II

104TH CONGRESS

1ST SESSION S. 933

To amend the Public Health Service Act to ensure that affordable, comprehensive, high quality health care coverage is available through the establishment of State-based programs for children and for all uninsured pregnant

women, and to facilitate access to health services, strengthen public

health functions, enhance health-related research, and support other activities that improve the health of mothers and children, and for other

purposes.

IN THE SENATE OF THE UNITED STATES

JUNE 15 (legislative day, JUNE 5), 1995

Mr. SIMON introduced the following bill; which was read twice and referred

to the Committee on Labor and Human Resources

A BILL

To amend the Public Health Service Act to ensure that

affordable, comprehensive, high quality health care coverage is available through the establishment of Statebased programs for children and for all uninsured pregnant women, and to facilitate access to health services,

strengthen public health functions, enhance health-related research, and support other activities that improve

the health of mothers and children, and for other purposes.

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

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

3 ‘‘Healthy Mothers, Healthy Children Act of 1995’’.

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

5 this Act is as follows:

Sec. 1. Short title, table of contents.

Sec. 2. Findings.

TITLE I—NATIONAL HEALTH TRUST FUND FOR MOTHERS AND

CHILDREN

Sec. 101. Establishment.

TITLE II—HEALTHY MOTHERS, HEALTHY CHILDREN PROGRAM

Sec. 201. Establishment and allocation of funds.

Sec. 202. Comprehensive health benefits and cost sharing requirements.

Sec. 203. State program development and administration.

Sec. 204. Grants to improve the health of children and pregnant women.

Sec. 205. Responsibilities of families, certified plans, employers, States, and the

Federal government.

Sec. 206. Existing programs.

Sec. 207. General provisions.

Sec. 208. Unlawful use of tobacco products manufactured for export.

TITLE III—FINANCING PROVISIONS

Sec. 301. Increase in taxes on tobacco products.

Sec. 302. Assistance to States adversely affected by the tobacco tax.

Sec. 303. Designation of overpayments and contributions for the National

Health Trust Fund for Mothers and Children.

6 SEC. 2. FINDINGS.

7 Congress finds the following:

8 (1) The health of mothers and children in the

9 United States is vital to the development and com10 petitiveness of the Nation. Investing in comprehen11 sive health services for children substantially in12 creases their potential to be healthy, productive

13 members of society and averts significant health care

14 and other costs later in life. Similarly, ensuring that
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1 all pregnant women receive adequate prenatal care

2 significantly increases the likelihood of healthy in3 fants and results in substantial savings in future

4 health care costs to society.

5 (2) The State and Federal Government, in

6 partnership with families, must assume responsibil7 ity for providing health care coverage to children

8 since children do not have the means to ensure their

9 own health. This partnership should be based on in10 dividual and family responsibility as well as society’s

11 responsibility to ensure that all children and preg12 nant women have affordable, comprehensive, high

13 quality health care coverage. Responsibility for en14 suring the quality of health services should be

15 shared among families, providers, health plans, em16 ployers, and State and Federal Governments.

17 (3) The United States is the wealthiest nation

18 in the world, but it is not the healthiest nation. The

19 health status of mothers and children in the United

20 States lags behind many other countries. The United

21 States ranks 22nd in infant mortality and 18th in

22 maternal mortality compared to all other nations. In

23 addition, many developing countries have higher

24 childhood immunization rates than the United

25 States. Rates of preventable health conditions, ex-
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1 cess morbidity, and premature mortality are high es2 pecially among low income families and significant

3 disparities exist in the health status of children and

4 pregnant women.

5 (4) All children and pregnant women in the

6 United States should receive comprehensive, high

7 quality health care. However, many children and

8 pregnant women in the United States are not receiv9 ing adequate health care. In 1993, 11,100,000 or 16

10 percent of all children under the age of 18 did not

11 have health insurance or publicly-financed health

12 care, up from 10,200,000 or 15 percent in 1992.

13 Children accounted for the largest proportion of the

14 increase in the number of uninsured persons be15 tween 1992 and 1993. Of such 1,100,000 net in16 crease in the number of uninsured persons, 84 per17 cent or 922,500 were children.

18 (5) In 1993, 24 percent of all children and 29

19 percent of children under seven years of age were

20 living below the Federal poverty level. Despite recent

21 federally mandated expansions in Medicaid, 22 per22 cent of all children living below the poverty line did

23 not have health insurance. In addition, more than 90

24 percent of all uninsured children were in families

25 earning less than 400 percent of the Federal poverty
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1 level. Uninsured children are significantly less likely

2 to receive medically necessary care from a physician

3 compared to insured children. In addition, approxi4 mately 500,000 pregnant women did not have health

5 insurance in 1992 and 22 percent of mothers did

6 not receive prenatal care in the first trimester.

7 (6) Health care delivery systems should be con8 sistent with health care needs and conditions at the

9 State and local levels. Given the variability in cur10 rent health care delivery systems and health care

11 needs and conditions among the States, States

12 should have primary responsibility for developing

13 and administrating a delivery system for their resi14 dents. To ensure that all persons covered under

15 State health care delivery systems have affordable,

16 comprehensive, high quality care, and that such cov17 erage is equally available among the States, State

18 systems should be consistent with Federal guide19 lines. These guidelines should ensure a minimum na20 tional standard of care for all children and pregnant

21 women. However, State and Federal guidelines

22 should be based on a ‘‘management by objectives’’

23 approach where States and health plans are given

24 maximum flexibility and are encouraged to be inno25 vative in meeting program objectives.
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1 TITLE I—NATIONAL HEALTH

2 TRUST FUND FOR MOTHERS

3 AND CHILDREN

4 SEC. 101. ESTABLISHMENT.

5 (a) IN GENERAL.—Subchapter A of chapter 98 (re6 lating to establishment of trust funds) is amended by add7 ing at the end the following new part:

8 ‘‘PART II—HEALTH CARE TRUST FUNDS

‘‘Sec. 9551. National Health Trust Fund for Mothers and Children

9 ‘‘SEC. 9551. NATIONAL HEALTH TRUST FUND FOR MOTHERS

10 AND CHILDREN.

11 ‘‘(a) CREATION OF TRUST FUND.—There is estab12 lished in the Treasury of the United States a trust fund

13 to be known as the ‘National Health Trust Fund for

14 Mothers and Children’ to support State-based programs

15 under title XXVII of the Public Health Service Act that

16 ensure affordable, comprehensive, high quality health care

17 coverage for children, and for all uninsured pregnant

18 women. The National Health Trust Fund for Mothers and

19 Children shall consist of such amounts as may be appro20 priated or credited to the Trust Fund as provided for in

21 this section or section 9602(b) and such cash contribu22 tions as may be made.

23 ‘‘(b) TRANSFERS TO THE TRUST FUND.—
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1 ‘‘(1) IN GENERAL.—There are hereby appro2 priated to the National Health Trust Fund for

3 Mothers and Children amounts received in the

4 Treasury under—

5 ‘‘(A) section 5701 (relating to taxes on to6 bacco products) to the extent attributable to the

7 increases of such taxes as the result of the en8 actment of section 301 of the Healthy Mothers,

9 Healthy Children Act of 1995 minus any

10 amount appropriated to the Tobacco Alter11 natives Trust Fund under section 9512(b), and

12 ‘‘(B) section 6097 (relating to the designa13 tion of overpayments and contributions to the

14 Trust Fund).

15 ‘‘(2) SAVINGS AMOUNTS.—There are hereby ap16 propriated to the National Health Trust Fund for

17 Mothers and Children for each fiscal year amounts

18 equivalent to the amount of estimated Federal sav19 ings in such fiscal year—

20 ‘‘(A) under the medicaid program under

21 title XIX of the Social Security Act resulting

22 from the enactment of the Healthy Mothers,

23 Healthy Children Act of 1995, and

24 ‘‘(B) attributable to a duplication of serv25 ices or functions under any other Federal
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1 health program resulting from the enactment of

2 the Healthy Mothers, Healthy Children Act of

3 1995.

4 ‘‘(c) EXPENDITURES.—

5 ‘‘(1) IN GENERAL.—Except as provided in para6 graph (2), amounts in the National Health Trust

7 Fund for Mothers and Children are appropriated as

8 provided for in section 2782 of the Public Health

9 Service Act, and to the extent any such amount is

10 not expended during any fiscal year, such amount

11 shall be available for such purpose for subsequent

12 fiscal years.

13 ‘‘(2) PREVENTION OF TOBACCO USE.—

14 ‘‘(A) IN GENERAL.—Amounts not to ex15 ceed the amount described in subparagraph (B)

16 are appropriated in each fiscal year to fund ac17 tivities at the Office on Smoking and Health,

18 Centers for Disease Control and Prevention to

19 prevent the initiation of smoking and use of

20 other tobacco products by children and to co21 ordinate Federal and State tobacco prevention

22 and control initiatives. To the extent any such

23 amount is not expended during any fiscal year,

24 such amount shall be available for such purpose

25 for subsequent fiscal years.
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1 ‘‘(B) AMOUNT DESCRIBED.—The Secretary

2 of Health and Human Services may determine

3 an amount under this subparagraph not to ex4 ceed 0.2% of the annual amounts described

5 under subsection (b)(1)(A) received in the Na6 tional Health Trust Fund for Mothers and

7 Children.’’.

8 (b) CONFORMING AMENDMENT.—Subchapter A of

9 chapter 98 is amended by inserting after the subchapter

10 heading the following new items:

‘‘Part I. General trust funds.

‘‘Part II. Health care trust fund.

11 ‘‘PART I—GENERAL TRUST FUNDS’’.

12 TITLE II—HEALTHY MOTHERS,

13 HEALTHY CHILDREN PROGRAM

14 SEC. 201. ESTABLISHMENT AND ALLOCATION OF FUNDS.

15 The Public Health Service Act (42 U.S.C. 201 et

16 seq.) is amended by adding at the end thereof the follow17 ing new title:

18 ‘‘TITLE XXVII—HEALTHY MOTH19 ERS, HEALTH CHILDREN PRO20 GRAM

21 ‘‘SEC. 2700. ESTABLISHMENT OF PROGRAM.

22 ‘‘A State that desires to become a participating State

23 under this title and receive an allocation under section

24 2701, shall, in accordance with this title, establish a State
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1 program to ensure that eligible children and pregnant

2 women residing in the State are enrolled in certified plans

3 that provide for or cover the costs of comprehensive, high

4 quality health care items or services provided to such eligi5 ble individuals.

6 ‘‘Part A—Allocation of Funds

7 ‘‘SEC. 2701. ALLOCATION OF FUNDS TO PARTICIPATING

8 STATES.

9 ‘‘(a) INITIAL ALLOCATION.—With respect to a par10 ticipating State, during each of the first two fiscal years

11 in which the State program is in effect, the Secretary shall

12 make available to the State, from the Trust Fund, an

13 amount based on a formula developed by the Secretary

14 that takes into consideration—

15 ‘‘(1) the estimated number of eligible children

16 under 7 years of age residing in the State;

17 ‘‘(2) the number of pregnant women residing in

18 the State that lack health insurance; and

19 ‘‘(3) a geographic adjustment factor for the

20 State that is dependent on the average cost of health

21 care in such State.

22 ‘‘(b) SUBSEQUENT FISCAL YEARS.—

23 ‘‘(1) FORMULA.—With respect to a participat24 ing State, during each fiscal year subsequent to the

25 first two fiscal years in which the State program is
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1 in effect, the Secretary shall make available to the

2 State, from the Trust Fund, an amount based on

3 a formula developed by the Secretary that takes into

4 consideration—

5 ‘‘(A) the factors referred to in subsection

6 (a);

7 ‘‘(B) to encourage the enrollment of all eli8 gible individuals in the State in the State pro9 gram, an additional factor developed by the

10 Secretary that takes into consideration the

11 number of eligible individuals enrolled in the

12 State program in the year immediately preced13 ing the year for which the allocation under this

14 subsection is being made; and

15 ‘‘(C) an index that reflects the estimated

16 national average rate of inflation for health care

17 expenditures for children and a similar index

18 for pregnant women, to ensure that any in19 crease in allocations under this subsection do

20 not exceed the increase in such inflation index

21 from the previous fiscal year.

22 The additional factor shall be developed under sub23 paragraph (B) so that as the number of eligible indi24 viduals enrolled in the previous year increases, the

25 amount of the allocation for the State also increases.
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1 ‘‘(2) WAIVERS.—

2 ‘‘(A) REQUEST BY STATE.—A participat3 ing State may request that the Secretary, in al4 locating funds under paragraph (1), waive the

5 consideration of the index under subparagraph

6 (C) of such paragraph with respect to such

7 State.

8 ‘‘(B) GRANT OF WAIVER.—The Secretary

9 may grant a request for a waiver under sub10 paragraph (A) if the Secretary determines that

11 the participating State has demonstrated that

12 extenuating circumstances within the State ex13 isted which caused unavoidable increases in the

14 cost of health services provided to children and

15 pregnant women, and that the State has consid16 ered all reasonable strategies to control costs,

17 including working with certified plans to control

18 costs, reducing administrative costs, restructur19 ing the State program, and minimizing fraud

20 and abuse.

21 ‘‘SEC. 2702. STATE TRUST FUNDS AND MATCHING CON22 TRIBUTION.

23 ‘‘(a) STATE TRUST FUND.—

24 ‘‘(1) ESTABLISHMENT.—To be a participating

25 State under this title, a State shall establish a State
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1 trust fund (or in the case of regional programs, a re2 gional trust fund) in which the State shall deposit—

3 ‘‘(A) all funds allocated to the State under

4 section 2701;

5 ‘‘(B) all funds provided by the State under

6 subsection (b); and

7 ‘‘(C) any additional funds determined ap8 propriated by the State.

9 ‘‘(2) TRANSFER OF FUNDS.—From the Trust

10 Fund, the Secretary shall, on an annual basis, trans11 fer to the trust fund of a participating State the

12 amount of the State’s allocation under section 2701

13 for the fiscal year involved. Such annual transfer of

14 funds shall be contingent on a satisfactory annual

15 evaluation of the program of the participating State,

16 and the approval of the annual plan of the State by

17 the Secretary as required in section 2731(b).

18 ‘‘(3) USE OF FUNDS.—Amounts contained in

19 the State trust fund shall be used solely for activities

20 directly related to the provision of health services to

21 eligible children or pregnant women or for other ac22 tivities specifically authorized under this title.

23 ‘‘(b) MATCHING REQUIREMENT.—

24 ‘‘(1) IN GENERAL.—The Secretary may not

25 make an allocation to a participating State under
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1 section 2701 unless that State agrees that, with re2 spect to the costs to be incurred by the State in car3 rying out the program for which the allocation is

4 provided, the State will make available an amount

5 determined by the Secretary based on a formula that

6 takes into account the annual per capita income of

7 each State. In determining the matching require8 ment applicable to each State under this paragraph,

9 the Secretary shall ensure that—

10 ‘‘(A) each such matching requirement is

11 more generous for the State than the matching

12 requirement applicable under title XIX of the

13 Social Security Act at the time of the approval

14 of the State application under this title;

15 ‘‘(B) the average State matching require16 ment for all States is $2 for every $8 of Fed17 eral funds provided under the allocation (aver18 age Federal matching rate for all States of 80

19 percent); and

20 ‘‘(C) no State shall have a matching re21 quirement that is less than $1 for every $9 of

22 Federal funds provided under the allocation

23 (maximum Federal matching rate of 90 per24 cent).
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1 ‘‘(2) DONATIONS.—A participating State may

2 elect to accept a donation of funds, services, or

3 equipment for a State program under this title from

4 individuals and entities in the private sector. A State

5 shall ensure that any such donations from individ6 uals and for-profit entities do not result in a conflict

7 of interest in terms of the State giving preference to

8 the individual or entity related to the awarding of

9 contracts for a program under this title or for any

10 other State or Federally funded health programs not

11 covered by this Act.

12 ‘‘(3) NO REQUIREMENT.—With respect to

13 amounts deposited in the State trust fund under

14 subsection (a)(1)(C), such funds shall not be subject

15 to the matching requirements of paragraph (1) un16 less such funds are deposited for the purposes de17 scribed in sections 2732, 2735, and 2753.

18 ‘‘SEC. 2703. EXCESS AND INSUFFICIENT FUNDS IN TRUST

19 FUNDS.

20 ‘‘(a) AVAILABILITY OF UNALLOCATED FUNDS.—

21 ‘‘(1) NATIONAL TRUST FUND.—With respect to

22 amounts remaining in the Trust Fund after the Sec23 retary makes the allocations required under section

24 2701 or otherwise provides grants under this title

25 for a fiscal year, such amounts shall remain in the
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1 Trust Fund and be available for use in subsequent

2 years.

3 ‘‘(2) STATE TRUST FUNDS.—With respect to

4 amounts remaining in the trust fund of a participat5 ing State after allocations or expansions in eligibility

6 are made for a fiscal year under this title, such

7 amounts shall remain in the State trust fund and

8 may not be transferred back to the Trust Fund.

9 ‘‘(b) INSUFFICIENT FEDERAL FUNDS.—

10 ‘‘(1) IN GENERAL.—If the Secretary determines

11 that amounts contained in the Trust Fund for a fis12 cal year are not sufficient to make allocations under

13 section 2701, or to otherwise carry out this title, the

14 Secretary shall notify the Advisory Council. Not

15 later than 60 days after receipt of a notification

16 under this paragraph, the Advisory Council shall

17 recommend to the Secretary strategies to correct the

18 insufficiency of funds.

19 ‘‘(2) RECOMMENDATIONS BY COUNCIL.—Under

20 paragraph (1), the Advisory Council may rec21 ommend—

22 ‘‘(A) the generation of additional sources

23 of revenue for the Trust Fund;

24 ‘‘(B) an adjustment of the State matching

25 requirements under section 2702(b);
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1 ‘‘(C) an adjustment in the range or nature

2 of the health benefits provided under part B;

3 ‘‘(D) an adjustment in the cost sharing re4 quirements for families under part B;

5 ‘‘(E) a decrease in the amount or number

6 of grants awarded under part F; or

7 ‘‘(F) other measures as determined appro8 priate by the Council.

9 ‘‘(3) IMPLEMENTING LEGISLATION.—Not later

10 than 60 days after receipt of recommendations

11 under paragraph (1), the Secretary shall prepare

12 and submit to Congress, appropriate implementing

13 legislation that incorporates one or more of such rec14 ommendations, if determined appropriate by the

15 Secretary.

16 ‘‘(c) INSUFFICIENT STATE FUNDS.—

17 ‘‘(1) IN GENERAL.—If the chief executive offi18 cer of a participating State determines that the

19 State does not have sufficient funds in the State

20 trust fund to meet the requirements of this title for

21 a fiscal year, the chief executive officer may petition

22 the Secretary for additional funds. Not later than 90

23 days after receipt of a petition under this subsection

24 the Secretary shall determine whether to provide the
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1 State with additional funds or a loan from the Trust

2 Fund.

3 ‘‘(2) PROHIBITION.—The Secretary may not

4 transfer any additional funds to a State under para5 graph (1) if the Secretary determines that the State

6 mismanaged funds, failed to prevent foreseeable fis7 cal problems, or failed to control fraud and abuse.

8 ‘‘Part B—Eligibility and Enrollment

9 ‘‘SUBPART I—ELIGIBILITY

10 ‘‘SEC. 2710. ELIGIBILITY OF INDIVIDUALS.

11 ‘‘(a) IN GENERAL.—To be eligible to receive benefits

12 or services under this title an individual shall—

13 ‘‘(1) be a—

14 ‘‘(A) child who is under the age of 7 years,

15 regardless of the income or health insurance

16 status of the child or his or her parents, or an

17 older child (up to 21 years or age) if the Sec18 retary has expanded the program on a national

19 basis or the State in which the child resides has

20 expanded the State program to encompass such

21 older children; or

22 ‘‘(B) pregnant woman who is not insured

23 (or who if insured, has no pregnancy-related

24 benefits) through the employer of the woman or

25 the family’s employer (in compliance with the
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1 Pregnancy Discrimination Act of 1978), regard2 less of the income status of the woman; and

3 ‘‘(2) be a United States citizen or a citizen of

4 another country legally residing in the United

5 States.

6 ‘‘(b) CERTAIN INDIVIDUALS NOT ELIGIBLE.—A child

7 or pregnant woman shall not be eligible to participate in

8 the program established under this title if such child or

9 pregnant woman, during the 6-month period ending on the

10 date on which such individual desires to participate, was

11 covered under an employer-based health plan, and such

12 coverage was dropped by the employer.

13 ‘‘(c) DEFINITION.—As used in subsection (a)(2), the

14 term ‘citizen of another country legally residing in the

15 United States’ means any of the following:

16 ‘‘(1) An alien lawfully admitted for permanent

17 residence (within the meaning of section 101(a)(20)

18 of the Immigration and Nationality Act).

