded to the

9 nearest multiple of $5.

10 ‘‘(B) USE OF LEAST EXPENSIVE QUALI11 FIED PLAN.—In applying subparagraph (A),

12 the amount of the premium subsidy shall be

13 based on the qualified employer health plan

14 available to the employee with the smallest pre15 mium payment required of the employee (for

16 the type of individual or family enrollment with

17 which the employee is enrolled).

18 ‘‘(C) FREQUENCY OF PAYMENT.—Except

19 as provided in subparagraph (D), the premium

20 subsidy under this subsection shall be paid not

21 less frequently than quarterly or, if the amount

22 of the premium subsidy on a monthly basis ex23 ceeds $20, monthly.
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1 ‘‘(D) OPTIONAL, DIRECT COORDINATION

2 WITH EMPLOYERS.—In the case of an em3 ployee—

4 ‘‘(i) who is enrolled under a covered

5 employer health plan,

6 ‘‘(ii) who is entitled to assistance

7 under this part,

8 ‘‘(iii) whose employer agrees to enter

9 into an arrangement with the Secretary

10 under this subparagraph, and

11 ‘‘(iv) who assigns (in the manner

12 specified by the Secretary) rights to pre13 mium subsidies under this paragraph to

14 the employer,

15 the Secretary shall enter into an arrangement

16 with the employer under which (I) the employer

17 agrees to reduce premiums otherwise imposed

18 with respect to the individual by the amount of

19 the subsidy, and (II) the Secretary agrees to

20 make payment (not less often than monthly) to

21 the employer of the amount of such premium

22 subsidy.

23 ‘‘(2) TREATMENT UNDER PUBLIC HEALTH

24 PLAN.—In the case of an eligible individual who is

25 enrolled on an employment basis under this title—
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1 ‘‘(A) AMOUNT.—The amount of the pre2 mium subsidy under this subsection is the sub3 sidy percentage (as defined in section 2242(c))

4 of the taxes paid under section 3151(a)(2) of

5 the Internal Revenue Code of 1986.

6 ‘‘(B) FREQUENCY OF PAYMENT.—The pre7 mium subsidy under this subsection shall be

8 paid not less frequently than quarterly or, if the

9 amount of the premium subsidy on a monthly

10 basis exceeds $20, monthly.

11 ‘‘(c) DEDUCTIBLE AND COINSURANCE SUBSIDY.—

12 ‘‘(1) DEDUCTIBLE SUBSIDY AMOUNT.—The

13 amount of the deductible subsidy under this sub14 section is the subsidy percentage of the deductible

15 otherwise applied. Any deductible subsidy under this

16 paragraph that is not a multiple of $10 shall be

17 rounded to the nearest multiple of $10.

18 ‘‘(2) COINSURANCE SUBSIDY AMOUNT.—The

19 amount of the coinsurance subsidy under this sub20 section is the product of the subsidy percentage, the

21 percentage coinsurance otherwise applied, and the

22 payment amount permitted for required health serv23 ices.

24 ‘‘(3) DIRECT COORDINATION BY QUALIFIED EM25 PLOYER HEALTH PLAN REQUIRED.—In the case of
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1 an individual enrolled under a qualified employer

2 health plan, the plan shall provide for—

3 ‘‘(A) acceptance of information, electroni4 cally, from the Secretary on the amount of the

5 deductible and coinsurance subsidy for individ6 uals (and family members),

7 ‘‘(B) a reduction in the deductibles and co8 insurance otherwise imposed to reflect the de9 ductible and coinsurance subsidies to which the

10 individual and family members are entitled,

11 ‘‘(C) reasonably prompt payment of bills

12 for which such charges have been made, and

13 ‘‘(D) transmission of such information as

14 is necessary to indicate the amount of subsidy

15 provided under the plan for specified individ16 uals.

17 In return, the Secretary shall provide for payment,

18 not less often than monthly, to the plan of the

19 amount of payments made by such a plan for de20 ductible and coinsurance subsidies under this sub21 section.

22 ‘‘SEC. 2244. APPLICATIONS FOR ASSISTANCE.

23 ‘‘(a) IN GENERAL.—Subject to section 2245, any in24 dividual who seeks assistance under this part (with respect

25 to himself or herself or a family member) shall submit a
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1 written application, by person or mail, to the Secretary.

2 The application may be submitted with an application to

3 enroll under this title or separately.

4 ‘‘(b) BASIS FOR DETERMINATION.—Subject to sec5 tion 2245 and reconciliation under such section, eligibility

6 for assistance under this part shall be based on 4 times

7 the family adjusted total income (as defined in section

8 2247) during the 3 months preceding the month in which

9 the application is filed.

10 ‘‘(c) FORM AND CONTENTS.—An application for as11 sistance under this part shall be in a form and manner

12 specified by the Secretary and shall require—

13 ‘‘(1) the provision of information necessary to

14 make the determinations described in subsection (b),

15 ‘‘(2) the provision of information respecting any

16 covered employer health plan in which the individual

17 is enrolled, and

18 ‘‘(3) the individual (if enrolled under such a

19 plan) to assign rights for deductible subsidies under

20 this part to such plan.

21 Such form also shall include an option to execute, as part

22 of completing the form and in order to meet the condition

23 described in section 2243(b)(4)(D), an assignment of an

24 individual’s right for premium subsidies under this part

25 to an employer.
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1 ‘‘(d) FREQUENCY OF APPLICATIONS.—

2 ‘‘(1) IN GENERAL.—An application for assist3 ance under this part may be filed at any time during

4 the year and may be resubmitted (but, except as

5 provided in paragraph (3), not more frequently than

6 once every 3 months) based upon a change of in7 come or family composition.

8 ‘‘(2) NEED TO REAPPLY.—In the case of an in9 dividual who—

10 ‘‘(A) is entitled to assistance under this

11 section in September of a year, and

12 ‘‘(B) wishes to remain eligible for benefits

13 for months beginning with January of the fol14 lowing year,

15 the individual (or a family member) must file with

16 the Secretary in October of that preceding year a

17 new application for assistance. If an individual fails

18 to file a new application under this paragraph, an

19 application for such assistance with respect to any

20 family member may not be filed during November or

21 December of that preceding year.

22 ‘‘(3) CORRECTION OF INCOME.—Nothing in

23 paragraph (1) shall be construed as preventing an

24 individual or family from, at any time, submitting an

25 application to reduce the amount of assistance under
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1 this part based upon an increase in income from

2 that stated in the previous application.

3 ‘‘(e) TIMING OF ASSISTANCE.—

4 ‘‘(1) IN GENERAL.—If an application for assist5 ance under this part is filed—

6 ‘‘(A) on or before the 15th day of a month,

7 assistance under this part shall be available for

8 premiums for months after such month and,

9 with respect to the deductible, for expenses in10 curred after such month; or

11 ‘‘(B) after the 15th day of a month, assist12 ance under this part shall be available for pre13 miums for months after the month following

14 such month and, with respect to the deductible,

15 for expenses incurred after such following

16 month.

17 ‘‘(2) WELFARE RECIPIENTS.—In the case of an

18 individual or family with respect to whom an appli19 cation for assistance is not required because of sec20 tion 2246, in applying paragraph (1), the date of ap21 proval of aid or benefits described in such section

22 shall be considered the date of filing of an applica23 tion for assistance under this part.

24 ‘‘(f) VERIFICATION.—The Secretary shall provide for

25 verification, on a sample basis or other basis, of the infor-
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1 mation supplied in applications under this part. This ver2 ification shall be separate from the reconciliation provided

3 under section 2245.

4 ‘‘(g) HELP IN COMPLETING APPLICATIONS.—The

5 Secretary shall provide, from funds appropriated to carry

6 out this title, for grants to public or private nonprofit enti7 ties that will make available assistance to individuals and

8 families in filing applications for assistance under this

9 part. The Secretary shall make grants in a manner that

10 provides such assistance at a variety of sites (such as low11 income housing projects and shelters for homeless individ12 uals) that are readily accessible to individuals and families

13 eligible for assistance under this part.

14 ‘‘(h) PENALTIES FOR INACCURATE INFORMATION.—

15 ‘‘(1) INTEREST FOR UNDERSTATEMENTS.—

16 Each individual who knowingly understates income

17 reported in an application for assistance under this

18 part or otherwise makes a material misrepresenta19 tion of information in such an application shall be

20 liable to the Federal Government for excess pay21 ments made based on such understatement or mis22 representation, and for interest on such excess pay23 ments at a rate specified by the Secretary.

24 ‘‘(2) PENALTIES FOR MISREPRESENTATION.—

25 Each individual who knowingly misrepresents mate-
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1 rial information in an application for assistance

2 under this part shall be liable to the Federal Govern3 ment for $1,000 or, if greater, three times the ex4 cess payments made based on such misrepresenta5 tion.

6 ‘‘(i) FILING OF APPLICATION DEFINED.—Except as

7 provided in subsection (e)(2), for purposes of this part,

8 an application under this part is considered to be ‘filed’

9 on the date on which the complete application, including

10 all documentation required to act on the application, has

11 been filed with the Secretary.

12 ‘‘SEC. 2245. RECONCILIATION OF PREMIUM ASSISTANCE

13 THROUGH USE OF INCOME STATEMENTS.

14 ‘‘(a) REQUIREMENT FOR FILING OF INCOME STATE15 MENT.—Subject to section 2246, in the case of a family

16 which is receiving low-income assistance under this part

17 for any month in a year, a member of the family shall

18 file with the Secretary, by not later than April 15 of the

19 following year, a statement that verifies the family’s total

20 adjusted family income for the taxable year ending during

21 the previous year. Such a statement shall provide informa22 tion necessary to determine the family adjusted total in23 come during the year and the number of family members

24 in the family as of the last day of the year.
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1 ‘‘(b) RECONCILIATION OF PREMIUM ASSISTANCE

2 BASED ON ACTUAL INCOME.—Based on and using the in3 come reported in the statement filed under subsection (a)

4 with respect to a family or individual, subject to section

5 2246, the Secretary shall compute the amount of assist6 ance that should have been provided under this part with

7 respect to premiums for the family in the year involved.

8 If the amount of such assistance computed is—

9 ‘‘(1) greater than the amount of premium as10 sistance provided, the Secretary shall provide for

11 payment (directly or through a credit against future

12 premiums owed) to the family or individual involved

13 of an amount equal to the amount of the deficit, or

14 ‘‘(2) less than the amount of assistance pro15 vided, the Secretary shall require the family or indi16 vidual to pay (directly or through an increase in fu17 ture premiums owed) to the Secretary (to the credit

18 of the program under this title) an amount equal to

19 the amount of the excess payment.

20 ‘‘(c) DISQUALIFICATION FOR FAILURE TO FILE.—

21 Subject to section 2246, in the case of any family that

22 is required to file an information statement under sub23 section (a) in a year and that fails to file such a statement

24 by the deadline specified in such subsection, no member

25 of the family shall be eligible for assistance under this part
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1 after May 1 of such year. The Secretary shall waive the

2 application of this subsection if the family establishes, to

3 the satisfaction of the Secretary, good cause for the failure

4 to file the statement on a timely basis.

5 ‘‘(d) PENALTIES FOR FALSE INFORMATION.—Any

6 individual that provides false information in a statement

7 under subsection (a) is subject to a criminal penalty to

8 the same extent as a criminal penalty may be imposed

9 under section 1128B(a) with respect to a person described

10 in clause (ii) of such section.

11 ‘‘(e) NOTICE OF REQUIREMENT.—The Secretary

12 shall provide for written notice, in March of each year,

13 of the requirement of subsection (a) to each family which

14 received assistance under this part in any month during

15 the preceding year and to which such requirement applies.

16 ‘‘(f) TRANSMITTAL OF INFORMATION.—The Sec17 retary of the Treasury shall transmit annually to the Sec18 retary such information relating to the adjusted total in19 come of individuals for the taxable year ending in the pre20 vious year as may be necessary to verify the reconciliation

21 of assistance under this section.

22 ‘‘(g) CONSTRUCTION.—Nothing in this section shall

23 be construed as authorizing reconciliation of assistance

24 provided with respect to deductibles and coinsurance.
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1 ‘‘SEC. 2246. TREATMENT OF CERTAIN CASH ASSISTANCE

2 RECIPIENTS.

3 ‘‘In the case of a family that has been determined

4 to be eligible for aid under part A or E of title IV or an

5 individual who has been determined to be eligible for sup6 plemental security income benefits under title XVI—

7 ‘‘(1) the family or individual is deemed, without

8 the need to file an application for assistance under

9 section 2244, to have adjusted total income below

10 100 percent of the official poverty line applicable to

11 a family of the size involved,

12 ‘‘(2) the family or individual need not file a

13 statement under section 2245(a), and

14 ‘‘(3) the assistance received by the family is not

15 subject to reconciliation under section 2245(b).

16 ‘‘SEC. 2247. COMPUTATION OF FAMILY ADJUSTED TOTAL

17 INCOME.

18 ‘‘In this part:

19 ‘‘(1) ADJUSTED TOTAL INCOME.—The term

20 ‘adjusted total income’ means—

21 ‘‘(A) adjusted gross income (as defined in

22 section 62(a) of the Internal Revenue Code of

23 1986), determined without the application of

24 paragraphs (6) and (7) of such section and

25 without the application of section 162(l) of such

26 Code, plus
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1 ‘‘(B) the amount of social security benefits

2 (described in section 86(d) of such Code) which

3 is not includable in gross income under section

4 86 of such Code.

5 ‘‘(2) FAMILY ADJUSTED TOTAL INCOME.—The

6 term ‘family adjusted total income’ means, with re7 spect to an individual, the sum of the adjusted total

8 income for the individual and all the other family

9 members.

10 ‘‘(3) FAMILY SIZE.—The family size to be ap11 plied under this part, with respect to family adjusted

12 total income, is the number of individuals included

13 in the family for purposes of coverage of health in14 surance benefits under this title or under a qualified

15 employer health plan (as the case may be).

16 ‘‘PART F—ADMINISTRATIVE PROVISIONS

17 ‘‘SEC. 2261. AGREEMENTS WITH HOSPITALS; PARTICIPAT18 ING PHYSICIANS; TREATMENT OF INDIAN

19 HEALTH SERVICE FACILITIES.

20 ‘‘(a) REQUIREMENT.—

21 ‘‘(1) IN GENERAL.—Any hospital shall be quali22 fied to participate under this title and shall be eligi23 ble for payments under this title if—

24 ‘‘(A) it has in effect a participation agree25 ment under section 1866(a)(1), and
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1 ‘‘(B) it files with the Secretary a participa2 tion agreement meeting the requirements of

3 subsection (b).

4 ‘‘(b) ELEMENTS OF AGREEMENT.—

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

6 subsection, a participation agreement under this

7 subsection shall provide terms, specified by the Sec8 retary, that are the same terms as those required of

9 hospital participation agreements under section

10 1866(a)(1).

11 ‘‘(2) MODIFIED COPAYMENTS.—Instead of the

12 limitation on charges specified under paragraphs

13 (1)(A) and (2) of section 1866(a), the agreement

14 shall not permit the hospital to charge more than

15 the applicable deductible and coinsurance permitted

16 under this title.

17 ‘‘(3) ACCEPTANCE OF PAYMENT LIMITS.—Each

18 agreement shall require the hospital not to impose

19 charges that exceed the payment rates approved

20 under title III of the Health Insurance Coverage and

21 Cost Containment Act of 1993. The previous sen22 tence shall not be construed as prohibiting a quali23 fied employer health plan from negotiating or other24 wise providing payment rates that are less than such

25 reference rates.
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1 ‘‘(c) PHYSICIAN PARTICIPATION AGREEMENTS.—

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

3 subsection, the Secretary shall provide for participat4 ing physician agreements under this title in the

5 same manner as such agreements are provided for

6 under title part B of title XVIII pursuant to section

7 1842(h).

8 ‘‘(2) LIMITATION ON CHARGES TO OTHER ENTI9 TIES.—A participating physician agreement under

10 this subsection shall provide that the physician

11 agrees not to impose charges with respect to re12 quired health services that exceed the payment rates

13 approved with respect to such services under title III

14 of the Health Insurance Coverage and Cost Contain15 ment Act of 1993. The previous sentence shall not

16 be construed as prohibiting a qualified employer

17 health plan from negotiating or otherwise providing

18 payment rates that are less than such reference

19 rates.

20 ‘‘(d) INDIAN HEALTH SERVICE FACILITIES.—The

21 provisions of section 1880 (relating to Indian health serv22 ice facilities) shall apply to this title in the same manner

23 as they apply under title XVIII.
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1 ‘‘SEC. 2262. HEALTH MAINTENANCE ORGANIZATIONS.

