II

103D CONGRESS

1ST SESSION S. 18

To provide improved access to health care, enhance informed individual choice

regarding health care services, lower health care costs through the use

of appropriate providers, improve the quality of health care, improve

access to long-term care, and for other purposes.

IN THE SENATE OF THE UNITED STATES

JANUARY 21 (legislative day, JANUARY 5), 1993

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

to the Committee on Finance

A BILL

To provide improved access to health care, enhance informed

individual choice regarding health care services, lower

health care costs through the use of appropriate providers, improve the quality of health care, improve access

to long-term care, and for other purposes.

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

3 SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

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

5 ‘‘Comprehensive Health Care Act of 1993’’.

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

7 this Act is as follows:
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TITLE I—HEALTH CARE INSURANCE REFORM PROVISIONS

Subtitle A—Model Health Care Insurance Benefits Plan

Sec. 101. Model health care insurance benefits plan.

Sec. 102. Definitions.

Subtitle B—Managed Care

Sec. 111. Development of standards for managed care plans.

Sec. 112. Preemption of provisions relating to managed care.

Subtitle C—Small Employer Purchasing Groups

Sec. 121. Qualified small employer purchasing groups.

Sec. 122. Preemption from insurance mandates for small employer purchasing

groups.

Subtitle D—Insurance Market Reform

Sec. 131. Failure to satisfy certain standards for health care insurance provided to small employers.

Subtitle E—Deduction for Health Insurance Costs of Self-Employed

Individuals

Sec. 141. Increase in deductible health insurance costs for self-employed individuals.

TITLE II—PRIMARY AND PREVENTIVE CARE SERVICES

Sec. 201. Maternal and infant care coordination.

Sec. 202. Reauthorization of certain programs providing primary and preventive care.

Sec. 203. Comprehensive school health education program.

Sec. 204. Comprehensive early childhood health education program.

TITLE III—DISCLOSURE OF CERTAIN INFORMATION TO BENEFICIARIES UNDER THE MEDICARE AND MEDICAID PROGRAMS

Sec. 301. Regulations requiring disclosure of certain information to beneficiaries under the medicare and medicaid programs.

Sec. 302. Outreach activities.

TITLE IV—PATIENT’S RIGHT TO DECLINE MEDICAL TREATMENT

Sec. 401. Right to decline medical treatment.

Sec. 402. Federal right enforceable in Federal courts.

Sec. 403. Suicide and homicide.

Sec. 404. Rights granted by States.

Sec. 405. Effect on other laws.

Sec. 406. Information provided to certain individuals.

Sec. 407. Recommendations to the Congress on issues relating to a patient’s

right of self-determination.

Sec. 408. Effective date.

TITLE V—PRIMARY AND PREVENTIVE CARE PROVIDERS
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Sec. 501. Increasing payments to certain nonphysician providers under the

medicare program.

Sec. 502. Requiring coverage of certain nonphysician providers under the medicaid program.

Sec. 503. Medical student tutorial program grants.

Sec. 504. General medical practice grants.

Sec. 505. Payments for direct and indirect graduate medical education costs.

TITLE VI—MEDICARE PREFERRED PROVIDER DEMONSTRATION

PROJECTS

Sec. 601. Establishment of medicare primary and specialty preferred provider

organization demonstration projects.

TITLE VII—COST CONTAINMENT

Sec. 701. New drug clinical trials program.

Sec. 702. Medical treatment effectiveness.

Sec. 703. Health care cost control—expenditure targets.

TITLE VIII—LONG-TERM CARE

Subtitle A—Tax Treatment of Qualified Long-Term Care Insurance Policies

Sec. 801. Amendment of 1986 Code.

Sec. 802. Definitions of qualified long-term care insurance and premiums.

Sec. 803. Treatment of qualified long-term care insurance as accident and

health insurance for purposes of taxation of insurance companies.

Sec. 804. Treatment of accelerated death benefits under life insurance contracts.

Subtitle B—Tax Incentives for Purchase of Qualified Long-Term Care

Insurance

Sec. 811. Credit for qualified long-term care premiums.

Sec. 812. Deduction for expenses relating to qualified long-term care.

Sec. 813. Exclusion from gross income of benefits received under qualified longterm care insurance.

Sec. 814. Employer deduction for contributions made for long-term care insurance.

Sec. 815. Inclusion of qualified long-term care insurance in cafeteria plans.

Sec. 816. Exclusion from gross income for amounts withdrawn from individual

retirement plans and section 401(k) plans for qualified longterm care premiums and expenses.

Sec. 817. Exclusion from gross income for amounts received on cancellation of

life insurance policies and used for qualified long-term care insurance.

Sec. 818. Use of gain from sale of principal residence for purchase of qualified

long-term health care insurance.

Subtitle C—Medicaid Amendments

Sec. 821. Expansion of medicaid eligibility for long-term care benefits.

Sec. 822. Effective date.
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1 TITLE I—HEALTH CARE INSUR2 ANCE REFORM PROVISIONS

3 Subtitle A—Model Health Care

4 Insurance Benefits Plan

5 SEC. 101. MODEL HEALTH CARE INSURANCE BENEFITS

6 PLAN.

7 (a) IN GENERAL.—The Secretary shall request that

8 the NAIC—

9 (1) develop a model health care insurance bene10 fits plan that shall contain standards that entities

11 offering health care insurance policies should meet

12 with respect to the benefits and coverage provided

13 under such policies, and

14 (2) report to the Secretary on such standards,

15 not later than 1 year after the date of the enactment

16 of this Act.

17 If the NAIC develops such a plan by such date and the

18 Secretary finds that such plan implements the require19 ments of subsection (c), such plan shall be the model

20 health care insurance benefits plan under this Act.

21 (b) ROLE OF THE SECRETARY IN ABSENCE OF NAIC

22 PLAN.—If the NAIC fails to develop and report a model

23 health care insurance benefits plan by the date specified

24 in subsection (a) or the Secretary finds that such plan

25 does not implement the requirements of subsection (c), the
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1 Secretary shall develop and publish such a plan, by not

2 later than 18 months after the date of the enactment of

3 this Act. Such plan shall then be the plan under this Act.

4 (c) CONTENTS.—The standards under the model ben5 efits plan should require—

6 (1) that coverage be provided under health care

7 insurance policies for basic hospital, medical and

8 surgical services, including preventive care services,

9 mental health services, and other ancillary services

10 determined appropriate by the Secretary;

11 (2) reasonable cost sharing by the beneficiaries

12 under such policies; and

13 (3) appropriate copayments and deductibles.

14 SEC. 102. DEFINITIONS.

15 As used in this title:

16 (1) HEALTH CARE INSURANCE.—The term

17 ‘‘health care insurance’’ means any hospital or medi18 cal expense incurred policy or certificate, hospital or

19 medical service plan contract, health maintenance

20 subscriber contract, multiple employer welfare ar21 rangement, other employee welfare plan (as defined

22 in the Employee Retirement Income Security Act of

23 1974), or any other health insurance arrangement,

24 and includes an employment-related reinsurance

25 plan, but does not include—
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1 (A) a self-insured health care insurance

2 plan; or

3 (B) any of the following offered by an in4 surer—

5 (i) accident only, dental only, or dis6 ability income only insurance,

7 (ii) coverage issued as a supplement

8 to liability insurance,

9 (iii) worker’s compensation or similar

10 insurance, or

11 (iv) automobile medical-payment in12 surance.

13 (2) MANAGED CARE PLAN.—The term ‘‘man14 aged care plan’’ means a health care insurance plan

15 in which the insurer offering such plan utilizes the

16 recommended standards developed under section 111

17 concerning the benefits and coverage under such

18 plan.

19 (3) MODEL BENEFITS PLAN.—The term ‘‘model

20 benefits plan’’ means the model health care insur21 ance benefits plan developed under section 101(a).

22 (4) NAIC.—The term ‘‘NAIC’’ means the Na23 tional Association of Insurance Commissioners.

24 (5) SECRETARY.—The term ‘‘Secretary’’ means

25 the Secretary of Health and Human Services.
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1 (6) SMALL EMPLOYER.—

2 (A) IN GENERAL.—The term ‘‘small em3 ployer’’ means any employer which, on an aver4 age business day during the preceding taxable

5 year, had more than 2 but less than 100 em6 ployees.

7 (B) EMPLOYEE.—The term ‘‘employee’’

8 shall not include—

9 (i) a self-employed individual as de10 fined in section 401(c)(1) of the Internal

11 Revenue Code of 1986, or

12 (ii) an employee who works less than

13 20 hours per week.

14 Subtitle B—Managed Care

15 SEC. 111. DEVELOPMENT OF STANDARDS FOR MANAGED

16 CARE PLANS.

17 (a) IN GENERAL.—Not later than 1 year after the

18 date of the enactment of this Act, the Secretary, taking

19 into account recommendations of the Managed Care Advi20 sory Committee, shall develop recommended standards

21 that insurers offering managed care plans should meet

22 with respect to the benefits, coverage, and delivery systems

23 provided under such plans. Such standards shall encom24 pass the standards by which managed care entities

25 operate.
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1 (b) MANAGED CARE ADVISORY COMMITTEE.—

2 (1) ESTABLISHMENT.—There shall be estab3 lished a Managed Care Advisory Committee (herein4 after referred to as the ‘‘Committee’’).

5 (2) MEMBERSHIP.—The Committee shall be

6 composed of individuals appointed by the Secretary,

7 representing the following:

8 (A) Consumers.

9 (B) Physicians.

10 (C) Nurses.

11 (D) Hospitals.

12 (E) Community-based providers.

13 (F) Organizations delivering managed care

14 services.

15 (G) Academia (with specific expertise in

16 managed care plans).

17 (H) Business management.

18 (I) Organized labor.

19 (3) COMPENSATION.—

20 (A) IN GENERAL.—Members of the Com21 mittee shall serve without compensation.

22 (B) EXPENSES, ETC., REIMBURSED.—

23 While away from their homes or regular places

24 of business on the business of the Committee,

25 the members may be allowed travel expenses,
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1 including per diem in lieu of subsistence, as au2 thorized by section 5703 of title 5, United

3 States Code, for persons employed intermit4 tently in Government service.

5 (C) APPLICATION OF ACT.—The provisions

6 of the Federal Advisory Committee Act (5

7 U.S.C. App.) shall not apply with respect to the

8 Committee.

9 (D) SUPPORT.—The Secretary shall supply

10 such necessary office facilities, office supplies,

11 support services, and related expenses as nec12 essary to carry out the functions of the

13 Committee.

14 SEC. 112. PREEMPTION OF PROVISIONS RELATING TO MAN15 AGED CARE.

16 In the case of a managed care plan meeting the rec17 ommended standards developed under section 111 that is

18 offered by an insurer, the following provisions of State law

19 are preempted and may not be enforced against the man20 aged care plan with respect to an insurer offering such

21 plan:

22 (1) RESTRICTIONS ON REIMBURSEMENT RATES

23 OR SELECTIVE CONTRACTING.—Any law that re24 stricts the ability of the insurer to negotiate reim25 bursement rates with health care providers or to
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1 contract selectively with one provider or a limited

2 number of providers.

3 (2) RESTRICTIONS ON DIFFERENTIAL FINAN4 CIAL INCENTIVES.—Any law that limits the financial

5 incentives that the managed care plan may require

6 a beneficiary to pay when a nonplan provider is used

7 on a nonemergency basis.

8 (3) RESTRICTIONS ON UTILIZATION REVIEW

9 METHODS.—

10 (A) IN GENERAL.—Any law that—

11 (i) prohibits utilization review of any

12 or all treatments and conditions;

13 (ii) requires that such review be made

14 by a resident of the State in which the

15 treatment is to be offered or by an individ16 ual licensed in such State, or by a physi17 cian in any particular specialty or with any

18 board certified specialty of the same medi19 cal specialty as the provider whose services

20 are being rendered;

21 (iii) requires the use of specified

22 standards of health care practice in such

23 review or requires the disclosure of the

24 specific criteria used in such review;
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1 (iv) requires payments to providers for

2 the expenses of responding to utilization

3 review requests; or

4 (v) imposes liability for delays in per5 forming such review.

6 (B) CONSTRUCTION.—Nothing in subpara7 graph (A)(ii) shall be construed as prohibiting

8 a State from requiring that utilization review be

9 conducted by a licensed health care profes10 sional, or requiring that any appeal from such

11 a review be made by a licensed physician or by

12 a licensed physician in any particular specialty

13 or with any board certified specialty of the

14 same medical specialty as the provider whose

15 services are being rendered.

16 (4) RESTRICTIONS ON BENEFITS.—Any law

17 that mandates benefits under the managed care plan

18 that are greater than the benefits recommended

19 under the standards developed under section 111.

20 Subtitle C—Small Employer

21 Purchasing Groups

22 SEC. 121. QUALIFIED SMALL EMPLOYER PURCHASING

23 GROUPS.

24 (a) DEFINED.—For purposes of this title, an entity

25 is a qualified small employer purchasing group if—
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1 (1) the entity submits an application to the Sec2 retary at such time, in such form and containing

3 such information as the Secretary may require; and

4 (2) on the basis of information contained in the

5 application and any other information the Secretary

6 may require, the Secretary determines that—

7 (A) the entity is administered solely under

8 the authority and control of its member employ9 ers;

10 (B) the membership of the entity consists

11 solely of small employers (except that an em12 ployer member of the group may retain its

13 membership in the group if, after the Secretary

14 determines that the entity meets the require15 ments of this subsection, the number of employ16 ees of the employer member increases to more

17 than 100);

18 (C) with respect to each State in which its

19 members are located, the entity consists of not

20 fewer than 100 employers;

21 (D) at the time the entity submits its ap22 plication, the health care insurance plans with

23 respect to the employer members of the entity

24 are in compliance with applicable State laws
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1 and the model benefits plan relating to such

2 plans;

3 (E) the health care insurance plans of the

4 entity and the employer members of the entity

5 are not self-insured plans;

6 (F) each enrollee in the program of the en7 tity may enroll with any participating carrier

8 that offers health care insurance coverage in

9 the geographic area in which the enrollee re10 sides; and

11 (G) such entity will be a nonprofit entity;

12 and

13 (3) such entity has a board of directors as de14 scribed in subsection (b) with authority to act as de15 scribed in subsection (c).

16 (b) OPERATIONS.—A small employer purchasing

17 group shall be administered by a board of directors. The

18 members of such board shall be elected by the employers

19 that are members of the group, and such board members

20 shall serve at the pleasure of the majority of such employ21 ers.

22 (c) DUTIES OF BOARD.—

23 (1) IN GENERAL.—The board shall have the au24 thority to—
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1 (A) enter into contracts with carriers to

2 provide health care insurance coverage to eligi3 ble employees and their dependents;

4 (B) enter into other contracts as are nec5 essary or proper to carry out the provisions of

6 this subtitle;

7 (C) employ necessary staff;

8 (D) appoint committees as necessary to

9 provide technical assistance in the operation of

10 the entity’s program;

11 (E) assess participating employers a rea12 sonable fee for necessary costs in connection

13 with the program;

14 (F) undertake activities necessary to ad15 minister the program including marketing and

16 publicizing the program and assuring carrier,

17 employer, and enrollee compliance with program

18 requirements;

19 (G) issue rules and regulations necessary

20 to carry out the purpose of this subtitle; and

21 (H) accept and expend funds received

22 through fees, grants, appropriations, or other

23 appropriate and lawful means.

24 (2) PROGRAM MANAGEMENT.—
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1 (A) GEOGRAPHIC AREAS OF COVERAGE.—

2 The board shall establish geographic areas

3 within which participating carriers may offer

4 health care insurance coverage to eligible em5 ployees and dependents. The board shall con6 tract with sufficient numbers and types of car7 riers in an area to assure that employees have

8 a choice from among a reasonable number and

9 type of competing health care insurance car10 riers.

11 (B) CONTRACT REQUIREMENTS.—

12 (i) IN GENERAL.—The board shall

13 enter into contracts with qualified carriers

14 for the purpose of providing health care in15 surance coverage to eligible employees and

16 dependents, and shall pay qualified carriers

17 on at least a monthly basis at the con18 tracted rates.

19 (ii) GENERAL QUALIFICATIONS OF

20 CARRIERS.—Participating carriers shall be

21 qualified if such carriers have—

22 (I) adequate administrative man23 agement,

24 (II) financial solvency, and
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1 (III) the ability to assume the

2 risk of providing and paying for cov3 ered services.

4 A participating carrier may utilize reinsur5 ance, provider risk sharing, and other ap6 propriate mechanisms to share a portion of

7 the risk described in subclause (III). The

8 board may establish risk adjustment mech9 anisms that can be utilized to address cir10 cumstances where a participating carrier

11 has a significantly disproportionate share

12 of high risk or low risk enrollees based

13 upon valid data provided by the carrier.

14 Any such risk adjustment mechanism may

15 be developed and applied only after con16 sultation with the participating carriers.

17 (C) PROGRAM STANDARDS.—The board

18 shall require that participating carriers that

19 contract with or employ health care providers

20 shall have mechanisms to accomplish at least

21 the following, satisfactory to the program:

22 (i) Review the quality of care covered.

23 (ii) Review the appropriateness of care

24 covered.

25 (iii) Provide accessible health services.
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1 (D) UNIFORMITY OF BENEFITS.—The

2 board shall assure that participating carriers—

3 (i) shall offer substantially similar

4 benefits to enrollees in the program, except

5 that enrollees cost sharing required by par6 ticipating carriers may vary according to

7 the basic method of operation of the car8 rier, and

9 (ii) shall not vary rates to small em10 ployers or enrollees in the program on ac11 count of claim experience, health status, or

12 duration from issue.

13 (E) PAYMENT MECHANISM.—The board

14 shall establish a mechanism to collect premiums

15 from small employers, including remittance of

16 the enrollee’s share of the premium.

17 (3) NOTIFICATION OF PROGRAM BENEFITS.—

18 The board shall use appropriate and efficient means

19 to notify employers of the availability of sponsored

20 health care insurance coverage under the program.

