II

Calendar No. 457

103D CONGRESS

2D SESSION S. 2153

To improve access to quality health care, to reform medical malpractice

liability standards, to reduce paperwork and simplify administration of

health care claims, to establish safe harbors from the application of

the antitrust laws for certain activities of providers of health care services, to prevent fraud and abuse in the health care delivery system,

and for other purposes.

IN THE SENATE OF THE UNITED STATES

MAY 25 (legislative day, MAY 16), 1994

Mr. KEMPTHORNE (for himself, Mr. CRAIG, and Mr. WALLOP) introduced the

following bill; which was read the first time

JUNE 7, 1994

Read the second time and placed on the calendar

A BILL

To improve access to quality health care, to reform medical

malpractice liability standards, to reduce paperwork and

simplify administration of health care claims, to establish

safe harbors from the application of the antitrust laws

for certain activities of providers of health care services,

to prevent fraud and abuse in the health care delivery

system, and for other purposes.

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

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

3 ‘‘Advancement of Health Care Reform Act of 1994’’.

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

5 as follows:

Sec. 1. Short title; table of contents.

Sec. 101. Amendments to COBRA.

Sec. 102. Penalty-free withdrawals from qualified retirement plans for COBRA

coverage.

Subtitle B—Federally Qualified Health Insurance Plan

Sec. 111. Federally qualified health insurance plan.

Sec. 112. Family security benefits package.

Sec. 113. Rating practices.

Sec. 114. Guaranteed issue.

Sec. 115. Guaranteed renewability.

Subtitle C—Certification of Federally Qualified Health Insurance Plans

Sec. 121. Establishment of regulatory program for certification of plans.

Sec. 122. Standards for regulatory programs.

TITLE II—PAPERWORK REDUCTION AND ADMINISTRATIVE

SIMPLIFICATION

Sec. 201. Preemption of State quill pen laws.

Sec. 202. Confidentiality of electronic health care information.

Sec. 203. Standardization for the electronic receipt and transmission of health

plan information.

Sec. 204. Use of uniform health claims forms and identification numbers.

Sec. 205. Priority among insurers.

Sec. 206. Furnishing of information among health plans.

Sec. 207. Definitions.

TITLE III—HEALTH CARE LIABILITY REFORM

Subtitle A—General Provisions

Sec. 301. Federal reform of medical malpractice liability actions.

Sec. 302. Definitions.

Sec. 303. Effective date.

Subtitle B—Medical Malpractice and Product Liability Reform

Sec. 311. Requirement for initial resolution of action through alternative dispute resolution.

Sec. 312. Calculation and payment of damages.

Sec. 313. Treatment of attorney’s fees and other costs.

Sec. 314. Joint and several liability.

Sec. 315. Statute of limitations.

Sec. 316. Practice guidelines.
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Sec. 317. Uniform standard for determining negligence.

Sec. 318. Special provision for certain obstetric services.

Subtitle C—Requirements for State Alternative Dispute Resolution Systems

(ADR)

Sec. 331. Basic requirements.

Sec. 332. Certification of State systems; applicability of alternative Federal system.

Sec. 333. Reports on implementation and effectiveness of alternative dispute

resolution systems.

TITLE IV—ANTITRUST PROVISIONS

Sec. 401. Exemption from antitrust laws for certain competitive and collaborative activities.

Sec. 402. Safe harbors.

Sec. 403. Designation of additional safe harbors.

Sec. 404. Certificates of review.

Sec. 405. Notifications providing reduction in certain penalties under antitrust

law for health care cooperative ventures.

Sec. 406. Review and reports on safe harbors and certificates of review.

Sec. 407. Rules, regulations, and guidelines.

Sec. 408. Establishment of HHS Office of Health Care Competition Policy.

Sec. 409. Definitions.

TITLE V—ANTI-FRAUD AND ABUSE CONTROL PROGRAM

Subtitle A—All-Payer Fraud and Abuse Control Program

Sec. 501. All-payer fraud and abuse control program.

Sec. 502. Application of Federal health anti-fraud and abuse sanctions to all

fraud and abuse against any health care plan.

Sec. 503. Reporting of fraudulent actions under medicare.

Subtitle B—Revisions to Current Sanctions for Fraud and Abuse

Sec. 511. Mandatory exclusion from participation in medicare and State health

care programs.

Sec. 512. Establishment of minimum period of exclusion for certain individuals

and entities subject to permissive exclusion from medicare and

State health care programs.

Sec. 513. Permissive exclusion of individuals with ownership or control interest

in sanctioned entities.

Sec. 514. Civil monetary penalties.

Sec. 515. Actions subject to criminal penalties.

Sec. 516. Sanctions against practitioners and persons for failure to comply with

statutory obligations.

Sec. 517. Intermediate sanctions for medicare health maintenance organizations.

Sec. 518. Effective date.

Subtitle C—Administrative and Miscellaneous Provisions

Sec. 521. Establishment of the health care fraud and abuse data collection program.

Sec. 522. Quarterly publication of adverse actions taken.
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Subtitle D—Amendments to Criminal Law

Sec. 531. Health care fraud.

Sec. 532. Forfeitures for Federal health care offenses.

Sec. 533. Injunctive relief relating to Federal health care offenses.

Sec. 534. Racketeering activity relating to Federal health care offenses.

Subtitle E—Amendments to Civil False Claims Act

Sec. 541. Amendments to Civil False Claims Act.

TITLE VI—EXPANDING ACCESS IN RURAL AREAS

Sec. 601. Short title.

Sec. 602. Rural health extension networks.

Sec. 603. Rural managed care cooperatives.

Sec. 604. Rural mental health outreach grants.

Sec. 605. Area health education centers.

TITLE VII—TAX PROVISIONS

Sec. 701. Amendment of 1986 Code.

Sec. 702. Deductions for costs of qualified health plans.

TITLE VIII—REVENUE PROVISIONS

Sec. 801. Discretionary spending reductions.

1 SEC. 101. AMENDMENTS TO COBRA.

2 (a) LOWER COST COVERAGE OPTIONS.—Subpara3 graph (A) of section 4980B(f)(2) of the Internal Revenue

4 Code of 1986 (relating to continuation coverage require5 ments of group health plans) is amended to read as fol6 lows:

7 ‘‘(A) TYPE OF BENEFIT COVERAGE.—The

8 coverage must consist of coverage which, as of

9 the time the coverage is being provided—

10 ‘‘(i) is identical to the coverage pro11 vided under the plan to similarly situated

12 beneficiaries under the plan with respect to

13 whom a qualifying event has not occurred,
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1 ‘‘(ii) is so identical, except such cov2 erage is offered with an annual $1,000 de3 ductible, and

4 ‘‘(iii) is so identical, except such cov5 erage is offered with an annual $3,000 de6 ductible.

7 If coverage under the plan is modified for any

8 group of similarly situated beneficiaries, the

9 coverage shall also be modified in the same

10 manner for all individuals who are qualified

11 beneficiaries under the plan pursuant to this

12 subsection in connection with such group.’’.

13 (b) TERMINATION OF COBRA COVERAGE AFTER

14 ELIGIBLE FOR EMPLOYER-BASED COVERAGE FOR 90

15 DAYS.—Clause (iv) of section 4980B(f)(2)(B) of the In16 ternal Revenue Code of 1986 (relating to period of cov17 erage) is amended—

18 (1) by striking ‘‘or’’ at the end of subclause (I);

19 (2) by redesignating subclause (II) as subclause

20 (III); and

21 (3) by inserting after subclause (I) the follow22 ing new subclause:

23 ‘‘(II) eligible for such employer24 based coverage for more than 90 days,

25 or’’.
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1 (c) EFFECTIVE DATE.—The amendments made by

2 this section shall apply to qualifying events occurring after

3 the date of the enactment of this Act.

4 SEC. 102. PENALTY-FREE WITHDRAWALS FROM QUALIFIED

5 RETIREMENT PLANS FOR COBRA COVERAGE.

6 (a) IN GENERAL.—Subparagraph (A) of section

7 72(t)(2) of the Internal Revenue Code of 1986 (relating

8 to additional tax not to apply to certain distributions) is

9 amended—

10 (1) by striking ‘‘or’’ at the end of clauses (iv)

11 and (v);

12 (2) by striking the period at the end of clause

13 (vi) and inserting ‘‘, or’’; and

14 (3) by adding at the end the following new

15 clause:

16 ‘‘(vii) made to an employee who is a

17 qualified beneficiary during the period of

18 continuation coverage under section

19 4980B(f).’’

20 (b) EFFECTIVE DATE.—The amendments made by

21 subsection (a) shall apply to distributions made after the

22 date of the enactment of this Act.
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1 Subtitle B—Federally Qualified

2 Health Insurance Plan

3 SEC. 111. FEDERALLY QUALIFIED HEALTH INSURANCE

4 PLAN.

5 (a) IN GENERAL.—A federally qualified health insur6 ance plan is a health insurance plan offered, issued, or

7 renewed on or after January 1, 1997, which is certified

8 by the applicable regulatory authority as meeting, at a

9 minimum, the requirements of sections 112, 113, 114, and

10 115, and the regulatory program described in subtitle C.

11 (b) GENERAL DEFINITIONS.—Except as specifically

12 provided otherwise, as used in this Act:

13 (1) HEALTH INSURANCE PLAN.—The term

14 ‘‘health insurance plan’’ means any hospital or medi15 cal service policy or certificate, hospital or medical

16 service plan contract, or health maintenance organi17 zation group contract and, in States which have dis18 tinct licensure requirements, a multiple employer

19 welfare arrangement, but does not include any of the

20 following offered by an insurer:

21 (A) Accident only, dental only, disability

22 only, or long-term care only insurance.

23 (B) Coverage issued as a supplement to li24 ability insurance.
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1 (C) Workers’ compensation or similar in2 surance.

3 (D) Automobile medical-payment insur4 ance.

5 (2) APPLICABLE REGULATORY AUTHORITY.—

6 The term ‘‘applicable regulatory authority’’ means—

7 (A) in the case of a State with a program

8 described in subtitle C, the State commissioner

9 or superintendent of insurance or other State

10 authority responsible for regulation of health in11 surance; or

12 (B) if the State has not established such a

13 program or such program has been decertified

14 under section lllll, the Secretary.

15 (3) SECRETARY.—The term ‘‘Secretary’’ means

16 the Secretary of Health and Human Services.

17 (4) STATE.—The term ‘‘State’’ means each of

18 the several States of the United States, the District

19 of Columbia, the Commonwealth of Puerto Rico, the

20 United States Virgin Islands, Guam, American

21 Samoa, and the Commonwealth of the Northern

22 Mariana Islands.

23 SEC. 112. FAMILY SECURITY BENEFITS PACKAGE.

24 (a) IN GENERAL.—The requirements of this section

25 are met, if the health insurance plan—
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1 (1) provides coverage for all medically necessary

2 acute medical care described in subsection (b);

3 (2) does not exclude coverage for selected ill4 nesses or selected treatments if consistent with

5 medically accepted practices; and

6 (3) meets the patient cost sharing requirements

7 of subsection (c).

8 (b) ACUTE MEDICAL CARE.—Coverage for all medi9 cally necessary acute medical care is described in this sub10 section if such coverage includes—

11 (1) physician services;

12 (2) inpatient, outpatient, and emergency hos13 pital services and appropriate alternatives to hos14 pitalization; and

15 (3) inpatient and outpatient prescription drugs.

16 Nothing in this subsection may be construed to require

17 the inclusion of abortion services.

18 (c) COST SHARING REQUIREMENTS.—The require19 ments of this subsection are as follows:

20 (1) LIMITATION ON DEDUCTIBLES.—A health

21 insurance plan shall not provide a deductible amount

22 for benefits provided in any plan year that exceeds—

23 (A) with respect to benefits payable for

24 items and services furnished to a single individ-
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1 ual enrolled under the plan, for a plan year be2 ginning in—

3 (i) a calendar year prior to 1998,

4 $1,000; or

5 (ii) for a subsequent calendar year,

6 the limitation specified in this subpara7 graph for the previous calendar year in8 creased by the percentage increase in the

9 consumer price index for all urban consum10 ers (United States city average, as pub11 lished by the Bureau of Labor Statistics)

12 for the 12-month period ending on Septem13 ber 30 of the preceding calendar year; and

14 (B) with respect to benefits payable for

15 items and services furnished to a family en16 rolled under the plan, for a plan year beginning

17 in—

18 (i) a calendar year prior to 1998,

19 $2,000 per family; or

20 (ii) for a subsequent calendar year,

21 the limitation specified in this subpara22 graph for the previous calendar year in23 creased by such percentage increase.

24 If the limitation computed under subparagraph

25 (A)(ii) or (B)(ii) is not a multiple of $10, it
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1 shall be rounded to the next highest multiple of

2 $10.

3 (2) LIMITATION ON COPAYMENTS AND COIN4 SURANCE.—

5 (A) IN GENERAL.—A health insurance

6 plan may not require the payment of any

7 copayment or coinsurance for an item or service

8 for which coverage is required under this sec9 tion after an individual or a family covered

10 under the plan has incurred out-of-pocket ex11 penses under the plan that are equal to the out12 of-pocket limit for a plan year.

13 (B) LIMIT ON OUT-OF-POCKET EX14 PENSES.—As used in this paragraph—

15 (i) OUT-OF-POCKET EXPENSES DE16 FINED.—The term ‘‘out-of-pocket ex17 penses’’ means, with respect to an individ18 ual or a family in a plan year, amounts

19 payable under the plan as deductibles and

20 coinsurance with respect to items and serv21 ices provided under the plan and furnished

22 in the plan year on behalf of the individual

23 or the family covered under the plan.
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1 (ii) OUT-OF-POCKET LIMIT DE2 FINED.—The term ‘‘out-of-pocket limit’’

3 means for a plan year beginning in—

4 (I) a calendar year prior to 1998,

5 $5,000; or

6 (II) for a subsequent calendar

7 year, the limit specified in this clause

8 for the previous calendar year in9 creased by the percentage increase in

10 the consumer price index for all urban

11 consumers (United States city aver12 age, as published by the Bureau of

13 Labor Statistics) for the 12-month pe14 riod ending on September 30 of the

15 preceding calendar year.

16 If the limit computed under subclause (II)

17 is not a multiple of $10, it shall be round18 ed to the next highest multiple of $10.

19 SEC. 113. RATING PRACTICES.

20 (a) IN GENERAL.—The requirements of this section

21 are met, if, except as provided in subsection (b), the health

22 insurance plan provides for—

23 (1) a variation in premium rates only on the

24 basis of age, sex, and geography; and
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1 (2) a charge of the same premium rates to new

2 applicants and existing policyholders with the same

3 age, sex, and geographic characteristics.

4 (b) INCENTIVE DISCOUNTS.—A plan may discount

5 an individual’s premium rate as an incentive for partici6 pating in a program, approved by the applicable regulatory

7 authority to be offered in conjunction with the coverage,

8 which has as its objective, one or more of the following:

9 (1) To promote healthy behavior.

10 (2) To prevent or delay the onset of illness.

11 (3) To provide for screening or early detection

12 of illness.

13 SEC. 114. GUARANTEED ISSUE.

14 (a) IN GENERAL.—Except as provided in paragraph

15 (2), in the case of applications made on and after January

16 1, 1998, the following rules apply:

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

18 section are met, if, except as provided in paragraph

19 (2), the health insurance plan—

20 (A) provides guaranteed issue at standard

21 rates to all applicants, and

22 (B) does not exclude from coverage, or

23 limit coverage for, any preexisting medical con24 dition of any applicant who, on the date the ap25 plication is made, has been continuously insured
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1 for a period of at least 1 year prior to the date

2 of the application under one or more of the fol3 lowing health insurance plans or programs:

4 (i) Another federally qualified health

5 insurance plan.

6 (ii) An employer-sponsored group

7 health insurance plan in effect before the

8 date of the enactment of this Act.

9 (iii) An individual health insurance

10 plan in effect before such date.

11 (iv) A program described in—

12 (I) title XVIII or XIX of the So13 cial Security Act;

14 (II) chapter 55 of title 10, Unit15 ed States Code;

16 (III) chapter 17 of title 38, Unit17 ed States Code;

18 (IV) chapter 89 of title 5, United

19 States Code; or

20 (V) the Indian Health Care Im21 provement Act.

22 (2) BREAK IN COVERAGE.—In the case of an

23 applicant who has not been continuously insured for

24 a period of 1 year prior to the date the application

25 is made, the health insurance plan may exclude from
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1 coverage, or limit coverage for, any preexisting medi2 cal condition for a period no greater than the lesser

3 of—

4 (A) the number of months immediately

5 prior to the date of the application during

6 which the individual was not insured since the

7 illness or condition in question was first diag8 nosed; or

9 (B) 1 year.

10 (b) TRANSITION RULE.—In the case of applications

11 made in 1997, the requirements of this section are met,

12 if the health insurance plan—

13 (1) provides guaranteed issue at standard rates

14 to all applicants, and

15 (2) does not exclude from coverage, or limit

16 coverage for, any preexisting medical condition of

17 any applicant.

18 SEC. 115. GUARANTEED RENEWABILITY.

19 The requirements of this section are met, if the

20 health insurance plan provides the policyholder with a con21 tractual right to renew the coverage which stipulates that

22 the insurer cannot cancel or refuse to renew the coverage

23 except for cases of—

24 (1) nonpayment of premiums by the policy25 holder; or
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1 (2) fraud or misrepresentation by the policy2 holder.

3 Subtitle C—Certification Of Feder4 ally Qualified Health Insurance

5 Plans

6 SEC. 121. ESTABLISHMENT OF REGULATORY PROGRAM

7 FOR CERTIFICATION OF PLANS.

8 (a) IN GENERAL.—Each State shall establish no later

9 than January 1, 1997, a regulatory program which meets

10 the standards referred to in section 122.

11 (b) PERIODIC SECRETARIAL REVIEW OF STATE REG12 ULATORY PROGRAM.—The Secretary periodically shall re13 view each State regulatory program to determine if such

14 program continues to meet and enforce the standards re15 ferred to in section 122. If the Secretary initially deter16 mines that a State regulatory program no longer meets

17 and enforces such standards, the Secretary shall provide

18 the State an opportunity to adopt a plan of correction that

19 would bring such program into compliance with such

20 standards. If the Secretary makes a final determination

21 that the State regulatory program fails to meet and en22 force such standards after such an opportunity, the Sec23 retary shall decertify such program and assume respon24 sibility with respect to health insurance plans in the State.
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1 SEC. 122. STANDARDS FOR REGULATORY PROGRAMS.

2 (a) IN GENERAL.—The Secretary, in consultation

3 with the National Association of Insurance Commissioners

4 (hereafter in this section referred to as ‘‘NAIC’’) shall de5 velop by not later than 1 year after the date of the enact6 ment of this Act, in the form of model Acts and model

7 regulations, State regulatory program standards which in8 clude—

9 (1) procedures for certifying that the require10 ments of subtitle B have been met by a health insur11 ance plan applying for certification as a federally

12 qualified health insurance plan;

13 (2) the requirements described in subsections

14 (b), (c), and (d);

15 (3) requirements with respect to solvency stand16 ards and guaranty funds for carriers of federally

17 qualified health insurance plans; and

18 (4) reporting requirements under which carriers

19 report to the Internal Revenue Service regarding the

20 acquisition and termination by individuals of cov21 erage under federally qualified health insurance

22 plans.

23 (b) PASSBACK OF CLAIMS AND PREMIUMS.—The re24 quirements of this subsection are met, if, in the case of

25 an applicant who has been continuously insured, as de26 scribed in section 114(a)(1)(B), and is at the time of the
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1 application receiving treatment for a preexisting medical

2 condition—

3 (1) the federally qualified health insurance plan

4 is allowed to pass back to the applicant’s previous

5 plan any claims relating to such condition, together

6 with a portion of the premium; and

7 (2) such previous plan is required to pay such

8 claims and premium incurred during the lesser of—

9 (A) the duration of the course of the treat10 ment or spell of illness; or

11 (B) 2 years from the date at which cov12 erage commenced under the federally qualified

13 health insurance plan.

14 (c) MARKETING PRACTICES.—The requirements of

15 this subsection are met, if the carrier offering the federally

16 qualified health insurance plan retains the right to select

17 agents with whom such plan contracts and to determine

18 the amount and form of compensation to such agents, ex19 cept that—

20 (1) if the carrier chooses to contract with an

21 agent, the carrier may not terminate or refuse to

22 renew the agency contract for any reason related to

23 the age, sex, health status, claims experience, occu24 pation, or geographic location of the insureds placed

25 by the agent with such plan, and
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1 (2) the carrier may not, directly or indirectly,

2 enter into any contract, agreement, or arrangement

3 with an agent that provides for, or results in, any

4 consideration provided to such agent for the issu5 ance or renewal of such a plan to vary on account

6 of the age, sex, health status, claims experience, oc7 cupation, or geographic location of the insureds

8 placed by the agent with such plan.

9 (d) RISK ADJUSTMENT OR REINSURANCE PRO10 GRAMS.—The requirements of this subsection are met, if

11 the carrier offering the federally qualified health insurance

12 plan participates in a State-administered risk adjustment

13 program (or, at the option of the State, a reinsurance pro14 gram) designed to compensate for the potential occurrence

15 of grossly disproportionate distributions of above-standard

16 or below-standard insured risks among federally qualified

17 health insurance plans.

18 (e) NONBINDING STANDARDS.—The Secretary, in

19 consultation with NAIC, shall also develop within the 1-

20 year period described in subsection (a), nonbinding stand21 ards for premium rating practices and guaranteed renew22 ability of coverage which, if the insurer so elects, is more

23 generous (additional benefits or lower cost sharing or

24 both) than the requirements under subtitle B for federally

25 qualified health insurance plans.
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1 TITLE II—PAPERWORK REDUC2 TION AND ADMINISTRATIVE

3 SIMPLIFICATION

4 SEC. 201. PREEMPTION OF STATE QUILL PEN LAWS.

5 After December 31, 1995, no effect shall be given to

6 any provision of State law that requires medical or health

7 insurance records (including billing information) to be

8 maintained in written, rather than electronic, form.

9 SEC. 202. CONFIDENTIALITY OF ELECTRONIC HEALTH

10 CARE INFORMATION.

11 (a) PROMULGATION OF REQUIREMENTS.—

12 (1) IN GENERAL.—The Secretary shall promul13 gate, and may modify from time to time, require14 ments to facilitate and ensure the uniform, confiden15 tial treatment of individually identifiable health care

16 information in electronic environments.