2 ‘‘(a) IN GENERAL.—Except as provided in this sec3 tion, section 1876 shall apply to individuals entitled to

4 benefits under this title in the same manner as such sec5 tion applies to individuals entitled to benefits under part

6 A, and enrolled under part B, of title XVIII.

7 ‘‘(b) APPLICATION.—In applying section 1876 under

8 this section—

9 ‘‘(1) the provisions of such section relating only

10 to individuals enrolled under part B of title XVIII

11 shall not apply;

12 ‘‘(2) any reference to a Trust Fund established

13 under title XVIII and to benefits with respect to any

14 services under such title is deemed a reference to the

15 Public Health Trust Fund and to health insurance

16 benefits with respect to required health services

17 under this title;

18 ‘‘(3) the adjusted average per capita cost shall

19 be determined on the basis of benefits under this

20 title;

21 ‘‘(4) subsections (f) and (h) shall not apply; and

22 ‘‘(5) in applying subsection (c)(3)(B), an eligi23 ble organization may require a minimum period of

24 enrollment (of not greater than 6 months) during

25 which an individual may not disenroll other than for
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1 cause or unless enrollment under this title is termi2 nated.

3 ‘‘SEC. 2263. USE OF FISCAL AGENTS.

4 ‘‘(a) USE OF FISCAL AGENTS.—

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

6 section, the Secretary shall provide for the adminis7 tration of this title through the use of fiscal agents

8 in the same manner as title XVIII is carried out

9 through the use of such fiscal intermediaries and

10 carriers.

11 ‘‘(2) SPECIAL RULES.—In the administration of

12 this title, the Secretary—

13 ‘‘(A) may use a single carrier with respect

14 to all required health services in an area, and

15 ‘‘(B) shall establish performance standards

16 at least as rigorous as the performance stand17 ards applied in the administration of title

18 XVIII.

19 ‘‘(3) SEPARATE CONTRACTS.—Contracts with

20 fiscal agents entered into pursuant to this subsection

21 for an area need not be with the same fiscal

22 intermediary or carrier with an agreement under

23 section 1816 or a contract under section 1842 for

24 the area. However, nothing in this section shall be

25 construed as preventing such an organization with
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1 such an agreement or contract under such section

2 from entering into a contract under this section.

3 ‘‘(b) REQUIRING USE OF ELECTRONIC BILLING.—

4 Effective for claims submitted on or after January 1,

5 1997, payment shall only be made under this title on the

6 basis of bills or charges that are submitted electronically

7 in a manner specified by the Secretary.

8 ‘‘SEC. 2264. GENERAL ADMINISTRATION.

9 ‘‘(a) THROUGH HEALTH CARE FINANCING ADMINIS10 TRATION.—Except as otherwise provided in this title, this

11 title shall be administered by the Health Care Financing

12 Administration.

13 ‘‘(b) REGULATIONS; TITLE II PROVISIONS; ADMINIS14 TRATION.—The provisions of sections 1871, 1872, and

15 1874 (relating to regulations, application of certain provi16 sions of title II, and administration) shall apply to this

17 title in the same manner as they apply to title XVIII.

18 ‘‘(c) TREATMENT OF AMOUNTS DUE.—In bank19 ruptcy and reorganization proceedings, amounts owed to

20 the public health plan under this title shall be treated in

21 the same manner as amounts owed to the Federal Govern22 ment under the Federal Insurance Contributions Act.
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1 ‘‘SEC. 2265. DETERMINATIONS; APPEALS; PROVIDER REIM2 BURSEMENT REVIEW BOARD.

3 ‘‘(a) DETERMINATIONS.—The determination of

4 whether an individual is entitled to benefits under this title

5 and the determination of the amount of benefits under this

6 title shall be made by the Secretary in accordance with

7 regulations prescribed by the Secretary.

8 ‘‘(b) HEARINGS.—

9 ‘‘(1) IN GENERAL.—Any individual dissatisfied

10 with any determination under subsection (a) shall be

11 entitled to a hearing thereon by the Secretary to the

12 same extent as is provided in section 205(b) and to

13 judicial review of the Secretary’s final decision after

14 such hearing as is provided in section 205(g). Sec15 tions 206(a), 1102, and 1871 (as incorporated by

16 reference by section 2264) shall not be construed as

17 authorizing the Secretary to prohibit an individual

18 from being represented under this subsection by a

19 person that furnishes the individual, directly or indi20 rectly, with services solely on the basis that the per21 son furnishes the individual with such a service. Any

22 person that furnishes services to an individual may

23 not represent an individual under this subsection

24 with respect to the issue described in section

25 1879(a)(2) unless the person has waived any rights

26 for payment from the beneficiary with respect to the
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1 services involved in the appeal. If a person furnishes

2 services to an individual and represents the individ3 ual under this subsection, the person may not im4 pose any financial liability on such individual in con5 nection with such representation.

6 ‘‘(2) LIMITATION.—Notwithstanding paragraph

7 (1), a hearing shall not be available to an individual

8 if the amount in controversy is less than $500 and

9 judicial review shall not be available to the individual

10 if the amount in controversy is less than $1,000. In

11 determining the amount in controversy, the Sec12 retary, under regulations, shall allow two or more

13 claims to be aggregated if the claims involve the de14 livery of similar or involve related services to the

15 same individual or involve common issues of law and

16 fact arising from services furnished to two or more

17 individuals.

18 ‘‘(3) EXPEDITED REVIEW.—In an administra19 tive hearing pursuant to paragraph (1), where the

20 moving party alleges that there are no material is21 sues of fact in dispute, the administrative law judge

22 shall make an expedited determination as to whether

23 any such facts are in dispute and, if not, shall deter24 mine the case expeditiously.
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1 ‘‘(c) PROVIDER REIMBURSEMENT REVIEW BOARD.—

2 The provisions of section 1878 (relating to the Provider

3 Reimbursement Review Board) shall apply under this title

4 in the same manner as they apply under title XVIII.

5 ‘‘SEC. 2266. PROGRAM INTEGRITY; MISCELLANEOUS PROVI6 SIONS.

7 ‘‘(a) PROGRAM INTEGRITY.—Sections 1124, 1124A,

8 1126, and 1128 through 1128B (relating to fraud and

9 abuse) shall apply to this title in the same manner as they

10 apply to title XVIII.

11 ‘‘(b) TITLE XI PROVISIONS.—The following provi12 sions shall apply to this title in the same manner as they

13 apply to title XVIII:

14 ‘‘(1) Section 1134 (relating to nonprofit hos15 pital philanthropy).

16 ‘‘(2) Section 1138 (relating to hospital proto17 cols for organ procurement and standards for organ

18 procurement agencies).

19 ‘‘(c) WITHHOLDING OF PAYMENTS FROM CERTAIN

20 PROVIDERS.—Subsections (a) through (c) of section 1885

21 shall apply to this title, the Secretary, and the Public

22 Health Trust Fund in the same manner as such sub23 sections apply to title XIX, the State agency, and the ap24 propriate State agency paid funds under subsection (c),

25 respectively.
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1 ‘‘SEC. 2267. INFORMATION BY TELEPHONE.

2 ‘‘The Secretary shall provide information via a toll3 free telephone number on the public health plan, including

4 information concerning—

5 ‘‘(1) the requirement of section 2204, and

6 ‘‘(2) low-income assistance under part E.

7 ‘‘SEC. 2268. DEMONSTRATION PROJECT AUTHORITY.

8 ‘‘(a) DEMONSTRATION PROJECT AUTHORITY.—

9 ‘‘(1) IN GENERAL.—The Secretary is authorized

10 to conduct demonstration projects—

11 ‘‘(A) to improve the delivery and quality of

12 health care services under this title, and

13 ‘‘(B) to increase the efficiency and effec14 tiveness of methods of payment for such serv15 ices.

16 Subject to paragraph (2), the Secretary may waive

17 such requirements of this title as may be necessary

18 to carry out such demonstration projects.

19 ‘‘(2) LIMITATION.—The Secretary does not

20 have the authority under paragraph (1)—

21 ‘‘(A) to reduce the benefits available under

22 part B, or

23 ‘‘(B) to increase the deductibles or coinsur24 ance under part C.
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1 ‘‘(3) FUNDING.—Grants, payments under con2 tracts, and other expenditures made for demonstra3 tion projects under this subsection—

4 ‘‘(A) shall be made from the Public Health

5 Trust Fund,

6 ‘‘(B) may be made either in advance or by

7 way of reimbursement, as may be determined

8 by the Secretary, and

9 ‘‘(C) shall be made in such installments

10 and on such conditions as the Secretary finds

11 necessary to carry out the purpose of this sub12 section.

13 ‘‘(b) CONSTRUCTION.—Except as provided in sub14 section (a), the Secretary is not authorized to waive any

15 requirement of this title.

16 ‘‘SEC. 2269. INCORPORATION OF MISCELLANEOUS MEDI17 CARE PROVISIONS.

18 ‘‘(a) OVERPAYMENTS ON BEHALF OF INDIVIDUALS

19 AND SETTLEMENT OF CLAIMS FOR BENEFITS ON BE20 HALF OF DECEASED INDIVIDUALS.—The provisions of

21 section 1870 (relating to overpayments on behalf of indi22 viduals and settlement of claims for benefits on behalf of

23 deceased individuals), other than subsection (b), shall

24 apply under this title in the same manner as they apply

25 under title XVIII.
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1 ‘‘(b) LIMITATION ON CERTAIN PHYSICIAN REFER2 RALS.—The provisions of section 1877 (relating to limita3 tion on certain physician referrals) shall apply under this

4 title in the same manner as they apply under title XVIII.

5 ‘‘PART G—[RESERVED]

6 ‘‘PART H—DEFINITIONS AND MISCELLANEOUS

7 ‘‘SEC. 2281. INCORPORATION OF CERTAIN DEFINITIONS

8 USED IN OTHER HEALTH-RELATED TITLES.

9 ‘‘(a) INCORPORATION OF MEDICARE DEFINITIONS.—

10 In this title, the definitions contained in section 1861

11 apply for purposes of this title in the same manner as they

12 apply for purposes of title XVIII.

13 ‘‘(b) INCORPORATION OF CERTAIN EMPLOYMENT14 RELATED DEFINITIONS IN TITLE XXI.—In this title, ex15 cept as otherwise provided, the definitions of the following

16 terms contained in title XXI apply for purposes of this

17 title:

18 ‘‘(1) COVERED EMPLOYER HEALTH PLAN.—The

19 term ‘covered employer health plan’ as defined in

20 section 2121(b).

21 ‘‘(2) EMPLOYEE.—The term ‘employee’ as de22 fined in section 2181(a)(3).

23 ‘‘(3) FULL-TIME EMPLOYEE.—The term ‘full24 time employee’ as defined in section 2181(b)(1).
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1 ‘‘(4) LARGE EMPLOYER.—The term ‘large em2 ployer’ as defined in section 2181(c)(3).

3 ‘‘(5) MEDIUM-SIZE EMPLOYER.—The term ‘me4 dium-size employer’ as defined in section 2181(c)(2).

5 ‘‘(6) PART-TIME EMPLOYEE.—The term ‘part6 time employee’ as defined in section 2181(b)(2).

7 ‘‘(7) QUALIFIED EMPLOYER HEALTH PLAN.—

8 The term ‘qualified employer health plan’ as defined

9 in section 2121(a).

10 ‘‘(8) SEASONAL OR TEMPORARY EMPLOYEE.—

11 The term ‘seasonal or temporary employee’ as de12 fined in section 2181(b)(3).

13 ‘‘(9) SMALL EMPLOYER.—The term ‘small em14 ployer’ as defined in section 2181(c)(1).

15 ‘‘(10) VERY LARGE EMPLOYER.—The term

16 ‘very large employer’ as defined in section

17 2181(c)(4).

18 ‘‘(11) WAGES.—The term ‘wages’ as defined in

19 section 2181(a)(1).

20 ‘‘SEC. 2282. DEFINITIONS RELATING TO FAMILIES.

21 ‘‘In this title:

22 ‘‘(1) IN GENERAL.—Except as provided in para23 graph (2), the terms ‘family’ and ‘family member’

24 mean an individual and the individual’s spouse, and

25 includes all the individual’s children.
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1 ‘‘(2) TREATMENT OF FAMILIES WITH MEDI2 CARE BENEFICIARIES FOR COVERAGE PURPOSES.—

3 In the case of a family with a medicare beneficiary,

4 if coverage is provided to family members other than

5 on the basis of employment of a family member, the

6 beneficiary shall not be treated under this title as a

7 member of the family for purposes of determining

8 eligibility for coverage but shall be treated as a sepa9 rate individual. However, except as provided in sec10 tion 2242(b)(2), for purposes of applying part E, a

11 medicare beneficiary shall continue to be treated as

12 a member of the beneficiary’s family.

13 ‘‘(3) SPOUSE.—The term ‘spouse’ means, with

14 respect to an individual, the individual to which the

15 individual is married.

16 ‘‘(4) MARRIED; UNMARRIED.—Marital status

17 shall be determined in accordance with section 7703

18 of the Internal Revenue Code of 1986.

19 ‘‘(5) CHILD.—The term ‘child’ means, with re20 spect to a person who is not a child, an individual—

21 ‘‘(A) who (i) is unmarried and under 18

22 years of age, (ii) is unmarried and under 23

23 years of age and a full-time student, or (iii) is

24 an unmarried, dependent child, regardless of

25 age, who is incapable of self-support because of
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1 mental or physical disability which existed be2 fore age 22;

3 ‘‘(B)(i) who is the child of the person or

4 the person’s spouse, or

5 ‘‘(ii) who is the legal ward of the person or

6 the person’s spouse; and

7 ‘‘(C) who is not in the legal custody of an8 other individual.

9 The Secretary shall establish, by regulation, such

10 rules as are appropriate with respect to the treat11 ment of foster children, emancipated minors, chil12 dren in the process of adoption, and other unmar13 ried individuals under 23 years of age under similar

14 circumstances as children for purposes of this title.

15 ‘‘(6) ADULT.—The term ‘adult’ means an indi16 vidual who is not a child.

17 ‘‘SEC. 2283. OTHER DEFINITIONS.

18 ‘‘In this title:

19 ‘‘(1) MEDICARE BENEFICIARY; LOW-INCOME

20 MEDICARE BENEFICIARY.—

21 ‘‘(A) The term ‘medicare beneficiary’

22 means an individual entitled to benefits under

23 part A of title XVIII.

24 ‘‘(B) The term ‘low-income medicare bene25 ficiary’ means a medicare beneficiary whose
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1 family adjusted total income (as defined in sec2 tion 2247(2)), as determined based upon an ap3 plication under part E, is less than 200 percent

4 of the official poverty line applicable to a family

5 of the size involved.

6 ‘‘(2) OFFICIAL POVERTY LINE.—The term ‘offi7 cial poverty line’ means, for an individual in a fam8 ily, the official poverty line (as defined by the Office

9 of Management and Budget, and revised annually in

10 accordance with section 673(2) of the Omnibus

11 Budget Reconciliation Act of 1981) applicable to a

12 family of the size involved.

13 ‘‘(3) PREGNANT WOMAN.—The term ‘pregnant

14 woman’ means a woman who has been certified by

15 a physician (in a manner specified by the Secretary)

16 as being pregnant, until the last day of the month

17 in which the 60-day period (beginning on the date

18 of termination of the pregnancy) ends.

19 ‘‘(4) PUBLIC HEALTH PLAN.—The term ‘public

20 health plan’ means the program of health insurance

21 provided under this title.
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1 ‘‘SEC. 2284. AUTHORIZING RECIPROCAL COVERAGE OF FOR2 EIGN NATIONALS.

3 ‘‘Effective January 1, 1997, the Secretary may make

4 benefits available under this title with respect to required

5 health services for individuals who—

6 ‘‘(1) are not eligible individuals described in

7 section 2201(d),

8 ‘‘(2) are in the United States, and

9 ‘‘(3) are nationals of a foreign state which pro10 vides health benefits to nationals of the United

11 States who are in that state,

12 if the Secretary determines that such benefits with respect

13 to such services would be available to nationals of the

14 United States under comparable circumstances in the for15 eign state.

16 ‘‘SEC. 2285. NONAPPLICATION TO RESIDENTS OF PUERTO

17 RICO AND TERRITORIES.

18 ‘‘The provisions of this title shall not apply to an indi19 vidual who is not a resident of one of the 50 States or

20 the District of Columbia.’’.
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1 TITLE III—COST CONTAINMENT

2 Subtitle A—Health Care Spending

3 Amounts

4 SEC. 301. SPECIFICATION OF OVERALL HEALTH CARE

5 SPENDING AMOUNTS.

6 (a) AMOUNT.—For purposes of this title, with respect

7 to each year (beginning with 1994), the overall health care

8 spending amount (specified under this section) is the prod9 uct of—

10 (1) the average per capita health care expendi11 tures (identified in subsection (c)) in previous year,

12 as estimated by the Secretary, multiplied by the ap13 plicable adjustment factor for the year involved spec14 ified in subsection (b), and

15 (2) the population of the United States (exclud16 ing medicare beneficiaries), as projected by the Sec17 retary of Commerce as of July 1 of the year in18 volved.