21 The board shall make available marketing materials

22 which accurately summarize the carriers’ insurance

23 plans and rates which are offered through the pro24 gram. A participating carrier may contract with an

25 agent or broker to provide marketing, advertising, or
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1 presentation proposals or otherwise disseminate in2 formation regarding coverage or services or rates of3 fered in connection with the program.

4 (4) CONDITIONS OF PARTICIPATION.—

5 (A) IN GENERAL.—The board shall estab6 lish conditions of participation for small em7 ployers and enrollees that—

8 (i) assure that the entity is a valid

9 small employer purchasing group and is

10 not formed for the purpose of securing

11 health care insurance coverage;

12 (ii) assure that individuals in the

13 group are not added for the purpose of se14 curing such coverage;

15 (iii) require that a specified percent16 age of employees and dependents obtain

17 health care insurance coverage;

18 (iv) require minimum employer con19 tributions; and

20 (v) require prepayment of premiums

21 or other mechanisms to assure that pay22 ment will be made for coverage.

23 (B) MINIMUM PARTICIPATION.—The board

24 may require participating employers to agree to

25 participate in the program for a specified mini-
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1 mum period of time and may include in any

2 participation agreements with employers a re3 quirement for a financial deposit or provision

4 for a financial penalty, which would be invoked

5 in the event the employer violates the participa6 tion agreement.

7 (d) GRANTS.—

8 (1) AUTHORITY.—The Secretary may award

9 grants to qualified small employer purchasing

10 groups to assist such groups in paying the expendi11 tures associated with the formation and initial oper12 ations of such groups.

13 (2) APPLICATION.—To be eligible to receive a

14 grant under this subsection, a qualified small em15 ployer purchasing group shall request such a grant

16 as part of the application submitted by such group

17 under subsection (a)(1).

18 (3) AUTHORIZATION OF APPROPRIATIONS.—

19 There are authorized to be appropriated for award20 ing grants under this subsection such sums as may

21 be necessary.

22 (e) FREEDOM OF CONTRACT.—Nothing in this sub23 title shall be construed to prohibit a participating carrier

24 from offering health care insurance coverage to small em-
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1 ployers that are not participating in the program of a

2 small employer purchasing group.

3 SEC. 122. PREEMPTION FROM INSURANCE MANDATES FOR

4 SMALL EMPLOYER PURCHASING GROUPS.

5 (a) FINDING.—The Congress finds that qualified

6 small employer purchasing groups organized for the pur7 pose of obtaining health insurance for the employer mem8 bers of such groups affect interstate commerce.

9 (b) PREEMPTION OF STATE MANDATES.—In the case

10 of a qualified small employer purchasing group, no provi11 sion of State law shall apply that requires the offering,

12 as part of the health care insurance plan with respect to

13 an employer member of such a group, of any services, cat14 egory of care, or services of any class or type of provider

15 that is in excess of that recommended under the model

16 benefit plan.

17 Subtitle D—Insurance Market

18 Reform

19 SEC. 131. FAILURE TO SATISFY CERTAIN STANDARDS FOR

20 HEALTH CARE INSURANCE PROVIDED TO

21 SMALL EMPLOYERS.

22 (a) IN GENERAL.—Subchapter L of chapter 1 of the

23 Internal Revenue Code of 1986 (relating to insurance

24 companies) is amended by adding at the end thereof the

25 following new part:
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1 ‘‘PART IV—HEALTH CARE INSURANCE PROVIDED

2 TO SMALL EMPLOYERS

‘‘Sec. 850. Failure to satisfy standards for health care insurance

of small employers.

‘‘Sec. 850A. General issuance requirements.

‘‘Sec. 850B. Specific contractual requirements.

‘‘Sec. 850C. State compliance agreements.

‘‘Sec. 850D. Definitions and other rules.

3 ‘‘SEC. 850. FAILURE TO SATISFY CERTAIN STANDARDS FOR

4 HEALTH CARE INSURANCE OF SMALL EM5 PLOYERS.

6 ‘‘(a) GENERAL RULE.—No health insurance contract

7 issued to an eligible small employer shall be treated as

8 a contract for purposes of section 807 or 832 if the issuer

9 of such a contract fails to meet at any time during any

10 taxable year—

11 ‘‘(1) the general issuance requirements of sec12 tion 850A, or

13 ‘‘(2) the specific contractual requirements of

14 section 850B.

15 ‘‘(b) LIMITATION.—

16 ‘‘(1) SECTION NOT TO APPLY WHERE FAILURE

17 NOT DISCOVERED EXERCISING REASONABLE DILI18 GENCE.—Subsection (a) shall not apply with respect

19 to any failure for which it is established to the satis20 faction of the Secretary that the person described in

21 such subsection did not know, or exercising reason-
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1 able diligence would not have known, that such fail2 ure existed.

3 ‘‘(2) SECTION NOT TO APPLY WHERE FAILURES

4 CORRECTED WITHIN 30 DAYS.—Subsection (a) shall

5 not apply with respect to any failure if—

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

7 cause and not to willful neglect, and

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

9 30-day period beginning on the 1st date any of

10 the persons described in such subsection knew,

11 or exercising reasonable diligence would have

12 known, that such failure existed.

13 ‘‘(3) WAIVER BY SECRETARY.—In the case of a

14 failure which is due to reasonable cause and not to

15 willful neglect, the Secretary may waive the applica16 tion of subsection (a).

17 ‘‘SEC. 850A. GENERAL ISSUANCE REQUIREMENTS.

18 ‘‘(a) GENERAL RULE.—The requirements of this sec19 tion are met if a person meets—

20 ‘‘(1) the mandatory policy requirements of sub21 section (b),

22 ‘‘(2) the guaranteed issue requirements of sub23 section (c), and

24 ‘‘(3) the mandatory registration and disclosure

25 requirements of subsection (d).
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1 ‘‘(b) MANDATORY POLICY REQUIREMENTS.—

2 ‘‘(1) IN GENERAL.—The requirements of this

3 subsection are met if any person issuing a health

4 care insurance contract to any eligible small em5 ployer makes available to such employer a health

6 care insurance contract which—

7 ‘‘(A) provides benefits and coverage con8 sistent with the model health care insurance

9 benefits plan developed under section 101 of the

10 Comprehensive Health Care Act of 1993, and

11 ‘‘(B) is for a term of not less than 12

12 months.

13 ‘‘(2) PRICING AND MARKETING REQUIRE14 MENTS.—The requirements of paragraph (1) are not

15 met unless—

16 ‘‘(A) the price at which the contract de17 scribed in paragraph (1) is made available is

18 not greater than the price for such contract de19 termined on the same basis as prices for other

20 health care insurance contracts within the same

21 class of business made available by the person

22 to eligible small employers, and

23 ‘‘(B) such contract is made available to eli24 gible small employers using at least the market-
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1 ing methods and other sales practices which are

2 used in selling such other contracts.

3 ‘‘(c) GUARANTEED ISSUE.—

4 ‘‘(1) IN GENERAL.—The requirements of this

5 subsection are met if the person offering health care

6 insurance contracts to eligible small employers issues

7 such a contract to any eligible small employer seek8 ing to enter into such a contract.

9 ‘‘(2) FINANCIAL CAPACITY EXCEPTION.—Para10 graph (1) shall not require any person to issue a

11 health care insurance contract to the extent that the

12 issuance of such contract would result in such per13 son violating the financial solvency standards (if

14 any) established by the State in which such contract

15 is to be issued.

16 ‘‘(3) DELIVERY CAPACITY EXCEPTION.—Para17 graph (1) shall not require any person to issue a

18 health care insurance contract to the extent that the

19 issuance of such contract would result, upon dem20 onstration to the Secretary, in such person exceeding

21 such person’s administrative capacity to serve pre22 viously enrolled groups and individuals (and addi23 tional individuals who will be expected to enroll be24 cause of affiliation with such previously enrolled

25 groups).
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1 ‘‘(4) EXCEPTION FOR CERTAIN EMPLOYERS.—

2 Paragraph (1) shall not apply to a failure to issue

3 a health care insurance contract to an eligible small

4 employer if—

5 ‘‘(A) such employer is unable to pay the

6 premium for such contract, or

7 ‘‘(B) in the case of an eligible small em8 ployer with fewer than 15 employees, such em9 ployer fails to enroll a minimum percentage of

10 the employer’s eligible employees for coverage

11 under such contract, so long as such percentage

12 is enforced uniformly for all eligible small em13 ployers of comparable size.

14 ‘‘(5) EXCEPTION FOR ALTERNATIVE STATE

15 PROGRAMS.—

16 ‘‘(A) IN GENERAL.—Paragraph (1) shall

17 not apply if the State in which the health care

18 insurance contract is issued—

19 ‘‘(i) has a program which—

20 ‘‘(I) assures the availability of

21 health care insurance contracts to eli22 gible small employers through the eq23 uitable distribution of high risk

24 groups among all persons offering

25 such contracts to such employers, and
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1 ‘‘(II) is consistent with a model

2 program developed by the NAIC;

3 ‘‘(ii) has a qualified State-run reinsur4 ance program, or

5 ‘‘(iii) has a program which the Sec6 retary of Health and Human Services has

7 determined assures all eligible small em8 ployers in the State an opportunity to pur9 chase a health care insurance contract

10 without regard to any risk characteristic.

11 ‘‘(B) REINSURANCE PROGRAM.—

12 ‘‘(i) PROGRAM REQUIREMENTS.—For

13 purposes of subparagraph (A)(ii), a State14 run reinsurance program is qualified if

15 such program is one of the NAIC reinsur16 ance program models developed under

17 clause (ii) or is a variation of one of such

18 models, as approved by the Secretary of

19 Health and Human Services.

20 ‘‘(ii) MODELS.—Not later than 120

21 days after the date of the enactment of the

22 Comprehensive Health Care Act of 1993,

23 the NAIC shall develop several models for

24 a reinsurance program, including options

25 for program funding.
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1 ‘‘(d) MANDATORY REGISTRATION AND DISCLOSURE

2 REQUIREMENTS.—The requirements of this subsection

3 are met if the person offering health care insurance con4 tracts to eligible small employers in any State—

5 ‘‘(1) registers with the State commissioner or

6 superintendent of insurance or other State authority

7 responsible for regulation of health insurance,

8 ‘‘(2) fully discloses the rating practices for

9 small employer health care insurance contracts at

10 the time such person offers a health care insurance

11 contract to an eligible small employer, and

12 ‘‘(3) fully discloses the terms for renewal of the

13 contract at the time of the offering of such contract

14 and at least 90 days before the expiration of such

15 contract.

16 ‘‘SEC. 850B. SPECIFIC CONTRACTUAL REQUIREMENTS.

17 ‘‘(a) GENERAL RULE.—The requirements of this sec18 tion are met if the following requirements are met:

19 ‘‘(1) The coverage requirements of subsection

20 (b).

21 ‘‘(2) The rating requirements of subsection (c).

22 ‘‘(b) COVERAGE REQUIREMENTS.—

23 ‘‘(1) IN GENERAL.—The requirements of this

24 subsection are met with respect to any health care
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1 insurance contract if, under the terms and operation

2 of the contract, the following requirements are met:

3 ‘‘(A) GUARANTEED ELIGIBILITY.—No eli4 gible employee (and the spouse or any depend5 ent child of the employee eligible for coverage)

6 may be excluded from coverage under the con7 tract.

8 ‘‘(B) LIMITATIONS ON COVERAGE OF PRE9 EXISTING CONDITIONS.—Any limitation under

10 the contract on any preexisting condition—

11 ‘‘(i) may not extend beyond the 6-

12 month period beginning with the date an

13 insured is first covered by the contract,

14 and

15 ‘‘(ii) may only apply to preexisting

16 conditions which manifested themselves, or

17 for which medical care or advice was

18 sought or recommended, during the 3-

19 month period preceding the date an in20 sured is first covered by the contract.

21 ‘‘(C) GUARANTEED RENEWABILITY.—

22 ‘‘(i) IN GENERAL.—The contract must

23 be renewed at the election of the eligible

24 small employer unless the contract is ter25 minated for cause.
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1 ‘‘(ii) CAUSE.—For purposes of this

2 subparagraph, the term ‘cause’ means—

3 ‘‘(I) nonpayment of the required

4 premiums;

5 ‘‘(II) fraud or misrepresentation

6 of the employer or, with respect to

7 coverage of individual insureds, the

8 insureds or their representatives;

9 ‘‘(III) noncompliance with the

10 contract’s minimum participation re11 quirements;

12 ‘‘(IV) noncompliance with the

13 contract’s employer contribution re14 quirements; or

15 ‘‘(V) repeated misuse of a pro16 vider network provision in the con17 tract.

18 ‘‘(2) WAITING PERIODS.—Paragraph (1)(A)

19 shall not apply to any period an employee is ex20 cluded from coverage under the contract solely by

21 reason of a requirement applicable to all employees

22 that a minimum period of service with the employer

23 is required before the employee is eligible for such

24 coverage.
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1 ‘‘(3) DETERMINATION OF PERIODS FOR RULES

2 RELATING TO PREEXISTING CONDITIONS.—For pur3 poses of paragraph (1)(B), the date on which an in4 sured is first covered by a contract shall be the

5 earlier of—

6 ‘‘(A) the date on which coverage under

7 such contract begins, or

8 ‘‘(B) the first day of any continuous

9 period—

10 ‘‘(i) during which the insured was cov11 ered under one or more other health insur12 ance arrangements, and

13 ‘‘(ii) which does not end more than

14 120 days before the date employment with

15 the employer begins.

16 ‘‘(4) CESSATION OF SMALL EMPLOYER HEALTH

17 INSURANCE BUSINESS.—

18 ‘‘(A) IN GENERAL.—Except as otherwise

19 provided in this paragraph, a person shall not

20 be treated as failing to meet the requirements

21 of paragraph (1)(C) if such person terminates

22 the class of business which includes the health

23 care insurance contract.

24 ‘‘(B) NOTICE REQUIREMENT.—Subpara25 graph (A) shall apply only if the person gives
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1 notice of the decision to terminate at least 90

2 days before the expiration of the contract.

3 ‘‘(C) 5-YEAR MORATORIUM.—If, within 5

4 years of the year in which a person terminates

5 a class of business under subparagraph (A),

6 such person establishes a new class of business,

7 the issuance of such contracts in that year shall

8 be treated as a failure to which this section

9 applies.

10 ‘‘(D) TRANSFERS.—If, upon a failure to

11 renew a contract to which subparagraph (A)

12 applies, a person offers to transfer such con13 tract to another class of business, such transfer

14 must be made without regard to risk character15 istics.

16 ‘‘(c) RATING REQUIREMENTS.—

17 ‘‘(1) IN GENERAL.—The requirements of this

18 subsection are met if—

19 ‘‘(A) the requirements of paragraphs (2)

20 and (3) are met, and

21 ‘‘(B) any increase in any premium rate

22 under the renewal contract over the correspond23 ing rate under the health care insurance con24 tract being renewed does not exceed the appli25 cable annual adjusted increase.
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1 ‘‘(2) LIMIT ON VARIATION OF PREMIUMS BE2 TWEEN CLASSES OF BUSINESS.—

3 ‘‘(A) IN GENERAL.—The requirements of

4 this paragraph are met if the index rate for a

5 rating period for any class of business of the in6 surer does not exceed the index rate for any

7 other class of business by more than 20 per8 cent.

9 ‘‘(B) EXCEPTIONS.—Subparagraph (A)

10 shall not apply to a class of business if—

11 ‘‘(i) the class is one for which the in12 surer does not reject, and never has re13 jected, eligible small employers included

14 within the class of business or otherwise el15 igible employees and dependents who enroll

16 on a timely basis, based upon risk charac17 teristics,

18 ‘‘(ii) the insurer does not transfer,

19 and never has transferred, a health care

20 insurance contract involuntarily into or out

21 of the class of business, and

22 ‘‘(iii) the class of business is currently

23 available for purchase.

24 ‘‘(3) LIMIT ON VARIATION IN PREMIUM RATES

25 WITHIN A CLASS OF BUSINESS.—The requirements
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1 of this paragraph are met if the premium rates

2 charged during a rating period to eligible small em3 ployers with similar case characteristics (other than

4 risk characteristics) for the same or similar cov5 erage, or the rates which could be charged to such

6 employers under the rating system for that class of

7 business, do not vary from the index rate by more

8 than 20 percent of the index rate.

9 ‘‘(4) APPLICABLE ANNUAL ADJUSTED IN10 CREASE.—For purposes of paragraph (1)(B)—

11 ‘‘(A) IN GENERAL.—The applicable annual

12 adjusted increase is an amount equal to the

13 sum of—

14 ‘‘(i) the applicable percentage of the

15 premium rate under the health care insur16 ance contract being renewed, plus

17 ‘‘(ii) any increase in the rate under

18 the renewal contract due to any change in

19 coverage or to any change of case charac20 teristics (other than risk characteristics),

21 plus

22 ‘‘(iii) 5 percentage points.

23 ‘‘(B) APPLICABLE PERCENTAGE.—
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1 ‘‘(i) IN GENERAL.—For purposes of

2 subparagraph (A), the applicable percent3 age is the percentage (if any) by which—

4 ‘‘(I) the premium rate for newly

5 issued contracts for substantially simi6 lar coverage for an employer with

7 similar case characteristics (other

8 than risk characteristics) as the em9 ployer under the health care insurance

10 contract (determined on the 1st day

11 of the rating period applicable to such

12 contracts), exceeds

13 ‘‘(II) such rate on the 1st day of

14 the rating period applicable to the

15 contract being renewed.

16 ‘‘(ii) CASES WHERE NO NEW BUSI17 NESS.—If no new contracts are being is18 sued for a class of business during any rat19 ing period, the applicable percentage shall

20 be the percentage (if any) by which the

21 base premium rate determined under para22 graph (5)(B) with respect to the renewal

23 contract exceeds such rate for the contract

24 to be renewed.
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1 ‘‘(5) DEFINITIONS.—For purposes of this sub2 section—

3 ‘‘(A) INDEX RATE.—The term ‘index rate’

4 means, with respect to a class of business, the

5 arithmetic average of the applicable base pre6 mium rate and the corresponding highest pre7 mium rate for that class.

