Calendar No. 340

103D CONGRESS

1ST SESSION S. 1779

A BILL

To ensure individual and family security through

Americans.and to ensure and protect the health care of allance practices, to promote choice in health care,care costs and promotes responsible health insurner that contains the rate of growth in healthhealth care coverage for all Americans in a manNOVEMBER 23, 1993

Read the second time and placed on the calendar
II

Calendar No. 340

103D CONGRESS

1ST SESSION S. 1779

To ensure individual and family security through health care coverage for

all Americans in a manner that contains the rate of growth in health

care costs and promotes responsible health insurance practices, to promote choice in health care, and to ensure and protect the health care

of all Americans.

IN THE SENATE OF THE UNITED STATES

NOVEMBER 22, 1993

Mr. KENNEDY introduced the following bill; which was read the first time

NOVEMBER 23, 1993

Read the second time and placed on the calendar

A BILL

To ensure individual and family security through health care

coverage for all Americans in a manner that contains

the rate of growth in health care costs and promotes

responsible health insurance practices, to promote choice

in health care, and to ensure and protect the health

care of all Americans.

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.

2 This Act may be cited as the ‘‘Health Security Act’’.

3 SEC. 2. FINDINGS.

4 The Congress finds as follows:

5 (1) Under the current health care system in the

6 United States—

7 (A) individuals risk losing their health care

8 coverage when they move, when they lose or

9 change jobs, when they become seriously ill, or

10 when the coverage becomes unaffordable;

11 (B) continued escalation of health care

12 costs threatens the economy of the United

13 States, undermines the international competi14 tiveness of the Nation, and strains Federal,

15 State, and local budgets;

16 (C) an excessive burden of forms, paper17 work, and bureaucratic procedures confuses

18 consumers and overwhelms health care provid19 ers;

20 (D) fraud and abuse sap the strength of

21 the health care system; and

22 (E) health care is a critical part of the

23 economy of the United States and interstate

24 commerce, consumes a significant percentage of

25 public and private spending, and affects all in26 dustries and individuals in the United States.
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1 (2) Under any reform of the health care sys2 tem—

3 (A) health insurance and high quality

4 health care should be secure, uninterrupted,

5 and affordable for all individuals in the United

6 States;

7 (B) comprehensive health care benefits

8 that meet the full range of health needs, includ9 ing primary, preventive, and specialized care,

10 should be available to all individuals in the

11 United States;

12 (C) the current high quality of health care

13 in the United States should be maintained;

14 (D) individuals in the United States should

15 be afforded a meaningful opportunity to choose

16 among a range of health plans, health care pro17 viders, and treatments;

18 (E) regulatory and administrative burdens

19 should be reduced;

20 (F) the rapidly escalating costs of health

21 care should be contained without sacrificing

22 high quality or impeding technological improve23 ments;

24 (G) competition in the health care industry

25 should ensure that health plans and health care
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1 providers are efficient and charge reasonable

2 prices;

3 (H) a partnership between the Federal

4 Government and each State should allow the

5 State and its local communities to design an ef6 fective, high-quality system of care that serves

7 the residents of the State;

8 (I) all individuals should have a respon9 sibility to pay their fair share of the costs of

10 health care coverage;

11 (J) a health care system should build on

12 the strength of the employment-based coverage

13 arrangements that now exist in the United

14 States;

15 (K) the penalties for fraud and abuse

16 should be swift and severe; and

17 (L) an individual’s medical information

18 should remain confidential and should be pro19 tected from unauthorized disclosure and use.

20 SEC. 3. PURPOSES.

21 The purposes of this Act are as follows:

22 (1) To guarantee comprehensive and secure

23 health care coverage.

24 (2) To simplify the health care system for con25 sumers and health care professionals.
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1 (3) To control the cost of health care for em2 ployers, employees, and others who pay for health

3 care coverage.

4 (4) To promote individual choice among health

5 plans and health care providers.

6 (5) To ensure high quality health care.

7 (6) To encourage all individuals to take respon8 sibility for their health care coverage.

9 TITLE I—HEALTH CARE

10 SECURITY

TABLE OF CONTENTS OF TITLE

Subtitle A—Universal Coverage and Individual Responsibility

PART 1—UNIVERSAL COVERAGE

Page

Sec. 1001. Entitlement to health benefits ............................................... 11

Sec. 1002. Individual responsibilities ...................................................... 12

Sec. 1003. Protection of consumer choice ............................................... 12

Sec. 1004. Applicable health plan providing coverage ............................ 13

Sec. 1005. Treatment of other nonimmigrants ....................................... 14

Sec. 1006. Effective date of entitlement ................................................. 15

PART 2—TREATMENT OF FAMILIES AND SPECIAL RULES

Sec. 1011. General rule of enrollment of family in same health plan .... 18

Sec. 1012. Treatment of certain families ................................................ 22

Sec. 1013. Multiple employment situations ............................................ 27

Sec. 1014. Treatment of residents of States with statewide single-payer

systems .......................................................................... 29

Subtitle B—Benefits

PART 1—COMPREHENSIVE BENEFIT PACKAGE

Sec. 1101. Provision of comprehensive benefits by plans ....................... 29

PART 2—DESCRIPTION OF ITEMS AND SERVICES COVERED

Sec. 1111. Hospital services .................................................................... 31

Sec. 1112. Services of health professionals ............................................. 33

Sec. 1113. Emergency and ambulatory medical and surgical services ... 34

Sec. 1114. Clinical preventive services .................................................... 35

Sec. 1115. Mental illness and substance abuse services ......................... 43
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Sec. 1116. Family planning services and services for pregnant women 60

Sec. 1117. Hospice care .......................................................................... 60

Sec. 1118. Home health care .................................................................. 60

Sec. 1119. Extended care services .......................................................... 60

Sec. 1120. Ambulance services ................................................................ 63

Sec. 1121. Outpatient laboratory, radiology, and diagnostic services .... 64

Sec. 1122. Outpatient prescription drugs and biologicals ....................... 64

Sec. 1123. Outpatient rehabilitation services .......................................... 66

Sec. 1124. Durable medical equipment and prosthetic and orthotic devices ............................................................................... 67

Sec. 1125. Vision care ............................................................................. 68

Sec. 1126. Dental care ............................................................................ 68

Sec. 1127. Health education classes ....................................................... 70

Sec. 1128. Investigational treatments ..................................................... 71

PART 3—COST SHARING

Sec. 1131. Cost sharing .......................................................................... 73

Sec. 1132. Lower cost sharing ................................................................ 77

Sec. 1133. Higher cost sharing ............................................................... 79

Sec. 1134. Combination cost sharing ...................................................... 82

Sec. 1135. Table of copayments and coinsurance ................................... 83

Sec. 1136. Indexing dollar amounts relating to cost sharing ................. 86

PART 4—EXCLUSIONS

Sec. 1141. Exclusions .............................................................................. 87

PART 5—ROLE OF THE NATIONAL HEALTH BOARD

Sec. 1151. Definition of benefits ............................................................. 89

Sec. 1152. Acceleration of expanded benefits ......................................... 89

Sec. 1153. Authority with respect to clinical preventive services ........... 90

Sec. 1154. Establishment of standards regarding medical necessity ...... 91

PART 6—ADDITIONAL PROVISIONS RELATING TO HEALTH CARE PROVIDERS

Sec. 1161. Override of restrictive State practice laws ............................ 92

Sec. 1162. Provision of items or services contrary to religious belief or

moral conviction ............................................................ 92

Subtitle C—State Responsibilities

Sec. 1200. Participating State ................................................................ 92

PART 1—GENERAL STATE RESPONSIBILITIES

Sec. 1201. General State responsibilities ................................................ 94

Sec. 1202. State responsibilities with respect to alliances ...................... 95

Sec. 1203. State responsibilities relating to health plans ....................... 98

Sec. 1204. Financial solvency; fiscal oversight; guaranty fund .............. 103

Sec. 1205. Restrictions on funding of additional benefits ...................... 105

PART 2—REQUIREMENTS FOR STATE SINGLE-PAYER SYSTEMS

Sec. 1221. Single-payer system described ............................................... 106

Sec. 1222. General requirements for single-payer systems ..................... 106
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Sec. 1223. Special rules for States operating statewide single-payer

system ........................................................................... 111

Sec. 1224. Special rules for alliance-specific single-payer systems ......... 114

Subtitle D—Health Alliances

Sec. 1300. Health alliance defined .......................................................... 115

PART 1—ESTABLISHMENT OF REGIONAL AND CORPORATE ALLIANCES

SUBPART A—REGIONAL ALLIANCES

Sec. 1301. Regional alliance defined ....................................................... 115

Sec. 1302. Board of directors ................................................................. 116

Sec. 1303. Provider advisory boards for regional alliances .................... 117

SUBPART B—CORPORATE ALLIANCES

Sec. 1311. Corporate alliance defined; individuals eligible for coverage

through corporate alliances; additional definitions ....... 118

Sec. 1312. Timing of elections ................................................................ 124

Sec. 1313. Termination of alliance election ............................................ 126

PART 2—GENERAL RESPONSIBILITIES AND AUTHORITIES OF REGIONAL

ALLIANCES

Sec. 1321. Contracts with health plans .................................................. 128

Sec. 1322. Offering choice of health plans for enrollment; establishment of fee-for-service schedule .................................... 129

Sec. 1323. Enrollment rules and procedures .......................................... 135

Sec. 1324. Issuance of health security cards .......................................... 145

Sec. 1325. Consumer information and marketing .................................. 145

Sec. 1326. Ombudsman ........................................................................... 147

Sec. 1327. Data collection; quality .......................................................... 147

Sec. 1328. Additional duties ................................................................... 147

Sec. 1329. Additional authorities for regional alliances to address

needs in areas with inadequate health services; prohibition of insurance role ................................................. 148

Sec. 1330. Prohibition against self-dealing and conflicts of interest ...... 149

PART 3—AUTHORITIES AND RESPONSIBILITIES OF REGIONAL ALLIANCES

RELATING TO FINANCING AND INCOME DETERMINATIONS

SUBPART A—COLLECTION OF FUNDS

Sec. 1341. Information and negotiation and acceptance of bids ............ 150

Sec. 1342. Calculation and publication of general family share and

general employer premium amounts ............................. 153

Sec. 1343. Determination of family share for families ........................... 155

Sec. 1344. Notice of family payments due .............................................. 160

Sec. 1345. Collections .............................................................................. 165

Sec. 1346. Coordination among regional alliances .................................. 168

SUBPART B—PAYMENTS

Sec. 1351. Payment to regional alliance health plans ............................ 171

Sec. 1352. Alliance administrative allowance percentage ....................... 175
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SUBPART C—FINANCIAL MANAGEMENT

Sec. 1361. Management of finances and records .................................... 176

SUBPART D—REDUCTIONS IN COST SHARING; INCOME DETERMINATIONS

Sec. 1371. Reduction in cost sharing for low-income families ................ 180

Sec. 1372. Application process for cost sharing reductions .................... 182

Sec. 1373. Application for premium discounts and reduction in liabilities to alliances ............................................................. 188

Sec. 1374. General provisions relating to application process ................ 189

Sec. 1375. End-of-year reconciliation for premium discount and repayment reduction with actual income ............................... 192

PART 4—RESPONSIBILITIES AND AUTHORITIES OF CORPORATE ALLIANCES

Sec. 1381. Contracts with health plans .................................................. 196

Sec. 1382. Offering choice of health plans for enrollment ...................... 197

Sec. 1383. Enrollment; issuance of health security card ........................ 197

Sec. 1384. Community-rated premiums within premium areas .............. 200

Sec. 1385. Assistance for low-wage families ........................................... 202

Sec. 1386. Consumer information and marketing; data collection and

quality; additional duties ............................................... 202

Sec. 1387. Plan and information requirements ...................................... 202

Sec. 1388. Management of funds; relations with employees ................... 203

Sec. 1389. Cost control ........................................................................... 204

Sec. 1390. Payments by corporate alliance employers to corporate alliances .............................................................................. 204

Sec. 1391. Coordination of payments ..................................................... 205

Sec. 1392. Applicability of ERISA enforcement mechanisms for enforcement of certain requirements ................................ 206

Sec. 1393. Applicability of certain ERISA protections to enrolled individuals ........................................................................... 206

Sec. 1394. Disclosure and reserve requirements ..................................... 206

Sec. 1395. Trusteeship by the Secretary of insolvent corporate alliance

health plans ................................................................... 207

Subtitle E—Health Plans

Sec. 1400. Health plan defined ............................................................... 213

PART 1—REQUIREMENTS RELATING TO COMPREHENSIVE BENEFIT PACKAGE

Sec. 1401. Application of requirements .................................................. 214

Sec. 1402. Requirements relating to enrollment and coverage ............... 214

Sec. 1403. Community rating ................................................................. 219

Sec. 1404. Marketing of health plans; information ................................ 220

Sec. 1405. Grievance procedure .............................................................. 222

Sec. 1406. Health plan arrangements with providers ............................. 222

Sec. 1407. Preemption of certain State laws relating to health plans ... 226

Sec. 1408. Financial solvency ................................................................. 227

Sec. 1409. Requirement for offering cost sharing policy ........................ 228

Sec. 1410. Quality assurance .................................................................. 228

Sec. 1411. Provider verification .............................................................. 228

Sec. 1412. Consumer disclosures of utilization management protocols .. 228

Sec. 1413. Confidentiality, data management, and reporting ................ 229

Sec. 1414. Participation in reinsurance system ...................................... 229
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PART 2—REQUIREMENTS RELATING TO SUPPLEMENTAL INSURANCE

Sec. 1421. Imposition of requirements on supplemental insurance ........ 230

Sec. 1422. Standards for supplemental health benefit policies ............... 232

Sec. 1423. Standards for cost sharing policies ....................................... 234

PART 3—REQUIREMENTS RELATING TO ESSENTIAL COMMUNITY PROVIDERS

Sec. 1431. Health plan requirement ....................................................... 237

Sec. 1432. Sunset of requirement ........................................................... 240

PART 4—REQUIREMENTS RELATING TO WORKERS’ COMPENSATION AND

AUTOMOBILE MEDICAL LIABILITY COVERAGE

Sec. 1441. Reference to requirements relating to workers compensation

services .......................................................................... 244

Sec. 1442. Reference to requirements relating to automobile medical liability services ............................................................... 244

Subtitle F—Federal Responsibilities

PART 1—NATIONAL HEALTH BOARD

SUBPART A—ESTABLISHMENT OF NATIONAL HEALTH BOARD

Sec. 1501. Creation of National Health Board; membership ................. 245

Sec. 1502. Qualifications of board members ........................................... 247

Sec. 1503. General duties and responsibilities ........................................ 248

Sec. 1504. Annual report ........................................................................ 250

Sec. 1505. Powers ................................................................................... 251

Sec. 1506. Funding ................................................................................. 252

SUBPART B—RESPONSIBILITIES RELATING TO REVIEW AND APPROVAL OF

STATE SYSTEMS

Sec. 1511. Federal review and action on State systems ......................... 253

Sec. 1512. Failure of participating States to meet conditions for compliance ........................................................................... 258

Sec. 1513. Reduction in payments for health programs by Secretary of

Health and Human Services ......................................... 261

Sec. 1514. Review of Federal determinations ......................................... 261

Sec. 1515. Federal support for State implementation ............................ 262

SUBPART C—RESPONSIBILITIES IN ABSENCE OF STATE SYSTEMS

Sec. 1521. Application of subpart ........................................................... 263

Sec. 1522. Federal assumption of responsibilities in non-participating

States ............................................................................ 264

Sec. 1523. Imposition of surcharge on premiums under federally-operated system ................................................................... 265

Sec. 1524. Return to State operation ..................................................... 266

SUBPART D—ESTABLISHMENT OF CLASS FACTORS FOR CHARGING PREMIUMS

Sec. 1531. Premium class factors ........................................................... 267
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SUBPART E—RISK ADJUSTMENT AND REINSURANCE METHODOLOGY FOR

PAYMENT OF PLANS

Sec. 1541. Development of a risk adjustment and reinsurance methodology .......................................................................... 267

Sec. 1542. Incentives to enroll disadvantaged groups ............................ 273

Sec. 1543. Advisory committee ............................................................... 274

Sec. 1544. Research and demonstrations ................................................ 274

Sec. 1545. Technical assistance to States and alliances ......................... 274

SUBPART F—RESPONSIBILITIES FOR FINANCIAL REQUIREMENTS

Sec. 1551. Capital standards for regional alliance health plan .............. 274

Sec. 1552. Standard for guaranty funds ................................................ 276

PART 2—RESPONSIBILITIES OF DEPARTMENT OF HEALTH AND HUMAN

SERVICES

SUBPART A—GENERAL RESPONSIBILITIES

Sec. 1571. General responsibilities of Secretary of Health and Human

Services ......................................................................... 277

Sec. 1572. Advisory council on breakthrough drugs ............................... 279

SUBPART B—CERTIFICATION OF ESSENTIAL COMMUNITY PROVIDERS

Sec. 1581. Certification ........................................................................... 281

Sec. 1582. Categories of providers automatically certified ..................... 282

Sec. 1583. Standards for additional providers ........................................ 284

Sec. 1584. Certification process; review; termination of certifications ... 286

Sec. 1585. Notification of health alliances and participating States ...... 287

PART 3—SPECIFIC RESPONSIBILITIES OF SECRETARY OF LABOR

Sec. 1591. Responsibilities of Secretary of Labor .................................. 288

Subtitle G—Employer Responsibilities

Sec. 1601. Payment requirement ............................................................ 291

Sec. 1602. Requirement for information reporting ................................. 292

Sec. 1603. Requirements relating to new employees .............................. 302

Sec. 1604. Auditing of records ................................................................ 304

Sec. 1605. Prohibition of certain employer discrimination ..................... 304

Sec. 1606. Prohibition on self-funding of cost sharing benefits by regional alliance employers ............................................... 304

Sec. 1607. Equal voluntary contribution requirement ............................ 305

Sec. 1608. Employer retiree obligation ................................................... 310

Sec. 1609. Enforcement .......................................................................... 311

Subtitle J—General Definitions; Miscellaneous Provisions

PART 1—GENERAL DEFINITIONS

Sec. 1901. Definitions relating to employment and income .................... 312

Sec. 1902. Other general definitions ....................................................... 319

PART 2—MISCELLANEOUS PROVISIONS

Sec. 1911. Use of interim, final regulations ........................................... 329

Sec. 1912. Social Security Act references ............................................... 329
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1 TITLE I—HEALTH CARE

2 SECURITY

3 Subtitle A—Universal Coverage

4 and Individual Responsibility

5 PART 1—UNIVERSAL COVERAGE

6 SEC. 1001. ENTITLEMENT TO HEALTH BENEFITS.

7 (a) IN GENERAL.—In accordance with this part, each

8 eligible individual is entitled to the comprehensive benefit

9 package under subtitle B through the applicable health

10 plan in which the individual is enrolled consistent with this

11 title.

12 (b) HEALTH SECURITY CARD.—Each eligible individ13 ual is entitled to a health security card to be issued by

14 the alliance or other entity that offers the applicable

15 health plan in which the individual is enrolled.

16 (c) ELIGIBLE INDIVIDUAL DEFINED.—In this Act,

17 the term ‘‘eligible individual’’ means an individual who is

18 residing in the United States and who is—

19 (1) a citizen or national of the United States;

20 (2) an alien permanently residing in the United

21 States under color of law (as defined in section

22 1902(1)); or

23 (3) a long-term nonimmigrant (as defined in

24 section 1902(19)).
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1 (d) TREATMENT OF MEDICARE-ELIGIBLE INDIVID2 UALS.—Subject to section 1012(a), a medicare-eligible in3 dividual is entitled to health benefits under the medicare

4 program instead of the entitlement under subsection (a).

5 (e) TREATMENT OF PRISONERS.—A prisoner (as de6 fined in section 1902(26)) is entitled to health care serv7 ices provided by the authority responsible for the prisoner

8 instead of the entitlement under subsection (a).

9 SEC. 1002. INDIVIDUAL RESPONSIBILITIES.

10 (a) IN GENERAL.—In accordance with this Act, each

11 eligible individual (other than a medicare-eligible individ12 ual)—

13 (1) must enroll in an applicable health plan for

14 the individual, and

15 (2) must pay any premium required, consistent

16 with this Act, with respect to such enrollment.

17 (b) LIMITATION ON DISENROLLMENT.—No eligible

18 individual shall be disenrolled from an applicable health

19 plan until the individual—

20 (1) is enrolled under another applicable health

21 plan, or

22 (2) becomes a medicare-eligible individual.

23 SEC. 1003. PROTECTION OF CONSUMER CHOICE.

24 Nothing in this Act shall be construed as prohibiting

25 the following:
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1 (1) An individual from purchasing any health

2 care services.

3 (2) An individual from purchasing supplemental

4 insurance (offered consistent with this Act) to cover

5 health care services not included within the com6 prehensive benefit package.

7 (3) An individual who is not an eligible individ8 ual from purchasing health insurance (other than

9 through a regional alliance).

10 (4) Employers from providing coverage for ben11 efits in addition to the comprehensive benefit pack12 age (subject to part 2 of subtitle E).

13 SEC. 1004. APPLICABLE HEALTH PLAN PROVIDING COV14 ERAGE.

15 (a) SPECIFICATION OF APPLICABLE HEALTH

16 PLAN.—Except as otherwise provided:

17 (1) GENERAL RULE: REGIONAL ALLIANCE

18 HEALTH PLANS.—The applicable health plan for a

19 family is a regional alliance health plan for the alli20 ance area in which the family resides.

21 (2) CORPORATE ALLIANCE HEALTH PLANS.—In

22 the case of a family member that is eligible to enroll

23 in a corporate alliance health plan under section

24 1311(c), the applicable health plan for the family is

25 such a corporate alliance health plan.
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1 (b) CHOICE OF PLANS FOR CERTAIN GROUPS.—

2 (1) MILITARY PERSONNEL AND FAMILIES.—For

3 military personnel and families who elect a Uni4 formed Services Health Plan of the Department of

5 Defense under section 1073a(d) of title 10, United

6 States Code, as inserted by section 8001(a) of this

7 Act, that plan shall be the applicable health plan.

8 (2) VETERANS.—For veterans and families who

9 elect to enroll in a veterans health plan under sec10 tion 1801 of title 38, United States Code, as in11 serted by section 8101(a) of this Act, that plan shall

12 be the applicable health plan.

13 (3) INDIANS.—For those individuals who are el14 igible to enroll, and who elect to enroll, in a health

15 program of the Indian Health Service under section

16 8302(b) or 8306(b), that program shall be the appli17 cable health plan.

18 SEC. 1005. TREATMENT OF OTHER NONIMMIGRANTS.

19 (a) UNDOCUMENTED ALIENS INELIGIBLE FOR BEN20 EFITS.—An undocumented alien is not eligible to obtain

21 the comprehensive benefit package through enrollment in

22 a health plan pursuant to this Act.

23 (b) DIPLOMATS AND OTHER FOREIGN GOVERNMENT

24 OFFICIALS.—Subject to conditions established by the Na25 tional Health Board in consultation with the Secretary of
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1 State, a nonimmigrant under subparagraph (A) or (G) of

2 section 101(a)(15) of the Immigration and Nationality Act

3 may obtain the comprehensive benefit package through en4 rollment in the regional alliance health plan for the alli5 ance area in which the nonimmigrant resides.

6 (c) RECIPROCAL TREATMENT OF OTHER

7 NONIMMIGRANTS.—With respect to those classes of indi8 viduals who are lawful nonimmigrants but who are not

9 long-term nonimmigrants (as defined in section 1902(19))

10 or described in subsection (b), such individuals may obtain

11 such benefits through enrollment with regional alliance

12 health plans only in accordance with such reciprocal agree13 ments between the United States and foreign states as

14 may be entered into.

15 SEC. 1006. EFFECTIVE DATE OF ENTITLEMENT.

16 (a) REGIONAL ALLIANCE ELIGIBLE INDIVIDUALS.—

17 (1) IN GENERAL.—In the case of regional alli18 ance eligible individuals residing in a State, the enti19 tlement under this part (and requirements under

20 section 1002) shall not take effect until the State

21 becomes a participating State (as defined in section

22 1200).

23 (2) TRANSITIONAL RULE FOR CORPORATE ALLI24 ANCES.—
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1 (A) IN GENERAL.—In the case of a State

2 that becomes a participating State before the

3 general effective date (as defined in subsection

4 (c)) and for periods before such date, under

5 rules established by the Board, an individual

6 who is covered under a plan (described in sub7 paragraph (C)) based on the individual (or the

8 individual’s spouse) being a qualifying employee

9 of a qualifying employer, the individual shall

10 not be treated under this Act as a regional alli11 ance eligible individual.

12 (B) QUALIFYING EMPLOYER DEFINED.—In

13 subparagraph (A), the term ‘‘qualifying em14 ployer’’ means an employer that—

15 (i) is described in section

16 1311(b)(1)(A), or is participating in a

17 multiemployer plan described in section

18 1311(b)(1)(B) or plan described in section

19 1311(b)(1)(C), and

20 (ii) provides such notice to the re21 gional alliance involved as the Board speci22 fies.

23 (C) BENEFITS PLAN DESCRIBED.—A plan

24 described in this subparagraph is an employee

25 benefit plan that—
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1 (i) provides (through insurance or

2 otherwise) the comprehensive benefit pack3 age, and

4 (ii) provides an employer contribution

5 of at least 80 percent of the premium (or

6 premium equivalent) for coverage.

7 (b) CORPORATE ALLIANCE ELIGIBLE INDIVID8 UALS.—

9 (1) IN GENERAL.—In the case of corporate alli10 ance eligible individuals, the entitlement under this

11 part shall not take effect until the general effective

12 date.

13 (2) TRANSITION.—For purposes of this Act and

14 before the general effective date, in the case of an

15 eligible individual who resides in a participating

16 State, the individual is deemed a regional alliance el17 igible individual until the individual becomes a cor18 porate alliance eligible individual, unless subsection

19 (a)(2)(A) applies to the individual.

20 (c) GENERAL EFFECTIVE DATE DEFINED.—In this

21 Act, the term ‘‘general effective date’’ means January 1,

22 1998.
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1 PART 2—TREATMENT OF FAMILIES AND SPECIAL

2 RULES

3 SEC. 1011. GENERAL RULE OF ENROLLMENT OF FAMILY IN

4 SAME HEALTH PLAN.

5 (a) IN GENERAL.—Except as provided in this part

6 or otherwise, all members of the same family (as defined

7 in subsection (b)) shall be enrolled in the same applicable

8 health plan.

9 (b) FAMILY DEFINED.—In this Act, unless otherwise

10 provided, the term ‘‘family’’—

11 (1) means, with respect to an eligible individual

12 who is not a child (as defined in subsection (c)), the

13 individual; and

14 (2) includes the following persons (if any):

15 (A) The individual’s spouse if the spouse is

16 an eligible individual.

17 (B) The individual’s children (and, if appli18 cable, the children of the individual’s spouse) if

19 they are eligible individuals.

20 (c) CLASSES OF FAMILY ENROLLMENT; TERMINOL21 OGY.—

22 (1) IN GENERAL.—In this Act, each of the fol23 lowing is a separate class of family enrollment:

24 (A) Coverage only of an individual (re25 ferred to in this Act as the ‘‘individual’’ enroll26 ment or class of enrollment).
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1 (B) Coverage of a married couple without

2 children (referred to in this Act as the ‘‘couple3 only’’ enrollment or class of enrollment).

4 (C) Coverage of an unmarried individual

5 and one or more children (referred to in this

6 Act as the ‘‘single parent’’ enrollment or class

7 of enrollment).

8 (D) Coverage of a married couple and one

9 or more children (referred to in this Act as the

10 ‘‘dual parent’’ enrollment or class of enroll11 ment).

12 (2) REFERENCES TO FAMILY AND COUPLE

13 CLASSES OF ENROLLMENT.—In this Act:

14 (A) FAMILY.—The terms ‘‘family enroll15 ment’’ and ‘‘family class of enrollment’’, refer

16 to enrollment in a class of enrollment described

17 in subparagraph (B), (C), or (D) of paragraph

18 (1).

19 (B) COUPLE.—The term ‘‘couple class of

20 enrollment’’ refers to enrollment in a class of

21 enrollment described in subparagraph (B) or

22 (D) of paragraph (1).

23 (d) SPOUSE; MARRIED; COUPLE.—

24 (1) IN GENERAL.—In this Act, the terms

25 ‘‘spouse’’ and ‘‘married’’ mean, with respect to a
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1 person, another individual who is the spouse of the

2 person or married to the person, as determined

3 under applicable State law.

4 (2) COUPLE.—The term ‘‘couple’’ means an in5 dividual and the individual’s spouse.

6 (e) CHILD DEFINED.—

7 (1) IN GENERAL.—In this Act, except as other8 wise provided, the term ‘‘child’’ means an eligible in9 dividual who (consistent with paragraph (3))—

10 (A) is under 18 years of age (or under 24

11 years of age in the case of a full-time student),

12 and

13 (B) is a dependent of an eligible individual.

14 (2) APPLICATION OF STATE LAW.—Subject to

15 paragraph (3), determinations of whether a person

16 is the child of another person shall be made in ac17 cordance with applicable State law.

18 (3) NATIONAL RULES.—The National Health

19 Board may establish such national rules respecting

20 individuals who will be treated as children under this

21 Act as the Board determines to be necessary. Such

22 rules shall be consistent with the following prin23 ciples:

24 (A) STEP AND FOSTER CHILD.—A child in25 cludes a step child or foster child who is an eli-
21

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1 gible individual living with an adult in a regular

2 parent-child relationship.

3 (B) DISABLED CHILD.—A child includes

4 an unmarried dependent eligible individual re5 gardless of age who is incapable of self-support

6 because of mental or physical disability which

7 existed before age 21.

8 (C) CERTAIN 3-GENERATION FAMILIES.—A

9 child includes the grandchild of an individual, if

10 the parent of the grandchild is a child and the

11 parent and grandchild are living with the

12 grandparent.

13 (D) TREATMENT OF EMANCIPATED MI14 NORS AND MARRIED INDIVIDUALS.—An emanci15 pated minor or married individual shall not be

16 treated as a child.

17 (E) CHILDREN PLACED FOR ADOPTION.—

18 A child includes a child who is placed for adop19 tion with an eligible individual.

20 (f) ADDITIONAL RULES.—The Board shall provide

21 for such additional exceptions and special rules, including

22 rules relating to—

23 (1) families in which members are not residing

24 in the same area or in which children are not resid25 ing with their parents,
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1 (2) the treatment of eligible individuals who are

2 under 19 years of age and who are not a dependent

3 of an eligible individual,

4 (3) changes in family composition occurring

5 during a year, and

6 (4) treatment of children of parents who are

7 separated or divorced,

8 as the Board finds appropriate.

9 SEC. 1012. TREATMENT OF CERTAIN FAMILIES.

10 (a) TREATMENT OF MEDICARE-ELIGIBLE INDIVID11 UALS WHO ARE QUALIFYING EMPLOYEES OR SPOUSES OF

12 QUALIFYING EMPLOYEES.—

13 (1) IN GENERAL.—Except as specifically pro14 vided, in the case of an individual who is an individ15 ual described in paragraph (2) with respect to 2 con16 secutive months in a year (and it is anticipated

17 would be in the following month and in such follow18 ing month would be a medicare-eligible individual

19 but for this paragraph), the individual shall not be

20 treated as a medicare-eligible individual under this

21 Act during such following month and the remainder

22 of the year.

23 (2) INDIVIDUAL DESCRIBED.—An individual de24 scribed in this paragraph with respect to a month is

25 an individual who is a qualifying employee or the
23

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1 spouse or family member of a qualifying employee in

2 the month.

3 (b) SEPARATE TREATMENT FOR CERTAIN GROUPS

4 OF INDIVIDUALS.—In the case of a family that includes

5 one or more individuals in a group described in subsection

6 (c)—

7 (1) all the individuals in each such group within

8 the family shall be treated collectively as a separate

9 family, and

10 (2) all the individuals not described in any such

11 group shall be treated collectively as a separate

12 family.

13 (c) GROUPS OF INDIVIDUALS DESCRIBED.—Each of

14 the following is a group of individuals described in this

15 subsection:

16 (1) AFDC recipients (as defined in section

17 1902(3)).

18 (2) Disabled SSI recipients (as defined in sec19 tion 1902(13)) .

20 (3) SSI recipients (as defined in section

21 1902(33)) who are not disabled SSI recipients.

22 (4) Electing veterans (as defined in subsection

23 (d)(1)).

24 (5) Active duty military personnel (as defined

25 in subsection (d)(2)).
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1 (6) Electing Indians (as defined in subsection

2 (d)(3)).

3 (7) Prisoners (as defined in section 1902(26)).

4 (d) SPECIAL RULES.—In this Act:

5 (1) ELECTING VETERANS.—

6 (A) DEFINED.—Subject to subparagraph

7 (B), the term ‘‘electing veteran’’ means a vet8 eran who makes an election to enroll with a

9 health plan of the Department of Veterans Af10 fairs under chapter 18 of title 38, United

11 States Code, as added by section 8101(a)(1).

12 (B) FAMILY EXCEPTION.—Subparagraph

13 (A) shall not apply with respect to coverage

14 under a health plan referred to in such sub15 paragraph if, for the area in which the electing

16 veteran resides, such health plan offers cov17 erage to family members of an electing veteran

18 and the veteran elects family enrollment under

19 such plan (instead of individual enrollment).

20 (2) ACTIVE DUTY MILITARY PERSONNEL.—

21 (A) IN GENERAL.—Subject to subpara22 graph (B), the term ‘‘active duty military per23 sonnel’’ means an individual on active duty in

24 the Uniformed Services of the United States.
25

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1 (B) EXCEPTION.—If an individual de2 scribed in subparagraph (A) elects family cov3 erage under section 1073a(e)(2)(A) of title 10,

4 United States Code (as added by section

5 8001(a)), then paragraph (5) of subsection (c)

6 shall not apply with respect to such coverage.

7 (3) ELECTING INDIANS.—

8 (A) IN GENERAL.—Subject to subpara9 graph (B), the term ‘‘electing Indian’’ means

10 an eligible individual who makes an election

11 under section 8302(b) of this Act.

12 (B) FAMILY ELECTION FOR ALL INDIVID13 UALS ELIGIBLE TO ELECT.—No such election

14 shall be made with respect to an individual in

15 a family (as defined without regard to this sec16 tion) unless such election is made for all eligible

17 individuals (described in section 8302(a)) who

18 are family members of the family.

19 (4) MULTIPLE CHOICE.—Eligible individuals

20 who are permitted to elect coverage under more than

21 one health plan or program referred to in this sub22 section may elect which of such plans or programs

23 will be the applicable health plan under this Act.

24 (e) QUALIFYING STUDENTS.—
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1 (1) IN GENERAL.—In the case of a qualifying

2 student (described in paragraph (2)), the student

3 may elect to enroll in a regional alliance health plan

4 offered by the regional alliance for the area in which

5 the school is located.

6 (2) QUALIFYING STUDENT.—In paragraph (1),

7 the term ‘‘qualifying student’’ means an individual

8 who—

9 (A) but for this subsection would receive

10 coverage under a health plan as a child of an11 other person, and

12 (B) is a full-time student at a school in an

13 alliance area that is different from the alliance

14 area (or, in the case of a corporate alliance,

15 such coverage area as the Board may specify)

16 providing the coverage described in subpara17 graph (A).

18 (3) PAYMENT RULES.—

19 (A) CONTINUED TREATMENT AS FAM20 ILY.—Except as provided in subparagraph (B),

21 nothing in this subsection shall be construed as

22 affecting the payment liabilities between fami23 lies and health alliances or between health alli24 ances and health plans.
27

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1 (B) TRANSFER PAYMENT.—In the case of

2 an election under paragraph (1), for transfer

3 payments see section 1346(e).

4 (f) SPOUSES LIVING IN DIFFERENT ALLIANCE

5 AREAS.—The Board shall provide for such special rules

6 in applying this Act in the case of a couple in which the

7 spouses reside in different alliance areas as the Board

8 finds appropriate.

9 SEC. 1013. MULTIPLE EMPLOYMENT SITUATIONS.

10 (a) MULTIPLE EMPLOYMENT OF AN INDIVIDUAL.—

11 In the case of an individual who—

12 (1)(A) is not married or (B) is married and

13 whose spouse is not a qualifying employee (as de14 fined in section 1901(b)(1)),

15 (2) is not a child, and

16 (3) who is a qualifying employee both of a re17 gional alliance employer and of a corporate alliance

18 employer (or of 2 corporate alliance employers),

19 the individual may elect the applicable health plan to be

20 either a regional alliance health plan (for the alliance area

21 in which the individual resides) or a corporate alliance

22 health plan (for an employer employing the individual).

23 (b) MULTIPLE EMPLOYMENT WITHIN A FAMILY.—

24 (1) MARRIED COUPLE WITH EMPLOYMENT

25 WITH A REGIONAL ALLIANCE EMPLOYER AND WITH
28

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1 A CORPORATE ALLIANCE EMPLOYER.—In the case of

2 a married individual—

3 (A) who is a qualifying employee of a re4 gional alliance employer and whose spouse is a

5 qualifying employee of a corporate alliance em6 ployer, or

7 (B) who is a qualifying employee of a cor8 porate alliance employer and whose spouse is a

9 qualifying employee of a regional alliance em10 ployer,

11 the individual and the individual’s spouse may elect

12 the applicable health plan to be either a regional alli13 ance health plan (for the alliance area in which the

14 couple resides) or a corporate alliance health plan

15 (for an employer employing the individual or the

16 spouse).

17 (2) MARRIED COUPLE WITH DIFFERENT COR18 PORATE ALLIANCE EMPLOYERS.—In the case of a

19 married individual—

20 (A) who is a qualifying employee of a cor21 porate alliance employer, and

22 (B) whose spouse is a qualifying employee

23 of a different corporate alliance employer,

24 the individual and the individual’s spouse may elect

25 the applicable health plan to be a corporate alliance
29

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1 health plan for an employer employing either the in2 dividual or the spouse.

3 SEC. 1014. TREATMENT OF RESIDENTS OF STATES WITH

4 STATEWIDE SINGLE-PAYER SYSTEMS.

5 (a) UNIVERSAL COVERAGE.—Notwithstanding the

6 previous provisions of this title, except as provided in part

7 2 of subtitle C, in the case of an individual who resides

8 in a State that has a Statewide single-payer system under

9 section 1223, universal coverage shall be provided consist10 ent with section 1222(3).

11 (b) INDIVIDUAL RESPONSIBILITIES.—In the case of

12 an individual who resides in a single-payer State, the re13 sponsibilities of such individual under such system shall

14 supersede the obligations of the individual under section

15 1002.

16 Subtitle B—Benefits

17 PART 1—COMPREHENSIVE BENEFIT PACKAGE

18 SEC. 1101. PROVISION OF COMPREHENSIVE BENEFITS BY

19 PLANS.

20 (a) IN GENERAL.—The comprehensive benefit pack21 age shall consist of the following items and services (as

22 described in part 2), subject to the cost sharing require23 ments described in part 3, the exclusions described in part

24 4, and the duties and authority of the National Health

25 Board described in part 5:
30

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1 (1) Hospital services (described in section

2 1111).

3 (2) Services of health professionals (described

4 in section 1112).

5 (3) Emergency and ambulatory medical and

6 surgical services (described in section 1113).

7 (4) Clinical preventive services (described in

8 section 1114).

9 (5) Mental illness and substance abuse services

10 (described in section 1115).

11 (6) Family planning services and services for

12 pregnant women (described in section 1116).

13 (7) Hospice care (described in section 1117).

14 (8) Home health care (described in section

15 1118).

16 (9) Extended care services (described in section

17 1119).

18 (10) Ambulance services (described in section

19 1120).

20 (11) Outpatient laboratory, radiology, and diag21 nostic services (described in section 1121).

22 (12) Outpatient prescription drugs and

23 biologicals (described in section 1122).

24 (13) Outpatient rehabilitation services (de25 scribed in section 1123).
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1 (14) Durable medical equipment and prosthetic

2 and orthotic devices (described in section 1124).

3 (15) Vision care (described in section 1125).

4 (16) Dental care (described in section 1126).

5 (17) Health education classes (described in sec6 tion 1127).

7 (18) Investigational treatments (described in

8 section 1128).

9 (b) NO OTHER LIMITATIONS OR COST SHARING.—

10 The items and services in the comprehensive benefit pack11 age shall not be subject to any duration or scope limitation

12 or any deductible, copayment, or coinsurance amount that

13 is not required or authorized under this Act.

14 (c) HEALTH PLAN.—Unless otherwise provided in

15 this subtitle, for purposes of this subtitle, the term ‘‘health

16 plan’’ has the meaning given such term in section 1400.

17 PART 2—DESCRIPTION OF ITEMS AND SERVICES

18 COVERED

19 SEC. 1111. HOSPITAL SERVICES.

20 (a) COVERAGE.—The hospital services described in

21 this section are the following items and services:

22 (1) Inpatient hospital services.

23 (2) Outpatient hospital services.

24 (3) 24-hour a day hospital emergency services.
32

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1 (b) LIMITATION.—The hospital services described in

2 this section do not include hospital services provided for

3 the treatment of a mental or substance abuse disorder

4 (which are subject to section 1115), except for medical de5 toxification as required for the management of medical

6 conditions associated with withdrawal from alcohol or

7 drugs (which is not covered under such section).

8 (c) DEFINITIONS.—For purposes of this subtitle:

9 (1) HOSPITAL.—The term ‘‘hospital’’ has the

10 meaning given such term in section 1861(e) of the

11 Social Security Act, except that such term shall in12 clude—

13 (A) in the case of an item or service pro14 vided to an individual whose applicable health

15 plan is specified pursuant to section 1004(b)(1),

16 a facility of the uniformed services under title

17 10, United States Code, that is primarily en18 gaged in providing services to inpatients that

19 are equivalent to the services provided by a hos20 pital defined in such section 1861(e);

21 (B) in the case of an item or service pro22 vided to an individual whose applicable health

23 plan is specified pursuant to section 1004(b)(2),

24 a facility operated by the Department of Veter25 ans Affairs that is primarily engaged in provid-
33

•S 1779 PCS

1 ing services to inpatients that are equivalent to

2 the services provided by a hospital defined in

3 such section 1861(e); and

4 (C) in the case of an item or service pro5 vided to an individual whose applicable health

6 plan is specified pursuant to section 1004(b)(3),

7 a facility operated by the Indian Health Service

8 that is primarily engaged in providing services

9 to inpatients that are equivalent to the services

10 provided by a hospital defined in such section

11 1861(e).

12 (2) INPATIENT HOSPITAL SERVICES.—The term

13 ‘‘inpatient hospital services’’ means items and serv14 ices described in paragraphs (1) through (3) of sec15 tion 1861(b) of the Social Security Act when pro16 vided to an inpatient of a hospital. The National

17 Health Board shall specify those health professional

18 services described in section 1112 that shall be

19 treated as inpatient hospital services when provided

20 to an inpatient of a hospital.

21 SEC. 1112. SERVICES OF HEALTH PROFESSIONALS.

22 (a) COVERAGE.—The items and services described in

23 this section are—
34

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1 (1) inpatient and outpatient health professional

2 services, including consultations, that are provided

3 in—

4 (A) a home, office, or other ambulatory

5 care setting; or

6 (B) an institutional setting; and

7 (2) services and supplies (including drugs and

8 biologicals which cannot be self-administered) fur9 nished as an incident to such health professional

10 services, of kinds which are commonly furnished in

11 the office of a health professional and are commonly

12 either rendered without charge or included in the bill

13 of such professional.

14 (b) LIMITATION.—The items and services described

15 in this section do not include items or services that are

16 described in any other section of this part. An item or

17 service that is described in section 1114 but is not pro18 vided consistent with a periodicity schedule for such item

19 or service specified in such section or under section 1153

20 may be covered under this section if the item or service

21 otherwise meets the requirements of this section.

22 (c) DEFINITIONS.—Unless otherwise provided in this

23 Act, for purposes of this Act:
35

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1 (1) HEALTH PROFESSIONAL.—The term

2 ‘‘health professional’’ means an individual who pro3 vides health professional services.

4 (2) HEALTH PROFESSIONAL SERVICES.—The

5 term ‘‘health professional services’’ means profes6 sional services that—

7 (A) are lawfully provided by a physician; or

8 (B) would be described in subparagraph

9 (A) if provided by a physician, but are provided

10 by another person who is legally authorized to

11 provide such services in the State in which the

12 services are provided.

13 SEC. 1113. EMERGENCY AND AMBULATORY MEDICAL AND

14 SURGICAL SERVICES.

15 The emergency and ambulatory medical and surgical

16 services described in this section are the following items

17 and services provided by a health facility that is not a hos18 pital and that is legally authorized to provide the services

19 in the State in which they are provided:

20 (1) 24-hour a day emergency services.

21 (2) Ambulatory medical and surgical services.

22 SEC. 1114. CLINICAL PREVENTIVE SERVICES.

23 (a) COVERAGE.—The clinical preventive services de24 scribed in this section are—
36

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1 (1) an item or service for high risk populations

2 (as defined by the National Health Board) that is

3 specified and defined by the Board under section

4 1153, but only when the item or service is provided

5 consistent with any periodicity schedule for the item

6 or service promulgated by the Board;

7 (2) except as modified by the National Health

8 Board under section 1153, an age-appropriate im9 munization, test, or clinician visit specified in one of

10 subsections (b) through (h) that is provided consist11 ent with any periodicity schedule for the item or

12 service specified in the applicable subsection or by

13 the National Health Board under section 1153; and

14 (3) an immunization, test, or clinician visit that

15 is provided to an individual during an age range

16 other than the age range for such immunization,

17 test, or clinician visit that is specified in one of sub18 sections (b) through (h), but only when provided

19 consistent with any requirements for such immuniza20 tions, tests, and clinician visits established by the

21 National Health Board under section 1153.

22 (b) INDIVIDUALS UNDER 3.—For an individual

23 under 3 years of age:
37

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1 (1) IMMUNIZATIONS.—The immunizations spec2 ified in this subsection are age-appropriate immuni3 zations for the following illnesses:

4 (A) Diphtheria.

5 (B) Tetanus.

6 (C) Pertussis.

7 (D) Polio.

8 (E) Haemophilus influenzae type B.

9 (F) Measles.

10 (G) Mumps.

11 (H) Rubella.

12 (I) Hepatitis B.

13 (2) TESTS.—The tests specified in this sub14 section are as follows:

15 (A) 1 hematocrit.

16 (B) 2 blood tests to screen for blood lead

17 levels for individuals who are at risk for lead

18 exposure.

19 (3) CLINICIAN VISITS.—The clinician visits

20 specified in this subsection are 1 clinician visit for

21 an individual who is newborn and 7 other clinician

22 visits.

23 (c) INDIVIDUALS AGE 3 TO 5.—For an individual at

24 least 3 years of age, but less than 6 years of age:
38

•S 1779 PCS

1 (1) IMMUNIZATIONS.—The immunizations spec2 ified in this subsection are age-appropriate immuni3 zations for the following illnesses:

4 (A) Diphtheria.

5 (B) Tetanus.

6 (C) Pertussis.

7 (D) Polio.

8 (E) Measles.

9 (F) Mumps.

10 (G) Rubella.

11 (2) TESTS.—The tests specified in this sub12 section are 1 urinalysis.

13 (3) CLINICIAN VISITS.—The clinician visits

14 specified in this subsection are 3 clinician visits.

15 (d) INDIVIDUALS AGE 6 TO 12.—For an individual

16 at least 6 years of age, but less than 13 years of age,

17 the clinician visits specified in this subsection are 3 clini18 cian visits.

19 (e) INDIVIDUALS AGE 13 TO 19.—For an individual

20 at least 13 years of age, but less than 20 years of age:

21 (1) IMMUNIZATIONS.—The immunizations spec22 ified in this subsection are age-appropriate immuni23 zations for the following illnesses:

24 (A) Tetanus.

25 (B) Diphtheria.
39

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1 (2) TESTS.—The tests specified in this sub2 section are as follows:

3 (A) Papanicolaou smears and pelvic exams,

4 for females who have reached childbearing age

5 and are at risk for cervical cancer, every 3

6 years, but—

7 (i) annually until 3 consecutive nega8 tive smears have been obtained, if medi9 cally necessary; and

10 (ii) annually for females who are at

11 risk for fertility related infectious illnesses.

12 (B) Annual screening for chlamydia and

13 gonorrhea for females who have reached child14 bearing age and are at risk for fertility related

15 infectious illnesses.

16 (3) CLINICIAN VISITS.—The clinician visits

17 specified in this subsection are 3 clinician visits.

18 (f) INDIVIDUALS AGE 20 TO 39.—For an individual

19 at least 20 years of age, but less than 40 years of age:

20 (1) IMMUNIZATIONS.—The immunizations spec21 ified in this subsection are booster immunizations

22 against tetanus and diphtheria every 10 years.

23 (2) TESTS.—The tests specified in this sub24 section are as follows:
40

•S 1779 PCS

1 (A) Papanicolaou smears and pelvic exams

2 for females every 3 years, but—

3 (i) annually if an abnormal smear has

4 been obtained, until 3 consecutive negative

5 smears have been obtained; and

6 (ii) annually for females who are at

7 risk for fertility related infectious illnesses.

8 (B) Annual screening for chlamydia and

9 gonorrhea for females who are at risk for fertil10 ity related infectious illnesses.

11 (C) Cholesterol every 5 years.

12 (3) CLINICIAN VISITS.—The clinician visits

13 specified in this subsection are 1 clinician visit every

14 3 years.

15 (g) INDIVIDUALS AGE 40 TO 49.—For an individual

16 at least 40 years of age, but less than 50 years of age:

17 (1) IMMUNIZATIONS.—The immunizations spec18 ified in this subsection are booster immunizations

19 against tetanus and diphtheria every 10 years.

20 (2) TESTS.—The tests specified in this sub21 section are as follows:

22 (A) Papanicolaou smears and pelvic exams

23 for females every 2 years, but—
41

•S 1779 PCS

1 (i) annually if an abnormal smear has

2 been obtained, until 3 consecutive negative

3 smears have been obtained; and

4 (ii) annually for females who are at

5 risk for fertility related infectious illnesses.

6 (B) Annual screening for chlamydia and

7 gonorrhea for females who are at risk for fertil8 ity related infectious illnesses.

9 (C) Cholesterol every 5 years.

10 (3) CLINICIAN VISITS.—The clinician visits

11 specified in this subsection are 1 clinician visit every

12 2 years.

13 (h) INDIVIDUALS AGE 50 TO 65.—For an individual

14 at least 50 years of age, but less than 65 years of age:

15 (1) IMMUNIZATIONS.—The immunizations spec16 ified in this subsection are booster immunizations

17 against tetanus and diphtheria every 10 years.

18 (2) TESTS.—The tests specified in this sub19 section are as follows:

20 (A) Papanicolaou smears and pelvic exams

21 for females every 2 years.

22 (B) Mammograms for females every 2

23 years.

24 (C) Cholesterol every 5 years.
42

•S 1779 PCS

1 (3) CLINICIAN VISITS.—The clinician visits

2 specified in this subsection are 1 clinician visit every

3 2 years.

4 (i) INDIVIDUALS AGE 65 OR OLDER.—For an indi5 vidual at least 65 years of age who is enrolled under a

6 health plan:

7 (1) IMMUNIZATIONS.—The immunizations spec8 ified in this subsection are as follows:

9 (A) Booster immunizations against tetanus

10 and diphtheria every 10 years.

11 (B) Age-appropriate immunizations for the

12 following illnesses:

13 (i) Influenza.

14 (ii) Pneumococcal invasive disease.

15 (2) TESTS.—The tests specified in this sub16 section are as follows:

17 (A) Papanicolaou smears and pelvic exams

18 for females who are at risk for cervical cancer

19 every 2 years.

20 (B) Mammograms for females every 2

21 years.

22 (C) Cholesterol every 5 years.

23 (3) CLINICIAN VISITS.—The clinician visits

24 specified in this subsection are 1 clinician visit every

25 year.
43

•S 1779 PCS

1 (j) CLINICIAN VISIT.—For purposes of this section,

2 the term ‘‘clinician visit’’ includes the following health pro3 fessional services (as defined in section 1112(c)):

4 (1) A complete medical history.

5 (2) An appropriate physical examination.

6 (3) Risk assessment.

7 (4) Targeted health advice and counseling, in8 cluding nutrition counseling.

9 (5) The administration of age-appropriate im10 munizations and tests specified in subsections (b)

11 through (h).

12 (k) IMMUNIZATIONS AND TESTS NOT ADMINISTERED

13 DURING CLINICIAN VISIT.—Notwithstanding subsection

14 (i)(5), the clinical preventive services described in this sec15 tion include an immunization or test described in this sec16 tion that is administered to an individual consistent with

17 any periodicity schedule for the immunization or test dur18 ing the age range specified for the immunization or test,

19 and any administration fee for such immunization or test,

20 even if the immunization or test is not administered dur21 ing a clinician visit.

22 SEC. 1115. MENTAL ILLNESS AND SUBSTANCE ABUSE SERV23 ICES.

24 (a) COVERAGE.—The mental illness and substance

25 abuse services that are described in this section are the
44

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1 following items and services for eligible individuals, as de2 fined in section 1001(c), who satisfy the eligibility require3 ments in subsection (b):

4 (1) Inpatient and residential mental illness and

5 substance abuse treatment (described in subsection

6 (c)).

7 (2) Intensive nonresidential mental illness and

8 substance abuse treatment (described in subsection

9 (d)).

10 (3) Outpatient mental illness and substance

11 abuse treatment (described in subsection (e)), in12 cluding case management, screening and assessment,

13 crisis services, and collateral services.

14 (b) ELIGIBILITY.—The eligibility requirements re15 ferred to in subsection (a) are as follows:

16 (1) INPATIENT, RESIDENTIAL,

17 NONRESIDENTIAL, AND OUTPATIENT TREATMENT.—

18 An eligible individual is eligible to receive coverage

19 for inpatient and residential mental illness and sub20 stance abuse treatment, intensive nonresidential

21 mental illness and substance abuse treatment, or

22 outpatient mental illness and substance abuse treat23 ment (except case management and collateral serv24 ices) if the individual—
45

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1 (A) has, or has had during the 1-year pe2 riod preceding the date of such treatment, a

3 diagnosable mental disorder or a diagnosable

4 substance abuse disorder; and

5 (B) is experiencing, or is at significant risk

6 of experiencing, functional impairment in fam7 ily, work, school, or community activities.

8 For purposes of this paragraph, an individual who

9 has a diagnosable mental disorder or a diagnosable

10 substance abuse disorder, is receiving treatment for

11 such disorder, but does not satisfy the functional im12 pairment criterion in subparagraph (B) shall be

13 treated as satisfying such criterion if the individual

14 would satisfy such criterion without such treatment.

15 (2) CASE MANAGEMENT.—An eligible individual

16 is eligible to receive coverage for case management

17 if—

18 (A) a health professional designated by the

19 health plan in which the individual is enrolled

20 determines that the individual should receive

21 such services; and

22 (B) the individual is eligible to receive cov23 erage for, and is receiving, outpatient mental

24 illness and substance abuse treatment with re-
46

•S 1779 PCS

1 spect to a diagnosable mental disorder or a

2 diagnosable substance abuse disorder.

3 (3) SCREENING AND ASSESSMENT AND CRISIS

4 SERVICES.—All eligible individuals enrolled under a

5 health plan are eligible to receive coverage for out6 patient mental illness and substance abuse treat7 ment consisting of screening and assessment and

8 crisis services.

9 (4) COLLATERAL SERVICES.—An eligible indi10 vidual is eligible to receive coverage for outpatient

11 mental illness and substance abuse treatment con12 sisting of collateral services if the individual is a

13 family member (described in section 1011(b)) of an

14 individual who is receiving inpatient and residential

15 mental illness and substance abuse treatment, inten16 sive nonresidential mental illness and substance

17 abuse treatment, or outpatient mental illness and

18 substance abuse treatment.

19 (c) INPATIENT AND RESIDENTIAL TREATMENT.—

20 (1) DEFINITION.—For purposes of this subtitle,

21 the term ‘‘inpatient and residential mental illness

22 and substance abuse treatment’’ means the items

23 and services described in paragraphs (1) through (3)

24 of section 1861(b) of the Social Security Act when
47

•S 1779 PCS

1 provided with respect to a diagnosable mental dis2 order or a diagnosable substance abuse disorder to—

3 (A) an inpatient of a hospital, psychiatric

4 hospital, residential treatment center, residen5 tial detoxification center, crisis residential pro6 gram, or mental illness residential treatment

7 program; or

8 (B) a resident of a therapeutic family or

9 group treatment home or community residential

10 treatment and recovery center for substance

11 abuse.

12 The National Health Board shall specify those

13 health professional services described in section 1112

14 that shall be treated as inpatient and residential

15 mental illness and substance abuse treatment when

16 provided to such an inpatient or resident.

17 (2) LIMITATIONS.—Coverage for inpatient and

18 residential mental illness and substance abuse treat19 ment is subject to the following limitations:

20 (A) RESIDENTIAL MENTAL ILLNESS

21 TREATMENT.—Such treatment, when provided

22 with respect to a diagnosable mental disorder in

23 a setting that is not a hospital or a psychiatric

24 hospital, is covered only to avert the need for,

25 or as an alternative to, treatment in a hospital
48

•S 1779 PCS

1 or a psychiatric hospital, as determined by a

2 health professional designated by the health

3 plan in which the individual receiving such

4 treatment is enrolled.

5 (B) RESIDENTIAL SUBSTANCE ABUSE

6 TREATMENT.—Such treatment, when provided

7 with respect to a diagnosable substance abuse

8 disorder in a setting that is not a hospital or

9 a psychiatric hospital, is covered only if a

10 health professional designated by the health

11 plan in which the individual receiving such

12 treatment is enrolled determines (based on cri13 teria that the plan may choose to employ) that

14 the individual should receive such treatment.

15 (C) LEAST RESTRICTIVE SETTING.—Such

16 treatment is covered only when—

17 (i) provided to an individual in the

18 least restrictive inpatient or residential set19 ting that is effective and appropriate for

20 the individual; and

21 (ii) less restrictive intensive

22 nonresidential or outpatient treatment

23 would be ineffective or inappropriate.

24 (D) ANNUAL LIMIT.—Prior to January 1,

25 2001, such treatment is subject to an aggregate
49

•S 1779 PCS

1 annual limit of 30 days. A maximum of 30 ad2 ditional days of such treatment shall be covered

3 for an individual if a health professional des4 ignated by the health plan in which the individ5 ual is enrolled determines in advance that—

6 (i) the individual poses a threat to his

7 or her own life or the life of another indi8 vidual; or

9 (ii) the medical condition of the indi10 vidual requires inpatient treatment in a

11 hospital or a psychiatric hospital in order

12 to initiate, change, or adjust pharma13 cological or somatic therapy.

14 (E) INPATIENT HOSPITAL TREATMENT

15 FOR SUBSTANCE ABUSE.—Such treatment,

16 when provided in a hospital or a psychiatric

17 hospital with respect to a diagnosable substance

18 abuse disorder, is covered under this section

19 only for detoxification requiring the manage20 ment of psychiatric conditions associated with

21 withdrawal from alcohol or drugs. The items

22 and services described in this section do not in23 clude medical detoxification as required for the

24 management of medical conditions associated
50

•S 1779 PCS

1 with withdrawal from alcohol or drugs (which is

2 covered under section 1111).

3 (d) INTENSIVE NONRESIDENTIAL TREATMENT.—

4 (1) DEFINITION.—For purposes of this subtitle,

5 the term ‘‘intensive nonresidential mental illness and

6 substance abuse treatment’’ means diagnostic or

7 therapeutic items or services provided with respect

8 to a diagnosable mental disorder or a diagnosable

9 substance abuse disorder to an individual—

10 (A) participating in a partial hospitaliza11 tion program, a day treatment program, a psy12 chiatric rehabilitation program, or an ambula13 tory detoxification program; or

14 (B) receiving home-based mental illness

15 services or behavioral aide mental illness serv16 ices.

17 The National Health Board shall specify those

18 health professional services described in section 1112

19 that shall be treated as intensive nonresidential men20 tal illness and substance abuse treatment when pro21 vided to such an individual.

22 (2) LIMITATIONS.—Coverage for intensive

23 nonresidential mental illness and substance abuse

24 treatment is subject to the following limitations:
51

•S 1779 PCS

1 (A) DISCRETION OF PLAN.—An individual

2 shall receive coverage for such treatment if a

3 health professional designated by the health

4 plan in which the individual is enrolled deter5 mines (based on criteria that the plan may

6 choose to employ) that the individual should re7 ceive such treatment.

8 (B) TREATMENT PURPOSES.—Such treat9 ment is covered only when provided—

10 (i) to avert the need for, or as an al11 ternative to, treatment in residential or in12 patient settings;

13 (ii) to facilitate the earlier discharge

14 of an individual receiving inpatient or resi15 dential care;

16 (iii) to restore the functioning of an

17 individual with a diagnosable mental dis18 order or a diagnosable substance abuse

19 disorder; or

20 (iv) to assist such an individual to de21 velop the skills and gain access to the sup22 port services the individual needs to

23 achieve the maximum level of functioning

24 of the individual within the community.

25 (C) ANNUAL LIMIT.—
52

•S 1779 PCS

1 (i) IN GENERAL.—Prior to January 1,

2 2001, the number of covered days of inpa3 tient and residential mental illness and

4 substance abuse treatment that are avail5 able to an individual under the 30-day

6 limit described in the first sentence of sub7 section (c)(2)(D) shall be reduced by 1 day

8 for each 2 covered days of intensive

9 nonresidential mental illness and substance

10 abuse treatment that are provided to the

11 individual, until such number is reduced to

12 zero.

13 (ii) ADDITIONAL DAYS.—After the

14 number of covered days referred to in

15 clause (i) has been reduced to zero with re16 spect to an individual, the individual shall

17 receive coverage for a maximum of 60 days

18 of intensive nonresidential mental illness

19 and substance abuse treatment if a health

20 professional designated by the health plan

21 in which the individual is enrolled deter22 mines that the individual should receive

23 such treatment.

24 (D) DETOXIFICATION.—Intensive

25 nonresidential mental illness and substance
53

•S 1779 PCS

1 abuse treatment consisting of detoxification is

2 covered only if it is provided in the context of

3 a treatment program.

4 (E) OUT-OF-POCKET MAXIMUM.—Prior to

5 January 1, 2001, expenses for intensive

6 nonresidential mental illness and substance

7 abuse treatment that an individual incurs prior

8 to satisfying a deductible applicable to such

9 treatment, and copayments and coinsurance

10 paid by or on behalf of the individual for such

11 treatment, may not be applied toward any an12 nual out-of-pocket limit on cost sharing under

13 any cost sharing schedule described in part 3 of

14 this subtitle if such treatment is provided—

15 (i) with respect to a diagnosable sub16 stance abuse disorder; or

17 (ii) pursuant to subparagraph (C)(ii).

18 (e) OUTPATIENT TREATMENT.—

19 (1) DEFINITION.—For purposes of this subtitle,

20 the term ‘‘outpatient mental illness and substance

21 abuse treatment’’ means the following services pro22 vided with respect to a diagnosable mental disorder

23 or a diagnosable substance abuse disorder in an out24 patient setting:

25 (A) Screening and assessment.
54

•S 1779 PCS

1 (B) Diagnosis.

2 (C) Medical management.

3 (D) Substance abuse counseling and re4 lapse prevention.

5 (E) Crisis services.

6 (F) Somatic treatment services.

7 (G) Psychotherapy.

8 (H) Case management.

9 (I) Collateral services.

10 (2) LIMITATIONS.—Coverage for outpatient

11 mental illness and substance abuse treatment is sub12 ject to the following limitations:

13 (A) HEALTH PROFESSIONAL SERVICES.—

14 Such treatment is covered only when it con15 stitutes health professional services (as defined

16 in section 1112(c)(2)).

17 (B) DISCRETION OF PLAN.—An individual

18 shall receive coverage for outpatient mental ill19 ness and substance abuse treatment consisting

20 of substance abuse counseling and relapse pre21 vention if a health professional designated by

22 the health plan in which the individual is en23 rolled determines (based on criteria that the

24 plan may choose to employ) that the individual

25 should receive such treatment. This subpara-
55

•S 1779 PCS

1 graph does not apply to group therapy covered

2 pursuant to subparagraph (C)(ii)(II).

3 (C) ANNUAL LIMITS.—

4 (i) PSYCHOTHERAPY AND COLLAT5 ERAL SERVICES.—Prior to January 1,

6 2001, psychotherapy and collateral services

7 are subject to an aggregate annual limit of

8 30 visits per individual. Additional visits

9 may be covered, at the discretion of the

10 health plan in which the individual receiv11 ing treatment is enrolled, to prevent hos12 pitalization or to facilitate earlier hospital

13 release, for which the number of covered

14 days of inpatient and residential mental ill15 ness and substance abuse treatment that

16 are available to an individual under the 30-

17 day limit described in the first sentence of

18 subsection (c)(2)(D) shall be reduced by 1

19 day for each 4 visits. After such number

20 has been reduced to zero, no additional vis21 its under the preceding sentence may be

22 covered.

23 (ii) SUBSTANCE ABUSE COUNSELING

24 AND RELAPSE PREVENTION.—
56

•S 1779 PCS

1 (I) IN GENERAL.—Except as pro2 vided in subclause (II), the number of

3 covered days of inpatient and residen4 tial mental illness and substance

5 abuse treatment that are available to

6 an individual under the 30-day limit

7 described in the first sentence of sub8 section (c)(2)(D) shall be reduced by

9 1 day for each 4 visits for substance

10 abuse counseling and relapse preven11 tion that are covered for the individ12 ual under subparagraph (B). After

13 such number has been reduced to

14 zero, no visits for substance abuse

15 counseling and relapse prevention may

16 be covered, except as provided in

17 subclause (II).

18 (II) GROUP THERAPY.—Prior to

19 January 1, 2001, substance abuse

20 counseling and relapse prevention con21 sisting of group therapy is subject to

22 a separate aggregate annual limit of

23 30 visits, if such therapy occurs with24 in 12 months after the individual has

25 received, with respect to a diagnosable
57

•S 1779 PCS

1 substance abuse disorder, inpatient

2 and residential mental illness and sub3 stance abuse treatment or intensive

4 nonresidential mental illness and sub5 stance abuse treatment. The provi6 sions of clause (i) and subclause (I)

7 do not apply to therapy that is de8 scribed in the preceding sentence.

9 (D) DETOXIFICATION.—Outpatient mental

10 illness and substance abuse treatment consist11 ing of detoxification is covered only if it is pro12 vided in the context of a treatment program.

13 (E) OUT-OF-POCKET MAXIMUM.—Prior to

14 January 1, 2001, expenses for outpatient men15 tal illness and substance abuse treatment that

16 an individual incurs prior to satisfying a de17 ductible applicable to such treatment, and

18 copayments and coinsurance paid by or on be19 half of the individual for such treatment, may

20 not be applied toward any annual out-of-pocket

21 limit on cost sharing under any cost sharing

22 schedule described in part 3 of this subtitle.

23 (f) OTHER DEFINITIONS.—For purposes of this sub24 title:
58

•S 1779 PCS

1 (1) CASE MANAGEMENT.—The term ‘‘case man2 agement’’ means services that assist individuals in

3 gaining access to needed medical, social, educational,

4 and other services.

5 (2) DIAGNOSABLE MENTAL DISORDER AND

6 DIAGNOSABLE SUBSTANCE ABUSE DISORDER.—The

7 terms ‘‘diagnosable mental disorder’’ and

8 ‘‘diagnosable substance abuse disorder’’ mean a dis9 order that—

10 (A) is listed in the Diagnostic and Statis11 tical Manual of Mental Disorders, Third Edi12 tion, Revised or a revised version of such man13 ual (except V Codes for Conditions Not Attrib14 utable to a Mental Disorder That Are a Focus

15 of Attention or Treatment);

16 (B) is the equivalent of a disorder de17 scribed in subparagraph (A), but is listed in the

18 International Classification of Diseases, 9th Re19 vision, Clinical Modification, Third Edition or a

20 revised version of such text; or

21 (C) is listed in any authoritative text speci22 fying diagnostic criteria for mental disorders or

23 substance abuse disorders that is identified by

24 the National Health Board.
59

•S 1779 PCS

1 (3) PSYCHIATRIC HOSPITAL.—The term ‘‘psy2 chiatric hospital’’ has the meaning given such term

3 in section 1861(f) of the Social Security Act, except

4 that such term shall include—

5 (A) in the case of an item or service pro6 vided to an individual whose applicable health

7 plan is specified pursuant to section 1004(b)(1),

8 a facility of the uniformed services under title

9 10, United States Code, that is engaged in pro10 viding services to inpatients that are equivalent

11 to the services provided by a psychiatric hos12 pital;

13 (B) in the case of an item or service pro14 vided to an individual whose applicable health

15 plan is specified pursuant to section 1004(b)(2),

16 a facility operated by the Department of Veter17 ans Affairs that is engaged in providing services

18 to inpatients that are equivalent to the services

19 provided by a psychiatric hospital; and

20 (C) in the case of an item or service pro21 vided to an individual whose applicable health

22 plan is specified pursuant to section 1004(b)(3),

23 a facility operated by the Indian Health Service

24 that is engaged in providing services to inpa-
60

•S 1779 PCS

1 tients that are equivalent to the services pro2 vided by a psychiatric hospital.

3 SEC. 1116. FAMILY PLANNING SERVICES AND SERVICES

4 FOR PREGNANT WOMEN.

5 The services described in this section are the follow6 ing items and services:

7 (1) Voluntary family planning services.

8 (2) Contraceptive devices that—

9 (A) may only be dispensed upon prescrip10 tion; and

11 (B) are subject to approval by the Sec12 retary of Health and Human Services under the

13 Federal Food, Drug, and Cosmetic Act.

14 (3) Services for pregnant women.

15 SEC. 1117. HOSPICE CARE.

16 The hospice care described in this section is the items

17 and services described in paragraph (1) of section

18 1861(dd) of the Social Security Act, as defined in para19 graphs (2), (3), and (4)(A) of such section (with the ex20 ception of paragraph (2)(A)(iii)), except that all references

21 to the Secretary of Health and Human Services in such

22 paragraphs shall be treated as references to the National

23 Health Board.
61

•S 1779 PCS

1 SEC. 1118. HOME HEALTH CARE.

2 (a) COVERAGE.—The home health care described in

3 this section is—

4 (1) the items and services described in section

5 1861(m) of the Social Security Act; and

6 (2) home infusion drug therapy services de7 scribed in section 1861(ll) of the Social Security Act

8 (as inserted by section 2005).

9 (b) LIMITATIONS.—Coverage for home health care is

10 subject to the following limitations:

11 (1) INPATIENT TREATMENT ALTERNATIVE.—

12 Such care is covered only as an alternative to inpa13 tient treatment in a hospital, skilled nursing facility,

14 or rehabilitation facility after an illness or injury.

15 (2) REEVALUATION.—At the end of each 60-

16 day period of home health care, the need for contin17 ued care shall be reevaluated by the person who is

18 primarily responsible for providing the home health

19 care. Additional periods of care are covered only if

20 such person determines that the requirement in

21 paragraph (1) is satisfied.

22 SEC. 1119. EXTENDED CARE SERVICES.

23 (a) COVERAGE.—The extended care services de24 scribed in this section are the items and services described

25 in section 1861(h) of the Social Security Act when pro-
62

•S 1779 PCS

1 vided to an inpatient of a skilled nursing facility or a reha2 bilitation facility.

3 (b) LIMITATIONS.—Coverage for extended care serv4 ices is subject to the following limitations:

5 (1) HOSPITAL ALTERNATIVE.—Such services

6 are covered only as an alternative to inpatient treat7 ment in a hospital after an illness or injury.

8 (2) ANNUAL LIMIT.—Such services are subject

9 to an aggregate annual limit of 100 days.

10 (c) DEFINITIONS.—For purposes of this subtitle:

11 (1) REHABILITATION FACILITY.—The term ‘‘re12 habilitation facility’’ means an institution (or a dis13 tinct part of an institution) which is established and

14 operated for the purpose of providing diagnostic,

15 therapeutic, and rehabilitation services to individuals

16 for rehabilitation from illness or injury.

17 (2) SKILLED NURSING FACILITY.—The term

18 ‘‘skilled nursing facility’’ means an institution (or a

19 distinct part of an institution) which is primarily en20 gaged in providing to residents—

21 (A) skilled nursing care and related serv22 ices for residents who require medical or nurs23 ing care; or

24 (B) rehabilitation services to residents for

25 rehabilitation from illness or injury.
63

•S 1779 PCS

1 SEC. 1120. AMBULANCE SERVICES.

2 (a) COVERAGE.—The ambulance services described in

3 this section are the following items and services:

4 (1) Ground transportation by ambulance.

5 (2) Air transportation by an aircraft equipped

6 for transporting an injured or sick individual.

7 (3) Water transportation by a vessel equipped

8 for transporting an injured or sick individual.

9 (b) LIMITATIONS.—Coverage for ambulance services

10 is subject to the following limitations:

11 (1) MEDICAL INDICATION.—Ambulance services

12 are covered only in cases in which the use of an am13 bulance is indicated by the medical condition of the

14 individual concerned.

15 (2) AIR TRANSPORT.—Air transportation is cov16 ered only in cases in which there is no other method

17 of transportation or where the use of another meth18 od of transportation is contra-indicated by the medi19 cal condition of the individual concerned.

20 (3) WATER TRANSPORT.—Water transportation

21 is covered only in cases in which there is no other

22 method of transportation or where the use of an23 other method of transportation is contra-indicated

24 by the medical condition of the individual concerned.
64

•S 1779 PCS

1 SEC. 1121. OUTPATIENT LABORATORY, RADIOLOGY, AND DI2 AGNOSTIC SERVICES.

3 The items and services described in this section are

4 laboratory, radiology, and diagnostic services provided

5 upon prescription to individuals who are not inpatients of

6 a hospital, hospice, skilled nursing facility, or rehabilita7 tion facility.

8 SEC. 1122. OUTPATIENT PRESCRIPTION DRUGS AND

9 BIOLOGICALS.

10 (a) COVERAGE.—The items described in this section

11 are the following:

12 (1) Covered outpatient drugs described in sec13 tion 1861(t) of the Social Security Act (as amended

14 by section 2001(b))—

15 (A) except that, for purposes of this sec16 tion, a medically accepted indication with re17 spect to the use of a covered outpatient drug in18 cludes any use which has been approved by the

19 Food and Drug Administration for the drug,

20 and includes another use of the drug if—

21 (i) the drug has been approved by the

22 Food and Drug Administration; and

23 (ii) such use is supported by one or

24 more citations which are included (or ap25 proved for inclusion) in one or more of the

26 following compendia: the American Hos-
65

•S 1779 PCS

1 pital Formulary Service-Drug Information,

2 the American Medical Association Drug

3 Evaluations, the United States Pharma4 copoeia-Drug Information, and other au5 thoritative compendia as identified by the

6 Secretary, unless the Secretary has deter7 mined that the use is not medically appro8 priate or the use is identified as not indi9 cated in one or more such compendia; or

10 (iii) such use is medically accepted

11 based on supportive clinical evidence in

12 peer reviewed medical literature appearing

13 in publications which have been identified

14 for purposes of this clause by the Sec15 retary; and

16 (B) notwithstanding any exclusion from

17 coverage that may be made with respect to such

18 a drug under title XVIII of such Act pursuant

19 to section 1862(a)(18) of such Act.

20 (2) Blood clotting factors when provided on an

21 outpatient basis.

22 (b) REVISION OF COMPENDIA LIST.—The Secretary

23 may revise the list of compendia in subsection (a)(1)(A)(ii)

24 designated as appropriate for identifying medically

25 accepted indications for drugs.
66

•S 1779 PCS

1 (c) BLOOD CLOTTING FACTORS.—For purposes of

2 this subtitle, the term ‘‘blood clotting factors’’ has the

3 meaning given such term in section 1861(s)(2)(I) of the

4 Social Security Act.

5 SEC. 1123. OUTPATIENT REHABILITATION SERVICES.

6 (a) COVERAGE.—The outpatient rehabilitation serv7 ices described in this section are—

8 (1) outpatient occupational therapy;

9 (2) outpatient physical therapy; and

10 (3) outpatient speech pathology services for the

11 purpose of attaining or restoring speech.

12 (b) LIMITATIONS.—Coverage for outpatient rehabili13 tation services is subject to the following limitations:

14 (1) RESTORATION OF CAPACITY OR MINIMIZA15 TION OF LIMITATIONS.—Such services include only

16 items or services used to restore functional capacity

17 or minimize limitations on physical and cognitive

18 functions as a result of an illness or injury.

19 (2) REEVALUATION.—At the end of each 60-

20 day period of outpatient rehabilitation services, the

21 need for continued services shall be reevaluated by

22 the person who is primarily responsible for providing

23 the services. Additional periods of services are cov24 ered only if such person determines that functioning

25 is improving.
67

•S 1779 PCS

1 SEC. 1124. DURABLE MEDICAL EQUIPMENT AND PROS2 THETIC AND ORTHOTIC DEVICES.

3 (a) COVERAGE.—The items and services described in

4 this section are—

5 (1) durable medical equipment, including acces6 sories and supplies necessary for repair, function,

7 and maintenance of such equipment;

8 (2) prosthetic devices (other than dental de9 vices) which replace all or part of the function of an

10 internal body organ (including colostomy bags and

11 supplies directly related to colostomy care), including

12 replacement of such devices;

13 (3) accessories and supplies which are used di14 rectly with a prosthetic device to achieve the thera15 peutic benefits of the prosthesis or to assure the

16 proper functioning of the device;

17 (4) leg, arm, back, and neck braces;

18 (5) artificial legs, arms, and eyes, including re19 placements if required because of a change in the

20 patient’s physical condition; and

21 (6) fitting and training for use of the items de22 scribed in paragraphs (1) through (5).

23 (b) LIMITATION.—An item or service described in

24 this section is covered only if it improves functional ability

25 or prevents further deterioration in function.
68

•S 1779 PCS

1 (c) DURABLE MEDICAL EQUIPMENT.—For purposes

2 of this subtitle, the term ‘‘durable medical equipment’’ has

3 the meaning given such term in section 1861(n) of the

4 Social Security Act.

5 SEC. 1125. VISION CARE.

6 (a) COVERAGE.—The vision care described in this

7 section is routine eye examinations, diagnosis, and treat8 ment for defects in vision.

9 (b) LIMITATION.—Eyeglasses and contact lenses are

10 covered only for individuals less than 18 years of age, ac11 cording to a periodicity schedule established by the Board.

12 SEC. 1126. DENTAL CARE.

13 (a) COVERAGE.—The dental care described in this

14 section is the following:

15 (1) Emergency dental treatment, including sim16 ple extractions, for acute infections, bleeding, and

17 injuries to natural teeth and oral structures for con18 ditions requiring immediate attention to prevent

19 risks to life or significant medical complications, as

20 specified by the National Health Board.

21 (2) Prevention and diagnosis of dental disease,

22 including oral dental examinations, radiographs,

23 dental sealants, fluoride application, and dental pro24 phylaxis.
69

•S 1779 PCS

1 (3) Treatment of dental disease, including rou2 tine fillings, prosthetics for genetic defects, periodon3 tal maintenance, and endodontic services.

4 (4) Space maintenance procedures to prevent

5 orthodontic complications.

6 (5) Interceptive orthodontic treatment to pre7 vent severe malocclusion.

8 (b) LIMITATIONS.—Coverage for dental care is sub9 ject to the following limitations:

10 (1) PREVENTION AND DIAGNOSIS.—Prior to

11 January 1, 2001, the items and services described in

12 subsection (a)(2) are covered only for individuals

13 less than 18 years of age. On or after such date,

14 such items and services are covered for all eligible

15 individuals enrolled under a health plan, except that

16 dental sealants are not covered for individuals 18

17 years of age or older.

18 (2) TREATMENT OF DENTAL DISEASE.—Prior

19 to January 1, 2001, the items and services described

20 in subsection (a)(3) are covered only for individuals

21 less than 18 years of age. On or after such date,

22 such items and services are covered for all eligible

23 individuals enrolled under a health plan, except that

24 endodontic services are not covered for individuals

25 18 years of age or older.
70

•S 1779 PCS

1 (3) SPACE MAINTENANCE.—The items and

2 services described in subsection (a)(4) are covered

3 only for individuals at least 3 years of age, but less

4 than 13 years of age and—

5 (A) are limited to posterior teeth;

6 (B) involve maintenance of a space or

7 spaces for permanent posterior teeth that would

8 otherwise be prevented from normal eruption if

9 the space were not maintained; and

10 (C) do not include a space maintainer that

11 is placed within 6 months of the expected erup12 tion of the permanent posterior tooth con13 cerned.

14 (4) INTERCEPTIVE ORTHODONTIC TREAT15 MENT.—Prior to January 1, 2001, the items and

16 services described in subsection (a)(5) are not cov17 ered. On or after such date, such items and services

18 are covered only for individuals at least 6 years of

19 age, but less than 12 years of age.

20 SEC. 1127. HEALTH EDUCATION CLASSES.

21 (a) COVERAGE.—Subject to subsection (b), the items

22 and services described in this section are health education

23 and training classes to encourage the reduction of behav24 ioral risk factors and to promote healthy activities. Such

25 education and training classes may include smoking ces-
71

•S 1779 PCS

1 sation, nutrition counseling, stress management, support

2 groups, and physical training classes.

3 (b) DISCRETION OF PLAN.—A health plan may offer

4 education and training classes at its discretion.

5 (c) CONSTRUCTION.—This section shall not be con6 strued to include or limit education or training that is pro7 vided in the course of the delivery of health professional

8 services (as defined in section 1112(c)).

9 SEC. 1128. INVESTIGATIONAL TREATMENTS.

10 (a) COVERAGE.—Subject to subsection (b), the items

11 and services described in this subsection are qualifying in12 vestigational treatments that are administered for a life13 threatening disease, disorder, or other health condition (as

14 defined by the National Health Board).

15 (b) DISCRETION OF PLAN.—A health plan may cover

16 an investigational treatment described in subsection (a) at

17 its discretion.

18 (c) ROUTINE CARE DURING INVESTIGATIONAL

19 TREATMENTS.—The comprehensive benefit package in20 cludes an item or service described in any other section

21 of this part, subject to the limitations and cost sharing

22 requirements applicable to the item or service, when the

23 item or service is provided to an individual in the course

24 of an investigational treatment, if—
72

•S 1779 PCS

1 (1) the treatment is a qualifying investigational

2 treatment; and

3 (2) the item or service would have been pro4 vided to the individual even if the individual were

5 not receiving the investigational treatment.

6 (d) DEFINITIONS.—For purposes of this subtitle:

7 (1) QUALIFYING INVESTIGATIONAL TREAT8 MENT.—The term ‘‘qualifying investigational treat9 ment’’ means a treatment—

10 (A) the effectiveness of which has not been

11 determined; and

12 (B) that is under clinical investigation as

13 part of an approved research trial.

14 (2) APPROVED RESEARCH TRIAL.—The term

15 ‘‘approved research trial’’ means—

16 (A) a research trial approved by the Sec17 retary of Health and Human Services, the Di18 rector of the National Institutes of Health, the

19 Commissioner of the Food and Drug Adminis20 tration, the Secretary of Veterans Affairs, the

21 Secretary of Defense, or a qualified nongovern22 mental research entity as defined in guidelines

23 of the National Institutes of Health; or

24 (B) a peer-reviewed and approved research

25 program, as defined by the Secretary of Health
73

•S 1779 PCS

1 and Human Services, conducted for the primary

2 purpose of determining whether or not a treat3 ment is safe, efficacious, or having any other

4 characteristic of a treatment which must be

5 demonstrated in order for the treatment to be

6 medically necessary or appropriate.

7 PART 3—COST SHARING

8 SEC. 1131. COST SHARING.

9 (a) IN GENERAL.—Each health plan shall offer to in10 dividuals enrolled under the plan one, but not more than

11 one, of the following cost sharing schedules, which sched12 ule shall be offered to all such enrollees:

13 (1) Lower cost sharing (described in section

14 1132).

15 (2) Higher cost sharing (described in section

16 1133).

17 (3) Combination cost sharing (described in sec18 tion 1134).

19 (b) COST SHARING FOR LOW-INCOME FAMILIES.—

20 For provisions relating to reducing cost sharing for certain

21 low-income families, see section 1371.

22 (c) DEDUCTIBLES, COST SHARING, AND OUT-OF23 POCKET LIMITS ON COST SHARING.—

24 (1) APPLICATION ON AN ANNUAL BASIS.—The

25 deductibles and out-of-pocket limits on cost sharing
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1 for a year under the schedules referred to in sub2 section (a) shall be applied based upon expenses in3 curred for items and services furnished in the year.

4 (2) INDIVIDUAL AND FAMILY GENERAL

5 DEDUCTIBLES.—

6 (A) INDIVIDUAL.—Subject to subpara7 graph (B), with respect to an individual en8 rolled under a health plan (regardless of the

9 class of enrollment), any individual general de10 ductible in the cost sharing schedule offered by

11 the plan represents the amount of countable ex12 penses (as defined in subparagraph (C)) that

13 the individual may be required to incur in a

14 year before the plan incurs liability for expenses

15 for such items and services furnished to the in16 dividual.

17 (B) FAMILY.—In the case of an individual

18 enrolled under a health plan under a family

19 class of enrollment (as defined in section

20 1011(c)(2)(A)), the individual general deduct21 ible under subparagraph (A) shall not apply to

22 countable expenses incurred by any member of

23 the individual’s family in a year at such time as

24 the family has incurred, in the aggregate,
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•S 1779 PCS

1 countable expenses in the amount of the family

2 general deductible for the year.

3 (C) COUNTABLE EXPENSE.—In this para4 graph, the term ‘‘countable expense’’ means,

5 with respect to an individual for a year, an ex6 pense for an item or service covered by the

7 comprehensive benefit package that is subject

8 to the general deductible and for which, but for

9 such deductible and any other cost sharing

10 under this subtitle, a health plan is liable for

11 payment. The amount of countable expenses for

12 an individual for a year under this paragraph

13 shall not exceed the individual general deduct14 ible for the year.

15 (3) COINSURANCE AND COPAYMENTS.—After a

16 general or separate deductible that applies to an

17 item or service covered by the comprehensive benefit

18 package has been satisfied for a year, subject to

19 paragraph (4), coinsurance and copayments are

20 amounts (expressed as a percentage of an amount

21 otherwise payable or as a dollar amount, respec22 tively) that an individual may be required to pay

23 with respect to the item or service.

24 (4) INDIVIDUAL AND FAMILY LIMITS ON COST

25 SHARING.—
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•S 1779 PCS

1 (A) INDIVIDUAL.—Subject to subpara2 graph (B), with respect to an individual en3 rolled under a health plan (regardless of the

4 class of enrollment), the individual out-of5 pocket limit on cost sharing in the cost sharing

6 schedule offered by the plan represents the

7 amount of expenses that the individual may be

8 required to incur under the plan in a year be9 cause of a general deductible, separate

10 deductibles, copayments, and coinsurance before

11 the plan may no longer impose any cost sharing

12 with respect to items or services covered by the

13 comprehensive benefit package that are pro14 vided to the individual, except as provided in

15 subsections (d)(2)(E) and (e)(2)(E) of section

16 1115.

17 (B) FAMILY.—In the case of an individual

18 enrolled under a health plan under a family

19 class of enrollment (as defined in section

20 1011(c)(2)(A)), the family out-of-pocket limit

21 on cost sharing in the cost sharing schedule of22 fered by the plan represents the amount of ex23 penses that members of the individual’s family,

24 in the aggregate, may be required to incur

25 under the plan in a year because of a general
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•S 1779 PCS

1 deductible, separate deductibles, copayments,

2 and coinsurance before the plan may no longer

3 impose any cost sharing with respect to items

4 or services covered by the comprehensive benefit

5 package that are provided to any member of the

6 individual’s family, except as provided in sub7 sections (d)(2)(E) and (e)(2)(E) of section

8 1115.

9 SEC. 1132. LOWER COST SHARING.

10 (a) IN GENERAL.—The lower cost sharing schedule

11 referred to in section 1131 that is offered by a health

12 plan—

13 (1) may not include a deductible;

14 (2) shall have—

15 (A) an annual individual out-of-pocket

16 limit on cost sharing of $1500; and

17 (B) an annual family out-of-pocket limit on

18 cost sharing of $3000;

19 (3) except as provided in paragraph (4)—

20 (A) shall prohibit payment of any coinsur21 ance; and

22 (B) subject to section 1152, shall require

23 payment of the copayment for an item or serv24 ice (if any) that is specified for the item or

25 service in the table under section 1135; and
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•S 1779 PCS

1 (4) shall require payment of coinsurance for an

2 out-of-network item or service (as defined in section

3 1402(f)) in an amount that is a percentage (deter4 mined under subsection (b)) of the applicable pay5 ment rate for the item or service established under

6 section 1322(c), but only if the item or service is

7 subject to coinsurance under the higher cost sharing

8 schedule described in section 1133.

9 (b) OUT-OF-NETWORK COINSURANCE PERCENT10 AGE.—

11 (1) IN GENERAL.—The National Health Board

12 shall determine a percentage referred to in sub13 section (a)(4). The percentage—

14 (A) may not be less than 20 percent; and

15 (B) shall be the same with respect to all

16 out-of-network items and services that are sub17 ject to coinsurance, except as provided in para18 graph (2).

19 (2) EXCEPTION.—The National Health Board

20 may provide for a percentage that is greater than a

21 percentage determined under paragraph (1) in the

22 case of an out-of-network item or service for which,

23 under the higher cost sharing schedule described in

24 section 1133, the coinsurance is greater than 20 per25 cent of the applicable payment rate.
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•S 1779 PCS

1 SEC. 1133. HIGHER COST SHARING.

2 (a) IN GENERAL.—The higher cost sharing schedule

3 referred to in section 1131 that is offered by a health

4 plan—

5 (1) shall have an annual individual general de6 ductible of $200 and an annual family general de7 ductible of $400 that apply with respect to expenses

8 incurred for all items and services in the comprehen9 sive benefit package except—

10 (A) an item or service with respect to

11 which a separate individual deductible applies

12 under paragraph (2), (3), or (4); or

13 (B) an item or service described in para14 graph (5), (6), or (7) with respect to which a

15 deductible does not apply;

16 (2) shall require an individual to incur expenses

17 during each episode of inpatient and residential

18 mental illness and substance abuse treatment (de19 scribed in section 1115(c)) equal to the cost of one

20 day of such treatment before the plan provides bene21 fits for such treatment to the individual;

22 (3) shall require an individual to incur expenses

23 during each episode of intensive nonresidential men24 tal illness and substance abuse treatment (described

25 in section 1115(d)) equal to the cost of one day of
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•S 1779 PCS

1 such treatment before the plan provides benefits for

2 such treatment to the individual;

3 (4) shall require an individual to incur expenses

4 in a year for outpatient prescription drugs and

5 biologicals (described in section 1122) equal to $250

6 before the plan provides benefits for such items to

7 the individual;

8 (5) shall require an individual to incur expenses

9 in a year for dental care described in section 1126,

10 except the items and services for prevention and di11 agnosis of dental disease described in section

12 1126(a)(2), equal to $50 before the plan provides

13 benefits for such care to the individual;

14 (6) may not require any deductible for clinical

15 preventive services (described in section 1114);

16 (7) may not require any deductible for clinician

17 visits and associated services related to prenatal care

18 or 1 post-partum visit under section 1116;

19 (8) may not require any deductible for the

20 items and services for prevention and diagnosis of

21 dental disease described in section 1126(a)(2);

22 (9) shall have—

23 (A) an annual individual out-of-pocket

24 limit on cost sharing of $1500; and
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•S 1779 PCS

1 (B) an annual family out-of-pocket limit on

2 cost sharing of $3000;

3 (10) shall prohibit payment of any copayment;

4 and

5 (11) subject to section 1152, shall require pay6 ment of the coinsurance for an item or service (if

7 any) that is specified for the item or service in the

8 table under section 1135.

9 (b) EPISODES OF TREATMENT.—

10 (1) INPATIENT AND RESIDENTIAL TREAT11 MENT.—For purposes of subsection (a)(2), an epi12 sode of inpatient and residential mental illness and

13 substance abuse treatment shall be considered to

14 begin on the date an individual is admitted to a fa15 cility for such treatment and to end on the date the

16 individual is discharged from the facility.

17 (2) INTENSIVE NONRESIDENTIAL TREAT18 MENT.—For purposes of subsection (a)(3), an epi19 sode of intensive nonresidential mental illness and

20 substance abuse treatment—

21 (A) shall be considered to begin on the

22 date an individual begins participating in a pro23 gram described in section 1115(d)(1)(A) and to

24 end on the date the individual ceases such par25 ticipation; or
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1 (B) shall be considered to begin on the

2 date an individual begins receiving home-based

3 or behavioral aide services described in section

4 1115(d)(1)(B) and to end on the date the indi5 vidual ceases to receive such services.

6 SEC. 1134. COMBINATION COST SHARING.

7 (a) IN GENERAL.—The combination cost sharing

8 schedule referred to in section 1131 that is offered by a

9 health plan—

10 (1) shall have—

11 (A) an annual individual out-of-pocket

12 limit on cost sharing of $1500; and

13 (B) an annual family out-of-pocket limit on

14 cost sharing of $3000; and

15 (2) otherwise shall require different cost shar16 ing for in-network items and services than for out17 of-network items and services.

18 (b) IN-NETWORK ITEMS AND SERVICES.—With re19 spect to an in-network item or service (as defined in sec20 tion 1402(f)(1)), the combination cost sharing schedule

21 that is offered by a health plan—

22 (1) may not apply a deductible;

23 (2) shall prohibit payment of any coinsurance;

24 and
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1 (3) shall require payment of a copayment in ac2 cordance with the lower cost sharing schedule de3 scribed in section 1132.

4 (c) OUT-OF-NETWORK ITEMS AND SERVICES.—With

5 respect to an out-of-network item or service (as defined

6 in section 1402(f)(2)), the combination cost sharing sched7 ule that is offered by a health plan—

8 (1) shall require an individual and a family to

9 incur expenses before the plan provides benefits for

10 the item or service in accordance with the

11 deductibles under the higher cost sharing schedule

12 described in section 1133;

13 (2) shall prohibit payment of any copayment;

14 and

15 (3) shall require payment of coinsurance in ac16 cordance with such schedule.

17 SEC. 1135. TABLE OF COPAYMENTS AND COINSURANCE.

18 (a) IN GENERAL.—The following table specifies, for

19 different items and services, the copayments and coinsur20 ance referred to in sections 1132 and 1133:

21

Copayments and Coinsurance for Items and Services

Benefit Section Lower Cost Sharing

Schedule Higher Cost Sharing Schedule

Inpatient hospital services ..... 1111 No copayment 20 percent of applicable

payment rate

Outpatient hospital services ... 1111 $10 per visit 20 percent of applicable

payment rate
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Copayments and Coinsurance for Items and Services—Continued

Benefit Section Lower Cost Sharing

Schedule Higher Cost Sharing Schedule

Hospital emergency room

services ............................... 1111 $25 per visit (unless patient has

an emergency

medical condition

as defined in section 1867(e)(1)

of the Social Security Act)

20 percent of applicable

payment rate

Services of health professionals ................................ 1112 $10 per visit 20 percent of applicable

payment rate

Emergency services other

than hospital emergency

room services ...................... 1113 $25 per visit (unless patient has

an emergency

medical condition

as defined in section 1867(e)(1)

of the Social Security Act)

20 percent of applicable

payment rate

Ambulatory medical and surgical services ...................... 1113 $10 per visit 20 percent of applicable

payment rate

Clinical preventive services .... 1114 No copayment No coinsurance

Inpatient and residential mental illness and substance

abuse treatment ................. 1115 No copayment 20 percent of applicable

payment rate

Intensive nonresidential mental illness and substance

abuse treatment (except

treatment provided pursuant to section

1115(d)(2)(C)(ii)) .............. 1115 No copayment 20 percent of applicable

payment rate

Intensive nonresidential mental illness and substance

abuse treatment provided

pursuant to section

1115(d)(2)(C)(ii) ................ 1115 $25 per visit 50 percent of applicable

payment rate

Outpatient mental illness and

substance abuse treatment

(except psychotherapy, collateral services, and case

management) ...................... 1115 $10 per visit 20 percent of applicable

payment rate

Outpatient psychotherapy and

collateral services ............... 1115 $25 per visit until

January 1, 2001,

and $10 per visit

thereafter

50 percent of applicable

payment rate until January 1, 2001, and 20

percent thereafter
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Copayments and Coinsurance for Items and Services—Continued

Benefit Section Lower Cost Sharing

Schedule Higher Cost Sharing Schedule

Case management .................. 1115 No copayment No coinsurance

Family planning and services

for pregnant women (except

clinician visits and associated services related to prenatal care and 1 postpartum visit) ...................... 1116 $10 per visit 20 percent of applicable

payment rate

Clinician visits and associated

services related to prenatal

care and 1 post-partum

visit ..................................... 1116 No copayment No coinsurance

Hospice care ........................... 1117 No copayment 20 percent of applicable

payment rate

Home health care ................... 1118 No copayment 20 percent of applicable

payment rate

Extended care services ........... 1119 No copayment 20 percent of applicable

payment rate

Ambulance services ................ 1120 No copayment 20 percent of applicable

payment rate

Outpatient laboratory, radiology, and diagnostic services 1121 No copayment 20 percent of applicable

payment rate

Outpatient prescription drugs

and biologicals .................... 1122 $5 per prescription 20 percent of applicable

payment rate

Outpatient rehabilitation services ..................................... 1123 $10 per visit 20 percent of applicable

payment rate

Durable medical equipment

and prosthetic and orthotic

devices ................................ 1124 No copayment 20 percent of applicable

payment rate

Vision care ............................. 1125 $10 per visit (No

additional charge

for 1 set of necessary eyeglasses

for an individual

less than 18

years of age)

20 percent of applicable

payment rate

Dental care (except space

maintenance procedures

and interceptive orthodontic

treatment) .......................... 1126 $10 per visit 20 percent of applicable

payment rate

Space maintenance procedures and interceptive orthodontic treatment ........... 1126 $20 per visit 40 percent of applicable

payment rate
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Copayments and Coinsurance for Items and Services—Continued

Benefit Section Lower Cost Sharing

Schedule Higher Cost Sharing Schedule

Health education classes ........ 1127 All cost sharing

rules determined

by plans

All cost sharing rules determined by plans

Investigational treatment for

life-threatening condition ... 1128 All cost sharing

rules determined

by plans

All cost sharing rules determined by plans

1 (b) APPLICABLE PAYMENT RATE.—For purposes of

2 this section, the term ‘‘applicable payment rate’’, when

3 used with respect to an item or service, means the applica4 ble payment rate for the item or service established under

5 section 1322(c).

6 SEC. 1136. INDEXING DOLLAR AMOUNTS RELATING TO

7 COST SHARING.

8 (a) IN GENERAL.—Any deductible, copayment, out9 of-pocket limit on cost sharing, or other amount expressed

10 in dollars in this subtitle for items or services provided

11 in a year after 1994 shall be such amount increased by

12 the percentage specified in subsection (b) for the year.

13 (b) PERCENTAGE.—The percentage specified in this

14 subsection for a year is equal to the product of the factors

15 described in subsection (d) for the year and for each pre16 vious year after 1994, minus 1.

17 (c) ROUNDING.—Any increase (or decrease) under

18 subsection (a) shall be rounded, in the case of an amount

19 specified in this subtitle of—

20 (1) $200 or less, to the nearest multiple of $1,
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•S 1779 PCS

1 (2) more than $200, but less than $500, to the

2 nearest multiple of $5, or

3 (3) $500 or more, to the nearest multiple of

4 $10.

5 (d) FACTOR.—

6 (1) IN GENERAL.—The factor described in this

7 subsection for a year is 1 plus the general health

8 care inflation factor (as specified in section

9 6001(a)(3) and determined under paragraph (2)) for

10 the year.

11 (2) DETERMINATION.—In computing such fac12 tor for a year, the percentage increase in the CPI

13 for a year (referred to in section 6001(b)) shall be

14 determined based upon the percentage increase in

15 the average of the CPI for the 12-month period end16 ing with August 31 of the previous year over such

17 average for the preceding 12-month period.

18 PART 4—EXCLUSIONS

19 SEC. 1141. EXCLUSIONS.

20 (a) MEDICAL NECESSITY.—The comprehensive bene21 fit package does not include—

22 (1) an item or service that is not medically nec23 essary or appropriate; or

24 (2) an item or service that the National Health

25 Board may determine is not medically necessary or
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•S 1779 PCS

1 appropriate in a regulation promulgated under sec2 tion 1154.

3 (b) ADDITIONAL EXCLUSIONS.—The comprehensive

4 benefit package does not include the following items and

5 services:

6 (1) Custodial care, except in the case of hospice

7 care under section 1117.

8 (2) Surgery and other procedures performed

9 solely for cosmetic purposes and hospital or other

10 services incident thereto, unless—

11 (A) required to correct a congenital anom12 aly; or

13 (B) required to restore or correct a part of

14 the body that has been altered as a result of—

15 (i) accidental injury;

16 (ii) disease; or

17 (iii) surgery that is otherwise covered

18 under this subtitle.

19 (3) Hearing aids.

20 (4) Eyeglasses and contact lenses for individ21 uals at least 18 years of age.

22 (5) In vitro fertilization services.

23 (6) Sex change surgery and related services.

24 (7) Private duty nursing.
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•S 1779 PCS

1 (8) Personal comfort items, except in the case

2 of hospice care under section 1117.

3 (9) Any dental procedures involving orthodontic

4 care, inlays, gold or platinum fillings, bridges,

5 crowns, pin/post retention, dental implants, surgical

6 periodontal procedures, or the preparation of the

7 mouth for the fitting or continued use of dentures,

8 except as specifically described in section 1126.

9 PART 5—ROLE OF THE NATIONAL HEALTH

10 BOARD

11 SEC. 1151. DEFINITION OF BENEFITS.

12 (a) IN GENERAL.—The National Health Board may

13 promulgate such regulations or establish such guidelines

14 as may be necessary to assure uniformity in the applica15 tion of the comprehensive benefit package across all health

16 plans.

17 (b) FLEXIBILITY IN DELIVERY.—The regulations or

18 guidelines under subsection (a) shall permit a health plan

19 to deliver covered items and services to individuals enrolled

20 under the plan using the providers and methods that the

21 plan determines to be appropriate.

22 SEC. 1152. ACCELERATION OF EXPANDED BENEFITS.

23 (a) IN GENERAL.—Subject to subsection (b), at any

24 time prior to January 1, 2001, the National Health
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•S 1779 PCS

1 Board, in its discretion, may by regulation expand the

2 comprehensive benefit package by—

3 (1) adding any item or service that is added to

4 the package as of January 1, 2001; and

5 (2) requiring that a cost sharing schedule de6 scribed in part 3 of this subtitle reflect (wholly or

7 in part) any of the cost sharing requirements that

8 apply to the schedule as of January 1, 2001.

9 No such expansion shall be effective except as of January

10 1 of a year.

11 (b) CONDITION.—The Board may not expand the

12 benefit package under subsection (a) which is to become

13 effective with respect to a year, by adding any item or

14 service or altering any cost sharing schedule, unless the

15 Board estimates that the additional increase in per capita

16 health care expenditures resulting from the addition or al17 teration, for each regional alliance for the year, will not

18 cause any regional alliance to exceed its per capita target

19 (as determined under section 6003).

20 SEC. 1153. AUTHORITY WITH RESPECT TO CLINICAL PRE21 VENTIVE SERVICES.

22 (a) IN GENERAL.—With respect to clinical preventive

23 services described in section 1114, the National Health

24 Board—
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•S 1779 PCS

1 (1) shall specify and define specific items and

2 services as clinical preventive services for high risk

3 populations and shall establish and update a perio4 dicity schedule for such items and services;

5 (2) shall update the periodicity schedules for

6 the age-appropriate immunizations, tests, and clini7 cian visits specified in subsections (b) through (h) of

8 such section;

9 (3) shall establish rules with respect to coverage

10 for an immunization, test, or clinician visit that is

11 not provided to an individual during the age range

12 for such immunization, test, or clinician visit that is

13 specified in one of subsections (b) through (h) of

14 such section; and

15 (4) may otherwise modify the items and services

16 described in such section, taking into account age

17 and other risk factors, but may not modify the cost

18 sharing for any such item or service.

19 (b) CONSULTATION.—In performing the functions de20 scribed in subsection (a), the National Health Board shall

21 consult with experts in clinical preventive services.

22 SEC. 1154. ESTABLISHMENT OF STANDARDS REGARDING

23 MEDICAL NECESSITY.

24 The National Health Board may promulgate such

25 regulations as may be necessary to carry out section
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•S 1779 PCS

1 1141(a)(2) (relating to the exclusion of certain services

2 that are not medically necessary or appropriate).

3 PART 6—ADDITIONAL PROVISIONS RELATING TO

4 HEALTH CARE PROVIDERS

5 SEC. 1161. OVERRIDE OF RESTRICTIVE STATE PRACTICE

6 LAWS.

7 No State may, through licensure or otherwise, re8 strict the practice of any class of health professionals be9 yond what is justified by the skills and training of such

10 professionals.

11 SEC. 1162. PROVISION OF ITEMS OR SERVICES CONTRARY

12 TO RELIGIOUS BELIEF OR MORAL CONVIC13 TION.

14 A health professional or a health facility may not be

15 required to provide an item or service in the comprehen16 sive benefit package if the professional or facility objects

17 to doing so on the basis of a religious belief or moral con18 viction.

19 Subtitle C—State Responsibilities

20 SEC. 1200. PARTICIPATING STATE.

21 (a) IN GENERAL.—For purposes of the approval of

22 a State health care system by the Board under section

23 1511, a State is a ‘‘participating State’’ if the State meets

24 the applicable requirements of this subtitle.

25 (b) SUBMISSION OF SYSTEM DOCUMENT.—
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•S 1779 PCS

1 (1) IN GENERAL.—In order to be approved as

2 a participating State under section 1511, a State

3 shall submit to the National Health Board a docu4 ment (in a form and manner specified by the Board)

5 that describes the State health care system that the

6 State is establishing (or has established).

7 (2) DEADLINE.—If a State is not a participat8 ing State with a State health care system in oper9 ation by January 1, 1998, the provisions of subpart

10 C of part 1 of subtitle F (relating to responsibilities

11 in absence of State systems) shall take effect.

12 (3) SUBMISSION OF INFORMATION SUBSEQUENT

13 TO APPROVAL.—A State approved as a participating

14 State under section 1511 shall submit to the Board

15 an annual update to the State health care system

16 not later than February 15 of each year following

17 the first year for which the State is a participating

18 State. The update shall contain—

19 (A) such information as the Board may re20 quire to determine that the system shall meet

21 the applicable requirements of this Act for the

22 succeeding year; and

23 (B) such information as the Board may re24 quire to determine that the State operated the

25 system during the previous year in accordance
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•S 1779 PCS

1 with the Board’s approval of the system for

2 such previous year.

3 PART 1—GENERAL STATE RESPONSIBILITIES

4 SEC. 1201. GENERAL STATE RESPONSIBILITIES.

5 The responsibilities for a participating State are as

6 follows:

7 (1) REGIONAL ALLIANCES.—Establishing one

8 or more regional alliances (in accordance with sec9 tion 1202).

10 (2) HEALTH PLANS.—Certifying health plans

11 (in accordance with section 1203).

12 (3) FINANCIAL SOLVENCY OF PLANS.—Assur13 ing the financial solvency of health plans (in accord14 ance with section 1204).

15 (4) ADMINISTRATION.—Designating an agency

16 or official charged with coordinating the State re17 sponsibilities under this Act.

18 (5) WORKERS COMPENSATION AND AUTO19 MOBILE INSURANCE.—Conforming State laws to

20 meet the requirements of subtitles A and B of title

21 X (relating to medical benefits under workers com22 pensation and automobile insurance).

23 (6) OTHER RESPONSIBILITIES.—Carrying out

24 other responsibilities of participating States specified

25 under this Act.
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•S 1779 PCS

1 SEC. 1202. STATE RESPONSIBILITIES WITH RESPECT TO

2 ALLIANCES.

3 (a) ESTABLISHMENT OF ALLIANCES.—

4 (1) IN GENERAL.—A participating State shall—

5 (A) establish and maintain one or more re6 gional alliances in accordance with this section

7 and subtitle D, and ensure that such alliances

8 meet the requirements of this Act; and

9 (B) designate alliance areas in accordance

10 with subsection (b).

11 (2) DEADLINE.—A State may not be a partici12 pating State for a year unless the State has estab13 lished such alliances by March 1 of the previous

14 year.

15 (b) ALLIANCE AREAS.—

16 (1) IN GENERAL.—In accordance with this sub17 section, each State shall designate a geographic area

18 assigned to each regional alliance. Each such area is

19 referred to in this Act as an ‘‘alliance area’’.

20 (2) POPULATION REQUIRED.—

21 (A) IN GENERAL.—Each alliance area shall

22 encompass a population large enough to ensure

23 that the alliance has adequate market share to

24 negotiate effectively with health plans providing

25 the comprehensive benefit package to eligible

26 individuals who reside in the area.
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•S 1779 PCS

1 (B) TREATMENT OF CONSOLIDATED MET2 ROPOLITAN STATISTICAL AREAS.—An alliance

3 area that includes a Consolidated Metropolitan

4 Statistical Area within a State is presumed to

5 meet the requirement of subparagraph (A).

6 (3) SINGLE ALLIANCE IN EACH AREA.—No geo7 graphic area may be assigned to more than one re8 gional alliance.

9 (4) BOUNDARIES.—In establishing boundaries

10 for alliance areas, the State may not discriminate on

11 the basis of or otherwise take into account race, age,

12 language, religion, national origin, socio-economic

13 status, disability, or perceived health status.

14 (5) TREATMENT OF METROPOLITAN AREAS.—

15 The entire portion of a metropolitan statistical area

16 located in a State shall be included in the same alli17 ance area.

18 (6) NO PORTIONS OF STATE PERMITTED TO BE

19 OUTSIDE ALLIANCE AREA.—Each portion of the

20 State shall be assigned to a regional alliance under

21 this subsection.

22 (c) STATE COORDINATION OF REGIONAL ALLI23 ANCES.—One or more States may allow or require two or

24 more regional alliances to coordinate their operations,

25 whether such alliances are in the same or different States.
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•S 1779 PCS

1 Such coordination may include adoption of joint operating

2 rules, contracting with health plans, enforcement activi3 ties, and establishment of fee schedules for health

4 providers.

5 (d) ASSISTANCE IN COLLECTION OF AMOUNTS OWED

6 TO ALLIANCES.—Each State shall assure that the

7 amounts owed to regional alliances in the State are col8 lected and paid to such alliances.

9 (e) ASSISTANCE IN ELIGIBILITY VERIFICATIONS.—

10 (1) IN GENERAL.—Each State shall assure that

11 the determinations of eligibility for cost sharing as12 sistance (and premium discounts and cost sharing

13 reductions for families) are made by regional alli14 ances in the State on the basis of the best informa15 tion available to the alliances and the State.

16 (2) PROVISION OF INFORMATION.—Each State

17 shall use the information available to the State

18 under section 6103(l)(7)(D)(x) of the Internal Reve19 nue Code of 1986 to assist regional alliances in veri20 fying such eligibility status.

21 (f) SPECIAL REQUIREMENTS FOR ALLIANCES WITH

22 SINGLE-PAYER SYSTEM.—If the State operates an alli23 ance-specific single-payer system (as described in part 2),

24 the State shall assure that the regional alliance in which
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1 the system is operated meets the requirements for such

2 an alliance described in section 1224(b).

3 (g) PAYMENT OF SHORTFALLS FOR CERTAIN ADMIN4 ISTRATIVE ERRORS.—Each participating State is finan5 cially responsible, under section 9201(c)(2), for adminis6 trative errors described in section 9201(e)(2).

7 SEC. 1203. STATE RESPONSIBILITIES RELATING TO HEALTH

8 PLANS.

9 (a) CRITERIA FOR CERTIFICATION.—

10 (1) IN GENERAL.—For purposes of this section,

11 a participating State shall establish and publish the

12 criteria that are used in the certification of health

13 plans under this section.

14 (2) REQUIREMENTS.—Such criteria shall be es15 tablished with respect to—

16 (A) the quality of the plan,

17 (B) the financial stability of the plan,

18 (C) the plan’s capacity to deliver the com19 prehensive benefit package in the designated

20 service area,

21 (D) other applicable requirements for

22 health plans under parts 1, 3, and 4 of subtitle

23 E, and

24 (E) other requirements imposed by the

25 State consistent with this part.
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1 (b) CERTIFICATION OF HEALTH PLANS.—A partici2 pating State shall certify each plan as a regional alliance

3 health plan that it determines meets the criteria for cer4 tification established and published under subsection (a).

5 (c) MONITORING.—A participating State shall mon6 itor the performance of each State-certified regional alli7 ance health plan to ensure that it continues to meet the

8 criteria for certification.

9 (d) LIMITATIONS ON AUTHORITY.—A participating

10 State may not—

11 (1) discriminate against a plan based on the

12 domicile of the entity offering of the plan; and

13 (2) regulate premium rates charged by health

14 plans, except as may be required under title VI (re15 lating to the enforcement of cost containment rules

16 for plans in the State) or as may be necessary to en17 sure that plans meet financial solvency requirements

18 under section 1408.

19 (e) ASSURING ADEQUATE ACCESS TO A CHOICE OF

20 HEALTH PLANS.—

21 (1) GENERAL ACCESS.—

22 (A) IN GENERAL.—Each participating

23 State shall ensure that—

24 (i) each regional alliance eligible fam25 ily has adequate access to enroll in a
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1 choice of regional alliance health plans pro2 viding services in the area in which the in3 dividual resides, including (to the maxi4 mum extent practicable) adequate access

5 to a plan whose premium is at or below the

6 weighted average premium for plans in the

7 regional alliance, and

8 (ii) each such family that is eligible

9 for a premium discount under section

10 6104(b) is provided a discount in accord11 ance with such section (including an in12 crease in such discount described in section

13 6104(b)(2)).

14 (B) AUTHORITY.—In order to carry out its

15 responsibility under subparagraph (A), a par16 ticipating State may require, as a condition of

17 entering into a contract with a regional alliance

18 under section 1321, that one or more certified

19 regional alliance health plans cover all (or se20 lected portions) of the alliance area.

21 (2) ACCESS TO PLANS USING CENTERS OF EX22 CELLENCE.—Each participating State may require,

23 as a condition of entering into a contract with a re24 gional alliance under section 1321, that one or more

25 certified health plans provide access (through reim-
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1 bursement, contracts, or otherwise) of enrolled indi2 viduals to services of centers of excellence (as des3 ignated by the State in accordance with rules pro4 mulgated by the Secretary).

5 (3) USE OF INCENTIVES TO ENROLL AND

6 SERVE DISADVANTAGED GROUPS.—A State may pro7 vide—

8 (A) for an adjustment to the risk-adjust9 ment methodology under section 1541(b) and

10 other financial incentives to regional alliance

11 health plans to ensure that such plans enroll in12 dividuals who are members of disadvantaged

13 groups, and

14 (B) for appropriate extra services, such as

15 outreach to encourage enrollment and transpor16 tation and interpreting services to ensure access

17 to care, for certain population groups that face

18 barriers to access because of geographic loca19 tion, income levels, or racial or cultural dif20 ferences.

21 (f) COORDINATION OF WORKERS’ COMPENSATION

22 SERVICES AND AUTOMOBILE INSURANCE.—Each partici23 pating State shall comply with the responsibilities regard24 ing workers’ compensation and automobile insurance spec25 ified in subtitles A and B of title X.
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1 (g) IMPLEMENTATION OF MANDATORY REINSUR2 ANCE SYSTEM.—If the risk adjustment and reinsurance

3 methodology developed under section 1541 includes a

4 mandatory reinsurance system, each participating State

5 shall establish a reinsurance program consistent with such

6 methodology and any additional standards established by

7 the Board.