19 (b) APPLICABLE ADJUSTMENT FACTOR.—The appli20 cable adjustment factor under this subsection for each

21 year is 1 plus the sum (expressed as a fraction) of—

22 (1) the average annual percentage increase in

23 the gross domestic product (in current dollars, as

24 published by the Secretary of Commerce) during the
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1 3-year period ending with the second previous year;

2 plus

3 (2)(A) for 1995, 3.5 percentage points,

4 (B) for 1996, 2.5 percentage points,

5 (C) for 1997, 1.5 percentage points,

6 (D) for 1998, 0.5 percentage point, and

7 (E) for each year thereafter, 0 percentage

8 points.

9 (c) SERVICES COVERED.—The average per capita

10 health care expenditures shall be based on the expendi11 tures (including expenditures for deductibles and coinsur12 ance) for required and other health services (as defined

13 in subsection (d)) expended in the United States, other

14 than with respect to individuals entitled to benefits under

15 part A or B of title XVIII of the Social Security Act.

16 (d) REQUIRED AND OTHER HEALTH SERVICES DE17 FINED.—In this subtitle, the term ‘‘required and other

18 health services’’ means required health services, specified

19 in section 2211(a)(2) of the Social Security Act, and also

20 includes prescription drugs, biologicals, and insulin.

21 SEC. 302. ESTABLISHMENT OF FEDERAL HEALTH CARE

22 COST CONTAINMENT COMMISSION.

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

24 Federal Health Care Cost Containment Commission (in

25 this subtitle referred to as the ‘‘FHCC’’). The FHCC shall
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1 be composed of 11 members, appointed by the President

2 by and with the advice and consent of the Senate. The

3 membership of the FHCC shall include individuals with

4 national recognition for their expertise in health econom5 ics, health insurance, provider reimbursement, and related

6 fields. In appointing individuals, the President shall assure

7 representation of labor organizations, employers, health

8 care providers, and consumers of health services.

9 (b) TERMS.—Members of the FHCC shall be ap10 pointed to serve for terms of 3 years, except that the terms

11 of the members first appointed shall be staggered so that

12 the terms of no more than 4 members expire in any year.

13 Individuals appointed to fill a vacancy created in the

14 FHCC shall be appointed for the remainder of the term.

15 (c) DUTIES RELATING TO ESTABLISHMENT OF PAY16 MENT RATES.—

17 (1) ALLOCATION OF OVERALL SPENDING BY

18 STATE.—

19 (A) IN GENERAL.—Each year the FHCC

20 shall apportion the overall health care spending

21 amount specified under section 301 for required

22 and other health services among the States.

23 Subject to subparagraph (B), such apportion24 ment shall be based on the populations of the

25 States, adjusted to reflect differences in age
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1 and health status of the population and the

2 cost-of-living among the States and such other

3 considerations as the FHCC deems appropriate,

4 including such adjustment as will encourage the

5 provision of necessary services in underserved

6 areas.

7 (B) PHASE-IN.—During the 10-year period

8 beginning in 1994—

9 (i) initially the apportionment shall

10 reflect the current variations in per capita

11 health care expenditures among the States,

12 (ii) gradually the apportionment shall

13 reflect to a lesser degree such current vari14 ations, and

15 (iii) at the end of the period the ap16 portionment shall reflect only the factors

17 and considerations described in subpara18 graph (A).

19 (2) MONITORING STATE EXPENDITURES.—The

20 FHCC shall monitor the compliance of each State

21 with the overall health care spending amount appor22 tioned under paragraph (1) for each year and over

23 each 3-year period.

24 (3) APPROVAL OF PAYMENT RATES IN CERTAIN

25 STATES WITHOUT A STATE HEALTH COMMISSION OR
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1 UNABLE TO CONTROL HEALTH CARE EXPENDI2 TURES.—

3 (A) IN GENERAL.—In the case of a State

4 described in subparagraph (B)—

5 (i) the FHCC shall conduct negotia6 tions with professional and other associa7 tions representing the types of health care

8 providers in order to apportion the overall

9 health care spending apportioned to the

10 States under paragraph (1) among the dif11 ferent classes of providers (as defined in

12 subsection (f));

13 (ii) the Secretary shall establish, for

14 each class of provider for the year involved

15 and subject to approval by the FHCC

16 under clause (iii), payment rates for re17 quired and other health services consistent

18 with the limitation on overall health care

19 spending for such services specified in sub20 paragraph (B)(ii) and reflecting such re21 duction in payment rates as may be nec22 essary to reduce spending by an amount

23 equal to the amount by which the State

24 has exceeded such spending limitation; and
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1 (iii) the FHCC shall review and, if

2 they meet the standards described in sec3 tion 304(a), approve the payment rates es4 tablished by the Secretary under clause (ii)

5 or, if they do not, disapprove such rates.

6 (B) STATES COVERED.—A State is de7 scribed in this subparagraph if the FHCC de8 termines that the State—

9 (i) has failed to establish a State

10 Health Commission in accordance with sec11 tion 303(a), or

12 (ii) has permitted over a 3-consecu13 tive-year period overall health care spend14 ing for required and other health services

15 in the State to exceed the sum of—

16 (I) the cumulative overall health

17 care spending amount apportioned to

18 the State under paragraph (1) for

19 that period and

20 (II) any cumulative difference be21 tween a State’s overall health care

22 spending for required and other

23 health services in previous periods and

24 spending amounts apportioned to the
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1 State under paragraph (1) for those

2 periods,

3 until such time as the FHCC determines that

4 such a State Health Commission has been es5 tablished and that the State has provided the

6 FHCC with satisfactory assurances that overall

7 health care spending for required and other

8 health services in the State will not exceed the

9 overall health care spending amount appor10 tioned to the State under paragraph (1).

11 (C) PAYMENT BASIS.—The payment rates

12 established under subparagraph (A)(ii) shall be

13 based on payment methodologies (including

14 payment for inpatient hospital services on the

15 basis of per discharge payments relating to di16 agnosis-related groups and payment for physi17 cians’ services based on a resource-based rel18 ative value scale) used under title XVIII of the

19 Social Security Act. In establishing such rates,

20 the Secretary shall consult with the Prospective

21 Payment Assessment Commission and with the

22 Physician Payment Review Commission, as ap23 propriate.

24 (D) APPLICATION OF RATES.—
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1 (i) IN GENERAL.—Except as provided

2 in clause (ii), the rates established under

3 subparagraph (B)(ii) shall be the rate that

4 may be charged by providers under quali5 fied employer health plans or under the

6 public health plan.

7 (ii) SPECIAL TREATMENT OF PHYSI8 CIANS’ SERVICES.—In applying subpara9 graph (E) in the case of physicians’ serv10 ices, the rate specified under this para11 graph shall be the same percentage above

12 the rate otherwise computed under this

13 paragraph as the percentage by which the

14 limiting charge under section 1848(g) of

15 the Social Security Act exceeds the recog16 nized payment amount (as defined in sec17 tion 1848(g)(2)(D) of such Act).

18 (E) ENFORCEMENT.—Any health care pro19 vider that imposes a charge in excess of the

20 rate specified under this paragraph shall be in21 eligible for a period (specified by the Secretary)

22 of not more than 5 years to provide services for

23 which payment may be made under title XVIII,

24 XIX, or XXII of the Social Security Act.
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1 (4) APPEALS OF PAYMENT RATES ESTAB2 LISHED BY STATE HEALTH COMMISSIONS.—

3 (A) PROCESS.—The FHCC shall establish

4 a process for receipt of, and action upon, griev5 ances concerning payment rates established by

6 a State Health Commission under section 303.

7 Such process shall provide for disapproval of

8 such a rate if the rate fails to meet the stand9 ards for approval of such a rate under section

10 304(a).

11 (B) RATE ADJUSTMENTS.—In the case of

12 such a disapproval, the SHC shall revise rates

13 consistent with such standards.

14 (d) PERIODIC REPORTS.—The FHCC shall report to

15 the Congress and the public periodically (not less often

16 than annually) on the effect of this title on the delivery

17 of required health care services.

18 (e) MISCELLANEOUS.—

19 (1) AUTHORITY.—The FHCC shall have the

20 authority specified in clauses (i) through (vi) of sec21 tion 1886(e)(6)(C) of the Social Security Act, but

22 (under such clause (i)) not subject to the approval

23 of the Director of the Office.

24 (2) COMPENSATION.—While serving on the

25 business of the FHCC (including traveltime), a
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1 member of the FHCC shall be entitled to compensa2 tion at the per diem equivalent of the rate provided

3 for level IV of the Executive Schedule under section

4 5315 of title 5, United States Code; and while so

5 serving away from home and his regular place of

6 business, a member may be allowed travel expenses,

7 as authorized by the Chairman of the FHCC. Physi8 cians serving as personnel of the FHCC may be pro9 vided a physician comparability allowance by the

10 FHCC in the same manner as Government physi11 cians may be provided such an allowance by an

12 agency under section 5948 of title 5, United States

13 Code, and for such purpose subsection (i) of such

14 section shall apply to the FHCC in the same manner

15 as it applies to the Tennessee Valley Authority.

16 (3) ACCESS TO INFORMATION, ETC.—The provi17 sions of subparagraphs (F) and (H) of section

18 1886(e)(6) of the Social Security Act shall apply to

19 the FHCC in the same manner as they apply to the

20 Prospective Payment Assessment Commission.

21 (4) AUTHORIZATION OF APPROPRIATIONS.—

22 There are authorized to be appropriated, from the

23 Public Health Trust Fund (established under section

24 2233 of the Social Security Act) such sums as may

25 be necessary to carry out this section.
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1 (f) CLASS OF PROVIDER DEFINED.—In this subtitle,

2 the term ‘‘class of provider’’ means hospitals, physicians,

3 and such other classes of health care providers (which may

4 include a prepaid system of health care delivery) as the

5 FHCC specifies in regulations.

6 (g) SECRETARY.—In this subtitle, the term ‘‘Sec7 retary’’ means the Secretary of Health and Human Serv8 ices.

9 SEC. 303. STATE HEALTH RATE COMMISSIONS.

10 (a) IN GENERAL.—Each State shall establish a State

11 Health Commission (each in this section referred to as a

12 ‘‘SHC’’) to carry out duties under this section. If a State

13 fails to establish such a SHC, the FHCC shall perform

14 functions of such a Commission under section 302(c)(3).

15 (b) COMPOSITION AND TERMS.—

16 (1) COMPOSITION.—Each SHC shall be com17 posed of not to exceed 11 members, appointed by the

18 chief executive officer of the State. The membership

19 of each SHC shall include individuals with recogni20 tion for their expertise in health economics, health

21 insurance, provider reimbursement, and related

22 fields. In appointing individuals, the chief executive

23 officer shall assure representation of labor organiza24 tions, employers, health care providers, and consum25 ers of health services.
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1 (2) TERMS.—Members of each SHC shall be

2 appointed to serve for terms of 3 years, except that

3 the terms of the members first appointed shall be

4 staggered so that the terms of no more than 40 per5 cent of the number of members expire in any year.

6 Individuals appointed to fill a vacancy created in an

7 SHC shall be appointed for the remainder of the

8 term.

9 (c) DUTIES.—

10 (1) ALLOCATION OF OVERALL SPENDING BY

11 STATE.—Each year each SHC shall apportion the

12 portion of the health care spending amount appor13 tioned to the State under section 302(c)(1) among

14 required and other health services furnished by the

15 different classes of providers.

16 (2) ESTABLISHMENT OF PAYMENT RATES.—

17 (A) IN GENERAL.—Each year each SHC

18 shall establish for each such class of provider

19 payment rates for required and other health

20 services (as defined in section 301(d)) furnished

21 in that State in that year, which meet the

22 standards for approval under section 304(a).

23 (B) REVISION OF RATES.—If the FHCC

24 determines that particular payment rates do not

25 meet the standard specified under section
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1 304(a)(2) and must be increased to meet such

2 standard, the SHC—

3 (i) shall increase those payment rates

4 so as to meet such standard, and

5 (ii) shall provide for such decrease in

6 other payment rates as may be necessary

7 to assure that the standard described in

8 section 304(a)(1) continues to be met (tak9 ing into account the increase provided

10 under clause (i)).

11 (3) USE OF REGIONAL COMMISSIONS IN CARRY12 ING OUT DUTIES.—In carrying out duties of an SHC

13 under this subsection, a State may establish regional

14 commissions to carry out the functions of the SHC

15 on a local basis, within the allocation provided to the

16 region by the SHC.

17 SEC. 304. STANDARD FOR PAYMENT RATES.

18 (a) IN GENERAL.—The FHCC shall approve rates es19 tablished by a State Health Commission (or regional com20 mission) under section 303(c)(2), or the Secretary under

21 section 302(c)(3)(A)(ii), for a class of provider only if the

22 FHCC determines that—

23 (1) the rates, if applied in the aggregate by all

24 qualified employer health plans and by the public

25 health plan during the year in the State, would re-
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1 sult in total expenditures for required services fur2 nished by that class of provider that are consistent

3 with the amount distributed under section 303(c)(1)

4 or 302(c)(3)(A)(i), as the case may be, for services

5 of that class of provider; and

6 (2) the rates are reasonable and adequate, con7 sistent with subsection (b).

8 (b) TEST OF REASONABLENESS AND ADEQUACY.—

9 For purposes of applying subsection (a)(2) with respect

10 to payment rates for required and other health services

11 furnished by a class of provider—

12 (1) ACCESS AND QUALITY.—Payment rates are

13 not considered to be reasonable and adequate if pa14 tients will not have reasonable access to services of

15 high quality.

16 (2) AGGREGATE ADEQUACY.—The determina17 tion of reasonableness and adequacy of payment

18 rates shall be made based on the aggregate rates.

19 (3) EQUITABLE RATE DISTRIBUTION.—Pay20 ment rates are not considered to be reasonable un21 less they are set equitably among all purchasers

22 without undue discrimination.

23 (4) APPROPRIATE SETTING.—Payment rates

24 are not considered to be reasonable and adequate

25 unless the rates—
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1 (A) encourage services to be provided to

2 patients in the most cost effective environment

3 that does not endanger patients’ well-being, and

4 (B) include incentives to contain health

5 care costs.

6 The payment rates may be designed to encourage the pro7 vision of necessary services in underserved areas.

8 SEC. 305. APPLICATION OF RATES UNDER MEDICARE AND

9 PUBLIC PROGRAMS.

10 Payment rates approved this subtitle shall apply both

11 under the medicare program under title XVIII of the So12 cial Security Act and under the public health plan under

13 title XXII of such Act.

14 Subtitle B—Administrative

15 Simplification

16 SEC. 321. REQUIREMENT FOR UNIFORM HEALTH CLAIMS

17 CARDS.

18 (a) UNIFORM HEALTH CLAIMS CARDS.—

19 (1) REQUIREMENT.—Each health benefit plan

20 (as defined in section 326(a)) shall issue a health

21 claims card that meets the requirements of sub22 section (c) for each individual who is entitled to ben23 efits under the plan and who is residing in the Unit24 ed States. Such card shall be issued to the individual

25 involved or, in the case of an individual enrolled as
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1 a dependent of another individual, to that other indi2 vidual.

3 (2) DEADLINE FOR APPLICATION OF REQUIRE4 MENT.—The deadline specified under this paragraph

5 for the requirement under paragraph (1) is 6

6 months after the date the standards are established

7 under subsection (c).

8 (b) ENFORCEMENT THROUGH CIVIL MONEY PEN9 ALTIES.—

10 (1) IN GENERAL.—In the case of a health bene11 fit plan that fails to issue a health claims card in ac12 cordance with subsection (a)(1), the plan is subject

13 to a civil money penalty of not to exceed $100 for

14 each such violation. The provisions of section 1128A

15 of the Social Security Act (other than subsections

16 (a) and (b)) shall apply to a civil money penalty

17 under this subsection in the same manner as such

18 provisions apply to a penalty or proceeding under

19 section 1128A(a) of such Act.