8 ‘‘(B) BASE PREMIUM RATE.—The term

9 ‘base premium rate’ means, for each class of

10 business for each rating period, the lowest pre11 mium rate which could have been charged

12 under a rating system for that class of business

13 by the insurer to eligible small employers with

14 similar case characteristics (other than risk

15 characteristics) for health care insurance con16 tracts with the same or similar coverage.

17 ‘‘SEC. 850C. STATE COMPLIANCE AGREEMENTS.

18 ‘‘(a) AGREEMENTS.—The Secretary of Health and

19 Human Services may enter into an agreement with any

20 State—

21 ‘‘(1) to apply the standards set by the NAIC

22 for health care insurance contracts in lieu of the re23 quirements of this subchapter, and

24 ‘‘(2) to provide for the State to make the initial

25 determination as to whether a person is in compli-
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1 ance with such standards for purposes of applying

2 the sanctions under section 850.

3 ‘‘(b) STANDARDS.—An agreement may be entered

4 into under subsection (a)(1) only if—

5 ‘‘(1) the chief executive officer of the State re6 quests that such agreement be entered into,

7 ‘‘(2) the Secretary of Health and Human Serv8 ices determines that the NAIC standards to be ap9 plied under the agreement will carry out the pur10 poses of this subchapter, and

11 ‘‘(3) the Secretary determines that the NAIC

12 standards to be applied under the agreement will

13 apply to substantially all health care insurance

14 contracts issued in such State to eligible small

15 employers.

16 ‘‘(c) TERMINATION.—The Secretary of Health and

17 Human Services shall terminate any agreement if the Sec18 retary determines that the application of NAIC standards

19 by the State ceases to carry out the purposes of this sub20 chapter.

21 ‘‘(d) NAIC STANDARDS.—Not later than 270 days

22 after the date of the enactment of the Comprehensive

23 Health Care Act of 1993, the NAIC shall develop stand24 ards which provide for requirements substantially similar

25 to the requirements of this subchapter.
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1 ‘‘SEC. 850D. DEFINITIONS AND OTHER RULES.

2 ‘‘For purposes of this part—

3 ‘‘(1) HEALTH CARE INSURANCE.—The term

4 ‘health care insurance’ means any hospital or medi5 cal expense incurred policy or certificate, hospital or

6 medical service plan contract, health maintenance

7 subscriber contract, multiple employer welfare ar8 rangement, other employee welfare plan (as defined

9 in the Employee Retirement Income Security Act of

10 1974), or any other health insurance arrangement,

11 and includes an employment-related reinsurance

12 plan, but does not include—

13 ‘‘(A) a self-insured health care insurance

14 plan; or

15 ‘‘(B) any of the following offered by an in16 surer—

17 ‘‘(i) accident only, dental only, or dis18 ability income only insurance,

19 ‘‘(ii) coverage issued as a supplement

20 to liability insurance,

21 ‘‘(iii) worker’s compensation or simi22 lar insurance, or

23 ‘‘(iv) automobile medical-payment in24 surance.

25 ‘‘(2) CLASS OF BUSINESS.—
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1 ‘‘(A) IN GENERAL.—Except as provided in

2 subparagraph (B), the term ‘class of business’

3 means, with respect to health care insurance

4 provided to eligible small employers, all health

5 care insurance provided to such employers.

6 ‘‘(B) ESTABLISHMENT OF GROUPINGS.—

7 ‘‘(i) IN GENERAL.—An issuer may es8 tablish separate classes of business with re9 spect to health care insurance provided to

10 eligible small employers but only if such

11 classes are based on one or more of the

12 following:

13 ‘‘(I) Business marketed and sold

14 through persons not participating in

15 the marketing and sale of such insur16 ance to other eligible small employers.

17 ‘‘(II) Business acquired from

18 other insurers as a distinct grouping.

19 ‘‘(III) Business provided through

20 an association of not less than 20 eli21 gible small employers which was es22 tablished for purposes other than ob23 taining insurance.

24 ‘‘(IV) Business related to man25 aged care plans (as defined in section
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1 102(2) of the Comprehensive Health

2 Care Act of 1993.

3 ‘‘(V) Any other business which

4 the Secretary of Health and Human

5 Services determines needs to be sepa6 rately grouped to prevent a substan7 tial threat to the solvency of the

8 insurer.

9 ‘‘(ii) EXCEPTION ALLOWED.—Except

10 as provided in subparagraph (C), an in11 surer may not establish more than one dis12 tinct group of eligible small employers for

13 each category specified in clause (i).

14 ‘‘(C) SPECIAL RULE.—An insurer may es15 tablish up to 2 groups under each category in

16 subparagraph (A) or (B) to account for dif17 ferences in characteristics (other than dif18 ferences in plan benefits) of health insurance

19 plans that are expected to produce substantial

20 variation in health care costs.

21 ‘‘(3) CHARACTERISTICS.—

22 ‘‘(A) IN GENERAL.—The term ‘characteris23 tics’ means, with respect to any insurance rat24 ing system, the factors used in determining

25 rates.
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1 ‘‘(B) RISK CHARACTERISTICS.—The term

2 ‘risk characteristics’ means factors related to

3 the health risks of individuals, including health

4 status, prior claims experience, the duration

5 since the date of issue of a health insurance

6 plan or arrangement, industry, and occupation.

7 ‘‘(C) GEOGRAPHIC FACTORS.—

8 ‘‘(i) IN GENERAL.—In applying geo9 graphic location as a characteristic, an in10 surer may not use for purposes of this sub11 chapter areas smaller than 3-digit postal

12 zip code areas.

13 ‘‘(ii) STUDY AND REPORT.—Not later

14 than 120 days after the date of the enact15 ment of the Comprehensive Health Care

16 Act of 1993, the Comptroller General of

17 the United States shall study and report to

18 the Congress concerning—

19 ‘‘(I) insurance industry practices

20 in determining the geographic bound21 aries of communities used for setting

22 rates,

23 ‘‘(II) the feasibility and desirabil24 ity of establishing standardized geo-
41

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1 graphic communities for setting rates,

2 and

3 ‘‘(III) the effect such standard4 ized geographic communities would

5 have on rates charged small employ6 ers.

7 ‘‘(4) ELIGIBLE SMALL EMPLOYER.—

8 ‘‘(A) IN GENERAL.—The term ‘eligible

9 small employer’ means any person which, on an

10 average business day during the preceding tax11 able year, had more than 2 but less than 50

12 employees.

13 ‘‘(B) AGGREGATION RULES.—All members

14 of the same controlled group of corporations

15 (within the meaning of section 52(a)) and all

16 persons under common control (within the

17 meaning of section 52(b)) shall be treated as 1

18 person.

19 ‘‘(C) EMPLOYEE.—The term ‘employee’

20 shall not include—

21 ‘‘(i) a self-employed individual as de22 fined in section 401(c)(1), or

23 ‘‘(ii) an employee who works less than

24 20 hours per week.
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1 ‘‘(5) NAIC.—The term ‘NAIC’ means the Na2 tional Association of Insurance Commissioners.’’.

3 (b) CONFORMING AMENDMENT.—Subchapter L of

4 chapter 1 of the Internal Revenue Code of 1986 is amend5 ed by adding at the end thereof the following new item:

‘‘Part IV. Health Care Insurance Provided to Small Employers.’’.

6 (c) EFFECTIVE DATES.—

7 (1) IN GENERAL.—The amendments made by

8 this section shall apply to contracts issued, or re9 newed, after the date of the enactment of this Act.

10 (2) GUARANTEED ISSUE.—The provisions of

11 section 850A(c) of the Internal Revenue Code of

12 1986, as added by this section, shall apply to con13 tracts which are issued, or renewed, after the date

14 which is 18 months after the date of the enactment

15 of this Act.

16 (3) PREMIUM RANGE.—In the case of any con17 tract in effect on the date of the enactment of this

18 Act, the provisions of section 850B(c)(1)(A) of such

19 Code, as added by this section, shall not apply to the

20 premiums under such contract or any renewal con21 tract for benefits provided during the period begin22 ning on such date and ending on the last day of the

23 2nd plan year beginning after such date.
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1 Subtitle E—Deduction for Health

2 Insurance Costs of Self-Em3 ployed Individuals

4 SEC. 141. INCREASE IN DEDUCTIBLE HEALTH INSURANCE

5 COSTS FOR SELF-EMPLOYED INDIVIDUALS.

6 (a) IN GENERAL.—Paragraph (1) of section 162(l)

7 of the Internal Revenue Code of 1986 (relating to special

8 rules for health insurance costs of self-employed individ9 uals) is amended by striking ‘‘25 percent’’ and inserting

10 ‘‘100 percent’’.

11 (b) REPEAL OF TERMINATION PROVISION.—Para12 graph (6) of section 162(l) of such Code (relating to termi13 nation) is repealed.

14 (c) CONFORMING AMENDMENT.—Section 110(a) of

15 the Tax Extension Act of 1991 is amended by striking

16 paragraph (2).

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

18 this section shall apply to taxable years beginning after

19 June 30, 1992.

20 TITLE II—PRIMARY AND

21 PREVENTIVE CARE SERVICES

22 SEC. 201. MATERNAL AND INFANT CARE COORDINATION.

23 (a) PURPOSE.—It is the purpose of this section to

24 assist States in the development and implementation of

25 coordinated, multidisciplinary, and comprehensive primary
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1 health care and social services, and health and nutrition

2 education programs, designed to improve maternal and

3 child health.

4 (b) GRANTS FOR IMPLEMENTATION OF PROGRAMS.—

5 (1) AUTHORITY.—The Secretary of Health and

6 Human Services (hereafter referred to in this section

7 as the ‘‘Secretary’’) is authorized to award grants to

8 States to enable such States to plan and implement

9 coordinated, multidisciplinary, and comprehensive

10 primary health care and social service programs tar11 geted to pregnant women and infants.

12 (2) ELIGIBILITY.—To be eligible to receive a

13 grant under this section, a State shall—

14 (A) prepare and submit to the Secretary

15 an application at such time, in such manner,

16 and containing such information as the Sec17 retary may require;

18 (B) provide assurances that under the pro19 gram established with amounts received under a

20 grant, individuals will have access (without any

21 barriers) to comprehensive family planning

22 counseling, pregnancy testing, prenatal care,

23 delivery, intrapartum and postpartum care, pe24 diatric care for infants, and social services as

25 appropriate, including outreach activities, home
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1 visits, child care, transportation, risk assess2 ment, nutrition counseling, dental care, mental

3 health services, substance abuse services, serv4 ices relating to HIV infection, and prevention

5 counseling;

6 (C) provide assurances that under the pro7 gram individuals will have access, without any

8 barriers, to the full range of pediatric services

9 provided by pediatric nurse practitioners and

10 clinical nurse specialists, including in-home

11 services for low birth weight babies;

12 (D) as part of the State application, sub13 mit a plan for providing incentive payments of

14 up to $500 to pregnant women who—

15 (i) have not attained age 20;

16 (ii) are at risk of having low birth

17 weight babies;

18 (iii) agree to attend not less than 5

19 prenatal visits and 1 postnatal visit; and

20 (iv) agree to attend a requisite num21 ber of prenatal care and parenting classes,

22 as determined by the State;

23 (E) as part of the State application, sub24 mit a plan for the coordination and maximiza25 tion of existing and proposed Federal and State
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1 resources, including amounts provided under

2 the medicaid program under title XIX of the

3 Social Security Act, the special supplemental

4 food program under section 17 of the Child Nu5 trition Act of 1966, family planning programs,

6 substance abuse programs, State maternal and

7 child health programs funded under title V of

8 the Social Security Act, community and mi9 grant health center programs under the Public

10 Health Service Act, and other publicly, or where

11 practicable, privately supported programs;

12 (F) demonstrate that the major service

13 providers to be involved, including private non14 profit entities committed to improving maternal

15 and infant health, are committed to and in16 volved in the program to be funded with

17 amounts received under the grant;

18 (G) with respect to States with high infant

19 mortality rates among minority populations,

20 demonstrate the involvement of major health,

21 multiservice, professional, or civic group rep22 resentatives of such minority groups in the

23 planning and implementation of the State pro24 gram; and
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1 (H) demonstrate that health promotion

2 and outreach activities under the State program

3 are targeted to women of childbearing age, par4 ticularly those at risk for having low birth

5 weight babies.

6 (3) TERM OF GRANT.—A grant awarded under

7 this subsection shall be for a period of 5 years.

8 (4) USE OF AMOUNTS.—Amounts received by a

9 State under a grant awarded under this subsection

10 shall be used to establish a State program to provide

11 coordinated, multidisciplinary, and comprehensive

12 primary health care and social services, and health

13 and nutrition education program services, that are

14 designed to improve maternal and child health.

15 (5) AUTHORIZATION OF APPROPRIATIONS.—

16 There are authorized to be appropriated to carry out

17 this subsection, $100,000,000 for fiscal year 1994,

18 $300,000,000 for fiscal year 1995, and

19 $500,000,000 for each of the fiscal years 1996

20 through 1998.

21 (c) MODEL HEALTH AND NUTRITION EDUCATION

22 CURRICULA.—

23 (1) AUTHORITY.—The Secretary, in conjunction

24 with the Secretary of Education and the Secretary

25 of Agriculture, is authorized to award grants, on a
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1 competitive basis, to public or nonprofit private enti2 ties to enable such entities to develop model health

3 and nutrition education curricula for children in

4 grades kindergarten through twelfth.

5 (2) APPLICATION.—To be eligible to receive a

6 grant under paragraph (1), an entity shall prepare

7 and submit to the Secretary an application at such

8 time, in such manner, and containing such informa9 tion as the Secretary may require.

10 (3) CURRICULA.—Curricula developed under

11 paragraph (1) should be consistent with the goals of

12 ‘‘Healthy People 2000: National Health Promotion

13 and Disease Prevention Objectives’’, published by

14 the Department of Health and Human Services in

15 September 1990, and shall address the cultural and

16 lifestyle realities of racial and ethnic minority popu17 lations.

18 (4) AUTHORIZATION OF APPROPRIATIONS.—

19 There are authorized to be appropriated to carry out

20 this subsection, $10,000,000 for fiscal year 1994.

21 SEC. 202. REAUTHORIZATION OF CERTAIN PROGRAMS PRO22 VIDING PRIMARY AND PREVENTIVE CARE.

23 (a) IMMUNIZATION PROGRAMS.—Section

24 317(j)(1)(A) of the Public Health Service Act (42 U.S.C.

25 247b(j)(1)(A)) is amended—
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1 (1) by striking ‘‘and such sums’’ and inserting

2 ‘‘such sums’’; and

3 (2) by striking ‘‘each of the fiscal years 1992

4 through 1995’’ and inserting ‘‘each of the fiscal

5 years 1992 and 1993, $380,000,000 for fiscal year

6 1994, and such sums as may be necessary for each

7 of the fiscal years 1995 through 1998’’.

8 (b) TUBERCULOSIS PREVENTION GRANTS.—Section

9 317(j)(2) of the Public Health Service Act (42 U.S.C.

10 247b(j)(2)) is amended—

11 (1) by striking ‘‘and such sums’’ and inserting

12 ‘‘such sums’’; and

13 (2) by striking ‘‘each of the fiscal years 1992

14 through 1995’’ and inserting ‘‘each of the fiscal

15 years 1992 and 1993, $30,000,000 for fiscal year

16 1994, and such sums as may be necessary for each

17 of the fiscal years 1995 through 1998’’.

18 (c) SEXUALLY TRANSMITTED DISEASES.—Section

19 318(d)(1) of the Public Health Service Act (42 U.S.C.

20 247c(d)(1)) is amended—

21 (1) by striking ‘‘and such sums’’ and inserting

22 ‘‘such sums’’; and

23 (2) by inserting before the first period the fol24 lowing: ‘‘$125,000,000 for fiscal year 1994, and
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1 such sums as may be necessary for each of the fiscal

2 years 1995 through 1998’’.

3 (d) MIGRANT HEALTH CENTERS.—Section

4 329(h)(1)(A) of the Public Health Service Act (42 U.S.C.

5 254b(h)(1)(A)) is amended by striking ‘‘and 1991, and

6 such sums as may be necessary for each of the fiscal years

7 1992 through 1994’’ and inserting ‘‘through 1993,

8 $80,000,000 for fiscal year 1994, and such sums as may

9 be necessary for each of the fiscal years 1995 through

10 1998’’.

11 (e) COMMUNITY HEALTH CENTERS.—Section

12 330(g)(1)(A) of the Public Health Service Act (42 U.S.C.

13 254c(g)(1)(A)) is amended by striking ‘‘and 1991, and

14 such sums as may be necessary for each of the fiscal years

15 1992 through 1994’’ and inserting ‘‘through 1993,

16 $700,000,000 for fiscal year 1994, and such sums as may

17 be necessary for each of the fiscal years 1995 through

18 1998’’.

19 (f) HEALTH CARE SERVICES FOR THE HOMELESS.—

20 Section 340(q)(1) of the Public Health Service Act (42

21 U.S.C. 256(q)(1)) is amended by striking ‘‘and such

22 sums’’ and all that follows through the period and insert23 ing ‘‘$90,000,000 for fiscal year 1994, and such sums as

24 may be necessary for each of the fiscal years 1995 through

25 1998.’’.
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1 (g) FAMILY PLANNING PROJECT GRANTS.—Section

2 1001(d) of the Public Health Service Act (42 U.S.C.

3 300(d)) is amended—

4 (1) by striking ‘‘and $158,400,000’’ and insert5 ing ‘‘$158,400,000’’; and

6 (2) by inserting before the period the following:

7 ‘‘, $200,000,000 for fiscal year 1994, and such sums

8 as may be necessary for each of the fiscal years

9 1995 through 1998’’.

10 (h) BREAST AND CERVICAL CANCER PREVENTION.—

11 Section 1509(a) of the Public Health Service Act (42

12 U.S.C. 300n–5(a)) is amended—

13 (1) by striking ‘‘and such sums’’ and inserting

14 ‘‘such sums’’; and

15 (2) by striking ‘‘for each of the fiscal years

16 1992 and 1993’’ and inserting ‘‘for each of the fiscal

17 years 1992 and 1993, $100,000,000 for fiscal year

18 1994, and such sums as may be necessary for each

19 of the fiscal years 1995 through 1998’’.