8 (h) REQUIREMENTS FOR PLANS OFFERING SUPPLE9 MENTAL INSURANCE.—Notwithstanding any other provi10 sion of this Act a State may not certify a regional alliance

11 health plan under this section if—

12 (1) the plan (or any entity with which the plan

13 is affiliated under such rules as the Board may es14 tablish) offers a supplemental health benefit policy

15 (as defined in section 1421(b)(1)) that fails to meet

16 the applicable requirements for such a policy under

17 part 2 of subtitle E (without regard to the State in

18 which the policy is offered); or

19 (2) the plan offers a cost sharing policy (as de20 fined in section 1421(b)(2)) that fails to meet the

21 applicable requirements for such a policy under part

22 2 of subtitle E.
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1 SEC. 1204. FINANCIAL SOLVENCY; FISCAL OVERSIGHT;

2 GUARANTY FUND.

3 (a) CAPITAL STANDARDS.—A participating State

4 shall establish capital standards for health plans that meet

5 minimum Federal requirements established by the Na6 tional Health Board under sections 1503(i) and 1551(a).

7 (b) REPORTING AND AUDITING REQUIREMENTS.—

8 Each participating State shall define financial reporting

9 and auditing requirements and requirements for fund re10 serves adequate to monitor the financial status of plans.

11 (c) GUARANTY FUND.—

12 (1) ESTABLISHMENT.—Each participating

13 State shall ensure that there is a guaranty fund that

14 meets the requirements established by the Board

15 under sections 1503(i) and 1552, in order to provide

16 financial protection to health care providers and oth17 ers in the case of a failure of a regional alliance

18 health plan.

19 (2) ASSESSMENTS TO PROVIDE FUNDS.—In the

20 case of a failure of one or more regional alliance

21 health plans, the State may require each regional al22 liance health plan within the State to pay an assess23 ment to the State in an amount not to exceed 2 per24 cent of the premiums of such plans paid by or on

25 behalf of regional alliance eligible individuals during

26 a year for so long as necessary to generate sufficient
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1 revenue to cover any outstanding claims against the

2 failed plan.

3 (d) PROCEDURES IN EVENT OF PLAN FAILURE.—

4 (1) IN GENERAL.—A participating State shall

5 assure that, in the event of the failure of a regional

6 alliance health plan in the State, eligible individuals

7 enrolled in the plan will be assured continuity of cov8 erage for the comprehensive benefit package.

9 (2) DESIGNATION OF STATE AGENCY.—A par10 ticipating State shall designate an agency of State

11 government that supervises or assumes control of

12 the operation of a regional alliance health plan in

13 the case of the failure of the plan.

14 (3) PROTECTIONS FOR HEALTH CARE PROVID15 ERS AND ENROLLEES.—Each participating State

16 shall assure that in the case of a plan failure—

17 (A) the guaranty fund shall pay health

18 care providers for items and services covered

19 under the comprehensive benefit package for

20 enrollees of the plan for which the plan is other21 wise obligated to make payment;

22 (B) after making all payments required to

23 be made to providers under subparagraph (A),

24 the guaranty fund shall make payments for the

25 operational, administrative, and other costs and
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1 debts of the plan (in accordance with require2 ments imposed by the State based on rules pro3 mulgated by the Board);

4 (C) such health care providers have no

5 legal right to seek payment from eligible indi6 viduals enrolled in the plan for any such cov7 ered items or services (other than the enrollees’

8 obligations under cost sharing arrangements);

9 and

10 (D) health care providers are required to

11 continue caring for such eligible individuals

12 until such individuals are enrolled in a new

13 health plan.

14 (4) PLAN FAILURE.—For purposes of this sec15 tion, the failure of a health plan means the current

16 or imminent inability of the plan to pay claims.

17 SEC. 1205. RESTRICTIONS ON FUNDING OF ADDITIONAL

18 BENEFITS.

19 If a participating State provides benefits (either di20 rectly or through regional alliance health plans or other21 wise) in addition to those covered under the comprehensive

22 benefit package, the State may not provide for payment

23 for such benefits through funds provided under this Act.
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1 PART 2—REQUIREMENTS FOR STATE SINGLE2 PAYER SYSTEMS

3 SEC. 1221. SINGLE-PAYER SYSTEM DESCRIBED.

4 The Board shall approve the application of a State

5 to operate a single-payer system if the Board finds that

6 the system—

7 (1) meets the requirements of section 1222;

8 (2)(A) meets the requirements for a Statewide

9 single-payer system under section 1223, in the case

10 of a system offered throughout a State; or

11 (B) meets the requirements for an alliance-spe12 cific single-payer system under section 1224, in the

13 case of a system offered in a single alliance of a

14 State.

15 SEC. 1222. GENERAL REQUIREMENTS FOR SINGLE-PAYER

16 SYSTEMS.

17 Each single-payer system shall meet the following

18 requirements:

19 (1) ESTABLISHMENT BY STATE.—The system is

20 established under State law, and State law provides

21 for mechanisms to enforce the requirements of the

22 system.

23 (2) OPERATION BY STATE.—The system is op24 erated by the State or a designated agency of the

25 State.

26 (3) ENROLLMENT OF ELIGIBLE INDIVIDUALS.—
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1 (A) MANDATORY ENROLLMENT OF ALL

2 REGIONAL ALLIANCE INDIVIDUALS.—The sys3 tem provides for the enrollment of all eligible

4 individuals residing in the State (or, in the case

5 of an alliance-specific single-payer system, in

6 the alliance area) for whom the applicable

7 health plan would otherwise be a regional alli8 ance health plan.

9 (B) OPTIONAL ENROLLMENT OF MEDI10 CARE-ELIGIBLE INDIVIDUALS.—At the option of

11 the State, the system may provide for the en12 rollment of medicare-individuals residing in the

13 State (or, in the case of an alliance-specific sin14 gle-payer system, in the alliance area) if the

15 Secretary of Health and Human Services has

16 approved an application submitted by the State

17 under section 1893 of the Social Security Act

18 (as added by section 4001(a)) for the integra19 tion of medicare beneficiaries into plans of the

20 State. Nothing in this subparagraph shall be

21 construed as requiring that a State have a sin22 gle-payer system in order to provide for such

23 integration.

24 (C) OPTIONAL ENROLLMENT OF COR25 PORATE ALLIANCE INDIVIDUALS IN STATEWIDE
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1 PLANS.—At the option of the State, a Statewide

2 single-payer system may provide for the enroll3 ment of individuals residing in the State who

4 are otherwise eligible to enroll in a corporate al5 liance health plan under section 1311.

6 (D) OPTIONS INCLUDED IN STATE SYSTEM

7 DOCUMENT.—A State may not exercise any of

8 the options described in subparagraphs (A) or

9 (B) for a year unless the State included a de10 scription of the option in the submission of its

11 system document to the Board for the year

12 under section 1200(b).

13 (E) EXCLUSION OF CERTAIN INDIVID14 UALS.—A single-payer system may not require

15 the enrollment of electing veterans, active duty

16 military personnel, and electing Indians (as de17 fined in 1012(d)).

18 (4) DIRECT PAYMENT TO PROVIDERS.—

19 (A) IN GENERAL.—With respect to provid20 ers who furnish items and services included in

21 the comprehensive benefit package to individ22 uals enrolled in the system, the State shall

23 make payments directly to such providers and

24 assume (subject to subparagraph (B)) all finan25 cial risk associated with making such payments.
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1 (B) CAPITATED PAYMENTS PERMITTED.—

2 Nothing in subparagraph (A) shall be construed

3 to prohibit providers furnishing items and serv4 ices under the system from receiving payments

5 from the plan on a capitated, at-risk basis

6 based on prospectively determined rates.

7 (5) PROVISION OF COMPREHENSIVE BENEFIT

8 PACKAGE.—

9 (A) IN GENERAL.—The system shall pro10 vide for coverage of the comprehensive benefit

11 package, including the cost sharing provided

12 under the package (subject to subparagraph

13 (B)), to all individuals enrolled in the system.

14 (B) IMPOSITION OF REDUCED COST SHAR15 ING.—The system may decrease the cost shar16 ing otherwise provided in the comprehensive

17 benefit package with respect to any class of in18 dividuals enrolled in the system or any class of

19 services included in the package, so long as the

20 system does not increase the cost sharing other21 wise imposed with respect to any other class of

22 individuals or services.

23 (6) COST CONTAINMENT.—The system shall

24 provide for mechanisms to ensure, in a manner sat25 isfactory to the Board, that—
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1 (A) per capita expenditures for items and

2 services in the comprehensive benefit package

3 under the system for a year (beginning with the

4 first year) do not exceed an amount equivalent

5 to the regional alliance per capita premium tar6 get that is determined under section 6003

7 (based on the State being a single regional alli8 ance) for the year;

9 (B) the per capita expenditures described

10 in subparagraph (A) are computed and effec11 tively monitored; and

12 (C) automatic, mandatory, nondiscretion13 ary reductions in payments to health care pro14 viders will be imposed to the extent required to

15 assure that such per capita expenditures do not

16 exceed the applicable target referred to in sub17 paragraph (A).

18 (7) REQUIREMENTS GENERALLY APPLICABLE

19 TO HEALTH PLANS.—The system shall meet the re20 quirements applicable to a health plan under section

21 1400(a), except that—

22 (A) the system does not have the authority

23 provided to health plans under section

24 1402(a)(2) (relating to permissible limitations
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1 on the enrollment of eligible individuals on the

2 basis of limits on the plan’s capacity);

3 (B) the system is not required to meet the

4 requirements of section 1404(a) (relating to re5 strictions on the marketing of plan materials);

6 and

7 (C) the system is not required to meet the

8 requirements of section 1408 (relating to plan

9 solvency).

10 SEC. 1223. SPECIAL RULES FOR STATES OPERATING STATE11 WIDE SINGLE-PAYER SYSTEM.

12 (a) IN GENERAL.—In the case of a State operating

13 a Statewide single-payer system—

14 (1) the State shall operate the system through15 out the State through a single alliance;

16 (2) except as provided in subsection (b), the

17 State shall meet the requirements for participating

18 States under part 1; and

19 (3) the State shall assume the functions de20 scribed in subsection (c) that are otherwise required

21 to be performed by regional alliances in participating

22 States that do not operate a Statewide single-payer

23 system.

24 (b) EXCEPTIONS TO CERTAIN REQUIREMENTS FOR

25 PARTICIPATING STATES.—In the case of a State operating
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1 a Statewide single-payer system, the State is not required

2 to meet the following requirements otherwise applicable to

3 participating States under part 1:

4 (1) ESTABLISHMENT OF ALLIANCES.—The re5 quirements of section 1202 (relating to the estab6 lishment of alliances).

7 (2) HEALTH PLANS.—The requirements of sec8 tion 1203 (relating to health plans), other than the

9 requirement of subsection (f) of such section (relat10 ing to coordination of workers’ compensation serv11 ices and automobile liability insurance).

12 (3) FINANCIAL SOLVENCY.—The requirements

13 of section 1204 (relating to the financial solvency of

14 health plans in the State).

15 (c) ASSUMPTION BY STATE OF CERTAIN REQUIRE16 MENTS APPLICABLE TO REGIONAL ALLIANCES.—A State

17 operating a Statewide single-payer system shall be subject

18 to the following requirements otherwise applicable to re19 gional alliances in other participating States:

20 (1) ENROLLMENT; ISSUANCE OF HEALTH SECU21 RITY CARDS.—The requirements of subsections (a)

22 and (c) of section 1323 and section 1324 shall apply

23 to the State, eligible individuals residing in the

24 State, and the single-payer system operated by the

25 State in the same manner as such requirements
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1 apply to a regional alliance, alliance eligible individ2 uals, and regional alliance health plans.

3 (2) REDUCTIONS IN COST SHARING FOR LOW4 INCOME INDIVIDUALS.—The requirement of section

5 1371 shall apply to the State in the same manner

6 as such requirement applies to a regional alliance.

7 (3) DATA COLLECTION; QUALITY.—The require8 ments of section 1327 shall apply to the State and

9 the single-payer system operated by the State in the

10 same manner as such requirement applies to a re11 gional alliance and health plans offered through a

12 regional alliance.

13 (4) ANTI-DISCRIMINATION; COORDINATION.—

14 The requirements of section 1328 shall apply to the

15 State in the same manner as such requirements

16 apply with respect to a regional alliance.

17 (d) FINANCING.—

18 (1) IN GENERAL.—A State operating a State19 wide single-payer system shall provide for the financ20 ing of the system using, at least in part, a payroll21 based financing system that requires employers to

22 pay at least the amount that the employers would be

23 required to pay if the employers were subject to the

24 requirements of subtitle B of title VI.
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1 (2) USE OF FINANCING METHODS.—Such a

2 State may use, consistent with paragraph (1), any

3 other method of financing.

4 (e) SINGLE-PAYER STATE DEFINED.—In this Act,

5 the term ‘‘single-payer State’’ means a State with a State6 wide single-payer system in effect that has been approved

7 by the Board in accordance with this part.

8 SEC. 1224. SPECIAL RULES FOR ALLIANCE-SPECIFIC SIN9 GLE-PAYER SYSTEMS.

10 (a) IN GENERAL.—In the case of a State operating

11 an alliance-specific single-payer system—

12 (1) the State shall meet the requirements for

13 participating States under part 1; and

14 (2) the regional alliance in which the system is

15 operated shall meet the requirements of subsection

16 (b).

17 (b) REQUIREMENTS FOR ALLIANCE IN WHICH SYS18 TEM OPERATES.—A regional alliance in which an alliance19 specific single payer system is operated shall meet the re20 quirements applicable to regional alliances under subtitle

21 D, except that the alliance is not required to meet the fol22 lowing requirements of such subtitle:

23 (1) CONTRACTS WITH HEALTH PLANS.—The re24 quirements of section 1321 (relating to contracts

25 with health plans).
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1 (2) CHOICE OF HEALTH PLANS OFFERED.—The

2 requirements of subsections (a) or (b) of section

3 1322 (relating to offering a choice of health plans to

4 eligible enrollees).

5 (3) ESTABLISHMENT OF OMBUDSMAN OF6 FICE.—The requirements of section 1326(a) (relat7 ing to the establishment of an office of ombudsman).

8 (4) ADDRESSING NEEDS OF AREAS WITH INAD9 EQUATE HEALTH SERVICES.—The regional alliance

10 does not have any of the authorities described in

11 subsections (a) and (b) of section 1329 (relating to

12 adjusting payments to plans and encouraging the es13 tablishment of new plans).

14 Subtitle D—Health Alliances

15 SEC. 1300. HEALTH ALLIANCE DEFINED.

16 In this Act, the term ‘‘health alliance’’ means a re17 gional alliance (as defined in section 1301) and a cor18 porate alliance (as defined in section 1311).

19 PART 1—ESTABLISHMENT OF REGIONAL AND

20 CORPORATE ALLIANCES

21 Subpart A—Regional Alliances

22 SEC. 1301. REGIONAL ALLIANCE DEFINED.

23 In this Act, the term ‘‘regional alliance’’ means a

24 non-profit organization, an independent state agency, or

25 an agency of the State which—
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1 (1) meets the applicable organizational require2 ments of this subpart, and

3 (2) is carrying out activities consistent with

4 part 2.

5 SEC. 1302. BOARD OF DIRECTORS.

6 (a) IN GENERAL.—A regional alliance must be gov7 erned by a Board of Directors appointed consistent with

8 the provisions of this subpart. All powers vested in a re9 gional alliance under this Act shall be vested in the Board

10 of Directors.

11 (b) MEMBERSHIP.—

12 (1) IN GENERAL.—Such a Board of Directors

13 shall consist of—

14 (A) members who represent employers

15 whose employees purchase health coverage

16 through the alliance, including self-employed in17 dividuals who purchase such coverage; and

18 (B) members who represent individuals

19 who purchase such coverage, including employ20 ees who purchase such coverage.

21 (2) EQUAL REPRESENTATION OF EMPLOYERS

22 AND CONSUMERS.—The number of members of the

23 Board described under subparagraph (A) of para24 graph (1) shall be the same as the number of mem-
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1 bers described in subparagraph (B) of such para2 graph.

3 (c) NO CONFLICT OF INTEREST PERMITTED.—An

4 individual may not serve as a member of the Board of

5 Directors if the individual is one of the following (or an

6 immediate family member of one of the following):

7 (1) A health care provider.

8 (2) An individual who is an employee or mem9 ber of the Board of Directors of, has a substantial

10 ownership in, or derives substantial income from, a

11 health care provider, health plan, pharmaceutical

12 company, or a supplier of medical equipment, de13 vices, or services.

14 (3) A person who derives substantial income

15 from the provision of health care.

16 (4)(A) A member or employee of an association,

17 law firm, or other institution or organization that

18 represents the interests of one or more health care

19 providers, health plans or others involved in the

20 health care field, or (B) an individual who practices

21 as a professional in an area involving health care.

22 SEC. 1303. PROVIDER ADVISORY BOARDS FOR REGIONAL

23 ALLIANCES.

24 Each regional alliance must establish a provider advi25 sory board consisting of representatives of health care pro-
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1 viders and professionals who provide covered services

2 through health plans offered by the alliance.

3 Subpart B—Corporate Alliances

4 SEC. 1311. CORPORATE ALLIANCE DEFINED; INDIVIDUALS

5 ELIGIBLE FOR COVERAGE THROUGH COR6 PORATE ALLIANCES; ADDITIONAL DEFINI7 TIONS.

8 (a) CORPORATE ALLIANCE DEFINED.—In this Act,

9 the term ‘‘corporate alliance’’ means an eligible sponsor

10 (as defined in subsection (b)) if—

11 (1) the sponsor elects, in a form and manner

12 specified by the Secretary of Labor consistent with

13 this subpart, to be treated as a corporate alliance

14 under this title and such election has not been ter15 minated under section 1313; and

16 (2) the sponsor has filed with the Secretary of

17 Labor a document describing how the sponsor shall

18 carry out activities as such an alliance consistent

19 with part 4.

20 (b) ELIGIBLE SPONSORS.—

21 (1) IN GENERAL.—In this subpart, each of the

22 following is an eligible sponsor:

23 (A) LARGE EMPLOYER.—An employer

24 that—
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1 (i) is a large employer (as defined in

2 subsection (e)(2)) as of the date of an elec3 tion under subsection (a)(1), and

4 (ii) is not an excluded employer de5 scribed in paragraph (2).

6 (B) PLAN SPONSOR OF A MULTIEMPLOYER

7 PLAN.—A plan sponsor described in section

8 3(16)(B)(iii) of Employee Retirement Income

9 Security Act of 1974, but only with respect to

10 a group health plan that is a multiemployer

11 plan (as defined in subsection (e)(3)) main12 tained by the sponsor and only if—

13 (i) such plan offered health benefits

14 as of September 1, 1993, and

15 (ii) as of both September 1, 1993, and

16 January 1, 1996, such plan has more than

17 5,000 active participants in the United

18 States, or the plan is maintained by one or

19 more affiliates of the same labor organiza20 tion, or one or more affiliates of labor or21 ganizations representing employees in the

22 same industry, covering more than 5,000

23 employees.

24 (C) RURAL ELECTRIC COOPERATIVE AND

25 RURAL TELEPHONE COOPERATIVE ASSOCIA-
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1 TION.—A rural electric cooperative or a rural

2 telephone cooperative association, but only with

3 respect to a group health plan that is main4 tained by such cooperative or association (or

5 members of such cooperative or association)

6 and only if such plan—

7 (i) offered health benefits as of Sep8 tember 1, 1993, and

9 (ii) as of both September 1, 1993, and

10 January 1, 1996, has more than 5,000

11 full-time employees in the United States

12 entitled to health benefits under the plan.

13 (2) EXCLUDED EMPLOYERS.—For purposes of

14 paragraph (1)(A), any of the following are excluded

15 employers described in this paragraph:

16 (A) An employer whose primary business is

17 employee leasing.

18 (B) The Federal government (other than

19 the United States Postal Service).

20 (C) A State government, a unit of local

21 government, and an agency or instrumentality

22 of government, including any special purpose

23 unit of government.
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1 (c) INDIVIDUALS ELIGIBLE TO ENROLL IN COR2 PORATE ALLIANCE HEALTH PLANS.—For purposes of

3 part 1 of subtitle A, subject to subsection (d)—

4 (1) FULL-TIME EMPLOYEES OF LARGE EMPLOY5 ERS.—Each eligible individual who is a full-time em6 ployee (as defined in section 1901(b)(2)(C)) of a

7 large employer that has an election in effect as a

8 corporate alliance is eligible to enroll in a corporate

9 alliance health plan offered by such corporate

10 alliance.

11 (2) MULTIEMPLOYER ALLIANCES.—

12 (A) PARTICIPANTS.—Each participant and

13 beneficiary (as defined in subparagraph (B))

14 under a multiemployer plan, with respect to

15 which an eligible sponsor of the plan described

16 in subsection (b)(1)(B) has an election in effect

17 as a corporate alliance, is eligible to enroll in a

18 corporate alliance health plan offered by such

19 corporate alliance.

20 (B) PARTICIPANT AND BENEFICIARY DE21 FINED.—In subparagraph (A), the terms ‘‘par22 ticipant’’ and ‘‘beneficiary’’ have the meaning

23 given such terms in section 3 of the Employee

24 Retirement Income Security Act of 1974.
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1 (3) FULL-TIME EMPLOYEES OF RURAL COOPER2 ATIVE ALLIANCES.—Each full-time employee of a

3 member of a rural electric cooperative or rural tele4 phone cooperative association which has an election

5 in effect as a corporate alliance (and each full-time

6 employee of such a cooperative or association) is eli7 gible to enroll in a corporate alliance health plan of8 fered by such corporate alliance.

9 (4) INELIGIBLE TO ENROLL IN REGIONAL ALLI10 ANCE HEALTH PLAN.—Except as provided in section

11 1013, a corporate alliance eligible individual is not

12 eligible to enroll under a regional alliance health

13 plan.

14 (d) EXCLUSION OF CERTAIN INDIVIDUALS.—In ac15 cordance with rules of the Board, the following individuals

16 shall not be treated as corporate alliance eligible individ17 uals:

18 (1) AFDC recipients.

19 (2) SSI recipients.

20 (3) Individuals who are described in section

21 1004(b) (relating to veterans, military personnel,

22 and Indians) and who elect an applicable health plan

23 described in such section.

24 (4) Employees who are seasonal or temporary

25 workers (as defined by the Board), other than such
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1 workers who are treated as corporate alliance eligible

2 individuals pursuant to a collective bargaining agree3 ment (as defined by the Secretary of Labor).

4 (e) DEFINITIONS RELATING TO CORPORATE ALLI5 ANCES.—In this subtitle, except as otherwise provided:

6 (1) GROUP HEALTH PLAN.—The term ‘‘group

7 health plan’’ means an employee welfare benefit plan

8 (as defined in section 3(1) of the Employee Retire9 ment Income Security Act of 1974) providing medi10 cal care (as defined in section 213(d) of the Internal

11 Revenue Code of 1986) to participants or bene12 ficiaries (as defined in section 3 of the Employee Re13 tirement Income Security Act of 1974) directly or

14 through insurance, reimbursement, or otherwise.

15 (2) LARGE EMPLOYER.—The term ‘‘large em16 ployer’’ means an employer that has more than

17 5,000 full-time employees in the United States. Such

18 term includes the United States Postal Service.

19 (3) MULTIEMPLOYER PLAN.—The term ‘‘multi20 employer plan’’ has the meaning given such term in

21 section 3(37) of the Employee Retirement Income

22 Security Act of 1974, and includes any plan that is

23 treated as such a plan under title I of such Act.

24 (4) RURAL ELECTRIC COOPERATIVE.—The term

25 ‘‘rural electric cooperative’’ has the meaning given
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1 such term in section 3(40)(A)(iv) of the Employee

2 Retirement Income Security Act of 1974.

3 (5) RURAL TELEPHONE COOPERATIVE ASSOCIA4 TIONS.—The term ‘‘rural telephone cooperative asso5 ciation’’ has the meaning given such term in section

6 3(40)(A)(v) of the Employee Retirement Income Se7 curity Act of 1974.

8 SEC. 1312. TIMING OF ELECTIONS.

9 (a) FOR LARGE EMPLOYERS.—

10 (1) CURRENT LARGE EMPLOYERS.—

11 (A) IN GENERAL.—In the case of an em12 ployer that is an eligible sponsor described in

13 section 1311(b)(1)(A) as of the most recent

14 January 1 prior to the general effective date,

15 the sponsor’s election to be a corporate alliance

16 under such section must be made and filed with

17 the Secretary of Labor not later than the date

18 specified in subparagraph (B).

19 (B) DEADLINE FOR NOTICE.—The date

20 specified in this subparagraph is January 1 of

21 the second year preceding the general effective

22 date or, in the case of a State that elects to be23 come a participating State before the general

24 effective date, not later than one month later
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1 than the date specified for States under section

2 1202(a)(2).

3 (2) NEW LARGE EMPLOYERS.—In the case of

4 an employer that is not an eligible sponsor described

5 in section 1311(b)(1)(A) as of the most recent Janu6 ary 1 prior to the general effective date, but first be7 comes such a sponsor as of a subsequent date, the

8 election to be a corporate alliance under such section

9 must be made and filed with the Secretary of Labor

10 not later than March 1 of the year following the

11 year in which the employer first becomes such a

12 sponsor.

13 (3) APPLICATION OF OPTION.—The Secretary

14 of Labor shall promulgate rules regarding how the

15 option described in section 1311(c)(1)(B) will be ap16 plied to the determination of whether an employer is

17 a large employer before an election is made under

18 section 1311.

19 (b) FOR MULTIEMPLOYER PLANS AND RURAL CO20 OPERATIVES.—In the case of an eligible sponsor described

21 in section 1311(b)(1) (B) or (C), the sponsor’s election

22 to be a corporate alliance under such section must be

23 made and filed with the Secretary of Labor not later than

24 March 1, 1996.
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1 (c) EFFECTIVE DATE OF ELECTION.—An election

2 made under subsection (a) or (b) shall be effective for cov3 erage provided under health plans on and after January

4 1 of the year following the year in which the election is

5 made.

6 (d) ONE-TIME ELECTION.—If an eligible sponsor

7 fails to make the election on a timely manner under sub8 section (a) or (b), the sponsor may not make such election

9 at any other time.

10 SEC. 1313. TERMINATION OF ALLIANCE ELECTION.

11 (a) TERMINATION FOR INSUFFICIENT NUMBER OF

12 FULL-TIME EMPLOYEES OR PARTICIPANTS.—If a cor13 porate alliance reports under section 1387(c), that there

14 were fewer than 4,800 full-time employees (or, active par15 ticipants, in the case of one or more plans offered by a

16 corporate alliance which is an eligible sponsor described

17 in section 1311(b)(1)(B)) who are enrolled in a health

18 plan through the alliance, the election under this part with

19 respect to the alliance shall terminate.

20 (b) TERMINATION FOR FAILURE TO MEET REQUIRE21 MENTS.—

22 (1) IN GENERAL.—If the Secretary of Labor

23 finds that a corporate alliance has failed substan24 tially to meet the applicable requirements of this
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1 subtitle, the Secretary shall terminate the election

2 under this part with respect to the alliance

3 (2) EXCESS INCREASE IN PREMIUM EQUIVA4 LENT.—If the Secretary of Labor finds that the alli5 ance is in violation of the requirements of section

6 6022 (relating to prohibition against excess increase

7 in premium expenditures), the Secretary shall termi8 nate the alliance in accordance with such section.

9 (c) ELECTIVE TERMINATION.—A corporate alliance

10 may terminate an election under this part by filing with

11 the National Health Board and the Secretary of Labor

12 a notice of intent to terminate.

13 (d) EFFECTIVE DATE OF TERMINATION.—In the

14 case of a termination of an election under this section,

15 in accordance with rules established by the Secretary of

16 Labor—

17 (1) subject to section 6022(a)(1), the termi18 nation shall take effect as of the effective date of en19 rollments in regional alliance health plans made dur20 ing the next open enrollment period (as provided in

21 section 1323(d)), and

22 (2) the enrollment of eligible individuals in cor23 porate alliance health plans of the corporate alliance

24 shall be terminated as of such date and such individ-
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1 uals shall be enrolled in other applicable health plans

2 effective on such date.

3 (e) NOTICE TO BOARD.—If an election with respect

4 to a corporate alliance is terminated pursuant to sub5 section (a) or subsection (b), the Secretary of Labor shall

6 notify the National Health Board of the termination of

7 the election.

8 PART 2—GENERAL RESPONSIBILITIES AND

9 AUTHORITIES OF REGIONAL ALLIANCES

10 SEC. 1321. CONTRACTS WITH HEALTH PLANS.

11 (a) CONTRACTS WITH PLANS.—

12 (1) IN GENERAL.—In order to assure the avail13 ability of the comprehensive benefit package to eligi14 ble individuals residing in the alliance area in a cost15 effective manner, except as provided in this section,

16 each regional alliance shall negotiate with any will17 ing State-certified health plan to enter into a con18 tract with the alliance for the enrollment under the

19 plan of eligible individuals in the alliance area. Sub20 ject to paragraph (2), a regional alliance shall not

21 enter into any such contract with a health plan that

22 is not a State-certified health plan.

23 (2) TREATMENT OF CERTAIN PLANS.—Each re24 gional alliance shall enter into a contract under this

25 section with any veterans health plan of the Depart-
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1 ment of Veterans Affairs and with a Uniformed

2 Services Health Plan of the Department of Defense,

3 that offers the comprehensive benefit package to eli4 gible individuals residing in the alliance area if the

5 appropriate official requests to enter into such a

6 contract.

7 (b) GENERAL CONDITIONS FOR DENIAL OF CON8 TRACT BY A REGIONAL ALLIANCE.—A regional alliance

9 is not required under this section to offer a contract with

10 a health plan if—

11 (1) the alliance finds that the proposed bid ex12 ceeds 120 percent of the regional alliance per capita

13 prremium target (as determined under section

14 6003); or

15 (2) the plan has failed to comply with require16 ments under prior contracts with the alliance, in17 cluding failing to offer coverage for all the services

18 in the comprehensive benefit package in the entire

19 service area of the plan.

20 SEC. 1322. OFFERING CHOICE OF HEALTH PLANS FOR EN21 ROLLMENT; ESTABLISHMENT OF FEE-FOR22 SERVICE SCHEDULE.

23 (a) IN GENERAL.—Each regional alliance must pro24 vide to each eligible enrollee (as defined in section

25 1902(14)) with respect to the alliance a choice of health
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1 plans among the plans which have contracts in effect with

2 the alliance under section 1321 (in the case of a regional

3 alliance) or section 1341 (in the case of a corporate alli4 ance).

5 (b) OFFERING OF PLANS BY REGIONAL ALLI6 ANCES.—

7 (1) IN GENERAL.—Each regional alliance shall

8 include among its health plan offerings at least one

9 fee-for-service plan (as defined in paragraph (2)).

10 (2) FEE-FOR-SERVICE PLAN DEFINED.—

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

12 Act, the term ‘‘fee-for-service plan’’ means a

13 health plan that—

14 (i) provides coverage for all items and

15 services included in the comprehensive ben16 efit package that are furnished by any law17 ful health care provider of the enrollee’s

18 choice, subject to reasonable restrictions

19 (described in subparagraph (B)), and

20 (ii) makes payment to such a provider

21 without regard to whether or not there is

22 a contractual arrangement between the

23 plan and the provider.

24 (B) REASONABLE RESTRICTIONS DE25 SCRIBED.—The reasonable restrictions on cov-
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1 erage permitted under a fee-for-service plan (as

2 specified by the National Health Board) are as

3 follows:

4 (i) Utilization review.

5 (ii) Prior approval for specified serv6 ices.

7 (iii) Exclusion of providers on the

8 basis of poor quality of care, based on evi9 dence obtainable by the plan.

10 Clause (ii) shall not be construed as permitting

11 a plan to require prior approval for non-pri12 mary health care services through a gatekeeper

13 or other process.

14 (c) ESTABLISHMENT OF FEE-FOR-SERVICE SCHED15 ULE.—

16 (1) IN GENERAL.—Except in the case of re17 gional alliances of a State that has established a

18 Statewide fee schedule under paragraph (3), each re19 gional alliance shall establish a fee schedule setting

20 forth the payment rates applicable to services fur21 nished during a year to individuals enrolled in fee22 for-service plans (or to services furnished under the

23 fee-for-service component of any regional alliance

24 health plan) for use by regional alliance health plans

25 under section 1406(c) and corporate alliance health
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1 plans providing services subject to the schedule in

2 the regional alliance area.

3 (2) NEGOTIATION WITH PROVIDERS.—The fee

4 schedule under paragraph (1) shall be established

5 after negotiations with providers, and (subject to

6 paragraphs (5) and (6)) providers may collectively

7 negotiate the fee schedule with the regional alliance.

8 (3) USE OF STATEWIDE SCHEDULE.—At the

9 option of a State, the State may establish its own

10 statewide fee schedule which shall apply to all fee11 for-service plans offered by regional alliances and

12 corporate alliances in the State instead of alliance13 specific schedules established under paragraph (1).

14 (4) ANNUAL REVISION.—A regional alliance or

15 State (as the case may be) shall annually update the

16 payment rates provided under the fee schedule es17 tablished pursuant to paragraph (1) or paragraph

18 (3).

19 (5) ACTIVITIES TREATED AS STATE ACTION OR

20 EFFORTS INTENDED TO INFLUENCE GOVERNMENT

21 ACTION.—The establishment of a fee schedule under

22 this subsection by a regional alliance of a State shall

23 be considered to be pursuant to a clearly articulated

24 and affirmatively expressed State policy to displace

25 competition and to be actively supervised by the
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1 State, and conduct by providers respecting the es2 tablishment of the fee schedule, including collective

3 negotiations by providers with the regional alliance

4 (or the State) pursuant to paragraph (2), shall be

5 considered as efforts intended to influence govern6 mental action.

7 (6) NO BOYCOTT PERMITTED.—Nothing in this

8 subsection shall be construed to permit providers to

9 threaten or engage in any boycott.

10 (7) NEGOTIATIONS DEFINED.—In this sub11 section, ‘‘negotiations’’ are the process by which pro12 viders collectively and jointly meet, confer, consult,

13 discuss, share information, among and between

14 themselves in order to agree on information to be

15 provided, presentations to be made, and other such

16 activities with respect to regional alliances (or

17 States) relating to the establishment of the fee

18 schedule (but not including any activity that con19 stitutes engaging in or threatening to engage in a

20 boycott), as well as any and all collective and joint

21 meetings, discussions, presentations, conferences,

22 and consultations between or among providers and

23 any regional alliance (or State) for the purpose of

24 establishing the fee schedule described in this sub25 section.
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1 (d) PROSPECTIVE BUDGETING OF FEE-FOR-SERV2 ICE.—

3 (1) IN GENERAL.—The fee schedule established

4 by a regional alliance or a State under subsection (c)

5 may be based on prospective budgeting described in

6 paragraph (2).

7 (2) PROSPECTIVE BUDGETING DESCRIBED.—

8 Under prospective budgeting—

9 (A) the regional alliance or State (as the

10 case may be) shall negotiate with health provid11 ers annually to develop a budget for the des12 ignated fee-for-service plan;

13 (B) the negotiated budget shall establish

14 spending targets for each sector of health ex15 penditures made by the plan; and

16 (C) if the regional alliance or State (as the

17 case may be) determines that the utilization of

18 services under the plan is at a level that will re19 sult in expenditures under the plan exceeding

20 the negotiated budget, the plan shall reduce the

21 amount of payments otherwise made to provid22 ers (through a withhold or delay in payments or

23 adjustments) in such a manner and by such

24 amounts as necessary to assure that expendi25 tures will not exceed the budget.
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1 (3) USE OF PROSPECTIVE BUDGETING EXCLU2 SIVE.—If a regional alliance or State establishes the

3 fee schedule for fee-for-service plans on the basis of

4 prospective budgeting under this subsection, pay5 ment for all services provided by fee-for-service plans

6 in the alliance or State shall be determined on such

7 basis.

8 SEC. 1323. ENROLLMENT RULES AND PROCEDURES.

9 (a) IN GENERAL.—Each regional alliance shall as10 sure that each regional alliance eligible individual who re11 sides in the alliance area is enrolled in a regional alliance

12 health plan and shall establish and maintain methods and

13 procedures, consistent with this section, sufficient to as14 sure such enrollment. Such methods and procedures shall

15 assure the enrollment of alliance eligible individuals at the

16 time they first become eligible enrollees in the alliance

17 area, including individuals at the time of birth, at the time

18 they move into the alliance area, and at the time of reach19 ing the age of individual eligibility as an eligible enrollee

20 (and not merely as a family member). Each regional alli21 ance shall establish procedures, consistent with subtitle A,

22 for the selection of a single health plan in which all mem23 bers of a family are enrolled.

24 (b) POINT OF SERVICE ENROLLMENT MECHA25 NISM.—
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1 (1) IN GENERAL.—Each regional alliance shall

2 establish a point-of-service enrollment mechanism

3 (meeting the requirements of this subsection) for en4 rolling eligible individuals who are not enrolled in a

5 health plan of the alliance when the individual seeks

6 health services.

7 (2) REQUIREMENTS OF MECHANISM.—Under

8 such a mechanism, if an eligible individual seeks to

9 receive services (included in the comprehensive bene10 fit package) from a provider in an alliance area and

11 does not present evidence of enrollment under any

12 applicable health plan, or if the provider has no evi13 dence of the individual’s enrollment under any such

14 plan, the following rules shall apply:

15 (A) NOTICE TO ALLIANCE.—Consistent

16 with part 2 of subtitle B of title V, the pro17 vider—

18 (i) shall provide the regional alliance

19 with information relating to the identity of

20 the eligible individual, and

21 (ii) may request payment from the re22 gional alliance for the furnishing of such

23 services.
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1 (B) INITIAL DETERMINATION OF ELIGI2 BILITY AND ENROLLMENT STATUS.—The re3 gional alliance shall determine—

4 (i) if the individual is an alliance eligi5 ble individual for the alliance, and

6 (ii) if the individual is enrolled under

7 an applicable health plan (including a cor8 porate alliance health plan).

9 (C) TREATMENT OF ALLIANCE ELIGIBLE

10 INDIVIDUALS.—If the regional alliance deter11 mines that the individual is an alliance eligible

12 individual with respect to the alliance and—

13 (i) is enrolled under a regional alli14 ance health plan of the alliance, the alli15 ance shall forward the claim to the health

16 plan involved and shall notify the provider

17 (and the individual) of the fact of such en18 rollment and the forwarding of such claim

19 (and the plan shall make payment to the

20 provider for the services furnished to the

21 individual as described in paragraph

22 (3)(C));

23 (ii) is not enrolled under a regional al24 liance health plan of the alliance but is re25 quired to be so enrolled in a specific health
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1 plan as a family member under section

2 1011, the alliance shall record the individ3 ual’s enrollment under such specific plan,

4 shall forward the claim to such plan, and

5 shall notify the provider (and the individ6 ual) of the fact of such enrollment and the

7 forwarding of such claim (and the plan

8 shall make payment to the provider for the

9 services furnished to the individual as de10 scribed in paragraph (3)(C)); or

11 (iii) is not enrolled under such a plan

12 and is not described in clause (ii), the

13 point-of-service enrollment procedures de14 scribed in paragraph (3) shall apply.

15 (D) TREATMENT OF INDIVIDUALS EN16 ROLLED UNDER HEALTH PLANS OF OTHER AL17 LIANCES.—If the regional alliance determines

18 that the individual is not an alliance eligible in19 dividual with respect to the alliance but the in20 dividual is enrolled—

21 (i) under a regional alliance health

22 plan of another alliance, the alliance shall

23 forward the claim to the other regional alli24 ance and shall notify the provider (and the

25 individual) of the fact of such enrollment
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1 and the forwarding of such claim (and the

2 plan shall make payment to the provider

3 for the services furnished to the individual

4 as described in paragraph (3)(C)); or

5 (ii) under a corporate alliance health

6 plan, the alliance shall forward the claim

7 to the corporate alliance involved and shall

8 notify the provider (and the individual) of

9 the fact of such enrollment and the for10 warding of such claim (and the plan shall

11 make payment to the provider for the serv12 ices furnished to the individual as de13 scribed in section 1383(b)(2)(B)).

14 (E) TREATMENT OF OTHER ALLIANCE ELI15 GIBLE INDIVIDUALS NOT ENROLLED IN HEALTH

16 PLAN.—If the regional alliance determines that

17 the individual is not an alliance eligible individ18 ual with respect to the alliance and the individ19 ual is an alliance eligible individual with respect

20 to another health alliance but is not enrolled in

21 a health plan of such alliance, the regional alli22 ance shall forward the claim to the other alli23 ance involved and shall notify the provider (and

24 the individual) of the forwarding of such claim

25 and the requirement for prompt enrollment of
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1 the individual under an applicable health plan

2 of such alliance pursuant to the procedures de3 scribed in paragraph (3) (in the case of a re4 gional alliance) or in section 1383(b) (in the

5 case of a corporate alliance).

6 (F) TREATMENT OF ALL OTHER INDIVID7 UALS.—The National Board shall promulgate

8 rules regarding the responsibilities of regional

9 alliances relating to individuals whose applicable

10 health plan is not an alliance plan and other in11 dividuals the alliance is unable to identify as eli12 gible individuals.

13 (3) POINT-OF-SERVICE ENROLLMENT PROCE14 DURES DESCRIBED.—The point-of-service enrollment

15 procedures under this paragraph are as follows:

16 (A) Not later than 10 days after the date

17 an alliance is notified of the receipt of services

18 by an unenrolled eligible individual, the alliance

19 provides the individual with materials describ20 ing health plans offered through the alliance.

21 (B) The individual shall be provided a pe22 riod of 30 days in which to enroll in a health

23 plan of the individual’s choice. If the individual

24 fails to so enroll during such period, the alli-
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1 ance shall enroll the individual in a health plan

2 of the alliance selected on a random basis.

3 (C) Using the fee-for-service schedule

4 adopted by the alliance under section 1322(c),

5 the health plan in which the individual is en6 rolled under this subparagraph shall reimburse

7 the provider who provided the services referred

8 to in subparagraph (A) to the same extent as

9 if the individual had been enrolled under the

10 plan at the time of provision of the services.

11 (c) ENROLLMENT OF NEW RESIDENTS.—

12 (1) IN GENERAL.—Each regional alliance shall

13 establish procedures for enrolling regional alliance

14 eligible individuals who move into the alliance area.

15 (2) LONG-TERM RESIDENTS.—Such procedures

16 shall assure that regional alliance eligible individuals

17 who intend to reside in the alliance area for longer

18 than 6 months shall register with the regional alli19 ance for the area and shall enroll in a regional alli20 ance health plan offered by the alliance.

21 (3) SHORT-TERM RESIDENTS.—Such proce22 dures shall permit eligible individuals who intend to

23 reside in the alliance area for more than 3 months

24 but less than 6 months to choose among the follow25 ing options:
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1 (A) To continue coverage through the

2 health plan in which such individual is pre3 viously enrolled, in which case coverage for care

4 in the area of temporary residence may be lim5 ited to emergency services and urgent care.

6 (B) To register with the regional alliance

7 and enroll in a regional alliance health plan of8 fered by the alliance.

9 (C) To change enrollment in the previous

10 alliance area to enrollment in a health plan of

11 such alliance that provides for coverage on a

12 fee-for-service basis of services provided outside

13 the area of that alliance.

14 (d) CHANGES IN ENROLLMENT.—

15 (1) ANNUAL OPEN ENROLLMENT PERIOD TO

16 CHANGE PLAN ENROLLMENT.—Each regional alli17 ance shall hold an annual open enrollment period

18 during which each eligible enrollee in the alliance

19 has the opportunity to choose among health plans

20 offered through the alliance, according to rules to be

21 promulgated by the National Health Board.

22 (2) DISENROLLMENT FOR CAUSE.—In addition

23 to the annual open enrollment period held under

24 paragraph (1), each regional alliance shall establish

25 procedures under which alliance eligible individuals
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1 enrolled in a plan may disenroll from the plan for

2 good cause at any time during a year and enroll in

3 another plan of the alliance. Such procedures shall

4 be implemented in a manner that ensures continuity

5 of coverage for the comprehensive benefit package

6 for such individuals during the year.

7 (e) ENROLLMENT OF FAMILY MEMBERS.—Each re8 gional alliance shall provide for the enrollment of all family

9 members in the same plan, consistent with part 2 of sub10 title A.

11 (f) OVERSUBSCRIPTION OF PLANS.—

12 (1) IN GENERAL.—Each regional alliance shall

13 establish a method for establishing enrollment prior14 ities in the case of a health plan that does not have

15 sufficient capacity to enroll all eligible individuals

16 seeking enrollment.

17 (2) PREFERENCE FOR CURRENT MEMBERS.—

18 Such method shall provide that in the case of such

19 an oversubscribed plan—

20 (A) individuals already enrolled in the plan

21 are given priority in continuing enrollment in

22 the plan, and

23 (B) other individuals who seek enrollment

24 during an applicable enrollment period are per25 mitted to enroll in accordance with a random
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1 selection method, up to the enrollment capacity

2 of the plan.

3 (g) TERMINATION OF ENROLLMENT.—

4 (1) IN GENERAL.—Each regional alliance shall

5 establish special enrollment procedures to permit al6 liance eligible individuals to change the plan in

7 which they are enrolled in the case of the termi8 nation of coverage under a plan, in a manner that

9 ensures the individuals’ continuation of coverage for

10 the comprehensive benefit package.

11 (2) FAILURE OF A CORPORATE ALLIANCE.—

12 Each regional alliance shall establish special enroll13 ment procedures to permit individuals, who become

14 alliance eligible individuals as a result of the failure

15 of a corporate alliance, to enroll promptly in regional

16 alliance health plans in a manner that ensures the

17 individuals’ continuation of coverage for the com18 prehensive benefit package.

19 (h) LIMITATION ON OFFERING OF COVERAGE TO IN20 ELIGIBLE INDIVIDUALS.—A regional alliance may not

21 knowingly offer coverage under a regional alliance health

22 plan or other health insurance or health benefits to an

23 individual who is not an eligible individual. Nothing in this

24 section shall be construed as affecting the ability of a re25 gional alliance health plan or other health plan to offer
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1 coverage to such individuals without any financial pay2 ment or participation by a regional alliance.

3 (i) ENFORCEMENT OF ENROLLMENT REQUIRE4 MENT.—In the case of a regional alliance eligible individ5 ual who fails to enroll in an applicable health plan as re6 quired under section 1002(a)—

7 (1) the applicable regional alliance shall enroll

8 the individual in a regional alliance health plan (se9 lected by the alliance consistent with this Act and

10 with any rules established by the Board), and

11 (2) such alliance shall require the payment of

12 twice the amount of the family share of premiums

13 that would have been payable under subtitle B of

14 title VI if the individual had enrolled on a timely

15 basis in the plan, unless the individual has estab16 lished to the satisfaction of the alliance good cause

17 for the failure to enroll on a timely basis.

18 SEC. 1324. ISSUANCE OF HEALTH SECURITY CARDS.

19 A regional alliance is responsible for the issuance of

20 health security cards to regional alliance eligible individ21 uals under section 1001(b).

22 SEC. 1325. CONSUMER INFORMATION AND MARKETING.

23 (a) CONSUMER INFORMATION.—

24 (1) IN GENERAL.—Before each open enrollment

25 period, each regional alliance shall make available to
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1 eligible enrollees information, in an easily under2 stood and useful form, that allows such enrollees

3 (and other alliance eligible individuals) to make valid

4 comparisons among health plans offered by the alli5 ance.

6 (2) INFORMATION TO BE INCLUDED.—Such in7 formation must include, in the same format for each

8 plan, such information as the National Health

9 Board shall require, including at least the following:

10 (A) The cost of the plan, including pre11 miums and average out-of-pocket expenses.

12 (B) The characteristics and availability of

13 health care professionals and institutions par14 ticipating in the plan.

15 (C) Any restrictions on access to providers

16 and services under the plan.

17 (D) A summary of the annual quality per18 formance report, established pursuant to section

19 5005(c)(1), which contains measures of quality

20 presented in a standard format.

21 (b) MARKETING.—Each regional alliance shall, con22 sistent with section 1404, review and approve or dis23 approve the distribution of any materials used to market

24 health plans offered through the alliance.
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1 SEC. 1326. OMBUDSMAN.

2 (a) ESTABLISHMENT.—Each regional alliance must

3 establish and maintain an office of an ombudsman to as4 sist consumers in dealing with problems that arise with

5 health plans and the alliance.

6 (b) OPTIONAL FINANCING THROUGH VOLUNTARY

7 CONTRIBUTION.—At the option of the State in which a

8 regional alliance is located, the alliance—

9 (1) shall permit alliance eligible individuals to

10 designate that one dollar of the premium paid for

11 enrollment in the individual’s regional alliance health

12 plan for the operation of the office of the alliance’s

13 ombudsman; and

14 (2) shall apply any such amounts towards the

15 establishment and operation of such office.

16 SEC. 1327. DATA COLLECTION; QUALITY.

17 Each regional alliance shall comply with requirements

18 of subtitles A and B of title V (relating to quality, infor19 mation systems, and privacy), and shall take appropriate

20 steps to ensure that health plans offered through the alli21 ance comply with such requirements.

22 SEC. 1328. ADDITIONAL DUTIES.

23 (a) ANTI-DISCRIMINATION.—In carrying out its ac24 tivities under this part, a regional alliance may not dis25 criminate against health plans on the basis of race, sex,

26 national origin, religion, mix of health professionals, loca-
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1 tion of the plan’s headquarters, or (except as specifically

2 provided in this part) organizational arrangement.

3 (b) COORDINATION OF ENROLLMENT ACTIVITIES.—

4 Each regional alliance shall coordinate, in a manner speci5 fied by the National Health Board, with other health alli6 ances its activities, including enrollment and disenrollment

7 activities, in a manner that ensures continuous,

8 nonduplicative coverage of alliance eligible individuals in

9 health plans and that minimizes administrative procedures

10 and paperwork.

11 SEC. 1329. ADDITIONAL AUTHORITIES FOR REGIONAL ALLI12 ANCES TO ADDRESS NEEDS IN AREAS WITH

13 INADEQUATE HEALTH SERVICES; PROHIBI14 TION OF INSURANCE ROLE.

15 (a) PAYMENT ADJUSTMENT.—In order to ensure

16 that plans are available to all eligible individuals residing

17 in all portions of the alliance area, a regional alliance may

18 adjust payments to plans or use other financial incentives

19 to encourage health plans to expand into areas that have

20 inadequate health services.

21 (b) ENCOURAGING NEW PLANS.—Subject to sub22 section (c), in order to encourage the establishment of a

23 new health plan in an area that has inadequate health

24 services, an alliance may—
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1 (1) organize health providers to create such a

2 plan in such an area a new health plan targeted at

3 such an area,

4 (2) provide assistance with setting up and ad5 ministering such a plan, and

6 (3) arrange favorable financing for such a plan.

7 (c) PROHIBITION OF REGIONAL ALLIANCES BEARING

8 RISK.—A regional alliance may not bear insurance risk.

9 SEC. 1330. PROHIBITION AGAINST SELF-DEALING AND CON10 FLICTS OF INTEREST.

11 (a) PROMULGATION OF STANDARDS.—The Board

12 shall promulgate standards of conduct in accordance with

13 subsection (b) for any administrator, officer, trustee, fidu14 ciary, custodian, counsel, agent, or employee of any re15 gional alliance.

16 (b) REQUIREMENTS FOR STANDARDS.—The stand17 ards of conduct referred to in subsection (a) shall set

18 forth—

19 (1) the types of investment interests, ownership

20 interests, affiliations or other employment that

21 would be improper for an individual described in

22 subsection (a) to hold during the time of the individ23 ual’s service or employment with an alliance; and

24 (2) the circumstances that will constitute im25 permissible conflicts of interest or self-dealing by
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1 such employees in performing their official duties

2 and functions for any regional alliance.

3 (c) CIVIL MONETARY PENALTY.—Any individual who

4 engages in an activity that the individual knows or has

5 reason to know is in violation of the regulations and stand6 ards promulgated by the Board pursuant to subsections

7 (a) and (b) shall be subject, in addition to any other pen8 alties that may be prescribed by law, to a civil money pen9 alty of not more than $10,000 for each such violation. The

10 provisions of section 1128A of the Social Security Act

11 (other than subsections (a) and (b)) shall apply to civil

12 money penalties under this subsection in the same manner

13 as they apply to a penalty or proceeding under section

14 1128A(a) of such Act.

15 PART 3—AUTHORITIES AND RESPONSIBILITIES

16 OF REGIONAL ALLIANCES RELATING TO FI17 NANCING AND INCOME DETERMINATIONS

18 Subpart A—Collection of Funds

19 SEC. 1341. INFORMATION AND NEGOTIATION AND ACCEPT20 ANCE OF BIDS.

21 (a) INFORMATION PROVIDED TO PLANS BEFORE SO22 LICITING BIDS.—

23 (1) IN GENERAL.—Each regional alliance shall

24 make available, by April 1 of each year, to each plan

25 that indicates an interest in submitting a premium
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1 bid under section 6004 in the year, information (in2 cluding information described in paragraph (2)) that

3 the Board specifies as being necessary to enable a

4 plan to estimate, based upon an accepted bid, the

5 amounts payable to such a plan under section 1351.

6 (2) INFORMATION TO BE INCLUDED.—Such in7 formation shall include the following:

8 (A) The demographic and other character9 istics of regional alliance eligible individuals for

10 the regional alliance.

11 (B) The uniform per capita conversion fac12 tor for the regional alliance (established under

13 subsection (b)).

14 (C) The premium class factors (established

15 by the Board under section 1531).

16 (D) The regional alliance inflation factor

17 (determined under section 6001(a)).

18 (E) The risk-adjustment factors and rein19 surance methodology and payment amounts

20 (published under subsection (c)) to be used by

21 the regional alliance in computing blended plan

22 per capita rates (in accordance with section

23 6201).

24 (F) The plan bid proportion, the AFDC

25 proportion, the SSI proportion, the AFDC per
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1 capita premium amount, and the SSI per capita

2 premium amount, for the year, as computed

3 under subtitle D of title VI.

4 (G) The alliance administrative allowance

5 percentage, computed under section 1352(b).

6 (b) DETERMINATION OF UNIFORM PER CAPITA CON7 VERSION FACTOR.—Each regional alliance shall specify,

8 not later than April 1 of each year (beginning with the

9 year before the first year) a uniform per capita conversion

10 factor to be used under section 6102(a)(2) in converting

11 the accepted bid for each plan for the year into the pre12 mium for an individual enrollment for such plan for the

13 year. SSI or AFDC recipients shall not be included for

14 purposes of computing the conversion factor.

15 (c) DETERMINATION OF RISK-ADJUSTMENT FAC16 TORS AND REINSURANCE PAYMENT AMOUNTS.—Each re17 gional alliance shall compute and publish the risk-adjust18 ment factors and reinsurance payment amounts to be used

19 by the regional alliance in computing blended plan per

20 capita rates under section 6201.

21 (d) SOLICITATION OF BIDS.—Each regional alliance

22 shall solicit and negotiate, consistent with section 6004,

23 with each regional alliance health plan a bid for the pay24 ment rate on a per capita basis for the comprehensive ben-
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1 efit package for all alliance eligible individuals in the alli2 ance area.

3 SEC. 1342. CALCULATION AND PUBLICATION OF GENERAL

4 FAMILY SHARE AND GENERAL EMPLOYER

5 PREMIUM AMOUNTS.

6 (a) CALCULATION OF COMPONENTS IN GENERAL

7 FAMILY SHARE AND GENERAL EMPLOYER PREMIUMS.—

8 (1) FAMILY SHARE.—Each regional alliance

9 shall compute the following components of the gen10 eral family share of premiums (as defined in sub11 section (b)(1)(B)):

12 (A) PLAN PREMIUMS.—For each plan of13 fered, the premium for the plan for each class

14 of family enrollment (including the amount of

15 any family collection shortfall).

16 (B) ALLIANCE CREDIT.—The alliance cred17 it amount for each class of family enrollment,

18 under section 6103.

19 (C) EXCESS PREMIUM CREDIT.—The

20 amount of any excess premium credit provided

21 under section 6105 for each class of family en22 rollment.

23 (D) CORPORATE ALLIANCE OPT-IN CRED24 IT.—The amount of any corporate alliance opt-
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1 in credit provided under section 6106 for each

2 class of family enrollment.

3 (2) EMPLOYER PREMIUMS.—Each regional alli4 ance shall compute the following components of the

5 general employer premium payment amount (as de6 fined in subsection (b)(2)(B)):

7 (A) BASE EMPLOYER MONTHLY PREMIUM

8 PER WORKER.—The base employer monthly

9 premium determined under section 6122 for

10 each class of family enrollment.

11 (B) EMPLOYER COLLECTION SHORTFALL

12 ADD-ON.—The employer collection shortfall

13 add-on computed under section 6125(b).

14 (b) PUBLICATION.—

15 (1) FAMILY SHARE.—

16 (A) IN GENERAL.—Each regional alliance

17 shall publish, before the open enrollment period

18 in each year, the general family share of the

19 premium (as defined in subparagraph (B)) for

20 each class of family enrollment for each re21 gional alliance health plan to be offered by the

22 alliance in the following year.

23 (B) GENERAL FAMILY SHARE OF PREMIUM

24 DEFINED.—In this subpart, the term ‘‘general

25 family share of premium’’ means the family
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1 share of premium under section 6101 computed

2 without regard to section 6104 and without re3 gard to section 6101(b)(2)(C)(v).

4 (2) EMPLOYER PREMIUM.—

5 (A) IN GENERAL.—Each regional alliance

6 shall publish, in December before each year (be7 ginning with December before the first year)

8 the general employer premium payment amount

9 (as defined in subparagraph (B)) for each class

10 of family enrollment for the following year.

11 (B) GENERAL EMPLOYER PREMIUM PAY12 MENT AMOUNT DEFINED.—In this subpart, the

13 term ‘‘general employer premium payment

14 amount’’ means the employer premium payment

15 under section 6121 computed, as an amount

16 per full-time equivalent worker, without regard

17 to sections 6124 through 6126.

18 SEC. 1343. DETERMINATION OF FAMILY SHARE FOR FAMI19 LIES.

20 (a) AMOUNT OF FAMILY SHARE.—The amount

21 charged by a regional alliance to a family for a class of

22 family enrollment (specified under section 1011(c)) under

23 a regional alliance health plan is equal to the family share

24 of premium established under section 6101(a) for the fam25 ily. Based upon the information described in this section,
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1 each regional alliance shall determine the amount required

2 to be paid under section 6101 and under section 6111 for

3 each year for families enrolling in regional alliance health

4 plans.

5 (b) FAMILY SHARE AMOUNT.—The amount required

6 to be paid under section 6101, with respect to each family,

7 takes into account—

8 (1) the general family share of premium (as de9 fined in section 1342(b)(1)(B)) for the class of en10 rollment involved;

11 (2) any income-related discount provided under

12 section 6104(a)(1) for the family; and

13 (3) whether or not the family is an SSI or

14 AFDC family.

15 (c) ALLIANCE CREDIT REPAYMENT AMOUNT.—The

16 amount of the alliance credit repayment amount under

17 section 6111, with respect to each family, takes into ac18 count the following:

19 (1) The number of months of enrollment, and

20 class of enrollment, in regional alliance health plans,

21 used in determining the amount of the alliance cred22 it under section 6103 for the family.

23 (2) Reductions in liability under section

24 6111(b) based on employer premium payments
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1 based on net earnings from self-employment for the

2 family.

3 (3) Reductions in liability under section 6112

4 based on months of employment for the family.

5 (4) Limitations in liability under section 6113

6 on the basis of the adjusted family income for the

7 family.

8 (5) The elimination of liability in the case of

9 certain retirees and qualified spouses and children

10 under section 6114.

11 (6) The elimination of liability in the case of

12 certain working medicare beneficiaries under section

13 6115.

14 (d) ACCESS TO NECESSARY INFORMATION TO MAKE

15 DETERMINATION.—Information required for an alliance

16 to make the determination under subsection (a) shall be

17 based on information obtained or maintained by the alli18 ance in the conduct of its business, including the following:

19 (1) Information required for income-related de20 terminations shall be obtained under subpart B.

21 (2) Information on SSI and AFDC recipients

22 under subsection (e).

23 (3) Information submitted on a monthly and

24 annual basis by employers under section 1602.
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1 (4) Information submitted by self-employed in2 dividuals on net earnings from self-employment

3 under section 1602(d).

4 (5) Applications for premium reductions under

5 section 6114.

6 (6) Information concerning medicare-eligible in7 dividuals under subsection (f).

8 (7) Any income-related discount provided under

9 section 6104(a)(1) for the family.

10 (8) Whether or not the family is an SSI or

11 AFDC family.

12 (e) INFORMATION CONCERNING CASH ASSISTANCE

13 STATUS.—Each participating State and the Secretary

14 shall make available (in a time and manner specified by

15 the Secretary) to each regional alliance such information

16 as may be necessary to determine and verify whether an

17 individual is an AFDC or SSI recipient for a month in

18 a year.

19 (f) INFORMATION CONCERNING MEDICARE-ELIGIBLE

20 INDIVIDUALS.—

21 (1) INFORMATION TO REGIONAL ALLIANCES.—

22 The Secretary shall make available to regional alli23 ances (through regional information centers or oth24 erwise) information necessary to determine—
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1 (A) whether an individual is a medicare-eli2 gible individual,

3 (B) the eligibility of individuals for the

4 special treatment under section 6115,

5 (C) if medicare-eligible individuals are de6 scribed in section 1012(a), and

7 (D) the amounts of payments owed the al8 liance under section 1894 of the Social Security

9 Act, added by section 4003.

10 (2) INFORMATION TO SECRETARY.—Each re11 gional alliance shall make available to the Secretary

12 (through the national information system under sec13 tion 5101 or otherwise) information relating to the

14 enrollment of individuals who would be medicare-eli15 gible individuals but for section 1012(a).

16 (g) ALLIANCE ACCOUNTING SYSTEM.—

17 (1) IN GENERAL.—Each regional alliance shall

18 establish an accounting system that meets standards

19 established by the Secretary.

20 (2) SPECIFICS.—Such system shall collect infor21 mation, on a timely basis for each individual enrolled

22 (and, to the extent required by the Secretary, identi23 fied and required to be enrolled) in a regional alli24 ance health plan regarding—
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1 (A) the applicable premium for such enroll2 ment,

3 (B) family members covered under such

4 enrollment,

5 (C) the premium payments made by (or on

6 behalf of) the individual for such enrollment,

7 (D) employer premium payments made re8 specting the employment of the individual and

9 other employer contributions made respecting

10 such enrollment, and

11 (E) any government contributions made

12 with respect to such enrollment (including con13 tributions for electing veterans and active duty

14 military personnel).

15 (3) END-OF-YEAR REPORTING.—Such system

16 shall provide for a report, at the end of each year,

17 regarding the total premiums imposed, and total

18 amounts collected, for individuals enrolled under re19 gional health alliance plans, in such manner as iden20 tifies net amounts that may be owed to the regional

21 alliance.

22 SEC. 1344. NOTICE OF FAMILY PAYMENTS DUE.

23 (a) FAMILY STATEMENTS.—

24 (1) NOTICE OF NO AMOUNT OWED.—If the re25 gional alliance determines under section 1343 that a
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1 family has paid any family share required under sec2 tion 6101 and is not required to repay any amount

3 under section 6111 for a year, the alliance shall pro4 vide notice of such determination to the family. Such

5 notice shall include a prominent statement that the

6 family is not required to make any additional pay7 ment and is not required to file any additional infor8 mation with the regional alliance.

9 (2) NOTICE OF AMOUNT OWED.—

10 (A) IN GENERAL.—If the regional alliance

11 determines that a family has not paid the entire

12 family share required under section 6101 or is

13 required to repay an amount under section

14 6111 for a year, the alliance shall provide to

15 the family a notice of such determination.

16 (B) INFORMATION ON AMOUNT DUE.—

17 Such notice shall include detailed information

18 regarding the amount owed, the basis for the

19 computation (including the amount of any re20 ductions that have been made in the family’s li21 ability under subtitle B of title VI), and the

22 date the amount is due and the manner in

23 which such amount is payable.
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1 (C) INFORMATION ON DISCOUNTS AND RE2 DUCTIONS AVAILABLE.—Such notice shall in3 clude—

4 (i) information regarding the dis5 counts and reductions available (under sec6 tions 6104, 6112, 6113, 6114, and 6115)

7 to reduce or eliminate any liability, and

8 (ii) a worksheet which may be used to

9 calculate reductions in liability based on

10 income under sections 6104 and 6113.

11 (3) INCLUSION OF INCOME RECONCILIATION

12 FORM FOR FAMILIES PROVIDED PREMIUM DIS13 COUNTS.—

14 (A) IN GENERAL.—A notice under this

15 subsection shall include, in the case of a family

16 that has been provided a premium discount

17 under section 6104 (or section 6113) for the

18 previous year, an income reconciliation state19 ment (for use under section 1375) to be com20 pleted and returned to the regional alliance

21 (along with any additional amounts owed) by

22 the deadline specified in subsection (b). Such

23 form shall require the submission of such infor24 mation as the Secretary specifies to establish or

25 verify eligibility for such premium discount.
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1 (B) OTHER FAMILIES.—Any family which

2 has not been provided such a discount but may

3 be eligible for such a discount may submit such

4 an income reconciliation statement and, if eligi5 ble, receive a rebate of the amount of excess

6 family share paid for the previous year.

7 (C) ADDITIONAL INFORMATION.—The alli8 ance shall permit a family to provide additional

9 information relating to the amount of such re10 ductions or the income of the family (insofar as

11 it may relate to a premium discount or reduc12 tion in liability under section 6104 or 6113).

13 (4) TIMING OF NOTICE.—Notices under this

14 subsection shall be mailed to each family at least 45

15 days before the deadline specified in subsection (b).

16 (b) DEADLINE FOR PAYMENT.—The deadline speci17 fied in this subsection for amounts owed for a year is such

18 date as the Secretary may specify, taking into account the

19 dates when the information specified in section 1343 be20 comes available to compute the amounts owed and to file

21 income reconciliation statements under section 1375.

22 Amounts not paid by such deadline are subject to interest

23 and penalty.

24 (c) CHANGE IN REGIONAL ALLIANCE.—In the case

25 of a family that during a year changes the regional alli-
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1 ance through which the family obtains coverage under a

2 regional alliance health plan, the Secretary shall establish

3 rules which provide that the regional alliance in which the

4 family last obtained such coverage in a year—

5 (1) is responsible for recovering amounts due

6 under this subpart for the year (whether or not at7 tributable to periods of coverage obtained through

8 that alliance);

9 (2) shall obtain such information, through the

10 health information system implemented under sec11 tion 5101, as the alliance may require in order to

12 compute the amount of any liability owed under this

13 subpart (taking into account any reduction in such

14 amount under this section), and

15 (3) shall provide for the payment to other re16 gional alliances of such amounts collected as may be

17 attributable to amounts owed for periods of coverage

18 obtained through such alliances.

19 (d) NO LOSS OF COVERAGE.—In no case shall the

20 failure to pay amounts owed under this subsection result

21 in an individual’s or family’s loss of coverage under this

22 Act.

23 (e) DISPUTE RESOLUTION.—Each regional alliance

24 shall establish a fair hearing mechanism for the resolution
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1 of disputes concerning amounts owed the alliance under

2 this subpart.

3 SEC. 1345. COLLECTIONS.

4 (a) IN GENERAL.—Each regional alliance is respon5 sible for the collection of all amounts owed the alliance

6 (whether by individuals, employers, or others and whether

7 on the basis of premiums owed, incorrect amounts of dis8 counts or premium, cost sharing, or other reductions

9 made, or otherwise). No amounts are payable by the Fed10 eral Government under this Act (including section 9102)

11 with respect to the failure to collect any such amounts.

12 Each regional alliance shall use credit and collection pro13 cedures, including the imposition of interest charges and

14 late fees for failure to make timely payment, as may be

15 necessary to collect amounts owed to the alliance. States

16 assist regional alliances in such collection process under

17 section 1202(d).

18 (b) COLLECTION OF FAMILY SHARE.—

19 (1) WITHHOLDING.—

20 (A) IN GENERAL.—In the case of a family

21 that includes a qualifying employee of an em22 ployer, the employer shall deduct from the

23 wages of the qualifying employee (in a manner

24 consistent with any rules of the Secretary of

25 Labor) the amount of the family share of the
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1 premium for the plan in which the family is en2 rolled.

3 (B) MULTIPLE EMPLOYMENT.—In the case

4 of a family that includes more than one qualify5 ing employee, the family shall choose the em6 ployer to which subparagraph (A) will apply.

7 (C) PAYMENT.—Amounts withheld under

8 this paragraph shall be maintained in a manner

9 consistent with standards established by the

10 Secretary of Labor and paid to the regional alli11 ance involved in a manner consistent with the

12 payment of employer premiums under sub13 section (c).

14 (D) SATISFACTION OF LIABILITY.—An

15 amount deducted from wages of a qualifying

16 employee by an employer is deemed to have

17 been paid by the employee and to have satisfied

18 the employee’s obligation under subsection (a)

19 to the extent of such amount.

20 (2) OTHER METHODS.—In the case of a family

21 that does not include a qualifying employee, the re22 gional alliance shall require payment to be made

23 prospectively. Such payment may be required to be

24 made not less frequently than monthly. The Sec25 retary may issue regulations in order to assure the
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1 timely and accurate collection of the family share

2 due.

3 (c) TIMING AND METHOD OF PAYMENT OF EM4 PLOYER PREMIUMS.—

5 (1) FREQUENCY OF PAYMENT.—Payment of

6 employer premiums under section 6121 for a month

7 shall be made not less frequently than monthly (or

8 quarterly in the case of such payments made by vir9 tue of section 6126). The Secretary of Labor may

10 establish a method under which employers that pay

11 wages on a weekly or biweekly basis are permitted

12 to make such employer payments on such a weekly

13 or biweekly basis.

14 (2) ELECTRONIC TRANSFER.—A regional alli15 ance may require those employers that have the ca16 pacity to make payments by electronic transfer to

17 make payments under this subsection by electronic

18 transfer.

19 (d) ASSISTANCE.—

20 (1) EMPLOYER COLLECTIONS.—The Secretary

21 of Labor shall provide regional alliances with such

22 technical and other assistance as may promote the

23 efficient collection of all amounts owed such alli24 ances under this Act by employers. Such assistance

25 may include the assessment of civil monetary pen-
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1 alties, not to exceed $5,000 or three times the

2 amount of the liability owed, whichever is greater, in

3 the case of repeated failure to pay (as specified in

4 rules of the Secretary of Labor).

5 (2) FAMILY COLLECTIONS.—Except as provided

6 in paragraph (1), the Secretary shall provide re7 gional alliances with such technical and other assist8 ance as may promote the efficient collection of other

9 amounts owed such alliances under this Act. Such

10 assistance may include the assessment of civil mone11 tary penalties, not to exceed $5,000 or three times

12 the amount of the liability owed, whichever is great13 er, in the case of repeated failure to pay (as speci14 fied in rules of the Secretary).

15 (e) RECEIPT OF MISCELLANEOUS AMOUNTS.—For

16 payments to regional alliances by—

17 (1) States, see subtitle A of title IX, and

18 (2) the Federal Government, see subtitle B of

19 such title and section 1894 of the Social Security

20 Act (as added by section 4003).

21 SEC. 1346. COORDINATION AMONG REGIONAL ALLIANCES.

22 (a) IN GENERAL.—The regional alliance which offers

23 the regional alliance health plan in which a family is en24 rolled in December of each year (in this section referred

25 to as the ‘‘final alliance’’) is responsible for the collection
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1 of any amounts owed by the family under this subpart,

2 without regard to whether the family resided in the alli3 ance area during the entire year.

4 (b) PROVISION OF INFORMATION IN THE CASE OF

5 CHANGE OF RESIDENCE.—In the case of a family that

6 moves from one alliance area to another alliance area dur7 ing a year, each regional alliance (other than the final alli8 ance) is responsible for providing to the final alliance

9 (through the national information system under section

10 5101 or otherwise) such information as the final alliance

11 may require in order to determine the liability (and reduc12 tions in liability under section 6112) attributable to alli13 ance credits provided by such regional alliance.

14 (c) DISTRIBUTION OF PROCEEDS.—In accordance

15 with rules established by the Secretary, in consultation

16 with the Secretary of Labor, the final alliance shall provide

17 for the distribution of amounts collected under this sub18 part with respect to families in a year in an equitable man19 ner among the regional alliances that provided health plan

20 coverage to the families in the year.

21 (d) EXPEDITING PROCESS.—In order to reduce pa22 perwork and promote efficiency in the collection of

23 amounts owed regional alliances under this subpart, the

24 Secretary may require or permit regional alliances to share

25 such information (through the national information sys-
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1 tem under section 5101 or otherwise) as the Secretary de2 termines to be cost-effective, subject to such confidential3 ity restrictions as may otherwise apply.

4 (e) STUDENTS.—In the case of a qualifying student

5 who makes an election described in section 1012(e)(1) (re6 lating to certain full-time students who are covered under

7 the plan of a parent but enrolled in a health plan offered

8 by a different regional alliance from the one in which the

9 parent is enrolled), the regional alliance that offered the

10 plan to the parent shall provide for transfers of an appro11 priate portion of the premium (determined in accordance

12 with procedures specified by the Board) to the other re13 gional alliance in order to compensate that alliance for the

14 provision of such coverage.

15 (f) PAYMENTS OF CERTAIN AMOUNTS TO COR16 PORATE ALLIANCES.—In the case of a married couple in

17 which one spouse is a qualifying employee of a regional

18 alliance employer and the other spouse is a qualifying em19 ployee of a corporate alliance employer, if the couple is

20 enrolled with a corporate alliance health plan the regional

21 alliance (which receives employer premium payments from

22 such regional alliance employer with respect to such em23 ployee) shall pay to the corporate alliance the amounts so

24 paid (or would be payable by the employer if section 6123

25 did not apply).
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1 Subpart B—Payments

2 SEC. 1351. PAYMENT TO REGIONAL ALLIANCE HEALTH

3 PLANS.

4 (a) COMPUTATION OF BLENDED PLAN PER CAPITA

5 PAYMENT AMOUNT.—For purposes of making payments

6 to plans under this section, each regional alliance shall

7 compute, under section 6201(a), a blended plan per capita

8 payment amount for each regional alliance health plan for

9 enrollment in the alliance for a year.

10 (b) AMOUNT OF PAYMENT TO PLANS.—

11 (1) IN GENERAL.—Subject to subsection (e)

12 and section 6121(b)(5)(B), each regional alliance

13 shall provide for payment to each regional alliance

14 health plan, in which an alliance eligible individual

15 is enrolled, an amount equal to the net blended rate

16 (described in paragraph (2)) adjusted (consistent

17 with subsection (c)) to take into account the relative

18 actuarial risk associated with the coverage with re19 spect to the individual.

20 (2) NET BLENDED RATE.—The net blended

21 rate described in this paragraph is the blended plan

22 per capita payment amount (determined under sec23 tion 6201(a)), reduced by—

24 (A) such amount multiplied by the sum

25 of—
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1 (i) the administrative allowance per2 centage for the regional alliance, computed

3 by the alliance under section 1352(b), and

4 (ii) 1.5 percentage points; and

5 (B) any plan payment reduction imposed

6 under section 6011 for the plan for the year.

7 (c) APPLICATION OF RISK ADJUSTMENT AND REIN8 SURANCE METHODOLOGY.—Each regional alliance shall

9 use the risk adjustment methodology developed under sec10 tion 1541 in making payments to regional alliance health

11 plans under this section, except as provided in section

12 1542.

13 (d) APPLICATION OF PORTION OF SET ASIDE.—

14 Amounts attributable to subsection (b)(2)(A)(ii) are paid

15 to the Federal Government (for academic health centers

16 and graduate medical education) under section 1353.

17 (e) TREATMENT OF VETERANS, MILITARY, AND IN18 DIAN HEALTH PLANS AND PROGRAMS.—

19 (1) VETERANS HEALTH PLAN.—In applying

20 this subtitle (and title VI) in the case of a regional

21 alliance health plan that is a veterans health plan of

22 the Department of Veterans Affairs, the following

23 rules apply:
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1 (A) For purposes of applying subtitle A of

2 title VI, families enrolled under the plan shall

3 not be taken into account.

4 (B) The provisions of subtitle A of title VI

5 shall not apply to the plan, other than such pro6 visions as require the plan to submit a per cap7 ita amount for each regional alliance area on a

8 timely basis, which amount shall be treated as

9 the final accepted bid of the plan for the area

10 for purposes of subtitle B of such title and this

11 subtitle. This amount shall not be subject to ne12 gotiation and not subject to reduction under

13 section 6011.

14 (C) For purposes of computing the blended

15 plan per capita payment amount under section

16 6201(a), the AFDC and SSI proportions (under

17 section 6202(a)) are deemed to be 0 percent.

18 (2) UNIFORMED SERVICES HEALTH PLAN.—In

19 applying this subtitle (and title VI) in the case of a

20 regional alliance health plan that is a Uniformed

21 Services Health Plan of the Department of Defense,

22 the following rules apply:

23 (A) For purposes of applying subtitle A of

24 title VI, families enrolled under the plan shall

25 not be taken into account.
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1 (B) The provisions of subtitle A of title VI

2 shall not apply to the plan, other than such pro3 visions as require the plan to submit a per cap4 ita amount on a timely basis, which amount

5 shall be treated as the final accepted bid of the

6 plan for the area involved for purposes of sub7 title B of such title and this subtitle. This

8 amount shall not be subject to negotiation and

9 not subject to reduction under section 6011.

10 The Board, in consultation with the Secretary

11 of Defense, shall establish rules relating to the

12 area (or areas) in which such a bid shall apply.

13 (C) For purposes of computing the blended

14 plan per capita payment amount under section

15 6201(a), the AFDC and SSI proportions (under

16 section 6202(a)) are deemed to be 0 percent.

17 (3) INDIAN HEALTH PROGRAMS.—In applying

18 this subtitle (and title VI) in the case of a health

19 program of the Indian Health Service, the following

20 rules apply:

21 (A) Except as provided in this paragraph,

22 the plan shall not be considered or treated to be

23 a regional alliance health plan and for purposes

24 of applying title VI, families enrolled under the

25 program shall not be taken into account.
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1 (B) In accordance with rules established by

2 the Secretary, regional alliances shall act as

3 agents for the collection of employer premium

4 payments (including payments of corporate alli5 ance employers) required under subtitle B of

6 title VI with respect to qualifying employees

7 who are enrolled under a health program of the

8 Indian Health Service. The Secretary shall per9 mit such alliances to retain a nominal fee to

10 compensate them for such collection activities.

11 In applying this subparagraph, the family share

12 of premium for such employees is deemed to be

13 zero for electing Indians (as defined in section

14 1012(d)(3)) and for other employees is the

15 amount of the premium established under sec16 tion 8306(b)(4)(A), employees are deemed to be

17 residing in the area of residence (or area of em18 ployment), as specified under rules of the Sec19 retary, and the class of enrollment shall be such

20 class (or classes) as specified under rules of the

21 Secretary.

22 SEC. 1352. ALLIANCE ADMINISTRATIVE ALLOWANCE PER23 CENTAGE.

24 (a) SPECIFICATION BY ALLIANCE.—Before obtaining

25 bids under section 6004 from health plans for a year, each
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1 regional alliance shall establish the administrative allow2 ance for the operation of the regional alliance in the year.

3 (b) ADMINISTRATIVE ALLOWANCE PERCENTAGE.—

4 Subject to subsection (c), the regional alliance shall com5 pute an administrative allowance percentage for each year

6 equal to—

7 (1) the administrative allowance determined

8 under subsection (a) for the year, divided by

9 (2) the total of the amounts payable to regional

10 alliance health plans under subpart A (as estimated

11 by the alliance and determined without regard to

12 section 1345(d)).

(c) LIMITATION TO 21 13 ⁄2 PERCENT.—In no case shall

14 an administrative allowance percentage exceed 2.5 per15 cent.

16 Subpart C—Financial Management

17 SEC. 1361. MANAGEMENT OF FINANCES AND RECORDS.

18 (a) IN GENERAL.—Each regional alliance shall com19 ply with standards established under section 1571(b) (re20 lating to the management of finances, maintenance of

21 records, accounting practices, auditing procedures, and fi22 nancial reporting) and under section 1591(d) (relating to

23 employer payments).

24 (b) SPECIFIC PROVISIONS.—In accordance with such

25 standards—
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1 (1) FINANCIAL STATEMENTS.—

2 (A) IN GENERAL.—Each regional alliance

3 shall publish periodic audited financial state4 ments.

5 (B) ANNUAL FINANCIAL AUDIT.—

6 (i) IN GENERAL.—Each regional alli7 ance shall have an annual financial audit

8 conducted by an independent auditor in ac9 cordance with generally accepted auditing

10 standards.

11 (ii) PUBLICATION.—A report on each

12 such audit shall be made available to the

13 public at nominal cost.

14 (iii) REQUIRED ACTIONS FOR DEFI15 CIENCIES.—If the report from such an

16 audit does not bear an unqualified opinion,

17 the alliance shall take such steps on a

18 timely basis as may be necessary to correct

19 any material deficiency identified in the re20 port.

21 (C) ELIGIBILITY ERROR RATES.—Each re22 gional alliance shall make eligibility determina23 tions for premium discounts, liability reduc24 tions, and cost sharing reductions under sec25 tions 6104 and 6123, section 6113, and section
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1 1371, respectively, in a manner that maintains

2 the error rates below an applicable maximum

3 permissible error rate specified by the Secretary

4 (or the Secretary of Labor with respect to sec5 tion 6123). In specifying such a rate, the Sec6 retary shall take into account maximum permis7 sible error rates recognized by the Federal Gov8 ernment under comparable State-administered

9 programs.

10 (2) SAFEGUARDING OF FUNDS.—Each regional

11 alliance shall safeguard family, employer, State, and

12 Federal government payments to the alliance in ac13 cordance with fiduciary standards and shall hold

14 such payments in financial institutions and instru15 ments that meet standards recognized or established

16 by the Secretary, in consultation with the Secretar17 ies of Labor and the Treasury and taking into ac18 count current Federal laws and regulations relating

19 to fiduciary responsibilities and financial manage20 ment of public funds.

21 (3) CONTINGENCIES.—Each regional alliance

22 shall provide that any surplus of funds resulting

23 from an estimation discrepancy described in section

24 9201(e)(1), up to a reasonable amount specified by

25 the Secretary, shall be held in a contingency fund
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1 established by the alliance and used to fund any fu2 ture shortfalls resulting from such a discrepancy.

3 (4) AUDITING OF EMPLOYER PAYMENTS.—

4 (A) IN GENERAL.—Each regional alliance

5 is responsible for auditing the records of re6 gional alliance employers to assure that em7 ployer payments (including the payment of

8 amounts withheld) were made in the appro9 priate amount as provided under subpart A of

10 part 2 of subtitle B of title VI.

11 (B) EMPLOYERS WITH EMPLOYEES RESID12 ING IN DIFFERENT ALLIANCE AREAS.—In the

13 case of a regional alliance employer which has

14 employees who reside in more than one alliance

15 area, the Secretary of Labor, in consultation

16 with the Secretary, shall establish a process for

17 the coordination of regional alliance auditing

18 activities among the regional alliances involved.

19 (C) APPEAL.—In the case of an audit con20 ducted by a regional alliance on an employer

21 under this paragraph, an employer or other re22 gional alliance that is aggrieved by the deter23 mination in the audit is entitled to review of

24 such audit by the Secretary of Labor in a man25 ner to be provided by such Secretary.
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1 Subpart D—Reductions in Cost Sharing; Income

2 Determinations

3 SEC. 1371. REDUCTION IN COST SHARING FOR LOW-INCOME

4 FAMILIES.

5 (a) REDUCTION.—

6 (1) IN GENERAL.—Subject to subsection (b), in

7 the case of a family that is enrolled in a regional al8 liance health plan and that is either (A) an AFDC

9 or SSI family or (B) is determined under this sub10 part to have family adjusted income below 150 per11 cent of the applicable poverty level, the family is en12 titled to a reduction in cost sharing in accordance

13 with this section.

14 (2) TIMING OF REDUCTION.—The reduction in

15 cost sharing shall only apply to items and services

16 furnished after the date the application for such re17 duction is approved under section 1372(c) and be18 fore the date of termination of the reduction under

19 this subpart, or, in the case of an AFDC or SSI

20 family, during the period in which the family is such

21 a family.

22 (3) INFORMATION TO PROVIDERS AND

23 PLANS.—Each regional alliance shall provide,

24 through electronic means and otherwise, health care

25 providers and regional alliance health plans with ac26 cess to such information as may be necessary in
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1 order to provide for the cost sharing reductions

2 under this section.

3 (b) LIMITATION.—No reduction in cost sharing under

4 subsection (c)(1) shall be available for families residing

5 in an alliance area if the regional alliance for the area

6 determines that there are sufficient low-cost plans (as de7 fined in section 6104(b)(3)) that are lower or combination

8 cost sharing plans available in the alliance area to enroll

9 AFDC and SSI families and families with family adjusted

10 income below 150 percent of the applicable poverty level.

11 (c) AMOUNT OF COST SHARING REDUCTION.—

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

13 the reduction in cost sharing under this section shall

14 be such reduction as will reduce cost sharing to the

15 level of a lower or combination cost sharing plan.

16 (2) SPECIAL TREATMENT OF CERTAIN AFDC

17 AND SSI FAMILIES.—In the case of an AFDC or SSI

18 family enrolled in a lower or combination cost shar19 ing plan or receiving a reduction in cost sharing

20 under paragraph (1), the amount of copayment ap21 plied with respect to an item or service (other than

22 with respect to hospital emergency room services for

23 which there is no emergency medical condition, as

24 defined in section 1867(e)(1) of the Social Security

25 Act) shall be an amount equal to 20 percent of the
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1 copayment amount otherwise applicable under sec2 tions 1135 and 1136, rounded to the nearest dollar.

3 (d) ADMINISTRATION.—

4 (1) IN GENERAL.—In the case of an approved

5 family (as defined in section 1372(b)(3)) enrolled in

6 a regional alliance health plan, the regional alliance

7 shall pay the plan for cost sharing reductions (other

8 than cost sharing reductions under subsection

9 (c)(2)) provided under this section and included in

10 payments made by the plan to its providers.

11 (2) ESTIMATED PAYMENTS, SUBJECT TO REC12 ONCILIATION.—Such payment shall be made initially

13 on the basis of reasonable estimates of cost sharing

14 reductions incurred by such a plan with respect to

15 approved families and shall be reconciled not less

16 often than quarterly based on actual claims for

17 items and services provided.

18 (e) NO COST SHARING FOR INDIANS AND CERTAIN

19 VETERANS AND MILITARY PERSONNEL.—The provisions

20 of section 6104(a)(3) shall apply to cost sharing reduc21 tions under this section in the same manner as such provi22 sions apply to premium discounts under section 6104.

23 SEC. 1372. APPLICATION PROCESS FOR COST SHARING RE24 DUCTIONS.

25 (a) APPLICATION.—
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1 (1) IN GENERAL.—A regional alliance eligible

2 family may apply for a determination of the family

3 adjusted income of the family, for the purpose of es4 tablishing eligibility for cost sharing reductions

5 under section 1371.

6 (2) FORM.—An application under this section

7 shall include such information as may be determined

8 by the regional alliance (consistent with rules devel9 oped by the Secretary) and shall include at least in10 formation about the family’s employment status and

11 income.

12 (b) TIMING.—

13 (1) IN GENERAL.—An application under this

14 section may be filed at such times as the Secretary

15 may provide, including during any open enrollment

16 period, at the time of a move, or after a change in

17 life circumstances (such as unemployment or di18 vorce) affecting class of enrollment or amount of

19 family share or repayment amount.

20 (2) CONSIDERATION.—Each regional alliance

21 shall approve or disapprove an application under this

22 section, and notify the applicant of such decision,

23 within such period (specified by the Secretary) after

24 the date of the filing of the application.
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1 (3) APPROVED FAMILY DEFINED.—In this sec2 tion and section 1371, the term ‘‘approved family’’

3 means a family for which an application under this

4 section is approved, until the date of termination of

5 such approval under this section.

6 (c) APPROVAL OF APPLICATION.—

7 (1) IN GENERAL.—A regional alliance shall ap8 prove an application of a family under this section

9 filed in a month if the application demonstrates that

10 the family adjusted income of the family (as defined

11 in subsection (d) and determined under paragraph

12 (2)) is (or is expected to be) less than 150 percent

13 of the applicable poverty level.

14 (2) USE OF CURRENT INCOME.—In making the

15 determination under paragraph (1), a regional alli16 ance shall take into account the income for the pre17 vious 3-month period and current wages from em18 ployment (if any), consistent with rules specified by

19 the Secretary.

20 (d) FAMILY ADJUSTED INCOME.—

21 (1) IN GENERAL.—Except as provided in para22 graph (4), in this Act the term ‘‘family adjusted in23 come’’ means, with respect to a family, the sum of

24 the adjusted incomes (as defined in paragraph (2))
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1 for all members of the family (determined without

2 regard to section 1012).

3 (2) ADJUSTED INCOME.—In paragraph (1), the

4 term ‘‘adjusted income’’ means, with respect to an

5 individual, adjusted gross income (as defined in sec6 tion 62(a) of the Internal Revenue Code of 1986)—

7 (A) determined without regard to sections

8 135, 162(l), 911, 931, and 933 of such Code,

9 and

10 (B) increased by the amount of interest re11 ceived or accrued by the individual which is ex12 empt from tax.

13 (3) PRESENCE OF ADDITIONAL DEPEND14 ENTS.—At the option of an individual, a family may

15 include (and not be required to separate out) the in16 come of other individuals who are claimed as de17 pendents of the family for income tax purposes, but

18 such individuals shall not be counted as part of the

19 family for purposes of determining the size of the

20 family.

21 (e) REQUIREMENT FOR PERIODIC CONFIRMATION

22 AND VERIFICATION AND NOTICES.—

23 (1) CONFIRMATION AND VERIFICATION RE24 QUIREMENT.—The continued eligibility of a family
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1 for cost sharing reductions under this section is con2 ditioned upon the family’s eligibility being—

3 (A) confirmed periodically by the regional

4 alliance, and

5 (B) verified (through the filing of a new

6 application under this section) by the regional

7 alliance at the time income reconciliation state8 ments are required to be filed under section

9 1375.

10 (2) RULES.—The Secretary shall issue rules re11 lated to the manner in which alliances confirm and

12 verify eligibility under this section.

13 (3) NOTICES OF CHANGES IN INCOME AND EM14 PLOYMENT STATUS.—

15 (A) IN GENERAL.—Each approved family

16 shall promptly notify the regional alliance of

17 any material increase (as defined by the Sec18 retary) in the family adjusted income.

19 (B) RESPONSE.—If a regional alliance re20 ceives notice under subparagraph (A) (or from

21 an employer under section 1602(b)(3)(A)(i)) or

22 otherwise receives information indicating a po23 tential significant change in the family’s em24 ployment status or increase in adjusted family

25 income, the regional alliance shall promptly
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•S 1779 PCS

1 take steps necessary to reconfirm the family’s

2 eligibility.

3 (f) TERMINATION OF COST SHARING REDUCTION.—

4 The regional alliance shall, after notice to the family, ter5 minate the reduction of cost sharing under this subpart

6 for an approved family if the family fails to provide for

7 confirmation or verification or notice required under sub8 section (c) on a timely basis or the alliance otherwise de9 termines that the family is no longer eligible for such re10 duction. The previous sentence shall not prevent the fam11 ily from subsequently reapplying for cost sharing reduc12 tion under this section.

13 (g) TREATMENT OF AFDC AND SSI RECIPIENTS.—

14 (1) NO APPLICATION REQUIRED.—AFDC and

15 SSI families are not required to make an application

16 under this section.

17 (2) NOTICE REQUIREMENT.—Each State (and

18 the Secretary) shall notify each regional alliance, in

19 a manner specified by the Secretary, of the identity

20 (and period of eligibility under the AFDC or SSI

21 programs) of each AFDC and SSI recipient, unless

22 such a recipient elects (in a manner specified by the

23 Secretary) not to accept the reduction of cost shar24 ing under this section.
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1 SEC. 1373. APPLICATION FOR PREMIUM DISCOUNTS AND

2 REDUCTION IN LIABILITIES TO ALLIANCES.

3 (a) IN GENERAL.—Any regional alliance eligible fam4 ily may apply for a determination of the family adjusted

5 income of the family, for the purpose of establishing eligi6 bility for a premium discount under section 6104 or a re7 duction in liability under section 6113.

8 (b) TIMING.—Such an application may be filed at

9 such times as an application for a cost sharing reduction

10 may be filed under section 1372(b) and also may be filed

11 after the end of the year to obtain a rebate for excess pre12 mium payments made during a year.

13 (c) APPROVAL OF APPLICATION.—

14 (1) IN GENERAL.—A regional alliance shall ap15 prove an application of a family under this section

16 filed in a month—

17 (A) for a premium discount under section

18 6104, if the application demonstrates that fam19 ily adjusted income of the family (as deter20 mined under paragraph (2)) is (or is expected

21 to be) less than 150 percent of the applicable

22 poverty level, or

23 (B) for a reduction in liability under sec24 tion 6113, if the application demonstrates that

25 the wage-adjusted income (as defined in sub26 section 6113(d)) of the family (as determined
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1 under paragraph (2)) is (or is expected to be)

2 less than 250 percent of the applicable poverty

3 level.

4 (2) USE OF CURRENT INCOME.—In making the

5 determination under paragraph (1), a regional alli6 ance shall take into account the income for the pre7 vious 3-month period and current wages from em8 ployment (if any) and the statement of estimated in9 come for the year (filed under section 1374(c)), con10 sistent with rules specified by the Secretary.

11 (d) REQUIREMENT FOR PERIODIC CONFIRMATION

12 AND VERIFICATION AND NOTICES.—The provisions of

13 subsection (e) of section 1372 shall apply under this sec14 tion in the same manner as it applies under such section,

15 except that any reference to family adjusted income is

16 deemed a reference to wage-adjusted income.

17 SEC. 1374. GENERAL PROVISIONS RELATING TO APPLICA18 TION PROCESS.

19 (a) DISTRIBUTION OF APPLICATIONS.—Each re20 gional alliance shall distribute applications under this sub21 part directly to consumers and through employers, banks,

22 and designated public agencies.

23 (b) TO WHOM APPLICATION MADE.—Applications

24 under this subpart shall be filed, by person or mail, with

25 a regional alliance or an agency designated by the State
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1 for this purpose. The application may be submitted with

2 an application to enroll with a health plan under this sub3 title or separately.

4 (c) INCOME STATEMENT.—Each application shall in5 clude a declaration of estimated annual income for the

6 year involved.

7 (d) FORM AND CONTENTS.—An application for a dis8 count or reduction under this subpart shall be in a form

9 and manner specified by the Secretary and shall require

10 the provision of information necessary to make the deter11 minations required under this subpart.

12 (e) FREQUENCY OF APPLICATIONS.—

13 (1) IN GENERAL.—An application under this

14 subpart may be filed at any time during the year

15 (including, in the case of section 1373, during the

16 reconciliation process).

17 (2) CORRECTION OF INCOME.—Nothing in

18 paragraph (1) shall be construed as preventing an

19 individual or family from, at any time, submitting an

20 application to reduce the amount of premium dis21 count or reduction of liability under this subpart

22 based upon an increase in income from that stated

23 in the previous application.

24 (f) TIMING OF REDUCTIONS AND DISCOUNTS.—
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1 (1) IN GENERAL.—Subject to reconciliation

2 under section 1375, premium discounts and cost

3 sharing reductions under this subpart shall be ap4 plied to premium payments required (and for ex5 penses incurred) after the date of approval of the

6 application under this subpart.

7 (2) AFDC AND SSI RECIPIENTS.—In the case

8 of an AFDC or SSI family, in applying paragraph

9 (1), the date of approval of benefits under the

10 AFDC or SSI program shall be considered the date

11 of approval of an application under this subpart.

12 (g) VERIFICATION.—The Secretary shall provide for

13 verification, on a sample basis or other basis, of the infor14 mation supplied in applications under this part. This ver15 ification shall be separate from the reconciliation provided

16 under section 1375.

17 (h) HELP IN COMPLETING APPLICATIONS.—Each re18 gional alliance shall assist individuals in the filing of appli19 cations and income reconciliation statements under this

20 subpart.

21 (i) PENALTIES FOR INACCURATE INFORMATION.—

22 (1) INTEREST FOR UNDERSTATEMENTS.—Each

23 individual who knowingly understates income re24 ported in an application to a regional alliance under

25 this subpart or otherwise makes a material misrepre-
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•S 1779 PCS

1 sentation of information in such an application shall

2 be liable to the alliance for excess payments made

3 based on such understatement or misrepresentation,

4 and for interest on such excess payments at a rate

5 specified by the Secretary.

6 (2) PENALTIES FOR MISREPRESENTATION.—In

7 addition to the liability established under paragraph

8 (1), each individual who knowingly misrepresents

9 material information in an application under this

10 subpart to a regional alliance shall be liable to the

11 State in which the alliance is located for $2,000 or,

12 if greater, three times the excess payments made

13 based on such misrepresentation. The State shall

14 provide for the transfer of a significant portion of

15 such amount to the regional alliance involved.

16 SEC. 1375. END-OF-YEAR RECONCILIATION FOR PREMIUM

17 DISCOUNT AND REPAYMENT REDUCTION

18 WITH ACTUAL INCOME.

19 (a) IN GENERAL.—In the case of a family whose ap20 plication for a premium discount or reduction of liability

21 for a year has been approved before the end of the year

22 under this subpart, the family shall, subject to subsection

23 (c) and by the deadline specified in section 1344(b) file

24 with the regional alliance an income reconciliation state25 ment to verify the family’s adjusted income or wage-
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1 adjusted income, as the case may be, for the previous year.

2 Such a statement shall contain such information as the

3 Secretary may specify. Each regional alliance shall coordi4 nate the submission of such statements with the notice

5 and payment of family payments due under section 1344.

6 (b) RECONCILIATION OF PREMIUM DISCOUNT AND

7 LIABILITY ASSISTANCE BASED ON ACTUAL INCOME.—

8 Based on and using the income reported in the reconcili9 ation statement filed under subsection (a) with respect to

10 a family, the regional alliance shall compute the amount

11 of premium discount or reduction in liability that should

12 have been provided under section 6104 or section 6113

13 with respect for the family for the year involved. If the

14 amount of such discount or liability reduction computed

15 is—

16 (1) greater than the amount that has been pro17 vided, the family is liable to the regional alliance to

18 pay (directly or through an increase in future family

19 share of premiums or other payments) a total

20 amount equal to the amount of the excess payment,

21 or

22 (2) less than the amount that has been pro23 vided, the regional alliance shall pay to the family

24 (directly or through a reduction in future family
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1 share of premiums or other payments) a total

2 amount equal to the amount of the deficit.

3 (c) NO RECONCILIATION FOR AFDC AND SSI FAMI4 LIES; NO RECONCILIATION FOR COST SHARING REDUC5 TIONS.—No reconciliation statement is required under

6 this section—

7 (1) with respect to cost sharing reductions pro8 vided under section 1372, or

9 (2) for a family that only claims a premium dis10 count or liability reduction under this subpart on the

11 basis of being an AFDC or SSI family.

12 (d) DISQUALIFICATION FOR FAILURE TO FILE.—In

13 the case of any family that is required to file a statement

14 under this section in a year and that fails to file such a

15 statement by the deadline specified, members of the family

16 shall not be eligible for premium reductions under section

17 6104 or reductions in liability under section 6113 until

18 such statement is filed. A regional alliance, using rules es19 tablished by the Secretary, shall waive the application of

20 this subsection if the family establishes, to the satisfaction

21 of the alliance under such rules, good cause for the failure

22 to file the statement on a timely basis.

23 (e) PENALTIES FOR FALSE INFORMATION.—Any in24 dividual that provides false information in a statement

25 under subsection (a) is subject to the same liabilities as
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1 are provided under section 1374(h) for a misrepresenta2 tion of material fact described in such section.

3 (f) NOTICE OF REQUIREMENT.—Each regional alli4 ance (directly or in coordination with other regional alli5 ances) shall provide for written notice, at the end of each

6 year, of the requirement of this section to each family

7 which had received premium discount or reduction in li8 ability under this subpart in any month during the preced9 ing year and to which such requirement applies.

10 (g) TRANSMITTAL OF INFORMATION; VERIFICA11 TION.—

12 (1) IN GENERAL.—Each participating State

13 shall transmit annually to the Secretary such infor14 mation relating to the income of families for the pre15 vious year as the Secretary may require to verify

16 such income under this subpart.

17 (2) VERIFICATION.—Each participating State

18 may use such information as it has available to it to

19 assist regional alliances in verifying income of fami20 lies with applications filed under this subpart. The

21 Secretary of the Treasury may, consistent with sec22 tion 6103 of the Internal Revenue Code of 1986,

23 permit return information to be disclosed and used

24 by a participating State in verifying such income but

25 only in accordance with such section and only if the
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•S 1779 PCS

1 information is not directly disclosed to a regional al2 liance.

3 (h) CONSTRUCTION.—Nothing in this section shall be

4 construed as authorizing reconciliation of any cost sharing

5 reduction provided under this subpart.

6 PART 4—RESPONSIBILITIES AND AUTHORITIES

7 OF CORPORATE ALLIANCES

8 SEC. 1381. CONTRACTS WITH HEALTH PLANS.

9 (a) CONTRACTS WITH PLANS.—Subject to section

10 1382, each corporate alliance may—

11 (1) offer to individuals eligible to enroll under

12 section 1311(c) coverage under an appropriate self13 insured health plan (as defined in section 1400(b)),

14 or

15 (2) negotiate with a State-certified health plan

16 to enter into a contract with the plan for the enroll17 ment of such individuals under the plan,

18 or do both.

19 (b) TERMS OF CONTRACTS WITH STATE-CERTIFIED

20 HEALTH PLANS.—Contracts under this section between

21 a corporate alliance and a State-certified health plan may

22 contain such provisions (not inconsistent with the require23 ments of this title) as the alliance and plan may provide,

24 except that in no case does such contract remove the obli25 gation of the sponsor of the corporate alliance to provide
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1 for health benefits to corporate alliance eligible individuals

2 consistent with this part.

3 SEC. 1382. OFFERING CHOICE OF HEALTH PLANS FOR EN4 ROLLMENT.

5 (a) IN GENERAL.—Each corporate alliance must pro6 vide to each eligible enrollee with respect to the alliance

7 a choice of health plans among the plans which have con8 tracts with the alliance under section 1381.

9 (b) OFFERING OF PLANS BY ALLIANCES.—A cor10 porate alliance shall include among its health plan offer11 ings for any eligible enrollee at least 3 health plans to en12 rollees, of which the alliance must offer—

13 (1) at least one fee-for-service plan (as defined

14 in section 1322(b)(2)); and

15 (2) at least two health plans that are not fee16 for-service plans.

17 SEC. 1383. ENROLLMENT; ISSUANCE OF HEALTH SECURITY

18 CARD.

19 (a) IN GENERAL.—

20 (1) ENROLLMENT OF ALLIANCE ELIGIBLE INDI21 VIDUALS.—Each corporate alliance shall assure that

22 each alliance eligible individual with respect to the

23 alliance is enrolled in a corporate alliance health

24 plan offered by the alliance, and shall establish and

25 maintain methods and procedures consistent with
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1 this section sufficient to assure such enrollment.

2 Such methods and procedures shall assure the en3 rollment of such individuals at the time they first

4 become alliance eligible individuals with respect to

5 the alliance.

6 (2) ISSUANCE OF HEALTH SECURITY CARDS.—

7 A corporate alliance is responsible for the issuance

8 of health security cards to corporate alliance eligible

9 individuals under section 1001(b).

10 (b) RESPONSE TO POINT-OF-SERVICE NOTICES.—If

11 a corporate alliance is notified under section 1323(b)(2)

12 regarding an individual who has received services and ap13 pears to be a corporate alliance eligible individual—

14 (1) the alliance shall promptly ascertain the in15 dividual’s eligibility as a corporate alliance eligible

16 individual; and

17 (2) if the alliance determines that the individual

18 is a corporate alliance eligible individual—

19 (A) the alliance shall promptly provide for

20 the enrollment of the individual in a health plan

21 offered by the alliance (and notify the Secretary

22 of Labor of such enrollment), and

23 (B) the alliance shall forward the claim for

24 payment for the services to the health plan in

25 which the individual is so enrolled and the plan
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1 shall make payment to the provider for such

2 claim (in a manner consistent with require3 ments of the Secretary of Labor).

4 (c) ANNUAL OPEN ENROLLMENT; ENROLLMENT OF

5 FAMILY MEMBERS; OVERSUBSCRIPTION OF PLANS.—The

6 provisions of subsections (d) through (f) of section 1323

7 shall apply to a corporate alliance in the same manner

8 as such provisions apply to a regional alliance.

9 (d) TERMINATION.—

10 (1) IN GENERAL.—The provisions of section

11 1323(g)(1) shall apply to a corporate alliance in the

12 same manner as such provisions apply to a regional

13 alliance.

14 (2) FAILURE TO PAY PREMIUMS.—If a cor15 porate alliance fails to make premium payments to

16 a health plan, the plan, after reasonable written no17 tice to the alliance and the Secretary of Labor, may

18 terminate coverage (and any contract with the alli19 ance under this part). If such coverage is terminated

20 the corporate alliance is responsible for the prompt

21 enrollment of alliance eligible individuals whose cov22 erage is terminated in another corporate alliance

23 health plan.

24 (e) CORPORATE ALLIANCE TRANSITION.—Each cor25 porate alliance must provide coverage—
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1 (1) as of the first day of any month in which

2 an individual first becomes a corporate alliance eligi3 ble individual, and

4 (2) through the end of the month in the case

5 of a corporate alliance eligible individual who loses

6 such eligibility during the month.

7 SEC. 1384. COMMUNITY-RATED PREMIUMS WITHIN PRE8 MIUM AREAS.

9 (a) APPLICATION OF COMMUNITY-RATED PRE10 MIUMS.—The premiums charged by a corporate alliance

11 for enrollment in a corporate alliance health plan (not tak12 ing into account any employer premium payment required

13 under section 6131) shall vary only by class of family en14 rollment (specified in section 1011(c)) and by premium

15 area.

16 (b) DESIGNATION OF PREMIUM AREAS.—

17 (1) DESIGNATION.—Each corporate alliance

18 shall designate premium areas to be used for the im19 position of premiums (and calculation of employer

20 premium payments) under this Act.

21 (2) CONDITIONS.—The boundaries of such

22 areas shall reasonably reflect labor market areas or

23 health care delivery areas and shall be consistent

24 with rules the Secretary of Labor establishes (con25 sistent with paragraph (3)) so that within such
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1 areas there are not substantial differences in average

2 per capita health care expenditures.

3 (3) ANTI-REDLINING.—The provisions of para4 graphs (4) and (5) of section 1202(b) (relating to

5 redlining and metropolitan statistical areas) shall

6 apply to the establishment of premium areas in the

7 same manner as they apply to the establishment of

8 the boundaries of regional alliance areas.

9 (c) APPLICATIONS OF CLASSES OF ENROLLMENT.—

10 (1) IN GENERAL.—The premiums shall be ap11 plied under this section based on class of family en12 rollment and shall vary based on such class in ac13 cordance with factors specified by the corporate alli14 ance.

15 (2) BASIS FOR FACTORS.—Such factors shall be

16 the same in each premium area and shall take into

17 account such appropriate considerations (including

18 the considerations the Board takes into account in

19 the establishment of premium class factors under

20 section 1531 and the costs of regional alliance health

21 plans providing the comprehensive benefit package

22 for families enrolled in the different classes) as the

23 alliance considers appropriate, consistent with rules

24 the Secretary of Labor establishes.
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1 (d) SPECIAL TREATMENT OF MULTIEMPLOYER ALLI2 ANCES.—The Secretary of Labor shall provide for such

3 exceptions to the requirements of this section in the case

4 of a corporate alliance with a sponsor described in section

5 1311(b)(1)(B) as may be appropriate to reflect the unique

6 and historical relationship between the employers and em7 ployees under such alliances.

8 SEC. 1385. ASSISTANCE FOR LOW-WAGE FAMILIES.

9 Each corporate alliance shall make an additional con10 tribution towards the enrollment in health plans of the al11 liance by certain low-wage families in accordance with sec12 tion 6131(b)(2).

13 SEC. 1386. CONSUMER INFORMATION AND MARKETING;

14 DATA COLLECTION AND QUALITY; ADDI15 TIONAL DUTIES.

16 The provisions of sections 1325(a), 1327, and 1328

17 shall apply to a corporate alliance in the same manner

18 as such provisions apply to a regional alliance.

19 SEC. 1387. PLAN AND INFORMATION REQUIREMENTS.

20 (a) IN GENERAL.—A corporate alliance shall provide

21 a written submission to the Secretary of Labor (in such

22 form as the Secretary may require) detailing how the cor23 porate alliance will carry out its activities under this part.

24 (b) ANNUAL INFORMATION.—A corporate alliance

25 shall provide to the Secretary of Labor each year, in such
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1 form and manner as the Secretary may require, such in2 formation as the Secretary may require in order to mon3 itor the compliance of the alliance with the requirements

4 of this part.

5 (c) ANNUAL NOTICE OF EMPLOYEES OR PARTICI6 PANTS.—

7 (1) CORPORATE ALLIANCE.—Each corporate al8 liance shall submit to the Secretary of Labor, by not

9 later than March 1 of each year, information on the

10 number of full-time employees or participants ob11 taining coverage through the alliance as of January

12 1 of that year.

13 (2) EMPLOYERS THAT BECOME LARGE EMPLOY14 ERS.—Each employer that is not a corporate alli15 ance but employs 5,000 full-time employees as of

16 January 1 of a year, shall submit to the Secretary

17 of Labor, by not later than March 1 of the year, in18 formation on the number of such employees.

19 SEC. 1388. MANAGEMENT OF FUNDS; RELATIONS WITH EM20 PLOYEES.

21 (a) MANAGEMENT OF FUNDS.—The management of

22 funds by a corporate alliance shall be subject to the appli23 cable fiduciary requirements of part 4 of subtitle B of title

24 I of the Employee Retirement Income Security Act of
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1 1974, together with the applicable enforcement provisions

2 of part 5 of subtitle B of title I of such Act.

3 (b) MANAGEMENT OF FINANCES AND RECORDS; AC4 COUNTING SYSTEM.—Each corporate alliance shall comply

5 with standards relating to the management of finances

6 and records and accounting systems as the Secretary of

7 Labor shall specify.

8 SEC. 1389. COST CONTROL.

9 Each corporate alliance shall control covered expendi10 tures in a manner that meets the requirements of part

11 2 of subtitle A of title VI.

12 SEC. 1390. PAYMENTS BY CORPORATE ALLIANCE EMPLOY13 ERS TO CORPORATE ALLIANCES.

14 (a) LARGE EMPLOYER ALLIANCES.—In the case of

15 a corporate alliance with a sponsor described in section

16 1311(b)(1)(A), the sponsor shall provide for the funding

17 of benefits, through insurance or otherwise, consistent

18 with section 6131, the applicable solvency requirements of

19 sections 1394, 1395, and 1396, and any rules established

20 by the Secretary of Labor.

21 (b) OTHER ALLIANCES.—In the case of a corporate

22 alliance with a sponsor described in subparagraph (B) or

23 (C) of section 1311(b)(1), a corporate alliance employer

24 shall make payment of the employer premiums required

25 under section 6131 under rules established by the cor-
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1 porate alliance, which rules shall be consistent with rules

2 established by the Secretary of Labor.

3 SEC. 1391. COORDINATION OF PAYMENTS.

4 (a) PAYMENTS OF CERTAIN AMOUNTS TO REGIONAL

5 ALLIANCES.—In the case of a married couple in which one

6 spouse is a qualifying employee of a regional alliance em7 ployer and the other spouse is a qualifying employee of

8 a corporate alliance employer, if the couple is enrolled with

9 a regional alliance health plan, the corporate alliance

10 (which receives employer premium payments from such

11 corporate alliance employer with respect to such employee)

12 shall pay to the regional alliance the amounts so paid.

13 (b) PAYMENTS OF CERTAIN AMOUNTS TO COR14 PORATE ALLIANCES.—In the case of a married couple in

15 which one spouse is a qualifying employee of a corporate

16 alliance employer and the other spouse is a qualifying em17 ployee of another corporate alliance employer, the cor18 porate alliance of the corporate alliance health plan in

19 which the couple is not enrolled shall pay to the corporate

20 alliance of the plan in which the couple is enrolled any

21 employer premium payments received from such corporate

22 alliance employer with respect to such employee.
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1 SEC. 1392. APPLICABILITY OF ERISA ENFORCEMENT MECH2 ANISMS FOR ENFORCEMENT OF CERTAIN RE3 QUIREMENTS.

4 The provisions of sections 502 (relating to civil en5 forcement) and 504 (relating to investigative authority) of

6 the Employee Retirement Income Security Act of 1974

7 shall apply to enforcement by the Secretary of Labor of

8 this part in the same manner and to same extent as such

9 provisions apply to enforcement of title I of such Act.

10 SEC. 1393. APPLICABILITY OF CERTAIN ERISA PROTEC11 TIONS TO ENROLLED INDIVIDUALS.

12 The provisions of sections 510 (relating to inter13 ference with rights protected under Act) and 511 (relating

14 to coercive interference) of the Employee Retirement In15 come Security Act of 1974 shall apply, in relation to the

16 provisions of this Act, with respect to individuals enrolled

17 under corporate alliance health plans in the same manner

18 and to the same extent as such provisions apply, in rela19 tion to the provisions of the Employee Retirement Income

20 Security Act of 1974, with respect to participants and

21 beneficiaries under employee welfare benefit plans covered

22 by title I of such Act.

23 SEC. 1394. DISCLOSURE AND RESERVE REQUIREMENTS.

24 (a) IN GENERAL.—The Secretary of Labor shall en25 sure that each corporate alliance health plan which is a

26 self-insured plan maintains plan assets in trust as pro-
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1 vided in section 403 of the Employee Retirement Income

2 Security Act of 1974—

3 (1) without any exemption under section

4 403(b)(4) of such Act, and

5 (2) in amounts which the Secretary determines

6 are sufficient to provide at any time for payment to

7 health care providers of all outstanding balances

8 owed by the plan at such time.

9 The requirements of the preceding sentence may be met

10 through letters of credit, bonds, or other appropriate secu11 rity to the extent provided in regulations of the Secretary.

12 (b) DISCLOSURE.—Each self-insured corporate alli13 ance health plan shall notify the Secretary at such time

14 as the financial reserve requirements of this section are

15 not being met. The Secretary may assess a civil money

16 penalty of not more than $100,000 against any corporate

17 alliance for any failure to provide such notification in such

18 form and manner and within such time periods as the Sec19 retary may prescribe by regulation.

20 SEC. 1395. TRUSTEESHIP BY THE SECRETARY OF INSOL21 VENT CORPORATE ALLIANCE HEALTH PLANS.

22 (a) APPOINTMENT OF SECRETARY AS TRUSTEE FOR

23 INSOLVENT PLANS.—Whenever the Secretary of Labor

24 determines that a corporate alliance health plan which is

25 a self-insured plan will be unable to provide benefits when
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1 due or is otherwise in a financially hazardous condition

2 as defined in regulations of the Secretary, the Secretary

3 shall, upon notice to the plan, apply to the appropriate

4 United States district court for appointment of the Sec5 retary as trustee to administer the plan for the duration

6 of the insolvency. The plan may appear as a party and

7 other interested persons may intervene in the proceedings

8 at the discretion of the court. The court shall appoint the

9 Secretary trustee if the court determines that the trustee10 ship is necessary to protect the interests of the enrolled

11 individuals or health care providers or to avoid any unrea12 sonable deterioration of the financial condition of the plan

13 or any unreasonable increase in the liability of the Cor14 porate Alliance Health Plan Insolvency Fund. The trustee15 ship of the Secretary shall continue until the conditions

16 described in the first sentence of this subsection are rem17 edied or the plan is terminated.