17 (2) ITEMS TO BE INCLUDED.—The require18 ments under this subsection shall—

19 (A) provide for the preservation of con20 fidentiality and privacy rights in electronic

21 health care claims processing and payment;

22 (B) apply to the collection, storage, han23 dling, and transmission of individually identifi24 able health care data (including initial and sub25 sequent disclosures) in electronic form by health
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1 plans, public and private third-party payers,

2 providers of health care, and all other entities

3 involved in the transactions;

4 (C) not apply to public health reporting re5 quired under Federal or State law;

6 (D) delineate protocols for securing elec7 tronic storage, processing, and transmission of

8 health care data;

9 (E) specify fair information practices that

10 assure a proper balance between required dis11 closures and use of data, including—

12 (i) creating a proper balance between

13 what an individual is expected to divulge to

14 a record-keeping organization and what the

15 individual seeks in return;

16 (ii) minimizing the extent to which in17 formation concerning an individual is itself

18 a source of unfairness in any decision

19 made on the basis of such information; and

20 (iii) creating and defining obligations

21 respecting the uses and disclosures that

22 will be made of recorded information about

23 an individual;

24 (F) require publication of the existence of

25 health care data banks;
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1 (G) establish appropriate protections for

2 highly sensitive data (such as data concerning

3 mental health, substance abuse, and commu4 nicable and genetic diseases);

5 (H) encourage the use of alternative dis6 pute resolution mechanisms (where appro7 priate); and

8 (I) provide for the deletion of information

9 that is no longer needed to carry out the pur10 pose for which it was collected.

11 (3) CONSULTATION WITH WORKING GROUP.—In

12 promulgating and modifying requirements under this

13 subsection, the Secretary shall consult with a work14 ing group of knowledgeable individuals representing

15 all interested parties (including third-party payers,

16 providers, consumers, employers, information man17 agers, and technical experts).

18 (4) DEADLINE.—The Secretary shall first pro19 mulgate requirements under this subsection by not

20 later than 6 months after the date of the enactment

21 of this Act.

22 (b) APPLICATION OF REQUIREMENTS.—

23 (1) STATE ENFORCEMENT OF SIMILAR RE24 QUIREMENTS.—The requirements promulgated
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1 under subsection (a) shall not apply to health care

2 information in a State if—

3 (A) the State has applied to the Secretary

4 for a determination that the State has in effect

5 a law that provides for the application of re6 quirements with respect to such information

7 (and enforcement provisions with respect to

8 such requirements) consistent with such re9 quirements (and with the enforcement provi10 sions of subsection (c)); and

11 (B) the Secretary determines that the

12 State has such a law in effect.

13 (2) APPLICATION TO CURRENT INFORMA14 TION.—The Secretary shall specify the extent to

15 which (and manner in which) the requirements pro16 mulgated under subsection (a) apply to information

17 collected before the effective date of the require18 ments.

19 (c) DEFENSE FOR PROPER DISCLOSURES.—An en20 tity that establishes that it has disclosed health care infor21 mation in accordance with the requirements promulgated

22 under subsection (a) has established a defense in an action

23 brought for improper disclosure of such information.

24 (d) PENALTIES FOR VIOLATIONS.—An entity that

25 collects, stores, handles, transmits, or discloses health care
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1 information in violation of the requirements promulgated

2 under subsection (a) is liable for civil damages, equitable

3 remedies, and attorneys’ fees (if appropriate), in accord4 ance with regulations of the Secretary.

5 SEC. 203. STANDARDIZATION FOR THE ELECTRONIC RE6 CEIPT AND TRANSMISSION OF HEALTH PLAN

7 INFORMATION.

8 (a) GOALS.—The Secretary shall establish national

9 goals, and time frameworks, respecting the progress to be

10 made by the health care industry in eliminating unneces11 sary paperwork and achieving appropriate standardization

12 in the areas of electronic receipt and transmission of

13 health care claims and health plan information and eligi14 bility verification (consistent with the requirements pro15 mulgated under section 202(a)).

16 (b) CONTINGENT REQUIREMENTS.—If the Secretary

17 determines that the health care industry has failed to meet

18 the goals established under subsection (a) by the deadlines

19 established by the Secretary under such subsection, the

20 Secretary shall promulgate (and may, from time to time,

21 modify) standards and requirements concerning the elec22 tronic receipt and transmission of health plan claims

23 forms and other health plan information.

24 (c) COMPLIANCE.—
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1 (1) IN GENERAL.—The Secretary may impose a

2 civil money penalty on any health plan (other than

3 a health plan described in paragraph (2)) that fails

4 to comply with standards and requirements promul5 gated under subsection (b) in an amount not to ex6 ceed $100 for each such failure. The provisions of

7 section 1128A of the Social Security Act (other than

8 the first sentence of subsection (a) and other than

9 subsection (b)) shall apply to a civil money penalty

10 under this paragraph in the same manner as such

11 provisions apply to a penalty or proceeding under

12 section 1128A(a) of such Act.

13 (2) PLANS SUBJECT TO EFFECTIVE STATE REG14 ULATION.—A health plan described in this para15 graph is a health plan that is subject to regulation

16 by a State, if the Secretary finds that—

17 (A) the State provides for application of

18 the standards and requirements promulgated

19 under subsection (b); and

20 (B) the State regulatory program provides

21 for the appropriate and effective enforcement of

22 such standards and requirements with respect

23 to such plans.

24 (d) CONSULTATION.—The Secretary shall conduct

25 activities under this section in consultation with the Ac-
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1 credited Standards Committee X–12 of the American Na2 tional Standards Institute, insurers, providers, and others.

3 SEC. 204. USE OF UNIFORM HEALTH CLAIMS FORMS AND

4 IDENTIFICATION NUMBERS.

5 (a) GOALS.—The Secretary shall establish national

6 goals, and time frameworks, respecting the progress to be

7 made by the health care industry in achieving uniform8 ity—

9 (1) in the format and content of basic claims

10 forms under health plans, and

11 (2) in the use of common identification num12 bers for beneficiaries and providers of health care

13 items or services under health plans.

14 (b) CONTINGENT REQUIREMENTS.—If the Secretary

15 determines that the health care industry has failed to meet

16 the goals established under subsection (a) by the deadlines

17 established by the Secretary under such subsection, the

18 Secretary shall promulgate (and may, from time to time,

19 modify) standards and requirements concerning—

20 (1) the format and content of basic claims

21 forms under health plans; and

22 (2) the common identification numbers to be

23 used by health plans to identify health plan bene24 ficiaries and health care providers.

25 (c) COMPLIANCE.—
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1 (1) IN GENERAL.—The Secretary may impose a

2 civil money penalty on any health plan (other than

3 a health plan described in paragraph (2)) that fails

4 to comply with standards and requirements promul5 gated under subsection (b) in an amount not to ex6 ceed $100 for each such failure. The provisions of

7 section 1128A of the Social Security Act (other than

8 the first sentence of subsection (a) and other than

9 subsection (b)) shall apply to a civil money penalty

10 under this paragraph in the same manner as such

11 provisions apply to a penalty or proceeding under

12 section 1128A(a) of such Act.

13 (2) PLANS SUBJECT TO EFFECTIVE STATE REG14 ULATION.—A health plan described in this para15 graph is a health plan that is subject to regulation

16 by a State, if the Secretary finds that—

17 (A) the State provides for application of

18 the standards and requirements promulgated

19 under subsection (b); and

20 (B) the State regulatory program provides

21 for the appropriate and effective enforcement of

22 such standards and requirements with respect

23 to such plans.

24 (d) CONSULTATION.—The Secretary shall conduct

25 activities under this section in consultation with the
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1 Workgroup for Electronic Data Interchange and with in2 surers, providers, and others.

3 SEC. 205. PRIORITY AMONG INSURERS.

4 (a) GOALS.—The Secretary shall establish national

5 goals, and time frameworks, respecting the progress to be

6 made by the health care industry in achieving uniformity

7 in the rules for determining the liability of insurers when

8 benefits are payable under two or more health plans.

9 (b) CONTINGENT REQUIREMENTS.—If the Secretary

10 determines that the health care industry has failed to meet

11 the goals established under subsection (a) by the deadlines

12 established by the Secretary under such subsection, the

13 Secretary shall promulgate (and may, from time to time,

14 modify) rules for determining the liability of health plans

15 when benefits are payable under two or more health plans.

16 (c) COMPLIANCE.—

17 (1) IN GENERAL.—The Secretary may impose a

18 civil money penalty on any health plan (other than

19 a health plan described in paragraph (2)) that fails

20 to comply with rules promulgated under subsection

21 (b) in an amount not to exceed $100 for each such

22 failure. The provisions of section 1128A of the So23 cial Security Act (other than the first sentence of

24 subsection (a) and other than subsection (b)) shall

25 apply to a civil money penalty under this paragraph
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1 in the same manner as such provisions apply to a

2 penalty or proceeding under section 1128A(a) of

3 such Act.

4 (2) PLANS SUBJECT TO EFFECTIVE STATE REG5 ULATION.—A health plan described in this para6 graph is a health plan that is subject to regulation

7 by a State, if the Secretary finds that—

8 (A) the State provides for application of

9 the rules established under subsection (b); and

10 (B) the State regulatory program provides

11 for the appropriate and effective enforcement of

12 such rules with respect to such plans.

13 (d) CONSULTATION.—The Secretary shall conduct

14 activities under this section in consultation with health

15 plans.

16 SEC. 206. FURNISHING OF INFORMATION AMONG HEALTH

17 PLANS.

18 (a) GOALS.—The Secretary shall establish national

19 goals, and time frameworks, respecting the progress to be

20 made by the health care industry in achieving uniformity

21 in the availability of information among health plans when

22 benefits are payable under two or more health plans.

23 (b) CONTINGENT REQUIREMENTS.—If the Secretary

24 determines that the health care industry has failed to meet

25 the goals established under subsection (a) by the deadlines
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1 established by the Secretary under such subsection, the

2 Secretary shall promulgate (and may, from time to time,

3 modify) requirements concerning the transfer among

4 health plans (and annual updating) of appropriate infor5 mation (which may include requirements for the use of

6 unique identifiers, and for the listing of all individuals cov7 ered under a health plan).

8 (c) COMPLIANCE.—

9 (1) IN GENERAL.—The Secretary may impose a

10 civil money penalty on any health plan (other than

11 a health plan described in paragraph (2)) that fails

12 to comply with requirements promulgated under sub13 section (b) in an amount not to exceed $100 for

14 each such failure. The provisions of section 1128A

15 of the Social Security Act (other than the first sen16 tence of subsection (a) and other than subsection

17 (b)) shall apply to a civil money penalty under this

18 paragraph in the same manner as such provisions

19 apply to a penalty or proceeding under section

20 1128A(a) of such Act.

21 (2) PLANS SUBJECT TO EFFECTIVE STATE REG22 ULATION.—A plan described in this paragraph is a

23 health plan that is subject to regulation by a State,

24 if the Secretary finds that—
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1 (A) the State provides for application of

2 the requirements promulgated under subsection

3 (b); and

4 (B) the State regulatory program provides

5 for the appropriate and effective enforcement of

6 such requirements with respect to such plans.

7 (d) CONSULTATION.—The Secretary shall conduct

8 activities under this section in consultation with health

9 plans.

10 SEC. 207. DEFINITIONS.

11 As used in this title:

12 (1) HEALTH PLAN.—The term ‘‘health plan’’

13 means any contract or arrangement under which an

14 entity bears all or part of the cost of providing

15 health care items and services, including a hospital

16 or medical expense incurred policy or certificate,

17 hospital or medical service plan contract, or health

18 maintenance subscriber contract (including any

19 closed accountable health plan), but does not include

20 (except for purposes of sections 205 and 206)—

21 (A) coverage only for accident, dental, vi22 sion, disability, or long term care, medicare

23 supplemental health insurance, or any combina24 tion thereof,
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1 (B) coverage issued as a supplement to li2 ability insurance,

3 (C) workers’ compensation or similar in4 surance; or

5 (D) automobile medical-payment insur6 ance.

7 (2) PROVIDER.—The term ‘‘provider’’ means a

8 physician, hospital, pharmacy, laboratory, or other

9 person licensed or otherwise authorized under appli10 cable State laws to furnish health care items or serv11 ices.

12 TITLE III—HEALTH CARE

13 LIABILITY REFORM

14 Subtitle A—General Provisions

15 SEC. 301. FEDERAL REFORM OF MEDICAL MALPRACTICE

16 LIABILITY ACTIONS.

17 (a) APPLICABILITY.—This title shall apply with re18 spect to any medical malpractice liability claim and to any

19 medical malpractice liability action brought in any Federal

20 or State court, except that this title shall not apply to a

21 claim or action for damages arising from a vaccine-related

22 injury or death to the extent that title XXI of the Public

23 Health Service Act applies to the claim or action.

24 (b) PREEMPTION.—The provisions of this title shall

25 preempt any State law to the extent such law is inconsist-
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1 ent with the limitations contained in such provisions. The

2 provisions of this title shall not preempt any State law

3 that provides for defenses or places limitations on a per4 son’s liability in addition to those contained in this title,

5 places greater limitations on the amount of attorneys’ fees

6 that can be collected, or otherwise imposes greater restric7 tions than those provided in this title.

8 (c) EFFECT ON SOVEREIGN IMMUNITY AND CHOICE

9 OF LAW OR VENUE.—

10 Nothing in subsection (b) shall be construed to—

11 (1) waive or affect any defense of sovereign im12 munity asserted by any State under any provision of

13 law;

14 (2) waive or affect any defense of sovereign im15 munity asserted by the United States;

16 (3) affect the applicability of any provision of

17 the Foreign Sovereign Immunities Act of 1976;

18 (4) preempt State choice-of-law rules with re19 spect to claims brought by a foreign nation or a citi20 zen of a foreign nation; or

21 (5) affect the right of any court to transfer

22 venue or to apply the law of a foreign nation or to

23 dismiss a claim of a foreign nation or of a citizen

24 of a foreign nation on the ground of inconvenient

25 forum.
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1 (d) FEDERAL COURT JURISDICTION NOT ESTAB2 LISHED ON FEDERAL QUESTION GROUNDS.—Nothing in

3 this title shall be construed to establish any jurisdiction

4 in the district courts of the United States over medical

5 malpractice liability actions on the basis of section 1331

6 or 1337 of title 28, United States Code.

7 SEC. 302. DEFINITIONS.

8 As used in this title:

9 (1) ALTERNATIVE DISPUTE RESOLUTION SYS10 TEM; ADR.—The term ‘‘alternative dispute resolution

11 system’’ or ‘‘ADR’’ means a system established

12 under this title that provides for the resolution of

13 medical malpractice liability claims in a manner

14 other than through medical malpractice liability ac15 tions.

16 (2) CLAIMANT.—The term ‘‘claimant’’ means

17 any person who alleges a medical malpractice liabil18 ity claim, and any person on whose behalf such a

19 claim is alleged, including the decedent in the case

20 of an action brought through or on behalf of an es21 tate.

22 (3) CLEAR AND CONVINCING EVIDENCE.—The

23 term ‘‘clear and convincing evidence’’ is that meas24 ure or degree of proof that will produce in the mind

25 of the trier of fact a firm belief or conviction as to
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1 the truth of the allegations sought to be established,

2 except that such measure or degree of proof is more

3 than that required under preponderance of the evi4 dence, but less than that required for proof beyond

5 a reasonable doubt.

6 (4) ECONOMIC DAMAGES.—The term ‘‘economic

7 damages’’ means damages paid to compensate an in8 dividual for hospital and other medical expenses, lost

9 wages, lost employment, and other pecuniary losses.

10 (5) HEALTH CARE PROFESSIONAL.—The term

11 ‘‘health care professional’’ means any individual who

12 provides health care services in a State and who is

13 required by the laws or regulations of the State to

14 be licensed or certified by the State to provide such

15 services in the State.

16 (6) HEALTH CARE PROVIDER.—The term

17 ‘‘health care provider’’ means any organization or

18 institution that is engaged in the delivery of health

19 care services in a State and that is required by the

20 laws or regulations of the State to be licensed or cer21 tified by the State to engage in the delivery of such

22 services in the State.

23 (7) INJURY.—The term ‘‘injury’’ means any ill24 ness, disease, or other harm that is the subject of
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1 a medical malpractice liability action or a medical

2 malpractice liability claim.

3 (8) MEDICAL MALPRACTICE LIABILITY AC4 TION.—The term ‘‘medical malpractice liability ac5 tion’’ means a civil action brought in a Federal or

6 State court against a health care provider or health

7 care professional in which the plaintiff alleges a

8 medical malpractice liability claim, but does not in9 clude any action in which the plaintiff’s sole allega10 tion is an allegation of an intentional tort.

11 (9) MEDICAL MALPRACTICE LIABILITY

12 CLAIM.—The term ‘‘medical malpractice liability

13 claim’’ means a claim in which the claimant alleges

14 that injury was caused by the provision of (or the

15 failure to provide) health care services or the use of

16 a medical product.

17 (10) MEDICAL PRODUCT.—

18 (A) IN GENERAL.—The term ‘‘medical

19 product’’ means, with respect to the allegation

20 of a claimant, a drug (as defined in section

21 201(g)(1) of the Federal Food, Drug, and Cos22 metic Act (21 U.S.C. 321(g)(1)) or a medical

23 device (as defined in section 201(h) of the Fed24 eral Food, Drug, and Cosmetic Act (21 U.S.C.

25 321(h)) if—
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1 (i) such drug or device was subject to

2 premarket approval under section 505,

3 507, or 515 of the Federal Food, Drug,

4 and Cosmetic Act (21 U.S.C. 355, 357, or

5 360e) or section 351 of the Public Health

6 Service Act (42 U.S.C. 262) with respect

7 to the safety of the formulation or per8 formance of the aspect of such drug or de9 vice which is the subject of the claimant’s

10 allegation or the adequacy of the packag11 ing or labeling of such drug or device, and

12 such drug or device is approved by the

13 Food and Drug Administration; or

14 (ii) the drug or device is generally rec15 ognized as safe and effective under regula16 tions issued by the Secretary under section

17 201(p) of the Federal Food, Drug, and

18 Cosmetic Act (21 U.S.C. 321(p)).

19 (B) EXCEPTION IN CASE OF MISREPRE20 SENTATION OR FRAUD.—Notwithstanding sub21 paragraph (A), the term ‘‘medical product’’

22 shall not include any product described in such

23 subparagraph if the claimant shows that the

24 product is approved by the Food and Drug Ad25 ministration for marketing as a result of with-
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1 held information, misrepresentation, or an ille2 gal payment by manufacturer of the product.

3 (11) NONECONOMIC DAMAGES.—The term

4 ‘‘noneconomic damages’’ means damages paid to

5 compensate an individual for physical and emotional

6 pain, suffering, inconvenience, physical impairment,

7 mental anguish, disfigurement, loss of enjoyment of

8 life, loss of consortium, and other nonpecuniary

9 losses, but does not include punitive damages.

10 (12) PUNITIVE DAMAGES; EXEMPLARY DAM11 AGES.—The terms ‘‘punitive damages’’ and ‘‘exem12 plary damages’’ mean compensation, in addition to

13 compensation for actual harm suffered, that is

14 awarded for the purpose of punishing a person for

15 conduct deemed to be malicious, wanton, willful, or

16 excessively reckless.

17 (13) STATE.—The term ‘‘State’’ means each of

18 the several States, the District of Columbia, the

19 Commonwealth of Puerto Rico, the Virgin Islands,

20 Guam, and American Samoa.

21 SEC. 303. EFFECTIVE DATE.

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

23 (b) and section 318(c), this title shall apply with respect

24 to claims accruing or actions brought on or after the expi-
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1 ration of the 3-year period that begins on the date of the

2 enactment of this Act.

3 (b) EXCEPTION FOR STATES REQUESTING EARLIER

4 IMPLEMENTATION OF REFORMS.—

5 (1) APPLICATION.—A State may submit an ap6 plication to the Secretary requesting the early imple7 mentation of this subtitle with respect to claims or

8 actions brought in the State.

9 (2) DECISION BY SECRETARY.—The Secretary

10 shall issue a response to a State’s application under

11 paragraph (1) not later than 90 days after receiving

12 the application. If the Secretary determines that the

13 State meets the requirements of this title at the time

14 of submitting its application, the Secretary shall ap15 prove the State’s application, and this title shall

16 apply with respect to actions brought in the State on

17 or after the expiration of the 90-day period that be18 gins on the date the Secretary issues the response.

19 If the Secretary denies the State’s application, the

20 Secretary shall provide the State with a written ex21 planation of the grounds for the decision.
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1 Subtitle B—Medical Malpractice

2 and Product Liability Reform

3 SEC. 311. REQUIREMENT FOR INITIAL RESOLUTION OF AC4 TION THROUGH ALTERNATIVE DISPUTE RES5 OLUTION.

6 (a) IN GENERAL.—

7 (1) STATE CASES.—A medical malpractice li8 ability action may not be brought in any State court

9 during a calendar year unless the medical mal10 practice liability claim that is the subject of the ac11 tion has been initially resolved under an alternative

12 dispute resolution system certified for the year by

13 the Secretary under section 332(a), or, in the case

14 of a State in which such a system is not in effect

15 for the year, under the alternative Federal system

16 established under section 332(b).

17 (2) FEDERAL DIVERSITY ACTIONS.—A medical

18 malpractice liability action may not be brought in

19 any Federal court under section 1332 of title 28,

20 United States Code, during a calendar year unless

21 the medical malpractice liability claim that is the

22 subject of the action has been initially resolved

23 under the alternative dispute resolution system re24 ferred to in paragraph (1) that applied in the State

25 whose law applies in such action.
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1 (3) CLAIMS AGAINST UNITED STATES.—

2 (A) ESTABLISHMENT OF PROCESS FOR

3 CLAIMS.—The Attorney General shall establish

4 an alternative dispute resolution process for the

5 resolution of tort claims consisting of medical

6 malpractice liability claims brought against the

7 United States under chapter 171 of title 28,

8 United States Code. Under such process, the

9 resolution of a claim shall occur after the com10 pletion of the administrative claim process ap11 plicable to the claim under section 2675 of such

12 title.

