II

103D CONGRESS

1ST SESSION S. 223

To contain health care costs and increase access to affordable health care,

and for other purposes.

IN THE SENATE OF THE UNITED STATES

JANUARY 27 (legislative day, JANUARY 5), 1993

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

to the Committee on Finance

A BILL

To contain health care costs and increase access to affordable

health care, and for other purposes.

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

3 SECTION 1. SHORT TITLE AND TABLE OF CONTENTS.

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

5 ‘‘Access to Affordable Health Care Act’’.

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

7 as follows:

Sec. 2. Definitions.

TITLE I—MANAGED COMPETITION IN HEALTH CARE PLANS

Sec. 100. Block grant program.

Subtitle A—Health Plan Purchasing Cooperatives
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Sec. 101. Establishment and organization; HPPC areas.

Sec. 102. Agreements with accountable health plans (AHPs).

Sec. 103. Agreements with employers.

Sec. 104. Enrolling individuals in accountable health plans through a HPPC.

Sec. 105. Receipt of premiums.

Sec. 106. Coordination among HPPCs.

Subtitle B—Accountable Health Plans (AHPs)

PART 1—REQUIREMENTS FOR ACCOUNTABLE HEALTH PLANS

Sec. 111. Registration process; qualifications.

Sec. 112. Specified uniform set of effective benefits.

Sec. 113. Collection and provision of standardized information.

Sec. 114. Prohibition of discrimination based on health status for certain conditions; limitation on pre-existing condition exclusions.

Sec. 115. Use of standard premiums.

Sec. 116. Financial solvency requirements.

Sec. 117. Grievance mechanisms; enrollee protections; written policies and procedures respecting advance directives; agent commissions.

Sec. 118. Additional requirements of open AHPs.

Sec. 119. Additional requirement of certain AHPs.

PART 2—PREEMPTION OF STATE LAWS FOR ACCOUNTABLE HEALTH PLANS

Sec. 120. Preemption from State benefit mandates.

Sec. 121. Preemption of State law restrictions on network plans.

Sec. 122. Preemption of State laws restricting utilization review programs.

Subtitle C—Federal Health Board

Sec. 131. Establishment of Federal Health Board.

Sec. 132. Specification of uniform set of effective benefits.

Sec. 133. Health benefits and data standards board.

Sec. 134. Health plan standards board.

Sec. 135. Registration of accountable health plans.

Sec. 136. Specification of risk-adjustment factors.

Sec. 137. National health data system.

Sec. 138. Measures of quality of care of specialized centers of care.

Sec. 139. Report on impact of adverse selection; recommendations on mandated

purchase of coverage.

TITLE II—TAX INCENTIVES TO INCREASE HEALTH CARE ACCESS

Sec. 201. Credit for accountable health plan costs.

Sec. 202. No deduction for employer health plan expenses in excess of accountable health plan costs.

Sec. 203. Increase in deduction for health plan premium expenses of self-employed individuals.

Sec. 204. Deduction for health plan premium expenses of individuals.

Sec. 205. Exclusion from gross income for employer contributions to accountable health plans.

TITLE III—OUTCOMES RESEARCH AND PRACTICE GUIDELINE DEVELOPMENT; APPLICATION OF GUIDELINES AS LEGAL STANDARD

Sec. 301. Authorization for expansion of health services research.
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Sec. 302. Treatment practice guidelines as a legal standard.

TITLE IV—COOPERATIVE AGREEMENTS BETWEEN HOSPITALS

Sec. 401. Purpose.

Sec. 402. Hospital technology and services sharing program.

TITLE V—IMPROVED ACCESS TO HEALTH CARE FOR RURAL AND

UNDERSERVED AREAS

Subtitle A—Revenue Incentives for Practice in Rural Areas

Sec. 501. Revenue incentives for practice in rural areas.

Subtitle B—Public Health Service Act Provisions

Sec. 511. National health service corps.

Sec. 512. Establishment of grant program.

Sec. 513. Establishment of new program to provide funds to allow federally

qualified health centers and other entities or organizations to

provide expanded services to medically underserved individuals.

Sec. 514. Rural mental health outreach grants.

Sec. 515. Health professions training.

Sec. 516. Rural health extension networks.

Sec. 517. Rural managed care cooperatives.

TITLE VI—MALPRACTICE REFORM

Sec. 601. Prelitigation screening panel grants.

TITLE VII—HEALTH PROMOTION AND DISEASE PREVENTION

Sec. 701. Disease prevention and health promotion programs treated as medical

care.

Sec. 702. Worksite wellness grant program.

Sec. 703. Expanding and improving school health education.

TITLE VIII—PRESCRIPTION DRUG COST CONTAINMENT

Sec. 801. Reduction in possessions tax credit for excessive pharmaceutical inflation.

TITLE IX—FINANCING

Sec. 901. Repeal of dollar limitation on amount of wages subject to hospital insurance tax.

1 SEC. 2. DEFINITIONS.

2 (a) ELIGIBILITY.—As used in this Act:

3 (1) ELIGIBLE INDIVIDUAL.—The term ‘‘eligible

4 individual’’ means, with respect to a HPPC area, an

5 individual who—

6 (A) is an eligible employee;
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1 (B) is an eligible resident; or

2 (C) an eligible family member of an eligible

3 employee or eligible resident.

4 (2) ELIGIBLE EMPLOYEE.—The term ‘‘eligible

5 employee’’ means, with respect to a HPPC area, an

6 individual residing in the area who is the employee

7 of a small employer.

8 (3) ELIGIBLE FAMILY MEMBER.—The term ‘‘el9 igible family member’’ means, with respect to an eli10 gible employee or other principal enrollee, an individ11 ual who—

12 (A)(i) is the spouse of the employee or

13 principal enrollee; or

14 (ii) is an unmarried dependent child under

15 22 years of age; including—

16 (I) an adopted child or recognized

17 natural child; and

18 (II) a stepchild or foster child but

19 only if the child lives with the employee or

20 principal enrollee in a regular parent-child

21 relationship;

22 or such an unmarried dependent child regard23 less of age who is incapable of self-support be24 cause of mental or physical disability which ex25 isted before age 22;
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1 (B) is a citizen or national of the United

2 States, an alien lawfully admitted to the United

3 States for permanent residence, or an alien oth4 erwise lawfully residing permanently in the

5 United States under color of law; and

6 (C) with respect to an eligible resident, is

7 not a medicare-eligible individual.

8 (4) ELIGIBLE RESIDENT.—

9 (A) IN GENERAL.—The term ‘‘eligible resi10 dent’’ means, with respect to a HPPC area, an

11 individual who is not an eligible employee, is re12 siding in the area, and is a citizen or national

13 of the United States, an alien lawfully admitted

14 for permanent residence, and an alien otherwise

15 permanently residing in the United States

16 under color of law.

17 (B) EXCLUSION OF CERTAIN INDIVIDUALS

18 OFFERED COVERAGE THROUGH A LARGE EM19 PLOYER.—The term ‘‘eligible resident’’ does not

20 include an individual who—

21 (i) is covered under an AHP pursuant

22 to an offer made under section

23 105(b)(1)(A); or
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1 (ii) could be covered under an AHP as

2 the principal enrollee pursuant to such an

3 offer if such offer had been accepted.

4 (C) TREATMENT OF MEDICARE BENE5 FICIARIES.—The term ‘‘eligible resident’’ does

6 not include a medicare-eligible beneficiary.

7 (5) ENROLLEE UNIT.—The term ‘‘enrollee

8 unit’’ means one unit in the case of coverage on an

9 individual basis or in the case of coverage on a fam10 ily basis.

11 (6) MEDICARE BENEFICIARY.—The term ‘‘med12 icare beneficiary’’ means an individual who is enti13 tled to benefits under part A of title XVIII of the

14 Social Security Act, including an individual who is

15 entitled to such benefits pursuant to an enrollment

16 under section 1818 or 1818A of such Act.

17 (7) MEDICARE-ELIGIBLE INDIVIDUAL.—The

18 term ‘‘medicare-eligible individual’’ means an indi19 vidual who—

20 (A) is a medicare beneficiary; or

21 (B) is not a medicare beneficiary but is eli22 gible to enroll under part A or part B of title

23 XVIII of the Social Security Act.

24 (b) ABBREVIATIONS.—As used in this Act:
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1 (1) AHP; ACCOUNTABLE HEALTH PLAN.—The

2 terms ‘‘accountable health plan’’ and ‘‘AHP’’ mean

3 a health plan registered with the Board under sec4 tion 111(a).

5 (2) BOARD.—The term ‘‘Board’’ means the

6 Federal Health Board established under subtitle C

7 of title I.

8 (3) HPPC; HEALTH PLAN PURCHASING COOP9 ERATIVE.—The terms ‘‘health plan purchasing coop10 erative’’ and ‘‘HPPC’’ mean a health plan purchas11 ing cooperative established under subtitle A of title

12 I.

13 (4) CLOSED AND OPEN PLANS.—

14 (A) CLOSED.—A plan is ‘closed’ if the plan

15 is limited by structure or law to a particular

16 employer or industry or is organized on behalf

17 of a particular group. A plan maintained pursu18 ant to one or more collective bargaining agree19 ments between one or more employee organiza20 tions and one or more employers shall be con21 sidered to be a closed plan.

22 (B) OPEN.—A plan is ‘‘open’’ if the plan

23 is not closed (within the meaning of subpara24 graph (A)).

25 (c) OTHER TERMS.—As used in this Act:
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1 (1) HEALTH PLAN.—The term ‘‘health plan’’

2 means a plan that provides health benefits, whether

3 directly, through insurance, or otherwise, and in4 cludes a policy of health insurance, a contract of a

5 service benefit organization, or a membership agree6 ment with a health maintenance organization or

7 other prepaid health plan, and also includes an em8 ployee welfare benefit plan or a multiple employer

9 welfare plan (as such terms are defined in section 3

10 of the Employee Retirement Income Security Act of

11 1974).

12 (2) SMALL EMPLOYER.—

13 (A) IN GENERAL.—Subject to subpara14 graph (B), the term ‘‘small employer’’ means

15 an employer that normally employed fewer than

16 100 employees during a typical business day in

17 the previous year.

18 (B) SPECIAL RULE FOR LARGE EMPLOY19 ERS.—Subject to subparagraph (C), the Board

20 shall provide a procedure by which, in the case

21 of an employer that is not a small employer but

22 normally employs fewer than 100 employees in

23 a HPPC area (or other locality identified by the

24 Board) during a typical business day, the em25 ployer, upon application, would be considered to
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1 be a small employer with respect to such em2 ployees in the HPPC area (or other locality).