19 ‘‘(2) An alien granted work authorization by

20 the Immigration and Naturalization Service.

21 ‘‘(3) An alien permanently residing in the Unit22 ed States under color of law, including (but not lim23 ited to) any of the following:
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1 ‘‘(A) An alien who is admitted as a refugee

2 under section 207 of the Immigration and Na3 tionality Act.

4 ‘‘(B) An alien who is granted asylum

5 under section 208 of such Act.

6 ‘‘(C) An alien whose deportation is with7 held under section 243(h) of such Act.

8 ‘‘(D) An alien who is admitted for tem9 porary residence under section 210, 210A, or

10 245A of such Act.

11 ‘‘(E) An alien who has been paroled into

12 the United States under section 212(d)(5) of

13 such Act for an indefinite period or who has

14 been granted extended voluntary departure,

15 temporary protected status, or deferred en16 forced departure.

17 ‘‘(F) An alien who is the spouse or unmar18 ried child under 21 years of age of a citizen of

19 the United States, or the parent of such a citi20 zen if the citizen is over 21 years of age, and

21 with respect to whom an application for adjust22 ment to lawful permanent residence is pending.

23 ‘‘(G) An alien within such other classifica24 tion of aliens permanently residing under color

25 of law for purposes of this title as the Secretary
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1 may establish by regulation. Such regulation

2 shall include categories of such aliens who are

3 included in regulations as in effect on the date

4 of the enactment of this Act under title XIX of

5 the Social Security Act and other categories

6 within a public health priority.

7 ‘‘(4) An alien not otherwise covered under this

8 subsection who the State elects to consider eligible.

9 A State shall ensure that Federal funds provided

10 under this title are not used to provide coverage for

11 aliens under this paragraph.

12 ‘‘SEC. 2711. ELECTION OF ELIGIBILITY.

13 ‘‘(a) COVERAGE OF CHILDREN UNDER OTHER FED14 ERAL PROGRAMS.—

15 ‘‘(1) IN GENERAL.—An eligible individual de16 scribed in section 2710(a)(1)(A) who receives bene17 fits or services under—

18 ‘‘(A) the Civilian Health and Medical Pro19 gram of the Uniformed Services (CHAMPUS),

20 as defined in section 1073(4) of title 10, United

21 States Code;

22 ‘‘(B) chapter 17 of title 38, United States

23 Code; or

24 ‘‘(C) a health program of the Indian

25 Health Service;
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1 may elect to continue to use such services or elect

2 to enroll in a certified plan under this title.

3 ‘‘(2) MEDICAID.—An eligible individual de4 scribed in section 2710(a)(1)(A) who receives bene5 fits or services under title XIX of the Social Security

6 Act shall, on the date on which the State program

7 of the participating State in which such individual

8 resides provides for open enrollment, be automati9 cally enrolled in a certified plan of such individuals

10 choice under the State program of the participating

11 State which such individual resides in.

12 ‘‘(3) STATE PROGRAMS.—In the case of an eli13 gible individual described in section 2710(a)(1)(A)

14 who resides in a State-supervised care setting or who

15 does not live with his or her parents, such child shall

16 be enrolled in a certified plan by the State agency

17 or guardian that has been awarded the temporary or

18 permanent custody of the child unless there is an

19 otherwise more appropriate, specially designed

20 health care system for such a child.

21 ‘‘(b) COVERAGE OF PREGNANT WOMEN UNDER

22 OTHER FEDERAL PROGRAMS.—

23 ‘‘(1) IN GENERAL.—An eligible individual de24 scribed in section 2710(a)(1)(B) who receives bene25 fits or services under—
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1 ‘‘(A) the Civilian Health and Medical Pro2 gram of the Uniformed Services (CHAMPUS),

3 as defined in section 1073(4) of title 10, United

4 States Code;

5 ‘‘(B) chapter 17 of title 38, United States

6 Code; or

7 ‘‘(C) a health program of the Indian

8 Health Service;

9 shall not be eligible for coverage under a certified

10 plan under this title.

11 ‘‘(2) MEDICAID.—An eligible individual de12 scribed in section 2710(a)(1)(B) who receives bene13 fits or services under title XIX of the Social Security

14 Act shall, on the date on which the State program

15 of the participating State in which such individual

16 resides provides for open enrollment, be automati17 cally enrolled in a certified plan of such individuals

18 choice under the State program of the participating

19 State which such individual resides in.

20 ‘‘(c) ENROLLMENT IN CERTIFIED PLANS.—In the

21 case of an eligible individual who elects or is automatically

22 enrolled in a State program under this title, all privileges

23 (such as choice of certified plans) and responsibilities

24 (such as payment of premiums or copayments) accorded

25 to their families or themselves under this title shall apply.
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1 ‘‘SEC. 2712. ELIGIBLE HEALTH PLANS AND PROVIDERS.

2 ‘‘A health plan or health care provider that is licensed

3 and credentialed, or otherwise legally authorized by the

4 State in which such plan or provider operates, to provide

5 health services of a type described in this title, under the

6 respective rules and regulations of the State, shall be eligi7 ble to participate in the State program under this title

8 if such plan or provider meets all applicable Federal and

9 State requirements under this title.

10 ‘‘SUBPART II—ENROLLMENT

11 ‘‘SEC. 2715. ENROLLMENT OF ELIGIBLE PERSONS.

12 ‘‘(a) NATIONAL OPEN ENROLLMENT PERIOD.—Not

13 later than 30 days after the effective date, the Secretary

14 shall establish a national annual open enrollment period

15 to be held during a month that shall be designated as ‘Na16 tional Healthy Mothers, Healthy Children Month’. During

17 such enrollment period, an eligible child may be enrolled

18 in a certified plan operating in the State in which such

19 individual resides in accordance with the enrollment re20 quirements of the State.

21 ‘‘(b) ESTABLISHMENT OF ENROLLMENT SYSTEM.—

22 ‘‘(1) IN GENERAL.—Not later than 30 days

23 after the approval of a State program under section

24 2731, the State shall establish a system for the en25 rollment of all eligible individuals residing within the

26 State in a certified plan under this title. Such enroll-
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1 ment system shall be designed to minimize, to the

2 maximum extent practicable, any barriers that may

3 exist to prevent enrollment. All applicants shall be

4 presumed to be eligible until the State has deter5 mined otherwise.

6 ‘‘(2) METHOD OF ENROLLMENT.—The enroll7 ment process established under paragraph (1) shall

8 be reasonably convenient, efficient, and provide for

9 enrollment through a wide range of methods. At a

10 minimum, such process shall provide for enrollment

11 through the mail, telephone (via a toll free number),

12 and in person.

13 ‘‘(c) ENROLLMENT MATERIALS.—

14 ‘‘(1) IN GENERAL.—Under a process estab15 lished under subsection (b), a State shall ensure that

16 enrollment materials are made available through

17 health care providers, health provider organizations,

18 hospitals, health clinics, at facilities that provide

19 health and nutrition services to children and women,

20 and from State and local government health offices.

21 ‘‘(2) ESSENTIAL DATA.—The Secretary, in con22 sultation with the States and representatives of cer23 tified plans, shall develop essential data elements for

24 the establishment and use by participating States of

25 a standardized enrollment form that shall not exceed
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1 one page in length. The Secretary may utilize or

2 permit such States to utilize additional data collec3 tion instruments for the purpose of assessing and

4 improving State programs so long as such instru5 ments are not a requirement for enrollment in a cer6 tified plan.

7 ‘‘(d) PROCESSING OF APPLICATIONS.—

8 ‘‘(1) IN GENERAL.—Not later than 30 days

9 after the date on which an application for enrollment

10 in a certified plan is submitted to a State by or on

11 behalf of an eligible individual, the State shall proc12 ess and render a final decision with respect to the

13 application. Approval of such an application shall be

14 dependent on eligibility and income verification by

15 the State. Income verification mechanisms and re16 quirements shall be developed by the State in ac17 cordance with guidelines prescribed by the Secretary.

18 ‘‘(2) WAIVER.—A participating State may elect

19 to waive the income verification requirements for

20 families who are already subject to similar require21 ments under other appropriate Federal or State pro22 grams or in other situations determined appropriate

23 by the State.

24 ‘‘(3) NOTIFICATION.—Not later than 30 days

25 after the date on which an application for enrollment
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1 is approved under paragraph (1), the State shall no2 tify the family and the relevant certified plan of the

3 approval and the expected annual premium contribu4 tion of the family, the first payment of which must

5 be received by the plan or the State within 30 days

6 of such notification.

7 ‘‘(e) TIME OF ENROLLMENT.—

8 ‘‘(1) IN GENERAL.—An eligible child shall be

9 enrolled, or change enrollment, in a certified plan

10 during the national annual open enrollment period.

11 ‘‘(2) PREGNANT WOMAN.—An eligible pregnant

12 woman may enroll in a certified plan at any time

13 after the diagnosis of pregnancy is confirmed by a

14 physician or qualified health professional. A woman

15 may also enroll in a certified plan in order to con16 firm her pregnancy. Except as otherwise provided in

17 subsection (f)(1), a pregnant woman enrolled in a

18 certified plan under this section may not change

19 such enrollment.

20 ‘‘(3) SURCHARGE.—

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

22 paragraph (4), with respect to an eligible indi23 vidual who does not enroll in a certified plan

24 during, or who elects to change the plan in

25 which such individual is enrolled outside of, the
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1 national open enrollment period, the participat2 ing State involved may assess a late enrollment

3 surcharge in an amount determined appropriate

4 by the State.

5 ‘‘(B) WAIVER.—A State may grant a waiv6 er of any enrollment surcharges if the applicant

7 or applicant’s family can demonstrate that the

8 applicant or was out-of-State during the open

9 enrollment period or for other unavoidable and

10 legitimate reasons as determined appropriate by

11 the State, including sudden loss of health cov12 erage due to unemployment, divorce, and finan13 cial crisis.

14 ‘‘(4) ENROLLMENT OF NEWBORNS.—A partici15 pating State shall provide a family with the oppor16 tunity to enroll the newborn children of such family

17 in a certified plan prior to or at the time of the de18 livery (through the hospital or birthing center) of

19 such children. To avoid a surcharge under para20 graph (2), a newborn must be enrolled in a certified

21 plan prior to birth or within 30 days after birth or

22 during the open enrollment period.

23 ‘‘(f) PLAN CHOICE AND TERMINATION OF ENROLL24 MENT.—
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1 ‘‘(1) PLAN CHOICE.—As part of an enrollment

2 application, the family shall indicate the choice of

3 certified plan. A family with a child enrolled in a

4 certified plan may at any time elect to change enroll5 ment in plans and such new enrollment shall become

6 effective on the first day of the next open enrollment

7 period. A family that desires to change certified

8 plans at a time that is not within the open enroll9 ment period may do so but shall be subject to a sub10 stantial surcharge to be imposed by the State. An

11 enrolled pregnant woman who elects to change plans

12 shall be subject to a similar surcharge. The State

13 shall not impose a surcharge on a family with an en14 rolled child or on a pregnant woman if the change

15 of certified plans is due to the family moving to an16 other area not served by the current plan, in the

17 case of a plan withdrawing from a market area, or

18 for other justifiable and legitimate reasons as deter19 mined by the State.

20 ‘‘(2) PERIOD OF ENROLLMENT.—The period

21 during which enrollment in a certified plan shall be

22 effective shall—

23 ‘‘(A) in the case of an eligible child, not be

24 less than 1 year; and
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1 ‘‘(B) in the case of a pregnant woman, be

2 for the duration of the pregnancy and eligible

3 post-partum period.

4 ‘‘(3) PROHIBITION ON WAITING PERIODS.—A

5 certified plan may not impose a waiting period with

6 respect to the provision of covered health services

7 under the plan. Access to such services shall be ef8 fective immediately upon the date on which the en9 rollment application is submitted.

10 ‘‘(4) PROVISION OF SERVICES.—Upon the sub11 mission of an application for enrollment during an

12 initial point-of-service visit, a certified plan shall

13 provide covered health services to the applicant indi14 vidual if the individual declares that such individual

15 is not otherwise enrolled in a certified plan under

16 this title and the individual reasonably appears to be

17 of an eligible age. The provision of such services

18 shall continue until such time as the State has noti19 fied the plan that the applicant is not eligible under

20 this title. The State shall impose a surcharge, in an

21 amount to be determined appropriate by the State,

22 for enrollment at the point-of-service outside of the

23 open enrollment period. A State may elect to directly

24 compensate a certified plan for services provided to

25 individuals who are subsequently determined to be
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1 ineligible, or permit such plans to factor in the esti2 mated costs of providing services to such individuals

3 in their rate negotiations with the State.

4 ‘‘SEC. 2716. TRANSITION FROM ELIGIBILITY.

5 ‘‘(a) ELIGIBLE CHILD.—

6 ‘‘(1) TERMINATION OF SUBSIDIES.—With re7 spect to an eligible child enrolled in a certified plan

8 who attains the age of seven years during the term

9 of enrollment under the plan, premium subsidies

10 under this title for such plan shall terminate on the

11 date on which the term of enrollment terminates.

12 The plan in which the child is enrolled shall continue

13 to provide coverage for such child for an indefinite

14 period if the full unsubsidized premium and

15 copayments for such plan are paid.

16 ‘‘(2) PREEXISTING CONDITIONS.—With respect

17 to an eligible child, a certified plan may not exclude

18 coverage for preexisting conditions. If an eligible

19 child elects to terminate coverage under a certified

20 plan after the seventh birthday of the child and en21 roll in another health plan or in an employer-pro22 vided health plan that provides similar benefits to

23 employee dependents, the plan or employer shall ac24 cept the child into the plan and may not exclude cov25 erage for any preexisting conditions.
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•S 933 IS

1 ‘‘(b) ELIGIBLE PREGNANT WOMAN.—With respect to

2 an eligible pregnant woman enrolled in a certified plan,

3 coverage for health benefits under the plan shall terminate

4 on the date that is 2 months after the date of the end

5 of the pregnancy. If the woman was covered under a

6 health plan or employer-based health plan (without preg7 nancy-related benefits) immediately prior to enrollment in

8 the certified plan under the State program, the previous

9 health plan or employer shall readmit the woman into the

10 plan with no exclusions for preexisting or pregnancy-relat11 ed conditions at a cost comparable to the cost paid prior

12 to enrollment in the certified plan.’’.

13 SEC. 202. COMPREHENSIVE HEALTH BENEFITS AND COST

14 SHARING REQUIREMENTS.

15 (a) FINDINGS.—Congress finds the following:

16 (1) Children and pregnant women, as develop17 ing individuals with a wide spectrum of health care

18 needs, should receive comprehensive health services.

19 Prevention and adequate treatment of health condi20 tions early in life are necessary to avoid more seri21 ous or long-term health conditions later in life. Com22 prehensive health services are necessary to ensure

23 that the spectrum of physical and mental health care

24 needs are met during childhood and that children
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1 have the opportunity to develop fully into healthy,

2 productive members of society.

3 (2) Children with disabilities or chronic health

4 conditions require a complex array of health serv5 ices. In many States, chronic and long-term health

6 services for these children are separated from other

7 essential health services, often resulting in seg8 mented, discontinuous health care. A partnership in9 volving families, State and Federal governments,

10 and the private sector should be promoted to help

11 ensure that all health services for children with dis12 abilities or chronic health conditions will be coordi13 nated, integrated, and continuous.

14 (3) Competing health plans should be required

15 to offer and price at least one standard benefits

16 package. A standard benefits package should—

17 (A) permit families to adequately evaluate

18 and select among health plans;

19 (B) provide families who move to another

20 State with continuous and uniform coverage;

21 (C) permit participating health plans to

22 compete on a level playing field;

23 (D) facilitate the integration of health

24 plans among neighboring States;
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•S 933 IS

1 (E) eliminate administrative complexity for

2 plans that serve multiple States;

3 (F) eliminate the expense and duplication

4 of effort associated with each State developing

5 its own benefits package; and

6 (G) minimize the problems of selective en7 rollment of healthy individuals and adverse se8 lection of high risk individuals by competing

9 plans.

10 (4) All families should contribute toward their

11 own or their children’s health care. By contributing,

12 families are more likely to develop a sense of owner13 ship and responsibility for the health care delivery

14 system. In addition, the family’s contribution rep15 resents an investment in the success of the program

16 and increases the likelihood that families will fully

17 participate in ensuring that children and pregnant

18 women receive comprehensive, high quality health

19 care. To ensure that family contributions toward

20 health care are affordable for all families, the ex21 pected family contribution should be based on the

22 family’s ability to pay.

23 (5) It is in the national interest that all chil24 dren and pregnant women receive adequate health

25 services. Therefore, all families should receive finan-
35

•S 933 IS

1 cial assistance to enroll children and pregnant

2 women in a health plan. Financial incentives for all

3 families encourage families of all income levels to

4 participate in the same program, thus averting a

5 multi-tier health care delivery system.

6 (b) AMENDMENT.—Title XXVII of the Public Health

7 Service Act (as added by section 201) is amended by add8 ing at the end thereof the following new part:

9 ‘‘Part C—Comprehensive Health Benefits and Cost

10 Sharing Requirements

11 ‘‘SUBPART I—COMPREHENSIVE HEALTH

12 BENEFITS

13 ‘‘SEC. 2721. COMPREHENSIVE HEALTH BENEFITS PACKAGE.

14 ‘‘(a) DEVELOPMENT OF PACKAGE.—

15 ‘‘(1) IN GENERAL.—Not later than 180 days

16 after the date of enactment of this title, the Sec17 retary, in consultation with health care professionals

18 and health-related organizations determined appro19 priate by the Secretary and in accordance with para20 graph (2), shall develop a comprehensive benefits

21 package for both children and pregnant women.

22 Such benefits packages shall be based on the general

23 categories of benefits described in section 2722.
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•S 933 IS

1 ‘‘(2) CONSULTATION.—In developing a com2 prehensive benefits package under paragraph (1),

3 the Secretary shall, at a minimum, consult with—

4 ‘‘(A) in the case of a benefits package for

5 children, the American Academy of Pediatrics,

6 the Association of Maternal and Child Health

7 Programs, and the American Dental Associa8 tion; and

9 ‘‘(B) in the case of a benefits package for

10 pregnant women, the American College of Ob11 stetricians and Gynecologists and the Associa12 tion of Maternal and Child Health Programs.

13 ‘‘(3) PERIODICITY SCHEDULES.—To the extent

14 practicable, the comprehensive benefits packages de15 veloped under paragraph (1) shall contain periodicity

16 schedules for preventive services.

17 ‘‘(b) LIMITATIONS.—In developing the comprehensive

18 benefits packages under subsection (a), the Secretary shall

19 ensure that such packages are consistent with the follow20 ing:

21 ‘‘(1) The actuarial equivalent of the specific

22 comprehensive benefits packages shall exceed the av23 erage actuarial equivalent of all health benefits of24 fered to children and pregnant women by all States
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•S 933 IS

1 under the program under title XIX of the Social Se2 curity Act on the date of enactment of this title.

3 ‘‘(2) The actuarial equivalent of the specific

4 comprehensive benefits packages shall not exceed the

5 actuarial equivalent of health benefits offered to chil6 dren and pregnant women in the State or States

7 providing the most generous benefits package under

8 title XIX of the Social Security Act for such popu9 lations on the date of enactment of this title.

10 ‘‘(c) COPAYMENTS.—In addition to developing the

11 comprehensive benefits package under subsection (a), the

12 Secretary, in consultation with health professional organi13 zations determined appropriate by the Secretary, shall de14 termine the types of services under the benefits package

15 that shall be subject to utilization copayments under sec16 tion 2727. The Secretary shall ensure that preventive serv17 ices are exempt from any utilization copayment require18 ments.

19 ‘‘(d) REVIEW AND MODIFICATION.—Not later than

20 2 years after the development of the comprehensive bene21 fits package under subsection (a), and every 2 years there22 after, the Secretary, in consultation with relevant health

23 professional organizations and the Advisory Council, shall

24 review and revise the comprehensive benefits package. The

25 Secretary shall ensure that any revision of the comprehen-
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•S 933 IS

1 sive benefits package is consistent with changes in the age

2 group of eligible children, standard medical practice, new

3 technologies, emerging health problems and health care

4 needs. If children seven years of age or older are eligible

5 on a national basis or in a participating State prior to

6 2 years after the development of the initial benefits pack7 age, the Secretary shall revise the benefits package as nec8 essary by the methods specified in this section.

9 ‘‘(e) REQUIREMENTS OF CERTIFIED PLAN.—To be

10 eligible to operate as a certified plan under this title, the

11 plan shall provide coverage for or directly provide the

12 items or services required under the applicable comprehen13 sive benefits package. A certified plan may not offer cov14 erage to eligible individuals under this title if such plan

15 does not ensure the provision of all items or services re16 quired under the comprehensive benefits package. Cer17 tified plans may provide a benefits package that is more

18 generous than the comprehensive benefits package re19 quired by the Secretary.