13 (B) REQUIREMENT FOR INITIAL RESOLU14 TION UNDER PROCESS.—A medical malpractice

15 liability action based on a medical malpractice

16 liability claim described in subparagraph (A)

17 may not be brought in any Federal court unless

18 the claim has been initially resolved under the

19 alternative dispute resolution process estab20 lished by the Attorney General under such sub21 paragraph.

22 (b) INITIAL RESOLUTION OF CLAIMS UNDER

23 ADR.—For purposes of subsection (a), an action is ‘‘ini24 tially resolved’’ under an alternative dispute resolution

25 system if—
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1 (1) the ADR reaches a decision on whether the

2 defendant is liable to the plaintiff for damages; and

3 (2) if the ADR determines that the defendant

4 is liable, the ADR reaches a decision on the amount

5 of damages assessed against the defendant.

6 (c) PROCEDURES FOR FILING ACTIONS.—

7 (1) NOTICE OF INTENT TO CONTEST DECI8 SION.—Not later than 60 days after a decision is is9 sued with respect to a medical malpractice liability

10 claim under an alternative dispute resolution system,

11 each party affected by the decision shall submit a

12 sealed statement to a court of competent jurisdiction

13 indicating whether or not the party intends to con14 test the decision.

15 (2) DEADLINE FOR FILING ACTION.—A medical

16 malpractice liability action may not be brought by a

17 party unless—

18 (A) the party has filed the notice of intent

19 required by paragraph (1); and

20 (B) the party files the action in a court of

21 competent jurisdiction not later than 90 days

22 after the decision resolving the medical mal23 practice liability claim that is the subject of the

24 action is issued under the applicable alternative

25 dispute resolution system.
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1 (3) COURT OF COMPETENT JURISDICTION.—

2 For purposes of this subsection, the term ‘‘court of

3 competent jurisdiction’’ means—

4 (A) with respect to actions filed in a State

5 court, the appropriate State trial court; and

6 (B) with respect to actions filed in a Fed7 eral court, the appropriate United States dis8 trict court.

9 (d) LEGAL EFFECT OF UNCONTESTED ADR DECI10 SION.—The decision reached under an alternative dispute

11 resolution system shall, for purposes of enforcement by a

12 court of competent jurisdiction, have the same status in

13 the court as the verdict of a medical malpractice liability

14 action adjudicated in a Federal or State trial court. The

15 previous sentence shall not apply to a decision that is con16 tested by a party affected by the decision pursuant to sub17 section (c)(1).

18 SEC. 312. CALCULATION AND PAYMENT OF DAMAGES.

19 (a) LIMITATION ON NONECONOMIC DAMAGES.—

20 (1) IN GENERAL.—Except as provided in para21 graph (2), the total amount of damages that may be

22 awarded to an individual and the family members of

23 such individual for noneconomic losses resulting

24 from an injury which is the subject of a health care

25 malpractice claim or a health care product liability
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1 claim may not exceed $250,000, regardless of the

2 number of defendants against whom the claim is

3 brought, the number of claims brought with respect

4 to the injury, or the number of actions brought with

5 respect to the injury.

6 (2) JURY TRIALS.—

7 (A) REDUCTION IN AWARDS.—Any jury

8 trial with respect to involving a medical mal9 practice liability claim, the jury shall not be in10 formed of the limitation established under para11 graph (1). If the jury awards an amount for

12 noneconomic damages that exceeds $250,000,

13 the court shall reduce the award to $250,000

14 unless the court finds that special cir15 cumstances (such as egregious injury) would

16 make such reduction unjust.

17 (B) DISCRETION OF COURT.—In any case

18 in which the court finds a reduction under sub19 paragraph (A) would be unjust, the court

20 may—

21 (i) decline to reduce such award; or

22 (ii) reduce such award by a lesser

23 amount than provided for under subpara24 graph (A).
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1 (b) MANDATORY OFFSETS FOR DAMAGES PAID BY

2 A COLLATERAL SOURCE.—

3 (1) IN GENERAL.—With respect to a health

4 care malpractice claim or action, the total amount of

5 damages received by an individual under such action

6 shall be reduced, in accordance with paragraph (2),

7 by any other payment that has been, or will be,

8 made to an individual to compensate such individual

9 for the injury that was the subject of such action.

10 (2) AMOUNT OF REDUCTION.—The amount by

11 which an award of damages to an individual for an

12 injury shall be reduced under paragraph (1) shall

13 be—

14 (A) the total amount of any payments

15 (other than such award) that have been made

16 or that will be made to such individual to pay

17 costs of or compensate such individual for the

18 injury that was the subject of the action; minus

19 (B) the amount paid by such individual (or

20 by the spouse, parent, or legal guardian of such

21 individual) to secure the payments described in

22 subparagraph (A).

23 (c) TREATMENT OF PUNITIVE DAMAGES.—

24 (1) BASIS FOR RECOVERY.—Punitive or exem25 plary damages shall not be awarded in a medical
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1 malpractice liability action unless the claimant es2 tablishes by clear and convincing evidence that the

3 injury suffered was the direct result of conduct

4 manifesting a malicious, wanton, willful, or exces5 sively reckless disregard of the safety of others.

6 (2) NO AWARD AGAINST MANUFACTURER OF

7 MEDICAL PRODUCT.—In the case of a medical mal8 practice liability action in which the plaintiff alleges

9 a claim against the manufacturer of a medical prod10 uct, no punitive or exemplary damages may be

11 awarded against such manufacturer.

12 (3) PAYMENTS TO STATE FOR MEDICAL QUAL13 ITY ASSURANCE ACTIVITIES.—

14 (A) IN GENERAL.—Any punitive or exem15 plary damages awarded in a medical mal16 practice liability action shall be paid to the

17 State in which the action is brought or, in a

18 case brought in Federal court, to the State in

19 which the health care services that caused the

20 injury that is the subject of the action were

21 provided.

22 (B) ACTIVITIES DESCRIBED.—A State

23 shall use amounts paid pursuant to subpara24 graph (A) to carry out activities to assure the

25 safety and quality of health care services pro-
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1 vided in the State, including (but not limited

2 to)—

3 (i) licensing or certifying health care

4 professionals and health care providers in

5 the State;

6 (ii) operating alternative dispute reso7 lution systems;

8 (iii) carrying out public education pro9 grams relating to medical malpractice and

10 the availability of alternative dispute reso11 lution systems in the State; and

12 (iv) carrying out programs to reduce

13 malpractice-related costs for retired provid14 ers or other providers volunteering to pro15 vide services in medically underserved

16 areas.

17 (C) MAINTENANCE OF EFFORT.—A State

18 shall use any amounts paid pursuant to sub19 paragraph (A) to supplement and not to replace

20 amounts expended by the State for the activi21 ties described in subparagraph (B).

22 (d) PERIODIC PAYMENTS FOR FUTURE LOSSES.—

23 (1) GENERAL RULE.—In any medical mal24 practice liability action in which the damages award25 ed for future economic loss exceeds $100,000, a de-
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1 fendant may not be required to pay such damages

2 in a single, lump-sum payment, but shall be per3 mitted to make such payments periodically based on

4 when the damages are found likely to occur, as such

5 payments are determined by the court.

6 (2) WAIVER.—A court may waive the applica7 tion of paragraph (1) with respect to a defendant if

8 the court determines that it is not in the best inter9 ests of the plaintiff to receive payments for damages

10 on such a periodic basis.

11 SEC. 313. TREATMENT OF ATTORNEY’S FEES AND OTHER

12 COSTS.

13 (a) LIMITATION ON AMOUNT OF CONTINGENCY

14 FEES.—

15 (1) IN GENERAL.—An attorney who represents,

16 on a contingency fee basis, a claimant in a medical

17 malpractice liability claim may not charge, demand,

18 receive, or collect for services rendered in connection

19 with such claim in excess of the following amount re20 covered by judgment or settlement under such claim:

21 (A) 25 percent of the first $150,000 (or

22 portion thereof) recovered, plus

23 (B) 10 percent of any amount in excess of

24 $150,000 recovered.
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1 (2) CALCULATION OF PERIODIC PAYMENTS.—In

2 the event that a judgment or settlement includes

3 periodic or future payments of damages, the amount

4 recovered for purposes of computing the limitation

5 on the contingency fee under paragraph (1) shall be

6 based on the cost of the annuity or trust established

7 to make the payments. In any case in which an an8 nuity or trust is not established to make such pay9 ments, such amount shall be based on the present

10 value of the payments.

11 (b) REQUIRING PARTY CONTESTING ADR RULING

12 TO PAY ATTORNEY’S FEES AND OTHER COSTS.—

13 (1) IN GENERAL.—The court in a medical mal14 practice liability action shall require the party that

15 (pursuant to section 311(c)(1)) contested the ruling

16 of the alternative dispute resolution system with re17 spect to the medical malpractice liability claim that

18 is the subject of the action to pay to the opposing

19 party the costs incurred by the opposing party under

20 the action, including attorney’s fees, fees paid to ex21 pert witnesses, and other litigation expenses (but not

22 including court costs, filing fees, or other expenses

23 paid directly by the party to the court, or any fees

24 or costs associated with the resolution of the claim
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1 under the alternative dispute resolution system), but

2 only if—

3 (A) in the case of an action in which the

4 party that contested the ruling is the claimant,

5 the amount of damages awarded to the party

6 under the action does not exceed the amount of

7 damages awarded to the party under the ADR

8 system by at least 10 percent; and

9 (B) in the case of an action in which the

10 party that contested the ruling is the defendant,

11 the amount of damages assessed against the

12 party under the action is not at least 10 per13 cent less than the amount of damages assessed

14 under the ADR system.

15 (2) EXCEPTIONS.—Paragraph (1) shall not

16 apply if—

17 (A) the party contesting the ruling made

18 under the previous alternative dispute resolu19 tion system shows that—

20 (i) the ruling was procured by corrup21 tion, fraud, or undue means;

22 (ii) there was partiality or corruption

23 under the system;
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1 (iii) there was other misconduct under

2 the system that materially prejudiced the

3 party’s rights; or

4 (iv) the ruling was based on an error

5 of law;

6 (B) the party contesting the ruling made

7 under the alternative dispute resolution system

8 presents new evidence before the trier of fact

9 that was not available for presentation under

10 the ADR system;

11 (C) the medical malpractice liability action

12 raised a novel issue of law; or

13 (D) the court finds that the application of

14 such paragraph to a party would constitute an

15 undue hardship, and issues an order waiving or

16 modifying the application of such paragraph

17 that specifies the grounds for the court’s deci18 sion.

19 (3) REQUIREMENT FOR PERFORMANCE

20 BOND.—The court in a medical malpractice liability

21 action shall require the party that (pursuant to sec22 tion 311(c)(1)) contested the ruling of the alter23 native dispute resolution system with respect to the

24 medical malpractice liability claim that is the subject

25 of the action to post a performance bond (in such
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1 amount and consisting of such funds and assets as

2 the court determines to be appropriate), except that

3 the court may waive the application of such require4 ment to a party if the court determines that the

5 posting of such a bond is not necessary to ensure

6 that the party shall meet the requirements of this

7 subsection to pay the opposing party the costs in8 curred by the opposing party under the action.

9 (4) LIMIT ON ATTORNEY’S FEES PAID.—Attor10 neys’ fees that are required to be paid under para11 graph (1) by the contesting party shall not exceed

12 the amount of the attorneys’ fees incurred by the

13 contesting party in the action. If the attorneys’ fees

14 of the contesting party are based on a contingency

15 fee agreement, the amount of attorneys’ fees for

16 purposes of the preceding sentence shall not exceed

17 the reasonable value of those services.

18 (5) RECORDS.—In order to receive attorneys’

19 fees under paragraph (1), counsel of record in the

20 medical malpractice liability action involved shall

21 maintain accurate, complete records of hours worked

22 on the action, regardless of the fee arrangement

23 with the client involved.

24 (c) FRIVOLOUS ACTIONS.—
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1 (1) BY ATTORNEY.—With respect to a health

2 care malpractice claim or action, if the court or the

3 adjudicating body determines that the claim or ac4 tion, or any part thereof, was pursued by an attor5 ney where the attorney does not have reasonable

6 grounds to believe that the action was well grounded

7 in fact and was warranted by existing law, the court

8 shall impose an appropriate sanction, including the

9 reasonable costs and attorneys fees attributable to

10 the frivolous claims.

11 (2) BY CLAIMANT.—Sanctions under paragraph

12 (1) may apply against a claimant if the court deter13 mines that the frivolous nature of the action was a

14 result of the misrepresentation of facts by the claim15 ant to the attorney.

16 (d) CONTINGENCY FEE DEFINED.—As used in this

17 section, the term ‘‘contingency fee’’ means any fee for pro18 fessional legal services which is, in whole or in part, con19 tingent upon the recovery of any amount of damages,

20 whether through judgment or settlement.

21 SEC. 314. JOINT AND SEVERAL LIABILITY.

22 (a) IN GENERAL.—Except as provided in Section

23 313(b), a defendant may be held severally but not jointly

24 liable in a medical malpractice action. A person found lia25 ble for damages in any such action may be found liable,
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1 if at all, only for those damages directly attributable to

2 the person’s proportionate share of fault or responsibility

3 for the injury, and may not be found liable for damages

4 attributable to the proportionate share of fault or respon5 sibility of any other person (without regard to whether

6 that person is a party to the action) for the injury, includ7 ing any person bringing the action.

8 (b) DETERMINATION OF PROPORTION OF RESPON9 SIBILITY.—For purposes of this subsection, the trier of

10 fact shall determine the proportion of responsibility of

11 each party for the claimant’s harm.

12 SEC. 315. STATUTE OF LIMITATIONS.

13 (a) IN GENERAL.—Except as provided in paragraph

14 (2), no health care malpractice claim or action may be ini15 tiated after the expiration of the 2-year period that begins

16 on the date on which the alleged injury and its cause

17 should reasonably have been discovered, but in no event

18 later than 6 years after the date of the alleged occurrence

19 of the injury.

20 (2) EXCEPTION FOR MINORS.—In the case of an al21 leged injury suffered by a minor who has not attained 6

22 years of age, no health care malpractice claim or action

23 may be initiated after the expiration of the 2-year period

24 that begins on the date on which the alleged injury and

25 its cause should reasonably have been discovered, but in
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1 no event later than 6 years after the date of the alleged

2 occurrence of the injury and its cause or the date on which

3 the minor attains 12 years of age, whichever is later.

4 SEC. 316. PRACTICE GUIDELINES.

5 (a) REBUTTABLE PRESUMPTION.—

6 (1) DEVELOPMENT.—Each State shall develop,

7 for certification by the Secretary, a set of specialty

8 clinical practice guidelines, based on recommended

9 guidelines developed by the Agency for Health Care

10 Policy and Research.

11 (2) PROVISION OF HEALTH CARE UNDER

12 GUIDELINES.—Notwithstanding any other provision

13 of law, in any claim or action brought in a Federal

14 or State court or other forum arising from the provi15 sion of a health care service to an individual, if the

16 service was provided to the individual in accordance

17 with the guidelines developed by the State (that cer18 tified or regulates the health plan involved in the ac19 tion) and certified by the Secretary under paragraph

20 (1), the guidelines—

21 (A) may be introduced by a provider who

22 is a party to the claim or action;

23 (B) if introduced, shall establish a rebutta24 ble presumption that the service prescribed by
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1 the guidelines is the appropriate standard of

2 medical care; and

3 (C) if used to establish a rebuttable pre4 sumption, may only be overcome by the presen5 tation of clear and convincing evidence on be6 half of the party against whom the presumption

7 operates.

8 (b) ABSOLUTE DEFENSE.—With respect to new or

9 experimental treatments that are part of approved re10 search trials (as defined in subsection (c)), no health care

11 provider may be required to provide or held liable for fail12 ing to provide such treatment until that treatment is

13 found to be safe and efficacious by the Agency for Health

14 Care Policy and Research.

15 (c) DEFINITIONS.—As used in this section—

16 (1) APPROVED RESEARCH TRIALS.—The term

17 ‘‘approved research trial’’ means a trial—

18 (A) conducted for the primary purpose of

19 determining the safety, effectiveness, efficacy,

20 or health outcomes of a treatment, compared

21 with the best available alternative treatment;

22 and

23 (B) approved by the Secretary.

24 A trial is deemed to be approved under this subparagraph

25 if it is approved by the National Institutes of Health, the
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1 Food and Drug Administration (through an investiga2 tional new drug exemption), the Department of Defense,

3 the Department of Veterans Affairs, or by a qualified non4 governmental research entity (as identified in guidelines

5 issued by one or more of the National Institutes of

6 Health).

7 (2) NEW OR EXPERIMENTAL TREATMENTS.—

8 The term ‘‘new or experimental treatments’’ means

9 a treatment for which there is not sufficient evidence

10 to determine the health outcome of the treatment

11 compared with the best available alternative treat12 ment (or with no treatment if there is no alternative

13 treatment).

14 SEC. 317. UNIFORM STANDARD FOR DETERMINING NEG15 LIGENCE.

16 A defendant in a medical malpractice liability action

17 may not be found to have acted negligently unless the de18 fendant’s conduct at the time of providing the health care

19 services that are the subject of the action was not reason20 able.

21 SEC. 318. SPECIAL PROVISION FOR CERTAIN OBSTETRIC

22 SERVICES.

23 (a) IMPOSITION OF HIGHER STANDARD OF PROOF.—

24 In the case of a medical malpractice liability claim relating

25 to services provided during labor or the delivery of a baby,
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1 if the health care professional against whom the claim is

2 brought did not previously treat the individual alleged to

3 have been injured for the pregnancy, the trier of fact may

4 not find that the defendant committed malpractice and

5 may not assess damages against the health care profes6 sional unless the malpractice is proven by clear and con7 vincing evidence.

8 (b) APPLICABILITY TO GROUP PRACTICES OR

9 AGREEMENTS AMONG PROVIDERS.—For purposes of sub10 section (a), a health care professional shall be considered

11 to have previously treated an individual for a pregnancy

12 if the professional is a member of a group practice whose

13 members previously treated the individual for the preg14 nancy or is providing services to the individual during

15 labor or the delivery of a baby pursuant to an agreement

16 with another health care professional.

17 (c) EFFECTIVE DATE.—This section shall apply with

18 respect to claims accruing or actions brought on or after

19 the expiration of the 2-year period that begins on the date

20 of the enactment of this Act.
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1 Subtitle C—Requirements for State

2 Alternative Dispute Resolution

3 Systems (ADR)

4 SEC. 331. BASIC REQUIREMENTS.

5 (a) IN GENERAL.—A State’s alternative dispute reso6 lution system meets the requirements of this section if the

7 system—

8 (1) applies to all medical malpractice liability

9 claims under the jurisdiction of the courts of that

10 State;

11 (2) requires that a written opinion resolving the

12 dispute be issued not later than 6 months after the

13 date by which each party against whom the claim is

14 filed has received notice of the claim (other than in

15 exceptional cases for which a longer period is re16 quired for the issuance of such an opinion), and that

17 the opinion contains—

18 (A) findings of fact relating to the dispute,

19 and

20 (B) a description of the costs incurred in

21 resolving the dispute under the system (includ22 ing any fees paid to the individuals hearing and

23 resolving the claim), together with an appro24 priate assessment of the costs against any of

25 the parties;
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1 (3) requires individuals who hear and resolve

2 claims under the system to meet such qualifications

3 as the State may require (in accordance with regula4 tions of the Secretary);

5 (4) is approved by the State or by local govern6 ments in the State;

7 (5) with respect to a State system that consists

8 of multiple dispute resolution procedures—

9 (A) permits the parties to a dispute to se10 lect the procedure to be used for the resolution

11 of the dispute under the system; and

12 (B) if the parties do not agree on the pro13 cedure to be used for the resolution of the dis14 pute, assigns a particular procedure to the par15 ties;

16 (6) provides for the transmittal to the State

17 agency responsible for monitoring or disciplining

18 health care professionals and health care providers

19 of any findings made under the system that such a

20 professional or provider committed malpractice, un21 less, during the 90-day period beginning on the date

22 the system resolves the claim against the profes23 sional or provider, the professional or provider

24 brings an action contesting the decision made under

25 the system; and
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1 (7) provides for the regular transmittal to the

2 Administrator for Health Care Policy and Research

3 of information on disputes resolved under the sys4 tem, in a manner that assures that the identity of

5 the parties to a dispute shall not be revealed.

6 (b) APPLICATION OF MALPRACTICE LIABILITY

7 STANDARDS TO ALTERNATIVE DISPUTE RESOLUTION.—

8 The provisions of subtitle B shall apply with respect to

9 claims brought under a State alternative dispute resolu10 tion system or the alternative Federal system in the same

11 manner as such provisions apply with respect to medical

12 malpractice liability actions brought in the State.

13 SEC. 332. CERTIFICATION OF STATE SYSTEMS; APPLICABIL14 ITY OF ALTERNATIVE FEDERAL SYSTEM.

15 (a) CERTIFICATION.—

16 (1) IN GENERAL.—Not later than October 1 of

17 each year (beginning with 1994), the Secretary, in

18 consultation with the Attorney General, shall deter19 mine whether a State’s alternative dispute resolution

20 system meets the requirements of this subtitle for

21 the following calendar year.

22 (2) BASIS FOR CERTIFICATION.—The Secretary

23 shall certify a State’s alternative dispute resolution

24 system under this subsection for a calendar year if
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1 the Secretary determines under paragraph (1) that

2 the system meets the requirements of section 331.

3 (b) APPLICABILITY OF ALTERNATIVE FEDERAL SYS4 TEM.—

5 (1) ESTABLISHMENT AND APPLICABILITY.—

6 Not later than October 1, 1994, the Secretary, in

7 consultation with the Attorney General, shall estab8 lish by rule an alternative Federal ADR system for

9 the resolution of medical malpractice liability claims

10 during a calendar year in States that do not have

11 in effect an alternative dispute resolution system

12 certified under subsection (a) for the year.

13 (2) REQUIREMENTS FOR SYSTEM.—Under the

14 alternative Federal ADR system established under

15 paragraph (1)—

16 (A) paragraphs (1), (2), (6), and (7) of

17 section 331(a) shall apply to claims brought

18 under the system;

19 (B) if the system provides for the resolu20 tion of claims through arbitration, the claims

21 brought under the system shall be heard and

22 resolved by arbitrators appointed by the Sec23 retary in consultation with the Attorney Gen24 eral; and
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1 (C) with respect to a State in which the

2 system is in effect, the Secretary may (at the

3 State’s request) modify the system to take into

4 account the existence of dispute resolution pro5 cedures in the State that affect the resolution

6 of medical malpractice liability claims.