18 (b) POWERS AS TRUSTEE.—The Secretary of Labor,

19 upon appointment as trustee under subsection (a), shall

20 have the power—

21 (1) to do any act authorized by the plan, this

22 Act, or other applicable provisions of law to be done

23 by the plan administrator or any trustee of the plan,
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1 (2) to require the transfer of all (or any part)

2 of the assets and records of the plan to the Sec3 retary as trustee,

4 (3) to invest any assets of the plan which the

5 Secretary holds in accordance with the provisions of

6 the plan, regulations of the Secretary, and applicable

7 provisions of law,

8 (4) to do such other acts as the Secretary

9 deems necessary to continue operation of the plan

10 without increasing the potential liability of the Cor11 porate Alliance Health Plan Insolvency Fund, if

12 such acts may be done under the provisions of the

13 plan,

14 (5) to require the corporate alliance, the plan

15 administrator, any contributing employer, and any

16 employee organization representing covered individ17 uals to furnish any information with respect to the

18 plan which the Secretary as trustee may reasonably

19 need in order to administer the plan,

20 (6) to collect for the plan any amounts due the

21 plan and to recover reasonable expenses of the trust22 eeship,

23 (7) to commence, prosecute, or defend on behalf

24 of the plan any suit or proceeding involving the plan,
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1 (8) to issue, publish, or file such notices, state2 ments, and reports as may be required under regula3 tions of the Secretary or by any order of the court,

4 (9) to terminate the plan and liquidate the plan

5 assets in accordance with applicable provisions of

6 this Act and other provisions of law, to restore the

7 plan to the responsibility of the corporate alliance,

8 or to continue the trusteeship,

9 (10) to provide for the enrollment of individuals

10 covered under the plan in an appropriate regional al11 liance health plan, and

12 (11) to do such other acts as may be necessary

13 to comply with this Act or any order of the court

14 and to protect the interests of enrolled individuals

15 and health care providers.

16 (c) NOTICE OF APPOINTMENT.—As soon as prac17 ticable after the Secretary’s appointment as trustee, the

18 Secretary shall give notice of such appointment to—

19 (1) the plan administrator,

20 (2) each enrolled individual,

21 (3) each employer who may be liable for con22 tributions to the plan, and

23 (4) each employee organization which, for pur24 poses of collective bargaining, represents enrolled in25 dividuals.
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1 (d) ADDITIONAL DUTIES.—Except to the extent in2 consistent with the provisions of this Act or part 4 of sub3 title B of title I of the Employee Retirement Income Secu4 rity Act of 1974, or as may be otherwise ordered by the

5 court, the Secretary of Labor, upon appointment as trust6 ee under this section, shall be subject to the same duties

7 as those of a trustee under section 704 of title 11, United

8 States Code, and shall have the duties of a fiduciary for

9 purposes of such part 4.

10 (e) OTHER PROCEEDINGS.—An application by the

11 Secretary of Labor under this subsection may be filed not12 withstanding the pendency in the same or any other court

13 of any bankruptcy, mortgage foreclosure, or equity receiv14 ership proceeding, or any proceeding to reorganize, con15 serve, or liquidate such plan or its property, or any pro16 ceeding to enforce a lien against property of the plan.

17 (f) JURISDICTION OF COURT.—

18 (1) IN GENERAL.—Upon the filing of an appli19 cation for the appointment as trustee or the issuance

20 of a decree under this subsection, the court to which

21 the application is made shall have exclusive jurisdic22 tion of the plan involved and its property wherever

23 located with the powers, to the extent consistent

24 with the purposes of this subsection, of a court of

25 the United States having jurisdiction over cases
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1 under chapter 11 of title 11, United States Code.

2 Pending an adjudication under this section such

3 court shall stay, and upon appointment by it of the

4 Secretary of Labor as trustee, such court shall con5 tinue the stay of, any pending mortgage foreclosure,

6 equity receivership, or other proceeding to reorga7 nize, conserve, or liquidate the plan, the sponsoring

8 alliance, or property of such plan or alliance, and

9 any other suit against any receiver, conservator, or

10 trustee of the plan, the sponsoring alliance, or prop11 erty of the plan or alliance. Pending such adjudica12 tion and upon the appointment by it of the Sec13 retary as trustee, the court may stay any proceeding

14 to enforce a lien against property of the plan or the

15 sponsoring alliance or any other suit against the

16 plan or the alliance.

17 (2) VENUE.—An action under this subsection

18 may be brought in the judicial district where the

19 plan administrator resides or does business or where

20 any asset of the plan is situated. A district court in

21 which such action is brought may issue process with

22 respect to such action in any other judicial district.

23 (g) PERSONNEL.—In accordance with regulations of

24 the Secretary of Labor, the Secretary shall appoint, retain,

25 and compensate accountants, actuaries, and other profes-
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1 sional service personnel as may be necessary in connection

2 with the Secretary’s service as trustee under this section.

3 Subtitle E—Health Plans

4 SEC. 1400. HEALTH PLAN DEFINED.

5 (a) IN GENERAL.—In this Act, the term ‘‘health

6 plan’’ means a plan that provides the comprehensive bene7 fit package and meets the requirements of parts 1, 3, and

8 4 applicable to health plans.

9 (b) APPROPRIATE SELF-INSURED HEALTH PLAN.—

10 In this Act, the term ‘‘appropriate self-insured health

11 plan’’ means a group health plan (as defined in section

12 3(42) of the Employee Retirement Income Security Act

13 of 1974) which is a self-insured health plan and with re14 spect to which the applicable requirements of title I of the

15 Employee Retirement Income Security Act of 1974 are

16 met.

17 (c) STATE-CERTIFIED HEALTH PLAN.—In this Act,

18 the term ‘‘State-certified health plan’’ means a health plan

19 that has been certified by a State under section 1203(a)

20 (or, in the case in which the Board is exercising certifi21 cation authority under section 1522(b), that has been cer22 tified by the Board).

23 (d) APPLICABLE REGULATORY AUTHORITY DE24 FINED.—In this subtitle, the term ‘‘applicable regulatory

25 authority’’ means—
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1 (1) with respect to a self-insured health plan,

2 the Secretary of Labor, or

3 (2) with respect to a State-certified health plan,

4 the State authority responsible for certification of

5 the plan.

6 PART 1—REQUIREMENTS RELATING TO

7 COMPREHENSIVE BENEFIT PACKAGE

8 SEC. 1401. APPLICATION OF REQUIREMENTS.

9 No plan shall be treated under this Act as a health

10 plan—

11 (1) unless the plan is a self-insured plan or a

12 State-certified plan; or

13 (2) on and after the effective date of a finding

14 by the applicable regulatory authority that the plan

15 has failed to comply with such applicable require16 ments.

17 SEC. 1402. REQUIREMENTS RELATING TO ENROLLMENT

18 AND COVERAGE.

19 (a) NO UNDERWRITING.—

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

21 each health plan offered by a regional alliance or a

22 corporate alliance must accept for enrollment every

23 alliance eligible individual who seeks such enroll24 ment. No plan may engage in any practice that has

25 the effect of attracting or limiting enrollees on the
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1 basis of personal characteristics, such as health sta2 tus, anticipated need for health care, age, occupa3 tion, or affiliation with any person or entity.

4 (2) CAPACITY LIMITATIONS.—With the approval

5 of the applicable regulatory authority, a health plan

6 may limit enrollment because of the plan’s capacity

7 to deliver services or to maintain financial stability.

8 If such a limitation is imposed, the limitation may

9 not be imposed on a basis referred to in paragraph

10 (1).

11 (b) NO LIMITS ON COVERAGE; NO PRE-EXISTING

12 CONDITION LIMITS.—A health plan may not—

13 (1) terminate, restrict, or limit coverage for the

14 comprehensive benefit package in any portion of the

15 plan’s service area for any reason, including

16 nonpayment of premiums;

17 (2) cancel coverage for any alliance eligible indi18 vidual until that individual is enrolled in another ap19 plicable health plan;

20 (3) exclude coverage of an alliance eligible indi21 vidual because of existing medical conditions;

22 (4) impose waiting periods before coverage be23 gins; or

24 (5) impose a rider that serves to exclude cov25 erage of particular eligible individuals.
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1 (c) ANTIDISCRIMINATION.—

2 (1) IN GENERAL.—No health plan may dis3 criminate, or engage (directly or through contractual

4 arrangements) in any activity, including the selection

5 of a service area, that has the effect of discriminat6 ing, against an individual on the basis of race, na7 tional origin, sex, language, socio-economic status,

8 age, disability, health status, or anticipated need for

9 health services.

10 (2) SELECTION OF PROVIDERS FOR PLAN NET11 WORK.—In selecting among providers of health serv12 ices for membership in a provider network, or in es13 tablishing the terms and conditions of such member14 ship, a health plan may not engage in any practice

15 that has the effect of discriminating against a pro16 vider—

17 (A) based on the race, national origin, sex,

18 language, age, or disability of the provider; or

19 (B) based on the socio-economic status,

20 disability, health status, or anticipated need for

21 health services of a patient of the provider.

22 (3) BUSINESS NECESSITY.—Except in the case

23 of intentional discrimination, it shall not be a viola24 tion of this subsection, or of any regulation issued

25 under this subsection, for any person to take any ac-
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•S 1779 PCS

1 tion otherwise prohibited under this subsection, if

2 the action is required by business necessity.

3 (4) REGULATIONS.—Not later than 1 year after

4 the date of the enactment of this Act, the Secretary

5 of Health and Human Services shall issue regula6 tions to carry out this subsection.

7 (d) REQUIREMENTS FOR PLANS OFFERING LOWER

8 COST SHARING.—Each health plan that offers enrollees

9 the lower cost sharing schedule referred to in section

10 1131—

11 (1) shall apply such schedule to all items and

12 services in the comprehensive benefit package;

13 (2) shall offer enrollees the opportunity to ob14 tain coverage for out-of-network items and services

15 (as described in subsection (f)(2)); and

16 (3) notwithstanding section 1403, in the case of

17 an enrollee who obtains coverage for such items and

18 services, may charge an alternative premium to take

19 into account such coverage.

20 (e) TREATMENT OF COST SHARING.—Each health

21 plan, in providing benefits in the comprehensive benefit

22 package—

23 (1) shall include in its payments to providers,

24 such additional reimbursement as may be necessary
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1 to reflect cost sharing reductions to which individ2 uals are entitled under section 1371, and

3 (2) shall maintain such claims or encounter

4 records as may be necessary to audit the amount of

5 such additional reimbursements and the individuals

6 for which such reimbursement is provided.

7 (f) IN-NETWORK AND OUT-OF-NETWORK ITEMS AND

8 SERVICES DEFINED.—

9 (1) IN-NETWORK ITEMS AND SERVICES.—For

10 purposes of this Act, the term ‘‘in-network’’, when

11 used with respect to items or services described in

12 this subtitle, means items or services provided to an

13 individual enrolled under a health plan by a health

14 care provider who is a member of a provider network

15 of the plan (as defined in paragraph (3)).

16 (2) OUT-OF-NETWORK ITEMS AND SERVICES.—

17 For purposes of this Act, the term ‘‘out-of network’’,

18 when used with respect to items or services de19 scribed in this subtitle, means items or services pro20 vided to an individual enrolled under a health plan

21 by a health care provider who is not a member of

22 a provider network of the plan (as defined in para23 graph (3)).

24 (3) PROVIDER NETWORK DEFINED.—A ‘‘pro25 vider network’’ means, with respect to a health plan,
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1 providers who have entered into an agreement with

2 the plan under which such providers are obligated to

3 provide items and services in the comprehensive ben4 efit package to individuals enrolled in the plan, or

5 have an agreement to provide services on a fee-for6 service basis.

7 (g) RELATION TO DETENTION.—A health plan is not

8 required to provide any reimbursement to any detention

9 facility for services performed in that facility for detainees

10 in the facility.

11 SEC. 1403. COMMUNITY RATING.

12 (a) REGIONAL ALLIANCE HEALTH PLANS.—Each re13 gional alliance health plan may not vary the premium im14 posed with respect to residents of an alliance area, except

15 as may be required under section 6102(a) with respect to

16 different types of individual and family coverage under the

17 plan.

18 (b) CORPORATE ALLIANCE HEALTH PLANS.—Each

19 corporate alliance health plan may not vary the premium

20 imposed with respect to individuals enrolled in the plan,

21 except as may be required under section 1384 with respect

22 to different types of individual and family coverage under

23 the plan.
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1 SEC. 1404. MARKETING OF HEALTH PLANS; INFORMATION.

2 (a) REGIONAL ALLIANCE MARKETING RESTRIC3 TIONS.—

4 (1) IN GENERAL.—The contract entered into

5 between a regional alliance and a regional alliance

6 health plan shall prohibit the distribution by the

7 health plan of marketing materials within the re8 gional alliance that contain false or materially mis9 leading information and shall provide for prior ap10 proval by the regional alliance of any marketing ma11 terials to be distributed by the plan.

12 (2) ENTIRE MARKET.—A health plan offered by

13 a regional alliance may not distribute marketing ma14 terials to an area smaller than the entire area served

15 by the plan.

16 (3) PROHIBITION OF TIE-INS.—A regional alli17 ance health plan, and any agency of such a plan,

18 may not seek to influence an individual’s choice of

19 plans in conjunction with the sale of any other in20 surance.

21 (b) INFORMATION AVAILABLE.—

22 (1) IN GENERAL.—Each regional alliance health

23 plan must provide to the regional alliance and make

24 available to alliance eligible individuals and health

25 care professionals complete and timely information

26 concerning the following:
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1 (A) Costs.

2 (B) The identity, locations, qualifications,

3 and availability of participating providers.

4 (C) Procedures used to control utilization

5 of services and expenditures.

6 (D) Procedures for assuring and improving

7 the quality of care.

8 (E) Rights and responsibilities of enrollees.

9 (F) Information on the number of plan

10 members who disenroll from the plan.

11 (2) PROHIBITION AGAINST CERTIFICATION OF

12 PLANS PROVIDING INACCURATE INFORMATION.—No

13 regional alliance health plan may be a State-certified

14 health plan under this title if the State determines

15 that the plan submitted materially inaccurate infor16 mation under paragraph (1).

17 (c) ADVANCE DIRECTIVES.—Each self-insured health

18 plan and each State-certified health plan shall meet the

19 requirement of section 1866(f) of the Social Security Act

20 (relating to maintaining written policies and procedures

21 respecting advance directives) in the same manner as such

22 requirement relates to organizations with contracts under

23 section 1876 of such Act.
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1 SEC. 1405. GRIEVANCE PROCEDURE.

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

3 a grievance procedure for enrollees to use in pursuing

4 complaints. Such procedure shall be consistent with sub5 title C of title V.

6 (b) ADDITIONAL REMEDIES.—If the grievance proce7 dure fails to resolve an enrollee’s complaint—

8 (1) in the case of an enrollee of a regional alli9 ance health plan, the enrollee has the option of seek10 ing assistance from the office of the ombudsman for

11 the regional alliance established under section

12 1326(a), and

13 (2) the enrollee may pursue additional legal

14 remedies, including those provided under subtitle C

15 of title V.

16 SEC. 1406. HEALTH PLAN ARRANGEMENTS WITH PROVID17 ERS.

18 (a) REQUIREMENT.—Each health plan must enter

19 into such agreements with health care providers or have

20 such other arrangements as may be necessary to assure

21 the provision of all services covered by the comprehensive

22 benefit package to eligible individuals enrolled with the

23 plan.

24 (b) EMERGENCY AND URGENT CARE SERVICES.—

25 (1) IN GENERAL.—Each health plan must cover

26 emergency and urgent care services provided to en-
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1 rollees, without regard to whether or not the pro2 vider furnishing such services has a contractual (or

3 other) arrangement with the plan to provide items or

4 services to enrollees of the plan and in the case of

5 emergency services without regard to prior author6 ization.

7 (2) PAYMENT AMOUNTS.—In the case of emer8 gency and urgent care provided to an enrollee out9 side of a health plan’s service area, the payment

10 amounts of the plan shall be based on the fee for

11 service rate schedule established by the regional alli12 ance for the alliance area where the services were

13 provided.

14 (c) APPLICATION OF FEE SCHEDULE.—

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

16 each regional alliance health plan or corporate alli17 ance health plan that provides for payment for serv18 ices on a fee-for-service basis shall make such pay19 ment in the amounts provided under the fee sched20 ule established by the regional alliance under section

21 1322(c) (or, in the case of a plan offered in a State

22 that has established a Statewide fee schedule under

23 section 1322(c)(3), under such Statewide fee sched24 ule).
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1 (2) REDUCTION FOR PROVIDERS VOLUNTARILY

2 REDUCING CHARGES.—If a provider under a health

3 plan voluntarily agrees to reduce the amount

4 charged to an individual enrolled under the plan, the

5 plan shall reduce the amount otherwise determined

6 under the fee schedule applicable under paragraph

7 (1) by the proportion of the reduction in such

8 amount charged.

9 (3) REDUCTION FOR NONCOMPLYING PLAN.—

10 Each regional alliance health plan that is a non11 complying plan shall provide for reductions in pay12 ments under the fee schedule to providers that are

13 not participating providers in accordance with sec14 tion 6012(b).

15 (d) PROHIBITION AGAINST BALANCE BILLING; RE16 QUIREMENT OF DIRECT BILLING.—

17 (1) PROHIBITION OF BALANCE BILLING.—A

18 provider may not charge or collect from an enrollee

19 a fee in excess of the applicable payment amount

20 under the applicable fee schedule under subsection

21 (c), and the health plan and its enrollees are not le22 gally responsible for payment of any amount in ex23 cess of such applicable payment amount for items

24 and services covered under the comprehensive bene25 fits package.
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1 (2) DIRECT BILLING.—A provider may not

2 charge or collect from an enrollee amounts that are

3 payable by the health plan (including any cost shar4 ing reduction assistance payable by the plan) and

5 shall submit charges to such plan in accordance with

6 any applicable requirements of part 1 of subtitle B

7 of title V (relating to health information systems).

8 (3) COVERAGE UNDER AGREEMENTS WITH

9 PLANS.—The agreements or other arrangements en10 tered into under subsection (a) between a health

11 plan and the health care providers providing the

12 comprehensive benefit package to individuals en13 rolled with the plan shall prohibit a provider from

14 engaging in balance billing described in paragraph

15 (1).

16 (e) IMPOSITION OF PARTICIPATING PROVIDER AS17 SESSMENT IN CASE OF A NONCOMPLYING PLAN.—Each

18 regional alliance health plan shall provide that if the plan

19 is a noncomplying plan for a year under section 6012, pay20 ments to participating providers shall be reduced by the

21 applicable network reduction percentage under such sec22 tion.
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1 SEC. 1407. PREEMPTION OF CERTAIN STATE LAWS RELAT2 ING TO HEALTH PLANS.

3 (a) LAWS RESTRICTING PLANS OTHER THAN FEE4 FOR-SERVICE PLANS.—Except as may otherwise be pro5 vided in this section, no State law shall apply to any serv6 ices provided under a health plan that is not a fee-for7 service plan (or a fee-for-service component of a plan) if

8 such law has the effect of prohibiting or otherwise restrict9 ing plans from—

10 (1) except as provided in section 1203, limiting

11 the number and type of health care providers who

12 participate in the plan;

13 (2) requiring enrollees to obtain health services

14 (other than emergency services) from participating

15 providers or from providers authorized by the plan;

16 (3) requiring enrollees to obtain a referral for

17 treatment by a specialized physician or health insti18 tution;

19 (4) establishing different payment rates for par20 ticipating providers and providers outside the plan;

21 (5) creating incentives to encourage the use of

22 participating providers; or

23 (6) requiring the use of single-source suppliers

24 for pharmacy, medical equipment, and other health

25 products and services.
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1 (b) PREEMPTION OF STATE CORPORATE PRACTICE

2 ACTS.—Any State law related to the corporate practice

3 of medicine and to provider ownership of health plans or

4 other providers shall not apply to arrangements between

5 health plans that are not fee-for-service plans and their

6 participating providers.

7 (c) PARTICIPATING PROVIDER DEFINED.—In this

8 title, a ‘‘participating provider’’ means, with respect to a

9 health plan, a provider of health care services who is a

10 member of a provider network of the plan (as described

11 in section 1402(f)(3)).

12 SEC. 1408. FINANCIAL SOLVENCY.

13 Each regional alliance health plan must—

14 (1) meet or exceed minimum capital require15 ments established by States under section 1204(a);

16 (2) in the case of a plan operating in a State,

17 must participate in the guaranty fund established by

18 the State under section 1204(c); and

19 (3) meet such other requirements relating to

20 fiscal soundness as the State may establish (subject

21 to the establishment of any alternative standards by

22 the Board).
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1 SEC. 1409. REQUIREMENT FOR OFFERING COST SHARING

2 POLICY.

3 Each regional alliance health plan shall offer a cost

4 sharing policy (as defined in section 1421(b)(2)) to each

5 eligible family enrolled under the plan.

6 SEC. 1410. QUALITY ASSURANCE.

7 Each health plan shall comply with such quality as8 surance requirements as are imposed under subtitle A of

9 title V with respect to such a plan.

10 SEC. 1411. PROVIDER VERIFICATION.

11 Each health plan shall—

12 (1) verify the credentials of practitioners and

13 facilities;

14 (2) ensure that all providers participating in the

15 plan meet applicable State licensing and certification

16 standards;

17 (3) oversee the quality and performance of par18 ticipating providers, consistent with section 1410;

19 and

20 (4) investigate and resolve consumer complaints

21 against participating providers.

22 SEC. 1412. CONSUMER DISCLOSURES OF UTILIZATION MAN23 AGEMENT PROTOCOLS.

24 Each health plan shall disclose to enrollees (and pro25 spective enrollees) the protocols used by the plan for con26 trolling utilization and costs.
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1 SEC. 1413. CONFIDENTIALITY, DATA MANAGEMENT, AND

2 REPORTING.

3 (a) IN GENERAL.—Each health plan shall comply

4 with the confidentiality, data management, and reporting

5 requirements imposed under subtitle B of title V.

6 (b) TREATMENT OF ELECTRONIC INFORMATION.—

7 (1) ACCURACY AND RELIABILITY.—Each health

8 plan shall take such measures as may be necessary

9 to ensure that health care information in electronic

10 form that the plan, or a member of a provider net11 work of the plan, collects for or transmits to the

12 Board under subtitle B of title V is accurate and re13 liable.

14 (2) PRIVACY AND SECURITY.—Each health plan

15 shall take such measures as may be necessary to en16 sure that health care information described in para17 graph (1) is not distributed to any individual or en18 tity in violation of a standard promulgated by the

19 Board under part 2 of subtitle B of title V.

20 SEC. 1414. PARTICIPATION IN REINSURANCE SYSTEM.

21 Each regional alliance health plan of a State that has

22 established a reinsurance system under section 1203(g)

23 shall participate in the system in the manner specified by

24 the State.
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1 PART 2—REQUIREMENTS RELATING TO

2 SUPPLEMENTAL INSURANCE

3 SEC. 1421. IMPOSITION OF REQUIREMENTS ON SUPPLE4 MENTAL INSURANCE.

5 (a) IN GENERAL.—An entity may offer a supple6 mental insurance policy but only if—

7 (1) in the case of a supplemental health benefit

8 policy (as defined in subsection (b)(1)), the entity

9 and the policy meet the requirements of section

10 1422; and

11 (2) in the case of a cost sharing policy (as de12 fined in subsection (b)(2)), the entity and the policy

13 meet the requirements of section 1423.

14 (b) POLICIES DEFINED.—

15 (1) SUPPLEMENTAL HEALTH BENEFIT POL16 ICY.—

17 (A) IN GENERAL.—In this part, the term

18 ‘‘supplemental health benefit policy’’ means a

19 health insurance policy or health benefit plan

20 offered to an alliance eligible individual which

21 provides—

22 (i) coverage for services and items not

23 included in the comprehensive benefit

24 package, or

25 (ii) coverage for items and services in26 cluded in such package but not covered be-
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•S 1779 PCS

1 cause of a limitation in amount, duration,

2 or scope provided under this title,

3 or both.

4 (B) EXCLUSIONS.—Such term does not in5 clude the following:

6 (i) A cost sharing policy (as defined in

7 paragraph (2)).

8 (ii) A long-term care insurance policy

9 (as defined in section 2304(10)).

10 (iii) Insurance that limits benefits

11 with respect to specific diseases (or condi12 tions).

13 (iv) Hospital or nursing home indem14 nity insurance.

15 (v) A medicare supplemental policy

16 (as defined in section 1882(g) of the Social

17 Security Act).

18 (vi) Insurance with respect to acci19 dents.

20 (2) COST SHARING POLICY.—In this part, the

21 term ‘‘cost sharing policy’’ means a health insurance

22 policy or health benefit plan offered to an alliance el23 igible individual which provides coverage for

24 deductibles, coinsurance, and copayments imposed as

25 part of the comprehensive benefit package under
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1 subtitle B, whether imposed under a higher cost

2 sharing plan or with respect to out-of-network pro3 viders.

4 SEC. 1422. STANDARDS FOR SUPPLEMENTAL HEALTH BEN5 EFIT POLICIES.

6 (a) PROHIBITING DUPLICATION OF COVERAGE.—

7 (1) IN GENERAL.—No health plan, insurer, or

8 any other person may offer—

9 (A) to any eligible individual a supple10 mental health benefit policy that duplicates any

11 coverage provided in the comprehensive benefit

12 package; or

13 (B) to any medicare-eligible individual a

14 supplemental health benefit policy that dupli15 cates any coverage provided under the medicare

16 program.

17 (2) EXCEPTION FOR MEDICARE-ELIGIBLE INDI18 VIDUALS.—For purposes of this subsection, for the

19 period in which an individual is a medicare-eligible

20 individual and also is an alliance eligible individual

21 (and is enrolled under a regional alliance or cor22 porate alliance health plan), paragraph (1)(A) (and

23 not paragraph (1)(B)) shall apply.

24 (b) NO LIMITATION ON INDIVIDUALS OFFERED POL25 ICY.—
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1 (1) IN GENERAL.—Except as provided in para2 graph (2), each entity offering a supplemental health

3 benefit policy must accept for enrollment every indi4 vidual who seeks such enrollment, subject to capac5 ity and financial limits.

6 (2) EXCEPTION FOR CERTAIN OFFERORS.—

7 Paragraph (1) shall not apply to any supplemental

8 health benefit policy offered to an individual only on

9 the basis of—

10 (A) the individual’s employment (in the

11 case of a policy offered by the individual’s em12 ployer); or

13 (B) the individual’s membership or enroll14 ment in a fraternal, religious, professional, edu15 cational, or other similar organization.

16 (c) RESTRICTIONS ON MARKETING ABUSES.—Not

17 later than January 1, 1996, the Board shall develop (in

18 consultation with the States) minimum standards that

19 prohibit marketing practices by entities offering supple20 mental health benefit policies that involve:

21 (1) Providing monetary incentives for or tying

22 or otherwise conditioning the sale of the policy to en23 rollment in a regional alliance health plan of the en24 tity.
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1 (2) Using or disclosing to any party information

2 about the health status or claims experience of par3 ticipants in a regional alliance health plan for the

4 purpose of marketing such a policy.

5 (d) CIVIL MONETARY PENALTY.—An entity that

6 knowingly and willfully violates any provision of this sec7 tion with respect to the offering of a supplemental health

8 benefit policy to any individual shall be subject to a civil

9 monetary penalty (not to exceed $10,000) for each such

10 violation. The provisions of section 1128A of the Social

11 Security Act (other than subsections (a) and (b)) shall

12 apply to civil money penalties under this subsection in the

13 same manner as they apply to a penalty or proceeding

14 under section 1128A(a) of such Act.

15 SEC. 1423. STANDARDS FOR COST SHARING POLICIES.

16 (a) RULES FOR OFFERING OF POLICIES.—Subject to

17 subsection (f), a cost sharing policy may be offered to an

18 individual only if—

19 (1) the policy is offered by the regional alliance

20 health plan in which the individual is enrolled;

21 (2) the regional alliance health plan offers the

22 policy to all individuals enrolled in the plan;

23 (3) the plan offers each such individual a choice

24 of a policy that provides standard coverage and a
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•S 1779 PCS

1 policy that provides maximum coverage (in accord2 ance with standards established by the Board); and

3 (4) the policy is offered only during the annual

4 open enrollment period for regional alliance health

5 plans (described in section 1323(d)(1)).

6 (b) PROHIBITION OF COVERAGE OF COPAYMENTS.—

7 Each cost sharing policy may not provide any benefits re8 lating to any copayments established under the table of

9 copayments and coinsurance under section 1135.

10 (c) EQUIVALENT COVERAGE FOR ALL SERVICES.—

11 Each cost sharing policy must provide coverage for items

12 and services in the comprehensive benefit package to the

13 same extent as the policy provides coverage for all items

14 and services in the package.

15 (d) REQUIREMENTS FOR PRICING.—

16 (1) IN GENERAL.—The price of any cost shar17 ing policy shall—

18 (A) be the same for each individual to

19 whom the policy is offered;

20 (B) take into account any expected in21 crease in utilization resulting from the purchase

22 of the policy by individuals enrolled in the re23 gional alliance health plan; and

24 (C) not result in a loss-ratio of less than

25 90 percent.
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1 (2) LOSS-RATIO DEFINED.—In paragraph

2 (1)(C), a ‘‘loss-ratio’’ is the ratio of the premium re3 turned to the consumer in payout relative to the

4 total premium collected.

5 (e) LOSS OF STATE CERTIFICATION FOR REGIONAL

6 ALLIANCE HEALTH PLANS FAILING TO MEET STAND7 ARDS.—A State may not certify a regional alliance health

8 plan that offers a cost sharing policy unless the plan and

9 the policy meet the standards described in this section.

10 (f) SPECIAL RULES FOR FEHBP SUPPLEMENTAL

11 PLANS.—Subsection (a) shall not apply to an FEHBP

12 supplemental plan described in section 8203(f)(1), but

13 only if the plan meets the following requirements:

14 (1) The plan must be offered to all individuals

15 to whom such a plan is required to be offered under

16 section 8203.

17 (2) The plan must offer each such individual a

18 choice of a policy that provides standard coverage

19 and a policy that provides maximum coverage (in ac20 cordance with standards established by the Board

21 under subsection (a)(3)).

22 (3) The plan is offered only during the annual

23 open enrollment period for regional alliance health

24 plans (described in section 1323(d)(1)).
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1 (4)(A) The price of the plan shall include an

2 amount, established in accordance with rules estab3 lished by the Board in consultation with the Office

4 of Personnel Management, that takes into account

5 any expected increase in utilization of the items and

6 services in the comprehensive benefit package result7 ing from the purchase of the plan by individuals en8 rolled in a regional alliance health plan.

9 (B) The plan provides for payment, in a man10 ner specified by the Board in the case of an individ11 ual enrolled in the plan and in a regional alliance

12 health plan, to the regional alliance health plan of

13 an amount equivalent to the additional amount de14 scribed in subparagraph (A).

15 PART 3—REQUIREMENTS RELATING TO

16 ESSENTIAL COMMUNITY PROVIDERS

17 SEC. 1431. HEALTH PLAN REQUIREMENT.

18 (a) IN GENERAL.—Subject to section 1432, each

19 health plan shall, with respect to each electing essential

20 community provider (as defined in subsection (d), other

21 than a provider of school health services) located within

22 the plan’s service area, either—

23 (1) enter into a written provider participation

24 agreement (described in subsection (b)) with the

25 provider, or
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1 (2) enter into a written agreement under which

2 the plan shall make payment to the provider in ac3 cordance with subsection (c).

4 (b) PARTICIPATION AGREEMENT.—A participation

5 agreement between a health plan and an electing essential

6 community provider under this subsection shall provide

7 that the health plan agrees to treat the provider in accord8 ance with terms and conditions at least as favorable as

9 those that are applicable to other providers participating

10 in the health plan with respect to each of the following:

11 (1) The scope of services for which payment is

12 made by the plan to the provider.

13 (2) The rate of payment for covered care and

14 services.

15 (3) The availability of financial incentives to

16 participating providers.

17 (4) Limitations on financial risk provided to

18 other participating providers.

19 (5) Assignment of enrollees to participating

20 providers.

21 (6) Access by the provider’s patients to provid22 ers in medical specialties or subspecialties participat23 ing in the plan.

24 (c) PAYMENTS FOR PROVIDERS WITHOUT PARTICI25 PATION AGREEMENTS.—
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•S 1779 PCS

1 (1) IN GENERAL.—Payment in accordance with

2 this subsection is payment based, as elected by the

3 electing essential community provider, either—

4 (A) on the fee schedule developed by the

5 applicable regional alliance (or the State) under

6 section 1322(c), or

7 (B) on payment methodologies and rates

8 used under the applicable Medicare payment

9 methodology and rates (or the most closely ap10 plicable methodology under such program as

11 the Secretary of Health and Human Services

12 specifies in regulations).

13 (2) NO APPLICATION OF GATE-KEEPER LIMITA14 TIONS.—Payment in accordance with this subsection

15 may be subject to utilization review, but may not be

16 subject to otherwise applicable gate-keeper require17 ments under the plan.

18 (d) ELECTION.—

19 (1) IN GENERAL.—In this part, the term ‘‘elect20 ing essential community provider’’ means, with re21 spect to a health plan, an essential community pro22 vider that elects this subpart to apply to the health

23 plan.

24 (2) FORM OF ELECTION.—An election under

25 this subsection shall be made in a form and manner
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•S 1779 PCS

1 specified by the Secretary, and shall include notice

2 to the health plan involved. Such an election may be

3 made annually with respect to a health plan, except

4 that the plan and provider may agree to make such

5 an election on a more frequent basis.

6 (e) SPECIAL RULE FOR PROVIDERS OF SCHOOL

7 HEALTH SERVICES.—A health plan shall pay, to each pro8 vider of school health services located in the plan’s service

9 area an amount determined by the Secretary for such

10 services furnished to enrollees of the plan.

11 SEC. 1432. SUNSET OF REQUIREMENT.

12 (a) IN GENERAL.—Subject to subsection (d), the re13 quirement of section 1431 shall only apply to health plans

14 offered by a health alliance during the 5-year period begin15 ning with the first year in which any health plan is offered

16 by the alliance.

17 (b) STUDIES.—In order to prepare recommendations

18 under subsection (c), the Secretary shall conduct studies

19 regarding essential community providers, including studies

20 that assess—

21 (1) the definition of essential community pro22 vider,

23 (2) the sufficiency of the funding levels for pro24 viders, for both covered and uncovered benefits

25 under this Act,
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•S 1779 PCS

1 (3) the effects of contracting requirements re2 lating to such providers on such providers, health

3 plans, and enrollees,

4 (4) the impact of the payment rules for such

5 providers, and

6 (5) the impact of national health reform on

7 such providers.

8 (c) RECOMMENDATIONS TO CONGRESS.—The Sec9 retary shall submit to Congress, by not later than March

10 1, 2001, specific recommendations respecting whether,

11 and to what extent, section 1431 should continue to apply

12 to some or all essential community providers. Such rec13 ommendations may include a description of the particular

14 types of such providers and circumstances under which

15 such section should continue to apply.

16 (d) CONGRESSIONAL CONSIDERATION.—

17 (1) IN GENERAL.—Recommendations submitted

18 under subsection (c) shall apply under this part (and

19 may supersede the provisions of subsection (a)) un20 less a joint resolution (described in paragraph (2))

21 disapproving such recommendations is enacted, in

22 accordance with the provisions of paragraph (3), be23 fore the end of the 60-day period beginning on the

24 date on which such recommendations were submit25 ted. For purposes of applying the preceding sentence
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•S 1779 PCS

1 and paragraphs (2) and (3), the days on which ei2 ther House of Congress is not in session because of

3 an adjournment of more than three days to a day

4 certain shall be excluded in the computation of a

5 period.

6 (2) JOINT RESOLUTION OF DISAPPROVAL.—A

7 joint resolution described in this paragraph means

8 only a joint resolution which is introduced within the

9 10-day period beginning on the date on which the

10 Secretary submits recommendations under sub11 section (c) and—

12 (A) which does not have a preamble;

13 (B) the matter after the resolving clause of

14 which is as follows: ‘‘That Congress disapproves

15 the recommendations of the Secretary of Health

16 and Human Services concerning the continued

17 application of certain essential community pro18 vider requirements under section 1431 of the

19 Health Security Act, as submitted by the Sec20 retary on lllllll.’’, the blank space

21 being filled in with the appropriate date; and

22 (C) the title of which is as follows: ‘‘Joint

23 resolution disapproving recommendations of the

24 Secretary of Health and Human Services con25 cerning the continued application of certain es-
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•S 1779 PCS

1 sential community provider requirements under

2 section 1431 of the Health Security Act, as

3 submitted by the Secretary on

4 lllllll.’’, the blank space being filled

5 in with the appropriate date.

6 (3) PROCEDURES FOR CONSIDERATION OF RES7 OLUTION OF DISAPPROVAL.—Subject to paragraph

8 (4), the provisions of section 2908 (other than sub9 section (a)) of the Defense Base Closure and Re10 alignment Act of 1990 shall apply to the consider11 ation of a joint resolution described in paragraph (2)

12 in the same manner as such provisions apply to a

13 joint resolution described in section 2908(a) of such

14 Act.

15 (4) SPECIAL RULES.—For purposes of applying

16 paragraph (3) with respect to such provisions—

17 (A) any reference to the Committee on

18 Armed Services of the House of Representatives

19 shall be deemed a reference to an appropriate

20 Committee of the House of Representatives

21 (specified by the Speaker of the House of Rep22 resentatives at the time of submission of rec23 ommendations under subsection (c)) and any

24 reference to the Committee on Armed Services

25 of the Senate shall be deemed a reference to an
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1 appropriate Committee of the Senate (specified

2 by the Majority Leader of the Senate at the

3 time of submission of recommendations under

4 subsection (c)); and

5 (B) any reference to the date on which the

6 President transmits a report shall be deemed a

7 reference to the date on which the Secretary

8 submits recommendations under subsection (c).

9 PART 4—REQUIREMENTS RELATING TO WORK10 ERS’ COMPENSATION AND AUTOMOBILE

11 MEDICAL LIABILITY COVERAGE

12 SEC. 1441. REFERENCE TO REQUIREMENTS RELATING TO

13 WORKERS COMPENSATION SERVICES.

14 Each health plan shall meet the applicable require15 ments of part 2 of subtitle A of title X (relating to provi16 sion of workers compensation services to enrollees).

17 SEC. 1442. REFERENCE TO REQUIREMENTS RELATING TO

18 AUTOMOBILE MEDICAL LIABILITY SERVICES.

19 Each health plan shall meet the applicable require20 ments of part 2 of subtitle B of title X (relating to provi21 sion of automobile medical liability services to enrollees).
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1 Subtitle F—Federal

2 Responsibilities

3 PART 1—NATIONAL HEALTH BOARD

4 Subpart A—Establishment of National Health Board

5 SEC. 1501. CREATION OF NATIONAL HEALTH BOARD; MEM6 BERSHIP.

7 (a) IN GENERAL.—There is hereby created in the Ex8 ecutive Branch a National Health Board.

9 (b) COMPOSITION.—The Board is composed of 7

10 members appointed by the President, by and with the ad11 vice and consent of the Senate.

12 (c) CHAIR.—The President shall designate one of the

13 members as chair. The chair serves a term concurrent

14 with that of the President. The chair may serve a maxi15 mum of 3 terms. The chair shall serve as the chief execu16 tive officer of the Board.

17 (d) TERMS.—

18 (1) IN GENERAL.—Except as provided in para19 graphs (2) and (4), the term of each member of the

20 Board, except the chair, is 4 years and begins when

21 the term of the predecessor of that member ends.

22 (2) INITIAL TERMS.—The initial terms of the

23 members of the Board (other than the chair) first

24 taking office after the date of the enactment of this

25 Act, shall expire as designated by the President, two
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1 at the end of one year, two at the end of two years,

2 and two at the end of three years.

3 (3) REAPPOINTMENT.—A member (other than

4 the chair) may be reappointed for one additional

5 term.

6 (4) CONTINUATION IN OFFICE.—Upon the expi7 ration of a term of office, a member shall continue

8 to serve until a successor is appointed and qualified.

9 (e) VACANCIES.—

10 (1) IN GENERAL.—Whenever a vacancy shall

11 occur, other than by expiration of term, a successor

12 shall be appointed by the President, by and with the

13 consent of the Senate, to fill such vacancy, and is

14 appointed for the remainder of the term of the pred15 ecessor.

16 (2) NO IMPAIRMENT OF FUNCTION.—A vacancy

17 in the membership of the Board does not impair the

18 authority of the remaining members to exercise all

19 of the powers of the Board.

20 (3) ACTING CHAIR.—The Board may designate

21 a Member to act as chair during any period in which

22 there is no chair designated by the President.

23 (f) MEETINGS; QUORUM.—

24 (1) MEETINGS.—At meetings of the Board the

25 chair shall preside, and in the absence of the chair,
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•S 1779 PCS

1 the Board shall elect a member to act as chair pro

2 tempore.

3 (2) QUORUM.—Four members of the Board

4 shall constitute a quorum thereof.

5 SEC. 1502. QUALIFICATIONS OF BOARD MEMBERS.

6 (a) CITIZENSHIP.—Each member of the Board shall

7 be a citizen of the United States.

8 (b) BASIS OF SELECTION.—Board members will be

9 selected on the basis of their experience and expertise in

10 relevant subjects, including the practice of medicine, nurs11 ing, or other clinical practices, health care financing and

12 delivery, state health systems, consumer protection, busi13 ness, law, and delivery of care to vulnerable populations.

14 (c) EXCLUSIVE EMPLOYMENT.—During the term of

15 appointment, Board members shall serve as employees of

16 the Federal Government and shall hold no other employ17 ment.

18 (d) PROHIBITION OF CONFLICT OF INTEREST.—A

19 member of the Board may not have a pecuniary interest

20 in or hold an official relation to any health care plan,

21 health care provider, insurance company, pharmaceutical

22 company, medical equipment company, or other affected

23 industry. Before entering upon the duties as a member

24 of the Board, the member shall certify under oath compli25 ance with this requirement.
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1 (e) POST-EMPLOYMENT RESTRICTIONS.—After leav2 ing the Board, former members are subject to post-em3 ployment restrictions applicable to comparable Federal

4 employees.

5 (f) COMPENSATION OF BOARD MEMBERS.—Each

6 member of the Board (other than the chair) shall receive

7 an annual salary at the annual rate payable from time

8 to time for level IV of the Executive Schedule. The chair

9 of the Board, during the period of service as chair, shall

10 receive an annual salary at the annual rate payable from

11 time to time for level III of the Executive Schedule.

12 SEC. 1503. GENERAL DUTIES AND RESPONSIBILITIES.

13 (a) COMPREHENSIVE BENEFIT PACKAGE.—

14 (1) INTERPRETATION.—The Board shall inter15 pret the comprehensive benefit package, adjust the

16 delivery of preventive services under section 1153,

17 and take such steps as may be necessary to assure

18 that the comprehensive benefit package is available

19 on a uniform national basis to all eligible individuals.

20 (2) RECOMMENDATIONS.—The Board may rec21 ommend to the President and the Congress appro22 priate revisions to such package. Such recommenda23 tions may reflect changes in technology, health care

24 needs, health care costs, and methods of service de25 livery.
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1 (b) ADMINISTRATION OF COST CONTAINMENT PRO2 VISIONS.—The Board shall oversee the cost containment

3 requirements of subtitle A of title VI and certify compli4 ance with such requirements.

5 (c) COVERAGE AND FAMILIES.—The Board shall de6 velop and implement standards relating to the eligibility

7 of individuals for coverage in applicable health plans under

8 subtitle A of title I and may provide such additional excep9 tions and special rules relating to the treatment of family

10 members under section 1012 as the Board finds appro11 priate.

12 (d) QUALITY MANAGEMENT AND IMPROVEMENT.—

13 The Board shall establish and have ultimate responsibility

14 for a performance-based system of quality management

15 and improvement as required by section 5001.

16 (e) INFORMATION STANDARDS.—The Board shall de17 velop and implement standards to establish national

18 health information system to measure quality as required

19 by section 5101.

20 (f) PARTICIPATING STATE REQUIREMENTS.—Con21 sistent with the provisions of subtitle C, the Board shall—

22 (1) establish requirements for participating

23 States,

24 (2) monitor State compliance with those re25 quirements,
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1 (3) provide technical assistance, and

2 in a manner that ensures access to the comprehensive ben3 efit package for all eligible individuals.

4 (g) DEVELOPMENT OF PREMIUM CLASS FACTORS.—

5 The Board shall establish premium class factors under

6 subpart D of this part.

7 (h) DEVELOPMENT OF RISK-ADJUSTMENT METH8 ODOLOGY.—The Board shall develop a methodology for

9 the risk-adjustment of premium payments to regional alli10 ance health plans in accordance with subpart E of this

11 part.

12 (i) FINANCIAL REQUIREMENTS.—The Board shall es13 tablish minimum capital requirements and requirements

14 for guaranty funds under subpart F of this part.

15 (j) STANDARDS FOR HEALTH PLAN GRIEVANCE

16 PROCEDURES.—The Board shall establish standards for

17 health plan grievance procedures that are used by enroll18 ees in pursuing complaints.

19 SEC. 1504. ANNUAL REPORT.

20 (a) IN GENERAL.—The Board shall prepare and send

21 to the President and Congress an annual report address22 ing the overall implementation of the new health care sys23 tem.
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1 (b) MATTERS TO BE INCLUDED.—The Board shall

2 include in each annual report under this section the follow3 ing:

4 (1) Information on Federal and State imple5 mentation.

6 (2) Data related to quality improvement.

7 (3) Recommendations or changes in the admin8 istration, regulation and laws related to health care

9 and coverage.

10 (4) A full account of all actions taken during

11 the previous year.

12 SEC. 1505. POWERS.

13 (a) STAFF; CONTRACT AUTHORITY.—The Board

14 shall have authority, subject to the provisions of the civil15 service laws and chapter 51 and subchapter III of chapter

16 53 of title 5, United States Code, to appoint such officers

17 and employees as are necessary to carry out its functions.

18 To the extent provided in advance in appropriations Acts,

19 the Board may contract with any person (including an

20 agency of the Federal Government) for studies and analy21 sis as required to execute its functions. Any employee of

22 the Executive Branch may be detailed to the Board to as23 sist the Board in carrying out its duties.

24 (b) ESTABLISHMENT OF ADVISORY COMMITTEES.—

25 The Board may establish advisory committees.
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1 (c) ACCESS TO INFORMATION.—The Board may se2 cure directly from any department or agency of the United

3 States information necessary to enable it to carry out its

4 functions, to the extent such information is otherwise

5 available to a department or agency of the United States.

6 Upon request of the chair, the head of that department

7 or agency shall furnish that information to the Board.

8 (d) DELEGATION OF AUTHORITY.—Except as other9 wise provided in this Act, the Board may delegate any

10 function to such officers and employees as the Board may

11 designate and may authorize such successive redelegations

12 of such functions with the Board as the Board deems to

13 be necessary or appropriate. No delegation of functions

14 by the Board shall relieve the Board of responsibility for

15 the administration of such functions.

16 (e) RULEMAKING.—The National Health Board is

17 authorized to establish such rules as may be necessary to

18 carry out this Act.

19 SEC. 1506. FUNDING.

20 (a) AUTHORIZATION OF APPROPRIATIONS.—There

21 are authorized to be appropriated to the Board such sums

22 as may be necessary for fiscal years 1994, 1995, 1996,

23 1997, and 1998.

24 (b) SUBMISSION OF BUDGET.—Under the procedures

25 of chapter 11 of title 31, United States Code, the budget
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1 for the Board for a fiscal year shall be reviewed by the

2 Director of the Office of Management and Budget and

3 submitted to the Congress as part of the President’s sub4 mission of the Budget of the United States for the fiscal

5 year.

6 Subpart B—Responsibilities Relating to Review and

7 Approval of State Systems

8 SEC. 1511. FEDERAL REVIEW AND ACTION ON STATE SYS9 TEMS.

10 (a) APPROVAL OF STATE SYSTEMS BY NATIONAL

11 BOARD.—

12 (1) IN GENERAL.—The National Health Board

13 shall approve a State health care system for which

14 a document is submitted under section 1200(b) un15 less the Board finds that the system (as set forth in

16 the document) does not (or will not) provide for the

17 State meeting the responsibilities for participating

18 States under this Act.

19 (2) REGULATIONS.—The Board shall issue reg20 ulations, not later than July 1, 1995, prescribing the

21 requirements for State health care systems under

22 parts 2 and 3 of subtitle C, except that in the case

23 of a document submitted under section 1200(b) be24 fore the date of issuance of such regulations, the

25 Board shall take action on such document notwith-
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1 standing the fact that such regulations have not

2 been issued.

3 (3) NO APPROVAL PERMITTED FOR YEARS

4 PRIOR TO 1996.—The Board may not approve a

5 State health care system under this subpart for any

6 year prior to 1996.

7 (b) REVIEW OF COMPLETENESS OF DOCUMENTS.—

8 (1) IN GENERAL.—If a State submits a docu9 ment under subsection (a)(1), the Board shall notify

10 the State, not later than 7 working days after the

11 date of submission, whether or not the document is

12 complete and provides the Board with sufficient in13 formation to approve or disapprove the document.

14 (2) ADDITIONAL INFORMATION ON INCOMPLETE

15 DOCUMENT.—If the Board notifies a State that the

16 State’s document is not complete, the State shall be

17 provided such additional period (not to exceed 45

18 days) as the Board may by regulation establish in

19 which to submit such additional information as the

20 Board may require. Not later than 7 working days

21 after the State submits the additional information,

22 the Board shall notify the State respecting the com23 pleteness of the document.

24 (c) ACTION ON COMPLETED DOCUMENTS.—
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1 (1) IN GENERAL.—The Board shall make a de2 termination (and notify the State) on whether the

3 State’s document provides for implementation of a

4 State system that meets the applicable requirements

5 of subtitle C—

6 (A) in the case of a State that did not re7 quire the additional period described in sub8 section (b)(2) to file a complete document, not

9 later than 90 days after notifying a State under

10 subsection (b) that the State’s document is

11 complete, or

12 (B) in the case of a State that required the

13 additional period described in subsection (b)(2)

14 to file a complete document, not later than 90

15 days after notifying a State under subsection

16 (b) that the State’s document is complete.

17 (2) PLANS DEEMED APPROVED.—If the Board

18 does not meet the applicable deadline for making a

19 determination and providing notice under paragraph

20 (1) with respect to a State’s document, the Board

21 shall be deemed to have approved the State’s docu22 ment for purposes of this Act.

23 (d) OPPORTUNITY TO RESPOND TO REJECTED DOC24 UMENT.—
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1 (1) IN GENERAL.—If (within the applicable

2 deadline under subsection (c)(1)) the Board notifies

3 a State that its document does not provide for im4 plementation of a State system that meets the appli5 cable requirements of subtitle C, the Board shall

6 provide the State with a period of 30 days in which

7 to submit such additional information and assur8 ances as the Board may require.

9 (2) DEADLINE FOR RESPONSE.—Not later than

10 30 days after receiving such additional information

11 and assurances, the Board shall make a determina12 tion (and notify the State) on whether the State’s

13 document provides for implementation of a State

14 system that meets the applicable requirements of

15 subtitle C.

16 (3) PLAN DEEMED APPROVED.—If the Board

17 does not meet the deadline established under para18 graph (2) with respect to a State, the Board shall

19 be deemed to have approved the State’s document

20 for purposes of this Act.

21 (e) APPROVAL OF PREVIOUSLY TERMINATED

22 STATES.—If the Board has approved a State system

23 under this part for a year but subsequently terminated

24 the approval of the system under section 1512(b)(2), the
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1 Board shall approve the system for a succeeding year if

2 the State—

3 (1) demonstrates to the satisfaction of the

4 Board that the failure that formed the basis for the

5 termination no longer exists, and

6 (2) provides reasonable assurances that the

7 types of actions (or inactions) which formed the

8 basis for such termination will not recur.

9 (f) REVISIONS TO STATE SYSTEM.—

10 (1) SUBMISSION.—A State may revise a system

11 approved for a year under this section, except that

12 such revision shall not take effect unless the State

13 has submitted to the Board a document describing

14 such revision and the Board has approved such revi15 sion.

16 (2) ACTIONS ON AMENDMENTS.—Not later than

17 60 days after a document is submitted under para18 graph (1), the Board shall make a determination

19 (and notify the State) on whether the implementa20 tion of the State system, as proposed to be revised,

21 meets the applicable requirements of subtitle C. If

22 the Board fails to meet the requirement of the pre23 ceding sentence, the Board shall be deemed to have

24 approved the implementation of the State system as

25 proposed to be revised.
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1 (3) REJECTION OF AMENDMENTS.—Subsection

2 (d) shall apply to an amendment submitted under

3 this subsection in the same manner as it applies to

4 a completed document submitted under subsection

5 (b).

6 (g) NOTIFICATION OF NON-PARTICIPATING

7 STATES.—If a State fails to submit a document for a

8 State system by the deadline referred to in section 1200,

9 or such a document is not approved under subsection (c),

10 the Board shall immediately notify the Secretary of Health

11 and Human Services of the State’s failure for purposes

12 of applying subpart C in that State.

13 SEC. 1512. FAILURE OF PARTICIPATING STATES TO MEET

14 CONDITIONS FOR COMPLIANCE.

15 (a) IN GENERAL.—In the case of a participating

16 State, if the Board determines that the operation of the

17 State system under subtitle C fails to meet the applicable

18 requirements of this Act, sanctions shall apply against the

19 State in accordance with subsection (b).

20 (b) TYPE OF SANCTION APPLICABLE.—The sanctions

21 applicable under this part are as follows:

22 (1) If the Board determines that the State’s

23 failure does not substantially jeopardize the ability

24 of eligible individuals in the State to obtain coverage

25 for the comprehensive benefit package—
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1 (A) the Board may order a regional alli2 ance in the State to comply with applicable re3 quirements of this Act and take such additional

4 measures to assure compliance with such re5 quirements as the Board may impose, if the

6 Board determines that the State’s failure re7 lates to a requirement applicable to a regional

8 alliance in the State, or

9 (B) if the Board does not take the action

10 described in subparagraph (A) (or if the Board

11 takes the action and determines that the action

12 has not remedied the violation that led to the

13 imposition of the sanction), the Board shall no14 tify the Secretary of Health and Human Serv15 ices, who shall reduce payments with respect to

16 the State in accordance with section 1513.

17 (2) If the Board determines that the failure

18 substantially jeopardizes the ability of eligible indi19 viduals in the State to obtain coverage for the com20 prehensive benefit package—

21 (A) the Board shall terminate its approval

22 of the State system; and

23 (B) the Board shall notify the Secretary of

24 Health and Human Services, who shall assume

25 the responsibilities described in section 1522.
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1 (c) TERMINATION OF SANCTION.—

2 (1) COMPLIANCE BY STATE.—A State against

3 which a sanction is imposed may submit information

4 at any time to the Board to demonstrate that the

5 failure that led to the imposition of the sanction has

6 been corrected.

7 (2) TERMINATION OF SANCTION.—If the Board

8 determines that the failure that led to the imposition

9 of a sanction has been corrected—

10 (A) in the case of the sanction described in

11 subsection (b)(1)(A), the Board shall notify the

12 regional alliance against which the sanction is

13 imposed; or

14 (B) in the case of any other sanction de15 scribed in subsection (b), the Board shall notify

16 the Secretary of Health and Human Services.

17 (d) PROTECTION OF ACCESS TO BENEFITS.—The

18 Board and the Secretary of Health and Human Services

19 shall exercise authority to take actions under this section

20 with respect to a State only in a manner that assures the

21 continuous coverage of eligible individuals under regional

22 alliance health plans.
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1 SEC. 1513. REDUCTION IN PAYMENTS FOR HEALTH PRO2 GRAMS BY SECRETARY OF HEALTH AND

3 HUMAN SERVICES.

4 (a) IN GENERAL.—Upon receiving notice from the

5 Board under section 1512(b)(1)(B), the Secretary of

6 Health and Human Services shall reduce the amount of

7 any of the payments described in subsection (b) that would

8 otherwise be made to individuals and entities in the State

9 by such amount as the Secretary determines to be appro10 priate.

11 (b) PAYMENTS DESCRIBED.—The payments de12 scribed in this subsection are as follows:

13 (1) Payments to academic health centers in the

14 State under subtitle B of title III.

15 (2) Payments to individuals and entities in the

16 State for health research activities under section 301

17 and title IV of the Public Health Service Act.

18 (3) Payments to hospitals in the State under

19 part 4 of subtitle E of title III (relating to payments

20 to hospitals serving vulnerable populations)

21 SEC. 1514. REVIEW OF FEDERAL DETERMINATIONS.

22 Any State or alliance affected by a determination by

23 the Board under this subpart may appeal such determina24 tion in accordance with section 5231.
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1 SEC. 1515. FEDERAL SUPPORT FOR STATE IMPLEMENTA2 TION.

3 (a) PLANNING GRANTS.—

4 (1) IN GENERAL.—Not later than 90 days after

5 the date of the enactment of this Act, the Secretary

6 shall make available to each State a planning grant

7 to assist a State in the development of a health care

8 system to become a participating State under sub9 title C.

10 (2) FORMULA.—The Secretary shall establish a

11 formula for the distribution of funds made available

12 under this subsection.

13 (3) AUTHORIZATION OF APPROPRIATIONS.—

14 There are authorized to be appropriated

15 $50,000,000 in each of fiscal years 1995 and 1996

16 for grants under this subsection.

17 (b) GRANTS FOR START-UP SUPPORT.—

18 (1) IN GENERAL.—The Secretary shall make

19 available to States, upon their enacting enabling leg20 islation to become participating States, grants to as21 sist in the establishment of regional alliances.

22 (2) FORMULA.—The Secretary shall establish a

23 formula for the distribution of funds made available

24 under this subsection.

25 (3) STATE MATCHING FUNDS REQUIRED.—

26 Funds are payable to a State under this subsection
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1 only if the State provides assurances, satisfactory to

2 the Secretary, that amounts of State funds (at least

3 equal to the amount made available under this sub4 section) are expended for the purposes described in

5 paragraph (1).

6 (4) AUTHORIZATION OF APPROPRIATIONS.—

7 There are authorized to be appropriated

8 $313,000,000 for fiscal year 1996, $625,000,000 for

9 fiscal year 1997, and $313,000,000 for fiscal year

10 1998 for grants under this subsection.

11 Subpart C—Responsibilities in Absence of State

12 Systems

13 SEC. 1521. APPLICATION OF SUBPART.

14 (a) INITIAL APPLICATION.—This subpart shall apply

15 with respect to a State as of January 1, 1998, unless—

16 (1) the State submits a document for a State

17 system under section 1511(a)(1) by July 1, 1997,

18 and

19 (2) the Board determines under section 1511

20 that such system meets the requirements of part 1

21 of subtitle C.

22 (b) TERMINATION OF APPROVAL OF SYSTEM OF PAR23 TICIPATING STATE.—In the case of a participating State

24 for which the Board terminates approval of the State sys25 tem under section 1512(b)(2), this subpart shall apply
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1 with respect to the State as of such date as is appropriate

2 to assure the continuity of coverage for the comprehensive

3 benefit package for eligible individuals in the State.

4 SEC. 1522. FEDERAL ASSUMPTION OF RESPONSIBILITIES IN

5 NON-PARTICIPATING STATES.

6 (a) NOTICE.—When the Board determines that this

7 subpart will apply to a State for a calendar year, the

8 Board shall notify the Secretary of Health and Human

9 Services.

10 (b) ESTABLISHMENT OF REGIONAL ALLIANCE SYS11 TEM.—Upon receiving notice under subsection (a), the

12 Secretary shall take such steps, including the establish13 ment of regional alliances, and compliance with other re14 quirements applicable to participating States under sub15 title C, as are necessary to ensure that the comprehensive

16 benefit package is provided to eligible individuals in the

17 State during the year.

18 (c) REQUIREMENTS FOR ALLIANCES.—Subject to

19 section 1523, any regional alliance established by the Sec20 retary pursuant to this section must meet all the require21 ments applicable under subtitle D to a regional alliance

22 established and operated by a participating State, and the

23 Secretary shall have the authority to fulfill all the func24 tions of such an alliance.

25 (d) ESTABLISHMENT OF GUARANTY FUND.—
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1 (1) ESTABLISHMENT.—The Secretary must en2 sure that there is a guaranty fund that meets the re3 quirements established by the Board under section

4 1552, in order to provide financial protection to

5 health care providers and others in the case of a fail6 ure of a regional alliance health plan under a re7 gional alliance established and operated by the Sec8 retary under this section.

9 (2) ASSESSMENTS TO PROVIDE GUARANTY

10 FUNDS.—In the case of a failure of one or more re11 gional alliance health plans under a regional alliance

12 established and operated by the Secretary under this

13 section, the Secretary may require each regional alli14 ance health plan under the alliance to pay an assess15 ment to the Secretary in an amount not to exceed

16 2 percent of the premiums of such plans paid by or

17 on behalf of regional alliance eligible individuals dur18 ing a year for so long as necessary to generate suffi19 cient revenue to cover any outstanding claims

20 against the failed plan.

21 SEC. 1523. IMPOSITION OF SURCHARGE ON PREMIUMS

22 UNDER FEDERALLY-OPERATED SYSTEM.

23 (a) IN GENERAL.—If this subpart applies to a State

24 for a calendar year, the premiums charged under the re25 gional alliance established and operated by the Secretary
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1 in the State shall be equal to premiums that would other2 wise be charged under a regional alliance established and

3 operated by the State, increased by 15 percent. Such 15

4 percent increase shall be used to reimburse the Secretary

5 for any administrative or other expenses incurred as a re6 sult of establishing and operating the system.

7 (b) TREATMENT OF SURCHARGE AS PART OF PRE8 MIUM.—For purposes of determining the compliance of a

9 State for which this subpart applies in a year with the

10 requirements for budgeting under subtitle A of title VI

11 for the year, the 15 percent increase described in sub12 section (a) shall be treated as part of the premium for

13 payment to a regional alliance.

14 SEC. 1524. RETURN TO STATE OPERATION.

15 (a) APPLICATION PROCESS.—After the establishment

16 and operation of an alliance system by the Secretary in

17 a State under section 1522, the State may at any time

18 apply to the Board for the approval of a State system in

19 accordance with the procedures described in section 1511.

20 (b) TIMING.—If the Board approves the system of a

21 State for which the Secretary has operated an alliance sys22 tem during a year, the Secretary shall terminate the oper23 ation of the system, and the State shall establish and oper24 ate its approved system, as of January 1 of the first year

25 beginning after the Board approves the State system. The
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1 termination of the Secretary’s system and the operation

2 of the State’s system shall be conducted in a manner that

3 assures the continuous coverage of eligible individuals in

4 the State under regional alliance health plans.

5 Subpart D—Establishment of Class Factors for

6 Charging Premiums

7 SEC. 1531. PREMIUM CLASS FACTORS.

8 (a) IN GENERAL.—For each class of family enroll9 ment (as specified in section 1011(c)), for purposes of title

10 VI, the Board shall establish a premium class factor that

11 reflects, subject to subsection (b), the relative actuarial

12 value of the comprehensive benefit package of the class

13 of family enrollment compared to such value of such pack14 age for individual enrollment.

15 (b) CONDITIONS.—In establishing such factors, the

16 factor for the class of individual enrollment shall be 1 and

17 the factor for the couple-only class of family enrollment

18 shall be 2.

19 Subpart E—Risk Adjustment and Reinsurance

20 Methodology for Payment of Plans

21 SEC. 1541. DEVELOPMENT OF A RISK ADJUSTMENT AND RE22 INSURANCE METHODOLOGY.

23 (a) DEVELOPMENT.—

24 (1) INITIAL DEVELOPMENT.—Not later than

25 April 1, 1995, the Board shall develop a risk adjust-
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1 ment and reinsurance methodology in accordance

2 with this subpart.

3 (2) IMPROVEMENTS.—The Board shall make

4 such improvements in such methodology as may be

5 appropriate to achieve the purposes described in sub6 section (b)(1).

7 (b) METHODOLOGY.—

8 (1) PURPOSES.—Such methodology shall pro9 vide for the adjustment of payments to regional alli10 ance health plans for the purposes of—

11 (A) assuring that payments to such plans

12 reflect the expected relative utilization and ex13 penditures for such services by each plan’s en14 rollees compared to the average utilization and

15 expenditures for regional alliance eligible indi16 viduals, and

17 (B) protecting health plans that enroll a

18 disproportionate share of regional alliance eligi19 ble individuals with respect to whom expected

20 utilization of health care services (included in

21 the comprehensive benefit package) and ex22 pected health care expenditures for such serv23 ices are greater than the average level of such

24 utilization and expenditures for regional alliance

25 eligible individuals.
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1 (2) FACTORS TO BE CONSIDERED.—In develop2 ing such methodology, the Board shall take into ac3 count the following factors:

4 (A) Demographic characteristics.

5 (B) Health status.

6 (C) Geographic area of residence.

7 (D) Socio-economic status.

8 (E) Subject to paragraph (5), (i) the pro9 portion of enrollees who are SSI recipients and

10 (ii) the proportion of enrollees who are AFDC

11 recipients.

12 (F) Any other factors determined by the

13 Board to be material to the purposes described

14 in paragraph (1).

15 (3) ZERO SUM.—The methodology shall assure

16 that the total payments to health plans by the re17 gional alliance after application of the methodology

18 are the same as the amount of payments that would

19 have been made without application of the methodol20 ogy.

21 (4) PROSPECTIVE ADJUSTMENT OF PAY22 MENTS.—The methodology, to the extent possible

23 and except in the case of a mandatory reinsurance

24 system described in subsection (c), shall be applied
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1 in a manner that provides for the prospective adjust2 ment of payments to health plans.

3 (5) TREATMENT OF SSI/AFDC ADJUSTMENT.—

4 The Board is not required to apply the factor de5 scribed in clause (i) or (ii) of paragraph (2)(E) if

6 the Board determines that the application of the

7 other risk adjustment factors described in paragraph

8 (2) is sufficient to adjust premiums to take into ac9 count the enrollment in plans of AFDC recipients

10 and SSI recipients.

11 (6) SPECIAL CONSIDERATION FOR MENTAL ILL12 NESS.—In developing the methodology under this

13 section, the Board shall give consideration to the

14 unique problems of adjusting payments to health

15 plans with respect to individuals with mental illness.

16 (7) SPECIAL CONSIDERATION FOR VETERANS,

17 MILITARY, AND INDIAN HEALTH PLANS.—In devel18 oping the methodology under this section, the Board

19 shall give consideration to the special enrollment and

20 funding provisions relating to plans described in sec21 tion 1004(b).

22 (8) ADJUSTMENT TO ACCOUNT FOR USE OF ES23 TIMATES.—Subject to section 1361(b)(3) (relating

24 to establishment of regional alliance reserve funds),

25 if the total payments made by a regional alliance to
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1 all regional alliance health plans in a year under sec2 tion 1351(b) exceeds, or is less than, the total of

3 such payments estimated by the alliance in the ap4 plication of the methodology under this subsection,

5 because of a difference between—

6 (A) the alliance’s estimate of the distribu7 tion of enrolled families in different risk cat8 egories (assumed in the application of risk fac9 tors under this subsection in making payments

10 to regional alliance health plans), and

11 (B) the actual distribution of such enrolled

12 families in such categories,

13 the methodology under this subsection shall provide

14 for an adjustment in the application of such meth15 odology in the second succeeding year in a manner

16 that would reduce, or increase, respectively, by the

17 amount of such excess (or deficit) the total of such

18 payments made by the alliance to all such plans.

19 (c) MANDATORY REINSURANCE.—

20 (1) IN GENERAL.—The methodology developed

21 under this section may include a system of manda22 tory reinsurance, but may not include a system of

23 voluntary reinsurance.

24 (2) REQUIREMENT IN CERTAIN CASES.—If the

25 Board determines that an adequate system of pro-
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1 spective adjustment of payments to health plans to

2 account for the health status of individuals enrolled

3 by regional alliance health plans cannot be developed

4 (and ready for implementation) by the date specified

5 in subsection (a)(1), the Board shall include a man6 datory reinsurance system as a component of the

7 methodology. The Board may thereafter reduce or

8 eliminate such a system at such time as the Board

9 determines that an adequate prospective payment

10 adjustment for health status has been developed and

11 is ready for implementation.

12 (3) REINSURANCE SYSTEM.—The Board, in de13 veloping the methodology for a mandatory reinsur14 ance system under this subsection, shall—

15 (A) provide for health plans to make pay16 ments to state-established reinsurance programs

17 for the purpose of reinsuring part or all of the

18 health care expenses for items and services in19 cluded in the comprehensive benefit package for

20 specified classes of high-cost enrollees or speci21 fied high-cost treatments or diagnoses; and

22 (B) specify the manner of creation, struc23 ture, and operation of the system in each State,

24 including—
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1 (i) the manner (which may be pro2 spective or retrospective) in which health

3 plans make payments to the system, and

4 (ii) the type and level of reinsurance

5 coverage provided by the system.

6 (d) CONFIDENTIALITY OF INFORMATION.—The

7 methodology shall be developed in a manner consistent

8 with privacy standards promulgated under section

9 5120(a). In developing such standards, the Board shall

10 take into account any potential need of alliances for cer11 tain individually identifiable health information in order

12 to carry out risk-adjustment and reinsurance activities

13 under this Act, but only to the minimum extent necessary

14 to carry out such activities and with protections provided

15 to minimize the identification of the individuals to whom

16 the information relates.

17 SEC. 1542. INCENTIVES TO ENROLL DISADVANTAGED

18 GROUPS.

19 The Board shall establish standards under which

20 States may provide (under section 1203(e)(3)) for an ad21 justment in the risk-adjustment methodology developed

22 under section 1541 in order to provide a financial incen23 tive for regional alliance health plans to enroll individuals

24 who are members of disadvantaged groups.
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1 SEC. 1543. ADVISORY COMMITTEE.

2 (a) IN GENERAL.—The Board shall establish an advi3 sory committee to provide technical advice and rec4 ommendations regarding the development and modifica5 tion of the risk adjustment and reinsurance methodology

6 developed under this subpart.

7 (b) COMPOSITION.—Such advisory committee shall

8 consist of 15 individuals and shall include individuals who

9 are representative of health plans, regional alliances, con10 sumers, experts, employers, and health providers.

11 SEC. 1544. RESEARCH AND DEMONSTRATIONS.

12 The Secretary shall conduct and support research

13 and demonstration projects to develop and improve, on a

14 continuing basis, the risk adjustment and reinsurance

15 methodology under this subpart.

16 SEC. 1545. TECHNICAL ASSISTANCE TO STATES AND ALLI17 ANCES.

18 The Board shall provide technical assistance to

19 States and regional alliances in implementing the meth20 odology developed under this subpart.

21 Subpart F—Responsibilities for Financial

22 Requirements

23 SEC. 1551. CAPITAL STANDARDS FOR REGIONAL ALLIANCE

24 HEALTH PLAN.

25 (a) IN GENERAL.—The Board shall establish, in con26 sultation with the States, minimum capital requirements
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1 for regional alliance health plans, for purposes of section

2 1204(a).

3 (b) $500,000 MINIMUM.—Subject to subsection (c),

4 under such requirements there shall be not less than

5 $500,000 of capital maintained for each plan offered in

6 each alliance area, regardless of whether or not the same

7 sponsor offered more than one of such plans.

8 (c) ADDITIONAL CAPITAL REQUIREMENTS.—The

9 Board may require additional capital for factors likely to

10 affect the financial stability of health plans, including the

11 following:

12 (1) Projected plan enrollment and number of

13 providers participating in the plan.

14 (2) Market share and strength of competition.

15 (3) Extent and nature of risk-sharing with par16 ticipating providers and the financial stability of

17 risk-sharing providers.

18 (4) Prior performance of the plan, risk history,

19 and liquidity of assets.

20 (d) DEVELOPMENT OF STANDARDS BY NAIC.—The

21 Board may request the National Association of Insurance

22 Commissioners to develop model standards for the addi23 tional capital requirements described in subsection (c) and

24 to present such standards to the Board not later than July

25 1, 1995. The Board may accept such standards as the
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1 standards to be applied under subsection (c) or modify the

2 standards in any manner it finds appropriate.

3 SEC. 1552. STANDARD FOR GUARANTY FUNDS.

4 (a) IN GENERAL.—In consultation with the States,

5 the Board shall establish standards for guaranty funds es6 tablished by States under section 1204(c).

7 (b) GUARANTY FUND STANDARDS.—The standards

8 established under subsection (a) for a guaranty fund shall

9 include the following:

10 (1) Each fund must have a method to generate

11 sufficient resources to pay health providers and oth12 ers in the case of a failure of a health plan (as de13 scribed in section 1204(d)(4)) in order to meet obli14 gations with respect to—

15 (A) services rendered by the health plan

16 for the comprehensive benefit package, includ17 ing any supplemental coverage for cost sharing

18 provided by the health plan, and

19 (B) services rendered prior to health plan

20 insolvency and services to patients after the in21 solvency but prior to their enrollment in other

22 health plans.

23 (2) The fund is liable for all claims against the

24 plan by health care providers with respect to their

25 provision of items and services covered under the
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1 comprehensive benefit package to enrollees of the

2 failed plan. Such claims, in full, shall take priority

3 over all other claims. The fund also is liable, to the

4 extent and in the manner provided in accordance

5 with rules established by the Board, for other

6 claims, including other claims of such providers and

7 the claims of contractors, employees, governments,

8 or any other claimants.

9 (3) The fund stands as a creditor for any pay10 ments owed the plan to the extent of the payments

11 made by the fund for obligations of the plan.

12 (4) The fund has authority to borrow against

13 future assessments (payable under section

14 1204(c)(2)) in order to meet the obligations of failed

15 plans participating in the fund.

16 PART 2—RESPONSIBILITIES OF DEPARTMENT OF

17 HEALTH AND HUMAN SERVICES

18 Subpart A—General Responsibilities

19 SEC. 1571. GENERAL RESPONSIBILITIES OF SECRETARY OF

20 HEALTH AND HUMAN SERVICES.

21 (a) IN GENERAL.—Except as otherwise specifically

22 provided under this Act (or with respect to administration

23 of provisions in the Internal Revenue Code of 1986 or in

24 the Employee Retirement Income Security Act of 1974),

25 the Secretary of Health and Human Services shall admin-
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1 ister and implement all of the provisions of this Act, except

2 those duties delegated to the National Health Board, any

3 other executive agency, or to any State.

4 (b) FINANCIAL MANAGEMENT STANDARDS.—The

5 Secretary, in consultation with the Secretaries of Labor

6 and the Treasury, shall establish, for purposes of section

7 1361, standards relating to the management of finances,

8 maintenance of records, accounting practices, auditing

9 procedures, and financial reporting for health alliances.

10 Such standards shall take into account current Federal

11 laws and regulations relating to fiduciary responsibilities

12 and financial management of funds.

13 (c) AUDITING REGIONAL ALLIANCE PERFORM14 ANCE.—The Secretary shall perform periodic financial and

15 other audits of regional alliances to assure that such alli16 ances are carrying out their responsibilities under this Act

17 consistent with this Act. Such audits shall include audits

18 of alliance performance in the areas of—

19 (1) assuring enrollment of all regional alliance

20 eligible individuals in health plans,

21 (2) management of premium and cost sharing

22 discounts and reductions provided; and

23 (3) financial management of the alliance, in24 cluding allocation of collection shortfalls.
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1 SEC. 1572. ADVISORY COUNCIL ON BREAKTHROUGH

2 DRUGS.

3 (a) IN GENERAL.—The Secretary shall appoint an

4 Advisory Council on Breakthrough Drugs (in this section

5 referred to as the ‘‘Council’’) that will examine the reason6 ableness of launch prices of new drugs that represent a

7 breakthrough or significant advance over existing thera8 pies.

9 (b) DUTIES.—(1) At the request of the Secretary, or

10 a member of the Council, the Council shall make a deter11 mination regarding the reasonableness of launch prices of

12 a breakthrough drug. Such a determination shall be based

13 on—

14 (A) prices of other drugs in the same thera15 peutic class;

16 (B) cost information supplied by the manufac17 turer;

18 (C) prices of the drug in countries specified in

19 section 802(b)(4)(A) of the Federal Food, Drug, and

20 Cosmetic Act;

21 (D) projected prescription volume, economies of

22 scale, product stability, special manufacturing re23 quirements and research costs;

24 (E) cost effectiveness relative to the cost of al25 ternative course of treatment options, including non26 pharmacological medical interventions; and
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1 (F) improvements in quality of life offered by

2 the new product, including ability to return to work,

3 ability to perform activities of daily living, freedom

4 from attached medical devices, and other appro5 priate measurements of quality of life improvements.

6 (2) The Secretary shall review the determinations of

7 the Council and publish the results of such review along

8 with the Council’s determination (including minority opin9 ions) as a notice in the Federal Register.

10 (c) MEMBERSHIP.—The Council shall consist of a

11 chair and 12 other persons, appointed without regard to

12 the provisions of title 5, United States Code, governing

13 appointments in the competitive service. The Council shall

14 include a representative from the pharmaceutical industry,

15 consumer organizations, physician organizations, the hos16 pital industry, and the managed care industry. Other indi17 viduals appointed by the Secretary shall be recognized ex18 perts in the fields of health care economics, pharmacology,

19 pharmacy, and prescription drug reimbursement. Only one

20 member of the Council may have direct or indirect finan21 cial ties to the pharmaceutical industry.

22 (d) TERM OF APPOINTMENTS.—Appointments shall

23 be for a term of 3 years, except that the Secretary may

24 provide initially for such shorter terms as will ensure that
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1 the terms of not more than 5 members expire in any one

2 year.

3 (e) COMPENSATION.—Members of the Council shall

4 be entitled to receive reimbursement of expenses and per

5 diem in lieu of subsistence in the same manner as other

6 members of advisory councils appointed by the Secretary

7 are provided such reimbursements under the Social Secu8 rity Act.

9 (f) NO TERMINATION.—Notwithstanding the provi10 sions of the Federal Advisory Committee Act, the Council

11 shall continue in existence until otherwise specified in law.

12 Subpart B—Certification of Essential Community

13 Providers

14 SEC. 1581. CERTIFICATION.

15 (a) IN GENERAL.—For purposes of this Act, the Sec16 retary shall certify as an ‘‘essential community provider’’

17 any health care provider or organization that—

18 (1) is within any of the categories of providers

19 and organizations specified in section 1582(a), or

20 (2) meets the standards for certification under

21 section 1583(a).

22 (b) TIMELY ESTABLISHMENT OF PROCESS.—The

23 Secretary shall take such actions as may be necessary to

24 permit health care providers and organizations to be cer-
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1 tified as essential community providers in a State before

2 the beginning of the first year for the State.

3 SEC. 1582. CATEGORIES OF PROVIDERS AUTOMATICALLY

4 CERTIFIED.

5 (a) IN GENERAL.—The categories of providers and

6 organizations specified in this subsection are as follows:

7 (1) MIGRANT HEALTH CENTERS.—A recipient

8 or subrecipient of a grant under section 329 of the

9 Public Health Service Act.

10 (2) COMMUNITY HEALTH CENTERS.—A recipi11 ent or subrecipient of a grant under section 330 of

12 the Public Health Service Act.

13 (3) HOMELESS PROGRAM PROVIDERS.—A recip14 ient or subrecipient of a grant under section 340 of

15 the Public Health Service Act.

16 (4) PUBLIC HOUSING PROVIDERS.—A recipient

17 or subrecipient of a grant under section 340A of the

18 Public Health Service Act.

19 (5) FAMILY PLANNING CLINICS.—A recipient or

20 subrecipient of a grant under title X of the Public

21 Health Service Act.

22 (6) INDIAN HEALTH PROGRAMS.—A service unit

23 of the Indian Health Service, a tribal organization,

24 or an urban Indian program, as defined in the In25 dian Health Care Improvement Act.
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1 (7) AIDS PROVIDERS UNDER RYAN WHITE

2 ACT.—A public or private nonprofit health care pro3 vider that is a recipient or subrecipient of a grant

4 under title XXVI of the Public Health Service Act.

5 (8) MATERNAL AND CHILD HEALTH PROVID6 ERS.—A public or private nonprofit entity that pro7 vides prenatal care, pediatric care, or ambulatory

8 services to children, including children with special

9 health care needs, and that receives funding for such

10 care or services under title V of the Social Security

11 Act.

12 (9) FEDERALLY QUALIFIED HEALTH CENTER;

13 RURAL HEALTH CLINIC.—A Federally-qualified

14 health center or a rural health clinic (as such terms

15 are defined in section 1861(aa) of the Social Secu16 rity Act).

17 (10) PROVIDER OF SCHOOL HEALTH SERV18 ICES.—A provider of school health services that re19 ceives funding for such services under subtitle G of

20 title III.

21 (11) COMMUNITY PRACTICE NETWORK.—A

22 qualified community practice network receiving de23 velopment funds under subtitle E of title III.
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1 (b) SUBRECIPIENT DEFINED.—In this subpart, the

2 term ‘‘subrecipient’’ means, with respect to a recipient of

3 a grant under a particular authority, an entity that—

4 (1) is receiving funding from such a grant

5 under a contract with the principal recipient of such

6 a grant, and

7 (2) meets the requirements established to be a

8 recipient of such a grant.

9 (c) HEALTH PROFESSIONAL DEFINED.—In this sub10 part, the term ‘‘health professional’’ means a physician,

11 nurse, nurse practitioner, certified nurse midwife, physi12 cian assistant, psychologist, dentist, pharmacist, and other

13 health care professional recognized by the Secretary.

14 SEC. 1583. STANDARDS FOR ADDITIONAL PROVIDERS.

15 (a) STANDARDS.—The Secretary shall publish stand16 ards for the certification of additional categories of health

17 care providers and organizations as essential community

18 providers, including the categories described in subsection

19 (b). Such a health care provider or organization shall not

20 be certified unless the Secretary determines, under such

21 standards, that health plans operating in the area served

22 by the applicant would not otherwise be able to assure ade23 quate access to items and services included in the com24 prehensive benefit package if such a provider was not so

25 certified.
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1 (b) CATEGORIES TO BE INCLUDED.—The categories

2 described in this subsection are as follows:

3 (1) HEALTH PROFESSIONALS.—Health profes4 sionals—

5 (A) located in an area designated as a

6 health professional shortage area (under section

7 332 of the Public Health Service Act), or

8 (B) providing a substantial amount of

9 health services (as determined in accordance

10 with standards established by the Secretary) to

11 a medically underserved population (as des12 ignated under section 330 of such Act).

13 (2) INSTITUTIONAL PROVIDERS.—Public and

14 private nonprofit hospitals and other institutional

15 health care providers located in such an area or pro16 viding health services to such a population.

17 (3) OTHER PROVIDERS.—Other public and pri18 vate nonprofit agencies and organizations that—

19 (A) are located in such an area or provid20 ing health services to such a population, and

21 (B) provide health care and services essen22 tial to residents of such an area or such popu23 lations.
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1 SEC. 1584. CERTIFICATION PROCESS; REVIEW; TERMI2 NATION OF CERTIFICATIONS.

3 (a) CERTIFICATION PROCESS.—

4 (1) PUBLICATION OF PROCEDURES.—The Sec5 retary shall publish, not later than 6 months after

6 the date of the enactment of this Act, the procedures

7 to be used by health care professionals, providers,

8 agencies, and organizations seeking certification

9 under this subpart, including the form and manner

10 in which an application for such certification is to be

11 made.

12 (2) TIMELY DETERMINATION.—The Secretary

13 shall make a determination upon such an application

14 not later than 60 days (or 15 days in the case of

15 a certification for an entity described in section

16 1582) after the date the complete application has

17 been submitted. The determination on an application

18 for certification of an entity described in section

19 1582 shall only involve the verification that the en20 tity is an entity described in such section.

21 (b) REVIEW OF CERTIFICATIONS.—The Secretary

22 shall periodically review whether professionals, providers,

23 agencies, and organizations certified under this subpart

24 continue to meet the requirements for such certification.

25 (c) TERMINATION OR DENIAL OF CERTIFICATION.—
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1 (1) PRELIMINARY FINDING.—If the Secretary

2 preliminarily finds that an entity seeking certifi3 cation under this section does not meet the require4 ments for such certification or such an entity cer5 tified under this subpart fails to continue to meet

6 the requirements for such certification, the Secretary

7 shall notify the entity of such preliminary finding

8 and permit the entity an opportunity, under subtitle

9 C of title V, to rebut such findings.

10 (2) FINAL DETERMINATION.—If, after such op11 portunity, the Secretary continues to find that such

12 an entity continues to fail to meet such require13 ments, the Secretary shall terminate the certification

14 and shall notify the entity, regional alliances, and

15 corporate alliances of such termination and the ef16 fective date of the termination.

17 SEC. 1585. NOTIFICATION OF HEALTH ALLIANCES AND PAR18 TICIPATING STATES.

19 (a) IN GENERAL.—Not less often than annually the

20 Secretary shall notify each participating State and each

21 health alliance of essential community providers that have

22 been certified under this subpart.

23 (b) CONTENTS.—Such notice shall include sufficient

24 information to permit each health alliance to notify health
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1 plans of the identify of each entity certified as an essential

2 community provider, including—

3 (1) the location of the provider within each

4 plan’s service area,

5 (2) the health services furnished by the pro6 vider, and

7 (3) other information necessary for health plans

8 to carry out part 3 of subtitle E.

9 PART 3—SPECIFIC RESPONSIBILITIES OF

10 SECRETARY OF LABOR.

11 SEC. 1591. RESPONSIBILITIES OF SECRETARY OF LABOR.

12 (a) IN GENERAL.—The Secretary of Labor is respon13 sible—

14 (1) under subtitle G, for the enforcement of re15 quirements applicable to employers under regional

16 alliances (including requirements relating to pay17 ment of premiums) and the administration of cor18 porate alliances;

19 (2) under subtitle D, with respect to elections

20 by eligible sponsors to become corporate alliances

21 and the termination of such elections;

22 (3) under section 1395, for the temporary as23 sumption of the operation of self-insured corporate

24 alliance health plans that are insolvent;
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1 (4) under section 1396, for the establishment

2 and administration of Corporate Alliance Health

3 Plan Insolvency Fund;

4 (5) for carrying out any other responsibilities

5 assigned to the Secretary under this Act; and

6 (6) for administering title I of the Employee

7 Retirement Income Security Act of 1974 as it re8 lates to group health plans maintained by corporate

9 alliances.

10 (b) AGREEMENTS WITH STATES.—The Secretary of

11 Labor may enter into agreements with States in order to

12 enforce responsibilities of employers and corporate alli13 ances, and requirements of corporate alliance health plans,

14 under subtitle B of title I of the Employee Retirement In15 come Security Act of 1974.

16 (c) CONSULTATION WITH BOARD.—In carrying out

17 activities under this Act with respect to corporate alli18 ances, corporate alliance health plans, and employers, the

19 Secretary of Labor shall consult with the National Health

20 Board.

21 (d) EMPLOYER-RELATED REQUIREMENTS.—

22 (1) IN GENERAL.—The Secretary of Labor, in

23 consultation with the Secretary, shall be responsible

24 for assuring that employers—
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1 (A) make payments of any employer pre2 miums (and withhold and make payment of the

3 family share of premiums with respect to quali4 fying employees) as required under this Act, in5 cluding auditing of regional alliance collection

6 activities with respect to such payments,

7 (B) submit timely reports as required

8 under this Act, and

9 (C) otherwise comply with requirements

10 imposed on employers under this Act.

11 (2) AUDIT AND SIMILAR AUTHORITIES.—The

12 Secretary of Labor—

13 (A) may carry out such audits (directly or

14 through contract) and such investigations of

15 employers and health alliances,

16 (B) may exercise such authorities under

17 section 504 of Employee Retirement Income Se18 curity Act of 1974 (in relation to activities

19 under this Act),

20 (C) may, with the permission of the Board,

21 provide (through contract or otherwise) for such

22 collection activities (in relation to amounts owed

23 to regional alliances and for the benefit of such

24 alliances), and
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•S 1779 PCS

1 (D) may impose such civil penalties under

2 section 1345(d)(1),

3 as may be necessary to carry out such Secretary’s

4 responsibilities under this section.

5 (e) AUTHORITY.—The Secretary of Labor is author6 ized to issue such regulations as may be necessary to carry

7 out section 1607 and responsibilities of the Secretary

8 under this Act (including under title XI).

9 Subtitle G—Employer

10 Responsibilities

11 SEC. 1601. PAYMENT REQUIREMENT.

12 (a) IN GENERAL.—Each employer shall provide for

13 payments required under section 6121 or 6131 in accord14 ance with the applicable provisions of this Act.

15 (b) EMPLOYERS IN SINGLE-PAYER STATES.—In the

16 case of an employer with respect to employees who reside

17 in a single-payer State, the responsibilities of such em18 ployer under such system shall supersede the obligations

19 of the employer under subsection (a), except as the Board

20 may provide.

21 (c) EMPLOYERS PARTICIPATING IN REGIONAL ALLI22 ANCES THROUGH MULTIEMPLOYER PLANS.—In the case

23 of an employer participating in a multiemployer plan,

24 which plan elects to serve as a regional alliance employer

25 on behalf of its participating employers, the employer’s
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•S 1779 PCS

1 payment obligation under section 6121 shall be deemed

2 satisfied if the employer pays to the multiemployer plan

3 at least the premium payment amount specified in section

4 6121(b) and the plan has assumed legal obligations of

5 such an employer under such section.

6 SEC. 1602. REQUIREMENT FOR INFORMATION REPORTING.

7 (a) REPORTING OF END-OF-YEAR INFORMATION TO

8 QUALIFYING EMPLOYEES.—

9 (1) IN GENERAL.—Each employer shall provide

10 to each individual who was a qualifying employee of

11 the employer during any month in the previous year

12 information described in paragraph (2) with respect

13 to the employee.

14 (2) INFORMATION TO BE SUPPLIED.—The in15 formation described in this paragraph, with respect

16 to a qualifying employee, is the following (as speci17 fied by the Secretary):

18 (A) REGIONAL ALLIANCE INFORMATION.—

19 With respect to each regional alliance through

20 which the individual obtained health coverage:

21 (i) The total number of months of

22 full-time equivalent employment (as deter23 mined under section 1901(b)(2)) for each

24 class of enrollment.
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•S 1779 PCS

1 (ii) The amount of wages attributable

2 to qualified employment and the amount of

3 covered wages (as defined in paragraph

4 (4)).

5 (iii) The total amount deducted from

6 wages and paid for the family share of the

7 premium.

8 (iv) Such other information as the

9 Secretary of Labor may specify.

10 (B) CORPORATE ALLIANCE INFORMA11 TION.—With respect to a qualifying employee

12 who obtains coverage through a corporate alli13 ance health plan:

14 (i) The total number of months of

15 full-time equivalent employees (as deter16 mined under section 1901(b)(2)) for each

17 class of enrollment.

18 (ii) Such other information as the

19 Secretary of Labor may specify.

20 (3) ALLIANCE SPECIFIC INFORMATION.—In the

21 case of a qualifying employee with respect to whom

22 an employer made employer premium payments dur23 ing the year to more than one regional alliance, the

24 information under this subsection shall be reported

25 separately with respect to each such alliance.
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1 (4) COVERED WAGES DEFINED.—In this sec2 tion, the term ‘‘covered wages’’ means wages paid an

3 employee of an employer during a month in which

4 the employee was a qualifying employee of the em5 ployer.

6 (b) REPORTING OF INFORMATION FOR USE OF RE7 GIONAL ALLIANCES.—

8 (1) IN GENERAL.—Each employer (including

9 corporate alliance employers) shall provide under

10 subsection (f) on behalf of each regional alliance in11 formation described in paragraph (2) on an annual

12 basis, information described in paragraph (3) on a

13 monthly basis, and information described in para14 graph (4) on a one-time basis, with respect to the

15 employment of qualifying employees in each year,

16 month, or other time, respectively.

17 (2) INFORMATION TO BE SUPPLIED ON AN AN18 NUAL BASIS.—The information described in this

19 paragraph, with respect to an employer, is the fol20 lowing (as specified by the Secretary of Labor):

21 (A) REGIONAL ALLIANCE INFORMATION.—

22 With respect to each regional alliance to which

23 employer premium payments were payable in

24 the year:
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1 (i) For each qualifying employee in

2 the year—

3 (I) The total number of months

4 of full-time equivalent employment (as

5 determined under section 1901(b)(2))

6 for the employee for each class of en7 rollment.

8 (II) The total amount deducted

9 from wages and paid for the family

10 share of the premium of the qualify11 ing employee.

12 (ii) The total employer premium pay13 ment made under section 6121 for the

14 year with respect to the employment of all

15 qualifying employees residing in the alli16 ance area and, in the case of an employer

17 that has obtained (or seeks to obtain) a

18 premium discount under section 6123, the

19 total employer premium payment that

20 would have been owed for such employ21 ment for the year but for such section.

22 (iii) The number of full-time equiva23 lent employees (determined under section

24 1901(b)(2)) for each class of family enroll25 ment in the year (and for each month in
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1 the year in the case of an employer that

2 has obtained or is seeking a premium dis3 count under section 6123).

4 (iv) In the case of an employer to

5 which section 6124 applies in a year, such

6 additional information as the Secretary of

7 Labor may require for purposes of that

8 section.

9 (v) The amounts paid (and payable)

10 pursuant to section 6125.

11 (vi) The amount of covered wages for

12 each qualifying employee.

13 (3) INFORMATION ON A MONTHLY BASIS.—

14 (A) IN GENERAL.—The information de15 scribed in this paragraph for a month for an

16 employer is such information as the Secretary

17 of Labor may specify regarding—

18 (i) the identity of each eligible individ19 ual who changed qualifying employee sta20 tus with respect to the employer in the

21 month; and

22 (ii) in the case of such an individual

23 described in subparagraph (B)(i)—
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1 (I) the regional alliance for the

2 alliance area in which the individual

3 resides, and

4 (II) the individual’s class of fam5 ily enrollment.

6 (B) CHANGES IN QUALIFYING EMPLOYEE

7 STATUS DESCRIBED.—For purposes of subpara8 graph (A), an individual is considered to have

9 changed qualifying employee status in a month

10 if the individual either (i) is a qualifying em11 ployee of the employer in the month and was

12 not a qualifying employee of the employer in

13 the previous month, or (ii) is not a qualifying

14 employee of the employer in the month but was

15 a qualifying employee of the employer in the

16 previous month.

17 (4) INITIAL INFORMATION.—Each employer, at

18 such time before the first year in which qualifying

19 employees of the employer are enrolled in regional

20 alliance health plans as the Board may specify, shall

21 provide for the reporting of such information relat22 ing to employment of eligible individuals as the

23 Board may specify.

24 (c) RECONCILIATION OF EMPLOYER PREMIUM PAY25 MENTS.—
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1 (1) PROVISION OF INFORMATION.—Each em2 ployer (whether or not the employer claimed (or

3 claims) an employer premium discount under section

4 6123 for a year) that is liable for employer premium

5 payments to a regional alliance for any month in a

6 year shall provide the alliance with such information

7 as the alliance may require (consistent with rules of

8 the Secretary of Labor) to determine the appropriate

9 amount of employer premium payments that should

10 have been made for all months in the year (taking

11 into account any employer premium discount under

12 section 6123 for the employer).

13 (2) DEADLINE.—Such information shall be pro14 vided not later than the beginning of February of

15 the following year with the payment to be made for

16 that month.

17 (3) RECONCILIATION.—

18 (A) CONTINUING EMPLOYERS.—Based on

19 such information, the employer shall adjust the

20 amount of employer premium payment made in

21 the month in which the information is provided

22 to reflect the amount by which the payments in

23 the previous year were greater or less than the

24 amount of payments that should have been

25 made.
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1 (B) DISCONTINUING EMPLOYERS.—In the

2 case of a person that ceases to be an employer

3 in a year, such adjustment shall be made in the

4 form of a payment to, or from, the alliance in5 volved.

6 (4) SPECIAL TREATMENT OF SELF-EMPLOYED

7 INDIVIDUALS.—Except as the Secretary of Labor

8 may provide, individuals who are employers only by

9 virtue of the operation of section 6126 shall have

10 employer premium payments attributable to such

11 section reconciled (in the manner previously de12 scribed in this subsection) under the process for the

13 collection of the family share of premiums under sec14 tion 1344 rather than under this subsection.

15 (d) SPECIAL RULES FOR SELF-EMPLOYED.—

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

17 who is treated as an employer under section 6126,

18 the individual shall provide, under subsection (f) on

19 behalf of each regional alliance, information de20 scribed in paragraph (2) with respect to net earn21 ings from self-employment income of the individual

22 in each year.

23 (2) INFORMATION TO BE SUPPLIED.—The in24 formation described in this paragraph, with respect

25 to an individual, is such information as may be nec-
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1 essary to compute the amount payable under section

2 6131 by virtue of section 6126.

3 (e) FORM.—Information shall be provided under this

4 section in such electronic or other form as the Secretary

5 specifies. Such specifications shall be done in a manner

6 that, to the maximum extent practicable, simplifies admin7 istration for small employers.

8 (f) INFORMATION CLEARINGHOUSE FUNCTIONS.—

9 (1) DESIGNATION.—The Board shall provide

10 for the use of the regional centers (which are part

11 of the electronic data network under section 5103)

12 to perform information clearinghouse functions

13 under this section with respect to employers and re14 gional and corporate alliances.

15 (2) FUNCTIONS.—The functions referred to in

16 paragraph (1) shall include—

17 (A) receipt of information submitted by

18 employers under subsection (b) on an annual

19 (or one-time) basis,

20 (B) from the information received, trans21 mittal of information required to regional alli22 ances, and

23 (C) such other functions as the Board

24 specifies.
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1 (g) DEADLINE.—Information required to be provided

2 by an employer for a year under this section—

3 (1) to a qualifying employee shall be provided

4 not later than the date the employer is required

5 under law to provide for statements under section

6 6051 of the Internal Revenue Code of 1986 for that

7 year, or

8 (2) to a health alliance (through a regional cen9 ter) shall be provided not later than the date by

10 which information is required to be filed with the

11 Secretary pursuant to agreements under section 232

12 of the Social Security Act for that year.

13 (h) NOTICE TO CERTAIN INDIVIDUALS WHO ARE

14 NOT EMPLOYEES.—

15 (1) IN GENERAL.—A person that carries on a

16 trade or business shall notify in writing each individ17 ual described in paragraph (2) that the person is not

18 obligated to make any employer health care premium

19 payment (under section 6121) in relation to the

20 services performed by the individual for the person.

21 (2) INDIVIDUAL DESCRIBED.—An individual de22 scribed in this paragraph, with respect to a person,

23 is an individual who normally performs services for

24 the person in the person’s trade or business for more

25 than 40 hours per month but who is not an em-
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1 ployee of the person (within the meaning of section

2 1901(a)).

3 (3) TIMING; EFFECTIVE DATE.—Such notice

4 shall be provided within a reasonable time after the

5 individual begins performing services for the person,

6 except that in no event is such a notice required to

7 be provided with respect to services performed before

8 January 1, 1998.

9 (4) EXCEPTIONS.—The Secretary shall issue

10 regulations providing exceptions to the notice re11 quirement of paragraph (1) with respect to individ12 uals performing services on an irregular, incidental,

13 or casual basis.

14 (5) MODEL NOTICE.—The Secretary shall pub15 lish a model notice that is easily understood by the

16 average reader and that persons may use to satisfy

17 the requirements of paragraph (1).

18 SEC. 1603. REQUIREMENTS RELATING TO NEW EMPLOYEES.

19 (a) COMPLETION OF ENROLLMENT INFORMATION

20 FORM.—At the time an individual is hired as a qualifying

21 employee of a regional alliance employer, the employer

22 shall obtain from the individual the following information

23 (pursuant to rules established by the Secretary of Labor):

24 (1) The identity of the individual.
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1 (2) The individual’s alliance area of residence

2 and whether the individual has moved from another

3 alliance area.

4 (3) The class of family enrollment applicable to

5 the individual.

6 (4) The health plan (and health alliance) in

7 which the individual is enrolled at that time.

8 (5) If the individual has moved from another al9 liance area, whether the individual intends to enroll

10 in a regional alliance health plan.

11 (b) TRANSMITTAL OF INFORMATION TO ALLIANCE.—

12 (1) IN GENERAL.—Each employer shall trans13 mit the information obtained under subsection (a) to

14 the regional alliance for the alliance area in which

15 the qualifying employee resides (or will reside at the

16 time of initial employment).

17 (2) DEADLINE.—Such information shall be

18 transmitted within 30 days of the date of hiring of

19 the employee.

20 (3) FORM.—Information under this section may

21 be forwarded in electronic form to a regional alli22 ance.

23 (c) PROVISION OF ENROLLMENT FORM AND INFOR24 MATION.—In the case of an individual described in sub-
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1 section (a)(5), the employer shall provide the individual,

2 at the time of hiring, with—

3 (1) such information regarding the choice of,

4 and enrollment in, regional alliance health plans,

5 and

6 (2) such enrollment form,

7 as the regional alliance provides to the employer.

8 SEC. 1604. AUDITING OF RECORDS.

9 Each regional alliance employer shall maintain such

10 records, and provide the regional alliance for the area in

11 which the employer maintains the principal place of em12 ployment (as specified by the Secretary of Labor) with ac13 cess to such records, as may be necessary to verify and

14 audit the information reported under this subtitle.

15 SEC. 1605. PROHIBITION OF CERTAIN EMPLOYER DISCRIMI16 NATION.

17 No employer may discriminate with respect to an em18 ployee on the basis of the family status of the employee

19 or on the basis of the class of family enrollment selected

20 with respect to the employee.

21 SEC. 1606. PROHIBITION ON SELF-FUNDING OF COST SHAR22 ING BENEFITS BY REGIONAL ALLIANCE EM23 PLOYERS.

24 (a) PROHIBITION.—A regional alliance employer (and

25 a corporate alliance employer with respect to employees
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1 who are regional alliance eligible individuals) may provide

2 benefits to employees that consist of the benefits included

3 in a cost sharing policy (as defined in section 1421(b)(2))

4 only through a contribution toward the purchase of a cost

5 sharing policy which is funded primarily through insur6 ance.

7 (b) INDIVIDUAL AND EMPLOYER RESPONSIBIL8 ITIES.—In the case of an individual who resides in a sin9 gle-payer State and an employer with respect to employees

10 who reside in such a State, the responsibilities of such in11 dividual and employer under such system shall supersede

12 the obligations of the individual and employer under this

13 subtitle.

14 SEC. 1607. EQUAL VOLUNTARY CONTRIBUTION REQUIRE15 MENT.

16 (a) IN GENERAL.—

17 (1) EQUAL VOLUNTARY EMPLOYER PREMIUM

18 PAYMENT REQUIREMENT.—

19 (A) REGIONAL ALLIANCE HEALTH

20 PLANS.—If an employer makes available a vol21 untary employer premium payment (as defined

22 in subsection (d)) on behalf of a full-time em23 ployee (as defined in section 1901(b)(2)(C))

24 who is enrolled in a regional alliance health

25 plan of a regional alliance in a class of family
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1 enrollment, the employer shall make available

2 such a voluntary employer premium payment in

3 the same dollar amount to all qualifying em4 ployees (as defined in section 1901(b)(1)) of the

5 employer who are enrolled in any regional alli6 ance health plan of the same alliance in the

7 same class of family enrollment.

8 (B) CORPORATE ALLIANCE HEALTH

9 PLANS.—If a corporate alliance employer makes

10 available a voluntary employer premium pay11 ment on behalf of a full-time employee who is

12 enrolled in a corporate alliance health plan of a

13 corporate alliance in a class of family enroll14 ment in a premium area (designated under sec15 tion 1384(b)), the employer shall make avail16 able such a voluntary employer premium pay17 ment in the same dollar amount to all qualify18 ing employees of the employer enrolled in any

19 corporate alliance health plan of the same alli20 ance in the same class of family enrollment in

21 the same premium area.

22 (C) TREATMENT OF PART-TIME EMPLOY23 EES.—In applying subparagraphs (A) and (B)

24 in the case of a qualifying employee employed

25 on a part-time basis (within the meaning of sec-
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1 tion 1901(b)(2)(A)(ii)), the dollar amount shall

2 be equal to the full-time employment ratio (as

3 defined in section 1901(b)(2)(B)) multiplied by

4 the dollar amount otherwise required.

5 (2) LIMIT ON VOLUNTARY EMPLOYER PREMIUM

6 PAYMENTS.—

7 (A) REGIONAL ALLIANCE HEALTH

8 PLANS.—An employer may not make available a

9 voluntary employer premium payment on behalf

10 of an employee (enrolled in a regional alliance

11 health plan of a regional alliance in a class of

12 family enrollment) in an amount that exceeds

13 the maximum amount that could be payable as

14 the family share of premium (described in sec15 tion 6101(b)(2)) for the most expensive regional

16 alliance health plan of the same alliance for the

17 same class of family enrollment.

18 (B) CORPORATE ALLIANCE HEALTH

19 PLANS.—An employer may not make available a

20 voluntary employer premium payment on behalf

21 of an employee (enrolled in a corporate alliance

22 health plan of a corporate alliance in a class of

23 family enrollment in a premium area, des24 ignated under section 1384) in an amount that

25 exceeds the maximum amount that could be
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1 payable as the family share of premium (de2 scribed in section 6101(b)(3)) for the most ex3 pensive corporate alliance health plan of the

4 same alliance for the same class of family en5 rollment in the same premium area.

6 (C) EXCLUSION OF PLANS WITHOUT MA7 TERIAL ENROLLMENT.—Subparagraphs (A)

8 and (B) shall not take into account any health

9 plan that does not have material enrollment (as

10 determined in accordance with regulations of

11 the Secretary of Labor).

12 (3) NONDISCRIMINATION AMONG PLANS SE13 LECTED.—An employer may not discriminate in the

14 wages or compensation paid, or other terms or con15 ditions of employment, with respect to an employee

16 based on the health plan (or premium of such a

17 plan) in which the employee is enrolled.

18 (b) REBATE REQUIRED IN CERTAIN CASES.—

19 (1) IN GENERAL.—Subject to subsection (c),

20 if—

21 (A) an employer makes available a vol22 untary employer premium payment on behalf of

23 an employee, and

24 (B)(i) the sum of the amount of the appli25 cable alliance credit (under section 6103) and
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1 the voluntary employer premium payment, ex2 ceeds (ii) the premium for the plan selected,

3 the employer must rebate to the employee an

4 amount equal to the excess described in subpara5 graph (B).

6 (2) TREATMENT OF MULTIPLE FULL-TIME EM7 PLOYMENT IN A FAMILY.—In the case of—

8 (A) an individual who is an employee of

9 more than one employer, or

10 (B) a couple for which both spouses are

11 employees,

12 if more than one employer provides for vol13 untary employer premium payments, the indi14 vidual or couple may elect to have paragraph

15 (1) applied with respect to all employment.

16 (c) EXCEPTION FOR COLLECTIVE BARGAINING

17 AGREEMENT.—Subsections (a) and (b) (other than sub18 section (a)(2)) shall not apply with respect to voluntary

19 employer premium payments made pursuant to a bona

20 fide collective bargaining agreement.

21 (d) VOLUNTARY EMPLOYER PREMIUM PAYMENT.—

22 In this section, the term ‘‘voluntary employer premium

23 payment’’ means any payment designed to be used exclu24 sively (or primarily) towards the cost of the family share

25 of premiums for a health plan. Such term does not include
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1 any employer premiums required to be paid under part

2 3 of subtitle B of title VI.

3 SEC. 1608. EMPLOYER RETIREE OBLIGATION.

4 (a) IN GENERAL.—If an employer was providing, as

5 of October 1, 1993, a threshold payment (specified in sub6 section (c)) for a person who was a qualifying retired bene7 ficiary (as defined in subsection (b)) as of such date, the

8 employer shall pay, to or on behalf of that beneficiary for

9 each month beginning with January 1998, an amount that

10 is not less than the amount specified in subsection (d),

11 but only if and for so long as the person remains a qualify12 ing retired beneficiary.

13 (b) QUALIFYING RETIRED BENEFICIARY.—In this

14 section, the term ‘‘qualifying retired beneficiary’’ means

15 a person who is an eligible retiree or qualified spouse or

16 child (as such terms are defined in subsections (b) and

17 (c) of section 6114).

18 (c) THRESHOLD PAYMENT.—The term ‘‘threshold

19 payment’’ means, for an employer with respect to a health

20 benefit plan providing coverage to a qualifying retired ben21 eficiary, a payment—

22 (1) for coverage of any item or service described

23 in section 1101, and

24 (2) the amount of which is at least 20 percent

25 of the amount of the premium (or premium equiva-
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1 lent) for such coverage with respect to the bene2 ficiary (and dependents).

3 (d) AMOUNT.—The amount specified in this sub4 section is 20 percent of the weighted average premium for

5 the regional alliance in which the beneficiary resides and

6 for the applicable class of family enrollment.

7 (e) NATURE OF OBLIGATION.—The requirement of

8 this section shall be in addition to any other requirement

9 imposed on an employer under this Act or otherwise.

10 (f) PROTECTION OF COLLECTIVE BARGAINING

11 RIGHTS.—Nothing in this Act (including this section)

12 shall be construed as affecting collective bargaining rights

13 or rights under collective bargaining agreements.

14 SEC. 1609. ENFORCEMENT.

15 In the case of a person that violates a requirement

16 of this subtitle, the Secretary of Labor may impose a civil

17 money penalty, in an amount not to exceed $10,000, for

18 each violation with respect to each individual.
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1 Subtitle J—General Definitions;

2 Miscellaneous Provisions

3 PART 1—GENERAL DEFINITIONS

4 SEC. 1901. DEFINITIONS RELATING TO EMPLOYMENT AND

5 INCOME.

6 (a) IN GENERAL.—Except as otherwise specifically

7 provided, in this Act the following definitions and rules

8 apply:

9 (1) EMPLOYER, EMPLOYEE, EMPLOYMENT, AND

10 WAGES DEFINED.—Except as provided in this sec11 tion—

12 (A) the terms ‘‘wages’’ and ‘‘employment’’

13 have the meanings given such terms under sec14 tion 3121 of the Internal Revenue Code of

15 1986,

16 (B) the term ‘‘employee’’ has the meaning

17 given such term under section 3121 of such

18 Code, subject to the provisions of chapter 25 of

19 such Code, and

20 (C) the term ‘‘employer’’ has the same

21 meaning as the term ‘‘employer’’ as used in

22 such section 3121.

23 (2) EXCEPTIONS.—For purposes of paragraph

24 (1)—

25 (A) EMPLOYMENT.—
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1 (i) EMPLOYMENT INCLUDED.—Para2 graphs (1), (2), (5), (7) (other than

3 clauses (i) through (iv) of subparagraph

4 (C) and clauses (i) through (v) of subpara5 graph (F)), (8), (9), (10), (11), (13), (15),

6 (18), and (19) of section 3121(b) of the

7 Internal Revenue Code of 1986 shall not

8 apply.

9 (ii) EXCLUSION OF INMATES AS EM10 PLOYEES.—Employment shall not include

11 services performed in a penal institution by

12 an inmate thereof or in a hospital or other

13 health care institution by a patient thereof.

14 (B) WAGES.—

15 (i) IN GENERAL.—Paragraph (1) of

16 section 3121(a) of the Internal Revenue

17 Code of 1986 shall not apply.

18 (ii) TIPS NOT INCLUDED.—The term

19 ‘‘wages’’ does not include cash tips.

20 (C) EXCLUSION OF EMPLOYEES OUTSIDE

21 THE UNITED STATES.—The term ‘‘employee’’

22 does not include an individual who does not re23 side in the United States.
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1 (D) EXCLUSION OF FOREIGN EMPLOY2 MENT.—The term ‘‘employee’’ does not include

3 an individual—

4 (i) with respect to service, if the indi5 vidual is not a citizen or resident of the

6 United States and the service is performed

7 outside the United States, or

8 (ii) with respect to service, if the indi9 vidual is a citizen or resident of the United

10 States and the service is performed outside

11 the United States for an employer other

12 than an American employer (as defined in

13 section 3121(h) of the Internal Revenue

14 Code of 1986).

15 (3) AGGREGATION RULES FOR EMPLOYERS.—

16 For purposes of this Act—

17 (A) all employers treated as a single em18 ployer under subsection (a) or (b) of section 52

19 of the Internal Revenue Code of 1986 shall be

20 treated as a single employer, and

21 (B) under regulations of the Secretary of

22 Labor, all employees of organizations which are

23 under common control with one or more organi24 zations which are exempt from income tax

25 under subtitle A of the Internal Revenue Code
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1 of 1986 shall be treated as employed by a single

2 employer.

3 The regulations prescribed under subparagraph (B)

4 shall be based on principles similar to the principles

5 which apply to taxable organizations under subpara6 graph (A).

7 (4) EMPLOYER PREMIUM.—The term ‘‘employer

8 premium’’ refers to the premium established and im9 posed under part 2 of subtitle B of title VI.

10 (b) QUALIFYING EMPLOYEE; FULL-TIME EMPLOY11 MENT.—

12 (1) QUALIFYING EMPLOYEE.—

13 (A) IN GENERAL.—In this Act, the term

14 ‘‘qualifying employee’’ means, with respect to

15 an employer for a month, an employee (other

16 than a covered child, as defined in subpara17 graph (C)) who is employed by the employer for

18 at least 40 hours (as determined under para19 graph (3)) in the month.

20 (B) NO SPECIAL TREATMENT OF MEDI21 CARE BENEFICIARIES, SSI RECIPIENTS, AFDC

22 RECIPIENTS, AND OTHERS.—Subparagraph (A)

23 shall apply regardless of whether or not the em24 ployee is a medicare-eligible individual, an SSI

25 recipient, an AFDC recipient, an individual de-
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1 scribed in section 1004(b), an eligible individual

2 or is authorized to be so employed.

3 (C) COVERED CHILD DEFINED.—In sub4 paragraph (A), the term ‘‘covered child’’ means

5 an eligible individual who is a child and is en6 rolled under a health plan as a family member

7 described in section 1011(b)(2)(B).

8 (2) FULL-TIME EQUIVALENT EMPLOYEES;

9 PART-TIME EMPLOYEES.—

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

11 Act, a qualifying employee who is employed by

12 an employer—

13 (i) for at least 120 hours in a month,

14 is counted as 1 full-time equivalent em15 ployee for the month and shall be deemed

16 to be employed on a full-time basis, or

17 (ii) for at least 40 hours, but less

18 than 120 hours, in a month, is counted as

19 a fraction of a full-time equivalent em20 ployee in the month equal to the full-time

21 employment ratio (as defined in subpara22 graph (B)) for the employee and shall be

23 deemed to be employed on a part-time

24 basis.
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1 (B) FULL-TIME EMPLOYMENT RATIO DE2 FINED.—For purposes of this Act, the term

3 ‘‘full-time employment ratio’’ means, with re4 spect to a qualifying employee of an employer

5 in a month, the lesser of 1 or the ratio of—

6 (i) the number of hours of employ7 ment such employee is employed by such

8 employer for the month (as determined

9 under paragraph (3)), to

10 (ii) 120 hours.

11 (C) FULL-TIME EMPLOYEE.—For purposes

12 of this Act, the term ‘‘full-time employee’’

13 means, with respect to an employer, an em14 ployee who is employed on a full-time basis (as

15 specified in subparagraph (A)) by the employer.

16 (D) CONSIDERATION OF INDUSTRY PRAC17 TICE.—As provided under rules established by

18 the Board, an employee who is not described in

19 subparagraph (C) shall be considered to be em20 ployed on a full-time basis by an employer (and

21 to be a full-time employee of an employer) for

22 a month (or for all months in a 12-month pe23 riod) if the employee is employed by that em24 ployer on a continuing basis that, taking into

25 account the structure or nature of the employ-
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1 ment in the industry, represents full time em2 ployment.

3 (3) HOURS OF EMPLOYMENT.—

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

5 Act, the Board shall specify the method for

6 computing hours of employment for employees

7 of an employer consistent with this paragraph.

8 The Board shall take into account rules used

9 for purposes of applying the Fair Labor Stand10 ards Act.

11 (B) HOURLY WAGE EARNERS.—In the case

12 of an individual who receives compensation (in

13 the form of hourly wages or compensation) for

14 the performance of services, the individual is

15 considered to be ‘‘employed’’ by an employer for

16 an hour if compensation is payable with respect

17 to that hour of employment, without regard to

18 whether or not the employee is actually per19 forming services during such hours.

20 (4) TREATMENT OF SALARIED EMPLOYEES AND

21 EMPLOYEES PAID ON CONTINGENT OR BONUS AR22 RANGEMENTS.—In the case of an employee who re23 ceives compensation on a salaried basis or on the

24 basis of a commission (or other contingent or bonus

25 basis), rather than an hourly wage, the Board shall
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•S 1779 PCS

1 establish rules for the conversion of the compensa2 tion to hours of employment, taking into account the

3 minimum monthly compensation levels for workers

4 employed on a full-time basis under the Fair Labor

5 Standards Act and other factors the Board considers

6 relevant.