20 ‘‘(f) EXCEPTION TO REQUIREMENTS OF CERTIFIED

21 PLAN.—In a case in which a State has determined that

22 no participating health plan is able to provide for or cover

23 all the services in the comprehensive benefits package, or

24 the State has determined that certain services are most

25 effectively delivered by providers other than participating
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•S 933 IS

1 health plans, the State may elect to develop an alternative

2 mechanism, such as entering into agreements with other

3 providers, to provide for or cover specific services. In all

4 cases the State shall ensure that all services covered under

5 the comprehensive benefits package are of high quality

6 and are fully coordinated and integrated.

7 ‘‘SEC. 2722. GENERAL CATEGORIES OF HEALTH BENEFITS.

8 ‘‘(a) IN GENERAL.—At a minimum, the following

9 general categories of health benefits shall be included in

10 the comprehensive benefits package:

11 ‘‘(1) CHILDREN.—With respect to the com12 prehensive benefits package for children (from birth

13 through the child’s seventh birthday) the package

14 shall require coverage for—

15 ‘‘(A) preventive services (including immu16 nizations as recommended by the Advisory

17 Committee on Immunization Practices, well

18 baby/child care, routine medical examinations

19 and check ups, recommended screening tests,

20 dental prophylaxis and examinations, and pre21 ventive health counseling and health education);

22 ‘‘(B) ambulatory care;

23 ‘‘(C) laboratory services;

24 ‘‘(D) prescription drugs;

25 ‘‘(E) inpatient care;
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1 ‘‘(F) vision, audiology and aural rehabilita2 tive, and other rehabilitative services (including

3 prescription eyeglasses and hearing aids);

4 ‘‘(G) durable medical equipment (including

5 orthoptics and prosthetics);

6 ‘‘(H) dental care, excluding orthodontic

7 care;

8 ‘‘(I) mental health and substance abuse

9 services;

10 ‘‘(J) long-term and chronic health care

11 services;

12 ‘‘(K) special health care services for chil13 dren with disabilities or chronic health condi14 tions;

15 ‘‘(L) occupational, physical, and res16 piratory therapy, and speech-language pathol17 ogy services; and

18 ‘‘(M) investigational treatments (limited to

19 participation in a clinical investigation as part

20 of an approved research trial as defined by the

21 Secretary, services or other items related to the

22 trial that are normally paid for by other fund23 ing sources need not be covered);

24 ‘‘(2) PREGNANT WOMEN.—With respect to the

25 comprehensive benefits package for pregnant women
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•S 933 IS

1 (from diagnosis of pregnancy through 60 days after

2 the end of the pregnancy) the package shall require

3 coverage for—

4 ‘‘(A) maternity care (including prenatal,

5 delivery, and postpartum care, preventive serv6 ices such as routine examinations and check

7 ups, recommended immunizations and screening

8 tests, family planning services, and preventive

9 health counseling including nutrition and health

10 education);

11 ‘‘(B) ambulatory care;

12 ‘‘(C) laboratory services;

13 ‘‘(D) prescription drugs;

14 ‘‘(E) inpatient care;

15 ‘‘(F) inpatient hospital and nonhospital de16 livery services;

17 ‘‘(G) mental health and substance abuse

18 services;

19 ‘‘(H) other pregnancy- or nonpregnancy-re20 lated health conditions determined appropriate

21 by the Secretary; and

22 ‘‘(I) investigational treatments (limited to

23 participation in a clinical investigation as part

24 of an approved research trial as defined by the

25 Secretary, and services or other items related to
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•S 933 IS

1 the trial normally paid for by other funding

2 sources need not be covered).

3 ‘‘(3) EXTENSION OF PERIOD OF COVERAGE.—

4 With respect to the comprehensive benefits package

5 for pregnant women, a participating State may elect

6 to extend coverage of selected health services under

7 the benefits package beyond the 60-day postpartum

8 period if Federal funds are not used for such addi9 tional coverage.

10 ‘‘(b) LIMITATIONS AND REDUCTION IN COVERAGE.—

11 ‘‘(1) INITIAL IMPLEMENTATION.—During the

12 2-year period that begins on the date of the imple13 mentation of this title, the items and services cov14 ered under the comprehensive benefits package may

15 not be subject to any duration or scope limitation.

16 During such period, a certified plan may not require

17 any cost sharing that is not permitted under this

18 title.

19 ‘‘(2) REDUCTION IN COVERAGE.—In years sub20 sequent to the period referred to in paragraph (1),

21 the Secretary, in consultation with professional orga22 nizations determined appropriate by the Secretary

23 and the Advisory Council, may implement utilization

24 limitations or other limitations on items or services
43

•S 933 IS

1 covered under the comprehensive benefits package

2 on a national basis if—

3 ‘‘(A) the Secretary determines that such

4 limitations are necessary for the solvency of the

5 program established under this title; and

6 ‘‘(B) additional funds are not appropriated

7 and deposited into the Trust Fund.

8 ‘‘(3) ALTERNATIVES.—Prior to implementing

9 limitations under paragraph (2), the Secretary shall

10 consider alternatives such as minimizing administra11 tive costs, increasing cost sharing requirements, and

12 increasing Federal or State funding requirements. In

13 no case may the Secretary subject required preven14 tive services to such limitations.

15 ‘‘(c) PERIODICITY SCHEDULES.—A certified plan

16 may not be required to provide coverage for the provision

17 of items or services under the comprehensive benefits

18 package that are greater in frequency than that required

19 under the periodicity schedules contained in the benefits

20 package. Notwithstanding the preceding sentence, a cer21 tified plan shall provide coverage for the provision of any

22 items or services, within the general scope of the com23 prehensive benefits package, that are medically necessary

24 or appropriate for children and pregnant women.
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•S 933 IS

1 ‘‘(d) RULES OF CONSTRUCTION.—Nothing in this

2 title shall be construed as—

3 ‘‘(1) limiting the ability of a participating State

4 or a certified plan to provide items or services in ad5 dition to those required under the comprehensive

6 benefits package, so long as Federal funds are not

7 used to pay for the provision of such additional serv8 ices;

9 ‘‘(2) limiting the ability of eligible individuals to

10 obtain items or services in addition to those required

11 under the comprehensive benefits package so long as

12 Federal funds are not used to pay for the provision

13 of such additional services.

14 A certified plan may provide coverage for extra contrac15 tual services and items determined to be appropriate by

16 the plan and individual or family involved.

17 ‘‘(e) ENCOURAGING THE PROVISION OF BENEFITS.—

18 In the interest of ensuring that all children in the United

19 States receive comprehensive health services, it is the

20 sense of Congress that employer-based, self-insured, and

21 other health plans not participating in the program estab22 lished under this title be encouraged to provide com23 prehensive benefits to children and pregnant women simi24 lar to those required in this title.
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•S 933 IS

1 ‘‘SUBPART II—COST SHARING REQUIREMENTS

2 ‘‘SEC. 2725. PRINCIPLES OF COST SHARING.

3 ‘‘(a) GENERAL PRINCIPLE.—All families who partici4 pate in the program established under this title shall be

5 required to contribute toward the cost of health care for

6 themselves or their children. Such required contribution

7 shall be in the form of a required premium or a copayment

8 requirement. In no case may a certified plan or participat9 ing State require the payment of deductibles.

10 ‘‘(b) GENERAL STATE REQUIREMENTS AND LIMITA11 TIONS.—

12 ‘‘(1) STATE SPECIFIC COST SHARING.—A par13 ticipating State may elect to develop State specific

14 cost sharing requirements that differ from those

15 specified in this section so long as such requirements

16 are consistent with the guidelines developed by the

17 Secretary that ensure that—

18 ‘‘(A) all families participating in the pro19 gram contribute toward the program cost;

20 ‘‘(B) all families participating in the pro21 gram receive premium subsidies;

22 ‘‘(C) all families participating in the pro23 gram pay the same copayment for services; and

24 ‘‘(D) coverage under the program is af25 fordable for families at all income levels.
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•S 933 IS

1 ‘‘(2) FUNDING LIMITATION.—State specific cost

2 sharing requirements developed under paragraph (1)

3 shall not result in any increase in overall Federal

4 funding obligations in excess of such obligations that

5 would exist under the cost sharing schedules de6 scribed in this title.

7 ‘‘(3) ANNUAL CONTRIBUTION.—In all partici8 pating States, the annual family contribution under

9 this title shall not be less than $10 per eligible child

10 and $20 per eligible pregnant woman.

11 ‘‘(4) REQUIREMENTS APPLICABLE WITH RE12 SPECT TO LOW INCOME FAMILIES.—

13 ‘‘(A) PROHIBITION.—A participating State

14 may not require cost sharing under a certified

15 plan, for families with annual incomes that are

16 less than 150 percent of the Federal poverty

17 level, in an amount that exceeds the applicable

18 cost sharing amount described in this title.

19 ‘‘(B) ADDITIONAL SUBSIDIES.—A partici20 pating State may elect to provide additional

21 premium or copayment subsidies under certified

22 plans for families with annual incomes that are

23 less than 400 percent of the Federal poverty

24 level if there are sufficient funds in the State
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•S 933 IS

1 trust fund to cover the costs of such subsidies

2 and if no additional Federal funds are used.

3 ‘‘(C) MONITORING IMPACT OF COST SHAR4 ING.—Participating States, in consultation with

5 certified plans, shall monitor the impact of cost

6 sharing requirements (premiums and

7 copayments) on low income families and ensure

8 that any cost sharing requirements are not sig9 nificant barriers that prevent such families

10 from enrolling in a certified plan or from ob11 taining medically appropriate care. An analysis

12 of the impact of cost sharing on low income

13 families shall be presented to the Secretary as

14 part of the annual quality assessment and im15 provement plan of the State under section

16 2741.

17 ‘‘SEC. 2726. PREMIUMS AND PREMIUM SUBSIDY.

18 ‘‘(a) PAYMENT.—

19 ‘‘(1) FAMILY PORTION.—A family enrolled in a

20 certified plan shall be responsible for paying the

21 family portion of the premium for coverage under

22 such plan. Premium payments under a certified plan

23 may be made directly to the plan or to the State (if

24 the State elects to accept such payments on behalf
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•S 933 IS

1 of the certified plan) on a monthly, quarterly, or

2 other basis as determined by the State.

3 ‘‘(2) SUBSIDY PORTION.—Upon the final ap4 proval of an enrollment application under this title,

5 a participating State shall transfer to the certified

6 plan in which the family is enrolled an amount of

7 funds equal to the amount of the applicable pre8 mium subsidy under subsection (d) with respect to

9 the family that is enrolled in the plan.

10 ‘‘(3) LIMITATION.—If the annual premium con11 tribution under a certified plan for an eligible fam12 ily, after the application of the appropriate premium

13 subsidy, exceeds the maximum annual family con14 tribution amount for such family under section

15 2728, such excess amount shall be paid by the State

16 directly to the plan.

17 ‘‘(b) ANNUAL LIMITATION.—All eligible families in a

18 participating State, regardless of their incomes, shall re19 ceive a subsidy (in an amount determined under sub20 section (d)) with respect to the premiums required for en21 rollment in certified plans. The annual premium amount

22 that a certified plan may require an eligible family to pay

23 under this title shall be equal to—

24 ‘‘(1) the annual per capita premium that is ne25 gotiated by the State with the certified plan; less
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•S 933 IS

1 ‘‘(2) the annual premium subsidy amount pro2 vided by the State.

3 In no case shall the annual premium subsidy amount be

4 greater than the annual per capita premium negotiated

5 with the certified plan.

6 ‘‘(c) BASIS FOR DETERMINATION OF SUBSIDY.—

7 With respect to cases in which multiple certified plans are

8 available in a geographic area or in which certified plans

9 offers additional benefit package options at an additional

10 cost, the amount of the premium subsidy shall be deter11 mined based on the lowest priced certified plan that is

12 available in the area. A family shall be responsible for the

13 payment of any premium amounts not covered by the pre14 mium subsidy under this title. In addition, any such pre15 mium amounts that result from the selection of more ex16 pensive plans shall not be credited toward the maximum

17 annual family contribution under section 2728.

18 ‘‘(d) SUBSIDY AMOUNT.—

19 ‘‘(1) IN GENERAL.—The annual premium sub20 sidy amount to be applied to the premiums assessed

21 with respect to an eligible family enrolled in certified

22 plan under this title shall be equal to the product

23 of—

24 ‘‘(A) the amount of the annual per capita

25 premium for the certified plan involved; and
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1 ‘‘(B) the annual premium subsidy percent2 age for the family as determined under para3 graph (2).

4 ‘‘(2) ANNUAL PREMIUM SUBSIDY PERCENT5 AGE.—The annual premium subsidy percentage

6 under this paragraph shall be—

7 ‘‘(A) with respect to an eligible family with

8 an annual gross income that is less than 50

9 percent of the Federal poverty level, 99 percent;

10 ‘‘(B) with respect to an eligible family with

11 an annual gross income that is equal to between

12 50 and 149 percent of the Federal poverty

13 level, 97.5 percent reduced by 1.5 percentage

14 points for each 10 percent increase in the an15 nual gross income of the family in excess of 49

16 percent of the Federal poverty level;

17 ‘‘(C) with respect to an eligible family with

18 an annual gross income that is equal to between

19 150 and 299 percent of the Federal poverty

20 level, 80 percent reduced by 4 percentage points

21 for each 10 percent increase in the annual gross

22 income of the family in excess of 149 percent

23 of the Federal poverty level;

24 ‘‘(D) with respect to an eligible family with

25 an annual gross income that is equal to between
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•S 933 IS

1 300 and 399 percent of the Federal poverty

2 level, 22.5 percent reduced by 1.5 percentage

3 points for each 10 percent increase in the an4 nual gross income of the family in excess of 299

5 percent of the Federal poverty level; and

6 ‘‘(E) with respect to an eligible family with

7 an annual gross income that is equal to 400

8 percent or more of the Federal poverty level, 5

9 percent.

10 ‘‘SEC. 2727. UTILIZATION COPAYMENTS.

11 ‘‘(a) GENERAL COPAYMENT.—With respect to items

12 or services designated by the Secretary under section

13 2721(c), and provided under a certified plan, the plan

14 shall assess an eligible family a $5 copayment for the pro15 vision of such items or services to such family. Preventive

16 services shall be exempt from such copayment require17 ment.

18 ‘‘(b) HIGHER COPAYMENTS.—In addition to offering

19 certified plans with a $5 copayment, a participating State

20 may elect to permit the offering of certified plans that

21 have higher copayment requirements. With respect to such

22 plans, the copayment amount shall be the same for eligible

23 families at all income levels and the minimum copayment

24 amount shall be $5. Premium subsidies for an eligible

25 family who selects a high copayment plan may not exceed
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1 the subsidy determined to be applicable to an similarly sit2 uated eligible family enrolled in a certified plan with a $5

3 utilization copayment requirement.

4 ‘‘(c) LIMITATION.—An eligible family may not be re5 quired to make utilization copayments under this section

6 after the annual contributions of the family (including pre7 miums and copayments) have exceeded the maximum an8 nual family contribution for the family under section

9 2728.

10 ‘‘SEC. 2728. MAXIMUM ANNUAL FAMILY CONTRIBUTION.

11 ‘‘(a) FAMILIES WITH ELIGIBLE CHILDREN.—

12 ‘‘(1) IN GENERAL.—With respect to a family

13 with an eligible child enrolled in a certified plan

14 under this title, the maximum annual family con15 tribution that such family may be required to pay

16 under this title (including premiums and

17 copayments) for such eligible child shall be—

18 ‘‘(A) with respect to an eligible family with

19 an annual gross income that is less than 50

20 percent of the Federal poverty level, $10;

21 ‘‘(B) with respect to an eligible family with

22 an annual gross income that is between 50 per23 cent and 149 percent of the Federal poverty

24 level, $15 increased by $5 for each 10 percent
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1 increase in the annual gross income of the fam2 ily in excess of 49 percent;

3 ‘‘(C) with respect to an eligible family with

4 an annual gross income that is between 150

5 percent and 299 percent of the Federal poverty

6 level, $110 increased by $50 for each 10 per7 cent increase in the annual gross income of the

8 family in excess of 149 percent;

9 ‘‘(D) with respect to an eligible family with

10 an annual gross income that is between 300

11 percent and 399 percent of the Federal poverty

12 level, $960 increased by $150 for each 10 per13 cent increase in the annual gross income of the

14 family in excess of 299 percent; and

15 ‘‘(E) with respect to an eligible family with

16 an annual gross income that is equal to 400

17 percent or more of the Federal poverty level,

18 $3,000.

19 ‘‘(2) FAMILIES WITH MULTIPLE CHILDREN.—

20 With respect to an eligible family that enrolls more

21 than one eligible child in a certified plan under this

22 title, the maximum annual family contribution that

23 such family may be required to pay under paragraph

24 (1) shall be—
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1 ‘‘(A) in the case of a family enrolling two

2 eligible children, twice the amount under para3 graph (1) applicable to the family based on

4 family income;

5 ‘‘(B) in the case of a family enrolling three

6 eligible children, twice the amount under para7 graph (1) applicable to the family based on

8 family income increased by an amount equal to

9 40 percent of such amount; and

10 ‘‘(C) in the case of a family enrolling four

11 or more eligible children, twice the amount

12 under paragraph (1) applicable to the family

13 based on family income increased by an amount

14 equal to 80 percent of such amount.

15 ‘‘(b) FAMILIES WITH PREGNANT WOMAN.—With re16 spect to a family with an eligible pregnant woman enrolled

17 in a certified plan under this title, the maximum annual

18 family contribution that such family may be required to

19 pay under this title (including premiums and copayments)

20 for such pregnant woman shall be—

21 ‘‘(1) with respect to an eligible family with an

22 annual gross income that is less than 50 percent of

23 the Federal poverty level, $20;

24 ‘‘(2) with respect to an eligible family with an

25 annual gross income that is between 50 percent and
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1 149 percent of the Federal poverty level, $30 in2 creased by $10 for each 10 percent increase in the

3 annual gross income of the family in excess of 49

4 percent;

5 ‘‘(3) with respect to an eligible family with an

6 annual gross income that is between 150 percent

7 and 299 percent of the Federal poverty level, $220

8 increased by $100 for each 10 percent increase in

9 the annual gross income of the family in excess of

10 149 percent;

11 ‘‘(4) with respect to an eligible family with an

12 annual gross income that is between 300 percent

13 and 399 percent of the Federal poverty level, $1,820

14 increased by $200 for each 10 percent increased in

15 the annual gross income of the family in excess of

16 299 percent; and

17 ‘‘(5) with respect to an eligible family with an

18 annual gross income that is equal to 400 percent or

19 more of the Federal poverty level, $5,000.

20 ‘‘(c) FAMILIES WITH ELIGIBLE CHILDREN AND

21 PREGNANT WOMEN.—In the case of an eligible family

22 with both an eligible child and eligible pregnant woman

23 enrolled in a certified plan, the maximum annual family

24 contribution that such family may be required to pay
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1 under this title (including premiums and copayments)

2 shall be equal to the sum of—

3 ‘‘(1) the amount determined under subsection

4 (a) with respect to the family involved; and

5 ‘‘(2) the amount determined under subsection

6 (b) with respect to the family involved.

7 ‘‘(d) ADJUSTMENT FOR SUBSEQUENT YEARS.—The

8 maximum annual family contribution amounts described

9 in subsections (a) and (b) shall remain in effect during

10 the first 2 fiscal years in which the program under this

11 title is in effect. In subsequent years, the maximum annual

12 family contribution amounts under such subsections shall

13 be increased annually (and adjusted to the nearest $5 in14 crement) based on the indexes used by the Secretary to

15 calculate funding allocations under section 2701(b)(1)(B).

16 ‘‘(e) LIMITATION AND CALCULATIONS.—

17 ‘‘(1) PROHIBITION ON PREMIUM INCREASES.—

18 The amount of the premium contribution or

19 copayments assessed to an eligible family enrolled in

20 certified plans under this title shall not be increased

21 during the 1-year period beginning on the date of

22 such enrollment.

23 ‘‘(2) PERMISSIBLE ADJUSTMENTS.—The

24 amount of the premium subsidy and the maximum

25 annual family contribution applied under this part
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1 with respect to an eligible family enrolled in a cer2 tified plan may be adjusted during the 1-year period

3 beginning on the date of enrollment, if the family

4 can demonstrate a decrease in income of an amount

5 to permit such family to qualify for a larger pre6 mium subsidy. In such case, the premium contribu7 tion for the family shall be recalculated based on the

8 larger premium

9 ‘‘(3) APPLICATION FOR RECONCILIATION.—A

10 family that desires to have an income reconciliation

11 adjustment made under paragraph (2) shall apply

12 directly to the State. Such a family shall be limited

13 to one such income reconciliation adjustment during

14 each year in which the family is enrolled in a cer15 tified plan. In cases where premium subsidies have

16 been subject to income reconciliation under this sub17 section, the State shall appropriately adjust its pay18 ments to the respective certified plan.’’.