20 (2) EFFECTIVE DATE.—No penalty may be im21 posed under paragraph (1) for any failure occurring

22 before the deadline specified in subsection (a)(2).

23 (c) UNIFORM HEALTH CLAIMS CARDS.—

24 (1) IN GENERAL.—The Secretary shall establish

25 standards consistent with this subsection respecting
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1 the form and information to be contained on uni2 form health claims cards (for purposes of subsection

3 (a)).

4 (2) ELECTRONIC.—

5 (A) IN GENERAL.—Subject to subpara6 graph (B), the card shall be in a form similar

7 to that of a credit card and shall have, encoded

8 in electronic form—

9 (i) the identity of the individual,

10 (ii) the health benefit plan in which

11 the individual is enrolled, and

12 (iii) the telephone number or numbers

13 to be used for the verification electronically

14 of entitlement to benefits under the plan

15 under section 322 and for the submission

16 electronically of claims under the plan

17 under section 323.

18 (B) USE OF ELECTRONIC READ-AND19 WRITE CARDS.—The Secretary may provide for

20 cards in a electronic form that permits informa21 tion on the card to be readily changed. Such in22 formation may include information relating to

23 the health coverage status of the individual and

24 the medical history of the individual.
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1 (C) PERSONAL IDENTIFIER.—For pur2 poses of subparagraph (A) and for purposes of

3 claims processing and related purposes under

4 section 323, the Social Security account number

5 of the individual or, in the case of an infant or

6 other individual to whom such a number has

7 not been issued, such a Social Security account

8 number of a parent or guardian or other num9 ber as the Secretary shall specify, shall be used

10 as the personal identifier for the individual.

11 (3) ADDITIONAL INFORMATION.—The card

12 shall include such additional information, in elec13 tronic or other form, as the Secretary may require

14 to carry out the purposes of this Act. In addition,

15 the health benefit plan issuing the card may include

16 such additional information on the card as the plan

17 desires, subject to such limitations as the Secretary

18 may provide.

19 (4) DEADLINE.—The Secretary shall first es20 tablish the standards for uniform health claims

21 cards under this subsection by not later than 12

22 months after the date of the enactment of this Act.

23 (d) APPLICATION TO MEDICARE AND MEDICAID PRO24 GRAMS.—
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1 (1) MEDICARE PROGRAM.—The Secretary shall

2 provide, in regulations promulgated to carry out the

3 medicare program, that identification cards issued

4 under that program are modified to the extent re5 quired to conform to the standards established under

6 subsection (c), by not later than the deadline speci7 fied in subsection (a)(2).

8 (2) STATE MEDICAID PLANS.—As a condition

9 for the approval of a State plan under the medicaid

10 program, effective for calendar quarters beginning

11 on or after the deadline specified in subsection

12 (a)(2), each such plan shall provide, in accordance

13 with regulations of the Secretary, that identification

14 cards issued under the plan are modified to the ex15 tent required to conform to the requirements of sub16 section (c).

17 SEC. 322. REQUIREMENT FOR ENTITLEMENT VERIFICA18 TION SYSTEM.

19 (a) IN GENERAL.—

20 (1) REQUIREMENT.—Each health benefit plan

21 shall provide for an electronic system, that is cer22 tified by the Secretary as meeting the standards es23 tablished under subsection (c), for the verification of

24 an individual’s entitlement to benefits under such

25 plan.
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1 (2) DEADLINE FOR APPLICATION OF REQUIRE2 MENT.—The deadline specified under this paragraph

3 for the requirement under paragraph (1) is 6

4 months after the date the standards are established

5 under subsection (c).

6 (b) ENFORCEMENT THROUGH CIVIL MONEY PEN7 ALTIES.—

8 (1) IN GENERAL.—In the case of a health bene9 fit plan that fails to provide for an electronic ver10 ification system that is certified by the Secretary as

11 meeting the standards established under subsection

12 (c), the plan is subject to a civil money penalty of

13 not to exceed $100 for each day in which such fail14 ure persists. The provisions of section 1128A of the

15 Social Security Act (other than subsections (a) and

16 (b)) shall apply to a civil money penalty under this

17 subsection in the same manner as such provisions

18 apply to a penalty or proceeding under section

19 1128A(a) of such Act.

20 (2) EFFECTIVE DATE.—No penalty may be im21 posed under paragraph (1) for any failure occurring

22 before the deadline specified in subsection (a)(2).

23 (c) STANDARDS FOR ENTITLEMENT VERIFICATION

24 SYSTEMS.—
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1 (1) IN GENERAL.—The Secretary shall estab2 lish standards consistent with this subsection re3 specting the requirements for certification of entitle4 ment verification systems.

5 (2) INFORMATION AVAILABLE.—Such standards

6 shall require a system to provide information, with

7 respect to individuals, concerning the following:

8 (A) The specific benefits to which the indi9 vidual is entitled under the plan.

10 (B) Current status of the individual with

11 respect to fulfillment of deductibles,

12 copayments, and out-of-pocket limits on cost13 sharing.

14 (C) Restrictions on providers who may pro15 vide covered services, including utilization con16 trols (such as preadmission certification).

17 (3) COORDINATION OF BENEFIT INFORMA18 TION.—Such standards shall require a system to

19 provide for the transfer among health benefit plans

20 of appropriate information in determining liability in

21 cases in which benefits may be payable under two or

22 more such plans.

23 (4) FORM OF INQUIRY.—Each verification sys24 tem shall be capable of accepting inquiries under

25 this subsection from health care providers (and, to
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1 the extent provided under paragraph (3), from other

2 health benefit plans) in a variety of electronic and

3 other forms, including—

4 (A) through electronic transmission of in5 formation on the uniform health claims card (in

6 a manner similar to that for verification of

7 credit card purchases),

8 (B) through the use of a touch-tone tele9 phone line, and

10 (C) through the use of a computer modem.

11 The system shall also provide, for an additional fee,

12 for the acceptance of inquiries in a nonelectronic

13 form.

14 (5) FORM OF RESPONSE.—Each such system

15 shall be capable of responding to such inquiries

16 under this subsection in a variety of electronic and

17 other forms, including—

18 (A) through modem transmission of infor19 mation,

20 (B) through computer synthesized voice

21 communication, and

22 (C) through transmission of information to

23 a facsimile (fax) machine.

24 The system shall also provide, for an additional fee,

25 for the response to inquiries in a nonelectronic form.
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1 (6) LIMITATION ON FEES.—A health benefit

2 plan may not impose a fee for the acceptance or re3 sponse to an inquiry under this subsection except

4 where the acceptance or response is in a

5 nonelectronic form.

6 (7) PUBLIC DOMAIN SOFTWARE TO PROVID7 ERS.—The Secretary shall provide for the develop8 ment, and shall make available without charge to

9 health service providers and health benefit plans,

10 such computer software as will enable—

11 (A) such providers to make inquiries, and

12 receive responses, electronically respecting the

13 eligibility and benefits of an individual under

14 health benefit plans, and

15 (B) such plans to make inquiries, and re16 ceive responses, electronically respecting liability

17 of other plans for the provision or payment of

18 benefits.

19 (8) DEADLINE.—The Secretary shall first es20 tablish the standards under this subsection (and

21 shall develop and make available the software under

22 paragraph (7)) by not later than 12 months after

23 the date of the enactment of this Act.

24 (d) APPLICATION TO MEDICARE AND MEDICAID PRO25 GRAMS.—
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1 (1) MEDICARE PROGRAM.—The Secretary shall

2 provide, in regulations promulgated to carry out the

3 medicare program, that there is established an enti4 tlement verification system that meets the standards

5 established under subsection (c), by not later than

6 the deadline specified in subsection (a)(2).

7 (2) STATE MEDICAID PLANS.—As a condition

8 for the approval of a State plan under the medicaid

9 program, effective for calendar quarters beginning

10 on or after the deadline specified in subsection

11 (a)(2), each such plan shall provide, in accordance

12 with regulations of the Secretary, that there is es13 tablished an entitlement verification system that

14 meets the standards established under subsection

15 (c).

16 SEC. 323. REQUIREMENTS FOR UNIFORM CLAIMS AND

17 ELECTRONIC CLAIMS DATA SET.

18 (a) REQUIREMENTS.—

19 (1) SUBMISSION OF CLAIMS.—Each health serv20 ice provider that furnishes services in the United

21 States for which payment may be made under a

22 health benefit plan shall submit any claim for pay23 ment for such services only in a form and manner

24 consistent with standards established under sub25 section (c).
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1 (2) ACCEPTANCE OF CLAIMS.—A health benefit

2 plan may not reject a claim for payment under the

3 plan on the basis of the form or manner in which

4 the claim is submitted if the claim is submitted in

5 accordance with the standards established under

6 subsection (c).

7 (3) EFFECTIVE DATE.—This subsection shall

8 apply to claims for services furnished on or after the

9 date that is 6 months after the date standards are

10 established under subsection (c).

11 (b) ENFORCEMENT THROUGH CIVIL MONEY PEN12 ALTIES.—

13 (1) IN GENERAL.—

14 (A) PROVIDERS.—In the case of a health

15 service provider that submits a claim in viola16 tion of subsection (a)(1), the provider is subject

17 to a civil money penalty of not to exceed $100

18 (or, if greater, the amount of the claim) for

19 each such violation.

20 (B) PLANS.—In the case of a health bene21 fit plan that rejects a claim in violation of sub22 section (a)(2), the plan is subject to a civil

23 money penalty of not to exceed $100 (or, if

24 greater, the amount of the claim) for each such

25 violation.
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1 (2) PROCESS.—The provisions of section 1128A

2 of the Social Security Act (other than subsections

3 (a) and (b)) shall apply to a civil money penalty

4 under paragraph (1) in the same manner as such

5 provisions apply to a penalty or proceeding under

6 section 1128A(a) of such Act.

7 (3) SUNSET FOR PENALTY.—No civil money

8 penalty may be imposed under this subsection for

9 submission (or rejection) of any claim on or after

10 the date that is 36 months after the effective date

11 specified in subsection (a)(3).

12 (c) STANDARDS RELATING TO UNIFORM CLAIMS AND

13 ELECTRONIC CLAIMS DATA SET.—

14 (1) ESTABLISHMENT OF STANDARDS.—The

15 Secretary shall establish standards that—

16 (A) relate to the form and manner of sub17 mission of claims for benefits under a health

18 benefit plan, and

19 (B) define the data elements to be con20 tained in a uniform electronic claims data set to

21 used with respect to such claims.

22 (2) SCOPE OF INFORMATION.—

23 (A) IN GENERAL.—The standards under

24 this subsection are intended to cover substan25 tially most claims that are filed under health
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1 benefit plans. Such information need not in2 clude all elements that may potentially be re3 quired to be reported under utilization review

4 provisions of plans.

5 (B) ENSURING ACCOUNTABILITY FOR

6 CLAIMS SUBMITTED ELECTRONICALLY.—In es7 tablishing such standards, the Secretary, in

8 consultation with appropriate agencies, shall in9 clude such methods of ensuring provider re10 sponsibility and accountability for claims sub11 mitted electronically that are designed to con12 trol fraud and abuse in the submission of such

13 claims.

14 (C) COMPONENTS.—In establishing such

15 standards the Secretary shall—

16 (i) with respect to data elements, de17 fine data fields, formats, and medical no18 menclature, and plan benefit and insurance

19 information;

20 (ii) develop a single, uniform coding

21 system for diagnostic and procedure codes;

22 and

23 (iii) provide for standards for the uni24 form electronic transmission of such ele25 ments.
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1 (3) COORDINATION WITH STANDARDS FOR

2 ELECTRONIC MEDICAL RECORDS.—In establishing

3 standards under this subsection, the Secretary shall

4 assure that—

5 (A) the development of such standards is

6 coordinated with the development of the stand7 ards for electronic medical records under sec8 tion 324, and

9 (B) the coding of data elements under the

10 uniform electronic claims data set and the cod11 ing of the same elements in the uniform hos12 pital clinical data set are consistent.

13 (4) USE OF TASK FORCES.—In adopting stand14 ards under this subsection—

15 (A) the Secretary shall take into account

16 the recommendations of current task forces, in17 cluding at least the Workgroup on Electronic

18 Data Interchange, National Uniform Billing

19 Committee, the Uniform Claim Task Force, and

20 the Computer-based Patient Record Institute,

21 and

22 (B) the Secretary shall provide that the

23 electronic transmission standards are consist24 ent, to the extent practicable, with the applica25 ble standards established by the Accredited
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1 Standards Committee X–12 of the American

2 National Standards Institute.

3 (5) UNIFORM, UNIQUE PROVIDER IDENTIFICA4 TION CODES.—In establishing standards under this

5 subsection—

6 (A) the Secretary shall provide for a

7 unique identifier code for each health service

8 provider that furnishes services for which a

9 claim may be submitted under a health benefit

10 plan, and

11 (B) in the case of a provider that has a

12 unique identifier issued for purposes of the

13 medicare program, the code provided under

14 subparagraph (A) shall be the same as such

15 unique identifier.

16 (6) PUBLIC DOMAIN SOFTWARE TO PROVID17 ERS.—The Secretary shall provide for the develop18 ment, and shall make available without charge to

19 health service providers, such computer software as

20 will enable the providers to submit claims and to re21 ceive verification of claims status electronically.

22 (7) STANDARDS FOR PAPER CLAIMS.—The

23 standards shall provide for a uniform paper claims

24 form which is consistent with data elements required

25 for the submission of claims electronically.
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1 (8) STANDARDS FOR CLAIMS FOR CLINICAL

2 LABORATORY TESTS.—The standards shall provide

3 that claims for clinical laboratory tests for which

4 benefits are provided under a health benefit plan

5 shall be submitted directly by the person or entity

6 that performed (or supervised the performance of)

7 the tests to the plan in a manner consistent with

8 (and subject to such exceptions as are provided

9 under) the requirement for direct submission of such

10 claims under the medicare program.

11 (9) DEADLINE.—The Secretary shall first pro12 vide for the standards for the uniform claims under

13 this subsection (and shall develop and make avail14 able the software under paragraph (6)) by not later

15 than 1 year after the date of the enactment of this

16 Act.

17 (d) USE UNDER MEDICARE AND MEDICAID PRO18 GRAMS.—

19 (1) REQUIREMENT FOR PROVIDERS.—In the

20 case of a health service provider that submits a

21 claim for services furnished under the medicare pro22 gram or medicaid program in violation of subsection

23 (a)(1), no payment shall be made under such pro24 gram for such services.
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1 (2) REQUIREMENTS OF INTERMEDIARIES AND

2 CARRIERS UNDER MEDICARE PROGRAM.—The Sec3 retary shall provide, in regulations promulgated to

4 carry out title XVIII of the Social Security Act, that

5 the claims process provided under that title is modi6 fied to the extent required to conform to the stand7 ards established under subsection (c).

8 (3) REQUIREMENTS OF STATE MEDICAID

9 PLANS.—As a condition for the approval of State

10 plans under the medicaid program, effective as of

11 the effective date specified in subsection (a)(3), each

12 such plan shall provide, in accordance with regula13 tions of the Secretary, that the claims process pro14 vided under the plan is modified to the extent re15 quired to conform to the standards established under

16 subsection (c).

17 SEC. 324. ELECTRONIC MEDICAL RECORDS AND REPORT18 ING.

19 (a) STANDARDS FOR ELECTRONIC MEDICAL

20 RECORDS FOR HOSPITALS.—

21 (1) PROMULGATION OF STANDARDS.—

22 (A) IN GENERAL.—Between July 1, 1994,

23 and January 1, 1995, the Secretary shall pro24 mulgate standards described in paragraph (2)
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1 for hospitals concerning electronic medical

2 records.

3 (B) REVISION.—The Secretary may from

4 time to time revise the standards promulgated

5 under this paragraph.

6 (2) CONTENTS OF STANDARDS.—The standards

7 promulgated under paragraph (1) shall include at

8 least the following:

9 (A) A definition of a uniform hospital clini10 cal data set, including a definition of the set of

11 comprehensive data elements, for use by utiliza12 tion and quality control peer review organiza13 tions.

14 (B) Standards for an electronic patient

15 care information system with data obtained at

16 the point of care.

17 (C) A specification of, and manner of pres18 entation of, the individual data elements of the

19 set and system under this paragraph.

20 (D) Standards concerning the transmission

21 of electronic medical data.

22 (E) Standards relating to confidentiality of

23 patient-specific information, which include the

24 physical security of electronic data and the use

25 of keys, passwords, encryption, and other
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1 means to ensure the protection of the confiden2 tiality and privacy of electronic data.