7 (3) TREATMENT OF STATES WITH ALTER8 NATIVE SYSTEM IN EFFECT.—If the alternative Fed9 eral ADR system established under this subsection is

10 applied with respect to a State for a calendar year—

11 (A) the State shall reimburse the United

12 States (at such time and in such manner as the

13 Secretary may require) for the costs incurred

14 by the United States during the year as a result

15 of the application of the system with respect to

16 the State; and

17 (B) notwithstanding any other provision of

18 law, no funds may be paid to the State (or to

19 any unit of local government in the State) or to

20 any entity in the State under the Public Health

21 Service Act.
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1 SEC. 333. REPORTS ON IMPLEMENTATION AND EFFECTIVE2 NESS OF ALTERNATIVE DISPUTE RESOLU3 TION SYSTEMS.

4 (a) IN GENERAL.—Not later than 5 years after the

5 date of the enactment of this Act, the Secretary shall pre6 pare and submit to the Congress a report describing and

7 evaluating State alternative dispute resolution systems op8 erated pursuant to this subtitle and the alternative Fed9 eral system established under section 332(b).

10 (b) CONTENTS OF REPORT.—The Secretary shall in11 clude in the report prepared and submitted under sub12 section (a)—

13 (1) information on—

14 (A) the effect of the alternative dispute

15 resolution systems on the cost of health care

16 within each State;

17 (B) the impact of such systems on the ac18 cess of individuals to health care within the

19 State; and

20 (C) the effect of such systems on the qual21 ity of health care provided within the State; and

22 (2) to the extent that such report does not pro23 vide information on nofault systems operated by

24 States as alternative dispute resolution systems pur25 suant to this subtitle, an analysis of the feasibility

26 and desirability of establishing a system under which
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1 medical malpractice liability claims shall be resolved

2 on a no-fault basis.

3 TITLE IV—ANTITRUST

4 PROVISIONS

5 SEC. 401. EXEMPTION FROM ANTITRUST LAWS FOR CER6 TAIN COMPETITIVE AND COLLABORATIVE

7 ACTIVITIES.

8 (a) EXEMPTION DESCRIBED.—An activity relating to

9 the provision of health care services shall be exempt from

10 the antitrust laws if—

11 (1) the activity is within one of the categories

12 of safe harbors described in section 402;

13 (2) the activity is within an additional safe har14 bor designated by the Attorney General under sec15 tion 403; or

16 (3) the activity is specified in and in compliance

17 with the terms of a certificate of review issued by

18 the Attorney General under section 404 and the ac19 tivity occurs—

20 (A) while the certificate is in effect; or

21 (B) in the case of a certificate issued dur22 ing the 2-year period beginning on the date of

23 the enactment of this Act, at any time on or

24 after the first day of the 2-year period that

25 ends on the date the certificate takes effect.
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1 (b) AWARD OF ATTORNEY’S FEES AND COSTS OF

2 SUIT.—

3 (1) IN GENERAL.—If any person brings an ac4 tion alleging a claim under the antitrust laws and

5 the activity on which the claim is based is found by

6 the court to be exempt from such laws under sub7 section (a), the court shall, at the conclusion of the

8 action—

9 (A) award to a substantially prevailing

10 claimant the cost of suit attributable to such

11 claim, including a reasonable attorney’s fee; or

12 (B) award to a substantially prevailing

13 party defending against such claim the cost of

14 such suit attributable to such claim, including

15 reasonable attorney’s fee, if the claim, or the

16 claimant’s conduct during litigation of the

17 claim, was frivolous, unreasonable, without

18 foundation, or in bad faith.

19 (2) OFFSET IN CASES OF BAD FAITH.—The

20 court may reduce an award made pursuant to para21 graph (1) in whole or in part by an award in favor

22 of another party for any part of the cost of suit (in23 cluding a reasonable attorney’s fee) attributable to

24 conduct during the litigation by any prevailing party
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1 that the court finds to be frivolous, unreasonable,

2 without foundation, or in bad faith.

3 SEC. 402. SAFE HARBORS.

4 The following activities are safe harbors for purposes

5 of section 401(a)(1):

6 (1) COMBINATIONS WITH MARKET SHARE

7 BELOW THRESHOLD.—Activities relating to health

8 care services of any combination of health care pro9 viders if the number of each type or specialty of pro10 vider in question does not exceed 20 percent of the

11 total number of such type or specialty of provider in

12 the relevant market area.

13 (2) ACTIVITIES OF MEDICAL SELF-REGULATORY

14 ENTITIES.—

15 (A) IN GENERAL.—Subject to subpara16 graph (B), any activity of a medical self-regu17 latory entity relating to standard setting or

18 standard enforcement activities that are de19 signed to promote the quality of health care

20 provided to patients.

21 (B) EXCEPTION.—No activity of a medical

22 self-regulatory entity may be deemed to fall

23 under the safe harbor established under this

24 paragraph if the activity is conducted for pur25 poses of financial gain.
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1 (3) PARTICIPATION IN SURVEYS.—The partici2 pation of a provider of health care services in a writ3 ten survey of the prices of services, reimbursement

4 levels, or the compensation and benefits of employ5 ees and personnel, but only if—

6 (A) the survey is conducted by a third

7 party, such as a purchaser of health care serv8 ices, governmental entity, institution of higher

9 education, or trade association;

10 (B) the information provided by partici11 pants in the survey is based on prices charged,

12 reimbursements received, or compensation and

13 benefits paid prior to the third month preceding

14 the month in which the information is provided;

15 and

16 (C) the results of the survey are dissemi17 nated, the results are aggregated in a manner

18 that ensures that no recipient of the results

19 may identify the prices charged, reimbursement

20 received, or compensation and benefits paid by

21 any particular provider.

22 (4) JOINT VENTURES FOR HIGH TECHNOLOGY

23 AND COSTLY EQUIPMENT AND SERVICES.—Any ac24 tivity of a health care cooperative venture relating to

25 the purchase, operation, or marketing of high tech-
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1 nology or other expensive medical equipment, or the

2 provision of high cost or complex services, but only

3 if the number of participants in the venture does not

4 exceed the lowest number needed to support the ven5 ture. Other providers may be included in the ven6 ture, but only if such other providers could not pur7 chase, operate, or market such equipment or provide

8 a competing service either alone or through the for9 mation of a competing venture.

10 (5) HOSPITAL MERGERS.—Activities relating to

11 a merger of 2 hospitals if, during the 3-year period

12 preceding the merger, one of the hospitals had an

13 average of 200 or fewer operational beds and an av14 erage daily inpatient census of less than 60 percent

15 of such beds.

16 (6) JOINT PURCHASING ARRANGEMENTS.—Any

17 joint purchasing arrangement among health care

18 providers if—

19 (A) the purchases under the arrangement

20 represent less than 35 percent of the total sales

21 of the product or service purchased in the rel22 evant market; and

23 (B) the cost of the products and services

24 purchased jointly accounts for less than 20 per25 cent of the total revenues from all products or
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1 services sold by each participant in the joint

2 purchasing arrangement.

3 (7) NEGOTIATIONS.—Activities consisting of

4 good faith negotiations to carry out any activity—

5 (A) described in this section;

6 (B) within an additional safe harbor des7 ignated by the Attorney General under section

8 403;

9 (C) that is the subject of an application for

10 a certificate of review under section 404; or

11 (D) that is deemed a submission of a noti12 fication under section 405(a)(2)(B), without re13 gard to whether such an activity is carried out.

14 SEC. 403. DESIGNATION OF ADDITIONAL SAFE HARBORS.

15 (a) IN GENERAL.—

16 (1) SOLICITATION OF PROPOSALS.—Not later

17 than 30 days after the date of the enactment of this

18 Act, the Attorney General shall publish a notice in

19 the Federal Register soliciting proposals for addi20 tional safe harbors.

21 (2) REVIEW AND REPORT ON PROPOSED SAFE

22 HARBORS.—Not later than 180 days after the date

23 of the enactment of this Act, the Attorney General

24 (in consultation with the Secretary and the Chair

25 shall—
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1 (A) review the proposed safe harbors sub2 mitted under paragraph (1); and

3 (B) submit a report to Congress describing

4 the proposals to be included in the publication

5 of additional safe harbors described in para6 graph (3) and the proposals that are not to be

7 so included, together with explanations there8 fore.

9 (3) PUBLICATION OF ADDITIONAL SAFE HAR10 BORS.—Not later than 180 days after the date of

11 the enactment of this Act, the Attorney General (in

12 consultation with the Secretary and the Chair shall

13 publish in the Federal Register proposed additional

14 safe harbors for purposes of section 401(a)(2) for

15 providers of health care services. Not later than 180

16 days after publishing such proposed safe harbors in

17 the Federal Register, the Attorney General shall

18 issue final rules establishing such safe harbors.

19 (b) CRITERIA FOR SAFE HARBORS.—In establishing

20 safe harbors under subsection (a), the Attorney General

21 shall take into account the following:

22 (1) The extent to which a competitive or col23 laborative activity will accomplish any of the follow24 ing:
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1 (A) An increase in access to health care

2 services.

3 (B) The enhancement of the quality of

4 health care services.

5 (C) The establishment of cost efficiencies

6 that will be passed on to consumers, including

7 economies of scale and reduced transaction and

8 administrative costs.

9 (D) An increase in the ability of health

10 care facilities to provide services in medically

11 underserved areas or to medically underserved

12 populations.

13 (E) An improvement in the utilization of

14 health care resources or the reduction in the in15 efficient duplication of the use of such re16 sources.

17 (2) Whether the designation of an activity as a

18 safe harbor under subsection (a) will result in the

19 following outcomes:

20 (A) Health plans and other health care in21 surers, consumers of health care services, and

22 health care providers will be better able to ne23 gotiate payment and service arrangements

24 which will reduce costs to consumers.
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1 (B) Taking into consideration the charac2 teristics of the particular purchasers and pro3 viders involved, competition will not be unduly

4 restricted.

5 (C) Equally efficient and less restrictive al6 ternatives do not exist to meet the criteria de7 scribed in paragraph (1).

8 (D) The activity will not unreasonably

9 foreclose competition by denying competitors a

10 necessary element of competition.

11 SEC. 404. CERTIFICATES OF REVIEW.

12 (a) ESTABLISHMENT OF PROGRAM.—In consultation

13 with the Secretary and the Chair, the Attorney General

14 shall (not later than 180 days after the date of the enact15 ment of this Act) issue certificates of review in accordance

16 with this section for providers of health care services and

17 advise and assist any person with respect to applying for

18 such a certificate of review.

19 (b) PROCEDURES FOR APPLICATION FOR CERTIFI20 CATE.—

21 (1) FORM; CONTENT.—To apply for a certifi22 cate of review, a person shall submit to the Attorney

23 General a written application which—

24 (A) specifies the activities relating to the

25 provision of health care services which satisfy
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1 the criteria described in section 403(b) and

2 which will be included in the certificate; and

3 (B) is in a form and contains any informa4 tion, including information pertaining to the

5 overall market in which the applicant operates,

6 required by rule or regulation promulgated

7 under section 407.

8 (2) PUBLICATION OF NOTICE IN FEDERAL REG9 ISTER.—Not later than 10 days after an application

10 submitted under paragraph (1) is received by the

11 Attorney General, the Attorney General shall publish

12 in the Federal Register a notice that announces that

13 an application for a certificate of review has been

14 submitted, identifies each person submitting the ap15 plication, and describes the conduct for which the

16 application is submitted.

17 (3) ESTABLISHMENT OF PROCEDURES FOR IS18 SUANCE OF CERTIFICATE.—In consultation with the

19 Chair and the Secretary, the Attorney General shall

20 establish procedures to be used in applying for and

21 in determining whether to approve an application for

22 a certificate of review under this title. Under such

23 procedures the Attorney General shall approve an

24 application if the Attorney General determines that

25 the activities to be covered under the certificate will
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1 satisfy the criteria described in section 403(b) for

2 additional safe harbors designated under such sec3 tion and that the benefits of the issuance of the cer4 tificate will outweigh any disadvantages that may re5 sult from reduced competition.

6 (4) TIMING FOR DECISION ON APPLICATION.—

7 (A) IN GENERAL.—Not later than 90 days

8 after the Attorney General receives an applica9 tion for a certificate of review, the Attorney

10 General shall determine whether the applicant’s

11 health care market activities are in accordance

12 with the procedures described in paragraph (3).

13 If the Attorney General, with the concurrence

14 of the Secretary, determines that such proce15 dures are met, the Attorney General shall issue

16 to the applicant a certificate of review. The cer17 tificate of review shall specify—

18 (i) the health care market activities to

19 which the certificate applies;

20 (ii) the person to whom the certificate

21 of review is issued; and

22 (iii) any terms and conditions the At23 torney General or the Secretary deems nec24 essary to assure compliance with the appli-
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1 cable procedures described in paragraph

2 (3).

3 (B) APPLICATIONS DEEMED APPROVED.—

4 If the Attorney General does not reject an ap5 plication before the expiration of the 90-day pe6 riod beginning on the date the Attorney General

7 receives the application, the Attorney General

8 shall be deemed to have approved the applica9 tion and to have issued a certificate of review

10 relating to the applicant’s health care market

11 activities covered under the application.

12 (5) EXPEDITED ACTION.—If the applicant indi13 cates a special need for prompt disposition, the At14 torney General and the Secretary may expedite ac15 tion on the application, except that no certificate of

16 review may be issued within 30 days of publication

17 of notice in the Federal Register under subsection

18 (b)(2).

19 (6) ACTIONS UPON DENIAL.—

20 (A) NOTIFICATION.—If the Attorney Gen21 eral denies in whole or in part an application

22 for a certificate, the Attorney General shall no23 tify the applicant of the Attorney General’s de24 termination and the reasons for it.
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1 (B) REQUEST FOR RECONSIDERATION.—

2 An applicant may, within 30 days of receipt of

3 notification that the application has been denied

4 in whole or in part, request the Attorney Gen5 eral to reconsider the determination. The Attor6 ney General, with the concurrence of the Sec7 retary, shall notify the applicant of the deter8 mination upon reconsideration within 30 days

9 of receipt of the request.

10 (C) RETURN OF DOCUMENTS.—If the At11 torney General denies an application for the is12 suance of a certificate of review and thereafter

13 receives from the applicant a request for the re14 turn of documents submitted by the applicant

15 in connection with the application for the cer16 tificate, the Attorney General and the Secretary

17 shall return to the applicant, not later than 30

18 days after receipt of the request, the documents

19 and all copies of the documents available to the

20 Attorney General and the Secretary, except to

21 the extent that the information has been made

22 public under an exception to the rule against

23 public disclosure described in subsection

24 (g)(2)(B).
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1 (7) FRAUDULENT PROCUREMENT.—A certifi2 cate of review shall be void ab initio with respect to

3 any health care market activities for which the cer4 tificate was procured by fraud.

5 (c) AMENDMENT AND REVOCATION OF CERTIFI6 CATES.—

7 (1) NOTIFICATION OF CHANGES.—Any appli8 cant who receives a certificate of review—

9 (A) shall promptly report to the Attorney

10 General any change relevant to the matters

11 specified in the certificate; and

12 (B) may submit to the Attorney General

13 an application to amend the certificate to re14 flect the effect of the change on the conduct

15 specified in the certificate.

16 (2) AMENDMENT TO CERTIFICATE.—An appli17 cation for an amendment to a certificate of review

18 shall be treated as an application for the issuance of

19 a certificate. The effective date of an amendment

20 shall be the date on which the application for the

21 amendment is submitted to the Attorney General.

22 (3) REVOCATION.—

23 (A) GROUNDS FOR REVOCATION.—In ac24 cordance with this paragraph, the Attorney

25 General may revoke in whole or in part a cer-
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1 tificate of review issued under this section. The

2 following shall be considered grounds for the

3 revocation of a certificate:

4 (i) After the expiration of the 2-year

5 period beginning on the date a person’s

6 certificate is issued, the activities of the

7 person have not substantially accomplished

8 the purposes for the issuance of the certifi9 cate.

10 (ii) The person has failed to comply

11 with any of the terms or conditions im12 posed under the certificate by the Attorney

13 General or the Secretary under subsection

14 (b)(4).

15 (iii) The activities covered under the

16 certificate no longer satisfy the criteria set

17 forth in section 403(b).

18 (B) REQUEST FOR COMPLIANCE INFORMA19 TION.—If the Attorney General or Secretary

20 has reason to believe that any of the grounds

21 for revocation of a certificate of review de22 scribed in subparagraph (A) may apply to a

23 person holding the certificate, the Attorney

24 General shall request such information from

25 such person as the Attorney General or the Sec-
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1 retary deems necessary to resolve the matter of

2 compliance. Failure to comply with such request

3 shall be grounds for revocation of the certificate

4 under this paragraph.

5 (C) PROCEDURES FOR REVOCATION.—If

6 the Attorney General or the Secretary deter7 mines that any of the grounds for revocation of

8 a certificate of review described in subpara9 graph (A) apply to a person holding the certifi10 cate, or that such person has failed to comply

11 with a request made under subparagraph (B),

12 the Attorney General shall give written notice of

13 the determination to such person. The notice

14 shall include a statement of the circumstances

15 underlying, and the reasons in support of, the

16 determination. In the 60-day period beginning

17 30 days after the notice is given, the Attorney

18 General shall revoke the certificate or modify it

19 as the Attorney General or the Secretary deems

20 necessary to cause the certificate to apply only

21 to activities that meet the procedures for the is22 suance of certificates described in subsection

23 (b)(2).

24 (D) INVESTIGATION AUTHORITY.—For

25 purposes of carrying out this paragraph, the
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1 Attorney General may conduct investigations in

2 the same manner as the Attorney General con3 ducts investigations under section 3 of the Anti4 trust Civil Process Act, except that no civil in5 vestigative demand may be issued to a person

6 to whom a certificate of review is issued if such

7 person is the target of such investigation.

8 (d) REVIEW OF DETERMINATIONS.—

9 (1) AVAILABILITY OF REVIEW FOR CERTAIN AC10 TIONS.—If the Attorney General denies, in whole or

11 in part, an application for a certificate of review or

12 for an amendment to a certificate, or revokes or

13 modifies a certificate pursuant to paragraph (3), the

14 applicant or certificate holder (as the case may be)

15 may, within 30 days of the denial or revocation,

16 bring an action in any appropriate district court of

17 the United States to set aside the determination on

18 the ground that such determination is erroneous

19 based on the preponderance of the evidence.

20 (2) NO OTHER REVIEW PERMITTED.—Except

21 as provided in paragraph (1), no action by the At22 torney General or the Secretary pursuant to this

23 title shall be subject to judicial review.

24 (3) EFFECT OF REJECTED APPLICATION.—If

25 the Attorney General denies, in whole or in part, an
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1 application for a certificate of review or for an

2 amendment to a certificate, or revokes or amends a

3 certificate, neither the negative determination nor

4 the statement of reasons therefore shall be admissi5 ble in evidence, in any administrative or judicial pro6 ceeding, concerning any claim under the antitrust

7 laws.

8 (e) PUBLICATION OF DECISIONS.—The Attorney

9 General shall publish a notice in the Federal Register on

10 a timely basis of each decision made with respect to an

11 application for a certificate of review under this section

12 or the amendment or revocation of such a certificate, in

13 a manner that protects the confidentiality of any propri14 etary information relating to the application.

15 (f) ANNUAL REPORTS.—Every person to whom a cer16 tificate of review is issued shall submit to the Attorney

17 General an annual report, in such form and at such time

18 as the Attorney General may require, that contains any

19 necessary updates to the information required under sub20 section (b) and a description of the activities of the holder

21 under the certificate during the preceding year.

22 (g) RESTRICTIONS ON DISCLOSURE OF INFORMA23 TION.—

24 (1) WAIVER OF DISCLOSURE REQUIREMENTS

25 UNDER ADMINISTRATIVE PROCEDURE ACT.—Infor-
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1 mation submitted by any person in connection with

2 the issuance, amendment, or revocation of a certifi3 cate of review shall be exempt from disclosure under

4 section 552 of title 5, United States Code.

5 (2) RESTRICTIONS ON DISCLOSURE OF COM6 MERCIAL OR FINANCIAL INFORMATION.—

7 (A) IN GENERAL.—Except as provided in

8 subparagraph (B), no officer or employee of the

9 United States shall disclose commercial or fi10 nancial information submitted in connection

11 with the issuance, amendment, or revocation of

12 a certificate of review if the information is priv13 ileged or confidential and if disclosure of the in14 formation would cause harm to the person who

15 submitted the information.

16 (B) EXCEPTIONS.—Subparagraph (A)

17 shall not apply with respect to information dis18 closed—

19 (i) upon a request made by the Con20 gress or any committee of the Congress;

21 (ii) in a judicial or administrative pro22 ceeding, subject to appropriate protective

23 orders;

24 (iii) with the consent of the person

25 who submitted the information;
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1 (iv) in the course of making a deter2 mination with respect to the issuance,

3 amendment, or revocation of a certificate

4 of review, if the Attorney General deems

5 disclosure of the information to be nec6 essary in connection with making the de7 termination;

8 (v) in accordance with any require9 ment imposed by a statute of the United

10 States; or

11 (vi) in accordance with any rule or

12 regulation promulgated to permit the dis13 closure of the information to an agency of

14 the United States or of a State on the con15 dition that the agency will disclose the in16 formation only under the circumstances

17 specified in clauses (i) through (v).

18 (3) PROHIBITION AGAINST USE OF INFORMA19 TION TO SUPPORT OR ANSWER CLAIMS UNDER ANTI20 TRUST LAWS.—Any information disclosed in an

21 application for a certificate of review under this sec22 tion shall only be admissible into evidence in a judi23 cial or administrative proceeding for the sole pur24 pose of establishing that a person is entitled to the

25 protections provided by such a certificate.
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1 SEC. 405. NOTIFICATIONS PROVIDING REDUCTION IN CER2 TAIN PENALTIES UNDER ANTITRUST LAW

3 FOR HEALTH CARE COOPERATIVE VEN4 TURES.

5 (a) NOTIFICATIONS DESCRIBED.—

6 (1) SUBMISSION OF NOTIFICATION BY VEN7 TURE.—Any party to a health care cooperative ven8 ture, acting on such venture’s behalf, may, not later

9 than 90 days after entering into a written agreement

10 to form such venture or not later than 90 days after

11 the date of the enactment of this Act, whichever is

12 later, file with the Attorney General a written notifi13 cation disclosing—

14 (A) the identities of the parties to such

15 venture;

16 (B) the nature and objectives of such ven17 ture; and

18 (C) such additional information as the At19 torney General may require by regulation.