3 Such procedure shall be designed so as to pre4 vent the adverse selection of employees with re5 spect to which the previous sentence is applied.

6 (C) STATE ELECTION.—Subject to section

7 101(a)(3), a State may by law, with respect to

8 employers in the State, substitute for ‘‘100’’ in

9 subparagraphs (A) and (B) any greater number

10 (not to exceed 10,001), so long as such number

11 is applied uniformly to all employers in a

12 HPPC area.

13 (3) HPPC STANDARD PREMIUM AMOUNT.—The

14 term ‘‘HPPC standard premium amount’’ means,

15 with respect to an AHP offered by a HPPC, the

16 sum of—

17 (A) the standard premium amount estab18 lished by the AHP under section 115, and

19 (B) the HPPC overhead amount estab20 lished under section 104(a)(3).

21 (4) PREMIUM CLASS.—The term ‘‘premium

22 class’’ means a class established under section

23 115(a)(2).

24 (5) STATE.—The term ‘‘State’’ includes the

25 District of Columbia, Puerto Rico, the Virgin Is-
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1 lands, Guam, American Samoa, and the Northern

2 Mariana Islands.

3 (6) TYPE OF ENROLLMENT.—There are 4

4 ‘‘types of enrollment’’:

5 (A) Coverage only of an individual (re6 ferred to in this Act as enrollment ‘‘on an indi7 vidual basis’’).

8 (B) Coverage of an individual and the indi9 vidual’s spouse.

10 (C) Coverage of an individual and one

11 child.

12 (D) Coverage of an individual and more

13 than one eligible family member.

14 The types of coverage described in subparagraphs

15 (B) through (D) are collectively referred to in this

16 Act as enrollment ‘‘on a family basis’’.

17 (7) UNIFORM SET OF EFFECTIVE BENEFITS.—

18 The term ‘‘uniform set of effective benefits’’ means,

19 for a year, such set of benefits as specified by the

20 Board under section 132(a).

21 TITLE I—MANAGED COMPETI22 TION IN HEALTH CARE PLANS

23 SEC. 100. BLOCK GRANT PROGRAM.

24 (a) IN GENERAL.—The Secretary shall award grants

25 to States to enable such State to defray the costs associ-
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1 ated with the implementation and administration of the

2 requirements of this title in such States.

3 (b) AMOUNT OF GRANTS.—The amount of a grant

4 awarded to a State under this section shall be determined

5 by the Secretary according to a formula developed by the

6 Secretary to take into consideration the population, health

7 care availability, and geographic make-up of the State as

8 compared to other States.

9 (c) AUTHORIZATION OF APPROPRIATIONS.—There

10 are authorized to be appropriated to enable the Secretary

11 to award grants under subsection (a), such sums as may

12 be necessary for each fiscal year.

13 Subtitle A—Health Plan

14 Purchasing Cooperatives

15 SEC. 101. ESTABLISHMENT AND ORGANIZATION; HPPC

16 AREAS.

17 (a) HPPC AREAS.—

18 (1) IN GENERAL.—For purposes of carrying out

19 this title, subject to paragraphs (2) and (3), each

20 State shall be considered a HPPC area.

21 (2) ALTERNATIVE, INTRASTATE AREAS.—Each

22 State may provide for the division of the State into

23 HPPC areas so long as—
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1 (A) all portions of each metropolitan sta2 tistical area in a State are within the same

3 HPPC area; and

4 (B) the number of individuals residing

5 within a HPPC area is not less than 100,000.

6 (3) ALTERNATIVE, INTERSTATE AREAS.—In ac7 cordance with rules established by the Board, one or

8 more contiguous States may provide for the estab9 lishment of a HPPC area that includes adjoining

10 portions of the States so long as such area, if it in11 cludes any part of a metropolitan statistical area, in12 cludes all of such area. In the case of a HPPC serv13 ing a multi-state area, section 2(c)(2)(C) shall only

14 apply to the area if all the States encompassed in

15 the area agree to the number to be substituted.

16 (b) ESTABLISHMENT OF HPPCS.—

17 (1) IN GENERAL.—Each State shall provide, by

18 legislation or otherwise, for the establishment by not

19 later than July 1, 1994, as a not-for-profit corpora20 tion, with respect to each HPPC area (specified

21 under subsection (a)) of a health plan purchasing

22 cooperative (each in this subtitle referred to as a

23 ‘‘HPPC’’).
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1 (2) SINGLE ORGANIZATION SERVING MULTIPLE

2 HPPC AREAS.—Nothing in this subsection shall be

3 construed as preventing—

4 (A) a single corporation from being the

5 HPPC for more than one HPPC area; or

6 (B) a State from coordinating, through a

7 single entity, the activities of one or more

8 HPPCs in the State.

9 (3) INTERSTATE HPPC AREAS.—HPPCs with

10 respect to interstate areas specified under subsection

11 (a)(3) shall be established in accordance with rules

12 of the Board.

13 (c) BOARD OF DIRECTORS.—Each HPPC shall be

14 governed by a Board of Directors appointed by the Gov15 ernor or other chief executive officer of the State (or as

16 otherwise provided under State law or by the Board in

17 the case of a HPPC described in subsection (b)(3)).

18 (d) DUTIES OF HPPCS.—Each HPPC shall—

19 (1) enter into agreements with accountable

20 health plans under section 102;

21 (2) enter into agreements with small employers

22 under section 103;

23 (3) enroll individuals under accountable health

24 plans, in accordance with section 104;
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1 (4) receive and forward adjusted premiums, in

2 accordance with section 105, including the reconcili3 ation of low-income assistance among accountable

4 health plans;

5 (5) provide for coordination with other HPPCs,

6 in accordance with section 106; and

7 (6) carry out other functions provided for under

8 this title.

9 SEC. 102. AGREEMENTS WITH ACCOUNTABLE HEALTH

10 PLANS (AHPS).

11 (a) AGREEMENTS.—

12 (1) OPEN AHPS.—Each HPPC for a HPPC

13 area shall enter into an agreement under this section

14 with each open accountable health plan registered

15 with the Board under subtitle B, that serves resi16 dents of the area. Each such agreement under this

17 section, between an open AHP and a HPPC shall

18 include (as specified by the Board) provisions con19 sistent with the requirements of the succeeding sub20 sections of this section. Except as provided in para21 graph (3)(A), a HPPC may not refuse to enter into

22 such an agreement with an open AHP which is reg23 istered with the Board under subtitle B.

24 (2) CLOSED AHPS.—Each HPPC for a HPPC

25 area shall enter into a special agreement under this
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1 paragraph with each closed AHP that serves resi2 dents of the area, in order to carry out subsection

3 (e). Except as otherwise specifically provided, any

4 reference in this Act to an agreement under this sec5 tion shall not be considered to be a reference to an

6 agreement under this paragraph.

7 (3) TERMINATION OF AGREEMENT.—In accord8 ance with regulations of the Board—

9 (A) the HPPC may terminate an agree10 ment under paragraph (1) if the AHP’s reg11 istration under subtitle B is terminated or for

12 other good cause shown; and

13 (B) the AHP may terminate either such

14 agreement only upon sufficient notice in order

15 to provide for the orderly enrollment of enroll16 ees under other AHPs.

17 The Board shall establish a process for the termi18 nation of agreements under this paragraph.

19 (b) OFFER OF ENROLLMENT OF INDIVIDUALS.—

20 (1) IN GENERAL.—Under an agreement under

21 this section between an AHP and a HPPC, the

22 HPPC shall offer, on behalf of the AHP, enrollment

23 in the AHP to eligible individuals (as defined in sec24 tion 2(a)(1)) at the applicable monthly premium

25 rates (specified under section 105(a)).
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1 (2) TIMING OF OFFER.—The offer of enroll2 ment shall be available—

3 (A) to eligible individuals who are employ4 ees of small employers, during the 30-day pe5 riod beginning on the date of commencement of

6 employment; and

7 (B) to other eligible individuals, at such

8 time (including an annual open enrollment pe9 riod specified by the Board) as the HPPC shall

10 specify, consistent with section 104(b).

11 (c) RECEIPT OF GROSS PREMIUMS.—

12 (1) IN GENERAL.—Under an agreement under

13 this section between a HPPC and an AHP, payment

14 of premiums shall be made, by individuals or em15 ployers on their behalf, directly to the HPPC for the

16 benefit of the AHP.

17 (2) TIMING OF PAYMENT OF PREMIUMS.—Pre18 miums shall be payable on a monthly basis (or, at

19 the option of an eligible individual described in sec20 tion 2(a)(2)(B), on a quarterly basis). The HPPC

21 may provide for penalties and grace periods for late

22 payment.

23 (3) AHPS RETAIN RISK OF NONPAYMENT.—

24 Nothing in this subsection shall be construed as

25 placing upon a HPPC any risk associated with fail-
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1 ure to make prompt payment of premiums (other

2 than the portion of the premium representing the

3 HPPC overhead amount). Each eligible individual

4 who enrolls with an AHP through the HPPC is lia5 ble to the AHP for premiums.

6 (d) FORWARDING OF ADJUSTED PREMIUMS.—

7 (1) IN GENERAL.—Under an agreement under

8 this section between an AHP and a HPPC, subject

9 to section 115(b), the HPPC shall forward to each

10 AHP in which an eligible individual has been en11 rolled an amount equal to the sum of—

12 (A) the standard premium rate (estab13 lished under section 115) received for type of

14 enrollment, and

15 (B) the product of—

16 (i) the lowest standard premium rate

17 offered by an open AHP for the type of en18 rollment; and

19 (ii) a risk-adjustment factor (deter20 mined and adjusted in accordance with

21 section 136(b)).

22 (2) PAYMENTS.—Payments shall be made by

23 the HPPC under this subsection within a period

24 (specified by the Board and not to exceed 7 days)

25 after receipt of the premium from the employer of
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1 the eligible individual or the eligible individual, as

2 the case may be.

3 (3) ADJUSTMENTS FOR DIFFERENCES IN

4 NONPAYMENT RATES.—In accordance with rules es5 tablished by the Board, each agreement between an

6 AHP and a HPPC under this section shall provide

7 that, if a HPPC determines that the rates of

8 nonpayment of premiums during grace periods es9 tablished under subsection (c)(2) vary appreciably

10 among AHPs, the HPPC shall provide for such ad11 justments in the payments made under this sub12 section as will place each AHP in the same position

13 as if the rates of nonpayment were the same.