20 (i) PREVENTIVE HEALTH AND HEALTH SERVICES

21 BLOCK GRANT.—Section 1901(a) of the Public Health

22 Service Act (42 U.S.C. 300w(a)) is amended by striking

23 ‘‘$205,000,000’’ and inserting ‘‘$235,000,000’’.
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1 (j) HIV EARLY INTERVENTION.—Section 2655 of the

2 Public Health Service Act (42 U.S.C. 300ff–55) is

3 amended—

4 (1) by striking ‘‘and such sums’’ and inserting

5 ‘‘such sums’’; and

6 (2) by striking ‘‘each of the fiscal years 1992

7 through 1995’’ and inserting ‘‘each of fiscal years

8 1992 and 1993, $310,000,000 for fiscal year 1994,

9 and such sums as may be necessary for each of the

10 fiscal years 1995 through 1998’’.

11 (k) MATERNAL AND CHILD HEALTH SERVICES

12 BLOCK GRANT.—Section 501(a) of the Social Security

13 Act (42 U.S.C. 701(a)) is amended by striking

14 ‘‘$686,000,000 for fiscal year 1990 and each fiscal year

15 thereafter’’ and inserting ‘‘$800,000,000 for fiscal year

16 1994, and such sums as may be necessary in each of the

17 fiscal years 1995 through 1998’’.

18 SEC. 203. COMPREHENSIVE SCHOOL HEALTH EDUCATION

19 PROGRAM.

20 Section 4605 of the Elementary and Secondary Edu21 cation Act of 1965 (20 U.S.C. 3155) is amended to read

22 as follows:
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1 ‘‘SEC. 4605. COMPREHENSIVE SCHOOL HEALTH EDUCATION

2 PROGRAMS.

3 ‘‘(a) PURPOSE.—It is the purpose of this section to

4 establish a comprehensive school health education and pre5 vention program for elementary and secondary school

6 students.

7 ‘‘(b) PROGRAM AUTHORIZED.—The Secretary,

8 through the Office of Comprehensive School Health Edu9 cation established in subsection (e), shall award grants to

10 States from allotments under subsection (c) to enable such

11 States to—

12 ‘‘(1) award grants to local or intermediate edu13 cational agencies, and consortia thereof, to enable

14 such agencies or consortia to establish, operate and

15 improve local programs of comprehensive health edu16 cation and prevention, early health intervention, and

17 health education, in elementary and secondary

18 schools (including preschool, kindergarten, inter19 mediate, and junior high schools); and

20 ‘‘(2) develop training, technical assistance and

21 coordination activities for the programs assisted pur22 suant to paragraph (1).

23 ‘‘(c) RESERVATIONS AND STATE ALLOTMENTS.—

24 ‘‘(1) RESERVATIONS.—From the sums appro25 priated pursuant to the authority of subsection (f)

26 for any fiscal year, the Secretary shall reserve—
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1 ‘‘(A) 1 percent for payments to Guam,

2 American Samoa, the Virgin Islands, the Re3 public of the Marshall Islands, the Federated

4 States of Micronesia, the Northern Mariana Is5 lands, and the Republic of Palau, to be allotted

6 in accordance with their respective needs; and

7 ‘‘(B) 1 percent for payments to the Bureau

8 of Indian Affairs.

9 ‘‘(2) STATE ALLOTMENTS.—From the remain10 der of the sums not reserved under paragraph (1),

11 the Secretary shall allot to each State an amount

12 which bears the same ratio to the amount of such

13 remainder as the school-age population of the State

14 bears to the school-age population of all States, ex15 cept that no State shall be allotted less than an

16 amount equal to 0.5 percent of such remainder.

17 ‘‘(3) REALLOTMENT.—The Secretary may

18 reallot any amount of any allotment to a State to

19 the extent that the Secretary determines that the

20 State will not be able to obligate such amount within

21 2 years of allotment. Any such reallotment shall be

22 made on the same basis as an allotment under para23 graph (2).

24 ‘‘(d) USE OF FUNDS.—Grant funds provided to local

25 or intermediate educational agencies, or consortia thereof,
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1 under this section may be used to improve elementary and

2 secondary education in the areas of—

3 ‘‘(1) personal health and fitness;

4 ‘‘(2) prevention of chronic diseases;

5 ‘‘(3) prevention and control of communicable

6 diseases;

7 ‘‘(4) nutrition;

8 ‘‘(5) substance use and abuse;

9 ‘‘(6) accident prevention and safety;

10 ‘‘(7) community and environmental health;

11 ‘‘(8) mental and emotional health;

12 ‘‘(9) parenting and the challenges of raising

13 children; and

14 ‘‘(10) the effective use of the health services

15 delivery system.

16 ‘‘(e) OFFICE OF COMPREHENSIVE SCHOOL HEALTH

17 EDUCATION.—The Secretary shall establish within the Of18 fice of the Secretary an Office of Comprehensive School

19 Health Education which shall have the following respon20 sibilities:

21 ‘‘(1) To recommend mechanisms for the coordi22 nation of school health education programs con23 ducted by the various departments and agencies of

24 the Federal Government.
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1 ‘‘(2) To advise the Secretary on formulation of

2 school health education policy within the Depart3 ment of Education.

4 ‘‘(3) To disseminate information on the benefits

5 to health education of utilizing a comprehensive

6 health curriculum in schools.

7 ‘‘(f) AUTHORIZATION OF APPROPRIATIONS.—

8 ‘‘(1) IN GENERAL.—There are authorized to be

9 appropriated $50,000,000 for fiscal year 1994 and

10 such sums as may be necessary for each of the fiscal

11 years 1995 and 1996 to carry out this section.

12 ‘‘(2) AVAILABILITY.—Funds appropriated pur13 suant to the authority of paragraph (1) in any fiscal

14 year shall remain available for obligation and ex15 penditure until the end of the fiscal year succeeding

16 the fiscal year for which such funds were appro17 priated.’’.

18 SEC. 204. COMPREHENSIVE EARLY CHILDHOOD HEALTH

19 EDUCATION PROGRAM.

20 (a) PURPOSE.—It is the purpose of this section to

21 establish a comprehensive early childhood health education

22 program.

23 (b) PROGRAM.—The Secretary of Health and Human

24 Services shall conduct a program of awarding grants to

25 agencies conducting Head Start training to enable such
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1 agencies to provide training and technical assistance to

2 Head Start teachers and other child care providers. Such

3 program shall—

4 (1) establish a training system through the

5 Head Start agencies and organizations conducting

6 Head Start training for the purpose of enhancing

7 teacher skills and providing comprehensive early

8 childhood health education curriculum;

9 (2) enable such agencies and organizations to

10 provide training to day care providers in order to

11 strengthen the skills of the early childhood workforce

12 in providing health education;

13 (3) provide technical support for health edu14 cation programs and curricula; and

15 (4) provide cooperation with other early child16 hood providers to ensure coordination of such pro17 grams and the transition of students into the public

18 school environment.

19 (c) USE OF FUNDS.—Grant funds under this section

20 may be used to provide training and technical assistance

21 in the areas of—

22 (1) personal health and fitness;

23 (2) prevention of chronic diseases;

24 (3) prevention and control of communicable dis25 eases;
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1 (4) dental health;

2 (5) nutrition;

3 (6) substance use and abuse;

4 (7) accident prevention and safety;

5 (8) community and environmental health;

6 (9) mental and emotional health; and

7 (10) strengthening the role of parent involve8 ment.

9 (d) RESERVATION FOR INNOVATIVE PROGRAMS.—

10 The Secretary shall reserve 5 percent of the funds appro11 priated pursuant to the authority of subsection (e) in each

12 fiscal year for the development of innovative model health

13 education programs or curricula.

14 (e) AUTHORIZATION OF APPROPRIATIONS.—There

15 are authorized to be appropriated $40,000,000 for fiscal

16 year 1994 and such sums as may be necessary for each

17 of the fiscal years 1995 and 1996 to carry out this section.
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1 TITLE III—DISCLOSURE OF CER2 TAIN INFORMATION TO BENE3 FICIARIES UNDER THE MEDI4 CARE AND MEDICAID PRO5 GRAMS

6 SEC. 301. REGULATIONS REQUIRING DISCLOSURE OF CER7 TAIN INFORMATION TO BENEFICIARIES

8 UNDER THE MEDICARE AND MEDICAID PRO9 GRAMS.

10 Part A of title XI of the Social Security Act (42

11 U.S.C. 1301 et seq.) is amended by adding at the end

12 the following new section:

13 ‘‘DISCLOSURE OF CERTAIN INFORMATION TO BENE14 FICIARIES UNDER THE MEDICARE AND MEDICAID

15 PROGRAMS

16 ‘‘SEC. 1144. (a) ANNUAL REPORTS.—

17 ‘‘(1) INSTITUTIONAL HEALTH CARE PROVID18 ERS.—

19 ‘‘(A) IN GENERAL.—The Secretary shall

20 issue regulations requiring that each institu21 tional health care provider receiving payment

22 for services provided under title XVIII or XIX

23 shall make an annual report available to the re24 cipients of services under such title.
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1 ‘‘(B) CONTENTS OF REPORT.—The annual

2 report referred to in subparagraph (A) shall in3 clude—

4 ‘‘(i) mortality rates relating to serv5 ices provided to individuals, including inci6 dence and outcomes of surgical and other

7 invasive procedures;

8 ‘‘(ii) nosocomial infection rates;

9 ‘‘(iii) a list of routine preoperative

10 tests and other frequently performed medi11 cal tests, including blood tests, chest x12 rays, magnetic resonance imaging, comput13 erized axial tomography, urinalysis, and

14 heart catherizations, and the cost of such

15 tests;

16 ‘‘(iv) the number and types of mal17 practice claims against the provider de18 cided or settled for the year; and

19 ‘‘(v) such other information as the

20 Secretary shall require.

21 ‘‘(2) NONINSTITUTIONAL HEALTH CARE PRO22 VIDERS.—

23 ‘‘(A) IN GENERAL.—The Secretary shall

24 issue regulations requiring that each

25 noninstitutional provider receiving payment for
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1 services provided under title XVIII or XIX shall

2 make an annual report available to the recipi3 ents of services under such title.

4 ‘‘(B) CONTENTS OF REPORT.—The report

5 referred to in subparagraph (A) shall include—

6 ‘‘(i) information regarding the provid7 er’s education, experience, qualifications,

8 board certification, and license to provide

9 health care services, including a list of the

10 States in which such provider is licensed

11 and any limitations on such provider’s

12 license;

13 ‘‘(ii) any disciplinary actions taken

14 against the provider by any health care fa15 cility, State medical agency, or medical or16 ganization which result in a finding of im17 proper conduct;

18 ‘‘(iii) any malpractice action against

19 the provider decided or settled;

20 ‘‘(iv) a disclosure of any ownership in21 terest the provider may have in any health

22 care facility, laboratory, or health care

23 supply company; and

24 ‘‘(v) such other information as the

25 Secretary shall require.
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1 ‘‘(b) DISCLOSURE OF INFORMATION REGARDING

2 HEALTH CARE PROCEDURES AND FORMS.—

3 ‘‘(1) INFORMATION REGARDING HEALTH CARE

4 PROCEDURES AND FORMS.—The Secretary shall

5 issue regulations requiring that each institutional

6 and noninstitutional health care provider receiving

7 payment for services under title XVIII or XIX shall

8 make available any forms required in connection

9 with the receipt of services under such title which

10 consist of any diagnostic, surgical, or other invasive

11 procedure, prior to the performance of such proce12 dure.

13 ‘‘(2) INFORMATION PROVIDED BEFORE PER14 FORMANCE OF PROCEDURE.—The Secretary shall

15 issue regulations requiring each institutional and

16 noninstitutional health care provider receiving pay17 ment for services provided under title XVIII or XIX

18 to disclose to any individual receiving any surgical,

19 palliative, or other health care procedure or any

20 drug therapy or other treatment, the following infor21 mation prior to the performance of such procedure

22 or treatment:

23 ‘‘(A) The nature of the procedure or treat24 ment.
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1 ‘‘(B) A description of the procedure or

2 treatment.

3 ‘‘(C) The risk and benefits associated with

4 the procedure or treatment.

5 ‘‘(D) The success rate for the procedure or

6 treatment generally, and for the provider.

7 ‘‘(E) The provider’s cost range for the pro8 cedure or treatment.

9 ‘‘(F) Any alternative treatment which may

10 be available to such individual.

11 ‘‘(G) Any known side effects of any medi12 cations required in connection with the proce13 dure or treatment.

14 ‘‘(H) The interactive effect of the complete

15 regimen of medications associated with the pro16 cedure.

17 ‘‘(I) The availability of the information

18 under this subsection and under subsections (a)

19 and (c).

20 ‘‘(J) Such other information as the Sec21 retary shall require.

22 ‘‘(3) EMERGENCIES.—The Secretary shall issue

23 regulations with respect to the waiver of any require24 ment established under paragraphs (1) and (2) in a

25 case where emergency health care is needed.
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1 ‘‘(c) PATIENT’S RIGHT TO REFUSE INFORMATION

2 AND TREATMENT.—The Secretary shall issue regulations

3 requiring each institutional and noninstitutional health

4 care provider receiving payment for services provided

5 under title XVIII or XIX to inform any individual receiv6 ing services under such title of such individual’s right—

7 ‘‘(1) to refuse any information which is avail8 able to such individual under the regulations de9 scribed in subsections (a) and (b);

10 ‘‘(2) to refuse any procedure or treatment;

11 ‘‘(3) to refuse attendance by any such provider;

12 or

13 ‘‘(4) to leave the premises of any such provider.

14 ‘‘(d) DEFINITIONS.—As used in this section—

15 ‘‘(1) INSTITUTIONAL HEALTH CARE PRO16 VIDER.—The term ‘institutional health care pro17 vider’ means any hospital, clinic, skilled nursing fa18 cility, comprehensive outpatient rehabilitation facil19 ity, home health agency, hospice program, or other

20 facility receiving payment for services provided

21 under title XVIII or XIX, as determined by the

22 Secretary.

23 ‘‘(2) NONINSTITUTIONAL HEALTH CARE PRO24 VIDER.—The term ‘noninstitutional health care pro25 vider’ means any physician, physician assistant,
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1 nurse practitioner, certified nurse midwife, certified

2 registered nurse anesthetist, or other individual re3 ceiving payment for services provided under title

4 XVIII or XIX, as determined by the Secretary.

5 ‘‘(e) COMPLIANCE.—

6 ‘‘(1) PENALTIES FOR FAILURE TO COMPLY.—

7 The Secretary shall issue regulations establishing

8 appropriate penalties for any failure to comply with

9 the regulations issued under this section.

10 ‘‘(2) WAIVER OF COMPLIANCE.—The Secretary

11 may waive any of the requirements under the regula12 tions issued under this section if a health care pro13 vider demonstrates that such requirements will re14 sult in an undue burden on such provider.’’.

15 SEC. 302. OUTREACH ACTIVITIES.

16 (a) MEDICARE PROGRAM.—

17 (1) GRANTS TO NONPROFIT PRIVATE ENTITIES

18 FOR OUTREACH ACTIVITIES.—

19 (A) AUTHORITY.—The Secretary of Health

20 and Human Services (hereafter referred to in

21 this paragraph as the ‘‘Secretary’’), is author22 ized to award grants, on a competitive basis, to

23 nonprofit private entities to enable such entities

24 to develop outreach activities to inform bene25 ficiaries under title XVIII of the Social Security
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1 Act of the information available to such bene2 ficiaries pursuant to regulations issued by the

3 Secretary under section 1144 of the Social Se4 curity Act as added by section 311 of this Act.

5 (B) APPLICATION.—To be eligible to re6 ceive a grant under subparagraph (A), an entity

7 shall prepare and submit to the Secretary an

8 application at such time, in such manner, and

9 containing such information as the Secretary

10 may require.

11 (C) AUTHORIZATION OF APPROPRIA12 TIONS.—There are authorized to be appro13 priated to carry out this section, $5,000,000 for

14 fiscal year 1994, $5,000,000 for fiscal year

15 1995, and $5,000,000 for fiscal year 1996.

16 (2) OUTREACH THROUGH NOTICE OF MEDICARE

17 BENEFITS.—Section 1804 of the Social Security Act

18 (42 U.S.C. 1395b–2) is amended—

19 (A) in paragraph (2), by striking ‘‘, and’’

20 and inserting a comma,

21 (B) in paragraph (3), by striking the pe22 riod and inserting ‘‘, and’’, and

23 (C) by inserting after paragraph (3), the

24 following new paragraph:
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1 ‘‘(4) a description of the information available

2 to beneficiaries under this title pursuant to regula3 tions issued by the Secretary under section 1144.’’.

4 (b) MEDICAID PROGRAM.—

5 (1) IN GENERAL.—Section 1902(a) of the So6 cial Security Act (42 U.S.C. 1396a(a)), is amend7 ed—

8 (A) by striking ‘‘and’’ at the end of para9 graph (54),

10 (B) by striking the period at the end of

11 paragraph (58) (as added by section

12 4751(a)(1)(C) of the Omnibus Budget Rec13 onciliation Act of 1990) and inserting a semi14 colon,

15 (C) by redesignating the second paragraph

16 (58) (as added by section 4752(c)(1)(C) of the

17 Omnibus Budget Reconciliation Act of 1990) as

18 paragraph (59) and by striking the period at

19 the end and inserting ‘‘; and’’, and

20 (D) by adding at the end the following new

21 paragraph:

22 ‘‘(60) provide for an outreach program inform23 ing individuals who receive medical assistance under

24 this title of the information available to such individ-
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1 uals pursuant to regulations issued by the Secretary

2 under section 1144.’’.