7 (c) DEFINITIONS RELATING TO SELF-EMPLOY8 MENT.—In this Act:

9 (1) NET EARNINGS FROM SELF-EMPLOY10 MENT.—The term ‘‘net earnings from self-employ11 ment’’ has the meaning given such term under sec12 tion 1402(a) of the Internal Revenue Code of 1986.

13 (2) SELF-EMPLOYED INDIVIDUAL.—The term

14 ‘‘self-employed individual’’ means, for a year, an in15 dividual who has net earnings from self-employment

16 for the year.

17 SEC. 1902. OTHER GENERAL DEFINITIONS.

18 Except as otherwise specifically provided, in this Act

19 the following definitions apply:

20 (1) ALIEN PERMANENTLY RESIDING IN THE

21 UNITED STATES UNDER COLOR OF LAW.—The term

22 ‘‘alien permanently residing in the United States

23 under color of law’’ means an alien lawfully admitted

24 for permanent residence (within the meaning of sec-
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1 tion 101(a)(20) of the Immigration and Nationality

2 Act), and includes any of the following:

3 (A) An alien who is admitted as a refugee

4 under section 207 of the Immigration and Na5 tionality Act.

6 (B) An alien who is granted asylum under

7 section 208 of such Act.

8 (C) An alien whose deportation is withheld

9 under section 243(h) of such Act.

10 (D) An alien who is admitted for tem11 porary residence under section 210, 210A, or

12 245A of such Act.

13 (E) An alien who has been paroled into the

14 United States under section 212(d)(5) of such

15 Act for an indefinite period or who has been

16 granted extended voluntary departure as a

17 member of a nationality group.

18 (F) An alien who is the spouse or unmar19 ried child under 21 years of age of a citizen of

20 the United States, or the parent of such a citi21 zen if the citizen is over 21 years of age, and

22 with respect to whom an application for adjust23 ment to lawful permanent residence is pending.

24 (G) An alien within such other classifica25 tion of permanent resident aliens as the Na-
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1 tional Health Board may establish by regula2 tion.

3 (2) AFDC FAMILY.—The term ‘‘AFDC family’’

4 means a family composed entirely of one or more

5 AFDC recipients.

6 (3) AFDC RECIPIENT.—The term ‘‘AFDC re7 cipient’’ means, for a month, an individual who is

8 receiving aid or assistance under any plan of the

9 State approved under title I, X, XIV, or XVI, or

10 part A or part E of title IV, of the Social Security

11 Act for the month.

12 (4) ALLIANCE AREA.—The term ‘‘alliance area’’

13 means the area served by a regional alliance and

14 specified under section 1202(b).

15 (5) ALLIANCE ELIGIBLE INDIVIDUAL.—The

16 term ‘‘alliance eligible individual’’ means, with re17 spect to a health alliance, an eligible individual with

18 respect to whom the applicable health plan is a

19 health plan offered by or through such alliance and

20 does not include a prisoner.

21 (6) APPLICABLE HEALTH PLAN.—The term

22 ‘‘applicable health plan’’ means, with respect to an

23 eligible individual, the health plan specified pursuant

24 to section 1004 and part 2 of subtitle A.
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1 (7) COMBINATION COST SHARING PLAN.—The

2 term ‘‘combination cost sharing plan’’ means a

3 health plan that provides combination cost sharing

4 schedule (consistent with section 1134).

5 (8) COMPREHENSIVE BENEFIT PACKAGE.—The

6 term ‘‘comprehensive benefit package’’ means the

7 package of health benefits provided under subtitle B.

8 (9) CONSUMER PRICE INDEX; CPI.—The terms

9 ‘‘consumer price index’’ and ‘‘CPI’’ mean the

10 Consumer Price Index for all urban consumers (U.S.

11 city average), as published by the Bureau of Labor

12 Statistics.

13 (10) CORPORATE ALLIANCE ELIGIBLE INDIVID14 UAL.—The term ‘‘corporate alliance eligible individ15 ual’’ means, with respect to a corporate alliance, an

16 eligible individual with respect to whom the cor17 porate alliance is the applicable health plan.

18 (11) CORPORATE ALLIANCE EMPLOYER.—The

19 term ‘‘corporate alliance employer’’ means, with re20 spect to a corporate alliance, an employer of an indi21 vidual who is a participant in a corporate alliance

22 health plan of that alliance.

23 (12) CORPORATE ALLIANCE HEALTH PLAN.—

24 The term ‘‘corporate alliance health plan’’ means a

25 health plan offered by a corporate alliance.
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1 (13) DISABLED SSI RECIPIENT.—The term

2 ‘‘disabled SSI recipient’’ means an individual who—

3 (A) is an SSI recipient, and

4 (B) has been determined to be disabled for

5 purposes of the supplemental security income

6 program (under title XVI of the Social Security

7 Act).

8 (14) ELIGIBLE ENROLLEE.—The term ‘‘eligible

9 enrollee’’ means, with respect to a health plan of10 fered by a health alliance, an alliance eligible individ11 ual, but does not include such an individual if the

12 individual is enrolled under such a plan as the fam13 ily member of another alliance eligible individual.

14 (15) ESSENTIAL COMMUNITY PROVIDER.—The

15 term ‘‘essential community provider’’ means an en16 tity certified as such a provider under subpart B of

17 part 2 of subtitle F.

18 (16) FEE-FOR-SERVICE PLAN.—The term ‘‘fee19 for-service plan’’ means a health plan described in

20 section 1322(b)(2)(A).

21 (17) FIRST YEAR.—The term ‘‘first year’’

22 means, with respect to—

23 (A) a State that is a participating State in

24 a year before 1998, the year in which the State

25 first is a participating State, or
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1 (B) any other State, 1998.

2 (18) HIGHER COST SHARING PLAN.—The term

3 ‘‘higher cost sharing plan’’ means a health plan that

4 provides a higher cost sharing schedule (consistent

5 with section 1133).

6 (19) LONG-TERM NONIMMIGRANT.—The term

7 ‘‘long-term nonimmigrant’’ means a nonimmigrant

8 described in subparagraph (E), (H), (I), (J), (K),

9 (L), (M), (N), (O), (Q), or (R) of section 101(a)(15)

10 of the Immigration and Nationality Act or an alien

11 within such other classification of nonimmigrant as

12 the National Health Board may establish by regula13 tion.

14 (20) LOWER COST SHARING PLAN.—The term

15 ‘‘lower cost sharing plan’’ means a health plan that

16 provides a lower cost sharing schedule (consistent

17 with section 1132).

18 (21) MEDICARE PROGRAM.—The term ‘‘medi19 care program’’ means the health insurance program

20 under title XVIII of the Social Security Act.

21 (22) MEDICARE-ELIGIBLE INDIVIDUAL.—The

22 term ‘‘medicare-eligible individual’’ means, subject to

23 section 1012(a), an individual who is entitled to ben24 efits under part A of the medicare program.
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1 (23) MOVE.—The term ‘‘move’’ means, respect

2 to an individual, a change of residence of the indi3 vidual from one alliance area to another alliance

4 area.

5 (24) NATIONAL HEALTH BOARD; BOARD.—The

6 terms ‘‘National Health Board’’ and ‘‘Board’’ mean

7 the National Health Board created under section

8 1501.

9 (25) POVERTY LEVEL.—

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

11 poverty level’’ means, for a family for a year,

12 the official poverty line (as defined by the Of13 fice of Management and Budget, and revised

14 annually in accordance with section 673(2) of

15 the Omnibus Budget Reconciliation Act of

16 1981) applicable to a family of the size involved

17 (as determined under subparagraph (B)) for

18 1994 adjusted by the percentage increase or de19 crease described in subparagraph (C) for the

20 year involved.

21 (B) FAMILY SIZE.—In applying the appli22 cable poverty level to—

23 (i) an individual enrollment, the fam24 ily size is deemed to be one person;
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1 (ii) a couple-only enrollment, the fam2 ily size is deemed to be two persons;

3 (iii) a single parent enrollment, the

4 family size is deemed to be three persons;

5 or

6 (iv) a dual parent enrollment, the

7 family size is deemed to be four persons.

8 (C) PERCENTAGE ADJUSTMENT.—The per9 centage increase or decrease described in this

10 subparagraph for a year is the percentage in11 crease or decrease by which the average CPI for

12 the 12-month-period ending with August 31 of

13 the preceding year exceeds such average for the

14 12-month period ending with August 31, 1993.

15 (D) ROUNDING.—Any adjustment made

16 under subparagraph (A) for a year shall be

17 rounded to the nearest multiple of $100.

18 (26) PRISONER.—The term ‘‘prisoner’’ means,

19 as specified by the Board, an eligible individual dur20 ing a period of imprisonment under Federal, State,

21 or local authority after conviction as an adult.

22 (27) REGIONAL ALLIANCE ELIGIBLE INDIVID23 UAL.—The term ‘‘regional alliance eligible individ24 ual’’ means an eligible individual with respect to
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1 whom a regional alliance health plan is an applicable

2 health plan.

3 (28) REGIONAL ALLIANCE EMPLOYER.—The

4 term ‘‘regional alliance employer’’ means, with re5 spect to an employee, an employer that is not a cor6 porate alliance employer with respect to such em7 ployee.

8 (29) REGIONAL ALLIANCE HEALTH PLAN.—The

9 term ‘‘regional alliance health plan’’ means a health

10 plan offered by a regional alliance.

11 (30) RESIDE.—

12 (A) An individual is considered to reside in

13 the location in which the individual maintains a

14 primary residence (as established under rules of

15 the National Health Board).

16 (B) Under such rules and subject to sec17 tion 1323(c), in the case of an individual who

18 maintains more than one residence, the primary

19 residence of the individual shall be determined

20 taking into account the proportion of time spent

21 at each residence.

22 (C) In the case of a couple only one spouse

23 of which is a qualifying employee, except as the

24 Board may provide, the residence of the em25 ployee shall be the residence of the couple.
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1 (31) SECRETARY.—The term ‘‘Secretary’’

2 means the Secretary of Health and Human Services.

3 (32) SSI FAMILY.—The term ‘‘SSI family’’

4 means a family composed entirely of one or more

5 SSI recipients.

6 (33) SSI RECIPIENT.—The term ‘‘SSI recipi7 ent’’ means, for a month, an individual—

8 (A) with respect to whom supplemental se9 curity income benefits are being paid under title

10 XVI of the Social Security Act for the month,

11 (B) who is receiving a supplementary pay12 ment under section 1616 of such Act or under

13 section 212 of Public Law 93–66 for the

14 month, or

15 (C) who is receiving monthly benefits

16 under section 1619(a) of the Social Security

17 Act (whether or not pursuant to section

18 1616(c)(3) of such Act) for the month.

19 (34) STATE.—The term ‘‘State’’ includes the

20 District of Columbia, Puerto Rico, the Virgin Is21 lands, Guam, American Samoa, and the Northern

22 Mariana Islands.

23 (35) STATE MEDICAID PLAN.—The term ‘‘State

24 medicaid plan’’ means a plan of medical assistance
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1 of a State approved under title XIX of the Social

2 Security Act.

3 (36) UNDOCUMENTED ALIEN.—The term ‘‘un4 documented alien’’ means an alien who is not a long5 term nonimmigrant, a diplomat, or described in sec6 tion 1005(c).

7 (37) UNITED STATES.—The term ‘‘United

8 States’’ means the 50 States, the District of Colum9 bia, Puerto Rico, the Virgin Islands, Guam, Amer10 ican Samoa, and Northern Mariana Islands.

11 PART 2—MISCELLANEOUS PROVISIONS

12 SEC. 1911. USE OF INTERIM, FINAL REGULATIONS.

13 In order to permit the timely implementation of the

14 provisions of this Act, the National Health Board, the Sec15 retary of Health and Human Services, the Secretary of

16 Labor are each authorized to issue regulations under this

17 Act on an interim basis that become final on the date of

18 publication, subject to change based on subsequent public

19 comment.

20 SEC. 1912. SOCIAL SECURITY ACT REFERENCES.

21 Except as may otherwise be provided, any reference

22 in this title, or in title V or VI, to a provision of the Social

23 Security Act shall be to that provision of the Social Secu24 rity Act as in effect on the date of the enactment of this

25 Act.
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1 TITLE II—NEW BENEFITS

TABLE OF CONTENTS OF TITLE

Subtitle B—Long-Term Care

PART 1—STATE PROGRAMS FOR HOME AND COMMUNITY-BASED SERVICES

FOR INDIVIDUALS WITH DISABILITIES

Page

Sec. 2101. State programs for home and community-based services for

individuals with disabilities ........................................... 331

Sec. 2102. State plans ............................................................................. 332

Sec. 2103. Individuals with disabilities defined ...................................... 340

Sec. 2104. Home and community-based services covered under State

plan ............................................................................... 343

Sec. 2105. Cost sharing .......................................................................... 349

Sec. 2106. Quality assurance and safeguards ......................................... 350

Sec. 2107. Advisory groups ..................................................................... 352

Sec. 2108. Payments to States ............................................................... 354

Sec. 2109. Total Federal budget; allotments to States .......................... 357

PART 2—MEDICAID NURSING HOME IMPROVEMENTS

Sec. 2201. Reference to amendments ..................................................... 367

PART 3—PRIVATE LONG-TERM CARE INSURANCE

SUBPART A—GENERAL PROVISIONS

Sec. 2301. Federal regulations; prior application or certain requirements ............................................................................. 368

Sec. 2302. National Long-Term Care Insurance Advisory Council ........ 372

Sec. 2303. Relation to State law ............................................................. 380

Sec. 2304. Definitions ............................................................................. 380

SUBPART B—FEDERAL STANDARDS AND REQUIREMENTS

Sec. 2321. Requirements to facilitate understanding and comparison of

benefits .......................................................................... 385

Sec. 2322. Requirements relating to coverage ........................................ 391

Sec. 2323. Requirements relating to premiums ...................................... 396

Sec. 2324. Requirements relating to sales practices ............................... 397

Sec. 2325. Continuation, renewal, replacement, conversion, and cancellation of policies ........................................................ 403

Sec. 2326. Requirements relating to payment of benefits ...................... 412

SUBPART C—ENFORCEMENT

Sec. 2342. State programs for enforcement of standards ...................... 416

Sec. 2342. Authorization of appropriations for State programs ............. 422

Sec. 2343. Allotments to States .............................................................. 423

Sec. 2344. Payments to States ............................................................... 423

Sec. 2345. Federal oversight of State enforcement ................................ 424

Sec. 2346. Effect of failure to have approved State program ................ 425
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SUBPART D—CONSUMER EDUCATION GRANTS

Sec. 2361. Grants for consumer education ............................................. 427

PART 4—TAX TREATMENT OF LONG-TERM CARE INSURANCE AND SERVICES

Sec. 2401. Reference to tax provisions ................................................... 430

PART 5—TAX INCENTIVES FOR INDIVIDUALS WITH DISABILITIES WHO

WORK

Sec. 2501. Reference to tax provision ..................................................... 431

1 Subtitle B—Long-Term Care

2 PART 1—STATE PROGRAMS FOR HOME AND COM3 MUNITY-BASED SERVICES FOR INDIVIDUALS

4 WITH DISABILITIES

5 SEC. 2101. STATE PROGRAMS FOR HOME AND COMMUNITY6 BASED SERVICES FOR INDIVIDUALS WITH

7 DISABILITIES.

8 (a) IN GENERAL.—Each State that has a plan for

9 the home and community-based services to individuals

10 with disabilities submitted to and approved by the Sec11 retary under section 2102(b) is entitled to payment in ac12 cordance with section 2108.

13 (b) NO INDIVIDUAL ENTITLEMENT ESTABLISHED.—

14 Nothing in this part shall be construed to create an enti15 tlement for individuals or a requirement that a State with

16 such an approved plan expend the entire amount of funds

17 to which it is entitled in any year.

18 SEC. 2102. STATE PLANS.

19 (a) PLAN REQUIREMENTS.—In order to be approved

20 under subsection (b), a State plan for home and commu-
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1 nity-based services for individuals with disabilities must

2 meet the following requirements:

3 (1) ELIGIBILITY.—

4 (A) IN GENERAL.—Within the amounts

5 provided by the State (and under section 2108)

6 for such plan, the plan shall provide that serv7 ices under the plan will be available to individ8 uals with disabilities (as defined in section

9 2103(a)) in the State.

10 (B) INITIAL SCREENING.—The plan shall

11 provide a process for the initial screening of in12 dividuals who appear to have some reasonable

13 likelihood of being an individual with disabil14 ities.

15 (C) RESTRICTIONS.—The plan may not

16 limit the eligibility of individuals with disabil17 ities based on—

18 (i) income,

19 (ii) age,

20 (iii) geography,

21 (iv) nature, severity, or category of

22 disability,

23 (v) residential setting (other than an

24 institutional setting), or
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•S 1779 PCS

1 (vi) other grounds specified by the

2 Secretary.

3 (D) MAINTENANCE OF EFFORT.—The plan

4 must provide assurances that, in the case of an

5 individual receiving medical assistance for home

6 and community-based services under the State

7 medicaid plan as of the date of the enactment

8 of this Act, the State will continue to make

9 available (either under this plan, under the

10 State medicaid plan, or otherwise) to such indi11 vidual an appropriate level of assistance for

12 home and community-based services, taking

13 into account the level of assistance provided as

14 of such date and the individual’s need for home

15 and community-based services.

16 (2) SERVICES.—

17 (A) SPECIFICATION.—Consistent with sec18 tion 2104, the plan shall specify—

19 (i) the services made available under

20 the plan,

21 (ii) the extent and manner in which

22 such services are allocated and made avail23 able to individuals with disabilities, and

24 (iii) the manner in which services

25 under the plan are coordinated with each
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•S 1779 PCS

1 other and with health and long-term care

2 services available outside the plan for indi3 viduals with disabilities.

4 (B) ALLOCATION.—The State plan—

5 (i) shall specify how it will allocate

6 services under the plan, during and after

7 the 7-fiscal-year phase-in period beginning

8 with fiscal year 1996, among covered indi9 viduals with disabilities, and

10 (ii) may not allocate such services

11 based on the income or other financial re12 sources of such individuals.

13 (C) LIMITATION ON LICENSURE OR CER14 TIFICATION.—The State may not subject

15 consumer-directed providers of personal assist16 ance services to licensure, certification, or other

17 requirements which the Secretary finds not to

18 be necessary for the health and safety of indi19 viduals with disabilities.

20 (D) CONSUMER CHOICE.—To the extent

21 possible, the choice of an individual with dis22 abilities (and that individual’s family) regarding

23 which covered services to receive and the pro24 viders who will provide such services shall be

25 followed.
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1 (E) REQUIREMENT TO SERVE LOW-INCOME

2 INDIVIDUALS.—The plan shall assure that—

3 (i) the proportion of the population of

4 low-income individuals with disabilities in

5 the State that represents individuals with

6 disabilities who are provided home and

7 community-based services either under the

8 plan, under the State medicaid plan, or

9 under both, is not less than

10 (ii) the proportion of the population of

11 the State that represents individuals who

12 are low-income individuals.

13 (3) COST SHARING.—The plan shall impose cost

14 sharing with respect to covered services only in ac15 cordance with section 2105.

16 (4) TYPES OF PROVIDERS AND REQUIREMENTS

17 FOR PARTICIPATION.—The plan shall specify—

18 (A) the types of service providers eligible

19 to participate in the program under the plan,

20 which shall include consumer-directed providers,

21 and

22 (B) any requirements for participation ap23 plicable to each type of service provider.

24 (5) BUDGET.—The plan shall specify how the

25 State will manage Federal and State funds available
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•S 1779 PCS

1 under the plan for each fiscal year during the period

2 beginning with fiscal year 1996 and ending with fis3 cal year 2003 and for each 5-fiscal-year periods

4 thereafter to serve all categories of individuals with

5 disabilities and meet the requirements of this sub6 section. If the Secretary makes an adjustment under

7 section 2109(a)(5)(C) for a year, each State shall

8 update the specifications under this paragraph to re9 flect the impact of such an adjustment.

10 (6) PROVIDER REIMBURSEMENT.—

11 (A) PAYMENT METHODS.—The plan shall

12 specify the payment methods to be used to re13 imburse providers for services furnished under

14 the plan. Such methods may include retrospec15 tive reimbursement on a fee-for-service basis,

16 prepayment on a capitation basis, payment by

17 cash or vouchers to individuals with disabilities,

18 or any combination of these methods. In the

19 case of the use of cash or vouchers, the plan

20 shall specify how the plan will assure compli21 ance with applicable employment tax provisions.

22 (B) PAYMENT RATES.—The plan shall

23 specify the methods and criteria to be used to

24 set payment rates for services furnished under
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•S 1779 PCS

1 the plan (including rates for cash payments or

2 vouchers to individuals with disabilities).

3 (C) PLAN PAYMENT AS PAYMENT IN

4 FULL.—The plan shall restrict payment under

5 the plan for covered services to those providers

6 that agree to accept the payment under the

7 plan (at the rates established pursuant to sub8 paragraph (B)) and any cost sharing permitted

9 or provided for under section 2105 as payment

10 in full for services furnished under the plan.

11 (7) QUALITY ASSURANCE AND SAFEGUARDS.—

12 The State plan shall provide for quality assurance

13 and safeguards for applicants and beneficiaries in

14 accordance with section 2106.

15 (8) ADVISORY GROUP.—The State plan shall—

16 (A) assure the establishment and mainte17 nance of an advisory group under section

18 2107(b), and

19 (B) include the documentation prepared by

20 the group under section 2107(b)(4).

21 (9) ADMINISTRATION.—

22 (A) STATE AGENCY.—The plan shall des23 ignate a State agency or agencies to administer

24 (or to supervise the administration of) the plan.
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•S 1779 PCS

1 (B) ADMINISTRATIVE EXPENDITURES.—

2 Effective beginning with fiscal year 2003, the

3 plan shall contain assurances that not more

4 than 10 percent of expenditures under the plan

5 for all quarters in any fiscal year shall be for

6 administrative costs.

7 (C) COORDINATION.—The plan shall speci8 fy how the plan—

9 (i) will be integrated with the State

10 medicaid plan, titles V and XX of the So11 cial Security Act, programs under the

12 Older Americans Act of 1965, programs

13 under the Developmental Disabilities As14 sistance and Bill of Rights Act, the Indi15 viduals with Disabilities Education Act,

16 and any other Federal or State programs

17 that provide services or assistance targeted

18 to individuals with disabilities, and

19 (ii) will be coordinated with health

20 plans.

21 (10) REPORTS AND INFORMATION TO SEC22 RETARY; AUDITS.—The plan shall provide that the

23 State will furnish to the Secretary—

24 (A) such reports, and will cooperate with

25 such audits, as the Secretary determines are
339

•S 1779 PCS

1 needed concerning the State’s administration of

2 its plan under this part, including the process3 ing of claims under the plan, and

4 (B) such data and information as the Sec5 retary may require in order to carry out the

6 Secretary’s responsibilities.

7 (11) USE OF STATE FUNDS FOR MATCHING.—

8 The plan shall provide assurances that Federal

9 funds will not be used to provide for the State share

10 of expenditures under this part.

11 (12) HEALTH CARE WORKER REDEPLOYMENT

12 REQUIREMENT.—The plan provides for compliance

13 with the requirement of section 3074(a).

14 (b) APPROVAL OF PLANS.—The Secretary shall ap15 prove a plan submitted by a State if the Secretary deter16 mines that the plan—

17 (1) was developed by the State after consulta18 tion with individuals with disabilities and representa19 tives of groups of such individuals, and

20 (2) meets the requirements of subsection (a).

21 The approval of such a plan shall take effect as of the

22 first day of the first fiscal year beginning after the date

23 of such approval (except that any approval made before

24 January 1, 1996, shall be effective as of January 1, 1996).

25 In order to budget funds allotted under this part, the Sec-
340

•S 1779 PCS

1 retary may establish a deadline for the submission of such

2 a plan before the beginning of a fiscal year as a condition

3 of its approval effective with that fiscal year.

4 (c) MONITORING.—The Secretary shall monitor the

5 compliance of State plans with the eligibility requirements

6 of section 2103 and may monitor the compliance of such

7 plans with other requirements of this part.

8 (d) REGULATIONS.—The Secretary shall issue such

9 regulations as may be appropriate to carry out this part

10 on a timely basis.

11 SEC. 2103. INDIVIDUALS WITH DISABILITIES DEFINED.

12 (a) IN GENERAL.—In this part, the term ‘‘individual

13 with disabilities’’ means any individual within one or more

14 of the following 4 categories of individuals:

15 (1) INDIVIDUALS REQUIRING HELP WITH AC16 TIVITIES OF DAILY LIVING.—An individual of any

17 age who—

18 (A) requires hands-on or standby assist19 ance, supervision, or cueing (as defined in regu20 lations) to perform three or more activities of

21 daily living (as defined in subsection (c)), and

22 (B) is expected to require such assistance,

23 supervision, or cueing over a period of at least

24 100 days.
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•S 1779 PCS

1 (2) INDIVIDUALS WITH SEVERE COGNITIVE OR

2 MENTAL IMPAIRMENT.—An individual of any age—

3 (A) whose score, on a standard mental sta4 tus protocol (or protocols) appropriate for

5 measuring the individual’s particular condition

6 specified by the Secretary, indicates either se7 vere cognitive impairment or severe mental im8 pairment, or both;

9 (B) who—

10 (i) requires hands-on or standby as11 sistance, supervision, or cueing with one or

12 more activities of daily living,

13 (ii) requires hands-on or standby as14 sistance, supervision, or cueing with at

15 least such instrumental activity (or activi16 ties) of daily living related to cognitive or

17 mental impairment as the Secretary speci18 fies, or

19 (iii) displays symptoms of one or more

20 serious behavioral problems (that is on a

21 list of such problems specified by the Sec22 retary) which create a need for supervision

23 to prevent harm to self or others; and
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•S 1779 PCS

1 (C) who is expected to meet the require2 ments of subparagraphs (A) and (B) over a pe3 riod of at least 100 days.

4 (3) INDIVIDUALS WITH SEVERE OR PROFOUND

5 MENTAL RETARDATION.—An individual of any age

6 who has severe or profound mental retardation (as

7 determined according to a protocol specified by the

8 Secretary).

9 (4) SEVERELY DISABLED CHILDREN.—An indi10 vidual under 6 years of age who—

11 (A) has a severe disability or chronic medi12 cal condition,

13 (B) but for receiving personal assistance

14 services or any of the services described in sec15 tion 2104(d)(1), would require institutionaliza16 tion in a hospital, nursing facility, or intermedi17 ate care facility for the mentally retarded, and

18 (C) is expected to have such disability or

19 condition and require such services over a pe20 riod of at least 100 days.

21 (b) DETERMINATION.—

22 (1) IN GENERAL.—The determination of wheth23 er an individual is an individual with disabilities

24 shall be made, by persons or entities specified under

25 the State plan, using a uniform protocol consisting
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•S 1779 PCS

1 of an initial screening and assessment specified by

2 the Secretary. A State may collect additional infor3 mation, at the time of obtaining information to

4 make such determination, in order to provide for the

5 assessment and plan described in section 2104(b) or

6 for other purposes. The State shall establish a fair

7 hearing process for appeals of such determinations.

8 (2) PERIODIC REASSESSMENT.—The determina9 tion that an individual is an individual with disabil10 ities shall be considered to be effective under the

11 State plan for a period of not more than 12 months

12 (or for such longer period in such cases as a signifi13 cant change in an individual’s condition that may af14 fect such determination is unlikely). A reassessment

15 shall be made if there is a significant change in an

16 individual’s condition that may affect such deter17 mination.

18 (c) ACTIVITY OF DAILY LIVING DEFINED.—In this

19 part, the term ‘‘activity of daily living’’ means any of the

20 following: eating, toileting, dressing, bathing, and trans21 ferring.

22 SEC. 2104. HOME AND COMMUNITY-BASED SERVICES COV23 ERED UNDER STATE PLAN.

24 (a) SPECIFICATION.—
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•S 1779 PCS

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

2 provisions of this section, the State plan under this

3 part shall specify—

4 (A) the home and community-based serv5 ices available under the plan to individuals with

6 disabilities (or to such categories of such indi7 viduals), and

8 (B) any limits with respect to such serv9 ices.

10 (2) FLEXIBILITY IN MEETING INDIVIDUAL

11 NEEDS.—The services shall be specified in a manner

12 that permits sufficient flexibility for providers to

13 meet the needs of individuals with disabilities in a

14 cost effective manner. Subject to subsection

15 (e)(1)(B), such services may be delivered in an indi16 vidual’s home, a range of community residential ar17 rangements, or outside the home.

18 (b) REQUIREMENT FOR NEEDS ASSESSMENT AND

19 PLAN OF CARE.—

20 (1) IN GENERAL.—The State plan shall provide

21 for home and community-based services to an indi22 vidual with disabilities only if—

23 (A) a comprehensive assessment of the in24 dividual’s need for home and community-based

25 services (regardless of whether all needed serv-
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•S 1779 PCS

1 ices are available under the plan) has been

2 made,

3 (B) an individualized plan of care based on

4 such assessment is developed, and

5 (C) such services are provided consistent

6 with such plan of care.

7 (2) INVOLVEMENT OF INDIVIDUALS.—The indi8 vidualized plan of care under paragraph (1)(B) for

9 an individual with disabilities shall—

10 (A) be developed by qualified individuals

11 (specified under the State plan),

12 (B) be developed and implemented in close

13 consultation with the individual and the individ14 ual’s family,

15 (C) be approved by the individual (or the

16 individual’s representative), and

17 (D) be reviewed and updated not less often

18 than every 6 months.

19 (3) PLAN OF CARE.—The plan of care under

20 paragraph (1)(B) shall—

21 (A) specify which services specified under

22 the individual plan will be provided under the

23 State plan under this part,

24 (B) identify (to the extent possible) how

25 the individual will be provided any services
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•S 1779 PCS

1 specified under the plan of care and not pro2 vided under the State plan, and

3 (C) specify how the provision of services to

4 the individual under the plan will be coordi5 nated with the provision of other health care

6 services to the individual.

7 The State shall make reasonable efforts to identify

8 and arrange for services described in subparagraph

9 (B). Nothing in this subsection shall be construed as

10 requiring a State (under the State plan or other11 wise) to provide all the services specified in such a

12 plan.

13 (c) MANDATORY COVERAGE OF PERSONAL ASSIST14 ANCE SERVICES.—The State plan shall include, in the

15 array of services made available to each category of indi16 viduals with disabilities, both agency-administered and

17 consumer-directed personal assistance services (as defined

18 in subsection (g)).

19 (d) ADDITIONAL SERVICES.—

20 (1) TYPES OF SERVICES.—Subject to subsection

21 (e), services available under a State plan under this

22 part shall include any (or all) of the following:

23 (A) Case management.

24 (B) Homemaker and chore assistance.

25 (C) Home modifications.
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•S 1779 PCS

1 (D) Respite services.

2 (E) Assistive devices.

3 (F) Adult day services.

4 (G) Habilitation and rehabilitation.

5 (H) Supported employment.

6 (I) Home health services.

7 (J) Any other care or assistive services

8 (approved by the Secretary) that the State de9 termines will help individuals with disabilities to

10 remain in their homes and communities.

11 (2) CRITERIA FOR SELECTION OF SERVICES.—

12 The State plan shall specify—

13 (A) the methods and standards used to se14 lect the types, and the amount, duration, and

15 scope, of services to be covered under the plan

16 and to be available to each category of individ17 uals with disabilities, and

18 (B) how the types, and the amount, dura19 tion, and scope, of services specified meet the

20 needs of individuals within each of the 4 cat21 egories of individuals with disabilities.

22 (e) EXCLUSIONS AND LIMITATIONS.—

23 (1) IN GENERAL.—A State plan may not pro24 vide for coverage of—

25 (A) room and board,
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•S 1779 PCS

1 (B) services furnished in a hospital, nurs2 ing facility, intermediate care facility for the

3 mentally retarded, or other institutional setting

4 specified by the Secretary, or

5 (C) items and services to the extent cov6 erage is provided for the individual under a

7 health plan or the medicare program.

8 (2) TAKING INTO ACCOUNT INFORMAL CARE.—

9 A State plan may take into account, in determining

10 the amount and array of services made available to

11 covered individuals with disability, the availability of

12 informal care.

13 (f) PAYMENT FOR SERVICES.—A State plan may pro14 vide for the use of—

15 (1) vouchers,

16 (2) cash payments directly to individuals with

17 disabilities,

18 (3) capitation payments to health plans, and

19 (4) payment to providers,

20 to pay for covered services.

21 (g) PERSONAL ASSISTANCE SERVICES.—

22 (1) IN GENERAL.—In this section, the term

23 ‘‘personal assistance services’’ means those services

24 specified under the State plan as personal assistance

25 services and shall include at least hands-on and
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•S 1779 PCS

1 standby assistance, supervision, and cueing with ac2 tivities of daily living, whether agency-administered

3 or consumer-directed (as defined in paragraph (2)).

4 (2) CONSUMER-DIRECTED; AGENCY-ADMINIS5 TERED.—In this part:

6 (A) The term ‘‘consumer-directed’’ means,

7 with reference to personal assistance services or

8 the provider of such services, services that are

9 provided by an individual who is selected and

10 managed (and, at the individual’s option,

11 trained) by the individual receiving the services.

12 (B) The term ‘‘agency-administered’’

13 means, with respect to such services, services

14 that are not consumer-directed.

15 SEC. 2105. COST SHARING.

16 (a) NO OR NOMINAL COST SHARING FOR POOR17 EST.—The State plan may not impose any cost sharing

18 (other than nominal cost sharing) for individuals with in19 come (as determined under subsection (c)) less than 150

20 percent of the official poverty line (referred to in section

21 1902(25)(A)) applicable to a family of the size involved

22 (determined without regard to section 1902(25)(B)).

23 (b) SLIDING SCALE FOR REMAINDER.—The State

24 plan shall impose cost sharing in the form of coinsurance
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•S 1779 PCS

1 (based on the amount paid under the State plan for a serv2 ice)—

3 (1) at a rate of 10 percent for individuals with

4 disabilities with income not less than 150 percent,

5 and less than 200 percent, of such official poverty

6 line (as so applied);

7 (2) at a rate of 20 percent for such individuals

8 with income not less than 200 percent, and less than

9 250 percent, of such official poverty line (as so ap10 plied); and

11 (3) at a rate of 25 percent for such individuals

12 with income equal to at least 250 percent of such of13 ficial poverty line (as so applied).

14 (c) DETERMINATION OF INCOME FOR PURPOSES OF

15 COST SHARING.—The State plan shall specify the process

16 to be used to determine the income of an individual with

17 disabilities for purposes of this section. Such process shall

18 be consistent with standards specified by the Secretary.

19 SEC. 2106. QUALITY ASSURANCE AND SAFEGUARDS.

20 (a) QUALITY ASSURANCE.—The State plan shall

21 specify how the State will ensure and monitor the quality

22 of services, including—

23 (1) safeguarding the health and safety of indi24 viduals with disabilities,
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•S 1779 PCS

1 (2) the minimum standards for agency provid2 ers and how such standards will be enforced,

3 (3) the minimum competency requirements for

4 agency provider employees who provide direct serv5 ices under this part and how the competency of such

6 employees will be enforced,

7 (4) obtaining meaningful consumer input, in8 cluding consumer surveys that measure the extent to

9 which participants receive the services described in

10 the plan of care and participant satisfaction with

11 such services,

12 (5) participation in quality assurance activities,

13 and

14 (6) specifying the role of the long-term care om15 budsman (under the Older Americans Act of 1965)

16 and the Protection and Advocacy Agency (under the

17 Developmental Disabilities Assistance and Bill of

18 Rights Act) in assuring quality of services and pro19 tecting the rights of individuals with disabilities.

20 (b) SAFEGUARDS.—

21 (1) CONFIDENTIALITY.—The State plan shall

22 provide safeguards which restrict the use or disclo23 sure of information concerning applicants and bene24 ficiaries to purposes directly connected with the ad-
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•S 1779 PCS

1 ministration of the plan (including performance re2 views under section 2602).

3 (2) SAFEGUARDS AGAINST ABUSE.—The State

4 plans shall provide safeguards against physical, emo5 tional, or financial abuse or exploitation (specifically

6 including appropriate safeguards in cases where pay7 ment for program benefits is made by cash pay8 ments or vouchers given directly to individuals with

9 disabilities).

10 SEC. 2107. ADVISORY GROUPS.

11 (a) FEDERAL ADVISORY GROUP.—

12 (1) ESTABLISHMENT.—The Secretary shall es13 tablish an advisory group, to advise the Secretary

14 and States on all aspects of the program under this

15 part.

16 (2) COMPOSITION.—The group shall be com17 posed of individuals with disabilities and their rep18 resentatives, providers, Federal and State officials,

19 and local community implementing agencies. A ma20 jority of its members shall be individuals with dis21 abilities and their representatives.

22 (b) STATE ADVISORY GROUPS.—

23 (1) IN GENERAL.—Each State plan shall pro24 vide for the establishment and maintenance of an
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•S 1779 PCS

1 advisory group to advise the State on all aspects of

2 the State plan under this part.

3 (2) COMPOSITION.—Members of each advisory

4 group shall be appointed by the Governor (or other

5 chief executive officer of the State) and shall include

6 individuals with disabilities and their representa7 tives, providers, State officials, and local community

8 implementing agencies. A majority of its members

9 shall be individuals with disabilities and their rep10 resentatives.

11 (3) SELECTION OF MEMBERS.—Each State

12 shall establish a process whereby all residents of the

13 State, including individuals with disabilities and

14 their representatives, shall be given the opportunity

15 to nominate members to the advisory group.

16 (4) PARTICULAR CONCERNS.—Each advisory

17 group shall—

18 (A) before the State plan is developed, ad19 vise the State on guiding principles and values,

20 policy directions, and specific components of the

21 plan,

22 (B) meet regularly with State officials in23 volved in developing the plan, during the devel24 opment phase, to review and comment on all as25 pects of the plan,
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1 (C) participate in the public hearings to

2 help assure that public comments are addressed

3 to the extent practicable,

4 (D) document any differences between the

5 group’s recommendations and the plan,

6 (E) document specifically the degree to

7 which the plan is consumer-directed, and

8 (F) meet regularly with officials of the des9 ignated State agency (or agencies) to provide

10 advice on all aspects of implementation and

11 evaluation of the plan.

12 SEC. 2108. PAYMENTS TO STATES.

13 (a) IN GENERAL.—Subject to section 2102(a)(9)(B)

14 (relating to limitation on payment for administrative

15 costs), the Secretary, in accordance with the Cash Man16 agement Improvement Act, shall authorize payment to

17 each State with a plan approved under this part, for each

18 quarter (beginning on or after January 1, 1996), from its

19 allotment under section 2109(b), an amount equal to—

20 (1) the Federal matching percentage (as de21 fined in subsection (b)) of amount demonstrated by

22 State claims to have been expended during the quar23 ter for home and community-based services under

24 the plan for individuals with disabilities; plus
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1 (2) an amount equal to 90 percent of amount

2 expended during the quarter under the plan for ac3 tivities (including preliminary screening) relating to

4 determination of eligibility and performance of needs

5 assessment; plus

6 (3) an amount equal to 90 percent (or, begin7 ning with quarters in fiscal year 2003, 75 percent)

8 of the amount expended during the quarter for the

9 design, development, and installation of mechanical

10 claims processing systems and for information re11 trieval; plus

12 (4) an amount equal to 50 percent of the re13 mainder of the amounts expended during the quar14 ter as found necessary by the Secretary for the prop15 er and efficient administration of the State plan.

16 (b) FEDERAL MATCHING PERCENTAGE.—

17 (1) IN GENERAL.—In subsection (a), the term

18 ‘‘Federal matching percentage’’ means, with respect

19 to a State, the reference percentage specified in

20 paragraph (2) increased by 28 percentage points, ex21 cept that the Federal matching percentage shall in

22 no case be less than 78 percent or more than 95

23 percent.

24 (2) REFERENCE PERCENTAGE.—
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1 (A) IN GENERAL.—The reference percent2 age specified in this paragraph is 100 percent

3 less the State percentage specified in subpara4 graph (B), except that—

5 (i) the percentage under this para6 graph shall in no case be less than 50 per7 cent or more than 83 percent, and

8 (ii) the percentage for Puerto Rico,

9 the Virgin Islands, Guam, the Northern

10 Mariana Islands, and American Samoa

11 shall be 50 percent.

12 (B) STATE PERCENTAGE.—The State per13 centage specified in this subparagraph is that

14 percentage which bears the same ratio to 45

15 percent as the square of the per capita income

16 of such State bears to the square of the per

17 capita income of the continental United States

18 (including Alaska) and Hawaii.

19 (c) PAYMENTS ON ESTIMATES WITH RETROSPECTIVE

20 ADJUSTMENTS.—The method of computing and making

21 payments under this section shall be as follows:

22 (1) The Secretary shall, prior to the beginning

23 of each quarter, estimate the amount to be paid to

24 the State under subsection (a) for such quarter,

25 based on a report filed by the State containing its
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1 estimate of the total sum to be expended in such

2 quarter, and such other information as the Secretary

3 may find necessary.

4 (2) From the allotment available therefore, the

5 Secretary shall provide for payment of the amount

6 so estimated, reduced or increased, as the case may

7 be, by any sum (not previously adjusted under this

8 section) by which the Secretary finds that the esti9 mate of the amount to be paid the State for any

10 prior period under this section was greater or less

11 than the amount which should have been paid.

12 (d) APPLICATION OF RULES REGARDING LIMITA13 TIONS ON PROVIDER-RELATED DONATIONS AND HEALTH

14 CARE RELATED TAXES.—The provisions of section

15 1903(w) of the Social Security Act shall apply to pay16 ments to States under this section in the same manner

17 as they apply to payments to States under section 1903(a)

18 of such Act .

19 SEC. 2109. TOTAL FEDERAL BUDGET; ALLOTMENTS TO

20 STATES.

21 (a) TOTAL FEDERAL BUDGET.—

22 (1) FISCAL YEARS 1996 THROUGH 2003.—Sub23 ject to paragraph (5)(C), for purposes of this part,

24 the total Federal budget for State plans under this
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1 part for each of fiscal years 1996 through 2003 is

2 the following:

3 (A) For fiscal year 1996, $4.5 billion.

4 (B) For fiscal year 1997, $7.8 billion.

5 (C) For fiscal year 1998, $11.0 billion.

6 (D) For fiscal year 1999, $14.7 billion.

7 (E) For fiscal year 2000, $18.7 billion.

8 (F) For fiscal year 2001, $26.7 billion.

9 (G) For fiscal year 2002, $35.5 billion.

10 (H) For fiscal year 2003, $38.3 billion.

11 (2) SUBSEQUENT FISCAL YEARS.—For pur12 poses of this part, the total Federal budget for State

13 plans under this part for each fiscal year after fiscal

14 year 2003 is the total Federal budget under this

15 subsection for the preceding fiscal year multiplied

16 by—

17 (A) a factor (described in paragraph (3))

18 reflecting the change in the CPI for the fiscal

19 year, and

20 (B) a factor (described in paragraph (4))

21 reflecting the change in the number of individ22 uals with disabilities for the fiscal year.

23 (3) CPI INCREASE FACTOR.—For purposes of

24 paragraph (2)(A), the factor described in this para25 graph for a fiscal year is the ratio of—
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1 (A) the annual average index of the

2 consumer price index for the preceding fiscal

3 year, to—

4 (B) such index, as so measured, for the

5 second preceding fiscal year.

6 (4) DISABLED POPULATION FACTOR.—For pur7 poses of paragraph (2)(B), the factor described in

8 this paragraph for a fiscal year is 100 percent plus

9 (or minus) the percentage increase (or decrease)

10 change in the disabled population of the United

11 States (as determined for purposes of the most re12 cent update under subsection (b)(3)(D)).

13 (5) ADDITIONAL FUNDS DUE TO MEDICAID

14 OFFSETS.—

15 (A) IN GENERAL.—Each participating

16 State must provide the Secretary with informa17 tion concerning offsets and reductions in the

18 medicaid program resulting from home and

19 community-based services provided disabled in20 dividuals under this part, that would have been

21 paid for such individuals under the State medic22 aid plan but for the provision of similar services

23 under the program under this part. At the time

24 a State first submits its plan under this title

25 and before each subsequent fiscal year (through
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1 fiscal year 2003), the State also must provide

2 the Secretary with such budgetary information

3 (for each fiscal year through fiscal year 2003),

4 as the Secretary determines to be necessary to

5 carry out this paragraph.

6 (B) REPORTS.—Each State with a pro7 gram under this part shall submit such reports

8 to the Secretary as the Secretary may require

9 in order to monitor compliance with subpara10 graph (A).

11 (C) ADJUSTMENTS TO FEDERAL BUDG12 ET.—

13 (i) IN GENERAL.—For each fiscal year

14 (beginning with fiscal year 1996 and end15 ing with fiscal year 2003) and based on a

16 review of information submitted under sub17 paragraph (A), the Secretary shall deter18 mine the amount by which the total Fed19 eral budget under subsection (a) will in20 crease. The amount of such increase for a

21 fiscal year shall be limited to the reduction

22 in Federal expenditures of medical assist23 ance (as determined by Secretary) that

24 would have been made under title XIX of

25 the Social Security Act for home and com-
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1 munity based services for disabled individ2 uals but for the provision of similar serv3 ices under the program under this part.

4 (ii) ANNUAL PUBLICATION.—The Sec5 retary shall publish before the beginning of

6 such fiscal year, the revised total Federal

7 budget under this subsection for such fis8 cal year (and succeeding fiscal years before

9 fiscal year 2003).

10 (D) NO DUPLICATE PAYMENT.—No pay11 ment may be made to a State under this section

12 for any services to the extent that the State re13 ceived payment for such services under section

14 1903(a) of the Social Security Act.

15 (E) CONSTRUCTION.—Nothing in this sub16 section shall be construed as requiring States to

17 determine eligibility for medical assistance

18 under the State medicaid plan on behalf of indi19 viduals receiving assistance under this part.

20 (b) ALLOTMENTS TO STATES.—

21 (1) IN GENERAL.—The Secretary shall allot to

22 each State for each fiscal year an amount that bears

23 the same ratio to the total Federal budget for the

24 fiscal year (specified under paragraph (1) or (2) of

25 subsection (a)) as the State allotment factor (under
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1 paragraph (2) for the State for the fiscal year) bears

2 to the sum of such factors for all States for that fis3 cal year.

4 (2) STATE ALLOTMENT FACTOR.—

5 (A) IN GENERAL.—For each State for each

6 fiscal year, the Secretary shall compute a State

7 allotment factor equal to the sum of—

8 (i) the base allotment factor (specified

9 in subparagraph (B)), and

10 (ii) the low income allotment factor

11 (specified in subparagraph (C)),

12 for the State for the fiscal year.

13 (B) BASE ALLOTMENT FACTOR.—The base

14 allotment factor, specified in this subparagraph,

15 for a State for a fiscal year is equal to the

16 product of the following:

17 (i) NUMBER OF INDIVIDUALS WITH

18 DISABILITIES.—The number of individuals

19 with disabilities in the State (determined

20 under paragraph (3)) for the fiscal year.

21 (ii) 80 PERCENT OF THE NATIONAL

22 PER CAPITA BUDGET.—80 percent of the

23 national average per capita budget amount

24 (determined under paragraph (4)) for the

25 fiscal year.
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1 (iii) WAGE ADJUSTMENT FACTOR.—

2 The wage adjustment factor (determined

3 under paragraph (5)) for the State for the

4 fiscal year.

5 (iv) FEDERAL MATCHING RATE.—The

6 Federal matching rate (determined under

7 section 2108(b)) for the fiscal year.

8 (C) LOW INCOME ALLOTMENT FACTOR.—

9 The low income allotment factor, specified in

10 this subparagraph, for a State for a fiscal year

11 is equal to the product of the following:

12 (i) NUMBER OF INDIVIDUALS WITH

13 DISABILITIES.—The number of individuals

14 with disabilities in the State (determined

15 under paragraph (3)) for the fiscal year.

16 (ii) 10 PERCENT OF THE NATIONAL

17 PER CAPITA BUDGET.—10 percent of the

18 national average per capita budget amount

19 (determined under paragraph (4)) for the

20 fiscal year.

21 (iii) WAGE ADJUSTMENT FACTOR.—

22 The wage adjustment factor (determined

23 under paragraph (5)) for the State for the

24 fiscal year.
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1 (iv) FEDERAL MATCHING RATE.—The

2 Federal matching rate (determined under

3 section 2108(b)) for the fiscal year.

4 (v) LOW INCOME INDEX.—The low in5 come index (determined under paragraph

6 (6)) for the State for the preceding fiscal

7 year.

8 (3) NUMBER OF INDIVIDUALS WITH DISABIL9 ITIES.—The number of individuals with disabilities

10 in a State for a fiscal year shall be determined as

11 follows:

12 (A) BASE.—The Secretary shall determine

13 the number of individuals in the State by age,

14 sex, and income category, based on the 1990

15 decennial census, adjusted (as appropriate) by

16 the March 1994 current population survey.

17 (B) DISABILITY PREVALENCE LEVEL BY

18 POPULATION CATEGORY.—The Secretary shall

19 determine, for each such age, sex, and income

20 category, the national average proportion of the

21 population of such category that represents in22 dividuals with disabilities. The Secretary may

23 conduct periodic surveys in order to determine

24 such proportions.
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1 (C) BASE DISABLED POPULATION IN A

2 STATE.—The number of individuals with dis3 abilities in a State in 1994 is equal to the sum

4 of the products, for such each age, sex, and in5 come category, of—

6 (i) the population of individuals in the

7 State in the category (determined under

8 subparagraph (A)), and

9 (ii) the national average proportion

10 for such category (determined under sub11 paragraph (B)).

12 (D) UPDATE.—The Secretary shall deter13 mine the number of individuals with disabilities

14 in a State in a fiscal year equal to the number

15 determined under subparagraph (C) for the

16 State increased (or decreased) by the percent17 age increase (or decrease) in the disabled popu18 lation of the State as determined under the cur19 rent population survey from 1994 to the year

20 before the fiscal year involved.

21 (4) NATIONAL PER CAPITA BUDGET AMOUNT.—

22 The national average per capita budget amount, for

23 a fiscal year, is—
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1 (A) the total Federal budget specified

2 under subsection (a) for the fiscal year; divided

3 by

4 (B) the sum, for the fiscal year, of the

5 numbers of individuals with disabilities (deter6 mined under paragraph (3)) for all the States

7 for the fiscal year.

8 (5) WAGE ADJUSTMENT FACTOR.—The wage

9 adjustment factor, for a State for a fiscal year, is

10 equal to the ratio of—

11 (A) the average hourly wages for service

12 workers (other than household or protective

13 services) in the State, to

14 (B) the national average hourly wages for

15 service workers (other than household or protec16 tive services).

17 The hourly wages shall be determined under this

18 paragraph based on data from the most recent de19 cennial census for which such data are available.

20 (6) LOW INCOME INDEX.—The low income

21 index for each State for a fiscal year is the ratio, de22 termined for the preceding fiscal year, of—

23 (A) the percentage of the State’s popu24 lation that has income below 150 percent of the

25 poverty level, to
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•S 1779 PCS

1 (B) the percentage of the population of the

2 United States that has income below 150 per3 cent of the poverty level.

4 Such percentages shall be based on data from the

5 most recent decennial census for which such data

6 are available, adjusted by data from the most recent

7 current population survey as determined appropriate

8 by the Secretary.

9 (c) STATE ENTITLEMENT.—This part constitutes

10 budget authority in advance of appropriations Acts, and

11 represents the obligation of the Federal Government to

12 provide for the payment to States of amounts described

13 in subsection (a).

14 PART 2—MEDICAID NURSING HOME

15 IMPROVEMENTS

16 SEC. 2201. REFERENCE TO AMENDMENTS.

17 For amendments to the medicaid program under title

18 XIX of the Social Security Act to improve nursing home

19 benefits under such program, see part 2 of subtitle C of

20 title IV.
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1 PART 3—PRIVATE LONG-TERM CARE INSURANCE

2 Subpart A—General Provisions

3 SEC. 2301. FEDERAL REGULATIONS; PRIOR APPLICATION

4 OR CERTAIN REQUIREMENTS.

5 (a) IN GENERAL.—The Secretary, with the advice

6 and assistance of the Advisory Council, as appropriate,

7 shall promulgate regulations as necessary to implement

8 the provisions of this part, in accordance with the time9 table specified in subsection (b).

10 (b) TIMETABLE FOR PUBLICATION OF REGULA11 TIONS.—

12 (1) FEDERAL REGISTER NOTICE.—Within 120

13 days after the date a majority of the members are

14 first appointed to the Advisory Council pursuant to

15 section 2302, the Secretary shall publish in the Fed16 eral Register a notice setting forth the projected

17 timetable for promulgation of regulations required

18 under this part. Such timetable shall indicate which

19 regulations are proposed to be published by the end

20 of the first, second, and third years after appoint21 ment of the Advisory Council.

22 (2) FINAL DEADLINE.—All regulations required

23 under this part shall be published by the end of the

24 third year after appointment of the Advisory Coun25 cil.
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•S 1779 PCS

1 (c) PROVISIONS EFFECTIVE WITHOUT REGARD TO

2 PROMULGATION OF REGULATIONS.—

3 (1) IN GENERAL.—Notwithstanding any other

4 provision of this part, insurers shall be required, not

5 later than 6 months after the enactment of this Act,

6 regardless of whether final implementing regulations

7 have been promulgated by the Secretary, to comply

8 with the following provisions of this part:

9 (A) Section 2321(c) (standard outline of

10 coverage);

11 (B) Section 2321(d) (reporting to State in12 surance commissioners);

13 (C) Section 2322(b) (preexisting condition

14 exclusions);

15 (D) Section 2322(c) (limiting conditions on

16 benefits);

17 (E) Section 2322(d) (inflation protection);

18 (F) Section 2324 (sales practices);

19 (G) Section 2325 (continuation, renewal,

20 replacement, conversion, and cancellation of

21 policies); and

22 (H) Section 2326 (payment of benefits).

23 (2) INTERIM REQUIREMENTS.—Before the ef24 fective date of applicable regulations promulgated by

25 the Secretary implementing requirements of this
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1 part as specified below, such requirements will be

2 considered to be met—

3 (A) in the case of section 2321(c) (requir4 ing a standard outline of coverage), if the long5 term care insurance policy meets the require6 ments of section 6.G.(2) of the NAIC Model

7 Act and of section 24 of the NAIC Model Regu8 lation;

9 (B) in the case of section 2321(d) (requir10 ing reporting to the State insurance commis11 sioner), if the insurer meets the requirements of

12 section 14 of the NAIC Model Regulation;

13 (C) in the case of section 2322(c)(1) (gen14 eral requirements concerning limiting conditions

15 on benefits), if such policy meets the require16 ments of section 6.D. of the NAIC Model Act;

17 (D) in the case of section 2322(c)(2) (lim18 iting conditions on home health care or commu19 nity-based services) if such policy meets the re20 quirements of section 11 of the NAIC Model

21 Regulations;

22 (E) in the case of section 2322(d) (con23 cerning inflation protection), if the insurer

24 meets the requirements of section 12 of the

25 NAIC Model Regulation;
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•S 1779 PCS

1 (F) in the case of section 2324(b) (con2 cerning applications for the purchase of insur3 ance), if the insurer meets the requirements of

4 section 10 of the NAIC Model Regulation;

5 (G) in the case of section 2324(d) (con6 cerning compensation for the sale of policies), if

7 the insurer meets the requirements of the op8 tional regulation entitled ‘‘Permitted Compensa9 tion Arrangements’’ included in the NAIC

10 Model Regulation;

11 (H) in the case of section 2324(g) (con12 cerning sales through employers or membership

13 organizations), if the insurer and the member14 ship organization meet the requirements of sec15 tion 21.C. of the NAIC Model Regulation;

16 (I) in the case of section 2324(h) (concern17 ing interstate sales of group policies), if the in18 surer and the policy meet the requirements of

19 section 5 of the NAIC Model Act; and

20 (J) in the case of section 2325(f) (concern21 ing continuation, renewal, replacement, and

22 conversion of policies), if the insurer and the

23 policy meet the requirements of section 7 of the

24 NAIC Model Regulation.
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1 SEC. 2302. NATIONAL LONG-TERM CARE INSURANCE ADVI2 SORY COUNCIL.

3 (a) APPOINTMENT.—The Secretary shall appoint an

4 advisory board to be known as the National Long-Term

5 Care Insurance Advisory Council.

6 (b) COMPOSITION.—

7 (1) NUMBER AND QUALIFICATIONS OF MEM8 BERS.—The Advisory Council shall consist of 5

9 members, each of whom has substantial expertise in

10 matters relating to the provision and regulation of

11 long-term care insurance. At least one member shall

12 have experience as a State insurance commissioner

13 or legislator with expertise in policy development

14 with respect to, and regulation of, long-term care in15 surance.

16 (2) TERMS OF OFFICE.—

17 (A) IN GENERAL.—Except as otherwise

18 provided in this subsection, members shall be

19 appointed for terms of office of 5 years.

20 (B) INITIAL MEMBERS.—Of the initial

21 members of the Council, one shall be appointed

22 for a term of 5 years, one for 4 years, one for

23 3 years, one for 2 years, and one for 1 year.

24 (C) TWO-TERM LIMIT.—No member shall

25 be eligible to serve in excess of two consecutive
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1 terms, but may continue to serve until such

2 member’s successor is appointed.

3 (3) VACANCIES.—Any member appointed to fill

4 a vacancy occurring before the expiration of the

5 term of such member’s predecessor shall be ap6 pointed for the remainder of such term.

7 (4) REMOVAL.—No member may be removed

8 during the member’s term of office except for just

9 and sufficient cause.

10 (c) CHAIRPERSON.—The Secretary shall appoint a

11 Chairperson from among the members.

12 (d) COMPENSATION.—

13 (1) IN GENERAL.—Except as provided in para14 graph (3), members of the Advisory Council, while

15 serving on business of the Advisory Council, shall be

16 entitled to receive compensation at a rate not to ex17 ceed the daily equivalent of the rate specified for

18 level V of the Executive Schedule under section 5316

19 of title 5, United States Code.

20 (2) TRAVEL.—Except as provided in paragraph

21 (3), members of the Advisory Council, while serving

22 on business of the Advisory Council away from their

23 homes or regular places of business, may be allowed

24 travel expenses (including per diem in lieu of sub25 sistence) as authorized by section 5703(b) of title 5,
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•S 1779 PCS

1 United States Code, for persons in the Government

2 service employed intermittently.

3 (3) RESTRICTION.—A member of the Advisory

4 Council may not be compensated under this section

5 if the member is receiving compensation or travel ex6 penses from another source while serving on busi7 ness of the Advisory Council.

8 (e) MEETINGS.—The Advisory Council shall meet not

9 less often than 2 times a year at the direction of the Chair10 person.

11 (f) STAFF AND SUPPORT.—

12 (1) IN GENERAL.—The Advisory Council shall

13 have a salaried executive director appointed by the

14 Chairperson, and staff appointed by the executive di15 rector with the approval of the Chairperson.

16 (2) FEDERAL ENTITIES.—The head of each

17 Federal department and agency shall make available

18 to the Advisory Council such information and other

19 assistance as it may require to carry out its respon20 sibilities.

21 (g) GENERAL RESPONSIBILITIES.—The Advisory

22 Council shall—

23 (1) provide advice, recommendations, and as24 sistance to the Secretary on matters relating to long-
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1 term care insurance as specified in this part and as

2 otherwise required by the Secretary;

3 (2) collect, analyze, and disseminate informa4 tion relating to long-term care insurance in order to

5 increase the understanding of insurers, providers,

6 consumers, and regulatory bodies of the issues relat7 ing to, and to facilitate improvements in, such insur8 ance;

9 (3) develop for the Secretary’s consideration

10 proposed models, standards, requirements, and pro11 cedures relating to long-term care insurance, as ap12 propriate, with respect to the content and format of

13 insurance policies, agent and insurer practices con14 cerning the sale and servicing of such policies, and

15 regulatory activities; and

16 (4) monitor the development of the long-term

17 care insurance market (including policies, marketing

18 practices, pricing, eligibility and benefit pre19 conditions, and claims payment procedures) and ad20 vise the Secretary concerning the need for regulatory

21 changes.

22 (h) SPECIFIC MATTERS FOR CONSIDERATION.—The

23 Advisory Council shall consider, and provide views and

24 recommendations to the Secretary concerning, the follow25 ing matters relating to long-term care insurance:
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1 (1) UNIFORM TERMS, DEFINITIONS, AND FOR2 MATS.—The Advisory Council shall develop and pro3 pose to the Secretary uniform terminology, defini4 tions, and formats for use in long-term care insur5 ance policies.

6 (2) STANDARD OUTLINE OF COVERAGE.—The

7 Advisory Council shall develop and propose to the

8 Secretary a standard format for use by all insurers

9 offering long-term care policies for the outline of

10 coverage required pursuant to section 2321(c).

11 (3) PREMIUMS.—The Advisory Council shall

12 consider, and make recommendations to the Sec13 retary concerning—

14 (A) whether Federal standards should be

15 established governing the amounts of and rates

16 of increase in premiums in long-term care poli17 cies, and

18 (B) if so, what factors should be taken into

19 account (and whether such factors should in20 clude the age of the insured, actuarial informa21 tion, cost of care, lapse rates, financial reserve

22 requirements, insurer solvency, and tax treat23 ment of premiums, and benefits.

24 (4) UPGRADES OF COVERAGE.—The Advisory

25 Council shall consider, and make recommendations
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1 to the Secretary concerning, whether Federal stand2 ards are needed governing the terms and conditions

3 insurers may place on insured individuals’ eligibility

4 to obtain improved coverage (including any restric5 tions considered advisable with respect to premium

6 increases, agent commissions, medical underwriting,

7 and age rating).

8 (5) THRESHOLD CONDITIONS FOR PAYMENT OF

9 BENEFITS.—The Advisory Council shall—

10 (A) consider, and make recommendations

11 to the Secretary concerning, the advisability of

12 establishing standardized sets of threshold con13 ditions (based on degrees of functional or cog14 nitive impairment or on other conditions) for

15 payment of covered benefits;

16 (B) to the extent found appropriate, rec17 ommend to the Secretary specific sets of thresh18 old conditions to be used for such purpose;

19 (C) develop and propose to the Secretary,

20 with respect to assessments of insured individ21 uals’ levels of need for purposes of receipt of

22 covered benefits—

23 (i) professional qualification standards

24 applicable to individuals making such de25 terminations; and
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1 (ii) uniform procedures and formats

2 for use in performing and documenting

3 such assessments.

4 (6) DISPUTE RESOLUTION.—The Advisory

5 Council shall consider, and make recommendations

6 to the Secretary concerning, procedures that insur7 ers and States should be required to implement to

8 afford insured individuals a reasonable opportunity

9 to dispute denial of benefits under a long-term care

10 insurance policy.

11 (7) SALES AND SERVICING OF POLICIES.—The

12 Advisory Council shall consider, and make rec13 ommendations to the Secretary concerning—

14 (A) training and certification to be re15 quired of agents involved in selling or servicing

16 long-term care insurance policies;

17 (B) appropriate limits on commissions or

18 other compensation paid to agents for the sale

19 or servicing of such policies;

20 (C) sales practices that should be prohib21 ited or limited with respect to such policies (in22 cluding any financial limits that should be ap23 plied concerning the individuals to whom such

24 policies may be sold); and
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1 (D) appropriate standards and require2 ments with respect to sales of such policies by

3 or through employers and other entities, to em4 ployees, members, or affiliates of such entities.

5 (8) CONTINUING CARE RETIREMENT COMMU6 NITIES.—The Advisory Council shall consider, and

7 make recommendations to the Secretary concerning,

8 the extent to which the long-term care insurance as9 pects of continuing care retirement community ar10 rangements should be subject to regulation under

11 this part (and the Secretary, in consultation with the

12 Secretary of the Treasury, shall consider such rec13 ommendations and promulgate appropriate regula14 tions).

15 (i) ACTIVITIES.—In order to carry out its responsibil16 ities under this part, the Advisory Council is authorized

17 to—

18 (1) consult individuals and public and private

19 entities with experience and expertise in matters re20 lating to long-term care insurance (and shall consult

21 the National Association of Insurance Commis22 sioners);

23 (2) conduct meetings and hold hearings;

24 (3) conduct research (either directly or under

25 grant or contract);
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1 (4) collect, analyze, publish, and disseminate

2 data and information (either directly or under grant

3 or contract); and

4 (5) develop model formats and procedures for

5 insurance policies and marketing materials; and de6 velop proposed standards, rules, and procedures for

7 regulatory programs.

8 (j) AUTHORIZATION OF APPROPRIATIONS.—There

9 are authorized to be appropriated, for activities of the Ad10 visory Council, $1,500,000 for fiscal year 1995, and

11 $2,000,000 for each succeeding fiscal year.

12 SEC. 2303. RELATION TO STATE LAW.

13 Nothing in this part shall be construed as preventing

14 a State from applying standards that provide greater pro15 tection to insured individuals under long-term care insur16 ance policies than the standards promulgated under this

17 part, except that such State standards may not be incon18 sistent with any of the requirements of this part or of reg19 ulations hereunder.

20 SEC. 2304. DEFINITIONS.

21 For purposes of this part:

22 (1) ACTIVITY OF DAILY LIVING.—The term ‘‘ac23 tivity of daily living’’ means any of the following:

24 eating, toileting, dressing, bathing, and transferring.
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•S 1779 PCS

1 (2) ADULT DAY CARE.—The term ‘‘adult day

2 care’’ means a program providing social and health3 related services during the day to six or more adults

4 with disabilities (or such smaller number as the Sec5 retary may specify in regulations) in a community

6 group setting outside the home.

7 (3) ADVISORY COUNCIL.—The term ‘‘Advisory

8 Council’’ means the National Long-Term Care In9 surance Advisory Council established pursuant to

10 section 2302.

11 (4) CERTIFICATE.—The term ‘‘certificate’’

12 means a document issued to an individual as evi13 dence of such individual’s coverage under a group

14 insurance policy.

15 (5) CONTINUING CARE RETIREMENT COMMU16 NITY.—The term ‘‘continuing care retirement com17 munity’’ means a residential community operated by

18 a private entity that enters into contractual agree19 ments with residents under which such entity guar20 antees, in consideration for residents’ purchase of or

21 periodic payment for membership in the community,

22 to provide for such residents’ future long-term care

23 needs.

24 (6) DESIGNATED REPRESENTATIVE.—The term

25 ‘‘designated representative’’ means the person des-
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•S 1779 PCS

1 ignated by an insured individual (or, if such individ2 ual is incapacitated, pursuant to an appropriate ad3 ministrative or judicial procedure) to communicate

4 with the insurer on behalf of such individual in the

5 event of such individual’s incapacitation.

6 (7) HOME HEALTH CARE.—The term ‘‘home

7 health care’’ means medical and nonmedical services

8 including such services as homemaker services, as9 sistance with activities of daily living, and respite

10 care provided to individuals in their residences.

11 (8) INSURED INDIVIDUAL.—The term ‘‘insured

12 individual’’ means, with respect to a long-term care

13 insurance policy, any individual who has coverage of

14 benefits under such policy.

15 (9) INSURER.—The term ‘‘insurer’’ means any

16 person that offers or sells an individual or group

17 long-term care insurance policy under which such

18 person is at risk for all or part of the cost of bene19 fits under the policy, and includes any agent of such

20 person.

21 (10) LONG-TERM CARE INSURANCE POLICY.—

22 The term ‘‘long-term care insurance policy’’ has the

23 meaning given that term in section 4 of the NAIC

24 Model Act, except that the last sentence of such sec25 tion shall not apply.
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•S 1779 PCS

1 (11) NAIC MODEL ACT.—The term ‘‘NAIC

2 Model Act’’ means the Long-Term Care Insurance

3 Model Act published by the NAIC, as amended

4 through January 1993.

5 (12) NAIC MODEL REGULATION.—The term

6 ‘‘NAIC Model Regulation’’ means the Long-Term

7 Care Insurance Model Regulation published by the

8 NAIC, as amended through January 1993.

9 (13) NURSING FACILITY.—The term ‘‘nursing

10 facility’’ means a facility licensed by the State to

11 provide to residents—

12 (A) skilled nursing care and related serv13 ices for residents who require medical or nurs14 ing care;

15 (B) rehabilitation services for the rehabili16 tation of injured, disabled, or sick individuals,

17 or

18 (C) on a regular basis, health-related care

19 and services to individuals who because of their

20 mental or physical condition require care and

21 services (above the level of room and board)

22 which can be made available to them only

23 through institutional facilities.
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•S 1779 PCS

1 (14) POLICYHOLDER.—The term ‘‘policyholder’’

2 means the entity which is the holder of record of a

3 group long-term care insurance policy.

4 (15) RESIDENTIAL CARE FACILITY.—The term

5 ‘‘residential care facility’’ means a facility (including

6 a nursing facility) that—

7 (A) provides to residents medical or per8 sonal care services (including at a minimum as9 sistance with activities of daily living) in a set10 ting other than an individual or single-family

11 home, and

12 (B) does not provide services of a higher

13 level than can be provided by a nursing facility.

14 (16) RESPITE CARE.—The term ‘‘respite care’’

15 means the temporary provision of care (including as16 sistance with activities of daily living) to an individ17 ual, in the individual’s home or another setting in

18 the community, for the purpose of affording such in19 dividual’s unpaid caregiver a respite from the re20 sponsibilities of such care.

21 (17) STATE INSURANCE COMMISSIONER.—The

22 term ‘‘State insurance commissioner’’ means the

23 State official bearing such title, or, in the case of a

24 jurisdiction where such title is not used, the State
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•S 1779 PCS

1 official with primary responsibility for the regulation

2 of insurance.

3 Subpart B—Federal Standards and Requirements

4 SEC. 2321. REQUIREMENTS TO FACILITATE UNDERSTAND5 ING AND COMPARISON OF BENEFITS.

6 (a) IN GENERAL.—The Secretary, after considering

7 (where appropriate) recommendations of the Advisory

8 Council, shall promulgate regulations designed to stand9 ardize formats and terminology used in long-term care in10 surance policies, to require insurers to provide to cus11 tomers and beneficiaries information on the range of pub12 lic and private long-term care coverage available, and to

13 establish such other requirements as may be appropriate

14 to promote consumer understanding and facilitate com15 parison of benefits, which shall include at a minimum the

16 requirements specified in this section.

17 (b) UNIFORM TERMS, DEFINITIONS, AND FOR18 MATS.—Insurers shall be required to use, in long-term

19 care insurance policies, uniform terminology, definitions of

20 terms, and formats, in accordance with regulations pro21 mulgated by the Secretary, after considering recommenda22 tions of the Advisory Council.

23 (c) STANDARD OUTLINE OF COVERAGE.—

24 (1) IN GENERAL.—Insurers shall be required to

25 develop for each long-term care insurance policy of-
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•S 1779 PCS

1 fered or sold, to include as a part of each such pol2 icy, and to make available to each potential pur3 chaser and furnish to each insured individual and

4 policyholder, an outline of coverage under such pol5 icy that—

6 (A) includes the elements specified in para7 graph (2),

8 (B) is in a uniform format (as prescribed

9 by Secretary on the basis of recommendations

10 by the Advisory Council),

11 (C) accurately and clearly reflects the con12 tents of the policy, and

13 (D) is updated periodically on such time14 table as may be required by the Secretary (or

15 more frequently as necessary to reflect signifi16 cant changes in outlined information).

17 (2) CONTENTS OF OUTLINE.—The outline of

18 coverage for each long-term care insurance policy

19 shall include at least the following:

20 (A) BENEFITS.—A description of—

21 (i) the principal benefits covered, in22 cluding the extent of—

23 (I) benefits for services furnished

24 in residential care facilities, and

25 (II) other benefits,
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•S 1779 PCS

1 (ii) the principal exclusions from and

2 limitations on coverage,

3 (iii) the terms and conditions, if any,

4 upon which the insured individual may ob5 tain upgraded benefits, and

6 (iv) the threshold conditions for enti7 tlement to receive benefits.

8 (B) CONTINUATION, RENEWAL, AND CON9 VERSION.—A statement of the terms under

10 which a policy may be—

11 (i) returned (and premium refunded)

12 during an initial examination period,

13 (ii) continued in force or renewed,

14 (iii) converted to an individual policy

15 (in the case of coverage under a group pol16 icy),

17 (C) CANCELLATION.—A statement of the

18 circumstances in which a policy may be termi19 nated, and the refund or nonforfeitures benefits

20 (if any) applicable in each such circumstance,

21 including—

22 (i) death of the insured individual,

23 (ii) nonpayment of premiums,

24 (iii) election by the insured individual

25 not to renew,
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•S 1779 PCS

1 (iv) any other circumstance.

2 (D) PREMIUM.—A statement of—

3 (i) the total annual premium, and the

4 portion of such premium attributable to

5 each covered benefit,

6 (ii) any reservation by the insurer of

7 a right to change premiums,

8 (iii) any limit on annual premium in9 creases,

10 (iv) any expected premium increases

11 associated with automatic or optional bene12 fit increases (including inflation protec13 tion), and

14 (v) any circumstances under which

15 payment of premium is waived.

16 (E) DECLARATION CONCERNING SUM17 MARY.—A statement, in bold face type on the

18 face of the document in language understand19 able to the average individual, that the outline

20 of coverage is a summary only, not a contract

21 of insurance, and that the policy contains the

22 contractual provisions that govern.

23 (F) COST/VALUE COMPARISON.—

24 (i) Information on average costs (and

25 variation in such costs) for nursing facility
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•S 1779 PCS

1 care (and such other care as the Secretary

2 may specify) and information on the value

3 of benefits relative to such costs.

4 (ii) A comparison of benefits, over a

5 period of at least 20 years, for policies

6 with and without inflation protection.

7 (iii) A declaration as to whether the

8 amount of benefits will increase over time,

9 and, if so, a statement of the type and

10 amount of, any limitations on, and any

11 premium increases for, such benefit in12 creases.

13 (G) TAX TREATMENT.—A statement of the

14 Federal income tax treatment of premiums and

15 benefits under the policy, as determined by the

16 Secretary of the Treasury.

17 (H) OTHER.—Such other information as

18 the Secretary may require.

19 (d) REPORTING TO STATE INSURANCE COMMIS20 SIONER.—Each insurer shall be required to report at least

21 annually, to the State insurance commissioner of each

22 State in which any long-term care insurance policy of the

23 insurer is sold, such information, in such format, as the

24 Secretary may specify with respect to each such policy,

25 including—
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•S 1779 PCS

1 (1) the standard outline of coverage required

2 pursuant to subsection (c);

3 (2) lapse rates and replacement rates for such

4 policies;

5 (3) the ratio of premiums collected to benefits

6 paid;

7 (4) reserves;

8 (5) written materials used in sale or promotion

9 of such policy; and

10 (6) any other information the Secretary may re11 quire.

12 (e) COMPARISON OF LONG-TERM CARE COVERAGE

13 ALTERNATIVES.—Each insurer shall be required to fur14 nish to each individual before a long-term care insurance

15 policy of the insurer is sold to the individual information

16 on the conditions of eligibility for, and benefits under, each

17 of the following:

18 (1) POLICIES OFFERED BY THE INSURER.—The

19 standard outline of coverage, and such other infor20 mation as the Secretary may specify, with respect to

21 each long-term care insurance policy offered by the

22 insurer.

23 (2) COMPARISON TO OTHER AVAILABLE PRI24 VATE INSURANCE.—Information, in such format as

25 may be required under this part, on—
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•S 1779 PCS

1 (A) benefits offered under long-term care

2 insurance policies of the insurer (and the

3 threshold conditions for receipt by an insured

4 individual of each such benefit); and

5 (B) additional benefits available under

6 policies offered by other private insurers (to the

7 extent such information is made available by

8 the State insurance commissioner).

9 (3) PUBLIC PROGRAMS; REGIONAL ALLI10 ANCES.—Information furnished to the insurer, pur11 suant to section 2342(b)(2), by the State in which

12 such individual resides, on conditions of eligibility

13 for, and long-term care benefits (or the lack of such

14 benefits) under—

15 (A) each public long-term care program

16 administered by the State,

17 (B) the Medicare programs under title

18 XVIII of the Social Security Act; and

19 (C) each regional alliance operating in the

20 State.

21 SEC. 2322. REQUIREMENTS RELATING TO COVERAGE.

22 (a) IN GENERAL.—The Secretary, after considering

23 (where appropriate) recommendations of the Advisory

24 Council, shall promulgate regulations establishing require25 ments with respect to the terms of and benefits under
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•S 1779 PCS

1 long-term care insurance policies, which shall include at

2 a minimum the requirements specified in this section.

3 (b) LIMITATIONS ON PREEXISTING CONDITION EX4 CLUSIONS.—

5 (1) INITIAL POLICIES.—A long-term care insur6 ance policy may not exclude or limit coverage for

7 any service or benefit, the need for which is the re8 sult of a medical condition or disability because an

9 insured individual received medical treatment for, or

10 was diagnosed as having, such condition before the

11 issuance of the policy, unless—

12 (A) the insurer, prior to issuance of the

13 policy, determines and documents (with evi14 dence including written evidence that such con15 dition has been treated or diagnosed by a quali16 fied health care professional) that the insured

17 individual had such condition during the 6-

18 month period (or such longer period as the Sec19 retary may specify) ending on the effective date

20 of the policy; and

21 (B) the need or such service or benefit be22 gins within 6 months (or such longer period as

23 the Secretary may specify) following the effec24 tive date of the policy.
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•S 1779 PCS

1 (2) REPLACEMENT POLICIES.—Solely for pur2 poses of the requirements of paragraph (1), with re3 spect to an insured individual, the effective date of

4 a long-term care insurance policy issued to replace

5 a previous policy, with respect to benefits which are

6 the same as or substantially equivalent to benefits

7 under such previous policy, shall be considered to be

8 the effective date of such previous policy with re9 spect to such individual.

10 (c) LIMITING CONDITIONS ON BENEFITS.—

11 (1) IN GENERAL.—A long-term care insurance

12 policy may not—

13 (A) condition eligibility for benefits for a

14 type of service on the need for or receipt of any

15 other type of service (such as prior hospitaliza16 tion or institutionalization, or a higher level of

17 care than the care for which benefits are cov18 ered);

19 (B) condition eligibility for any benefit

20 (where the need for such benefit has been es21 tablished by an independent assessment of im22 pairment) on any particular medical diagnosis

23 (including any acute condition) or on one of a

24 group of diagnoses;
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•S 1779 PCS

1 (C) condition eligibility for benefits fur2 nished by licensed or certified providers on com3 pliance by such providers with conditions not

4 required under Federal or State law; or

5 (D) condition coverage of any service on

6 provision of such service by a provider, or in a

7 setting, providing a higher level of care than

8 that required by an insured individual.

9 (2) HOME CARE OR COMMUNITY-BASED SERV10 ICES.—A long-term care insurance policy that pro11 vides benefits for any home care or community-based

12 services provided in a setting other than a residen13 tial care facility—

14 (A) may not limit such benefits to services

15 provided by registered nurses or licensed prac16 tical nurses;

17 (B) may not limit such benefits to services

18 furnished by persons or entities participating in

19 programs under titles XVIII and XIX of the

20 Social Security Act and in part 1 of this sub21 title; and

22 (C) must provide, at a minimum, benefits

23 for personal assistance with activities of daily

24 living, home health care, adult day care, and

25 respite care.
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•S 1779 PCS

1 (3) NURSING FACILITY SERVICES.—A long-term

2 care insurance policy that provides benefits for any

3 nursing facility services—

4 (A) must provide benefits for such services

5 provided by all types of nursing facilities li6 censed by the State, and

7 (B) may provide benefits for care in other

8 residential facilities.

9 (4) PROHIBITION ON DISCRIMINATION BY DIAG10 NOSIS.—A long-term care insurance policy may not

11 provide for treatment of—

12 (A) Alzheimer’s disease or any other pro13 gressive degenerative dementia of an organic or14 igin,

15 (B) any organic or inorganic mental ill16 ness,

17 (C) mental retardation or any other cog18 nitive or mental impairment, or

19 (D) HIV infection or AIDS,

20 different from the treatment of any other medical

21 condition for purposes of determining whether

22 threshold conditions for the receipt of benefits have

23 been met, or the amount of benefits under the pol24 icy.

25 (d) INFLATION PROTECTION.—
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•S 1779 PCS

1 (1) REQUIREMENT TO OFFER.—An insurer of2 fering for sale any long-term care insurance policy

3 shall be required to afford the purchaser the option

4 to obtain coverage under such policy (upon payment

5 of increased premiums) of annual increases in bene6 fits at rates in accordance with paragraph (2).

7 (2) RATE INCREASE IN BENEFITS.—For pur8 poses of paragraph (1), the benefits under a policy

9 for each year shall be increased by a percentage of

10 the full value of benefits under the policy for the

11 previous year, which shall be not less than 5 percent

12 of such value (or such other rate of increase as may

13 be determined by the Secretary to be adequate to

14 offset increases in the costs of long-term care serv15 ices for which coverage is provided under the policy).

16 (3) REQUIREMENT OF WRITTEN REJECTION.—

17 Inflation protection in accordance with paragraph

18 (1) may be excluded from the coverage under a pol19 icy only if the insured individual (or, if different, the

20 person responsible for payment of premiums) has re21 jected in writing the option to obtain such coverage.

22 SEC. 2323. REQUIREMENTS RELATING TO PREMIUMS.

23 (a) IN GENERAL.—The Secretary, after considering

24 (where appropriate) recommendations of the Advisory

25 Council, shall promulgate regulations establishing require-
397

•S 1779 PCS

1 ments applicable to premiums for long-term care insur2 ance policies, which shall include at a minimum the re3 quirements specified in this section.

4 (b) LIMITATIONS ON RATES AND INCREASES.—The

5 Secretary, after considering recommendations of the Advi6 sory Council, may establish by regulation such standards

7 and requirements as may be determined appropriate with

8 respect to—

9 (1) mandatory or optional State procedures for

10 review and approval of premium rates and rate in11 creases or decreases;

12 (2) limitations on the amount of initial pre13 miums, or on the rate or amount of premium in14 creases;

15 (3) the factors to be taken into consideration by

16 an insurer in proposing, and by a State in approving

17 or disapproving, premium rates and increases; and

18 (4) the extent to which consumers should be en19 titled to participate or be represented in the rate-set20 ting process and to have access to actuarial and

21 other information relied on in setting rates.

22 SEC. 2324. REQUIREMENTS RELATING TO SALES PRAC23 TICES.

24 (a) IN GENERAL.—The Secretary, after considering

25 (where appropriate) recommendations of the Advisory
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•S 1779 PCS

1 Council, shall promulgate regulations establishing require2 ments applicable to the sale or offering for sale of long3 term care insurance policies, which shall include at a mini4 mum the requirements specified in this section.

5 (b) APPLICATIONS.—Any insurer that offers any

6 long-term care insurance policy (including any group pol7 icy) shall be required to meet such requirements with re8 spect to the content, format, and use of application forms

9 for long-term care insurance as the Secretary may require

10 by regulation.

11 (c) AGENT TRAINING AND CERTIFICATION.—An in12 surer may not sell or offer for sale a long-term care insur13 ance policy through an agent who does not comply with

14 minimum standards with respect to training and certifi15 cation established by the Secretary after consideration of

16 recommendations by the Advisory Council.

17 (d) COMPENSATION FOR SALE OF POLICIES.—Com18 pensation by an insurer to an agent or agents for the sale

19 of an original long-term care insurance policy, or for serv20 icing or renewing such a policy, may not exceed amounts

21 (or percentage shares of premiums or other reference

22 amounts) specified by the Secretary in regulations, after

23 considering recommendations of the Advisory Council.

24 (e) PROHIBITED SALES PRACTICES.—The following

25 practices by insurers shall be prohibited with respect to
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•S 1779 PCS

1 the sale or offer for sale of long-term care insurance poli2 cies:

3 (1) FALSE AND MISLEADING REPRESENTA4 TIONS.—Making any statement or representation—

5 (A) which the insurer knows or should

6 know is false or misleading (including the inac7 curate, incomplete, or misleading comparison of

8 long-term care insurance policies or insurers),

9 and

10 (B) which is intended, or would be likely,

11 to induce any person to purchase, retain, termi12 nate, forfeit, permit to lapse, pledge, assign,

13 borrow against, convert, or effect a change with

14 respect to, any long-term care insurance policy.

15 (2) INACCURATE COMPLETION OF MEDICAL

16 HISTORY.—Making or causing to be made (by any

17 means including failure to inquire about or to record

18 information relating to preexisting conditions) state19 ments or omissions, in records detailing the medical

20 history of an applicant for insurance, which the in21 surer knows or should know render such records

22 false, incomplete, or misleading in any way material

23 to such applicant’s eligibility for or coverage under

24 a long-term care insurance policy.
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•S 1779 PCS

1 (3) UNDUE PRESSURE.—Employing force,

2 fright, threat, or other undue pressure, whether ex3 plicit or implicit, which is intended, or would be like4 ly, to induce the purchase of a long-term care insur5 ance policy.

6 (4) COLD LEAD ADVERTISING.—Using, directly

7 or indirectly, any method of contacting consumers

8 (including any method designed to induce consumers

9 to contact the insurer or agent) for the purpose of

10 inducing the purchase of long-term care insurance

11 (regardless of whether such purpose is the sole or

12 primary purpose of the contact) without conspicu13 ously disclosing such purpose.

14 (f) PROHIBITION ON SALE OF DUPLICATE BENE15 FITS.—An insurer or agent may not sell or issue to an

16 individual a long-term care insurance policy that the in17 surer or agent knows or should know provides for coverage

18 that duplicates coverage already provided in another long19 term care insurance policy held by such individual (unless

20 the policy is intended to replace such other policy).

21 (g) SALES THROUGH EMPLOYERS OR MEMBERSHIP

22 ORGANIZATIONS.—

23 (1) REQUIREMENTS CONCERNING SUCH AR24 RANGEMENTS.—In any case where an employer, or25 ganization, association, or other entity (referred to
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•S 1779 PCS

1 as a ‘‘membership entity’’) endorses a long-term

2 care insurance policy to, or such policy is marketed

3 or sold through such membership entity to, employ4 ees, members, or other individuals affiliated with

5 such membership entity—

6 (A) the insurer offering such policy shall

7 not permit its marketing or sale through such

8 entity unless the requirements of this sub9 section are met; and

10 (B) a membership entity that receives any

11 compensation for such sale, marketing, or en12 dorsement of such policy shall be considered the

13 agent of the insurer for purposes of this part.

14 (2) DISCLOSURE AND INFORMATION REQUIRE15 MENTS.—A membership entity that endorses a long16 term care insurance policy, or through which such

17 policy is sold, to individuals affiliated with such en18 tity, shall—

19 (A) disclose prominently, in a form and

20 manner designed to ensure that each such indi21 vidual who receives information concerning any

22 such policy through such entity is aware of and

23 understands such disclosure—

24 (i) the manner in which the insurer

25 and policy were selected;
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•S 1779 PCS

1 (ii) the extent (if any) to which a per2 son independent of the insurer with exper3 tise in long-term care insurance analyzed

4 the advantages and disadvantages of such

5 policy from the standpoint of such individ6 uals (including such matters as the merits

7 of the policy compared to other available

8 benefit packages, and the financial stability

9 of the insurer), and the results of any such

10 analysis;

11 (iii) any organizational or financial

12 ties between the entity (or a related entity)

13 and the insurer (or a related entity); and

14 (iv) the nature of compensation ar15 rangements (if any) and the amount of

16 compensation (including all fees, commis17 sions, and other forms of financial sup18 port) for the endorsement or sale of such

19 policy; and

20 (B) make available to such individuals, ei21 ther directly or through referrals, appropriate

22 counseling to assist such individuals to make

23 educated and informed decisions concerning the

24 purchase of such policies.
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•S 1779 PCS

1 SEC. 2325. CONTINUATION, RENEWAL, REPLACEMENT, CON2 VERSION, AND CANCELLATION OF POLICIES.

3 (a) IN GENERAL.—The Secretary, after considering

4 (where appropriate) recommendations of the Advisory

5 Council, shall promulgate regulations establishing require6 ments applicable to the renewal, replacement, conversion,

7 and cancellation of long-term care insurance policies,

8 which shall include at a minimum the requirements speci9 fied in this section.

10 (b) INSURED’S RIGHT TO CANCEL DURING EXAM11 INATION PERIOD.—Each individual insured (or, if dif12 ferent, each individual liable for payment of premiums)

13 under a long-term care insurance policy shall have the un14 conditional right to return the policy within 30 days after

15 the date of its issuance and delivery, and to obtain a full

16 refund of any premium paid.

17 (c) INSURER’S RIGHT TO CANCEL (OR DENY BENE18 FITS) BASED ON FRAUD OR NONDISCLOSURE.—An in19 surer shall have the right to cancel a long-term care insur20 ance policy, or to refuse to pay a claim for benefits, based

21 on evidence that the insured falsely represented or failed

22 to disclose information material to the determination of

23 eligibility to purchase such insurance, but only if—

24 (1) the insurer presents written documentation,

25 developed at the time the insured applied for such

26 insurance, of the insurer’s request for the informa-
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•S 1779 PCS

1 tion thus withheld or misrepresented, and the in2 sured individual’s response to such request;

3 (2) the insurer presents medical records or

4 other evidence showing that the insured individual

5 knew or should have known that such response was

6 false, incomplete, or misleading;

7 (3) notice of cancellation is furnished to the in8 sured individual before the date 3 years after the ef9 fective date of the policy (or such earlier date as the

10 Secretary may specify in regulations); and

11 (4) the insured individual is afforded the oppor12 tunity to review and refute the evidence presented by

13 the insurer pursuant to paragraphs (1) and (2).

14 (d) INSURER’S RIGHT TO CANCEL FOR NONPAYMENT

15 OF PREMIUMS.—

16 (1) IN GENERAL.—Insurers shall have the right

17 to cancel long-term care insurance policies for

18 nonpayment of premiums, subject to the provisions

19 of this subsection and subsection (e) (relating to

20 nonforfeiture).

21 (2) NOTICE AND ACKNOWLEDGEMENT.—

22 (A) IN GENERAL.—The insurer may not

23 cancel coverage of an insured individual until—

24 (i) the insurer, not earlier than the

25 date when such payment is 30 days past
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•S 1779 PCS

1 due, has given written notice to the insured

2 individual (by registered letter or the

3 equivalent) of such intent, and

4 (ii) 30 days have elapsed since the in5 surer obtained written acknowledgment of

6 receipt of such notice from the insured in7 dividual (or the designated representative,

8 at the insured individual’s option or in the

9 case of an insured individual determined to

10 be incapacitated in accordance with para11 graph (4)).

12 (B) ADDITIONAL REQUIREMENT FOR

13 GROUP POLICIES.—In the case of a group long14 term care insurance policy, the notice and ac15 knowledgement requirements of subparagraph

16 (A) apply with respect to the policyholder and

17 to each insured individual.

18 (3) REINSTATEMENT OF COVERAGE OF INCA19 PACITATED INDIVIDUALS.—In any case where the

20 coverage of an individual under a long-term care in21 surance policy has been canceled pursuant to para22 graph (2), the insurer shall be required to reinstate

23 full coverage of such individual under such policy,

24 retroactive to the effective date of cancellation, if the

25 insurer receives from such individual (or the des-
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•S 1779 PCS

1 ignated representative of such individual), within 5

2 months after such date—

3 (A) evidence of a determination of such in4 dividual’s incapacitation in accordance with

5 paragraph (4) (whether made before or after

6 such date), and

7 (B) payment of all premiums due and past

8 due, and all charges for late payment.

9 (4) DETERMINATION OF INCAPACITATION.—For

10 purposes of this subsection, the term ‘‘determination

11 of incapacitation’’ means a determination by a quali12 fied health professional (in accordance with such re13 quirements as the Secretary may specify), that an

14 insured individual has suffered a cognitive impair15 ment or loss of functional capacity which could rea16 sonably be expected to render the individual perma17 nently or temporarily unable to deal with business or

18 financial matters. The standard used to make such

19 determination shall not be more stringent than the

20 threshold conditions for the receipt of covered bene21 fits.

22 (5) DESIGNATION OF REPRESENTATIVE.—The

23 insurer shall be required—
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•S 1779 PCS

1 (A) to require the insured individual, at

2 the time of sale or issuance of a long-term care

3 insurance policy—

4 (i) to designate a representative for

5 purposes of communication with the in6 surer concerning premium payments in the

7 event the insured individual cannot be lo8 cated or is incapacitated, or

9 (ii) to complete a signed and dated

10 statement declining to designate a rep11 resentative, and

12 (B) to obtain from the insured individual,

13 at the time of each premium payment (but in

14 no event less often than once in each 12-month

15 period) reconfirmation or revision of such des16 ignation or declination.

17 (e) NONFORFEITURE.—

18 (1) IN GENERAL.—The Secretary, after consid19 eration of recommendations by the Advisory Council,

20 shall by regulation require appropriate nonforfeiture

21 benefits with respect to each long-term care insur22 ance policy that lapses for any reason (including

23 nonpayment of premiums, cancellation, or failure to

24 renew, but excluding lapses due to death) after re-
408

•S 1779 PCS

1 maining in effect beyond a specified minimum pe2 riod.

3 (2) NONFORFEITURE BENEFITS.—The stand4 ards established under this subsection shall require

5 that the amount or percentage of nonforfeiture bene6 fits shall increase proportionally with the amount of

7 premiums paid by a policyholder.

8 (f) CONTINUATION, RENEWAL, REPLACEMENT, AND

9 CONVERSION OF POLICIES.—

10 (1) IN GENERAL.—Insurers shall not be per11 mitted to cancel, or refuse to renew (or replace with

12 a substantial equivalent), any long-term care insur13 ance policy for any reason other than for fraud or

14 material misrepresentation (as provided in sub15 section (c)) or for nonpayment of premium (as pro16 vided in subsection (d)).

17 (2) DURATION AND RENEWAL OF POLICIES.—

18 Each long-term care insurance policy shall contain a

19 provision that clearly states—

20 (A) the duration of the policy,

21 (B) the right of the insured individual (or

22 policyholder) to renewal (or to replacement with

23 a substantial equivalent),
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•S 1779 PCS

1 (C) the date by which, and the manner in

2 which, the option to renew must be exercised,

3 and

4 (D) any applicable restrictions or limita5 tions (which may not be inconsistent with the

6 requirements of this part).

7 (3) REPLACEMENT OF POLICIES.—

8 (A) IN GENERAL.—Except as provided in

9 subparagraph (B), an insurer shall not be per10 mitted to sell any long-term care insurance pol11 icy as a replacement for another such policy un12 less coverage under such replacement policy is

13 available to an individual insured for benefits

14 covered under the previous policy to the same

15 extent as under such previous policy (including

16 every individual insured under a group policy)

17 on the date of termination of such previous pol18 icy, without exclusions or limitations that did

19 not apply under such previous policy.

20 (B) INSURED’S OPTION TO REDUCE COV21 ERAGE.—In any case where an insured individ22 ual covered under a long-term care insurance

23 policy knowingly and voluntarily elects to sub24 stitute for such policy a policy that provides less
410

•S 1779 PCS

1 coverage, substitute policy shall be considered a

2 replacement policy for purposes of this part.

3 (3) CONTINUATION AND CONVERSION RIGHTS

4 WITH RESPECT TO GROUP POLICIES.—

5 (A) IN GENERAL.—Insurers shall be re6 quired to include in each group long-term care

7 insurance policy, a provision affording to each

8 insured individual, when such policy would oth9 erwise terminate, the opportunity (at the insur10 er’s option, subject to approval of the State in11 surance commissioner) either to continue or to

12 convert coverage under such policy in accord13 ance with this paragraph.

14 (B) RIGHTS OF RELATED INDIVIDUALS.—

15 In the case of any insured individual whose eli16 gibility for coverage under a group policy is

17 based on relationship to another individual, the

18 insurer shall be required to continue such cov19 erage upon termination of the relationship due

20 to divorce or death.

21 (C) CONTINUATION OF COVERAGE.—A

22 group policy shall be considered to meet the re23 quirements of this paragraph with respect to

24 rights of an insured individual to continuation

25 of coverage if coverage of the same (or substan-
411

•S 1779 PCS

1 tially equivalent) benefits for such individual

2 under such policy is maintained, subject only to

3 timely payment of premiums.

4 (D) CONVERSION OF COVERAGE.—A group

5 policy shall be considered to meet the require6 ments of this paragraph with respect to conver7 sion if it entitles each individual who has been

8 continuously covered under the policy for at

9 least 6 months before the date of the termi10 nation to issuance of a replacement policy pro11 viding benefits identical to, substantially equiva12 lent to, or in excess of, the benefits under such

13 terminated group policy—

14 (i) without requiring evidence of in15 surability with respect to benefits covered

16 under such previous policy, and

17 (ii) at premium rates no higher than

18 would apply if the insured individual had

19 initially obtained coverage under such re20 placement policy on the date such insured

21 individual initially obtained coverage under

22 such group policy.

23 (4) TREATMENT OF SUBSTANTIAL EQUIVA24 LENCE.—
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•S 1779 PCS

1 (A) UNDER SECRETARY’S GUIDELINES.—

2 The Secretary, after considering recommenda3 tions by the Advisory Council, shall develop

4 guidelines for comparing long-term care insur5 ance policies for the purpose of determining

6 whether benefits under such policies are sub7 stantially equivalent.

8 (B) BEFORE EFFECTIVE DATE OF SEC9 RETARY’S GUIDELINES.—During the period

10 prior to the effective date of guidelines pub11 lished by the Secretary under this paragraph,

12 insurers shall comply with standards for deter13 minations of substantial equivalence established

14 by State insurance commissioners.

15 (5) ADDITIONAL REQUIREMENTS.—Insurers

16 shall comply with such other requirements relating

17 to continuation, renewal, replacement, and conver18 sion of long-term care insurance policies as the Sec19 retary may establish.

20 SEC. 2326. REQUIREMENTS RELATING TO PAYMENT OF

21 BENEFITS.

22 (a) IN GENERAL.—The Secretary, after considering

23 (where appropriate) recommendations of the Advisory

24 Council, shall promulgate regulations establishing require25 ments with respect to claims for and payment of benefits
413

•S 1779 PCS

1 under long-term care insurance policies, which shall in2 clude at a minimum the requirements specified in this sec3 tion.

4 (b) STANDARDS RELATING TO THRESHOLD CONDI5 TIONS FOR RECEIPT OF COVERED BENEFITS.—Each

6 long-term care insurance policy shall meet the following

7 requirements with respect to identification of, and deter8 mination of whether an insured individual meets, the

9 threshold conditions for receipt of benefits covered under

10 such policy:

11 (1) DECLARATION OF THRESHOLD CONDI12 TIONS.—

13 (A) IN GENERAL.—The policy shall specify

14 the level (or levels) of functional or cognitive

15 mental impairment (or combination of impair16 ments) required as a threshold condition of en17 titlement to receive benefits under the policy

18 (which threshold condition or conditions shall

19 be consistent with any regulations promulgated

20 by the Secretary pursuant to subsection (B)).

21 (B) SECRETARIAL RESPONSIBILITY.—The

22 Secretary (after considering the views of the

23 Advisory Council on current practices of insur24 ers concerning, and the appropriateness of

25 standardizing, threshold conditions) may pro-
414

•S 1779 PCS

1 mulgate such regulations as the Secretary finds

2 appropriate establishing standardized thresholds

3 to be used under such policies as preconditions

4 for varying levels of benefits.

5 (2) INDEPENDENT PROFESSIONAL ASSESS6 MENT.—The policy shall provide for a procedure for

7 determining whether the threshold conditions speci8 fied under paragraph (1) have been met with respect

9 to an insured individual which—

10 (A) applies such uniform assessment

11 standards, procedures, and formats as the Sec12 retary may specify, after consideration of rec13 ommendations by the Advisory Council;

14 (B) permits an initial evaluation (or, if the

15 initial evaluation was performed by a qualified

16 independent assessor selected by the insurer, a

17 reevaluation) to be made by a qualified inde18 pendent assessor selected by the insured indi19 vidual (or designated representative) as to

20 whether the threshold conditions for receipt of

21 benefits have been met;

22 (C) permits the insurer the option to ob23 tain a reevaluation by a qualified independent

24 assessor selected and reimbursed by the insurer;
415

•S 1779 PCS

1 (D) provides that the insurer will consider

2 that the threshold conditions have been met in

3 any case where—

4 (i) the assessment under subpara5 graph (B) concluded that such conditions

6 had been met, and the insurer declined the

7 option under subparagraph (C), or

8 (ii) assessments under both subpara9 graphs (B) and (C) concluded that such

10 conditions had been met; and

11 (E) provides for final resolution of the

12 question by a State agency or other impartial

13 third party in any case where assessments

14 under subparagraphs (B) and (C) reach incon15 sistent conclusions.

16 (3) QUALIFIED INDEPENDENT ASSESSOR.—For

17 purposes of paragraph (2), the term ‘‘qualified inde18 pendent assessor’’ means a licensed or certified pro19 fessional, as appropriate, who—

20 (A) meets such standards with respect to

21 professional qualifications as may be established

22 by the Secretary, after consulting with the Sec23 retary of the Treasury, and

24 (B) has no significant or controlling finan25 cial interest in, is not an employee of, and does
416

•S 1779 PCS

1 not derive more than 5 percent of gross income

2 from, the insurer (or any provider of services

3 for which benefits are available under the policy

4 and in which the insurer has a significant or

5 controlling financial interest).

6 (c) REQUIREMENTS RELATING TO CLAIMS FOR BEN7 EFITS.—Insurers shall be required—

8 (1) to promptly pay or deny claims for benefits

9 submitted by (or on behalf of) insured individuals

10 who have been determined pursuant to subsection

11 (b) to meet the threshold conditions for payment of

12 benefits;

13 (2) to provide an explanation in writing of the

14 reasons for payment, partial payment, or denial of

15 each such claim; and

16 (3) to provide an administrative procedure

17 under which an insured individual may appeal the

18 denial of any claim.

19 Subpart C—Enforcement

20 SEC. 2342. STATE PROGRAMS FOR ENFORCEMENT OF

21 STANDARDS.

22 (a) REQUIREMENT FOR STATE PROGRAMS IMPLE23 MENTING FEDERAL STANDARDS.—In order for a State to

24 be eligible for grants under this subpart, the State must

25 have in effect a program (including such laws and proce-
417

•S 1779 PCS

1 dures as may be necessary) for the regulation of long-term

2 care insurance which the Secretary has determined—

3 (1) includes the elements required under this

4 subpart, and

5 (2) is designed to ensure the compliance of

6 long-term care insurance policies sold in the State,

7 and insurers offering such policies and their agents,

8 with the requirements established pursuant to sub9 part B.

10 (b) ACTIVITIES UNDER STATE PROGRAM.—A State

11 program approved under this subpart shall provide for the

12 following procedures and activities:

13 (1) MONITORING OF INSURERS AND POLI14 CIES.—Procedures for ongoing monitoring of the

15 compliance of insurers doing business in the State,

16 and of long-term care insurance policies sold in the

17 State, with requirements under this part, including

18 at least the following:

19 (A) POLICY REVIEW AND CERTIFI20 CATION.—A program for review and certifi21 cation (and annual recertification) of each such

22 policy sold in the State.

23 (B) REPORTING BY INSURERS.—Require24 ments of annual reporting by insurers selling or

25 servicing long-term care insurance policies in
418

•S 1779 PCS

1 the State, in such form and containing such in2 formation as the State may require to deter3 mine whether the insurer (and policies) are in

4 compliance with requirements under this part.

5 (C) DATA COLLECTION.—Procedures for

6 collection, from insurers, service providers, in7 sured individuals, and others, of information re8 quired by the State for purposes of carrying out

9 its responsibilities under this part (including

10 authority to compel compliance of insurers with

11 requests for such information).

12 (D) MARKETING OVERSIGHT.—Procedures

13 for monitoring (through sampling or other ap14 propriate procedures) the sales practices of in15 surers and agents, including review of market16 ing literature.

17 (E) OVERSIGHT OF ADMINISTRATION OF

18 BENEFITS.—Procedures for monitoring

19 (through sampling or other appropriate proce20 dures) insurers’ administration of benefits, in21 cluding monitoring of—

22 (i) determinations of insured individ23 uals’ eligibility to receive benefits, and

24 (ii) disposition of claims for payment.
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•S 1779 PCS

1 (2) INFORMATION TO INSURERS.—Procedures

2 for furnishing, to insurers selling or servicing any

3 long-term care insurance policies in the State, infor4 mation on conditions of eligibility for, and benefits

5 under, each public long-term care program adminis6 tered by the State, in order to enable them to com7 ply with the requirement under section 2321(e)(3).

8 (3) CONSUMER COMPLAINTS AND DISPUTE RES9 OLUTION.—Administrative procedures for the inves10 tigation and resolution of complaints by consumers,

11 and disputes between consumers and insurers, with

12 respect to long-term care insurance, including—

13 (A) procedures for the filing, investigation,

14 and adjudication of consumer complaints with

15 respect to the compliance of insurers and poli16 cies with requirements under this part, or other

17 requirements under State law; and

18 (B) procedures for resolution of disputes

19 between insured individuals and insurers con20 cerning eligibility for, or the amount of, benefits

21 payable under such policies, and other issues

22 with respect to the rights and responsibilities of

23 insurers and insured individuals under such

24 policies.
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•S 1779 PCS

1 (4) TECHNICAL ASSISTANCE TO INSURERS.—

2 Provision of technical assistance to insurers to help

3 them to understand and comply with the require4 ments of this part, and other State laws, concerning

5 long-term care insurance policies and business prac6 tices.

7 (c) STATE ENFORCEMENT AUTHORITIES.—A State

8 program meeting the requirements of this subpart shall

9 ensure that the State insurance commissioner (or other

10 appropriate official or agency) has the following authority

11 with respect to long-term care insurers and policies:

12 (1) PROHIBITION OF SALE.—Authority to pro13 hibit the sale, or offering for sale, of any long-term

14 care insurance policy that fails to comply with all

15 applicable requirements under this part.

16 (2) PLANS OF CORRECTION.—Authority, in

17 cases where the business practices of an insurer are

18 determined not to comply with requirements under

19 this part, to require the insurer to develop, submit

20 for State approval, and implement a plan of correc21 tion which must be fulfilled within the shortest pe22 riod possible (not to exceed a year) as a condition

23 of continuing to do business in the State.

24 (3) CORRECTIVE ACTION ORDERS.—Authority,

25 in cases where an insurer is determined to have
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•S 1779 PCS

1 failed to comply with requirements of this part, or

2 with the terms of a policy, with respect to a

3 consumer or insured individual, to direct the insurer

4 (subject to appropriate due process) to eliminate

5 such noncompliance within 30 days.

6 (4) CIVIL MONEY PENALTIES.—Authority to as7 sess civil money penalties, in amounts for each viola8 tive act up to the greater of $10,000 or three times

9 the amount of any commission involved—

10 (A) for violations of subsections (d) (con11 cerning compensation or sale of policies), (e)

12 (concerning prohibited sales practices), and (f)

13 (prohibition on sale of duplicate benefits) of

14 section 2324,

15 (B) for such other violative acts as the

16 Secretary may specify in regulations, and

17 (C) in such other cases as the State finds

18 appropriate.

19 (5) OTHER AUTHORITIES.—Such other authori20 ties as the State finds necessary or appropriate to

21 enforce requirements under this part.

22 (d) RECORDS, REPORTS, AND AUDITS.—As a condi23 tion of approval of its program under this part, a State

24 must agree to maintain such records, make such reports

25 (including expenditure reports), and cooperate with such
422

•S 1779 PCS

1 audits, as the Secretary finds necessary to determine the

2 compliance of such State program (and insurers and poli3 cies regulated under such program) with the requirements

4 of this part.

5 (e) SECRETARIAL RESPONSIBILITIES.—

6 (1) APPROVAL OF STATE PROGRAMS.—The Sec7 retary shall approve a State program meeting the re8 quirements of this part.

9 (2) INFORMATION ON MEDICARE BENEFITS.—

10 The Secretary shall furnish, to the official in each

11 State with chief responsibility for the regulation of

12 long-term care insurance, a description of the Medi13 care programs under title XVIII of the Social Secu14 rity Act which makes clear the unavailability of long15 term benefits under such programs, for distribution

16 by such State official to insurers selling long-term

17 care insurance in the State, in accordance with sub18 section (b)(2).

19 SEC. 2342. AUTHORIZATION OF APPROPRIATIONS FOR

20 STATE PROGRAMS.

21 There are authorized to be appropriated $10,000,000

22 for fiscal year 1996, $10,000,000 for fiscal year 1997,

23 $7,500,000 for fiscal year 1998, and $5,000,000 for fiscal

24 year 1999 and each succeeding fiscal year, for grants to
423

•S 1779 PCS

1 States with programs meeting the requirements of this

2 part, to remain available until expended.

3 SEC. 2343. ALLOTMENTS TO STATES.

4 The allotment for any fiscal year to a State with a

5 program approved under this part shall be an amount de6 termined by the Secretary, taking into account the num7 bers of long-term care insurance policies sold, and of elder8 ly individuals residing, in the State, and such other factors

9 as the Secretary finds appropriate.

10 SEC. 2344. PAYMENTS TO STATES.

11 (a) IN GENERAL.—Each State with a program ap12 proved under this part shall be entitled to payment under

13 this title for each fiscal year in an amount equal to its

14 allotment for such fiscal year, for expenditure by such

15 State for up to 50 percent of the cost of activities under

16 such program.

17 (b) STATE SHARE OF PROGRAM EXPENDITURES.—

18 No Federal funds from any source may be used as any

19 part of the non-Federal share of expenditures under the

20 State program under this subpart.

21 (c) TRANSFER AND DEPOSIT REQUIREMENTS.—The

22 Secretary shall make payments under this section in ac23 cordance with section 6503 of title 31, United States

24 Code.
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•S 1779 PCS

1 SEC. 2345. FEDERAL OVERSIGHT OF STATE ENFORCEMENT.

2 (a) IN GENERAL.—The Secretary shall periodically

3 review State regulatory programs approved under section

4 2341 to determine whether they continue to comply with

5 the requirements of this part.

6 (b) NOTICE OF DETERMINATION OF NONCOMPLI7 ANCE.—The Secretary shall promptly notify the State of

8 a determination that a State program fails to comply with

9 this part, specifying the requirement or requirements not

10 met and the elements of the State program requiring cor11 rection.

12 (c) OPPORTUNITY FOR CORRECTION.—

13 (1) IN GENERAL.—The Secretary shall afford a

14 State notified of noncompliance pursuant to sub15 section (b) a reasonable opportunity to eliminate

16 such noncompliance.

17 (2) CORRECTION PLANS.—In a case where sub18 stantial corrections are needed to eliminate non19 compliance of a State program, the Secretary may—

20 (A) permit the State a reasonable time

21 after the date of the notice pursuant to sub22 section (b) to develop and obtain the Sec23 retary’s approval of a correction plan, and

24 (B) permit the State a reasonable time

25 after the date of approval of such plan to elimi26 nate the noncompliance.
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•S 1779 PCS

1 (d) WITHDRAWAL OF PROGRAM APPROVAL.—In the

2 case of a State that fails to eliminate noncompliance with

3 requirements under this part by the date specified by the

4 Secretary pursuant to subsection (c), the Secretary shall

5 withdraw the approval of the State program pursuant to

6 section 2341(e).

7 SEC. 2346. EFFECT OF FAILURE TO HAVE APPROVED STATE

8 PROGRAM.

9 (a) RESTRICTION ON SALE OF LONG-TERM CARE IN10 SURANCE.—

11 (1) IN GENERAL.—No insurer may sell or offer

12 for sale any long-term care insurance policy, on or

13 after the date specified in subsection (c), in a State

14 that does not have in effect a regulatory program

15 approved under section 2341(e).

16 (2) APPLICATION OF PROHIBITION.—For pur17 poses of paragraph (1), an insurance policy shall not

18 be considered to be sold or offered for sale in a

19 State solely because it is sold or offered to a resident

20 of such State.

21 (b) CIVIL MONEY PENALTY.—

22 (1) IN GENERAL.—An insurer shall be subject

23 to a civil money penalty, in an amount up to the

24 greater of $10,000 or three times any commission

25 involved, for each incident in which the insurer sells,
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•S 1779 PCS

1 or offers to sell, an insurance policy to an individual

2 in violation of subsection (a).

3 (2) ENFORCEMENT PROCEDURE.—The Sec4 retary shall enforce the provisions of this subsection

5 in accordance with the procedures provided under

6 section 5412 of this Act.

7 (c) EFFECTIVE DATE.—

8 (1) IN GENERAL.—The date specified in this

9 subsection, for purposes of subsection (a), with re10 spect to any requirement under this part, is the date

11 one year after the date the Secretary first promul12 gates regulations with respect to such requirement.

13 (2) EXCEPTION.—To the extent that a State

14 demonstrates to the Secretary that State legislation

15 is required to meet any such requirement, the State

16 shall not be regarded as failing to have in effect a

17 program in compliance with this part solely on the

18 basis of its failure to comply with such requirement

19 before the first day of the first calendar quarter be20 ginning after the close of the first regular session of

21 the State legislature that begins after the promulga22 tion of the regulation imposing such requirement.

23 For purposes of the preceding sentence, in the case

24 of a State that has a 2-year legislative session, each
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•S 1779 PCS

1 year of such session shall be deemed to be a sepa2 rate regular session of the State legislature.

3 Subpart D—Consumer Education Grants

4 SEC. 2361. GRANTS FOR CONSUMER EDUCATION.

5 (a) GRANT PROGRAM AUTHORIZED.—The Secretary

6 is authorized to make grants—

7 (1) to States,

8 (2) to regional alliances (at the option of States

9 within which such Alliances are located), and

10 (3) to national organizations representing insur11 ance consumers, long-term care providers, and insur12 ers,

13 for the development and implementation of long-term care

14 information, counseling, and other programs.

15 (b) APPLICATIONS.—

16 (1) IN GENERAL.—Each State or organization

17 seeking a grant under this section shall submit to

18 the Secretary an application, in such format and

19 containing such information as the Secretary may

20 require.

21 (2) GOALS.—Programs under this section shall

22 be directed at the goals of increasing consumers’ un23 derstanding and awareness of options available to

24 them with respect to long-term care insurance (and
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•S 1779 PCS

1 alternatives, such as public long-term care pro2 grams), including—

3 (A) the risk of needing long-term care;

4 (B) the costs associated with long-term

5 care services;

6 (C) the lack of long-term care coverage

7 under the Medicare program, Medicare supple8 mental (Medigap) policies, and standard private

9 health insurance;

10 (D) the limitations on (and conditions of

11 eligibility for) long-term care coverage under

12 State programs;

13 (E) the availability, and variations in cov14 erage and cost, of private long-term care insur15 ance;

16 (F) features common to many private long17 term care insurance policies; and

18 (G) pitfalls to avoid when purchasing a

19 long-term care insurance policy.

20 (3) ACTIVITIES.—An application for a grant

21 under this section shall indicate the activities the

22 State or organization would carry out under such

23 grant, which activities may include—

24 (A) coordination of the activities of State

25 agencies and private entities as necessary to
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•S 1779 PCS

1 carry out the State’s program under this sec2 tion;

3 (B) collection, analysis, publication, and

4 dissemination of information,

5 (C) conducting or sponsoring of consumer

6 education, outreach, and information programs,

7 (D) providing (directly or through referral)

8 counseling and consultation services to consum9 ers to assist them in choosing long-term care

10 insurance coverage appropriate to their cir11 cumstances, and

12 (E) other appropriate activities.

13 (4) PRIORITY FOR INNOVATION.—In awarding

14 grants under this section, the Secretary shall give

15 priority to applications proposing to use innovative

16 approaches to providing information, counseling, and

17 other assistance to individuals who might benefit

18 from, or are considering the purchase of, long-term

19 care insurance.

20 (c) PERIOD OF GRANTS.—Grants under this section

21 shall be for not longer than 3 years.

22 (d) EVALUATIONS AND REPORTS.—

23 (1) BY GRANTEES TO THE SECRETARY.—Each

24 recipient of a grant under this section shall annually
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•S 1779 PCS

1 evaluate the effectiveness of its program under such

2 grant, and report its conclusions to the Secretary.

3 (2) BY THE SECRETARY TO THE CONGRESS.—

4 The Secretary shall annually evaluate, and report to

5 the Congress on, the effectiveness of programs under

6 this section, on the basis of reports received under

7 paragraph (1) and such independent evaluation as

8 the Secretary finds necessary.