14 SEC. 103. AGREEMENTS WITH EMPLOYERS.

15 (a) IN GENERAL.—Each HPPC for a HPPC area

16 shall offer each small employer that employs individuals

17 in the area the opportunity to enter into an agreement

18 under this section. Each agreement under this section, be19 tween an employer and a HPPC shall include (as specified

20 by the Board) provisions consistent with the requirements

21 specified in the succeeding subsections of this section.

22 (b) FORWARDING INFORMATION ON ELIGIBLE EM23 PLOYEES.—

24 (1) IN GENERAL.—Under an agreement under

25 this section between a small employer and a HPPC,
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1 the employer must forward to the appropriate

2 HPPC the name and address (and other identifying

3 information required by the HPPC) of each em4 ployee (including part-time and seasonal employees).

5 (2) APPROPRIATE HPPC.—In this subsection,

6 the term ‘‘appropriate HPPC’’ means the HPPC for

7 the principal place of business of the employer or (at

8 the option of an employee) the HPPC serving the

9 place of residence of the employee.

10 (c) PAYROLL DEDUCTION.—

11 (1) IN GENERAL.—Under an agreement under

12 this section between a small employer and a HPPC,

13 if the HPPC indicates to the employer that an eligi14 ble employee is enrolled in an AHP through the

15 HPPC, the employer shall provide for the deduction,

16 from the employee’s wages or other compensation, of

17 the amount of the premium due (less any employer

18 contribution). In the case of an employee who is paid

19 wages or other compensation on a monthly or more

20 frequent basis, an employer shall not be required to

21 provide for payment of amounts to a HPPC other

22 than at the same time at which the amounts are de23 ducted from wages or other compensation. In the

24 case of an employee who is paid wages or other com25 pensation less frequently than monthly, an employer
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1 may be required to provide for payment of amounts

2 to a HPPC on a monthly basis.

3 (2) ADDITIONAL PREMIUMS.—If the amount

4 withheld under paragraph (1) is not sufficient to

5 cover the entire cost of the premiums, the employee

6 shall be responsible for paying directly to the HPPC

7 the difference between the amount of such premiums

8 and the amount withheld.

9 (d) LIMITED EMPLOYER OBLIGATIONS.—Nothing in

10 this section shall be construed as—

11 (1) requiring an employer to provide directly for

12 enrollment of eligible employees under an account13 able health plan or other health plan;

14 (2) requiring the employer to make, or prevent15 ing the employer from making, information about

16 such plans available to such employees; or

17 (3) requiring the employer to make, or prevent18 ing the employer from making, an employer con19 tribution for coverage of such individuals under such

20 a plan.

21 SEC. 104. ENROLLING INDIVIDUALS IN ACCOUNTABLE

22 HEALTH PLANS THROUGH A HPPC.

23 (a) IN GENERAL.—Each HPPC shall offer in accord24 ance with this section eligible individuals the opportunity
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1 to enroll in an AHP for the HPPC area in which the indi2 vidual resides.

3 (b) ENROLLMENT PROCESS.—

4 (1) IN GENERAL.—Each HPPC shall establish

5 an enrollment process in accordance with rules es6 tablished by the Board consistent with this sub7 section.

8 (2) INITIAL ENROLLMENT PERIOD.—Each eligi9 ble individual, at the time the individual first be10 comes an eligible individual in a HPPC area of a

11 HPPC, have an initial enrollment period (of not less

12 than 30 days) in which to enroll in an AHP.

13 (3) GENERAL ENROLLMENT PERIOD.—Each

14 HPPC shall establish an annual period, of not less

15 than 30 days, during which eligible individuals may

16 enroll in an AHP or change in the AHP in which

17 the individual is enrolled.

18 (4) SPECIAL ENROLLMENT PERIODS.—In the

19 case of individuals who—

20 (A) through marriage, divorce, birth or

21 adoption of a child, or similar circumstances,

22 experience a change in family composition; or

23 (B) experience a change in employment

24 status (including a significant change in the

25 terms and conditions of employment);
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1 each HPPC shall provide for a special enrollment

2 period in which the individual is permitted to change

3 the individual or family basis of coverage or the

4 AHP in which the individual is enrolled. The cir5 cumstances under which such special enrollment pe6 riods are required and the duration of such periods

7 shall be specified by the Board.

8 (5) TRANSITIONAL ENROLLMENT PERIOD.—

9 Each HPPC shall provide for a special transitional

10 enrollment period (during a period beginning in the

11 months of October through December of 1994 as

12 specified by the Board) during which eligible individ13 uals may first enroll.

14 (c) DISTRIBUTION OF COMPARATIVE INFORMA15 TION.—Each HPPC shall distribute, to eligible individuals

16 and employers, information, in comparative form, on the

17 prices, outcomes, enrollee satisfaction, and other informa18 tion pertaining to the quality of the different AHPs for

19 which it is offering enrollment. Each HPPC also shall

20 make such information available to other interested per21 sons.

22 (d) PERIOD OF COVERAGE.—

23 (1) INITIAL ENROLLMENT PERIOD.—In the case

24 of an eligible individual who enrolls with an AHP

25 through a HPPC during an initial enrollment period,
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1 coverage under the plan shall begin on such date

2 (not later than the first day of the first month that

3 begins at least 15 days after the date of enrollment)

4 as the Board shall specify.

5 (2) GENERAL ENROLLMENT PERIODS.—In the

6 case of an eligible individual who enrolls with an

7 AHP through a HPPC during a general enrollment

8 period, coverage under the plan shall begin on the

9 1st day of the 1st month beginning at least 15 days

10 after the end of such period.

11 (3) SPECIAL ENROLLMENT PERIODS.—

12 (A) IN GENERAL.—In the case of an eligi13 ble individual who enrolls with an AHP during

14 a special enrollment period described in sub15 section (b)(4), coverage under the plan shall

16 begin on such date (not later than the first day

17 of the first month that begins at least 15 days

18 after the date of enrollment) as the Board shall

19 specify, except that coverage of family members

20 shall begin as soon as possible on or after the

21 date of the event that gives rise to the special

22 enrollment period.

23 (B) TRANSITIONAL SPECIAL ENROLLMENT

24 PERIOD.—In the case of an eligible individual

25 who enrolls with an AHP during the transi-
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1 tional special enrollment period described in

2 subsection (b)(5), coverage under the plan shall

3 begin on January 1, 1995.

4 (4) MINIMUM PERIOD OF ENROLLMENT.—In

5 order to avoid adverse selection, each HPPC may re6 quire, consistent with rules of the National Board,

7 that enrollments with AHPs be for not less than a

8 specified minimum enrollment period (with excep9 tions permitted for such exceptional circumstances

10 as the Board may recognize).

11 SEC. 105. RECEIPT OF PREMIUMS.

12 (a) ENROLLMENT CHARGE.—The amount charged by

13 a HPPC for coverage under an AHP in a HPPC area

14 is equal to the sum of—

15 (1) the standard premium rate established by

16 the AHP under section 115 for such coverage; and

17 (2) the HPPC overhead amount established

18 under subsection (b)(3) for enrollment of individuals

19 in the HPPC area.

20 (b) HPPC OVERHEAD AMOUNT.—

21 (1) HPPC BUDGET.—Each HPPC shall estab22 lish a budget for each year for each HPPC area in

23 accordance with regulations established by the

24 Board.
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1 (2) HPPC OVERHEAD PERCENTAGE.—The

2 HPPC shall compute for each HPPC area an over3 head percentage which, when applied to the standard

4 premium amount for individual coverage for each en5 rollee unit, will provide for revenues equal to the

6 budget for the HPPC area for the year. Such per7 centage may in no case exceed 5 percentage points.

8 (3) HPPC OVERHEAD AMOUNT.—The HPPC

9 overhead amount for enrollment, whether on an indi10 vidual or family basis, in an AHP for a HPPC area

11 for a month is equal to the applicable HPPC over12 head percentage (computed under paragraph (2))

13 multiplied by the standard premium amount for in14 dividual coverage under the AHP for the month.

15 SEC. 106. COORDINATION AMONG HPPCS.

16 (a) IN GENERAL.—The Board shall establish rules

17 consistent with this section for coordination among

18 HPPCs in cases where small employers are located in one

19 HPPC area and their employees reside in a different

20 HPPC area (and are eligible for enrollment with AHPs

21 located in the other area).

22 (b) COORDINATION RULES.—Under the rules estab23 lished under subsection (a)(1)—
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1 (1) HPPC FOR EMPLOYER.—The HPPC for

2 the principal place of business of a small employer

3 shall be responsible—

4 (A) for providing information to the em5 ployer’s employees on AHPs for areas in which

6 employees reside;

7 (B)(i) for enrolling employees under the

8 AHP selected (even if the AHP selected is not

9 in the same HPPC area as the HPPC) and (ii)

10 if the AHP chosen is not in the same HPPC

11 area as the HPPC, for forwarding the enroll12 ment information to the HPPC for the area in

13 which the AHP selected is located; and

14 (C) in the case of premiums to be paid

15 through payroll deduction, to receive such pre16 miums and forward them to the HPPC for the

17 area in which the AHP selected is located.

18 (2) HPPC FOR EMPLOYEE RESIDENCE.—The

19 HPPC for the HPPC area in which an employee re20 sides shall be responsible for providing other HPPCs

21 with information concerning AHPs being offered in

22 other HPPC areas within the State.
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1 Subtitle B—Accountable Health

2 Plans (AHPs)

3 PART 1—REQUIREMENTS FOR ACCOUNTABLE HEALTH

4 PLANS

5 SEC. 111. REGISTRATION PROCESS; QUALIFICATIONS.

6 (a) IN GENERAL.—The Board shall provide a process

7 whereby a health plan (as defined in section 2(c)(1)) may

8 be registered with the Board by its sponsor as an account9 able health plan.

10 (b) QUALIFICATIONS.—In order to be eligible to be

11 registered, a plan must—

12 (1) provide, in accordance with section 112, for

13 coverage of the uniform set of effective benefits spec14 ified by the Board;

15 (2) provide, in accordance with section 113, for

16 the collection and reporting to the Board of certain

17 information regarding its enrollees and provision of

18 services;

19 (3) not discriminate in enrollment or benefits,

20 as required under section 114;

21 (4) establish standard premiums for the uni22 form set of effective benefits, in accordance with sec23 tion 115;

24 (5) meet financial solvency requirements, in ac25 cordance with section 116;
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1 (6) provide for effective grievance procedures

2 and restrict certain physician incentive plans, in ac3 cordance with section 117; and

4 (7) in the case of an open plan (as defined in

5 section 2(b)(4)(B)), meet certain additional require6 ments under section 118 (relating to acceptance of

7 enrollees and participation as a plan under the medi8 care program under the Social Security Act and

9 under the Federal employees health benefits pro10 gram).