20 (2) ACTIVITIES DEEMED SUBMISSION OF NOTI21 FICATION.—The following health care cooperative

22 ventures shall be deemed to have filed a written noti23 fication with respect to the venture under paragraph

24 (1):

25 (A) SUBMISSION OF APPLICATION FOR

26 CERTIFICATE OF REVIEW.—Any health care co-
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1 operative venture for which an application for a

2 certificate of review is filed with the Attorney

3 General under section 403.

4 (B) CERTAIN VENTURES.—Any health care

5 cooperative venture meeting the following re6 quirements:

7 (i) The venture consists of a network

8 of noninstitutional providers not greater

9 than—

10 (I) in the case of a nonexclusive

11 network in which the participating

12 members are permitted to create or

13 join other competing networks, 50

14 percent of the providers of health care

15 services in the relevant geographic

16 area and 50 percent of the members

17 of the provider specialty group in the

18 relevant market; or

19 (II) in the case of an exclusive

20 network in which the participating

21 members are not permitted to create

22 or join other competing networks, 35

23 percent of the providers of health care

24 services in the relevant geographic

25 area and 35 percent of the members
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1 of the provider specialty group in the

2 relevant market.

3 (ii) Each member of the venture as4 sumes substantial financial risk for the op5 eration of the venture through risk-sharing

6 arrangements, including (but not limited

7 to)—

8 (I) the acceptance of capitation

9 contracts;

10 (II) the acceptance of contracts

11 with fee withholding mechanisms re12 lating to the ability to meet estab13 lished goals for utilization review and

14 management; and

15 (III) the holding by members of

16 significant ownership or equity inter17 ests in the venture, where the capital

18 contributed by the members is used to

19 fund the operational costs of the ven20 ture such as administration, market21 ing, and computer-operated medical

22 information, if the venture develops

23 and operates comprehensive programs

24 for utilization management and qual25 ity assurance that include controls
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1 over the use of institutional, special2 ized, and ancillary medical services.

3 (3) SUBMISSION OF ADDITIONAL INFORMA4 TION.—

5 (A) REQUEST OF ATTORNEY GENERAL.—

6 At any time after receiving a notification filed

7 under paragraph (1), the Attorney General may

8 require the submission of additional information

9 or documentary material relevant to the pro10 posed health care cooperative venture.

11 (B) PARTIES TO VENTURE.—Any party to

12 a health care cooperative venture may submit

13 such additional information on the venture’s be14 half as may be appropriate to ensure that the

15 venture will receive the protections provided

16 under subsection (b).

17 (C) REQUIRED SUBMISSION OF INFORMA18 TION ON CHANGES TO VENTURE.—A health

19 care cooperative venture for which a notification

20 is in effect under this section shall submit infor21 mation on any change in the membership of the

22 venture not later than 90 days after such

23 change occurs.

24 (4) PUBLICATION OF NOTIFICATION.—
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1 (A) INFORMATION MADE PUBLICLY AVAIL2 ABLE.—Not later than 30 days after receiving

3 a notification with respect to a venture under

4 paragraph (1), the Attorney General shall pub5 lish in the Federal Register a notice with re6 spect to the venture that identifies the parties

7 to the venture and generally describes the pur8 pose and planned activity of the venture. Prior

9 to its publication, the contents of the notice

10 shall be made available to the parties to the

11 venture.

12 (B) RESTRICTION ON DISCLOSURE OF

13 OTHER INFORMATION.—All information and

14 documentary material submitted pursuant to

15 this section and all information obtained by the

16 Attorney General in the course of any investiga17 tion or case with respect to a potential violation

18 of the antitrust laws by the health care coopera19 tive venture (other than information and mate20 rial described in subparagraph (A)) shall be ex21 empt from disclosure under section 552 of title

22 5, United States Code, and shall not be made

23 publicly available by any agency of the United

24 States to which such section applies except in
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1 a judicial proceeding in which such information

2 and material is subject to any protective order.

3 (5) WITHDRAWAL OF NOTIFICATION.—Any per4 son who files a notification pursuant to this section

5 may withdraw such notification before a publication

6 by the Attorney General pursuant to paragraph (4).

7 Any person who is deemed to have filed a notifica8 tion under paragraph (2)(A) shall be deemed to have

9 withdrawn the notification if the certificate of review

10 in question is revoked or withdrawn under section

11 404.

12 (6) NO JUDICIAL REVIEW PERMITTED.—Any

13 action taken or not taken by the Attorney General

14 with respect to notifications filed pursuant to this

15 subsection shall not be subject to judicial review.

16 (b) PROTECTIONS FOR VENTURES SUBJECT TO NO17 TIFICATION.—

18 (1) IN GENERAL.—

19 (A) PROTECTIONS DESCRIBED.—The pro20 visions of paragraphs (2), (3), (4), and (5) shall

21 apply with respect to any action under the anti22 trust laws challenging conduct within the scope

23 of a notification which is in effect pursuant to

24 subsection (a)(1).
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1 (B) TIMING OF PROTECTIONS.—The pro2 tections described in this subsection shall apply

3 to the venture that is the subject of a notifica4 tion under subsection (a)(1) as of the earlier

5 of—

6 (i) the date of the publication in the

7 Federal Register of the notice published

8 with respect to the notification; or

9 (ii) if such notice is not published dur10 ing the period required under subsection

11 (a)(4), the expiration of the 30-day period

12 that begins on the date the Attorney Gen13 eral receives any necessary information re14 quired to be submitted under subsection

15 (a)(1) or any additional information re16 quired by the Attorney General under sub17 section (a)(3)(A).

18 (2) APPLICABILITY OF RULE OF REASON

19 STANDARD.—In any action under the antitrust laws,

20 the conduct of any person which is within the scope

21 of a notification filed under subsection (a) shall not

22 be deemed illegal per se, but shall be judged on the

23 basis of its reasonableness, taking into account all

24 relevant factors affecting competition, including, but
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1 not limited to, effects on competition in relevant

2 markets.

3 (3) LIMITATION ON RECOVERY TO ACTUAL

4 DAMAGES AND INTEREST.—Notwithstanding section

5 4 of the Clayton Act, any person who is entitled to

6 recovery under the antitrust laws for conduct that is

7 within the scope of a notification filed under sub8 section (a) shall recover the actual damages sus9 tained by such person and interest calculated at the

10 rate specified in section 1961 of title 28, United

11 States Code, for the period beginning on the earliest

12 date for which injury can be established and ending

13 on the date of judgment, unless the court finds that

14 the award of all or part of such interest is unjust

15 under the circumstances.

16 (4) AWARD OF ATTORNEY’S FEES AND COSTS

17 OF SUIT.—

18 (A) IN GENERAL.—In any action under the

19 antitrust laws brought against a health care co20 operative venture for conduct that is within the

21 scope of a notification filed under subsection

22 (a), the court shall, at the conclusion of the ac23 tion—

24 (i) award to a substantially prevailing

25 claimant the cost of suit attributable to
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1 such claim, including a reasonable attor2 ney’s fee, or

3 (ii) award to a substantially prevailing

4 party defending against such claim the

5 cost of such suit attributable to such claim,

6 including reasonable attorney’s fee, if the

7 claim, or the claimant’s conduct during

8 litigation of the claim, was frivolous, un9 reasonable, without foundation, or in bad

10 faith.

11 (B) OFFSET IN CASES OF BAD FAITH.—

12 The court may reduce an award made pursuant

13 to subparagraph (A) in whole or in part by an

14 award in favor of another party for any part of

15 the cost of suit (including a reasonable attor16 ney’s fee) attributable to conduct during the

17 litigation by any prevailing party that the court

18 finds to be frivolous, unreasonable, without

19 foundation, or in bad faith.

20 (5) RESTRICTIONS ON ADMISSIBILITY OF IN21 FORMATION.—

22 (A) IN GENERAL.—Any information dis23 closed in a notification submitted under sub24 section (a)(1) and the fact of the publication of

25 a notification by the Attorney General under
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1 subsection (a)(4) shall only be admissible into

2 evidence in a judicial or administrative proceed3 ing for the sole purpose of establishing that a

4 party to a health care cooperative venture is en5 titled to the protections described in this sub6 section.

7 (B) ACTIONS OF ATTORNEY GENERAL.—

8 No action taken by the Attorney General pursu9 ant to this section shall be admissible into evi10 dence in any judicial or administrative proceed11 ing for the purpose of supporting or answering

12 any claim under the antitrust laws.

13 SEC. 406. REVIEW AND REPORTS ON SAFE HARBORS AND

14 CERTIFICATES OF REVIEW.

15 (a) IN GENERAL.—The Attorney General (in con16 sultation with the Secretary and the Chair) shall periodi17 cally review the safe harbors described in section 402, the

18 additional safe harbors designated under section 403, and

19 the certificates of review issued under section 404, and—

20 (1) with respect to the safe harbors described in

21 section 402, submit such recommendations to Con22 gress as the Attorney General considers appropriate

23 for modifications of such safe harbors;

24 (2) with respect to the additional safe harbors

25 designated under section 403, issue proposed revi-
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1 sions to such activities and publish the revisions in

2 the Federal Register; and

3 (3) with respect to the certificates of review,

4 submit a report to Congress on the issuance of such

5 certificates, and shall include in the report a descrip6 tion of the effect of such certificates on increasing

7 access to high quality health care services at reduced

8 costs.

9 (b) RECOMMENDATIONS FOR LEGISLATION.—The

10 Attorney General shall include in the reports submitted

11 under subsection (a)(3) any recommendations of the At12 torney General for legislation to improve the program for

13 the issuance of certificates of review established under this

14 title.

15 SEC. 407. RULES, REGULATIONS, AND GUIDELINES.

16 (a) SAFE HARBORS, CERTIFICATES, AND NOTIFICA17 TIONS.—The Attorney General, with the concurrence of

18 the Secretary, shall promulgate such rules, regulations,

19 and guidelines as are necessary to carry out sections 402,

20 403, 404, and 405, including guidelines defining or relat21 ing to relevant geographic and product markets for health

22 care services and providers of health care services.

23 (b) GUIDANCE FOR PROVIDERS.—

24 (1) IN GENERAL.—To promote greater cer25 tainty regarding the application of the antitrust laws
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1 to activities in the health care market, the Attorney

2 General, in consultation with the Secretary and the

3 Chair, shall (not later than 1 year after the date of

4 the enactment of this Act), taking into account the

5 criteria used to designate additional safe harbors

6 under section 403 and grant certificates of review

7 under section 404, publish guidelines—

8 (A) to assist providers of health care serv9 ices in analyzing whether the activities of such

10 providers may be subject to a safe harbor under

11 section 402 or 403; and

12 (B) describing specific types of activities

13 which would meet the requirements for a cer14 tificate of review under section 404, and sum15 marizing the factual and legal bases on which

16 the activities would meet the requirements.

17 (2) PERIODIC UPDATE.—The Attorney General

18 shall periodically update the guidelines published

19 under paragraph (1) as the Attorney General consid20 ers appropriate.

21 (3) WAIVER OF ADMINISTRATIVE PROCEDURE

22 ACT.—Section 553 of title 5, United States Code,

23 shall not apply to the issuance of guidelines under

24 paragraph (1).
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1 SEC. 408. ESTABLISHMENT OF HHS OFFICE OF HEALTH

2 CARE COMPETITION POLICY.

3 (a) IN GENERAL.—There is established within the

4 Department of Health and Human Services an Office to

5 be known as the Office of Health Care Competition Policy

6 (hereafter in this section referred to as the ‘‘Office’’). The

7 Office shall be headed by a director, who shall be ap8 pointed by the Secretary.

9 (b) DUTIES.—The Office shall coordinate the respon10 sibilities of the Secretary under this Act and otherwise as11 sist the Secretary in developing policies relating to the

12 competitive and collaborative activities of providers of

13 health care services.

14 SEC. 409. DEFINITIONS.

15 As used in this Act:

16 (1) ANTITRUST LAWS.—The term ‘‘antitrust

17 laws’’—

18 (A) has the meaning given such term in

19 subsection (a) of the first section of the Clayton

20 Act (15 U.S.C. 12(a)), except that such term

21 includes section 5 of the Federal Trade Com22 mission Act (15 U.S.C. 45) to the extent such

23 section applies to unfair methods of competi24 tion; and

25 (B) includes any State law similar to the

26 laws referred to in subparagraph (A).
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1 (2) CHAIR.—The term ‘‘Chair’’ means the

2 Chair of the Federal Trade Commission.

3 (3) HEALTH BENEFIT PLAN.—The term

4 ‘‘health benefit plan’’ means any hospital or medical

5 expense incurred policy or certificate, hospital or

6 medical service plan contract, or health maintenance

7 subscriber contract, or a multiple employer welfare

8 arrangement or employee benefit plan (as defined

9 under the Employee Retirement Income Security Act

10 of 1974) which provides benefits with respect to

11 health care services.

12 (4) HEALTH CARE COOPERATIVE VENTURE.—

13 The term ‘‘health care cooperative venture’’ means

14 any activities, including attempts to enter into or

15 perform a contract or agreement, carried out by 2

16 or more persons for the purpose of providing health

17 care services.

18 (5) HEALTH CARE SERVICES.—The term

19 ‘‘health care services’’ means any services for which

20 payment may be made under a health benefit plan,

21 including services related to the delivery or adminis22 tration of such services.

23 (6) MEDICAL SELF-REGULATORY ENTITY.—The

24 term ‘‘medical self-regulatory entity’’ means a medi25 cal society or association, a specialty board, a recog-
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1 nized accrediting agency, or a hospital medical staff,

2 and includes the members, officers, employees, con3 sultants, and volunteers or committees of such an

4 entity.

5 (7) PERSON.—The term ‘‘person’’ includes a

6 State or unit of local government.

7 (8) PROVIDER OF HEALTH CARE SERVICES.—

8 The term ‘‘provider of health care services’’ means

9 any individual or entity that is engaged in the deliv10 ery of health care services in a State and that is re11 quired by State law or regulation to be licensed or

12 certified by the State to engage in the delivery of

13 such services in the State.

14 (9) SPECIALTY GROUP.—The term ‘‘specialty

15 group’’ means a medical specialty or subspecialty in

16 which a provider of health care services may be li17 censed to practice by a State (as determined by the

18 Secretary in consultation with the certification

19 boards for such specialties and subspecialties).

20 (10) The term ‘‘standard setting and enforce21 ment activities’’ means—

22 (A) accreditation of health care practition23 ers, health care providers, medical education in24 stitutions, or medical education programs,
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1 (B) technology assessment and risk man2 agement activities,

3 (C) the development and implementation of

4 practice guidelines or practice parameters, or

5 (D) official peer review proceedings under6 taken by a hospital medical staff (or committee

7 thereof) or a medical society or association for

8 purposes of evaluating the professional conduct

9 or quality of health care provided by a medical

10 professional.

11 TITLE V—ANTI-FRAUD AND

12 ABUSE CONTROL PROGRAM

13 Subtitle A—All-Payer Fraud and

14 Abuse Control Program

15 SEC. 501. ALL-PAYER FRAUD AND ABUSE CONTROL PRO16 GRAM.

17 (a) ESTABLISHMENT OF PROGRAM.—

18 (1) IN GENERAL.—Not later than January 1,

19 1995, the Secretary shall establish in the Office of

20 the Inspector General of the Department of Health

21 and Human Services a program (hereafter referred

22 to in this section as the ‘‘program’’)—

23 (A) to coordinate Federal, State, and local

24 law enforcement programs to control fraud and
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1 abuse with respect to the delivery of and pay2 ment for health care in the United States,

3 (B) to conduct investigations, audits, eval4 uations, and inspections relating to the delivery

5 of and payment for health care in the United

6 States, and

7 (C) to facilitate the enforcement of the

8 provisions of sections 1128, 1128A, and 1128B

9 of the Social Security Act and other statutes

10 applicable to health care fraud and abuse.

11 (2) COORDINATION WITH HEALTH CARE

12 PLANS.—In carrying out the program established

13 under paragraph (1), the Secretary shall consult

14 with, and arrange for the sharing of data with, rep15 resentatives of health care plans.

16 (3) REGULATIONS.—

17 (A) IN GENERAL.—The Secretary shall by

18 regulation establish standards to carry out the

19 program under paragraph (1).

20 (B) INFORMATION STANDARDS.—

21 (i) IN GENERAL.—Standards under

22 subparagraph (A) shall include standards

23 relating to the furnishing of information by

24 health care plans, providers, and others to

25 enable the Secretary to carry out the pro-
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1 gram (including coordination with health

2 care plans under paragraph (2)).

3 (ii) CONFIDENTIALITY.—Standards

4 under subparagraph (A) shall include pro5 cedures to assure that such information is

6 provided and utilized in a manner that ap7 propriately protects the confidentiality of

8 the information and the privacy of individ9 uals receiving health care services and

10 items.

11 (iii) QUALIFIED IMMUNITY FOR PRO12 VIDING INFORMATION.—The provisions of

13 section 1157(a) of the Social Security Act

14 (relating to limitation on liability) shall

15 apply to a person providing information to

16 the Secretary under the program under

17 this section, with respect to the Secretary’s

18 performance of duties under the program,

19 in the same manner as such section applies

20 to information provided to organizations

21 with a contract under part B of title XI of

22 such Act, with respect to the performance

23 of such a contract.

24 (C) DISCLOSURE OF OWNERSHIP INFOR25 MATION.—
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1 (i) IN GENERAL.—Standards under

2 subparagraph (A) shall include standards

3 relating to the disclosure of ownership in4 formation described in clause (ii) by any

5 entity providing health care services and

6 items.

7 (ii) OWNERSHIP INFORMATION DE8 SCRIBED.—The ownership information de9 scribed in this clause includes—

10 (I) a description of such items

11 and services provided by such entity;

12 (II) the names and unique physi13 cian identification numbers of all phy14 sicians with a financial relationship

15 (as defined in section 1877(a)(2) of

16 the Social Security Act) with such en17 tity;

18 (III) the names of all other indi19 viduals with such an ownership or in20 vestment interest in such entity; and

21 (IV) any other ownership and re22 lated information required to be dis23 closed by such entity under section

24 1124 or section 1124A of the Social

25 Security Act.
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1 (4) AUTHORIZATION OF APPROPRIATIONS FOR

2 INVESTIGATIONS AND OTHER PERSONNEL.—In addi3 tion to any other amounts authorized to be appro4 priated to the Secretary for health care anti-fraud

5 and abuse activities for a fiscal year, there are au6 thorized to be appropriated additional amounts as

7 may be necessary to enable the Secretary to conduct

8 investigations and audits of allegations of health

9 care fraud and abuse and otherwise carry out the

10 program established under paragraph (1) in a fiscal

11 year.

12 (5) ENSURING ACCESS TO DOCUMENTATION.—

13 (A) IN GENERAL.—The Inspector General

14 of the Department of Health and Human Serv15 ices is authorized to exercise the authority de16 scribed in paragraphs (4) and (5) of section 6

17 of the Inspector General Act of 1978 (relating

18 to subpoenas and administration of oaths) with

19 respect to the activities under the program es20 tablished under this subsection to the same ex21 tent as such Inspector General may exercise

22 such authorities to perform the functions as23 signed by such Act.

24 (B) PERMISSIVE EXCLUSION.—Section

25 1128(b) of the Social Security Act (42 U.(b))
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1 is amended by adding at the end the following

2 new paragraph:

3 ‘‘(15) FAILURE TO SUPPLY REQUESTED INFOR4 MATION TO THE INSPECTOR GENERAL.—Any indi5 vidual or entity that fails fully and accurately to pro6 vide, upon request of the Inspector General of the

7 Department of Health and Human Services, records,

8 documents, and other information necessary for the

9 purposes of carrying out activities under the all10 payer fraud and abuse control program established

11 under section 501 of the Advancement of Health

12 Care Reform Act of 1994.’’.

13 (6) HEALTH CARE PLAN DEFINED.—For the

14 purposes of this subsection, the term ‘‘health care

15 plan’’ shall have the meaning given such term in sec16 tion 1128(i) of the Social Security Act.

17 (b) ESTABLISHMENT OF ANTI-FRAUD AND ABUSE

18 TRUST FUND.—

19 (1) ESTABLISHMENT.—

20 (A) IN GENERAL.—There is hereby created

21 on the books of the Treasury of the United

22 States a trust fund to be known as the ‘‘Anti23 Fraud and Abuse Trust Fund’’ (hereafter re24 ferred to as the ‘‘Trust Fund’’). The Trust

25 Fund shall consist of such gifts and bequests as
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1 may be made as provided in subparagraph (B)

2 and such amounts as may be deposited in, or

3 appropriated to, such Trust Fund as provided

4 in subsection (a)(5), and title XI of the Social

5 Security Act.

6 (B) AUTHORIZATION TO ACCEPT GIFTS.—

7 The Managing Trustee of the Trust Fund is

8 authorized to accept on behalf of the United

9 States money gifts and bequests made uncondi10 tionally to the Trust Fund, for the benefit of

11 the Trust Fund, or any activity financed

12 through the Trust Fund.

13 (2) MANAGEMENT.—

14 (A) IN GENERAL.—The Trust Fund shall

15 be managed by the Secretary through a Manag16 ing Trustee designated by the Secretary.

17 (B) INVESTMENT OF FUNDS.—

18 (i) IN GENERAL.—It shall be the duty

19 of the Managing Trustee to invest such

20 portion of the Trust Fund as is not, in the

21 Managing Trustee’s judgment, required to

22 meet current withdrawals.

23 (ii) GENERAL FORM OF INVEST24 MENT.—Investments described in clause (i)

25 may be made only in interest-bearing obli-
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1 gations of the United States or in obliga2 tions guaranteed as to both principal and

3 interest by the United States. For such

4 purpose such obligations may be ac5 quired—

6 (I) on original issue at the issue

7 price, or

8 (II) by purchase of outstanding

9 obligations at market price.