19 SEC. 203. STATE PROGRAM DEVELOPMENT AND ADMINIS20 TRATION.

21 Title XXVII of the Public Health Service Act (as

22 added by section 201 and amended by section 202) is fur23 ther amended by adding at the end thereof the following

24 new part:
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1 ‘‘Part D—State Program Development and

2 Administration

3 ‘‘SEC. 2731. APPLICATION AND DATE OF IMPLEMENTATION.

4 (a) IN GENERAL.—A State that desires to participate

5 in the program established under this title shall prepare

6 and submit to the Secretary an application at such time,

7 in such manner, and containing such information as the

8 Secretary may require, including the State strategic plan

9 under subsection (b). To be approved by the Secretary,

10 an application shall contain assurances that the State pro11 gram to be established under this title will fully implement

12 coverage for eligible children and pregnant women by Jan13 uary 1, 2000. The Secretary may approve the application

14 of a State that desires to implement a program under this

15 title as early as January 1, 1996.

16 ‘‘(b) STATE STRATEGIC PLAN.—

17 ‘‘(1) SUBMISSION.—A State that desires to par18 ticipate in the program established under this title

19 shall submit, as part of their application under sub20 section (a), an initial 5-year strategic plan.

21 ‘‘(2) PLAN GUIDELINES.—Not later than 90

22 days after the date of enactment of this title, the

23 Secretary, in consultation with the Maternal and

24 Child Health Bureau, shall develop and make avail25 able specific guidelines to assist States in preparing

26 and submitting an acceptable strategic plan under
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1 this subsection. At a minimum, such guidelines shall

2 require that a strategic plan—

3 ‘‘(A) describe the current health status of

4 the target population in the State;

5 ‘‘(B) describe the short- and long-term

6 health objectives of the State, including time

7 schedules for the achievement of such objec8 tives;

9 ‘‘(C) describe the performance and out10 come measures and mechanisms to be used by

11 the State for monitoring health indicators;

12 ‘‘(D) describe specific details of the pro13 posed structure of the State program, analyses

14 of at least one alternative structure considered,

15 and cost estimates;

16 ‘‘(E) in the case of a State that proposes

17 a structure that is different from that described

18 in this title, contain a comparative analysis of

19 the State’s proposed structure, including an

20 analysis of achievement of the objectives of the

21 State under this title and the program costs;

22 and

23 ‘‘(F) contain an outline of the manner in

24 which coverage for all eligible individuals resid25 ing within the State will be achieved within the
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1 first 5 years in which the program is in oper2 ation in the State.

3 Such plan may incorporate elements required under

4 current State application submitted under title V of

5 the Social Security Act.

6 ‘‘(3) CRITERIA FOR EVALUATION.—Not later

7 than 90 days after the date of enactment of this

8 title, the Secretary, in consultation with Maternal

9 and Child Health Bureau, shall develop and make

10 available specific criteria that will serve as the basis

11 for the evaluation and approval of State strategic

12 plans by the Secretary.

13 ‘‘(c) REQUIREMENTS.—In addition to otherwise

14 meeting the requirements of this title, a State program

15 under an application submitted under this section shall—

16 ‘‘(1) ensure that affordable coverage is available

17 for comprehensive, high quality health care for all

18 children under seven years of age and all pregnant

19 women residing within the State within a time pe20 riod determined to be reasonable by the Secretary;

21 ‘‘(2) ensure that each certified plan operating

22 in the State provide the comprehensive benefits

23 package required under section 2721;
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1 ‘‘(3) be consistent with the principle that all

2 families contribute towards their own or their chil3 dren’s health care;

4 ‘‘(4) ensure that the State is responsible for the

5 certification of health plans, entering into agree6 ments with certified plans to provide health services,

7 and negotiating premiums with certified plans on be8 half of eligible individuals;

9 ‘‘(5) have a quality assessment and improve10 ment program in effect under section 2741;

11 ‘‘(6) have a utilization review program in effect

12 under section 2742;

13 ‘‘(7) fulfill health information system require14 ments under sections 2743 and 2744; and

15 ‘‘(8) have a program in effect for preventing

16 and controlling fraud and abuse under section 2745.

17 ‘‘(d) DECISION BY SECRETARY.—Not later than 90

18 days after the date on which the Secretary receives the

19 application of a State under this section, the Secretary

20 shall notify the State concerning the final decision of the

21 Secretary with respect to such application. If the Sec22 retary fails to approve the State application, the Secretary

23 shall assist the State in modifying such application and

24 provide specific guidance on the manner in which to gain

25 approval. A State that has submitted an application that
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1 is not approved may submit another application in the fol2 lowing fiscal year.

3 ‘‘(e) STATE INNOVATION AND PROGRAM FLEXIBIL4 ITY.—A State with an application approved under this

5 section shall, at a minimum, implement a State program

6 that is consistent with the guidelines, principles and re7 quirements described in this title. In developing and imple8 menting such a program, a State is encouraged to be inno9 vative and propose structures or a blend of structures for

10 the State program that are different from that described

11 in this title. Such structures may include, modifications

12 of existing State or Federal programs, capitated pro13 grams, fee-for-service programs, subsidy programs for the

14 individual purchase of health insurance, and programs

15 where the State is the direct payer for services. Such

16 structures, however, must be shown to be or expected to

17 be, as effective or more effective in meeting the program

18 objectives of this title and containing program costs as the

19 structure described in this title. A State may establish a

20 State-specific program or participate in a program with

21 neighboring States.

22 ‘‘SEC. 2732. SPECIAL STATUS STATES.

23 ‘‘(a) PETITION.—

24 ‘‘(1) EXISTING PROGRAMS.—A State that deter25 mines that the existing health care program of the
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1 State provides, or that expects such provision to be

2 made within 1 year from the date of a petition

3 under this subsection, affordable, comprehensive,

4 high quality, health care coverage for all children

5 under seven years of age and pregnant women resid6 ing within the State, may petition the Secretary to

7 designate such State as a special status State.

8 ‘‘(2) PARTICIPATING STATES.—A participating

9 State that determines that the program of the State

10 under this title has achieved the objective described

11 in paragraph (1), may, in their annual quality as12 sessment and improvement plan, petition the Sec13 retary to designate such State as a special status

14 State.

15 ‘‘(3) APPROVAL OF PETITIONS.—The Secretary

16 shall approve a petition under this subsection if the

17 Secretary determines that the petitioning State has

18 demonstrated that at least 95 percent of all eligible

19 children and pregnant women residing in the State

20 are covered either under the State program or under

21 other sources of health insurance. The Secretary

22 shall make a determination on the State petition

23 under this section within 90 days of the date on

24 which the Secretary receives the petition.

25 ‘‘(b) EFFECT OF DESIGNATION.—
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1 ‘‘(1) EXPANSION OF SERVICES.—A State des2 ignated as a special status State under subsection

3 (a) may submit a proposal to the Secretary for the

4 expansion of health services provided under this title

5 to children under seven years of age and pregnant

6 women, or to expand comparable coverage with re7 spect to health services for older children up to age

8 21. Such expanded eligibility shall be consistent with

9 the requirements and guidelines under this title.

10 ‘‘(2) MATCHING REQUIREMENTS.—The match11 ing requirement in section 2702 shall apply to ex12 panded eligibility programs under paragraph (1).

13 ‘‘SEC. 2733. STATES WITH MEDICAID WAIVERS.

14 ‘‘A State that has in effect a waiver under section

15 1115 or 1915 of the Social Security Act shall be eligible

16 to be a participating State under this title. If such a State

17 desires to become a participating State, the State program

18 shall be subject to all program guidelines and require19 ments under this title. A State with a waiver described

20 in this section may submit a petition under section 2732

21 to be designated as a special status State.

22 ‘‘SEC. 2734. DEVELOPMENT GRANTS FOR STATE PRO23 GRAMS.

24 ‘‘(a) IN GENERAL.—Upon the approval of a State ap25 plication under section 2731, the Secretary, from the
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1 Trust Fund, shall award a one-time program development

2 grant to the State.

3 ‘‘(b) AMOUNT.—The amount of a grant awarded

4 under subsection (a), shall be determined based on a for5 mula developed by the Secretary.

6 ‘‘(c) USE OF FUNDS.—Amounts received under a

7 grant under this section shall be used to develop and im8 plement the approved State program and State strategic

9 plan, including the development of community-based

10 health networks and health plans.

11 ‘‘SEC. 2735. EXPANSION OF ELIGIBILITY.

12 ‘‘(a) DETERMINATION BY SECRETARY.—

13 ‘‘(1) IN GENERAL.—Not later than the date

14 that is 2 years after the date of enactment of this

15 title, and every 2 years thereafter, the Secretary, in

16 consultation with the Advisory Council, shall deter17 mine whether sufficient funding and public support

18 exists to enable the Secretary to expand the cat19 egories of individuals eligible for coverage under this

20 title to include additional groups of children up to

21 21 years of age.

22 ‘‘(2) REQUIREMENT.—If the Secretary deter23 mines under paragraph (1) that sufficient funding

24 and public support exists to permit the expansion of

25 individuals eligible for coverage to include additional
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1 age groups on a national basis, the Secretary shall

2 implement guidelines to provide for such expansion.

3 ‘‘(3) RECOMMENDATIONS.—If the Secretary de4 termines under paragraph (1) that public support

5 exists for the expansion of individuals eligible for

6 coverage but that funding is insufficient, the Sec7 retary may recommend to Congress that appropriate

8 legislation be considered to expand the program

9 under this title to expand such eligibility.

10 ‘‘(b) PETITION BY STATES.—

11 ‘‘(1) IN GENERAL.—A participating State that

12 does not qualify as a special status State under sec13 tion 2732 may, in the annual evaluation report of

14 the State, petition the Secretary to expand the State

15 program to provide coverage for additional age

16 groups if the State determines that sufficient funds

17 are available in the State trust fund or if additional

18 State funds are deposited into the State trust fund.

19 The Secretary shall make a final determination on

20 a State request for expanded eligibility within 90

21 days of the date of receiving the State petition.

22 ‘‘(2) MATCHING REQUIREMENT.—The Sec23 retary shall make available to a State, with respect

24 to additional funds deposited into the State trust

25 fund for the purpose of expanding eligibility under
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1 paragraph (1) to children not eligible for coverage

2 on a national basis, Federal funds in an amount

3 equal to the amount of State funds so deposited.

4 ‘‘(3) FUNDING.—An approved petition under

5 this section may be considered by the Secretary for

6 Federal funding only after funds are provided to all

7 participating States with approved programs and ap8 proved expanded eligibility programs of special sta9 tus States are allocated.

10 ‘‘SEC. 2736. FAILURE OF STATE TO ADMINISTER A PRO11 GRAM IN COMPLIANCE WITH TITLE.

12 ‘‘(a) FAILURE TO COMPLY.—If the Secretary deter13 mines that the State program of a participating State fails

14 to meet the requirements of this title, including require15 ments relating to cost containment and the prevention and

16 control of fraud and abuse, the Secretary shall notify the

17 State. Upon receiving such a notification, the State shall

18 be required to demonstrate that the State has made a rea19 sonable effort to address program deficiencies.

20 ‘‘(b) ADMINISTRATION BY SECRETARY.—If the Sec21 retary determines that a State has failed to demonstrate

22 a reasonable effort under subsection (a), the Secretary

23 may elect to directly administer, or enter into agreement

24 with a non-State government organization to administer,

25 the State program.
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1 ‘‘(c) PREMIUMS AND COPAYMENTS.—Premiums and

2 copayments under this title for a State program adminis3 tered by a Federal or non-State government entity may

4 not be in excess of the premiums and copayments assessed

5 under this title.

6 ‘‘(d) FUNDING AND MATCHING REQUIREMENT.—

7 The costs of administering a State program under sub8 section (b) may not be in excess of that amount that would

9 be provided to the State under this title. A State shall

10 continue to provide matching funds in accordance with

11 section 2702.

12 ‘‘SEC. 2737. LIMITS ON STATE AND FEDERAL ADMINISTRA13 TIVE COSTS.

14 ‘‘The Secretary and a participating State shall, to the

15 maximum extent practicable, ensure that the administra16 tive complexity and costs of the program implemented

17 under this title are minimized. A participating State may

18 expend not to exceed 5 percent of the amount in the State

19 trust fund in any fiscal year for the administration of the

20 State program. The State shall be responsible for any ad21 ministrative costs in excess of such 5 percent.
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1 ‘‘Part E—Ensuring Quality, Establishing Information

2 Systems, and Preventing Abuse

3 ‘‘SEC. 2741. ANNUAL QUALITY ASSESSMENT AND IMPROVE4 MENT PLANS.

5 ‘‘(a) REQUIREMENT.—Not later than 1 year after the

6 date on which the Secretary approves the application of

7 a State under section 2731, and annually thereafter, the

8 State, in coordination with existing State programs under

9 title V of the Social Security Act, shall prepare and submit

10 to the Secretary a quality assessment and improvement

11 plan.

12 ‘‘(b) GUIDELINES FOR PLANS.—Not later than 180

13 days after the date of enactment of this title, the Sec14 retary, in consultation with the Maternal and Child Health

15 Bureau, shall develop and submit to participating States

16 guidelines concerning the elements that must be included

17 in the annual quality assessment and improvement plan

18 of such participating State. At a minimum, such guide19 lines shall require a State plan to include an assessment

20 of the—

21 ‘‘(1) progress the State had made towards en22 suring health care coverage for all eligible individ23 uals residing within the State;

24 ‘‘(2) cost containment measures implemented

25 under the State program;
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1 ‘‘(3) assurances provided for ensuring the provi2 sion of high quality health care;

3 ‘‘(4) impact within the State on the health sta4 tus of the target populations (including process and

5 outcome measures and objectives);

6 ‘‘(5) the financial and administrative aspects of

7 the State program; and

8 ‘‘(6) any proposed modifications to the State

9 program.

10 ‘‘(c) RESPONSE BY SECRETARY.—Not later than 90

11 days after the date on which the Secretary has received

12 the quality assessment and improvement plan of a partici13 pating State, the Secretary shall provide a response to

14 such State concerning such plan. Such response shall in15 clude the determination of the Secretary with respect to

16 any proposed modifications in the State program as con17 tained in the plan. Evaluations of the State program by

18 the Secretary shall be based on an assessment of the per19 formance of the State program in meeting program objec20 tives rather than on the specific methods used to achieve

21 such objectives.

22 ‘‘SEC. 2742. NATIONAL ADVISORY COUNCIL FOR MOTHERS’

23 AND CHILDREN’S HEALTH.

24 ‘‘(a) ESTABLISHMENT.—The Secretary shall estab25 lish an advisory council to be known as the ‘‘National Ad-
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1 visory Council for Mothers’ and Children’s Health’’ to pro2 vide advice to the Secretary concerning the administration

3 of and modifications to programs established under this

4 title.

5 ‘‘(b) MEMBERSHIP.—

6 ‘‘(1) IN GENERAL.—The Advisory Council shall

7 be composed of 11 individuals to be appointed by the

8 President in consultation with the Secretary, not

9 later than 90 days after the date of the enactment

10 of this title, with the advice and consent of the Sen11 ate. Members of the Advisory Council shall be ap12 pointed on the basis of their experience and exper13 tise.

14 ‘‘(2) REPRESENTATION.—In appointing the

15 members of the Advisory Council under paragraph

16 (1), the Secretary shall ensure the appropriate rep17 resentation of—

18 ‘‘(A) pediatricians, obstetricians, and other

19 health care providers;

20 ‘‘(B) consumers;

21 ‘‘(C) health policy experts;

22 ‘‘(D) State and local government health of23 ficials;

24 ‘‘(E) public health and maternal and child

25 health professionals;
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1 ‘‘(F) experts in population-based health in2 formation systems;

3 ‘‘(G) experts in health promotion and dis4 ease prevention;

5 ‘‘(H) health care managers and econo6 mists;

7 ‘‘(I) medical ethicists;

8 ‘‘(J) health care industry representatives;

9 and

10 ‘‘(K) other related disciplines as deter11 mined appropriate by the Secretary.

12 In appointing such members, the Secretary shall en13 sure that not less than three members are health

14 care providers and not less than three members are

15 representatives of consumers.

16 ‘‘(3) ENROLLED INDIVIDUALS.—After the expi17 ration of the initial terms of the members of the Ad18 visory Council appointed to represent consumers,

19 subsequent consumer representatives shall be from

20 families currently enrolled in a certified plan.

21 ‘‘(4) CHAIRPERSON.—In appointing members of

22 the Advisory Council, the Secretary shall designate

23 one member to serve as chairperson and one member

24 to serve as vice chairperson. A Chairperson shall not

25 serve in that capacity for more than one full term.
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1 ‘‘(5) TERMS.—

2 ‘‘(A) IN GENERAL.—A member of the Ad3 visory Council shall be appointed for a term of

4 2 years, except that of the members first ap5 pointed six such members shall be appointed for

6 a term of 3 years.

7 ‘‘(B) LIMITATION.—No member of the Ad8 visory Council may serve more than two com9 plete terms.

10 ‘‘(6) VACANCIES.—

11 ‘‘(A) IN GENERAL.—A vacancy on the Ad12 visory Council shall be filled in the manner in

13 which the original appointment was made and

14 shall be subject to any conditions which applied

15 with respect to the original appointment.

16 ‘‘(B) FILLING UNEXPIRED TERM.—An in17 dividual chosen to fill a vacancy shall be ap18 pointed for the unexpired term of the member

19 replaced.

20 ‘‘(7) EXPIRATION OF TERMS.—The term of any

21 member shall not expire before the date on which

22 the member’s successor takes office.

23 ‘‘(8) EMPLOYMENT BY FEDERAL GOVERN24 MENT.—An individual may not be appointed to the

25 Advisory Council if such individual was employed by
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1 the Federal Government at any time during the 1-

2 year period prior to the appointment.

3 ‘‘(9) NO FINANCIAL INTEREST.—A member of

4 the Advisory Council shall have no substantial finan5 cial interest in any entity related to any issue to be

6 addressed by the Council.

7 ‘‘(c) RESPONSIBILITIES.—

8 ‘‘(1) IN GENERAL.—The Advisory Council shall

9 evaluate programs established under this title and

10 provide advice to the Secretary concerning methods

11 to improve the health of children and pregnant

12 women. As part of such evaluation, the Advisory

13 Council shall include an assessment of the impact of

14 State programs under this title on the health status

15 of children and pregnant women. Specifically, the

16 Advisory Council shall evaluate and make rec17 ommendations concerning—

18 ‘‘(A) items and services covered under the

19 comprehensive benefits package;

20 ‘‘(B) State program cost sharing require21 ments;

22 ‘‘(C) the allocation and management of

23 funds from the Trust Fund;

24 ‘‘(D) eligibility and enrollment issues with

25 respect to State programs;
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1 ‘‘(E) standards for and the responsibilities

2 of certified plans, at both the Federal and State

3 level;

4 ‘‘(F) national assessment and quality im5 provement program guidelines and utilization

6 review program guidelines;

7 ‘‘(G) the development of pediatric and ma8 ternal health care practice guidelines;

9 ‘‘(H) health care information systems and

10 reporting requirements;

11 ‘‘(I) general State and Federal program

12 administration; and

13 ‘‘(J) any other relevant matters deter14 mined to be appropriate by the Advisory Coun15 cil.

16 ‘‘(2) ANNUAL SUMMARY.—The Advisory Coun17 cil shall prepare and submit to the Secretary an an18 nual summary of the Council’s activities, analyses,

19 and evaluations of State programs together with the

20 recommendations of the Council for program im21 provement.

22 ‘‘(d) MEETINGS.—

23 ‘‘(1) INITIAL MEETING.—Not later than 30

24 days after the date on which all members of the Ad-
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1 visory Council have been appointed, the Council shall

2 hold its first meeting.

3 ‘‘(2) REGULAR MEETINGS.—The Advisory

4 Council shall meet at the call of the Chairperson,

5 but not less than four times each year.

6 ‘‘(3) QUORUM.—A majority of the members of

7 the Advisory Council shall constitute a quorum, but

8 a lesser number of members may hold hearings.

9 ‘‘(e) TASK FORCES.—The Advisory Council may es10 tablish professional or technical task forces to carry out

11 specific functions if the Council determines that appro12 priate expertise is not otherwise available.