3 (3) COORDINATION WITH STANDARDS FOR UNI4 FORM ELECTRONIC CLAIMS DATA SET.—In establish5 ing standards under this subsection, the Secretary

6 shall assure that—

7 (A) the development of such standards is

8 coordinated with the development of the stand9 ards for the uniform electronic claims data set

10 under section 323, and

11 (B) the coding of data elements under the

12 uniform hospital clinical data set and the cod13 ing of the same elements under the uniform

14 electronic claims data set are consistent.

15 (4) CONSULTATION.—in establishing standards

16 under this subsection, the Secretary shall—

17 (A) consult with the American National

18 Standards Institute, hospitals, health benefit

19 plans, and other interested parties, and

20 (B) take into consideration, in developing

21 standards under paragraph (2)(A), the data set

22 used by the utilization and quality control peer

23 review program under part B of title XI of the

24 Social Security Act.
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1 (b) REQUIREMENT FOR APPLICATION OF ELEC2 TRONIC RECORDS STANDARDS TO HOSPITALS.—

3 (1) AS CONDITION OF MEDICARE PARTICIPA4 TION.—As of January 1, 1996, each hospital, as a

5 requirement of each participation agreement under

6 section 1866 of the Social Security Act, shall, in ac7 cordance with the standards promulgated under sub8 section (a)(1)—

9 (A) maintain clinical data included in the

10 uniform hospital clinical data set under sub11 section (a)(2)(A) in electronic form on all inpa12 tients,

13 (B) upon request of the Secretary or of a

14 utilization and quality control peer review orga15 nization (with which the Secretary has entered

16 into a contract under part B of title XI of such

17 Act), transmit electronically data requested

18 from such data set, and

19 (C) upon request of the Secretary, or of a

20 fiscal intermediary or carrier, transmit elec21 tronically any data (with respect to a claim)

22 from such data set.

23 (2) APPLICATION OF PRESENTATION AND

24 TRANSMISSION STANDARDS TO ELECTRONIC TRANS25 MISSION TO FEDERAL AGENCIES.—Effective Janu-
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1 ary 1, 1996, if a hospital is required under a Fed2 eral program to transmit a data element that is sub3 ject to a standard, promulgated under subsection

4 (a)(1), described in subparagraph (C) or (D) of sub5 section (a)(2), the head of the Federal agency re6 sponsible for such program (if not otherwise author7 ized) is authorized to require the provider to present

8 and transmit the data element electronically in ac9 cordance with such a standard.

10 (c) LIMITATION ON DATA REQUIREMENTS WHERE

11 STANDARDS IN EFFECT.—

12 (1) IN GENERAL.—On or after January 1,

13 1996, a health benefit plan may not require, for the

14 purpose of utilization review or as a condition of

15 providing benefits or making payments under the

16 plan, that a hospital—

17 (A) provide any data element not in the

18 uniform hospital clinical data set specified

19 under the standards promulgated under sub20 section (a), or

21 (B) transmit or present any such data ele22 ment in a manner inconsistent with such stand23 ards applicable to such transmission or presen24 tation.
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1 (2) COMPLIANCE.—The Secretary may impose

2 a civil money penalty on any health benefit plan that

3 fails to comply with paragraph (1) in an amount not

4 to exceed $100 for each such failure. The provisions

5 of section 1128A of the Social Security Act (other

6 than the first sentence of subsection (a) and other

7 than subsection (b)) shall apply to a civil money

8 penalty under this paragraph in the same manner as

9 such provisions apply to a penalty or proceeding

10 under section 1128A(a) of such Act.

11 (3) APPLICATION TO MEDICARE PROGRAM.—Ef12 fective as of January 1, 1996, neither the Secretary,

13 nor any carrier or fiscal intermediary, nor any utili14 zation and quality control peer review organization

15 may require, for the purpose of utilization review or

16 as a condition of providing benefits or making pay17 ments under the medicare program, that a hos18 pital—

19 (A) provide any data element not in the

20 uniform hospital clinical data set specified

21 under the standards promulgated under sub22 section (a), or

23 (B) transmit or present any such data ele24 ment in a manner inconsistent with such stand-
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1 ards applicable to such transmission or presen2 tation.

3 (4) APPLICATION TO MEDICAID PROGRAM.—As

4 a condition for the approval of State plans under the

5 medicaid program and in accordance with regula6 tions of the Secretary, effective as of January 1,

7 1996, each such plan may not require that a hos8 pital, for the purpose of utilization review or as a

9 condition of providing benefits or making payments

10 under the plan—

11 (A) provide any data element not in the

12 uniform hospital clinical data set specified

13 under the standards promulgated under sub14 section (a), or

15 (B) transmit or present any such data ele16 ment in a manner inconsistent with such stand17 ards applicable to such transmission or presen18 tation.

19 (d) PREEMPTION OF STATE QUILL PEN LAWS.—

20 (1) IN GENERAL.—Any provision of State law

21 that requires medical or health insurance records

22 (including billing information) to be maintained in

23 written, rather than electronic, form shall be deemed

24 to be satisfied if the records are maintained in an
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1 electronic form that meets standards established by

2 the Secretary under paragraph (2).

3 (2) SECRETARIAL AUTHORITY.—Not later than

4 1 year after the the date of the enactment of this

5 Act, the Secretary shall issue regulations to carry

6 out paragraph (1). The regulations shall provide for

7 an electronic substitute that is in the form of a

8 unique identifier (assigned to each authorized indi9 vidual) that serves the functional equivalent of a sig10 nature. The regulations may provide for such excep11 tions to paragraph (1) as the Secretary determines

12 to be necessary to prevent fraud and abuse, to pre13 vent the illegal distribution of controlled substances,

14 and in such other cases as the Secretary deems ap15 propriate.

16 (3) EFFECTIVE DATE.—Paragraph (1) shall

17 take effect on the first day of the first month that

18 begins more than 30 days after the date the Sec19 retary issues the regulations referred to in para20 graph (2).

21 SEC. 325. UNIFORM HOSPITAL COST REPORTING.

22 Each hospital, as a requirement under a participation

23 agreement under section 1866(a) of the Social Security

24 Act for each cost reporting period beginning during or

25 after fiscal year 1993, shall provide for the reporting of
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1 information to the Secretary with respect to any hospital

2 care provided in a uniform manner consistent with stand3 ards established by the Secretary to carry out section

4 4007(c) of the Omnibus Budget Reconciliation Act of

5 1987 and in an electronic form consistent with standards

6 established by Secretary.

7 SEC. 326. DEFINITIONS.

8 (a) HEALTH BENEFIT PLAN.—In this subtitle:

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

10 plan’’ means, except as provided in paragraphs (2)

11 through (4), any public or private entity or program

12 that provides for payments for health care services,

13 including—

14 (A) a group health plan (as defined in sec15 tion 5000(b)(1) of the Internal Revenue Code

16 of 1986), and

17 (B) any other health insurance arrange18 ment, including any arrangement consisting of

19 a hospital or medical expense incurred policy or

20 certificate, hospital or medical service plan con21 tract, or health maintenance organization sub22 scriber contract.

23 Such term includes a qualified health plan under

24 title XXI of the Social Security Act, the public
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1 health plan under title XXII of such Act, and the

2 medicare program under title XVIII of such Act.

3 (2) PLANS EXCLUDED.—Such term does not in4 clude—

5 (A) accident-only, credit, or disability in6 come insurance;

7 (B) coverage issued as a supplement to li8 ability insurance;

9 (C) an individual making payment on the

10 individual’s own behalf (or on behalf of a rel11 ative or other individual) for deductibles, coin12 surance, or services not covered under a health

13 benefit plan; and

14 (D) such other plans as the Secretary may

15 determine, because of the limitation of benefits

16 to a single type or kind of health care, such as

17 dental services, or other reasons should not be

18 subject to the requirements of this section.

19 (3) PLANS INCLUDED.—Such term includes—

20 (A) worker’s compensation or similar in21 surance, and

22 (B) automobile medical-payment insurance.

23 (4) TREATMENT OF DIRECT FEDERAL PROVI24 SION OF SERVICES.—Such term does not include a
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1 Federal program that provides directly for the provi2 sion of health services to beneficiaries.

3 (b) HEALTH SERVICE PROVIDER.—In this subtitle,

4 the term ‘‘health service provider’’ includes a provider of

5 services (as defined in section 1861(u) of the Social Secu6 rity Act), physician, supplier, and other person furnishing

7 health care services.

8 (c) SECRETARY.—In this subtitle, the term ‘‘Sec9 retary’’ means Secretary of Health and Human Services.

10 Subtitle C—Malpractice Reform

11 SEC. 331. MALPRACTICE REFORM.

12 (a) STUDY BY PHYSICIAN PAYMENT REVIEW COM13 MISSION.—The Physician Payment Review Commission

14 shall conduct a study of—

15 (1) the need for reforms with respect to medical

16 malpractice liability claims, including the use of

17 practice guidelines developed by the Agency for

18 Health Care Policy and Research in such reforms,

19 and

20 (2) the impact of such reforms on—

21 (A) expenditures for health care services,

22 (B) access to such services,

23 (C) the quality of such services, and

24 (D) access of injured patients to the medi25 cal malpractice system.
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1 (b) REPORT.—Not later than March 31, 1994, the

2 Commission shall submit a report to Congress on the

3 study conducted under subsection (a) and shall include in

4 the report such recommendations as the Commission con5 siders appropriate.

6 TITLE IV—GROUP HEALTH

7 INSURANCE REFORM

8 SEC. 401. EXCISE TAX ON PREMIUMS RECEIVED ON

9 HEALTH INSURANCE POLICIES WHICH DO

10 NOT MEET CERTAIN REQUIREMENTS.

11 (a) IN GENERAL.—Chapter 47 of the Internal Reve12 nue Code of 1986 (relating to taxes on group health

13 plans), as amended by section 101 of this Act, is further

14 amended by adding at the end thereof the following new

15 section:

16 ‘‘SEC. 5000B. FAILURE TO SATISFY CERTAIN STANDARDS

17 FOR HEALTH INSURANCE.

18 ‘‘(a) GENERAL RULE.—In the case of any person is19 suing applicable accident and health insurance contracts,

20 there is hereby imposed a tax on the failure of such person

21 to meet at any time during any taxable year the applicable

22 requirements of title XXIII of the Social Security Act. The

23 Secretary of Health and Human Services shall determine

24 whether any contract meets the requirements of such title.

25 ‘‘(b) AMOUNT OF TAX.—
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1 ‘‘(1) IN GENERAL.—The amount of tax imposed

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

3 during a taxable year shall be equal to 50 percent

4 of the gross premiums received during such taxable

5 year with respect to all accident and health insur6 ance contracts issued by the person on whom such

7 tax is imposed.

8 ‘‘(2) GROSS PREMIUMS.—For purposes of para9 graph (1), gross premiums shall include any consid10 eration received with respect to any accident and

11 health insurance contract.

12 ‘‘(c) LIMITATION ON TAX.—

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

14 DISCOVERED EXERCISING REASONABLE DILI15 GENCE.—No tax shall be imposed by subsection (a)

16 with respect to any failure for which it is established

17 to the satisfaction of the Secretary that the person

18 on whom the tax is imposed did not know, and exer19 cising reasonable diligence would not have known,

20 that such failure existed.

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

22 CORRECTED WITHIN 30 DAYS.—No tax shall be im23 posed by subsection (a) with respect to any failure

24 if—
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1 ‘‘(A) such failure was due to reasonable

2 cause and not to willful neglect, and

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

4 30-day period beginning on the 1st date any of

5 the persons on whom the tax is imposed knew,

6 or exercising reasonable diligence would have

7 known, that such failure existed.

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

9 failure which is due to reasonable cause and not to

10 willful neglect, the Secretary may waive part or all

11 of the tax imposed by subsection (a).

12 ‘‘(d) LIABILITY FOR TAX.—The person issuing the

13 applicable accident and health contract with respect to

14 which a failure occurs shall be liable for the tax imposed

15 by subsection (a).

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

17 ‘‘(1) IN GENERAL.—The term ‘applicable acci18 dent and health insurance contract’ means a con19 tract under which a person authorized under appli20 cable State insurance law provides a health insur21 ance plan or arrangement to any group consisting of

22 more than 2 individuals. Such term does not include

23 any self-insured plan of an employer and does not

24 include a qualified health maintenance organization
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1 (as defined in section 1310(d) of the Public Health

2 Service Act).

3 ‘‘(2) CERTAIN CONTRACTS NOT COVERED.—The

4 term ‘applicable accident and health insurance con5 tract’ does not include any contract—

6 ‘‘(A) which provides for accident only, den7 tal only, or disability only coverage,

8 ‘‘(B) which provides coverage as a supple9 ment to liability insurance,

10 ‘‘(C) which provides insurance arising out

11 of a workmens’ compensation or similar law, or

12 automobile medical-payment insurance, or

13 ‘‘(D) which provides insurance which is re14 quired by law to be contained under any self15 insured plan of an employer.’’.

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

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

18 thereof the following new item:

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

19 SEC. 402. GROUP HEALTH INSURANCE STANDARDS.

20 The Social Security Act is amended by adding at the

21 end the following new title:
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1 ‘‘TITLE XXIII—GROUP HEALTH INSURANCE

2 STANDARDS

3 ‘‘PART 1—GENERAL STANDARDS; DEFINITIONS

4 ‘‘SEC. 2301. APPLICATION OF REQUIREMENTS TO EMPLOY5 MENT-RELATED HEALTH PLANS.

6 ‘‘(a) APPROVAL BY SECRETARY REQUIRED.—

7 ‘‘(1) IN GENERAL.—No employment-related

8 health plan may be issued on or after the effective

9 date specified in subsection (d) (and no new contract

10 may be offered under such plan with respect to any

11 employer beginning on or after such effective date)

12 unless the plan has been certified by the Secretary

13 (in accordance with such procedures as the Sec14 retary establishes) as meeting the applicable stand15 ards established under section 2302 by such effective

16 date.

17 ‘‘(2) PLAN DISAPPROVED.—If the Secretary de18 termines that an employment-related health plan

19 does not meet the applicable requirements of this

20 title on or after such effective date, no coverage may

21 be provided under the plan to individuals not en22 rolled as of the date of the determination and the

23 plan may not be continued for plan years beginning

24 after the date of such determination until the Sec-
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1 retary determines that such plan is in compliance

2 with such requirements.

3 ‘‘(b) SANCTIONS.—

4 ‘‘(1) TAX.—For application of excise tax in the

5 case of a nonconforming plan, see section 5000B of

6 the Internal Revenue Code of 1986.

7 ‘‘(2) NOTICE TO EMPLOYER IN THE CASE OF

8 INSURED PLANS.—If tax is imposed under section

9 5000B of the Internal Revenue Code of 1986, the

10 Secretary of the Treasury shall provide for notice to

11 be provided to each employer which meets the re12 quirement of section 2101 through coverage under

13 the plan of the imposition of the tax.

14 ‘‘(3) LOSS OF STATUS AS QUALIFIED EM15 PLOYER HEALTH PLAN.—

16 ‘‘(A) IN GENERAL.—If an employment-re17 lated health plan is determined to be in viola18 tion of subsection (a) and is not determined to

19 have come into compliance with the applicable

20 standards within 6 months after the date of the

21 initial determination of such a violation, the

22 plan shall no longer be treated as a qualified

23 employer health plan under title XXI as of the

24 end of such 6-month period.
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1 ‘‘(B) NO ENFORCEMENT OF INSURANCE

2 CONTRACTS.—In the case of an employer that

3 is required, under part A of title XXI, to pro4 vide enrollment under a qualified employer

5 health plan and that meets such requirement

6 through an insured plan that is determined to

7 be in violation of subsection (a)—

8 ‘‘(i) if such plan is not brought into

9 compliance within 30 days after the date of

10 the violation, the employer may terminate

11 by notice the contract with the plan and is

12 not liable for payment of any additional

13 amounts under the plan, and

14 ‘‘(ii) if such plan no longer qualifies

15 as a qualified employer health plan, such

16 contract shall be terminated and the em17 ployer is not liable for payment of any

18 amounts for periods in which the plan no

19 longer qualifies as a qualified employer

20 health plan.

21 ‘‘(d) EFFECTIVE DATE.—The effective date specified

22 in this subsection is January 1, 1994.

23 ‘‘SEC. 2302. ESTABLISHMENT OF STANDARDS.