3 (2) EFFECTIVE DATE.—

4 (A) IN GENERAL.—Paragraph (1) shall

5 apply to calendar quarters beginning on or after

6 January 1, 1994.

7 (B) GENERAL RULE.—In the case of a

8 State which the Secretary determines requires

9 State legislation (other than legislation author10 izing or appropriating funds) in order to comply

11 with paragraph (1), the State shall not be re12 garded as failing to comply with such para13 graph solely on the basis of its failure to meet

14 the requirements of such paragraph before the

15 first day of the first calendar quarter beginning

16 after the close of the first regular session of the

17 State legislature that begins after the date of

18 the enactment of this Act. For purposes of the

19 previous sentence, in the case of a State that

20 has a 2-year legislative session, each year of

21 such session shall be deemed to be a separate

22 regular session of the State legislature.
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1 TITLE IV—PATIENT’S RIGHT TO

2 DECLINE MEDICAL TREATMENT

3 SEC. 401. RIGHT TO DECLINE MEDICAL TREATMENT.

4 (a) RIGHTS OF COMPETENT ADULTS.—

5 (1) IN GENERAL.—Except as provided in para6 graph (2), a State may not restrict the right of a

7 competent adult to consent to, or to decline, medical

8 treatment.

9 (2) LIMITATIONS.—

10 (A) AFFECT ON THIRD PARTIES.—A State

11 may impose limitations on the right of a com12 petent adult to decline treatment if such limita13 tions protect third parties (including minor chil14 dren) from harm.

15 (B) TREATMENT WHICH IS NOT MEDI16 CALLY INDICATED.—Nothing in this section

17 shall be construed to require that any individual

18 be offered, or that any individual may demand,

19 medical treatment which the health care pro20 vider does not have available, or which is futile,

21 or which is otherwise not medically indicated.

22 (b) RIGHTS OF INCAPACITATED ADULTS.—

23 (1) IN GENERAL.—Notwithstanding incapacity,

24 each adult has a right to consent to, or to decline,

25 medical treatment. Except as provided in subsection
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1 (a)(2)(A), States may not restrict the right to con2 sent to, or to decline, medical treatment as exercised

3 by an adult through the documents specified in this

4 subsection, or through similar documents or other

5 written methods of directive which clearly and con6 vincingly evidence the adult’s treatment choices.

7 (2) ADVANCE DIRECTIVES AND POWERS OF AT8 TORNEY.—

9 (A) IN GENERAL.—In order to facilitate

10 the communication, despite incapacity, of an

11 adult’s treatment choices, the Secretary of

12 Health and Human Services (hereafter in this

13 title referred to as the ‘‘Secretary’’), in con14 sultation with the Attorney General, shall de15 velop a national advance directive form that—

16 (i) shall not limit or otherwise restrict,

17 except as provided in subsection (a)(2)(A),

18 an adult’s right to consent to, or to de19 cline, medical treatment; and

20 (ii) shall, at minimum—

21 (I) provide the means for an

22 adult to declare such adult’s own

23 treatment choices in the event of a

24 terminal condition;
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1 (II) provide the means for an

2 adult to declare, at such adult’s op3 tion, treatment choices in the event of

4 other conditions (such as persistent

5 vegetative state) which are chronic

6 and debilitating, which are medically

7 incurable, and from which such adult

8 likely will not recover; and

9 (III) provide the means by which

10 an adult may, at such adult’s option,

11 declare such adult’s wishes with re12 spect to all forms of medical treat13 ment, including forms of medical

14 treatment such as the provision of nu15 trition and hydration by artificial

16 means which may be, in some cir17 cumstances, relatively nonburdensome.

18 (B) NATIONAL DURABLE POWER OF AT19 TORNEY FORM.—The Secretary, in consultation

20 with the Attorney General, shall develop a na21 tional durable power of attorney form for health

22 care decisionmaking. The form shall provide a

23 means for any adult to designate another adult

24 or adults to exercise the same decisionmaking
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1 powers which would, under State law, otherwise

2 be exercised by next of kin.

3 (C) HONORED BY ALL HEALTH CARE PRO4 VIDERS.—The national advance directive and

5 durable power of attorney forms developed by

6 the Secretary shall be honored by all health

7 care providers.

8 (D) LIMITATIONS.—No individual shall be

9 required to execute an advance directive. This

10 title makes no presumption concerning the in11 tention of an individual who has not executed

12 an advance directive. An advance directive shall

13 be sufficient, but not necessary, proof of an

14 adult’s treatment choices with respect to the

15 circumstances addressed in the advance direc16 tive.

17 (3) DEFINITION.—For purposes of this sub18 section, the term ‘‘incapacity’’ means the inability to

19 understand the nature and consequences of health

20 care decisions (including the intended benefits and

21 foreseeable risks of, and alternatives to, proposed

22 treatment options), and to reach informed decisions

23 concerning health care. Individuals who are incapaci24 tated include adjudicated incompetents and individ25 uals who have not been adjudicated incompetent but
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1 who, nonetheless, lack the capacity to formulate or

2 communicate decisions concerning health care.

3 (c) HEALTH CARE PROVIDERS.—

4 (1) IN GENERAL.—No health care provider may

5 provide treatment to an adult contrary to the adult’s

6 wishes as expressed personally, by an advance direc7 tive as provided for in subsection (b)(2), or by a

8 similar written advance directive form or another

9 written method of directive which clearly and con10 vincingly evidence the adult’s treatment choices. A

11 health provider who acts in good faith pursuant to

12 the preceding sentence shall be immune from crimi13 nal or civil liability or discipline for professional mis14 conduct.

15 (2) HEALTH CARE PROVIDERS UNDER THE

16 MEDICARE AND MEDICAID PROGRAMS.—Any health

17 care provider who knowingly provides services to an

18 adult contrary to the adult’s wishes as expressed

19 personally, by an advance directive as provided for

20 in subsection (b)(2), or by a similar written advance

21 directive form or another written method of directive

22 which clearly and convincingly evidence the adult’s

23 treatment choices, shall be denied payment for such

24 services under titles XVIII and XIX of the Social

25 Security Act.
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1 (3) TRANSFERS.—Health care providers who

2 object to the provision of medical care in accordance

3 with an adult’s wishes shall transfer the adult to the

4 care of another health care provider.

5 (d) DEFINITION.—For purposes of this section, the

6 term ‘‘adult’’ means an individual who is 18 years of age

7 or older.

8 SEC. 402. FEDERAL RIGHT ENFORCEABLE IN FEDERAL

9 COURTS.

10 The rights recognized in this title may be enforced

11 by filing a civil action in an appropriate district court of

12 the United States.

13 SEC. 403. SUICIDE AND HOMICIDE.

14 Nothing in this title shall be construed to permit, con15 done, authorize, or approve suicide or mercy killing, or any

16 affirmative act to end a human life.

17 SEC. 404. RIGHTS GRANTED BY STATES.

18 Nothing in this title shall impair or supersede rights

19 granted by State law which exceed the rights recognized

20 by this title.

21 SEC. 405. EFFECT ON OTHER LAWS.

22 (a) IN GENERAL.—Except as specified in subsection

23 (b), written policies and written information adopted by

24 health care providers pursuant to sections 4206 and 4751

25 of the Omnibus Budget Reconciliation Act of 1990 (Public
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1 Law 101–508), shall be modified within 6 months of en2 actment of this title to conform to the provisions of this

3 title.

4 (b) DELAY PERIOD FOR UNIFORM FORMS.—Health

5 care providers shall modify any written forms distributed

6 as written information under sections 4206 and 4751 of

7 the Omnibus Budget Reconciliation Act of 1990 (Public

8 Law 101–508) not later than 6 months after promulgation

9 of the forms referred to in subparagraphs (A) and (B)

10 of section 401(b)(2) by the Secretary.

11 SEC. 406. INFORMATION PROVIDED TO CERTAIN INDIVID12 UALS.

13 The Secretary shall provide on a periodic basis writ14 ten information regarding an individual’s right to consent

15 to, or to decline, medical treatment as provided in this

16 title to individual’s who are beneficiaries under titles II,

17 XVI, XVIII, and XIX of the Social Security Act.

18 SEC. 407. RECOMMENDATIONS TO THE CONGRESS ON IS19 SUES RELATING TO A PATIENT’S RIGHT OF

20 SELF-DETERMINATION.

21 Not later than 180 days after the date of the enact22 ment of this Act the Secretary shall provide recommenda23 tions to the Congress concerning the medical, legal, ethi24 cal, social, and educational issues related to this title. In
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1 developing recommendations under this section the Sec2 retary shall address the following issues:

3 (1) the contents of the forms referred to in sub4 paragraphs (A) and (B) of section 401(b)(2);

5 (2) issues pertaining to the education and train6 ing of health care professionals concerning patients’

7 self-determination rights;

8 (3) issues pertaining to health care profes9 sionals’ duties with respect to patients’ rights, and

10 health care professionals’ roles in identifying, assess11 ing, and presenting for patient consideration medi12 cally indicated treatment options; and

13 (4) such other issues as the Secretary may

14 identify.

15 SEC. 408. EFFECTIVE DATE.

16 This title shall take effect on the date that is 6

17 months after the date of enactment of this Act.

18 TITLE V—PRIMARY AND

19 PREVENTIVE CARE PROVIDERS

20 SEC. 501. INCREASING PAYMENTS TO CERTAIN

21 NONPHYSICIAN PROVIDERS UNDER THE

22 MEDICARE PROGRAM.

23 (a) INCREASE IN PAYMENTS TO NURSE PRACTITION24 ERS, CLINICAL NURSE SPECIALISTS, CERTIFIED NURSE

25 MIDWIVES, AND PHYSICIAN ASSISTANTS.—
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1 (1) IN GENERAL.—Section 1833(a)(1) of the

2 Social Security Act (42 U.S.C. 1395l(a)(1)) is

3 amended—

4 (A) in subparagraph (K), by striking ‘‘80

5 percent’’ and all that follows through ‘‘physi6 cian)’’ and inserting ‘‘97 percent of the fee

7 schedule amount provided under section 1848

8 for the same service performed by a physician’’;

9 (B) by redesignating subparagraph (M)

10 the second place it appears and subparagraph

11 (N), as subparagraphs (N) and (O), respec12 tively; and

13 (C) by amending subparagraph (N), as re14 designated, to read as follows: ‘‘(N) with re15 spect to services described in section

16 1861(s)(2)(K) (relating to services provided by

17 a nurse practitioner, clinical nurse specialist, or

18 physician assistant) the amounts paid shall be

19 97 percent of the fee schedule amount provided

20 under section 1848 for the same service per21 formed by a physician,’’.

22 (2) NURSE PRACTITIONERS AND PHYSICIAN AS23 SISTANTS.—Section 1842(b)(12) of such Act (42

24 U.S.C. 1395u(b)(12)) is amended to read as follows:
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1 ‘‘(12) With respect to services described in clauses

2 (i), (ii), or (iv) of section 1861(s)(2)(K) (relating to physi3 cian assistants and nurse practitioners)—

4 ‘‘(A) payment under this part may only be

5 made on an assignment-related basis; and

6 ‘‘(B) the prevailing charges determined under

7 paragraph (3) shall not exceed—

8 ‘‘(i) in the case of services performed as an

9 assistant at surgery, 97 percent of the amount

10 that would otherwise be recognized if performed

11 by a physician who is serving as an assistant at

12 surgery, or

13 ‘‘(ii) in other cases, 97 percent of the fee

14 schedule amount specified in section 1848 for

15 such services performed by physicians who are

16 not specialists.’’.

17 (3) DIRECT PAYMENT FOR ALL NURSE PRACTI18 TIONERS OR CLINICAL NURSE SPECIALISTS.—Sec19 tion 1832(a)(2)(B)(iv) of such Act (42 U.S.C.

20 1395k(a)(2)(B)(iv)) is amended by striking ‘‘pro21 vided in a rural area (as defined in section

22 1886(d)(2)(D))’’.

23 (4) REMOVAL OF RESTRICTIONS ON SET24 TINGS.—Section 1861(s)(2)(K) of such Act (42

25 U.S.C. 1395x(s)(2)(K)) is amended—
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1 (A) in clause (i), by striking ‘‘(I) in a hos2 pital’’ and all that follows through ‘‘professional

3 shortage area,’’;

4 (B) in clause (ii), by striking ‘‘in a skilled’’

5 and all that follows through ‘‘1919(a)’’; and

6 (C) in clause (iii), by striking ‘‘in a rural’’

7 and all that follows through ‘‘(d)(2)(D))’’.

8 (b) BONUS PAYMENT FOR SERVICES PROVIDED IN

9 HEALTH PROFESSIONAL SHORTAGE AREAS.—Section

10 1833(m) of the Social Security Act (42 U.S.C. 1395l(m))

11 is amended—

12 (1) by inserting ‘‘(1)’’ after ‘‘(m)’’; and

13 (2) by adding at the end the following new

14 paragraph:

15 ‘‘(2) In the case of services of a nurse practitioner,

16 clinical nurse specialist, physician assistant, certified

17 nurse midwife, or certified registered nurse anesthetist

18 furnished to an individual described in paragraph (1) in

19 an area that is a health professional shortage area as de20 scribed in such paragraph, in addition to the amount oth21 erwise paid under this part, there shall also be paid to

22 such service provider (or to an employer in the cases de23 scribed in subparagraph (C) of section 1842(b)(6)) (on a

24 monthly or quarterly basis) from the Federal Supple25 mentary Medical Trust Fund an amount equal to 10 per-
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1 cent of the payment amount for such services under this

2 part.’’.

3 SEC. 502. REQUIRING COVERAGE OF CERTAIN

4 NONPHYSICIAN PROVIDERS UNDER THE

5 MEDICAID PROGRAM.

6 Section 1905(a) of the Social Security Act (42 U.S.C.

7 1396d(a)) is amended—

8 (1) in paragraph (21), by striking ‘‘; and’’ and

9 inserting a semicolon;

10 (2) in paragraph (24), by striking the period at

11 the end and inserting a semicolon;

12 (3) by redesignating paragraphs (22), (23), and

13 (24) as paragraphs (25), (22), and (23), respec14 tively;

15 (4) by inserting after paragraph (23) the fol16 lowing new paragraph:

17 ‘‘(24) services furnished by a physician assist18 ant, nurse practitioner, clinical nurse specialist (as

19 defined in section 1861(aa)(5)), and certified reg20 istered nurse anesthetist (as defined in section

21 1861(bb)(2)); and’’;

22 (5) by striking the semicolon at the end of

23 paragraph (25), as redesignated, and inserting a pe24 riod; and
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1 (6) by transferring and inserting paragraph

2 (25), as redesignated, after paragraph (24).

3 SEC. 503. MEDICAL STUDENT TUTORIAL PROGRAM

4 GRANTS.

5 Part C of title VII of the Public Health Service Act

6 is amended by adding at the end thereof the following new

7 section:

8 ‘‘SEC. 753. MEDICAL STUDENT TUTORIAL PROGRAM

9 GRANTS.

10 ‘‘(a) ESTABLISHMENT.—The Secretary shall estab11 lish a program to award grants to eligible schools of medi12 cine or osteopathic medicine to enable such schools to pro13 vide medical students for tutorial programs or as partici14 pants in clinics designed to interest high school or college

15 students in careers in general medical practice.

16 ‘‘(b) APPLICATION.—To be eligible to receive a grant

17 under this section, a school of medicine or osteopathic

18 medicine shall prepare and submit to the Secretary an ap19 plication at such time, in such manner, and containing

20 such information as the Secretary may require, including

21 assurances that the school will use amounts received under

22 the grant in accordance with subsection (c).

23 ‘‘(c) USE OF FUNDS.—

24 ‘‘(1) IN GENERAL.—Amounts received under a

25 grant awarded under this section shall be used to—
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1 ‘‘(A) fund programs under which students

2 of the grantee are provided as tutors for high

3 school and college students in the areas of

4 math, science, health promotion and prevention,

5 first aide, nutrition and prenatal care;

6 ‘‘(B) fund programs under which students

7 of the grantee are provided as participants in

8 clinics and seminars in the areas described in

9 paragraph (1); and

10 ‘‘(C) conduct summer institutes for high

11 school and college students to promote careers

12 in medicine.

13 ‘‘(2) DESIGN OF PROGRAMS.—The programs,

14 institutes and other activities conducted by grantees

15 under paragraph (1) shall be designed to—

16 ‘‘(A) give medical students desiring to

17 practice general medicine access to the local

18 community;

19 ‘‘(B) provide information to high school

20 and college students concerning medical school

21 and the general practice of medicine; and

22 ‘‘(C) promote careers in general medicine.

23 ‘‘(d) AUTHORIZATION OF APPROPRIATIONS.—There

24 are authorized to be appropriated to carry out this section,
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1 $5,000,000 for fiscal year 1994, and such sums as may

2 be necessary for fiscal year 1995.’’.

3 SEC. 504. GENERAL MEDICAL PRACTICE GRANTS.

4 Part C of title VII of the Public Health Service Act

5 (as amended by section 503) is further amended by adding

6 at the end thereof the following new section:

7 ‘‘SEC. 754. GENERAL MEDICAL PRACTICE GRANTS.

8 ‘‘(a) ESTABLISHMENT.—The Secretary shall estab9 lish a program to award grants to eligible public or private

10 nonprofit schools of medicine or osteopathic medicine, hos11 pitals, residency programs in family medicine or pediat12 rics, or to a consortium of such entities, to enable such

13 entities to develop effective strategies for recruiting medi14 cal students interested in the practice of general medicine

15 and placing such students into general practice positions

16 upon graduation.

17 ‘‘(b) APPLICATION.—To be eligible to receive a grant

18 under this section, an entity of the type described in sub19 section (a) shall prepare and submit to the Secretary an

20 application at such time, in such manner, and containing

21 such information as the Secretary may require, including

22 assurances that the entity will use amounts received under

23 the grant in accordance with subsection (c).

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

25 grant awarded under this section shall be used to fund
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1 programs under which effective strategies are developed

2 and implemented for recruiting medical students inter3 ested in the practice of general medicine and placing such

4 students into general practice positions upon graduation.

5 ‘‘(d) AUTHORIZATION OF APPROPRIATIONS.—There

6 are authorized to be appropriated to carry out this section,

7 $25,000,000 for each of the fiscal years 1994 through

8 1998, and such sums as may be necessary for fiscal years

9 thereafter.’’.