11 (c) MINIMUM SIZE FOR CLOSED PLANS.—No plan

12 may be registered as a closed AHP under this section un13 less the plan covers at least a number of employees greater

14 than the applicable number of employees specified in sec15 tion 2(c)(2).

16 (d) MEDICARE REQUIREMENT.—No plan may be reg17 istered as an AHP under this section unless the plan—

18 (1) meets the requirement of section 118(c); or

19 (2) provides for payment of the medicare ad20 justment amount under section 119.

21 SEC. 112. SPECIFIED UNIFORM SET OF EFFECTIVE BENE22 FITS.

23 (a) BENEFITS.—The Board shall not accept the reg24 istration of a health plan as an accountable health plan

25 unless, subject to subsection (b), the plan—
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1 (1) offers only the uniform set of effective bene2 fits, specified by Board under section 132(a);

3 (2) has entered into arrangements with a suffi4 cient number and variety of providers to provide for

5 its enrollees the uniform set of effective benefits

6 without imposing cost-sharing in excess of the cost7 sharing described in paragraph (3);

8 (3)(A) provides, subject to subsection (c), for

9 imposition of uniform cost-sharing (such as

10 deductibles and copayments), specified under such

11 subsection as part of such set of benefits; and

12 (B) does not permit providers participating in

13 the plan under paragraph (2) to charge for covered

14 services amounts in excess of such cost-sharing; and

15 (4) provides, in the case of individuals covered

16 under more than one accountable health plan, for

17 coordination of coverage under such plans in an eq18 uitable manner.

19 (b) TREATMENT OF ADDITIONAL BENEFITS.—

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

21 subsection (a) shall not be construed as preventing

22 an AHP from offering benefits in addition to the

23 uniform set of effective benefits or for reducing the

24 cost-sharing below the uniform cost-sharing, if such

25 additional benefits or reductions in cost-sharing are
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1 offered, and priced, separately from the benefits de2 scribed in subsection (a).

3 (2) NO DUPLICATIVE BENEFITS.—An AHP

4 may not offer under paragraph (1) any additional

5 benefits that have the effect of duplicating the bene6 fits required under subsection (a).

7 SEC. 113. COLLECTION AND PROVISION OF STANDARDIZED

8 INFORMATION.

9 (a) PROVISION OF INFORMATION.—

10 (1) IN GENERAL.—Each AHP must provide the

11 Board (at a time, not less frequently than annually,

12 and in an electronic, standardized form and manner

13 specified by the Board) such information as the

14 Board determines to be necessary, consistent with

15 this subsection and section 137, to evaluate the per16 formance of the AHP in providing the uniform set

17 of effective benefits to enrollees.

18 (2) INFORMATION TO BE INCLUDED.—Subject

19 to paragraph (3), information to be reported under

20 this subsection shall include at least the following:

21 (A) Information on the characteristics of

22 enrollees that may affect their need for or use

23 of health services.

24 (B) Information on the types of treatments

25 and outcomes of treatments with respect to the
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1 clinical health, functional status, and well-being

2 of enrollees.

3 (C) Information on enrollee satisfaction,

4 based on standard surveys prescribed by the

5 Board.

6 (D) Information on health care expendi7 tures, volume and prices of procedures, and use

8 of specialized centers of care (for which infor9 mation is submitted under section 138).

10 (E) Information on the flexibility permitted

11 by plans to enrollees in their selection of provid12 ers.

13 (3) SPECIAL TREATMENT.—The Board may

14 waive the provision of such information under para15 graph (2), or require such other information, as the

16 Board finds appropriate in the case of newly estab17 lished AHP for which such information is not avail18 able.

19 (b) CONDITIONING CERTAIN PROVIDER PAY20 MENTS.—

21 (1) IN GENERAL.—In order to assure the collec22 tion of all information required from the direct pro23 viders of services for which benefits are available

24 through an AHP, each AHP may not provide pay25 ment for services (other than emergency services)
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1 furnished by a provider to meet the uniform set of

2 effective benefits unless the provider has given the

3 AHP (or has given directly to the National Board)

4 standard information (specified by the Board) re5 specting the services.

6 (2) FORWARDING INFORMATION.—If informa7 tion under paragraph (1) is given to the AHP, the

8 AHP is responsible for forwarding the information

9 to the Board.

10 SEC. 114. PROHIBITION OF DISCRIMINATION BASED ON

11 HEALTH STATUS FOR CERTAIN CONDITIONS;

12 LIMITATION ON PRE-EXISTING CONDITION

13 EXCLUSIONS.

14 (a) IN GENERAL.—Except as provided under sub15 section (b), an AHP may not deny, limit, or condition the

16 coverage under (or benefits of) the plan based on the

17 health status, claims experience, receipt of health care,

18 medical history, or lack of evidence of insurability, of an

19 individual.

20 (b) TREATMENT OF PREEXISTING CONDITION EX21 CLUSIONS FOR SERVICES.—

22 (1) IN GENERAL.—Subject to the succeeding

23 provisions of this subsection, an AHP may exclude

24 coverage with respect to services related to treat25 ment of a preexisting condition, but the period of
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1 such exclusion may not exceed 6 months beginning

2 on the date of coverage under the plan. The exclu3 sion of coverage shall not apply to services furnished

4 to newborns and to pregnant women.

5 (2) CREDITING OF PREVIOUS COVERAGE.—

6 (A) IN GENERAL.—An AHP shall provide

7 that if an enrollee is in a period of continuous

8 coverage (as defined in subparagraph (B)(i)) as

9 of the date of initial coverage under such plan,

10 any period of exclusion of coverage with respect

11 to a preexisting condition for such services or

12 type of services shall be reduced by 1 month for

13 each month in the period of continuous cov14 erage.

15 (B) DEFINITIONS.—As used in this para16 graph:

17 (i) PERIOD OF CONTINUOUS COV18 ERAGE.—The term ‘‘period of continuous

19 coverage’’ means the period beginning on

20 the date an individual is enrolled under an

21 AHP (or, before July 1, 1994, under any

22 health plan that provides benefits with re23 spect to such services) and ends on the

24 date the individual is not so enrolled for a

25 continuous period of more than 3 months.
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1 (ii) PREEXISTING CONDITION.—The

2 term ‘‘preexisting condition’’ means, with

3 respect to coverage under an AHP, a con4 dition which has been diagnosed or treated

5 during the 3-month period ending on the

6 day before the first date of such coverage

7 (without regard to any waiting period).

8 (3) LIMITATION.—This subsection shall not

9 apply to treatment which is not within the uniform

10 set of effective benefits.

11 SEC. 115. USE OF STANDARD PREMIUMS.

12 (a) STANDARD PREMIUMS FOR OPEN AHPS.—

13 (1) IN GENERAL.—Subject to subsection (b),

14 each open AHP shall establish a standard premium

15 for the uniform set of effective benefits within each

16 HPPC area in which the plan is offered. The

17 amount of premium applicable for all individuals

18 within a premium class (established under para19 graph (2)) is the standard premium amount multi20 plied by the premium class factor specified by the

21 Board for that class under paragraph (2)(B). Within

22 a HPPC area for individuals within a premium

23 class, the standard premium for all individuals in

24 the class shall be the same.

25 (2) PREMIUM CLASSES.—
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1 (A) IN GENERAL.—The Board shall estab2 lish premium classes—

3 (i) based on types of enrollment (de4 scribed in section 2(c)(6)); and

5 (ii) within each type of enrollment,

6 based on age of principal enrollee.

7 In carrying out clause (ii), the Board shall es8 tablish reasonable age bands within which pre9 mium amounts will not vary for a type of en10 rollment.

11 (B) PREMIUM CLASS FACTORS.—

12 (i) IN GENERAL.—For each premium

13 class established under subparagraph (A),

14 the Board shall establish a premium class

15 factor that reflects, subject to clause (ii),

16 the relative actuarial value of benefits for

17 that class compared to the actuarial value

18 of benefits for an average class.

19 (ii) LIMIT ON VARIATION IN PREMIUM

20 CLASS FACTORS.—The highest premium

21 class factor may not exceed twice the low22 est premium class factor and the weighted

23 average of the premium class factors shall

24 be 1.
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1 (3) METHODOLOGY.—Standard premiums are

2 subject to adjustment in accordance with section

3 102(d)(1).

4 (b) LIMITATION ON PREMIUM INCREASES.—

5 (1) BOARD ACTION.—The Board shall establish

6 annual limits on the permissible percentage rate of

7 increase for premiums with respect to AHP’s provid8 ing the uniform set of effective benefits.

9 (2) INCREASES.—Annual increases in premiums

10 for an AHP may not exceed the percentage limit es11 tablished by the Board under paragraph (1).

12 SEC. 116. FINANCIAL SOLVENCY REQUIREMENTS.

13 (a) SOLVENCY PROTECTION.—

14 (1) FOR INSURED PLANS.—In the case of an

15 AHP that is an insured plan (as defined by the

16 Board) and is issued in a State, in order for the

17 plan to be registered under this subtitle the Board

18 must find that the State has established satisfactory

19 protection of enrollees with respect to potential insol20 vency.

21 (2) FOR OTHER PLANS.—In the case of an

22 AHP that is not an insured plan, the Board may re23 quire the plan to provide for such bond or provide

24 other satisfactory assurances that enrollees under
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1 the plan are protected with respect to potential in2 solvency of the plan.

3 (b) PROTECTION AGAINST PROVIDER CLAIMS.—In

4 the case of a failure of an AHP to make payments with

5 respect to the uniform set of basic benefits, under stand6 ards established by the Board, an individual who is en7 rolled under the plan is not liable to any health care pro8 vider or practitioner with respect to the provision of health

9 services within such uniform set for payments in excess

10 of the amount for which the enrollee would have been lia11 ble if the plan were to have made payments in a timely

12 manner.

13 SEC. 117. GRIEVANCE MECHANISMS; ENROLLEE PROTEC14 TIONS; WRITTEN POLICIES AND PROCE15 DURES RESPECTING ADVANCE DIRECTIVES;

16 AGENT COMMISSIONS.

17 (a) EFFECTIVE GRIEVANCE PROCEDURES.—Each

18 AHP shall provide for effective procedures for hearing and

19 resolving grievances between the plan and individuals en20 rolled under the plan, which procedures meet standards

21 specified by the Board.