24 ‘‘(a) ESTABLISHMENT OF STANDARDS.—The Sec25 retary shall develop and publish, by not later than October
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1 1, 1993, specific standards to implement the requirements

2 of this title and to be applied under section 5000B of the

3 Internal Revenue Code of 1986.

4 ‘‘(b) TELEPHONE INFORMATION SYSTEM.—The Sec5 retary shall provide for the establishment of a toll-free

6 telephone information and complaint system which

7 provides for—

8 ‘‘(1) a system for the receipt and disposition of

9 consumer complaints or inquiries regarding compli10 ance of health plans with the requirements of this

11 title, and

12 ‘‘(2) information to small employers about car13 riers that offer small employer health plans in the

14 area covered by the regulatory authority.

15 Such system shall provide for the recording of consumer

16 complaints in accordance with a uniform methodology rec17 ognized by the Secretary.

18 ‘‘(c) APPLICATION TO ERISA.—The Secretary shall

19 consult with the Secretary of Labor concerning the appli20 cation of the requirements of this part to employee welfare

21 benefit plans under title I of the Employee Retirement In22 come Security Act of 1974.
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1 ‘‘SEC. 2303. REQUIREMENTS APPLICABLE TO ALL EMPLOY2 MENT-RELATED HEALTH PLANS.

3 ‘‘(a) NO DISCRIMINATION BASED ON HEALTH STA4 TUS FOR CERTAIN SERVICES.—Except as provided under

5 subsection (b), an employment-related health plan may not

6 deny, limit, or condition the coverage under (or benefits

7 of) the plan with respect to required health services based

8 on the health status, claims experience, receipt of health

9 care, medical history, or lack of evidence of insurability,

10 of an individual.

11 ‘‘(b) TREATMENT OF PRE-EXISTING CONDITION EX12 CLUSIONS FOR ALL SERVICES.—The provisions of section

13 2154(b) (relating to treatment of pre-existing condition

14 exclusion) shall apply to employer-related health plans

15 under this section in the same manner as they apply to

16 qualified health plans under that section.

17 ‘‘SEC. 2304. DEFINITIONS.

18 ‘‘(a) HEALTH PLAN AND OTHER DEFINITIONS RE19 LATING TO HEALTH PLANS.—In this title:

20 ‘‘(1) HEALTH PLAN.—

21 ‘‘(A) IN GENERAL.—The term ‘health plan’

22 means—

23 ‘‘(i) a group health plan (as defined in

24 section 605 of the Employee Retirement

25 Income Security Act of 1974), and
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1 ‘‘(ii) any other health insurance ar2 rangement, including any arrangement

3 (other than a group health plan) consisting

4 of a hospital or medical expense incurred

5 policy or certificate, hospital or medical

6 service plan contract, health maintenance

7 organization subscriber contract;

8 but does not include a qualified health mainte9 nance organization (as defined in section

10 1310(d) of the Public Health Service Act).

11 ‘‘(B) EXCLUSIONS.—

12 ‘‘(i) CERTAIN TYPES OF INSUR13 ANCE.—Such term does not include—

14 ‘‘(I) accident-only, credit, or dis15 ability income insurance,

16 ‘‘(II) coverage issued as a supple17 ment to liability insurance,

18 ‘‘(III) worker’s compensation or

19 similar insurance, or

20 ‘‘(IV) automobile medical-pay21 ment insurance.

22 ‘‘(ii) PUBLIC HEALTH PLAN.—Such

23 term does not include the public health

24 plan under title XXII.
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1 ‘‘(2) EMPLOYMENT-RELATED HEALTH PLAN.—

2 The term ‘employment-related health plan’ means

3 any employee welfare benefit plan (as defined in sec4 tion 3(1) of the Employee Retirement Income Secu5 rity Act of 1974) that is a health plan.

6 ‘‘(3) INSURED EMPLOYMENT-RELATED HEALTH

7 PLAN.—The term ‘insured employment-related

8 health plan’ means an employment-related health

9 plan that has been provided by a person authorized

10 under applicable State insurance law, and does not

11 include any self-insured employment-related health

12 plan.

13 ‘‘(4) SELF-INSURED EMPLOYMENT-RELATED

14 HEALTH PLAN.—The term ‘self-insured employment15 related health plan’ means an employment-related

16 health plan in which the employer or employment-re17 lated group assumes the underwriting risk for the

18 plan (whether or not there is any reinsurance or

19 similar mechanism to underwrite a portion of that

20 risk).

21 ‘‘(5) SMALL EMPLOYER HEALTH PLAN.—The

22 term ‘small employer health plan’ means an employ23 ment-related health plan insofar as it offers benefits

24 with respect to any small employer, as defined in
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1 subsection (c)(4), or the employees of a small em2 ployer.

3 ‘‘(b) CARRIER; HEALTH MAINTENANCE ORGANIZA4 TION; AND OTHER DEFINITIONS RELATING TO CAR5 RIERS.—In this part:

6 ‘‘(1) CARRIER.—The term ‘carrier’ means any

7 person that offers a health plan, whether through in8 surance or otherwise, including a licensed insurance

9 company, a prepaid hospital or medical service plan,

10 a health maintenance organization, a self-insurer

11 carrier, and a multiple employer welfare arrange12 ment.

13 ‘‘(2) HEALTH MAINTENANCE ORGANIZATION.—

14 The term ‘health maintenance organization’ has the

15 meaning given the term ‘eligible organization’ in sec16 tion 1876(b).

17 ‘‘(3) SELF-INSURER CARRIER.—The term ‘self18 insurer carrier’ means a carrier that is not a li19 censed insurance company, a prepaid hospital or

20 medical service plan, or a health maintenance orga21 nization, that offers a health plan directly with re22 spect to an employment-related group.

23 ‘‘(4) SMALL EMPLOYER CARRIER.—The term

24 ‘small employer carrier’ means any carrier which of25 fers small employer health plans.
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1 ‘‘(c) GENERAL DEFINITIONS.—In this part:

2 ‘‘(1) COMMUNITY.—The term ‘community’ has

3 the meaning given such term in section 2131(e).

4 ‘‘(2) FULL-TIME EMPLOYEE.—The term ‘full5 time employee’ has the meaning given such term in

6 section 2181(b)(1).

7 ‘‘(3) REFERENCE PREMIUM RATE.—The term

8 ‘reference premium rate’ means, for a rating period

9 in a community, the lowest premium rate charged or

10 which could have been charged by the small em11 ployer carrier to small employers under a rating sys12 tem in the community for health plans with the

13 same or similar coverage. The reference premium

14 rate is determined without regard to any adjustment

15 for age or sex described in section 2312(c).

16 ‘‘(4) SMALL EMPLOYER.—The term ‘small em17 ployer’ has the meaning given such term in section

18 2181(c)(1) and also includes a medium-size em19 ployer (as defined in section 2181(c)(2)).

20 ‘‘(5) STATE.—The term ‘State’ means the 50

21 States and the District of Columbia.

22 ‘‘SEC. 2305. NOTICE OF PLANS MEETINGS REQUIREMENTS.

23 ‘‘The Secretary of Health and Human Services shall

24 publish periodically the names and issuers of insured em25 ployment-related small employer health plans that have
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1 been found to meet the applicable requirements of this

2 title.

3 ‘‘PART 2—SMALL EMPLOYER HEALTH INSURANCE

4 REFORM

5 ‘‘SEC. 2311. ENROLLMENT PRACTICE AND GUARANTEED RE6 NEWABILITY REQUIREMENTS FOR SMALL EM7 PLOYER HEALTH PLANS.

8 ‘‘(a) REGISTRATION.—

9 ‘‘(1) IN GENERAL.—Each small employer car10 rier (as defined in section 2304(b)(5)) shall register

11 with the Secretary.

12 ‘‘(2) NO PREEMPTION OF STATE INFORMATION

13 REQUIREMENTS.—Nothing in paragraph (1) shall be

14 construed as preventing the applicable regulatory

15 authority in a State from requiring, in the case of

16 carriers that are not self-insurance carriers, such ad17 ditional information in conjunction with, or apart

18 from, the registration required under paragraph (1)

19 as the applicable regulatory authority may be au20 thorized to require under State law.

21 ‘‘(b) GUARANTEED ISSUE.—

22 ‘‘(1) IN GENERAL.—Subject to the succeeding

23 provisions of this subsection, a carrier that offers a

24 health plan to small employers located in a commu25 nity must offer the same plan to any other small
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1 employer located in the community. Such require2 ment shall apply on a continuous, year-round basis.

3 ‘‘(2) TREATMENT OF HEALTH MAINTENANCE

4 ORGANIZATIONS.—

5 ‘‘(A) GEOGRAPHIC LIMITATIONS.—A

6 health maintenance organization may deny en7 rollment to employees (and family members) of

8 a small employer if the employees are located

9 outside the service area of the organization, but

10 only if such denial is applied uniformly without

11 regard to health status or insurability.

12 ‘‘(B) SIZE LIMITS.—A health maintenance

13 organization may apply to the Secretary to

14 cease enrolling new small employer groups in its

15 small employer health plan (or in a geographic

16 area served by the plan) if—

17 ‘‘(i) it ceases to enroll any new em18 ployer groups, and

19 ‘‘(ii) it can demonstrate that its finan20 cial or administrative capacity to serve pre21 viously enrolled groups and individuals

22 (and additional individuals who will be ex23 pected to enroll because of affiliation with

24 such previously enrolled groups) will be im-
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1 paired if it is required to enroll new em2 ployer groups.

3 ‘‘(3) GROUNDS FOR REFUSAL TO ISSUE OR

4 RENEW.—A carrier may refuse to issue or renew or

5 terminate a plan only for—

6 ‘‘(A) nonpayment of premiums, and

7 ‘‘(B) fraud or misrepresentation.

8 ‘‘(c) MINIMUM PLAN PERIOD.—A carrier may not

9 offer to, or issue with respect to, a small employer a small

10 employer health plan with a term of less than 12 months.

11 ‘‘(d) NOTICES AND RENEWAL PERIODS.—

12 ‘‘(1) NOTICE AND SPECIFICATION OF RATES

13 AND ADMINISTRATIVE CHANGES.—

14 ‘‘(A) NOTICE.—The small employer carrier

15 of a small employer health plan shall provide

16 for notice, at least 30 days before the date of

17 expiration of the health plan, of the terms for

18 renewal of the plan. Except with respect to

19 rates and administrative changes, the terms of

20 renewal (including benefits) shall be the same

21 as the terms of issuance.

22 ‘‘(B) RENEWAL RATES SAME AS ISSUANCE

23 RATES.—The carrier may change the terms for

24 such renewal, but the premium rates charged
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1 with respect to such renewal shall be the same

2 as that for a new issue.

3 ‘‘(2) PERIOD OF RENEWAL.—The period of re4 newal of each small employer health plan shall be for

5 a period of not less than 12 months.

6 ‘‘SEC. 2312. RATING PRACTICES FOR SMALL EMPLOYER

7 HEALTH PLANS.

8 ‘‘(a) COHESIVE RATING SYSTEM AND ACTUARIAL

9 CERTIFICATION.—

10 ‘‘(1) IN GENERAL.—The premiums (including

11 reference premium rate, as defined in section

12 2304(c)(3)) and age-sex adjustments under sub13 section (c) for all small employer health plans of the

14 same entity shall—

15 ‘‘(A) be established based on a single cohe16 sive rating system which is applied consistently

17 for all employer groups and is designed not to

18 treat groups, after January 1, 1994, differently

19 based on health status or risk status; and

20 ‘‘(B) be actuarially certified annually.

21 ‘‘(2) ACTUARIAL CERTIFIED DEFINED.—For

22 purposes of paragraph (1)(B), a plan is considered

23 to be ‘actuarially certified’ if there is a written state24 ment, by a member of the American Academy of Ac25 tuaries or other individual acceptable to the Sec-
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1 retary that a small employer carrier is in compliance

2 with this section, based upon the individual’s exam3 ination, including a review of the appropriate records

4 and of the actuarial assumptions and methods uti5 lized by the carrier in establishing premium rates for

6 applicable health plans.

7 ‘‘(b) USE OF COMMUNITY-RATED REFERENCE PRE8 MIUM RATES.—The reference premium rate charged for

9 a small employer health plan with similar benefits in a

10 community for a type of family enrollment (described in

11 subsection (d)) shall be the same for all small employers.

12 ‘‘(c) AGE AND SEX ADJUSTMENT TO COMMUNITY13 RATING.—

14 ‘‘(1) IN GENERAL.—Subject to paragraph (2), a

15 small employer health plan may provide for an ad16 justment to the reference premium rate based on

17 age and gender of covered individuals. Any such ad18 justment shall be applied consistently to all small

19 employers.

20 ‘‘(2) LIMITATION ON ADJUSTMENT.—The ad21 justment under paragraph (1) may not result, with

22 respect to small employer health plans with similar

23 benefits in a community, in a premium rate for the

24 most expensive age-sex group exceeding 133 percent
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1 of the premium rate for the least expensive age-sex

2 group.

3 ‘‘(d) TYPES OF FAMILY ENROLLMENT.—

4 ‘‘(1) IN GENERAL.—Each small employer health

5 plan shall permit enrollment of (and shall compute

6 premiums separately for) individuals based on each

7 of the following beneficiary classes:

8 ‘‘(A) 1 adult.

9 ‘‘(B) A married couple without children.

10 ‘‘(C) A married couple with 1 or more chil11 dren, or 1 adult with 1 or more children.

12 ‘‘(2) APPLICATION OF DEFINITIONS.—The defi13 nitions in section 2282 shall apply for purposes of

14 this subsection.

15 ‘‘SEC. 2313. BASIC BENEFIT PACKAGE FOR SMALL EM16 PLOYER HEALTH PLANS.

17 ‘‘(a) BENEFITS AND COST-SHARING IN QUALIFIED

18 EMPLOYER HEALTH PLANS.—Except as provided in sub19 section (b), no small employer health plan may be issued

20 to a small employer by a carrier unless—

21 ‘‘(1) the plan provides for benefits for all re22 quired health services (as defined in section

23 2211(a)(2));

24 ‘‘(2) the plan does not impose cost-sharing with

25 respect to required health services in excess of the
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1 deductibles and coinsurance permitted under title

2 XXII with respect to such services (not taking into

3 account any low-income assistance under part E of

4 such title); and

5 ‘‘(3) the carrier makes available to the employer

6 a small employer health plan that, subject to sub7 section (b), only provides the benefits for required

8 health services and the maximum cost-sharing con9 sistent with paragraphs (1) and (2).

10 ‘‘(b) EXCEPTIONS FOR HMO’S.—Subsection (a)(3)

11 shall not apply to the plan of a health maintenance organi12 zation.

13 ‘‘SEC. 2314. MISCELLANEOUS DISCLOSURE AND RECORD14 KEEPING REQUIREMENTS FOR SMALL EM15 PLOYER HEALTH PLANS.

16 ‘‘(a) DISCLOSURE TO EMPLOYERS.—

17 ‘‘(1) GENERAL DISCLOSURE.—Each small em18 ployer carrier shall disclose to each small employer

19 before issuing a small employer health plan the fol20 lowing:

21 ‘‘(A) The availability (pursuant to the re22 quirement of section 2313(a)(3) of a plan in23 cluding only basic benefits.
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1 ‘‘(B) The limits, imposed under section

2 2312, on the premiums permitted to be charged

3 for such plans.

4 ‘‘(C) The rights of guaranteed issue pro5 vided under section 2311.

6 Such disclosure shall be in addition to any disclosure

7 required generally of qualified health plans under

8 section 2158(a).

9 ‘‘(2) STANDARD FORMAT.—The disclosure

10 under paragraph (1) shall be made in a uniform for11 mat established by the Secretary.

12 ‘‘(b) INFORMATION FILED.—

13 ‘‘(1) IN GENERAL.—Each small employer car14 rier shall disclose to the Secretary, in a manner

15 specified by the Secretary, information concerning

16 applicable premiums for small employer health

17 plans.

18 ‘‘(2) ADDITIONAL INFORMATION.—Nothing in

19 this subsection shall be construed as limiting the in20 formation which a State may require to be reported

21 by small employer carriers (other than self-insured

22 carriers).

23 ‘‘SEC. 2315. PAYMENT OF COMMISSIONS.

24 ‘‘A small employer carrier may not vary the remu25 neration paid a broker for the sale or renewal of any small
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1 employer health plan based, directly or indirectly, on the

2 claims experience associated with the group to which the

3 plan was sold.

4 ‘‘SEC. 2316. NONAPPLICATION IN PUERTO RICO AND THE

5 TERRITORIES.

6 ‘‘This part shall not apply outside the 50 States or

7 the District of Columbia.’’.