13 ‘‘(f) INFORMATION FROM FEDERAL AGENCIES.—The

14 Secretary shall ensure that the Advisory Council has ac15 cess to all necessary logistic, administrative, and financial

16 support. Upon request of the chairperson of the Council,

17 the head of each Federal department or agency shall fur18 nish information to the Council.

19 ‘‘(g) ADVISORY COUNCIL PERSONNEL MATTERS.—

20 ‘‘(1) COMPENSATION.—Each member of the

21 Advisory Council shall be compensated at a rate

22 equal to the daily equivalent of the annual rate of

23 basic pay prescribed for level IV of the Executive

24 Schedule under section 5315 of title 5, United

25 States Code, for each day (including travel time)
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1 during which such member is engaged in the per2 formance of the responsibilities of the Council.

3 ‘‘(2) TRAVEL EXPENSES.—The members of the

4 Advisory Council shall be allowed travel expenses, in5 cluding per diem in lieu of subsistence, at rates au6 thorized for employees of agencies under subchapter

7 I of chapter 57 of title 5, United States Code, while

8 away from their homes or regular places of business

9 in the performance of services for the Council.

10 ‘‘(h) REPORT TO CONGRESS.—If the Advisory

11 Council—

12 ‘‘(1) irreconcilably differs with Secretary con13 cerning major policy issues related to the program

14 established under this title; or

15 ‘‘(2) has evidence that the Secretary is not ful16 filling the responsibilities of the Secretary under this

17 title to ensure affordable, comprehensive, high qual18 ity health care coverage for all eligible individuals;

19 the Council may prepare and submit to Congress a report

20 concerning such matters.
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1 ‘‘SEC. 2743. NATIONAL QUALITY ASSESSMENT AND IM2 PROVEMENT PROGRAM GUIDELINES AND

3 UTILIZATION REVIEW PROGRAM GUIDE4 LINES.

5 ‘‘(a) NATIONAL QUALITY ASSESSMENT AND IM6 PROVEMENT PROGRAM GUIDELINES.—

7 ‘‘(1) ESTABLISHMENT.—Not later than 1 year

8 after the date of enactment of this title, the Sec9 retary, in consultation with relevant governmental

10 and non-governmental organizations as determined

11 appropriate by the Secretary, shall develop national

12 quality assessment and improvement program guide13 lines for use by certified plans under this title.

14 ‘‘(2) REQUIREMENT.—The guidelines developed

15 under paragraph (1) shall be consistent with the

16 concepts and principles established under the Con17 tinuous Quality Improvement/Total Quality Manage18 ment programs.

19 ‘‘(b) NATIONAL UTILIZATION REVIEW PROGRAM

20 GUIDELINES.—

21 ‘‘(1) ESTABLISHMENT.—Not later than 1 year

22 after the date of enactment of this title, the Sec23 retary, in consultation with relevant governmental

24 and non-governmental organizations as determined

25 appropriate by the Secretary, shall develop national
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1 utilization review program guidelines for use by cer2 tified plans under this title.

3 ‘‘(2) REQUIREMENTS.—The guidelines devel4 oped under paragraph (1) shall, at a minimum, re5 quire that a certified plan ensure that the following

6 attributes are incorporated into the utilization review

7 program of the plan:

8 ‘‘(A) The utilization review program is

9 clearly documented in printed materials pro10 vided to the enrolled individual.

11 ‘‘(B) That only qualified licensed or cer12 tified health professionals with training or expe13 rience in pediatric or obstetric care are used for

14 specific case utilization reviews.

15 ‘‘(C) That individuals involved in specific

16 case utilization reviews do not have a financial

17 interest or incentive to deny or limit utilization.

18 ‘‘(D) That descriptions and protocols for

19 utilization review are disclosed to enrollees, af20 filiated providers, and appropriate State offi21 cials upon demand, and that such descriptions

22 and protocols protect proprietary business infor23 mation.
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1 ‘‘(E) That criteria for utilization review

2 shall be based on sound scientific principles and

3 standard medical practice.

4 ‘‘(F) That there is a mechanism for the

5 regular evaluation and modification of the utili6 zation review program.

7 ‘‘(c) GENERAL REQUIREMENTS.—The guidelines de8 veloped under this section shall be specific with respect

9 to pediatric and maternal health care delivery systems to

10 the maximum extent practicable. Such guidelines shall be

11 flexible and adaptable, and serve as the basis for the qual12 ity assessment and improvement program and utilization

13 review program of a certified plan.

14 ‘‘(d) CONSULTATION.—The Secretary, in developing

15 guidelines under this section shall, at a minimum, consult

16 with the National Committee on Quality Assurance, the

17 National Association of Insurance Commissioners, private

18 health care accreditation organizations, representatives of

19 certified plans, and relevant maternal and child health

20 care professional organizations.

21 ‘‘SEC. 2744. NATIONAL HEALTH INFORMATION SYSTEMS

22 FOR MOTHERS AND CHILDREN.

23 ‘‘(a) ESTABLISHMENT AND IMPLEMENTATION.—Not

24 later than 1 year after the date of enactment of this title,

25 the Secretary shall establish and implement a National
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1 Health Information System for Mothers and Children.

2 The Secretary, in consultation with States and representa3 tives of certified plans, the Administrator of the Agency

4 for Health Care Policy Research, the Administrator of the

5 Health Resources and Services Administration, the Direc6 tor of the Centers for Disease Control and Prevention, and

7 the heads of other agencies or nongovernment organiza8 tions as determined appropriate by the Secretary, shall de9 velop specific data elements and operating procedures with

10 respect to such Information System.

11 ‘‘(b) SUBMISSION OF DATA.—

12 ‘‘(1) ELECTRONIC FORM.— A participating

13 State shall be responsible for ensuring that certified

14 plans operating within the State submit the data re15 quired under this title. Such data shall be transmit16 ted to the Secretary. The State shall require that

17 each certified plan operating within the State submit

18 data to the Information System, as required by the

19 Secretary under the policies of the System, in elec20 tronic form.

21 ‘‘(2) SOFTWARE.—The Secretary shall develop

22 and freely distribute to participating States, the

23 computer software necessary to permit such States

24 and certified plans to efficiently collect and transmit

25 data to the Information System. A participating
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1 State or certified plan may not be required to use

2 such software if such State or plan is able to other3 wise comply with the data collection and reporting

4 requirements.

5 ‘‘(3) INTEGRATION OF DATA REPORTING RE6 QUIREMENTS.—The Secretary, and each participat7 ing State, shall, to the maximum extent practicable,

8 integrate reporting requirements applicable to cer9 tified plans under other Federal and State health

10 programs with those established under this title to

11 ensure that duplicative requirements are eliminated.

12 ‘‘(4) REASONABLE REQUIREMENTS.—The Sec13 retary, and each participating State, shall ensure

14 that, with respect to certified plans, the resources

15 and time required to comply with the information re16 quirements of the Secretary and State under this

17 title are reasonable and not excessive.

18 ‘‘(5) MAINTENANCE OF RECORDS.—Any law of

19 a participating State that requires that medical or

20 health records, including billing information, be

21 maintained in written, rather than electronic, form

22 shall be satisfied if such records are maintained in

23 a manner consistent with the Information System

24 requirements developed by the Secretary under this

25 section.
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1 ‘‘(c) USE OF DATA.—Data received by the Informa2 tion System from States and certified plans shall be used

3 to—

4 ‘‘(1) monitor and evaluate certified plans;

5 ‘‘(2) monitor the health status of the popu6 lations served by such plans;

7 ‘‘(3) support core public health functions;

8 ‘‘(4) increase capacity for health policy and pro9 gram evaluation, planning, and research;

10 ‘‘(5) provide for quality assessment and im11 provement activities;

12 ‘‘(6) improve provider coordination and access

13 to care; and

14 ‘‘(7) carry out other activities related to the

15 public health.

16 ‘‘(d) PRIVACY.—

17 ‘‘(1) IN GENERAL.—To ensure the privacy of

18 medical information provided under this title, the

19 Secretary and each participating State shall imple20 ment safeguards to prevent the unauthorized access

21 of individuals or entities to medically confidential in22 formation.

23 ‘‘(2) APPLICABILITY OF STATE LAWS.—A par24 ticipating State shall ensure that State laws that

25 protect medical confidentiality are applicable to data
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1 collected by the State or a certified plan operating

2 within the State under this title, except that such

3 laws that interfere with the use of the data as re4 quired under this title shall be preempted.

5 ‘‘SEC. 2745. NATIONAL CHILDHOOD IMMUNIZATION

6 DATABASE.

7 ‘‘(a) ESTABLISHMENT.—In order to achieve the goal

8 of providing age-appropriate immunization coverage for

9 100 percent of the children in the United States, the Sec10 retary shall establish a National Childhood Immunization

11 Database as part of the Information System.

12 ‘‘(b) REQUIREMENTS.—

13 ‘‘(1) IN GENERAL.—As part of the data pro14 vided under section 2744, a certified plan shall en15 sure that the immunization records of all enrolled in16 dividuals are updated as required under guidelines

17 developed by the Secretary and the participating

18 State involved. Such immunization record data shall

19 be maintained in the database established under

20 subsection (a). The Secretary shall, to the maximum

21 extent practicable, ensure that the database contains

22 accurate and up-to-date information concerning the

23 immunization records of every child enrolled in a

24 certified plan under this title.
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1 ‘‘(2) APPLICATION TO ALL HEALTH PLANS.—

2 All certified plans participating in a State program

3 under this title and all other health plans that pro4 vide coverage for 10,000 or more childhood immuni5 zations per year that are not participating under

6 this title but that are offered within a participating

7 State, shall participate in the National Childhood

8 Immunization Database.

9 ‘‘(3) AVAILABILITY OF INFORMATION.—The

10 database established under subsection (a) shall en11 sure that current immunization information is avail12 able on a real time basis to health care providers

13 who need such information to assess the appropriate

14 immunization needs of their patients.

15 ‘‘(4) ACCESS.—

16 ‘‘(A) IN GENERAL.—Information in the

17 database shall be accessible to the certified plan

18 in which a child is enrolled electronically or

19 through a toll free telephone number.

20 ‘‘(B) OTHER PLANS.—With respect to a

21 child accessing a certified plan, other than the

22 certified plan in which such child is enrolled,

23 such accessed plan or the public health authori24 ties involved may utilize the database to access

25 the immunization record of the child if such ac-
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1 cess is needed to assess the need for appro2 priate immunization.

3 ‘‘(c) RULE OF CONSTRUCTION.—Nothing in this sec4 tion shall be construed as preempting existing Federal or

5 State laws concerning disease reporting or the reporting

6 of other health-related data to local, State, and Federal

7 health authorities.

8 ‘‘SEC. 2746. PREVENTION, MONITORING, AND CONTROL OF

9 FRAUD AND ABUSE.

10 ‘‘(a) ESTABLISHMENT OF PROGRAM.—Not later than

11 180 days after the date of enactment of this title, the Sec12 retary, in consultation with the Attorney General, shall es13 tablish a program and develop State guidelines for pre14 venting, monitoring, and investigating fraud related to the

15 program established under this title. Under such Federal

16 program, the Secretary and the Attorney General shall

17 provide assistance to participating States for the monitor18 ing and control of fraud and abuse in the State programs,

19 and in investigating and prosecuting individuals and cer20 tified plans whose activities violate the provisions of this

21 title, any law enacted in the administration of this title,

22 or any act in violation of such laws that involve interstate

23 activity.

24 ‘‘(b) STATE SYSTEMS.—
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1 ‘‘(1) CERTIFICATION.—Prior to making an allo2 cation to a participating State under section 2701,

3 the Secretary shall certify that the State has estab4 lished and implemented a Statewide system for pre5 venting, monitoring, and investigating fraud and

6 abuse that occurs within the State with respect to

7 the State program.

8 ‘‘(2) REQUIREMENTS OF SYSTEM.—To be cer9 tified under paragraph (1), a State system shall—

10 ‘‘(A) provide authority to State officials to

11 prosecute individuals or certified plans for

12 criminal violations of the provisions of this title

13 or any law enacted to administer or enforce this

14 title;

15 ‘‘(B) solicit and receive consumer feedback

16 regarding compliance with requirements under

17 the State program;

18 ‘‘(C) provide for the investigation of com19 plaints of violations of requirements under the

20 State program;

21 ‘‘(D) assist in the resolution of consumer

22 complaints against certified plans;

23 ‘‘(E) have a formal mechanism for the

24 sharing of information with and assisting the
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1 Federal entity responsible for policing compli2 ance with this title; and

3 ‘‘(F) prepare and submit to the Secretary

4 and the Attorney General an annual report

5 summarizing the activities under the State sys6 tem.

7 ‘‘(3) INTEGRATION.—A State system estab8 lished under this subsection may be integrated into

9 existing State systems responsible for controlling

10 fraud and abuse under the State program under title

11 XIX of the Social Security Act.

12 ‘‘(c) PENALTIES.—

13 ‘‘(1) DEVELOPMENT OF LEGISLATIVE PRO14 POSAL.—Not later than 180 days after the date of

15 the enactment of this title, the Secretary, in con16 sultation with the Attorney General, shall submit to

17 the Congress a legislative proposal to modify or es18 tablish civil and criminal penalties for fraud and

19 abuse or for other violations by individuals and cer20 tified plans related to the program establish under

21 this title.

22 ‘‘(2) DATA.—Not later than 1 year after the

23 date of enactment of this title, the Secretary, in con24 sultation with the Attorney General, shall submit to

25 the Congress a legislative proposal to modify or es-
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1 tablish civil and criminal penalties for the unauthor2 ized use of data collected under this title, including

3 the sale or transfer of data for commercial use or

4 use of data for illegal activities.

5 ‘‘(3) RECOVERY OF FUNDS.—Any funds recov6 ered or fines collected under any civil or criminal ac7 tions related to fraud and abuse under this title

8 shall be deposited into the trust fund of the State

9 or States in which the fraud and abuse occurred.

10 Funds recovered on a national level shall be depos11 ited into the Trust Fund.

12 ‘‘(d) PROHIBITION ON PARTICIPATION.—A certified

13 plan, health care provider, or other individual or entity

14 participating in the Federal program or a State program

15 under this title, that has been found guilty of fraud or

16 abuse in connection with activities under this title, shall

17 be prohibited from participating in any manner in such

18 Federal or a State program, for a period of not less than

19 5 years. The Secretary may waive the 5-year limitation

20 if the Secretary determines that there is a compelling rea21 son to grant such waiver.

22 ‘‘(e) APPLICABILITY OF GUIDELINES.—Federal and

23 State guidelines developed and implemented under this

24 section shall be developed in recognition of the differences
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1 among the various types of health plans, and be applicable

2 to all health plans.’’.

3 SEC. 204. GRANTS TO IMPROVE THE HEALTH OF CHILDREN

4 AND PREGNANT WOMEN.

5 (a) FINDINGS.—Congress finds the following:

6 (1) Access to individual health care services

7 does not necessarily ensure the health of populations

8 and communities. Population-based health activities

9 that assess, monitor, and develop appropriate solu10 tions to the spectrum of health-related problems in

11 communities, and empower residents to participate

12 in the decisionmaking process, need to be strength13 ened. Such activities are the foundation for improv14 ing the health of communities and ensuring the

15 proper social environment for the development of

16 children in these communities.

17 (2) Although preventive services are more cost

18 effective compared to curative health services, only

19 one percent of health expenditures are allocated for

20 preventive health services. Core public health func21 tions ensure that our communities and the environ22 ment in which we live, including our air, water, and

23 food, are reasonably safe, but these essential public

24 health services remain widely misunderstood by the

25 public and underfunded.
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1 (3) Community programs and systems that sup2 port access to health care, many of which are usu3 ally beyond the mission or capacity of health plans,

4 are essential in order to ensure that all children and

5 pregnant women have access to health services. Ac6 cess to health services should be improved by

7 strengthening the primary care system, enhancing

8 enabling services, and supporting school-based

9 health programs.

10 (4) Health-related research has resulted in tre11 mendous advances in scientific knowledge and have

12 directly improved both the quality and length of life.

13 However, despite well-documented accomplishments,

14 biomedical, social science, public health, quality as15 sessment, and other health-related research, con16 tinue to be severely underfunded compared to other

17 national expenditures. In addition, the application of

18 telecommunications and computer technology to im19 proving the delivery of health services needs to be

20 encouraged.

21 (b) AMENDMENT.—Title XXVII of the Public Health

22 Service Act (as added by section 201 and amended by sec23 tions 202 and 203) is further amended by adding at the

24 end thereof the following new part:
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1 ‘‘Part F—Grants to Improve the Health of Children

2 and Pregnant Women

3 ‘‘SEC. 2751. ESTABLISHMENT OF PROGRAM AND ELIGIBLE

4 ACTIVITIES.

5 ‘‘(a) ESTABLISHMENT.—The Secretary shall estab6 lish a program to award grants to States, institutions of

7 higher education, and nonprofit entities to improve the ac8 cess of children and pregnant women to health services,

9 strengthen public health functions, enhance health-related

10 research, and support other activities that improve the

11 health of children and pregnant women.

12 ‘‘(b) ELIGIBLE ACTIVITIES.—A State, institution, or

13 entity that receives a grant under subsection (a) shall use

14 amounts provided under the grant for activities to—

15 ‘‘(1) increase the capacity of the primary care

16 health system in the State involved, including the

17 development of community-based health networks

18 and plans;

19 ‘‘(2) develop and enhance enabling services;

20 ‘‘(3) increasing the access of children and preg21 nant women to health services in rural and under22 served areas, including the use of telecommuni23 cations and computer technology (such as

24 telemedicine and information systems);

25 ‘‘(4) support school-based health programs;
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1 ‘‘(5) enhance core public health functions of

2 State and local health departments;

3 ‘‘(6) support health promotion and disease pre4 vention activities, including population- and commu5 nity-based health assessments and interventions;

6 ‘‘(7) support biomedical, social science, health

7 policy, and public health research activities;

8 ‘‘(8) support pediatric- and maternal-specific

9 quality assessment and outcomes research to im10 prove certified plan and program accountability, in11 cluding quality assessments of services for children

12 with disabilities and chronic health conditions;

13 ‘‘(9) develop and implement clinical practice

14 guidelines; and

15 ‘‘(10) carry out activities related to improving

16 the health of children and pregnant women.

17 All such activities shall be primarily targeted towards chil18 dren (under 21 years of age) or pregnant women.

19 ‘‘(c) REQUIREMENTS FOR CERTAIN ACTIVITIES.—In

20 awarding grants under this section, the Secretary shall en21 sure that not less than 50 percent of the amounts awarded

22 annually to States, universities, or other entities, be used

23 to support activities that are not directly related to the

24 delivery of health care services, including research, public
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1 health, community health, and health promotion and dis2 ease prevention activities.

3 ‘‘(d) ADMINISTRATION.—The Secretary may des4 ignate an existing entity with the Department of Health

5 and Human Services to administer the grant program es6 tablished under this section. The Secretary shall ensure

7 that, with respect to any amounts transferred from the

8 Trust Fund under this part—

9 ‘‘(1) such amount are used solely to support

10 grant awards under this part;

11 ‘‘(2) there shall be a full accounting of the use

12 of such amounts;

13 ‘‘(3) current Federal grant funding of maternal

14 and child health activities is maintained; and

15 ‘‘(4) all Federally-funded activities related to

16 maternal and child health are coordinated and inte17 grated to the maximum extent possible, and such ac18 tivities are consistent with the strategic plan out19 lined by the Secretary in section 2754.

20 ‘‘SEC. 2752. ELIGIBILITY AND APPLICATION PROCESS.

21 ‘‘(a) ELIGIBILITY.—To be eligible to receive a grant

22 under section 2751, an entity shall—

23 ‘‘(1) be a participating State or an institution

24 of higher education or other nonprofit entity located

25 in a participating State;
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1 ‘‘(2) prepare and submit to the Secretary an

2 application in accordance with subsection (b).

3 ‘‘(b) APPLICATION.—An application under this sub4 section shall—

5 ‘‘(1) be in such form, submitted in such man6 ner, and contain such information as required by the

7 Secretary;

8 ‘‘(2) provide assurance that the applicant entity

9 will provide matching funds in accordance with sec10 tion 2753; and

11 ‘‘(3) ensure that the applicant entity will other12 wise comply with the requirements of this part.

13 ‘‘SEC. 2753. MATCHING OF FEDERAL FUNDS AND STATE

14 MAINTENANCE OF EFFORT.

15 ‘‘(a) IN GENERAL.—The Secretary may not award a

16 grant to an entity eligible under section 2752(a) unless

17 that entity agrees that, with respect to the costs to be in18 curred by the entity in carrying out the program for which

19 the allocation is provided, the entity will make available

20 (directly or through donations from public or private enti21 ties) non-Federal contributions in an amount equal to not

22 less than $1 for every $9 of Federal funds provided under

23 the allocation.