9 (e) AUTHORIZATION OF APPROPRIATIONS.—There

10 are authorized to be appropriated, for grants under this

11 section—

12 (1) $10,000,000 for each of fiscal years 1995

13 through 1997 for grants to States, and

14 (2) $1,000,000 for each of fiscal years 1995

15 through 1997,

16 for grants to eligible organizations.

17 PART 4—TAX TREATMENT OF LONG-TERM CARE

18 INSURANCE AND SERVICES

19 SEC. 2401. REFERENCE TO TAX PROVISIONS.

20 For amendments to the Internal Revenue Code of

21 1986 relating to the treatment of long-term care insurance

22 and services, see subtitle G of title VII.
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•S 1779 PCS

1 PART 5—TAX INCENTIVES FOR INDIVIDUALS

2 WITH DISABILITIES WHO WORK

3 SEC. 2501. REFERENCE TO TAX PROVISION.

4 For amendment to the Internal Revenue Code of

5 1986 providing for a tax credit for cost of personal assist6 ance services required by employed individuals, see section

7 7901.

8 TITLE III—PUBLIC HEALTH

9 INITIATIVES

TABLE OF CONTENTS OF TITLE

Page

Subtitle A—Workforce Priorities Under Federal Payments

PART 1—INSTITUTIONAL COSTS OF GRADUATE MEDICAL EDUCATION;

WORKFORCE PRIORITIES

SUBPART A—NATIONAL COUNCIL REGARDING WORKFORCE PRIORITIES

Sec. 3001. National Council on Graduate Medical Education ................ 435

SUBPART B—AUTHORIZED POSITIONS IN SPECIALTY TRAINING

Sec. 3011. Cooperation regarding approved physician training programs ............................................................................ 437

Sec. 3012. Annual authorization of number of specialty positions; requirements regarding primary health care ................... 440

Sec. 3013. Allocations among specialities and programs ........................ 444

SUBPART D—GENERAL PROVISIONS

Sec. 3041. Definitions ............................................................................. 446

SUBPART E—TRANSITIONAL PROVISIONS

Sec. 3051. Transitional payments to institutions ................................... 448

PART 2—INSTITUTIONAL COSTS OF GRADUATE NURSING EDUCATION;

WORKFORCE PRIORITIES

Sec. 3061. National council; authorized graduate nurse training positions; institutional costs ................................................ 453

Sec. 3062. Applicability of part 1 provisions .......................................... 455

PART 3—RELATED PROGRAMS

Sec. 3071. Programs of the Secretary of Health and Human Services 456

Sec. 3072. Programs of the Secretary of Labor ..................................... 459
432

•S 1779 PCS

Sec. 3073. National Institute for Health Care Workforce Development 463

Sec. 3074. Requirement for certain programs regarding redeployment

of health care workers ................................................... 466

Subtitle B—Academic Health Centers

PART 2—ACCESS OF PATIENTS TO ACADEMIC HEALTH CENTERS

Sec. 3131. Contracts for ensuring access to centers ............................... 468

Sec. 3132. Discretionary grants regarding access to centers ................. 469

Subtitle C—Health Research Initiatives

PART 1—PROGRAMS FOR CERTAIN AGENCIES

Sec. 3201. Biomedical and behavioral research on health promotion

and disease prevention .................................................. 470

Sec. 3202. Health services research ........................................................ 471

PART 2—FUNDING FOR PROGRAMS

Sec. 3211. Authorizations of appropriations ........................................... 472

Subtitle D—Core Functions of Public Health Programs;

National Initiatives Regarding Preventive Health

PART 1—FUNDING

Sec. 3301. Authorizations of appropriations ........................................... 473

PART 2—CORE FUNCTIONS OF PUBLIC HEALTH PROGRAMS

Sec. 3311. Purposes ................................................................................ 474

Sec. 3312. Grants to States for core health functions ............................ 475

Sec. 3313. Submission of information .................................................... 479

Sec. 3314. Reports .................................................................................. 480

Sec. 3315. Application for grant ............................................................. 481

Sec. 3316. General provisions ................................................................. 481

Sec. 3317. Allocations for certain activities ............................................ 482

Sec. 3318. Definitions ............................................................................. 482

PART 3—NATIONAL INITIATIVES REGARDING HEALTH PROMOTION AND

DISEASE PREVENTION

Sec. 3331. Grants for national prevention initiatives ............................. 483

Sec. 3332. Priorities ................................................................................ 484

Sec. 3333. Submission of information .................................................... 486

Sec. 3334. Application for grant ............................................................. 486

Subtitle E—Health Services for Medically Underserved

Populations

PART 1—COMMUNITY AND MIGRANT HEALTH CENTERS

Sec. 3401. Authorizations of appropriations ........................................... 487

Sec. 3402. Use of funds .......................................................................... 488

PART 2—INITIATIVES FOR ACCESS TO HEALTH CARE
433

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SUBPART A—PURPOSES; FUNDING

Sec. 3411. Purposes ................................................................................ 488

Sec. 3412. Authorizations of appropriations ........................................... 490

SUBPART B—DEVELOPMENT OF QUALIFIED COMMUNITY HEALTH PLANS AND

PRACTICE NETWORKS

Sec. 3421. Grants and contracts for development of plans and networks ............................................................................. 491

Sec. 3422. Preferences in making awards of assistance ......................... 496

Sec. 3423. Certain uses of awards .......................................................... 496

Sec. 3424. Accessibility of services .......................................................... 499

Sec. 3425. Additional agreements ........................................................... 502

Sec. 3426. Submission of certain information ........................................ 503

Sec. 3427. Reports; audits ...................................................................... 504

Sec. 3428. Application for assistance ...................................................... 505

Sec. 3429. General provisions ................................................................. 505

SUBPART C—CAPITAL COST OF DEVELOPMENT OF QUALIFIED COMMUNITY

HEALTH PLANS AND PRACTICE NETWORKS

Sec. 3441. Loans and loan guarantees regarding plans and networks 505

Sec. 3442. Certain requirements ............................................................. 507

Sec. 3443. Defaults; right of recovery .................................................... 509

Sec. 3444. Provisions regarding construction or expansion of facilities 512

Sec. 3445. Application for assistance ...................................................... 514

Sec. 3446. Administration of programs .................................................. 514

SUBPART D—ENABLING SERVICES

Sec. 3461. Grants and contracts for enabling services ........................... 514

Sec. 3462. Authorizations of appropriations ........................................... 517

PART 3—NATIONAL HEALTH SERVICE CORPS

Sec. 3471. Authorizations of appropriations ........................................... 518

Sec. 3472. Allocation for participation of nurses in scholarship and

loan repayment programs ............................................. 519

PART 4—PAYMENTS TO HOSPITALS SERVING VULNERABLE POPULATIONS

Sec. 3481. Payments to hospitals ........................................................... 519

Sec. 3482. Identification of eligible hospitals .......................................... 521

Sec. 3483. Amount of payments ............................................................. 522

Sec. 3484. Base year ............................................................................... 524

Subtitle F—Mental Health; Substance Abuse

PART 1—FINANCIAL ASSISTANCE

Sec. 3501. Authorizations of appropriations ........................................... 525

Sec. 3502. Supplemental formula grants for States regarding activities

under part B of title XIX of Public Health Service Act 526

Sec. 3503. Capital costs of development of certain centers and clinics 530

PART 2—AUTHORITIES REGARDING PARTICIPATING STATES
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SUBPART A—REPORT

Sec. 3511. Report on integration of mental health systems ................... 531

SUBPART B—PILOT PROGRAM

Sec. 3521. Pilot program ........................................................................ 535

Subtitle G—Comprehensive School Health Education; SchoolRelated Health Services

PART 1—GENERAL PROVISIONS

Sec. 3601. Purposes ................................................................................ 536

Sec. 3602. Definitions ............................................................................. 538

PART 2—SCHOOL HEALTH EDUCATION; GENERAL PROVISIONS

Sec. 3611. Authorizations of appropriations ........................................... 540

Sec. 3612. Waivers of statutory and regulatory requirements ............... 541

PART 3—SCHOOL HEALTH EDUCATION; GRANTS TO STATE EDUCATION

AGENCIES

SUBPART A—PLANNING GRANTS FOR STATE EDUCATION AGENCIES

Sec. 3621. Application for grant ............................................................. 545

Sec. 3622. Approval of Secretary ............................................................ 547

Sec. 3623. Amount of grant .................................................................... 547

Sec. 3624. Authorized activities .............................................................. 548

SUBPART B—IMPLEMENTATION GRANTS FOR STATE EDUCATION AGENCIES

Sec. 3631. Application for grant ............................................................. 549

Sec. 3632. Selection of grantees ............................................................. 551

Sec. 3633. Amount of grant .................................................................... 552

Sec. 3634. Authorized activities; limitation on administrative costs ...... 552

Sec. 3635. Subgrants to local educational agencies ................................ 554

SUBPART C—STATE AND LOCAL REPORTS

Sec. 3641. State and local reports .......................................................... 555

PART 4—SCHOOL HEALTH EDUCATION; GRANTS TO CERTAIN LOCAL

EDUCATIONAL AGENCIES

SUBPART A—ELIGIBILITY

Sec. 3651. Substantial need of area served by agency ........................... 556

SUBPART B—PLANNING GRANTS FOR LOCAL EDUCATION AGENCIES

Sec. 3661. Application for grant ............................................................. 556

Sec. 3662. Selection of grantees ............................................................. 558

Sec. 3663. Amount of grant .................................................................... 559

Sec. 3664. Authorized activities .............................................................. 559

SUBPART C—IMPLEMENTATION GRANTS FOR LOCAL EDUCATIONAL AGENCIES

Sec. 3671. Application for grant ............................................................. 560

Sec. 3672. Selection of grantees ............................................................. 562
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Sec. 3673. Amount of grant .................................................................... 563

Sec. 3674. Authorized activities .............................................................. 564

Sec. 3675. Reports .................................................................................. 564

PART 5—SCHOOL-RELATED HEALTH SERVICES

SUBPART A—DEVELOPMENT AND OPERATION OF PROJECTS

Sec. 3681. Authorizations of appropriations ........................................... 565

Sec. 3682. Eligibility for development and operation grants .................. 565

Sec. 3683. Preferences ............................................................................ 567

Sec. 3684. Grants for development of projects ....................................... 568

Sec. 3685. Grants for operation of projects ............................................ 571

Sec. 3686. Federal administrative costs ................................................. 575

SUBPART B—CAPITAL COSTS OF DEVELOPING PROJECTS

Sec. 3691. Loans and loan guarantees regarding projects ..................... 575

Sec. 3692. Funding ................................................................................. 576

Subtitle H—Public Health Service Initiative

Sec. 3701. Public health service initiative ............................................... 576

Subtitle I—Coordination With COBRA Continuation Coverage

Sec. 3801. Public Health Service Act; coordination with COBRA continuation coverage ......................................................... 577

1 Subtitle A—Workforce Priorities

2 Under Federal Payments

3 PART 1—INSTITUTIONAL COSTS OF GRADUATE

4 MEDICAL EDUCATION; WORKFORCE PRIORITIES

5 Subpart A—National Council Regarding Workforce

6 Priorities

7 SEC. 3001. NATIONAL COUNCIL ON GRADUATE MEDICAL

8 EDUCATION.

9 (a) IN GENERAL.—There is established within the

10 Department of Health and Human Services a council to

11 be known as the National Council on Graduate Medical

12 Education.
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1 (b) DUTIES.—The Secretary shall carry out subpart

2 B acting through the National Council.

3 (c) COMPOSITION.—

4 (1) IN GENERAL.—The membership of the Na5 tional Council shall include individuals who are ap6 pointed to the Council from among individuals who

7 are not officers or employees of the United States.

8 Such individuals shall be appointed by the Secretary,

9 and shall include individuals from each of the follow10 ing categories:

11 (A) Consumers of health care services.

12 (B) Physicians who are faculty members of

13 medical schools.

14 (C) Physicians in private practice who are

15 not physicians described in subparagraph (B).

16 (D) Officers or employees of regional and

17 corporate health alliances.

18 (E) Officers or employees of health care

19 plans that participate in such alliances.

20 (F) Such other individuals as the Secretary

21 determines to be appropriate.

22 (2) EX OFFICIO MEMBERS; OTHER FEDERAL

23 OFFICERS OR EMPLOYEES.—The membership of the

24 National Council shall include individuals designated

25 by the Secretary to serve as members of the Council
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1 from among Federal officers or employees who are

2 appointed by the President, or by the Secretary or

3 other Federal officers who are appointed by the

4 President with the advice and consent of the Senate.

5 (d) CHAIR.—The Secretary shall, from among mem6 bers of the National Council appointed under subsection

7 (c)(1), designate an individual to serve as the Chair of

8 the Council.

9 (e) DEFINITIONS.—For purposes of this subtitle:

10 (1) The term ‘‘medical school’’ means a school

11 of medicine (as defined in section 799 of the Public

12 Health Service Act) or a school of osteopathic medi13 cine (as defined in such section).

14 (2) The term ‘‘National Council’’ means the

15 council established in subsection (a).

16 Subpart B—Authorized Positions in Specialty

17 Training

18 SEC. 3011. COOPERATION REGARDING APPROVED PHYSI19 CIAN TRAINING PROGRAMS.

20 (a) IN GENERAL.—With respect to an approved phy21 sician training program in a medical specialty, a funding

22 agreement for payments under section 3031 for a calendar

23 year is that the program will ensure that the number of

24 individuals enrolled in the program in the subsequent aca25 demic year is in accordance with this subpart.
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1 (b) DEFINITIONS.—

2 (1) APPROVED PROGRAM.—For purposes of this

3 subtitle:

4 (A) The term ‘‘approved physician training

5 program’’, with respect to the medical speciality

6 involved, means a residency or other post7 graduate program that trains physicians and

8 meets the following conditions:

9 (i) Participation in the program may

10 be counted toward certification in the med11 ical specialty.

12 (ii) The program is accredited by the

13 Accreditation Council on Graduate Medical

14 Education, or approved by the Council on

15 Postgraduate Training of the American

16 Osteopathic Association.

17 (B) The term ‘‘approved physician training

18 program’’ includes any postgraduate program

19 described in subparagraph (A) that provides

20 health services in an ambulatory setting, with21 out regard to whether the program provides in22 patient hospital services.

23 (C) The term ‘‘approved physician training

24 program’’ includes any postgraduate program

25 described in subparagraph (A), whether oper-
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1 ated by academic health centers, teaching hos2 pitals, multispecialty group practices, ambula3 tory care providers, prepaid health plans, or

4 other entities.

5 (2) ELIGIBLE PROGRAM; SUBPART DEFINI6 TION.—For purposes of this subpart, the term ‘‘eli7 gible program’’, with respect to an academic year,

8 means an approved physician training program that

9 receives payments under subpart C for the calendar

10 year in which the academic year begins.

11 (3) OTHER DEFINITIONS.—For purposes of this

12 subtitle:

13 (A)(i) The term ‘‘academic year’’ means

14 the 1-year period beginning on July 1. The aca15 demic year beginning July 1, 1993, is academic

16 year 1993–94.

17 (ii) With respect to the funding agreement

18 described in subsection (a), the term ‘‘subse19 quent academic year’’ means the academic year

20 beginning July 1 of the calendar year for which

21 payments are to be made under the agreement.

22 (B) The term ‘‘funding agreement’’, with

23 respect to payments under section 3031 to an

24 eligible program, means that the Secretary may
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1 make the payments only if the program makes

2 the agreement involved.

3 (C) The term ‘‘medical specialty’’ includes

4 all medical, surgical, and other physician spe5 cialties and subspecialties.

6 SEC. 3012. ANNUAL AUTHORIZATION OF NUMBER OF SPE7 CIALTY POSITIONS; REQUIREMENTS REGARD8 ING PRIMARY HEALTH CARE.

9 (a) ANNUAL AUTHORIZATION OF NUMBER OF POSI10 TIONS.—In the case of each medical specialty, the Na11 tional Council shall, pursuant to section 3011, designate

12 for each academic year the number of individuals nation13 wide who are authorized to be enrolled in eligible pro14 grams. The preceding sentence is subject to subsection

15 (c)(2).

16 (b) PRIMARY HEALTH CARE.—

17 (1) IN GENERAL.—Subject to paragraph (2), in

18 carrying out subsection (a) for an academic year, the

19 National Council shall ensure that, of the class of

20 training participants entering eligible programs for

21 academic year 1998–99 or any subsequent academic

22 year, the percentage of such class that completes eli23 gible programs in primary health care is not less

24 than 55 percent (without regard to the academic
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1 year in which the members of the class complete the

2 programs).

3 (2) RULE OF CONSTRUCTION.—The require4 ment of paragraph (1) regarding a percentage ap5 plies in the aggregate to training participants enter6 ing eligible programs for the academic year involved,

7 and not individually to any eligible program.

8 (c) DESIGNATIONS REGARDING 3-YEAR PERIODS.—

9 (1) DESIGNATION PERIODS.—For each medical

10 specialty, the National Council shall make the an11 nual designations under subsection (a) for periods of

12 3 academic years.

13 (2) INITIAL PERIOD.—The first designation pe14 riod established by the National Council after the

15 date of the enactment of this Act shall be the aca16 demic years 1998–99 through 2000–01.

17 (d) CERTAIN CONSIDERATIONS IN DESIGNATING AN18 NUAL NUMBERS.—

19 (1) IN GENERAL.—Factors considered by the

20 National Council in designating the annual number

21 of specialty positions for an academic year for a

22 medical specialty shall include the extent to which

23 there is a need for additional practitioners in the

24 speciality, as indicated by the following:
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1 (A) The incidence and prevalence (in the

2 general population and in various other popu3 lations) of the diseases, disorders, or other

4 health conditions with which the specialty is

5 concerned.

6 (B) The number of physicians who will be

7 practicing in the specialty in the academic year.

8 (C) The number of physicians who will be

9 practicing in the specialty at the end of the 5-

10 year period beginning on the first day of the

11 academic year.

12 (2) RECOMMENDATIONS OF PRIVATE ORGANIZA13 TIONS.—In designating the annual number of spe14 cialty positions for an academic year for a medical

15 specialty, the National Council shall consider the

16 recommendations of organizations representing phy17 sicians in the specialty and the recommendations of

18 organizations representing consumers of the services

19 of such physicians.

20 (3) TOTAL OF RESPECTIVE ANNUAL NUM21 BERS.—

22 (A) Subject to subparagraph (B), for aca23 demic year 1998–99 and subsequent academic

24 years, the National Council shall ensure that

25 the total of the respective annual numbers des-
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1 ignated under subsection (a) for an academic

2 year is a total that—

3 (i) bears a relationship to the number

4 of individuals who graduated from medical

5 schools in the United States in the preced6 ing academic year; and

7 (ii) is consistent with the purposes of

8 this subpart.

9 (B) For each of the academic years 1998–

10 99 through 2002–03, the total determined

11 under subparagraph (A) shall be reduced by a

12 percentage determined by the National Council.

13 (e) DEFINITIONS.—For purposes of this subtitle:

14 (1) The term ‘‘annual number of specialty posi15 tions’’, with respect to a medical specialty, means

16 the number designated by the National Council

17 under subsection (a) for eligible programs for the

18 academic year involved.

19 (2) The term ‘‘designation period’’ means a 3-

20 year period under subsection (c)(1) for which des21 ignations under subsection (a) are made by the Na22 tional Council.

23 (3) The term ‘‘primary health care’’ means the

24 following medical specialties: Family medicine, gen-
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1 eral internal medicine, general pediatrics, and ob2 stetrics and gynecology.

3 (4) The term ‘‘specialty position’’ means a posi4 tion as a training participant.

5 (5) The term ‘‘training participant’’ means an

6 individual who is enrolled in an approved physician

7 training program.

8 SEC. 3013. ALLOCATIONS AMONG SPECIALITIES AND PRO9 GRAMS.

10 (a) IN GENERAL.—For each academic year, the Na11 tional Council shall for each medical specialty make alloca12 tions among eligible programs of the annual number of

13 specialty positions that the Council has designated for

14 such year. The preceding sentence is subject to subsection

15 (b)(3).

16 (b) ALLOCATIONS REGARDING 3-YEAR PERIOD.—

17 (1) IN GENERAL.—For each medical specialty,

18 the National Council shall make the annual alloca19 tions under subsection (a) for periods of 3 academic

20 years.

21 (2) ADVANCE NOTICE TO PROGRAMS.—With re22 spect to the first academic year of an allocation pe23 riod established by the National Council, the Na24 tional Council shall, not later than July 1 of the pre25 ceding academic year, notify each eligible program of
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1 the allocations made for the program for each of the

2 academic years of the period.

3 (3) INITIAL PERIOD.—The first allocation pe4 riod established by the National Council after the

5 date of the enactment of this Act shall be the aca6 demic years 1998–99 through 2000–01.

7 (c) CERTAIN CONSIDERATIONS.—

8 (1) GEOGRAPHIC AREAS; QUALITY OF PRO9 GRAMS.—In making allocations under subsection (a)

10 for eligible programs of the various geographic

11 areas, the National Council shall include among the

12 factors considered the historical distribution among

13 the areas of approved physician training programs,

14 and the quality of such programs.

15 (2) UNDERREPRESENTATION OF MINORITY

16 GROUPS.—In making an allocation under subsection

17 (a) for an eligible program, the National Council

18 shall include among the factors considered the fol19 lowing:

20 (A) The extent to which the population of

21 training participants in the program includes

22 training participants who are members of racial

23 or ethnic minority groups.

24 (B) With respect to a racial or ethnic

25 group represented among the training partici-
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1 pants, the extent to which the group is

2 underrepresented in the field of medicine gen3 erally and in the various medical specialities.

4 (3) RECOMMENDATIONS OF PRIVATE ORGANIZA5 TIONS.—In making allocations under subsection (a)

6 for eligible programs, the National Council shall con7 sider the recommendations of organizations rep8 resenting physicians in the medical specialties and

9 the recommendations of organizations representing

10 consumers of the services of such physicians.

11 (d) DEFINITIONS.—For purposes of this subtitle, the

12 term ‘‘allocation period’’ means a 3-year period under sub13 section (b)(1) for which allocations under subsection (a)

14 are made by the National Council.

15 Subpart D—General Provisions

16 SEC. 3041. DEFINITIONS.

17 For purposes of this subtitle:

18 (1) The term ‘‘academic year’’ has the meaning

19 given such term in section 3011(b).

20 (2) The term ‘‘allocation period’’ has the mean21 ing given such term in section 3013(d).

22 (3) The term ‘‘annual health professions

23 workforce account’’ has the meaning given such

24 term in section 3033(d).
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1 (4) The term ‘‘annual number of specialty posi2 tions’’ has the meaning given such term in section

3 3012(e).

4 (5) The term ‘‘approved physician training pro5 gram’’ has the meaning given such term in section

6 3011(b).

7 (6) The term ‘‘consumer price index’’ has the

8 meaning given such term in section 3033(d).

9 (7) The term ‘‘designation period’’ has the

10 meaning given such term in section 3012(e).

11 (8) The term ‘‘eligible program’’ has the mean12 ing given such term in section 3011(b), in the case

13 of subpart B; and has the meaning given such term

14 in section 3031(c), in the case of subpart C.

15 (9) The term ‘‘funding agreement’’ has the

16 meaning given such term in section 3011(b).

17 (10) The term ‘‘general health care inflation

18 factor’’ has the meaning given such term in section

19 3033(d).

20 (11) The term ‘‘medical school’’ has the mean21 ing given such term in section 3001(e).

22 (12) The term ‘‘medical specialty’’ has the

23 meaning given such term in section 3011(b).

24 (13) The term ‘‘National Council’’ has the

25 meaning given such term in section 3001(e).
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1 (14) The term ‘‘plan payments’’ has the mean2 ing given such term in section 3034(e).

3 (15) The term ‘‘primary health care’’ has the

4 meaning given such term in section 3012(e).

5 (16) The term ‘‘specialty position’’ has the

6 meaning given such term in section 3012(e).

7 (17) The term ‘‘training participant’’ has the

8 meaning given such term in section 3012(e).

9 Subpart E—Transitional Provisions

10 SEC. 3051. TRANSITIONAL PAYMENTS TO INSTITUTIONS.

11 (a) PAYMENTS REGARDING EFFECTS OF SUBPART B

12 ALLOCATIONS.—For each of the four calendar years speci13 fied in subsection (b)(2), in the case of an institution that

14 submits to the Secretary an application for such year in

15 accordance with subsection (d), the Secretary shall make

16 payments for the year to the institution for the purpose

17 specified in subsection (c). The Secretary shall make the

18 payments in an amount determined in accordance with

19 subsection (e), and may administer the payments as a con20 tract, grant, or cooperative agreement.

21 (b) INSTITUTIONS LOSING SPECIALTY POSITIONS;

22 RELEVANT YEARS REGARDING PAYMENTS.—

23 (1) INSTITUTIONS LOSING SPECIALTY POSI24 TIONS.—The Secretary may make payments under

25 subsection (a) to an institution only if, with respect
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1 to the calendar year involved, the institution meets

2 the following conditions:

3 (A) The institution operates one or more

4 programs that—

5 (i) are approved physician training

6 programs; and

7 (ii) are receiving payments under sec8 tion 3031 for such year.

9 (B) The aggregate number of speciality po10 sitions in such programs (in the medical speci11 alities with respect to which such payments are

12 made) is below the aggregate number of such

13 positions at the institution for academic year

14 1993–94 as a result of allocations under sub15 part B.

16 (2) RELEVANT YEARS.—The Secretary may

17 make payments under subsection (a) to an institu18 tion only for the first four calendar years after cal19 endar 1997 for which the institution meets the con20 ditions described in paragraph (1).

21 (3) ELIGIBLE INSTITUTION.—For purposes of

22 this section, the term ‘‘eligible institution’’ means an

23 institution that submits to the Secretary an applica24 tion in accordance with subsection (d).
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1 (c) PURPOSE OF PAYMENTS.—The purpose of pay2 ments under subsection (a) is to assist an eligible institu3 tion with the costs of operation. A funding agreement for

4 such payments is that the institution involved will expend

5 the payments only for such purpose.

6 (d) APPLICATION FOR PAYMENTS.—For purposes of

7 subsection (a), an application for payments under such

8 subsection is in accordance with this subsection if the in9 stitution involved submits the application not later than

10 the date specified by the Secretary; the application dem11 onstrates that the institution meets the conditions de12 scribed in subsection (b)(1) and that the institution has

13 cooperated with the approved physician training programs

14 of the institution in meeting the condition described in sec15 tion 3032(b); the application contains each funding agree16 ment described in this subpart and the application pro17 vides such assurances of compliance with the agreements

18 as the Secretary may require; and the application is in

19 such form, is made in such manner, and contains such

20 agreements, assurances, and information as the Secretary

21 determines to be necessary to carry out this subpart.

22 (e) AMOUNT OF PAYMENTS.—

23 (1) IN GENERAL.—Subject to the annual health

24 professions workforce account available for the cal25 endar year involved, the amount of payments re-
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1 quired in subsection (a) to be made to an eligible in2 stitution for such year is the product of the amount

3 determined under paragraph (2) and the applicable

4 percentage specified in paragraph (3).

5 (2) NUMBER OF SPECIALTY POSITIONS LOST;

6 NATIONAL AVERAGE SALARY.—For purposes of

7 paragraph (1), the amount determined under this

8 paragraph for an eligible institution for the calendar

9 year involved is the product of—

10 (A) an amount equal to the aggregate

11 number of full-time equivalent specialty posi12 tions lost; and

13 (B) the national average salary of training

14 participants.

15 (3) APPLICABLE PERCENTAGE.—For purposes

16 of paragraph (1), the applicable percentage for a cal17 endar year is the following, as applicable to such

18 year:

19 (A) For the first calendar year after cal20 endar 1997 for which the eligible institution in21 volved meets the conditions described in sub22 section (b)(1), 100 percent.

23 (B) For the second such year, 75 percent.

24 (C) For the third such year, 50 percent.

25 (D) For the fourth such year, 25 percent.
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1 (4) DETERMINATION OF SPECIALTY POSITIONS

2 LOST.—

3 (A) For purposes of this subsection, the

4 aggregate number of specialty positions lost,

5 with respect to a calendar year, is the difference

6 between—

7 (i) the aggregate number of specialty

8 positions described in subparagraph (B)

9 that are estimated for the eligible institu10 tion involved for the academic year begin11 ning in such calendar year; and

12 (ii) the aggregate number of such spe13 cialty positions at the institution for aca14 demic year 1993–94.

15 (B) For purposes of subparagraph (A), the

16 specialty positions described in this subpara17 graph are specialty positions in the medical spe18 cialities with respect to which payments under

19 section 3031 are made to the approved physi20 cian training programs of the eligible institution

21 involved.

22 (5) ADDITIONAL PROVISION REGARDING NA23 TIONAL AVERAGE SALARY.—

24 (A) The Secretary shall determine, for aca25 demic year 1992–93, an amount equal to the
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1 national average described in paragraph (2)(B).

2 The national average applicable under such

3 paragraph for a calendar year is, subject to

4 subparagraph (B), the amount determined

5 under the preceding sentence increased by an

6 amount necessary to offset the effects of infla7 tion occurring since academic year 1992–93, as

8 determined through use of the consumer price

9 index.

10 (B) The national average determined

11 under subparagraph (A) and applicable to a cal12 endar year shall, in the case of the eligible insti13 tution involved, be adjusted by a factor to re14 flect regional differences in the applicable wage

15 and wage-related costs.

16 PART 2—INSTITUTIONAL COSTS OF GRADUATE

17 NURSING EDUCATION; WORKFORCE PRIORITIES

18 SEC. 3061. NATIONAL COUNCIL; AUTHORIZED GRADUATE

19 NURSE TRAINING POSITIONS; INSTITU20 TIONAL COSTS.

21 (a) PROGRAM REGARDING GRADUATE NURSE TRAIN22 ING PROGRAMS.—The Secretary shall, in accordance with

23 this part, carry out a program with respect to graduate

24 nurse training programs that is equivalent to the program
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1 carried out under part 1 with respect to approved physi2 cian training programs.

3 (b) DEFINITIONS.—For purposes of this part:

4 (1) The term ‘‘graduate nurse training pro5 grams’’ means programs for advanced nurse edu6 cation, programs for education as nurse practition7 ers, programs for education as nurse midwives, pro8 grams for education as nurse anesthetists, and such

9 other programs for training in clinical nurse special10 ties as are determined by the Secretary to require

11 advanced education.

12 (2) The term ‘‘graduate nurse training posi13 tion’’ means a position as an individual who is en14 rolled in a graduate nurse training program.

15 (3) The term ‘‘programs for advanced nurse

16 education’’ means programs meeting the conditions

17 to be programs for which awards of grants and con18 tracts may be made under section 821 of the Public

19 Health Service Act.

20 (4) The term ‘‘programs for education as nurse

21 practitioners’’ means programs meeting the condi22 tions to be programs for which awards of grants and

23 contracts may be made under section 822 of the

24 Public Health Service Act for education as a nurse

25 practitioners.
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1 (5) The term ‘‘programs for education as nurse

2 midwives’’ means programs meeting the conditions

3 to be programs for which awards of grants and con4 tracts may be made under section 822 of the Public

5 Health Service Act for education as nurse midwives.

6 (6) The term ‘‘programs for education as nurse

7 anesthetists’’ means programs meeting the condi8 tions to be programs for which awards of grants

9 may be made under section 831 of the Public Health

10 Service Act for education as nurse anesthetists.

11 SEC. 3062. APPLICABILITY OF PART 1 PROVISIONS.

12 (a) IN GENERAL.—The provisions of part 1 apply to

13 the program carried out under section 3061 to the same

14 extent and in the same manner as such provisions apply

15 to the program carried out under part 1, subject to the

16 subsequent provisions of this section. Section 3051 does

17 not apply for purposes of the preceding sentence.

18 (b) NATIONAL COUNCIL.—With respect to section

19 3001 as applied to this part, the council shall be known

20 as the National Council on Graduate Nurse Education (in

21 this part referred to as the ‘‘National Council’’). The pro22 visions of section 851 of the Public Health Service Act

23 regarding the composition of the council under such sec24 tion apply to the composition of the National Council to
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1 the same extent and in the same manner as such provi2 sions apply to the council under such section 851.

3 (c) ALLOCATION OF GRADUATE NURSE TRAINING

4 POSITIONS; FORMULA PAYMENTS FOR OPERATING

5 COSTS.—With respect to subparts B and C of part 1 as

6 applied to this part—

7 (1) the funding agreement described in section

8 3011 is to be made by graduate nurse training pro9 grams;

10 (2) designations under section 3012 and alloca11 tions under section 3013 apply to graduate nurse

12 training positions; and

13 PART 3—RELATED PROGRAMS

14 SEC. 3071. PROGRAMS OF THE SECRETARY OF HEALTH AND

15 HUMAN SERVICES.

16 (a) IN GENERAL.—

17 (1) FUNDING.—For purposes of carrying out

18 the programs described in this section, there is au19 thorized to be appropriated $400,000,000 for fiscal

20 year 1994 and each subsequent fiscal year (in addi21 tion to amounts that may otherwise be authorized to

22 be appropriated for carrying out the programs).

23 (2) ADMINISTRATION.—The programs described

24 in this section and carried out with amounts made
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1 available under subsection (a) shall be carried out by

2 the Secretary of Health and Human Services.

3 (b) PRIMARY CARE PHYSICIAN AND PHYSICIAN AS4 SISTANT TRAINING.—For purposes of subsection (a), the

5 programs described in this section include programs to

6 support projects to train additional numbers of primary

7 care physicians and physician assistants, including

8 projects to enhance community-based generalist training

9 for medical students, residents, and practicing physicians;

10 to retrain mid-career physicians previously certified in a

11 nonprimary care medical specialty; to expand the supply

12 of physicians with special training to serve in rural and

13 inner-city medically underserved areas; to support expan14 sion of service-linked educational networks that train a

15 range of primary care providers in community settings;

16 to provide for training in managed care, cost-effective

17 practice management, and continuous quality improve18 ment; and to develop additional information on primary

19 care workforce issues as required to meet future needs in

20 health care.

21 (c) TRAINING OF UNDERREPRESENTED MINORITIES

22 AND DISADVANTAGED PERSONS.—For purposes of sub23 section (a), the programs described in this section include

24 a program to support projects to increase the number of

25 underrepresented minority and disadvantaged persons in
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1 medicine, osteopathy, dentistry, nursing, public health,

2 and other health professions, including projects to provide

3 continuing financial assistance for such persons entering

4 health professions training programs; to increase support

5 for recruitment and retention of such persons in the health

6 professions; to maintain efforts to foster interest in health

7 careers among such persons at the preprofessional level;

8 and to increase the number of minority health professions

9 faculty.

10 (d) NURSE TRAINING.—For purposes of subsection

11 (a), the programs described in this section include a pro12 gram to support projects to support midlevel provider

13 training and address priority nursing workforce needs, in14 cluding projects to train additional nurse practitioners and

15 nurse midwives; to support baccalaureate-level nurse

16 training programs providing preparation for careers in

17 teaching, community health service, and specialized clini18 cal care; to train additional nurse clinicians and nurse an19 esthetists; to support interdisciplinary school-based com20 munity nursing programs; and to promote research on

21 nursing workforce issues.

22 (e) INAPPROPRIATE PRACTICE BARRIERS; FULL UTI23 LIZATION OF SKILLS.—For purposes of subsection (a), the

24 programs described in this section include a program—
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1 (1) to develop and encourage the adoption of

2 model professional practice statutes for advanced

3 practice nurses and physician assistants, and to oth4 erwise support efforts to remove inappropriate bar5 riers to practice by such nurses and such physician

6 assistants; and

7 (2) to promote the full utilization of the profes8 sional education and clinical skills of advanced prac9 tice nurses and physician assistants.

10 (f) OTHER PROGRAMS.—For purposes of subsection

11 (a), the programs described in this section include a pro12 gram to train health professionals and administrators in

13 managed care, cost-effective practice management, contin14 uous quality improvement practices, and provision of cul15 turally sensitive care.

16 (g) RELATIONSHIP TO EXISTING PROGRAMS.—This

17 section may be carried out through programs established

18 in title VII or VIII of the Public Health Service Act, as

19 appropriate and as consistent with the purposes of such

20 programs.

21 SEC. 3072. PROGRAMS OF THE SECRETARY OF LABOR.

22 (a) IN GENERAL.—

23 (1) FUNDING.—For purposes of carrying out

24 the programs described in this section, and for car25 rying out section 3073, there is authorized to be ap-
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1 propriated $200,000,000 for fiscal year 1994 and

2 each subsequent fiscal year (in addition to amounts

3 that may otherwise be authorized to be appropriated

4 for carrying out the programs).

5 (2) ADMINISTRATION.—The programs described

6 in this section and carried out with amounts made

7 available under subsection (a) shall be carried out by

8 the Secretary of Labor (in this section referred to as

9 the ‘‘Secretary’’).

10 (b) RETRAINING PROGRAMS; ADVANCED CAREER

11 POSITIONS; WORKFORCE ADJUSTMENT PROGRAMS.—

12 (1) IN GENERAL.—For purposes of subsection

13 (a), the programs described in this section are the

14 following:

15 (A) A program for skills upgrading and oc16 cupational retraining (including retraining

17 health care workers for more advanced positions

18 as technicians, nurses, and physician assist19 ants), and for quality and workforce improve20 ment.

21 (B) A demonstration program to assist

22 workers in health care institutions in obtaining

23 advanced career positions.
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1 (C) A program to develop and operate

2 health-worker job banks in local employment

3 services agencies, subject to the following:

4 (i) Such job banks shall be available

5 to all health care providers in the commu6 nity involved.

7 (ii) Such job banks shall begin oper8 ation not later than 90 days after the date

9 of the enactment of this Act.

10 (D) A program to provide for joint labor11 management decision-making in the health care

12 sector on workplace matters related to the re13 structuring of the health care delivery system

14 provided for in this Act.

15 (E) A program to facilitate the comprehen16 sive workforce adjustment initiative.

17 (2) USE OF FUNDS.—Amounts made available

18 under subsection (a) for carrying out this section

19 may be expended for program support, faculty devel20 opment, trainee support, workforce analysis, and dis21 semination of information, as necessary to produce

22 required performance outcomes.

23 (c) CERTAIN REQUIREMENTS FOR PROGRAMS.—In

24 carrying out the programs described in subsection (b), the
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1 Secretary shall, with respect to the organizations and em2 ployment positions involved, provide for the following:

3 (1) Explicit, clearly defined skill requirements

4 developed for all the positions and projections of the

5 number of openings for each position.

6 (2) Opportunities for internal career movement.

7 (3) Opportunities to work while training or

8 completing an educational program.

9 (4) Evaluation and dissemination.

10 (5) Training opportunities in several forms, as

11 appropriate.

12 (d) ADMINISTRATIVE REQUIREMENTS.—In carrying

13 out the programs described in subsection (b), the Sec14 retary shall, with respect to the organizations and employ15 ment positions involved, provide for the following:

16 (1) Joint labor-management implementation

17 and administration.

18 (2) Discussion with employees as to training

19 needs for career advancement.

20 (3) Commitment to a policy of internal hirings

21 and promotion.

22 (4) Provision of support services.

23 (5) Consultations with employers and with or24 ganized labor.
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1 SEC. 3073. NATIONAL INSTITUTE FOR HEALTH CARE

2 WORKFORCE DEVELOPMENT.

3 (a) ESTABLISHMENT OF INSTITUTE.—The Secretary

4 of Health and Human Services and the Secretary of Labor

5 shall jointly establish an office to be known as the Na6 tional Institute for Health Care Workforce Development.

7 (b) DIRECTOR.—The Institute shall be headed by a

8 director, who shall be appointed jointly by the Secretaries.

9 (c) DUTIES.—

10 (1) IN GENERAL.—The Director of the Institute

11 shall make recommendations to the Secretaries re12 garding—

13 (A) the supply of health care workers

14 needed for proper staffing of the health care de15 livery system serving the regional and corporate

16 alliance health plans established under title I;

17 (B) the impact of this Act, and of related

18 changes regarding health care, on health care

19 workers and the needs of such workers with re20 spect to such matters, including needs regard21 ing education, training, and other matters relat22 ing to career development; and

23 (C) the development and implementation of

24 high-performance, high-quality health care de25 livery systems, including employee participation

26 committee systems and employee team systems,
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1 that will contribute to the development of bet2 ter, more effective health care by increasing the

3 role, the responsibilities and the area of inde4 pendent decision-making authority of health

5 care workers.

6 (2) ADMINISTRATION OF PROGRAMS REGARD7 ING RETRAINING, ADVANCED CAREER POSITIONS,

8 JOB BANKS, AND HIGH-PERFORMANCE WORK9 PLACES.—The Secretary of Labor is authorized to—

10 (A) carry out section 3073 acting through

11 the Director of the Institute; and

12 (B) implement the recommendations of the

13 Director regarding employee participation com14 mittees and other high-performance systems.

15 (d) ADVISORY BOARD.—

16 (1) IN GENERAL.—The Secretaries shall estab17 lish an advisory board to assist in the development

18 of recommendations under subsection (c).

19 (2) COMPOSITION.—The Advisory Board shall

20 be composed of—

21 (A) the Secretary of Labor;

22 (B) the Secretary of Health and Human

23 Services;

24 (C) representatives of health care workers

25 in organized labor;
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1 (D) representatives of health care institu2 tions;

3 (E) representatives of health care edu4 cation organizations;

5 (F) representatives of consumer organiza6 tions; and

7 (G) such other individuals as the Secretar8 ies determine to be appropriate.

9 (e) STAFF, QUARTERS, AND OTHER ASSISTANCE.—

10 The Secretaries shall provide the Institute and the Advi11 sory Board with such staff, quarters, and other adminis12 trative assistance as may be necessary for the Institute

13 and the Advisory Board to carry out this section.

14 (f) DEFINITIONS.—For purposes of this section:

15 (1) The term ‘‘Advisory Board’’ means the ad16 visory board established under subsection (d).

17 (2) The term ‘‘employee participation commit18 tees’’ means committees of workers independently

19 drawn from a facility’s workforce, or selected by

20 unions where collective bargaining agreements are in

21 effect, and which operate without employer inter22 ference and consult with management on issues of

23 costs and efficiency, workplace reorganizations, pro24 ductivity, and quality of care.
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1 (3) The term ‘‘Institute’’ means the Institute

2 established under subsection (a).

3 (4) The term ‘‘Secretaries’’ means the Sec4 retary of Health and Human Services and the Sec5 retary of Labor.

6 (g) SUNSET.—Effective upon the end of calendar

7 year 2000, this section is repealed.

8 SEC. 3074. REQUIREMENT FOR CERTAIN PROGRAMS RE9 GARDING REDEPLOYMENT OF HEALTH CARE

10 WORKERS.

11 (a) STATE PROGRAMS FOR HOME AND COMMUNITY12 BASED SERVICES FOR INDIVIDUALS WITH DISABIL13 ITIES.—With respect to the plan required in section

14 2102(a) (for State programs for home and community15 based services for individuals with disabilities under part

16 1 of subtitle B of title II), the plan shall, in addition to

17 requirements under such part, provide for the following:

18 (1) Before initiating the process of implement19 ing the State program under such plan, negotiations

20 will be commenced with labor unions representing

21 the employees of the affected hospitals or other fa22 cilities.

23 (2) Negotiations under paragraph (1) will ad24 dress the following:
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1 (A) The impact of the implementation of

2 the program upon the workforce.

3 (B) Methods to redeploy workers to posi4 tions in the proposed system, in the case of

5 workers affected by the program.

6 (3) The plan will provide evidence that there

7 has been compliance with paragraphs (1) and (2),

8 including a description of the results of the negotia9 tions.

10 (b) PLAN FOR INTEGRATION OF MENTAL HEALTH

11 SYSTEMS.—With respect to the plan required in section

12 3511(a) (relating to the integration of the mental health

13 and substance abuse services of a State and its political

14 subdivisions with the mental health and substance abuse

15 services included in the comprehensive benefit package

16 under title I), the plan shall, in addition to requirements

17 under such section, provide for the following:

18 (1) Before initiating the process of implement19 ing the integration of such services, negotiations will

20 be commenced with labor unions representing the

21 employees of the affected hospitals or other facilities.

22 (2) Negotiations under paragraph (1) will ad23 dress the following:

24 (A) The impact of the proposed changes

25 upon the workforce.
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1 (B) Methods to redeploy workers to posi2 tions in the proposed system, in the case of

3 workers affected by the proposed changes.

4 (3) The plan will provide evidence that there

5 has been compliance with paragraphs (1) and (2),

6 including a description of the results of the negotia7 tions.

8 Subtitle B—Academic Health

9 Centers

10 PART 2—ACCESS OF PATIENTS TO ACADEMIC

11 HEALTH CENTERS

12 SEC. 3131. CONTRACTS FOR ENSURING ACCESS TO CEN13 TERS.

14 (a) CONTRACTS WITH HEALTH PLANS.—Regional

15 and corporate health alliances under this Act shall ensure

16 that, in accordance with subsection (b), the health plans

17 of the alliances enter into sufficient contracts with eligible

18 centers to ensure that enrollees in regional or corporate

19 alliance health plans, as appropriate, receive the special20 ized treatment expertise of such centers, subject to such

21 exceptions as the Secretary may provide.

22 (b) UTILIZATION OF SPECIALIZED TREATMENT EX23 PERTISE OF CENTERS.—Contracts under subsection (a)

24 between eligible centers and health plans are in accordance

25 with this subsection if the contracts provide that, with re-
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1 spect to health conditions within the specialized treatment

2 expertise of the centers, health plans will refer medical

3 cases involving such conditions to the centers.

4 (c) SPECIALIZED TREATMENT EXPERTISE.—For

5 purposes of this subtitle, the term ‘‘specialized treatment

6 expertise’’, with respect to treatment of a health condition

7 by an academic health center, means expertise in treating

8 rare diseases, treating unusually severe conditions, and

9 providing other specialized health care.

10 SEC. 3132. DISCRETIONARY GRANTS REGARDING ACCESS

11 TO CENTERS.

12 (a) RURAL INFORMATION AND REFERRAL SYS13 TEMS.—The Secretary may make grants to eligible centers

14 for the establishment and operation of information and re15 ferral systems to provide the services of such centers to

16 rural regional and corporate health alliance health plans.

17 (b) OTHER PURPOSES REGARDING URBAN AND

18 RURAL AREAS.—The Secretary may make grants to eligi19 ble centers to carry out activities (other than activities car20 ried out under subsection (a)) for the purpose of providing

21 the services of eligible centers to residents of rural or

22 urban communities who otherwise would not have ade23 quate access to such services.
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1 Subtitle C—Health Research

2 Initiatives

3 PART 1—PROGRAMS FOR CERTAIN AGENCIES

4 SEC. 3201. BIOMEDICAL AND BEHAVIORAL RESEARCH ON

5 HEALTH PROMOTION AND DISEASE PREVEN6 TION.

7 Section 402(f) of the Public Health Service Act (42

8 U.S.C. 282(f)), as amended by section 201 of Public Law

9 103–43 (107 Stat. 144), is amended—

10 (1) in paragraph (3), by redesignating subpara11 graphs (A) and (B) as clauses (i) and (ii), respec12 tively;

13 (2) by redesignating paragraphs (1) through

14 (3) as subparagraphs (A) through (C);

15 (3) by inserting ‘‘(1)’’ after ‘‘(f)’’; and

16 (4) by adding at the end the following para17 graph:

18 ‘‘(2)(A) The Director of NIH, in collaboration with

19 the Associate Director for Prevention and with the heads

20 of the agencies of the National Institutes of Health, shall

21 ensure that such Institutes conduct and support bio22 medical and behavioral research on promoting health and

23 preventing diseases, disorders, and other health conditions

24 (including Alzheimer’s disease, breast cancer, heart dis25 ease, and stroke).
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1 ‘‘(B) In carrying out subparagraph (A), the Director

2 of NIH shall give priority to conducting and supporting

3 research on child and adolescent health (including birth

4 defects), chronic and recurrent health conditions, repro5 ductive health, mental health, elderly health, substance

6 abuse, infectious diseases, health and wellness promotion,

7 and environmental health, and to resource development re8 lated to such research.’’.

9 SEC. 3202. HEALTH SERVICES RESEARCH.

10 Section 902 of the Public Health Service Act (42

11 U.S.C. 299a), as amended by section 2(b) of Public Law

12 102–410 (106 Stat. 2094), is amended by adding at the

13 end the following subsection:

14 ‘‘(f) RESEARCH ON HEALTH CARE REFORM.—

15 ‘‘(1) IN GENERAL.—In carrying out section

16 901(b), the Administrator shall conduct and support

17 research on the reform of the health care system of

18 the United States, as directed by the National

19 Board.

20 ‘‘(2) PRIORITIES.—In carrying out paragraph

21 (1), the Administrator shall give priority to the fol22 lowing:

23 ‘‘(A) Conducting and supporting research

24 on the appropriateness and effectiveness of al25 ternative clinical strategies; the quality and out-
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1 comes of care; and administrative simplifica2 tion.

3 ‘‘(B) Conducting and supporting research

4 on consumer choice and information resources;

5 the effects of health care reform on health de6 livery systems; workplace injury and illness pre7 vention; methods for risk adjustment; factors

8 influencing access to health care for under9 served populations; and primary care.

10 ‘‘(C) The development of clinical practice

11 guidelines consistent with section 913, the dis12 semination of such guidelines consistent with

13 section 903, and the assessment of the effec14 tiveness of such guidelines.’’.

15 PART 2—FUNDING FOR PROGRAMS

16 SEC. 3211. AUTHORIZATIONS OF APPROPRIATIONS.

17 (a) BIOMEDICAL AND BEHAVIORAL RESEARCH ON

18 HEALTH PROMOTION AND DISEASE PREVENTION.—For

19 the purpose of carrying out activities pursuant to the

20 amendments made by section 3201, there are authorized

21 to be appropriated $400,000,000 for fiscal year 1995, and

22 $500,000,000 for each of the fiscal years 1996 through

23 2000.

24 (b) HEALTH SERVICES RESEARCH.—For the purpose

25 of carrying out activities pursuant to the amendments
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1 made by section 3202, there are authorized to be appro2 priated $150,000,000 for fiscal year 1995, $400,000,000

3 for fiscal year 1996, $500,000,000 for fiscal year 1997,

4 and $600,000,000 for each of the fiscal years 1998

5 through 2000.

6 (c) RELATION TO OTHER FUNDS.—The authoriza7 tions of appropriations established in subsections (a) and

8 (b) are in addition to any other authorizations of appro9 priations that are available for the purposes described in

10 such subsections.

11 Subtitle D—Core Functions of Pub12 lic Health Programs; National

13 Initiatives Regarding Preven14 tive Health

15 PART 1—FUNDING

16 SEC. 3301. AUTHORIZATIONS OF APPROPRIATIONS.

17 (a) CORE FUNCTIONS OF PUBLIC HEALTH PRO18 GRAMS.—For the purpose of carrying out part 2, there

19 are authorized to be appropriated $12,000,000 for fiscal

20 year 1995, $325,000,000 for fiscal year 1996,

21 $450,000,000 for fiscal year 1997, $550,000,000 for fis22 cal year 1998, $650,000,000 for fiscal year 1999, and

23 $750,000,000 for fiscal year 2000.

24 (b) NATIONAL INITIATIVES REGARDING HEALTH

25 PROMOTION AND DISEASE PREVENTION.—For the pur-
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1 pose of carrying out part 3, there are authorized to be

2 appropriated $175,000,000 for fiscal year 1996, and

3 $200,000,000 for each of the fiscal years 1997 through

4 2000.

5 (c) RELATION TO OTHER FUNDS.—The authoriza6 tions of appropriations established in subsections (a) and

7 (b) are in addition to any other authorizations of appro8 priations that are available for the purposes described in

9 such subsections.

10 PART 2—CORE FUNCTIONS OF PUBLIC HEALTH

11 PROGRAMS

12 SEC. 3311. PURPOSES.

13 Subject to the subsequent provisions of this subtitle,

14 the purposes of this part are to strengthen the capacity

15 of State and local public health agencies to carry out the

16 following functions:

17 (1) To monitor and protect the health of com18 munities against communicable diseases and expo19 sure to toxic environmental pollutants, occupational

20 hazards, harmful products, and poor quality health

21 care.

22 (2) To identify and control outbreaks of infec23 tious disease and patterns of chronic disease and in24 jury.
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1 (3) To inform and educate health care consum2 ers and providers about their roles in preventing and

3 controlling disease and the appropriate use of medi4 cal services.

5 (4) To develop and test new prevention and

6 public health control interventions.

7 SEC. 3312. GRANTS TO STATES FOR CORE HEALTH FUNC8 TIONS.

9 (a) IN GENERAL.—The Secretary may make grants

10 to States for the purpose of carrying out one or more of

11 the functions described in subsection (b).

12 (b) CORE FUNCTIONS OF PUBLIC HEALTH PRO13 GRAMS.—For purposes of subsection (a), the functions de14 scribed in this subsection are, subject to subsection (c),

15 as follows:

16 (1) Data collection, activities related to popu17 lation health measurement and outcomes monitoring,

18 including the regular collection and analysis of pub19 lic health data, vital statistics, and personal health

20 services data and analysis for planning and needs

21 assessment purposes of data collected from health

22 plans through the information system under title V

23 of this Act.
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1 (2) Activities to protect the environment and to

2 assure the safety of housing, workplaces, food and

3 water, including the following activities:

4 (A) Monitoring the overall public health

5 quality and safety of communities.

6 (B) Assessing exposure to high lead levels

7 and water contamination.

8 (C) Monitoring sewage and solid waste dis9 posal, radiation exposure, radon exposure, and

10 noise levels.

11 (D) Abatement of lead-related hazards.

12 (E) Assuring recreation and worker safety.

13 (F) Enforcing public health safety and

14 sanitary codes.

15 (G) Other activities relating to promoting

16 the public health of communities.

17 (3) Investigation and control of adverse health

18 conditions, including improvements in emergency

19 treatment preparedness, cooperative activities to re20 duce violence levels in communities, activities to con21 trol the outbreak of disease, exposure related condi22 tions and other threats to the health status of indi23 viduals.

24 (4) Public information and education programs

25 to reduce risks to health such as use of tobacco, al-
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1 cohol and other drugs, sexual activities that increase

2 the risk to HIV transmission and sexually transmit3 ted diseases, poor diet, physical inactivity, and low

4 childhood immunization levels.

5 (5) Accountability and quality assurance activi6 ties, including monitoring the quality of personal

7 health services furnished by health plans and provid8 ers of medical and health services in a manner con9 sistent with the overall quality of care monitoring

10 activities undertaken under title V, and monitoring

11 communities’ overall access to health services.

12 (6) Provision of public health laboratory serv13 ices to complement private clinical laboratory serv14 ices and that screen for diseases and conditions such

15 as metabolic diseases in newborns, provide toxicology

16 assessments of blood lead levels and other environ17 mental toxins, diagnose sexually transmitted dis18 eases, tuberculosis and other diseases requiring part19 ner notification, test for infectious and food-borne

20 diseases, and monitor the safety of water and food

21 supplies.

22 (7) Training and education to assure provision

23 of care by all health professionals, with special em24 phasis placed on the training of public health profes25 sions including epidemiologists, biostatisticians,
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1 health educators, public health administrators,

2 sanitarians and laboratory technicians.

3 (8) Leadership, policy development and admin4 istration activities, including needs assessment, the

5 setting of public health standards, the development

6 of community public health policies, and the develop7 ment of community public health coalitions.

8 (c) RESTRICTIONS ON USE OF GRANT.—

9 (1) IN GENERAL.—A funding agreement for a

10 grant under subsection (a) for a State is that the

11 grant will not be expended—

12 (A) to provide inpatient services;

13 (B) to make cash payments to intended re14 cipients of health services;

15 (C) to purchase or improve land, purchase,

16 construct, or permanently improve (other than

17 minor remodeling) any building or other facil18 ity, or purchase major medical equipment;

19 (D) to satisfy any requirement for the ex20 penditure of non-Federal funds as a condition

21 for the receipt of Federal funds; or

22 (E) to provide financial assistance to any

23 entity other than a public or nonprofit private

24 entity.
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1 (2) LIMITATION ON ADMINISTRATIVE EX2 PENSES.—A funding agreement for a grant under

3 subsection (a) is that the State involved will not ex4 pend more than 10 percent of the grant for adminis5 trative expenses with respect to the grant.

6 (d) MAINTENANCE OF EFFORT.—A funding agree7 ment for a grant under subsection (a) is that the State

8 involved will maintain expenditures of non-Federal

9 amounts for core health functions at a level that is not

10 less than the level of such expenditures maintained by the

11 State for the fiscal year preceding the first fiscal year for

12 which the State receives such a grant.

13 SEC. 3313. SUBMISSION OF INFORMATION.

14 The Secretary may make a grant under section 3312

15 only if the State involved submits to the Secretary the fol16 lowing information:

17 (1) A description of existing deficiencies in the

18 State’s public health system (at the State level and

19 the local level), using standards of sufficiency devel20 oped by the Secretary.

21 (2) A description of health status measures to

22 be improved within the State (at the State level and

23 the local level) through expanded public health func24 tions.
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1 (3) Measurable outcomes and process objectives

2 for improving health status and core health func3 tions for which the grant is to be expended.

4 (4) Information regarding each such function,

5 which—

6 (A) identifies the amount of State and

7 local funding expended on each such function

8 for the fiscal year preceding the fiscal year for

9 which the grant is sought; and

10 (B) provides a detailed description of how

11 additional Federal funding will improve each

12 such function by both the State and local public

13 health agencies.

14 (5) A description of the core health functions to

15 be carried out at the local level, and a specification

16 for each such function of—

17 (A) the communities in which the function

18 will be carried out; and

19 (B) the amount of the grant to be ex20 pended for the function in each community so

21 specified.

22 SEC. 3314. REPORTS.

23 A funding agreement for a grant under section 3312

24 is that the States involved will, not later than the date
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1 specified by the Secretary, submit to the Secretary a re2 port describing—

3 (1) the purposes for which the grant was ex4 pended; and

5 (2) describing the extent of progress made by

6 the State in achieving measurable outcomes and

7 process objectives described in section 3313(3).

8 SEC. 3315. APPLICATION FOR GRANT.

9 The Secretary may make a grant under section 3312

10 only if an application for the grant is submitted to the

11 Secretary, the application contains each agreement de12 scribed in this part, the application contains the informa13 tion required in section 3314, and the application is in

14 such form, is made in such manner, and contains such

15 agreements, assurances, and information as the Secretary

16 determines to be necessary to carry out this part.

17 SEC. 3316. GENERAL PROVISIONS.

18 (a) UNIFORM DATA SETS.—The Secretary, in con19 sultation with the States, shall develop uniform sets of

20 data for the purpose of monitoring the core health func21 tions carried out with grants under section 3312.

22 (b) DURATION OF GRANT.—The period during which

23 payments are made to a State from a grant under section

24 3312 may not exceed 5 years. The provision of such pay25 ments shall be subject to annual approval by the Secretary
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1 of the payments. This subsection may not be construed

2 as establishing a limitation on the number of grants under

3 such section that may be made to the State.

4 SEC. 3317. ALLOCATIONS FOR CERTAIN ACTIVITIES.

5 Of the amounts made available under section 3301

6 for a fiscal year for carrying out this part, the Secretary

7 may reserve not more than 5 percent for carrying out the

8 following activities:

9 (1) Technical assistance with respect to plan10 ning, development, and operation of core health

11 functions carried out under section 3312, including

12 provision of biostatistical and epidemiological exper13 tise and provision of laboratory expertise.

14 (2) Development and operation of a national in15 formation network among State and local health

16 agencies.

17 (3) Program monitoring and evaluation of core

18 health functions carried out under section 3312.

19 (4) Development of a unified electronic report20 ing mechanism to improve the efficiency of adminis21 trative management requirements regarding the pro22 vision of Federal grants to State public health agen23 cies.

24 SEC. 3318. DEFINITIONS.

25 For purposes of this part:
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1 (1) The term ‘‘funding agreement’’, with re2 spect to a grant under section 3312 to a State,

3 means that the Secretary may make the grant only

4 if the State makes the agreement involved.

5 (2) The term ‘‘core health functions’’, with re6 spect to a State, means the functions described in

7 section 3312(b).

8 PART 3—NATIONAL INITIATIVES REGARDING

9 HEALTH PROMOTION AND DISEASE PREVENTION

10 SEC. 3331. GRANTS FOR NATIONAL PREVENTION INITIA11 TIVES.

12 (a) IN GENERAL.—The Secretary may make grants

13 to entities described in subsection (b) for the purpose of

14 carrying out projects to develop and implement innovative

15 community-based strategies to provide for health pro16 motion and disease prevention activities for which there

17 is a significant need, as identified under section 1701 of

18 the Public Health Service Act.

19 (b) ELIGIBLE ENTITIES.—The entities referred to in

20 subsection (a) are agencies of State or local government,

21 private nonprofit organizations (including research institu22 tions), and coalitions that link two or more of these

23 groups.

24 (c) CERTAIN ACTIVITIES.—The Secretary shall en25 sure that projects carried out under subsection (a)—
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1 (1) reflect approaches that take into account

2 the special needs and concerns of the affected popu3 lations;

4 (2) are targeted to the most needy and vulner5 able population groups and geographic areas of the

6 Nation;

7 (3) examine links between various high priority

8 preventable health problems and the potential com9 munity-based remedial actions; and

10 (4) establish or strengthen the links between

11 the activities of agencies engaged in public health

12 activities with those of health alliances, health care

13 providers, and other entities involved in the personal

14 health care delivery system described in title I.

15 SEC. 3332. PRIORITIES.

16 (a) ESTABLISHMENT.—

17 (1) ANNUAL STATEMENT.—The Secretary shall

18 for each fiscal year develop a statement of proposed

19 priorities for grants under section 3331 for the fiscal

20 year.

21 (2) ALLOCATIONS AMONG PRIORITIES.—With

22 respect to the amounts available under section

23 3301(b) for the fiscal year for carrying out this part,

24 each statement under paragraph (1) for a fiscal year

25 shall include a specification of the percentage of the
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1 amount to be devoted to projects addressing each of

2 the proposed priorities established in the statement.

3 (3) PROCESS FOR ESTABLISHING PRIORITIES.—

4 Not later than January 1 of each fiscal year, the

5 Secretary shall publish a statement under paragraph

6 (1) in the Federal Register. A period of 60 days

7 shall be allowed for the submission of public com8 ments and suggestions concerning the proposed pri9 orities. After analyzing and considering comments

10 on the proposed priorities, the Secretary shall pub11 lish in the Federal Register final priorities (and as12 sociated reservations of funds) for approval of

13 projects for the following fiscal year.

14 (b) APPLICABILITY TO MAKING OF GRANTS.—

15 (1) IN GENERAL.—The Secretary may make

16 grants under section 3331 for projects that the Sec17 retary determines—

18 (A) are consistent with the applicable final

19 statement of priorities and otherwise meets the

20 objectives described in subsection (a); and

21 (B) will assist in meeting a health need or

22 concern of a population served by a health plan

23 or health alliance established under title I.

24 (2) SPECIAL CONSIDERATION FOR CERTAIN

25 PROJECTS.—In making grants under section 3331,
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1 the Secretary shall give special consideration to ap2 plicants that will carry out projects that, in addition

3 to being consistent with the applicable published pri4 orities under subsection (a) and otherwise meeting

5 the requirements of this part, have the potential for

6 replication in other communities.

7 SEC. 3333. SUBMISSION OF INFORMATION.

8 The Secretary may make a grant under section 3331

9 only if the applicant involved submits to the Secretary the

10 following information:

11 (1) A description of the activities to be con12 ducted, and the manner in which the activities are

13 expected to contribute to meeting one or more of the

14 priority health needs specified under section 3332

15 for the fiscal year for which the grant is initially

16 sought.

17 (2) A description of the total amount of Federal

18 funding requested, the geographic area and popu19 lations to be served, and the evaluation procedures

20 to be followed.

21 (3) Such other information as the Secretary de22 termines to be appropriate.

23 SEC. 3334. APPLICATION FOR GRANT.

24 The Secretary may make a grant under section 3331

25 only if an application for the grant is submitted to the
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1 Secretary, the application contains each agreement de2 scribed in this part, the application contains the informa3 tion required in section 3333, and the application is in

4 such form, is made in such manner, and contains such

5 agreements, assurances, and information as the Secretary

6 determines to be necessary to carry out this part.

7 Subtitle E—Health Services for

8 Medically Underserved Popu9 lations

10 PART 1—COMMUNITY AND MIGRANT HEALTH

11 CENTERS

12 SEC. 3401. AUTHORIZATIONS OF APPROPRIATIONS.

13 (a) GRANTS TO COMMUNITY AND MIGRANT HEALTH

14 CENTERS.—The Secretary shall make grants in accord15 ance with this part to migrant health centers and commu16 nity health centers.

17 (b) AUTHORIZATION OF APPROPRIATIONS.—For the

18 purpose of carrying out subsection (a), there are author19 ized to be appropriated $100,000,000 for each of the fiscal

20 years 1995 through 2000.

21 (c) RELATION TO OTHER FUNDS.—The authoriza22 tions of appropriations established in subsection (b) for

23 the purpose described in such subsection are in addition

24 to any other authorizations of appropriations that are

25 available for such purpose.
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1 (d) DEFINITIONS.—For purposes of this subtitle, the

2 terms ‘‘migrant health center’’ and ‘‘community health

3 center’’ have the meanings given such terms in sections

4 329(a)(1) and 330(a) of the Public Health Service Act,

5 respectively.

6 SEC. 3402. USE OF FUNDS.

7 (a) DEVELOPMENT, OPERATION, AND OTHER PUR8 POSES REGARDING CENTERS.—Subject to subsection (b),

9 grants under section 3401 to migrant health centers and

10 community health centers may be made only in accordance

11 with the conditions upon which grants are made under

12 sections 329 and 330 of the Public Health Service Act,

13 respectively.

14 (b) REQUIRED FINANCIAL RESERVES.—The Sec15 retary may authorize migrant health centers and commu16 nity health centers to expend a grant under section 3401

17 to establish and maintain the financial reserves required

18 under title I for providers of health services.

19 PART 2—INITIATIVES FOR ACCESS TO HEALTH

20 CARE

21 Subpart A—Purposes; Funding

22 SEC. 3411. PURPOSES.

23 Subject to the provisions of subparts B through D,

24 the purposes of this part are as follows:
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1 (1) To improve access to health services for

2 urban and rural medically-underserved populations

3 through a program of flexible grants, contracts, and

4 loans.

5 (2) To facilitate transition to a system in which

6 medically-underserved populations have an adequate

7 choice of community-oriented providers and health

8 plans.

9 (3) To promote the development of community

10 practice networks and community health plans that

11 integrate health professionals and health care orga12 nizations supported through public funding with

13 other providers in medically underserved areas.

14 (4) To support linkages between providers of

15 health care for medically-underserved populations

16 and regional and corporate alliance health plans.

17 (5) To expand the capacity of community prac18 tice networks and community health plans in under19 served areas by increasing the number of practice

20 sites and by renovating and converting substandard

21 inpatient and outpatient facilities.

22 (6) To link providers in underserved areas with

23 each other and with regional health care institutions

24 and academic health centers through information

25 systems and telecommunications.
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1 (7) To support activities that enable medically

2 underserved populations to gain access to the health

3 care system and use it effectively.

4 SEC. 3412. AUTHORIZATIONS OF APPROPRIATIONS.

5 (a) DEVELOPMENT OF QUALIFIED COMMUNITY

6 HEALTH PLANS AND PRACTICE GROUPS.—For the pur7 pose of carrying out subparts B and C, there are author8 ized to be appropriated $200,000,000 for fiscal year 1995,

9 $500,000,000 for fiscal year 1996, $600,000,000 for fis10 cal year 1997, $700,000,000 for fiscal year 1998,

11 $500,000,000 for fiscal year 1999, and $200,000,000 for

12 fiscal year 2000.

13 (b) RELATION TO OTHER FUNDS.—The authoriza14 tions of appropriations established in subsection (a) are

15 in addition to any other authorizations of appropriations

16 that are available for the purpose described in such sub17 section.

18 (c) RELATIONSHIP TO PROGRAM REGARDING

19 SCHOOL-RELATED HEALTH SERVICES.—This section is

20 subject to section 3692.
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1 Subpart B—Development of Qualified Community

2 Health Plans and Practice Networks

3 SEC. 3421. GRANTS AND CONTRACTS FOR DEVELOPMENT

4 OF PLANS AND NETWORKS.

5 (a) IN GENERAL.—The Secretary may make grants

6 to and enter into contracts with consortia of public or pri7 vate health care providers for the development of qualified

8 community health plans and qualified community practice

9 networks. For purposes of this subtitle, the term ‘‘quali10 fied community health group’’ means such a health plan

11 or such a practice network.

12 (b) QUALIFIED COMMUNITY HEALTH PLANS.—For

13 purposes of this subtitle, the term ‘‘qualified community

14 health plan’’ means a health plan that meets the following

15 conditions:

16 (1) The health plan is a public or nonprofit pri17 vate entity whose principal purpose is, with respect

18 to the items and services included in the comprehen19 sive benefit package under title I, to provide each of

20 such items and services in one or more health pro21 fessional shortage areas or to provide such items and

22 services to a significant number of individuals who

23 are members of a medically underserved population.

24 (2) The health plan is a participant in one or

25 more health alliances.
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1 (3) Two or more of the categories specified in

2 subsection (d) are represented among the entities

3 providing health services through the health plan.

4 (c) QUALIFIED COMMUNITY PRACTICE NET5 WORKS.—For purposes of this subtitle, the term ‘‘quali6 fied community practice network’’ means a consortium of

7 health care providers meeting the following conditions:

8 (1) The consortium is a public or nonprofit pri9 vate entity whose principal purpose is the purpose

10 described in subsection (b)(1).

11 (2) The consortium has an agreement with one

12 or more health plans that are participating in one or

13 more health alliances.

14 (3) The participation of health care providers in

15 the consortium is governed by a written agreement

16 to which each of the participating providers is a

17 party.

18 (4) Two or more of the categories described in

19 subsection (d) are represented among the entities

20 participating in the consortium.

21 (d) RELEVANT CATEGORIES OF ENTITIES.—For pur22 poses of subsections (b)(3) and (c)(4), the categories de23 scribed in this subsection are the following categories of

24 entities:
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1 (1) Physicians, other health professionals, or

2 health care institutions that provide health services

3 in one or more health professional shortage areas or

4 provide such services to a significant number of indi5 viduals who are members of a medically underserved

6 population, and that do not provide health services

7 under any of the programs specified in paragraphs

8 (2) through (7) or as employees of public entities.

9 (2) Entities providing health services under

10 grants under sections 329 and 330 of the Public

11 Health Service Act.

12 (3) Entities providing health services under

13 grants under sections 340 and 340A of such Act.

14 (4) Entities providing health services under

15 grants under section 1001 or title XXVI of such

16 Act.

17 (5) Entities providing health services under title

18 V of the Social Security Act.

19 (6) Entities providing health services through

20 rural health clinics and other federally qualified

21 health centers.

22 (7) Entities providing health services in urban

23 areas through programs under title V of the Indian

24 Health Care Improvement Act, and entities provid-
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1 ing outpatient health services through programs

2 under the Indian Self-Determination Act.

3 (8) Programs providing personal health services

4 and operating through State or local public health

5 agencies.

6 (e) RULE OF CONSTRUCTION.—The consortia to

7 which the Secretary may make an award of financial as8 sistance under subsection (a) for the development of quali9 fied community practice networks include any health plan

10 that participates in one or more health alliances, without

11 regard to whether the health plan is a qualified community

12 health plan.

13 (f) SERVICE AREA.—In making an award of financial

14 assistance under subsection (a), the Secretary shall des15 ignate the geographic area with respect to which the quali16 fied community health group involved is to provide health

17 services. A funding agreement for such an award is that

18 the qualified community health group involved will provide

19 such services in the area so designated.

20 (g) DEFINITIONS.—For purposes of this subtitle:

21 (1) The term ‘‘health professional shortage

22 areas’’ means health professional shortage areas des23 ignated under section 332 of the Public Health Serv24 ice Act.
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1 (2) The term ‘‘medically underserved popu2 lation’’ means a medically underserved population

3 designated under section 330 of the Public Health

4 Service Act.

5 (3) The term ‘‘rural health clinic’’ has the

6 meaning given such term in section 1861(aa)(2) of

7 the Social Security Act.

8 (4) The term ‘‘federally qualified health cen9 ters’’ has the meaning given such term in section

10 1861(aa)(4) of the Social Security Act.

11 (5) The term ‘‘service area’’, with respect to a

12 qualified community health group, means the geo13 graphic area designated under subsection (f).

14 (6) The term ‘‘funding agreement’’, with re15 spect to an award of financial assistance under this

16 section, means that the Secretary may make the

17 award only if the applicant for the award makes the

18 agreement involved.

19 (7) The term ‘‘financial assistance’’, with re20 spect to awards under subsection (a), means a grant

21 or contract.
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1 SEC. 3422. PREFERENCES IN MAKING AWARDS OF ASSIST2 ANCE.

3 In making awards of financial assistance under sec4 tion 3421, the Secretary shall give preference to applicants

5 in accordance with the following:

6 (1) The Secretary shall give preference if 3 or

7 more of the categories described in subsection (d) of

8 such section will be represented in the qualified com9 munity health group involved (pursuant to sub10 section (b)(3) or (c)(4) of such section, as the case

11 may be).

12 (2) Of applicants receiving preference under

13 paragraph (1), the Secretary shall give a greater de14 gree of preference according to the extent to which

15 a greater number of categories are represented.

16 (3) Of applicants receiving preference under

17 paragraph (1), the Secretary shall give a greater de18 gree of preference if one of the categories rep19 resented is the category described in subsection

20 (d)(1) of such section.

21 SEC. 3423. CERTAIN USES OF AWARDS.

22 (a) IN GENERAL.—Subject to subsection (b), the pur23 poses for which an award of financial assistance under sec24 tion 3421 may be expended in developing a qualified com25 munity health group include the following:
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1 (1) Planning such group, including entering

2 into contracts between the recipient of the award

3 and health care providers who are to participate in

4 the group.

5 (2) Recruitment, compensation, and training of

6 health professionals and administrative staff.

7 (3) Acquisition, expansion, modernization, and

8 conversion of facilities, including for purposes of

9 providing for sites at which health services are to be

10 provided through such group.

11 (4) Acquisition and development of information

12 systems (exclusive of systems that the Secretary de13 termines are information highways).

14 (5) Such other expenditures as the Secretary

15 determines to be appropriate.

16 (b) TWENTY-YEAR OBLIGATION REGARDING SIGNIFI17 CANT CAPITAL EXPENDITURES; RIGHT OF RECOVERY.—

18 (1) IN GENERAL.—With respect to a facility for

19 which substantial capital costs are to paid from an

20 award of financial assistance under section 3421,

21 the Secretary may make the award only if the appli22 cant involved agrees that the applicant will be liable

23 to the United States for the amount of the award

24 expended for such costs, together with an amount

25 representing interest, if at any time during the 20-
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1 year period beginning on the date of completion of

2 the activities involved, the facility—

3 (A) ceases to be a facility utilized by a

4 qualified community health group, or by an5 other public or nonprofit private entity that

6 provides health services in one or more health

7 professional shortage areas or that provides

8 such services to a significant number of individ9 uals who are members of a medically under10 served population; or

11 (B) is sold or transferred to any entity

12 other than an entity that is—

13 (i) a qualified community health

14 group or other entity described in subpara15 graph (A); and

16 (ii) approved by the Secretary as a

17 purchaser or transferee regarding the facil18 ity.

19 (2) SUBORDINATION; WAIVERS.—The Secretary

20 may subordinate or waive the right of recovery

21 under paragraph (1), and any other Federal interest

22 that may be derived by virtue of an award of finan23 cial assistance under section 3421 from which sub24 stantial capital costs are to be paid, if the Secretary
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1 determines that subordination or waiver will further

2 the objectives of this part.

3 SEC. 3424. ACCESSIBILITY OF SERVICES.

4 (a) SERVICES FOR CERTAIN INDIVIDUALS.—A fund5 ing agreement for an award of financial assistance under

6 section 3421 is that the qualified community health group

7 involved will ensure that the services of the group will be

8 accessible directly or through formal contractual arrange9 ments with its participating providers regardless of wheth10 er individuals who seek care from the applicant are eligible

11 persons under title I.

12 (b) USE OF THIRD-PARTY PAYORS.—A funding

13 agreement for an award of financial assistance under sec14 tion 3421 is that the qualified community health group

15 involved will ensure that the health care providers of the

16 group are all approved by the Secretary as providers under

17 title XVIII of the Social Security Act and by the appro18 priate State agency as providers under title XIX of the

19 Social Security Act, and the applicant has made or will

20 make every reasonable effort to collect appropriate reim21 bursement for its costs in providing health services to indi22 viduals who are entitled to health benefits under title I

23 of this Act, insurance benefits under title XVIII of the

24 Social Security Act, medical assistance under a State plan

25 approved under title XIX of the Social Security Act, or
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1 to assistance for medical expenses under any other public

2 assistance program or private health insurance program.

3 (c) SCHEDULE OF FEES.—A funding agreement for

4 an award of financial assistance under section 3421 is that

5 the qualified community health group involved will—

6 (1) prepare a schedule of fees or payments for

7 the provision of health services not covered by title

8 I that is consistent with locally prevailing rates or

9 charges and designed to cover its reasonable costs of

10 operation and has prepared a corresponding sched11 ule of discounts to be applied to the payment of such

12 fees or payments (or payments of cost sharing

13 amounts owed in the case of covered benefits) which

14 discounts are applied on the basis of the patient’s

15 ability to pay; and

16 (2) make every reasonable effort to secure from

17 patients payment in accordance with such schedules,

18 and to collect reimbursement for services to persons

19 entitled to public or private insurance benefits or

20 other medical assistance on the basis of full fees

21 without application of discounts, except that the ap22 plicant will ensure that no person is denied service

23 based on the person’s inability to pay therefor.

24 (d) BARRIERS WITHIN SERVICE AREA.—A funding

25 agreement for an award of financial assistance under sec-
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1 tion 3421 is that the qualified community health group

2 involved will ensure that the following conditions are met:

3 (1) In the service area of the group, the group

4 will ensure that—

5 (A) the services of the group are accessible

6 to all residents; and

7 (B) to the maximum extent possible, bar8 riers to access to the services of the group are

9 eliminated, including barriers resulting from the

10 area’s physical characteristics, its residential

11 patterns, its economic, social and cultural

12 groupings, and available transportation.

13 (2) The group will periodically conduct reviews

14 within the service area of the group to determine

15 whether the conditions described in paragraph (1)

16 are being met.

17 (e) LIMITED ABILITY TO SPEAK ENGLISH LAN18 GUAGE.—A funding agreement for an award of financial

19 assistance under section 3421 is that, if the service area

20 of the qualified community health group involved includes

21 a substantial number of individuals who have a limited

22 ability to speak the English language, the applicant will—

23 (1) maintain arrangements responsive to the

24 needs of such individuals for providing services to
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1 the extent practicable in the language and cultural

2 context most appropriate to such individuals; and

3 (2) maintain a sufficient number of staff mem4 bers who are fluent in both English and the lan5 guages spoken by such individuals, and will ensure

6 that the responsibilities of the employees include

7 providing guidance and assistance to such individ8 uals and to other staff members of the group.

9 SEC. 3425. ADDITIONAL AGREEMENTS.

10 (a) REQUIRED SERVICES.—A funding agreement for

11 an award of financial assistance under section 3421 is that

12 the qualified community health group involved will provide

13 enabling services (as defined in section 3461(g)) and all

14 of the items and services identified by the Secretary in

15 rules regarding qualified community health plans and

16 practice networks.

17 (b) QUALITY CONTROL SYSTEM.—A funding agree18 ment for an award of financial assistance under section

19 3421 is that the qualified community health group in20 volved will maintain a community-oriented, patient respon21 sive, quality control system under which the group, in ac22 cordance with regulations prescribed by the Secretary—

23 (1) conducts an ongoing quality assurance pro24 gram for the health services delivered by participat25 ing provider entities;
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1 (2) maintains a continuous community health

2 status improvement process; and

3 (3) maintains a system for development, com4 pilation, evaluation and reporting of information to

5 the public regarding the costs of operation, service

6 utilization patterns, availability, accessibility and ac7 ceptability of services, developments in the health

8 status of the populations served, uniform health and

9 clinical performance measures and financial per10 formance of the network or plan.

11 (c) USE OF EXISTING RESOURCES.—A funding

12 agreement for an award of financial assistance under sec13 tion 3421 is that the applicant will, in developing the

14 qualified community health group involved, utilize existing

15 resources to the maximum extent practicable.

16 SEC. 3426. SUBMISSION OF CERTAIN INFORMATION.

17 (a) ASSESSMENT OF NEED.—The Secretary may

18 make an award of financial assistance under section 3421

19 only if the applicant involved submits to the Secretary an

20 assessment of the need that the medically underserved

21 population or populations proposed to be served by the ap22 plicant have for health services and for enabling services

23 (as defined in section 3461(g)).

24 (b) DESCRIPTION OF INTENDED EXPENDITURES;

25 RELATED INFORMATION.—The Secretary may make an
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1 award of financial assistance under section 3421 only if

2 the applicant involved submits to the Secretary the follow3 ing information:

4 (1) A description of how the applicant will de5 sign the proposed quality community health plan or

6 practice network (including the service sites in7 volved) for such populations based on the assess8 ment of need.

9 (2) A description of efforts to secure, within the

10 proposed service area of such health plan or practice

11 network (including the service sites involved), finan12 cial and professional assistance and support for the

13 project.

14 (3) Evidence of significant community involve15 ment in the initiation, development and ongoing op16 eration of the project.

17 SEC. 3427. REPORTS; AUDITS.

18 A funding agreement for an award of financial assist19 ance under section 3421 is that the applicant involved

20 will—

21 (1) provide such reports and information on ac22 tivities carried out under this section in a manner

23 and form required by the Secretary; and

24 (2) provide an annual organization-wide audit

25 that meets applicable standards of the Secretary.
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1 SEC. 3428. APPLICATION FOR ASSISTANCE.

2 The Secretary may make an award of financial assist3 ance under section 3421 only if an application for the

4 award is submitted to the Secretary, the application con5 tains each funding agreement described in this subpart,

6 the application contains the information required in sec7 tion 3426, and the application is in such form, is made

8 in such manner, and contains such agreements, assur9 ances, and information as the Secretary determines to be

10 necessary to carry out this subpart.

11 SEC. 3429. GENERAL PROVISIONS.

12 (a) LIMITATION ON NUMBER OF AWARDS.—The Sec13 retary may not make more than two awards of financial

14 assistance under section 3421 for the same project.

15 (b) AMOUNT.—The amount of any award of financial

16 assistance under section 3421 for any project shall be de17 termined by the Secretary.

18 Subpart C—Capital Cost of Development of Qualified

19 Community Health Plans and Practice Networks

20 SEC. 3441. LOANS AND LOAN GUARANTEES REGARDING

21 PLANS AND NETWORKS.

22 (a) IN GENERAL.—The Secretary may make loans to,

23 and guarantee the payment of principal and interest to

24 Federal and non-Federal lenders on behalf of, public and

25 private entities for the capital costs of developing qualified

26 community health groups (as defined in section 3421(a)).
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1 (b) PREFERENCES; ACCESSIBILITY OF SERVICES;

2 CERTAIN OTHER PROVISIONS.—The provisions of subpart

3 B apply to loans and loan guarantees under subsection

4 (a) to the same extent and in the same manner as such

5 provisions apply to awards of grants and contracts under

6 section 3421.

7 (c) USE OF ASSISTANCE.—

8 (1) IN GENERAL.—With respect to the develop9 ment of qualified community health groups, the cap10 ital costs for which loans made pursuant to sub11 section (a) may be expended are, subject to para12 graphs (2) and (3), the following:

13 (A) The acquisition, modernization, expan14 sion or construction of facilities, or the conver15 sion of unneeded hospital facilities to facilities

16 that will assure or enhance the provision and

17 accessibility of health care and enabling services

18 to medically underserved populations.

19 (B) The purchase of major equipment, in20 cluding equipment necessary for the support of

21 external and internal information systems.

22 (C) The establishment of reserves required

23 for furnishing services on a prepaid basis.
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1 (D) Such other capital costs as the Sec2 retary may determine are necessary to achieve

3 the objectives of this section.

4 (2) PRIORITIES REGARDING USE OF FUNDS.—

5 In providing loans or loan guarantees under sub6 section (a) for an entity, the Secretary shall give pri7 ority to authorizing the use of amounts for projects

8 for the renovation and modernization of medical fa9 cilities necessary to prevent or eliminate safety haz10 ards, avoid noncompliance with licensure or accredi11 tation standards, or projects to replace obsolete fa12 cilities.

13 (3) LIMITATION.—The Secretary may authorize

14 the use of amounts under subsection (a) for the con15 struction of new buildings only if the Secretary de16 termines that appropriate facilities are not available

17 through acquiring, modernizing, expanding or con18 verting existing buildings, or that construction new

19 buildings will cost less.

20 (d) AMOUNT OF ASSISTANCE.—The principal amount

21 of loans or loan guarantees under subsection (a) may,

22 when added to any other assistance under this section,

23 cover up to 100 percent of the costs involved.

24 SEC. 3442. CERTAIN REQUIREMENTS.

25 (a) LOANS.—
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1 (1) IN GENERAL.—The Secretary may approve

2 a loan under section 3441 only if—

3 (A) the Secretary is reasonably satisfied

4 that the applicant for the project for which the

5 loan would be made will be able to make pay6 ments of principal and interest thereon when

7 due; and

8 (B) the applicant provides the Secretary

9 with reasonable assurances that there will be

10 available to it such additional funds as may be

11 necessary to complete the project or undertak12 ing with respect to which such loan is re13 quested.

14 (2) TERMS AND CONDITIONS.—Any loan made

15 under section 3441 shall, subject to the Federal

16 Credit Reform Act of 1990, meet such terms and

17 conditions (including provisions for recovery in case

18 of default) as the Secretary, in consultation with the

19 Secretary of the Treasury, determines to be nec20 essary to carry out the purposes of such section

21 while adequately protecting the financial interests of

22 the United States. Terms and conditions for such

23 loans shall include provisions regarding the follow24 ing:

25 (A) Security.
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1 (B) Maturity date.

2 (C) Amount and frequency of installments.

3 (D) Rate of interest, which shall be at a

4 rate comparable to the rate of interest prevail5 ing on the date the loan is made.

6 (b) LOAN GUARANTEES.—The Secretary may not ap7 prove a loan guarantee under section 3441 unless the Sec8 retary determines that the terms, conditions, security (if

9 any), schedule and amount of repayments with respect to

10 the loan are sufficient to protect the financial interests

11 of the United States and are otherwise reasonable. Such

12 loan guarantees shall be subject to such further terms and

13 conditions as the Secretary determines, in consultation

14 with the Secretary of the Treasury, and subject to the

15 Federal Credit Reform Act of 1990, to be necessary to

16 ensure that the purposes of this section will be achieved.

17 (c) USE OF EXISTING RESOURCES.—The Secretary

18 may provide a loan or loan guarantee under section 3441

19 only if the applicant involved agrees that, in developing

20 the qualified community health group involved, the appli21 cant will utilize existing resources to the maximum extent

22 practicable.

23 SEC. 3443. DEFAULTS; RIGHT OF RECOVERY.

24 (a) DEFAULTS.—
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1 (1) IN GENERAL.—The Secretary may take

2 such action as may be necessary to prevent a default

3 on loans or loan guarantees under section 3441, in4 cluding the waiver of regulatory conditions, deferral

5 of loan payments, renegotiation of loans, and the ex6 penditure of funds for technical and consultative as7 sistance, for the temporary payment of the interest

8 and principal on such a loan, and for other pur9 poses.

10 (2) FORECLOSURE.—The Secretary may take

11 such action, consistent with State law respecting

12 foreclosure procedures, as the Secretary deems ap13 propriate to protect the interest of the United States

14 in the event of a default on a loan made pursuant

15 to section 3441, including selling real property

16 pledged as security for such a loan or loan guarantee

17 and for a reasonable period of time taking posses18 sion of, holding, and using real property pledged as

19 security for such a loan or loan guarantee.

20 (3) WAIVERS.—The Secretary may, for good

21 cause, but with due regard to the financial interests

22 of the United States, waive any right of recovery

23 which the Secretary has by reasons of the failure of

24 a borrower to make payments of principal of and in25 terest on a loan made pursuant to section 3441, ex-
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1 cept that if such loan is sold and guaranteed, any

2 such waiver shall have no effect upon the Secretary’s

3 guarantee of timely payment of principal and inter4 est.

5 (b) TWENTY-YEAR OBLIGATION; RIGHT OF RECOV6 ERY.—

7 (1) IN GENERAL.—With respect to a facility for

8 which a loan is to be made pursuant to section

9 3441, the Secretary may provide the loan or loan

10 guarantee only if the applicant involved agrees that

11 the applicant will be liable to the United States for

12 the amount of the loan or loan guarantee, together

13 with an amount representing interest, if at any time

14 during the 20-period beginning on the date of com15 pletion of the activities involved, the facility—

16 (A) ceases to be a facility utilized by a

17 qualified community health group, or by an18 other public or nonprofit private entity that

19 provides health services in one or more health

20 professional shortage areas or that provides

21 such services to a significant number of individ22 uals who are members of a medically under23 served population; or

24 (B) is sold or transferred to any entity

25 other than an entity that is—
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1 (i) a qualified community health

2 group or other entity described in subpara3 graph (A); and

4 (ii) approved by the Secretary as a

5 purchaser or transferee regarding the facil6 ity.

7 (2) SUBORDINATION; WAIVERS.—The Secretary

8 may subordinate or waive the right of recovery

9 under paragraph (1), and any other Federal interest

10 that may be derived by virtue of a loan or loan guar11 antee under subsection (a), if the Secretary deter12 mines that subordination or waiver will further the

13 objectives of this part.

14 SEC. 3444. PROVISIONS REGARDING CONSTRUCTION OR EX15 PANSION OF FACILITIES.

16 (a) SUBMISSION OF INFORMATION.—In the case of

17 a project for construction, conversion, expansion or mod18 ernization of a facility, the Secretary may provide loans

19 or loan guarantees under section 3441 only if the appli20 cant submits to the Secretary the following:

21 (1) A description of the site.

22 (2) Plans and specifications which meet require23 ments prescribed by the Secretary.

24 (3) Information reasonably demonstrating that

25 title to such site is vested in one or more of the enti-
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1 ties filing the application (unless the agreement de2 scribed in subsection (b)(1) is made).

3 (4) A specification of the type of assistance

4 being requested under section 3441.

5 (b) AGREEMENTS.—In the case of a project for con6 struction, conversion, expansion or modernization of a fa7 cility, the Secretary may provide loans or loan guarantees

8 under section 3441 only if the applicant makes the follow9 ing agreements:

10 (1) Title to such site will be vested in one or

11 more of the entities filing the application (unless the

12 assurance described in subsection (a)(3) has been

13 submitted under such subsection).

14 (2) Adequate financial support will be available

15 for completion of the project and for its maintenance

16 and operation when completed.

17 (3) All laborers and mechanics employed by

18 contractors or subcontractors in the performance of

19 work on a project will be paid wages at rates not

20 less than those prevailing on similar construction in

21 the locality as determined by the Secretary of Labor

22 in accordance with the Act of March 3, 1931 (40

23 U.S.C. 276a et seq; commonly known as the Davis24 Bacon Act), and the Secretary of Labor shall have

25 with respect to such labor standards the authority
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1 and functions set forth in Reorganization Plan

2 Numbered 14 of 1950 (15 FR 3176; 5 U.S.C. Ap3 pendix) and section 276c of title 40.

4 (4) The facility will be made available to all

5 persons seeking service regardless of their ability to

6 pay.

7 SEC. 3445. APPLICATION FOR ASSISTANCE.

8 The Secretary may provide loans or loan guarantees

9 under section 3441 only if an application for such assist10 ance is submitted to the Secretary, the application con11 tains each agreement described in this subpart, the appli12 cation contains the information required in section

13 3444(a), and the application is in such form, is made in

14 such manner, and contains such agreements, assurances,

15 and information as the Secretary determines to be nec16 essary to carry out this subpart.

17 SEC. 3446. ADMINISTRATION OF PROGRAMS.

18 This subpart, and any other program of the Secretary

19 that provides loans or loan guarantees, shall be carried

20 out by a centralized loan unit established within the De21 partment of Health and Human Services.

22 Subpart D—Enabling Services

23 SEC. 3461. GRANTS AND CONTRACTS FOR ENABLING SERV24 ICES.

25 (a) IN GENERAL.—
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1 (1) GRANTS AND CONTRACTS.—The Secretary

2 may make grants to and enter into contracts with

3 entities described in paragraph (2) to assist such en4 tities in providing the services described in sub5 section (b) for the purpose of increasing the capacity

6 of individuals to utilize the items and services in7 cluded in the comprehensive benefits package under

8 title I.

9 (2) RELEVANT ENTITIES.—For purposes of

10 paragraph (1), the entities described in this para11 graph are qualified community health groups (as de12 fined in section 3421(a)), and other public or non13 profit private entities, that—

14 (A) provide health services in one or more

15 health professional shortage areas or that pro16 vide such services to a significant number of in17 dividuals who are members of a medically un18 derserved population; and

19 (B) are experienced in providing services to

20 increase the capacity of individuals to utilize

21 health services.

22 (b) ENABLING SERVICES.—The services referred to

23 in subsection (a)(1) are transportation, community and

24 patient outreach, patient education, translation services,

25 and such other services as the Secretary determines to be
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1 appropriate in carrying out the purpose described in such

2 subsection.

3 (c) CERTAIN REQUIREMENTS REGARDING PROJECT

4 AREA.—The Secretary may make an award of a grant or

5 contract under subsection (a) only if the applicant in6 volved—

7 (1) submits to the Secretary—

8 (A) information demonstrating that the

9 medically underserved populations in the com10 munity to be served under the award have a

11 need for enabling services; and

12 (B) a proposed budget for providing such

13 services; and

14 (2) the applicant for the award agrees that the

15 residents of the community will be significantly in16 volved in the project carried out with the award.

17 (d) IMPOSITION OF FEES.—The Secretary may make

18 an award of a grant or contract under subsection (a) only

19 if the applicant involved agrees that, in the project carried

20 out under such subsection, enabling services will be pro21 vided without charge to the recipients of the services.

22 (e) USE OF EXISTING RESOURCES.—The Secretary

23 may make an award of a grant or contract under sub24 section (a) only if the applicant involved agrees that, in

25 carrying out the project under such subsection, the appli-
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1 cant will utilize existing resources to the maximum extent

2 practicable.

3 (f) APPLICATION FOR AWARDS OF ASSISTANCE.—

4 The Secretary may make an award of a grant or contract

5 under subsection (a) only if an application for the award

6 is submitted to the Secretary, the application contains

7 each agreement described in this subpart, the application

8 contains the information required in subsection (d)(1),

9 and the application is in such form, is made in such man10 ner, and contains such agreements, assurances, and infor11 mation as the Secretary determines to be necessary to

12 carry out this subpart.

13 (g) DEFINITION.—For purposes of this section, the

14 term ‘‘enabling services’’ means services described in sub15 section (b) that are provided for the purpose described in

16 subsection (a)(1).

17 SEC. 3462. AUTHORIZATIONS OF APPROPRIATIONS.

18 (a) ENABLING SERVICES.—For the purpose of carry19 ing out section 3461, there are authorized to be appro20 priated $200,000,000 for fiscal year 1996, $300,000,000

21 for each of the fiscal years 1997 through 1999, and

22 $100,000,000 for fiscal year 2000.

23 (b) RELATION TO OTHER FUNDS.—The authoriza24 tions of appropriations established in subsection (a) are

25 in addition to any other authorizations of appropriations
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1 that are available for the purpose described in such sub2 section.

3 PART 3—NATIONAL HEALTH SERVICE CORPS

4 SEC. 3471. AUTHORIZATIONS OF APPROPRIATIONS.

5 (a) ADDITIONAL FUNDING; GENERAL CORPS PRO6 GRAM; ALLOCATIONS REGARDING NURSES.—For the pur7 pose of carrying out subpart II of part D of title III of

8 the Public Health Service Act, and for the purpose of car9 rying out section 3472, there are authorized to be appro10 priated $50,000,000 for fiscal year 1995, $100,000,000

11 for fiscal year 1996, and $200,000,000 for each of the

12 fiscal years 1997 through 2000.

13 (b) RELATION TO OTHER FUNDS.—The authoriza14 tions of appropriations established in subsection (a) are

15 in addition to any other authorizations of appropriations

16 that are available for the purpose described in such sub17 section.

18 (c) AVAILABILITY OF FUNDS.—An appropriation

19 under this section for any fiscal year may be made at any

20 time before that fiscal year and may be included in an

21 Act making an appropriation under an authorization

22 under subsection (a) for another fiscal year; but no funds

23 may be made available from any appropriation under this

24 section for obligation under sections 331 through 335, sec25 tion 336A, and section 337 before the fiscal year involved.
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1 SEC. 3472. ALLOCATION FOR PARTICIPATION OF NURSES

2 IN SCHOLARSHIP AND LOAN REPAYMENT

3 PROGRAMS.

4 Of the amounts appropriated under section 3471, the

5 Secretary shall reserve such amounts as may be necessary

6 to ensure that, of the aggregate number of individuals who

7 are participants in the Scholarship Program under section

8 338A of the Public Health Service Act, or in the Loan

9 Repayment Program under section 338B of such Act, the

10 total number who are being educated as nurses or are

11 serving as nurses, respectively, is increased to 20 percent.

12 PART 4—PAYMENTS TO HOSPITALS SERVING

13 VULNERABLE POPULATIONS

14 SEC. 3481. PAYMENTS TO HOSPITALS.

15 (a) ENTITLEMENT STATUS.—The Secretary shall

16 make payments in accordance with this part to eligible

17 hospitals described in section 3482. The preceding sen18 tence—

19 (1) is an entitlement in the Secretary on behalf

20 of such eligible hospitals (but is not an entitlement

21 in the State in which any such hospital is located or

22 in any individual receiving services from any such

23 hospital); and

24 (2) constitutes budget authority in advance of

25 appropriations Acts and represents the obligation of

26 the Federal Government to provide funding for such
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1 payments in the amounts, and for the fiscal years,

2 specified in subsection (b).

3 (b) AMOUNT OF ENTITLEMENT.—

4 (1) IN GENERAL.—For purposes of subsection

5 (a)(2), the amounts and fiscal years specified in this

6 subsection are (in the aggregate for all eligible hos7 pitals) $800,000,000 for the fiscal year in which the

8 general effective date occurs and for each subse9 quent fiscal year.

10 (2) SPECIAL RULE FOR YEARS BEFORE GEN11 ERAL EFFECTIVE DATE.—

12 (A) IN GENERAL.—For any fiscal year

13 that begins prior to the general effective date,

14 the amount specified in this subsection for pur15 poses of subsection (a)(2) shall be equal to the

16 aggregate DSH percentage of the amount oth17 erwise determined under paragraph (1).

18 (B) AGGREGATE DSH PERCENTAGE DE19 FINED.—In subparagraph (A), the ‘‘aggregate

20 DSH percentage’’ for a year is the amount (ex21 pressed as a percentage) equal to—

22 (i) the total amount of payment made

23 by the Secretary under section 1903(a) of

24 the Social Security Act during the base

25 year with respect to payment adjustments
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1 made under section 1923(c) of such Act

2 for hospitals in the States in which eligible

3 hospitals for the year are located; divided

4 by

5 (ii) the total amount of payment made

6 by the Secretary under section 1903(a) of

7 such Act during the base year with respect

8 to payment adjustments made under sec9 tion 1923(c) of such Act for hospitals in

10 all States.

11 (c) PERIOD OF PAYMENT.—An eligible hospital shall

12 receive a payment under this section for a period of 5

13 years, without regard to the year for which the hospital

14 first receives a payment.

15 (d) PAYMENTS MADE ON QUARTERLY BASIS.—Pay16 ments to an eligible hospital under this section for a year

17 shall be made on a quarterly basis during the year.

18 SEC. 3482. IDENTIFICATION OF ELIGIBLE HOSPITALS.

19 (a) HOSPITALS IN PARTICIPATING STATES.—In

20 order to be an eligible hospital under this part, a hospital

21 must be located in a State that is a participating State

22 under this Act, except that an eligible hospital remains

23 eligible to receive a payment under this part notwithstand24 ing that, during the 5-year period for which the payment

25 is to be made, the State in which it is located no longer
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1 meets the requirements for participating States under this

2 Act.

3 (b) STATE IDENTIFICATION.—In accordance with the

4 criteria described in subsection (c) and such procedures

5 as the Secretary may require, each State shall identify the

6 hospitals in the State that meet such criteria and provide

7 the Secretary with a list of such hospitals.

8 (c) CRITERIA FOR ELIGIBILITY.—A hospital meets

9 the criteria described in this subsection if the hospital’s

10 low-income utilization rate for the base year under section

11 1923(b)(3) of the Social Security Act (as such section is

12 in effect on the day before the date of the enactment of

13 this Act) is not less than 25 percent.

14 SEC. 3483. AMOUNT OF PAYMENTS.

15 (a) DISTRIBUTION OF ALLOCATION FOR LOW-IN16 COME ASSISTANCE.—

17 (1) ALLOCATION FROM TOTAL AMOUNT.—Of

18 the total amount available for payments under this

19 section in a year, 75 percent shall be allocated to

20 hospitals for low-income assistance in accordance

21 with this subsection.

22 (2) DETERMINATION OF HOSPITAL PAYMENT

23 AMOUNT.—The amount of payment to an eligible

24 hospital from the allocation made under paragraph
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1 (1) during a year shall be the equal to the hospital’s

2 low-income percentage of the allocation for the year.

3 (b) DISTRIBUTION OF ALLOCATION FOR ASSISTANCE

4 FOR UNCOVERED SERVICES.—

5 (1) ALLOCATION FROM TOTAL AMOUNT; DETER6 MINATION OF STATE-SPECIFIC PORTION OF ALLOCA7 TION.—Of the total amount available for payments

8 under this section in a year, 25 percent shall be allo9 cated to hospitals for assistance in furnishing inpa10 tient hospital services that are not covered services

11 under title I (in accordance with regulations of the

12 Secretary) in accordance with this subsection. The

13 amount available for payments to eligible hospitals

14 in a State shall be equal to an amount determined

15 in accordance with a methodology specified by the

16 Secretary.

17 (2) DETERMINATION OF HOSPITAL PAYMENT

18 AMOUNT.—The amount of payment to an eligible

19 hospital in a State from the amount available for

20 payments to eligible hospitals in the State under

21 paragraph (1) during a year shall be the equal to

22 the hospital’s low-income percentage of such amount

23 for the year.

24 (c) LOW-INCOME PERCENTAGE DEFINED.—
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1 (1) IN GENERAL.—In this subsection, an eligi2 ble hospital’s ‘‘low-income percentage’’ for a year is

3 equal to the amount (expressed as a percentage) of

4 the total low-income days for all eligible hospitals for

5 the year that are attributable to the hospital.

6 (2) LOW-INCOME DAYS DESCRIBED.—For pur7 poses of paragraph (1), an eligible hospital’s low-in8 come days for a year shall be equal to the product

9 of—

10 (A) the total number of inpatient days for

11 the hospital for the year (as reported to the

12 Secretary by the State in which the hospital is

13 located, in accordance with a reporting schedule

14 and procedures established by the Secretary);

15 and

16 (B) the hospital’s low-income utilization

17 rate for the base year under section 1923(b)(3)

18 of the Social Security Act (as such section is in

19 effect on the day before the date of the enact20 ment of this Act).

21 SEC. 3484. BASE YEAR.

22 In this part, the ‘‘base year’’ is, with respect to a

23 State and hospitals in a State, the year immediately prior

24 to the year in which the general effective date occurs.
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1 Subtitle F—Mental Health;

2 Substance Abuse

3 PART 1—FINANCIAL ASSISTANCE

4 SEC. 3501. AUTHORIZATIONS OF APPROPRIATIONS.

5 (a) IN GENERAL.—For the purpose of carrying out

6 this part, there are authorized to be appropriated

7 $100,000,000 for fiscal year 1995, $150,000,000 for fis8 cal year 1996, and $250,000,000 for each of the fiscal

9 years 1997 through 2000.

10 (b) ALLOCATION AMONG PROGRAMS.—Of the

11 amounts made available under subsection (a) for a fiscal

12 year—

13 (1) the Secretary may reserve for carrying out

14 section 3503 such amounts as the Secretary deter15 mines to be appropriate; and

16 (2) the Secretary shall, of the remaining

17 amounts, reserve 50 percent for carrying out sub18 section (a) of section 3502 and 50 percent for carry19 ing out subsection (b) of such section.

20 (c) RELATION TO OTHER FUNDS.—The authoriza21 tions of appropriations established in subsection (a) are

22 in addition to any other authorizations of appropriations

23 that are available for the purpose described in such sub24 section.
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1 SEC. 3502. SUPPLEMENTAL FORMULA GRANTS FOR STATES

2 REGARDING ACTIVITIES UNDER PART B OF

3 TITLE XIX OF PUBLIC HEALTH SERVICE ACT.

4 (a) MENTAL HEALTH.—

5 (1) IN GENERAL.—In the case of any State that

6 submits to the Secretary an application in accord7 ance with subsection (e) for a fiscal year with re8 spect to mental health, the Secretary shall make a

9 grant to the State for the purposes authorized in

10 subsection (c) with respect to mental health. The

11 grant shall consist of the allotment determined

12 under paragraph (2) for the State for such year.

13 (2) DETERMINATION OF ALLOTMENT.—For

14 purposes of paragraph (1), the allotment under this

15 paragraph for a State for a fiscal year shall be de16 termined as follows: With respect to the amount re17 served under section 3501(b)(2) for carrying out

18 this subsection, section 1918 of the Public Health

19 Service Act shall be applied to such amount to the

20 same extent and in the same manner as such section

21 1918 is applied to the amount determined under sec22 tion 1918(a)(2) of such Act.

23 (b) SUBSTANCE ABUSE.—

24 (1) IN GENERAL.—In the case of any State that

25 submits to the Secretary an application in accord26 ance with subsection (e) for a fiscal year with re-
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1 spect to substance abuse, the Secretary shall make

2 a grant to the State for the purposes authorized in

3 subsection (c) with respect to substance abuse. The

4 grant shall consist of the allotment determined

5 under paragraph (2) for the State for such year.

6 (2) DETERMINATION OF ALLOTMENT.—For

7 purposes of paragraph (1), the allotment under this

8 paragraph for a State for a fiscal year shall be de9 termined as follows: With respect to the amount re10 served under section 3501(b)(2) for carrying out

11 this subsection, section 1933 of the Public Health

12 Service Act shall be applied to such amount to the

13 same extent and in the same manner as such section

14 1933 is applied to the amount determined pursuant

15 to sections 1933(a)(1)(B)(i) and 1918(a)(2)(A) of

16 such Act.

17 (c) USE OF GRANTS.—

18 (1) IN GENERAL.—With respect to the expendi19 ture of a grant to a State under subsection (a) or

20 (b), the Secretary—

21 (A) shall designate as authorized expendi22 tures such of the activities described in para23 graph (2) with respect to mental health and

24 substance abuse, respectively, as the Secretary

25 determines to be appropriate; and
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1 (B) may make the grant only if the State

2 agrees to expend the grant in accordance with

3 the activities so designated.

4 (2) DESCRIPTION OF ACTIVITIES.—The activi5 ties referred to in paragraph (1) are (as applicable

6 to the grant involved) the following:

7 (A) For the purpose of increasing the ac8 cess of individuals to services relating to mental

9 health and substance abuse, the following serv10 ices: Transportation, community and patient

11 outreach, patient education, translation serv12 ices, and such other services as the Secretary

13 determines to be appropriate regarding such

14 purpose.

15 (B) Improving the capacity of State and

16 local service systems to coordinate and monitor

17 mental health and substance abuse services, in18 cluding improvement of management informa19 tion systems, and establishment of linkages be20 tween providers of mental health and substance

21 abuse services and primary care providers and

22 health plans.

23 (C) Providing incentives to integrate public

24 and private systems for the treatment of mental

25 health and substance abuse disorders.
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1 (D) Any activity for which a grant under

2 section 1911 or section 1921 of the Public

3 Health Service Act is authorized to be ex4 pended.

5 (d) MAINTENANCE OF EFFORT.—

6 (1) IN GENERAL.—With respect to the activities

7 for which a grant under subsection (a) or (b) is to

8 be made, the Secretary may make the grant only if

9 the State involved agrees to maintain expenditures

10 of non-Federal amounts for such activities at a level

11 that is not less than the level of such expenditures

12 maintained by the State for the fiscal year preceding

13 the first fiscal year for which the State receives such

14 a grant.

15 (2) WAIVER.—The Secretary may waive all or

16 part of the requirement established for a State

17 under paragraph (1) if—

18 (A) the State agrees that the amounts that

19 otherwise would have been subject to such re20 quirement will be expended for the purpose of

21 developing community-based systems of care to

22 promote the eventual integration of the public

23 and private systems for treatment of mental

24 health, or substance abuse, as applicable to the

25 grant;
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1 (B) the State submits to the Secretary a

2 request for the waiver and a description of the

3 manner in which the State will carry out such

4 purpose; and

5 (C) the Secretary approves the waiver.

6 (e) APPLICATION FOR GRANT.—For purposes of sub7 section (a)(1) and (b)(1), an application for a grant under

8 this section regarding mental health or substance abuse,

9 respectively, is in accordance with this subsection if the

10 State involved submits the application not later than the

11 date specified by the Secretary, the application contains

12 each applicable agreement described in this section, and

13 the application otherwise is in such form, is made in such

14 manner, and contains such agreements, assurances, and

15 information as the Secretary determines to be necessary

16 to carry out the purpose involved.

17 SEC. 3503. CAPITAL COSTS OF DEVELOPMENT OF CERTAIN

18 CENTERS AND CLINICS.

19 (a) IN GENERAL.—The Secretary may make loans to,

20 and guarantee the payment of principal and interest to

21 Federal and non-Federal lenders on behalf of, public and

22 private entities for the capital costs to be incurred by the

23 entities in the development of non-acute, residential treat24 ment centers and community-based ambulatory clinics.
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•S 1779 PCS

1 (b) PRIORITIES REGARDING USE OF FUNDS.—In

2 providing loans or loan guarantees under subsection (a),

3 the Secretary shall give priority to authorizing the use of

4 amounts for projects in health professional shortage areas

5 or in geographic area in which there resides a significant

6 number of individuals who are members of a medically un7 derserved population.

8 (c) APPLICABILITY OF CERTAIN PROVISIONS.—The

9 Secretary may provide loans or loan guarantees under

10 subsection (a) only if the applicant involved agrees that,

11 except to the extent inconsistent with the purpose de12 scribed in subsection (a), subpart C of part 2 of subtitle

13 E applies to such assistance to the same extent and in

14 the same manner as such subpart applies to loans and

15 loan guarantees under section 3441.

16 PART 2—AUTHORITIES REGARDING

17 PARTICIPATING STATES

18 Subpart A—Report

19 SEC. 3511. REPORT ON INTEGRATION OF MENTAL HEALTH

20 SYSTEMS.

21 (a) IN GENERAL.—As a condition of being a partici22 pating State under title I, each State shall, not later than

23 October 1, 1998, submit to the Secretary a report on (in24 cluding a plan for) the measures to be implemented by

25 the State to achieve the integration of the mental illness
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•S 1779 PCS

1 and substance abuse services of the State and its political

2 subdivisions with the mental illness and substance abuse

3 services that are included in the comprehensive benefit

4 package under title I. The plan required in the preceding

5 sentence shall meet the conditions described in section

6 3074(b).

7 (b) REQUIRED CONTENTS.—With respect to the pro8 vision of items and services relating to mental illness and

9 substance abuse, the report of a State under subsection

10 (a) shall, at a minimum, contain the following information:

11 (1) Information on the number of individuals

12 served by or through mental illness and substance

13 abuse programs administered by State and local

14 agencies and the proportion who are eligible persons

15 under title I.

16 (2) The following information on services fur17 nished to eligible persons:

18 (A) Each type of benefit furnished.

19 (B) The mental illness diagnoses for which

20 each type of benefit is covered, the amount, du21 ration and scope of coverage for each covered

22 benefit, and any applicable limits on benefits.

23 (C) Cost sharing rules that apply.

24 (3) Information on the extent to which each

25 health provider furnishing mental illness and sub-
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•S 1779 PCS

1 stance abuse services under a State program partici2 pates in one or more regional or corporate alliance

3 health plans, and, in the case of providers that do

4 not so participate, the reasons for the lack of par5 ticipation.

6 (4) The amount of revenues from health plans

7 received by mental illness and substance abuse pro8 viders that are participating in such health plans

9 and are funded under one or more State programs.

10 (5) With respect to the two years preceding the

11 year in which the State becomes a participating

12 State under title I—

13 (A) the amount of funds expended by the

14 State and its political subdivisions for each of

15 such years for items and services that are in16 cluded in the comprehensive benefit package

17 under such title;

18 (B) the amount of funds expended for

19 medically necessary and appropriate items and

20 services not included in such benefit package,

21 including medical care, other health care, and

22 supportive services related to the provision of

23 health care.

24 (6) An estimate of the amount that the State

25 will expend to furnish items and services not in-
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•S 1779 PCS

1 cluded in such package once the expansion of cov2 erage for mental illness and substance abuse services

3 is implemented in the year 2001.

4 (7) A description of how the State will assure

5 that all individuals served by mental illness and sub6 stance abuse programs funded by the State will be

7 enrolled in a health plan and how mental illness and

8 substance abuse services not covered under the bene9 fit package will continue to be furnished to such en10 rollees.

11 (8) A description of the conditions under which

12 the integration of mental illness and substance abuse

13 providers into regional and corporate alliances can

14 be achieved, and an identification of changes in par15 ticipation and certification requirements that are

16 needed to achieve the integration of such programs

17 and providers into health plans.

18 (9) If the integration of mental illness and sub19 stance abuse programs operated by the State into

20 one or more health plans is not medically appro21 priate or feasible for one or more groups of individ22 uals treated under State programs, a description of

23 the reasons that integration is not feasible or appro24 priate and a plan for assuring the coordination for

25 such individuals of the care and services covered
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1 under the comprehensive benefit package with the

2 additional items and services furnished by such pro3 grams.

4 (c) GENERAL PROVISIONS.—Reports under sub5 section (a) shall be provided at the time and in the manner

6 prescribed by the Secretary.

7 Subpart B—Pilot Program

8 SEC. 3521. PILOT PROGRAM.

9 (a) IN GENERAL.—The Secretary shall establish a

10 pilot program to demonstrate model methods of achieving

11 the integration of the mental illness and substance abuse

12 services of the States with the mental illness and sub13 stance abuse services that are included in the comprehen14 sive benefit package under title I.

15 (b) CERTAIN CONSIDERATIONS.—With respect to the

16 provision of items and services relating to mental illness

17 and substance abuse, the Secretary, in carrying out sub18 section (a), shall consider the following:

19 (1) The types of items and services needed in

20 addition to the items and services included in the

21 comprehensive benefits package under title I.

22 (2) The optimal methods of treatment for indi23 viduals with long-term conditions.

24 (3) The capacity of alliance health plans to fur25 nish such treatment.
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1 (4) The modifications that should be made in

2 the items and services furnished by such health

3 plans.

4 (5) The role of publicly-funded health providers

5 in the integration of acute and long-term treatment.

6 Subtitle G—Comprehensive School

7 Health Education; School-Relat8 ed Health Services

9 PART 1—GENERAL PROVISIONS

10 SEC. 3601. PURPOSES.

11 Subject to the subsequent provisions of this subtitle,

12 the purposes of this subtitle are as follows:

13 (1) To support the provision in kindergarten

14 through grade 12 of sequential, age-appropriate,

15 comprehensive health education programs that ad16 dress locally relevant priorities.

17 (2) To establish a national framework within

18 which States can create comprehensive school health

19 education programs that—

20 (A) target the health risk behaviors ac21 counting for the majority of the morbidity and

22 mortality among youth and adults, including

23 the following: Tobacco use; alcohol and other

24 drug abuse; sexual behaviors resulting in infec25 tion with the human immunodeficiency virus, in
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1 other sexually transmitted diseases or in unin2 tended pregnancy; behaviors resulting in inten3 tional and unintentional injuries; dietary pat4 terns resulting in disease; and sedentary life5 styles; and

6 (B) are integrated with plans and pro7 grams in the State, if any, under title III of the

8 Goals 2000: Educate America Act and those

9 targeting health promotion and disease preven10 tion goals related to the national health objec11 tives set forth in Healthy People 2000.