8 TITLE V—CHANGES IN

9 MEDICARE PROGRAM

10 SEC. 501. COVERAGE OF COLORECTAL SCREENING.

11 (a) IN GENERAL.—Section 1834 of the Social Secu12 rity Act (42 U.S.C. 1395m), as amended by section

13 4163(b)(2) of the Omnibus Budget Reconciliation Act of

14 1990 (in this title referred to as ‘‘OBRA–1990’’), is

15 amended by inserting after subsection (c) the following

16 new subsection:

17 ‘‘(d) FREQUENCY AND PAYMENT LIMITS FOR

18 SCREENING FECAL-OCCULT BLOOD TESTS AND SCREEN19 ING FLEXIBLE SIGMOIDOSCOPIES.—

20 ‘‘(1) SCREENING FECAL-OCCULT BLOOD

21 TESTS.—

22 ‘‘(A) PAYMENT LIMIT.—In establishing fee

23 schedules under section 1833(h) with respect to

24 screening fecal-occult blood tests provided for

25 the purpose of early detection of colon cancer,
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1 except as provided by the Secretary under para2 graph (3)(A), the payment amount established

3 for tests performed—

4 ‘‘(i) in 1994 shall not exceed $5; and

5 ‘‘(ii) in a subsequent year, shall not

6 exceed the limit on the payment amount

7 established under this subsection for such

8 tests for the preceding year, adjusted by

9 the applicable adjustment under section

10 1833(h) for tests performed in such year.

11 ‘‘(B) FREQUENCY LIMIT.—Subject to revi12 sion by the Secretary under paragraph (3)(B),

13 no payment may be made under this part for

14 a screening fecal-occult blood test provided to

15 an individual for the purpose of early detection

16 of colon cancer—

17 ‘‘(i) if the individual is under 50 years

18 of age; or

19 ‘‘(ii) if the test is performed within

20 the 11 months after a previous screening

21 fecal-occult blood test.

22 ‘‘(2) SCREENING FLEXIBLE SIGMOIDOS23 COPIES.—

24 ‘‘(A) PAYMENT AMOUNT.—The Secretary

25 shall establish a payment amount under section
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1 1848 with respect to screening flexible

2 sigmoidoscopies provided for the purpose of

3 early detection of colon cancer that is consistent

4 with payment amounts under such section for

5 similar or related services, except that such

6 payment amount shall be established without

7 regard to subsection (a)(2)(A) of such section.

8 ‘‘(B) FREQUENCY LIMIT.—Subject to revi9 sion by the Secretary under paragraph (3)(B),

10 no payment may be made under this part for

11 a screening flexible sigmoidoscopy provided to

12 an individual for the purpose of early detection

13 of colon cancer—

14 ‘‘(i) if the individual is under 50 years

15 of age; or

16 ‘‘(ii) if the procedure is performed

17 within the 59 months after a previous

18 screening flexible sigmoidoscopy.

19 ‘‘(3) REDUCTIONS IN PAYMENT LIMIT AND RE20 VISION OF FREQUENCY.—

21 ‘‘(A) REDUCTIONS IN PAYMENT LIMIT.—

22 The Secretary shall review from time to time

23 the appropriateness of the amount of the pay24 ment limit established for screening fecal-occult

25 blood tests under paragraph (1)(A). The Sec-
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1 retary may, with respect to tests performed in

2 a year after 1996, reduce the amount of such

3 limit as it applies nationally or in any area to

4 the amount that the Secretary estimates is re5 quired to assure that such tests of an appro6 priate quality are readily and conveniently

7 available during the year.

8 ‘‘(B) REVISION OF FREQUENCY.—

9 ‘‘(i) REVIEW.—The Secretary, in con10 sultation with the Director of the National

11 Cancer Institute, shall review periodically

12 the appropriate frequency for performing

13 screening fecal-occult blood tests and

14 screening flexible sigmoidoscopies based on

15 age and such other factors as the Sec16 retary believes to be pertinent.

17 ‘‘(ii) REVISION OF FREQUENCY.—The

18 Secretary, taking into consideration the re19 view made under clause (i), may revise

20 from time to time the frequency with

21 which such tests and procedures may be

22 paid for under this subsection, but no such

23 revision shall apply to tests or procedures

24 performed before January 1, 1997.
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1 ‘‘(4) LIMITING CHARGES OF NONPARTICIPATING

2 PHYSICIANS.—

3 ‘‘(A) IN GENERAL.—In the case of a

4 screening flexible sigmoidoscopy provided to an

5 individual for the purpose of early detection of

6 colon cancer for which payment may be made

7 under this part, if a nonparticipating physician

8 provides the procedure to an individual enrolled

9 under this part, the physician may not charge

10 the individual more than the limiting charge (as

11 defined in subparagraph (B), or, if less, as de12 fined in section 1848(g)(2)).

13 ‘‘(B) LIMITING CHARGE DEFINED.—In

14 subparagraph (A), the term ‘limiting charge’

15 means, 115 percent of the payment limit estab16 lished under paragraph (2)(A).

17 ‘‘(C) ENFORCEMENT.—If a physician or

18 supplier knowingly and willfully imposes a

19 charge in violation of subparagraph (A), the

20 Secretary may apply sanctions against such

21 physician or supplier in accordance with section

22 1842(j)(2).’’.

23 (b) CONFORMING AMENDMENTS.—(1) Paragraphs

24 (1)(D) and (2)(D) of section 1833(a) of such Act (42

25 U.S.C. 1395l(a)) are each amended by striking ‘‘sub-
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1 section (h)(1),’’ and inserting ‘‘subsection (h)(1) or section

2 1834(d)(1),’’.

3 (2) Section 1833(h)(1)(A) of such Act (42 U.S.C.

4 1395l(h)(1)(A)) is amended by striking ‘‘The Secretary’’

5 and inserting ‘‘Subject to paragraphs (1) and (3)(A) of

6 section 1834(d), the Secretary’’.

7 (3) Clauses (i) and (ii) of section 1848(a)(2)(A) of

8 such Act (42 U.S.C. 1395w–4(a)(2)(A)) are each amended

9 by striking ‘‘a service’’ and inserting ‘‘a service (other

10 than a screening flexible sigmoidoscopy provided to an

11 individual for the purpose of early detection of colon

12 cancer)’’.

13 (4) Section 1862(a) of such Act (42 U.S.C. 1395y(a))

14 is amended—

15 (A) in paragraph (1)—

16 (i) in subparagraph (E), by striking ‘‘and’’

17 at the end,

18 (ii) in subparagraph (F), by striking the

19 semicolon at the end and inserting ‘‘, and’’, and

20 (iii) by adding at the end the following new

21 subparagraph:

22 ‘‘(G) in the case of screening fecal-occult blood

23 tests and screening flexible sigmoidoscopies provided

24 for the purpose of early detection of colon cancer,
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1 which are performed more frequently than is covered

2 under section 1834(d);’’; and

3 (B) in paragraph (7), by striking ‘‘paragraph

4 (1)(B) or under paragraph (1)(F)’’ and inserting

5 ‘‘subparagraphs (B), (F), or (G) of paragraph (1)’’.

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

7 this section shall apply to screening fecal-occult blood tests

8 and screening flexible sigmoidoscopies performed on or

9 after January 1, 1994.

10 SEC. 502. COVERAGE OF CERTAIN IMMUNIZATIONS.

11 (a) IN GENERAL.—Section 1861(s)(10) of the Social

12 Security Act (42 U.S.C. 1395x(s)(10)) is amended—

13 (1) in subparagraph (A)—

14 (A) by striking ‘‘, subject to section

15 4071(b) of the Omnibus Budget Reconciliation

16 Act of 1987,’’, and

17 (B) by striking ‘‘; and’’ and inserting a

18 comma;

19 (2) in subparagraph (B), by striking the semi20 colon at the end and inserting ‘‘, and’’; and

21 (3) by adding at the end the following new sub22 paragraph:

23 ‘‘(C) tetanus-diphtheria booster and its admin24 istration;’’.
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1 (b) LIMITATION ON FREQUENCY.—Section

2 1862(a)(1) of such Act (42 U.S.C. 1395y(a)(1)), as

3 amended by section 502(b)(4)(A), is amended—

4 (1) in subparagraph (F), by striking ‘‘and’’ at

5 the end;

6 (2) in subparagraph (G), by striking the semi7 colon at the end and inserting ‘‘, and’’; and

8 (3) by adding at the end the following new sub9 paragraph:

10 ‘‘(H) in the case of an influenza vaccine, which

11 is administered within the 11 months after a pre12 vious influenza vaccine, and, in the case of a teta13 nus-diphtheria booster, which is administered within

14 the 119 months after a previous tetanus-diphtheria

15 booster;’’.

16 (c) CONFORMING AMENDMENT.—Section 1862(a)(7)

17 of such Act (42 U.S.C. 1395y(a)(7)), as amended by sec18 tion 502(b)(4)(B), is amended by striking ‘‘or (G)’’ and

19 inserting ‘‘(G), or (H)’’.

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

21 this section shall apply to influenza vaccines and tetanus22 diphtheria boosters administered on or after January 1,

23 1994.
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1 SEC. 503. COVERAGE OF WELL-CHILD CARE.

2 (a) IN GENERAL.—Section 1861(s)(2) of the Social

3 Security Act (42 U.S.C. 1395x(s)(2)), as amended by sec4 tion 4201(d)(1) of OBRA–1990, is amended—

5 (1) by striking ‘‘and’’ at the end of subpara6 graph (O);

7 (2) by striking the semicolon at the end of sub8 paragraph (P) and inserting ‘‘; and’’; and

9 (3) by adding at the end the following new sub10 paragraph:

11 ‘‘(Q) well-child services (as defined in sub12 section (ll)(1)) provided to an individual entitled to

13 benefits under this title who is under 19 years of

14 age;’’.

15 (b) SERVICES DEFINED.—Section 1861 of such Act

16 (42 U.S.C. 1395x) is amended—

17 (1) by redesignating the subsection (jj) added

18 by section 4163(a)(2) of OBRA–1990 as subsection

19 (kk); and

20 (2) by inserting after subsection (kk) (as so re21 designated) the following new subsection:

22 ‘‘well-child services

23 ‘‘(ll)(1) The term ‘well-child services’ means well24 child care, including routine office visits, routine immuni25 zations (including the vaccine itself), routine laboratory

26 tests, and preventive dental care, provided in accordance
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1 with the periodicity schedule established with respect to

2 the services under paragraph (2).

3 ‘‘(2) The Secretary, in consultation with the Amer4 ican Academy of Pediatrics, the Advisory Committee on

5 Immunization Practices, and other entities considered ap6 propriate by the Secretary, shall establish a schedule of

7 periodicity which reflects the appropriate frequency with

8 which the services referred to in paragraph (1) should be

9 provided to healthy children.’’.

10 (c) CONFORMING AMENDMENTS.—(1) Section

11 1862(a)(1) of such Act (42 U.S.C. 1395y(a)(1)), as

12 amended by sections 502(b)(4)(A) and 503(b), is amend13 ed—

14 (A) in subparagraph (G), by striking ‘‘and’’ at

15 the end;

16 (B) in subparagraph (H), by striking the semi17 colon at the end and inserting ‘‘, and’’; and

18 (C) by adding at the end the following new sub19 paragraph:

20 ‘‘(I) in the case of well-child services, which are

21 provided more frequently than is provided under the

22 schedule of periodicity established by the Secretary

23 under section 1861(ll)(2) for such services;’’.

24 (2) Section 1862(a)(7) of such Act (42 U.S.C.

25 1395y(a)(7)), as amended by sections 502(b)(4)(B) and
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1 503(c), is amended by striking ‘‘or (H)’’ and inserting

2 ‘‘(H), or (I)’’.

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

4 this section shall apply to well-child services provided on

5 or after January 1, 1994.

6 SEC. 504. ANNUAL SCREENING MAMMOGRAPHY.

7 (a) ANNUAL SCREENING MAMMOGRAPHY FOR

8 WOMEN OVER AGE 64.—Section 1834(c)(2)(A) of the So9 cial Security Act (42 U.S.C. 1395m(b)(2)(A)), as added

10 by section 4163(b)(2) of OBRA–1990, is amended—

11 (1) in clause (iv), by striking ‘‘but under 65

12 years of age,’’; and

13 (2) by striking clause (v).

14 (b) EFFECTIVE DATE.—The amendments made by

15 subsection (a) shall apply to screening mammography per16 formed on or after January 1, 1994.

17 SEC. 505. DEMONSTRATION PROJECTS FOR COVERAGE OF

18 OTHER PREVENTIVE SERVICES.

19 (a) ESTABLISHMENT.—The Secretary of Health and

20 Human Services (in this title referred to as the ‘‘Sec21 retary’’) shall establish and provide for the conduct of a

22 series of ongoing demonstration projects under which the

23 Secretary shall provide for coverage of the preventive serv24 ices described in subsection (c) under the medicare pro25 gram in order to determine—
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1 (1) the feasibility and desirability of expanding

2 coverage of medical and other health services under

3 the medicare program to include coverage of such

4 services for all individuals enrolled under part B of

5 title XVIII of the Social Security Act; and

6 (2) appropriate methods for the delivery of

7 those services to medicare beneficiaries.

8 (b) SITES FOR PROJECT.—The Secretary shall pro9 vide for the conduct of the demonstration projects estab10 lished under subsection (a) at the sites at which the Sec11 retary conducts the demonstration program established

12 under section 9314 of the Consolidated Omnibus Budget

13 Reconciliation Act of 1985 and at such other sites as the

14 Secretary considers appropriate.

15 (c) SERVICES COVERED UNDER PROJECTS.—The

16 Secretary shall cover the following services under the se17 ries of demonstration projects established under

18 subsection (a):

19 (1) Glaucoma screening.

20 (2) Cholesterol screening and cholesterol-reduc21 ing drug therapies.

22 (3) Screening and treatment for osteoporosis,

23 including tests for bone-marrow density and hor24 mone replacement therapy.
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1 (4) Screening services for pregnant women, in2 cluding ultra-sound and clamydial testing and ma3 ternal serum alfa-protein.

4 (5) One-time comprehensive assessment for in5 dividuals beginning at age 65 or 75.

6 (6) Other services considered appropriate by the

7 Secretary.

8 (d) REPORTS TO CONGRESS.—Not later than October

9 1, 1995, and every 2 years thereafter, the Secretary shall

10 submit a report to the Committee on Finance of the Sen11 ate and the Committee on Ways and Means and the Com12 mittee on Energy and Commerce of the House of Rep13 resentatives describing findings made under the dem14 onstration projects conducted pursuant to subsection (a)

15 during the preceding 2-year period and the Secretary’s

16 plans for the demonstration projects during the succeeding

17 2-year period.

18 (e) AUTHORIZATION OF APPROPRIATIONS.—There

19 are authorized to be appropriated from the Federal Sup20 plementary Medical Insurance Trust Fund for expenses

21 incurred in carrying out the series of demonstration

22 projects established under subsection (a) the following

23 amounts:

24 (1) $4,000,000 for fiscal year 1994.

25 (2) $4,000,000 for fiscal year 1995.
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1 (3) $5,000,000 for fiscal year 1996.

2 (4) $5,000,000 for fiscal year 1997.

3 (5) $6,000,000 for fiscal year 1998.

4 SEC. 506. OTA STUDY OF PROCESS FOR REVIEW OF MEDI5 CARE COVERAGE OF PREVENTIVE SERVICES.

6 (a) STUDY.—The Director of the Office of Tech7 nology Assessment (in this section referred to as the ‘‘Di8 rector’’) shall, subject to the approval of the Technology

9 Assessment Board, conduct a study to develop a process

10 for the regular review for the consideration of coverage

11 of preventive services under the medicare program, and

12 shall include in such study a consideration of different

13 types of evaluations, the use of demonstration projects to

14 obtain data and experience, and the types of measures,

15 outcomes, and criteria that should be used in making cov16 erage decisions.

17 (b) REPORT.—Not later than 2 years after the date

18 of the enactment of this Act, the Director shall submit

19 a report to the Committee on Finance of the Senate and

20 the Committee on Ways and Means and the Committee

21 on Energy and Commerce of the House of Representatives

22 on the study conducted under subsection (a).
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1 SEC. 507. PHASED-IN REQUIREMENT OF PART B ENROLL2 MENT.

3 (a) IN GENERAL.—Section 1811 of the Social Secu4 rity Act (42 U.S.C. 1395c) is amended by inserting ‘‘(a)’’

5 after ‘‘1811.’’ and by adding at the end the following new

6 subsection:

7 ‘‘(b) Notwithstanding sections 226 and 226A and any

8 other provision of this title, effective for services furnished

9 on or after January 1, 1997, payment may not be made

10 under this part for items and services during any period

11 in which the individual is not enrolled under part B or

12 under a qualified employer health plan (as defined in sec13 tion 2121(a)). For purposes of the previous sentence, enti14 tlement to benefits under this part (but for this sub15 section) shall not be considered enrollment in a qualified

16 health plan.’’.