22 (b) RESTRICTION ON CERTAIN PHYSICIAN INCEN23 TIVE PLANS.—

24 (1) IN GENERAL.—A health plan may not be

25 registered as an AHP if it operates a physician in-
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1 centive plan (as defined in paragraph (2)) unless the

2 requirements specified in clauses (i) through (iii) of

3 section 1876(i)(8)(A) of the Social Security Act are

4 met (in the same manner as they apply to eligible

5 organizations under section 1876 of such Act).

6 (2) PHYSICIAN INCENTIVE PLAN DEFINED.—In

7 this subsection, the term ‘‘physician incentive plan’’

8 means any compensation or other financial arrange9 ment between the AHP and a physician or physician

10 group that may directly or indirectly have the effect

11 of reducing or limiting services provided with respect

12 to individuals enrolled under the plan.

13 (c) WRITTEN POLICIES AND PROCEDURES RESPECT14 ING ADVANCE DIRECTIVES.—A health plan may not be

15 registered as an AHP unless the plan meets the require16 ments of section 1866(f) of the Social Security Act (relat17 ing to maintaining written policies and procedures respect18 ing advance directives), insofar as such requirements

19 would apply to the plan if the plan were an eligible organi20 zation.

21 (d) PAYMENT OF AGENT COMMISSIONS.—An AHP—

22 (1) may pay a commission or other remunera23 tion to an agent or broker in marketing the plan to

24 individuals or groups; but
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1 (2) may not vary such remuneration based, di2 rectly or indirectly, on the anticipated or actual

3 claims experience associated with the group or indi4 viduals to which the plan was sold.

5 SEC. 118. ADDITIONAL REQUIREMENTS OF OPEN AHPS.

6 (a) REQUIREMENT OF AGREEMENT WITH HPPC.—

7 In the case of a health plan which is an open plan (as

8 defined in section 191(b)(4)(B)), in order to be registered

9 as an AHP the plan must have in effect an agreement

10 (described in section 102) with each HPPC for each

11 HPPC area in which it is offered.

12 (b) REQUIREMENT OF OPEN ENROLLMENT.—

13 (1) IN GENERAL.—In the case of a health plan

14 which is an open health plan, in order to be reg15 istered as an AHP the plan must, subject to para16 graph (3), not reject the enrollment of any eligible

17 individual whom a HPPC is authorized to enroll

18 under an agreement referred to in subsection (a) if

19 the individual applies for enrollment during an en20 rollment period.

21 (2) LIMITATION ON TERMINATION.—Subject to

22 paragraph (3), coverage of eligible individuals under

23 an open AHP may not be refused nor terminated ex24 cept for—

25 (A) nonpayment of premiums;
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1 (B) fraud or misrepresentation; or

2 (C) termination of the plan at the end of

3 a year (after notice and in accordance with

4 standards established by the Board).

5 (3) TREATMENT OF NETWORK PLANS.—

6 (A) GEOGRAPHIC LIMITATIONS.—

7 (i) IN GENERAL.—An AHP which is a

8 network plan (as defined in subparagraph

9 (D)) may deny coverage under the plan to

10 an eligible individual who is located outside

11 a service area of the plan, but only if such

12 denial is applied uniformly, without regard

13 to health status or insurability of individ14 uals.

15 (ii) SERVICE AREAS.—The Board

16 shall establish standards for the designa17 tion by network plans of service areas in

18 order to prevent discrimination based on

19 health status of individuals or their need

20 for health services.

21 (B) SIZE LIMITS.—Subject to subpara22 graph (C), an AHP which is a network plan

23 may apply to the Board to cease enrolling eligi24 ble individuals under the AHP (or in a service

25 area of the plan) if—
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1 (i) it ceases to enroll any new eligible

2 individuals; and

3 (ii) it can demonstrate that its finan4 cial or administrative capacity to serve pre5 viously covered groups or individuals (and

6 additional individuals who will be expected

7 to enroll because of affiliation with such

8 previously covered groups or individuals)

9 will be impaired if it is required to enroll

10 other eligible individuals.

11 (C) FIRST-COME-FIRST-SERVED.—A net12 work plan is only eligible to exercise the limita13 tions provided for in subparagraphs (A) and

14 (B) if it provides for enrollment of eligible indi15 viduals on a first-come-first-served basis.

16 (D) NETWORK PLAN.—In this paragraph,

17 the term ‘‘network plan’’ means an eligible or18 ganization (as defined in section 1876(b) of the

19 Social Security Act) and includes a similar or20 ganization, specified in regulations of the

21 Board, as requiring a limitation on enrollment

22 of employer groups or individuals due to the

23 manner in which the organization provides

24 health care services.
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1 (c) REQUIREMENT OF PARTICIPATION IN MEDICARE

2 RISK-BASED CONTRACTING.—

3 (1) IN GENERAL.—In the case of a health plan

4 which is an open health plan and which is an eligible

5 organization (as defined in section 1876(b) of the

6 Social Security Act), in order to be registered as an

7 AHP the plan must enter into a risk-sharing con8 tract under section 1876 of the Social Security Act

9 for the offering of benefits to medicare beneficiaries

10 in accordance with such section.

11 (2) EXPANSION OF MEDICARE SELECT PRO12 GRAM.—Subsection (c) of section 4358 of the Omni13 bus Budget Reconciliation Act of 1990 (104 Stat.

14 1388–137) is amended by striking ‘‘only apply in 15

15 States’’ and all that follows through the end and in16 serting ‘‘on and after January 1, 1992.’’.

17 (d) PARTICIPATION IN FEHBP.—

18 (1) IN GENERAL.—In the case of a health

19 plan which is an open health plan, in order to

20 be registered as an AHP the plan must have

21 entered into an agreement with the Office of

22 Personnel Management to offer a health plan to

23 Federal employees and annuitants, and family

24 members, under the Federal Employees Health

25 Benefits Program under chapter 89 of title 5,
43

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1 United States Code, under the same terms and

2 conditions offered by the AHP for enrollment of

3 individuals and small employers through

4 HPPCs.

5 (2) CHANGE IN CONTRIBUTION AND OTHER

6 FEHBP RULES.—Notwithstanding any other provi7 sion of law, effective January 1, 1994—

8 (A) enrollment shall not be permitted

9 under a health benefits plan under chapter 89

10 of title 5, United States Code, unless the plan

11 is an AHP, and

12 (B) the amount of the Federal Government

13 contribution under such chapter—

14 (i) for any premium class shall be the

15 same for all AHPs in a HPPC area,

16 (ii) for any premium class shall not

17 exceed the base individual premium (as de18 fined in section 209(c)(3)), and

19 (iii) in the aggregate for any fiscal

20 year shall be equal to the aggregate

21 amount of Government contributions that

22 would have been made but for this section.

23 SEC. 119. ADDITIONAL REQUIREMENT OF CERTAIN AHPS.

24 (a) MEDICARE ADJUSTMENT PAYMENT RE25 QUIRED.—Each AHP which does not meet the require-
44

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1 ment of section 148(c) shall provide for payment to the

2 Board of such amounts as may be required as to put the

3 plan in the same financial position as the AHP would be

4 in if it met such requirement.

5 (b) REDISTRIBUTION OF PAYMENTS TO PLANS.—

6 The Board shall provide for the distribution among AHPs

7 meeting the requirement of section 148(c) of amounts paid

8 under subsection (a) in such manner as reflects the rel9 ative financial impact of such requirement among such

10 plans.

11 PART 2—PREEMPTION OF STATE LAWS FOR

12 ACCOUNTABLE HEALTH PLANS

13 SEC. 120. PREEMPTION FROM STATE BENEFIT MANDATES.

14 Effective as of January 1, 1994, no State shall estab15 lish or enforce any law or regulation that—

16 (1) requires the offering, as part of an AHP, of

17 any services, category of care, or services of any

18 class or type of provider that is different from the

19 uniform set of effective benefits;

20 (2) specifies the individuals to be covered under

21 an AHP or the duration of such coverage; or

22 (3) requires a right of conversion from a group

23 health plan that is an AHP to an individual health

24 plan.
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1 SEC. 121. PREEMPTION OF STATE LAW RESTRICTIONS ON

2 NETWORK PLANS.

3 (a) LIMITATION ON RESTRICTIONS ON NETWORK

4 PLANS.—Effective as of January 1, 1994—

5 (1) A State may not by law or regulation pro6 hibit or unreasonably limit a network plan from in7 cluding incentives for enrollees to use the services of

8 participating providers.

9 (2) A State may not prohibit or unreasonably

10 limit a network plan from limiting coverage of serv11 ices to those provided by a participating provider.

12 (3)(A) Subject to subparagraph (B), a State

13 may not prohibit or unreasonably limit the negotia14 tion of rates and forms of payments for providers

15 under a network plan.

16 (B) Subparagraph (A) shall not apply where

17 the amount of payments with respect to a category

18 of services or providers is established under a State19 wide system applicable to all non-Federal payors

20 with respect to such services or providers.

21 (4) A State may not prohibit or unreasonably

22 limit a network plan from limiting the number of

23 participating providers.

24 (5) A State may not prohibit or unreasonably

25 limit a network plan from requiring that services be

26 provided (or authorized) by a practitioner selected
46

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1 by the enrollee from a list of available participating

2 providers.

3 (b) DEFINITIONS.—As used in this section:

4 (1) NETWORK PLAN.—The term ‘‘network

5 plan’’ means an AHP—

6 (A) which—

7 (i) limits coverage of the uniform set

8 of basic benefits to those provided by par9 ticipating providers; or

10 (ii) provides, with respect to such

11 services provided by persons who are not

12 participating providers, for deductibles or

13 other cost-sharing which are in excess of

14 those permitted under the uniform set of

15 basic benefits for participating providers;

16 (B) which has a sufficient number and dis17 tribution of participating providers to assure

18 that the uniform set of basic benefits is—

19 (i) available and accessible to each en20 rollee, within the area served by the plan,

21 with reasonable promptness and in a man22 ner which assures continuity; and

23 (ii) when medically necessary, avail24 able and accessible 24 hours a day and

25 seven days a week; and
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1 (C) which provides benefits for the uniform

2 set of basic benefits not furnished by participat3 ing providers if the services are medically nec4 essary and immediately required because of an

5 unforeseen illness, injury, or condition.

6 (2) PARTICIPATING PROVIDER.—The term

7 ‘‘participating provider’’ means an entity or individ8 ual which provides, sells, or leases health care serv9 ices under a contract with a network plan, which

10 contract does not permit—

11 (A) cost-sharing in excess of the cost-shar12 ing permitted under the uniform set of basic

13 benefits with respect to basic benefits; and

14 (B) any enrollee charges (for such services

15 covered under such set) in excess of such cost16 sharing.