10 (iii) ISSUANCE OF PUBLIC-DEBT OBLI11 GATIONS.—The purposes for which obliga12 tions of the United States may be issued

13 under chapter 31 of title 31, United States

14 Code, are hereby extended to authorize the

15 issuance at par of public-debt obligations

16 for purchase by the Trust Fund. Such obli17 gations issued for purchase by the Trust

18 Fund shall have maturities fixed with due

19 regard for the needs of the Trust Fund

20 and shall bear interest at a rate equal to

21 the average market yield (computed by the

22 Managing Trustee on the basis of market

23 quotations as of the end of the calendar

24 month next preceding the date of such

25 issue) on all marketable interest-bearing
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1 obligations of the United States then form2 ing a part of the public debt which are not

3 due or callable until after the expiration of

4 4 years from the end of such calendar

5 month, except that where such average is

not a multiple of 1 6 ⁄8 of 1 percent, the rate

7 of interest on such obligations shall be the

multiple of 1 8 ⁄8 of 1 percent nearest such

9 market yield.

10 (iv) PURCHASES OF OTHER OBLIGA11 TIONS.—The Managing Trustee may pur12 chase other interest-bearing obligations of

13 the United States or obligations guaran14 teed as to both principal and interest by

15 the United States, on original issue or at

16 the market price, only where the Managing

17 Trustee determines that the purchase of

18 such other obligations is in the public in19 terest.

20 (C) SALE OF OBLIGATIONS.—Any obliga21 tions acquired by the Trust Fund (except pub22 lic-debt obligations issued exclusively to the

23 Trust Fund) may be sold by the Managing

24 Trustee at the market price, and such public-
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1 debt obligations may be redeemed at par plus

2 accrued interest.

3 (D) INTEREST ON OBLIGATIONS AND PRO4 CEEDS FROM SALE OR REDEMPTION OF OBLI5 GATIONS.—The interest on, and the proceeds

6 from the sale or redemption of, any obligations

7 held in the Trust Fund shall be credited to and

8 form a part of the Trust Fund.

9 (E) RECEIPTS AND DISBURSEMENTS NOT

10 INCLUDED IN UNITED STATES GOVERNMENT

11 BUDGET TOTALS.—The receipts and disburse12 ments of the Secretary in the discharge of the

13 functions of the Secretary under the all-payer

14 fraud and abuse control program established

15 under subsection (a) shall not be included in

16 the totals of the budget of the United States

17 Government. For purposes of part C of the Bal18 anced Budget and Emergency Deficit Control

19 Act of 1985, the Secretary and the Trust Fund

20 shall be treated in the same manner as the

21 Federal Retirement Thrift Investment Board

22 and the Thrift Savings Fund, respectively. The

23 United States is not liable for any obligation or

24 liability incurred by the Trust Fund.

25 (3) USE OF FUNDS.—
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1 (A) IN GENERAL.—Amounts in the Trust

2 Fund shall be used without regard to fiscal year

3 limitation to assist the Inspector General of the

4 Department of Health and Human Services in

5 carrying out the all-payer fraud and abuse con6 trol program established under subsection (a).

7 (B) OVERALL ADMINISTRATION.—The

8 Managing Trustee shall also pay from time to

9 time from the Trust Fund such amounts as the

10 Secretary certifies are necessary to carry out

11 the all-payer fraud and abuse control program

12 established under subsection (a).

13 (4) ANNUAL REPORT.—The Managing Trustee

14 shall be required to submit an annual report to Con15 gress on the amount of revenue which is generated

16 and disbursed by the Trust Fund in each fiscal year.

17 Such report shall include an estimate of the amount

18 of additional appropriations authorized under sub19 section (a)(5) necessary for the Secretary to conduct

20 the all-payer fraud and abuse program established

21 under subsection (a) in the next fiscal year.
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1 SEC. 502. APPLICATION OF FEDERAL HEALTH ANTI-FRAUD

2 AND ABUSE SANCTIONS TO ALL FRAUD AND

3 ABUSE AGAINST ANY HEALTH CARE PLAN.

4 (a) CIVIL MONETARY PENALTIES.—Section 1128A

5 of the Social Security Act (42 U.S.C. 1320a–7a) is amend6 ed as follows:

7 (1) In subsection (a)(1), by inserting ‘‘or of any

8 health care plan (as defined in section 1128(i)),’’

9 after ‘‘subsection (i)(1)),’’.

10 (2) In subsection (b)(1)(A), by inserting ‘‘or

11 under a health care plan’’ after ‘‘title XIX’’.

12 (3) In subsection (f)—

13 (A) by redesignating paragraph (3) as

14 paragraph (4); and

15 (B) by inserting after paragraph (2) the

16 following new paragraph:

17 ‘‘(3) With respect to amounts recovered arising

18 out of a claim under a health care plan, the portion

19 of such amounts as is determined to have been paid

20 by the plan shall be repaid to the plan, and the por21 tion of such amounts attributable to the amounts re22 covered under this section by reason of the amend23 ments made by title V of the Advancement of Health

24 Care Reform Act of 1994 (as estimated by the Sec25 retary) shall be deposited into the Anti-Fraud and
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1 Abuse Trust Fund established under section 501(b)

2 of such Act.’’.

3 (4) In subsection (i)—

4 (A) in paragraph (2), by inserting ‘‘or

5 under a health care plan’’ before the period at

6 the end, and

7 (B) in paragraph (5), by inserting ‘‘or

8 under a health care plan’’ after ‘‘or XX’’.

9 (b) CRIMES.—

10 (1) SOCIAL SECURITY ACT.—Section 1128B of

11 such Act (42 U.S.C. 1320–7b) is amended as fol12 lows:

13 (A) In the heading, by adding at the end

14 the following: ‘‘OR HEALTH CARE PLANS’’.

15 (B) In subsection (a)(1)—

16 (i) by striking ‘‘title XVIII or’’ and

17 inserting ‘‘title XVIII,’’, and

18 (ii) by adding at the end the follow19 ing: ‘‘or a health care plan (as defined in

20 section 1128(i)),’’.

21 (C) In subsection (a)(5), by striking ‘‘title

22 XVIII or a State health care program’’ and in23 serting ‘‘title XVIII, a State health care pro24 gram, or a health care plan’’.
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1 (D) In the second sentence of subsection

2 (a)—

3 (i) by inserting after ‘‘title XIX’’ the

4 following: ‘‘or a health care plan’’, and

5 (ii) by inserting after ‘‘the State’’ the

6 following: ‘‘or the plan’’.

7 (E) In subsection (b)(1), by striking ‘‘title

8 XVIII or a State health care program’’ each

9 place it appears and inserting ‘‘title XVIII, a

10 State health care program, or a health care

11 plan’’.

12 (F) In subsection (b)(2), by striking ‘‘title

13 XVIII or a State health care program’’ each

14 place it appears and inserting ‘‘title XVIII, a

15 State health care program, or a health care

16 plan’’.

17 (G) In subsection (b)(3), by striking ‘‘title

18 XVIII or a State health care program’’ each

19 place it appears in subparagraphs (A) and (C)

20 and inserting ‘‘title XVIII, a State health care

21 program, or a health care plan’’.

22 (2) IDENTIFICATION OF COMMUNITY SERVICE

23 OPPORTUNITIES.—Section 1128B of such Act (42

24 U.S.C. 1320a–7b) is further amended by adding at

25 the end the following new subsection:
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1 ‘‘(f) The Secretary may—

2 ‘‘(1) in consultation with State and local health

3 care officials, identify opportunities for the satisfac4 tion of community service obligations that a court

5 may impose upon the conviction of an offense under

6 this section, and

7 ‘‘(2) make information concerning such oppor8 tunities available to Federal and State law enforce9 ment officers and State and local health care offi10 cials.’’.

11 (c) HEALTH CARE PLAN DEFINED.—Section 1128 of

12 such Act (42 U.S.C. 1320a–7) is amended by redesignat13 ing subsection (i) as subsection (j) and by inserting after

14 subsection (h) the following new subsection:

15 ‘‘(i) HEALTH CARE PLAN DEFINED.—For purposes

16 of sections 1128A and 1128B, the term ‘health care plan’

17 means a public or private program for the delivery of or

18 payment for health care items or services other than the

19 medicare program, the medicaid program, or a State

20 health care program.’’.

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

22 this section shall take effect on January 1, 1995.
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1 SEC. 503. REPORTING OF FRAUDULENT ACTIONS UNDER

2 MEDICARE.

3 Not later than 1 year after the date of the enactment

4 of this Act, the Secretary shall establish a program

5 through which individuals entitled to benefits under the

6 medicare program may report to the Secretary on a con7 fidential basis (at the individual’s request) instances of

8 suspected fraudulent actions arising under the program by

9 providers of items and services under the program.

10 Subtitle B—Revisions to Current

11 Sanctions for Fraud and Abuse

12 SEC. 511. MANDATORY EXCLUSION FROM PARTICIPATION

13 IN MEDICARE AND STATE HEALTH CARE PRO14 GRAMS.

15 (a) INDIVIDUAL CONVICTED OF FELONY RELATED

16 TO FRAUD.—

17 (1) IN GENERAL.—Section 1128(a) of the So18 cial Security Act (42 U.S.C. 1320a–7(a)) is amend19 ed by adding at the end the following new para20 graph:

21 ‘‘(3) FELONY CONVICTION RELATING TO

22 FRAUD.—Any individual or entity that has been con23 victed, under Federal or State law, in connection

24 with the delivery of a health care item or service or

25 with respect to any act or omission in a program

26 (other than those specifically described in paragraph
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1 (1)) operated by or financed in whole or in part by

2 any Federal, State, or local government agency, of

3 a criminal offense consisting of a felony relating to

4 fraud, theft, embezzlement, breach of fiduciary re5 sponsibility, or other financial misconduct.’’.

6 (2) CONFORMING AMENDMENT.—Section

7 1128(b)(1) of such Act (42 U.S.C. 1320a–7(b)(1))

8 is amended—

9 (A) in the heading, by striking ‘‘CONVIC10 TION’’ and inserting ‘‘MISDEMEANOR CONVIC11 TION’’; and

12 (B) by striking ‘‘criminal offense’’ and in13 serting ‘‘criminal offense consisting of a mis14 demeanor’’.

15 (b) INDIVIDUAL CONVICTED OF FELONY RELATING

16 TO CONTROLLED SUBSTANCE.—

17 (1) IN GENERAL.—Section 1128(a) of the So18 cial Security Act (42 U.S.C. 1320a–7(a)), as amend19 ed by subsection (a), is amended by adding at the

20 end the following new paragraph:

21 ‘‘(4) FELONY CONVICTION RELATING TO CON22 TROLLED SUBSTANCE.—Any individual or entity

23 that has been convicted, under Federal or State law,

24 of a criminal offense consisting of a felony relating
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1 to the unlawful manufacture, distribution, prescrip2 tion, or dispensing of a controlled substance.’’.

3 (2) CONFORMING AMENDMENT.—Section

4 1128(b)(3) of such Act (42 U.S.C. 1320a–7(b)(3))

5 is amended—

6 (A) in the heading, by striking ‘‘CONVIC7 TION’’ and inserting ‘‘MISDEMEANOR CONVIC8 TION’’; and

9 (B) by striking ‘‘criminal offense’’ and in10 serting ‘‘criminal offense consisting of a mis11 demeanor’’.

12 SEC. 512. ESTABLISHMENT OF MINIMUM PERIOD OF EX13 CLUSION FOR CERTAIN INDIVIDUALS AND

14 ENTITIES SUBJECT TO PERMISSIVE EXCLU15 SION FROM MEDICARE AND STATE HEALTH

16 CARE PROGRAMS.

17 Section 1128(c)(3) of the Social Security Act (42

18 U.S.C. 1320a–7(c)(3)) is amended by adding at the end

19 the following new subparagraphs:

20 ‘‘(D) In the case of an exclusion of an individual or

21 entity under paragraph (1), (2), or (3) of subsection (b),

22 the period of the exclusion shall be 3 years, unless the

23 Secretary determines in accordance with published regula24 tions that a shorter period is appropriate because of miti-
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1 gating circumstances or that a longer period is appro2 priate because of aggravating circumstances.

3 ‘‘(E) In the case of an exclusion of an individual or

4 entity under subsection (b)(4) or (b)(5), the period of the

5 exclusion shall not be less than the period during which

6 the individual’s or entity’s license to provide health care

7 is revoked, suspended, or surrendered, or the individual

8 or the entity is excluded or suspended from a Federal or

9 State health care program.

10 ‘‘(F) In the case of an exclusion of an individual or

11 entity under subsection (b)(6)(B), the period of the exclu12 sion shall be not less than 1 year.’’.

13 SEC. 513. PERMISSIVE EXCLUSION OF INDIVIDUALS WITH

14 OWNERSHIP OR CONTROL INTEREST IN

15 SANCTIONED ENTITIES.

16 Section 1128(b) of the Social Security Act (42 U.S.C.

17 1320a–7(b)), as amended by section 501(a)(5)(B), is fur18 ther amended by adding at the end the following new para19 graph:

20 ‘‘(16) INDIVIDUALS CONTROLLING A SANC21 TIONED ENTITY.—Any individual who has a direct

22 or indirect ownership or control interest of 5 percent

23 or more, or an ownership or control interest (as de24 fined in section 1124(a)(3)) in, or who is an officer,
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1 director, agent, or managing employee (as defined in

2 section 1126(b)) of, an entity—

3 ‘‘(A) that has been convicted of any of4 fense described in subsection (a) or in para5 graph (1), (2), or (3) of this subsection;

6 ‘‘(B) against which a civil monetary pen7 alty has been assessed under section 1128A; or

8 ‘‘(C) that has been excluded from partici9 pation under a program under title XVIII or

10 under a State health care program.’’.

11 SEC. 514. CIVIL MONETARY PENALTIES.

12 (a) PROHIBITION AGAINST OFFERING INDUCEMENTS

13 TO INDIVIDUALS ENROLLED UNDER OR EMPLOYED BY

14 PROGRAMS OR PLANS.—

15 (1) INDUCEMENTS TO INDIVIDUALS ENROLLED

16 UNDER MEDICARE.—

17 (A) OFFER OF REMUNERATION.—Section

18 1128A(a) of the Social Security Act (42 U.S.C.

19 1320a–7a(a)) is amended—

20 (i) by striking ‘‘, or’’ at the end of

21 paragraph (2) and inserting a semicolon;

22 (ii) by striking the semicolon at the

23 end of paragraph (3) and inserting ‘‘; or’’;

24 and
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1 (iii) by inserting after paragraph (3)

2 the following new paragraph:

3 ‘‘(4) offers to or transfers remuneration to any

4 individual eligible for benefits under title XVIII of

5 this Act, or under a State health care program (as

6 defined in section 1128(h)) that such person knows

7 or should know is likely to influence such individual

8 to order or receive from a particular provider, practi9 tioner, or supplier any item or service for which pay10 ment may be made, in whole or in part, under title

11 XVIII, or a State health care program;’’.

12 (B) REMUNERATION DEFINED.—Section

13 1128A(i) is amended by adding the following

14 new paragraph:

15 ‘‘(6) The term ‘remuneration’ includes the waiv16 er of coinsurance and deductible amounts (or any

17 part thereof), and transfers of items or services for

18 free or for other than fair market value. The term

19 ‘remuneration’ does not include the waiver of coin20 surance and deductible amounts by a person, if—

21 ‘‘(A) the waiver is not offered as part of

22 any advertisement or solicitation;

23 ‘‘(B) the person does not routinely waive

24 coinsurance or deductible amounts; and

25 ‘‘(C) the person—
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1 ‘‘(i) waives the coinsurance and de2 ductible amounts after determining in good

3 faith that the individual is in financial

4 need;

5 ‘‘(ii) fails to collect coinsurance or de6 ductible amounts after making reasonable

7 collection efforts; or

8 ‘‘(iii) provides for any permissible

9 waiver as specified in section 1128B(b)(3)

10 or in regulations issued by the Secretary.’’.

11 (2) INDUCEMENTS TO EMPLOYEES.—Section

12 1128A(a) of such Act (42 U.S.C. 1320a–7a(a)), as

13 amended by paragraph (1), is further amended—

14 (A) by striking ‘‘or’’ at the end of para15 graph (3);

16 (B) by striking the semicolon at the end of

17 paragraph (4) and inserting ‘‘; or’’; and

18 (C) by inserting after paragraph (4) the

19 following new paragraph:

20 ‘‘(5) pays a bonus, reward, or any other remu21 neration, directly or indirectly, to an employee to in22 duce the employee to encourage individuals to seek

23 or obtain covered items or services for which pay24 ment may be made under the medicare program, or

25 a State health care program where the amount of
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1 the remuneration is determined in a manner that

2 takes into account (directly or indirectly) the value

3 or volume of any referrals by the employee to the

4 employer for covered items or services;’’.

5 (b) EXCLUDED INDIVIDUAL RETAINING OWNERSHIP

6 OR CONTROL INTEREST IN PARTICIPATING ENTITY.—

7 Section 1128A(a) of such Act, as amended by subsection

8 (a), is further amended—

9 (1) by striking ‘‘or’’ at the end of paragraph

10 (4);

11 (2) by striking the semicolon at the end of

12 paragraph (5) and inserting ‘‘; or’’; and

13 (3) by inserting after paragraph (5) the follow14 ing new paragraph:

15 ‘‘(6) in the case of a person who is not an orga16 nization, agency, or other entity, is excluded from

17 participating in a program under title XVIII or a

18 State health care program in accordance with this

19 subsection or under section 1128 and who, during

20 the period of exclusion, retains a direct or indirect

21 ownership or control interest of 5 percent or more,

22 or an ownership or control interest (as defined in

23 section 1124(a)(3)) in, or who is an officer, director,

24 agent, or managing employee (as defined in section

25 1126(b)) of, an entity that is participating in a pro-
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1 gram under title XVIII or a State health care pro2 gram;’’.

3 (c) MODIFICATIONS OF AMOUNTS OF PENALTIES

4 AND ASSESSMENTS.—Section 1128A(a) of such Act (42

5 U.S.C. 1320a–7a(a)), as amended by subsections (a) and

6 (b), is amended in the matter following paragraph (6)—

7 (1) by striking ‘‘$2,000’’ and inserting

8 ‘‘$10,000’’;

9 (2) by inserting ‘‘; in cases under paragraph

10 (4), $10,000 for each such offer or transfer; in cases

11 under paragraph (5), $10,000 for each such pay12 ment; in cases under paragraph (6), $10,000 for

13 each day the prohibited relationship occurs; in cases

14 under paragraph (7), $10,000 per violation’’ after

15 ‘‘false or misleading information was given’’;

16 (3) by striking ‘‘twice the amount’’ and insert17 ing ‘‘3 times the amount’’; and

18 (4) by inserting ‘‘(or, in cases under paragraphs

19 (4), (5), and (7), 3 times the amount of the illegal

20 remuneration)’’ after ‘‘for each such item or serv21 ice’’.

22 (d) CLAIM FOR ITEM OR SERVICES BASED ON INCOR23 RECT CODING OR MEDICALLY UNNECESSARY SERV24 ICES.—Section 1128A(a)(1) of such Act (42 U.S.C.

25 1320a–7a(a)(1)) is amended—
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1 (1) in subparagraph (A) by striking ‘‘claimed,’’

2 and inserting the following: ‘‘claimed, including any

3 person who presents or causes to be presented a

4 claim for an item or service that is based on a code

5 that the person knows or should know will result in

6 a greater payment to the person than the code the

7 person knows or should know is applicable to the

8 item or service actually provided,’’;

9 (2) in subparagraph (C), by striking ‘‘or’’ at

10 the end; and

11 (3) by inserting after subparagraph (D) the fol12 lowing new subparagraph:

13 ‘‘(E) is for a medical or other item or serv14 ice that a person knows or should know is not

15 medically necessary; or’’.

16 (e) PERMITTING PARTIES TO BRING ACTIONS ON

17 OWN BEHALF.—Section 1128A of such Act (42 U.S.C.

18 1320a–7a) is amended by adding at the end the following

19 new subsection:

20 ‘‘(m)(1) Subject to paragraphs (2) and (3), any per21 son (including an organization, agency, or other entity,

22 but excluding a beneficiary, as defined in subsection

23 (i)(5)) that suffers harm or monetary loss as a result of

24 any activity of an individual or entity which makes the

25 individual or entity subject to a civil monetary penalty
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1 under this section may, in a civil action against the indi2 vidual or entity in the United States District Court, obtain

3 treble damages and costs including attorneys’ fees against

4 the individual or entity and such equitable relief as is ap5 propriate.

6 ‘‘(2) A person may bring a civil action under this sub7 section only if—

8 ‘‘(A) the person provides the Secretary with

9 written notice of—

10 ‘‘(i) the person’s intent to bring an action

11 under this subsection,

12 ‘‘(ii) the identities of the individuals or en13 tities the person intends to name as defendants

14 to the action, and

15 ‘‘(iii) all information the person possesses

16 regarding the activity that is the subject of the

17 action that may materially affect the Sec18 retary’s decision to initiate a proceeding to im19 pose a civil monetary penalty under this section

20 against the defendants, and

21 ‘‘(B) one of the following conditions is met:

22 ‘‘(i) During the 60-day period that begins

23 on the date the Secretary receives the written

24 notice described in subparagraph (A), the Sec25 retary does not notify the person that the Sec-
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1 retary intends to initiate an investigation to de2 termine whether to impose a civil monetary

3 penalty under this section against the defend4 ants.

5 ‘‘(ii) The Secretary notifies the person dur6 ing the 60-day period described in clause (i)

7 that the Secretary intends to initiate an inves8 tigation to determine whether to impose a civil

9 monetary penalty under this section against the

10 defendants, and the Secretary subsequently no11 tifies the person that the Secretary no longer

12 intends to initiate an investigation or proceed13 ing to impose a civil monetary penalty against

14 the defendants.

15 ‘‘(iii) After the expiration of the 2-year pe16 riod that begins on the date written notice is

17 provided to the Secretary, the Secretary has not

18 initiated a proceeding to impose a civil mone19 tary penalty against the defendants.

20 ‘‘(3) If a person is awarded any amounts in an action

21 brought under this subsection that are in excess of the

22 damages suffered by the person as a result of the defend23 ant’s activities, 20 percent of such amounts shall be with24 held from the person for payment into the Anti-Fraud and
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1 Abuse Trust Fund established under section 501(b) of the

2 Advancement of Health Care Reform Act of 1994.

3 ‘‘(4) No action may be brought under this subsection

4 more than 6 years after the date of the activity with re5 spect to which the action is brought.’’.