17 (b) CLARIFICATION OF COVERAGE PERIOD.—Section

18 1838(b) of such Act (42 U.S.C. 1395q(b)) is amended to

19 read as follows:

20 ‘‘(b)(1) An individual’s coverage period shall continue

21 until the individual’s enrollment is terminated by the filing

22 of notice that the individual—

23 ‘‘(A) no longer wishes to participate in the in24 surance program established by this part,

25 ‘‘(B) is covered under a qualified health plan,

26 and
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1 ‘‘(C) has notified the plan that the individual is

2 entitled to benefits under part A of this title.

3 ‘‘(2) The termination of coverage under paragraph

4 (1) shall take effect at the close of the month following

5 the month in which the notice is filed.

6 ‘‘(3) Such termination shall no longer be effective at

7 such time as the individual is eligible to be enrolled under

8 this part and is no longer covered under a qualified health

9 plan.’’.

10 (c) ELIMINATION OF LATE ENROLLMENT PEN11 ALTIES.—

12 (1) IN GENERAL.—Section 1839 of such Act

13 (42 U.S.C. 1395r) is amended by striking subsection

14 (b).

15 (2) CONFORMING AMENDMENTS.—(A) Section

16 1839(a)(2) of such Act (42 U.S.C. 1395r(a)(2)) is

17 amended—

18 (i) in subsection (a)(2), by striking ‘‘sub19 sections (b) and (e)’’ and inserting ‘‘subsection

20 (e)’’, and

21 (ii) by striking subsection (d).

22 (B) Section 1843(d)(1) of such Act (42 U.S.C.

23 1395v(d)(1)) is amended by striking ‘‘(without any

24 increase under subsection (b) thereof)’’.
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1 (d) EFFECTIVE DATE.—The amendments made by

2 subsections (b) and (c) shall take effect January 1, 1997,

3 and shall apply to premiums beginning with such January.

4 SEC. 508. CHANGES IN PARTICIPATION AGREEMENTS.

5 (a) PROVIDERS OF SERVICES.—Section 1866(a)(1)

6 of the Social Security Act (42 U.S.C. 1395cc(a)(1)) is

7 amended—

8 (1) by striking ‘‘and’’ at the end of subpara9 graph (P),

10 (2) by striking the period at the end of sub11 paragraph (Q) and inserting ‘‘, and’’, and

12 (3) by inserting after subparagraph (Q) the fol13 lowing new subparagraph:

14 ‘‘(R) effective January 1, 1994, to have

15 entered into a participation agreement under

16 title XXII of this Act and to report to the Fed17 eral Health Care Cost Containment Commission

18 information, described in section 302(d)(2) of

19 the Health Insurance Coverage and Cost Con20 tainment Act of 1993, in accordance with uni21 form standards developed under such section.’’.

22 (b) PHYSICIANS.—Section 1842(h)(1) of such Act

23 (42 U.S.C. 1395u(h)(1)) is amended by adding at the end

24 the following: ‘‘No such agreement with a physician shall

25 be entered into and continued in effect on or after January
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1 1, 1994, unless the physician has entered into a com2 parable agreement for purposes of title XXII and agrees

3 to report to the Federal Health Care Cost Containment

4 Commission information, described in section 302(d)(2) of

5 the Health Insurance Coverage and Cost Containment Act

6 of 1993, in accordance with uniform standards developed

7 under such section.’’

8 SEC. 509. ASSURING COORDINATION OF ENROLLMENT

9 WITH QUALIFIED HEALTH PLANS.

10 (a) NOTICES.—Section 1837 of the Social Security

11 Act (42 U.S.C. 1395p) is amended by adding at the end

12 the following new subsection:

13 ‘‘(j) The Secretary shall provide for notices of cov14 erage under this part (and part A) in the same manner

15 as qualified health plans are required to provide notices

16 of coverage under section 2157(b).’’.

17 (b) TREATMENT OF SECONDARY PAYMENT IN

18 CASE OF PART-TIME EMPLOYMENT.—Section

19 1862(b)(1)(A)(i)(I) of such Act (42 U.S.C.

20 1395y(b)(1)(A)(i)(I)) is amended by inserting ‘‘other than

21 on a part-time described in section 2181(b)(2)’’ after ‘‘in22 dividual’s spouse)’’.

23 (c) EFFECTIVE DATES.—(1) The amendment made

24 by subsection (a) shall take effect on the date specified

25 in section 2157(b)(2) of the Social Security Act.
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1 (2) The amendment made by subsection (b) shall

2 apply to employment occurring on or after January 1,

3 1994.

4 TITLE VI—FINANCING

5 PROVISIONS

6 Subtitle A—General Provisions

7 SEC. 601. INCREASE IN WAGE BASE FOR HOSPITAL INSUR8 ANCE TAX.

9 (a) GENERAL RULE.—Paragraph (2) of section

10 3121(x) of the Internal Revenue Code of 1986 (defining

11 applicable contribution base for hospital insurance tax) is

12 amended—

13 (1) in subparagraph (A), by striking ‘‘and’’ at

14 the end,

15 (2) in subparagraph (B), by striking ‘‘for any

16 calendar year after 1991’’ and inserting ‘‘for cal17 endar years 1992 and 1993’’ and by striking the pe18 riod at the end and inserting ‘‘, and’’, and

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

21 ‘‘(C) for any calendar year after 1993, an

22 amount without any limit.’’.

23 (b) EFFECTIVE DATE.—The amendments made by

24 subsection (a) shall apply to calendar year 1994 and fol25 lowing calendar years.
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1 Subtitle B—Deductibility of

2 Certain Health Insurance Costs

3 SEC. 611. INDEFINITE EXTENSION OF DEDUCTION FOR

4 HEALTH INSURANCE COSTS OF SELF-EM5 PLOYED INDIVIDUALS.

6 (a) IN GENERAL.—Subsection (l) of section 162 of

7 the Internal Revenue Code of 1986 (relating to special

8 rules for health insurance costs of self-employed individ9 uals) is amended by striking paragraph (6).

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

11 subsection (a) shall apply to taxable years beginning after

12 December 31, 1993.

13 SEC. 612. INCREASE IN AMOUNT OF DEDUCTION FOR SELF14 EMPLOYED INDIVIDUALS.

15 (a) GENERAL RULE.—Paragraph (1) of section

16 162(l) of the Internal Revenue Code of 1986 is amended

17 by striking ‘‘25 percent of’’.

18 (b) EFFECTIVE DATE.—

19 (1) IN GENERAL.—Except as otherwise pro20 vided in this subsection, the amendment made by

21 subsection (a) shall apply to taxable years beginning

22 after December 31, 1993.

23 (2) SPECIAL RULES FOR SELF-EMPLOYED INDI24 VIDUALS AND PERSONAL CORPORATIONS BEFORE

25 ‘‘PAY-OR-PLAY PROVISIONS’’ TAKE EFFECT.—
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1 (A) IN GENERAL.—If the requirements of

2 subparagraph (B) are not met by any taxpayer

3 to whom this paragraph applies during any pe4 riod before the ‘‘pay-or-play’’ provisions take ef5 fect with respect to such taxpayer—

6 (i) in the case of a taxpayer described

7 in subparagraph (C)(i), the amount allow8 able as a deduction to such taxpayer under

9 section 162(l) of the Internal Revenue

10 Code of 1986 for amounts attributable to

11 such period shall be determined without re12 gard to the amendment made by sub13 section (a), and

14 (ii) in the case of a taxpayer described

15 in subparagraph (C)(ii), the amount allow16 able as a deduction under such Code for

17 amounts which are attributable to such pe18 riod and which are paid or incurred for

19 coverage provided to any employee-owner

20 under an accident or health plan of such

21 taxpayer shall be 25 percent of the amount

22 which but for this clause would have been

23 so allowable.

24 For purposes of clause (ii), the term ‘‘owner25 employee’’ has the meaning given such term by
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1 section 269A(b)(2) of such Code with the modi2 fications provided in section 441(i)(2) of such

3 Code.

4 (B) REQUIREMENTS.—The requirements

5 of this subparagraph are met by any taxpayer

6 for any period if such taxpayer makes available

7 on the same terms and conditions health cov8 erage under a plan which would qualify as a

9 qualified employer health plan under title XXI

10 of the Social Security Act to all employees of

such taxpayer who normally work for 171 11 ⁄2

12 hours or more per week.

13 (C) TAXPAYERS TO WHOM PARAGRAPH AP14 PLIES.—This paragraph shall apply to—

15 (i) any individual who is an employee

16 within the meaning of section 401(c)(1) of

17 such Code, and

18 (ii) any personal service corporation

19 (as defined in section 441(i)(2) of such

20 Code).

21 (D) WHEN ‘‘PAY-OR-PLAY’’ PROVISIONS

22 TAKE EFFECT.—For purposes of this para23 graph, the ‘‘pay-or-play’’ provisions take effect

24 on January 1, 1997, or, if earlier, the date on

25 which the requirements of part A of title XXI
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1 of the Social Security Act apply with respect to

2 the taxpayer under section 2105(a) of such Act.

3 SEC. 613. DEDUCTION FOR PREMIUMS PAID BY SMALL EM4 PLOYERS FOR INSURANCE PROVIDING

5 QUALIFIED HEALTH COVERAGE.

6 (a) IN GENERAL.—Part VI of subchapter B of chap7 ter 1 of the Internal Revenue Code of 1986 (relating to

8 itemized deductions for individuals and corporations) is

9 amended by adding at the end thereof the following new

10 section:

11 ‘‘SEC. 197. PREMIUMS PAID BY SMALL EMPLOYERS FOR IN12 SURANCE PROVIDING QUALIFIED HEALTH

13 COVERAGE.

14 ‘‘(a) IN GENERAL.—In the case of a small employer,

15 there shall be allowed as a deduction (in addition to any

16 amount otherwise allowable) an amount equal to 20 per17 cent of the premiums paid during the taxable year for in18 surance providing coverage under a qualified health plan

19 for employees of such employer.

20 ‘‘(b) SMALL EMPLOYER.—For purposes of this sec21 tion—

22 ‘‘(1) IN GENERAL.—The term ‘small employer’

23 means, with respect to the taxable year, an employer

24 that normally employs fewer than 100 employees on
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1 a typical business day during the calendar year end2 ing with or within such taxable year.

3 ‘‘(2) CONTROLLED GROUPS.—All employers

4 treated as a single employer under subsection (a) or

5 (b) of section 52 shall be treated as a single em6 ployer.

7 ‘‘(c) QUALIFIED HEALTH PLAN.—For purposes of

8 this section, the term ‘qualified health plan’ means any

9 plan which meets the requirements of title XXI of the So10 cial Security Act and which provides only the minimum

11 benefits required under such title.’’

12 (b) CLERICAL AMENDMENT.—The table of sections

13 for part IV of subchapter B of chapter 1 of such Code

14 is amended by adding at the end thereof the following new

15 item:

‘‘Sec. 197. Premiums paid by small employers for insurance providing qualified health coverage.’’

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

17 this section shall apply to premiums for coverage provided

18 after December 31, 1996.

19 Subtitle C—State Maintenance of

20 Effort

21 SEC. 621. STATE MAINTENANCE OF EFFORT.

22 (a) CONDITION OF COVERAGE.—Notwithstanding

23 any other provision of this title, no individual who is a

24 resident of a State is eligible for benefits under title XXII
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1 for a month in a calendar year beginning with 1997, un2 less the State provides (in a manner and at a time speci3 fied by the Secretary) for payment to the Public Health

Trust Fund of 1 4 ⁄12 of the amount specified in subsection

5 (b) for the year.

6 (b) MAINTENANCE OF EFFORT AMOUNT.—The

7 amount of payment specified in this subsection for a State

8 for a year is equal to the difference between—

9 (1) the amount of payment (net of Federal pay10 ments) that would have been made, for required

11 health benefits (as defined in section 2211(a)(2) of

12 the Social Security Act), under its State plan under

13 title XIX of such Act for the year if—

14 (A) title XXII of such Act were not in ef15 fect in the year, and

16 (B) the provisions of section 702(a) of this

17 Act (and section 1902(a)(13)(G) of the Social

18 Security Act, as added by section 702(b)) ap19 plied during the year as in 1996 (except that in

20 applying such provisions the references in sec21 tion 702(a)(1)(A)(iii) of this Act and section

22 1902(a)(13)(G)(ii)(III) of the Social Security

23 Act to ‘‘90 percent’’ are deemed references to

24 ‘‘100 percent’’), and
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1 (2) the amount of payment (net of Federal pay2 ments) that is made, for required health benefits (as

3 defined in section 2211(a)(2) of the Social Security

4 Act), under its State plan under title XIX of the So5 cial Security Act for the year.

6 (c) STATE DEFINED.—In this section, the term

7 ‘‘State’’ means the 50 States and the District of Colum8 bia.

9 TITLE VII—MEDICAID

10 PROVISIONS

11 SEC. 701. COORDINATION WITH PUBLIC HEALTH PLAN.

12 (a) IN GENERAL.—

13 (1) LIMITING FEDERAL FINANCIAL PARTICIPA14 TION FOR SERVICES COVERED UNDER PUBLIC

15 HEALTH PLAN.—Section 1903(i) of the Social Secu16 rity Act (42 U.S.C. 1396b(i)) is amended—

17 (A) in the paragraph (10) inserted by sec18 tion 4401(a)(1)(B) of Omnibus Budget Rec19 onciliation Act of 1990, by striking all that fol20 lows ‘‘1927(g)’’ and inserting a semicolon;

21 (B) by redesignating the paragraph (10)

22 added by section 4701(b)(2) as paragraph (11),

23 by transferring and inserting it after the para24 graph (10) inserted by section 4401(a)(1)(B) of

25 Omnibus Budget Reconciliation Act of 1990,
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1 and by striking all that follows ‘‘with respect to

2 hospitals or facilities’’ and inserting a semi3 colon;

4 (C) by transferring and inserting the para5 graph (12) inserted by section 4752(a)(2) of

6 Omnibus Budget Reconciliation Act of 1990

7 after paragraph (11), as redesignated by sub8 paragraph (B), and by striking the period at

9 the end and inserting a semicolon;

10 (D) by redesignating the paragraph (14)

11 inserted by section 4752(e) of Omnibus Budget

12 Reconciliation Act of 1990 as paragraph (13),

13 by transferring and inserting it after paragraph

14 (12), and by striking the period at the end and

15 inserting a semicolon;

16 (E) by redesignating the paragraph (11)

17 inserted by section 4801(e)(16)(A) of Omnibus

18 Budget Reconciliation Act of 1990 as para19 graph (14), by transferring and inserting it

20 after paragraph (13), and by striking the period

21 at the end and inserting ‘‘; or’’; and

22 (F) by inserting after paragraph (14), as

23 so redesignated, the following new paragraph:

24 ‘‘(15) with respect to items and services (in25 cluding medicare cost-sharing) for which payment is
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1 made under the public health plan under title

2 XXII.’’.

3 (2) CLARIFICATION OF NONDUPLICATION OF

4 MEDICAL ASSISTANCE WITH BENEFITS UNDER PUB5 LIC HEALTH PLAN.—Title XIX of such Act is

6 amended by adding at the end the following new sec7 tion:

8 ‘‘NONDUPLICATION OF BENEFITS WITH PUBLIC HEALTH

9 PLAN

10 ‘‘SEC. 1931. Notwithstanding any other provision of

11 this title, a State is not required under its plan under sec12 tion 1901(a) to provide medical assistance for items and

13 services (including medicare cost-sharing) for which pay14 ment is made under the public health plan under title

15 XXII.’’.

16 (3) CLARIFICATION OF APPLICATION OF THIRD17 PARTY PAYOR RULES TO QUALIFIED HEALTH

18 PLANS.—Section 1902(a)(25)(A) of such Act (42

19 U.S.C. 1396a(a)(25)(A)) is amended by inserting

20 ‘‘and qualified health plans certified under part F of

21 title XXII’’ after ‘‘health insurers’’.

22 (b) CONTINUATION OF MEDICAID BENEFITS NOT

23 COVERED UNDER PUBLIC HEALTH PLAN.—Nothing in

24 this Act shall be construed as—
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1 (1) changing the eligibility of individuals for

2 medical assistance under title XIX of the Social Se3 curity Act, or

4 (2) subject to the amendments made by sub5 section (a), changing the amount, duration, or scope

6 of medical assistance required (or permitted) to be

7 provided under such title.

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