17 SEC. 122. PREEMPTION OF STATE LAWS RESTRICTING UTI18 LIZATION REVIEW PROGRAMS.

19 (a) IN GENERAL.—Effective January 1, 1994, no

20 State law or regulation shall prohibit or regulate activities

21 under a utilization review program (as defined in sub22 section (b)).

23 (b) UTILIZATION REVIEW PROGRAM DEFINED.—In

24 this section, the term ‘‘utilization review program’’ means

25 a system of reviewing the medical necessity and appro-
48

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1 priateness of patient services (which may include inpatient

2 and outpatient services) using specified guidelines. Such

3 a system may include preadmission certification, the appli4 cation of practice guidelines, continued stay review, dis5 charge planning, preauthorization of ambulatory proce6 dures, and retrospective review.

7 Subtitle C—Federal Health Board

8 SEC. 131. ESTABLISHMENT OF FEDERAL HEALTH BOARD.

9 (a) IN GENERAL.—There is hereby established a

10 Federal Health Board.

11 (b) COMPOSITION AND TERMS.—

12 (1) APPOINTMENT.—The Board shall be com13 posed of 5 members appointed by the President by

14 and with the advice and consent of the Senate. In

15 appointing members to the Board, the President

16 shall provide that all members shall demonstrate ex17 perience with and knowledge of the health care sys18 tem.

19 (2) CHAIRPERSON.—The President shall des20 ignate one of the members to be Chairperson of the

21 Board.

22 (3) TERMS.—Each member of the Board shall

23 be appointed for a term of 7 years, except that, of

24 the members first appointed, 1 shall each be ap25 pointed for terms of 3, 4, 5, 6, and 7 years, as des-
49

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1 ignated by the President at the time of appointment.

2 Members appointed to fill vacancies shall serve for

3 the remainder of the terms of the vacating members.

4 (4) PARTY AFFILIATION.—Not more than 3

5 members of the Board shall be of the same political

6 party.

7 (5) OTHER EMPLOYMENT PROHIBITED.—A

8 member of the Board may not, during the term as

9 a member, engage in any other business, vocation,

10 profession, or employment.

11 (6) QUORUM.—Three members of the Board

12 shall constitute a quorum, except that 2 members

13 may hold hearings.

14 (7) MEETINGS.—The Board shall meet at the

15 call of the Chairman or 3 members of the Board.

16 (8) COMPENSATION.—Each member of the

17 Board shall be entitled to compensation at the rate

18 provided for level II of the Executive Schedule, sub19 ject to such amounts as are provided in advance in

20 appropriation Acts.

21 (c) PERSONNEL.—

22 (1) IN GENERAL.—The Board shall appoint an

23 Executive Director and such additional officers and

24 employees as it considers necessary to carry out its

25 functions under this Act. Except as otherwise pro-
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1 vided in any other provision of law, such officers and

2 employees shall be appointed, and their compensa3 tion shall be fixed, in accordance with title 5, United

4 States Code.

5 (2) EXPERTS AND CONSULTANTS.—The Board

6 may procure the services of experts and consultants

7 in accordance with the provisions of section 3109 of

8 title 5, United States Code.

9 (d) MISCELLANEOUS PROVISIONS.—

10 (1) GIFTS, BEQUESTS, AND DEVISES.—The

11 Board may accept, use, and dispose of gifts, be12 quests, or devises of services or property for the pur13 pose of aiding or facilitating its work.

14 (2) MAILS.—The Board may use the United

15 States mails in the same manner and under the

16 same conditions as other departments and agencies

17 of the United States.

18 SEC. 132. SPECIFICATION OF UNIFORM SET OF EFFECTIVE

19 BENEFITS.

20 (a) SPECIFICATION OF UNIFORM SET OF EFFECTIVE

21 BENEFITS.—

22 (1) IN GENERAL.—The Board shall specify, by

23 not later than October 1 of each year (beginning

24 with 1993), the uniform set of effective benefits to

25 apply under this title for the following year.
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1 (2) SPECIFICATION OF HEALTH CARE CONDI2 TIONS.—

3 (A) IN GENERAL.—Such benefits shall in4 clude the full range of legally authorized treat5 ment for any health condition for which the

6 Board determines a treatment has been shown

7 to reasonably improve or significantly amelio8 rate the condition. The Board may exclude

9 health conditions the treatment of which do not

10 impact on clinical health or functional status of

11 individuals.

12 (B) COVERAGE OF CLINICAL PREVENTIVE

13 SERVICES.—Such benefits shall include the full

14 range of effective clinical preventive services

15 (including appropriate screening, counseling,

16 and immunization and chemoprophylaxis), spec17 ified by the Board, appropriate to age and

18 other risk factors.

19 (C) COVERAGE FOR PERSONS WITH SE20 VERE MENTAL ILLNESS.—The Board shall es21 tablish guidelines concerning nondiscrimination

22 towards individuals with severe mental illnesses

23 and coverage for the treatment of severe mental

24 illnesses. Such guidelines shall ensure that cov25 erage of such individuals is equitable and com-
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1 mensurate with the coverage provided to other

2 individuals.

3 (D) EXCLUSION FOR INEFFECTIVE TREAT4 MENTS.—The Board may exclude from the ben5 efits such treatments as the Board determines,

6 based on clinical information, have not been

7 reasonably shown to improve a health condition

8 or significantly ameliorate a health condition.

9 Except as specifically excluded, the actual spe10 cific treatments, procedures, and care (such as

11 the use of particular providers or services)

12 which may be used under a plan or be used

13 with respect to health conditions shall be left up

14 to the plan.

15 (E) NONDISCRIMINATION.—In determining

16 the uniform set of effective benefits, the Board

17 shall not discriminate against individuals with

18 serious mental illnesses.

19 (3) DEDUCTIBLES AND COST-SHARING.—

20 (A) IN GENERAL.—Subject to subpara21 graph (B), such set shall include uniform

22 deductibles and cost-sharing associated with

23 such benefits.

24 (B) TREATMENT OF NETWORK PLANS.—In

25 the case of a network plan (as defined in sec-
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1 tion 121(b)), the plan may provide for charging

2 deductibles and cost-sharing in excess of the

3 uniform deductibles and cost-sharing under

4 subparagraph (A) in the case of services pro5 vided by providers that are not participating

6 providers (as defined in such section).

7 (b) BASIS FOR BENEFITS.—In establishing such set,

8 the Board shall judge medical treatments, procedures, and

9 related health services based on—

10 (1) their effectiveness in improving the health

11 status of individuals; and

12 (2) their long-term impact on maintaining and

13 improving health and productivity and on reducing

14 the consumption of health care services.

15 (c) BASIS FOR COST-SHARING.—In establishing cost16 sharing that is part of the uniform set of effective benefits,

17 the Board shall—

18 (1) include only such cost-sharing as will re19 strain consumers from seeking unnecessary services;

20 (2) not impose cost-sharing for covered clinical

21 preventive services;

22 (3) balance the effect of the cost-sharing in re23 ducing premiums and in affecting utilization of ap24 propriate services; and
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1 (4) limit the total cost-sharing that may be in2 curred by an individual (or enrollee unit) in a year.

3 SEC. 133. HEALTH BENEFITS AND DATA STANDARDS

4 BOARD.

5 (a) ESTABLISHMENT.—The Board shall provide for

6 the initial organization, as a nonprofit corporation in the

7 District of Columbia, of the Health Benefits and Data

8 Standards Board (in this section referred to as the ‘‘Bene9 fits and Data Board’’), under the direction of a board of

10 directors consisting of 5 directors.

11 (b) APPOINTMENT OF DIRECTORS.—

12 (1) SOLICITATION.—The Board shall solicit

13 nominations for the initial board of directors of the

14 Benefits and Data Board from organizations that

15 represent the various groups with an interest in the

16 health care system and the functions of the Board.

17 (2) CONTINUATION.—The by-laws of the Bene18 fits and Data Board shall provide for the board of

19 directors subsequently to be appointed by the board

20 in a manner that ensures a broad range of represen21 tation of through groups with an interest in provid22 ing and purchasing health care.

23 (3) TERMS OF DIRECTORS.—The term of each

24 member of the board of directors shall be for 7

25 years, except that in order to provide for staggered
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1 terms, the terms of the members initially appointed

2 shall be for 3, 4, 5, 6, and 7 years. In the case of

3 a vacancy by death or resignation, the replacement

4 shall be appointed for the remainder of the term. No

5 individual may serve as a director of the board for

6 more than 14 years.

7 (c) FUNCTIONS.—

8 (1) IN GENERAL.—The Benefits and Data

9 Board shall make recommendations to the Board

10 concerning each of the following:

11 (A) The uniform set of effective benefits.

12 (B) The standards for information collec13 tion from AHPs.

14 (C) Auditing standards to ensure the accu15 racy of such information.

16 Before making recommendations concerning the

17 standards described in subparagraph (B), the Bene18 fits and Data Board shall consult with the Agency

19 for Health Care Policy and Research regarding the

20 Agency’s need for information in performing its ac21 tivities.

22 (2) ASSESSMENTS.—The Benefits and Data

23 Board shall provide the Board with its assessment

24 of—

25 (A) medical technology;
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1 (B) practice variations;

2 (C) the effectiveness of medical practices

3 and drug therapies based on research per4 formed by the Agency for Health Care Policy

5 and Research;

6 (D) information from clinical and epi7 demiologic studies; and

8 (E) information provided by AHPs, includ9 ing AHP-specific information on clinical health,

10 functional status, well-being, and plan satisfac11 tion of enrolled individuals.

12 (3) NATIONAL HEALTH DATA SYSTEM.—The

13 Benefits and Data Board shall provide the Board

14 with its assistance in the development of the stand15 ards for the national data reporting system under

16 section 137.

17 (d) FUNDING.—

18 (1) IN GENERAL.—In order to provide funding

19 for the Benefits and Data Board, the National

20 Health Board shall establish an annual registration

21 fee for AHPs which is imposed on a per-covered-in22 dividual-basis and is sufficient, in the aggregate, to

23 provide each year for not more than the amount

24 specified in paragraph (2) for the operation of the

25 Benefits and Data Board.
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1 (2) AMOUNT OF FUNDS.—The amount specified

2 in this paragraph for each of fiscal years 1994 and

3 1995, is $50,000,000, and, for each succeeding fis4 cal year, is $25,000,000.