12 (3) To pay the initial costs of planning and es13 tablishing Statewide comprehensive school health

14 education programs that will be implemented and

15 maintained with local, State, and other Federal re16 sources.

17 (4) To support Federal activities such as re18 search and demonstrations, evaluations, and training

19 and technical assistance regarding comprehensive

20 school health education.

21 (5) To motivate youth, especially low-achieving

22 youth, to stay in school, avoid teen pregnancy, and

23 strive for success by providing intensive, high-quality

24 health education programs that include peer-teach25 ing, family, and community involvement.
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1 (6) To improve the knowledge and skills of chil2 dren and youth by integrating academic and experi3 ential learning in health education with other ele4 ments of a comprehensive school health program.

5 (7) To further the National Education Goals

6 set forth in title I of the Goals 2000: Educate Amer7 ica Act and the national health objectives set forth

8 in Healthy People 2000.

9 SEC. 3602. DEFINITIONS.

10 (a) COMPREHENSIVE SCHOOL HEALTH EDUCATION

11 PROGRAM.—For purposes of this subtitle, the term ‘‘com12 prehensive school health education program’’ means a pro13 gram that addresses locally relevant priorities and meets

14 the following conditions:

15 (1) The program is sequential, and age and de16 velopmentally appropriate.

17 (2) The program is provided, in the area served

18 by the program, every year for all students from kin19 dergarten through grade 12.

20 (3) The program provides comprehensive health

21 education, including the following components:

22 (A) Community health.

23 (B) Environmental health.

24 (C) Personal health.

25 (D) Family life.
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1 (E) Growth and development.

2 (F) Nutritional health.

3 (G) Prevention and control of disease and

4 disorders.

5 (H) Safety and prevention of injuries.

6 (I) Substance abuse, including tobacco and

7 alcohol use.

8 (J) Consumer health, including education

9 to ensure that students understand the benefits

10 and appropriate use of medical services, includ11 ing immunizations and other clinical preventive

12 services.

13 (4) The program promotes personal responsibil14 ity for a healthy lifestyle and provides the knowledge

15 and skills necessary to adopt a healthy lifestyle, in16 cluding teaching the legal, social, and health con17 sequences of behaviors that pose health risks.

18 (5) The program is sensitive to cultural and

19 ethnic issues in the content of instructional mate20 rials and approaches.

21 (6) The program includes activities that sup22 port instruction.

23 (7) The program includes activities to promote

24 involvement by parents, families, community organi25 zations, and other appropriate entities.
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1 (8) The program is coordinated with other Fed2 eral, State, and local health education and preven3 tion programs and with other Federal, State and

4 local education programs, including those carried out

5 under title I of the Elementary and Secondary Edu6 cation Act of 1965.

7 (9) The program focuses on the particular

8 health concerns of the students in the State, school

9 district, or school, as the case may be.

10 (b) OTHER DEFINITIONS.—For purposes of this sub11 title:

12 (1) The term ‘‘local educational agency’’ has

13 the meaning given such term in section 1471(12) of

14 the Elementary and Secondary Education Act of

15 1965.

16 (2) The term ‘‘State educational agency’’ has

17 the meaning given such term in section 1471(23) of

18 the Elementary and Secondary Education Act of

19 1965.

20 PART 2—SCHOOL HEALTH EDUCATION; GENERAL

21 PROVISIONS

22 SEC. 3611. AUTHORIZATIONS OF APPROPRIATIONS.

23 (a) FUNDING FOR SCHOOL HEALTH EDUCATION.—

24 For the purpose of carrying out parts 3 and 4, there are
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1 authorized to be appropriated $50,000,000 for each of the

2 fiscal year 1995 through 2000.

3 (b) ALLOCATIONS.—Of the amounts appropriated

4 under subsection (a) for a fiscal year—

5 (1) the Secretary may reserve not more than

6 $13,000,000 for carrying out part 4;

7 (2) the Secretary may reserve not more than

8 $5,000,000 to support national leadership activities,

9 such as research and demonstration, evaluation, and

10 training and technical assistance in comprehensive

11 school health education; and

12 (3) the Secretary may reserve not more than 5

13 percent for administrative expenses regarding parts

14 3 and 4.

15 (c) RELATION TO OTHER FUNDS.—The authoriza16 tions of appropriations established in subsection (a) are

17 in addition to any other authorizations of appropriations

18 that are available for the purpose described in such sub19 section.

20 SEC. 3612. WAIVERS OF STATUTORY AND REGULATORY RE21 QUIREMENTS.

22 (a) IN GENERAL.—

23 (1) WAIVERS.—Except as provided in sub24 section (c), upon the request of an entity receiving

25 funds under part 3 or part 4 and under a program
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1 specified in paragraph (2), the Secretary of Health

2 and Human Services or the Secretary of Education

3 (as the case may be, according to which Secretary

4 administers the program so specified) may grant to

5 the entity a waiver of any requirement of such pro6 gram regarding the use of funds, or of the regula7 tions issued for the program by the Secretary in8 volved, if the following conditions are met with re9 spect to such program:

10 (A) The Secretary involved determines that

11 the requirement of such program impedes the

12 ability of the State educational agency or other

13 recipient to achieve more effectively the pur14 poses of part 3 or 4.

15 (B) The Secretary involved determines

16 that, with respect to the use of funds under

17 such program, the requested use of the funds

18 by the entity would be consistent with the pur19 poses of part 3 or 4.

20 (C) In the case of a request for a waiver

21 submitted by a State educational agency, the

22 State educational agency—

23 (i) provides all interested local edu24 cational agencies in the State with notice
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1 and an opportunity to comment on the

2 proposal; and

3 (ii) submits the comments to the Sec4 retary involved.

5 (D) In the case of a request for a waiver

6 submitted by a local educational agency or

7 other agency, institution, or organization that

8 receives funds under part 3 from the State edu9 cational agency, such request has been reviewed

10 by the State educational agency and is accom11 panied by the comments, if any, of such agency.

12 (2) RELEVANT PROGRAMS.—For purposes of

13 paragraph (1), the programs specified in this para14 graph are as follows:

15 (A) In the case of programs administered

16 by the Secretary of Health and Human Serv17 ices, the following:

18 (i) The program known as the Preven19 tion, Treatment, and Rehabilitation Model

20 Projects for High Risk Youth, carried out

21 under section 517 of the Public Health

22 Service Act.

23 (ii) The program known as the State

24 and Local Comprehensive School Health

25 Programs to Prevent Important Health
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1 Problems and Improve Educational Out2 comes, carried out under such Act.

3 (B) In the case of programs administered

4 by the Secretary of Education, any program

5 carried out under part B of the Drug-Free

6 Schools and Communities Act of 1986.

7 (b) WAIVER PERIOD.—

8 (1) IN GENERAL.—A waiver under this section

9 shall be for a period not to exceed three years.

10 (2) EXTENSIONS.—The Secretary involved

11 under subsection (a) may extend such period if the

12 Secretary determines that—

13 (A) the waiver has been effective in ena14 bling the State or affected recipients to carry

15 out the activities for which it was requested and

16 has contributed to improved performance; and

17 (B) such extension is in the public interest.

18 (c) WAIVERS NOT AUTHORIZED.—The Secretary in19 volved under subsection (a) may not waive, under this sec20 tion, any statutory or regulatory requirement relating to—

21 (1) comparability of services;

22 (2) maintenance of effort;

23 (3) the equitable participation of students at24 tending private schools;

25 (4) parental participation and involvement;
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1 (5) the distribution of funds to States or to

2 local educational agencies or other recipients of

3 funds under the programs specified in subsection

4 (a)(2);

5 (6) maintenance of records;

6 (7) applicable civil rights requirements; or

7 (8) the requirements of sections 438 and 439 of

8 the General Education Provisions Act.

9 (d) TERMINATION OF WAIVER.—The Secretary in10 volved under subsection (a) shall terminate a waiver under

11 this section if the Secretary determines that the perform12 ance of the State or other recipient affected by the waiver

13 has been inadequate to justify a continuation of the waiver

14 or if it is no longer necessary to achieve its original pur15 poses.

16 PART 3—SCHOOL HEALTH EDUCATION; GRANTS

17 TO STATE EDUCATION AGENCIES

18 Subpart A—Planning Grants for State Education

19 Agencies

20 SEC. 3621. APPLICATION FOR GRANT.

21 (a) IN GENERAL.—Any State educational agency

22 that wishes to receive a planning grant under this subpart

23 shall submit an application to the Secretary of Health and

24 Human Services, at such time and in such manner as the

25 Secretary may require.
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1 (b) APPLICATION; JOINT DEVELOPMENT; CON2 TENTS.—An application under subsection (a) shall be

3 jointly developed by the State educational agency and the

4 State health agencies of the State involved, and shall con5 tain the following:

6 (1) An assessment of the State’s need for com7 prehensive school health education, using goals es8 tablished by the Department of Health and Human

9 Services and the Department of Education and the

10 State’s school improvement plan, if any, under title

11 III of Goals 2000: Educate America Act.

12 (2) A description of how the State educational

13 agency will collaborate with the State health agency

14 in the planning and development of a comprehensive

15 school health education program in the State, in16 cluding coordination of existing health education

17 programs and resources.

18 (3) A plan to build capacity at the State and

19 local levels to provide staff development and tech20 nical assistance to local educational agency and local

21 health agency personnel involved with comprehensive

22 school health education.

23 (4) A preliminary plan for evaluating com24 prehensive school health education activities.
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1 (5) Information demonstrating that the State

2 has established a State-level advisory council whose

3 membership includes representatives of the State

4 agencies with principal responsibilities for programs

5 regarding health, education, and mental health.

6 (6) A timetable and proposed budget for the

7 planning process.

8 (7) Such other information and assurances as

9 the Secretary may require.

10 (c) NUMBER OF GRANTS.—States may receive one

11 planning grant annually and no more than two planning

12 grants may be awarded to any one State.

13 SEC. 3622. APPROVAL OF SECRETARY.

14 The Secretary may approve the application of a State

15 under section 3621 if the Secretary determines that—

16 (1) the application meets the requirements of

17 this subpart; and

18 (2) there is a substantial likelihood that the

19 State will be able to develop and implement a com20 prehensive school health education plan that com21 plies with the requirements of subpart B.

22 SEC. 3623. AMOUNT OF GRANT.

23 For any fiscal year, the minimum grant to any State

24 under this subpart is an amount determined by the Sec25 retary to be necessary to enable the State to conduct the
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1 planning process, and the maximum such grant is

2 $500,000.

3 SEC. 3624. AUTHORIZED ACTIVITIES.

4 A State may use funds received under this subpart

5 only for the following:

6 (1) To establish and carry out the State plan7 ning process.

8 (2) To conduct Statewide or sub-State regional

9 coordination and collaboration activities for local

10 educational agencies, local health agencies, and other

11 agencies and organizations, as appropriate.

12 (3) To conduct activities to build capacity to

13 provide staff development and technical assistance

14 services to local educational agency and local health

15 agency personnel involved with comprehensive school

16 health education.

17 (4) To develop student learning objectives and

18 assessment instruments.

19 (5) To work with State and local health agen20 cies and State and local educational agencies to re21 duce barriers to the implementation of comprehen22 sive school health education programs in schools.

23 (6) To prepare the plan required to receive an

24 implementation grant under subpart B.
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1 (7) To adopt, validate, and disseminate curricu2 lum models and program strategies, if the Secretary

3 determines that such activities are necessary to

4 achieving the objectives of the State’s program.

5 Subpart B—Implementation Grants for State

6 Education Agencies

7 SEC. 3631. APPLICATION FOR GRANT.

8 (a) IN GENERAL.—Any State that wishes to receive

9 an implementation grant under this subpart shall submit

10 an application to the Secretary of Health and Human

11 Services, at such time, in such manner, and containing

12 such information and assurances as the Secretary may re13 quire.

14 (b) APPLICATION AND STATE PLAN; JOINT DEVEL15 OPMENT; CONTENTS.—An application under subsection

16 (a) shall be jointly developed by the State educational

17 agency and the State health agencies of the State involved,

18 and shall include a State plan for comprehensive school

19 health education programs (as defined in section 3602)

20 that describes the following:

21 (1) The State’s goals and objectives for those

22 programs.

23 (2) How the State will allocate funds to local

24 educational agencies in accordance with section

25 3634.
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1 (3) How the State will coordinate programs

2 under this subpart with other local, State and Fed3 eral health education programs.

4 (4) How comprehensive school health education

5 programs will be coordinated with other local, State

6 and Federal education programs, such as programs

7 under title I of the Elementary and Secondary Edu8 cation Act of 1965, with the State’s school improve9 ment plan, if any, under title III of the Goals 2000:

10 Educate America Act, and with any similar pro11 grams.

12 (5) How the State has worked with State and

13 local education agencies and with State and local

14 health agencies to reduce barriers to implementing

15 comprehensive school health education programs.

16 (6) How the State will monitor the implementa17 tion of such programs by local educational agencies.

18 (7) How the State will build capacity for profes19 sional development of health educators.

20 (8) How the State will provide staff develop21 ment and technical assistance to local educational

22 agencies.

23 (9) The respective roles of the State educational

24 agency, local educational agencies, the State health

25 agency, and the local health agencies in developing
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1 and implementing such school health education pro2 grams.

3 (10) How such school health education pro4 grams will be tailored to the extent practicable to be

5 culturally and linguistically sensitive and responsive

6 to the various needs of the students served, includ7 ing individuals with disabilities, and individuals from

8 disadvantaged backgrounds (including racial and

9 ethnic minorities).

10 (11) How the State will evaluate and report on

11 the State’s progress toward attaining the goals and

12 objectives described in paragraph (1).

13 SEC. 3632. SELECTION OF GRANTEES.

14 (a) SELECTION OF GRANTEES.—The Secretary shall

15 establish criteria for the competitive selection of grantees

16 under this subpart.

17 (b) OPPORTUNITY FOR PLANNING GRANT.—If the

18 Secretary does not approve a State’s application under

19 this subpart and determines that the State could benefit

20 from a planning grant under subpart A, the Secretary

21 shall inform the State of any planning grant funds that

22 may be available to it under subpart A, subject to section

23 3621(c).
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1 SEC. 3633. AMOUNT OF GRANT.

2 (a) IN GENERAL.—For any fiscal year, the minimum

3 grant to any State under this subpart is an amount deter4 mined by the Secretary to be necessary to enable the State

5 to conduct the implementation process.

6 (b) CRITERIA.—In determining the amount of any

7 such grant, the Secretary may consider such factors as

8 the number of children enrolled in schools in the State,

9 the number of school-aged children living in poverty in the

10 State, and the scope and quality of the State’s plan.

11 SEC. 3634. AUTHORIZED ACTIVITIES; LIMITATION ON AD12 MINISTRATIVE COSTS.

13 (a) SUBGRANTS TO LOCAL EDUCATIONAL AGEN14 CIES.—Each State that receives funds under this subpart

15 for any fiscal year shall retain not more than 75 percent

16 of those funds in the first year, 50 percent of those funds

17 in the second and third years, and 25 percent of those

18 funds in each succeeding year. Those funds not retained

19 by the State shall be used to make grants to local edu20 cational agencies in accordance with section 3635.

21 (b) STATE-LEVEL ACTIVITIES.—Each State shall use

22 retained funds for any fiscal year for the following pur23 poses:

24 (1) To conduct Statewide or sub-State regional

25 coordination and collaboration activities.
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1 (2) To adapt, validate, or disseminate program

2 models or strategies for comprehensive school health

3 education.

4 (3) To build capacity to deliver staff develop5 ment and technical assistance services to local edu6 cational agencies, and State and local health agen7 cies.

8 (4) To promote program activities involving

9 families and coordinating program activities with

10 community groups and agencies.

11 (5) To evaluate and report to the Secretary on

12 the progress made toward attaining the goals and

13 objectives described in section 3621(b)(1).

14 (6) To conduct such other activities to achieve

15 the objectives of this subpart as the Secretary may

16 by regulation authorize.

17 (c) STATE ADMINISTRATION.—Of the amounts re18 ceived by a State for a fiscal year under this subpart and

19 remaining after any grants to local educational agencies

20 made from such amounts, the State may use up to 10

21 percent for the costs of administering such amounts, in22 cluding the activities of the State advisory council and

23 monitoring the performance of local educational agencies.
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1 SEC. 3635. SUBGRANTS TO LOCAL EDUCATIONAL AGEN2 CIES.

3 (a) APPLICATION FOR GRANT.—Any local edu4 cational agency that wishes to receive a grant under this

5 subpart shall submit an application to the State, contain6 ing such information and assurances as the State may re7 quire, including a description of the following:

8 (1) The local educational agency’s goals and ob9 jectives for comprehensive school health education

10 programs.

11 (2) How the local educational agency will con12 centrate funds in high-need schools and provide suf13 ficient funds to targeted schools to ensure the imple14 mentation of comprehensive programs.

15 (3) How the local educational agency will mon16 itor the implementation of these programs.

17 (4) How the local educational agency will en18 sure that school health education programs are tai19 lored to the extent practicable to be culturally and

20 linguistically sensitive and responsive to the various

21 needs of the students served, including individuals

22 with disabilities, and individuals from disadvantaged

23 backgrounds (including racial and ethnic minorities).

24 (5) How the local educational agency, in con25 sultation with the local health agency, will evaluate
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1 and report on its progress toward attaining the goals

2 and objectives described in paragraph (1).

3 (b) SELECTION OF SUBGRANTEES.—Each State shall

4 give priority to applications from local educational agen5 cies serving areas with high needs, as indicated by criteria

6 developed by the State, which shall include, but need not

7 be limited to, high rates of any of the following:

8 (1) Poverty among school-aged youth.

9 (2) Births to adolescents.

10 (3) Sexually transmitted diseases among school11 aged youth.

12 (4) Drug and alcohol use among school-aged

13 youth.

14 (5) Violence among school-aged youth.

15 (c) AUTHORIZED ACTIVITIES.—Each local edu16 cational agency that receives a grant under this subpart

17 shall use the grant funds to implement comprehensive

18 school health education programs, as defined in section

19 3602.

20 Subpart C—State and Local Reports

21 SEC. 3641. STATE AND LOCAL REPORTS.

22 (a) STATE REPORTS.—Each State that receives a

23 grant under this part shall collect and submit to the Sec24 retary such data and other information on State and local

25 programs as the Secretary may require.
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1 (b) IN GENERAL.— Each local educational agency

2 that receives a grant under subpart B shall collect and

3 report to the State such data and other information as

4 the Secretary may require.

5 PART 4—SCHOOL HEALTH EDUCATION; GRANTS

6 TO CERTAIN LOCAL EDUCATIONAL AGENCIES

7 Subpart A—Eligibility

8 SEC. 3651. SUBSTANTIAL NEED OF AREA SERVED BY

9 AGENCY.

10 Any local educational agency is eligible for a grant

11 under this part for any fiscal year if—

12 (1) the agency enrolls at least 25,000 students;

13 and

14 (2) the geographic area served by the agency

15 has a substantial need for such a grant, relative to

16 other geographic areas in the United States.

17 Subpart B—Planning Grants for Local Education

18 Agencies

19 SEC. 3661. APPLICATION FOR GRANT.

20 (a) IN GENERAL.—Any local educational agency that

21 wishes to receive a planning grant under this subpart shall

22 submit an application to the Secretary of Health and

23 Human Services at such time and in such manner as the

24 Secretary may require.
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1 (b) STATE EDUCATIONAL AGENCY REVIEW.—Each

2 such local educational agency, before submitting its appli3 cation to the Secretary, shall submit the application to the

4 State educational agency for comment by such agency and

5 by the State health agencies of the State.

6 (c) CONTENTS OF APPLICATIONS.—Each such appli7 cation shall contain the following:

8 (1) An assessment of the local educational

9 agency’s need for comprehensive school health edu10 cation, using goals established by the Department of

11 Health and Human Services and the Department of

12 Education, as well as local health and education

13 strategies, such as State school improvement plans,

14 if any, under title III of the Goals 2000: Educate

15 America Act.

16 (2) Information demonstrating that the local

17 educational agency has established or selected a

18 community-level advisory council, which shall include

19 representatives of relevant community agencies such

20 as those that administer education, child nutrition,

21 health, and mental health programs.

22 (3) A description of how the local educational

23 agency will collaborate with the State educational

24 agency, the State health agency, and the local health

25 agency in the planning and development of a com-
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1 prehensive school health education program in the

2 local educational agency, including coordination of

3 existing health education programs and resources.

4 (4) A plan to build capacity at the local edu5 cational agency to provide staff development and

6 technical assistance to local educational agency and

7 local health agency personnel involved with com8 prehensive school health education.

9 (5) A preliminary plan for evaluating com10 prehensive school health education activities.

11 (6) A timetable and proposed budget for the

12 planning process.

13 (7) Such other information and assurances as

14 the Secretary may require.

15 (d) NUMBER OF GRANTS.—Local educational agen16 cies may receive at a maximum two annual planning

17 grants.

18 SEC. 3662. SELECTION OF GRANTEES.

19 (a) SELECTION CRITERIA.—The Secretary shall es20 tablish criteria for the competitive selection of grantees

21 under this part.

22 (b) LIMITATION.—The Secretary shall not approve

23 an application from a local educational agency in a State

24 that has an approved plan under subpart A or B of part

25 3 of this subtitle unless the Secretary determines, after
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1 consultation with the State that the local application is

2 consistent with the State plan, if one exists.

3 SEC. 3663. AMOUNT OF GRANT.

4 For any fiscal year, the minimum grant to any local

5 educational agency under this subpart is an amount deter6 mined by the Secretary to be necessary to enable the local

7 educational agency to conduct the planning process, and

8 the maximum such grant is $500,000.

9 SEC. 3664. AUTHORIZED ACTIVITIES.

10 A local educational agency may use funds received

11 under this subpart only for the following:

12 (1) To establish and carry out the local edu13 cational agency planning process.

14 (2) To undertake joint training, staffing, ad15 ministration, and other coordination and collabora16 tion activities for local educational agencies, local

17 health agencies, and other agencies and organiza18 tions, as appropriate.

19 (3) To conduct activities to build capacity to

20 provide staff development and technical assistance

21 services to local educational agency and local health

22 agency personnel involved with comprehensive school

23 health education.

24 (4) To develop student learning objectives and

25 assessment instruments.
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1 (5) To work with State and local health agen2 cies and State educational agencies to reduce bar3 riers to the implementation of comprehensive school

4 health education programs in schools, by, for exam5 ple, ensuring that adequate time is a available dur6 ing the school day for such programs.

7 (6) To prepare the plan required to receive an

8 implementation grant under subpart C.

9 Subpart C—Implementation Grants for Local

10 Educational Agencies

11 SEC. 3671. APPLICATION FOR GRANT.

12 (a) IN GENERAL.—Any local educational agency that

13 wishes to receive an implementation grant under this sub14 part shall submit an application to the Secretary of Health

15 and Human Services, at such time, in such manner, and

16 containing such information and assurances as the Sec17 retary may require.

18 (b) STATE EDUCATIONAL AGENCY REVIEW.—Each

19 such local educational agency shall submit its application

20 to the State educational agency for comment before sub21 mitting it to the Secretary.

22 (c) LOCAL EDUCATIONAL AGENCY PLAN.—Each

23 such application shall include a local educational agency

24 plan for comprehensive school health education programs

25 (as defined in section 3602) that describes the following:
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1 (1) The local educational agency’s goals and ob2 jectives for those programs.

3 (2) How the local educational agency will co4 ordinate programs under this subpart with other

5 local, State and Federal health education programs.

6 (3) How comprehensive school health education

7 programs will be coordinated with other local, State

8 and Federal education programs, such as programs

9 under title I of the Elementary and Secondary Edu10 cation Act of 1965, and with State’s school improve11 ment plan, if any, under title III of the Goals 2000:

12 Educate America Act.

13 (4) How the local educational agency has

14 worked with State educational agencies and with

15 State and local health agencies to reduce barriers to

16 implementing comprehensive school health education

17 programs.

18 (5) How local educational agencies will monitor

19 the implementation of such programs.

20 (6) How the local educational agency, in con21 sultation with the State educational agency and

22 State and local health agencies and in conjunction

23 with other local professional development activities,

24 will build capacity for professional development of

25 health educators.
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1 (7) How the local educational agency, in con2 sultation with the State educational agency and

3 State and local health agencies, will provide staff de4 velopment and technical assistance.

5 (8) The respective roles of the State educational

6 agency, local educational agencies, the State health

7 agency, and the local health agencies in developing

8 and implementing such school health education pro9 grams.

10 (9) How such school health education programs

11 will be tailored to the extent practicable to be cul12 turally and linguistically sensitive and responsive to

13 the various needs of the students served, including

14 individuals with disabilities, and individuals from

15 disadvantaged backgrounds (including racial and

16 ethnic minorities).

17 (10) How the local educational agency, in con18 sultation with the local health agency, will evaluate

19 and report on the local educational agency’s progress

20 toward attaining the goals and objectives described

21 in paragraph (1).

22 SEC. 3672. SELECTION OF GRANTEES.

23 (a) SELECTION OF GRANTEES.—The Secretary shall

24 establish criteria for the competitive selection of grantees

25 under this subpart.
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1 (b) LIMITATION.—The Secretary shall not approve

2 an application from a local educational agency in a State

3 that has an approved plan under subpart A or B of part

4 3 unless the Secretary determines, after consultation with

5 the State that the local application is consistent with such

6 State plan.

7 (c) OPPORTUNITY FOR PLANNING GRANT.—If the

8 Secretary does not approve a local educational agency’s

9 application under this subpart and determines that the

10 local educational agency could benefit from a planning

11 grant under subpart B, the Secretary shall inform the

12 local educational agency of any planning grant funds that

13 may be available to it under subpart B, subject to section

14 3661(d).

15 SEC. 3673. AMOUNT OF GRANT.

16 (a) IN GENERAL.—For any fiscal year, the minimum

17 grant to any local educational agency under this subpart

18 is an amount determined by the Secretary to be necessary

19 to enable the local educational agency to conduct the im20 plementation process.

21 (b) CRITERIA.—In determining the amount of any

22 such grant, the Secretary may consider such factors as

23 the number of children enrolled in schools in the local edu24 cational agency, the number of school-aged children living
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1 in poverty in the local educational agency, and the scope

2 and quality of the local educational agency’s plan.

3 SEC. 3674. AUTHORIZED ACTIVITIES.

4 Each local educational agency that receives a grant

5 under this subpart shall use the grant funds as follows:

6 (1) To implement comprehensive school health

7 education programs, as defined in section 3602.

8 (2) To conduct local or regional coordination

9 and collaboration activities.

10 (3) To provide staff development and technical

11 assistance to schools, local health agencies, and

12 other community agencies involved in providing com13 prehensive school health education programs.

14 (4) To administer the program and monitor

15 program implementation at the local level.

16 (5) To evaluate and report to the Secretary on

17 the local educational agency’s progress toward at18 taining the goals and objectives described in section

19 3671(c)(1).

20 (6) To conduct such other activities as the Sec21 retary may by regulation authorize.

22 SEC. 3675. REPORTS.

23 Each local educational agency that receives a grant

24 under this subpart shall collect and report to the Secretary
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1 and the State such data and other information as the Sec2 retary may require.

3 PART 5—SCHOOL-RELATED HEALTH SERVICES

4 Subpart A—Development and Operation of Projects

5 SEC. 3681. AUTHORIZATIONS OF APPROPRIATIONS.

6 (a) FUNDING FOR SCHOOL-RELATED HEALTH SERV7 ICES.—For the purpose of carrying out this subpart, there

8 are authorized to be appropriated $100,000,000 for fiscal

9 year 1996, $275,000,000 for fiscal year 1997,

10 $350,000,000 for fiscal year 1998, and $400,000,000 for

11 each of the fiscal years 1999 and 2000.

12 (b) RELATION TO OTHER FUNDS.—The authoriza13 tions of appropriations established in subsection (a) are

14 in addition to any other authorizations of appropriations

15 that are available for the purpose described in such sub16 section.

17 SEC. 3682. ELIGIBILITY FOR DEVELOPMENT AND OPER18 ATION GRANTS.

19 (a) IN GENERAL.—Entities eligible to apply for and

20 receive grants under section 3484 or 3485 are the follow21 ing:

22 (1) State health agencies that apply on behalf

23 of local community partnerships and other commu24 nities in need of adolescent health services within the

25 State.
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1 (2) Local community partnerships in States in

2 which health agencies have not applied.

3 (b) LOCAL COMMUNITY PARTNERSHIPS.—

4 (1) IN GENERAL.—A local community partner5 ship under subsection (a)(2) is an entity that, at a

6 minimum, includes—

7 (A) a local health care provider with expe8 rience in delivering services to adolescents;

9 (B) one or more local public schools; and

10 (C) at least one community based organi11 zation located in the community to be served

12 that has a history of providing services to at13 risk youth in the community.

14 (2) PARTICIPATION.—A partnership described

15 in paragraph (1) shall, to the maximum extent fea16 sible, involve broad based community participation

17 from parents and youth to be served, health and so18 cial service providers (including regional alliance

19 health plans and corporate alliance health plans in

20 which families in the community are enrolled),

21 teachers and other public school and school board

22 personnel, the regional health alliance in which the

23 schools participating in the partnership are located,

24 youth development and service organizations, and in25 terested business leaders. Such participation may be
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1 evidenced through an expanded partnership, or an

2 advisory board to such partnership.

3 SEC. 3683. PREFERENCES.

4 (a) IN GENERAL.—In making grants under sections

5 3484 and 3485, the Secretary shall give preference to ap6 plicants whose communities to be served show the most

7 substantial level of need for such services among individ8 uals who are between the ages of 10 and 19 (inclusive),

9 as measured by indicators of community health including

10 the following:

11 (1) High levels of poverty.

12 (2) The presence of a medically underserved

13 area or population (as defined under section 330(a)

14 of the Public Health Service Act).

15 (3) A health professional shortage area, as des16 ignated under section 332 of the Public Health Serv17 ice Act.

18 (4) High rates of indicators of health risk

19 among children and youth, including a high propor20 tion of children receiving services through the Indi21 viduals with Disabilities Education Act, adolescent

22 pregnancy, sexually transmitted disease (including

23 infection with the human immunodeficiency virus),

24 preventable disease, communicable disease, inten25 tional and unintentional injuries among children and
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1 youth, community and gang violence, youth unem2 ployment, juvenile justice involvement, and high

3 rates of drug and alcohol exposure.

4 (b) LINKAGE TO QUALIFIED COMMUNITY HEALTH

5 GROUPS.—In making grants under sections 3484 and

6 3485, the Secretary shall give preference to applicants

7 that demonstrate a linkage to qualified community health

8 groups (as defined in section 3421(a)).

9 SEC. 3684. GRANTS FOR DEVELOPMENT OF PROJECTS.

10 (a) IN GENERAL.—The Secretary may make grants

11 to State health agencies or to local community partner12 ships to develop school health service sites.

13 (b) USE OF FUNDS.—A project for which a grant

14 may be made under subsection (a) may include but not

15 be limited to the cost of the following:

16 (1) Planning for the provision of school health

17 services.

18 (2) Recruitment, compensation, and training of

19 health and administrative staff.

20 (3) The development of agreements with re21 gional and corporate alliance health plans and the

22 acquisition and development of equipment and infor23 mation services necessary to support information ex24 change between school health service sites and
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1 health plans, health providers, and other entities au2 thorized to collect information under this Act.

3 (4) In the case of communities described in

4 subsection (d)(2)(B), funds to aid in the establish5 ment of local community partnerships.

6 (5) Other activities necessary to assume oper7 ational status.

8 (c) APPLICATION FOR GRANT.—

9 (1) IN GENERAL.—Applicants shall submit ap10 plications in a form and manner prescribed by the

11 Secretary.

12 (2) APPLICATIONS BY STATE HEALTH AGEN13 CIES.—

14 (A) In the case of applicants that are State

15 health agencies, the application shall contain

16 assurances that the State health agency is ap17 plying for funds—

18 (i) on behalf of at least one local com19 munity partnership; and

20 (ii) on behalf of at least one other

21 community identified by the State as in

22 need of the services funded under this part

23 but without a local community partnership.

24 (B) In the case of communities identified

25 in applications submitted by State health agen-
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1 cies that do not yet have local community part2 nerships, the State shall describe the steps that

3 will be taken to aid the community in develop4 ing a local community partnership.

5 (C) A State applying on behalf of local

6 community partnerships and other communities

7 may retain not more than 10 percent of grants

8 awarded under this subpart for administrative

9 costs.

10 (d) CONTENTS OF APPLICATION.—In order to receive

11 a grant under this section, an applicant must include in

12 the application the following information:

13 (1) An assessment of the need for school health

14 services in the communities to be served, using the

15 latest available health data and health goals and ob16 jectives established by the Secretary.

17 (2) A description of how the applicant will de18 sign the proposed school health services to reach the

19 maximum number of school-aged children and youth

20 at risk for poor health outcome.

21 (3) An explanation of how the applicant will in22 tegrate its services with those of other health and

23 social service programs within the community.

24 (4) An explanation of how the applicant will

25 link its activities to the regional and corporate alli-
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1 ance health plans serving the communities in which

2 the applicant’s program is to be located.

3 (5) A description of linkages with regional and

4 corporate health alliances in whose areas the appli5 cant’s program is to be located.

6 (6) A description of a quality assurance pro7 gram which complies with standards that the Sec8 retary may prescribe.

9 (e) NUMBER OF GRANTS.—Not more than one plan10 ning grant may be made to a single applicant. A planning

11 grant may not exceed two years in duration.

12 SEC. 3685. GRANTS FOR OPERATION OF PROJECTS.

13 (a) IN GENERAL.—The Secretary may make grants

14 to State health agencies or to local community partner15 ships for the cost of operating school health service sites.

16 (b) USE OF GRANT.—The costs for which a grant

17 may be made under this section include but are not limited

18 to the following:

19 (1) The cost of furnishing health services that

20 are not covered under title I of this Act or by any

21 other public or private insurer.

22 (2) The cost of furnishing enabling services, as

23 defined in section 3461(g).

24 (3) Training, recruitment and compensation of

25 health professionals and other staff.
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1 (4) Outreach services to at-risk youth and to

2 parents.

3 (5) Linkage of individuals to health plans, com4 munity health services and social services.

5 (6) Other activities deemed necessary by the

6 Secretary.

7 (c) APPLICATION FOR GRANT.—Applicants shall sub8 mit applications in a form and manner prescribed by the

9 Secretary. In order to receive a grant under this section,

10 an applicant must include in the application the following

11 information:

12 (1) A description of the services to be furnished

13 by the applicant.

14 (2) The amounts and sources of funding that

15 the applicant will expend, including estimates of the

16 amount of payments the applicant will receive from

17 alliance health plans and from other sources.

18 (3) Such other information as the Secretary de19 termines to be appropriate.

20 (d) ADDITIONAL CONTENTS OF APPLICATION.—In

21 order to receive a grant under this section, an applicant

22 must meet the following conditions:

23 (1) The applicant furnishes the following serv24 ices:
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1 (A) Diagnosis and treatment of simple ill2 nesses and minor injuries.

3 (B) Preventive health services, including

4 health screenings.

5 (C) Enabling services, as defined in section

6 3461(g).

7 (D) Referrals and followups in situations

8 involving illness or injury.

9 (E) Health and social services, counseling

10 services, and necessary referrals, including re11 ferrals regarding mental health and substance

12 abuse.

13 (F) Such other services as the Secretary

14 determines to be appropriate.

15 (2) The applicant maintains agreements with

16 all regional and corporate alliance health plans offer17 ing services in the applicant’s service area.

18 (3) The applicant is a participating provider in

19 the State’s program for medical assistance under

20 title XIX of the Social Security Act.

21 (4) The applicant does not impose charges on

22 students or their families for services (including col23 lection of any cost-sharing for services under the

24 comprehensive benefit package that otherwise would

25 be required).
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1 (5) The applicant has reviewed and will periodi2 cally review the needs of the population served by

3 the applicant in order to ensure that its services are

4 accessible to the maximum number of school age

5 children and youth in the area, and that, to the

6 maximum extent possible, barriers to access to serv7 ices of the applicant are removed (including barriers

8 resulting from the area’s physical characteristics, its

9 economic, social and cultural grouping, the health

10 care utilization patterns of children and youth, and

11 available transportation).

12 (6) In the case of an applicant which serves a

13 population that includes a substantial proportion of

14 individuals of limited English speaking ability, the

15 applicant has developed a plan to meet the needs of

16 such population to the extent practicable in the lan17 guage and cultural context most appropriate to such

18 individuals.

19 (7) The applicant will provide non-Federal con20 tributions toward the cost of the project in an

21 amount determined by the Secretary.

22 (8) The applicant will operate a quality assur23 ance program consistent with section 3684(e)(6).

24 (e) DURATION OF GRANT.—A grant under this sec25 tion shall be for a period determined by the Secretary.
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1 (f) REPORTS.—A recipient of funding under this sec2 tion shall provide such reports and information as are re3 quired in regulations of the Secretary.

4 SEC. 3686. FEDERAL ADMINISTRATIVE COSTS.

5 Of the amounts made available under section 3681,

6 the Secretary may reserve not more than 5 percent for

7 administrative expenses regarding this subpart.

8 Subpart B—Capital Costs of Developing Projects

9 SEC. 3691. LOANS AND LOAN GUARANTEES REGARDING

10 PROJECTS.

11 (a) IN GENERAL.—The Secretary may make loans to,

12 and guarantee the payment of principal and interest to

13 Federal and non-Federal lenders on behalf of, State health

14 agencies and local community partnerships for the capital

15 costs of developing projects in accordance with subpart A.

16 (b) APPLICABILITY OF CERTAIN PROVISIONS.—The

17 provisions of subpart A apply to loans and loan guarantees

18 under subsection (a) to the same extent and in the same

19 manner as such provisions apply to grants under subpart

20 A. Except for any provision inconsistent with the purpose

21 described in subsection (a), the provisions of subpart C

22 of part 2 of subtitle E apply to loans and loan guarantees

23 under subsection (a) to the same extent and in the same

24 manner as such provisions apply to loans and loan guaran25 tees under section 3441.
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1 SEC. 3692. FUNDING.

2 Amounts available to the Secretary under section

3 3412 for the purpose of carrying out subparts B and C

4 of part 2 of subtitle E are, in addition to such purpose,

5 available to the Secretary for the purpose of carrying out

6 this subpart.

7 Subtitle H—Public Health Service

8 Initiative

9 SEC. 3701. PUBLIC HEALTH SERVICE INITIATIVE.

10 (a) IN GENERAL.—There is established pursuant to

11 this title a Public Health Service Initiative consisting of

12 the total amounts authorized and described in subsection

13 (b). The Initiative includes the programs of subtitles C

14 through G of this title and the programs of subtitle D

15 of title VIII.

16 (b) TOTAL OF THE AMOUNTS AUTHORIZED TO BE

17 APPROPRIATED.—The following is the total of the

18 amounts authorized to be appropriated for the Initiative

19 under the previous subtitles of this title:

20 (1) For fiscal year 1995, $1,125,000,000.

21 (2) For fiscal year 1996, $2,984,000,000.

22 (3) For fiscal year 1997, $3,830,000,000.

23 (4) For fiscal year 1998, $4,205,000,000.

24 (5) For fiscal year 1999, $4,055,000,000.

25 (6) For fiscal year 2000, $3,666,000,000.

26 (c) USE OF AMOUNTS; AVAILABILITY.—
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1 (1) USE; ANNUAL APPROPRIATIONS.—Amounts

2 appropriated to carry out the Initiative, including

3 subtitles A through F of this title, are available to

4 carry out the specific programs for which the

5 amounts are appropriated.

6 (2) AVAILABILITY OF APPROPRIATED

7 AMOUNTS.—Amounts appropriated for programs in

8 the Initiative are available until expended.

9 Subtitle I—Coordination With

10 COBRA Continuation Coverage

11 SEC. 3801. PUBLIC HEALTH SERVICE ACT; COORDINATION

12 WITH COBRA CONTINUATION COVERAGE.

13 (a) PERIOD OF COVERAGE.—Subparagraph (D) of

14 section 2202(2) of the Public Health Service Act (42

15 U.S.C. 300bb–2(2)) is amended—

16 (1) by striking ‘‘or’’ at the end of clause (i), by

17 striking the period at the end of clause (ii) and in18 serting ‘‘, or’’, and by adding at the end the follow19 ing new clause:

20 ‘‘(iii) eligible for comprehensive health

21 coverage described in section 1101 of the

22 Health Security Act.’’, and

23 (2) by striking ‘‘OR MEDICARE ENTITLEMENT’’

24 in the heading and inserting ‘‘, MEDICARE ENTITLE25 MENT, OR HEALTH SECURITY ACT ELIGIBILITY’’.
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1 (b) QUALIFIED BENEFICIARY.—Section 2208(3) of

2 such Act (42 U.S.C. 300bb–8(3)) is amended by adding

3 at the end the following new subparagraph:

4 ‘‘(C) SPECIAL RULE FOR INDIVIDUALS

5 COVERED BY HEALTH SECURITY ACT.—The

6 term ‘qualified beneficiary’ shall not include any

7 individual who, upon termination of coverage

8 under a group health plan, is eligible for com9 prehensive health coverage described in section

10 1101 of the Health Security Act.’’.

11 (c) REPEAL UPON IMPLEMENTATION OF HEALTH

12 SECURITY ACT.—

13 (1) IN GENERAL.—Title XXII of such Act (42

14 U.S.C. 300bb–1 et seq.) is hereby repealed.

15 (2) CONFORMING AMENDMENT.—The table of

16 contents of such Act is amended by striking the item

17 relating to title XXII.

18 (3) EFFECTIVE DATE.—The amendments made

19 by this subsection shall take effect on the earlier

20 of—

21 (A) January 1, 1998, or

22 (B) the first day of the first calendar year

23 following the calendar year in which all States

24 have in effect plans under which individuals are
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1 eligible for comprehensive health coverage de2 scribed in section 1101 of this Act.

3 TITLE V—QUALITY AND

4 CONSUMER PROTECTION

TABLE OF CONTENTS OF TITLE

Subtitle A—Quality Management and Improvement

Page

Sec. 5001. National Quality Management Program ............................... 581

Sec. 5002. National Quality Management Council ................................. 581

Sec. 5003. National measures of quality performance ............................ 584

Sec. 5004. Consumer surveys .................................................................. 587

Sec. 5005. Evaluation and reporting of quality performance ................. 588

Sec. 5006. Development and dissemination of practice guidelines ......... 591

Sec. 5007. Research on health care quality ............................................ 595

Sec. 5008. Regional professional foundations ......................................... 596

Sec. 5009. National Quality Consortium ................................................ 598

Sec. 5010. Eliminating CLIA requirement for certificate of waiver for

simple laboratory examinations and procedures ........... 600

Sec. 5011. Uniform standards for health care institutions .................... 601

Sec. 5012. Role of alliances in quality assurance ................................... 603

Sec. 5013. Role of health plans in quality management ......................... 604

Subtitle B—Information Systems, Privacy, and Administrative

Simplification

PART 1—HEALTH INFORMATION SYSTEMS

Sec. 5101. Establishment of health information system ......................... 605

Sec. 5102. Additional requirements for health information system ....... 609

Sec. 5103. Electronic data network ........................................................ 611

Sec. 5104. Unique identifier numbers ..................................................... 613

Sec. 5105. Health security cards ............................................................ 613

Sec. 5106. Technical assistance in the establishment of health information systems ................................................................... 616

PART 2—PRIVACY OF INFORMATION

Sec. 5120. Health information system privacy standards ...................... 616

Sec. 5121. Other duties with respect to privacy ..................................... 620

Sec. 5122. Comprehensive Health Information Privacy Protection Act 621

Sec. 5123. Definitions ............................................................................. 622

PART 3—INTERIM REQUIREMENTS FOR ADMINISTRATIVE SIMPLIFICATION

Sec. 5130. Standard benefit forms ......................................................... 623

PART 4—GENERAL PROVISIONS

Sec. 5140. National Privacy and Health Data Advisory Council ........... 628
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Sec. 5141. Civil money penalties ............................................................. 630

Sec. 5142. Relationship to other laws ..................................................... 632

Subtitle C—Remedies and Enforcement

PART 1—REVIEW OF BENEFIT DETERMINATIONS FOR ENROLLED

INDIVIDUALS

SUBPART A—GENERAL RULES

Sec. 5201. Health plan claims procedure ................................................ 632

Sec. 5202. Review in regional alliance complaint review offices of grievances based on acts or practices by health plans ......... 639

Sec. 5203. Initial proceedings in complaint review offices ...................... 643

Sec. 5204. Hearings before hearing officers in complaint review offices 644

Sec. 5205. Review by Federal Health Plan Review Board ..................... 651

Sec. 5206. Rules governing benefit claims determinations ..................... 654

Sec. 5207. Civil money penalties ............................................................. 655

SUBPART B—EARLY RESOLUTION PROGRAMS

Sec. 5211. Establishment of early resolution programs in complaint review offices .................................................................... 656

Sec. 5212. Initiation of participation in mediation proceedings ............. 658

Sec. 5213. Mediation proceedings ........................................................... 661

Sec. 5214. Legal effect of participation in mediation proceedings ......... 663

Sec. 5215. Enforcement of settlement agreements ................................. 664

PART 2—ADDITIONAL REMEDIES AND ENFORCEMENT PROVISIONS

Sec. 5231. Judicial review of Federal action on State systems .............. 665

Sec. 5232. Administrative and judicial review relating to cost containment .............................................................................. 667

Sec. 5233. Civil enforcement ................................................................... 667

Sec. 5234. Priority of certain bankruptcy claims ................................... 667

Sec. 5235. Private right to enforce State responsibilities ....................... 668

Sec. 5236. Private right to enforce Federal responsibilities in operating

a system in a State ....................................................... 669

Sec. 5237. Private right to enforce responsibilities of alliances ............. 670

Sec. 5238. Discrimination claims ............................................................ 672

Sec. 5239. Nondiscrimination in federally assisted programs ................ 674

Sec. 5240. Civil action by essential community provider ........................ 674

Sec. 5241. Facial constitutional challenges ............................................. 675

Sec. 5242. Treatment of plans as parties in civil actions ....................... 677

Sec. 5243. General nonpreemption of existing rights and remedies ....... 678

1 Subtitle A—Quality Management

2 and Improvement

3 SEC. 5001. NATIONAL QUALITY MANAGEMENT PROGRAM.

4 Not later than 1 year after the date of the enactment

5 of this Act, the National Health Board shall establish and
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1 oversee a performance-based program of quality manage2 ment and improvement designed to enhance the quality,

3 appropriateness, and effectiveness of health care services

4 and access to such services. The program shall be known

5 as the National Quality Management Program and shall

6 be administered by the National Quality Management

7 Council established under section 5002.

8 SEC. 5002. NATIONAL QUALITY MANAGEMENT COUNCIL.

9 (a) ESTABLISHMENT.—There is established a council

10 to be known as the National Quality Management Council.

11 (b) DUTIES.—The Council shall—

12 (1) administer the National Quality Manage13 ment Program;

14 (2) perform any other duty specified as a duty

15 of the Council in this subtitle; and

16 (3) advise the National Health Board with re17 spect its duties under this subtitle.

18 (c) NUMBER AND APPOINTMENT.—The Council shall

19 be composed of 15 members appointed by the President.

20 The Council shall consist of members who are broadly rep21 resentative of the population of the United States and

22 shall include—

23 (1) individuals representing the interests of gov24 ernmental and corporate purchasers of health care;
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1 (2) individuals representing the interests of

2 health plans;

3 (3) individuals representing the interests of

4 States;

5 (4) individuals representing the interests of

6 health care providers and academic health centers

7 (as defined in section 3101(c)); and

8 (5) individuals distinguished in the fields of

9 public health, health care quality, and related fields

10 of health services research.

11 (d) TERMS.—

12 (1) IN GENERAL.—Except as provided in para13 graph (2), members of the Council shall serve for a

14 term of 3 years.

15 (2) STAGGERED ROTATION.—Of the members

16 first appointed to the Council under subsection (c),

17 the President shall appoint 5 members to serve for

18 a term of 3 years, 5 members to serve for a term

19 of 2 years, and 5 members to serve for a term of

20 1 year.

21 (3) SERVICE BEYOND TERM.—A member of the

22 Council may continue to serve after the expiration of

23 the term of the member until a successor is ap24 pointed.
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1 (e) VACANCIES.—If a member of the Council does not

2 serve the full term applicable under subsection (d), the in3 dividual appointed to fill the resulting vacancy shall be ap4 pointed for the remainder of the term of the predecessor

5 of the individual.

6 (f) CHAIR.—The President shall designate an individ7 ual to serve as the chair of the Council.

8 (g) MEETINGS.—The Council shall meet not less than

9 once during each 4-month period and shall otherwise meet

10 at the call of the President or the chair.

11 (h) COMPENSATION AND REIMBURSEMENT OF EX12 PENSES.—Members of the Council shall receive compensa13 tion for each day (including travel time) engaged in carry14 ing out the duties of the Council. Such compensation may

15 not be in an amount in excess of the maximum rate of

16 basic pay payable for level IV of the Executive Schedule

17 under section 5315 of title 5, United States Code.

18 (i) STAFF.—The National Health Board shall provide

19 to the Council such staff, information, and other assist20 ance as may be necessary to carry out the duties of the

21 Council.

22 (j) HEALTH CARE PROVIDER.—For purposes of this

23 subtitle, the term ‘‘health care provider’’ means an individ24 ual who, or entity that, provides an item or service to an
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1 individual that is covered under the health plan (as de2 fined in section 1400) in which the individual is enrolled.

3 SEC. 5003. NATIONAL MEASURES OF QUALITY PERFORM4 ANCE.

5 (a) IN GENERAL.—The National Quality Manage6 ment Council shall develop a set of national measures of

7 quality performance, which shall be used to assess the pro8 vision of health care services and access to such services.

9 (b) SUBJECT OF MEASURES.—National measures of

10 quality performance shall be selected in a manner that

11 provides information on the following subjects:

12 (1) Access to health care services by consumers.

13 (2) Appropriateness of health care services pro14 vided to consumers.

15 (3) Outcomes of health care services and proce16 dures.

17 (4) Health promotion.

18 (5) Prevention of diseases, disorders, and other

19 health conditions.

20 (6) Consumer satisfaction with care.

21 (c) SELECTION OF MEASURES.—

22 (1) CONSULTATION.—In developing and select23 ing the national measures of quality performance,

24 the National Quality Management Council shall con25 sult with appropriate interested parties, including—
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1 (A) States;

2 (B) health plans;

3 (C) employers and individuals purchasing

4 health care through regional and corporate alli5 ances;

6 (D) health care providers;

7 (E) the National Quality Consortium es8 tablished under section 5009;

9 (F) individuals distinguished in the fields

10 of law, medicine, economics, public health, and

11 health services research;

12 (G) the Administrator for Health Care

13 Policy and Research;

14 (H) the Director of the National Institutes

15 of Health; and

16 (I) the Administrator of the Health Care

17 Financing Administration.

18 (2) CRITERIA.—The following criteria shall be

19 used in developing and selecting national measures

20 of quality performance:

21 (A) SIGNIFICANCE.—When a measure re22 lates to a specific disease, disorder, or other

23 health condition, the disease, disorder, or condi24 tion shall be of significance in terms of preva25 lence, morbidity, mortality, or the costs associ-
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1 ated with the prevention, diagnosis, treatment,

2 or clinical management of the disease, disorder,

3 or condition.

4 (B) RANGE OF SERVICES.—The set of

5 measures, taken as a whole, shall be representa6 tive of the range of services provided to con7 sumers of health care.

8 (C) RELIABILITY AND VALIDITY.—The

9 measures shall be reliable and valid.

10 (D) UNDUE BURDEN.—The data needed to

11 calculate the measures shall be obtained with12 out undue burden on the entity or individual

13 providing the data.

14 (E) VARIATION.—Performance with re15 spect to a measure shall be expected to vary

16 widely among the individuals and entities whose

17 performance is assessed using the measure.

18 (F) LINKAGE TO HEALTH OUTCOME.—

19 When a measure is a rate of a process of care,

20 the process shall be linked to a health outcome

21 based upon the best available scientific evi22 dence.

23 (G) PROVIDER CONTROL AND RISK AD24 JUSTMENT.—When a measure is an outcome of

25 the provision of care, the outcome shall be with-
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1 in the control of the provider and one with re2 spect to which an adequate risk adjustment can

3 be made.

4 (H) PUBLIC HEALTH.—The measures may

5 incorporate standards identified by the Sec6 retary of Health and Human Services for meet7 ing public health objectives.

8 (d) UPDATING.—The National Quality Management

9 Council shall review and update the set of national meas10 ures of quality performance annually to reflect changing

11 goals for quality improvement. The Council shall establish

12 and maintain a priority list of performance measures that

13 within a 5-year period it intends to consider for inclusion

14 within the set through the updating process.

15 SEC. 5004. CONSUMER SURVEYS.

16 (a) IN GENERAL.—The National Quality Manage17 ment Council shall conduct periodic surveys of health care

18 consumers to gather information concerning access to

19 care, use of health services, health outcomes, and patient

20 satisfaction. The surveys shall monitor consumer reaction

21 to the implementation of this Act and be designed to as22 sess the impact of this Act on the general population of

23 the United States and potentially vulnerable populations.

24 (b) SURVEY ADMINISTRATION.—The National Qual25 ity Management Council shall develop and approve a
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1 standard design for the surveys, which shall be adminis2 tered by the Administrator for Health Care Policy and Re3 search on a plan-by-plan and State-by-State basis. A State

4 may add survey questions on quality measures of local in5 terest to surveys conducted in the State.

6 (c) SAMPLING STRATEGIES.—The National Quality

7 Management Council shall develop sampling strategies

8 that ensure that survey samples adequately measure popu9 lations that are considered to be at risk of receiving inad10 equate health care and may be difficult to reach through

11 consumer-sampling methods, including individuals who—

12 (1) fail to enroll in a health plan;

13 (2) resign from a plan; or

14 (3) are members of a vulnerable population.

15 SEC. 5005. EVALUATION AND REPORTING OF QUALITY PER16 FORMANCE.

17 (a) NATIONAL GOALS.—In subject matter areas with

18 respect to which the National Quality Management Coun19 cil determines that sufficient information and consensus

20 exist, the Council shall recommend to the Board that the

21 Board establish goals for performance by health plans and

22 health care providers on a subset of the set of national

23 measures of quality performance.

24 (b) IMPACT OF REFORM.—The National Quality

25 Management Council shall evaluate the impact of the im-
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1 plementation of this Act on the quality of health care serv2 ices in the United States and the access of consumers to

3 such services.

4 (c) PERFORMANCE REPORTS.—

5 (1) ALLIANCE AND HEALTH PLAN REPORTS.—

6 Each health alliance annually shall publish and

7 make available to the public a performance report

8 outlining in a standard format the performance of

9 each health plan offered in the alliance on the set of

10 national measures of quality performance. The re11 port shall include the results of a smaller number of

12 such measures for health care providers who are

13 members of provider networks of such plans (as de14 fined in section 1402(f)), if the available information

15 is statistically meaningful. The report also shall in16 clude the results of consumer surveys described in

17 section 5004 that were conducted in the alliance

18 area during the year that is the subject of the re19 port.

20 (2) NATIONAL QUALITY REPORTS.—The Na21 tional Quality Management Council annually shall

22 provide to the Congress and to each health alliance

23 a report that—
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1 (A) outlines in a standard format the per2 formance of each regional alliance, corporate al3 liance, and health plan;

4 (B) discusses State-level and national

5 trends relating to health care quality; and

6 (C) presents data for each health alliance

7 from consumer surveys described in section

8 5004 that were conducted during the year that

9 is the subject of the report.

10 (d) PUBLIC AVAILABILITY OF INFORMATION IN NA11 TIONAL PRACTITIONER DATA BANK ON DEFENDANTS,

12 AWARDS, AND SETTLEMENTS.—

13 (1) IN GENERAL.—Section 427(a) of the Health

14 Care Quality Improvement Act (42 U.S.C.

15 11137(a)) is amended by adding at the end the fol16 lowing new sentence: ‘‘Not later than January 1,

17 1996, the Secretary shall promulgate regulations

18 under which individuals seeking to enroll in health

19 plans under the Health Security Act may obtain in20 formation reported under this part with respect to

21 physicians and other licensed health practitioners

22 participating in such plans for whom information

23 has been reported under this part on repeated occa24 sions.’’.
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1 (2) ACCESS TO DATA BANK FOR POINT-OF2 SERVICE CONTRACTORS UNDER MEDICARE.—Section

3 427(a) of such Act (42 U.S.C. 11137(a)) is amend4 ed—

5 (A) by inserting ‘‘to sponsors of point-of6 service networks under section 1890 of the So7 cial Security Act,’’ after ‘‘State licensing

8 boards,’’, and

9 (B) in the heading, by inserting ‘‘RELAT10 ED’’ after ‘‘CARE’’.

11 SEC. 5006. DEVELOPMENT AND DISSEMINATION OF PRAC12 TICE GUIDELINES.

13 (a) DEVELOPMENT OF GUIDELINES.—

14 (1) IN GENERAL.—The National Quality Man15 agement Council shall direct the Administrator for

16 Health Care Policy and Research to develop and pe17 riodically review and update clinically relevant guide18 lines that may be used by health care providers to

19 assist in determining how diseases, disorders, and

20 other health conditions can most effectively and ap21 propriately be prevented, diagnosed, treated, and

22 managed clinically.

23 (2) CERTAIN REQUIREMENTS.—Guidelines

24 under paragraph (1) shall—
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1 (A) be based on the best available research

2 and professional judgment regarding the effec3 tiveness and appropriateness of health care

4 services and procedures;

5 (B) be presented in formats appropriate

6 for use by health care providers, medical edu7 cators, medical review organizations, and con8 sumers of health care;

9 (C) include treatment-specific or condition10 specific practice guidelines for clinical treat11 ments and conditions in forms appropriate for

12 use in clinical practice, for use in educational

13 programs, and for use in reviewing quality and

14 appropriateness of medical care;

15 (D) include information on risks and bene16 fits of alternative strategies for prevention, di17 agnosis, treatment, and management of a given

18 disease, disorder, or other health condition;

19 (E) include information on the costs of al20 ternative strategies for the prevention, diag21 nosis, treatment, and management of a given

22 disease, disorder, or other health condition,

23 where cost information is available and reliable;

24 and
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1 (F) be developed in accordance with prior2 ities that shall be established by the National

3 Quality Management Council based on the re4 search priorities that are established under sec5 tion 5007(b) and the 5-year priority list of per6 formance measures described in section

7 5003(d).

8 (3) HEALTH SERVICE UTILIZATION PROTO9 COLS.—The National Quality Management Council

10 shall establish standards and procedures for evaluat11 ing the clinical appropriateness of protocols used to

12 manage health service utilization.

13 (4) USE IN MEDICAL MALPRACTICE LIABILITY

14 PILOT PROGRAM.—Guidelines developed under this

15 subsection may be used by the Secretary of Health

16 and Human Services in the pilot program applying

17 practice guidelines to medical malpractice liability

18 under section 5312.

19 (b) EVALUATION AND CERTIFICATION OF OTHER

20 GUIDELINES.—

21 (1) METHODOLOGY.—The National Quality

22 Management Council shall direct the Administrator

23 for Health Care Policy and Research to develop and

24 publish standards relating to methodologies for de-
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1 veloping the types of guidelines described in sub2 section (a)(1).

3 (2) EVALUATION AND CERTIFICATION.—The

4 National Quality Management Council shall direct

5 the Administrator for Health Care Policy and Re6 search to establish a procedure by which individuals

7 and entities may submit guidelines of the type de8 scribed in subsection (a)(1) to the Council for eval9 uation and certification by the Council using the

10 standards developed under paragraph (1).

11 (3) USE IN MEDICAL MALPRACTICE LIABILITY

12 PILOT PROGRAM.—Guidelines certified under para13 graph (2) may be used by the Secretary of Health

14 and Human Services in the pilot program applying

15 practice guidelines to medical malpractice liability

16 under section 5312.

17 (c) GUIDELINE CLEARINGHOUSE.—The National

18 Quality Management Council shall direct the Adminis19 trator for Health Care Policy and Research to establish

20 and oversee a clearinghouse and dissemination program

21 for practice guidelines that are developed or certified

22 under this section.

23 (d) DISSEMINATION OF INFORMATION ON INEFFEC24 TIVE TREATMENTS.—The National Quality Management
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1 Council shall collect and disseminate information docu2 menting clinically ineffective treatments and procedures.

3 SEC. 5007. RESEARCH ON HEALTH CARE QUALITY.

4 (a) RESEARCH SUPPORT.—The National Quality

5 Management Council shall direct the Administrator for

6 Health Care Policy and Research to support research di7 rectly related to the 5-year priority list of performance

8 measures described in section 5003(d), including research

9 with respect to—

10 (1) outcomes of health care services and proce11 dures;

12 (2) effective and efficient dissemination of in13 formation, standards, and guidelines;

14 (3) methods of measuring quality and shared

15 decisionmaking; and

16 (4) design and organization of quality of care

17 components of automated health information sys18 tems.

19 (b) RESEARCH PRIORITIES.—The National Quality

20 Management Council shall establish priorities for research

21 with respect to the quality, appropriateness, and effective22 ness of health care and make recommendations concerning

23 research projects. In establishing the priorities, the Na24 tional Quality Management Council shall emphasize re-
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1 search involving diseases, disorders, and health conditions

2 as to which—

3 (1) there is the highest level of uncertainty con4 cerning treatment;

5 (2) there is the widest variation in practice pat6 terns;

7 (3) the costs associated with prevention, diag8 nosis, treatment, or clinical management are signifi9 cant; and

10 (4) the rate of incidence or prevalence is high

11 for the population as a whole or for particular sub12 populations.

13 SEC. 5008. REGIONAL PROFESSIONAL FOUNDATIONS.

14 (a) ESTABLISHMENT.—The National Health Board

15 shall establish and oversee regional professional founda16 tions to perform the duties specified in subsection (c).

17 (b) STRUCTURE AND MEMBERSHIP.—

18 (1) IN GENERAL.—The National Quality Con19 sortium established under section 5009 shall oversee

20 the establishment of regional professional founda21 tions, the membership requirements for each founda22 tion, and any other requirement for the internal op23 eration of each foundation.

24 (2) ENTITIES ELIGIBLE FOR MEMBERSHIP.—

25 Each regional professional foundation shall include
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1 at least one academic health center (as defined in

2 section 3101(c)). The following entities also shall be

3 eligible to serve as members of the regional profes4 sional foundation for the region in which the entity

5 is located:

6 (A) Schools of public health (as defined in

7 section 799 of the Public Health Service Act).

8 (B) Other schools and programs defined in

9 such section.

10 (C) Health plans.

11 (D) Regional alliances.

12 (E) Corporate alliances.

13 (F) Health care providers.

14 (c) DUTIES.—A regional professional foundation

15 shall carry out the following duties for the region in which

16 the foundation is located (such region to be demarcated

17 by the National Health Board with the advice of the Na18 tional Quality Consortium established under section

19 5009):

20 (1) Developing programs in lifetime learning for

21 health professionals (as defined in section

22 1112(c)(1)) to ensure the delivery of quality health

23 care.
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1 (2) Fostering collaboration among health plans

2 and health care providers to improve the quality of

3 primary and specialized health care.

4 (3) Disseminating information about successful

5 quality improvement programs, practice guidelines,

6 and research findings.

7 (4) Disseminating information on innovative

8 uses of health professionals.

9 (5) Developing innovative patient education sys10 tems that enhance patient involvement in decisions

11 relating their health care.

12 (6) Applying for and conducting research de13 scribed in section 5007.

14 (d) PROGRAMS IN LIFETIME LEARNING.—The pro15 grams described in subsection (c)(1) shall ensure that

16 health professionals remain abreast of new knowledge, ac17 quire new skills, and adopt new roles as technology and

18 societal demands change.

19 SEC. 5009. NATIONAL QUALITY CONSORTIUM.

20 (a) ESTABLISHMENT.—The National Health Board

21 shall establish a consortium to be known as the National

22 Quality Consortium.

23 (b) DUTIES.—The Consortium shall—

24 (1) establish programs for continuing education

25 for health professionals;
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1 (2) advise the National Quality Management

2 Council and the Administrator for Health Care Pol3 icy and Research on research priorities;

4 (3) oversee the development of the regional pro5 fessional foundations established under section 5008;

6 (4) advise the National Quality Management

7 Council with respect to the funding of proposals to

8 establish such foundations;

9 (5) consult with the National Quality Manage10 ment Council regarding the selection of national

11 measures of quality performance under section

12 5003(c); and

13 (6) advise the National Health Board and the

14 National Quality Management Council with respect

15 to any other duty of the Board or the Council under

16 this subtitle.

17 (c) MEMBERSHIP.—The Consortium shall be com18 posed of 11 members appointed by the National Health

19 Board. The members of the Consortium shall include—

20 (1) 5 individuals representing the interests of

21 academic health centers; and

22 (2) 6 other individuals representing the inter23 ests of one of the following persons:

24 (A) Schools of public health.
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1 (B) Other schools and programs defined in

2 section 799 of the Public Health Service Act

3 (including medical schools, nursing schools, and

4 allied health professional schools).

5 (d) TERMS.—

6 (1) IN GENERAL.—Except as provided in para7 graph (2), members of the Consortium shall serve

8 for a term of 3 years.

9 (2) STAGGERED ROTATION.—Of the members

10 first appointed to the Consortium under subsection

11 (c), the National Health Board shall appoint 4 mem12 bers to serve for a term of 3 years, 3 members to

13 serve for a term of 2 years, and 4 members to serve

14 for a term of 1 year.

15 (e) CHAIR.—The National Health Board shall des16 ignate an individual to serve as the chair of the Consor17 tium.

18 SEC. 5010. ELIMINATING CLIA REQUIREMENT FOR CERTIFI19 CATE OF WAIVER FOR SIMPLE LABORATORY

20 EXAMINATIONS AND PROCEDURES.

21 (a) IN GENERAL.—Section 353 of the Public Health

22 Service Act (42 U.S.C. 263a) is amended—

23 (1) in subsection (b), by inserting before the pe24 riod at the end the following: ‘‘or unless the labora-
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1 tory is exempt from the certificate requirement

2 under subsection (d)(2)’’;

3 (2) by amending paragraph (2) of subsection

4 (d) to read as follows:

5 ‘‘(2) EXEMPTION FROM CERTIFICATE REQUIRE6 MENT FOR LABORATORIES PERFORMING ONLY SIM7 PLE EXAMINATIONS AND PROCEDURES.—A labora8 tory which performs only laboratory examinations

9 and procedures described in paragraph (3) is not re10 quired to have in effect a certificate under this sec11 tion.’’;

12 (3) by striking paragraph (4) of subsection (d);

13 and

14 (4) in subsection (m)(1), by striking ‘‘, except

15 that the Secretary’’ and all that follows and insert16 ing a period.

17 (b) EFFECTIVE DATE.—The amendments made by

18 this section shall take effect on the first day of the first

19 month beginning after the date of the enactment of this

20 Act.

21 SEC. 5011. UNIFORM STANDARDS FOR HEALTH CARE INSTI22 TUTIONS.

23 (a) DEVELOPMENT OF STANDARDS.—Not later than

24 3 years after the date of the enactment of this Act, the

25 National Health Board shall develop demonstration stand-
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1 ards for the licensing of health care institutions that ad2 dress essential performance requirements related to pa3 tient care. The standards shall be developed in a manner

4 that permits them to be applied uniformly to all such insti5 tutions, except in the areas of fire safety, sanitation, and

6 patient rights, and so as not to undermine ongoing nurs7 ing home reforms.

8 (b) DEMONSTRATION PROJECTS.—By January 1,

9 1996, the National Quality Management Council shall

10 complete demonstration projects for the standards devel11 oped under subsection (a) and shall revise the standards

12 according to the findings of such projects. The demonstra13 tion projects shall evaluate the impact of these standards

14 in ensuring quality of care, reducing cost, and reducing

15 burdens on health care providers.

16 (c) PREEMPTIVE EFFECT OF FULLY IMPLEMENTED

17 STANDARD.—After a standard developed under this sec18 tion is tested, evaluated, revised, and fully implemented,

19 it shall replace existing standards, except in cases in which

20 statutory changes are necessary to implement such stand21 ards. In such cases, the National Quality Management

22 Council shall recommend to the President and the Con23 gress revisions in Federal statutes to conform the statutes

24 to the standards.
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1 (d) CONSOLIDATED AUDIT AND INSPECTION.—The

2 National Quality Management Council shall undertake re3 search efforts designed to develop a system for carrying

4 out through grant or contract a single, consolidated an5 nual audit and inspection of each health care institution

6 and health care provider for the combined purposes of

7 Federal, State, local, and private licensure, accreditation,

8 and certification.

9 SEC. 5012. ROLE OF ALLIANCES IN QUALITY ASSURANCE.

10 Each regional alliance and each corporate alliance

11 shall—

12 (1) disseminate to consumers information relat13 ed to quality and access to aid in their selection of

14 plans in accordance with section 1325;

15 (2) disseminate information on the quality of

16 health plans and health care providers contained in

17 reports of the National Quality Management Council

18 section 5005(c)(2);

19 (3) ensure through negotiations with health

20 plans that performance and quality standards are

21 continually improved; and

22 (4) conduct educational programs in coopera23 tion with regional professional foundations to assist

24 consumers in using quality and other information in

25 choosing health plans.
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1 SEC. 5013. ROLE OF HEALTH PLANS IN QUALITY MANAGE2 MENT.

3 Each health plan shall—

4 (1) measure and disclose performance on qual5 ity measures used by—

6 (A) participating States in which the plan

7 does business;

8 (B) regional alliances and corporate alli9 ances that offer the plan; and

10 (C) the National Quality Management

11 Council;

12 (2) furnish information required under subtitle

13 B of this title and provide such other reports and in14 formation on the quality of care delivered by health

15 care providers who are members of a provider net16 work of the plan (as defined in section 1402(f)) as

17 may be required under this Act; and

18 (3) maintain quality management systems

19 that—

20 (A) use the national measures of quality

21 performance developed by the National Quality

22 Management Council under section 5003; and

23 (B) measure the quality of health care fur24 nished to enrollees under the plan by all health

25 care providers who are members of a provider

26 network of the plan.
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1 Subtitle B—Information Systems,

2 Privacy, and Administrative

3 Simplification

4 PART 1—HEALTH INFORMATION SYSTEMS

5 SEC. 5101. ESTABLISHMENT OF HEALTH INFORMATION SYS6 TEM.

7 (a) IN GENERAL.—Not later than 2 years after the

8 date of the enactment of this Act, the National Health

9 Board shall develop and implement a health information

10 system by which the Board shall collect, report, and regu11 late the collection and dissemination of the health care in12 formation described in subsection (e) pursuant to stand13 ards promulgated by the Board and (if applicable) consist14 ent with policies established as part of the National Infor15 mation Infrastructure Act of 1993.

16 (b) PRIVACY.—The health information system shall

17 be developed and implemented in a manner that is consist18 ent with the privacy and security standards established

19 under section 5120.

20 (c) REDUCTION IN ADMINISTRATIVE COSTS.—The

21 health information system shall be developed and imple22 mented in a manner that is consistent with the objectives

23 of reducing wherever practicable and appropriate—

24 (1) the costs of providing and paying for health

25 care;
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1 (2) the time, effort, and financial resources ex2 pended by persons to provide information to States,

3 the Federal Government, health alliances, and health

4 plans.

5 (d) USES OF INFORMATION.—The health care infor6 mation described in subsection (e) shall be collected and

7 reported in a manner that facilitates its use for the follow8 ing purposes:

9 (1) Health care planning, policy development,

10 policy evaluation, and research by Federal, State,

11 and local governments and regional and corporate

12 alliances.

13 (2) Establishing and monitoring payments for

14 health services by the Federal Government, States,

15 regional alliances, and corporate alliances.

16 (3) Assessing and improving the quality of

17 health care.

18 (4) Measuring and optimizing access to health

19 care.

20 (5) Evaluating the cost of specific clinical or

21 administrative functions.

22 (6) Supporting public health functions and ob23 jectives.
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1 (7) Improving the ability of health plans, health

2 care providers, and consumers to coordinate, im3 prove, and make choices about health care.

4 (8) Managing and containing costs at the alli5 ance and plan levels.

6 (e) HEALTH CARE INFORMATION.—The health care

7 information referred to in subsection (a) shall include data

8 on—

9 (1) enrollment and disenrollment in health

10 plans;

11 (2) clinical encounters and other items and

12 services provided by health care providers;

13 (3) administrative and financial transactions

14 and activities of participating States, regional alli15 ances, corporate alliances, health plans, health care

16 providers, employers, and individuals that are nec17 essary to determine compliance with this Act or an

18 Act amended by this Act;

19 (4) the characteristics of regional alliances, in20 cluding the number, and demographic characteristics

21 of eligible individuals residing in each alliance area;

22 (5) the characteristics of corporate alliances, in23 cluding the number, and demographic characteristics

24 of individuals who are eligible to be enrolled in each

25 corporate alliance health plan and individuals with
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1 respect to whom a large employer has exercised an

2 option under section 1311 to make ineligible for

3 such enrollment;

4 (6) terms of agreement between health plans

5 and the health care providers who are members of

6 provider networks of the plans (as defined in section

7 1402(f));

8 (7) payment of benefits in cases in which bene9 fits may be payable under a health plan and any

10 other insurance policy or health program;

11 (8) utilization management by health plans and

12 health care providers;

13 (9) the information collected and reported by

14 the Board or disseminated by other individuals or

15 entities as part of the National Quality Management

16 Program under subtitle A;

17 (10) grievances filed against regional alliances,

18 corporate alliances, and health plans and the resolu19 tions of such grievances; and

20 (11) any other fact that may be necessary to

21 determine whether a health plan or a health care

22 provider has complied with a Federal statute per23 taining to fraud or misrepresentation in the provi24 sion or purchasing of health care or in the submis-
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1 sion of a claim for benefits or payment under a

2 health plan.

3 SEC. 5102. ADDITIONAL REQUIREMENTS FOR HEALTH IN4 FORMATION SYSTEM.

5 (a) CONSULTATION.—The health information system

6 shall be developed in consultation with—

7 (1) Federal agencies that—

8 (A) collect health care information;

9 (B) oversee the collection of information or

10 records management by other Federal agencies;

11 (C) directly provide health care services;

12 (D) provide for payments for health care

13 services; or

14 (E) enforce a provision of this Act or any

15 Act amended by this Act;

16 (2) the National Quality Management Council

17 established under section 5002;

18 (3) participating States;

19 (4) regional alliances and corporate alliances;

20 (5) health plans;

21 (6) representatives of health care providers;

22 (7) representatives of employers;

23 (8) representatives of consumers of health care;

24 (9) experts in public health and health care in25 formation and technology; and
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1 (10) representatives of organizations furnishing

2 health care supplies, services, and equipment.

3 (b) COLLECTION AND TRANSMISSION REQUIRE4 MENTS.—In establishing standards under section 5101,

5 the National Health Board shall specify the form and

6 manner in which individuals and entities are required to

7 collect or transmit health care information for or to the

8 Board. The Board also shall specify the frequency with

9 which individuals and entities are required to transmit

10 such information to the Board. Such specifications shall

11 include, to the extent practicable—

12 (1) requirements for use of uniform paper

13 forms containing standard data elements, defini14 tions, and instructions for completion in cases where

15 the collection or transmission of data in electronic

16 form is not specified by the Board;

17 (2) requirements for use of uniform health data

18 sets with common definitions to standardize the col19 lection and transmission of data in electronic form;

20 (3) uniform presentation requirements for data

21 in electronic form; and

22 (4) electronic data interchange requirements for

23 the exchange of data among automated health infor24 mation systems.
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1 (c) PREEMPTION OF STATE ‘‘PEN & QUILL’’ LAWS.—

2 A standard established by the National Health Board re3 lating to the form in which medical or health plan records

4 are required to be maintained shall supercede any contrary

5 provision of State law, except where the Board determines

6 that the provision is necessary to prevent fraud and abuse,

7 with respect to controlled substances, or for other pur8 poses.

9 SEC. 5103. ELECTRONIC DATA NETWORK.

10 (a) IN GENERAL.—As part of the health information

11 system, the National Health Board shall oversee the estab12 lishment of an electronic data network consisting of re13 gional centers that collect, compile, and transmit informa14 tion.

15 (b) CONSULTATION.—The electronic data network

16 shall be developed in consultation with—

17 (1) Federal agencies that—

18 (A) collect health care information;

19 (B) oversee the collection of information or

20 records management by other Federal agencies;

21 (C) directly provide health care services;

22 (D) provide for payments for health care

23 services; or

24 (E) enforce a provision of this Act or any

25 Act amended by this Act;
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1 (2) the National Quality Management Council

2 established under section 5002;

3 (3) participating States;

4 (4) regional alliances and corporate alliances;

5 (5) health plans;

6 (6) representatives of health care providers;

7 (7) representatives of employers;

8 (8) representatives of consumers of health care;

9 (9) experts in public health and health care in10 formation and technology; and

11 (10) representatives of organizations furnishing

12 health care supplies, services, and equipment.

13 (c) DEMONSTRATION PROJECTS.—The electronic

14 data network shall be tested prior to full implementation

15 through the establishment of demonstration projects.

16 (d) DISCLOSURE OF INDIVIDUALLY IDENTIFIABLE

17 INFORMATION.—The electronic data network may be used

18 to disclose individually identifiable health information (as

19 defined in section 5123(3)) to any individual or entity only

20 in accordance with the health information system privacy

21 standards promulgated by the National Health Board

22 under section 5120.
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1 SEC. 5104. UNIQUE IDENTIFIER NUMBERS.

2 (a) IN GENERAL.—As part of the health information

3 system, the Board shall establish a system to provide for

4 a unique identifier number for each—

5 (1) eligible individual;

6 (2) employer;

7 (3) health plan; and

8 (4) health care provider.

9 (b) IMPERMISSIBLE DATA LINKS.—In establishing

10 the system under subsection (a), the National Health

11 Board shall ensure that a unique identifier number may

12 not be used to connect individually identifiable health in13 formation (as defined in section 5123(3)) that is collected

14 as part of the health information system or that otherwise

15 may be accessed through the number with individually

16 identifiable information from any other source, except in

17 cases where the National Health Board determines that

18 such connection is necessary to carry out a duty imposed

19 on any individual or entity under this Act.

20 (c) PERMISSIBLE USES OF IDENTIFIER.—The Na21 tional Health Board shall by regulation establish the pur22 poses for which a unique identifier number provided pur23 suant to this section may be used.

24 SEC. 5105. HEALTH SECURITY CARDS.

25 (a) PERMISSIBLE USES OF CARD.—A health security

26 card that is issued to an eligible individual under section
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1 1001(b) may be used by an individual or entity, in accord2 ance with regulations promulgated by the Board, only for

3 the purpose of providing or assisting the eligible individual

4 in obtaining an item or service that is covered under—

5 (1) the applicable health plan in which the indi6 vidual is enrolled (as defined in section 1902);

7 (2) a policy consisting of a supplemental health

8 benefit policy (described in part 2 of subtitle E of

9 title I), a cost sharing policy (described in such

10 part), or both;

11 (3) a FEHBP supplemental plan (described in

12 subtitle C of title VIII);

13 (4) a FEHBP medicare supplemental plan (de14 scribed in such subtitle); or

15 (5) such other programs as the Board may

16 specify.

17 (b) FORM OF CARD AND ENCODED INFORMATION.—

18 The National Health Board shall establish standards re19 specting the form of health security cards and the infor20 mation to be encoded in electronic form on the cards. Such

21 information shall include—

22 (1) the identity of the individual to whom the

23 card is issued;

24 (2) the applicable health plan in which the indi25 vidual is enrolled;
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•S 1779 PCS

1 (3) any policy described in paragraph (2), (3),

2 or (4) of subsection (a) in which the individual is en3 rolled; and

4 (4) any other information that the National

5 Health Board determines to be necessary in order

6 for the card to serve the purpose described in sub7 section (a).

8 (c) UNIQUE IDENTIFIER NUMBERS.—The unique

9 identifier number system developed by the National

10 Health Board under section 5104 shall be used in encod11 ing the information described in subsection (b).

12 (d) REGISTRATION OF CARD.—The Board shall take

13 appropriate steps to register the card, the name of the

14 card, and other indicia relating to the card as a trademark

15 or service mark (as appropriate) under the Trademark Act

16 of 1946. For purposes of this subsection, the ‘‘Trademark

17 Act of 1946’’ refers to the Act entitled ‘‘An Act to provide

18 for the registration and protection of trademarks used in

19 commerce, to carry out the provisions of international con20 ventions, and for other purposes’’, approved July 5, 1946

21 (15 U.S.C. et seq.).

22 (e) REFERENCE TO CRIME.—For a provision relating

23 to criminal penalties for misuse of a health security card

24 or a unique identifier number, see section 5438.
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•S 1779 PCS

1 SEC. 5106. TECHNICAL ASSISTANCE IN THE ESTABLISH2 MENT OF HEALTH INFORMATION SYSTEMS.

3 The National Health Board shall provide information

4 and technical assistance to participating States, regional

5 alliances, corporate alliances, health plans, and health care

6 providers with respect to the establishment and operation

7 of automated health information systems. Such assistance

8 shall focus on—

9 (1) the promotion of community-based health

10 information systems; and

11 (2) the promotion of patient care information

12 systems that collect data at the point of care or as

13 a by-product of the delivery of care.

14 PART 2—PRIVACY OF INFORMATION

15 SEC. 5120. HEALTH INFORMATION SYSTEM PRIVACY

16 STANDARDS.

17 (a) HEALTH INFORMATION SYSTEM STANDARDS.—

18 Not later than 2 years after the date of the enactment

19 of this Act, the National Health Board shall promulgate

20 standards respecting the privacy of individually identifi21 able health information that is in the health information

22 system described in part 1 of this subtitle. Such standards

23 shall include standards concerning safeguards for the se24 curity of such information. The Board shall develop and

25 periodically revise the standards in consultation with—

26 (1) Federal agencies that—
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1 (A) collect health care information;

2 (B) oversee the collection of information or

3 records management by other Federal agencies;

4 (C) directly provide health care services;

5 (D) provide for payments for health care

6 services; or

7 (E) enforce a provision of this Act or any

8 Act amended by this Act;

9 (2) the National Quality Management Council

10 established under section 5002;

11 (3) participating States;

12 (4) regional alliances and corporate alliances;

13 (5) health plans; and

14 (6) representatives of consumers of health care.

15 (b) INFORMATION COVERED.—The standards estab16 lished under subsection (a) shall apply to individually iden17 tifiable health information collected for or by, reported to

18 or by, or the dissemination of which is regulated by, the

19 National Health Board under section 5101.

20 (c) PRINCIPLES.—The standards established under

21 subsection (a) shall incorporate the following principles:

22 (1) UNAUTHORIZED DISCLOSURE.—All disclo23 sures of individually identifiable health information

24 by an individual or entity shall be unauthorized un25 less—
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•S 1779 PCS

1 (A) the disclosure is by the enrollee identi2 fied in the information or whose identity can be

3 associated with the information;

4 (B) the disclosure is authorized by such

5 enrollee in writing in a manner prescribed by

6 the Board;

7 (C) the disclosure is to Federal, State, or

8 local law enforcement agencies for the purpose

9 of enforcing this Act or an Act amended by this

10 Act; or

11 (D) the disclosure otherwise is consistent

12 with this Act and specific criteria governing dis13 closure established by the Board.

14 (2) MINIMAL DISCLOSURE.—All disclosures of

15 individually identifiable health information shall be

16 restricted to the minimum amount of information

17 necessary to accomplish the purpose for which the

18 information is being disclosed.

19 (3) RISK ADJUSTMENT.—No individually identi20 fiable health information may be provided by a

21 health plan to a regional alliance or a corporate alli22 ance for the purpose of setting premiums based on

23 risk adjustment factors.

24 (4) REQUIRED SAFEGUARDS.—Any individual

25 or entity who maintains, uses, or disseminates indi-
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•S 1779 PCS

1 vidually identifiable health information shall imple2 ment administrative, technical, and physical safe3 guards for the security of such information.

4 (5) RIGHT TO KNOW.—An enrollee (or an en5 rollee representative of the enrollee) has the right to

6 know—

7 (A) whether any individual or entity uses

8 or maintains individually identifiable health in9 formation concerning the enrollee; and

10 (B) for what purposes the information may

11 be used or maintained.

12 (6) RIGHT TO ACCESS.—Subject to appropriate

13 procedures, an enrollee (or an enrollee representative

14 of the enrollee) has the right, with respect to individ15 ually identifiable health information concerning the

16 enrollee that is recorded in any form or medium—

17 (A) to see such information;

18 (B) to copy such information; and

19 (C) to have a notation made with or in

20 such information of any amendment or correc21 tion of such information requested by the en22 rollee or enrollee representative.

23 (7) RIGHT TO NOTICE.—An enrollee and an en24 rollee representative have the right to receive a writ25 ten statement concerning—
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•S 1779 PCS

1 (A) the purposes for which individually

2 identifiable health information provided to a

3 health care provider, a health plan, a regional

4 alliance, a corporate alliance, or the National

5 Health Board may be used or disclosed by, or

6 disclosed to, any individual or entity; and

7 (B) the right of access described in para8 graph (6).

9 (8) USE OF UNIQUE IDENTIFIER.—When indi10 vidually identifiable health information concerning

11 an enrollee is required to accomplish the purpose for

12 which information is being transmitted between or

13 among the National Health Board, regional and cor14 porate alliances, health plans, and health care pro15 viders, the transmissions shall use the unique identi16 fier number provided to the enrollee pursuant to sec17 tion 5104 in lieu of the name of the enrollee.

18 (9) USE FOR EMPLOYMENT DECISIONS.—Indi19 vidually identifiable health care information may not

20 be used in making employment decisions.

21 SEC. 5121. OTHER DUTIES WITH RESPECT TO PRIVACY.

22 (a) RESEARCH AND TECHNICAL SUPPORT.—The Na23 tional Health Board may sponsor—

24 (1) research relating to the privacy and security

25 of individually identifiable health information;
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•S 1779 PCS

1 (2) the development of consent forms governing

2 disclosure of such information; and

3 (3) the development of technology to implement

4 standards regarding such information.

5 (c) EDUCATION.—The National Health Board shall

6 establish education and awareness programs—

7 (1) to foster adequate security practices by

8 States, regional alliances, corporate alliances, health

9 plans, and health care providers;

10 (2) to train personnel of public and private en11 tities who have access to individually identifiable

12 health information respecting the duties of such per13 sonnel with respect to such information; and

14 (3) to inform individuals and employers who

15 purchase health care respecting their rights with re16 spect to such information.

17 SEC. 5122. COMPREHENSIVE HEALTH INFORMATION PRI18 VACY PROTECTION ACT.

19 (a) IN GENERAL.—Not later than 3 years after the

20 date of the enactment of this Act, the National Health

21 Board shall submit to the President and the Congress a

22 detailed proposal for legislation to provide a comprehen23 sive scheme of Federal privacy protection for individually

24 identifiable health information.
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•S 1779 PCS

1 (b) CODE OF FAIR INFORMATION PRACTICES.—The

2 proposal shall include a Code of Fair Information Prac3 tices to be used to advise enrollees to whom individually

4 identifiable health information pertains of their rights with

5 respect to such information in an easily understood and

6 useful form.

7 (c) ENFORCEMENT.—The proposal shall include pro8 visions to enforce effectively the rights and duties that

9 would be created by the legislation.

10 SEC. 5123. DEFINITIONS.

11 For purposes of this part:

12 (1) ENROLLEE.—The term ‘‘enrollee’’ means

13 an individual who enrolls or has enrolled under a

14 health plan. The term includes a deceased individual

15 who was enrolled under a health plan.

16 (2) ENROLLEE REPRESENTATIVE.—The term

17 ‘‘enrollee representative’’ means any individual le18 gally empowered to make decisions concerning the

19 provision of health care to an enrollee or the admin20 istrator or executor of the estate of a deceased en21 rollee.

22 (3) INDIVIDUALLY IDENTIFIABLE HEALTH IN23 FORMATION.—The term ‘‘individually identifiable

24 health information’’ means any information, whether

25 oral or recorded in any form or medium, that—
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•S 1779 PCS

1 (A) identifies or can readily be associated

2 with the identity of an enrollee; and

3 (B) relates to—

4 (i) the past, present, or future phys5 ical or mental health of the enrollee;

6 (ii) the provision of health care to the

7 enrollee; or

8 (iii) payment for the provision of

9 health care to the enrollee.

10 PART 3—INTERIM REQUIREMENTS FOR

11 ADMINISTRATIVE SIMPLIFICATION

12 SEC. 5130. STANDARD BENEFIT FORMS.

13 (a) DEVELOPMENT.—Not later than 1 year after the

14 date of the enactment of this Act, the National Health

15 Board shall develop, promulgate, and publish in the Fed16 eral Register the following standard health care benefit

17 forms:

18 (1) An enrollment and disenrollment form to be

19 used to record enrollment and disenrollment in a

20 health benefit plan.

21 (2) A clinical encounter record to be used by

22 health benefit plans and health service providers.

23 (3) A claim form to be used in the submission

24 of claims for benefits or payment under a health

25 benefit plan.
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•S 1779 PCS

1 (b) INSTRUCTIONS, DEFINITIONS, AND CODES.—

2 Each standard form developed under subsection (a) shall

3 include instructions for completing the form that—

4 (1) specifically define, to the extent practicable,

5 the data elements contained in the form; and

6 (2) standardize any codes or data sets to be

7 used in completing the form.

8 (c) REQUIREMENTS FOR ADOPTION OF FORMS.—

9 (1) HEALTH SERVICE PROVIDERS.—On or after

10 the date that is 270 days after the publication of the

11 standard forms developed under subsection (a), a

12 health service provider that furnishes items or serv13 ices in the United States for which payment may be

14 made under a health benefit plan may not—

15 (A) maintain records of clinical encounters

16 involving such items or services that are re17 quired to be maintained by the National Health

18 Board in a paper form that is not the clinical

19 encounter record promulgated by the Board; or

20 (B) submit any claim for benefits or pay21 ment for such services to such plan in a paper

22 form that is not the claim form promulgated by

23 the National Health Board.

24 (2) HEALTH BENEFIT PLANS.—On or after the

25 date that is 270 days after the publication of the
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•S 1779 PCS

1 standard forms developed under subsection (a), a

2 health benefit plan may not—

3 (A) record enrollment and disenrollment in

4 a paper form that is not the enrollment and

5 disenrollment form promulgated by the Na6 tional Health Board;

7 (B) maintain records of clinical encounters

8 that are required to be maintained by the Na9 tional Health Board in a paper form that is not

10 the clinical encounter record promulgated by

11 the Board; or

12 (C) reject a claim for benefits or payment

13 under the plan on the basis of the form or me14 dium in which the claim is submitted if—

15 (i) the claim is submitted on the claim

16 form promulgated by the National Health

17 Board; and

18 (ii) the plan accepts claims submitted

19 in paper form.

20 (d) DEFINITIONS.—For purposes of this subtitle:

21 (1) HEALTH BENEFIT PLAN.—

22 (A) IN GENERAL.—The term ‘‘health bene23 fit plan’’ means, except as provided in subpara24 graphs (B) through (D), any public or private
626

•S 1779 PCS

1 entity or program that provides for payments

2 for health care services, including—

3 (i) a group health plan (as defined in

4 section 5000(b)(1) of the Internal Revenue

5 Code of 1986); and

6 (ii) any other health insurance ar7 rangement, including any arrangement

8 consisting of a hospital or medical expense

9 incurred policy or certificate, hospital or

10 medical service plan contract, or health

11 maintenance organization subscriber con12 tract.

13 (B) PLANS EXCLUDED.—Such term does

14 not include—

15 (i) accident-only, credit, or disability

16 income insurance;

17 (ii) coverage issued as a supplement

18 to liability insurance;

19 (iii) an individual making payment on

20 the individual’s own behalf (or on behalf of

21 a relative or other individual) for

22 deductibles, coinsurance, or services not

23 covered under a health benefit plan; and

24 (iv) such other plans as the National

25 Health Board may determine, because of
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•S 1779 PCS

1 the limitation of benefits to a single type

2 or kind of health care, such as dental serv3 ices or hospital indemnity plans, or other

4 reasons should not be subject to the re5 quirements of this section.

6 (C) PLANS INCLUDED.—Such term in7 cludes—

8 (i) workers compensation or similar

9 insurance insofar as it relates to workers

10 compensation medical benefits (as defined

11 in section 10000(3)) provided by or

12 through health plans; and

13 (ii) automobile medical insurance in14 sofar as it relates to automobile insurance

15 medical benefits (as defined in section

16 10100(2)) provided by or through health

17 plans.

18 (D) TREATMENT OF DIRECT PROVISION OF

19 SERVICES.—Such term does not include a Fed20 eral or State program that provides directly for

21 the provision of health services to beneficiaries.

22 (2) HEALTH SERVICE PROVIDER.—The term

23 ‘‘health service provider’’ includes a provider of serv24 ices (as defined in section 1861(u) of the Social Se25 curity Act), physician, supplier, and other person
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•S 1779 PCS

1 furnishing health care services. Such term includes

2 a Federal or State program that provides directly

3 for the provision of health services to beneficiaries.

4 (e) INTERIM NATURE OF REQUIREMENTS.—The Na5 tional Health Board may modify, update, or supercede any

6 standard form or requirement developed, promulgated, or

7 imposed under this section through the establishment of

8 a standard under section 5101.

9 PART 4—GENERAL PROVISIONS

10 SEC. 5140. NATIONAL PRIVACY AND HEALTH DATA ADVI11 SORY COUNCIL.

12 (a) ESTABLISHMENT.—There is established an advi13 sory council to be known as the National Privacy and

14 Health Data Advisory Council.

15 (b) DUTIES.—The Council shall advise the National

16 Health Board with respect to its duties under this subtitle.

17 (c) NUMBER AND APPOINTMENT.—The Council shall

18 be composed of 15 members appointed by the National

19 Health Board. The members of the Council shall include—

20 (1) individuals representing the interests of con21 sumers, employers, and other purchasers of health

22 care;

23 (2) individuals representing the interests of

24 health plans, health care providers, corporate alli-
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•S 1779 PCS

1 ances, regional alliances, public health agencies, and

2 participating States; and

3 (3) individuals distinguished in the fields of

4 data collection, data protection and privacy, law,

5 ethics, medical and health services research, public

6 health, and civil liberties and patient advocacy.

7 (d) TERMS.—

8 (1) IN GENERAL.—Except as provided in para9 graph (2), members of the Council shall serve for a

10 term of 3 years.

11 (2) STAGGERED ROTATION.—Of the members

12 first appointed to the Council under subsection (c),

13 the National Health Board shall appoint 5 members

14 to serve for a term of 3 years, 5 members to serve

15 for a term of 2 years, and 5 members to serve for

16 a term of 1 year.

17 (3) SERVICE BEYOND TERM.—A member of the

18 Council may continue to serve after the expiration of

19 the term of the member until a successor is ap20 pointed.

21 (e) VACANCIES.—If a member of the Council does not

22 serve the full term applicable under subsection (d), the in23 dividual appointed to fill the resulting vacancy shall be ap24 pointed for the remainder of the term of the predecessor

25 of the individual.
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•S 1779 PCS

1 (f) CHAIR.—The National Health Board shall des2 ignate an individual to serve as the chair of the Council.

3 (g) MEETINGS.—The Council shall meet not less than

4 once during each 4-month period and shall otherwise meet

5 at the call of the National Health Board or the chair.

6 (h) COMPENSATION AND REIMBURSEMENT OF EX7 PENSES.—Members of the Council shall receive compensa8 tion for each day (including travel time) engaged in carry9 ing out the duties of the Council. Such compensation may

10 not be in an amount in excess of the maximum rate of

11 basic pay payable for level IV of the Executive Schedule

12 under section 5315 of title 5, United States Code.

13 (i) STAFF.—The National Health Board shall provide

14 to the Council such staff, information, and other assist15 ance as may be necessary to carry out the duties of the

16 Council.

17 (j) DURATION.—Notwithstanding section 14(a) of the

18 Federal Advisory Committee Act, the Council shall con19 tinue in existence until otherwise provided by law.

20 SEC. 5141. CIVIL MONEY PENALTIES.

21 (a) VIOLATION OF HEALTH INFORMATION SYSTEM

22 STANDARDS.—Any person who the Secretary of Health

23 and Human Services determines—
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•S 1779 PCS

1 (1) is required, but has substantially failed, to

2 comply with a standard established by the National

3 Health Board under section 5101 or 5120;

4 (2) has required the display of, has required the

5 use of, or has used a health security card for any

6 purpose other than a purpose described in section

7 5105(a); or

8 (3) has required the disclosure of, has required

9 the use of, or has used a unique identifier number

10 provided pursuant to section 5104 for any purpose

11 that is not authorized by the National Health Board

12 pursuant to such section,

13 shall be subject, in addition to any other penalties that

14 may be prescribed by law, to a civil money penalty of not

15 more than $10,000 for each such violation.

16 (b) STANDARD BENEFIT FORMS.—Any health service

17 provider or health benefit plan that the Secretary of

18 Health and Human Services determines is required, but

19 has substantially failed, to comply with section 5130(c)

20 shall be subject, in addition to any other penalties that

21 may be prescribed by law, to a civil money penalty of not

22 more than $10,000 for each such violation.

23 (c) PROCESS.—The process for the imposition of a

24 civil money penalty under the All-Payer Health Care

25 Fraud and Abuse Control Program under part 1 of sub-
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•S 1779 PCS

1 title E of this title shall apply to a civil money penalty

2 under this section in the same manner as such process

3 applies to a penalty or proceeding under such program.

4 SEC. 5142. RELATIONSHIP TO OTHER LAWS.

5 (a) COURT ORDERS.—Nothing in this title shall be

6 construed to invalidate or limit the power or authority of

7 any court of competent jurisdiction with respect to health

8 care information.

9 (b) PUBLIC HEALTH REPORTING.—Nothing in this

10 title shall be construed to invalidate or limit the authori11 ties, powers, or procedures established under any law that

12 provides for the reporting of disease, child abuse, birth,

13 or death.

14 Subtitle C—Remedies and

15 Enforcement

16 PART 1—REVIEW OF BENEFIT DETERMINATIONS

17 FOR ENROLLED INDIVIDUALS

18 Subpart A—General Rules

19 SEC. 5201. HEALTH PLAN CLAIMS PROCEDURE.

20 (a) DEFINITIONS.—For purposes of this section—

21 (1) CLAIM.—The term ‘‘claim’’ means a claim

22 for payment or provision of benefits under a health

23 plan or a request for preauthorization of items or

24 services which is submitted to a health plan prior to

25 receipt of the items or services.
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•S 1779 PCS

1 (2) INDIVIDUAL CLAIMANT.—The term ‘‘indi2 vidual claimant’’ with respect to a claim means any

3 individual who submits the claim to a health plan in

4 connection with the individual’s enrollment under

5 the plan, or on whose behalf the claim is submitted

6 to the plan by a provider.

7 (3) PROVIDER CLAIMANT.—The term ‘‘provider

8 claimant’’ with respect to a claim means any pro9 vider who submits the claim to a health plan with

10 respect to items or services provided to an individual

11 enrolled under the plan.

12 (b) GENERAL RULES GOVERNING TREATMENT OF

13 CLAIMS.—

14 (1) ADEQUATE NOTICE OF DISPOSITION OF

15 CLAIM.—In any case in which a claim is submitted

16 in complete form to a health plan, the plan shall

17 provide to the individual claimant and any provider

18 claimant with respect to the claim a written notice

19 of the plan’s approval or denial of the claim within

20 30 days after the date of the submission of the

21 claim. The notice to the individual claimant shall be

22 written in language calculated to be understood by

23 the typical individual enrolled under the plan and in

24 a form which takes into account accessibility to the

25 information by individuals whose primary language
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•S 1779 PCS

1 is not English. In the case of a denial of the claim,

2 the notice shall be provided within 5 days after the

3 date of the determination to deny the claim, and

4 shall set forth the specific reasons for the denial.

5 The notice of a denial shall include notice of the

6 right to appeal the denial under paragraph (2). Fail7 ure by any plan to comply with the requirements of

8 this paragraph with respect to any claim submitted

9 to the plan shall be treated as approval by the plan

10 of the claim.

11 (2) PLAN’S DUTY TO REVIEW DENIALS UPON

12 TIMELY REQUEST.—The plan shall review its denial

13 of the claim if an individual claimant or provider

14 claimant with respect to the claim submits to the

15 plan a written request for reconsideration of the

16 claim after receipt of written notice from the plan of

17 the denial. The plan shall allow any such claimant

18 not less than 60 days, after receipt of written notice

19 from the plan of the denial, to submit the claimant’s

20 request for reconsideration of the claim.

21 (3) TIME LIMIT FOR REVIEW.—The plan shall

22 complete any review required under paragraph (2),

23 and shall provide the individual claimant and any

24 provider claimant with respect to the claim written

25 notice of the plan’s decision on the claim after re-
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•S 1779 PCS

1 consideration pursuant to the review, within 30 days

2 after the date of the receipt of the request for recon3 sideration.

4 (4) DE NOVO REVIEWS.—Any review required

5 under paragraph (2)—

6 (A) shall be de novo,

7 (B) shall be conducted by an individual

8 who did not make the initial decision denying

9 the claim and who is authorized to approve the

10 claim, and

11 (C) shall include review by a qualified phy12 sician if the resolution of any issues involved re13 quires medical expertise.

14 (c) TREATMENT OF URGENT REQUESTS TO PLANS

15 FOR PREAUTHORIZATION.—

16 (1) IN GENERAL.—This subsection applies in

17 the case of any claim submitted by an individual

18 claimant or a provider claimant consisting of a re19 quest for preauthorization of items or services (other

20 than emergency services which under section

21 1406(b) may not be subject to preauthorization)

22 which is accompanied by an attestation that—

23 (A) failure to immediately provide the

24 items or services could reasonably be expected

25 to result in—
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•S 1779 PCS

1 (i) placing the health of the individual

2 claimant (or, with respect to an individual

3 claimant who is a pregnant woman, the

4 health of the woman or her unborn child)

5 in serious jeopardy,

6 (ii) serious impairment to bodily func7 tions, or

8 (iii) serious dysfunction of any bodily

9 organ or part,

10 or

11 (B) immediate provision of the items or

12 services is necessary because the individual

13 claimant has made or is at serious risk of mak14 ing an attempt to harm such individual claim15 ant or another individual.

16 (2) SHORTENED TIME LIMIT FOR CONSIDER17 ATION OF REQUESTS FOR PREAUTHORIZATION.—

18 Notwithstanding subsection (b)(1), a health plan

19 shall approve or deny any claim described in para20 graph (1) within 24 hours after submission of the

21 claim to the plan. Failure by the plan to comply with

22 the requirements of this paragraph with respect to

23 the claim shall be treated as approval by the plan of

24 the claim.
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•S 1779 PCS

1 (3) EXPEDITED EXHAUSTION OF PLAN REM2 EDIES.—Any claim described in paragraph (1) which

3 is denied by the plan shall be treated as a claim with

4 respect to which all remedies under the plan pro5 vided pursuant to this section are exhausted, irre6 spective of any review provided under subsection

7 (b)(2).

8 (4) DENIAL OF PREVIOUSLY AUTHORIZED

9 CLAIMS NOT PERMITTED.—In any case in which a

10 health plan approves a claim described in paragraph

11 (1)—

12 (A) the plan may not subsequently deny

13 payment or provision of benefits pursuant to

14 the claim, unless the plan makes a showing of

15 an intentional misrepresentation of a material

16 fact by the individual claimant, and

17 (B) in the case of a violation of subpara18 graph (A) in connection with the claim, all rem19 edies under the plan provided pursuant to this

20 section with respect to the claim shall be treat21 ed as exhausted.

22 (d) TIME LIMIT FOR DETERMINATION OF INCOM23 PLETENESS OF CLAIM.—For purposes of this section—

24 (1) any claim submitted by an individual claim25 ant and accepted by a provider serving under con-
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•S 1779 PCS

1 tract with a health plan and any claim described in

2 subsection (b)(1) shall be treated with respect to the

3 individual claimant as submitted in complete form,

4 and

5 (2) any other claim for benefits under the plan

6 shall be treated as filed in complete form as of 10

7 days after the date of the submission of the claim,

8 unless the plan provides to the individual claimant

9 and any provider claimant, within such period, a

10 written notice of any required matter remaining to

11 be filed in order to complete the claim.

12 Any filing by the individual claimant or the provider claim13 ant of additional matter requested by the plan pursuant

14 to paragraph (2) shall be treated for purposes of this sec15 tion as an initial filing of the claim.

16 (e) ADDITIONAL NOTICE AND DISCLOSURE RE17 QUIREMENTS FOR HEALTH PLANS.—In the case of a de18 nial of a claim for benefits under a health plan, the plan

19 shall include, together with the specific reasons provided

20 to the individual claimant and any provider claimant

21 under subsection (b)(1)—

22 (1) if the denial is based in whole or in part on

23 a determination that the claim is for an item or

24 service which is not covered by the comprehensive

25 benefit package or exceeds payment rates under the
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•S 1779 PCS

1 applicable alliance or State fee schedule, the factual

2 basis for the determination,

3 (2) if the denial is based in whole or in part on

4 exclusion of coverage with respect to services be5 cause the services are determined to comprise an ex6 perimental treatment or investigatory procedure, the

7 medical basis for the determination and a descrip8 tion of the process used in making the determina9 tion, and

10 (3) if the denial is based in whole or in part on

11 a determination that the treatment is not medically

12 necessary or appropriate or is inconsistent with the

13 plan’s practice guidelines, the medical basis for the

14 determination, the guidelines used in making the de15 termination, and a description of the process used in

16 making the determination.

17 (f) WAIVER OF RIGHTS PROHIBITED.—A health plan

18 may not require any party to waive any right under the

19 plan or this Act as a condition for approval of any claim

20 under the plan, except to the extent otherwise specified

21 in a formal settlement agreement.

22 SEC. 5202. REVIEW IN REGIONAL ALLIANCE COMPLAINT

23 REVIEW OFFICES OF GRIEVANCES BASED ON

24 ACTS OR PRACTICES BY HEALTH PLANS.

25 (a) COMPLAINT REVIEW OFFICES.—
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•S 1779 PCS

1 (1) IN GENERAL.—In accordance with rules

2 which shall be prescribed by the Secretary of Labor,

3 each State shall establish and maintain a complaint

4 review office for each regional alliance established by

5 such State. According to designations which shall be

6 made by each State under regulations of the Sec7 retary of Labor, the complaint review office for a re8 gional alliance established by such State shall also

9 serve as the complaint review office for corporate al10 liances operating in the State with respect to indi11 viduals who are enrolled under plans described in

12 subsection (b) maintained by such corporate alli13 ances and who reside within the area of the regional

14 alliance.

15 (2) REGIONAL ALLIANCES NOT ESTABLISHED

16 BY STATES.—In the case of any regional alliance es17 tablished in any State by the Secretary of Health

18 and Human Services, the Secretary of Health and

19 Human Services shall assume all duties and obliga20 tions of such State under this part in accordance

21 with the applicable regulations of the Secretary of

22 Labor under this part.

23 (b) FILINGS OF COMPLAINTS BY AGGRIEVED PER24 SONS.—In the case of any person who is aggrieved by—
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•S 1779 PCS

1 (1) any act or practice engaged in by any

2 health plan which consists of or results in denial of

3 payment or provision of benefits under the plan or

4 delay in the payment or provision of benefits, or

5 (2) any act or practice engaged in by any other

6 plan maintained by a regional alliance or a corporate

7 alliance which consists of or results in denial of pay8 ment or provision of benefits under a supplemental

9 benefit policy described in section 1421(b)(1) or a

10 cost sharing policy described in section 1421(b)(2)

11 or delay in the payment or provision of the benefits,

12 if the denial or delay consists of a failure to comply with

13 the terms of the plan (including the provision of benefits

14 in full when due in accordance with the terms of the plan),

15 or with the applicable requirements of this Act, such per16 son may file a complaint with the appropriate complaint

17 review office.

18 (c) EXHAUSTION OF PLAN REMEDIES.—Any com19 plaint including a claim to which section 5201 applies may

20 not be filed until the complainant has exhausted all rem21 edies provided under the plan with respect to the claim

22 in accordance with such section.

23 (d) EXCLUSIVE MEANS OF REVIEW FOR PLANS

24 MAINTAINED BY CORPORATE ALLIANCES.—Notwith25 standing part 2, proceedings under sections 5203 and
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•S 1779 PCS

1 5204 pursuant to complaints filed under subsection (b),

2 and review under section 5205 of determinations made

3 under section 5204, shall be the exclusive means of review

4 of acts or practices described in subsection (b) which are

5 engaged in by a corporate alliance health plan or by any

6 plan maintained by a corporate alliance with respect to

7 benefits under a supplemental benefit policy described in

8 section 1421(b)(1) or a cost sharing policy described in

9 section 1421(b)(2).

10 (e) FORM OF COMPLAINT.—The complaint shall be

11 in writing under oath or affirmation, shall set forth the

12 complaint in a manner calculated to give notice of the na13 ture of the complaint, and shall contain such information

14 as may be prescribed in regulations of the Secretary of

15 Labor.

16 (f) NOTICE OF FILING.—The complaint review office

17 shall serve by certified mail a notice of the complaint (in18 cluding the date, place, and circumstances of the alleged

19 violation) on the person or persons alleged in the com20 plaint to have committed the violation within 10 days after

21 the filing of the complaint.

22 (g) TIME LIMITATION.—Complaints may not be

23 brought under this section with respect to any violation

24 later than one year after the date on which the violation
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•S 1779 PCS

1 occurs. This subsection shall not prevent the subsequent

2 amending of a complaint.

3 SEC. 5203. INITIAL PROCEEDINGS IN COMPLAINT REVIEW

4 OFFICES.

5 (a) ELECTIONS.—Whenever a complaint is brought

6 to the complaint review office under section 5202(b), the

7 complaint review office shall provide the complainant with

8 an opportunity, in such form and manner as shall be pre9 scribed in regulations of the Secretary of Labor, to elect

10 one of the following:

11 (1) to forego further proceedings in the com12 plaint review office and rely on remedies available in

13 a court of competent jurisdiction, with respect to

14 any matter in the complaint with respect to which

15 proceedings under this section and section 5204, and

16 review under section 5205, are not under section

17 5202(d) the exclusive means of review,

18 (2) to submit the complaint as a dispute under

19 the Early Resolution Program established under

20 subpart B and thereby suspend further review pro21 ceedings under this section pending termination of

22 proceedings under the Program, or

23 (3) in any case in which an election under para24 graph (2) is not made, or such an election was made

25 but resolution of all matters in the complaint was
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•S 1779 PCS

1 not obtained upon termination of proceedings pursu2 ant to the election by settlement agreement or other3 wise, to proceed with the complaint to a hearing in

4 the complaint review office under section 5204 re5 garding the unresolved matters.

6 (b) EFFECT OF PARTICIPATION IN EARLY RESOLU7 TION PROGRAM.—Any matter in a complaint brought to

8 the complaint review office which is included in a dispute

9 which is timely submitted to the Early Resolution Pro10 gram established under subpart B shall not be assigned

11 to a hearing under section 5204 unless the proceedings

12 under the Program with respect to the dispute are termi13 nated without settlement or resolution of the dispute with

14 respect to such matter. Upon termination of any proceed15 ings regarding a dispute submitted to the Program, the

16 applicability of this section to any matter in a complaint

17 which was included in the dispute shall not be affected

18 by participation in the proceedings, except to the extent

19 otherwise required under the terms of any settlement

20 agreement or other formal resolution obtained in the pro21 ceedings.

22 SEC. 5204. HEARINGS BEFORE HEARING OFFICERS IN COM23 PLAINT REVIEW OFFICES.

24 (a) HEARING PROCESS.—
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•S 1779 PCS

1 (1) ASSIGNMENT OF COMPLAINTS TO HEARING

2 OFFICERS AND NOTICE TO PARTIES.—

3 (A) IN GENERAL.—In the case of an elec4 tion under section 5203(a)(3)—

5 (i) the complaint review office shall

6 assign the complaint, and each motion in

7 connection with the complaint, to a hearing

8 officer employed by the State in the office;

9 and

10 (ii) the hearing officer shall have the

11 power to issue and cause to be served upon

12 the plan named in the complaint a copy of

13 the complaint and a notice of hearing be14 fore the hearing officer at a place fixed in

15 the notice, not less than 5 days after the

16 serving of the complaint.

17 (B) QUALIFICATIONS FOR HEARING OFFI18 CERS.—No individual may serve in a complaint

19 review office as a hearing officer unless the in20 dividual meets standards which shall be pre21 scribed by the Secretary of Labor. Such stand22 ards shall include experience, training, affili23 ations, diligence, actual or potential conflicts of

24 interest, and other qualifications deemed rel25 evant by the Secretary of Labor. At no time
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•S 1779 PCS

1 shall a hearing officer have any official, finan2 cial, or personal conflict of interest with respect

3 to issues in controversy before the hearing offi4 cer.

5 (2) AMENDMENT OF COMPLAINTS.—Any such

6 complaint may be amended by the hearing officer

7 conducting the hearing, upon the motion of the com8 plainant, in the hearing officer’s discretion at any

9 time prior to the issuance of an order based thereon.

10 (3) ANSWERS.—The party against whom the

11 complaint is filed shall have the right to file an an12 swer to the original or amended complaint and to

13 appear in person or otherwise and give testimony at

14 the place and time fixed in the complaint.

15 (b) ADDITIONAL PARTIES.—In the discretion of the

16 hearing officer conducting the hearing, any other person

17 may be allowed to intervene in the proceeding and to

18 present testimony.

19 (c) HEARINGS.—

20 (1) DE NOVO HEARING.—Each hearing officer

21 shall hear complaints and motions de novo.

22 (2) TESTIMONY.—The testimony taken by the

23 hearing officer shall be reduced to writing. There24 after, the hearing officer, in his or her discretion,
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•S 1779 PCS

1 upon notice may provide for the taking of further

2 testimony or hear argument.

3 (3) AUTHORITY OF HEARING OFFICERS.—The

4 hearing officer may compel by subpoena the attend5 ance of witnesses and the production of evidence at

6 any designated place or hearing. In case of contu7 macy or refusal to obey a subpoena lawfully issued

8 under this paragraph and upon application of the

9 hearing officer, an appropriate district court of the

10 United States may issue an order requiring compli11 ance with the subpoena and any failure to obey the

12 order may be punished by the court as a contempt

13 thereof. The hearing officer may also seek enforce14 ment of the subpoena in a State court of competent

15 jurisdiction.

16 (4) EXPEDITED HEARINGS.—Notwithstanding

17 section 5203 and the preceding provisions of this

18 section, upon receipt of a complaint containing a

19 claim described in section 5201(c)(1), the complaint

20 review office shall promptly provide the complainant

21 with the opportunity to make an election under sec22 tion 5203(a)(3) and assignment to a hearing on the

23 complaint before a hearing officer. The complaint re24 view office shall ensure that such a hearing com-
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•S 1779 PCS

1 mences not later than 24 hours after receipt of the

2 complaint by the complaint hearing office.

3 (d) DECISION OF HEARING OFFICER.—

4 (1) IN GENERAL.—The hearing officer shall de5 cide upon the preponderance of the evidence whether

6 to decide in favor of the complainant with respect to

7 each alleged act or practice. Each such decision—

8 (A) shall include the hearing officer’s find9 ings of fact, and

10 (B) shall constitute the hearing officer’s

11 final disposition of the proceedings.

12 (2) DECISIONS FINDING IN FAVOR OF COM13 PLAINANT.—If the hearing officer’s decision includes

14 a determination that any party named in the com15 plaint has engaged in or is engaged in an act or

16 practice described in section 5202(b), the hearing of17 ficer shall issue and cause to be served on such

18 party an order which requires such party—

19 (A) to cease and desist from such act or

20 practice,

21 (B) to provide the benefits due under the

22 terms of the plan and to otherwise comply with

23 the terms of the plan and the applicable re24 quirements of this Act,
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•S 1779 PCS

1 (C) to pay to the complainant prejudgment

2 interest on the actual costs incurred in obtain3 ing the items and services at issue in the com4 plaint, and

5 (D) to pay to the prevailing complainant a

6 reasonable attorney’s fee, reasonable expert wit7 ness fees, and other reasonable costs relating to

8 the hearing on the charges on which the com9 plainant prevails.