10 SEC. 505. PAYMENTS FOR DIRECT AND INDIRECT GRAD11 UATE MEDICAL EDUCATION COSTS.

12 (a) DIRECT MEDICAL EDUCATION COSTS.—Section

13 1886(h) of the Social Security Act (42 U.S.C. 1395ww(h))

14 is amended—

15 (1) in paragraph (1)—

16 (A) by striking ‘‘hospitals for direct medi17 cal education costs’’ and inserting ‘‘hospitals

18 and public and private nonprofit entities with

19 approved medical residency training programs

20 for direct medical education costs’’; and

21 (B) by striking ‘‘hospitals associated’’ and

22 inserting ‘‘hospitals and public and private non23 profit entities with approved medical residency

24 training programs associated’’;

25 (2) in paragraph (2)—
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1 (A) in the matter preceding subparagraph

2 (A) by striking ‘‘each hospital’’ and inserting

3 ‘‘each hospital or public or private nonprofit

4 entity’’;

5 (B) in subparagraph (A)—

6 (i) in the heading, by striking ‘‘HOS7 PITAL’S ’’;

8 (ii) by striking ‘‘the hospital’s’’ and

9 inserting ‘‘the hospital’s or entity’s’’; and

10 (iii) by striking ‘‘the hospital’’ and in11 serting ‘‘the hospital or entity’’;

12 (C) in clause (ii) of subparagraph (B), by

13 striking ‘‘a hospital if the hospital’s’’ and in14 serting ‘‘a hospital or entity if the hospital’s or

15 entity’s’’;

16 (D) in subparagraph (C), by striking ‘‘the

17 hospital’’ each place it appears and inserting

18 ‘‘the hospital or the entity’’;

19 (E) in subparagraph (D), by striking ‘‘the

20 hospital’’ and inserting ‘‘the hospital or the

21 entity’’; and

22 (F) in subparagraph (E), by striking ‘‘a

23 hospital’’ and inserting ‘‘a hospital or entity’’;

24 (3) in paragraph (3)—
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1 (A) in the heading, by striking ‘‘HOS2 PITAL’’;

3 (B) in subparagraph (A),

4 (i) in the matter preceding clause (i),

5 by striking ‘‘hospital cost reporting period’’

6 and inserting ‘‘cost reporting period of a

7 hospital or a public or private nonprofit

8 entity’’; and

9 (ii) in clause (ii), by striking ‘‘the hos10 pital’s’’ and inserting ‘‘the hospital’s or

11 entity’s’’;

12 (C) in subparagraph (B),

13 (i) in the matter preceding clause (i),

14 by striking ‘‘hospital cost reporting period’’

15 and inserting ‘‘cost reporting period of a

16 hospital or a public or private nonprofit

17 entity’’; and

18 (ii) in clauses (i) and (ii), by striking

19 ‘‘hospital’s’’ each place it appears and in20 serting ‘‘hospital’s or entity’s’’; and

21 (D) in subparagraph (C), by striking ‘‘hos22 pital’s cost reporting period’’ and inserting

23 ‘‘cost reporting period of a hospital or a public

24 or private nonprofit entity’’; and

25 (4) in paragraph (4)—
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1 (A) in subparagraph (B), by striking ‘‘hos2 pital’’ each place it appears and inserting ‘‘hos3 pital or public or private nonprofit entity’’; and

4 (B) in subparagraph (E), by striking ‘‘hos5 pital’’ and inserting ‘‘hospital or public or pri6 vate nonprofit entity’’.

7 (b) INDIRECT MEDICAL EDUCATION COSTS.—

8 (1) IN GENERAL.—Section 1848 of such Act

9 (42 U.S.C. 1395w–4) is amended—

10 (A) by redesignating subsection (j) as sub11 section (k); and

12 (B) by inserting after subsection (i) the

13 following new subsection:

14 ‘‘(j) PAYMENTS FOR INDIRECT GRADUATE MEDICAL

15 EDUCATION COSTS.—

16 ‘‘(1) IN GENERAL.—The Secretary shall provide

17 for an additional payment for indirect costs of medi18 cal education in an amount equal to the product

19 of—

20 ‘‘(A) the amount determined under sub21 section (a)(1) for qualified physician’s services

22 (as defined in paragraph (2)), and

23 ‘‘(B) the indirect teaching adjustment fac24 tor determined in accordance with section

25 1886(d)(5)(B)(ii) with ‘r’ equal to .2.
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1 ‘‘(2) QUALIFIED PHYSICIAN’S SERVICES.—

2 ‘‘(A) IN GENERAL.—For purposes of para3 graph (1), the term ‘qualified physician’s serv4 ices’ means physician’s services (as defined in

5 subsection (k)(3)) that are—

6 ‘‘(i) provided during the course of

7 clinical training by medical residents in the

8 initial 3 years of postgraduate medical

9 training in approved medical residency

10 training programs in the fields of family

11 medicine (as defined by the Secretary),

12 general internal medicine (as defined by

13 the Secretary), and general pediatrics (as

14 defined by the Secretary), and

15 ‘‘(ii) provided at clinical training sites

16 affiliated with approved medical residency

17 training programs in family medicine, gen18 eral internal medicine, and general pediat19 rics.

20 ‘‘(B) CERTAIN SERVICES EXCLUDED.—For

21 purposes of paragraph (1), the term ‘qualified

22 physician’s services’ shall not include services

23 provided during an inpatient hospital stay for

24 which payment is made under part A of this

25 title.’’.
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1 (2) CONFORMING AMENDMENTS.—Section 1848

2 of such Act (42 U.S.C. 1395w–4) is amended—

3 (A) in subsection (a)(1), by striking ‘‘sub4 section (j)(3)’’ and inserting ‘‘subsection

5 (k)(3)’’;

6 (B) in subsection (b)(1), by striking ‘‘sub7 section (j)(2)’’ and inserting ‘‘(k)(2)’’; and

8 (C) in subparagraphs (C) and (D) of sub9 section (d)(2), by striking ‘‘subsection (j)(1)’’

10 and inserting ‘‘subsection (k)(1)’’.

11 (c) SUBSECTION (d) HOSPITALS.—Section

12 1886(d)(5)(B) of such Act (42 U.S.C. 1395ww(d)(5)(B))

13 is amended by adding at the end the following new clause:

14 ‘‘(v) In determining such adjustment the Sec15 retary shall count only those interns and residents

16 who are in the initial 3 years of postgraduate medi17 cal training.’’.

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

19 this section shall be effective for cost reporting periods be20 ginning on or after October 1, 1993.
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1 TITLE VI—MEDICARE PRE2 FERRED PROVIDER DEM3 ONSTRATION PROJECTS

4 SEC. 601. ESTABLISHMENT OF MEDICARE PRIMARY AND

5 SPECIALTY PREFERRED PROVIDER ORGANI6 ZATION DEMONSTRATION PROJECTS.

7 (a) IN GENERAL.—Not later than 180 days after the

8 date of the enactment of this Act the Secretary of Health

9 and Human Services (hereafter referred to in this section

10 as the ‘‘Secretary’’) shall provide for up to 10 demonstra11 tion projects to test the effectiveness of providing payment

12 under the medicare program under title XVIII of the So13 cial Security Act for primary and specialty procedures and

14 services (as determined appropriate by the Secretary) fur15 nished by preferred provider organizations. The dem16 onstration projects provided for under this section by the

17 Secretary shall—

18 (1) test the cost-effectiveness of preferred pro19 vider organizations furnishing primary and specialty

20 services in controlling the volume of such services

21 performed or ordered by physicians, and

22 nonphysician providers such as nurse practitioners,

23 clinical nurse specialists, certified nurse midwives,

24 certified registered nurse anesthetists, and physician
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1 assistants, for which payment is made under title

2 XVIII of the Social Security Act;

3 (2) gather information on factors which may

4 encourage medicare beneficiaries to participate in a

5 preferred provider organizational network;

6 (3) examine the efficacy of permanently estab7 lishing managed care networks of primary and spe8 cialty service providers; and

9 (4) examine the factors necessary to increase

10 the quality and efficiency of primary and specialty

11 services furnished by preferred provider networks in

12 order to realize increased savings under the medi13 care program and to increase medicare beneficiary

14 participation in such networks.

15 (b) WAIVER OF MEDICARE REQUIREMENTS.—The

16 Secretary may waive such requirements of title XVIII of

17 the Social Security Act as the Secretary determines nec18 essary in conducting demonstration programs under this

19 section, including—

20 (1) coinsurance requirements;

21 (2) provider payment arrangements;

22 (3) beneficiary deductibles; and

23 (4) reimbursement for nonphysician providers.

24 (c) DURATION OF PROJECTS.—The demonstration

25 projects provided for under this section shall be conducted
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1 for a period not to exceed 3 years from the date of the

2 enactment of this Act.

3 (d) REPORT.—Not later than 180 days after the date

4 of expiration of the demonstration projects conducted

5 under this section the Secretary shall report to the Con6 gress on the results of the demonstration projects includ7 ing recommendations for modifications in the medicare

8 program to increase the utilization of preferred provider

9 organizations in providing primary and specialty services

10 under such program.

11 TITLE VII—COST CONTAINMENT

12 SEC. 701. NEW DRUG CLINICAL TRIALS PROGRAM.

13 Part B of title IV of the Public Health Service Act

14 (42 U.S.C. 284 et seq.) is amended by adding at the end

15 the following new section:

16 ‘‘SEC. 409A. NEW DRUG CLINICAL TRIALS PROGRAM.

17 ‘‘(a) IN GENERAL.—The Director of the National In18 stitutes of Health (hereafter referred to in this section as

19 the ‘Director’) is authorized to establish and implement

20 a program for the conduct of clinical trials with respect

21 to new drugs and disease treatments determined to be

22 promising by the Director. In determining the drugs and

23 disease treatments that are to be the subject of such clini24 cal trials, the Director shall give priority to those drugs
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1 and disease treatments targeted toward the diseases deter2 mined—

3 ‘‘(1) to be the most costly to treat;

4 ‘‘(2) to have the highest mortality; or

5 ‘‘(3) to affect the greatest number of individ6 uals.

7 ‘‘(b) AUTHORIZATION OF APPROPRIATIONS.—There

8 are authorized to be appropriated to carry out this section,

9 $120,000,000 for fiscal year 1994, and such sums as may

10 be necessary in each of the fiscal years 1995 through

11 1998.’’.

12 SEC. 702. MEDICAL TREATMENT EFFECTIVENESS.

13 (a) RESEARCH ON COST-EFFECTIVE METHODS OF

14 HEALTH CARE.—Section 926 of the Public Health Service

15 Act (42 U.S.C. 299c–5) is amended—

16 (1) in subsection (a), by striking ‘‘and

17 $115,000,000 for fiscal year 1993’’ and inserting

18 ‘‘$115,000,000 for fiscal year 1993, and such sums

19 as may be necessary for each of the fiscal years

20 1994 through 1997’’; and

21 (2) by adding at the end the following new sub22 section:

23 ‘‘(f) USE OF ADDITIONAL APPROPRIATIONS.—Within

24 amounts appropriated under subsection (a) for each of the

25 fiscal years 1993 through 1996 that are in excess of the
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1 amounts appropriated under such subsection for fiscal

2 year 1992, the Secretary shall give priority to expanding

3 research conducted to determine the most cost-effective

4 methods of health care and for developing and disseminat5 ing new practice guidelines related to such methods. In

6 utilizing such amounts, the Secretary shall give priority

7 to diseases and disorders that the Secretary determines

8 are the most costly to the United States and evidence a

9 wide variation in current medical practice.’’.

10 (b) RESEARCH ON MEDICAL TREATMENT OUT11 COMES.—

12 (1) IMPOSITION OF TAX ON HEALTH INSUR13 ANCE POLICIES.—

14 (A) IN GENERAL.—Chapter 36 of the In15 ternal Revenue Code of 1986 (relating to cer16 tain other excise taxes) is amended by adding

17 at the end thereof the following new subchapter:

18 ‘‘Subchapter G—Tax on Health Insurance

19 Policies

‘‘Sec. 4501. Imposition of tax.

‘‘Sec. 4502. Liability for tax.

20 ‘‘SEC. 4501. IMPOSITION OF TAX.

21 ‘‘(a) GENERAL RULE.—There is hereby imposed a

22 tax equal to .001 cent on each dollar, or fractional part

23 thereof, of the premium paid on a policy of health

24 insurance.
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1 ‘‘(b) DEFINITION.—For purposes of subsection (a),

2 the term ‘policy of health insurance’ means any policy or

3 other instrument by whatever name called whereby a con4 tract of insurance is made, continued, or renewed with re5 spect to the health of an individual or group of individuals.

6 ‘‘SEC. 4502. LIABILITY FOR TAX.

7 ‘‘The tax imposed by this subchapter shall be paid,

8 on the basis of a return, by any person who makes, signs,

9 issues, or sells any of the documents and instruments sub10 ject to the tax, or for whose use or benefit the same are

11 made, signed, issued or sold. The United States or any

12 agency or instrumentality thereof shall not be liable for

13 the tax.’’.

14 (B) CONFORMING AMENDMENT.—The

15 table of subchapters for chapter 36 of the Inter16 nal Revenue Code of 1986 is amended by add17 ing at the end thereof the following new item:

‘‘SUBCHAPTER G. Tax on health insurance policies.’’.

18 (2) ESTABLISHMENT OF TRUST FUND.—

19 (A) IN GENERAL.—Subchapter A of chap20 ter 98 of such Code (relating to trust fund

21 code) is amended by adding at the end thereof

22 the following new section:
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1 ‘‘SEC. 9512. TRUST FUND FOR MEDICAL TREATMENT OUT2 COMES RESEARCH.

3 ‘‘(a) CREATION OF TRUST FUND.—There is estab4 lished in the Treasury of the United States a trust fund

5 to be known as the ‘Trust Fund for Medical Treatment

6 Outcomes Research’ (hereafter referred to in this section

7 as the ‘Trust Fund’), consisting of such amounts as may

8 be appropriated or credited to the Trust Fund as provided

9 in this section or section 9602(b).

10 ‘‘(b) TRANSFERS TO TRUST FUND.—There is hereby

11 appropriated to the Trust Fund an amount equivalent to

12 the taxes received in the Treasury under section 4501 (re13 lating to tax on health insurance policies).

14 ‘‘(c) DISTRIBUTION OF AMOUNTS IN TRUST FUND.—

15 On an annual basis the Secretary shall distribute the

16 amounts in the Trust Fund to the Secretary of Health

17 and Human Services. Such amounts shall be available to

18 the Secretary of Health and Human Services to pay for

19 research activities related to medical treatment out20 comes.’’.

21 (B) CONFORMING AMENDMENT.—The

22 table of sections for subchapter A of chapter 98

23 of such Code is amended by adding at the end

24 thereof the following new item:

‘‘Sec. 9512. Trust Fund for Medical Treatment Outcomes Research.’’.
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1 (3) EFFECTIVE DATE.—The amendments made

2 by this subsection shall apply to policies issued after

3 December 31, 1993.

4 SEC. 703. HEALTH CARE COST CONTROL—EXPENDITURE

5 TARGETS.

6 (a) IN GENERAL.—Not later than 1 year after the

7 date of the enactment of this Act, the Secretary of Health

8 and Human Services (hereafter referred to in this section

9 as the ‘‘Secretary’’), after considering the recommenda10 tions of the Health Care Cost Control Advisory Committee

11 established under subsection (b), shall prepare and submit

12 to the appropriate committees of the Congress a report

13 concerning the establishment of national spending targets

14 for health care and health care services. Such report shall

15 contain the recommendations of the Secretary concerning

16 the feasibility—

17 (1) for controlling the cost of health care, re18 ducing cost shifting and maintaining the quality of

19 care;

20 (2) of establishing national targets for health

21 expenditures;

22 (3) of establishing national reimbursement tar23 gets for hospital services;

24 (4) of establishing national reimbursement tar25 gets for physicians’ services; and
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1 (5) of establishing national reimbursement tar2 gets for prescription drug services.

3 (b) HEALTH CARE COST CONTROL ADVISORY COM4 MITTEE.—

5 (1) ESTABLISHMENT.—There shall be estab6 lished a Health Care Cost Control Advisory Commit7 tee (hereafter referred to in this subsection as the

8 ‘‘Committee’’).

9 (2) MEMBERSHIP.—The Committee shall be

10 composed of 8 individuals appointed by the Sec11 retary, representing—

12 (A) physicians;

13 (B) hospitals;

14 (C) pharmacies;

15 (D) private insurers;

16 (E) State and local governments;

17 (F) employers;

18 (G) organized labor; and

19 (H) academia with expertise as a health

20 economist.

21 (3) COMPENSATION.—

22 (A) IN GENERAL.—Members of the Com23 mittee shall serve without compensation.

24 (B) EXPENSES REIMBURSED.—While away

25 from their homes or regular places of business
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1 on the business of the Committee, the members

2 of the Committee may be allowed travel ex3 penses, including per diem in lieu of subsist4 ence, as authorized by section 5703 of title 5,

5 United States Code, for persons employed inter6 mittently in Government service.

7 (C) APPLICATION OF THE ACT.—The pro8 visions of the Federal Advisory Committee Act

9 (5 U.S.C. App.) shall not apply with respect to

10 the Committee.

11 (D) SUPPORT.—The Secretary shall supply

12 such necessary office facilities, office supplies,

13 support services, and related expenses as nec14 essary to carry out the functions of the Com15 mittee.

16 TITLE VIII—LONG-TERM CARE

17 Subtitle A—Tax Treatment of

18 Qualified Long-Term Care In19 surance Policies

20 SEC. 801. AMENDMENT OF 1986 CODE.

21 Except as otherwise expressly provided, whenever in

22 this title an amendment or repeal is expressed in terms

23 of an amendment to, or repeal of, a section or other provi24 sion, the reference shall be considered to be made to a
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1 section or other provision of the Internal Revenue Code

2 of 1986.