6 SEC. 515. ACTIONS SUBJECT TO CRIMINAL PENALTIES.

7 (a) PERMITTING SECRETARY TO IMPOSE CIVIL MON8 ETARY PENALTY.—Section 1128A(b) of the Social Secu9 rity Act (42 U.S.C. 1320a–7a(a)) is amended by adding

10 the following new paragraph:

11 ‘‘(3) Any person (including any organization, agency,

12 or other entity, but excluding a beneficiary as defined in

13 subsection (i)(5)) who the Secretary determines has vio14 lated section 1128(B)(b) shall be subject to a civil mone15 tary penalty of not more than $10,000 for each such viola16 tion. In addition, such person shall be subject to an assess17 ment of not more than twice the total amount of the remu18 neration offered, paid, solicited, or received in violation of

19 section 1128B(b). The total amount of remuneration sub20 ject to an assessment shall be calculated without regard

21 to whether some portion thereof also may have been in22 tended to serve a purpose other than one proscribed by

23 section 1128B(b).’’.

24 (b) RESTRICTION ON APPLICATION OF EXCEPTION

25 FOR AMOUNTS PAID TO EMPLOYEES.—Section
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1 1128B(b)(3)(B) of such Act (42 U.S.C. 1320a–

2 7b(b)(3)(B)) is amended by striking ‘‘services;’’ and in3 serting the following: ‘‘services, but only if the amount of

4 remuneration under the arrangement is (i) consistent with

5 fair market value; (ii) not determined in a manner that

6 takes into account (directly or indirectly) the volume or

7 value of any referrals by the employee to the employer for

8 the furnishing (or arranging for the furnishing) of such

9 items or services; and (iii) provided pursuant to an ar10 rangement that would be commercially reasonable even if

11 no referrals were made;’’.

12 SEC. 516. SANCTIONS AGAINST PRACTITIONERS AND PER13 SONS FOR FAILURE TO COMPLY WITH STATU14 TORY OBLIGATIONS.

15 (a) MINIMUM PERIOD OF EXCLUSION FOR PRACTI16 TIONERS AND PERSONS FAILING TO MEET STATUTORY

17 OBLIGATIONS.—

18 (1) IN GENERAL.—The second sentence of sec19 tion 1156(b)(1) of the Social Security Act (42

20 U.S.C. 1320c–5(b)(1)) is amended by striking ‘‘may

21 prescribe)’’ and inserting ‘‘may prescribe, except

22 that such period may not be less than 1 year)’’.

23 (2) CONFORMING AMENDMENT.—Section

24 1156(b)(2) of such Act (42 U.S.C. 1320c–5(b)(2)) is

25 amended by striking ‘‘shall remain’’ and inserting
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1 ‘‘shall (subject to the minimum period specified in

2 the second sentence of paragraph (1)) remain’’.

3 (b) REPEAL OF ‘‘UNWILLING OR UNABLE’’ CONDI4 TION FOR IMPOSITION OF SANCTION.—Section 1156(b)(1)

5 of such Act (42 U.S.C. 1320c–5(b)(1)) is amended—

6 (1) in the second sentence, by striking ‘‘and de7 termines’’ and all that follows through ‘‘such obliga8 tions,’’; and

9 (2) by striking the third sentence.

10 (c) AMOUNT OF CIVIL MONEY PENALTY.—Section

11 1156(b)(3) of such Act (42 U.S.C. 1320c–5(b)(3)) is

12 amended by striking ‘‘the actual or estimated cost’’ and

13 inserting the following: ‘‘up to $10,000 for each instance’’.

14 SEC. 517. INTERMEDIATE SANCTIONS FOR MEDICARE

15 HEALTH MAINTENANCE ORGANIZATIONS.

16 (a) APPLICATION OF INTERMEDIATE SANCTIONS FOR

17 ANY PROGRAM VIOLATIONS.—

18 (1) IN GENERAL.—Section 1876(i)(1) of the

19 Social Security Act (42 U.S.C. 1395mm(i)(1)) is

20 amended by striking ‘‘the Secretary may terminate’’

21 and all that follows and inserting the following: ‘‘in

22 accordance with procedures established under para23 graph (9), the Secretary may at any time terminate

24 any such contract or may impose the intermediate

25 sanctions described in paragraph (6)(B) or (6)(C)
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1 (whichever is applicable) on the eligible organization

2 if the Secretary determines that the organization—

3 ‘‘(A) has failed substantially to carry out

4 the contract;

5 ‘‘(B) is carrying out the contract in a man6 ner inconsistent with the efficient and effective

7 administration of this section;

8 ‘‘(C) is operating in a manner that is not

9 in the best interests of the individuals covered

10 under the contract; or

11 ‘‘(D) no longer substantially meets the ap12 plicable conditions of subsections (b), (c), (e),

13 and (f).’’.

14 (2) OTHER INTERMEDIATE SANCTIONS FOR

15 MISCELLANEOUS PROGRAM VIOLATIONS.—Section

16 1876(i)(6) of such Act (42 U.S.C. 1395mm(i)(6)) is

17 amended by adding at the end the following new

18 subparagraph:

19 ‘‘(C) In the case of an eligible organization for which

20 the Secretary makes a determination under paragraph (1)

21 the basis of which is not described in subparagraph (A),

22 the Secretary may apply the following intermediate sanc23 tions:

24 ‘‘(i) Civil money penalties of not more than

25 $25,000 for each determination under paragraph (1)
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1 if the deficiency that is the basis of the determina2 tion has directly adversely affected (or has the sub3 stantial likelihood of adversely affecting) an individ4 ual covered under the organization’s contract.

5 ‘‘(ii) Civil money penalties of not more than

6 $10,000 for each week beginning after the initiation

7 of procedures by the Secretary under paragraph (9)

8 during which the deficiency that is the basis of a de9 termination under paragraph (1) exists.

10 ‘‘(iii) Suspension of enrollment of individuals

11 under this section after the date the Secretary noti12 fies the organization of a determination under para13 graph (1) and until the Secretary is satisfied that

14 the deficiency that is the basis for the determination

15 has been corrected and is not likely to recur.’’.

16 (3) PROCEDURES FOR IMPOSING SANCTIONS.—

17 Section 1876(i) of such Act (42 U.S.C. 1395mm(i))

18 is amended by adding at the end the following new

19 paragraph:

20 ‘‘(9) The Secretary may terminate a contract with an

21 eligible organization under this section or may impose the

22 intermediate sanctions described in paragraph (6) on the

23 organization in accordance with formal investigation and

24 compliance procedures established by the Secretary under

25 which—
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1 ‘‘(A) the Secretary provides the organization

2 with the opportunity to develop and implement a

3 corrective action plan to correct the deficiencies that

4 were the basis of the Secretary’s determination

5 under paragraph (1);

6 ‘‘(B) in deciding whether to impose sanctions,

7 the Secretary considers aggravating factors such as

8 whether an entity has a history of deficiencies or has

9 not taken action to correct deficiencies the Secretary

10 has brought to their attention;

11 ‘‘(C) there are no unreasonable or unnecessary

12 delays between the finding of a deficiency and the

13 imposition of sanctions; and

14 ‘‘(D) the Secretary provides the organization

15 with reasonable notice and opportunity for hearing

16 (including the right to appeal an initial decision) be17 fore imposing any sanction or terminating the con18 tract.’’.

19 (4) CONFORMING AMENDMENTS.—

20 (A) IN GENERAL.—Section 1876(i)(6)(B)

21 of such Act (42 U.S.C. 1395mm(i)(6)(B)) is

22 amended by striking the second sentence.

23 (B) PROCEDURAL PROVISIONS.—Section

24 1876(i)(6) of such Act (42 U.S.C.
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1 1395mm(i)(6)) is further amended by adding at

2 the end the following new subparagraph:

3 ‘‘(D) The provisions of section 1128A (other than

4 subsections (a) and (b)) shall apply to a civil money pen5 alty under subparagraph (A) or (B) in the same manner

6 as they apply to a civil money penalty or proceeding under

7 section 1128A(a).’’.

8 (b) AGREEMENTS WITH PEER REVIEW ORGANIZA9 TIONS.—

10 (1) REQUIREMENT FOR WRITTEN AGREE11 MENT.—Section 1876(i)(7)(A) of the Social Security

12 Act (42 U.S.C. 1395mm(i)(7)(A)) is amended by

13 striking ‘‘an agreement’’ and inserting ‘‘a written

14 agreement’’.

15 (2) DEVELOPMENT OF MODEL AGENCIES.—Not

16 later than July 1, 1995, the Secretary shall develop

17 a model of the agreement that an eligible organiza18 tion with a risk-sharing contract under section 1876

19 of the Social Security Act must enter into with an

20 entity providing peer review services with respect to

21 services provided by the organization under section

22 1876(i)(7)(A) of such Act.

23 (3) REPORT BY GAO.—

24 (A) STUDY.—The Comptroller General

25 shall conduct a study of the costs incurred by
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1 eligible organizations with risk-sharing con2 tracts under section 1876(b) of such Act of

3 complying with the requirement of entering into

4 a written agreement with an entity providing

5 peer review services with respect to services pro6 vided by the organization, together with an

7 analysis of how information generated by such

8 entities is used by the Secretary to assess the

9 quality of services provided by such eligible or10 ganizations.

11 (B) REPORT TO CONGRESS.—Not later

12 than July 1, 1997, the Comptroller General

13 shall submit a report to the Committee on

14 Ways and Means and the Committee on Energy

15 and Commerce of the House of Representatives

16 and the Committee on Finance and the Special

17 Committee on Aging of the Senate on the study

18 conducted under subparagraph (A).

19 (c) EFFECTIVE DATE.—The amendments made by

20 this section shall apply with respect to contract years be21 ginning on or after January 1, 1995.

22 SEC. 518. EFFECTIVE DATE.

23 Unless specifically provided otherwise, the amend24 ments made by this subtitle shall take effect on January

25 1, 1995.
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1 Subtitle C—Administrative and

2 Miscellaneous Provisions

3 SEC. 521. ESTABLISHMENT OF THE HEALTH CARE FRAUD

4 AND ABUSE DATA COLLECTION PROGRAM.

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

6 (1) Fraud and abuse with respect to the deliv7 ery of and payment for health care services is a sig8 nificant contributor to the growing costs of the Na9 tion’s health care.

10 (2) Control of fraud and abuse in health care

11 services warrants greater efforts of coordination

12 than those that can be undertaken by individual

13 States or the various Federal, State, and local law

14 enforcement programs.

15 (3) There is a national need to coordinate infor16 mation about health care providers and entities that

17 have engaged in fraud and abuse in the delivery of

18 and payment for health care services.

19 (4) There is no comprehensive national data

20 collection program for the reporting of public infor21 mation about final adverse actions against health

22 care providers, suppliers, or licensed health care

23 practitioners that have engaged in fraud and abuse

24 in the delivery of and payment for health care serv25 ices.
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1 (5) A comprehensive national data collection

2 program for the reporting of public information

3 about final adverse actions will facilitate the enforce4 ment of the provisions of the Social Security Act and

5 other statutes applicable to health care fraud and

6 abuse.

7 (b) GENERAL PURPOSE.—Not later than January 1,

8 1995, the Secretary shall establish a national health care

9 fraud and abuse data collection program for the reporting

10 of final adverse actions (not including settlements where

11 no finding of liability has been made) against health care

12 providers, suppliers, or practitioners as required by sub13 section (c), with access as set forth in subsection (d).

14 (c) REPORTING OF INFORMATION.—

15 (1) IN GENERAL.—Each government agency

16 and health care plan shall report any final adverse

17 action (not including settlements where no finding of

18 liability has been made) taken against a health care

19 provider, supplier, or practitioner.

20 (2) INFORMATION TO BE REPORTED.—The in21 formation to be reported under paragraph (1) in22 cludes:

23 (A) The name of any health care provider,

24 supplier, or practitioner who is the subject of a

25 final adverse action.
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1 (B) The name (if known) of any health

2 care entity with which a health care provider,

3 supplier, or practitioner is affiliated or associ4 ated.

5 (C) The nature of the final adverse action.

6 (D) A description of the acts or omissions

7 and injuries upon which the final adverse action

8 was based, and such other information as the

9 Secretary determines by regulation is required

10 for appropriate interpretation of information re11 ported under this section.

12 (3) CONFIDENTIALITY.—In determining what

13 information is required to be reported, the Secretary

14 shall establish procedures to assure that the privacy

15 of individuals receiving health care services is appro16 priately protected.

17 (4) TIMING AND FORM OF REPORTING.—The

18 information required to be reported under this sub19 section shall be reported regularly (but not less often

20 than monthly) and in such form and manner as the

21 Secretary prescribes. Such information shall first be

22 required to be reported on a date specified by the

23 Secretary.
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1 (5) TO WHOM REPORTED.—The information re2 quired to be reported under this subsection shall be

3 reported to the Secretary.

4 (d) DISCLOSURE AND CORRECTION OF INFORMA5 TION.—

6 (1) DISCLOSURE.—With respect to the informa7 tion about final adverse actions (not including settle8 ments where no findings of liability has been made)

9 reported to the Secretary under this section respect10 ing a health care provider, supplier, or practitioner,

11 the Secretary shall, by regulation, provide for—

12 (A) disclosure of the information, upon re13 quest, to the health care provider, supplier, or

14 licensed practitioner, and

15 (B) procedures in the case of disputed ac16 curacy of the information.

17 (2) CORRECTIONS.—Each Government agency

18 and health care plan shall report corrections of in19 formation already reported about any final adverse

20 action taken against a health care provider, supplier,

21 or practitioner, in such form and manner that the

22 Secretary prescribes by regulation.

23 (e) ACCESS TO REPORTED INFORMATION.—

24 (1) AVAILABILITY.—The information in the

25 health care fraud and abuse data collection program
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1 database shall be available to the public, Federal

2 and State government agencies, and health care

3 plans pursuant to procedures that the Secretary

4 shall provide by regulation.

5 (2) FEES FOR DISCLOSURE.—The Secretary

6 may establish or approve reasonable fees for the dis7 closure of information in such database. The amount

8 of such a fee may not exceed the costs of processing

9 the requests for disclosure and of providing such in10 formation. Such fees shall be available to the Sec11 retary or, in the Secretary’s discretion to the agency

12 designated under this section to cover such costs.

13 (f) PROTECTION FROM LIABILITY FOR REPORT14 ING.—No person or entity shall be held liable in any civil

15 action with respect to any report made as required by this

16 section, without knowledge of the falsity of the informa17 tion contained in the report.

18 (g) DEFINITIONS AND SPECIAL RULES.—For pur19 poses of this section:

20 (1) FINAL ADVERSE ACTION.—The term ‘‘final

21 adverse action’’ includes:

22 (A) Civil judgments against a health care

23 provider in Federal or State court related to the

24 delivery of a health care item or service.
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1 (B) Federal or State criminal convictions

2 related to the delivery of a health care item or

3 service.

4 (C) Actions by Federal or State agencies

5 responsible for the licensing and certification of

6 health care providers, suppliers, and licensed

7 health care practitioners, including—

8 (i) formal or official actions, such as

9 revocation or suspension of a license (and

10 the length of any such suspension), rep11 rimand, censure or probation,

12 (ii) any other loss of license of the

13 provider, supplier, or practitioner, by oper14 ation of law, or

15 (iii) any other negative action or find16 ing by such State or Federal agency that

17 is publicly available information.

18 (D) Exclusion from participation in Fed19 eral or State health care programs.

20 (E) Any other adjudicated actions or deci21 sions that the Secretary shall establish by regu22 lation.

23 For purposes of subparagraph (B), the existence of

24 a conviction shall be determined under paragraph

25 (4) of section 1128(j) of the Social Security Act.
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1 (2) GOVERNMENT AGENCY.—The term ‘‘Gov2 ernment agency’’ shall include:

3 (A) The Department of Justice.

4 (B) The Department of Health and

5 Human Services.

6 (C) Any other Federal agency that either

7 administers or provides payment for the deliv8 ery of health care services, including, but not

9 limited to the Department of Defense and the

10 Department of Veterans Affairs.

11 (D) State law enforcement agencies.

12 (E) State medicaid fraud and abuse units.

13 (F) State or Federal agencies responsible

14 for the licensing and certification of health care

15 providers and licensed health care practitioners.

16 (3) HEALTH CARE PLAN.—The term ‘‘health

17 care plan’’ has the meaning given to such term by

18 section 1128(i) of the Social Security Act.

19 (4) HEALTH CARE PROVIDER.—The term

20 ‘‘health care provider’’ means a provider of services

21 as defined in section 1861(u) of the Social Security

22 Act, and any entity, including a health maintenance

23 organization, group medical practice, or any other

24 entity listed by the Secretary in regulation, that pro25 vides health care services.
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1 (5) LICENSED HEALTH CARE PRACTITION2 ERS.—The terms ‘‘licensed health care practitioner’’,

3 ‘‘licensed practitioner’’, and ‘‘practitioner’’ mean,

4 with respect to a State, an individual who is licensed

5 or otherwise authorized by the State to provide

6 health care services (or any individual who, without

7 authority holds himself or herself out to be so li8 censed or authorized).

9 (6) SUPPLIER.—The term ‘‘supplier’’ means a

10 supplier of health care items and services described

11 in sections 1819 (a) and (b), and section 1861 of

12 the Social Security Act.

13 (h) CONFORMING AMENDMENT.—Section 1921(d) of

14 the Social Security Act is amended by inserting ‘‘and sec15 tion 521 of the Advancement of Health Care Reform Act

16 of 1994’’ after ‘‘section 422 of the Health Care Quality

17 Improvement Act of 1986’’.

18 SEC. 522. QUARTERLY PUBLICATION OF ADVERSE ACTIONS

19 TAKEN.

20 (a) IN GENERAL.—Part A of title XI of the Social

21 Security Act (42 U.S.C. 1301 et seq.) is amended by add22 ing at the end the following new section:

23 ‘‘QUARTERLY PUBLICATION OF ADVERSE ACTIONS TAKEN

24 ‘‘SEC. 1145. Not later than 30 days after the end

25 of each calendar quarter, the Secretary shall publish in

26 the Federal Register a listing of all final adverse actions
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1 taken during the quarter under this part (including pen2 alties imposed under section 1107, exclusions under sec3 tion 1128, the imposition of civil monetary penalties under

4 section 1128A, and the imposition of criminal penalties

5 under section 1128B) and under section 1156.’’.

6 (b) EFFECTIVE DATE.—The amendment made by

7 subsection (a) shall apply to calendar quarters beginning

8 on or after January 1, 1995.

9 Subtitle D—Amendments to

10 Criminal Law

11 SEC. 531. HEALTH CARE FRAUD.

12 (a) IN GENERAL.—

13 (1) FINES AND IMPRISONMENT FOR HEALTH

14 CARE FRAUD VIOLATIONS.—Chapter 63 of title 18,

15 United States Code, is amended by adding at the

16 end the following:

17 ‘‘§ 1347. Health care fraud

18 ‘‘(a) Whoever knowingly executes, or attempts to exe19 cute, a scheme or artifice—

20 ‘‘(1) to defraud any health care plan or other

21 person, in connection with the delivery of or pay22 ment for health care benefits, items, or services; or

23 ‘‘(2) to obtain, by means of false or fraudulent

24 pretenses, representations, or promises, any of the

25 money or property owned by, or under the custody
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1 or control of, any health care plan, or person in con2 nection with the delivery of or payment for health

3 care benefits, items, or services;

4 shall be fined under this title or imprisoned not more than

5 10 years, or both. If the violation results in serious bodily

6 injury (as defined in section 1365(g)(3) of this title), such

7 person shall be imprisoned for life or any term of years.

8 ‘‘(b) For purposes of this section, the term ‘health

9 care plan’ means a federally funded public program or pri10 vate program for the delivery of or payment for health

11 care items or services.’’.

12 (2) CLERICAL AMENDMENT.—The table of sec13 tions at the beginning of chapter 63 of title 18,

14 United States Code, is amended by adding at the

15 end the following:

‘‘1347. Health care fraud.’’.

16 SEC. 532. FORFEITURES FOR FEDERAL HEALTH CARE OF17 FENSES.

18 Section 982(a) of title 18, United States Code, is

19 amended by inserting after paragraph (5) the following:

20 ‘‘(6)(A) If the court determines that a Federal health

21 care offense is of a type that poses a serious threat to

22 the health of any person or has a significant detrimental

23 impact on the health care system, the court, in imposing

24 sentence on a person convicted of that offense, shall order

25 that person to forfeit property, real or personal, that—
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1 ‘‘(i)(I) is used in the commission of the offense;

2 or

3 ‘‘(II) constitutes or is derived from proceeds

4 traceable to the commission of the offense; and

5 ‘‘(ii) is of a value proportionate to the serious6 ness of the offense.

7 ‘‘(B) For purposes of this paragraph, the term ‘Fed8 eral health care offense’ means a violation of, or a criminal

9 conspiracy to violate—

10 ‘‘(i) section 1347 of this title;

11 ‘‘(ii) section 1128B of the Social Security Act;

12 ‘‘(iii) sections 287, 371, 664, 666, 1001, 1027,

13 1341, 1343, or 1954 of this title if the violation or

14 conspiracy relates to health care fraud;

15 ‘‘(iv) section 501 or 511 of the Employee Re16 tirement Income Security Act of 1974, if the viola17 tion or conspiracy relates to health care fraud; and

18 ‘‘(v) section 301, 303 (a)(2), or 303 (b) or (e)

19 of the Federal Food, Drug and Cosmetic Act, if the

20 violation or conspiracy relates to health care fraud.’’.

21 SEC. 533. INJUNCTIVE RELIEF RELATING TO FEDERAL

22 HEALTH CARE OFFENSES.

23 Section 1345(a)(1) of title 18, United States Code,

24 is amended—
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1 (1) by striking ‘‘or’’ at the end of subparagraph

2 (A);

3 (2) by inserting ‘‘or’’ at the end of subpara4 graph (B); and

5 (3) by adding at the end the following new sub6 paragraph:

7 ‘‘(C) committing or about to commit a Federal

8 health care offense (as defined in section

9 982(a)(6)(B) of this title);’’.

10 SEC. 534. RACKETEERING ACTIVITY RELATING TO FED11 ERAL HEALTH CARE OFFENSES.

12 Section 1961(1) of title 18, United States Code, is

13 amended by inserting ‘‘section 982(a)(6) (relating to Fed14 eral health care offenses),’’ after ‘‘sections 891–894 (relat15 ing to extortionate credit transactions),’’.