5 SEC. 134. HEALTH PLAN STANDARDS BOARD.

6 (a) ESTABLISHMENT.—The Board shall provide for

7 the initial organization, as a nonprofit corporation in the

8 District of Columbia, of the Health Plan Standards Board

9 (in this section referred to as the ‘‘Plan Standards

10 Board’’), under the direction of a board of directors con11 sisting of 5 directors.

12 (b) APPOINTMENT OF DIRECTORS.—

13 (1) SOLICITATION.—The Board shall solicit

14 nominations for the initial board of directors of the

15 Plan Standards Board from organizations that rep16 resent the various groups with an interest in the

17 health care system and the functions of the Board.

18 (2) CONTINUATION.—The by-laws of the Plan

19 Standards Board shall provide for the board of di20 rectors subsequently to be appointed by the board in

21 a manner that ensures a broad range of representa22 tion of through groups with an interest in providing

23 and purchasing health care.

24 (3) TERMS OF DIRECTORS.—The term of each

25 member of the board of directors shall be for 7
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1 years, except that in order to provide for staggered

2 terms, the terms of the members initially appointed

3 shall be for 3, 4, 5, 6, and 7 years. In the case of

4 a vacancy by death or resignation, the replacement

5 shall be appointed for the remainder of the term. No

6 individual may serve as a director of the board for

7 more than 12 years.

8 (c) FUNCTIONS.—

9 (1) IN GENERAL.—The Plan Standards Board

10 shall make recommendations to the Board concern11 ing the standards for AHPs (other than standards

12 relating to the uniform set of effective benefits and

13 the national health data system) and for HPPCs.

14 (2) ASSESSMENT OF RISK-ADJUSTMENT FAC15 TORS.—The Plan Standards Board shall provide the

16 Board with its assessment of the risk-adjustment

17 factors under section 136.

18 (d) FUNDING.—In order to provide funding for the

19 Plan Standards Board, the National Health Board shall

20 establish an annual registration fee for AHPs which is im21 posed on a per-covered-individual-basis and is sufficient,

22 in the aggregate, to provide each year for not more than

23 60 percent of the amount specified in section 133(d)(2)

24 for the operation of the Plan Standards Board.
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1 SEC. 135. REGISTRATION OF ACCOUNTABLE HEALTH

2 PLANS.

3 (a) IN GENERAL.—The Board shall register those

4 health plans that meet the standards under subtitle B.

5 (b) TREATMENT OF STATE CERTIFICATION.—If the

6 Board determines that a State superintendent of insur7 ance, State insurance commissioner, or other State official

8 provides for the imposition of standards that the Board

9 finds are equivalent to the standards established under

10 subtitle B for registration of a health benefit plan as an

11 AHP, the Board may provide for registration as AHPs

12 of health plans that such official certifies as meeting the

13 standards for registration. Nothing in this subsection shall

14 require a health plan to be certified by such an official

15 in order to be registered by the Board.

16 (c) MEDICAID WAIVER.—The Board shall develop

17 criteria and procedures under which the Secretary may

18 grant a waiver to a State to permit that State to enroll

19 individuals, otherwise eligible for enrollment under title

20 XIX of the Social Security Act, under ACP’s through a

21 HPPC. The waiver shall permit the State to use funds

22 made available under such title XIX for the enrollment

23 of medicaid eligible individuals through a HPPC. The

24 State shall ensure that individuals enrolled in a AHP

25 under such a waiver are guaranteed at least those mini-
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1 mum benefits that such individual would have been enti2 tled to under such title XIX.

3 SEC. 136. SPECIFICATION OF RISK-ADJUSTMENT FACTORS.

4 (a) IN GENERAL.—The Board shall establish rules

5 for the process of risk-adjustment of premiums among

6 AHPs by HPPCs under section 102(d).

7 (b) PROCESS.—

8 (1) IDENTIFICATION OF RELATIVE RISK.—The

9 Board shall determine risk-adjustment factors that

10 are correlated with increased or diminished risk for

11 consumption of the type of health services included

12 in the uniform set of effective benefits. To the maxi13 mum extent practicable, such factors shall be deter14 mined without regard to the methodology used by in15 dividual AHPs in the provision of such benefits. In

16 determining such factors, with respect to an individ17 ual who is identified as having—

18 (A) a lower-than-average risk for consump19 tion of the services, the factor shall be a num20 ber, less than zero, reflecting the degree of such

21 lower risk;

22 (B) an average risk for consumption of the

23 services, the factor shall be zero; or

24 (C) a higher-than-average risk for con25 sumption of the services, the factor shall be a
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1 number, greater than zero, reflecting the degree

2 of such higher risk.

3 (2) ADJUSTMENT OF FACTORS.—In applying

4 under section 102(d)(1)(B) the risk-adjustment fac5 tors determined under paragraph (1), each HPPC

6 shall adjust such factors, in accordance with a meth7 odology established by the Board, so that the sum

8 of such factors is zero for all enrollee units in each

9 HPPC area for which a premium payment is for10 warded under section 102(d) for each premium pay11 ment period.

12 SEC. 137. NATIONAL HEALTH DATA SYSTEM.

13 (a) STANDARDIZATION OF INFORMATION.—

14 (1) IN GENERAL.—The Board shall establish

15 standards for the periodic reporting by AHPs of in16 formation under section 113(a).

17 (2) PATIENT CONFIDENTIALITY.—The stand18 ards shall be established in a manner that protects

19 the confidentiality of individual enrollees, but may

20 provide for the disclosure of information which dis21 closes particular providers within an AHP.

22 (b) ANALYSIS OF INFORMATION.—The Board shall

23 analyze the information reported in order to distribute it

24 in a form, consistent with subsection (a)(2), that—
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1 (1) reports, on a national, State, and commu2 nity basis, the levels and trends of health care ex3 penditures, the rates and trends in the provision of

4 individual procedures, and the price levels and rates

5 of price change for such procedures; and

6 (2) permits the direct comparison of different

7 AHPs on the basis of the ability of the AHPs to

8 maintain and improve clinical health, functional sta9 tus, and well-being and to satisfy enrolled individ10 uals.

11 The reports under paragraph (1) shall include both aggre12 gate and per capita measures for areas and shall include

13 comparative data of different areas. The comparison

14 under paragraph (2) may also be made to show changes

15 in the performance of AHPs over time.

16 (c) DISTRIBUTION OF INFORMATION.—

17 (1) IN GENERAL.—The Board shall provide,

18 through the HPPCs and directly to AHPs, for the

19 distribution of its analysis on individual AHPs. Such

20 distribution shall occur at least annually before each

21 general enrollment period.

22 (2) ANNUAL REPORT ON EXPENDITURES.—The

23 Board shall publish annually (beginning with 1996)

24 a report on expenditures on, and volumes and prices

25 of, procedures. Such report shall be distributed to
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1 each AHP, each HPPC, each Governor, and each

2 State legislature.

3 (3) ANNUAL REPORTS.—The Board shall also

4 publish an annual report, based on analyses under

5 this section, that identifies—

6 (A) procedures for which, as reflected in

7 variations in use or rates of increase, there ap8 pear to be the greatest need to develop valid

9 clinical protocols for clinical decision-making

10 and review;

11 (B) procedures for which, as reflected in

12 price variations and price inflation, there ap13 pear to be the greatest need for strengthening

14 competitive purchasing; and

15 (C) States and localities for which, as re16 flected in expenditure levels and rates of in17 crease, there appear to be the greatest need for

18 additional cost control measures.

19 (4) SPECIAL DISTRIBUTIONS.—The Board may,

20 whenever it deems appropriate, provide for the dis21 tribution—

22 (A) to an AHP of such information relat23 ing to the plan as may be appropriate in order

24 to encourage the plan to improve its delivery of

25 care; and
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1 (B) to business, consumer, and other

2 groups and individuals of such information as

3 may improve their ability to effect improve4 ments in the outcomes, quality, and efficiency

5 of health services.

6 (5) ACCESS BY AGENCY FOR HEALTH CARE

7 POLICY AND RESEARCH.—The Board shall make

8 available to the Agency for Health Care Policy and

9 Research information obtained under section 113(a)

10 in a manner consistent with subsection (a)(2).

11 (d) STANDARDIZED FORMS.—Not later than October

12 1, 1994, the Board, in consultation with representatives

13 of local governments, insurers, health care providers, and

14 consumers shall develop a plan to accelerate electronic bill15 ing and computerization of medical records and shall de16 velop standardized claim forms and billing procedures for

17 use by all AHP’s under this title.

18 SEC. 138. MEASURES OF QUALITY OF CARE OF SPECIAL19 IZED CENTERS OF CARE.

20 (a) COLLECTION OF INFORMATION.—The Board

21 shall provide a process whereby a specialized center of care

22 (as defined in subsection (c)) may submit to the Board

23 such clinical and other information bearing on the quality

24 of care provided with respect to the uniform set of effective

25 benefits at the center as the Board may specify. Such in-
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1 formation shall include sufficient information to take into

2 account outcomes and the risk factors associated with in3 dividuals receiving care through the center. Such informa4 tion shall be provided at such frequency (not less often

5 than annually) as the Board specifies.

6 (b) MEASURES OF QUALITY.—Using information

7 submitted under subsection (a) and information reported

8 under section 137, the Board shall—

9 (1) analyze the performance of such centers

10 with respect to the quality of care provided;

11 (2) rate the performance of such a center with

12 respect to a class of services relative to the perform13 ance of other specialized centers of care and relative

14 to the performance of AHPs generally; and

15 (3) publish such ratings.

16 (c) USE OF SERVICE MARK FOR SPECIALIZED CEN17 TERS OF CARE.—The Board may establish a service mark

18 for specialized centers of care the performance of which

19 has been rated under subsection (b). Such service mark

20 shall be registrable under the Trademark Act of 1946, and

21 the Board shall apply for the registration of such service

22 mark under such Act. For purposes of such Act, such serv23 ice mark shall be deemed to be used in commerce. For

24 purposes of this subsection, the ‘‘Trademark Act of 1946’’

25 refers to the Act entitled ‘‘An Act to provide for the reg-
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1 istration and protection of trademarks used in commerce,

2 to carry out the provisions of international conventions,

3 and for other purposes’’, approved July 5, 1946 (15

4 U.S.C. 1051 et seq.).

5 (d) SPECIALIZED CENTER OF CARE DEFINED.—In

6 this section, the term ‘‘specialized center of care’’ means

7 an institution or other organized system for the provision

8 of specific services, which need not be multi-disciplinary,

9 and does not include (except as the Board may provide)

10 individual practitioners.