3 SEC. 802. DEFINITIONS OF QUALIFIED LONG-TERM CARE

4 INSURANCE AND PREMIUMS.

5 (a) IN GENERAL.—Chapter 79 (relating to defini6 tions) is amended by adding at the end the following new

7 section:

8 ‘‘SEC. 7705. QUALIFIED LONG-TERM CARE INSURANCE AND

9 PREMIUMS.

10 ‘‘(a) QUALIFIED LONG-TERM CARE INSURANCE.—

11 ‘‘(1) IN GENERAL.—For purposes of this title,

12 the term ‘qualified long-term care insurance’ means

13 insurance under a policy or rider, issued by a quali14 fied issuer, which—

15 ‘‘(A) provides coverage for not less than 12

16 consecutive months for each covered person,

17 ‘‘(B) provides benefits on an expense in18 curred, indemnity, disability, prepaid, capita19 tion, or other basis,

20 ‘‘(C) provides benefits for—

21 ‘‘(i) medically necessary diagnostic,

22 preventive, therapeutic, rehabilitation, or

23 maintenance services,

24 ‘‘(ii) personal care services neces25 sitated by physical disability, or
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1 ‘‘(iii) preventive, therapeutic, rehabili2 tation, maintenance, or personal care serv3 ices necessitated by cognitive impairment

4 or the loss of functional capacity,

5 when provided in a nursing home, a respite care

6 facility, the home of the covered individual, or

7 any other setting which is not an acute care

8 unit of a hospital or a medical clinic, and

9 ‘‘(D) provides coverage for care described

10 in subparagraph (C) (other than nursing home

11 care) equal to not less than 47.5 percent of the

12 national median cost of nursing care coverage,

13 as determined by the Secretary.

14 ‘‘(2) QUALIFIED ISSUER.—For purposes of

15 paragraph (1), the term ‘qualified issuer’ means any

16 of the following, if subject to the jurisdiction and

17 regulation of at least 1 State insurance department:

18 ‘‘(A) Private insurance company.

19 ‘‘(B) Fraternal benefit society.

20 ‘‘(C) Nonprofit health corporation.

21 ‘‘(D) Nonprofit hospital corporation.

22 ‘‘(E) Nonprofit medical service corpora23 tion.

24 ‘‘(F) Prepaid health plan.

25 ‘‘(b) QUALIFIED LONG-TERM CARE PREMIUMS.—
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1 ‘‘(1) IN GENERAL.—For purposes of this title,

2 the term ‘qualified long-term care premiums’ means

3 the amount paid during a taxable year for qualified

4 long-term care insurance covering an individual, to

5 the extent such amount does not exceed the limita6 tion determined under the following table:

‘‘In the case of an individual

with an attained age before the The limitation

close of the taxable year of: is:

40 or less ........................................................................... $200

More than 40 but not more than 50 ................................ 375

More than 50 but not more than 60 ................................ 750

More than 60 but not more than 70 ................................ 1,600

More than 70 .................................................................... 2,000.

7 ‘‘(2) INDEXING.—

8 ‘‘(A) IN GENERAL.—In the case of any

9 taxable year beginning after December 31,

10 1993, each dollar amount contained in para11 graph (1) shall be increased by the medical care

12 cost adjustment for such taxable year. If any

13 increase determined under the preceding sen14 tence is not a multiple of $10, such increase

15 shall be rounded to the nearest multiple of $10.

16 ‘‘(B) MEDICAL CARE COST ADJUST17 MENT.—For purposes of subparagraph (A), the

18 medical care cost adjustment for any taxable

19 year is the percentage (if any) by which—

20 ‘‘(i) the medical care component of

21 the Consumer Price Index (as defined in
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1 section 1(f)(5)) for August of the calendar

2 year preceding the calendar year in which

3 the taxable year begins, exceeds

4 ‘‘(ii) such component for August of

5 1992.’’.

6 (b) CLERICAL AMENDMENT.—The table of sections

7 for chapter 79 is amended by inserting after the item re8 lating to section 7704 the following new item:

‘‘Sec. 7705. Qualified long-term care insurance and premiums.’’.

9 SEC. 803. TREATMENT OF QUALIFIED LONG-TERM CARE IN10 SURANCE AS ACCIDENT AND HEALTH INSUR11 ANCE FOR PURPOSES OF TAXATION OF IN12 SURANCE COMPANIES.

13 (a) IN GENERAL.—Section 818 (relating to other

14 definitions and special rules) is amended by adding at the

15 end the following new subsection:

16 ‘‘(g) QUALIFIED LONG-TERM CARE INSURANCE

17 TREATED AS ACCIDENT OR HEALTH INSURANCE.—For

18 purposes of this subchapter, any reference to

19 noncancellable accident or health insurance contracts shall

20 be treated as including a reference to qualified long-term

21 care insurance.’’.

22 (b) EFFECTIVE DATE.—The amendment made by

23 this section shall apply to taxable years beginning after

24 December 31, 1992.
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1 SEC. 804. TREATMENT OF ACCELERATED DEATH BENEFITS

2 UNDER LIFE INSURANCE CONTRACTS.

3 (a) EXCLUSION OF AMOUNTS RECEIVED.—Section

4 101 (relating to certain death benefits) is amended by

5 adding at the end the following new subsection:

6 ‘‘(g) TREATMENT OF CERTAIN ACCELERATED

7 DEATH BENEFITS.—

8 ‘‘(1) IN GENERAL.—For purposes of this sec9 tion, any amount paid to an individual under a life

10 insurance contract on the life of an insured who is

11 a terminally ill individual, who has a dread disease,

12 or who has been permanently confined to a nursing

13 home shall be treated as an amount paid by reason

14 of the death of such insured.

15 ‘‘(2) TERMINALLY ILL INDIVIDUAL.—For pur16 poses of this subsection, the term ‘terminally ill indi17 vidual’ means an individual who has been certified

18 by a physician, licensed under State law, as having

19 an illness or physical condition which can reasonably

20 be expected to result in death in 12 months or less.

21 ‘‘(3) DREAD DISEASE.—For purposes of this

22 subsection, the term ‘dread disease’ means a medical

23 condition which has required or requires extraor24 dinary medical intervention without which the in25 sured would die, or a medical condition which would,
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1 in the absence of extensive or extraordinary medical

2 treatment, result in a drastically limited life span.

3 ‘‘(4) PERMANENTLY CONFINED TO A NURSING

4 HOME.—For purposes of this subsection, an individ5 ual has been permanently confined to a nursing

6 home if the individual is presently confined to a

7 nursing home and has been certified by a physician,

8 licensed under State law, as having an illness or

9 physical condition which can reasonably be expected

10 to result in the individual remaining in a nursing

11 home for the rest of the individual’s life.’’.

12 (b) TREATMENT OF QUALIFIED ACCELERATED

13 DEATH BENEFIT RIDERS AS LIFE INSURANCE.—

14 (1) IN GENERAL.—Section 818 (relating to

15 other definitions and special rules), as amended by

16 section 803, is amended by adding at the end the

17 following new subsection:

18 ‘‘(h) QUALIFIED ACCELERATED DEATH BENEFIT

19 RIDERS TREATED AS LIFE INSURANCE.—For purposes of

20 this part—

21 ‘‘(1) IN GENERAL.—Any reference to a life in22 surance contract shall be treated as including a ref23 erence to a qualified accelerated death benefit rider

24 on such contract.
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1 ‘‘(2) QUALIFIED ACCELERATED DEATH BENE2 FIT RIDER.—For purposes of this subsection, the

3 term ‘qualified accelerated death benefit rider’

4 means any rider or addendum on, or other provision

5 of, a life insurance contract which provides for pay6 ments to an individual on the life of an insured upon

7 such insured becoming a terminally ill individual (as

8 defined in section 101(g)(2)), incurring a dread dis9 ease (as defined in section 101(g)(3)), or being per10 manently confined to a nursing home (as defined in

11 section 101(g)(4)).’’.

12 (2) DEFINITIONS OF LIFE INSURANCE AND

13 MODIFIED ENDOWMENT CONTRACTS.—

14 (A) RIDER TREATED AS QUALIFIED ADDI15 TIONAL BENEFIT.—Subparagraph (A) of sec16 tion 7702(f)(5) (relating to definition of life in17 surance contract) is amended by striking ‘‘or’’

18 at the end of clause (iv), by redesignating

19 clause (v) as clause (vi), and by inserting after

20 clause (iv) the following new clause:

21 ‘‘(v) any qualified accelerated death

22 benefit rider (as defined in section

23 818(h)(2)), or any qualified long-term care

24 insurance which reduces the death benefit,

25 or’’.
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1 (B) TRANSITIONAL RULE.—For purposes

2 of applying section 7702 or 7702A of the Inter3 nal Revenue Code of 1986 to any contract (or

4 determining whether either such section applies

5 to such contract), the issuance of a rider or ad6 dendum on, or other provision of, a life insur7 ance contract permitting the acceleration of

8 death benefits (as described in section 101(g))

9 or for qualified long-term care insurance shall

10 not be treated as a modification or material

11 change of such contract.

12 (c) EFFECTIVE DATE.—The amendments made by

13 this section shall apply to taxable years beginning after

14 December 31, 1992.

15 Subtitle B—Tax Incentives for Pur16 chase of Qualified Long-Term

17 Care Insurance

18 SEC. 811. CREDIT FOR QUALIFIED LONG-TERM CARE

19 PREMIUMS.

20 (a) GENERAL RULE.—Subpart C of part IV of sub21 chapter A of chapter 1 (relating to refundable credits) is

22 amended by redesignating section 35 as section 36 and

23 by inserting after section 34 the following new section:
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1 ‘‘SEC. 35. LONG-TERM CARE INSURANCE CREDIT.

2 ‘‘(a) GENERAL RULE.—In the case of an individual,

3 there shall be allowed as a credit against the tax imposed

4 by this subtitle for the taxable year an amount equal to

5 the applicable percentage of the qualified long-term care

6 premiums (as defined in section 7705(b)) paid during such

7 taxable year for such individual or the spouse of such

8 individual.

9 ‘‘(b) APPLICABLE PERCENTAGE.—

10 ‘‘(1) IN GENERAL.—For purposes of this sec11 tion, the term ‘applicable percentage’ means 28 per12 cent reduced (but not below zero) by 1 percentage

13 point for each $1,000 (or fraction thereof) by which

14 the taxpayer’s adjusted gross income for the taxable

15 year exceeds the base amount.

16 ‘‘(2) BASE AMOUNT.—For purposes of para17 graph (1) the term ‘base amount’ means—

18 ‘‘(A) except as otherwise provided in this

19 paragraph, $25,000,

20 ‘‘(B) $40,000 in the case of a joint return,

21 and

22 ‘‘(C) zero in the case of a taxpayer who—

23 ‘‘(i) is married at the close of the tax24 able year (within the meaning of section

25 7703) but does not file a joint return for

26 such taxable year, and
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1 ‘‘(ii) does not live apart from his or

2 her spouse at all times during the taxable

3 year.

4 ‘‘(c) COORDINATION WITH MEDICAL EXPENSE DE5 DUCTION.—Any amount allowed as a credit under this

6 section shall not be taken into account under section

7 213.’’.

8 (b) CLERICAL AMENDMENT.—The table of sections

9 for subpart C of part IV of subchapter A of chapter 1

10 is amended by striking the item relating to section 35 and

11 inserting the following:

‘‘Sec. 35. Long-term care insurance credit.

‘‘Sec. 36. Overpayments of tax.’’.

12 (c) EFFECTIVE DATE.—The amendments made by

13 this section shall apply to taxable years beginning after

14 December 31, 1992.

15 SEC. 812. DEDUCTION FOR EXPENSES RELATING TO QUALI16 FIED LONG-TERM CARE.

17 (a) DEDUCTION FOR QUALIFIED LONG-TERM CARE

18 PREMIUMS.—Subparagraph (C) of section 213(d)(1) (re19 lating to the definition of medical care) is amended by

20 striking ‘‘aged)’’ and inserting the following: ‘‘aged, and

21 amounts paid as qualified long-term care premiums (as

22 defined in section 7705(b))’’.

23 (b) DEDUCTION FOR LONG-TERM CARE EXPENSES

24 FOR PARENT OR GRANDPARENT.—Section 213 (relating
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1 to deduction for medical expenses) is amended by adding

2 at the end the following new subsection:

3 ‘‘(g) SPECIAL RULE FOR CERTAIN LONG-TERM CARE

4 EXPENSES.—For purposes of subsection (a), the term ‘de5 pendent’ shall include any parent or grandparent of the

6 taxpayer for whom the taxpayer has long-term care ex7 penses described in section 7705(a)(1)(C), but only to the

8 extent of such expenses.’’.

9 (c) EFFECTIVE DATE.—The amendments made by

10 this section shall apply to taxable years beginning after

11 December 31, 1992.

12 SEC. 813. EXCLUSION FROM GROSS INCOME OF BENEFITS

13 RECEIVED UNDER QUALIFIED LONG-TERM

14 CARE INSURANCE.

15 (a) IN GENERAL.—Section 105 (relating to amounts

16 received under accident and health plans) is amended by

17 adding at the end the following new subsection:

18 ‘‘(j) SPECIAL RULES RELATING TO QUALIFIED

19 LONG-TERM CARE INSURANCE.—For purposes of section

20 104, this section, and section 106—

21 ‘‘(1) BENEFITS TREATED AS PAYABLE FOR

22 SICKNESS, ETC.—Any benefit received through quali23 fied long-term care insurance shall be treated as

24 amounts received through accident or health insur25 ance for personal injuries or sickness.
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1 ‘‘(2) EXPENSES FOR WHICH REIMBURSEMENT

2 PROVIDED UNDER QUALIFIED LONG-TERM CARE IN3 SURANCE TREATED AS INCURRED FOR MEDICAL

4 CARE OR FUNCTIONAL LOSS.—

5 ‘‘(A) EXPENSES.—Expenses incurred by

6 the taxpayer or spouse, or by the dependent,

7 parent, or grandparent of either, to the extent

8 of benefits paid under qualified long-term care

9 insurance shall be treated for purposes of sub10 section (b) as incurred for medical care (as de11 fined in section 213(d)).

12 ‘‘(B) BENEFITS.—Benefits received under

13 qualified long-term care insurance shall be

14 treated for purposes of subsection (c) as pay15 ment for the permanent loss or loss of use of

16 a member or function of the body or the perma17 nent disfigurement of the taxpayer or spouse,

18 or the dependent, parent, or grandparent of

19 either.

20 ‘‘(3) REFERENCES TO ACCIDENT AND HEALTH

21 PLANS.—

22 ‘‘(A) IN GENERAL.—Any reference to an

23 accident or health plan shall be treated as in24 cluding a reference to a plan providing qualified

25 long-term care insurance.
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1 ‘‘(B) LIMITATION.—Subparagraph (A)

2 shall apply for purposes of section 106 only to

3 the extent of qualified long-term care premiums

4 (as defined in section 7705(b)).’’.

5 (b) EFFECTIVE DATE.—The amendment made by

6 this section shall apply to taxable years beginning after

7 December 31, 1992.

8 SEC. 814. EMPLOYER DEDUCTION FOR CONTRIBUTIONS

9 MADE FOR LONG-TERM CARE INSURANCE.

10 (a) IN GENERAL.—Subparagraph (B) of section

11 404(b)(2) (relating to plans providing certain deferred

12 benefits) is amended to read as follows:

13 ‘‘(B) EXCEPTIONS.—Subparagraph (A)

14 shall not apply to—

15 ‘‘(i) any benefit provided through a

16 welfare benefit fund (as defined in section

17 419(e)), or

18 ‘‘(ii) any benefit provided under quali19 fied long-term care insurance through the

20 payment (in whole or in part) of qualified

21 long-term care premiums (as defined in

22 section 7705(b)) by an employer pursuant

23 to a plan for its active or retired employ24 ees, but only if any refund or premium is
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1 applied to reduce the future costs of the

2 plan or increase benefits under the plan.’’.

3 (b) EFFECTIVE DATE.—The amendment made by

4 this section shall apply to taxable years beginning after

5 December 31, 1992.

6 SEC. 815. INCLUSION OF QUALIFIED LONG-TERM CARE IN7 SURANCE IN CAFETERIA PLANS.

8 (a) IN GENERAL.—Paragraph (2) of section 125(d)

9 (relating to the exclusion of deferred compensation) is

10 amended by adding at the end the following new

11 subparagraph:

12 ‘‘(D) EXCEPTION FOR LONG-TERM CARE

13 INSURANCE CONTRACTS.—For purposes of sub14 paragraph (A), amounts paid or incurred for

15 any long-term care insurance contract shall not

16 be treated as deferred compensation to the ex17 tent section 404(b)(2)(A) does not apply to

18 such amounts by reason of section

19 404(b)(2)(B)(ii).’’.

20 (b) CONFORMING AMENDMENT.—Subsection (f) of

21 section 125 (relating to qualified benefits) is amended by

22 striking ‘‘and such term includes’’ and inserting the fol23 lowing: ‘‘, qualified long-term care insurance, and’’.
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1 (c) EFFECTIVE DATE.—The amendments made by

2 this section shall apply to taxable years beginning after

3 December 31, 1992.

4 SEC. 816. EXCLUSION FROM GROSS INCOME FOR AMOUNTS

5 WITHDRAWN FROM INDIVIDUAL RETIRE6 MENT PLANS AND SECTION 401(k) PLANS FOR

7 QUALIFIED LONG-TERM CARE PREMIUMS

8 AND EXPENSES.

9 (a) IN GENERAL.—Part III of subchapter B of chap10 ter 1 (relating to items specifically excluded from gross

11 income) is amended by redesignating section 136 as sec12 tion 137 and by inserting after section 135 the following

13 new section:

14 ‘‘SEC. 136. DISTRIBUTIONS FROM INDIVIDUAL RETIREMENT

15 PLANS AND SECTION 401(k) PLANS FOR

16 QUALIFIED LONG-TERM CARE PREMIUMS

17 AND EXPENSES.

18 ‘‘(a) GENERAL RULE.—In the case of an individual,

19 gross income shall not include any qualified distribution.