16 Subtitle E—Amendments to Civil

17 False Claims Act

18 SEC. 541. AMENDMENTS TO CIVIL FALSE CLAIMS ACT.

19 Section 3729 of title 31, United States Code, is

20 amended—

21 (1) in subsection (a)(7), by inserting ‘‘or to a

22 health care plan,’’ after ‘‘property to the Govern23 ment,’’;
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1 (2) in the matter following subsection (a)(7), by

2 inserting ‘‘or health care plan’’ before ‘‘sustains be3 cause of the act of that person,’’;

4 (3) at the end of the first sentence of sub5 section (a), by inserting ‘‘or health care plan’’ before

6 ‘‘sustains because of the act of the person.’’;

7 (4) in subsection (c)—

8 (A) by inserting ‘‘the term‘ after ‘‘sec9 tion,’’; and

10 (B) by adding at the end the following new

11 sentence: ‘‘The term also includes any request

12 or demand, whether under contract or other13 wise, for money or property which is made or

14 presented to a health care plan.’’; and

15 (5) by adding at the end the following new sub16 section:

17 ‘‘(f) HEALTH CARE PLAN DEFINED.—For purposes

18 of this section, the term ‘health care plan’ means a feder19 ally funded public program for the delivery of or payment

20 for health care items or services.’’.

21 TITLE VI—EXPANDING ACCESS

22 IN RURAL AREAS

23 SEC. 601. SHORT TITLE.

24 This title may be cited as the ‘‘Rural Health Innova25 tion Demonstration Act of 1993’’.
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1 SEC. 602. RURAL HEALTH EXTENSION NETWORKS.

2 Title XVII of the Public Health Service Act (42

3 U.S.C. 300u et seq.) is amended by adding at the end

4 thereof the following new section:

5 ‘‘SEC. 1709. RURAL HEALTH EXTENSION NETWORKS.

6 ‘‘(a) GRANTS.—The Secretary, acting through the

7 Health Resources and Services Administration, may

8 award competitive grants to eligible entities to enable such

9 entities to facilitate the development of networks among

10 rural and urban health care providers to preserve and

11 share health care resources and enhance the quality and

12 availability of health care in rural areas. Such networks

13 may be statewide or regionalized in focus.

14 ‘‘(b) ELIGIBLE ENTITIES.—To be eligible to receive

15 a grant under subsection (a) an entity shall—

16 ‘‘(1)(A) be a rural health extension network

17 that meets the requirements of subsection (c); or

18 ‘‘(B) be an Area Health Education Center Pro19 gram;

20 ‘‘(2) prepare and submit to the Secretary an

21 application at such time, in such form and contain22 ing such information as the Secretary may require;

23 and

24 ‘‘(3) meet such other requirements as the Sec25 retary determines appropriate.
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1 ‘‘(c) NETWORKS.—For purposes of subsection

2 (b)(1)(A), a rural health extension network shall be an as3 sociation or consortium of three or more rural health care

4 providers, and may include one or more urban health care

5 provider, for the purposes of applying for a grant under

6 this section and using amounts received under such grant

7 to provide the services described in subsection (d).

8 ‘‘(d) SERVICES.—

9 ‘‘(1) IN GENERAL.—An entity that receives a

10 grant under subsection (a) shall use amounts re11 ceived under such grant to—

12 ‘‘(A) provide education and community de13 cisionmaking support for health care providers

14 in the rural areas served by the network;

15 ‘‘(B) utilize existing health care provider

16 education programs, including but not limited

17 to, the program for area health education cen18 ters under section 781, to provide educational

19 services to health care providers and trainees

20 including, but not limited to, physicians, nurses

21 and nursing students in the areas served by the

22 network;

23 ‘‘(C) make appropriately trained

24 facilitators available to health care providers lo25 cated in the areas served by the network to as-
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1 sist such providers in developing cooperative ap2 proaches to health care in such area;

3 ‘‘(D) facilitate linkage building through the

4 organization of discussion and planning groups

5 and the dissemination of information concern6 ing the health care resources where available,

7 within the area served by the network;

8 ‘‘(E) support telecommunications and con9 sultative projects to link rural hospitals and

10 other health care providers, and urban or ter11 tiary hospitals in the areas served by the net12 work; or

13 ‘‘(F) carry out any other activity deter14 mined appropriate by the Secretary.

15 ‘‘(2) EDUCATION.—In carrying out activities

16 under paragraph (1)(B), an entity shall support the

17 development of an information and resource sharing

18 system, including elements targeted towards high

19 risk populations and focusing on health promotion,

20 to facilitate the ability of rural health care providers

21 to have access to needed health care information.

22 Such activities may include the provision of training

23 to enable individuals to serve as coordinators of

24 health education programs in rural areas.
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1 ‘‘(3) COLLECTION AND DISSEMINATION OF

2 DATA.—The chief executive officer of a State shall

3 designate a State agency that shall be responsible

4 for collecting and regularly disseminating informa5 tion concerning the activities of the rural health ex6 tension networks in that State.

7 ‘‘(e) MATCHING REQUIREMENT.—An entity that re8 ceives a grant under subsection (a) shall make available

9 (directly or through donations from public or private enti10 ties), non-Federal contributions towards the costs of the

11 operations of the network in an amount equal to the

12 amount of the grant.

13 ‘‘(f) AUTHORIZATION OF APPROPRIATIONS.—There

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

15 $10,000,000 for each of the fiscal years 1994 through

16 1997.

17 ‘‘(g) DEFINITION.—As used in this section and sec18 tion 1710, the term ‘rural health care providers’ means

19 health care professionals and hospitals located in rural

20 areas. The Secretary shall ensure that for purposes of this

21 definition, rural areas shall include any area that meets

22 any applicable Federal or State definition of rural area.

23 ‘‘(h) RELATION TO OTHER LAWS.—

24 ‘‘(1) IN GENERAL.—Notwithstanding any provi25 sion of the antitrust laws, it shall not be considered
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1 a violation of the antitrust laws for entities to de2 velop and operate networks in accordance with this

3 section.

4 ‘‘(2) DEFINITION.—For purposes of this sub5 section, the term ‘antitrust laws’ means—

6 ‘‘(A) the Act entitled ‘An Act to protect

7 trade and commerce against unlawful restraints

8 and monopolies’, approved July 2, 1890, com9 monly known as the ‘Sherman Act’ (26 Stat.

10 209; chapter 647; 15 U.S.C. 1 et seq.);

11 ‘‘(B) the Federal Trade Commission Act,

12 approved September 26, 1914 (38 Stat. 717;

13 chapter 311; 15 U.S.C. 41 et seq.);

14 ‘‘(C) the Act entitled ‘An Act to supple15 ment existing laws against unlawful restraints

16 and monopolies, and for other purposes’, ap17 proved October 15, 1914, commonly known as

18 the ‘Clayton Act’ (38 Stat. 730; chapter 323;

19 15 U.S.C. 12 et seq.; 18 U.S.C. 402, 660,

20 3285, 3691; 29 U.S.C. 52, 53);

21 ‘‘(D) the Act of June 19, 1936, commonly

22 known as the Robinson-Patman Antidiscrimina23 tion Act (15 U.S.C. 13 et seq.); and
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1 ‘‘(E) any State antitrust laws that would

2 prohibit the activities described in paragraph

3 (1).’’.

4 SEC. 603. RURAL MANAGED CARE COOPERATIVES.

5 Title XVII of the Public Health Service Act (42

6 U.S.C. 300u et seq.) as amended by section 602 is further

7 amended by adding at the end thereof the following new

8 section:

9 ‘‘SEC. 1710. RURAL MANAGED CARE COOPERATIVES.

10 ‘‘(a) GRANTS.—The Secretary, acting through the

11 Health Resources and Services Administration, may

12 award competitive grants to eligible entities to enable such

13 entities to develop and administer cooperatives in rural

14 areas that will establish an effective case management and

15 reimbursement system designed to support the economic

16 viability of essential public or private health services, fa17 cilities, health care systems and health care resources in

18 such rural areas.

19 ‘‘(b) ELIGIBLE ENTITIES.—To be eligible to receive

20 a grant under subsection (a) an entity shall—

21 ‘‘(1) prepare and submit to the Secretary an

22 application at such time, in such form and contain23 ing such information as the Secretary may require,

24 including a description of the cooperative that the
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1 entity intends to develop and operate using grant

2 funds; and

3 ‘‘(2) meet such other requirements as the Sec4 retary determines appropriate.

5 ‘‘(c) COOPERATIVES.—

6 ‘‘(1) IN GENERAL.—Amounts provided under a

7 grant awarded under subsection (a) shall be used to

8 establish and operate a cooperative made up of all

9 types of health care providers, hospitals, primary ac10 cess hospitals, other alternate rural health care fa11 cilities, physicians, rural health clinics, rural nurse

12 practitioners and physician assistant practitioners,

13 public health departments and others located in, but

14 not restricted to, the rural areas to be served by the

15 cooperative.

16 ‘‘(2) BOARD OF DIRECTORS.—A cooperative es17 tablished under paragraph (1) shall be administered

18 by a board of directors elected by the members of

19 the cooperative, a majority of whom shall represent

20 rural providers from the local community and in21 clude representatives from the local community.

22 Such members shall serve at the pleasure of such

23 members.

24 ‘‘(3) EXECUTIVE DIRECTOR.—The members of

25 a cooperative established under paragraph (1) shall
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1 elect an executive director who shall serve as the

2 chief operating officer of the cooperative. The execu3 tive director shall be responsible for conducting the

4 day to day operation of the cooperative including—

5 ‘‘(A) maintaining an accounting system for

6 the cooperative;

7 ‘‘(B) maintaining the business records of

8 the cooperative;

9 ‘‘(C) negotiating contracts with provider

10 members of the cooperative; and

11 ‘‘(D) coordinating the membership and

12 programs of the cooperative.

13 ‘‘(4) REIMBURSEMENTS.—

14 ‘‘(A) NEGOTIATIONS.—A cooperative es15 tablished under paragraph (1) shall facilitate

16 negotiations among member health care provid17 ers and third party payors concerning the rates

18 at which such providers will be reimbursed for

19 services provided to individuals for which such

20 payors may be liable.

21 ‘‘(B) AGREEMENTS.—Agreements reached

22 under subparagraph (A) shall be binding on the

23 members of the cooperative.

24 ‘‘(C) EMPLOYERS.—Employer entities may

25 become members of a cooperative established
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1 under paragraph (1) in order to provide,

2 through a member third party payor, health in3 surance coverage for its employees. Deductibles

4 shall only be charged to employees covered

5 under such insurance if such employees receive

6 health care services from a provider that is not

7 a member of the cooperative if similar services

8 would have been available from a member pro9 vider.

10 ‘‘(D) MALPRACTICE INSURANCE.—A coop11 erative established under paragraph (1) shall be

12 responsible for identifying and implementing an

13 affordable malpractice insurance program that

14 shall include a requirement that such coopera15 tive assume responsibility for the payment of a

16 portion of the malpractice insurance premium

17 of providers members.

18 ‘‘(5) MANAGED CARE AND PRACTICE STAND19 ARDS.—A cooperative established under paragraph

20 (1) shall establish joint case management and pa21 tient care practice standards programs that health

22 care providers that are members of such cooperative

23 must meet to be eligible to participate in agreements

24 entered into under paragraph (4). Such standards

25 shall be developed by such provider members and
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1 shall be subject to the approval of a majority of the

2 board of directors. Such programs shall include cost

3 and quality of care guidelines including a require4 ment that such providers make available

5 preadmission screening, selective case management

6 services, joint patient care practice standards devel7 opment and compliance and joint utilization review.

8 ‘‘(6) CONFIDENTIALITY.—

9 ‘‘(A) IN GENERAL.—Patients records,

10 records of peer review, utilization review, and

11 quality assurance proceedings conducted by the

12 cooperative should be considered confidential

13 and protected from release outside of the coop14 erative. The provider members of the coopera15 tive shall be indemnified by the cooperative for

16 the good faith participation by such members in

17 such the required activities.

18 ‘‘(B) QUALITY DATA.—Notwithstanding

19 any other provision of law, quality data ob20 tained by a hospital or other member of a coop21 erative in the normal course of the operations

22 of the hospital or member shall be immune

23 from discovery regardless of whether such data

24 is used for purposes other than peer review or
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1 is disclosed to other members of the cooperative

2 involved.

3 ‘‘(d) LINKAGES.—A cooperative shall create linkages

4 among member health care providers, employers, and

5 payors for the joint consultation and formulation of the

6 types, rates, costs, and quality of health care provided in

7 rural areas served by the cooperative.

8 ‘‘(e) MATCHING REQUIREMENT.—An entity that re9 ceives a grant under subsection (a) shall make available

10 (directly or through donations from public or private enti11 ties), non-Federal contributions towards the costs of the

12 operations of the network in an amount equal to the

13 amount of the grant.

14 ‘‘(f) AUTHORIZATION OF APPROPRIATIONS.—There

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

16 $15,000,000 for each of the fiscal years 1994 through

17 1997.

18 ‘‘(g) RELATION TO OTHER LAWS.—

19 ‘‘(1) IN GENERAL.—Notwithstanding any provi20 sion of the antitrust laws, it shall not be considered

21 a violation of the antitrust laws for entities to de22 velop and operate cooperatives in accordance with

23 this section.

24 ‘‘(2) DEFINITION.—For purposes of this sub25 section, the term ‘antitrust laws’ means—
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1 ‘‘(A) the Act entitled ‘An Act to protect

2 trade and commerce against unlawful restraints

3 and monopolies’, approved July 2, 1890, com4 monly known as the ‘Sherman Act’ (26 Stat.

5 209; chapter 647; 15 U.S.C. 1 et seq.);

6 ‘‘(B) the Federal Trade Commission Act,

7 approved September 26, 1914 (38 Stat. 717;

8 chapter 311; 15 U.S.C. 41 et seq.);

9 ‘‘(C) the Act entitled ‘An Act to supple10 ment existing laws against unlawful restraints

11 and monopolies, and for other purposes’, ap12 proved October 15, 1914, commonly known as

13 the ‘Clayton Act’ (38 Stat. 730; chapter 323;

14 15 U.S.C. 12 et seq.; 18 U.S.C. 402, 660,

15 3285, 3691; 29 U.S.C. 52, 53); and

16 ‘‘(D) the Act of June 19, 1936, commonly

17 known as the Robinson-Patman Antidiscrimina18 tion Act (15 U.S.C. 13 et seq.); and

19 ‘‘(E) any State antitrust laws that would

20 prohibit the activities described in paragraph

21 (1).’’.

22 SEC. 604. RURAL MENTAL HEALTH OUTREACH GRANTS.

23 Subpart 3 of part B of title V of the Public Health

24 Service Act (42 U.S.C. 209bb–31 et seq.) is amended by

25 adding at the end thereof the following new section:
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1 ‘‘SEC. 520C. RURAL MENTAL HEALTH OUTREACH GRANTS.

2 ‘‘(a) IN GENERAL.—The Secretary may award com3 petitive grants to eligible entities to enable such entities

4 to develop and implement a plan for mental health out5 reach programs in rural areas.

6 ‘‘(b) ELIGIBLE ENTITIES.—To be eligible to receive

7 a grant under subsection (a) an entity shall—

8 ‘‘(1) prepare and submit to the Secretary an

9 application at such time, in such form and contain10 ing such information as the Secretary may require,

11 including a description of the activities that the en12 tity intends to undertake using grant funds; and

13 ‘‘(2) meet such other requirements as the Sec14 retary determines appropriate.

15 ‘‘(c) PRIORITY.—In awarding grants under sub16 section (a), the Secretary shall give priority to applications

17 that place emphasis on mental health services for the el18 derly or children. Priority shall also be given to applica19 tions that involve relationships between the applicant and

20 rural managed care cooperatives.

21 ‘‘(d) MATCHING REQUIREMENT.—An entity that re22 ceives a grant under subsection (a) shall make available

23 (directly or through donations from public or private enti24 ties), non-Federal contributions towards the costs of the

25 operations of the network in an amount equal to the

26 amount of the grant.
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1 ‘‘(e) AUTHORIZATION OF APPROPRIATIONS.—There

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

3 $5,000,000 for each of the fiscal years 1994 through

4 1997.’’.

5 SEC. 605. AREA HEALTH EDUCATION CENTERS.

6 (a) STIPENDS FOR PERSONNEL.—Section 746(a) of

7 the Public Health Service Act (42 U.S.C. 293j(a)) is

8 amended by adding at the end thereof the following new

9 paragraph:

10 ‘‘(4) STIPENDS.—

11 ‘‘(A) The Secretary may make award

12 grants under this section to rural communities

13 to enable such communities to provide stipends

14 to physicians, nurses, nurse practitioners, physi15 cian assistants, and other health professional

16 trainees to encourage such individuals to pro17 vide health care services in such rural commu18 nities. In addition, the Secretary may award

19 grants under this section to rural communities

20 to enable such communities to provide stipends

21 to physicians, nurses, nurse practitioners, physi22 cian assistants, and other health professionals

23 that are practicing in rural areas to retain such

24 individuals in such areas.
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1 ‘‘(B) A community that receives a grant

2 under subparagraph (A) shall make available

3 (directly or through donations from public or

4 private entities), non-Federal contributions to5 wards the costs of the operations of the network

6 in an amount equal to the amount of the

7 grant.’’.

8 (b) REAUTHORIZATION.—Section 746(i)(1)(A) of

9 such Act (42 U.S.C. 293j(i)(1)(A)) is amended by striking

10 out ‘‘$25,000,000’’ and all that follows through ‘‘1995’’

11 and inserting in lieu thereof ‘‘$25,000,000 for fiscal year

12 1993, and $42,000,000 for each of the fiscal years 1994

13 through 1997’’.

14 TITLE VII—TAX PROVISIONS

15 SEC. 701. AMENDMENT OF 1986 CODE.

16 Except as otherwise expressly provided, whenever in

17 this subtitle an amendment or repeal is expressed in terms

18 of an amendment to, or repeal of, a section or other provi19 sion, the reference shall be considered to be made to a

20 section or other provision of the Internal Revenue Code

21 of 1986.

22 SEC. 702. DEDUCTIONS FOR COSTS OF QUALIFIED HEALTH

23 PLANS.

24 (a) BUSINESS EXPENSE DEDUCTION FOR HEALTH

25 INSURANCE.—Section 162 (relating to trade or business
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1 expenses) is amended by redesignating subsection (m) as

2 subsection (n) and by inserting after subsection (l) the fol3 lowing new subsection:

4 ‘‘(m) GROUP HEALTH PLANS.—The amount of ex5 penses paid or incurred by an employer for a group health

6 plan or as contributions to an employee’s medical savings

7 account shall not be allowed as a deduction under this sec8 tion unless the plan is a federally qualified health plan

9 (as defined in section 111 of the Advancement of Health

10 Care Reform Act of 1994).’’.

11 (b) PERMANENT EXTENSION AND INCREASE IN

12 HEALTH INSURANCE TAX DEDUCTION FOR SELF-EM13 PLOYED INDIVIDUALS.—

14 (1) PERMANENT EXTENSION OF DEDUCTION.—

15 (A) IN GENERAL.—Subsection (l) of sec16 tion 162 (relating to special rules for health in17 surance costs of self-employed individuals) is

18 amended by striking paragraph (6).

19 (B) EFFECTIVE DATE.—The amendment

20 made by this paragraph shall apply to taxable

21 years beginning after December 31, 1993.

22 (2) INCREASE IN AMOUNT OF DEDUCTION; IN23 SURANCE PURCHASED MUST MEET CERTAIN STAND24 ARDS.—
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1 (A) INCREASE IN AMOUNT OF DEDUC2 TION.—Paragraph (1) of section 162(l) is

3 amended—

4 (i) by striking ‘‘25 percent of’’ and in5 serting ‘‘100 percent of’’.

6 (B) INSURANCE PURCHASED MUST MEET

7 CERTAIN STANDARDS.—Paragraph (2) of sec8 tion 162(l) is amended by adding at the end the

9 following new subparagraph:

10 ‘‘(C) INSURANCE MUST MEET CERTAIN

11 STANDARDS.—Paragraph (1) shall apply only to

12 insurance which is a qualified health plan.’’.

13 (C) TREATMENT OF MULTIEMPLOYER

14 HEALTH PLANS.—Subsection (l) of section 162

15 is amended by adding at the end the following

16 new paragraph:

17 ‘‘(6) TREATMENT OF MULTIEMPLOYER HEALTH

18 PLANS.—For purposes of this subsection, an amount

19 paid into a multiemployer health plan (as defined in

20 section 91(d)(7)) shall be deemed to be an amount

21 paid for insurance which constitutes medical care.’’.

22 (c) DEDUCTION FOR PREMIUMS LIMITED TO QUALI23 FIED HEALTH PLANS.—Subparagraph (C) of section

24 213(d)(1) (defining medical care) is amended by striking

25 ‘‘for insurance’’ and inserting ‘‘for a qualified health plan
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1 (as defined in section 111 of the Advancement of Health

2 Care Reform Act of 1994).’’.

3 (d) EFFECTIVE DATE.—Except as provided in sub4 section (b)(1)(B), the amendments made by this section

5 shall apply to taxable years beginning after the December

6 31, 1996.

7 TITLE VIII—REVENUE

8 PROVISIONS

9 SEC. 801. DISCRETIONARY SPENDING REDUCTIONS.

10 Section 601(a)(2) of the Congressional Budget Act

11 of 1974 is amended—

12 (1) in subparagraph (D) by inserting ‘‘and’’

13 after the semicolon;

14 (2) by amending subparagraph (E) to read as

15 follows:

16 ‘‘(E) with respect to fiscal years 1995,

17 1996, 1997, and 1998 for the discretionary cat18 egory 99.6 percent of the amounts set forth for

19 fiscal year 1994 in the concurrent resolution on

20 the budget for fiscal year 1994 (H. Con. Res.

21 64, 103d Congress);’’; and

22 (3) by striking subparagraph (F).

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Calendar No. 457

103D CONGRESS

2D SESSION S. 2153

A BILL

To improve access to quality health care, to reform

ery system, and for other purposes.prevent fraud and abuse in the health care delivtivities of providers of health care services, toapplication of the antitrust laws for certain accare claims, to establish safe harbors from thepaperwork and simplify administration of healthmedical malpractice liability standards, to reduce

JUNE 7, 1994

Read the second time and placed on the calendar