10 (3) DECISIONS NOT IN FAVOR OF COMPLAIN11 ANT.—If the hearing officer’s decision includes a de12 termination that the party named in the complaint

13 has not engaged in or is not engaged in an act or

14 practice referred to in section 5202(b), the hearing

15 officer—

16 (A) shall include in the decision a dismissal

17 of the charge in the complaint relating to the

18 act or practice, and

19 (B) upon a finding that such charge is

20 frivolous, shall issue and cause to be served on

21 the complainant an order which requires the

22 complainant to pay to such party a reasonable

23 attorney’s fee, reasonable expert witness fees,

24 and other reasonable costs relating to the pro25 ceedings on such charge.
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1 (4) SUBMISSION AND SERVICE OF DECISIONS.—

2 The hearing officer shall submit each decision to the

3 complaint review office at the conclusion of the pro4 ceedings and the office shall cause a copy of the de5 cision to be served on the parties to the proceedings.

6 (e) REVIEW.—

7 (1) IN GENERAL.—The decision of the hearing

8 officer shall be final and binding upon all parties.

9 Except as provided in paragraph (2), any party to

10 the complaint may, within 30 days after service of

11 the decision by the complaint review office, file an

12 appeal of the decision with the Federal Health Plan

13 Review Board under section 5205 in such form and

14 manner as may be prescribed by such Board.

15 (2) EXCEPTION.—The decision in the case of

16 an expedited hearing under subsection (c)(4) shall

17 not be subject to review.

18 (f) COURT ENFORCEMENT OF ORDERS.—

19 (1) IN GENERAL.—If a decision of the hearing

20 officer in favor of the complainant is not appealed

21 under section 5205, the complainant may petition

22 any court of competent jurisdiction for enforcement

23 of the order. In any such proceeding, the order of

24 the hearing officer shall not be subject to review.
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•S 1779 PCS

1 (2) AWARDING OF COSTS.—In any action for

2 court enforcement under this subsection, a prevailing

3 complainant shall be entitled to a reasonable attor4 ney’s fee, reasonable expert witness fees, and other

5 reasonable costs relating to such action.

6 SEC. 5205. REVIEW BY FEDERAL HEALTH PLAN REVIEW

7 BOARD.

8 (a) ESTABLISHMENT AND MEMBERSHIP.—The Sec9 retary of Labor shall establish by regulation a Federal

10 Health Plan Review Board (hereinafter in this subtitle re11 ferred to as the ‘‘Review Board’’). The Review Board shall

12 be composed of 5 members appointed by the Secretary of

13 Labor from among persons who by reason of training,

14 education, or experience are qualified to carry out the

15 functions of the Review Board under this subtitle. The

16 Secretary of Labor shall prescribe such rules as are nec17 essary for the orderly transaction of proceedings by the

18 Review Board. Every official act of the Review Board shall

19 be entered of record, and its hearings and records shall

20 be open to the public.

21 (b) REVIEW PROCESS.—The Review Board shall en22 sure, in accordance with rules prescribed by the Secretary

23 of Labor, that reasonable notice is provided for each ap24 peal before the Review Board of a hearing officer’s deci25 sion under section 5304, and shall provide for the orderly
652

•S 1779 PCS

1 consideration of arguments by any party to the hearing

2 upon which the hearing officer’s decision is based. In the

3 discretion of the Review Board, any other person may be

4 allowed to intervene in the proceeding and to present writ5 ten argument. The National Health Board may intervene

6 in the proceeding as a matter of right.

7 (c) SCOPE OF REVIEW.—The Review Board shall re8 view the decision of the hearing officer from which the

9 appeal is made, except that the review shall be only for

10 the purposes of determining—

11 (1) whether the determination is supported by

12 substantial evidence on the record considered as a

13 whole,

14 (2) in the case of any interpretation by the

15 hearing officer of contractual terms (irrespective of

16 the extent to which extrinsic evidence was consid17 ered), whether the determination is supported by a

18 preponderance of the evidence,

19 (3) whether the determination is in excess of

20 statutory jurisdiction, authority, or limitations, or in

21 violation of a statutory right, or

22 (4) whether the determination is without ob23 servance of procedure required by law.

24 (d) DECISION OF REVIEW BOARD.—The decision of

25 the hearing officer as affirmed or modified by the Review
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•S 1779 PCS

1 Board (or any reversal by the Review Board of the hearing

2 officer’s final disposition of the proceedings) shall become

3 the final order of the Review Board and binding on all

4 parties, subject to review under subsection (e). The Review

5 Board shall cause a copy of its decision to be served on

6 the parties to the proceedings not later than 5 days after

7 the date of the decision.

8 (e) REVIEW OF FINAL ORDERS.—

9 (1) IN GENERAL.—Not later than 60 days after

10 the entry of the final order, any person aggrieved by

11 any such final order under which the amount or

12 value in controversy exceeds $10,000 may seek a re13 view of the order in the United States court of ap14 peals for the circuit in which the violation is alleged

15 to have occurred or in which the complainant re16 sides.

17 (2) FURTHER REVIEW.—Upon the filing of the

18 record with the court, the jurisdiction of the court

19 shall be exclusive and its judgment shall be final, ex20 cept that the judgment shall be subject to review by

21 the Supreme Court of the United States upon writ

22 of certiorari or certification as provided in section

23 1254 of title 28 of the United States Code.

24 (3) ENFORCEMENT DECREE IN ORIGINAL RE25 VIEW.—If, upon appeal of an order under paragraph
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•S 1779 PCS

1 (1), the United States court of appeals does not re2 verse the order, the court shall have the jurisdiction

3 to make and enter a decree enforcing the order of

4 the Review Board.

5 (f) AWARDING OF ATTORNEYS’ FEES AND OTHER

6 COSTS AND EXPENSES.—In any proceeding before the Re7 view Board under this section or any judicial proceeding

8 under subsection (e), the Review Board or the court (as

9 the case may be) shall award to a prevailing complainant

10 reasonable costs and expenses (including a reasonable at11 torney’s fee) on the causes on which the complainant pre12 vails.

13 SEC. 5206. RULES GOVERNING BENEFIT CLAIMS DETER14 MINATIONS.

15 (a) IN GENERAL.—Determinations made under this

16 part or by any State court in connection with a complaint

17 based on an act or practice described in section 5202(b)

18 shall be in accordance with the provisions of this Act, the

19 comprehensive benefit package as provided by this Act, the

20 rules and regulations of the National Health Board pre21 scribed under this Act, and decisions of the National

22 Health Board under this Act.

23 (b) RIGHTS AND REMEDIES UNDER STATE LAW.—

24 Subject to subsection (a), the rights and remedies avail25 able in State court against a health plan providing services
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•S 1779 PCS

1 through a regional alliance in connection with a complaint

2 based on an act or practice described in section 5202(b)

3 shall be governed by State law.

4 SEC. 5207. CIVIL MONEY PENALTIES.

5 (a) DENIAL OR DELAY IN PAYMENT OR PROVISION

6 OF BENEFITS.—

7 (1) IN GENERAL.—The Secretary of Labor may

8 assess a civil penalty against any health plan, or

9 against any other plan in connection with benefits

10 provided thereunder under a supplemental benefit

11 policy described in section 1421(b)(1) or a cost shar12 ing policy described in section 1421(b)(2), for unrea13 sonable denial or delay in the payment or provision

14 of benefits thereunder, in an amount not to exceed—

15 (A) $25,000 per violation, or $75,000 per

16 violation in the case of a finding of bad faith

17 on the part of the plan, and

18 (B) in the case of a finding of a pattern

19 or practice of such violations engaged in by the

20 plan, $1,000,000 in addition to the total

21 amount of penalties assessed under subpara22 graph (A) with respect to such violations.

23 For purposes of subparagraph (A), each violation

24 with respect to any single individual shall be treated

25 as a separate violation.
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•S 1779 PCS

1 (2) CIVIL ACTION TO ENFORCE CIVIL PEN2 ALTY.—The Secretary of Labor may commence a

3 civil action in any court of competent jurisdiction to

4 enforce a civil penalty assessed under paragraph (1).

5 (b) CIVIL PENALTIES FOR CERTAIN OTHER AC6 TIONS.—The Secretary of Labor may assess a civil penalty

7 described in section 5412(b)(1) against any corporate alli8 ance health plan, or against any other plan sponsored by

9 a corporate alliance in connection with benefits provided

10 thereunder under a cost sharing policy described in section

11 1421(b)(2), for any action described in section 5412(a).

12 The Secretary of Labor may initiate proceedings to impose

13 such penalty in the same manner as the Secretary of

14 Health and Human Services may initiate proceedings

15 under section 5412 with respect to actions described in

16 section 5412(a).

17 Subpart B—Early Resolution Programs

18 SEC. 5211. ESTABLISHMENT OF EARLY RESOLUTION PRO19 GRAMS IN COMPLAINT REVIEW OFFICES.

20 (a) ESTABLISHMENT OF PROGRAMS.—Each State

21 shall establish and maintain an Early Resolution Program

22 in each complaint review office in such State. The Pro23 gram shall include—
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•S 1779 PCS

1 (1) the establishment and maintenance of fo2 rums for mediation of disputes in accordance with

3 this subpart, and

4 (2) the establishment and maintenance of such

5 forums for other forms of alternative dispute resolu6 tion (including binding arbitration) as may be pre7 scribed in regulations of the Secretary of Labor.

8 Each State shall ensure that the standards applied in

9 Early Resolution Programs administered in such State

10 which apply to any form of alternative dispute resolution

11 described in paragraph (2) and which relate to time re12 quirements, qualifications of facilitators, arbitrators, or

13 other mediators, and confidentiality are at least equivalent

14 to the standards which apply to mediation proceedings

15 under this subpart.

16 (b) DUTIES OF COMPLAINT REVIEW OFFICES.—

17 Each complaint review office in a State—

18 (1) shall administer its Early Resolution Pro19 gram in accordance with regulations of the Secretary

20 of Labor,

21 (2) shall, pursuant to subsection (a)(1)—

22 (A) recruit and train individuals to serve

23 as facilitators for mediation proceedings under

24 the Early Resolution Program from attorneys

25 who have the requisite expertise for such serv-
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•S 1779 PCS

1 ice, which shall be specified in regulations of

2 the Secretary of Labor,

3 (B) provide meeting sites, maintain

4 records, and provide facilitators with adminis5 trative support staff, and

6 (C) establish and maintain attorney refer7 ral panels,

8 (3) shall ensure that, upon the filing of a com9 plaint with the office, the complainant is adequately

10 apprised of the complainant’s options for review

11 under this part, and

12 (4) shall monitor and evaluate the Program on

13 an ongoing basis.

14 SEC. 5212. INITIATION OF PARTICIPATION IN MEDIATION

15 PROCEEDINGS.

16 (a) ELIGIBILITY OF CASES FOR SUBMISSION TO

17 EARLY RESOLUTION PROGRAM.—A dispute may be sub18 mitted to the Early Resolution Program only if the follow19 ing requirements are met with respect to the dispute:

20 (1) NATURE OF DISPUTE.—The dispute con21 sists of an assertion by an individual enrolled under

22 a health plan of one or more claims against the

23 health plan for payment or provision of benefits, or

24 against any other plan maintained by the regional

25 alliance or corporate alliance sponsoring the health
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•S 1779 PCS

1 plan with respect to benefits provided under a sup2 plemental benefit policy described in section

3 1421(b)(1) or a cost sharing policy described in sec4 tion 1421(b)(2), based on alleged coverage under the

5 plan, and a denial of the claims, or a denial of ap6 propriate reimbursement based on the claims, by the

7 plan.

8 (2) NATURE OF DISPUTED CLAIM.—Each claim

9 consists of—

10 (A) a claim for payment or provision of

11 benefits under the plan; or

12 (B) a request for information or docu13 ments the disclosure of which is required under

14 this Act (including claims of entitlement to dis15 closure based on colorable claims to rights to

16 benefits under the plan).

17 (b) FILING OF ELECTION.—A complainant with a

18 dispute which is eligible for submission to the Early Reso19 lution Program may make the election under section

20 5203(a)(2) to submit the dispute to mediation proceedings

21 under the Program not later than 15 days after the date

22 the complaint is filed with the complaint review office

23 under section 5202(b).

24 (c) AGREEMENT TO PARTICIPATE.—
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1 (1) ELECTION BY CLAIMANT.—A complainant

2 may elect participation in the mediation proceedings

3 only by entering into a written participation agree4 ment (including an agreement to comply with the

5 rules of the Program and consent for the complaint

6 review office to contact the health plan regarding the

7 agreement), and by releasing plan records to the

8 Program for the exclusive use of the facilitator as9 signed to the dispute.

10 (2) PARTICIPATION BY PLANS OR HEALTH BEN11 EFITS CONTRACTORS.—Each party whose participa12 tion in the mediation proceedings has been elected

13 by a claimant pursuant to paragraph (1) shall par14 ticipate in, and cooperate fully with, the proceedings.

15 The claims review office shall provide such party

16 with a copy of the participation agreement described

17 in paragraph (1), together with a written description

18 of the Program. Such party shall submit the copy of

19 the agreement, together with its authorized signa20 ture signifying receipt of notice of the agreement, to

21 the claims review office, and shall include in the sub22 mission to the claims review office a copy of the

23 written record of the plan claims procedure com24 pleted pursuant to section 5201 with respect to the

25 dispute and all relevant plan documents. The rel-
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•S 1779 PCS

1 evant documents shall include all documents under

2 which the plan is or was administered or operated,

3 including copies of any insurance contracts under

4 which benefits are or were provided and any fee or

5 reimbursement schedules for health care providers.

6 SEC. 5213. MEDIATION PROCEEDINGS.

7 (a) ROLE OF FACILITATOR.—In the course of medi8 ation proceedings under the Early Resolution Program,

9 the facilitator assigned to the dispute shall prepare the

10 parties for a conference regarding the dispute and serve

11 as a neutral mediator at such conference, with the goal

12 of achieving settlement of the dispute.

13 (b) PREPARATIONS FOR CONFERENCE.—In advance

14 of convening the conference, after identifying the nec15 essary parties and confirming that the case is eligible for

16 the Program, the facilitator shall analyze the record of the

17 claims procedure conducted pursuant to section 5201 and

18 any position papers submitted by the parties to determine

19 if further case development is needed to clarify the legal

20 and factual issues in dispute, and whether there is any

21 need for additional information and documents.

22 (c) CONFERENCE.—Upon convening the conference,

23 the facilitator shall assist the parties in identifying undis24 puted issues and exploring settlement. If settlement is

25 reached, the facilitator shall assist in the preparation of
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•S 1779 PCS

1 a written settlement agreement. If no settlement is

2 reached, the facilitator shall present the facilitator’s eval3 uation, including an assessment of the parties’ positions,

4 the likely outcome of further administrative action or liti5 gation, and suggestions for narrowing the issues in dis6 pute.

7 (d) TIME LIMIT.—The facilitator shall ensure that

8 mediation proceedings with respect to any dispute under

9 the Early Resolution Program shall be completed within

10 120 days after the election to participate. The parties may

11 agree to one extension of the proceedings by not more than

12 30 days if the proceedings are suspended to obtain an

13 agency ruling or to reconvene the conference in a subse14 quent session.

15 (e) INAPPLICABILITY OF FORMAL RULES.—Formal

16 rules of evidence shall not apply to mediation proceedings

17 under the Early Resolution Program. All statements made

18 and evidence presented in the proceedings shall be admis19 sible in the proceedings. The facilitator shall be the sole

20 judge of the proper weight to be afforded to each submis21 sion. The parties to mediation proceedings under the Pro22 gram shall not be required to make statements or present

23 evidence under oath.
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•S 1779 PCS

1 (f) REPRESENTATION.—Parties may participate pro

2 se or be represented by attorneys throughout the proceed3 ings of the Early Resolution Program.

4 (g) CONFIDENTIALITY.—

5 (1) IN GENERAL.—Under regulations of the

6 Secretary of Labor, rules similar to the rules under

7 section 574 of title 5, United States Code (relating

8 to confidentiality in dispute resolution proceedings)

9 shall apply to the mediation proceedings under the

10 Early Resolution Program.

11 (2) CIVIL REMEDIES.—The Secretary of Labor

12 may assess a civil penalty against any person who

13 discloses information in violation of the regulations

14 prescribed pursuant to paragraph (1) in the amount

15 of three times the amount of the claim involved. The

16 Secretary of Labor may bring a civil action to en17 force such civil penalty in any court of competent ju18 risdiction.

19 SEC. 5214. LEGAL EFFECT OF PARTICIPATION IN MEDI20 ATION PROCEEDINGS.

21 (a) PROCESS NONBINDING.—Findings and conclu22 sions made in the mediation proceedings of the Early Res23 olution Program shall be treated as advisory in nature and

24 nonbinding. Except as provided in subsection (b), the
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1 rights of the parties under subpart A shall not be affected

2 by participation in the Program.

3 (b) RESOLUTION THROUGH SETTLEMENT AGREE4 MENT.—If a case is settled through participation in medi5 ation proceedings under the Program, the facilitator shall

6 assist the parties in drawing up an agreement which shall

7 constitute, upon signature of the parties, a binding con8 tract between the parties, which shall be enforceable under

9 section 5215.

10 (c) PRESERVATION OF RIGHTS OF NON-PARTIES.—

11 The settlement agreement shall not have the effect of

12 waiving or otherwise affecting any rights to review under

13 subpart A, or any other right under this Act or the plan,

14 with respect to any person who is not a party to the settle15 ment agreement.

16 SEC. 5215. ENFORCEMENT OF SETTLEMENT AGREEMENTS.

17 (a) ENFORCEMENT.—Any party to a settlement

18 agreement entered pursuant to mediation proceedings

19 under this subpart may petition any court of competent

20 jurisdiction for the enforcement of the agreement, by filing

21 in the court a written petition praying that the agreement

22 be enforced. In such a proceeding, the order of the hearing

23 officer shall not be subject to review.

24 (b) COURT REVIEW.—It shall be the duty of the court

25 to advance on the docket and to expedite to the greatest
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1 possible extent the disposition of any petition filed under

2 this section, with due deference to the role of settlement

3 agreements under this part in achieving prompt resolution

4 of disputes involving health plans.

5 (c) AWARDING OF ATTORNEY’S FEES AND OTHER

6 COSTS AND EXPENSES.—In any action by an individual

7 enrolled under a health plan for court enforcement under

8 this section, a prevailing plaintiff shall be entitled to rea9 sonable costs and expenses (including a reasonable attor10 ney’s fee and reasonable expert witness fees) on the

11 charges on which the plaintiff prevails.

12 PART 2—ADDITIONAL REMEDIES AND

13 ENFORCEMENT PROVISIONS

14 SEC. 5231. JUDICIAL REVIEW OF FEDERAL ACTION ON

15 STATE SYSTEMS.

16 (a) IN GENERAL.—Any State or alliance that is ag17 grieved by a determination by the National Health Board

18 under subpart B of part 1 of subtitle F of title I shall

19 be entitled to judicial review of such determination in ac20 cordance with this section.

21 (b) JUDICIAL REVIEW.—

22 (1) JURISDICTION.—The courts of appeals of

23 the United States (other than the United States

24 Court of Appeals for the Federal Circuit) shall have

25 jurisdiction to review a determination described in
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1 subsection (a), to affirm the determination, or to set

2 it aside, in whole or in part. A judgment of a court

3 of appeals in such an action shall be subject to re4 view by the Supreme Court of the United States

5 upon certiorari or certification as provided in section

6 1254 of title 28, United States Code.

7 (2) PETITION FOR REVIEW.—A State or an alli8 ance that desires judicial review of a determination

9 described in subsection (a) shall, within 30 days

10 after it has been notified of such determination, file

11 with the United States court of appeals for the cir12 cuit in which the State or alliance is located a peti13 tion for review of such determination. A copy of the

14 petition shall be transmitted by the clerk of the

15 court to the National Health Board, and the Board

16 shall file in the court the record of the proceedings

17 on which the determination or action was based, as

18 provided in section 2112 of title 28, United States

19 Code.

20 (3) SCOPE OF REVIEW.—The findings of fact of

21 the National Health Board, if supported by substan22 tial evidence, shall be conclusive; but the court, for

23 good cause shown, may remand the case to the

24 Board to take further evidence, and the Board may

25 make new or modified findings of fact and may mod-
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1 ify its previous action, and shall certify to the court

2 the record of the further proceedings. Such new or

3 modified findings of fact shall likewise be conclusive

4 if supported by substantial evidence.

5 SEC. 5232. ADMINISTRATIVE AND JUDICIAL REVIEW RELAT6 ING TO COST CONTAINMENT.

7 There shall be no administrative or judicial review of

8 any determination by the National Health Board respect9 ing any matter under subtitle A of title VI.

10 SEC. 5233. CIVIL ENFORCEMENT.

11 Unless otherwise provided in this Act, the district

12 courts of the United States shall have jurisdiction of civil

13 actions brought by—

14 (1) the Secretary of Labor to enforce any final

15 order of such Secretary or to collect any civil mone16 tary penalty assessed by such Secretary under this

17 Act; and

18 (2) the Secretary of Health and Human Serv19 ices to enforce any final order of such Secretary or

20 to collect any civil monetary penalty assessed by

21 such Secretary under this Act.

22 SEC. 5234. PRIORITY OF CERTAIN BANKRUPTCY CLAIMS.

23 Section 507(a)(8) of title 11, United States Code, is

24 amended to read as follows:

25 ‘‘(8) Eighth, allowed unsecured claims—
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1 ‘‘(A) based upon any commitment by the

2 debtor to the Federal Deposit Insurance Cor3 poration, the Resolution Trust Corporation, the

4 Director of the Office of Thrift Supervision, the

5 Comptroller of the Currency, or the Board of

6 Governors of the Federal Reserve System, or

7 their predecessors or successors, to maintain

8 the capital of an insured depository institution;

9 ‘‘(B) for payments under subtitle B of title

10 IV of the Health Security Act owed to a re11 gional alliance (as defined in section 1301 of

12 such Act);

13 ‘‘(C) for payments owed to a corporate alli14 ance health plan under trusteeship of the Sec15 retary of Labor under section 1395 of the

16 Health Security Act; or

17 ‘‘(D) for assessments and related amounts

18 owed to the Secretary of Labor under section

19 1397 of the Health Security Act.’’.

20 SEC. 5235. PRIVATE RIGHT TO ENFORCE STATE RESPON21 SIBILITIES.

22 The failure of a participating State to carry out a

23 responsibility applicable to participating States under this

24 Act constitutes a deprivation of rights secured by this Act

25 for the purposes of section 1977 of the Revised Statutes
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1 of the United States (42 U.S.C. 1983). In an action

2 brought under such section, the court shall exercise juris3 diction without regard to whether the aggrieved person

4 has exhausted any administrative or other remedies that

5 may be provided by law.

6 SEC. 5236. PRIVATE RIGHT TO ENFORCE FEDERAL RESPON7 SIBILITIES IN OPERATING A SYSTEM IN A

8 STATE.

9 (a) IN GENERAL.—The failure of the Secretary of

10 Health and Human Services to carry out a responsibility

11 under section 1522 (relating to operation of an alliance

12 system in a State) confers an enforceable right of action

13 on any person who is aggrieved by such failure. Such a

14 person may commence a civil action against the Secretary

15 in an appropriate State court or district court of the Unit16 ed States.

17 (b) EXHAUSTION OF REMEDIES.—In an action under

18 subsection (a), the court shall exercise jurisdiction without

19 regard to whether the aggrieved person has exhausted any

20 administrative or other remedies that may be provided by

21 law.

22 (c) RELIEF.—In an action under subsection (a), if

23 the court finds that a failure described in such subsection

24 has occurred, the aggrieved person may recover compen-
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1 satory and punitive damages and the court may order any

2 other appropriate relief.

3 (d) ATTORNEY’S FEES.—In an action under sub4 section (a), the court, in its discretion, may allow the pre5 vailing party, other than the United States, a reasonable

6 attorney’s fee (including expert fees) as part of the costs,

7 and the United States shall be liable for costs the same

8 as a private person.

9 SEC. 5237. PRIVATE RIGHT TO ENFORCE RESPONSIBILITIES

10 OF ALLIANCES.

11 (a) IN GENERAL.—The failure of a regional alliance

12 or a corporate alliance to carry out a responsibility appli13 cable to the alliance under this Act confers an enforceable

14 right of action on any person who is aggrieved by such

15 failure. Such a person may commence a civil action

16 against the alliance in an appropriate State court or dis17 trict court of the United States.

18 (b) EXHAUSTION OF REMEDIES.—

19 (1) IN GENERAL.—Except as provided in para20 graph (2), in an action under subsection (a) the

21 court may not exercise jurisdiction until the ag22 grieved person has exhausted any administrative

23 remedies that may be provided by law.

24 (2) NO EXHAUSTION REQUIRED.—In an action

25 under subsection (a), the court shall exercise juris-
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1 diction without regard to whether the aggrieved per2 son has exhausted any administrative or other rem3 edies that may be provided by law if the action re4 lates to—

5 (A) whether the person is an eligible indi6 vidual within the meaning of section 1001(c);

7 (B) whether the person is eligible for a

8 premium discount under subpart A of part 1 of

9 subtitle B of title VI;

10 (C) whether the person is eligible for a re11 duction in cost sharing under subpart D of part

12 3 of subtitle D of title I; or

13 (D) enrollment or disenrollment in a health

14 plan.

15 (c) RELIEF.—In an action under subsection (a), if

16 the court finds that a failure described in such subsection

17 has occurred, the aggrieved person may recover compen18 satory and punitive damages and the court may order any

19 other appropriate relief.

20 (d) ATTORNEY’S FEES.—In any action under sub21 section (a), the court, in its discretion, may allow the pre22 vailing party, other than the United States, a reasonable

23 attorney’s fee (including expert fees) as part of the costs,

24 and the United States shall be liable for costs the same

25 as a private person.
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1 SEC. 5238. DISCRIMINATION CLAIMS.

2 (a) CIVIL ACTION BY AGGRIEVED PERSON.—

3 (1) IN GENERAL.—Any person who is aggrieved

4 by the failure of a health plan to comply with section

5 1402(c) may commence a civil action against the

6 plan in an appropriate State court or district court

7 of the United States.

8 (2) STANDARDS.—The standards used to deter9 mine whether a violation has occurred in a complaint

10 alleging discrimination on the basis of age or disabil11 ity under section 1402(c) shall be the standards ap12 plied under the Age Discrimination Act of 1975 (42

13 U.S.C. 6101 et seq.) and the Americans with Dis14 abilities Act of 1990 (42 U.S.C. 12101 et seq.).

15 (3) RELIEF.—In an action under paragraph

16 (1), if the court finds that the health plan has failed

17 to comply with section 1402(c), the aggrieved person

18 may recover compensatory and punitive damages

19 and the court may order any other appropriate re20 lief.

21 (4) ATTORNEY’S FEES.—In any action under

22 paragraph (1), the court, in its discretion, may allow

23 the prevailing party, other than the United States,

24 a reasonable attorney’s fee (including expert fees) as

25 part of the costs, and the United States shall be lia26 ble for costs the same as a private person.
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1 (b) ACTION BY SECRETARY.—Whenever the Sec2 retary of Health and Human Services finds that a health

3 plan has failed to comply with section 1402(c), or with

4 an applicable regulation issued under such section, the

5 Secretary shall notify the plan. If within a reasonable pe6 riod of time the health plan fails or refuses to comply,

7 the Secretary may—

8 (1) refer the matter to the Attorney General

9 with a recommendation that an appropriate civil ac10 tion be instituted;

11 (2) terminate the participation of the health

12 plan in an alliance; or

13 (3) take such other action as may be provided

14 by law.

15 (c) ACTION BY ATTORNEY GENERAL.—When a mat16 ter is referred to the Attorney General under subsection

17 (b)(1), the Attorney General may bring a civil action in

18 a district court of the United States for such relief as may

19 be appropriate, including injunctive relief. In a civil action

20 under this section, the court—

21 (1) may grant any equitable relief that the

22 court considers to be appropriate;

23 (2) may award such other relief as the court

24 considers to be appropriate, including compensatory

25 and punitive damages; and
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1 (3) may, to vindicate the public interest when

2 requested by the Attorney General, assess a civil

3 money penalty against the health plan in an

4 amount—

5 (A) not exceeding $50,000 for a first viola6 tion; and

7 (B) not exceeding $100,000 for any subse8 quent violation.

9 SEC. 5239. NONDISCRIMINATION IN FEDERALLY ASSISTED

10 PROGRAMS.

11 Federal payments to regional alliances under part 2

12 of subtitle C of title VI shall be treated as Federal finan13 cial assistance for purposes of section 504 of the Rehabili14 tation Act of 1973 (29 U.S.C. 794), section 303 of the

15 Age Discrimination Act of 1975 (42 U.S.C. 6102), and

16 section 601 of the Civil Rights Act of 1964 (42 U.S.C.

17 2000d).

18 SEC. 5240. CIVIL ACTION BY ESSENTIAL COMMUNITY PRO19 VIDER.

20 (a) IN GENERAL.—An electing essential community

21 provider (as defined in section 1431(d)) who is aggrieved

22 by the failure of a health plan to fulfill a duty imposed

23 on the plan by section 1431 may commence a civil action

24 against the plan in an appropriate State court or district

25 court of the United States.
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1 (b) RELIEF.—In an action under subsection (a), if

2 the court finds that the health plan has failed to fulfill

3 a duty imposed on the plan by section 1431, the electing

4 essential community provider may recover compensatory

5 damages and the court may order any other appropriate

6 relief.

7 (c) ATTORNEY’S FEES.—In any action under sub8 section (a), the court, in its discretion, may allow the pre9 vailing party, other than the United States, a reasonable

10 attorney’s fee (including expert fees) as part of the costs,

11 and the United States shall be liable for costs the same

12 as a private person.

13 SEC. 5241. FACIAL CONSTITUTIONAL CHALLENGES.

14 (a) JURISDICTION.—The United States District

15 Court for the District of Columbia shall have original and

16 exclusive jurisdiction of any civil action brought to invali17 date this Act or a provision of this Act on the ground of

18 its being repugnant to the Constitution of the United

19 States on its face and for every purpose. In any action

20 described in this subsection, the district court may not

21 grant any temporary order or preliminary injunction re22 straining the enforcement, operation, or execution of this

23 Act or any provision of this Act.
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1 (b) STATUTE OF LIMITATIONS.—An action described

2 in subsection (a) shall be commenced not later than 1 year

3 after the date of the enactment of this Act.

4 (c) CONVENING OF THREE-JUDGE COURT.—An ac5 tion described in subsection (a) shall be heard and deter6 mined by a district court of three judges in accordance

7 with section 2284 of title 28, United States Code.

8 (d) CONSOLIDATION.—When actions described in

9 subsection (a) involving a common question of law or fact

10 are pending before a district court, the court shall order

11 all the actions consolidated.

12 (e) DIRECT APPEAL TO SUPREME COURT.—In any

13 action described in subsection (a), an appeal may be taken

14 directly to the Supreme Court of the United States from

15 any final judgment, decree, or order in which the district

16 court—

17 (1) holds this Act or any provision of this Act

18 invalid; and

19 (2) makes a determination that its holding will

20 materially undermine the application of the Act as

21 whole.

22 (f) CONSTRUCTION.—This section does not limit—

23 (1) the right of any person—

24 (A) to a litigation concerning the Act or

25 any portion of the Act; or
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1 (B) to petition the Supreme Court for re2 view of any holding of a district court by writ

3 of certiorari at any time before the rendition of

4 judgment in a court of appeals; or

5 (2) the authority of the Supreme Court to grant

6 a writ of certiorari for the review described in para7 graph (1)(B).

8 SEC. 5242. TREATMENT OF PLANS AS PARTIES IN CIVIL AC9 TIONS.

10 (a) IN GENERAL.—A health plan may sue or be sued

11 under this Act as an entity. Service of summons, sub12 poena, or other legal process of a court or hearing officer

13 upon a trustee or an administrator of any such plan in

14 his capacity as such shall constitute service upon the plan.

15 In a case where a plan has not designated in applicable

16 plan documents an individual as agent for the service of

17 legal process, service upon the Secretary of Health and

18 Human Services (in the case of a regional alliance health

19 plan) or the Secretary of Labor (in the case of a corporate

20 alliance health plan) shall constitute such service. The

21 Secretary, not later than 15 days after receipt of service

22 under the preceding sentence, shall notify the adminis23 trator or any trustee of the plan of receipt of such service.

24 (b) OTHER PARTIES.—Any money judgment under

25 this Act against a plan referred to in subsection (a) shall
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1 be enforceable only against the plan as an entity and shall

2 not be enforceable against any other person unless liability

3 against such person is established in his individual capac4 ity under this Act.

5 SEC. 5243. GENERAL NONPREEMPTION OF EXISTING

6 RIGHTS AND REMEDIES.

7 Nothing in this title shall be construed to deny, im8 pair, or otherwise adversely affect a right or remedy avail9 able under law to any person on the date of the enactment

10 of this Act or thereafter, except to the extent the right

11 or remedy is inconsistent with this title.

12 TITLE VI—PREMIUM CAPS; PRE13 MIUM-BASED FINANCING;

14 AND PLAN PAYMENTS

TABLE OF CONTENTS OF TITLE

Page

Sec. 6000. General definitions ................................................................ 680

Subtitle A—Premium Caps

PART 1—REGIONAL ALLIANCE HEALTH EXPENDITURES

SUBPART A—COMPUTATION OF TARGETS AND ACCEPTED BIDS

Sec. 6001. Computation of regional alliance inflation factors ................ 682

Sec. 6002. Board determination of national per capita baseline premium target .................................................................. 688

Sec. 6003. Determination of alliance per capita premium targets ......... 693

Sec. 6004. Alliance initial bidding and negotiation process .................... 698

Sec. 6005. State financial incentives ....................................................... 702

Sec. 6006. Recommendations to eliminate regional variations in alliance targets due to variation in practice patterns; congressional consideration ................................................ 703

Sec. 6007. Reference to limitation on administrative and judicial review of certain determinations ...................................... 710
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SUBPART B—PLAN AND PROVIDER PAYMENT REDUCTIONS TO MAINTAIN

EXPENDITURES WITHIN TARGETS

Sec. 6011. Plan payment reduction ........................................................ 710

Sec. 6012. Provider payment reduction .................................................. 715

PART 2—CORPORATE ALLIANCES HEALTH EXPENDITURES

Sec. 6021. Calculation of premium equivalents ...................................... 718

Sec. 6022. Termination of corporate alliance for excess increase in expenditures ...................................................................... 719

PART 3—TREATMENT OF SINGLE-PAYER STATES

Sec. 6031. Special rules for single-payer States ..................................... 722

PART 4—TRANSITION PROVISIONS

Sec. 6041. Monitoring prices and expenditures ...................................... 722

Subtitle B—Premium-Related Financings

PART 1—FAMILY PREMIUM PAYMENTS

SUBPART A—FAMILY SHARE

Sec. 6101. Family share of premium ...................................................... 723

Sec. 6102. Amount of premium .............................................................. 726

Sec. 6103. Alliance credit ........................................................................ 728

Sec. 6104. Premium discount based on income ...................................... 728

Sec. 6105. Excess premium credit .......................................................... 740

Sec. 6106. Corporate alliance opt-in credit ............................................. 742

Sec. 6107. Family collection shortfall add-on ......................................... 743

SUBPART B—REPAYMENT OF ALLIANCE CREDIT BY CERTAIN FAMILIES

Sec. 6111. Repayment of alliance credit by certain families .................. 745

Sec. 6112. No liability for families employed full-time; reduction in liability for part-time employment .................................. 746

Sec. 6113. Limitation of liability based on income ................................. 749

Sec. 6114. Special treatment of certain retirees and qualified spouses

and children .................................................................. 753

Sec. 6115. Special treatment of certain medicare beneficiaries .............. 756

PART 2—EMPLOYER PREMIUM PAYMENTS

SUBPART A—REGIONAL ALLIANCE EMPLOYERS

Sec. 6121. Employer premium payment required ................................... 756

Sec. 6122. Computation of base employment monthly premium ............ 761

Sec. 6123. Premium discount for certain employers .............................. 768

Sec. 6124. Payment adjustment for large employers electing coverage

in a regional alliance ..................................................... 773

Sec. 6125. Employer collection shortfall add-on ..................................... 779

Sec. 6126. Application to self-employed individuals ............................... 779

SUBPART B—CORPORATE ALLIANCE EMPLOYERS

Sec. 6131. Employer premium payment required ................................... 782
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Subtitle C—Payments to Regional Alliance Health Plans

Sec. 6201. Computation of blended plan per capita payment amount ... 784

Sec. 6202. Computation of plan bid, AFDC, and SSI proportions ........ 786

1 SEC. 6000. GENERAL DEFINITIONS.

2 (a) DEFINITIONS RELATING TO BIDS.—In this title:

3 (1) ACCEPTED BID.—The term ‘‘accepted bid’’

4 means the bid which is agreed to between a regional

5 alliance health plan and a regional alliance for cov6 erage of the comprehensive benefit package in the

7 alliance area under subpart A of part 1.

8 (2) FINAL ACCEPTED BID.—The term ‘‘final ac9 cepted bid’’ means the accepted bid, taking into ac10 count any voluntary reduction in such bid made

11 under section 6004(e).

12 (3) WEIGHTED AVERAGE ACCEPTED BID.—The

13 term ‘‘weighted average accepted bid’’ means, for a

14 regional alliance for a year, the average of the ac15 cepted bids for all regional alliance health plans of16 fered by such alliance, weighted to reflect the rel17 ative enrollment of regional alliance eligible individ18 uals among such plans.

19 (4) REDUCED WEIGHTED AVERAGE ACCEPTED

20 BID.—The term ‘‘reduced weighted average accepted

21 bid’’, for a health plan offered by a regional alliance

22 for a year, is the lesser of—
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1 (A) the weighted average accepted bid for

2 the regional alliance for the year (determined

3 using the final accepted bids as the accepted

4 bids), or

5 (B) the regional alliance per capita target

6 for the year.

7 (b) WEIGHTED AVERAGE PREMIUM.—In this title,

8 the term ‘‘weighted average premium’’ means, for a class

9 of family enrollment and with respect to a regional alliance

10 for a year, the product of—

11 (1) reduced weighted average accepted bid (as

12 defined in subsection (a)(4));

13 (2) the uniform per capita conversion factor

14 (established under section 1341(b)) for the alliance;

15 and

16 (3) the premium class factor established by the

17 Board for that class under section 1531.

18 (c) INCORPORATION OF OTHER DEFINITIONS.—Ex19 cept as otherwise provided in this title, the definitions of

20 terms in subtitle J of title I of this Act shall apply to

21 this title.
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1 Subtitle A—Premium Caps

2 PART 1—REGIONAL ALLIANCE HEALTH

3 EXPENDITURES

4 Subpart A—Computation of Targets and Accepted

5 Bids

6 SEC. 6001. COMPUTATION OF REGIONAL ALLIANCE INFLA7 TION FACTORS.

8 (a) COMPUTATION.—

9 (1) IN GENERAL.—This section provides for the

10 computation of factors that limit the growth of pre11 miums for the comprehensive benefit package in re12 gional alliance health plans. The Board shall com13 pute and publish, not later than March 1 of each

14 year (beginning with 1995) the regional alliance in15 flation factor (as defined in paragraph (2)) for each

16 regional alliance for the following year.

17 (2) REGIONAL ALLIANCE INFLATION FACTOR.—

18 In this part, the term ‘‘regional alliance inflation

19 factor’’ means, for a year for a regional alliance—

20 (A) the general health care inflation factor

21 for the year (as defined in paragraph (3));

22 (B) adjusted under subsection (c) (to take

23 into account material changes in the demo24 graphic and socio-economic characteristics of

25 the population of alliance eligible individuals);
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1 (C) decreased by the percentage adjust2 ment (if any) provided with respect to the re3 gional alliance under subsection (d) (relating to

4 adjustment for previous excess expenditures);

5 and

6 (D) in the case of the year 2001, increased

7 by a factor that the Board determines to reflect

8 the ratio of (i) the actuarial value of the in9 crease in benefits provided in that year under

10 the comprehensive benefit package to (ii) the

11 actuarial value of the benefits that would have

12 been in such package in the year without regard

13 to the increase.

14 For purposes of subparagraph (D)(i), the actuarial

15 value of the increase with respect to mental illness

16 and substance abuse services (included within the

17 comprehensive benefit package) shall not exceed an

18 actuarial value based on the amount of the total ex19 penditures that would have been made in 2001 by

20 States and subdivisions of States for mental illness

21 and substance abuse services (included in such pack22 age as of 2001) if this Act had not been enacted.

23 (3) GENERAL HEALTH CARE INFLATION FAC24 TOR.—
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1 (A) 1996 THROUGH 2000.—In this part,

2 the term ‘‘general health care inflation factor’’,

3 for a year, means the percentage increase in the

4 CPI (as specified under subsection (b)) for the

5 year plus the following:

6 (i) For 1996, 1.5 percentage points.

7 (ii) For 1997, 1.0 percentage points.

8 (iii) For 1998, 0.5 percentage points.

9 (iv) For 1999 and for 2000, 0 per10 centage points.

11 (B) YEARS AFTER 2000.—

12 (i) RECOMMENDATION TO CON13 GRESS.—In 1999, the Board shall submit

14 to Congress recommendations on what the

15 general health care inflation factor should

16 be for years beginning with 2001.

17 (ii) FAILURE OF CONGRESS TO ACT.—

18 If the Congress fails to enact a law specify19 ing the general health care inflation factor

20 for a year after 2000, the Board, in Janu21 ary of the year before the year involved,

22 shall compute such factor for the year in23 volved. Such factor shall be the product of

24 the factors described in subparagraph (C)

25 for that fiscal year, minus 1.
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1 (C) FACTORS.—The factors described in

2 this subparagraph for a year are the following:

3 (i) CPI.—1 plus the percentage

4 change in the CPI for the year, determined

5 based upon the percentage change in the

6 average of the CPI for the 12-month pe7 riod ending with August 31 of the previous

8 fiscal year over such average for the pre9 ceding 12-month period.

10 (ii) REAL GDP PER CAPITA.—1 plus

11 the average annual percentage change in

12 the real, per capita gross domestic product

13 of the United States during the 3-year pe14 riod ending in the preceding calendar year,

15 determined by the Board based on data

16 supplied by the Department of Commerce.

17 (b) PROJECTION OF INCREASE IN CPI.—

18 (1) IN GENERAL.—For purposes of this section,

19 the Board shall specify, as of the time of publica20 tion, the annual percentage increase in the CPI (as

21 defined in section 1902(9)) for the following year.

22 (2) DATA TO BE USED.—Such increase shall be

23 the projection of the CPI contained in the budget of

24 the United States transmitted by the President to

25 the Congress in the year.
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1 (c) SPECIAL ADJUSTMENT FOR MATERIAL CHANGES

2 IN DEMOGRAPHIC CHARACTERISTICS OF POPULATION.—

3 (1) ADJUSTMENT FOR CORPORATE ALLIANCE

4 OPT-IN.—

5 (A) IN GENERAL.—The Board shall de6 velop a method for adjusting the regional alli7 ance inflation factor for each regional alliance

8 in order to reflect material changes in the de9 mographic characteristics of regional alliance el10 igible individuals residing in the alliance area

11 (in comparison with such characteristics for the

12 previous year) as a result of one or more cor13 porate alliances terminating an election under

14 section 1313.

15 (B) BASIS FOR ADJUSTMENTS.—Adjust16 ments under this paragraph (whether an in17 crease or decrease) shall be based on the char18 acteristics and factors used for making adjust19 ments in payments under section 6124.

20 (2) ADJUSTMENT FOR REGIONAL TREND COM21 PARED TO NATIONAL TREND.—

22 (A) IN GENERAL.—The Board shall de23 velop a method for adjusting the regional alli24 ance inflator factor for each regional alliance in

25 order to reflect material changes in the demo-
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1 graphic characteristics (including at least age,

2 gender, and socio-economic status) and health

3 status of regional alliance eligible individuals re4 siding in the alliance area in comparison with

5 the average change in such characteristics for

6 such individuals residing in the United States.

7 The adjustment under this paragraph shall be

8 for changes not taken into account in the ad9 justment under paragraph (1).

10 (B) NEUTRAL ADJUSTMENT.—Such meth11 od (and any annual adjustment under this

12 paragraph) shall be designed to result in the

13 adjustment effected under this paragraph for a

14 year not changing the weighted average of the

15 regional alliance inflation factors.

16 (3) APPLICATION.—The Board shall provide, on

17 an annual basis, for an adjustment of regional alli18 ance inflation factors under this subsection using

19 such methods.

20 (d) CONSULTATION PROCESS.—The Board shall have

21 a process for consulting with representatives of States and

22 regional alliances before establishing the regional alliance

23 inflation factors for each year under this section.
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1 SEC. 6002. BOARD DETERMINATION OF NATIONAL PER CAP2 ITA BASELINE PREMIUM TARGET.

3 (a) IN GENERAL.—Not later than January 1, 1995,

4 the Board shall determine a national per capita baseline

5 premium target. Such target is equal to—

6 (1) the national average per capita current cov7 erage health expenditures (determined under sub8 section (b)),

9 (2) updated under subsection (c).

10 (b) DETERMINATION OF NATIONAL AVERAGE PER

11 CAPITA CURRENT COVERAGE HEALTH EXPENDITURES.—

12 (1) IN GENERAL.—The Board shall determine

13 the national average per capita current coverage

14 health expenditures equal to—

15 (A) total covered current health care ex16 penditures (described in paragraph (2)), divided

17 by

18 (B) the estimated population in the United

19 States of regional alliance eligible individuals

20 (as determined by the Board as of 1993 under

21 paragraph (4)) for whom such expenditures

22 were determined.

23 The population under subparagraph (B) shall not in24 clude SSI recipients or AFDC recipients.

25 (2) CURRENT HEALTH CARE EXPENDITURES.—

26 For purposes of paragraph (1)(A), the Board shall
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1 determine current health care expenditures as fol2 lows:

3 (A) DETERMINATION OF TOTAL EXPENDI4 TURES.—The Board shall first determine the

5 amount of total payments made for items and

6 services included in the comprehensive benefit

7 package (determined without regard to cost

8 sharing) in the United States in 1993.

9 (B) REMOVAL OF CERTAIN EXPENDITURES

10 NOT TO BE COVERED THROUGH REGIONAL AL11 LIANCES.—The amount so determined shall be

12 decreased by the proportion of such amount

13 that is attributable to any of the following:

14 (i) Medicare beneficiaries (other than

15 such beneficiaries who are regional alliance

16 eligible individuals).

17 (ii) AFDC recipients or SSI recipi18 ents.

19 (iii) Expenditures which are paid for

20 through workers’ compensation or auto21 mobile or other liability insurance.

22 (iv) Expenditures by parties (includ23 ing the Federal Government) that the

24 Board determines will not be payable by

25 regional alliance health plans for coverage
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1 of the comprehensive benefit package

2 under this Act.

3 (C) ADDITION OF PROJECTED EXPENDI4 TURES FOR UNINSURED AND UNDERINSURED

5 INDIVIDUALS.—The amount so determined and

6 adjusted shall be increased to take into account

7 increased utilization of, and expenditures for,

8 items and services covered under the com9 prehensive benefit package likely to occur, as a

10 result of coverage under a regional alliance

11 health plan of individuals who, as of 1993 were

12 uninsured or underinsured with respect to the

13 comprehensive benefit package. In making such

14 determination, such expenditures shall be based

15 on the estimated average cost for such services

16 in 1993 (and not on private payment rates es17 tablished for such services). In making such de18 termination, the estimated amount of uncom19 pensated care in 1993 shall be removed and will

20 not include adjustments to offset payments

21 below costs by public programs.

22 (D) ADDITION OF HEALTH PLAN AND AL23 LIANCE COSTS OF ADMINISTRATION.—The

24 amount so determined and adjusted shall be in25 creased by an estimated percentage (determined
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1 by the Board, but no more than 15 percent)

2 that reflects the proportion of premiums that

3 are required for health plan and regional alli4 ance administration (including regional alliance

5 costs for administration of income-related pre6 mium discounts and cost sharing reductions)

7 and for State premium taxes (which taxes shall

8 be limited to such amounts in 1993 as are at9 tributable to the health benefits to be included

10 in the comprehensive benefit package).

11 (E) DECREASE FOR COST SHARING.—The

12 amount so determined and adjusted shall be de13 creased by a percentage that reflects (i) the es14 timated average percentage of total amounts

15 payable for items and services covered under

16 the comprehensive benefit package that will be

17 payments in the form of cost sharing under a

18 higher cost sharing plan, and (ii) the percent19 age reduction in utilization estimated to result

20 from the application of high cost sharing.

21 (3) SPECIAL RULES.—

22 (A) BENEFITS USED.—The determinations

23 under this section shall be based on the com24 prehensive benefit package as in effect in 1996.
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1 (B) ASSUMING NO CHANGE IN EXPENDI2 TURE PATTERN.—The determination under

3 paragraph (2) shall be made without regard to

4 any change in the pattern of expenditures that

5 may result from the enrollment of AFDC recipi6 ents and SSI recipients in regional alliance

7 health plans.

8 (4) ELIGIBLE INDIVIDUALS.—In this sub9 section, the determination of who are regional alli10 ance eligible individuals under this subsection shall

11 be made as though this Act was fully in effect in

12 each State as of 1993.

13 (c) UPDATING.—

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

15 the Board shall update the amount determined

16 under subsection (b)(1) for each of 1994 and 1995

17 by the appropriate update factor described in para18 graph (2) for the year.

19 (2) APPROPRIATE UPDATE FACTOR.—In para20 graph (1), the appropriate update factor for a year

21 is 1 plus the annual percentage increase for the year

22 (as determined by the Secretary, based on actual or

23 projected information) in private sector health care

24 spending for items and services included in the com25 prehensive benefit package (as of 1996).
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1 (3) LIMIT.—The total, cumulative update under

2 this subsection shall not exceed 15 percent.

3 SEC. 6003. DETERMINATION OF ALLIANCE PER CAPITA

4 PREMIUM TARGETS.

5 (a) INITIAL DETERMINATION.—Not later than Janu6 ary 1, 1995, the Board shall determine, for each regional

7 alliance for 1996, a regional alliance per capita premium

8 target. Such target shall equal—

9 (1) the national per capita baseline premium

10 target (determined by the Board under section

11 6002),

12 (2) updated by the regional alliance inflation

13 factor (as determined under section 6001(a)(2)) for

14 1996, and

15 (3) adjusted by the adjustment factor for the

16 regional alliance (determined under subsection (c)).

17 (b) SUBSEQUENT DETERMINATIONS.—

18 (1) DETERMINATION.—Not later than March 1

19 of each year (beginning with 1996) the Board shall

20 determine, for each regional alliance for the succeed21 ing year a regional alliance per capita premium tar22 get.

23 (2) GENERAL RULE.—Subject to subsection (e),

24 such target shall equal—
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1 (A) the regional alliance per capita target

2 determined under this section (without regard

3 to subsection (e)) for the regional alliance for

4 the previous year,

5 (B) updated by the regional alliance infla6 tion factor (as determined in section 6001(a))

7 for the year.

8 (3) ADJUSTMENT FOR PREVIOUS EXCESS RATE

9 OF INCREASE IN EXPENDITURES.—Such target for a

10 year is subject to a decrease under section 6001(d).

11 (c) ADJUSTMENT FACTORS FOR REGIONAL ALLI12 ANCES FOR INITIAL DETERMINATION.—

13 (1) IN GENERAL.—The Board shall establish an

14 adjustment factor for each regional alliance in a

15 manner consistent with this subsection.

16 (2) CONSIDERATIONS.—In establishing the fac17 tor for each regional alliance, the Board shall con18 sider, using information of the type described in

19 paragraph (3), the difference between the national

20 average of the factors taken into account in deter21 mining the national per capita baseline premium tar22 get and such factors for the regional alliance, includ23 ing variations in health care expenditures and in

24 rates of uninsurance and underinsurance in the dif25 ferent alliance areas and including variations in the
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1 proportion of expenditures for services provided by

2 academic health centers in the different alliance

3 areas.

4 (3) TYPE OF INFORMATION.—The type of infor5 mation described in this paragraph is—

6 (A) information on variations in premiums

7 across States and across alliance areas within a

8 State (based on surveys and other data);

9 (B) information on variations in per capita

10 health spending by State, as measured by the

11 Secretary;

12 (C) information on variations across States

13 in per capita spending under the medicare pro14 gram and in such spending among alliance

15 areas within a State under such program; and

16 (D) area rating factors commonly used by

17 actuaries.

18 (4) APPLICATION OF FACTORS IN NEUTRAL

19 MANNER.—The application of the adjustment factors

20 under this subsection for 1996 shall be done in a

21 manner so that the weighted average of the regional

22 alliance per capita premium targets for 1996 is

23 equal to the national per capita baseline premium

24 target determined under section 6002. Such weight25 ed average shall be based on the Board’s estimate of
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1 the expected distribution of alliance eligible individ2 uals (taken into account under section 6002) among

3 the regional alliances.

4 (5) CONSULTATION PROCESS.—The Board shall

5 have a process for consulting with representatives of

6 States and regional alliances before establishing the

7 adjustment for regional alliances under this sub8 section.

9 (d) TREATMENT OF CERTAIN STATES.—

10 (1) NON-ALLIANCE STATES.—In the case of a

11 State that is not a participating State or otherwise

12 has not established regional alliances, the entire

13 State shall be treated under the provisions of this

14 part as composing a single regional alliance.

15 (2) CHANGES IN ALLIANCE BOUNDARIES.—In

16 the case of a State that changes the boundaries of

17 its regional alliances (including the establishment of

18 such alliances after 1996), the Board shall provide

19 a method for computing a regional alliance per cap20 ita premium target for each regional alliance af21 fected by such change in a manner that—

22 (A) reflects the factors taken into account

23 in establishing the adjustment factors for re24 gional alliances under subsection (c), and
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•S 1779 PCS

1 (B) results in the weighted average of the

2 newly computed regional targets for the re3 gional alliances affected by the change equal to

4 the weighted average of the regional targets for

5 the regional alliances as previously established.

6 (e) ADJUSTMENT FOR PREVIOUS EXCESS RATE OF

7 INCREASE IN EXPENDITURES.—

8 (1) IN GENERAL.—If the actual weighted aver9 age accepted bid for a regional alliance for a year

10 (as determined by the Board based on actual enroll11 ment in the first month of the year) exceeds the re12 gional alliance per capita premium target (deter13 mined under this section) for the year, then the re14 gional alliance per capita premium target shall be

reduced, by 1 15 ⁄2 of the excess percentage (described in

16 paragraph (2)) for the year, for each of the 2 suc17 ceeding years.0

18 (2) EXCESS PERCENTAGE.—The excess percent19 age described in this paragraph for a year is the per20 centage by which—

21 (A) the actual weighted average accepted

22 bid (referred to in paragraph (1)) for a regional

23 alliance for the year, exceeds
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1 (B) the regional alliance per capita pre2 mium target (determined under this section) for

3 the year.

4 SEC. 6004. ALLIANCE INITIAL BIDDING AND NEGOTIATION

5 PROCESS.

6 (a) BIDDING PROCESS.—

7 (1) OBTAINING BIDS.—

8 (A) IN GENERAL.—Not later than July 1

9 before the first year, and not later than August

10 1 of each succeeding year, the regional alliance

11 shall have obtained premium bids from each

12 plan seeking to participate as a regional alli13 ance health plan with respect to the alliance in

14 the following year.

15 (B) DISCLOSURE.—In obtaining such bids,

16 a regional alliance may determine to disclose

17 (or not to disclose) the regional alliance per

18 capita premium target for the regional alliance

19 (determined under section 6003) for the year

20 involved.

21 (C) CONDITION.—Each bid submitted by a

22 plan under this subsection shall be conditioned

23 upon the plan’s agreement to accept any pay24 ment reduction that may be imposed under sec25 tion 6011.
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1 (2) NEGOTIATION PROCESS.—Following the

2 bidding process under paragraph (1), a State may

3 provide for negotiations with health plans relating to

4 the premiums to be charged by such plans. Such ne5 gotiations may result in the resubmission of bids,

6 but in no case shall a health plan resubmit a bid

7 that exceeds its prior bid.

8 (3) LEGALLY BINDING BIDS.—All bids submit9 ted under this subsection must be legally binding

10 with respect to the plans involved.

11 (4) ACCEPTANCE.—The final bid submitted by

12 a plan under this subsection shall be considered to

13 be the final accepted bid, except as provided in sub14 section (e).

15 (5) ASSISTANCE.—The Board shall provide re16 gional alliances with such information and technical

17 assistance as may assist such alliances in the bid18 ding process under this subsection.

19 (b) SUBMISSION OF INFORMATION TO BOARD.—By

20 not later than September 1 of each year for which bids

21 are obtained under subsection (a), each regional alliance

22 shall submit to the Board a report that discloses—

23 (1) information regarding the final bids ob24 tained under subsection (a) by the different plans;
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1 (2)(A) for the first year, any information the

2 Board may request concerning an estimation of the

3 enrollment likely in each such plan of alliance eligi4 ble individuals who will be offered enrollment in a

5 health plan by alliance in the first year, or

6 (B) for a succeeding year, the actual distribu7 tion of enrollment of alliance eligible individuals in

8 regional alliance health plans in the year in which

9 the report is transmitted; and

10 (3) limitations on capacity of regional alliance

11 health plans.

12 (c) COMPUTATION OF WEIGHTED AVERAGE ACCEPT13 ED BID.—

14 (1) IN GENERAL.—For each regional alliance

15 the Board shall determine a weighted average ac16 cepted bid for each year for which bids are obtained

17 under subsection (a). Such determination shall be

18 based on information on accepted bids for the year,

19 submitted under subsection (b)(1), and shall take

20 into account, subject to paragraph (2), the informa21 tion on enrollment distribution submitted under sub22 section (b)(2).

23 (2) ENROLLMENT DISTRIBUTION RULES.—In

24 making the determination under paragraph (1) for a

25 regional alliance, the Board shall establish rules re-
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1 specting the treatment of enrollment in plans that

2 are discontinued or are newly offered.

3 (d) NOTICE TO CERTAIN ALLIANCES.—

4 (1) IN GENERAL.—By not later than October 1

5 of each year for which bids are obtained, the Board

6 shall notify a regional alliance—

7 (A) if the weighted average accepted bid

8 (determined under subsection (c)) for the alli9 ance is greater than the regional alliance per

10 capita premium target for the alliance (deter11 mined under section 6003) for the year, and

12 (B) of the reduced weighted average ac13 cepted bid for the alliance.

14 (2) NOTICE OF PREMIUM REDUCTIONS.—If no15 tice is provided to a regional alliance under para16 graph (1), the Board shall notify the regional alli17 ance and each noncomplying plan of any plan pay18 ment reduction computed under section 6011 for

19 such a plan and the opportunity to voluntarily re20 duce the accepted bid under subsection (e) in order

21 to avoid such a reduction.

22 (e) VOLUNTARY REDUCTION OF ACCEPTED BID

23 (FINAL ACCEPTED BID).—After the Board has deter24 mined under subsection (c) the weighted average accepted

25 bid for a regional alliance and the Board has determined
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1 plan payment reductions, before such date as the Board

2 may specify (in order to provide for an open enrollment

3 period), a noncomplying plan has the opportunity to volun4 tarily reduce its accepted bid by the amount of the plan

5 payment reduction that would otherwise apply to the plan.

6 Such reduction shall not affect the amount of the plan

7 payment reduction for any other plan for that year.

8 SEC. 6005. STATE FINANCIAL INCENTIVES.

9 (a) ELECTION.—Any participating State may elect to

10 assume responsibility for containment of health care ex11 penditures in the State consistent with this part. Such re12 sponsibility shall include submitting annual reports to the

13 Board on any activities undertaken by the State to contain

14 such expenditures. A participating State may regulate the

15 rates charged by providers furnishing health care items

16 and services to all private payers. Such regulation of rates

17 may not cause a corporate alliance health plan to be

18 charged, directly or indirectly, rates different from those

19 charged other health plans for the same items and services

20 or otherwise discriminate against corporate alliance health

21 plans.

22 (b) FINANCIAL INCENTIVE.—In the case of a State

23 that has made an election under subsection (a), if the

24 Board determines for a particular year (beginning with

25 the first year) that the statewide weighted average of the
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1 reduced weighted average accepted bids (based on actual

2 average enrollment for the year), for regional alliances in

3 the State, is less than the statewide weighted average of

4 the regional alliance per capita premium targets (based

5 upon such enrollment) for such alliances for the year, then

6 the amount of the State maintenance-of-effort payment

7 under section 9001(b), for the following year, shall be reduced by 1 8 ⁄2 of the product of—

9 (1)(A) the amount by which the amount of such

10 statewide average target exceeds the amount of such

11 statewide average accepted bid, divided by (B) the

12 amount of such target; and

13 (2) the total of the amount of the Federal pay14 ments made in that particular year to regional alli15 ances in the State under subtitle B of title IX.

16 SEC. 6006. RECOMMENDATIONS TO ELIMINATE REGIONAL

17 VARIATIONS IN ALLIANCE TARGETS DUE TO

18 VARIATION IN PRACTICE PATTERNS; CON19 GRESSIONAL CONSIDERATION.

20 (a) ESTABLISHMENT OF ADVISORY COMMISSION ON

21 REGIONAL VARIATIONS IN HEALTH EXPENDITURES.—

22 The chair of the Board shall establish, by not later than

23 60 days after the date of appointment of the first chair,

24 an advisory commission on regional variations in health

25 expenditures.
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1 (b) COMPOSITION.—The advisory commission shall

2 be composed of consumers, employers, providers, rep3 resentatives of health plans, States, regional alliances, in4 dividuals with expertise in the financing of health care,

5 individuals with expertise in the economics of health care,

6 and representatives of diverse geographic areas.

7 (c) ELIMINATION OF REGIONAL VARIATION IN PRE8 MIUMS DUE TO PRACTICE PATTERN.—

9 (1) COMMISSION STUDY.—The advisory com10 mission shall examine methods of eliminating vari11 ation in regional alliance per capita premium targets

12 due to variation in practice patterns, not due to

13 other factors (such as health care input prices and

14 demographic factors), by 2002.

15 (2) COMMISSION REPORT.—The advisory com16 mission shall submit to the Board a report that

17 specifies one or more methods for eliminating the

18 variation described in paragraph (1).

19 (3) BOARD RECOMMENDATIONS.—The Board

20 shall submit to Congress, by not later July 1, 1995,

21 detailed recommendations respecting the specific

22 method to be used to eliminate the variation de23 scribed in paragraph (1) by 2002. Such rec24 ommendations may take into account regional vari25 ations in demographic or health status and in health
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1 care input prices, based on the availability of accu2 rate proxies for measuring price variation. In taking

3 into account health care input prices, the Board

4 shall explain what percentage of variation found

5 should be adjusted and what percentage of the pre6 mium should be adjusted.

7 (d) CONGRESSIONAL CONSIDERATION.—

8 (1) IN GENERAL.—Detailed recommendations

9 submitted under subsection (c)(3) shall apply under

10 this subtitle unless a joint resolution (described in

11 paragraph (2)) disapproving such recommendations

12 is enacted, in accordance with the provisions of

13 paragraph (3), before the end of the 60-day period

14 beginning on the date on which such recommenda15 tions were submitted. For purposes of applying the

16 preceding sentence and paragraphs (2) and (3), the

17 days on which either House of Congress is not in

18 session because of an adjournment of more than

19 three days to a day certain shall be excluded in the

20 computation of a period.

21 (2) JOINT RESOLUTION OF DISAPPROVAL.—A

22 joint resolution described in this paragraph means

23 only a joint resolution which is introduced within the

24 10-day period beginning on the date on which the
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1 Board submits recommendations under subsection

2 (e)(3) and—

3 (A) which does not have a preamble;

4 (B) the matter after the resolving clause of

5 which is as follows: ‘‘That Congress disapproves

6 the recommendations of the National Health

7 Board concerning elimination of regional vari8 ation in regional alliance premiums, as submit9 ted by the Board on lllllll.’’, the

10 blank space being filled in with the appropriate

11 date; and

12 (C) the title of which is as follows: ‘‘Joint

13 resolution disapproving recommendations of the

14 National Health Board concerning elimination

15 of regional variation in regional alliance pre16 miums, as submitted by the Board on

17 lllllll.’’, the blank space being filled

18 in with the appropriate date.

19 (3) PROCEDURES FOR CONSIDERATION OF RES20 OLUTION OF DISAPPROVAL.—Subject to paragraph

21 (4), the provisions of section 2908 (other than sub22 section (a)) of the Defense Base Closure and Re23 alignment Act of 1990 shall apply to the consider24 ation of a joint resolution described in paragraph (2)

25 in the same manner as such provisions apply to a
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1 joint resolution described in section 2908(a) of such

2 Act.

3 (4) SPECIAL RULES.—For purposes of applying

4 paragraph (3) with respect to such provisions—

5 (A) any reference to the Committee on

6 Armed Services of the House of Representatives

7 shall be deemed a reference to an appropriate

8 Committee of the House of Representatives

9 (specified by the Speaker of the House of Rep10 resentatives at the time of submission of rec11 ommendations under subsection (c)(3)) and any

12 reference to the Committee on Armed Services

13 of the Senate shall be deemed a reference to an

14 appropriate Committee of the Senate (specified

15 by the Majority Leader of the Senate at the

16 time of submission of recommendations under

17 subsection (c)(3)); and

18 (B) any reference to the date on which the

19 President transmits a report shall be deemed a

20 reference to the date on which the Board sub21 mits a recommendation under subsection (c)(3).

22 (e) ELIMINATION OF REGIONAL VARIATION STATE

23 PAYMENT AMOUNTS.—

24 (1) COMMISSION STUDY.—The advisory com25 mission shall examine methods of reducing variation
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1 among States in the level of payments required

2 under subtitle A of title IX by 2002. The commis3 sion shall examine methods of reducing variation due

4 to practice patterns, historical differences in the

5 rates of reimbursement to providers, and in the

6 amount, duration, and scope of benefits covered

7 under State medicaid plans.

8 (2) COMMISSION REPORT.—The advisory com9 mission shall submit to the Board a report that

10 specifies one or more methods for reducing the vari11 ation described in paragraph (1).

12 (3) BOARD RECOMMENDATIONS.—The Board

13 shall submit to Congress, by not later than July 1,

14 1995, detailed recommendations respecting the spe15 cific method to be used to reduce the variation de16 scribed in paragraph (1) by 2002 in a budget neu17 tral manner with respect to total government pay18 ments and payments by the Federal Government. In

19 submitting recommendations under this paragraph,

20 the Board shall consider the fiscal capacity of the

21 States.

22 (4) CONGRESSIONAL CONSIDERATION.—

23 (A) IN GENERAL.—Subject to the succeed24 ing provisions of this paragraph, the provisions

25 of subsection (d) shall apply to recommenda-
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1 tions under paragraph (3) in the same manner

2 as they apply to recommendations under sub3 section (c)(3).

4 (B) SPECIAL RULES.—In applying sub5 paragraph (A)—

6 (i) the following shall be substituted

7 for the matter after the resolving clause

8 described in subsection (d)(2)(B): ‘‘That

9 Congress disapproves the recommendations

10 of the National Health Board concerning

11 reduction of regional variation in State

12 payments, as submitted by the Board on

13 lllllll.’’; and

14 (ii) the following shall be substituted

15 for the title described in subsection

16 (d)(2)(C): ‘‘Joint resolution disapproving

17 recommendations of the National Health

18 Board concerning reducing regional vari19 ation in State payments, as submitted by

20 the Board on lllllll.’’.

21 (f) INFORMATION.—The advisory commission shall

22 provide the Board, States, and regional alliances with in23 formation about regional differences in health care costs

24 and practice patterns.
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1 SEC. 6007. REFERENCE TO LIMITATION ON ADMINISTRA2 TIVE AND JUDICIAL REVIEW OF CERTAIN DE3 TERMINATIONS.

4 For limitation on administrative and judicial review

5 of certain determinations under this part, see section

6 5232.

7 Subpart B—Plan and Provider Payment Reductions

8 to Maintain Expenditures within Targets

9 SEC. 6011. PLAN PAYMENT REDUCTION.

10 (a) PLAN PAYMENT REDUCTION.—In order to assure

11 that payments to regional alliance health plans by a re12 gional alliance are consistent with the applicable regional

13 alliance per capita target for the alliance (computed under

14 this subtitle), each noncomplying plan (as defined in sub15 section (b)(2)) for a year is subject to a reduction in plan

16 payment (under section 1351) by the amount equal to

17 plan payment reduction specified in subsection (c) for the

18 year.

19 (b) NONCOMPLYING ALLIANCE AND NONCOMPLYING

20 PLAN DEFINED.—In this part:

21 (1) NONCOMPLYING ALLIANCE.—The term

22 ‘‘noncomplying alliance’’ means, for a year, a re23 gional alliance for which the weighted average ac24 cepted bid (computed under section 6004(c)) exceeds

25 the regional alliance per capita premium target for

26 the year.
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1 (2) NONCOMPLYING PLAN.—The term ‘‘non2 complying plan’’ means, for a year, a regional alli3 ance health plan offered through a noncomplying al4 liance if the final accepted bid for the year exceeds

5 the maximum complying bid (as defined in sub6 section (d)) for the year. No plan shall be a non7 complying plan for a year before the first year in

8 which the plan is offered by a regional alliance.

9 (c) AMOUNT OF PLAN PAYMENT REDUCTION.—

10 (1) IN GENERAL.—The amount of the plan pay11 ment reduction, for a noncomplying plan offered by

12 an alliance, is the alliance-wide reduction percentage

13 (as defined in paragraph (2)) of the excess bid

14 amount (as defined in paragraph (3)) for the plan.

15 (2) ALLIANCE-WIDE REDUCTION PERCENT16 AGE.—

17 (A) IN GENERAL.—In paragraph (1), the

18 term ‘‘alliance-wide reduction percentage’’

19 means, for a noncomplying plan offered by an

20 alliance for a year—

21 (i) the amount by which (I) the

22 weighted average accepted bid (computed

23 under section 6004(c)(1)) for the alliance

24 for the year, exceeds (II) the regional alli-
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1 ance per capita target for the alliance for

2 the year; divided by

3 (ii) the sum, for noncomplying plans

4 offered by the alliance, of the plan propor5 tions of alliance excess bid amounts (de6 scribed in subparagraph (B)(i)) for the

7 year.

8 (B) PLAN PROPORTION OF ALLIANCE EX9 CESS BID AMOUNT DESCRIBED.—

10 (i) IN GENERAL.—The ‘‘plan propor11 tion of alliance excess bid amount’’ de12 scribed in this clause, for a noncomplying

13 plan, is the product of—

14 (I) the excess bid amount (as de15 fined in paragraph (3)) for the plan,

16 and

17 (II) the plan enrollment propor18 tion (as defined in clause (ii)) for the

19 plan.

20 (ii) PLAN ENROLLMENT PROPOR21 TION.—In clause (i)(II), the term ‘‘plan

22 enrollment proportion’’ means, with respect

23 to a health plan offered by a regional alli24 ance, the total enrollment of alliance eligi25 ble individuals enrolled in such plan ex-
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1 pressed as a percentage of the total enroll2 ment of alliance eligible individuals in all

3 regional alliance plans offered by the alli4 ance. Such proportion shall be computed

5 based on the information used in comput6 ing the weighted average accepted bid for

7 the alliance under section 6004(c)(1).

8 (3) EXCESS BID AMOUNT.—In this subsection,

9 the ‘‘excess bid amount’’, with respect to a non10 complying plan for a year, is the amount by which—

11 (A) the accepted bid for the year (not tak12 ing into account any voluntary reduction under

13 section 6004(e)), exceeds

14 (B) the maximum complying bid (as de15 fined in subsection (d)) for the plan for the

16 year.

17 (d) MAXIMUM COMPLYING BID.—

18 (1) FIRST YEAR.—In this part for the first

19 year, the ‘‘maximum complying bid’’ for each plan

20 offered by a regional alliance, is the regional alliance

21 per capita premium target for the alliance (deter22 mined under section 6003) for the year.

23 (2) SUBSEQUENT YEARS.—In this part, subject

24 to paragraph (3), for a subsequent year, the ‘‘maxi-
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1 mum complying bid’’, for a plan offered by an alli2 ance for a year, is the sum of the following:

3 (A) NET PREVIOUS YEAR ACCEPTED BID

4 FOR PLAN.—The accepted bid for the previous

5 year (not taking into account any voluntary re6 duction under section 6004(e)), minus the

7 amount of any plan payment reduction for the

8 plan for that year.

9 (B) ALLIANCE-WIDE INFLATION ALLOW10 ANCE.—The amount by which—

11 (i) the regional alliance per capita

12 premium target for the year, exceeds

13 (ii) such target for the previous year,

14 or, if less, the weighted average accepted

15 bid (computed under section 6004(c)(1))

16 for such year.

17 (3) SPECIAL RULES FOR NEW PLANS.—

18 (A) IN GENERAL.—Subject to subpara19 graph (B), in the case of a plan that is first of20 fered by a regional alliance in a year after the

21 first year the maximum complying bid shall be

22 the regional alliance per capita premium target

23 for the year.

24 (B) AUTHORITY.—The Board or a State

25 may establish rules to modify the application of
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1 subparagraph (A) for regional alliance health

2 plans in the State in order—

3 (i) to prevent abusive premium prac4 tices by entities previously offering plans,

5 or

6 (ii) to encourage the availability of all

7 types of plans in the State and to permit

8 establishment of new plans.

9 SEC. 6012. PROVIDER PAYMENT REDUCTION.

10 (a) PARTICIPATING PROVIDERS.—

11 (1) IN GENERAL.—Each regional alliance health

12 plan, as part of its contract under section 1406(e)

13 with any participating provider (as defined in section

14 1407(c), or group of participating providers) shall—

15 (A) include a provision that provides that

16 if the plan is a noncomplying plan for a year,

17 payments to the provider (or group) shall be re18 duced by the applicable network reduction per19 centage (described in paragraph (2)) for the

20 year, and

21 (B) not include any provision which the

22 State determines otherwise varies the payments

23 to such providers (or group) because of, or in

24 relation to, a plan payment reduction under sec-
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•S 1779 PCS

1 tion 6011 or otherwise is intended to nullify the

2 effect of subparagraph (A).

3 The Board may issue regulations relating to the re4 quirements of this paragraph.

5 (2) APPLICABLE NETWORK REDUCTION PER6 CENTAGE.—

7 (A) IN GENERAL.—Subject to subpara8 graph (B), the ‘‘applicable network reduction

9 percentage’’, with respect to participating pro10 viders of a noncomplying plan for a year is—

11 (i) the plan payment reduction

12 amount for the plan for the year (as deter13 mined under section 6011(c)), divided by

14 (ii) the final accepted bid for the plan

15 for the year,

16 adjusted under subparagraph (B).

17 (B) INDUCED VOLUME OFFSET.—The

18 Board shall provide for an appropriate increase

19 of the percentage reduction computed under

20 subparagraph (A) to take into account any esti21 mated increase in volume of services provided

22 that may reasonably be anticipated as a con23 sequence of applying a reduction in payment

24 under this subsection. The Board may compute

25 and apply such increase differently for different
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•S 1779 PCS

1 classes of providers or services or different

2 types of health plans (as the Board may de3 fine).

4 (b) OTHER PROVIDERS.—

5 (1) IN GENERAL.—Each regional alliance health

6 plan that is a noncomplying plan in a year shall pro7 vide for a reduction in the amount of payments to

8 providers (or groups of providers) that are not par9 ticipating providers under the applicable alliance fee

10 schedule under section 1406(c)(3) by the applicable

11 nonnetwork reduction percentage (described in para12 graph (2)) for the year.

13 (2) APPLICABLE NONNETWORK REDUCTION

14 PERCENTAGE.—

15 (A) IN GENERAL.—Subject to subpara16 graph (B), the ‘‘applicable nonnetwork reduc17 tion percentage’’, with respect to

18 nonparticipating providers of a noncomplying

19 plan for a year is—

20 (i) the plan payment reduction

21 amount for the plan for the year (as deter22 mined under section 6011(c)), divided by

23 (ii) the final accepted bid for the plan

24 for the year,

25 adjusted under subparagraph (B).
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•S 1779 PCS

1 (B) INDUCED VOLUME OFFSET.—The

2 Board shall provide for an appropriate increase

3 of the percentage reduction computed under

4 subparagraph (A) to take into account any esti5 mated increase in volume of services provided

6 that may reasonably be anticipated as a con7 sequence of applying a reduction in payment

8 under this subsection. The Board may compute

9 and apply such increase differently for different

10 classes of providers or services or different

11 types of health plans (as the Board may de12 fine).

13 (c) APPLICATION TO COST SHARING AND TO BAL14 ANCE BILLING RESTRICTIONS.—For purposes of applying

15 section 1406(d) (relating to balance billing limitations)

16 and part 3 of subtitle B of title I (relating to computation

17 of cost sharing), the payment basis otherwise used for

18 computing any limitation on billing or cost sharing shall

19 be such payment basis as adjusted by any reductions ef20 fected under this section.

21 PART 2—CORPORATE ALLIANCES HEALTH

22 EXPENDITURES

23 SEC. 6021. CALCULATION OF PREMIUM EQUIVALENTS.

24 (a) IN GENERAL.—By January 1, 1998, the Board

25 shall develop a methodology for calculating an annual per
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•S 1779 PCS

1 capita expenditure equivalent for amounts paid for cov2 erage for the comprehensive benefit package within a cor3 porate alliance.

4 (b) ADJUSTMENT PERMITTED.—Such methodology

5 shall permit a corporate alliance to petition the Secretary

6 of Labor for an adjustment of the inflation adjustment

7 that would otherwise apply to compensate for material

8 changes in the demographic characteristics of the eligible

9 individuals receiving coverage through the alliance.

10 (c) REPORTING.—In 2001 and each subsequent year,

11 each corporate alliance shall report to the Secretary of

12 Labor, in a form and manner specified by the Secretary,

13 the average of the annual per capita expenditure equiva14 lent for the previous 3-year period.

15 SEC. 6022. TERMINATION OF CORPORATE ALLIANCE FOR

16 EXCESS INCREASE IN EXPENDITURES.

17 (a) TERMINATION.—

18 (1) IN GENERAL.—If a corporate alliance has

19 two excess years (as defined in subsection (b)) in a

20 3-year-period, then, effective beginning with the sec21 ond year following the second excess year in such pe22 riod—

23 (A) the Secretary of Labor shall terminate

24 the corporate alliance, and
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•S 1779 PCS

1 (B) employers that were corporate alliance

2 employers with respect to such corporate alli3 ance shall become regional alliance employers

4 (unless, in the case of a corporate alliance with

5 a plan sponsor described in subparagraph (B)

6 or (C) of section 1311(b)(1), the employers be7 come corporate alliance employers of another

8 such corporate alliance).

9 (2) INITIAL 3-YEAR-PERIOD.—Paragraph (1)

10 shall first apply to the 3-year-period beginning with

11 1998.

12 (3) SPECIAL SUBSEQUENT TREATMENT FOR

13 LARGE EMPLOYERS.—In the case of corporate alli14 ance employers described in paragraph (1)(B) that

15 are large employers, the employer premium pay16 ments under section 6121 are subject to adjustment

17 under section 6124.

18 (4) NO FURTHER ELECTION.—If a corporate al19 liance of a large employer is terminated under this

20 subsection, no employer that is a corporate alliance

21 employer for that alliance is eligible to be a sponsor

22 of a corporate alliance.

23 (b) EXCESS YEAR.—
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•S 1779 PCS

1 (1) IN GENERAL.—In subsection (a), the term

2 ‘‘excess year’’ means, for a corporate alliance, a year

3 (after 2000) for which—

4 (A) the rate of increase for the corporate

5 alliance (specified in paragraph (2)) for the

6 year, exceeds

7 (B) the national corporate inflation factor

8 (specified in paragraph (3)) for the year.

9 (2) RATE OF INCREASE FOR CORPORATE ALLI10 ANCE.—The rate of increase for a corporate alliance

11 for a year, specified in this paragraph, is the per12 centage by which—

13 (A) the average of the annual per capita

14 expenditure equivalent for the corporate alliance

15 (reported under section 6021(c)) for the 3-year

16 period ending with such year, exceeds

17 (B) the average of the annual per capita

18 expenditure equivalent for the corporate alliance

19 (reported under such subsection) for the 3-year

20 period ending with the previous year.

21 (3) NATIONAL CORPORATE INFLATION FAC22 TOR.—The national corporate inflation factor for a

23 year, specified in this paragraph, is the average of

24 the general health care inflation factors (as defined
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•S 1779 PCS

1 in section 6001(a)(3)) for each of the 3 years ending

2 with such year.

3 PART 3—TREATMENT OF SINGLE-PAYER STATES

4 SEC. 6031. SPECIAL RULES FOR SINGLE-PAYER STATES.

5 In the case of a Statewide single-payer State, for pur6 poses of section 1222(6), the Board shall compute a State7 wide per capita premium target for each year in the same

8 manner as a regional alliance per capita premium target

9 is determined under section 6003.

10 PART 4—TRANSITION PROVISIONS

11 SEC. 6041. MONITORING PRICES AND EXPENDITURES.

12 (a) IN GENERAL.—The Secretary shall establish a

13 program to monitor prices and expenditures in the health

14 care system in the United States.

15 (b) REPORTS.—The Secretary shall periodically re16 port to the President on—

17 (1) the rate of increase in expenditures in each

18 sector of the health care system, and

19 (2) how such rates compare with rate of overall

20 increase in health care spending and rate of increase

21 in the consumer price index.

22 (c) ACCESS TO INFORMATION.—

23 (1) IN GENERAL.—The Secretary may obtain,

24 through surveys or otherwise, information on prices

25 and expenditures for health care services. The Sec-
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•S 1779 PCS

1 retary may compel health care providers and third

2 party payers to disclose such information as is nec3 essary to carry out the program under this section.

4 (2) CONFIDENTIALITY.—Non-public informa5 tion obtained under this subsection with respect to

6 individual patients is confidential.

7 (d) PERIODIC REPORTS.—The Secretary shall peri8 odically issue public reports on the matters described in

9 subsection (b).

10 Subtitle B—Premium-Related

11 Financings

12 PART 1—FAMILY PREMIUM PAYMENTS

13 Subpart A—Family Share

14 SEC. 6101. FAMILY SHARE OF PREMIUM.

15 (a) REQUIREMENT.—Each family enrolled in a re16 gional alliance health plan or in a corporate alliance health

17 plan in a class of family enrollment is responsible for pay18 ment of the family share of premium payable respecting

19 such enrollment. Such premium may be paid by an em20 ployer or other person on behalf of such a family.

21 (b) FAMILY SHARE OF PREMIUM DEFINED.—

22 (1) IN GENERAL.—In this subtitle, the term

23 ‘‘family share of premium’’ means, with respect to

24 enrollment of a family—
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•S 1779 PCS

1 (A) in a regional alliance health plan, the

2 amount specified in paragraph (2) for the class,

3 or

4 (B) in a corporate alliance health plan, the

5 amount specified in paragraph (3) for the class.

6 (2) REGIONAL ALLIANCE.—

7 (A) IN GENERAL.—The amount specified

8 in this paragraph for a health plan based on a

9 class of family enrollment is the sum of the

10 base amounts described in subparagraph (B)

11 reduced (but not below zero) by the sum of the

12 amounts described in subparagraph (C).

13 (B) BASE.—The base amounts described

14 in this subparagraph (for a plan for a class of

15 enrollment) are as follows:

16 (i) REGIONAL ALLIANCE PREMIUM.—

17 The premium specified in section 6102(a)

18 with respect to such class of enrollment.

19 (ii) FAMILY COLLECTION SHORT20 FALL.—20 percent of the family collection

21 shortfall add-on (computed under section

22 6107 for such class).

23 (C) CREDITS AND DISCOUNTS.—The

24 amounts described in this subparagraph (for a

25 plan for a class of enrollment) are as follows:
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•S 1779 PCS

1 (i) ALLIANCE CREDIT.—The amount

2 of the alliance credit under section

3 6103(a).

4 (ii) INCOME RELATED DISCOUNT.—

5 The amount of any income-related discount

6 provided under section 6104(a)(1).

7 (iii) EXCESS PREMIUM CREDIT.—The

8 amount of any excess premium credit pro9 vided under section 6105.

10 (iv) CORPORATE ALLIANCE OPT-IN

11 CREDIT.—The amount of any corporate al12 liance opt-in credit provided under section

13 6106.

14 (v) ADDITIONAL CREDIT FOR SSI AND

15 AFDC RECIPIENTS.—In the case of an SSI

16 or AFDC family or for whom the amount

17 described in clause (ii) is equal to the

18 amount described in section 6104(b)(1)(A),

19 the amount described in subparagraph

20 (B)(ii).

21 (D) LIMIT ON MISCELLANEOUS CRED22 ITS.—In no case shall the family share, due to

23 credits under subparagraph (C), be less than

24 zero.

25 (3) CORPORATE ALLIANCE.—
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•S 1779 PCS

1 (A) IN GENERAL.—The amount specified

2 in this paragraph for a health plan based on a

3 class of family enrollment is the premium de4 scribed in subparagraph (B) reduced (but not

5 below zero) by the sum of the amounts de6 scribed in subparagraph (C).

7 (B) PREMIUM.—The premium described in

8 this subparagraph (for a plan for a class of en9 rollment) is the premium specified under sec10 tion 1384 with respect to the plan and class of

11 enrollment involved.

12 (C) CREDITS AND DISCOUNTS.—The

13 amounts described in this subparagraph (for a

14 plan for a class of enrollment) are as follows:

15 (i) ALLIANCE CREDIT.—The amount

16 of the alliance credit under section

17 6103(b).

18 (ii) INCOME RELATED DISCOUNT.—

19 The amount of any income-related discount

20 provided under section 6104(a)(2).

21 SEC. 6102. AMOUNT OF PREMIUM.

22 (a) REGIONAL ALLIANCE.—The amount of the pre23 mium charged by a regional alliance for all families in a

24 class of family enrollment under a regional alliance health

25 plan offered by the alliance is equal to the product of—
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•S 1779 PCS

1 (1) the final accepted bid for the plan (as de2 fined in section 6000(a)(2)),

3 (2) the uniform per capita conversion factor

4 (specified under section 1341(b)) for the alliance,

5 and

6 (3) the premium class factor established by the

7 Board for that class under section 1531.

8 (b) REFERENCE TO CORPORATE ALLIANCE PREMIUM

9 PROVISIONS.—The amount of the premium charged by a

10 corporate alliance for all families in a class of family en11 rollment under a corporate alliance health plan offered by

12 the alliance is specified under section 1384.

13 (c) SPECIAL RULES FOR DIVIDED FAMILIES.—In the

14 case of an individual who is a qualifying employee of an

15 employer, if the individual has a spouse or child who is

16 not treated as part of the individual’s family because of

17 section 1012—

18 (1) the combined premium for both families

19 under this section shall be computed as though such

20 section had not applied if such combined premium is

21 less than the total of the premiums otherwise appli22 cable (without regard to this subsection),

23 (2) the regional alliance shall divide such com24 bined premium between the families proportionally

25 (consistent with rules established by the Board), and
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•S 1779 PCS

1 (3) in such case, credits and other amounts

2 shall be pro-rated in a manner consistent with rules

3 established by the Board.

4 SEC. 6103. ALLIANCE CREDIT.

5 (a) REGIONAL ALLIANCES.—The credit provided

6 under this section for a family enrolled in a regional alli7 ance health plan through a regional alliance for a class

8 of family enrollment is equal to 80 percent of the weighted

9 average premium (as defined in section 6000(b)) for

10 health plans offered by the alliance for the class.

11 (b) CORPORATE ALLIANCES.—The credit provided

12 under this section for a family enrolled in a corporate alli13 ance health plan for a class of family enrollment is equal

14 to the minimum employer premium payment required

15 under section 6131 with respect to the family.

16 SEC. 6104. PREMIUM DISCOUNT BASED ON INCOME.

17 (a) IN GENERAL.—

18 (1) ENROLLEES IN REGIONAL ALLIANCE

19 HEALTH PLANS.—Each family enrolled with a re20 gional alliance health plan is entitled to a premium

21 discount under this section, in the amount specified

22 in subsection (b), if the family—

23 (A) is an AFDC or SSI family,

24 (B) is determined, under subpart D of part

25 3 of subtitle D of title I, to have family ad-
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•S 1779 PCS

1 justed income below 150 percent of the applica2 ble poverty level, or

3 (C) is a family described in subsection

4 (c)(3) for which the family obligation amount

5 under subsection (c) for the year would other6 wise exceed a specified percent of family ad7 justed income described in such subsection.

8 (2) ENROLLEES IN CORPORATE ALLIANCE

9 HEALTH PLANS.—

10 (A) IN GENERAL.—Subject to subpara11 graph (B), each family enrolled with a cor12 porate alliance health plan in a class of family

13 enrollment by virtue of the full-time employ14 ment of a low-wage employee (as defined in

15 subparagraph (B)) is entitled to a premium dis16 count under this section in the amount (if any)

17 by which—

18 (i) 95 percent of the premium (speci19 fied in section 1384) for the least expen20 sive corporate alliance health plan that is

21 offered to the employee and that is a lower

22 or combination cost sharing plan (as de23 fined in paragraphs (7) and (20) of section

24 1902 for that class and premium area), ex25 ceeds
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•S 1779 PCS

1 (ii) the alliance credit under section

2 6103(b) for that class.

3 (B) LOW-WAGE EMPLOYEE DEFINED.—

4 (i) IN GENERAL.—In this paragraph,

5 the term ‘‘low-wage employee’’ means, with

6 respect to an employer, an employee who is

7 employed on a full-time basis and who is

8 receiving wages (as defined in section

9 1901(a)(1)(A)) for employment for the em10 ployer, at an annual rate of less than

11 $15,000 (as adjusted under clause (ii)).

12 (ii) INDEXING.—For a year after

13 1994, the dollar amount specified in clause

14 (i) shall be increased or decreased by the

15 same percentage as the percentage increase

16 or decrease by which the average CPI (de17 scribed in section 1902(9)) for the 12-

18 month period ending with August 31 of the

19 preceding year exceeds such average for

20 the 12-month period ending with August

21 31, 1993.

22 (C) TIMING OF DETERMINATION.—

23 (i) IN GENERAL.—The determination

24 of whether or not an employee is a low25 wage employee shall be made, in accord-
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•S 1779 PCS

1 ance with rules of the Secretary of Labor,

2 at the time of initial enrollment and shall

3 also be made at the time of each subse4 quent open enrollment period, on the basis

5 of the wages payable by the employer at

6 that time.

7 (ii) EFFECTIVE DATE.—Such deter8 mination shall apply as of the effective

9 date of the initial enrollment, or, in the

10 case of an open enrollment period, as of

11 the effective date of changes in enrollment

12 during such period.

13 (3) NO LIABILITY FOR INDIANS AND CERTAIN

14 VETERANS AND MILITARY PERSONNEL.—

15 (A) IN GENERAL.—In the case of an indi16 vidual described in subparagraph (B), because

17 the applicable health plan does not impose any

18 premium for such an individual, the individual

19 is not eligible for any premium discount under

20 this section.

21 (B) INDIVIDUALS DESCRIBED.—An indi22 vidual described in this subparagraph is—

23 (i) an electing veteran (as defined in

24 section 1012(d)(1)) who is enrolled under

25 a health plan of the Department of Veter-
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•S 1779 PCS

1 ans Affairs and who, under the laws and

2 rules as in effect as of December 31, 1994,

3 has a service-connected disability or who is

4 unable to defray the expenses of necessary

5 care as determined under section 1722(a)

6 of title 38, United States Code,

7 (ii) active duty military personnel (as

8 defined in section 1012(d)(2)), and

9 (iii) an electing Indian (as defined in

10 section 1012(d)(3)).

11 (4) MONTHLY APPLICATION TO AFDC AND SSI

12 FAMILIES.—Paragraph (1)(A) (and the family obli13 gation amount under subsection (c) insofar as it re14 lates to an AFDC or SSI family) shall be applied to

15 the premium or family obligation amount only for

16 months in which the family is such an AFDC or SSI

17 family.

18 (b) AMOUNT OF PREMIUM DISCOUNT FOR REGIONAL

19 ALLIANCE HEALTH PLANS.—

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

21 paragraphs of this subsection, the amount of the

22 premium discount under this subsection for a family

23 enrolled in a regional alliance health plan under a

24 class of family enrollment is equal to—
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•S 1779 PCS

1 (A) 20 percent of the weighted average

2 premium for regional alliance health plans of3 fered by the regional alliance for that class of

4 enrollment, increased by any amount provided

5 under paragraph (2); reduced (but not below

6 zero) by

7 (B) the sum of—

8 (i) the family obligation amount de9 scribed in subsection (c), and

10 (ii) the amount of any employer pay11 ment (not required under part 2) towards

12 the family share of premiums for covered

13 members of the family.

14 (2) INCREASE TO ASSURE ENROLLMENT IN AT15 OR-BELOW-AVERAGE-COST PLAN.—If a regional alli16 ance determines that a family eligible for a discount

17 under this section is unable to enroll in a at-or18 below-average-cost plan (as defined in paragraph

19 (3)) that serves the area in which the family resides,

20 the amount of the premium discount under this sub21 section is increased but only to such amount as will

22 permit the family to enroll in a regional alliance

23 health plan without the need to pay a family share

24 of premium under this part in excess of the sum de25 scribed in paragraph (1)(B).
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•S 1779 PCS

1 (3) AT-OR-BELOW-AVERAGE-COST PLAN DE2 FINED.—In this section, the term ‘‘at-or-below-aver3 age-cost plan’’ means a regional alliance health plan

4 the premium for which does not exceed, for the class

5 of family enrollment involved, the weighted average

6 premium for the regional alliance.

7 (c) FAMILY OBLIGATION AMOUNT.—

8 (1) DETERMINATION.—Subject to paragraphs

9 (2) and (3), the family obligation amount under this

10 subsection is determined as follows:

11 (A) NO OBLIGATION IF INCOME BELOW IN12 COME THRESHOLD AMOUNT OR IF AFDC OR SSI

13 FAMILY.—If the family adjusted income (as de14 fined in section 1372(d)) of the family is less

15 than the income threshold amount (specified in

16 paragraph (4)) or if the family is an AFDC or

17 SSI family, the family obligation amount is

18 zero.

19 (B) INCOME ABOVE INCOME THRESHOLD

20 AMOUNT.—If such income is at least such in21 come threshold amount and the family is not an

22 AFDC or SSI family, the family obligation

23 amount is the sum of the following:

24 (i) FOR INCOME (ABOVE INCOME

25 THRESHOLD AMOUNT) UP TO THE POV-
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•S 1779 PCS

1 ERTY LEVEL.—The product of the initial

2 marginal rate (specified in paragraph (2))

3 and the amount by which—

4 (I) the family adjusted income

5 (not including any portion that ex6 ceeds the applicable poverty level for

7 the class of family involved), exceeds

8 (II) such income threshold

9 amount.

10 (ii) GRADUATED PHASE OUT OF DIS11 COUNT UP TO 150 PERCENT OF POVERTY

12 LEVEL.—The product of the final marginal

13 rate (specified in paragraph (2)) and the

14 amount by which the family adjusted in15 come exceeds 100 percent (but is less than

16 150 percent) of the applicable poverty

17 level.

18 (2) MARGINAL RATES.—In paragraph (1)—

19 (A) INDIVIDUAL MARGINAL RATES.—For a

20 year for an individual class of enrollment—

21 (i) INITIAL MARGINAL RATE.—The

22 initial marginal rate is the ratio of—

23 (I) 3 percent of the applicable

24 poverty level for the individual class of

25 enrollment for the year, to
736

•S 1779 PCS

1 (II) the amount by which such

2 poverty level exceeds such income

3 threshold amount.

4 (ii) FINAL MARGINAL RATE.—The

5 final marginal rate is the ratio of—

6 (I) the amount by which the gen7 eral family share (as defined in sub8 paragraph (C)) for an individual class

9 of enrollment exceeds 3 percent of the

10 applicable poverty level (for an indi11 vidual class of enrollment for the

12 year); to

13 (II) 50 percent of such poverty

14 level.

15 (B) FAMILY MARGINAL RATES.—For a

16 year for a family class of enrollment (as defined

17 in section 1011(c)(2)(A))—

18 (i) INITIAL MARGINAL RATE.—The

19 initial marginal rate is the ratio of—

20 (I) 3 percent of the applicable

21 poverty level for a dual parent class of

22 enrollment for the year, to

23 (II) the amount by which such

24 poverty level exceeds such income

25 threshold amount.
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•S 1779 PCS

1 (ii) FINAL MARGINAL RATE.—The

2 final marginal rate is the ratio of—

3 (I) the amount by which the gen4 eral family share (as defined in sub5 paragraph (C)) for a dual parent class

6 of enrollment exceeds 3 percent of the

7 applicable poverty level (for such a

8 class for the year); to

9 (II) 50 percent of such poverty

10 level.

11 (C) GENERAL FAMILY SHARE.—In sub12 paragraphs (A) and (B), the term ‘‘general

13 family share’’ means, for a class, the weighted

14 average premium for the class minus the alli15 ance credit (determined without regard to this

16 section).

17 (3) LIMITATION TO 3.9 PERCENT FOR ALL FAM18 ILIES.—

19 (A) IN GENERAL.—

20 (i) FAMILIES WITH INCOME BELOW

21 150 PERCENT OF POVERTY.—In the case of

22 a family with family adjusted income of

23 less than 150 percent of the applicable

24 poverty level, in no case shall the family

25 obligation amount under this subsection
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•S 1779 PCS

1 for the year exceed 3.9 percent (adjusted

2 under subparagraph (C)) of the amount of

3 such adjusted income.

4 (ii) OTHER FAMILIES WITH INCOME

5 BELOW $40,000.—In the case of a family

6 with family adjusted income of at least 150

7 percent of the applicable poverty level but

8 less than $40,000 (adjusted under sub9 paragraph (B)) for a year, the family obli10 gation amount under this subsection for

11 the year is equal to 3.9 percent (adjusted

12 under subparagraph (C)) of the amount of

13 such adjusted income.

14 (B) INDEXING OF DOLLAR AMOUNTS.—

15 (i) IN GENERAL.—For a year after

16 1994, the dollar amounts specified in sub17 paragraph (A)(i) and in section

18 6113(d)(1)(B) shall be increased or de19 creased by the same percentage as the per20 centage increase or decrease by which the

21 average CPI (described in section 1902(9))

22 for the 12-month-period ending with Au23 gust 31 of the preceding year exceeds such

24 average for the 12-month period ending

25 with August 31, 1993.
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•S 1779 PCS

1 (ii) ROUNDING.—The dollar amounts

2 adjusted under this subparagraph shall be

3 rounded each year to the nearest multiple

4 of $100.

5 (C) INDEXING OF PERCENTAGE.—

6 (i) IN GENERAL.—The percentage

7 specified in subparagraph (A) shall be ad8 justed for any year after 1994 so that the

9 percentage for the year bears the same

10 ratio to the percentage so specified as the

11 ratio of—

12 (I) 1 plus the general health care

13 inflation factor (as defined in section

14 6001(a)(3)) for the year, bears to

15 (II) 1 plus the percentage speci16 fied in section 1136(b) (relating to in17 dexing of dollar amounts related to

18 cost sharing) for the year.

19 (ii) ROUNDING.—Any adjustment

20 under clause (i) for a year shall be rounded to the nearest multiple of 1 21 ⁄10 of 1 per22 centage point.

23 (4) INCOME THRESHOLD AMOUNT.—

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

25 subtitle, the income threshold amount specified
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•S 1779 PCS

1 in this paragraph is $1,000 (adjusted under

2 subparagraph (B)) .

3 (B) INDEXING.—For a year after 1994,

4 the income threshold amount specified in sub5 paragraph (A) shall be increased or decreased

6 by the same percentage as the percentage in7 crease or decrease by which the average CPI

8 (described in section 1902(9)) for the 12-

9 month-period ending with August 31 of the pre10 ceding year exceeds such average for the 12-

11 month period ending with August 31, 1993.

12 (C) ROUNDING.—Any increase or decrease

13 under subparagraph (B) for a year shall be

14 rounded to the nearest multiple of $10.

15 SEC. 6105. EXCESS PREMIUM CREDIT.

16 (a) IN GENERAL.—If plan payment reductions are

17 made for one or more regional alliance health plans offered

18 by a regional alliance for plan payments in a year under

19 section 6021, the alliance shall provide for a credit under

20 this section, in the amount described in subsection (b),

21 in the case of each family enrolled in a regional alliance

22 health plan offered by the alliance for premiums in the

23 year.

24 (b) AMOUNT OF CREDIT.—
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•S 1779 PCS

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

2 the amount of the credit under this subsection, for

3 a family enrolled in a class of family enrollment for

4 a regional alliance for a year, is the amount that

5 would be the weighted average premium for such al6 liance, class, and year, if the per capita excess pre7 mium amount (determined under subsection (c)) for

8 the alliance for the year were substituted for the re9 duced weighted average accepted bid for the regional

10 alliance for the year.

11 (2) ADJUSTMENT TO ACCOUNT FOR USE OF ES12 TIMATES.—Subject to section 1361(b)(3), if the

13 total payments made by a regional alliance to all re14 gional alliance health plans in a year under section

15 1351(b) exceeds (or is less than) the total of such

16 payments estimated by the alliance (based on the re17 duced weighted average accepted bid under sub18 section (c)(1)), because of a difference between—

19 (A) the alliance’s estimate of the distribu20 tion of enrolled families between excess pre21 mium plans and other plans, and

22 (B) the actual distribution of such enrolled

23 families among such plans,

24 the amount of the credit under this section in the

25 second succeeding year shall be reduced (or in-
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•S 1779 PCS

1 creased, respectively) by the amount of such excess

2 (or deficit) in the total of such payments made by

3 the alliance to all such plans.

4 (c) PER CAPITA EXCESS PREMIUM AMOUNT.—The

5 per capita excess premium amount, for a regional alliance

6 for a year, is the amount by which—

7 (1) the reduced weighted average accepted bid

8 (as defined in section 6000(a)(1)) for the alliance

9 for the year, exceeds

10 (2) the regional alliance per capita premium

11 target for the alliance for the year.

12 SEC. 6106. CORPORATE ALLIANCE OPT-IN CREDIT.

13 (a) IN GENERAL.—If a regional alliance is owed a

14 payment adjustment under section 6124 for a year, then

15 the alliance shall provide for a credit under this section

16 equal to 20 percent of the amount described in subsection

17 (b), in the case of each family enrolled in a regional alli18 ance plan offered by the alliance.

19 (b) AMOUNT OF CREDIT.—The amount described in

20 this subsection, for a family enrolled in a class of family

21 enrollment for a regional alliance for a year, is the amount

22 that would be the weighted average premium for such alli23 ance, class, and year, if the per capita corporate alliance

24 opt-in amount (determined under subsection (c)) for the

25 alliance for the year were substituted for the reduced
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•S 1779 PCS

1 weighted average accepted bid for the regional alliance for

2 the year.

3 (c) PER CAPITA CORPORATE ALLIANCE OPT-IN

4 AMOUNT.—The per capita corporate alliance opt-in

5 amount, for a regional alliance for a year, is—

6 (1) the total amount of the payment adjust7 ments owed for the year under section 6124, divided

8 by

9 (2) the estimated average number of regional

10 alliance eligible individuals in the regional alliance

11 during the year (reduced by the average number of

12 such individuals whose family share of premiums,

13 determined without regard to this section and sec14 tion 6107, is zero).

15 SEC. 6107. FAMILY COLLECTION SHORTFALL ADD-ON.

16 (a) IN GENERAL.—The family collection shortfall

17 add-on, for a regional alliance for a class of enrollment

18 for a year, is the amount that would be the weighted aver19 age premium for such alliance, class, and year, if the per

20 capita collection shortfall amount (determined under sub21 section (b)) for the alliance for the year were substituted

22 for the reduced weighted average accepted bid for the re23 gional alliance for the year.

24 (b) COMPUTATION OF PER CAPITA ADJUSTMENT

25 FOR COLLECTION SHORTFALLS.—
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•S 1779 PCS

1 (1) PER CAPITA COLLECTION SHORTFALL

2 AMOUNT.—The per capita collection shortfall

3 amount, for a regional alliance for a year, under this

4 subsection is equal to—

5 (A) the amount estimated under paragraph

6 (2)(A) for the year, divided by

7 (B) the estimated average number of re8 gional alliance eligible individuals in the re9 gional alliance during the year (reduced by the

10 average number of such individuals whose fam11 ily share of premiums, determined without re12 gard to this section and section 6106, is zero).

13 (2) AGGREGATE COLLECTION SHORTFALL.—

14 (A) IN GENERAL.—Each regional alliance

15 shall estimate, for each year (beginning with

16 the first year) the total amount of payments

17 which the alliance can reasonably identify as

18 owed to the alliance under this Act (taking into

19 account any premium reduction or discount

20 under this subtitle and including amounts owed

21 under subpart B and not taking into account

22 any penalties) for the year and not likely to be

23 collected (after making collection efforts de24 scribed in section 1345) during a period speci-
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•S 1779 PCS

1 fied by the Secretary beginning on the first day

2 of the year.

3 (B) EXCLUSION OF GOVERNMENT

4 DEBTS.—The amount under subparagraph (A)

5 shall not include any payments owed to a re6 gional alliance by the Federal, State, or local

7 governments.

8 (C) ADJUSTMENT FOR PREVIOUS SHORT9 FALL ESTIMATION DISCREPANCY.—Subject to

10 section 1361(b)(3), the amount estimated under

11 this paragraph for a year shall be adjusted to

12 reflect over (or under) estimations in the

13 amounts so computed under this paragraph for

14 previous years (based on actual collections),

15 taking into account interest payable based upon

16 borrowings (or savings) attributable to such

17 over or under estimations.

18 Subpart B—Repayment of Alliance Credit by Certain

19 Families

20 SEC. 6111. REPAYMENT OF ALLIANCE CREDIT BY CERTAIN

21 FAMILIES.

22 (a) IN GENERAL.—Subject to the succeeding provi23 sions of this subpart, each family which is provided an

24 alliance credit under section 6103(a) for a class of enroll25 ment is liable to the regional alliance for repayment of
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•S 1779 PCS

1 an amount equal to the base employment monthly pre2 mium (applicable to such class) for the month under sec3 tion 6122.

4 (b) REDUCTION FOR SELF-EMPLOYMENT PAY5 MENTS.—The liability of a family under this section for

6 a year shall be reduced (but not below zero) by the amount

7 of any employer payments made in the year under section

8 6126 based on the net earnings from self-employment of

9 a family member.

10 SEC. 6112. NO LIABILITY FOR FAMILIES EMPLOYED FULL11 TIME; REDUCTION IN LIABILITY FOR PART12 TIME EMPLOYMENT.

13 (a) IN GENERAL.—The amount of any liability under

14 section 6111 shall be reduced, in accordance with rules

15 established by the National Health Board consistent with

16 this section, based on employer premiums payable under

17 section 6121 with respect to the employment of a family

18 member who is a qualifying employee or with respect to

19 a family member. In no case shall the reduction under this

20 section result in any payment owing to a family.

21 (b) CREDIT FOR FULL-TIME AND PART-TIME EM22 PLOYMENT.—

23 (1) IN GENERAL.—Under rules of the Board, in

24 the case of a family enrolled under a class of family

25 enrollment, if a family member is a qualifying em-
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•S 1779 PCS

1 ployee for a month and (except in the case described

2 in section 6114(a)) the employer is liable for pay3 ment under section 6121 based on such employ4 ment—

5 (A) FULL-TIME EMPLOYMENT CREDIT.—If

6 the employment is on a full-time basis (as de7 fined in section 1901(b)(2)(A)) the liability

8 under section 6111 shall be reduced by the

9 credit amount described in subparagraph (C).

10 (B) PART-TIME EMPLOYMENT CREDIT.—If

11 the employment is on a part-time basis (as de12 fined in section 1901(b)(2)(A)) the liability

13 under section 6111 shall be reduced by the em14 ployment ratio (as defined in section

15 1901(b)(2)(B)) of the credit amount described

16 in subparagraph (C).

17 (C) FULL-TIME MONTHLY CREDIT.—The

18 amount of the credit under this subparagraph,

19 with respect to employment by an employer in

a month, is 1 20 ⁄12 (or, if applicable, the fraction

21 described in paragraph (2)) of the amount owed

22 under section 6111, based on the class of en23 rollment, for the year.

24 (2) COVERAGE DURING ONLY PART OF A

25 YEAR.—In the case of a family that is not enrolled
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•S 1779 PCS

1 in a regional alliance health plan for all the months

2 in a year, the fraction described in this paragraph

3 is 1 divided by the number of months in the year in

4 which the family was enrolled in such a plan.

5 (3) AGGREGATION OF CREDITS.—For purposes

6 of paragraph (1)—

7 (A) INDIVIDUALS.—In the case of an indi8 vidual who is a qualifying employee of more

9 than one employer in a month, the credit for

10 the month shall equal the sum of the credits

11 earned with respect to employment by each em12 ployer. Such sum may exceed the credit amount

13 described in paragraph (1)(C).

14 (B) COUPLES.—In the case of a couple

15 each spouse of which is a qualifying employee

16 in a month, the credit for the month shall equal

17 the sum of the credits earned with respect to

18 employment by each spouse. Such sum may ex19 ceed the credit amount described in paragraph

20 (1)(C).

21 (c) TREATMENT OF CHANGE OF ENROLLMENT STA22 TUS.—In the case of a family for which the class of family

23 enrollment changes during a year, the Board shall estab24 lish rules for appropriate conversion and allocation of the

25 credit amounts under the previous provisions of this sec-
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•S 1779 PCS

1 tion in a manner that reflects the relative values of the

2 base employment monthly premiums (as determined under

3 section 6122) among the different classes of family enroll4 ment.

5 SEC. 6113. LIMITATION OF LIABILITY BASED ON INCOME.

6 (a) IN GENERAL.—In the case of an eligible family

7 described in subsection (b), the repayment amount re8 quired under this subpart (after taking into account any

9 work credit earned under section 6112) with respect to

10 a year shall not exceed the amount of liability described

11 in subsection (c) for the year.

12 (b) ELIGIBLE FAMILY DESCRIBED.—An eligible fam13 ily described in this subsection is a family which is deter14 mined, under subpart B of part 3 of subtitle D of title

15 I by the regional alliance for the alliance area in which

16 the family resides, to have wage-adjusted income (as de17 fined in subsection (d)) below 250 percent of the applica18 ble poverty level.

19 (c) AMOUNT OF LIABILITY.—

20 (1) DETERMINATION.—Subject to subsection

21 (f), in the case of a family enrolled in a class of en22 rollment with wage-adjusted income (as defined in

23 subsection (d)), the amount of liability under this

24 subsection is determined as follows:
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•S 1779 PCS

1 (A) NO OBLIGATION IF INCOME BELOW IN2 COME THRESHOLD AMOUNT OR IF AFDC OR SSI

3 FAMILY.—If such income is less than the in4 come threshold amount (specified in section

5 6104(c)(4)) or if the family is an AFDC or SSI

6 family, the amount of liability is zero.

7 (B) INCOME ABOVE INCOME THRESHOLD

8 AMOUNT.—If such income is at least such in9 come threshold amount and the family is not an

10 AFDC or SSI family, the amount of liability is

11 the sum of the following:

12 (i) 5.5 PERCENT OF INCOME (ABOVE

13 INCOME THRESHOLD AMOUNT) UP TO THE

14 POVERTY LEVEL.—The initial marginal

15 rate (specified in paragraph (2)(A)) of the

16 amount by which—

17 (I) the wage-adjusted income

18 (not including any portion that ex19 ceeds the applicable poverty level for

20 the class of family involved), exceeds

21 (II) such income threshold

22 amount.

23 (ii) GRADUATED PHASE OUT OF DIS24 COUNT UP TO 250 PERCENT OF POVERTY

25 LEVEL.—The final marginal rate (specified
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•S 1779 PCS

1 in paragraph (2)(B)) of the amount by

2 which the wage-adjusted income exceeds

3 100 percent of the applicable poverty level.

4 (2) MARGINAL RATES.—In paragraph (1)—

5 (A) INITIAL MARGINAL RATE.—The initial

6 marginal rate, for a year for a class of enroll7 ment, is the ratio of—

8 (i) 5.5 percent of the applicable pov9 erty level for the class of enrollment for

10 the year, to

11 (ii) the amount by which such poverty

12 level exceeds such income threshold

13 amount.

14 (B) FINAL MARGINAL RATE.—The final

15 marginal rate, for a year for a class of enroll16 ment, is the ratio of—

17 (i) the amount by which (I) the

18 amount of the repayment amount de19 scribed in section 6111(a) exceeds (II) 5.5

20 percent of the applicable poverty level (for

21 the class and year); to

22 (ii) 150 percent of such poverty level.

23 (3) MONTHLY APPLICATION TO AFDC AND SSI

24 FAMILIES.—Paragraph (1) insofar as it relates to an

25 AFDC or SSI family shall be applied so as to reduce
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•S 1779 PCS

1 to zero the liability amount only for months in which

2 the family is such an AFDC or SSI family.

3 (d) WAGE-ADJUSTED INCOME DEFINED.—In this

4 subtitle, the term ‘‘wage-adjusted income’’ means, for a

5 family, family adjusted income of the family (as defined

6 in section 1372(d)(1)), reduced by the sum of the follow7 ing:

8 (1)(A) Subject to subparagraph (B), the

9 amount of any wages included in such family’s in10 come that is received for employment which is taken

11 into account in the computation of the amount of

12 employer premiums under section 6121 (without

13 consideration of section 6126).

14 (B) The reduction under subparagraph (A)

15 shall not exceed for a year $5,000 (adjusted under

16 section 6104(c)(3)(B)) multiplied by the number of

17 months (including portions of months) of employ18 ment with respect to which employer premiums were

19 payable under section 6121 (determined in a manner

20 consistent with section 1901(b)(3)).

21 (2) The amount of net earnings from self em22 ployment of the family taken into account under sec23 tion 6126.
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•S 1779 PCS

1 (3) The amount of unemployment compensation

2 included in income under section 85 of the Internal

3 Revenue Code of 1986.

4 (e) DETERMINATIONS.—A family’s wage-adjusted in5 come and the amount of liability under subsection (c) shall

6 be determined by the applicable regional alliance upon ap7 plication by a family under under subpart B of part 3 of

8 subtitle D of title I.

9 (f) NO LIABILITY FOR INDIANS AND CERTAIN VET10 ERANS AND MILITARY PERSONNEL.—The provisions of

11 paragraph (3) of section 6104(a) shall apply to the reduc12 tion in liability under this section in the same manner as

13 such paragraph applies to the premium discount under

14 section 6104.

15 SEC. 6114. SPECIAL TREATMENT OF CERTAIN RETIREES

16 AND QUALIFIED SPOUSES AND CHILDREN.

17 (a) TREATMENT AS FULL-TIME EMPLOYEE.—Sub18 ject to subsection (d), an individual who is an eligible re19 tiree (as defined in subsection (b)) or a qualified spouse

20 or child (as defined in subsection (c)) for a month in a

21 year (beginning with 1998) is considered, for purposes of

22 section 6112, to be a full-time employee described in such

23 section in such month.

24 (b) ELIGIBLE RETIREE DEFINED.—In this section,

25 the term ‘‘eligible retiree’’ means, for a month, an individ-
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•S 1779 PCS

1 ual who establishes to the satisfaction of the regional alli2 ance (for the alliance area in which the individual resides),

3 pursuant to rules of the Secretary, that the individual, as

4 of the first day of the month—

5 (1) is at least 55, but less than 65, years of

6 age,

7 (2) is not employed on a full-time basis (as de8 fined in section 1901(b)(2)(A)),

9 (3) would be eligible (under section 226(a) of

10 the Social Security Act) for hospital insurance bene11 fits under part A of title XVIII of such Act if the

12 individual were 65 years of age based only on the

13 employment of the individual, and

14 (4) is not a medicare-eligible individual.