24 ‘‘(b) DONATIONS.—An eligible entity may elect to ac25 cept a donation of funds, services, or equipment for activi-
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1 ties under this part from individuals and entities in the

2 private sector. An eligible entity shall ensure that any such

3 donations from individuals and for-profit entities do not

4 result in a conflict of interest in terms of the entity giving

5 preference to the individual or entity related to the award6 ing of contracts for activities under this part.

7 ‘‘(c) MAINTENANCE OF EFFORT.—A participating

8 State receiving a grant under this part shall maintain

9 State expenditures for the activities undertaken under the

10 grant at a level that is not less than the level maintained

11 by the State for such activities in the year previous to the

12 year for which the grant is awarded.

13 ‘‘SEC. 2754. DEVELOPMENT OF PRIORITY AREAS AND FUND14 ING CRITERIA.

15 ‘‘(a) STRATEGIC PLAN.—

16 ‘‘(1) DEVELOPMENT.—Not later than 180 days

17 after the date of enactment of this title, the Sec18 retary shall develop a 5-year strategic plan that out19 lines the national priorities for maternal and child

20 health, including—

21 ‘‘(A) the short- and long-term objectives of

22 Federal child and maternal programs;

23 ‘‘(B) priority areas for funding under this

24 part;
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1 ‘‘(C) specific criteria for determining the

2 merit of funding proposals;

3 ‘‘(D) standards for monitoring and evalu4 ating activities (including outcome and perform5 ance measures) funded under this part; and

6 ‘‘(E) administrative procedures for proc7 essing grant proposals.

8 ‘‘(2) REVIEW OF EXISTING PROGRAMS.—The

9 strategic plan developed under paragraph (1) shall

10 include a specific review of existing Federal pro11 grams related to maternal and child health and de12 velop national priorities for research, population13 based activities, and other activities described in sec14 tion 2751.

15 ‘‘(b) FUNDING CRITERIA.—In determining the cri16 teria to be utilized in evaluating proposals for grants

17 under this part, the Secretary shall consider—

18 ‘‘(1) the technical and scientific merit of the

19 proposal;

20 ‘‘(2) the relative need of the populations or geo21 graphic areas targeted under the proposal;

22 ‘‘(3) the potential positive impact of the activity

23 to be undertaken under the proposal in advancing

24 the goals of the Healthy People 2000 objectives;
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1 ‘‘(4) the potential for innovation in program de2 sign and the cost effectiveness of the proposal;

3 ‘‘(5) the application of current scientific and

4 medical knowledge under the proposal;

5 ‘‘(6) the integration of activities under the pro6 posal with existing health programs or research;

7 ‘‘(7) quality control and program accountability;

8 and

9 ‘‘(8) other attributes determined to be relevant

10 by the Secretary.

11 ‘‘SEC. 2755. COORDINATION AND INTEGRATION OF FUNDED

12 ACTIVITIES.

13 ‘‘(a) IN GENERAL.—

14 ‘‘(1) FEDERAL ACTIVITIES.—The Secretary

15 shall ensure that activities that receive funding

16 under this part are fully integrated and coordinated

17 with existing Federally funded activities of a similar

18 nature.

19 ‘‘(2) STATE ACTIVITIES.—Participating States

20 shall ensure that activities funded under this part in

21 the State are fully integrated and coordinated with

22 State and locally funded activities of a similar na23 ture.

24 ‘‘(b) SUBMISSION OF CERTAIN PROPOSALS TO

25 STATES.—
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1 ‘‘(1) REQUIREMENTS.—To ensure an appro2 priate coordination of related activities and pro3 grams within the State under subsection (a)(2), an

4 institution of higher education or other nonprofit en5 tity that submits an application for a grant under

6 this part shall initially submit the grant proposal to

7 the State for review and comment prior to submit8 ting such proposal to the Secretary.

9 ‘‘(2) STATE COMMENTS.—An application sub10 mitted to the Secretary by an institution of higher

11 education or other nonprofit entity under this part

12 shall be accompanied by the comments of the State

13 with respect to the initial submission under para14 graph (1) and the response of the submitting entity

15 to the such comments.

16 ‘‘(3) DESCRIPTION OF EXISTING PROGRAMS.—

17 An application referred to in paragraph (2) shall

18 contain a description of programs of a similar na19 ture operating within the targeted community and a

20 description of the manner in which the proposed

21 program will be coordinated and integrated with

22 such similar programs, including maternal and child

23 health programs under title V of the Social Security

24 Act.
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1 ‘‘SEC. 2756. ANNUAL BUDGET.

2 ‘‘The Secretary shall utilize an amount not to exceed

3 5 percent of the total amount deposited into the Trust

4 Fund in a fiscal year for awarding grants under this part

5 in such fiscal year.’’.

6 SEC. 205. RESPONSIBILITIES OF FAMILIES, CERTIFIED

7 PLANS, EMPLOYERS, STATES, AND THE FED8 ERAL GOVERNMENT.

9 Title XXVII of the Public Health Service Act (as

10 added by section 201 and amended by sections 202, 203,

11 and 204) is further amended by adding at the end thereof

12 the following new part:

13 ‘‘Part G—Responsibilities of Families, Certified

14 Plans, Employers, States, and the Federal Gov15 ernment

16 ‘‘SEC. 2761. RESPONSIBILITIES OF FAMILIES.

17 ‘‘A family with an eligible child under seven years of

18 age, or an eligible pregnant woman, who is not covered

19 under a health plan shall—

20 ‘‘(1) be responsible for enrolling such child or

21 pregnant woman in a certified plan;

22 ‘‘(2) pay the share of premiums and

23 copayments required of such family under this title;

24 and

25 ‘‘(3) maintain an active role and participate in

26 the health care system to ensure that the child or
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1 pregnant woman receives appropriate, high quality

2 health care.

3 ‘‘SEC. 2762. RESPONSIBILITIES OF CERTIFIED PLANS.

4 ‘‘(a) IN GENERAL.—A certified plan participating in

5 a State program under this title shall—

6 ‘‘(1) be certified by the State and comply with

7 all requirements for such certification or

8 recertification;

9 ‘‘(2) participate in a national open enrollment

10 period and permit enrollment at the point-of-service;

11 ‘‘(3) in the case of a family that has at least

12 one eligible child enrolled in the certified plan and

13 one or more other children who are not eligible for

14 coverage under this title, offer optional family enroll15 ment with respect to such other children at a rea16 sonable cost;

17 ‘‘(4) in the case of a family that has at least

18 one eligible child enrolled in the certified plan, and

19 one or more other children who are eligible for

20 health services under title XIX of the Social Security

21 Act but not eligible for coverage under this title,

22 offer health services under title XIX for such other

23 children in the family;

24 ‘‘(5) not discriminate against individuals during

25 marketing, enrollment, or provision of services based
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1 on pre-existing conditions, genetic predisposition of

2 health conditions, medical history, expected utiliza3 tion of services or health expenditures, race, eth4 nicity, national origin, religion, age (within the eligi5 ble age group), gender, income, or disability;

6 ‘‘(6) accept any applicant for enrollment if such

7 applicant is an eligible individual and resides within

8 the geographic area served by the plan, and may not

9 deny enrollment to any eligible individual except on

10 the basis of documented plan capacity;

11 ‘‘(7) in the case of enrolled individuals who are

12 re-enrolling in the plan, ensure that such individuals

13 are re-enrolled if eligibility is maintained;

14 ‘‘(8) not use pressure, misleading advertising or

15 marketing, or other unethical practices to coerce or

16 discourage certain individuals or groups from enroll17 ing in the plan or disenrolling from the plan;

18 ‘‘(9) establish a system for collecting premiums

19 and copayments;

20 ‘‘(10) not terminate the enrollment of an indi21 vidual except in cases of failure to pay premiums or

22 copayments, fraud and abuse, or withdrawal of the

23 plan from the market, and notify the State of the in24 tention of the plan to terminate the enrollment of an
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1 enrollee not later than 60 days prior to the date on

2 which coverage under such plan is terminated;

3 ‘‘(11) not impose a waiting period prior to the

4 date on which coverage under the plan commences;

5 ‘‘(12) directly provide or provide coverage for

6 all items and services required under the comprehen7 sive benefits package under part C, ensure that the

8 premium amount negotiated with the State under

9 this title is the full required premium, and not im10 pose any additional charges for covered items or

11 services;

12 ‘‘(13) not exclude coverage or deny care for any

13 pre-existing conditions, congenital conditions, or ge14 netic predispositions to conditions that are covered

15 under the comprehensive benefits package;

16 ‘‘(14) ensure that a choice of primary care pro17 viders is available to enrollees, that primary care

18 and preventive services are readily available and con19 venient to all enrollees within the geographic area

20 served, and that emergency services are available on

21 a 24-hour basis, 7 days a week;

22 ‘‘(15) establish a program for the credentialing

23 and performance monitoring of providers under the

24 plan and ensure that adequate health provider to en-
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1 rolled individual ratios are established and main2 tained;

3 ‘‘(16) provide strong, comprehensive preventive

4 health and patient education services;

5 ‘‘(17) ensure that the special health needs of

6 children with disabilities or chronic health conditions

7 are adequately met;

8 ‘‘(18) if sufficient capacity to deliver health

9 services for children described in paragraph (16)

10 does not exist within the certified plan, including pe11 diatric specialty and subspecialty care, enter into

12 agreements with such providers or facilities to pro13 vide appropriate care;

14 ‘‘(19) to the extent that resources or services

15 are not available within the plan, provide access to

16 an integrated child and maternal health care net17 work, which consists of a network of providers who

18 together can provide for the full continuum of health

19 care, including preventive, primary, secondary, ter20 tiary, rehabilitation, chronic and long-term care,

21 home care, and hospice care;

22 ‘‘(20) ensure that with respect to any network

23 described in paragraph (19), the network specifically

24 provide access to pediatric and maternal specialty

25 and subspecialty care;
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1 ‘‘(21) enter into cooperative agreements with

2 providers or facilities to provide a continuum of care

3 if resources to provide such care are not available

4 within the plan;

5 ‘‘(22) if medically-indicated subspecialty care is

6 not available within the geographic area served by

7 the plan, provide transportation to the nearest ap8 propriate facility;

9 ‘‘(23) provide coverage for emergency care ob10 tained in out-of-area or out-of-State facilities so long

11 as the health condition was certified to be an emer12 gency by the attending physician or could have been

13 reasonably assumed to be an emergency by the fam14 ily;

15 ‘‘(24) provide coverage for deliveries of

16 newborns at nonhospital facilities in areas where

17 such facilities are available;

18 ‘‘(25) make a reasonable effort to provide lan19 guage translation services in areas where languages

20 other than English are relatively common;

21 ‘‘(26) implement disincentives (such as higher

22 copayments) for the inappropriate use of emergency

23 rooms for nonemergency care;

24 ‘‘(27) provide incentives (such as reduced pre25 miums, premium rebates, or additional services) for
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1 enrollees who comply with medical and public health

2 recommendations for immunizations, prenatal care,

3 healthy behaviors, or other preventive health guide4 lines;

5 ‘‘(28) implement an information system to col6 lect and report data as required under sections 2744

7 and 2745;

8 ‘‘(29) implement a quality assessment and im9 provement program and utilization review program

10 as required under section 2743;

11 ‘‘(30) pursuant to the guidelines developed by

12 the State, submit an annual evaluation and quality

13 improvement plan, including an evaluation of the

14 plan’s cost containment measures, assurance of qual15 ity care, impact on the health status of the enrolled

16 population (including outcome measures and process

17 objectives), a financial statement, proposed changes

18 in premium rates, and a description of other rel19 evant changes to the plan (the State shall provide

20 guidance to certified plans concerning the elements

21 of an acceptable annual evaluation and quality im22 provement plan, and may use the annual evaluation

23 and quality improvement plan as the basis for the

24 recertification of plans);
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1 ‘‘(31) establish a program for consumer feed2 back and the resolution of consumer complaints that

3 includes specified time frames for decisions, such

4 program to be clearly documented and made avail5 able to all enrollees;

6 ‘‘(32) in consultation with local health depart7 ments and maternal and child health programs

8 under title V of the Social Security Act, establish,

9 support, or substantially participate in a community10 based maternal or child health program in the cov11 erage area served by the plan;

12 ‘‘(33) comply with any other relevant State or

13 Federal regulations.

14 ‘‘(b) REGULATORY BURDEN.—To minimize the regu15 latory burdens and potentially duplicative standards and

16 regulations that may be applied under this title or any

17 other Federal or State program that duplicates activities

18 undertaken under this title, a certified plan shall be con19 sidered as fulfilling a requirement or complying with a

20 standard under this title, if the plan is meeting an existing

21 State or Federal requirement or standard that has been

22 determined by the Secretary (or the State, as appropriate)

23 to be identical or at least as effective as that specified

24 under this title.
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1 ‘‘(c) NONAPPLICATION OF PROVISIONS.—The re2 quirements and guidelines described in this title shall not

3 apply to health plans that do not participate in a State

4 program under this title (with the exception of health

5 plans complying with section 2745), and shall not apply

6 (unless the plan elects for such requirements to apply),

7 to the care and treatment of individuals in the plan who

8 are not enrolled in the State program under this title.

9 ‘‘SEC. 2763. RESPONSIBILITIES OF EMPLOYERS.

10 ‘‘With respect to the program established under this

11 title, an employer shall—

12 ‘‘(1) in the case of an employer that provides

13 health benefits to pregnant women, not terminate

14 such benefits as result of the establishment of such

15 program;

16 ‘‘(2) in the case of an employer that provides

17 health benefits to employee dependents under seven

18 years of age, not terminate such benefits unless the

19 employer agrees to pay the temporary maintenance20 of-effort fee required under section 2771(b).

21 An employer may not terminate the benefits described in

22 this section until the expiration of the 180-day period be23 ginning on the date on which the State in which such em24 ployer fully implements a State program.
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1 ‘‘SEC. 2764. RESPONSIBILITIES OF THE STATE.

2 ‘‘A participating State shall—

3 ‘‘(1) develop and submit an approved initial 5-

4 year strategic plan and annual evaluation and qual5 ity improvement plans to the Secretary as required

6 under this title;

7 ‘‘(2) develop a process for certifying and re-cer8 tifying health plans under this title under which—

9 ‘‘(A) the criteria for certification or

10 recertification shall include—

11 ‘‘(i) an evaluation of minimum capital

12 requirements, solvency requirements, and

13 other standards related to the financial

14 stability of the plan;

15 ‘‘(ii) premium rating methodology;

16 ‘‘(iii) the quality of services to be pro17 vided by the plan; and

18 ‘‘(iv) the ability of the plan to provide

19 the required items and services; and

20 ‘‘(B) such plans shall be re-certified at

21 least once during every 4-year period and sub22 sequent to each instance in which the plan has

23 undergone significant changes (such as a merg24 er) as determined appropriate by the State;

25 ‘‘(3) establish a system through which the State

26 can solicit and evaluate proposals from all health
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1 plans desiring to be certified under this title, and

2 enter into cooperative agreements with such certified

3 plans;

4 ‘‘(4) to maximize the choice of certified plans in

5 an area, ensure, through the system established

6 under paragraph (3), that any certified health plan

7 that fulfills all State and Federal requirements and

8 guidelines under this title, and is otherwise in good

9 standing with the State, is permitted to participate

10 in the State program;

11 ‘‘(5) elect whether to enter into risk or profit

12 sharing agreements with all or selected certified

13 plans;

14 ‘‘(6) elect whether to implement rate margin

15 provisions in agreements with certified plans such

16 that, at the end of a contract period, certified plans

17 would be reimbursed by the State if incurred costs

18 exceeded anticipated costs, and States could recover

19 excess premiums from the plan if incurred costs are

20 less than anticipated costs at the time of rate nego21 tiation;

22 ‘‘(7) implement risk adjustment methods, rein23 surance mechanisms, or other appropriate mecha24 nisms to ensure that State payments to specific cer25 tified plans are reflective of the expected utilization
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•S 933 IS

1 or expenditure rates of plan enrollees and to protect

2 specific certified plans that enroll a disproportionate

3 share of individuals who are expected to incur a

4 higher than average utilization or expenditure rate;

5 ‘‘(8) ensure that the premium rating meth6 odologies of certified plans are well documented, ac7 tuarially sound, and minimize large variations in an8 nual premium rates;

9 ‘‘(9) directly reimburse each certified plan for

10 the State portion of the negotiated premium for en11 rolling eligible children and pregnant women;

12 ‘‘(10) ensure that the premiums negotiated with

13 each certified plan apply with respect to all eligible

14 children and all eligible pregnant women who enroll

15 in the plan;

16 ‘‘(11) negotiate discounted premiums for fami17 lies with multiple children with certified plans;

18 ‘‘(12) ensure that premium rates negotiated

19 with certified plans fairly compensate such plans for

20 the services provided, but that such rates do not re21 sult in excessive profits by plans;

22 ‘‘(13) offer families a choice of certified plans

23 to the extent practicable so long as at least one man24 aged care plan for children is available to all eligible

25 children regardless of geographic location;
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•S 933 IS

1 ‘‘(14) elect whether to use financial or other in2 centives to encourage adequate coverage of rural and

3 underserved areas;

4 ‘‘(15) develop and implement an open enroll5 ment system during the national open enrollment pe6 riod consistent with the guidelines described in sec7 tion 2715;

8 ‘‘(16) implement an outreach program to maxi9 mize the enrollment of eligible individuals;

10 ‘‘(17) ensure that certified plans accept any ap11 plicant who is eligible for coverage within the geo12 graphic area and that such plans do not discriminate

13 or use coercive or unethical practices to encourage or

14 dissuade enrollment into the plan;

15 ‘‘(18) in determining or approving the bound16 aries of coverage areas for certified plans, ensure

17 that the coverage areas are consistent with the anti18 discrimination standards specified in subsection

19 (a)(4) or section 2762, and that such boundaries do

20 not result in plans avoiding enrollment of individuals

21 who are expected to have higher than average rates

22 of utilization or expenditures;

23 ‘‘(19) impose a surcharge for persons who en24 roll outside of the regular open enrollment period as

25 required under section 2715;
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•S 933 IS

1 ‘‘(20) monitor, evaluate, and address the poten2 tial barriers, including cost sharing requirements,

3 that may prevent certain families, particularly low

4 income families, from enrolling in the State program

5 or from obtaining health services after enrollment;

6 ‘‘(21) develop a mechanism to assist families

7 who cannot temporarily pay for premiums or

8 copayments due to unexpected shortfalls in income;

9 ‘‘(22) in the case of fee-for-service plans, use

10 pediatric- and maternal-specific prospective payment

11 schedules for the reimbursement of services, such

12 schedules to be negotiated between providers, plans,

13 and the State;

14 ‘‘(23) ensure that State maternal and child

15 health programs under title V of the Social Security

16 Act and any relevant health services provided by

17 local and State health departments are integrated

18 and coordinated with the State program under this

19 title;

20 ‘‘(24) establish a State advisory council similar

21 in nature to the Advisory Council, except that the

22 composition, organization, and other guidelines for

23 the State council shall be determined by the State,

24 with the majority of State council members being

25 comprised of health care providers and consumers;
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1 ‘‘(25) develop and implement standards for the

2 dissemination of consumer information provided by

3 certified plans (including information concerning

4 services for children with special health care needs),

5 provide consumers with comparative information on

6 certified plans during the open enrollment period as

7 requested, and set up hotlines and other mechanisms

8 to assist consumers;

9 ‘‘(26) approve all advertising or other market10 ing materials from certified plans to ensure that

11 such materials do not contain misleading or false in12 formation, and that the content of the material does

13 not selectively encourage or selectively discourage

14 certain groups of individuals, as referred to in sec15 tion 2762, from enrolling in or disenrolling from the

16 plan (a State may elect to contract with nongovern17 ment entities to perform such functions);

18 ‘‘(27) ensure that decisions regarding the ap19 proval of the advertising or other marketing mate20 rials of a certified plan are made in a reasonable

21 time frame and are based on consistently applied cri22 teria as determined appropriate by the State;

23 ‘‘(28) establish a mechanism for consumer feed24 back, the collection of complaints, filing of griev-
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1 ances, and assist in the resolution of complaints

2 against certified plans;

3 ‘‘(29) establish at least one alternative dispute

4 resolution mechanism for malpractice claims filed by

5 individuals enrolled in a certified plan;

6 ‘‘(30) address deficiencies in enabling services

7 to ensure access to health services among under8 served areas or populations;

9 ‘‘(31) ensure that primary care services are ac10 cessible by public transportation in municipalities

11 that have a public transport system;

12 ‘‘(32) for a period of not less than 5 years after

13 the date of the implementation of the State pro14 gram, ensure that health facilities that provide care

15 to large numbers of children, pregnant women, chil16 dren with special health care needs, or low income

17 persons, including—

18 ‘‘(A) non-investor-owned hospitals;

19 ‘‘(B) community health centers;

20 ‘‘(C) school-based health clinics;

21 ‘‘(D) rural health clinics; and

22 ‘‘(E) local health departments;

23 are able to participate fully in the State program,

24 are adequately reimbursed for their services, and are

25 able to enter into agreements with certified plans (in
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•S 933 IS

1 cases where such providers are not affiliated with a

2 certified plan, the State may encourage such provid3 ers to form their own certified plan);

4 ‘‘(33) enter into agreements with bordering

5 States to ensure that individuals who need to travel

6 across State borders for medically necessary health

7 services that are otherwise not accessible may do so

8 without penalty;

9 ‘‘(34) if determined appropriate, elect to imple10 ment laws to take legal action against families who

11 fail to enroll their children or who fail to pay pre12 miums for children under their care who require

13 medical treatment for a health condition;

14 ‘‘(35) establish a system for preventing, mon15 itoring, and controlling fraud and abuse as required

16 under section 2746, and establish a system to pre17 vent and address any conflicts of interest on the

18 part of the State or its designated representatives

19 regarding the award, management, or evaluation of

20 contracts with certified plans; and

21 ‘‘(36) ensure that certified plans are in compli22 ance with State and Federal guidelines under this

23 title.
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1 ‘‘SEC. 2765. RESPONSIBILITIES OF THE SECRETARY.