20 ‘‘(b) QUALIFIED DISTRIBUTION.—For purposes of

21 this section, the term ‘qualified distribution’ means any

22 amount distributed from an individual retirement plan or

23 a section 401(k) plan during the taxable year if such

24 amount is used during such year—
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1 ‘‘(1) to pay qualified long-term care premiums

2 (as defined in section 7705(b)) for the benefit of the

3 payee or distributee or the spouse of the payee or

4 distributee, if such policy may not be surrendered

5 for cash, or

6 ‘‘(2) to pay long-term care expenses (as

7 described in section 7705(a)(1)(C)) of such an

8 individual.

9 ‘‘(c) SPECIAL RULES.—For purposes of this sec10 tion—

11 ‘‘(1) QUALIFIED DISTRIBUTIONS FROM IRA

12 DEEMED MADE FIRST FROM DESIGNATED NON13 DEDUCTIBLE CONTRIBUTIONS.—For purposes of

14 section 72, qualified distributions from an individual

15 retirement plan shall be treated as made from des16 ignated nondeductible contributions to the extent

17 thereof and then from other amounts.

18 ‘‘(2) SPECIAL RULES FOR SECTION 401(k)

19 PLANS.—

20 ‘‘(A) QUALIFIED DISTRIBUTIONS FROM

21 SECTION 401(k) PLAN MAY NOT EXCEED ELEC22 TIVE DEFERRALS.—This section shall not apply

23 to any distribution from a section 401(k) plan

24 to the extent the aggregate amount of such dis25 tributions for the use described in subsection
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1 (a) exceeds the aggregate employer contribu2 tions made pursuant to the employee’s election

3 under section 401(k)(2) (and the income

4 thereon).

5 ‘‘(B) WITHDRAWALS NOT TO CAUSE DIS6 QUALIFICATION.—A plan shall not be treated as

7 failing to satisfy the requirements of section

8 401, and an arrangement shall not be treated

9 as failing to be a qualified cash or deferred ar10 rangement (as defined in section 401(k)(2)),

11 merely because under the plan or arrangement

12 distributions are permitted which are excludable

13 from gross income by reason of this section.

14 ‘‘(d) SECTION 401(k) PLAN.—For purposes of this

15 section, the term ‘section 401(k) plan’ means any em16 ployer plan which meets the requirements of section

17 401(a) and which includes a qualified cash or deferred ar18 rangement (as defined in section 401(k)).’’.

19 (b) CONFORMING AMENDMENTS.—

20 (1) Subsection (k) of section 401 is amended by

21 adding at the end the following new paragraph:

22 ‘‘(11) CROSS REFERENCE.—

‘‘For provision permitting tax-free withdrawals

for qualified long-term care premiums and expenses, see section 136.’’.

23 (2) Subsection (d) of section 408 is amended by

24 adding at the end the following new paragraph:
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1 ‘‘(8) CROSS REFERENCE.—

‘‘For provision permitting tax-free withdrawals

for qualified long-term care premiums and expenses, see section 136.’’.

2 (3) The table of sections for such part III is

3 amended by striking the item relating to section 136

4 and inserting the following new items:

‘‘Sec. 136. Distributions from individual retirement plans and section 401(k) plans for qualified long-term care premiums and expenses.

‘‘Sec. 137. Cross references to other Acts.’’.

5 (c) INCREASE IN AMOUNT OF DEDUCTIBLE CON6 TRIBUTIONS TO INDIVIDUAL RETIREMENT PLANS.—

7 (1) IN GENERAL.—Subparagraph (A) of section

8 219(b)(1) (relating to maximum amount of deduc9 tion) is amended by striking ‘‘$2,000’’ and inserting

10 ‘‘$4,000’’.

11 (2) SPOUSAL IRA.—Paragraph (2) of section

12 219(c) (relating to special rules for certain married

13 individuals) is amended by striking ‘‘$2,250’’ and

14 ‘‘$2,000’’ and inserting ‘‘$4,500’’ and ‘‘$4,000’’,

15 respectively.

16 (3) CONFORMING AMENDMENTS.—

17 (A) Section 408(a)(1) is amended by strik18 ing ‘‘in excess of $2,000 on behalf of any indi19 vidual’’ and inserting ‘‘on behalf of any individ20 ual in excess of the amount in effect for such

21 taxable year under section 219(b)(1)(A)’’.
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1 (B) Section 408(b)(2)(B) is amended by

2 striking ‘‘$2,000’’ and inserting ‘‘the dollar

3 amount in effect under section 219(b)(1)(A)’’.

4 (C) Section 408(j) is amended by striking

5 ‘‘$2,000’’.

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

7 this section shall apply to taxable years beginning after

8 December 31, 1992.

9 SEC. 817. EXCLUSION FROM GROSS INCOME FOR AMOUNTS

10 RECEIVED ON CANCELLATION OF LIFE IN11 SURANCE POLICIES AND USED FOR QUALI12 FIED LONG-TERM CARE INSURANCE.

13 (a) IN GENERAL.—

14 (1) EXCLUSION FROM GROSS INCOME.—

15 (A) IN GENERAL.—Part III of subchapter

16 B of chapter 1 (relating to items specifically ex17 cluded from gross income), as amended by sec18 tion 216, is further amended by redesignating

19 section 137 as section 138 and by inserting

20 after section 136 the following new section:
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1 ‘‘SEC. 137. AMOUNTS RECEIVED ON CANCELLATION, ETC.

2 OF LIFE INSURANCE CONTRACTS AND USED

3 TO PAY PREMIUMS FOR QUALIFIED LONG4 TERM CARE INSURANCE.

5 ‘‘No amount (which but for this section would be in6 cludible in the gross income of an individual) shall be in7 cluded in gross income on the whole or partial surrender,

8 cancellation, or exchange of any life insurance contract

9 during the taxable year if—

‘‘(1) such individual has attained age 591 10 ⁄2 on

11 or before the date of the transaction, and

12 ‘‘(2) the amount otherwise includible in gross

13 income is used during such year to pay for any pol14 icy of qualified long-term care insurance which—

15 ‘‘(A) is for the benefit of such individual or

16 the spouse of such individual if such spouse has

attained age 591 17 ⁄2 on or before the date of the

18 transaction, and

19 ‘‘(B) may not be surrendered for cash.’’.

20 (B) CLERICAL AMENDMENT.—The table of

21 sections for such part III is amended by strik22 ing the last item and inserting the following

23 new items:

‘‘Sec. 137. Amounts received on cancellation, etc. of life insurance

contracts and used to pay premiums for qualified

long-term care insurance.

‘‘Sec. 138. Cross references to other Acts.’’.
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1 (2) CERTAIN EXCHANGES NOT TAXABLE.—Sub2 section (a) of section 1035 (relating to certain ex3 changes of insurance contracts) is amended by strik4 ing the period at the end of paragraph (3) and in5 serting ‘‘; or’’, and by adding at the end the follow6 ing new paragraph:

7 ‘‘(4) in the case of an individual who has attained age 591 8 ⁄2, a contract of life insurance or an

9 endowment or annuity contract for a policy of quali10 fied long-term care insurance, if such policy may not

11 be surrendered for cash.’’.

12 (b) EFFECTIVE DATE.—The amendments made by

13 this section shall apply to taxable years beginning after

14 December 31, 1992.

15 SEC. 818. USE OF GAIN FROM SALE OF PRINCIPAL RESI16 DENCE FOR PURCHASE OF QUALIFIED LONG17 TERM HEALTH CARE INSURANCE.

18 (a) IN GENERAL.—Subsection (d) of section 121 (re19 lating to 1-time exclusion of gain from sale of principal

20 residence by individual who has attained age 55) is

21 amended by adding at the end the following new

22 paragraph:

23 ‘‘(10) ELIGIBILITY OF HOME EQUITY CONVER24 SION SALE-LEASEBACK TRANSACTION FOR

25 EXCLUSION.—
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1 ‘‘(A) IN GENERAL.—For purposes of this

2 section, the term ‘sale or exchange’ includes a

3 home equity conversion sale-leaseback

4 transaction.

5 ‘‘(B) HOME EQUITY CONVERSION SALE6 LEASEBACK TRANSACTION.—For purposes of

7 subparagraph (A), the term ‘home equity con8 version sale-leaseback’ means a transaction in

9 which—

10 ‘‘(i) the seller-lessee—

11 ‘‘(I) has attained the age of 55

12 before the date of the transaction,

13 ‘‘(II) sells property which during

14 the 5-year period ending on the date

15 of the transaction has been owned and

16 used as a principal residence by such

17 seller-lessee for periods aggregating 3

18 years or more,

19 ‘‘(III) uses a portion of the pro20 ceeds from such sale to purchase a

21 policy of qualified long-term care in22 surance, which policy may not be sur23 rendered for cash,
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1 ‘‘(IV) obtains occupancy rights in

2 such property pursuant to a written

3 lease requiring a fair rental, and

4 ‘‘(V) receives no option to repur5 chase the property at a price less than

6 the fair market price of the property

7 unencumbered by any leaseback at the

8 time such option is exercised, and

9 ‘‘(ii) the purchaser-lessor—

10 ‘‘(I) is a person,

11 ‘‘(II) is contractually responsible

12 for the risks and burdens of owner13 ship and receives the benefits of own14 ership (other than the seller-lessee’s

15 occupancy rights) after the date of

16 such transaction, and

17 ‘‘(III) pays a purchase price for

18 the property that is not less than the

19 fair market price of such property en20 cumbered by a leaseback, and taking

21 into account the terms of the lease.

22 ‘‘(C) ADDITIONAL DEFINITIONS.—For pur23 poses of subparagraph (B)—

24 ‘‘(i) OCCUPANCY RIGHTS.—The term

25 ‘occupancy rights’ means the right to oc-
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1 cupy the property for any period of time,

2 including a period of time measured by the

3 life of the seller-lessee on the date of the

4 sale-leaseback transaction (or the life of

5 the surviving seller-lessee, in the case of

6 jointly held occupancy rights), or a periodic

7 term subject to a continuing right of re8 newal by the seller-lessee (or by the surviv9 ing seller-lessee, in the case of jointly held

10 occupancy rights).

11 ‘‘(ii) FAIR RENTAL.—The term ‘fair

12 rental’ means a rental for any subsequent

13 year which equals or exceeds the rental for

14 the first year of a sale-leaseback

15 transaction.’’.

16 (b) EFFECTIVE DATE.—The amendment made by

17 this section shall apply to sales after December 31, 1992,

18 in taxable years beginning after such date.

19 Subtitle C—Medicaid Amendments

20 SEC. 821. EXPANSION OF MEDICAID ELIGIBILITY FOR

21 LONG-TERM CARE BENEFITS.

22 (a) IN GENERAL.—Title XIX of the Social Security

23 Act (42 U.S.C. 1396 et seq.) is amended by adding at

24 the end the following new section:
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1 ‘‘ELIGIBILITY FOR LONG-TERM CARE BENEFITS

2 ‘‘SEC. 1931. (a) ELIGIBILITY FOR NURSING FACIL3 ITY SERVICES.—Any individual—

4 ‘‘(1) who is 65 years of age or older,

5 ‘‘(2) who has resources (including resources of

6 the individual’s spouse) which do not exceed the re7 source limitation specified in subsection (c)(1),

8 ‘‘(3) who is not otherwise eligible for medical

9 assistance for nursing facility services under this

10 title, and

11 ‘‘(4) who has been provided 30 months of nurs12 ing facility services (during a period in which the in13 dividual required the level of care provided in a

14 nursing facility) during the previous 48 months (or,

15 with respect to the application of subsection (e), 72

16 months),

17 is eligible, notwithstanding any other provisions of this

18 title, for medical assistance under this title for nursing

19 facility services so long as the individual continues to meet

20 the requirements of this subsection (other than paragraph

21 (4)) and is confined to a nursing facility or otherwise re22 quires the same level of care as is provided in a nursing

23 facility.

24 ‘‘(b) ELIGIBILITY FOR HOME AND COMMUNITY25 BASED CARE.—Any individual—
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1 ‘‘(1) who is 65 years of age or older,

2 ‘‘(2) who has resources (including resources of

3 the individual’s spouse) which do not exceed the re4 source limitation specified in subsection (c)(1), and

5 ‘‘(3) who is not otherwise eligible for medical

6 assistance for home and community-based long-term

7 care under this title,

8 is eligible, notwithstanding any other provisions of this

9 title, for medical assistance under this title for home and

10 community-based long-term care so long as the individual

11 continues to meet the requirements of this subsection and

12 requires the same level of care as is provided in a nursing

13 facility.

14 ‘‘(c) RESOURCE LIMITATION.—

15 ‘‘(1) IN GENERAL.—For purposes of this sec16 tion, the resource limitation specified in this sub17 section is $500,000, increased, for each year after

18 1993, by the percentage increase in the Consumer

19 Price Index for All Urban Consumers (all items;

20 U.S. city average) from July 1992 to July of the

21 previous year, rounded (if not a multiple of $1,000)

22 to the nearest $1,000.

23 ‘‘(2) CERTAIN PERSONAL PROPERTY NOT IN24 CLUDED.—Personal property items with a fair mar25 ket value less than $5,000 in the aggregate shall not
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1 be included in any calculation of resources under

2 subsections (a) and (b) which are subject to the re3 source limitation specified in paragraph (1).

4 ‘‘(d) TREATMENT OF LEVEL OF CARE.—

5 ‘‘(1) IN GENERAL.—For purposes of sub6 sections (a) and (b), an individual is considered to

7 require the level of care provided in a nursing facil8 ity if the individual cannot perform (without sub9 stantial human assistance) at least 3 activities of

10 daily living or needs substantial human assistance

11 because of cognitive or other mental impairment (in12 cluding Alzheimer’s disease).

13 ‘‘(2) ACTIVITIES OF DAILY LIVING DEFINED.—

14 The ‘activities of daily living’ referred to in para15 graph (1) are the following: eating, bathing, dress16 ing, toileting, and transferring in and out of a bed

17 or in and out of a chair.

18 ‘‘(e) SUBSTITUTION OF EXPENSES INCURRED FOR

19 QUALIFIED HOME CARE FOR MONTHS IN NURSING

20 FACILITY.—

21 ‘‘(1) IN GENERAL.—In determining whether an

22 individual has been provided 30 months of nursing

23 facility services under subsection (a)(4), expenses in24 curred (whether paid for by insurance, themselves,

25 or relatives but not including expenses for which
127

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1 payment is made under this title, by the Department

2 of Veterans Affairs, the Department of Defense, or

3 other Federal programs) for qualified home care (as

4 defined in paragraph (3)) shall be taken into ac5 count in the manner specified in paragraph (2).

6 ‘‘(2) CONVERTING EXPENSES TO MONTHS.—

7 Expenses described in paragraph (1) shall be con8 verted to months of nursing facility services by di9 viding such expenses by the national median month10 ly cost (as determined by the Secretary, and using

11 a weighted average for both public and private nurs12 ing facilities) for nursing facility services in the

13 month in which the expenses are incurred.

14 ‘‘(3) QUALIFIED HOME CARE DEFINED.—In

15 this subsection, the term ‘qualified home care’

16 means home and community-based services described

17 in section 1915(d).’’.

18 (b) CONFORMING AMENDMENTS.—Section 1902(a)

19 of such Act (42 U.S.C. 1396a(a)), as amended by section

20 302, is further amended—

21 (1) in paragraph (10)—

22 (A) in clause (i) of subparagraph (A), by

23 striking ‘‘or’’ at the end of subclause (VI), by

24 striking the semicolon at the end of subclause
128

•S 18 IS

1 (VII) and inserting ‘‘, or’’, and by adding at the

2 end the following:

3 ‘‘(VIII) who are described in sub4 sections (a) and (b) of section 1931;’’;

5 and

6 (B) in the matter following subparagraph

7 (F)—

8 (i) by striking ‘‘; and (XI)’’; and in9 serting ‘‘, (XI);

10 (ii) by striking ‘‘, and (XI)’’ and in11 serting ‘‘, (XII); and

12 (iii) by inserting before the semicolon

13 at the end the following: ‘‘, and (XIII) the

14 making available of medical assistance for

15 certain nursing facility services and home

16 and community-based long-term care in ac17 cordance with section 1931 shall not, by

18 reason of this paragraph, require such as19 sistance to be made available to other indi20 viduals’’;

21 (2) in paragraph (59), by striking ‘‘; and’’ and

22 inserting a semicolon,

23 (3) in paragraph (60), by striking the period at

24 the end and inserting ‘‘; and’’, and
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1 (4) by adding at the end the following new

2 paragraph:

3 ‘‘(61) provides for medical assistance for cer4 tain nursing facility services and home and commu5 nity-based long-term care in accordance with section

6 1931.’’.

7 SEC. 822. EFFECTIVE DATE.

8 (a) IN GENERAL.—The amendments made by this

9 subtitle apply (except as provided under subsection (b))

10 to payments under title XIX of the Social Security Act

11 for calendar quarters beginning on or after 1 year after

12 the date of the enactment of this Act, without regard to

13 whether regulations to implement such amendments are

14 promulgated by such date.

15 (b) DELAY PERMITTED IF STATE LEGISLATION RE16 QUIRED.—In the case of a State plan for medical assist17 ance under title XIX of the Social Security Act which the

18 Secretary of Health and Human Services determines re19 quires State legislation (other than legislation authorizing

20 or appropriating funds) in order for the plan to meet the

21 additional requirements imposed by the amendments made

22 by this subtitle, the State plan shall not be regarded as

23 failing to comply with the requirements of such title solely

24 on the basis of its failure to meet these additional require25 ments before the first day of the first calendar quarter
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1 beginning after the close of the first regular session of the

2 State legislature that begins after the date of the enact3 ment of this Act. For purposes of the previous sentence,

4 in the case of a State that has a 2-year legislative session,

5 each year of such session shall be deemed to be a separate

6 regular session of the State legislature.

7 (c) TRANSITION.—In applying the amendments made

8 by this subtitle, only months beginning after the date of

9 the enactment of this Act may be counted toward meeting

10 the 30-month deductible described in section 1931(a)(4)

11 of the Social Security Act, as added by this subtitle.

Æ

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