15 (c) QUALIFIED SPOUSE OR CHILD DEFINED.—In

16 subsection (a), the term ‘‘qualified spouse or child’’ means,

17 in relation to an eligible retiree for a month, an individual

18 who establishes to the satisfaction of the regional alliance

19 (for the alliance area in which the individual resides)

20 under rules of the Secretary that the requirements in one

21 of the following paragraphs is met with respect to the indi22 vidual:

23 (1) The individual (A) is under 65 years of age

24 and is (and has been for a period of at least one
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•S 1779 PCS

1 year) married to an eligible retiree or (B) is a child

2 of the eligible retiree.

3 (2) In the case of a person who was an eligible

4 retiree at the time of the person’s death—

5 (A) the individual was (and had for a pe6 riod of at least one year been) married to the

7 retiree at the time of the person’s death,

8 (B) the individual is under 65 years of age,

9 (C) the individual is not employed on a

10 full-time basis (as defined in section

11 1901(b)(2)(A)),

12 (D) the individual is not remarried, and

13 (E) the deceased spouse would still be an

14 eligible retiree in the month if such spouse had

15 not died.

16 (3) The individual is a child of an individual de17 scribed in paragraph (2).

18 (d) APPLICATION.—An individual may not be deter19 mined to be an eligible retiree or qualified spouse or child

20 unless an application has been filed with the regional alli21 ance. Such application shall contain such information as

22 the Secretary may require to establish such status and

23 verify information in the application. Any material mis24 representation in the application is subject to a penalty
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•S 1779 PCS

1 in the same manner as a misrepresentation described in

2 section 1374(i)(2).

3 SEC. 6115. SPECIAL TREATMENT OF CERTAIN MEDICARE

4 BENEFICIARIES.

5 In the case of an individual who would be a medicare6 eligible individual in a month but for the application of

7 section 1012(a) on the basis of employment (in the month

8 or a previous month) of the individual or the individual’s

9 spouse or parent, the individual (or spouse or parent, as

10 the case may be) so employed is considered, for purposes

11 of section 6112, to be a full-time employee described in

12 such section in such month.

13 PART 2—EMPLOYER PREMIUM PAYMENTS

14 Subpart A—Regional Alliance Employers

15 SEC. 6121. EMPLOYER PREMIUM PAYMENT REQUIRED.

16 (a) REQUIREMENT.—

17 (1) IN GENERAL.—Each regional alliance em18 ployer described in paragraph (2) for a month shall

19 pay to the regional alliance that provides health cov20 erage to a qualifying employee of the employer an

21 employer premium in a amount at least equal to the

22 amount specified in subsection (b). Such payments

23 shall be made in accordance with section 1345(c).

24 (2) EMPLOYER DESCRIBED.—An employer de25 scribed in this paragraph for a month is an employer
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•S 1779 PCS

1 that in the month employs one or more qualifying

2 employees (as defined in section 1901(b)(1)).

3 (3) TREATMENT OF CERTAIN EMPLOYMENT BY

4 CORPORATE ALLIANCE EMPLOYERS.—A corporate al5 liance employer shall be deemed, for purposes of this

6 subpart, to be a regional alliance employer with re7 spect to qualifying employees who are not corporate

8 alliance eligible individuals.

9 (b) PREMIUM PAYMENT AMOUNT.—

10 (1) IN GENERAL.—Except as provided in sec11 tion 6123 (relating to a discount for certain employ12 ers), section 6124 (relating to large employers elect13 ing coverage in a regional alliance), and section

14 6125 (relating to the employer collection shortfall

15 add-on), the amount of the employer premium pay16 ment, for a month for qualifying employees of the

17 employer who reside in an alliance area, is the sum

18 of the payment amounts computed under paragraph

19 (2) for each class of family enrollment with respect

20 to such employees in such area.

21 (2) PAYMENT AMOUNT FOR ALL EMPLOYEES IN

22 A CLASS OF FAMILY ENROLLMENT.—Subject to

23 paragraph (3), the payment amount under this para24 graph, for an employer for a class of family enroll-
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•S 1779 PCS

1 ment for a month for qualifying employees residing

2 in an alliance area, is the product of—

3 (A) the base employment monthly premium

4 determined under section 6122 for the class of

5 family enrollment for the previous month for

6 the regional alliance, and

7 (B) the number of full-time equivalent em8 ployees (determined under section 1901(b)(2))

9 enrolled in that class of family enrollment for

10 the previous month and residing in the alliance

11 area.

12 (3) TREATMENT OF CERTAIN EMPLOYEES.—In

13 applying this subpart in the case of a qualifying em14 ployee (other than a medicare-eligible individual)

15 who is not enrolled in any alliance health plan—

16 (A) the employee is deemed enrolled in a

17 regional alliance health plan (for the alliance

18 area in which the individual resides) in the dual

19 parent class of enrollment, and

20 (B) if the employee’s residence is not

21 known, the employee is deemed to reside in the

22 alliance area in which the employee principally

23 is employed for the employer.

24 (4) TRANSITIONAL RULES FOR FIRST MONTH IN

25 FIRST YEAR FOR A STATE.—In the case of an em-
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•S 1779 PCS

1 ployer for a State in the first month of the State’s

2 first year—

3 (A) the premium amount for such month

4 shall be computed by substituting ‘‘month’’ for

5 ‘‘previous month’’ in paragraph (2);

6 (B) payment for such month shall be made

7 on the first of the month based on an estimate

8 of the payment for such month;

9 (C) an adjustment shall be made to the

10 payment in the following month to reflect the

11 difference between the payment in the first

12 month and the payment in the following month

13 (calculated without regard to the adjustment

14 under this subparagraph); and

15 (D) the reconciliation of premiums for

16 such first month under section 1602(c) shall be

17 included in the reconciliation of premiums for

18 the following 12 months.

19 (5) SPECIAL RULES FOR DIVIDED FAMILIES.—

20 In the case of an individual who is a qualifying em21 ployee of an employer, if the individual has a spouse

22 or child who is not treated as part of the individual’s

23 family because of section 1012—
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•S 1779 PCS

1 (A) the employer premium payment under

2 this section shall be computed as though such

3 section had not applied, and

4 (B) the regional alliance shall make pro5 portional payments (consistent with rules estab6 lished by the Secretary) to the health plans (if

7 different) of the qualifying employee and of the

8 employee’s spouse and children.

9 (c) APPLICATION DURING TRANSITION PERIOD.—

10 (1) IN GENERAL.—For purposes of applying

11 this subpart in the case of an employer described in

12 paragraph (3), there shall only be taken into account

13 qualifying employees (and wages of such employees)

14 who reside in a participating State.

15 (2) EXCEPTION.—Paragraph (1) shall not

16 apply in determining the average number of full-time

17 equivalent employees or whether an employer is a

18 small employer.

19 (3) EMPLOYER DESCRIBED.—An employer de20 scribed in this paragraph is an employer that em21 ploys one or more qualifying employees in a partici22 pating State and one or more qualifying employees

23 in a State that is not a participating State.
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1 SEC. 6122. COMPUTATION OF BASE EMPLOYMENT MONTH2 LY PREMIUM.

3 (a) IN GENERAL.—Each regional alliance shall pro4 vide for the computation for each year (beginning with the

5 first year) of a base employment monthly premium for

6 each class of family enrollment as follows:

7 (1) INDIVIDUAL ENROLLMENT.—The base em8 ployment monthly premium for the individual class

of enrollment is equal to 1 9 ⁄12 of 80 percent of the

10 credit-adjusted weighted average premium (as de11 fined in paragraph (4)) for such regional alliance for

12 the individual class of enrollment.

13 (2) COUPLE-ONLY ENROLLMENT.—

14 (A) IN GENERAL.—The base employment

15 monthly premium for the couple-only class of

enrollment is equal to 1 16 ⁄12 of 80 percent of the

17 product described in subparagraph (B), divided

18 by the sum described in subparagraph (C).

19 (B) TOTAL PREMIUMS FOR COUPLE-ONLY

20 ENROLLMENTS.—The product described in this

21 subparagraph is—

22 (i) the credit-adjusted weighted aver23 age premium for such regional alliance for

24 the couple-only class of enrollment, multi25 plied by
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•S 1779 PCS

1 (ii) the sum, for all the months in the

2 year, of the number of covered families re3 ceiving coverage through regional alliance

4 health plans of the regional alliance within

5 such class of enrollment in each such

6 month.

7 (C) NUMBER OF WORKERS AND EXTRA

8 WORKERS.—The sum described in this subpara9 graph is—

10 (i) the sum specified in subparagraph

11 (B)(ii), plus

12 (ii) the number of additional workers

13 (determined under subsection (b)(1)), for

14 families receiving coverage within such

15 class from regional alliance health plans of16 fered by the regional alliance.

17 (3) SINGLE AND DUAL PARENT ENROLL18 MENTS.—

19 (A) IN GENERAL.—The base employment

20 monthly premium for the single parent and

dual parent classes of enrollment is equal to 1 21 ⁄12

22 of 80 percent of the sum described in subpara23 graph (B), divided by the sum described in sub24 paragraph (C).
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•S 1779 PCS

1 (B) TOTAL PREMIUMS FOR SINGLE AND

2 DUAL PARENT ENROLLMENTS.—The sum de3 scribed in this subparagraph is the sum of the

4 products described in the following clauses:

5 (i) TOTAL PREMIUMS FOR SINGLE

6 PARENT ENROLLMENT.—The product of—

7 (I) the credit-adjusted weighted

8 average premium for such regional al9 liance for the single parent class of

10 enrollment, multiplied by

11 (II) the sum, for all the months

12 in the year, of the number of covered

13 families receiving coverage through re14 gional alliance health plans of the re15 gional alliance within such class of en16 rollment in each such month.

17 (ii) TOTAL PREMIUMS FOR DUAL PAR18 ENT ENROLLMENT.—The product of—

19 (I) the credit-adjusted weighted

20 average premium for such regional al21 liance for the dual parent class of en22 rollment, multiplied by

23 (II) the sum, for all the months

24 in the year, of the number of covered

25 families receiving coverage through re-
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1 gional alliance health plans of the re2 gional alliance within such class of en3 rollment in each such month.

4 (C) NUMBER OF WORKERS AND EXTRA

5 WORKERS.—The sum described in this subpara6 graph is—

7 (i) the sum specified in subparagraph

8 (B)(i)(II); plus

9 (ii) the sum specified in subparagraph

10 (B)(ii)(II); plus

11 (iii) the number of additional workers

12 (determined under subsection (b)(1)), for

13 families receiving coverage within the dual

14 parent class of enrollment from regional al15 liance health plans offered by the regional

16 alliance.

17 (4) CREDIT-ADJUSTED WEIGHTED AVERAGE

18 PREMIUM DEFINED.—In this subsection, the term

19 ‘‘credit-adjusted weighted average premium’’ means,

20 for a class of enrollment and a regional alliance, the

21 weighted average premium for the class and alliance,

22 reduced by the amount described in section 6106(b)

23 for such class and alliance.

24 (b) DETERMINATION OF ADDITIONAL WORKERS FOR

25 COUPLE-ONLY AND DUAL PARENT CLASS.—
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•S 1779 PCS

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

2 the regional alliance shall determine, for each couple

3 class of family enrollment and in a manner specified

4 by the Board, an estimated total number of addi5 tional workers equal to—

6 (A) 12 times the alliance-wide monthly av7 erage number of premium payments (as deter8 mined under paragraph (2)) for covered fami9 lies (as defined in paragraph (3)) within such

10 class of enrollment, minus

11 (B) the sum described in subsection

12 (a)(2)(B)(ii) or (a)(3)(B)(ii)(II) for the couple13 only and dual parent classes, respectively.

14 (2) COMPUTATION OF ALLIANCE-WIDE MONTH15 LY AVERAGE NUMBER.—

16 (A) IN GENERAL.—In determining the alli17 ance-wide monthly average number of premium

18 payments under paragraph (1)(A), a covered

19 family shall count for a month as 1, or, if

20 greater, the number computed under subpara21 graph (B) (but in no case greater than 2).

22 (B) COUNTING OF FAMILIES IN WHICH

23 BOTH SPOUSES ARE QUALIFYING EMPLOY24 EES.—The number computed under this sub25 paragraph over all families within a couple-only
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1 or dual parent class of enrollment in which both

2 spouses are qualifying employees is determined

3 on an alliance-wide basis based on the follow4 ing:

5 (i) For such a spouse, determine,

6 using the rules under section

7 1902(b)(1)(A), how many full-time equiva8 lent employees the spouse is counted as,

9 but not to exceed 1 for either spouse.

10 (ii) Add the 2 numbers determined

11 under clause (i) for spouses in such fami12 lies.

13 (3) COVERED FAMILY DEFINED.—In this sub14 section, the term ‘‘covered family’’ means a family

15 other than—

16 (A) an SSI family or AFDC family,

17 (B) a family in which a spouse is a medi18 care-eligible individual, or

19 (C) a family that is enrolled in a health

20 plan other than a regional alliance health plan.

21 (4) ADJUSTMENT TO ACCOUNT FOR USE OF ES22 TIMATES.—Subject to section 1361(b)(3), if the

23 total receipts of a regional alliance to all regional al24 liance health plans in a year under this subpart ex25 ceeds, or is less than, the total of such receipts esti-
767

•S 1779 PCS

1 mated by the alliance (based on the base employ2 ment monthly premium under subsection (a)), be3 cause of a difference between—

4 (A) the alliance’s estimate of the estimated

5 total number of additional workers for the alli6 ance and the estimate of the number of covered

7 families, and

8 (B) the actual total number of additional

9 workers and the actual number of covered fami10 lies,

11 the estimated total number of additional workers to

12 be applied under this section in the second succeed13 ing year shall be reduced, or increased, respectively,

14 in a manner that results in total receipts of the alli15 ance under this subpart in such succeeding year

16 being increased or decreased by the amount of such

17 excess (or deficit).

18 (c) BASIS FOR DETERMINATIONS.—

19 (1) PREMIUMS.—The determinations of pre20 miums and families under plans under this section

21 shall be made in a manner determined by the Board

22 and based on the premiums and families used by the

23 Board in carrying out subtitle A and shall be based

24 on estimates on an annualized basis.
768

•S 1779 PCS

1 (2) EMPLOYMENT.—The determinations of em2 ployment under this section for the first year for a

3 State shall be based on estimates of employment es4 tablished by the regional alliance in accordance with

5 standards promulgated by the Secretary of Labor in

6 consultation with the National Health Board.

7 (3) REPORTS.—In accordance with rules estab8 lished by the Secretary of Labor in consultation with

9 the National Health Board, a regional alliance may

10 require regional alliance employers to submit such

11 periodic information on employment as may be nec12 essary to monitor the determinations made under

13 this section, including months and extent of employ14 ment.

15 (d) TIMING OF DETERMINATION.—Determinations

16 under this section for a year shall be made by not later

17 than December 1, or such other date as the Board may

18 specify, before the beginning of the year.

19 SEC. 6123. PREMIUM DISCOUNT FOR CERTAIN EMPLOYERS.

20 (a) EMPLOYER DISCOUNT.—

21 (1) IN GENERAL.—Subject to section 6124(c)

22 (relating to phase in for certain large corporate alli23 ance employers) and section 6125 (relating to the

24 employer collection shortfall add-on), the amount of

25 the employer premium payment required under this
769

•S 1779 PCS

1 subpart for a regional alliance employer for any year

2 shall not exceed the limiting percentage (as defined

3 in subsection (b)) of the employer’s wages for that

4 year.

5 (2) EXCLUSION OF GOVERNMENTAL EMPLOY6 ERS AND CERTAIN CORPORATE ALLIANCE EMPLOY7 ERS.—Paragraph (1) shall not apply to—

8 (A) the Federal Government, a State gov9 ernment, or a unit of local government, or a

10 unit or instrumentality of such government, be11 fore 2002; and

12 (B) a corporate alliance employer which is

13 treated as a regional alliance employer under

14 section 6131(a)(2).

15 (b) LIMITING PERCENTAGE DEFINED.—In sub16 section (a)—

17 (1) ANY EMPLOYER.—For an employer that is

18 not a small employer (as defined in subsection (c)),

19 the limiting percentage is 7.9 percent.

20 (2) SMALL EMPLOYERS.—For an employer that

21 is a small employer and that has an average number

22 of full-time equivalent employees and average annual

23 wages per full-time equivalent employee (as deter24 mined under subsection (d)), the limiting percentage
770

•S 1779 PCS

1 is the applicable percentage determined based on fol2 lowing table:

Limiting Percentage

Average number of

full-time equivalent

employees

Employer’s average annual wages per full-time equivalent employee

are:

$0–

$12,000

$12,001–

$15,000

$15,001–

$18,000

$18,001–

$21,000

$21,001–

$24,000

Fewer than 25 ...... 3.5% 4.4% 5.3% 6.2% 7.1%

25 but fewer than

50 ...................... 4.4% 5.3% 6.2% 7.1% 7.9%

50 but not over 75 5.3% 6.2% 7.1% 7.9% 7.9%

3 (c) SMALL EMPLOYER DEFINED.—

4 (1) IN GENERAL.—In this section—

5 (A) the term ‘‘small employer’’ means an

6 employer that does not employ, on average,

7 more than 75 full-time equivalent employees;

8 and

9 (B) the average number of full-time equiv10 alent employees shall be determined by averag11 ing the number of full-time equivalent employ12 ees employed by the employer in each countable

13 month during the year.

14 (2) COUNTABLE MONTH.—In paragraph (1),

15 the term ‘‘countable month’’ means, for an em16 ployer, a month in which the employer employs any

17 qualifying employee.

18 (3) DETERMINATIONS.—The number of full19 time equivalent employees shall be determined using

20 the rules under section 1901(b)(2).
771

•S 1779 PCS

1 (d) AVERAGE ANNUAL WAGES PER FULL-TIME

2 EQUIVALENT EMPLOYEE DEFINED.—

3 (1) IN GENERAL.—In this section, the term

4 ‘‘average annual wages per full-time equivalent em5 ployee’’ means, for an employer for a year—

6 (A) the total wages paid in the year to in7 dividuals who, at the time of payment of the

8 wages, are qualifying employees of the em9 ployer; divided by

10 (B) the number of full-time equivalent em11 ployees of the employer in the year.

12 (2) DETERMINATION.—The Board may estab13 lish rules relating to the computation of the average

14 annual wages for employers.

15 (e) DETERMINATIONS.—For purposes of this section,

16 the number of employees and average wages shall be de17 termined on an annual basis.

18 (f) TREATMENT OF CERTAIN SELF-EMPLOYED INDI19 VIDUALS.—In the case of an individual who is a partner

20 in a partnership, is a 2-percent shareholder in an S cor21 poration (within the meaning of section 1372 of the Inter22 nal Revenue Code of 1986), or is any other individual who

23 carries on a trade or business as a sole proprietorship,

24 for purposes of this section—
772

•S 1779 PCS

1 (1) the individual is deemed to be an employee

2 of the partnership, S corporation, or proprietorship,

3 and

4 (2) the individual’s net earnings from self em5 ployment attributable to the partnership, S corpora6 tion, or sole proprietorship are deemed to be wages

7 from the partnership, S corporation, or proprietor8 ship.

9 (g) APPLICATION TO EMPLOYERS.—An employer

10 that claims that this section applies—

11 (1) shall provide notice to the regional alliance

12 involved of the claim at the time of making pay13 ments under this subpart; and

14 (2) shall make available such information (and

15 provide access to such information) as the regional

16 alliance may require (in accordance with regulations

17 of the Secretary of Labor) to audit the determina18 tion of—

19 (A) whether the employer is a small em20 ployer, and, if so, the average number of full21 time equivalent employees and average annual

22 wages of the employer; and

23 (B) the total wages paid by the employer

24 for qualifying employees.
773

•S 1779 PCS

1 (h) TREATMENT OF MULTI-ALLIANCE EMPLOY2 ERS.—In the case in which this section is applied to an

3 employer that makes employer premium payments to more

4 than one regional alliance, the reduction under this section

5 shall be applied in a pro-rated manner to the premium

6 payments made to all such alliances.

7 SEC. 6124. PAYMENT ADJUSTMENT FOR LARGE EMPLOYERS

8 ELECTING COVERAGE IN A REGIONAL ALLI9 ANCE.

10 (a) APPLICATION OF SECTION.—

11 (1) IN GENERAL.—Except as otherwise pro12 vided in this subsection, this section shall apply to

13 the employer premium payments for full-time em14 ployees in a State of an employer if—

15 (A)(i) the employer is an eligible sponsor

16 described in section 1311(b)(1)(A), (ii) the em17 ployer elected to be a corporate alliance under

18 section 1312(a)(1), and (iii) the election is ter19 minated under section 1313;

20 (B)(i) the employer is such an eligible

21 sponsor as of the first day of the first year of

22 the State, and (ii) the employer did not provide

23 the notice required under section 1312(a)(1)

24 (with respect to an election to become a cor25 porate alliance); or
774

•S 1779 PCS

1 (C)(i) the employer is such an eligible

2 sponsor, (ii) the employer subsequently became

3 a large employer and elected to be a corporate

4 alliance under section 1312(a)(2), and (iii) the

5 election was terminated under section 1313.

6 (2) EFFECTIVE DATE.—In the case of an em7 ployer described in—

8 (A) paragraph (1)(A) or (1)(C), this sec9 tion shall first apply on the effective date of the

10 termination of the election under section 1313,

11 or

12 (B) paragraph (1)(B), this section shall

13 first apply as of January 1, 1996 (or, if later

14 with respect to a State, the first day of the first

15 year for the State).

16 (3) TREATMENT OF EMPLOYEES IN SMALL ES17 TABLISHMENTS.—This section shall not apply to the

18 payment of premiums for full-time employees of an

19 employer described in paragraph (1)(A) or (1)(C), if

20 the employees are employed at an establishment with

21 respect to which the option described in section

22 1311(c)(1)(B) was exercised.

23 (4) SUNSET.—This section shall cease applying

24 to an employer with respect to employment in a
775

•S 1779 PCS

1 State after the 7th year in which this section applies

2 to the employer in the State.

3 (5) LARGE EMPLOYER DEFINED.—In this sec4 tion, the term ‘‘large employer’’ has the meaning

5 given such term in section 1311(e)(3).

6 (b) ADDITIONAL AMOUNT.—

7 (1) IN GENERAL.—If an employer subject to

8 this section for a year has an excess risk proportion

9 (specified in paragraph (3)) of greater than zero

10 with respect to an alliance area, then the employer

11 shall provide, on a monthly basis, for payment to the

12 regional alliance for such area of an amount equal

to 1 13 ⁄12 of the excess risk amount described in para14 graph (2) for the year.

15 (2) EXCESS RISK AMOUNT.—The excess risk

16 amount described in this paragraph, for an employer

17 for a year with respect to an alliance area, is equal

18 to the product of the following:

19 (A) The reduced weighted average accept20 ed bid for the regional alliance for the area for

21 the year.

22 (B) The total average number of alliance

23 eligible individuals who—
776

•S 1779 PCS

1 (i) were full-time employees (or family

2 members of such employees) of the em3 ployer, and

4 (ii) residing in the regional alliance

5 area,

6 in the year before the first year in which this

7 section applies to the employer.

8 (C) The excess risk proportion (specified in

9 paragraph (3)) for the employer for such area.

10 (D) The phase-down percentage (specified

11 in paragraph (4)) for the year.

12 (3) EXCESS RISK PROPORTION.—

13 (A) IN GENERAL.—The ‘‘excess risk pro14 portion’’, specified in this paragraph, with re15 spect to an employer and an alliance area, is a

16 percentage that reflects, for the year before the

17 first year in which this section applies to the

18 employer, the amount by which—

19 (i) the average demographic risk for

20 employees (and family members) described

21 in paragraph (2)(B) residing in the alli22 ance area, exceeds

23 (ii) the average demographic risk for

24 all regional alliance eligible individuals re25 siding in the area.
777

•S 1779 PCS

1 (B) MEASUREMENT OF DEMOGRAPHIC

2 RISK.—

3 (i) IN GENERAL.—Demographic risk

4 under subparagraph (A) shall be meas5 ured, in a manner specified by the Board,

6 based on the demographic characteristics

7 described in section 6001(c)(1)(A), that re8 late to the actuarial value of the com9 prehensive benefit package.

10 (ii) PROVISION OF INFORMATION.—

11 Each employer to which this section ap12 plies shall submit, to each regional alliance

13 for which an additional payment may be

14 required under this section, such informa15 tion (and at such time) as the Board may

16 require in order to determine the demo17 graphic risk referred to in subparagraph

18 (A)(i).

19 (4) PHASE-DOWN PERCENTAGE.—The phase

20 down percentage, specified in this paragraph for an

21 employer for—

22 (A) each of the first 4 years to which this

23 section applies to the employer, is 100 percent,

24 (B) the fifth such year, is 75 percent,

25 (C) the sixth such year, is 50 percent, and
778

•S 1779 PCS

1 (D) the seventh such year, is 25 percent.

2 (c) PHASE IN OF EMPLOYER PREMIUM DISCOUNT.—

3 For—

4 (1) each of the first 4 years in which this sec5 tion applies to such employer, section 6123 shall not

6 apply to the employer;

7 (2) the fifth such year, section 6123 shall apply

8 to the employer but the reduction in premium pay9 ment effected by such section shall be 25 percent of

10 the reduction that would otherwise apply (but for

11 this subsection);

12 (3) the sixth such year, section 6123 shall apply

13 to the employer but the reduction in premium pay14 ment effected by such section shall be 50 percent of

15 the reduction that would otherwise apply (but for

16 this subsection);

17 (4) the seventh such year, section 6123 shall

18 apply to the employer but the reduction in premium

19 payment effected by such section shall be 75 percent

20 of the reduction that would otherwise apply (but for

21 this subsection); or

22 (5) a subsequent year, section 6123 shall apply

23 to the employer without any reduction under this

24 subsection.
779

•S 1779 PCS

1 SEC. 6125. EMPLOYER COLLECTION SHORTFALL ADD-ON.

2 (a) IN GENERAL.—The amount payable by an em3 ployer under this subpart shall be increased by the amount

4 computed under subsection (b).

5 (b) AMOUNT.—The amount under this subsection for

6 an employer is equal to the premium payment amount that

7 would be computed under section 6121(b)(2) if the per

8 capita collection shortfall amount (computed under section

9 6107(b)(1)) for the year were substituted for the reduced

10 weighted average accepted bid for the year. The reduced

11 weighted average accepted bid is used under section

12 6000(b)(1) in computing the weighted average premium,

13 which in turn is used under section 6122(a)(1) in comput14 ing the base employment monthly premium, which in turn

15 is used under section 6121(b)(2)(A) in computing the em16 ployer premium amount.

17 (c) DISCOUNT NOT APPLICABLE.—Section 6123

18 shall not apply to the increase in the amount payable by

19 virtue of this section.

20 SEC. 6126. APPLICATION TO SELF-EMPLOYED INDIVIDUALS.

21 (a) IN GENERAL.—A self-employed individual (as de22 fined in section 1901(c)(2)) shall be considered, for pur23 poses of this subpart to be an employer of himself or her24 self and to pay wages to himself or herself equal to the

25 amount of net earnings from self-employment (as defined

26 in section 1901(c)(1)).
780

•S 1779 PCS

1 (b) CREDIT FOR EMPLOYER PREMIUMS.—

2 (1) IN GENERAL.—In the case of a self-em3 ployed individual, the amount of any employer pre4 mium payable by virtue of subsection (a) in a year

5 shall be reduced (but not below zero) by the sum of

6 the following:

7 (A) Subject to paragraph (2), the amount

8 of any employer premiums payable under this

9 subpart (determined not taking into account

10 any adjustment in the premium amounts under

11 section 6123 or 6124) with respect to the em12 ployment of that individual in the year.

13 (B) The product of (i) the number of

14 months in the year the individual was employed

15 on a full-time basis by a corporate alliance em16 ployer, and (ii) the employer premium that

17 would have been payable for such months under

18 this subpart (determined not taking into ac19 count any adjustment in the premium amounts

20 under section 6123 or 6124) for the class of en21 rollment if such employer had been a regional

22 alliance employer.

23 (2) SPECIAL RULE FOR CERTAIN CLOSELY24 HELD BUSINESSES.—
781

•S 1779 PCS

1 (A) IN GENERAL.—In the case of an indi2 vidual who—

3 (i) has wage-adjusted income (as de4 fined in section 6113(d), determined with5 out regard to paragraphs (1)(B) and (2)

6 thereof) that exceeds 250 percent (or such

7 higher percentage as the Board may estab8 lish) of the applicable poverty level, and

9 (ii) is both a substantial owner and an

10 employee of a closely held business,

11 the amount of any reduction under paragraph

12 (1)(A) that is attributable to the individual’s

13 employment by that business shall be appro14 priately reduced in accordance with rules pre15 scribed by the Board, in order to prevent indi16 viduals from avoiding payment of the full

17 amount owed through fraudulent or secondary

18 employment arrangements.

19 (B) CLOSELY HELD BUSINESS.—For pur20 poses of subparagraph (A), a business is ‘‘close21 ly held’’ if it is an employer that meets the re22 quirements of section 542(a)(2) of the Internal

23 Revenue Code of 1986 or similar requirements

24 as appropriate in the case of a partnership or

25 other entity.
782

•S 1779 PCS

1 Subpart B—Corporate Alliance Employers

2 SEC. 6131. EMPLOYER PREMIUM PAYMENT REQUIRED.

3 (a) PER EMPLOYEE PREMIUM PAYMENT.—Subject

4 to section 6124, each corporate alliance employer of a cor5 porate alliance that in a month in a year employs a quali6 fying employee who is—

7 (1) enrolled in a corporate alliance health plan

8 offered by the alliance, shall provide for a payment

9 toward the premium for the plan in an amount at

10 least equal to the corporate employer premium speci11 fied in subsection (b); or

12 (2) is not so enrolled, shall make employer pre13 mium payments with respect to such employment

14 under subpart A in the same manner as if the em15 ployer were a regional alliance employer (except as

16 otherwise provided in such subpart).

17 (b) CORPORATE EMPLOYER PREMIUM.—

18 (1) AMOUNT.—

19 (A) IN GENERAL.—Except as provided in

20 paragraph (2), the amount of the corporate em21 ployer premium for a month in a year for a

22 class of family enrollment for a family residing

23 in a premium area (established under section

24 1384(b)) is 80 percent of the weighted average

25 monthly premium of the corporate alliance

26 health plans offered by the corporate alliance
783

•S 1779 PCS

1 for that class of enrollment for families residing

2 in that area.

3 (B) APPLICATION TO SELF-INSURED

4 PLANS.—In applying this paragraph in the case

5 of one or more corporate alliance health plans

6 that are self-insured plans—

7 (i) the ‘‘premium’’ for the plan is the

8 actuarial equivalent of such premium,

9 based upon the methodology (or such other

10 consistent methodology) used under section

11 6021(a) (relating to application of pre12 mium caps to corporate alliance health

13 plans), and

14 (ii) the premium amount, for different

15 classes and, if applicable, for different pre16 mium areas, shall be computed in a man17 ner based on such factors as may bear a

18 reasonable relationship to costs for the

19 provision of the comprehensive benefit

20 package to the different classes in such

21 areas.

22 The Secretary of Labor shall establish rules to

23 carry out this subparagraph.

24 (2) LOW-WAGE EMPLOYEES.—In the case of a

25 low-wage employee entitled to a premium discount
784

•S 1779 PCS

1 under section 6104(a)(2), the amount of the em2 ployer premium payment for a month in a year for

3 a class of family enrollment shall be increased by the

4 amount of such premium discount.

5 (c) DETERMINATIONS.—

6 (1) BASIS.—Determinations under this section

7 shall be made based on such information as the Sec8 retary of Labor shall specify.

9 (2) TIMING.—Determinations of the monthly

10 premiums under this section for months in a year

11 shall be made not later than December 1 of the pre12 vious year.

13 Subtitle C—Payments to Regional

14 Alliance Health Plans

15 SEC. 6201. COMPUTATION OF BLENDED PLAN PER CAPITA

16 PAYMENT AMOUNT.

17 (a) IN GENERAL.—For purposes of section 1351, the

18 blended plan per capita payment amount for a regional

19 alliance health plan for enrollments in an alliance for a

20 year is equal to the sum of the 3 components described

21 in subsection (b), multiplied by any adjustment factor ap22 plied for the year under section 6202(d).

23 (b) SUM OF PRODUCTS.—The 3 components de24 scribed in this subsection are:
785

•S 1779 PCS

1 (1) PLAN BID COMPONENT FOR THAT PLAN.—

2 The product of—

3 (A) the final accepted bid for plan (as

4 defined in section 6000(a)(2)) for the year,

5 and

6 (B) the plan bid proportion deter7 mined under section 6202(a)(1) for the

8 year.

9 (2) AFDC COMPONENT FOR ALLIANCE.—The

10 product of—

11 (A) the AFDC per capita premium

12 amount for the regional alliance for the

13 year (determined under section 9012), and

14 (B) the AFDC proportion determined

15 under section 6202(a)(2) for the year.

16 (3) SSI COMPONENT FOR ALLIANCE.—The

17 product of—

18 (A) the SSI per capita premium

19 amount for the regional alliance for the

20 year (determined under section 9013) for

21 the year, and

22 (B) the SSI proportion determined

23 under section 6202(a)(3) for the year.
786

•S 1779 PCS

1 SEC. 6202. COMPUTATION OF PLAN BID, AFDC, AND SSI

2 PROPORTIONS.

3 (a) IN GENERAL.—For purposes of this subtitle:

4 (1) PLAN BID PROPORTION.—The ‘‘plan bid

5 proportion’’ is, for a class of enrollment, 1 minus the

6 sum of (A) the AFDC proportion, and (B) the SSI

7 proportion.

8 (2) AFDC PROPORTION.—The ‘‘AFDC propor9 tion’’ is, for a class of family enrollment for a year,

10 the ratio of—

11 (A) the average of the number of AFDC

12 recipients (as determined under subsection (c))

13 enrolled in regional alliance health plans in that

14 class of enrollment for the year, to

15 (B) the average of the total number of in16 dividuals enrolled in regional alliance health

17 plans in that class of enrollment for the year.

18 (3) SSI PROPORTION.—The ‘‘SSI proportion’’

19 is, for a class of family enrollment for a year, the

20 ratio of—

21 (A) the average of the number of SSI re22 cipients (as determined under subsection (c))

23 enrolled in regional alliance health plans in that

24 class of enrollment for the year, to

25 (B) the average described in paragraph

26 (2)(B).
787

•S 1779 PCS

1 (b) COMPUTATION.—

2 (1) PROJECTIONS.—The proportions described

3 in subsection (a) shall be determined and applied by

4 the State, based upon the best available data, at

5 least 1 month before the date bids are submitted

6 under section 6004 before the beginning of the cal7 endar year involved.

8 (2) ACTUAL.—For purposes of making adjust9 ments under subsection (d), the regional alliance

10 shall determine, after the end of each year, the ac11 tual proportions described in subsection (a).

12 (c) COUNTING OF AFDC AND SSI RECIPIENTS.—

13 For purposes of subsections (a)(2)(A) and (a)(3)(A), the

14 terms ‘‘SSI recipient’’ and ‘‘AFDC recipient’’ do not in15 clude a medicare-eligible individual.

16 (d) ADJUSTMENTS FOR DISCREPANCIES IN ESTI17 MATIONS.—

18 (1) IN GENERAL.—If the actual AFDC propor19 tion or SSI proportion (as determined under sub20 section (a)) for a year (in this subsection referred to

21 as the ‘‘reference year’’), determined after the end

22 of the year based upon actual number of AFDC re23 cipients and SSI recipients in the year, is different

24 from the projected AFDC and SSI proportions (as

25 determined under subsection (b)(1)) used in comput-
788

•S 1779 PCS

1 ing the blended plan payment amount for the year,

2 then, subject to section 1361(b)(3), the regional alli3 ance shall adjust the blended plan payment amount

4 in the second succeeding year (in this subsection re5 ferred to as the ‘‘applicable year’’) in the manner de6 scribed in paragraph (2). By regulation the Sec7 retary may apply the adjustment, based on esti8 mated amounts, in the year before the applicable

9 year, with final adjustment in the applicable year.

10 (2) ADJUSTMENT DESCRIBED.—

11 (A) POSITIVE CASH FLOW.—If the cash

12 flow difference (as defined in paragraph (3)(A))

13 for the reference year is positive, then in the

14 applicable year the blended plan payment

15 amount shall be increased by the adjustment

16 percentage described in paragraph (4).

17 (B) NEGATIVE CASH FLOW.—If the cash

18 flow difference (as defined in paragraph (3)(A))

19 for the reference year is negative, then in the

20 applicable year the blended plan payment

21 amount shall be reduced by the adjustment per22 centage described in paragraph (4).

23 (3) CASH FLOW DIFFERENCE DEFINED.—In

24 this subsection:
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•S 1779 PCS

1 (A) IN GENERAL.—The term ‘‘cash flow

2 difference’’ means, for a regional alliance for a

3 reference year—

4 (i) the actual cash flow (as defined in

5 subparagraph (B)) for the alliance for the

6 year, minus

7 (ii) the reconciled cash flow (as de8 fined in subparagraph (C)) for the alliance

9 for the year.

10 (B) ACTUAL CASH FLOW.—The term ‘‘ac11 tual cash flow’’ means, for a regional alliance

12 for a reference year, the total amount paid by

13 the regional alliance to the regional alliance

14 health plans in the year based on the blended

15 plan payment amount (computed on the basis

16 of projected AFDC and SSI proportions deter17 mined under subsection (b)(1)).

18 (C) RECONCILED CASH FLOW.—The term

19 ‘‘reconciled cash flow’’ means, for a regional al20 liance for a reference year, the total amount

21 that would have been paid to regional alliance

22 health plans in the year if such payments had

23 been made based on the blended plan payment

24 amount computed on the basis of the actual

25 AFDC and SSI proportions for the year (deter-
790

•S 1779 PCS

1 mined under subsection (b)(2), rather than

2 based on such payment amount computed on

3 the basis of the projected AFDC and SSI pro4 portions for the year (determined under sub5 section (b)(1)).

6 (4) PERCENTAGE ADJUSTMENT.—The percent7 age adjustment described in this paragraph for a re8 gional alliance for an applicable year is the ratio (ex9 pressed as a percentage) of—

10 (A) the cash flow difference for the ref11 erence year, to

12 (B) the total payments estimated by the

13 regional alliance to be paid to regional alliance

14 health plans under this subtitle in the applica15 ble year (determined without regard to any ad16 justment under this subsection).

17 TITLE VIII—HEALTH AND

18 HEALTH-RELATED PRO19 GRAMS OF THE FEDERAL

20 GOVERNMENT

TABLE OF CONTENTS OF TITLE

Subtitle E—Amendments to the Employee Retirement Income

Security Act of 1974

Sec. 8401. Group health plan defined ..................................................... 791

Sec. 8402. Limitation on coverage of group health plans under title I

of ERISA ...................................................................... 791

Sec. 8403. Amendments relating to continuation coverage .................... 797

Sec. 8404. Additional amendments relating to group health plans ........ 800

Sec. 8405. Plan claims procedures .......................................................... 801

Sec. 8406. Effective dates ....................................................................... 801
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•S 1779 PCS

1 Subtitle E—Amendments to the

2 Employee Retirement Income

3 Security Act of 1974

4 SEC. 8401. GROUP HEALTH PLAN DEFINED.

5 Section 3 of the Employee Retirement Income Secu6 rity Act of 1974 (29 U.S.C. 1002) is amended by adding

7 at the end the following new paragraph:

8 ‘‘(42) The term ‘group health plan’ means an em9 ployee welfare benefit plan which provides medical care (as

10 defined in section 213(d) of the Internal Revenue Code

11 of 1986) to participants or beneficiaries directly or

12 through insurance, reimbursement, or otherwise.’’.

13 SEC. 8402. LIMITATION ON COVERAGE OF GROUP HEALTH

14 PLANS UNDER TITLE I OF ERISA.

15 (a) IN GENERAL.—Section 4 of the Employee Retire16 ment Income Security Act of 1974 (29 U.S.C. 1003) is

17 amended—

18 (1) in subsection (a), by striking ‘‘subsection

19 (b)’’ and inserting ‘‘subsections (b) and (c)’’;

20 (2) in subsection (b), by striking ‘‘The provi21 sions’’ and inserting ‘‘Except as provided in sub22 section (c), the provisions’’; and

23 (3) by adding at the end the following new sub24 section:

25 ‘‘(c) COVERAGE OF GROUP HEALTH PLANS.—
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1 ‘‘(1) LIMITED INCLUSION.—This title shall

2 apply to a group health plan only to the extent pro3 vided in this subsection.

4 ‘‘(2) COVERAGE UNDER CERTAIN PROVISIONS

5 WITH RESPECT TO CERTAIN PLANS.—

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

7 subparagraph (B), parts 1, 4, and 6 of subtitle

8 B shall apply to—

9 ‘‘(i) a group health plan which is

10 maintained by—

11 ‘‘(I) a corporate alliance (as de12 fined in section 1311(a) of the Health

13 Security Act), or

14 ‘‘(II) a member of a corporate al15 liance (as so defined) whose eligible

16 sponsor is described in section

17 1311(b)(1)(C) (relating to rural elec18 tric cooperatives and rural telephone

19 cooperative associations), and

20 ‘‘(ii) a group health plan not de21 scribed in clause (i) which provides bene22 fits which are permitted under paragraph

23 (4) of section 1003 of the Health Security

24 Act.
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1 ‘‘(B) INAPPLICABILITY WITH RESPECT TO

2 STATE-CERTIFIED HEALTH PLANS.—Subpara3 graph (A) shall not apply with respect to any

4 plan or portion thereof which consists of a

5 State-certified health plan (as defined in section

6 1400(c) of the Health Security Act). The Sec7 retary shall provide by regulation for treatment

8 as a separate group health plan of any arrange9 ment which would otherwise be treated under

10 this title as part of a group health plan to the

11 extent necessary to carry out the purposes of

12 this title.

13 ‘‘(3) CIVIL ACTIONS BY CORPORATE ALLIANCE

14 PARTICIPANTS, BENEFICIARIES, AND FIDUCIARIES

15 AND BY THE SECRETARY.—

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

17 subparagraph (B), in the case of a group health

18 plan to which parts 1, 4, and 6 of subtitle B

19 apply under paragraph (2), section 502 shall

20 apply with respect to a civil action described in

21 such section brought—

22 ‘‘(i) by a participant, beneficiary, or

23 fiduciary under such plan, or

24 ‘‘(ii) by the Secretary.
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1 ‘‘(B) EXCEPTION WHERE REVIEW IS OTH2 ERWISE AVAILABLE UNDER HEALTH SECURITY

3 ACT.—Subparagraph (A) shall not apply with

4 respect to any cause of action for which, under

5 section 5202(d) of the Health Security Act,

6 proceedings under sections 5203 and 5204 of

7 such Act pursuant to complaints filed under

8 section 5202(b) of such Act, and review under

9 section 5205 of such Act of determinations

10 made under such section 5204, are the exclu11 sive means of review.

12 ‘‘(4) DEFINITIONS AND ENFORCEMENT PROVI13 SIONS.—Sections 3, 501, 502, 503, 504, 505, 506,

14 507, 508, 509, 510, and 511 and the preceding sub15 sections of this section shall apply to a group health

16 plan to the extent necessary to effectively carry out,

17 and enforce the requirements under, the provisions

18 of this title as they apply pursuant to this sub19 section.

20 ‘‘(5) APPLICABILITY OF PREEMPTION RULES.—

21 Section 514 shall apply in the case of any group

22 health plan to which parts 1, 4, and 6 of subtitle B

23 apply under paragraph (2).’’.

24 (b) REPORTING AND DISCLOSURE REQUIREMENTS

25 APPLICABLE TO GROUP HEALTH PLANS.—
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•S 1779 PCS

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

2 I of such Act is amended—

3 (A) in the heading for section 110 (29

4 U.S.C. 1030), by adding ‘‘BY PENSION PLANS’’

5 at the end;

6 (B) by redesignating section 111 (29

7 U.S.C. 1031) as section 112; and

8 (C) by inserting after section 110 the fol9 lowing new section:

10 ‘‘SPECIAL RULES FOR GROUP HEALTH PLANS

11 ‘‘SEC. 111. (a) IN GENERAL.—The Secretary may by

12 regulation provide special rules for the application of this

13 part to group health plans which are consistent with the

14 purposes of this title and the Health Security Act and

15 which take into account the special needs of participants,

16 beneficiaries, and health care providers under such plans.

17 ‘‘(b) EXPEDITIOUS REPORTING AND DISCLOSURE.—

18 Such special rules may include rules providing for—

19 ‘‘(1) reductions in the periods of time referred

20 to in this part,

21 ‘‘(2) increases in the frequency of reports and

22 disclosures required under this part, and

23 ‘‘(3) such other changes in the provisions of

24 this part as may result in more expeditious reporting

25 and disclosure of plan terms and changes in such
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1 terms to the Secretary and to plan participants and

2 beneficiaries,

3 to the extent that the Secretary determines that the rules

4 described in this subsection are necessary to ensure timely

5 reporting and disclosure of information consistent with the

6 purposes of this part and the Health Security Act as they

7 relate to group health plans.

8 ‘‘(c) ADDITIONAL REQUIREMENTS.—Such special

9 rules may include rules providing for reporting and disclo10 sure to the Secretary and to participants and beneficiaries

11 of additional information or at additional times with re12 spect to group health plans to which this part applies

13 under section 4(c)(2), if such reporting and disclosure

14 would be comparable to and consistent with similar re15 quirements applicable under the Health Security Act with

16 respect to plans maintained by regional alliances (as de17 fined in such section 1301 of such Act) and applicable reg18 ulations of the Secretary of Health and Human Services

19 prescribed thereunder.’’.

20 (2) CLERICAL AMENDMENT.—The table of con21 tents in section 1 of such Act is amended by striking

22 the items relating to sections 110 and 111 and in23 serting the following new items:

‘‘Sec. 110. Alternative methods of compliance by pension plans.

‘‘Sec. 111. Special rules for group health plans.

‘‘Sec. 112. Repeal and effective date.’’.
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•S 1779 PCS

1 (d) EXCLUSION OF PLANS MAINTAINED BY RE2 GIONAL ALLIANCES FROM TREATMENT AS MULTIPLE EM3 PLOYER WELFARE ARRANGEMENTS.—Section 3(40)(A) of

4 such Act (29 U.S.C. 1002(40)(A)) is amended—

5 (1) in clause (ii), by striking ‘‘or’’;

6 (2) in clause (iii), by striking the period and in7 serting ‘‘, or’’; and

8 (3) by adding after clause (iii) the following

9 new clause:

10 ‘‘(iv) by a regional alliance (as defined in sec11 tion 1301 of the Health Security Act).’’.

12 SEC. 8403. AMENDMENTS RELATING TO CONTINUATION

13 COVERAGE.

14 (a) PERIOD OF COVERAGE.—Subparagraph (D) of

15 section 602(2) of the Employee Retirement Income Secu16 rity Act of 1974 (29 U.S.C. 1162(1)) is amended—

17 (1) by striking ‘‘or’’ at the end of clause (i), by

18 striking the period at the end of clause (ii) and in19 serting ‘‘, or’’, and by adding at the end the follow20 ing new clause:

21 ‘‘(iii) eligible for coverage under a

22 comprehensive benefit package described in

23 section 1101 of the Health Security Act.’’,

24 and
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1 (2) by striking ‘‘OR MEDICARE ENTITLEMENT’’

2 in the heading and inserting ‘‘, MEDICARE ENTITLE3 MENT, OR HEALTH SECURITY ACT ELIGIBILITY’’.

4 (b) QUALIFIED BENEFICIARY.—Section 607(3) of

5 such Act (29 U.S.C. 1167(3)) is amended by adding at

6 the end the following new subparagraph:

7 ‘‘(D) SPECIAL RULE FOR INDIVIDUALS

8 COVERED BY HEALTH SECURITY ACT.—The

9 term ‘qualified beneficiary’ shall not include any

10 individual who, upon termination of coverage

11 under a group health plan, is eligible for cov12 erage under a comprehensive benefit package

13 described in section 1101 of the Health Secu14 rity Act.’’

15 (c) REPEAL UPON IMPLEMENTATION OF HEALTH

16 SECURITY ACT.—

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

18 I of such Act (29 U.S.C. 601 et seq.) is amended

19 by striking sections 601 through 608 and by redesig20 nating section 609 as section 601.

21 (2) CONFORMING AMENDMENTS.—

22 (A) Section 502(a)(7) of such Act (29

23 U.S.C. 1132(a)(7)) is amended by striking

24 ‘‘609(a)(2)(A)’’ and inserting ‘‘601(a)(2)(A)’’.
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•S 1779 PCS

1 (B) Section 502(c)(1) is amended by strik2 ing ‘‘paragraph (1) or (4) of section 606 or’’.

3 (C) Section 514 of such Act (29 U.S.C.

4 1144) is amended by striking ‘‘609’’ each place

5 it appears in subsections (b)(7) and (b)(8) and

6 inserting ‘‘601’’.

7 (D) The table of contents in section 1 of

8 such Act is amended by striking the items relat9 ing to sections 601 through 609 and inserting

10 the following new item:

‘‘Sec. 601. Additional standards for group health plans.’’

11 (d) EFFECTIVE DATE.—

12 (1) SUBSECTIONS (a) AND (b).—The amend13 ments made by subsections (a) and (b) shall take ef14 fect on the date of the enactment of this Act.

15 (2) SUBSECTION (c).—The amendments made

16 by subsection (c) shall take effect on the earlier of—

17 (A) January 1, 1998, or

18 (B) the first day of the first calendar year

19 following the calendar year in which all States

20 have in effect plans under which individuals are

21 eligible for coverage under a comprehensive

22 benefit package described in section 1101 of

23 this Act.
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1 SEC. 8404. ADDITIONAL AMENDMENTS RELATING TO

2 GROUP HEALTH PLANS.

3 (a) REGULATIONS OF THE NATIONAL HEALTH

4 BOARD REGARDING CASES OF ADOPTION.—Section

5 601(c) of the Employee Retirement Income Security Act

6 of 1974 (as redesignated by section 8403) is amended by

7 adding at the end the following new paragraph:

8 ‘‘(4) REGULATIONS BY NATIONAL HEALTH

9 BOARD.—The preceding provisions of this subsection

10 shall apply except to the extent otherwise provided

11 in regulations of the National Health Board under

12 the Health Security Act.’’.

13 (b) COVERAGE OF PEDIATRIC VACCINES.—Section

14 601(d) of such Act (as redesignated by section 8403) is

15 amended by adding at the end the following new sentence:

16 ‘‘The preceding sentence shall cease to apply to a group

17 health plan upon becoming a corporate alliance health

18 plan pursuant to an effective election of the plan sponsor

19 to be a corporate alliance under section 1311 of the Health

20 Security Act.’’.

21 (c) TECHNICAL CORRECTIONS.—Effective as if in22 cluded in the enactment of the Omnibus Budget Reconcili23 ation Act of 1993—

24 (1) Subsection (a)(2)(B)(ii) of section 609 of

25 the Employee Retirement Income Security Act of
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•S 1779 PCS

1 1974 is amended by striking ‘‘section 13822’’ and

2 inserting ‘‘section 13623’’.

3 (2) Subsection (a)(4) of such section 609 is

4 amended by striking ‘‘section 13822’’ and inserting

5 ‘‘section 13623’’.

6 (3) Subsection (d) of such section 609 is

7 amended by striking ‘‘section 13830’’ and inserting

8 ‘‘section 13631’’.

9 SEC. 8405. PLAN CLAIMS PROCEDURES.

10 Section 503 of the Employee Retirement Income Se11 curity Act of 1974 (29 U.S.C. 1133) is amended—

12 (1) by inserting ‘‘(a) IN GENERAL.—’’ after

13 ‘‘SEC. 503.’’; and

14 (2) by adding at the end the following new sub15 section:

16 ‘‘(b) GROUP HEALTH PLANS.—In addition to the re17 quirements of subsection (a), a group health plan to which

18 parts 1 and 4 apply under section 4(c)(2) shall comply

19 with the requirements of section 5201 of the Health Secu20 rity Act (relating to health plan claims procedure).’’.

21 SEC. 8406. EFFECTIVE DATES.

22 Except as otherwise provided in this subtitle, the

23 amendments made by this subtitle shall take effect on the

24 earlier of—

25 (1) January 1, 1998, or
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1 (2) such date or dates as may be prescribed in

2 regulations of the National Health Board in connec3 tion with plans whose participants or beneficiaries

4 reside in any State which becomes a participating

5 State under section 1200 of this Act before January

6 1, 1998.

7 TITLE IX—AGGREGATE

8 GOVERNMENT PAYMENTS

TABLE OF CONTENTS OF TITLE

TITLE IX—AGGREGATE GOVERNMENT PAYMENTS

Page

Subtitle B—Aggregate Federal Alliance Payments

Sec. 9102. Capped Federal alliance payments ........................................ 802

Subtitle C—Borrowing Authority to Cover Cash-Flow

Shortfalls

Sec. 9201. Borrowing authority to cover cash-flow shortfalls ................ 812

9 Subtitle B—Aggregate Federal

10 Alliance Payments

11 SEC. 9102. CAPPED FEDERAL ALLIANCE PAYMENTS.

12 (a) CAPPED ENTITLEMENT.—

13 (1) PAYMENT.—The Secretary shall provide for

14 each calendar quarter (beginning on or after Janu15 ary 1, 1996) for payment to each regional alliance

16 of an amount equal to the capped Federal alliance

17 payment amount (as defined in subsection (b)(1))

18 for the regional alliance for the quarter.
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•S 1779 PCS

1 (2) ENTITLEMENT.—This section constitutes

2 budget authority in advance of appropriations Acts,

3 and represents the obligation of the Federal Govern4 ment to provide for the payment to regional alliances

5 of the capped Federal alliance payment amount

6 under this section.

7 (b) CAPPED FEDERAL ALLIANCE PAYMENT

8 AMOUNT.—

9 (1) IN GENERAL.—In this section, the term

10 ‘‘capped Federal alliance payment amount’’ means,

11 for a regional alliance for a calendar quarter in a

12 year and subject to subsection (e), the amount by

13 which—

(A) 1 14 ⁄4 of the total payment obligation (de15 scribed in paragraph (2)) for the alliance for

16 the year, exceeds

(B) 1 17 ⁄4 of the total amounts receivable (de18 scribed in paragraph (3)) by the alliance for the

19 year.

20 (2) TOTAL PAYMENT OBLIGATION.—The total

21 payment obligation described in this paragraph for

22 an alliance for a year is the total amount payable by

23 the alliance for the following:

24 (A) PLAN PAYMENTS (AND CERTAIN COST

25 SHARING REDUCTIONS).—Payments to regional
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1 alliance health plans under section 1351 (in2 cluding amounts attributable to cost sharing re3 ductions under section 1371, not including a re4 duction under subsection (c)(2) thereof).

5 (B) ALLIANCE ADMINISTRATIVE EX6 PENSES.—Payments retained by the regional

7 alliance for administration (in accordance with

8 section 1352).

9 (3) TOTAL AMOUNTS RECEIVABLE.—The total

10 amounts receivable by a regional alliance for a year

11 is the sum of the following:

12 (A) PREMIUMS.—The amount payable to

13 the regional alliance for the family share of pre14 miums, employer premiums, and liabilities owed

15 the alliance under subtitle B of title VI, not

16 taking into account any failure to make or col17 lect such payments.

18 (B) OTHER GOVERNMENT PAYMENTS.—

19 The amounts payable to the regional alliance

20 under sections 9001, 9011, and 9101, and pay21 able under section 1894 of the Social Security

22 Act (as added by section 4003) during the year.

23 (4) NO PAYMENT FOR CERTAIN AMOUNTS.—

24 (A) UNCOLLECTED ALLIANCE PRE25 MIUMS.—Each regional alliance is responsible,
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1 under section 1345(a), for the collection of all

2 amounts owed the alliance (whether by individ3 uals, employers, or others and whether on the

4 basis of premiums owed, incorrect amounts of

5 discounts or premium, cost sharing, or other re6 ductions made, or otherwise), and no amounts

7 are payable by the Federal Goverment under

8 this section with respect to the failure to collect

9 any such amounts.

10 (B) ADMINISTRATIVE ERRORS.—

11 (i) IN GENERAL.—Each participating

12 State is responsible, under section 1202(g),

13 for the payment to regional alliances in the

14 State of amounts attributable to adminis15 trative errors (described in clause (ii)).

16 (ii) ADMINISTRATIVE ERRORS DE17 SCRIBED.—The administrative errors de18 scribed in this clause include the following:

19 (I) An eligibility error rate for

20 premium discounts, liability reduc21 tions, and cost sharing reductions

22 under sections 6104 and 6123, section

23 6113, and section 1371, respectively,

24 to the extent the applicable error rate

25 exceeds the maximum permissible
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•S 1779 PCS

1 error rate, specified by the applicable

2 Secretary under section

3 1361(b)(1)(C), with respect to the

4 section involved.

5 (II) Misappropriations or other

6 regional alliance expenditures that the

7 Secretary finds are attributable to

8 malfeasance or misfeasance by the re9 gional alliance or the State.

10 (5) SPECIAL RULES FOR SINGLE-PAYER

11 STATES.—In applying this subsection in the case of

12 a single-payer State, the Secretary shall develop and

13 apply a methodology for computing an amount of

14 payment (with respect to each calendar quarter) that

15 is equivalent to the amount of payment that would

16 have been made to all regional alliances in the State

17 for the quarter if the State were not a single-payer

18 State.

19 (c) DETERMINATION OF CAPPED FEDERAL ALLI20 ANCE PAYMENT AMOUNTS.—

21 (1) REPORTS.—At such time as the Secretary

22 may require before the beginning of each fiscal year,

23 each regional alliance shall submit to the Secretary

24 such information as the Secretary may require to es25 timate the capped Federal alliance payment amount
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1 under this section for the succeeding calendar year

2 (and the portion of such year that falls in such fiscal

3 year).

4 (2) ESTIMATION.—Before the beginning of each

5 year, the Secretary shall estimate for each regional

6 alliance the capped Federal alliance payment amount

7 for calendar quarters in such year. Such estimate

8 shall be based on factors including prior financial ex9 perience in the alliance, future estimates of income,

10 wages, and employment, and other characteristics of

11 the area found relevant by the Secretary. The Sec12 retary shall transmit to Congress, on a timely basis

13 consistent with the timely appropriation of funds

14 under this section, a report that specifies an esti15 mate of the total capped Federal alliance payment

16 amounts owed to regional alliances under this sec17 tion for the fiscal and calendar year involved.

18 (d) PAYMENTS TO REGIONAL ALLIANCES.—Subject

19 to subsection (e), the provisions of section 9101(b) apply

20 to payments under this section in the same manner as

21 they apply to payments under section 9101.

22 (e) CAP ON PAYMENTS.—

23 (1) IN GENERAL.—The total amount of the

24 capped Federal alliance payments made under this

25 section for quarters in a fiscal year may not exceed
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•S 1779 PCS

1 the cap specified under paragraph (2) for the fiscal

2 year.

3 (2) CAP.—Subject to paragraphs (3) and (6)—

4 (A) FISCAL YEARS 1996 THROUGH 2000.—

5 The cap under this paragraph—

6 (i) for fiscal year 1996, is $10.3 bil7 lion,

8 (ii) for fiscal year 1997, is $28.3 bil9 lion,

10 (iii) for fiscal year 1998, is $75.6 bil11 lion,

12 (iv) for fiscal year 1999, is $78.9 bil13 lion, and

14 (v) for fiscal year 2000, is $81.0 bil15 lion.

16 (B) SUBSEQUENT FISCAL YEAR.—The cap

17 under this paragraph for a fiscal year after fis18 cal year 2000 is the cap under this paragraph

19 for the previous fiscal year (not taking into ac20 count paragraph (3)) multiplied by the product

21 of the factors described in subparagraph (C) for

22 that fiscal year and for each previous year after

23 fiscal year 2000.
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1 (C) FACTOR.—The factor described in this

2 subparagraph for a fiscal year is 1 plus the fol3 lowing:

4 (i) CPI.—The percentage change in

5 the CPI for the fiscal year, determined

6 based upon the percentage change in the

7 average of the CPI for the 12-month pe8 riod ending with May 31 of the previous

9 fiscal year over such average for the pre10 ceding 12-month period.

11 (ii) POPULATION.—The average an12 nual percentage change in the population

13 of the United States during the 3-year pe14 riod ending in the preceding calendar year,

15 determined by the Board based on data

16 supplied by the Bureau of the Census.

17 (iii) REAL GDP PER CAPITA.—The av18 erage annual percentage change in the

19 real, per capita gross domestic product of

20 the United States during the 3-year period

21 ending in the preceding calendar year, de22 termined by the Board based on data sup23 plied by the Department of Commerce.

24 (3) CARRYFORWARD.—If the total of the

25 capped Federal alliance payment amounts for all re-
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•S 1779 PCS

1 gional alliances for all calendar quarters in a fiscal

2 year is less than the cap specified in paragraph (2)

3 for the fiscal year, then the amount of such surplus

4 shall be accumulated and will be available in the

5 case of a year in which the cap would otherwise be

6 breached.

7 (4) NOTIFICATION.—

8 (A) IN GENERAL.—If the Secretary antici9 pates that the amount of the cap, plus any

10 carryforward from a previous year accumulated

11 under paragraph (3), will not be sufficient for

12 a fiscal year, the Secretary shall notify the

13 President, the Congress, and each regional alli14 ance. Such notification shall include informa15 tion about the anticipated amount of the short16 fall and the anticipated time when the shortfall

17 will first occur.

18 (B) REQUIRED ACTION.—Within 30 days

19 after receiving such a notice, the President shall

20 submit to Congress a report containing specific

21 legislative recommendations for actions which

22 would eliminate the shortfall.

23 (5) CONGRESSIONAL CONSIDERATION.—

24 (A) EXPEDITED CONSIDERATION.—If a

25 joint resolution the substance of which approves
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•S 1779 PCS

1 the specific recommendations submitted under

2 paragraph (4)(B) is introduced, subject to sub3 paragraph (B), the provisions of section 2908

4 (other than subsection (a)) of the Defense Base

5 Closure and Realignment Act of 1990 shall

6 apply to the consideration of the joint resolution

7 in the same manner as such provisions apply to

8 a joint resolution described in section 2908(a)

9 of such Act.

10 (B) SPECIAL RULES.—For purposes of ap11 plying subparagraph (A) with respect to such

12 provisions, any reference to the Committee on

13 Armed Services of the House of Representatives

14 shall be deemed a reference to an appropriate

15 Committee of the House of Representatives

16 (specified by the Speaker of the House of Rep17 resentatives at the time of submission of rec18 ommendations under paragraph (4)) and any

19 reference to the Committee on Armed Services

20 of the Senate shall be deemed a reference to an

21 appropriate Committee of the Senate (specified

22 by the Majority Leader of the Senate at the

23 time of submission of such recommendations).

24 (6) METHOD FOR ADJUSTING THE CAP FOR

25 CHANGES IN INFLATION.—If the inflation rate, as
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•S 1779 PCS

1 measured by the percentage increase in the CPI, is

2 projected to be significantly different from the infla3 tion rate projected by the Council of Economic Advi4 sors to the President as of October 1993, the Sec5 retary may adjust the caps under paragraph (2) so

6 as to reflect such deviation from the projection.

7 Subtitle C—Borrowing Authority to

8 Cover Cash-flow Shortfalls

9 SEC. 9201. BORROWING AUTHORITY TO COVER CASH-FLOW

10 SHORTFALLS.

11 (a) IN GENERAL.—The Secretary shall make avail12 able loans to regional alliances in order to cover any period

13 of temporary cash-flow shortfall attributable to any of the

14 following:

15 (1) Any estimation discrepancy (including those

16 described in subsection (e)(1)).

17 (2) A period of temporary cash-flow shortfall

18 attributable to an administrative error (described in

19 subsection (e)(2)).

20 (3) A period of temporary cash-flow shortfall

21 relating to the relative timing during the year in

22 which amounts are received and payments are re23 quired to be made.

24 (b) TERMS AND CONDITIONS.—
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•S 1779 PCS

1 (1) IN GENERAL.—Loans shall be made under

2 this section under terms and conditions, consistent

3 with this subsection, specified by the Secretary, in

4 consultation with the Secretary of the Treasury and

5 taking into account Treasury cash management

6 rules.

7 (2) PERIOD.—Loans under this section shall be

8 repayable with interest over a period of not to exceed

9 2 years.

10 (3) INTEREST RATE.—The rate of interest on

11 such loans shall be at a rate determined by the Sec12 retary of the Treasury taking into consideration the

13 current average rate on outstanding marketable obli14 gations of the United States.

15 (4) APPROPRIATE PAYMENT ADJUSTMENTS.—

16 As a condition of providing a loan under subsection

17 (a)(1), the Secretary shall require the regional alli18 ance to make such adjustments under the appro19 priate estimation adjustment provision (described in

20 subsection (f)) in order to assure the repayment of

21 the amount so borrowed.

22 (5) LIMITATION ON LOAN BALANCE OUTSTAND23 ING TO A REGIONAL ALLIANCE.—The total balance

24 of loans outstanding at any time to a regional alli25 ance shall not exceed—
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1 (A) for the first year, 25 percent of the es2 timated total premiums for the alliance for such

3 year, or

4 (B) for a subsequent year, 25 percent of

5 the actual total premiums for the alliance for

6 the previous year.

7 (c) REPAYMENT.—

8 (1) ESTIMATION DISCREPANCIES AND TIM9 ING.—Loans made under paragraphs (1) and (3) of

10 subsection (a) shall be repaid through a reduction in

11 the payment amounts otherwise required to be made

12 under section 9102 to the regional alliance.

13 (2) ADMINISTRATIVE ERROR.—Loans made

14 under subsection (a)(2) shall be repaid through a

15 temporary increase in the amount of the State main16 tenance-of-effort payment required under section

17 9001.

18 (d) REPORTS.—The Secretary shall annually report

19 to Congress on the loans made (and loan amounts repaid)

20 under this section.

21 (e) SOURCES OF DISCREPANCY DESCRIBED.—

22 (1) ESTIMATION DISCREPANCIES.—The esti23 mation discrepancies described in this paragraph are

24 discrepancies in estimating the following:
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1 (A) The average premium payments per

2 family under section 6122(b).

3 (B) The AFDC and SSI proportions under

4 section 6202.

5 (C) The distribution of enrolled families in

6 different risk categories for purposes of section

7 1351(c).

8 (D) The distribution of enrollment in ex9 cess premium plans (for purposes of calculating

10 and applying the reduced weighted average ac11 cepted bid under section 6105(c)(1)).

12 (E) The collection shortfalls (used in com13 puting the family collection shortfall add-on

14 under section 6107).

15 (2) ADMINISTRATIVE ERRORS.—The adminis16 trative errors described in this paragraph are errors

17 described in section 9201(b)(4)(B)(ii).

18 (f) ESTIMATION ADJUSTMENT PROVISIONS DE19 SCRIBED.—The estimation adjustment provisions, referred

20 to in subsection (b)(4)) are the following adjustments (cor21 responding to the respective estimation discrepancies spec22 ified in subsection (d)(1)):

23 (1) Adjustments for average premium payments

24 per family under section 6122(b)(4).
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•S 1779 PCS

1 (2) Adjustments in the AFDC and SSI propor2 tions under section 6202(d).

3 (3) Adjustments pursuant to the methodology

4 described in section 1541(b)(8).

5 (4) Adjustments in excess premium credit pur6 suant to section 6105(b)(2).

7 (5) Adjustment in the collection shortfall add8 on under section 6107(b)(2)(C)).

9 (g) ADVANCES; LIMITATIONS ON ADVANCES.—

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

11 the Secretary of the Treasury is authorized to ad12 vance to the Secretary, under terms and conditions

13 determined by the Secretary of the Treasury,

14 amounts sufficient to cover the loans made to re15 gional alliances by the Secretary under this section.

16 (2) LIMITATION.—The total balance of Treas17 ury advances outstanding at any time to the Sec18 retary under paragraph (1) shall not exceed

19 $3,500,000,000.

20 TITLE X—COORDINATION OF

21 MEDICAL PORTION OF WORK22 ERS COMPENSATION AND

23 AUTOMOBILE INSURANCE

TABLE OF CONTENTS OF TITLE

Page

Subtitle A—Workers Compensation Insurance
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Sec. 10000. Definitions ........................................................................... 817

PART 1—HEALTH PLAN REQUIREMENTS RELATING TO WORKERS

COMPENSATION

Sec. 10001. Provision of workers compensation services ........................ 819

Sec. 10002. Payment by workers compensation carrier ......................... 823

PART 2—REQUIREMENTS OF PARTICIPATING STATES

Sec. 10011. Coordination of specialized workers compensation providers .................................................................................. 824

Sec. 10012. Preemption of State laws restricting delivery of workers

compensation medical benefits ...................................... 825

Sec. 10013. Development of supplemental schedule ............................... 826

Sec. 10014. Construction ........................................................................ 826

PART 3—APPLICATION OF INFORMATION REQUIREMENTS; REPORT ON

PREMIUM REDUCTIONS

Sec. 10021. Application of information requirements ............................. 827

Sec. 10022. Report on reduction in workers compensation premiums ... 827

PART 4—DEMONSTRATION PROJECTS

Sec. 10031. Authorization ....................................................................... 829

Sec. 10032. Development of work-related protocols ............................... 829

Sec. 10033. Development of capitation payment models ........................ 830

Subtitle C—Commission on Integration of Health Benefits

Sec. 10201. Commission .......................................................................... 830

Subtitle E—Davis-Bacon Act and Service Contract Act

Sec. 10401. Coverage of benefits under Health Security Act ................. 832

Subtitle F—Effective Dates

Sec. 10501. Regional alliances ................................................................ 832

Sec. 10502. Corporate alliances .............................................................. 832

Sec. 10503. Federal requirements .......................................................... 833

1 Subtitle A—Workers Compensation

2 Insurance

3 SEC. 10000. DEFINITIONS.

4 In this subtitle:

5 (1) INJURED WORKER.—The term ‘‘injured

6 worker’’ means, with respect to a health plan, an in7 dividual enrolled under the plan who has a work-re-
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1 lated injury or illness for which workers compensa2 tion medical benefits are available under State law.

3 (2) SPECIALIZED WORKERS COMPENSATION

4 PROVIDER.—The term ‘‘specialized workers com5 pensation provider’’ means a health care provider

6 that specializes in the provision of treatment relating

7 to work-related injuries or illness, and includes spe8 cialists in industrial medicine, specialists in occupa9 tional therapy, and centers of excellence in industrial

10 medicine and occupational therapy.

11 (3) WORKERS COMPENSATION MEDICAL BENE12 FITS.—The term ‘‘workers compensation medical

13 benefits’’ means, with respect to an enrollee who is

14 an employee subject to the workers compensation

15 laws of a State, the comprehensive medical benefits

16 for work-related injuries and illnesses provided for

17 under such laws with respect to such an employee.

18 (4) WORKERS COMPENSATION CARRIER.—The

19 term ‘‘workers compensation carrier’’ means an in20 surance company that underwrites workers com21 pensation medical benefits with respect to one or

22 more employers and includes an employer or fund

23 that is financially at risk for the provision of work24 ers compensation medical benefits.
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1 (5) WORKERS COMPENSATION SERVICES.—The

2 term ‘‘workers compensation services’’ means items

3 and services included in workers compensation medi4 cal benefits and includes items and services (includ5 ing rehabilitation services and long-term care serv6 ices) commonly used for treatment of work-related

7 injuries and illnesses.

8 PART 1—HEALTH PLAN REQUIREMENTS

9 RELATING TO WORKERS COMPENSATION

10 SEC. 10001. PROVISION OF WORKERS COMPENSATION

11 SERVICES.

12 (a) PROVISION OF BENEFITS.—Subject to subsection

13 (b)—

14 (1) REQUIREMENT FOR CERTAIN HEALTH

15 PLANS.—

16 (A) IN GENERAL.—Each health plan that

17 provides services to enrollees through partici18 pating providers shall enter into such contracts

19 and arrangements as are necessary (in accord20 ance with subparagraph (B)) to provide or ar21 range for the provision of workers compensation

22 services to such enrollees, in return for payment

23 from the workers compensation carrier under

24 section 10002.
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1 (B) PROVISION OF SERVICES.—For pur2 poses of this paragraph, a health plan provides

3 (or arranges for the provision of) workers com4 pensation services with respect to an enrollee if

5 the services are provided by—

6 (i) a participating provider in the

7 plan,

8 (ii) any other provider with whom the

9 plan has entered into an agreement for the

10 provision of such services, or

11 (iii) a specialized workers compensa12 tion provider (designated by the State

13 under 10011(b)), whether or not the pro14 vider is a provider described in clause (i)

15 or (ii).

16 (2) INDIVIDUAL REQUIREMENT.—An individual

17 entitled to workers compensation medical benefits

18 and enrolled in a health plan (whether or not the

19 plan is described in paragraph (1)(A)) shall receive

20 workers compensation services through the provision

21 (or arrangement for the provision) of such services

22 by the health plan.

23 (3) EXCEPTIONS.—
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1 (A) EMERGENCY SERVICES.—Paragraphs

2 (1) and (2) shall not apply in the case of emer3 gency services.

4 (B) ELECTING VETERANS, MILITARY PER5 SONNEL AND INDIANS.—Paragraphs (1) and

6 (2) shall not apply in the case of an individual

7 described in section 1004(b) and making an

8 election described in such section.

9 (4) USE OF SPECIALIZED WORKERS COMPENSA10 TION PROVIDERS.—If a participating State has des11 ignated under section 10011(b) specialized workers

12 compensation providers with respect to one or more

13 types of injuries or illnesses for a geographic area,

14 either a health plan or an injured worker who has

15 an injury or illness of such type may elect to provide

16 or receive the benefits under this subsection through

17 such a provider.

18 (b) ALTERNATIVE PERMITTED.—Subsection (a) shall

19 not be construed as preventing an injured worker and a

20 workers compensation carrier from agreeing that workers

21 compensation services shall be provided other than by or

22 through the health plan in which the worker is enrolled.

23 (c) COORDINATION.—

24 (1) DESIGNATION OF CASE MANAGER.—Each

25 health plan shall employ or contract with one or
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1 more individuals, such as occupational nurses, with

2 experience in the treatment of occupational illness

3 and injury to provide case management services with

4 respect to workers compensation services provided

5 through the plan under this section.

6 (2) FUNCTIONS OF CASE MANAGER.—The

7 health plan (through the case manager described in

8 paragraph (1)) is responsible for ensuring that—

9 (A) there is plan of treatment (when ap10 propriate) for each enrollee who is an injured

11 worker designed to assure appropriate treat12 ment and facilitate return to work;

13 (B) the plan of treatment is coordinated

14 with the workers compensation carrier, the em15 ployer, or both;

16 (C) the health plan (and its providers)

17 comply with legal duties and requirements

18 under State workers compensation law; and

19 (D) if the health plan is unable to provide

20 a workers compensation service needed to treat

21 a work-related injury or illness, the injured

22 worker is referred (in consultation with the

23 workers compensation carrier) to an appro24 priate provider.
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1 (c) ADMINISTRATION.—The Secretary of Labor shall

2 administer this part and, for such purposes, the Secretary

3 is authorized to prescribe such rules and regulations as

4 may be necessary and appropriate.

5 SEC. 10002. PAYMENT BY WORKERS COMPENSATION CAR6 RIER.

7 (a) PAYMENT.—

8 (1) IN GENERAL.—Each workers compensation

9 carrier that is liable for payment for workers com10 pensation services furnished by or through a health

11 plan, regardless of whether or not the services are

12 included in the comprehensive benefit package, shall

13 make payment for such services.

14 (2) USE OF REGIONAL ALLIANCE FEE SCHED15 ULE.—Except as provided in subsection (b), such

16 payment shall be made in accordance with the appli17 cable fee schedule established under section 1322(c)

18 or section 10013.

19 (b) ALTERNATIVE PAYMENT METHODOLOGIES.—

20 Subsection (a)(2) shall not apply—

21 (1) in the case of a regional alliance or partici22 pating State that establishes an alternative payment

23 methodology (such as payment on a negotiated fee

24 for each case) for payment for workers compensation

25 services; or
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1 (2) in the case in which a workers compensa2 tion carrier and the health plan negotiate alternative

3 payment arrangements.

4 (c) LIMITATION OF LIABILITY OF INJURED WORK5 ER.—Nothing in this part shall be construed as requiring

6 an injured worker to make any payment (including pay7 ment of any cost sharing or any amount in excess of the

8 applicable fee schedule) to any health plan or health care

9 provider for the receipt of workers compensation services.

10 PART 2—REQUIREMENTS OF PARTICIPATING

11 STATES

12 SEC. 10011. COORDINATION OF SPECIALIZED WORKERS

13 COMPENSATION PROVIDERS.

14 (a) IN GENERAL.—Each participating State shall co15 ordinate access to services provided by specialized workers

16 compensation providers on behalf of health plans, provid17 ing coverage to individuals residing in the State, under

18 part 1.

19 (b) OPTIONAL DESIGNATION OF SPECIALIZED

20 WORKERS COMPENSATION PROVIDERS.—A participating

21 State may designate such specialized workers compensa22 tion providers, with respect to one or more types of ill23 nesses or injuries in a geographic area as the State deter24 mines to be appropriate, to provide under part 1 workers

25 compensation services that—
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•S 1779 PCS

1 (1) are not included in the comprehensive bene2 fit package, or

3 (2) are so included but are specialized services

4 that are typically provided (as determined by the

5 State) by specialists in occupational or rehabilitative

6 medicine.

7 Injured workers and health plans may elect to use such

8 providers under section 10001(a)(4).

9 SEC. 10012. PREEMPTION OF STATE LAWS RESTRICTING

10 DELIVERY OF WORKERS COMPENSATION

11 MEDICAL BENEFITS.

12 (a) IN GENERAL.—Subject to section 10011(b), no

13 State law shall have any effect that restricts the choice,

14 or payment, of providers that may provide workers com15 pensation services for individuals enrolled in a health plan.

16 (b) DISPUTE RESOLUTION.—A State law may pro17 vide for a method for resolving disputes among parties re18 lated to—

19 (1) an individual’s entitlement to workers com20 pensation medical benefits under State law,

21 (2) the necessity and appropriateness of work22 ers compensation services provided to an injured

23 worker, and
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•S 1779 PCS

1 (3) subject to section 10002, the reasonableness

2 of charges or fees charged for workers compensation

3 services.

4 SEC. 10013. DEVELOPMENT OF SUPPLEMENTAL SCHEDULE.

5 Each participating State shall develop a fee schedule

6 applicable to payment for workers compensation services

7 for which a fee is not included in the applicable fee sched8 ule established under section 1322(c).

9 SEC. 10014. CONSTRUCTION.

10 (a) IN GENERAL.—Nothing in this subtitle shall be

11 construed as altering—

12 (1) the effect of a State workers compensation

13 law as the exclusive remedy for work-related injuries

14 or illnesses,

15 (2) the determination of whether or not a per16 son is an injured worker and entitled to workers

17 compensation medical benefits under State law,

18 (3) the scope of items and services available to

19 injured workers entitled to workers compensation

20 medical benefits under State law, or

21 (4) the eligibility of any individual or class of

22 individuals for workers compensation medical bene23 fits under State law.

24 (b) EARLY INTEGRATION.—Nothing in this subtitle

25 shall prevent a State from integrating or otherwise coordi-
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•S 1779 PCS

1 nating the payment for workers compensation medical

2 benefits with payment for benefits under health insurance

3 or health benefit plans before the date the Commission

4 submits its report under section 10201(e).

5 PART 3—APPLICATION OF INFORMATION RE6 QUIREMENTS; REPORT ON PREMIUM REDUC7 TIONS

8 SEC. 10021. APPLICATION OF INFORMATION REQUIRE9 MENTS.

10 (a) IN GENERAL.—The provisions of—

11 (1) part 3 of subtitle B of title V (relating to

12 use of standard forms), and

13 (2) section 5101(e)(9) (relating to provision of

14 data on quality),

15 apply to the provision of workers compensation services

16 in the same manner as such provisions apply with respect

17 to the provision of services included in the comprehensive

18 benefit package.

19 (b) RULES.—The Secretary of Labor shall promul20 gate rules to clarify the responsibilities of health plans and

21 workers compensation carriers in carrying out the provi22 sions referred to in subsection (a).

23 SEC. 10022. REPORT ON REDUCTION IN WORKERS COM24 PENSATION PREMIUMS.

25 (a) STUDY AND REPORT.—
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1 (1) STUDY.—The Secretary of Labor shall pro2 vide for a study of the impact of the provisions of

3 this subtitle on the premium rates charged to em4 ployers for workers compensation insurance. Such

5 study shall use information supplied by States relat6 ing to workers compensation premiums and such

7 other information as such Secretary finds appro8 priate.

9 (2) REPORT.—Such Secretary shall submit to

10 the Congress, by not later than 2 years after the

11 date that this subtitle applies in all States, a report

12 on the findings of the study.

13 (b) WORKERS COMPENSATION CARRIER FILINGS.—

14 (1) IN GENERAL.—Within six months after the

15 date this subtitle is effective in a participating State,

16 each workers compensation carrier (other than a

17 self-funded employer) providing workers compensa18 tion insurance in the State shall make a filing with

19 an agency designated by the State. Such filing shall

20 describe the manner in which such carrier has modi21 fied (or intends to modify) its premium rates for

22 workers compensation insurance provided in the

23 State to reflect the changes brought about by the

24 provisions in this subtitle. The filing shall include
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•S 1779 PCS

1 such actuarial projections and assumptions as nec2 essary to support the modifications of such rates.

3 (2) REPORT TO SECRETARY.—Each participat4 ing State shall provide to the Secretary of Labor

5 such information on filings made under paragraph

6 (1) as such Secretary may specify.

7 PART 4—DEMONSTRATION PROJECTS

8 SEC. 10031. AUTHORIZATION.

9 The Secretary of Health and Human Services and the

10 Secretary of Labor are authorized to conduct demonstra11 tion projects under this part in one or more States with

12 respect to treatment of work-related injuries and illnesses.

13 SEC. 10032. DEVELOPMENT OF WORK-RELATED PROTO14 COLS.

15 (a) IN GENERAL.—Under this part, the Secretaries,

16 in consultation with States and such experts on work-re17 lated injuries and illnesses as the Secretaries find appro18 priate, shall develop protocols for the appropriate treat19 ment of work-related conditions.

20 (b) TESTING OF PROTOCOLS.—The Secretaries shall

21 enter into contracts with one or more health alliances to

22 test the validity of the protocols developed under sub23 section (a).
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1 SEC. 10033. DEVELOPMENT OF CAPITATION PAYMENT MOD2 ELS.

3 Under this part, the Secretaries shall develop, using

4 protocols developed under section 10032 if possible, meth5 ods of providing for payment by workers compensation

6 carriers to health plans on a per case, capitated payment

7 for the treatment of specified work-related injuries and ill8 nesses.

9 Subtitle C—Commission on

10 Integration of Health Benefits

11 SEC. 10201. COMMISSION.

12 (a) ESTABLISHMENT.—There is hereby created a

13 Commission on Integration of Health Benefits (in this sec14 tion referred to as the ‘‘Commission’’).

15 (b) COMPOSITION.—

16 (1) IN GENERAL.—The Commission shall con17 sist of 15 members appointed jointly by the Sec18 retary of Health and Human Services and the Sec19 retary of Labor.

20 (2) NO COMPENSATION EXCEPT TRAVEL EX21 PENSES.—Members of the Commission shall serve

22 without compensation, but the Secretaries shall pro23 vide that each member shall receive travel expenses,

24 including per diem in lieu of subsistence, in accord25 ance with sections 5702 and 5703 of title 5, United

26 States Code.
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1 (c) DUTIES.—The Commission shall study the fea2 sibility and appropriateness of transferring financial re3 sponsibility for all medical benefits (including those cur4 rently covered under workers compensation and auto5 mobile insurance) to health plans.

6 (d) STAFF SUPPORT.—The Secretaries shall provide

7 staff support for the Commission.

8 (e) REPORT.—The Commission shall submit a report

9 on its work to the President by not later than July 1,

10 1995. If such report recommends the integration of finan11 cial responsibility for all medical benefits in health plans,

12 such report shall provide for a detailed plan as to how

13 (and when) such an integration should be effected under

14 this Act.

15 (f) TERMINATION.—The Commission shall terminate

16 90 days after the date of submission of its report under

17 subsection (e).

18 (g) AUTHORIZATION OF APPROPRIATIONS.—There

19 are authorized to be appropriated such sums as may be

20 necessary to carry out this section.
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1 Subtitle E—Davis-Bacon Act and

2 Service Contract Act

3 SEC. 10401. COVERAGE OF BENEFITS UNDER HEALTH SE4 CURITY ACT.

5 (a) DAVIS-BACON ACT.—Subsection (b)(2) of the

6 first section of the Davis-Bacon Act (40 U.S.C.

7 276a(b)(2)) is amended in the matter following subpara8 graph (B) by inserting after ‘‘local law’’ the following:

9 ‘‘(other than benefits provided pursuant to the Health Se10 curity Act)’’.

11 (b) SERVICE CONTRACT ACT OF 1965.—The second

12 sentence of section 2(a)(2) of the Service Contract Act of

13 1965 (41 U.S.C. 351(a)(2)) is amended by inserting after

14 ‘‘local law’’ the following: ‘‘(other than benefits provided

15 pursuant to the Health Security Act)’’.

16 Subtitle F—Effective Dates

17 SEC. 10501. REGIONAL ALLIANCES.

18 The provisions of subtitles A and B of this title apply

19 to regional alliances, and regional alliance health plans,

20 in a State 2 years after the State’s first year (as defined

21 in section 1902(17)).

22 SEC. 10502. CORPORATE ALLIANCES.

23 The provisions of subtitles A and B of this title apply

24 to corporate alliances, and corporate alliance health plans,

25 on the date under section 10501 that such subtitles apply
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1 to regional alliances, and regional alliance health plans,

2 in the State.

3 SEC. 10503. FEDERAL REQUIREMENTS.

4 The provisions of subtitle D of this title shall take

5 effect on January 1, 1998.

6 TITLE XI—TRANSITIONAL

7 INSURANCE REFORM

TABLE OF CONTENTS OF TITLE

Page

Sec. 11001. Imposition of requirements ................................................. 834

Sec. 11002. Enforcement ........................................................................ 835

Sec. 11003. Requirements relating to preserving current coverage ........ 836

Sec. 11004. Restrictions on premium increases during transition ......... 838

Sec. 11005. Requirements relating to portability ................................... 849

Sec. 11006. Requirements limiting reduction of benefits ....................... 851

Sec. 11007. National transitional health insurance risk pool ................. 852

Sec. 11008. Definitions ........................................................................... 856

Sec. 11009. Termination ......................................................................... 862

8 SEC. 11001. IMPOSITION OF REQUIREMENTS.

9 (a) IN GENERAL.—The Secretary and the Secretary

10 of Labor shall apply the provisions of this title to assure,

11 to the extent possible, the maintenance of current health

12 care coverage and benefits during the period between the

13 enactment of this Act and the dates its provisions are im14 plemented in the various States.

15 (b) ENFORCEMENT.—

16 (1) HEALTH INSURANCE PLANS.—The Sec17 retary shall enforce the requirements of this title

18 with respect to health insurance plans. The Sec-
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1 retary shall promulgate regulations to carry out the

2 requirements under this title with respect to health

3 insurance plans. The Secretary shall promulgate reg4 ulations with respect to section 11004 within 90

5 days after the date of the enactment of this Act.

6 (2) SELF-INSURED PLANS.—The Secretary of

7 Labor shall enforce the requirements of this title

8 with respect to self-insured plans. Such Secretary

9 shall promulgate regulations to carry out the re10 quirements under this title as they relate to self11 funded plans.

12 (3) ARRANGEMENTS WITH STATES.—The Sec13 retary and the Secretary of Labor may enter into ar14 rangements with a State to enforce the requirements

15 of this title with respect to health insurance plans

16 and self-insured plans issued or sold, or established

17 and maintained, in the State.

18 (c) PREEMPTION.—The requirements of this title do

19 not preempt any State law unless State law directly con20 flicts with such requirements. The provision of additional

21 protections under State law shall not be considered to di22 rectly conflict with such requirements. The Secretary (or,

23 in the case of a self-insured plan, the Secretary of Labor)

24 may issue letter determinations with respect to whether

25 this Act preempts a provision of State law.
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1 (d) INTERIM FINAL REGULATIONS.—Section 1911

2 shall apply to regulations issued to carry out this title.

3 The Secretary may consult with States and the National

4 Association of Insurance Commissioners in issuing regula5 tions and guidelines under this title.

6 (e) CONSTRUCTION.—The provisions of this title shall

7 be construed in a manner that assures, to the greatest

8 extent practicable, continuity of health benefits under

9 health benefit plans in effect on the effective date of this

10 Act.

11 (f) SPECIAL RULES FOR ACQUISITIONS AND TRANS12 FERS.—The Secretary may issue regulations regarding the

13 application of this title in the case of health insurance

14 plans (or groups of such plans) which are transferred from

15 one insurer to another insurer through assumption, acqui16 sition, or otherwise.

17 SEC. 11002. ENFORCEMENT.

18 (a) IN GENERAL.—Any health insurer or health bene19 fit plan sponsor that violates a requirement of this title

20 shall be subject to a civil money penalty of not more than

21 $25,000 for each such violation. The provisions of section

22 1128A of the Social Security Act (other than subsections

23 (a) and (b)) shall apply to civil money penalties under this

24 subsection in the same manner as they apply to a penalty

25 or proceeding under section 1128A(a) of such Act.
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1 (b) EQUITABLE REMEDIES.—

2 (1) IN GENERAL.—A civil action may be

3 brought by the applicable Secretary—

4 (A) to enjoin any act or practice which vio5 lates any provision of this title, or

6 (B) to obtain other appropriate equitable

7 relief (i) to redress such violations, or (ii) to en8 force any provision of this title, including, in

9 the case of a wrongful termination of (or re10 fusal to renew) coverage, reinstating coverage

11 effective as of the date of the violation.

12 SEC. 11003. REQUIREMENTS RELATING TO PRESERVING

13 CURRENT COVERAGE.

14 (a) PROHIBITION OF TERMINATION.—

15 (1) GROUP HEALTH INSURANCE PLANS.—Each

16 health insurer that provides a group health insur17 ance plan may not terminate (or fail to renew) cov18 erage for any covered employee if the employer of

19 the employee continues the plan, except in the case

20 of—

21 (A) nonpayment of required premiums,

22 (B) fraud, or

23 (C) misrepresentation of a material fact re24 lating to an application for coverage or claim

25 for benefits.
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1 (2) INDIVIDUAL HEALTH INSURANCE PLANS.—

2 Each health insurer that provides coverage to a cov3 ered individual under an individual health insurance

4 plan may not terminate (or fail to renew) coverage

5 for such individual (or a covered dependent), except

6 in the case of—

7 (A) nonpayment of required premiums,

8 (B) fraud, or

9 (C) misrepresentation of a material fact re10 lating to an application for coverage or claim

11 for benefits.

12 (2) EFFECTIVE DATE OF TITLE.—

13 (A) IN GENERAL.—This subsection shall

14 take effect on the effective date of this title and

15 shall apply to coverage on or after such date.

16 (B) DEFINITION.—Except as otherwise

17 provided, in this title the term ‘‘effective date of

18 this title’’ means the date of the enactment of

19 this Act.

20 (b) ACCEPTANCE OF NEW MEMBERS IN A GROUP

21 HEALTH INSURANCE PLAN.—

22 (1) IN GENERAL.—In the case of a health in23 surer that provides a group health insurance plan

24 that is in effect on the effective date of this title, the

25 insurer is required—
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•S 1779 PCS

1 (A) to accept all individuals, and their eli2 gible dependents, who become full-time employ3 ees (as defined in section 1901(b)(2)(C)) of an

4 employer covered after such effective date;

5 (B) to establish and apply premium rates

6 that are consistent with section 11004(b); and

7 (C) to limit the application of pre-existing

8 condition restrictions in accordance with section

9 11005.

10 (2) CONSISTENT APPLICATION OF RULES RE11 LATING TO DEPENDENTS AND WAITING PERIODS.—

12 In this subsection, the term ‘‘eligible dependent’’,

13 with respect to a group health insurance plan, has

14 the meaning provided under the plan as of October

15 27, 1993, or, in the case of a plan not established

16 as of such date, as of the date of establishment of

17 the plan.

18 SEC. 11004. RESTRICTIONS ON PREMIUM INCREASES DUR19 ING TRANSITION.

20 (a) DIVISION OF HEALTH INSURANCE PLANS BY

21 SECTOR.—For purposes of this section, each health in22 surer shall divide its health insurance business into the

23 following 3 sectors:
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1 (1) Health insurance for groups with at least

2 100 covered lives (in this section referred to as the

3 ‘‘large group sector’’)

4 (2) Health insurance for groups with fewer

5 than 100 covered lives (in this section referred as

6 the ‘‘small group sector’’).

7 (3) Health insurance for individuals, and not

8 for groups (in this section referred to as the ‘‘indi9 vidual sector’’).

10 (b) PREMIUM CHANGES TO REFLECT CHANGES IN

11 GROUP OR INDIVIDUAL CHARACTERISTICS OR TERMS OF

12 COVERAGE.—

13 (1) APPLICATION.—The provisions of this sub14 section shall apply to changes in premiums that re15 flect—

16 (A) changes in the number of individuals

17 covered under a plan;

18 (B) changes in the group or individual

19 characteristics (including age, gender, family

20 composition or geographic area but not includ21 ing health status, claims experience or duration

22 of coverage under the plan) of individuals cov23 ered under a plan;
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•S 1779 PCS

1 (C) changes in the level of benefits (includ2 ing changes in cost-sharing) under the plan;

3 and

4 (D) changes in any material terms and

5 conditions of the health insurance plan (other

6 than factors related to health status, claims ex7 perience, and duration of coverage under the

8 plan).

9 (2) SPECIFICATION OF REFERENCE RATE FOR

10 EACH SECTOR.—Each health insurer shall calculate

11 a reference rate for each such sector. The reference

12 rate for a sector shall be calculated so that, if it

13 were applied using the rate factors specified under

14 paragraph (3), the average premium rate for individ15 uals and groups in that sector would approximate

16 the average premium rate charged individuals and

17 groups in the sector as of the effective date of this

18 title.

19 (3) SINGLE SET OF RATE FACTORS WITHIN

20 EACH SECTOR.—

21 (A) IN GENERAL.—Each health insurer

22 shall develop for each sector a single set of rate

23 factors which will be used to calculate any

24 changes in premium that relate to the reasons
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•S 1779 PCS

1 described in subparagraphs (B) through (D) of

2 paragraph (1).

3 (B) STANDARDS.—Such rate factors—

4 (i) shall relate to reasonable and ob5 jective differences in demographic charac6 teristics, in the design and in levels of cov7 erage, and in other terms and conditions of

8 a contract,

9 (ii) shall not relate to expected health

10 status, claims experience, or duration of

11 coverage of the one or more groups or indi12 viduals, and

13 (iii) shall comply with regulations es14 tablished under subsection (f).

15 (4) COMPUTATION OF PREMIUM CHANGES.—

16 (A) IN GENERAL.—Changes in premium

17 rates that relate to the reasons described in

18 paragraph (1) shall be calculated using the rate

19 factors developed pursuant to paragraph (3).

20 (B) APPLICATION TO CHANGES IN NUMBER

21 OF COVERED INDIVIDUALS.—In the case of a

22 change in premium rates related to the reason

23 described in paragraph (1)(A), the change in

24 premium rates shall be calculated to reflect,

25 with respect to the enrollees who enroll or
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•S 1779 PCS

1 disenroll in a health insurance plan, the sum of

2 the products, for such individuals, of the ref3 erence rate (determined under paragraph (2))

4 and the rate factors (specified under paragraph

5 (3)) applicable to such enrollees.

6 (C) APPLICATION OF OTHER FACTORS.—

7 (i) IN GENERAL.—In the case of a

8 change in premium rates related to a rea9 son described in subparagraph (B), (C), or

10 (D) of paragraph (1), the change in pre11 mium rates with respect to each health in12 surance plan in each sector shall reflect the

13 rate factors specified under paragraph (3)

14 applicable to the reason as applied to the

15 current premium charged for the health in16 surance plan. Such rate factors shall be

17 applied in a manner so that the resulting

18 adjustment, to the extent possible, reflects

19 the premium that would have been charged

20 under the plan if the reason for the change

21 in premium had existed at the time that

22 the current premium rate was calculated.

23 (ii) NO REFLECTION OF CHANGE IN

24 HEALTH STATUS.—In applying the rate

25 factors under this subparagraph, the ad-
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1 justment shall not reflect any change in

2 the health status, claims experience or du3 ration of coverage with respect to any em4 ployer or individual covered under the

5 plan.

6 (5) LIMITATION ON APPLICATION.—This sub7 section shall only apply—

8 (A) to changes in premiums occurring on

9 or after the date of the enactment of this Act

10 to groups and individuals covered as of such

11 date, and

12 (B) with respect to groups and individuals

13 subsequently covered, to changes in premiums

14 subsequent to such coverage.

15 (6) APPLICATION TO COMMUNITY-RATED

16 PLANS.—Nothing in this subsection shall require the

17 application of rate factors related to individual or

18 group characteristics with respect to community19 rated plans.

20 (c) LIMITATIONS ON CHANGES IN PREMIUMS RELAT21 ED TO INCREASES IN HEALTH CARE COSTS AND UTILIZA22 TION.—

23 (1) APPLICATION.—The provisions of this sub24 section shall apply to changes in premiums that re25 flect increases in health care costs and utilization.
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1 (2) EQUAL INCREASE FOR ALL PLANS IN ALL

2 SECTORS.—

3 (A) IN GENERAL.—Subject to subpara4 graph (B), the annual percentage increase in

5 premiums by a health insurer for health insur6 ance plans in the individual sector, small group

7 sector, and large group sector, to the extent

8 such increase reflect increases in health care

9 costs and utilization, shall be the same for all

10 such plans in those sectors.

11 (B) SPECIAL RULE FOR LARGE GROUP

12 SECTOR.—The annual percentage increase in

13 premiums by a health insurer for health insur14 ance plans in the large group sector may vary

15 among such plans based on the claims experi16 ence of an employer (to the extent the experi17 ence is credible), so long as the weighted aver18 age of such increases for all such plans in the

19 sector complies with the requirement of sub20 paragraph (A).

21 (C) GEOGRAPHIC APPLICATION.—Subpara22 graphs (A) and (B)—

23 (i) may be applied on a national level,

24 or
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1 (ii) may vary based on geographic

2 area, but only if (I) such areas are suffi3 ciently large to provide credible data on

4 which to calculate the variation and (II)

5 the variation is due to reasonable factors

6 related to the objective differences among

7 such areas in costs and utilization of

8 health services.

9 (D) EXCEPTIONS TO ACCOMMODATE STATE

10 RATE REFORM EFFORTS.—Subparagraphs (A)

11 and (B) shall not apply, in accordance with

12 guidelines of the Secretary, to the extent nec13 essary to permit a State to narrow the vari14 ations in premiums among health insurance

15 plans offered by health insurers to similarly sit16 uated groups or individuals within a sector.

17 (E) EXCEPTION FOR RATES SUBJECT TO

18 PRIOR APPROVAL.—Subparagraphs (A) and (B)

19 shall not apply to premiums that are subject to

20 prior approval by a State insurance commis21 sioner (or similar official) and are approved by

22 such official.

23 (F) OTHER REASONS SPECIFIED BY THE

24 SECRETARY.—The Secretary may specify

25 through regulations such other exceptions to
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1 the provisions of this subsection as the Sec2 retary determines are required to enhance sta3 bility of the health insurance market and con4 tinued availability of coverage.

5 (3) EVEN APPLICATION THROUGHOUT A

6 YEAR.—In applying the provisions of this subsection

7 to health insurance plans that are renewed in dif8 ferent months of a year, the annual percentage in9 crease shall be applied in a consistent, even manner

10 so that any variations in the rate of increase applied

11 in consecutive months are even and continuous dur12 ing the year.

13 (4) PETITION FOR EXCEPTION.—A health in14 surer may petition the Secretary (or a State acting

15 under a contract with the Secretary under section

16 11001(b)(3)) for an exception from the application

17 of the provisions of this subsection. The Secretary

18 may approve such an exception if—

19 (A) the health insurer demonstrates that

20 the application of this subsection would threat21 en the financial viability of the insurer, and

22 (B) the health insurer offers an alternative

23 method for increasing premiums that is not

24 substantially discriminatory to any sector or to
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1 any group or individual covered by a health in2 surance plan offered by the insurer.

3 (d) PRIOR APPROVAL FOR CERTAIN RATE IN4 CREASES.—

5 (1) IN GENERAL.—If the percentage increase in

6 the premium rate for the individual and small group

7 sector exceeds a percentage specified by the Sec8 retary under paragraph (2), annualized over any 12-

9 month period, the increase shall not take effect un10 less the Secretary (or a State acting under a con11 tract with the Secretary under section 11001(b)(3))

12 has approved the increase.

13 (2) PERCENTAGE.—The Secretary shall specify,

14 for each 12-month period beginning after the date of

15 the enactment of this Act, a percentage that will

16 apply under paragraph (1). Such percentage shall be

17 determined taking into consideration the rate of in18 crease in health care costs and utilization, previous

19 trends in health insurance premiums, and the condi20 tions in the health insurance market. Within 30 days

21 after the date of the enactment of this Act, the Sec22 retary shall first specify a percentage under this

23 paragraph.

24 (e) DOCUMENTATION OF COMPLIANCE.—
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1 (1) PERIOD FOR CONFORMANCE.—Effective 1

2 year after the date of the enactment of this Act, the

3 premium for each health insurance plan shall be

4 conformed in a manner that complies with the provi5 sions of this section.

6 (2) METHODOLOGY.—Each health insurer shall

7 document the methodology used in applying sub8 sections (b) and (c) with respect to each sector (and

9 each applicable health plan). Such documentation

10 shall be sufficient to permit the auditing of the ap11 plication of such methodology to determine if such

12 application was consistent with such subsections.

13 (3) CERTIFICATION.—For each 6-month period

14 in which this section is effective, each health insurer

15 shall file a certification with the Secretary (or with

16 a State with which the Secretary has entered into an

17 arrangement under section 11001(b)(3)) that the in18 surer is in compliance with such requirements.

19 (f) REGULATIONS.—The Secretary shall establish

20 regulations to carry out this section. Such regulations may

21 include guidelines relating to the permissible variation

22 that results from the use of demographic or other charac23 teristics in the development of rate factors. Such guide24 lines may be based on the guidelines currently used by
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1 States in applying rate limitations under State insurance

2 regulations.

3 (g) EFFECTIVE PERIOD.—This section shall apply to

4 premium increases occurring during the period beginning

5 on the date of the enactment of this Act and ending, for

6 a health insurance plan provided in a State, on the first

7 day of the State’s first year.

8 SEC. 11005. REQUIREMENTS RELATING TO PORTABILITY.

9 (a) TREATMENT OF PREEXISTING CONDITION EX10 CLUSIONS.—

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

12 provisions of this subsection, a group health benefit

13 plan may exclude coverage with respect to services

14 related to treatment of a preexisting condition, but

15 the period of such exclusion may not exceed 6

16 months. The exclusion of coverage shall not apply to

17 services furnished to newborns or in the case of a

18 plan that did not apply such exclusions as of the ef19 fective date of this title.

20 (2) CREDITING OF PREVIOUS COVERAGE.—

21 (A) IN GENERAL.—A group health benefit

22 plan shall provide that if an individual covered

23 under such plan is in a period of continuous

24 coverage (as defined in subparagraph (B)(i))

25 with respect to particular services as of the date
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1 of initial coverage under such plan, any period

2 of exclusion of coverage with respect to a pre3 existing condition for such services or type of

4 services shall be reduced by 1 month for each

5 month in the period of continuous coverage.

6 (B) DEFINITIONS.—As used in this para7 graph:

8 (i) PERIOD OF CONTINUOUS COV9 ERAGE.—The term ‘‘period of continuous

10 coverage’’ means, with respect to particu11 lar services, the period beginning on the

12 date an individual is enrolled under a

13 group or individual health benefit plan,

14 self-insured plan, the medicare program, a

15 State medicaid plan, or other health bene16 fit arrangement which provides benefits

17 with respect to such services and ends on

18 the date the individual is not so enrolled

19 for a continuous period of more than 3

20 months.

21 (ii) PREEXISTING CONDITION.—The

22 term ‘‘preexisting condition’’ means, with

23 respect to coverage under a health benefits

24 plan, a condition which has been diagnosed

25 or treated during the 6-month period end-
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1 ing on the day before the first date of such

2 coverage (without regard to any waiting

3 period).

4 (b) WAITING PERIODS.—A self-insured plan, and an

5 employer with respect to a group health insurance plan,

6 may not discriminate among employees in the establish7 ment of a waiting period before making health insurance

8 coverage available based on the health status, claims expe9 rience, receipt of health care, medical history, or lack of

10 evidence of insurability, of the employee or the employee’s

11 dependents.

12 SEC. 11006. REQUIREMENTS LIMITING REDUCTION OF BEN13 EFITS.

14 (a) IN GENERAL.—A self-insured sponsor may not

15 make a modification of benefits described in subsection

16 (b).

17 (b) MODIFICATION OF BENEFITS DESCRIBED.—

18 (1) IN GENERAL.—A modification of benefits

19 described in this subsection is any reduction or limi20 tation in coverage, effected on or after the effective

21 date of this title, with respect to any medical condi22 tion or course of treatment for which the anticipated

23 cost is likely to exceed $5,000 in any 12-month pe24 riod.
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1 (2) TREATMENT OF TERMINATION.—A modi2 fication of benefits includes the termination of a

3 plan if the sponsor, within a period (specified by the

4 Secretary of Labor) establishes a substitute plan

5 that reflects the reduction or limitation described in

6 paragraph (1).

7 (c) REMEDY.—Any modification made in violation of

8 this section shall not be effective and the self-insured

9 sponsor shall continue to provide benefits as though the

10 modification (described in subsection (b)) had not oc11 curred.

12 SEC. 11007. NATIONAL TRANSITIONAL HEALTH INSURANCE

13 RISK POOL.

14 (a) ESTABLISHMENT.—In order to assure access to

15 health insurance during the transition, the Secretary is

16 authorized to establish a National Transitional Health In17 surance Risk Pool (in this section referred to as the ‘‘na18 tional risk pool’’) in accordance with this section.

19 (b) ADMINISTRATION.—

20 (1) IN GENERAL.—The Secretary may admin21 ister the national risk pool through contracts with—

22 (A) one or more existing State health in23 surance risk pools,

24 (B) one or more private health insurers, or
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1 (C) such other contracts as the Secretary

2 deems appropriate.

3 (2) COORDINATION WITH STATE RISK POOLS.—

4 The Secretary may enter into such arrangements

5 with existing State health insurance risk pools to co6 ordinate the coverage under such pools with the cov7 erage under the national risk pool. Such coordina8 tion may address eligibility and funding of coverage

9 for individuals currently covered under State risk

10 pools.

11 (c) ELIGIBILITY FOR COVERAGE.—The national risk

12 pool shall provide health insurance coverage to individuals

13 who are unable to secure health insurance coverage from

14 private health insurers because of their health status or

15 condition (as determined in accordance with rules and pro16 cedures specified by the Secretary).

17 (d) BENEFITS.—

18 (1) IN GENERAL.—Benefits and terms of cov19 erage provided through the national risk pool shall

20 include items and services, conditions of coverage,

21 and cost sharing (subject to out-of-pocket limits on

22 cost sharing) comparable to the benefits and terms

23 of coverage available in State health insurance risk

24 pools.
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1 (2) PAYMENT RATES.—Payments under the na2 tional risk pool for covered items and services shall

3 be made at rates (specified by the Secretary) based

4 on payment rates for comparable items and services

5 under the medicare program. Providers who accept

6 payment from the national risk pool shall accept

7 such payment as payment in full for the service,

8 other than for cost sharing provided under the na9 tional risk pool.

10 (e) PREMIUMS.—

11 (1) IN GENERAL.—Premiums for coverage in

12 the national risk pool shall be set in a manner speci13 fied by the Secretary.

14 (2) VARIATION.—Such premiums shall vary

15 based upon age, place of residence, and other tradi16 tional underwriting factors other than on the basis

17 of health status or claims experience.

18 (3) LIMITATION.—The premiums charged indi19 viduals shall be set at a level that is no less than

20 150 percent of the premiums that the Secretary esti21 mates would be charged to a population of average

22 risk for the covered benefits.

23 (f) TREATMENT OF SHORTFALLS.—

24 (1) ESTIMATES.—The Secretary shall estimate

25 each year the extent to which the total premiums
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1 collected under subsection (e) in the year are insuffi2 cient to cover the expenses of the national risk pool

3 with respect to the year.

4 (2) TEMPORARY BORROWING AUTHORITY.—The

5 Secretary of the Treasury is authorized to advance

6 to the Secretary amounts sufficient to cover the

7 amount estimated under paragraph (1) during the

8 year before assessments are collected under para9 graph (3), except that the total balance of such

10 Treasury advances at any time shall not exceed

11 $1,500,000,000. The Secretary shall repay such

12 amounts, with interest at a rate specified by the Sec13 retary of the Treasury, from the assessments under

14 paragraph (3).

15 (3) ASSESSMENTS.—

16 (A) IN GENERAL.—Each health benefit

17 plan sponsor shall be liable for an assessment

18 in the amount specified in subparagraph (C).

19 (B) AMOUNT.—For each year for which

20 amounts are advanced under paragraph (2), the

21 Secretary shall—

22 (i) estimate the total amount of pre23 miums (and premium equivalents) for

24 health benefits under health benefit plans

25 for the succeeding year, and
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1 (ii) calculate a percentage equal to (I)

2 the total amounts repayable by the Sec3 retary to the Secretary of the Treasury

4 under paragraph (2) for the year, divided

5 by the amount determined under clause (i).

6 (C) ASSESSMENT AMOUNT.—The amount

7 of an assessment for a sponsor of a health ben8 efit plan for a year shall be equal to the per9 centage calculated under subparagraph (B)(ii)

(or, if less, 1 10 ⁄2 of 1 percent) of the total amount

11 of premiums (and premium equivalents) for

12 health benefits under the plan for the previous

13 year.

14 (D) SELF-INSURED PLANS.—The amount

15 of premiums (and premium equivalents) under

16 this paragraph shall be estimated—

17 (i) by the Secretary for health insur18 ance plans, and

19 (ii) by the Secretary of Labor for self20 insured plans.

21 Such estimates may be based on a methodology

22 that requires plans liable for assessment to file

23 information with the applicable Secretary.

24 SEC. 11008. DEFINITIONS.

25 In this title:
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1 (1) APPLICABLE SECRETARY.—The term ‘‘ap2 plicable Secretary’’ means—

3 (A) the Secretary with respect to health in4 surance plans and insurers, or

5 (B) the Secretary of Labor with respect to

6 self-insured plans and self-insured plan spon7 sors.

8 (2) COVERED EMPLOYEE.—The term ‘‘covered

9 employee’’ means an employee (or dependent of such

10 an employee) covered under a group health benefits

11 plan.

12 (3) COVERED INDIVIDUAL.—The ‘‘covered indi13 vidual’’ means, with respect to a health benefit plan,

14 an individual insured, enrolled, eligible for benefits,

15 or otherwise covered under the plan.

16 (4) GROUP HEALTH BENEFITS PLAN.—The

17 term ‘‘group health benefits plan’’ means a group

18 health insurance plan and a self-insured plan.

19 (5) GROUP HEALTH INSURANCE PLAN.—

20 (A) IN GENERAL.—The term ‘‘group

21 health insurance plan’’ means a health insur22 ance plan offered primarily to employers for the

23 purpose of providing health insurance to the

24 employees (and dependents) of the employer.
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1 (B) INCLUSION OF ASSOCIATION PLANS

2 AND MEWAS.—Such term includes—

3 (i) any arrangement in which coverage

4 for health benefits is offered to employers

5 through an association, trust, or other ar6 rangement, and

7 (ii) a multiple employer welfare ar8 rangement (as defined in section 3(40) of

9 the Employee Retirement Income Security

10 Act of 1974), whether funded through in11 surance or otherwise.

12 (6) HEALTH BENEFITS PLAN.—The term

13 ‘‘health benefits plan’’ means health insurance plan

14 and a self-insured health benefit plan.

15 (7) HEALTH BENEFIT PLAN SPONSOR.—The

16 term ‘‘health benefit plan sponsor’’ means, with re17 spect to a health insurance plan or self-insured plan,

18 the insurer offering the plan or the self-insured

19 sponsor for the plan, respectively.

20 (8) HEALTH INSURANCE PLAN.—

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

22 subparagraph (B), the term ‘‘health insurance

23 plan’’ means any contract of health insurance,

24 including any hospital or medical service policy

25 or certificate, any major medical policy or cer-
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1 tificate, any hospital or medical service plan

2 contract, or health maintenance organization

3 subscriber contract offered by an insurer.

4 (B) EXCEPTION.—Such term does not in5 clude any of the following—

6 (i) coverage only for accident, dental,

7 vision, disability income, or long-term care

8 insurance, or any combination thereof,

9 (ii) medicare supplemental health in10 surance,

11 (iii) coverage issued as a supplement

12 to liability insurance,

13 (iv) worker’s compensation or similar

14 insurance, or

15 (v) automobile medical payment insur16 ance,

17 or any combination thereof.

18 (C) STOP LOSS INSURANCE NOT COV19 ERED.—Such term does not include any aggre20 gate or specific stop-loss insurance or similar

21 coverage applicable to a self-insured plan. The

22 Secretary may develop rules determining the

23 applicability of this subparagraph with respect

24 to minimum premium plans or other partially

25 insured plans.
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1 (9) HEALTH INSURER.—The term ‘‘health in2 surer’’ means a licensed insurance company, a pre3 paid hospital or medical service plan, a health main4 tenance organization, or other entity providing a

5 plan of health insurance or health benefits with re6 spect to which the State insurance laws are not pre7 empted under section 514 of the Employee Retire8 ment Income Security Act of 1974.

9 (10) INDIVIDUAL HEALTH INSURANCE PLAN.—

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

11 health insurance plan’’ means any health insur12 ance plan directly purchased by an individual or

13 offered primarily to individuals (including fami14 lies) for the purpose of permitting individuals

15 (without regard to an employer contribution) to

16 purchase health insurance coverage.

17 (B) INCLUSION OF ASSOCIATION PLANS.—

18 Such term includes any arrangement in which

19 coverage for health benefits is offered to indi20 viduals through an association, trust, list-billing

21 arrangement, or other arrangement in which

22 the individual purchaser is primarily responsible

23 for the payment of any premium associated

24 with the contract.
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1 (C) TREATMENT OF CERTAIN ASSOCIATION

2 PLANS.—In the case of a health insurance plan

3 sponsored by an association, trust, or other ar4 rangement that provides health insurance cov5 erage both to employers and to individuals, the

6 plan shall be treated as—

7 (i) a group health insurance plan with

8 respect to such employers, and

9 (ii) an individual health insurance

10 plan with respect to such individuals.

11 (11) SELF-INSURED PLAN.—The term ‘‘self-in12 sured plan’’ means an employee welfare benefit plan

13 or other arrangement insofar as the plan or arrange14 ment provides benefits with respect to some or all of

15 the items and services included in the comprehensive

16 benefit package (as in effect as of January 1, 1996)

17 that is funded in a manner other than through the

18 purchase of one or more health insurance plans.

19 Such term shall not include a group health insur20 ance plan described in paragraph (5)(B)(ii).

21 (12) SELF-INSURED SPONSOR.—The term ‘‘self22 insured sponsor’’ includes, with respect to a self-in23 sured plan, any entity which establishes or main24 tains the plan.
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1 (13) STATE COMMISSIONER OF INSURANCE.—

2 The term ‘‘State commissioner of insurance’’ in3 cludes a State superintendent of insurance.

4 SEC. 11009. TERMINATION.

5 (a) HEALTH INSURANCE PLANS.—The provisions of

6 this title shall not apply to a health insurance plan pro7 vided in a State on and after the first day of the first

8 year for the State.

9 (b) SELF-INSURED PLANS.—The provisions of this

10 title shall not apply to a self-insured plan that—

11 (1) is sponsored by a sponsor that is an eligible

12 sponsor of a corporate alliance (described in section

13 1311(b)(1)), as of the effective date of the election

14 under section 1312(c); or

15 (2) is sponsored by a sponsor that is not such

16 an eligible sponsor, with respect to individuals or

17 groups in a State on and after the first day of the

18 first year for the State.

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