2 ‘‘With respect to the program established under this

3 title, the Secretary shall—

4 ‘‘(1) administer amounts provided to the Sec5 retary from the Trust Fund;

6 ‘‘(2) approve, evaluate, and monitor State pro7 grams as required under part D;

8 ‘‘(3) provide participating States with technical

9 and other assistance;

10 ‘‘(4) establish, appoint, and provide support for

11 the Advisory Council as required under section

12 2742;

13 ‘‘(5) establish and coordinate the national open

14 enrollment period as required under section 2715;

15 ‘‘(6) develop a specific comprehensive benefits

16 package required under part B;

17 ‘‘(7) develop national guidelines for quality as18 sessment and improvement programs and utilization

19 review programs as required under section 2743;

20 ‘‘(8) develop and implement the Information

21 System and the National Childhood Immunization

22 Database;

23 ‘‘(9) review, prioritize, integrate, and coordinate

24 Federally funded health programs for children and

25 pregnant women as required under sections 2754,

26 2755, and 2773;
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1 ‘‘(10) in conjunction with the Attorney General,

2 establish a system for preventing, monitoring, and

3 controlling fraud and abuse as required under sec4 tion 2746; and

5 ‘‘(11) develop and administer the grant pro6 gram under part F.

7 ‘‘SEC. 2766. RESPONSIBILITIES OF THE ATTORNEY GEN8 ERAL.

9 ‘‘With respect to the program established under this

10 title, the Attorney General in conjunction with the Sec11 retary shall establish a system for preventing, monitoring,

12 and controlling fraud and abuse as required under section

13 2746.

14 ‘‘SEC. 2767. RESPONSIBILITIES OF THE SECRETARY OF

15 AGRICULTURE.

16 ‘‘With respect to the program established under this

17 title, the Secretary of Agriculture shall administer amount

18 distributed from the Tobacco Alternatives Trust Fund es19 tablished under section 9512 of the Internal Revenue Code

20 of 1986.’’.

21 SEC. 206. EXISTING PROGRAMS.

22 Title XXVII of the Public Health Service Act (as

23 added by section 201 and amended by sections 202, 203,

24 204, and 205) is further amended by adding at the end

25 thereof the following new part:
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•S 933 IS

1 ‘‘Part H—Impact on Employers and Existing

2 Programs

3 ‘‘SEC. 2771. IMPACT ON EMPLOYERS.

4 ‘‘(a) IN GENERAL.—The Congress encourages em5 ployers to provide, or continue to provide, comprehensive

6 health care coverage to the dependent children of their em7 ployees.

8 ‘‘(b) DROPPING OF COVERAGE.—

9 ‘‘(1) IN GENERAL.—With respect to a partici10 pating State, if the Secretary of Labor determines

11 that an employer who provided health care coverage

12 for the dependent children of the employees of the

13 employer, has terminated such coverage on or after

14 the date of enactment of this title, for all children

15 or children under seven years of age, the Secretary

16 may impose a temporary annual maintenance of ef17 fort fee on such employer, the proceeds of which

18 shall be deposited into the Trust Fund. In no case

19 may an employer drop coverage of employee-depend20 ent children until the date that is 180 days after the

21 State fully implements a State program. An em22 ployer may not selectively drop health care coverage

23 for specific employee-dependent children who have,

24 or are expected to have, higher than average utiliza25 tion or health care costs.
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1 ‘‘(2) AMOUNT OF FEE.—The amount of a fee

2 assessed under paragraph (1) shall be equivalent to

3 50 percent of the estimated annual cost of providing

4 comprehensive coverage for all employee-dependent

5 children.

6 ‘‘(3) PERIOD OF FEE.—An annual fee imposed

7 under paragraph (1) shall be in effect for a period

8 not to exceed 5 years.

9 ‘‘(4) PREGNANCY COVERAGE.—Employers who

10 provide pregnancy-related health care benefits for

11 their employees and dependents shall continue to do

12 so after the date of enactment of this Act.

13 ‘‘SEC. 2772. IMPACT ON MEDICAID.

14 (a) AUTOMATIC ENROLLMENT.—With respect to a

15 participating State, children under 7 years of age, and

16 pregnant women, who are enrolled in the program under

17 title XIX of the Social Security Act shall be automatically

18 enrolled into the appropriate State program under this

19 title.

20 ‘‘(b) BENEFITS.—All health benefits provided under

21 title XIX of the Social Security Act, including long-term

22 and chronic care services for children with disabilities or

23 chronic health conditions, shall be received under the State

24 program under this title. A participating State may elect

25 not to shift long-term and chronic care services for chil-
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•S 933 IS

1 dren with disabilities or chronic health conditions under

2 such title XIX into the State program under this title,

3 if the State can demonstrate that doing so would signifi4 cantly compromise the quality of care for such children.

5 A participating State that elects not to shift such long6 term and chronic care services into the State program

7 under this Act shall develop health care coordination plans

8 that integrate the various sources of health services for

9 such children in consultation with State maternal and

10 child health programs under title V of such Act. A partici11 pating State may elect to establish a transitional period

12 to gradually phase in children with disabilities or chronic

13 health condition benefits into the State program.

14 ‘‘SEC. 2773. INTEGRATION OF HEALTH SERVICES AND IM15 PACT ON EXISTING FEDERAL AND STATE

16 GOVERNMENT HEALTH PROGRAMS.

17 ‘‘(a) REVIEW BY SECRETARY AND STATES.—Not

18 later than 2 years after the date of enactment of this Act,

19 and every 2 years thereafter—

20 ‘‘(1) the Secretary, in consultation with the Ma21 ternal and Child Health Bureau, shall review all

22 Federal health programs that provide health services

23 to children under 7 years of age and pregnant

24 women; and
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1 ‘‘(2) a participating State, acting through a

2 designated single State agency or other entity, and

3 in consultation with State health programs author4 ized under title V of the Social Security Act, shall

5 review State-funded programs that provide health

6 services to children under seven years of age and

7 pregnant women;

8 to ensure that such programs are integrated and coordi9 nated with the services covered by this title.

10 ‘‘(b) RECOMMENDATIONS.—If the Secretary, through

11 the review conducted under subsection (a), determines

12 that specific functions performed by Federal health pro13 grams under such review are duplicated or made extra14 neous by the programs and benefits provided under this

15 title, the Secretary shall submit recommendation to Con16 gress concerning the elimination or reduction in such pro17 grams or benefits. With respect to any amounts appro18 priated for any programs terminated, such remaining ap19 propriations shall be transferred to the Trust Fund.

20 ‘‘(c) ASSURANCE.—The Secretary and all participat21 ing States shall ensure that Federal payments under title

22 V of the Social Security Act and matching State funds

23 provided under this title are retained within existing pro24 grams to—
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1 ‘‘(1) meet the health care needs of children over

2 7 years of age, and eligible children and pregnant

3 women who do not participate in the State program

4 under this title;

5 ‘‘(2) perform core public health functions;

6 ‘‘(3) coordinate care for children with special

7 health care needs; and

8 ‘‘(4) otherwise to meet needs identified through

9 title V needs assessments consistent with Healthy

10 People 2000 objectives.

11 SEC. 207. GENERAL PROVISIONS.

12 Title XXVII of the Public Health Service Act (as

13 added by section 201 and amended by sections 202, 203,

14 204, 205, and 206) is further amended by adding at the

15 end thereof the following new part:

16 ‘‘Part I—General Provisions

17 ‘‘SEC. 2781. DEFINITIONS.

18 ‘‘Unless specifically provided otherwise, for purposes

19 of this title:

20 ‘‘(1) ADJUSTED FAMILY GROSS INCOME.—The

21 term ‘adjusted family gross income’ means the sum

22 of all adjusted gross income of all family members

23 of the child or pregnant women involved in the most

24 recent tax year. In the case of a pregnant woman,
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•S 933 IS

1 such term also includes the adjusted gross income of

2 the pregnant woman.

3 ‘‘(2) ADVISORY COUNCIL.—The term ‘Advisory

4 Council’ means the National Advisory Council for

5 Mother’s and Children’s Health established under

6 section 2742.

7 ‘‘(3) CERTIFIED PLAN.—The term ‘certified

8 plan’ means the agreement entered into by an orga9 nized health care entity to cover or provide specified

10 health care services under State and Federal guide11 lines under this title. Organizations that may enter

12 into such agreement shall include health mainte13 nance organizations, preferred provider organiza14 tions, point-of-service plans, fee-for-service plans, in15 demnity insurance plans, hybrids of such plans, and

16 any other organized health care entities that fulfill

17 the requirements of this title.

18 ‘‘(4) CHILD.—

19 ‘‘(A) IN GENERAL.—The term ‘child’

20 means an individual who has not attained the

21 age of 21.

22 ‘‘(B) REFERENCES.—References in this

23 title to a child shall be construed to mean—

24 ‘‘(i) in the case of a State program

25 that does not have an expanded eligibility
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•S 933 IS

1 component, an individual under 7 years of

2 age; and

3 ‘‘(ii) in the case of a State program

4 that offers an expanded eligibility compo5 nent, an individual under 21 years of age.

6 ‘‘(5) COMPREHENSIVE BENEFITS PACKAGE.—

7 The term ‘comprehensive benefits package’ means

8 either the benefits package for children or the bene9 fits package for pregnant women, as the case may

10 be, developed by the Secretary under section

11 2721(a).

12 ‘‘(6) CORE PUBLIC HEALTH FUNCTIONS.—The

13 term ‘core public health functions’ means the follow14 ing:

15 ‘‘(A) The collection and analysis of public

16 health-related data and the technical aspects of

17 developing and operating information systems.

18 ‘‘(B) Activities related to protecting the

19 environment and ensuring the safety of work20 places, food, and water.

21 ‘‘(C) Investigation and control of adverse

22 health conditions and exposures to individuals

23 and the community.

24 ‘‘(D) Information and education programs

25 to prevent adverse health conditions.
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1 ‘‘(E) Accountability and health care qual2 ity improvement activities.

3 ‘‘(F) The provision of public health labora4 tory services.

5 ‘‘(G) Training for public health profes6 sionals.

7 ‘‘(H) Health care leadership, policy devel8 opment, coalition-building, and administrative

9 activities.

10 ‘‘(I) Integration and coordination of pre11 vention programs and services of health plans,

12 community-based providers, government health

13 agencies, and other government agencies that

14 affect health including education, labor, trans15 portation, welfare, criminal justice, environ16 ment, agriculture and housing.

17 ‘‘(J) Research on effective and cost-effec18 tive public health practices.

19 ‘‘(7) ENABLING SERVICES.—The term ‘enabling

20 services’ means community outreach, health edu21 cation, transportation, language translation, and

22 other services that facilitate or otherwise assist eligi23 ble individuals to receive health services provided

24 under this title.
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1 ‘‘(8) FAMILY.—The term ‘family’ means a preg2 nant woman residing alone or a group of two or

3 more individuals who reside together in the same

4 housing unit. Such individuals may be related (such

5 as parent and child) or unrelated (such as guardian

6 and foster child) individuals. In the case of children

7 who do not reside with their parents, such term may

8 also include individuals (such as family friends) or

9 entities (such as government agencies) that have pri10 mary responsibility for the health and welfare of the

11 child.

12 ‘‘(9) INFORMATION SYSTEM.—The term ‘Infor13 mation System’ means the National Health Informa14 tion System for Mothers and Children established

15 under section 2744.

16 ‘‘(10) NATIONAL CHILDHOOD IMMUNIZATION

17 DATABASE.—The term ‘National Childhood Immuni18 zation Database’ means the electronic database es19 tablished under section 2745.

20 ‘‘(11) PARTICIPATING STATE.—The term ‘par21 ticipating State’ means any of the 50 States, the

22 District of Columbia, Puerto Rico, and any of the

23 trust territories of the United States, that elects to

24 participate in the program established under this

25 title.
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1 ‘‘(12) POVERTY LEVEL.—The term ‘poverty

2 level’ the income official poverty line (as defined by

3 the Office of Management and Budget, and revised

4 annually in accordance with section 673(2) of the

5 Community Services Block Grant Act (42 U.S.C.

6 9902(2)) applicable to a family of the size involved.

7 ‘‘(13) TOBACCO ALTERNATIVES TRUST FUND.—

8 The term ‘Tobacco Alternatives Trust Fund’ means

9 the trust fund established under section 9512 of the

10 Internal Revenue Code of 1986.

11 ‘‘(14) TRUST FUND.—The term ‘Trust Fund’

12 means the National Health Trust Fund for Mothers

13 and Children established under section 9551 of the

14 Internal Revenue Code of 1986.

15 ‘‘SEC. 2782. AUTHORIZATION OF APPROPRIATIONS.

16 ‘‘(a) AVAILABILITY OF FUNDS FROM TRUST

17 FUND.—From the Trust Fund established under section

18 9551 of the Internal Revenue Code of 1986, there shall

19 be available such sums as may be necessary to carry out

20 this title in each fiscal year.

21 ‘‘(b) HHS ACTIVITIES.—With respect to the develop22 ment and implementation of programs and activities re23 quired to be carried out by the Secretary under this title,

24 there are authorized to be appropriate such sums as may
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1 be necessary for each of the fiscal years 1996 through

2 2000.

3 ‘‘(c) JUSTICE ACTIVITIES.—With respect to the de4 velopment and implementation of programs and activities

5 required to be carried out by the Attorney General under

6 this title, there are authorized to be appropriate such sums

7 as may be necessary for each of the fiscal years 1996

8 through 2000.’’.

9 SEC. 208. UNLAWFUL USE OF TOBACCO PRODUCTS MANU10 FACTURED FOR EXPORT.

11 (a) DEFINITIONS.—Section 2341 of title 18, United

12 States Code, is amended—

13 (1) in paragraph (4), by striking ‘‘; and’’ and

14 inserting a semicolon;

15 (2) by striking the period at the end of para16 graph (5) and inserting ‘‘; and’’; and

17 (3) by adding at the end the following new

18 paragraph:

19 ‘‘(6) the term ‘tobacco products’ has the mean20 ing given such term in section 5702(c) of the Inter21 nal Revenue Code of 1986.’’.

22 (b) UNLAWFUL ACTS.—Section 2342 of title 18,

23 United States Code, is amended by adding at the end the

24 following new subsection:
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1 ‘‘(c) It shall be unlawful for any person knowingly

2 to purchase, sell, distribute, or smuggle in the United

3 States, tobacco products that are designated for consump4 tion beyond the territorial jurisdiction of the internal reve5 nue laws of the United States.’’.

6 (c) PENALTY.—Section 2344 of title 18, United

7 States Code, is amended by adding at the end the follow8 ing new subsection:

9 ‘‘(d)(1) Whoever knowingly violates section 2342(c)

10 shall be fined the greater of—

11 ‘‘(A) $10,000; or

12 ‘‘(B) an amount equal to 5 times the amount

13 of the tax imposed under section 5701 of the Inter14 nal Revenue Code of 1986,

15 which shall be deposited into the Fund created pursuant

16 to section 9512 of the Internal Revenue Code of 1986.

17 ‘‘(2) A judgment for a violation of section 2342(c),

18 may, in addition to the penalty under paragraph (1), order

19 the confiscation of any equipment and vehicles, including

20 ships, aircraft, and motor vehicles, used to transport to21 bacco products in violation of such section. Any property

22 confiscated under this paragraph shall become the prop23 erty of the United States.’’.
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1 TITLE III—FINANCING

2 PROVISIONS

3 SEC. 301. INCREASE IN TAXES ON TOBACCO PRODUCTS.

4 (a) FINDINGS.—The Congress finds the following:

5 (1) More than 400,000 people die prematurely

6 every year in the United States from tobacco-related

7 diseases. This number is more than the total number

8 of deaths from AIDS, car accidents, alcohol, sui9 cides, homicides, fires, and illegal drugs combined.

10 (2) In addition to the human toll of tobacco,

11 the economic costs of tobacco are staggering. To12 bacco-related direct medical care costs in 1993 were

13 estimated at $50,000,000,000 or approximately 7

14 percent of all direct medical expenditures and total

15 costs were estimated at $102,000,000,000. Expected

16 lifetime medical costs for the average smoker exceed

17 those of the nonsmoker by 28 percent for men and

18 21 percent for women.

19 (3) On average, each pack of cigarettes smoked

20 is responsible for more than $3.90 in health care

21 costs and lost productivity. Approximately

22 $22,000,000,000 of direct medical care costs caused

23 by tobacco use in 1993 were paid for with Govern24 ment funds. The excess health care costs attributed

25 to tobacco use and paid for by all taxpayers should
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1 be partially recouped and used to fund health-related

2 activities.

3 (4) Tobacco use is a pediatric disease. Most

4 smokers begin smoking during childhood. Among

5 current adult daily smokers, 89 percent started

6 smoking by or at 18 years. Smokeless tobacco users

7 start at an average age of nine and a half. Public

8 health experts and studies indicate that a substan9 tial increase in the tobacco tax is the single most im10 portant element of an overall comprehensive strategy

11 to reduce tobacco use among children. In addition to

12 a substantial tax, a coordinated and adequately

13 funded national program is needed to prevent and

14 control tobacco use among children.

15 (5) A $1.50 per pack increase in the Federal

16 excise tax for cigarettes and equivalent increase in

17 other tobacco products is estimated to result in

18 6,100,000 fewer smokers, most of them children,

19 and will save 1,500,000 lives.

20 (b) ESTABLISHMENT OF INCREASE.—

21 (1) IN GENERAL.—Section 5701 of the Internal

22 Revenue Code of 1986 (relating to rate of tax on ci23 gars, smokeless tobacco, pipe tobacco, and cigarette

24 papers and tubes) is amended to read as follows:
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1 ‘‘SEC. 5701. RATE OF TAX.

2 ‘‘(a) CIGARS.—On cigars manufactured in or im3 ported into the United States and removed during 1996,

4 there shall be imposed the following taxes:

5 ‘‘(1) SMALL CIGARS.—On cigars weighing not

6 more than 3 pounds per thousand, $76.1325 per

7 thousand.

8 ‘‘(2) LARGE CIGARS.—On cigars weighing more

9 than 3 pounds per thousand, 92.4375 percent of the

10 price for which sold but not more than $217.50 per

11 thousand.

12 Cigars not exempt from tax under this chapter which are

13 removed but not intended for sale shall be taxed at the

14 same rate as similar cigars removed for sale.

15 ‘‘(b) CIGARETTES.—On cigarettes manufactured in

16 or imported into the United States and removed during

17 1996, there shall be imposed the following taxes:

18 ‘‘(1) SMALL CIGARETTES.—On cigarettes,

19 weighing not more than 3 pounds per thousand, $87

20 per thousand.

21 ‘‘(2) LARGE CIGARETTES.—

22 ‘‘(A) IN GENERAL.—Except as provided in

23 subparagraph (B), on cigarettes, weighing more

24 than 3 pounds per thousand, $182.70 per thou25 sand.
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1 ‘‘(B) LONG CIGARETTES.—In the case of

2 cigarettes weighing more than 3 pounds per

thousand that are more than 61 3 ⁄2 inches in

4 length, such cigarettes shall be taxable at the

5 rate prescribed for cigarettes weighing not more

than 3 pounds per thousand, counting each 23 6 ⁄4

7 inches, or fraction thereof, of the length of each

8 as one cigarette.

9 ‘‘(c) CIGARETTE PAPERS.—On each book or set of

10 cigarette papers containing more than 25 papers, manu11 factured in or imported into the United States and re12 moved during 1996, there shall be imposed a tax of 5.445

13 cents for each 50 papers or fractional part thereof (except

that if cigarette papers measure more than 61 14 ⁄2 inches,

15 such papers shall be taxable at the rate prescribed, counting each 23 16 ⁄4 inches, or fraction thereof, of the length of

17 each as one cigarette paper).

18 ‘‘(d) CIGARETTE TUBES.—On cigarette tubes, manu19 factured in or imported into the United States and re20 moved during 1996, there shall be imposed a tax of 10.89

21 cents for each 50 tubes or fractional part thereof, except

that if cigarette tubes measure more than 61 22 ⁄2 inches in

23 length, such tubes shall be taxable at the rate prescribed,

counting each 23 24 ⁄4 inches, or fraction thereof as the length

25 of each as one cigarette tube.
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1 ‘‘(e) SMOKELESS TOBACCO.—On smokeless tobacco,

2 manufactured in or imported into the United States and

3 removed during 1996, there shall be imposed the following

4 taxes:

5 ‘‘(1) SNUFF.—On snuff, $20.355 per pound

6 and a proportionate tax at the like rate on all frac7 tional parts of a pound.

8 ‘‘(2) CHEWING TOBACCO.—On chewing tobacco,

9 $8.115 per pound and a proportionate tax at the

10 like rate on all fractional parts of a pound.

11 ‘‘(f) PIPE TOBACCO.—On pipe tobacco, manufac12 tured in or imported into the United States and removed

13 during 1996, there shall be imposed a tax of $25.6875

14 per pound and a proportionate tax at the like rate on all

15 fractional parts of a pound.

16 ‘‘(g) ROLL-YOUR-OWN TOBACCO.—On roll-your-own

17 tobacco, manufactured in or imported into the United

18 States and removed during 1996, there shall be imposed

19 a tax of $26.025 per pound (and a proportionate tax at

20 the like rate on all fractional parts of a pound).

21 ‘‘(h) DETERMINATION OF TAX IN YEARS AFTER

22 1996.—On all tobacco products, cigarette papers, and cig23 arette tubes removed after 1996, there shall be imposed

24 a tax equal to the tax imposed on such product during

25 1996 increased by an amount equal to—
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1 ‘‘(1) such dollar amount, multiplied by

2 ‘‘(2) the cost of living adjustment determined

3 under section 1(f)(3) for the calendar year in which

4 the cigarettes are removed, by substituting ‘calendar

5 year 1995’ for ‘calendar year 1992’ in subparagraph

6 (B) thereof.

7 ‘‘(i) DETERMINATION OF FLOOR STOCKS TAX IN IN8 CREASE YEARS.—

9 ‘‘(1) IN GENERAL.—On all tobacco products,

10 cigarette papers, and cigarette tubes manufactured

11 in or imported into the United States which are re12 moved before January 1 of any increase year and

13 held on such date for sale by any person, there shall

14 be imposed a tax equal to the amount by which—

15 ‘‘(A) the applicable tax on such product

16 determined under this section for such year, ex17 ceeds

18 ‘‘(B) such applicable tax on such product

19 under this section for the preceding calendar

20 year.

21 ‘‘(2) LIABILITY FOR TAX AND METHOD OF PAY22 MENT.—

23 ‘‘(A) LIABILITY FOR TAX.—A person hold24 ing tobacco products, cigarette papers, and cig25 arette tubes on January 1 of any increase year
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1 to which any tax imposed by paragraph (1) ap2 plies shall be liable for such tax.

3 ‘‘(B) METHOD OF PAYMENT.—The tax im4 posed by paragraph (1) or (2) shall be treated

5 as a tax imposed under subsection (a) through

6 (g) or subsection (h) of this section, as applica7 ble, and shall be due and payable on February

8 15 of each increase year in the same manner as

9 the tax imposed under such section is payable

10 with respect to tobacco products, cigarette pa11 pers, and cigarette tubes removed on or after

12 January 1 of such increase year.

13 ‘‘(3) EXCEPTION FOR RETAIL STOCKS.—The

14 taxes imposed by paragraph (1) shall not apply to

15 tobacco products, cigarette papers, and cigarette

16 tubes in retail stocks held on January 1 of any in17 crease year at the place where intended to be sold

18 at retail.

19 ‘‘(j) FOREIGN TRADE ZONES.—Notwithstanding the

20 Act of June 18, 1934 (19 U.S.C. 81a et seq.) or any other

21 provision of law—

22 ‘‘(1) tobacco products, cigarette papers, and

23 cigarette tubes—

24 ‘‘(A) on which taxes imposed by Federal

25 law are determined, or customs responsibilities
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1 are liquidated, by a customs officer pursuant to

2 a request made under the first proviso of sec3 tion 3(a) of the Act of June 18, 1934 (19

4 U.S.C. 81c(a)) before January 1 of any in5 crease year, and

6 ‘‘(B) which are entered into the customs

7 territory of the United States on or after Janu8 ary 1 of such increase year from a foreign trade

9 zone, and

10 ‘‘(2) tobacco products, cigarette paper, and cig11 arette tubes which—

12 ‘‘(A) are placed under the supervision of a

13 customs officer pursuant to the provisions of

14 the second proviso of section 3(a) of the Act of

15 June 18, 1934 (19 U.S.C. 81c(a)) before Janu16 ary 1 of such increase year, and

17 (B) are entered into the customs territory

18 of the United States on or after January 1 of

19 such increase year, from a foreign trade zone,

20 shall be subject to the tax imposed by subsection (i)

21 and such tobacco products, cigarette papers, and

22 cigarette tubes shall, for purposes of subsection (i),

23 be treated as being held on January 1 of such in24 crease year for sale.
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1 ‘‘(k) IMPORTED PRODUCTS AND CIGARETTE PAPERS

2 AND TUBES.—The taxes imposed by this section on to3 bacco products and cigarette papers, and cigarette tubes

4 imported into the United States shall be in addition to

5 any import responsibilities imposed on such articles, un6 less such import responsibilities are imposed in lieu of in7 ternal revenue tax.

8 ‘‘(l) INCREASE YEAR.—For purposes of this section,

9 the term ‘increase year’ means any calendar year after

10 1996.’’

11 (2) ROLL-YOUR-OWN TOBACCO.—Section 5702

12 of such Code (relating to definitions) is amended by

13 adding at the end the following new subsection:

14 ‘‘(p) ROLL-YOUR-OWN TOBACCO.—The term ‘roll15 your-own tobacco’ means any tobacco which, because of

16 its appearance, type, packaging, or labeling, is suitable for

17 use and likely to be offered to, or purchased by, consumers

18 as tobacco for making cigarettes.’’

19 (3) TECHNICAL AMENDMENTS.—

20 (A) Subsection (c) of section 5702 of such

21 Code is amended by striking ‘‘and pipe to22 bacco’’ and inserting ‘‘pipe tobacco, and roll23 your-own tobacco’’.

24 (B) Subsection (d) of section 5702 of such

25 Code is amended—
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1 (i) in the material preceding para2 graph (1), by striking ‘‘or pipe tobacco’’

3 and inserting ‘‘pipe tobacco, or roll-your4 own tobacco’’, and

5 (ii) by striking paragraph (1) and in6 serting the following new paragraph:

7 ‘‘(1) a person who produces cigars, cigarettes,

8 smokeless tobacco, pipe tobacco, or roll-your-own to9 bacco solely for the person’s own personal consump10 tion or use, and’’.

11 (C) The chapter heading for chapter 52 of

12 such Code is amended to read as follows:

13 ‘‘CHAPTER 52—TOBACCO PRODUCTS AND

14 CIGARETTE PAPERS AND TUBES’’.

15 (D) The table of chapters for subtitle E of

16 such Code is amended by striking the item re17 lating to chapter 52 and inserting the following

18 new item:

‘‘CHAPTER 52. Tobacco products and cigarette papers and tubes.’’

19 (4) EFFECTIVE DATE.—

20 (A) IN GENERAL.—The amendments made

21 by this section shall apply to tobacco products,

22 cigarette papers, and cigarette tubes removed

23 (as defined in section 5702 of the Internal Rev24 enue Code of 1986, as amended by this section)

25 after December 31, 1995.
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1 (B) TRANSITIONAL RULE.—Any person

2 who—

3 (i) on the date of the enactment of

4 this Act is engaged in business as a manu5 facturer of roll-your-own tobacco or as an

6 importer of tobacco products or cigarette

7 papers and tubes, and

8 (ii) before January 1, 1996, submits

9 an application under subchapter B of

10 chapter 52 of such Code to engage in such

11 business,

12 may, notwithstanding such subchapter B, con13 tinue to engage in such business pending final

14 action on such application. Pending such final

15 action, all provisions of such chapter 52 shall

16 apply to such applicant in the same manner

17 and to the same extent as if such applicant

18 were a holder of a permit under such chapter

19 52 to engage in such business.

20 (c) SPECIAL RULES FOR 1996.—

21 (1) FLOOR STOCKS.—On tobacco products, cig22 arette papers, and cigarette tubes manufactured in

23 or imported into the United States which are re24 moved before January 1, 1996, and held on such
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1 date for sale by any person, there shall be imposed

2 the following taxes:

3 (A) SMALL CIGARS.—On cigars, weighing

4 not more than 3 pounds per thousand,

5 $75.0075 per thousand.

6 (B) LARGE CIGARS.—On cigars, weighing

7 more than 3 pounds per thousand, a tax equal

8 to 79.6875 percent of the price for which sold,

9 but not more than $187.50 per thousand.

10 (C) SMALL CIGARETTES.—On cigarettes,

11 weighing not more than 3 pounds per thousand,

12 $75 per thousand.

13 (D) LARGE CIGARETTES.—On cigarettes,

14 weighing more than 3 pounds per thousand,

15 $157.50 per thousand; except that, if more than

61 16 ⁄2 inches in length, they shall be taxable at

17 the rate prescribed for cigarettes weighing not

18 more than 3 pounds per thousand, counting

each 23 19 ⁄4 inches, or fraction thereof, of the

20 length of each as one cigarette.

21 (E) CIGARETTE PAPERS.—On cigarette pa22 pers, 4.695 cents for each 50 papers or frac23 tional part thereof; except that, if cigarette papers measure more than 61 24 ⁄2 inches in length,

25 they shall be taxable at the rate prescribed,
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counting each 23 1 ⁄4 inches, or fraction thereof,

2 of the length of each as one cigarette paper.

3 (F) CIGARETTE TUBES.—On cigarette

4 tubes, 9.39 cents for each 50 tubes or fractional

5 part thereof; except that, if cigarette tubes

measure more than 61 6 ⁄2 inches in length, they

7 shall be taxable at the rate prescribed, counting

each 23 8 ⁄4 inches, or fraction thereof, of the

9 length of each as one cigarette tube.

10 (G) SNUFF.—On snuff, $19.995 per pound

11 and a proportionate tax at the like rate on all

12 fractional parts of a pound.

13 (H) CHEWING TOBACCO.—On chewing to14 bacco, $7.995 per pound and a proportionate

15 tax at the like rate on all fractional parts of a

16 pound.

17 (I) PIPE TOBACCO.—On pipe tobacco,

18 $25.0125 per pound and a proportionate tax at

19 the like rate on all fractional parts of a pound.

20 (J) ROLL-YOUR-OWN TOBACCO.—On roll21 your-own tobacco, $26.025 per pound and a

22 proportionate tax at the like rate on all frac23 tional parts of a pound.
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1 (2) FOREIGN TRADE ZONES.—Notwithstanding

2 the Act of June 18, 1934 (19 U.S.C. 81a et seq.)

3 or any other provision of law—

4 (A) tobacco products, cigarette papers, and

5 cigarette tubes—

6 (i) on which taxes imposed by Federal

7 law are determined, or customs responsibil8 ities are liquidated, by a customs officer

9 pursuant to a request made under the first

10 proviso of section 3(a) of the Act of June

11 18, 1934 (19 U.S.C. 81c(a)) before Janu12 ary 1, 1996, and

13 (ii) which are entered into the cus14 toms territory of the United States on or

15 after January 1, 1996 from a foreign trade

16 zone, and

17 (B) tobacco products, cigarette papers, and

18 cigarette tubes which—

19 (i) are placed under the supervision of

20 a customs officer pursuant to the provi21 sions of the second proviso of section 3(a)

22 of the Act of June 18, 1934 (19 U.S.C.

23 81c(a)) before January 1, 1996, and

24 (ii) are entered into the customs terri25 tory of the United States on or after Janu-
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1 ary 1 of such increase year, from a foreign

2 trade zone,

3 shall be subject to the tax imposed by para4 graph (1) and such tobacco products, cigarette

5 papers, and cigarette tubes shall, for purposes

6 of paragraph (1) be treated as being held on

7 January 1, 1996 for sale.

8 (3) CIGARS, CIGARETTES, CIGARETTE PAPER,

9 CIGARETTE TUBES, SNUFF, CHEWING TOBACCO,

10 PIPE TOBACCO, ROLL-YOUR-OWN TOBACCO, AND TO11 BACCO PRODUCTS.—For purposes of this subsection,

12 the terms ‘‘cigar’’, ‘‘cigarette’’, ‘‘cigarette paper’’,

13 ‘‘cigarette tubes’’, ‘‘snuff’’, ‘‘chewing tobacco’’, ‘‘pipe

14 tobacco’’, ‘‘roll-your-own tobacco’’, and ‘‘tobacco

15 products’’ shall have the meaning given to such

16 terms by subsections (a), (b), (e), and (g), para17 graphs (2) and (3) of subsection (n), subsection (o),

18 subsection (p), and subsection (c) of section 5702 of

19 the Internal Revenue Code of 1986, respectively.

20 SEC. 302. ASSISTANCE TO STATES ADVERSELY AFFECTED

21 BY THE TOBACCO TAX.

22 (a) ESTABLISHMENT OF TRUST FUND.—

23 (1) IN GENERAL.—Subchapter A of chapter 98

24 of the Internal Revenue Code of 1986 (relating to
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1 trust fund code) is amended by adding at the end

2 the following new section:

3 ‘‘SEC. 9512. TOBACCO ALTERNATIVES TRUST FUND.

4 ‘‘(a) CREATION OF TRUST FUND.—There is estab5 lished in the Treasury of the United States a trust fund

6 to be known as the ‘Tobacco Alternatives Trust Fund’

7 (hereafter referred to in this section as the ‘Trust Fund’),

8 consisting of such amounts as may be appropriated or

9 credited to the Trust Fund as provided in this section or

10 section 9602(b).

11 ‘‘(b) TRANSFERS TO TRUST FUND.—The Secretary

12 shall transfer to the Trust Fund an amount equivalent

13 to 2 percent of the net increase in revenues received in

14 the Treasury attributable to the amendments made to sec15 tion 5701 by subsections (b) and (c) of section 301 and

16 the provisions contained in section 301(d) of the Healthy

17 Mothers, Healthy Children Act of 1995, as estimated by

18 the Secretary.

19 ‘‘(c) DISTRIBUTION OF AMOUNTS IN TRUST FUND.—

20 ‘‘(1) IN GENERAL.—Amounts in the Trust

21 Fund shall be available to the Secretary of Agri22 culture, as provided by appropriation Acts, for mak23 ing grants to States that have submitted an applica24 tion in accordance with paragraph (2) for the pur25 poses of—
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1 ‘‘(A) making direct payments to tobacco

2 farmers and workers,

3 ‘‘(B) providing assistance to farmers in

4 converting from tobacco to other crops and im5 proving the access of such farmers to markets

6 for other crops,

7 ‘‘(C) providing infrastructure and business8 related financing in areas with significant num9 bers of tobacco-related jobs,

10 ‘‘(D) providing job training for tobacco

11 farmers and workers, and

12 ‘‘(E) establishing other economic develop13 ment projects (upon approval of the Secretary

14 of Agriculture) in areas with significant num15 bers of tobacco-related jobs.

16 ‘‘(2) APPLICATION.—Each State desiring to re17 ceive a grant under this subsection shall submit an

18 application to the Secretary of Agriculture describ19 ing—

20 ‘‘(A) the economic impact of the increase

21 in the rate of tax attributable to the amend22 ments made to section 5701 by subsections (b)

23 and (c) of section 301 and the provisions con24 tained in section 301(d) of the Healthy Moth25 ers, Healthy Children Act of 1995,
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1 ‘‘(B) the State’s 5-year goals with regard

2 to minimizing such economic impact, and

3 ‘‘(C) the State’s proposal for the use of the

4 grant funds.

5 ‘‘(3) ALLOCATION FORMULA.—The Secretary of

6 Agriculture shall develop a formula for allocating

7 grant funds under this section that shall take into

8 account the number of farmers and workers affected

9 by the increase in the rate of tax described in para10 graph (2)(A) in a State and the severity of the eco11 nomic impact in the State.

12 ‘‘(4) ANNUAL REPORTS.—Each State that has

13 received a grant under this subsection shall submit

14 an annual report to the Secretary of Agriculture de15 scribing—

16 ‘‘(A) the economic impact of the increase

17 in the rate of tax described in paragraph

18 (2)(A),

19 ‘‘(B) an evaluation of the State’s activities

20 using grant amounts in the previous year, and

21 ‘‘(C) an improvement plan for the follow22 ing year.

23 ‘‘(5) TERMINATION.—The authority provided by

24 this section shall terminate on December 31, 2000.’’
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1 (2) CLERICAL AMENDMENT.—The table of sec2 tions for such subchapter A is amended by adding

3 at the end the following new item:

‘‘Sec. 9512. Tobacco Alternatives Trust Fund.’’

4 SEC. 303. DESIGNATION OF OVERPAYMENTS AND CON5 TRIBUTIONS FOR THE NATIONAL HEALTH

6 TRUST FUND FOR MOTHERS AND CHILDREN.

7 (a) DESIGNATION OF OVERPAYMENTS AND CON8 TRIBUTIONS FOR THE NATIONAL HEALTH TRUST FUND

9 FOR MOTHERS AND CHILDREN.—

10 (1) IN GENERAL.—Subchapter A of chapter 61

11 of the Internal Revenue Code of 1986 (relating to

12 returns and records) is amended by adding at the

13 end the following new part:

14 ‘‘PART IX—DESIGNATION OF OVERPAYMENTS

15 AND CONTRIBUTIONS FOR THE NATIONAL

16 HEALTH TRUST FUND FOR MOTHERS AND

17 CHILDREN

‘‘Sec. 6097. Amounts for the National Health Trust Fund for Mothers and Children.

18 ‘‘SEC. 6097. AMOUNTS FOR THE NATIONAL HEALTH TRUST

19 FUND FOR MOTHERS AND CHILDREN.

20 ‘‘(a) IN GENERAL.—Every individual (other than a

21 nonresident alien) may designate that—
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1 ‘‘(1) a portion (not less than $1) of any over2 payment of the tax imposed by chapter 1 for the

3 taxable year, and

4 ‘‘(2) a cash contribution (not less than $1),

5 be paid over to the National Health Trust Fund for Moth6 ers and Children. In the case of a joint return of a hus7 band and wife, each spouse may designate one-half of any

8 such overpayment of tax (not less than $2).

9 ‘‘(b) MANNER AND TIME OF DESIGNATION.—Any

10 designation under subsection (a) may be made with re11 spect to any taxable year only at the time of filing the

12 original return of the tax imposed by chapter 1 for such

13 taxable year. Such designation shall be made either on the

14 1st page of the return or on the page bearing the tax15 payer’s signature.

16 ‘‘(c) OVERPAYMENTS TREATED AS REFUNDED.—For

17 purposes of this section, any overpayment of tax des18 ignated under subsection (a) shall be treated as being re19 funded to the taxpayer as of the last day prescribed for

20 filing the return of tax imposed by chapter 1 (determined

21 with regard to extensions) or, if later, the date the return

22 is filed.

23 ‘‘(d) DESIGNATED AMOUNTS NOT DEDUCTIBLE.—

24 No amount designated pursuant to subsection (a) shall be
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1 allowed as a deduction under section 170 or any other sec2 tion for any taxable year.

3 ‘‘(e) TERMINATION.—This section shall not apply to

4 taxable years beginning in a calendar year after a deter5 mination by the Secretary that the sum of all designations

6 under subsection (a) for taxable years beginning in the

7 second year preceding the calendar year is less than

8 $5,000,000.’’.

9 (b) CLERICAL AMENDMENT.—The table of parts for

10 subchapter A of chapter 61 of such Code is amended by

11 adding at the end the following new item:

‘‘Part IX. Designation of overpayments and contributions for the

National Health Trust Fund for Mothers and Children.’’.

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

13 this section shall apply to taxable years beginning with

14 the first calendar year beginning after the date of enact15 ment of this Act.

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