11 SEC. 139. REPORT ON IMPACT OF ADVERSE SELECTION;

12 RECOMMENDATIONS ON MANDATED PUR13 CHASE OF COVERAGE.

14 (a) STUDY.—The Board shall study—

15 (1) the extent to which those eligible individuals

16 (as defined in subsection (c)) who enroll with AHPs

17 have significantly greater needs for health care serv18 ices than the population of eligible individuals as a

19 whole; and

20 (2) methods for reducing adverse impacts that

21 may result from such adverse selection.

22 (b) REPORT.—By not later than January 1, 1996,

23 the Board shall submit to Congress a report on the study

24 under subsection (a) and on appropriate methods for re25 ducing adverse impacts that may result from adverse se-
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1 lection in enrollment. The report shall specifically in2 clude—

3 (1) an examination of the impact of establishing

4 a requirement that all eligible individuals obtain

5 health coverage through enrollment with an AHP;

6 and

7 (2) a recommendation as to whether (and, if so,

8 how) to impose such a requirement.

9 (c) ELIGIBLE INDIVIDUAL DEFINED.—In this sec10 tion, the term ‘‘eligible individual’’—

11 (1) includes individuals who would be eligible

12 individuals but for section 2(a)(4)(B), but

13 (2) does not include individuals eligible to enroll

14 for benefits under part B of title XVIII of the Social

15 Security Act.

16 TITLE II—TAX INCENTIVES TO

17 INCREASE HEALTH CARE AC18 CESS

19 SEC. 201. CREDIT FOR ACCOUNTABLE HEALTH PLAN

20 COSTS.

21 (a) IN GENERAL.—Subpart C of part IV of sub22 chapter A of chapter 1 of the Internal Revenue Code of

23 1986 (relating to refundable personal credits) is amended

24 by inserting after section 34 the following new section:
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1 ‘‘SEC. 34A. ACCOUNTABLE HEALTH PLAN COSTS.

2 ‘‘(a) ALLOWANCE OF CREDIT.—

3 ‘‘(1) IN GENERAL.—In the case of an eligible

4 individual, there shall be allowed as a credit against

5 the tax imposed by this subtitle for the taxable year

6 an amount equal to the applicable percentage of the

7 accountable health plan costs paid by such individual

8 during the taxable year.

9 ‘‘(2) APPLICABLE PERCENTAGE.—For purposes

10 of paragraph (1), the term ‘applicable percentage’

11 means 60 percent reduced (but not below zero) by

12 10 percentage points for each $1,000 (or fraction

13 thereof) by which the taxpayer’s adjusted gross in14 come for the taxable year exceeds the applicable dol15 lar amount.

16 ‘‘(3) APPLICABLE DOLLAR AMOUNT.—For pur17 poses of this subsection, the term ‘applicable dollar

18 amount’ means—

19 ‘‘(A) in the case of a taxpayer filing a joint

20 return, $28,000,

21 ‘‘(B) in the case of any other taxpayer

22 (other than a married individual filing a sepa23 rate return), $18,000, and

24 ‘‘(C) in the case of a married individual fil25 ing a separate return, zero.
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1 For purposes of this subsection, the rule of section

2 219(g)(4) shall apply.

3 ‘‘(b) ACCOUNTABLE HEALTH PLAN COSTS.—For

4 purposes of this section—

5 ‘‘(1) IN GENERAL.—The term ‘accountable

6 health plan costs’ means amounts paid during the

7 taxable year for insurance which constitutes medical

8 care (within the meaning of section 213(g). For pur9 poses of the preceding sentence, the rules of section

10 213(d)(6) shall apply.

11 ‘‘(2) DOLLAR LIMIT ON ACCOUNTABLE HEALTH

12 PLAN COSTS.—The amount of the accountable

13 health care costs paid during any taxable year which

14 may be taken into account under subsection (a)(1)

15 shall not exceed the reference premium amount for

16 the taxable year.

17 ‘‘(3) ELECTION NOT TO TAKE CREDIT.—A tax18 payer may elect for any taxable year to have

19 amounts described in paragraph (1) not treated as

20 accountable health plan costs.

21 ‘‘(4) DEFINITION.—As used in paragraph (2),

22 the term ‘reference premium rate amount’ means,

23 with respect to an individual in a HPPC area, the

24 lowest premium established by an open accountable

25 health plan and offered in the area for the premium
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•S 223 IS

1 class applicable to such individual (including, if ap2 propriate, the HPPC overhead amount established

3 under section 105(b)(3) of the Access to Affordable

4 Health Care Act) applied for the taxable year period

5 involved.

6 ‘‘(c) ELIGIBLE INDIVIDUAL.—For purposes of this

7 section, the term ‘eligible individual’ means, with respect

8 to any period, an individual who is not covered during such

9 period by a health plan maintained by an employer of such

10 individual or such individual’s spouse.

11 ‘‘(d) SPECIAL RULES.—For purposes of this sec12 tion—

13 ‘‘(1) COORDINATION WITH ADVANCE PAYMENT

14 AND MINIMUM TAX.—Rules similar to the rules of

15 subsections (g) and (h) of section 32 shall apply to

16 any credit to which this section applies.

17 ‘‘(2) MEDICARE-ELIGIBLE INDIVIDUALS.—No

18 expense shall be treated as an accountable health

19 plan cost if it is an amount paid for insurance for

20 an individual for any period with respect to which

21 such individual is entitled (or, on application without

22 the payment of an additional premium, would be en23 titled to) benefits under part A of title XVIII of the

24 Social Security Act.
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1 ‘‘(3) SUBSIDIZED EXPENSES.—No expense shall

2 be treated as an accountable health plan cost to the

3 extent—

4 ‘‘(A) such expense is paid, reimbursed, or

5 subsidized (whether by being disregarded for

6 purposes of another program or otherwise) by

7 the Federal Government, a State or local gov8 ernment, or any agency or instrumentality

9 thereof, and

10 ‘‘(B) the payment, reimbursement, or sub11 sidy of such expense is not includible in the

12 gross income of the recipient.

13 ‘‘(e) REGULATIONS.—The Secretary shall prescribe

14 such regulations as may be necessary to carry out the pur15 poses of this section.’’.

16 (b) ADVANCE PAYMENT OF CREDIT.—

17 (1) IN GENERAL.—Chapter 25 of the Internal

18 Revenue Code of 1986 is amended by inserting after

19 section 3507 the following new section:

20 ‘‘SEC. 3507A. ADVANCE PAYMENT OF ACCOUNTABLE

21 HEALTH PLAN COSTS.

22 ‘‘(a) GENERAL RULE.—Except as otherwise provided

23 in this section, every employer making payment of wages

24 with respect to whom an accountable health plan costs eli25 gibility certificate is in effect shall, at the time of paying
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1 such wages, make an additional payment equal to such

2 employee’s accountable health plan costs advance amount.

3 ‘‘(b) ACCOUNTABLE HEALTH PLAN COSTS ELIGI4 BILITY CERTIFICATE.—For purposes of this title, an ac5 countable health plan costs eligibility certificate is a state6 ment furnished by an employee to the employer which—

7 ‘‘(1) certifies that the employee will be eligible

8 to receive the credit provided by section 34A for the

9 taxable year,

10 ‘‘(2) certifies that the employee does not have

11 an accountable health plan costs eligibility certificate

12 in effect for the calendar year with respect to the

13 payment of wages by another employer,

14 ‘‘(3) states whether or not the employee’s

15 spouse has an accountable health plan costs eligi16 bility certificate in effect, and

17 ‘‘(4) estimates the amount of accountable

18 health plan costs (as defined in section 34A(b)) for

19 the calendar year.

20 For purposes of this section, a certificate shall be treated

21 as being in effect with respect to a spouse if such a certifi22 cate will be in effect on the first status determination date

23 following the date on which the employee furnishes the

24 statement in question.
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1 ‘‘(c) ACCOUNTABLE HEALTH PLAN COSTS ADVANCE

2 AMOUNT.—

3 ‘‘(1) IN GENERAL.—For purposes of this title,

4 the term ‘accountable health plan costs advance

5 amount’ means, with respect to any payroll period,

6 the amount determined—

7 ‘‘(A) on the basis of the employee’s wages

8 from the employer for such period,

9 ‘‘(B) on the basis of the employee’s esti10 mated accountable health plan costs included in

11 the accountable health plan costs eligibility cer12 tificate, and

13 ‘‘(C) in accordance with tables provided by

14 the Secretary.

15 ‘‘(2) ADVANCE AMOUNT TABLES.—The tables

16 referred to in paragraph (1)(D) shall be similar in

17 form to the tables prescribed under section 3402

18 and, to the maximum extent feasible, shall be coordi19 nated with such tables and the tables prescribed

20 under section 3507(c).

21 ‘‘(d) OTHER RULES.—For purposes of this section,

22 rules similar to the rules of subsections (d) and (e) of sec23 tion 3507 shall apply.
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1 ‘‘(e) REGULATIONS.—The Secretary shall prescribe

2 such regulations as may be necessary to carry out the pur3 poses of this section.’’.

4 (2) CONFORMING AMENDMENT.—The table of

5 sections for chapter 25 of such Code is amended by

6 adding after the item relating to section 3507 the

7 following new item:

‘‘Sec. 3507A. Advance payment of accountable health plan costs

credit.’’.

8 (c) COORDINATION WITH DEDUCTIONS FOR HEALTH

9 INSURANCE EXPENSES.—

10 (1) SELF-EMPLOYED INDIVIDUALS.—Section

11 162(l) of the Internal Revenue Code of 1986, as

12 amended by section 203, is further amended by add13 ing after paragraph (5) the following new para14 graph:

15 ‘‘(6) COORDINATION WITH HEALTH INSURANCE

16 PREMIUM CREDIT.—Paragraph (1) shall not apply to

17 any amount taken into account in computing the

18 amount of the credit allowed under section 34A.’’.

19 (2) MEDICAL, DENTAL, ETC., EXPENSES.—Sub20 section (e) of section 213 of such Code is amended

21 by inserting ‘‘or section 34A’’ after ‘‘section 21’’.

22 (d) TERMINATION OF HEALTH INSURANCE CRED23 IT.—Section 32 of the Internal Revenue Code of 1986 (re-
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1 lating to earned income credit) is amended by adding at

2 the end thereof the following new subsection:

3 ‘‘(d) TERMINATION OF HEALTH INSURANCE CRED4 IT.—In the case of taxable years beginning after Decem5 ber 31, 1991, the health insurance credit percentage shall

6 be equal to 0 percent.’’

7 (e) CLERICAL AMENDMENT.—The table of sections

8 for subpart A of part IV of subchapter A of chapter 1

9 of the Internal Revenue Code of 1986 is amended by in10 serting after the item relating to section 34 the following

11 new item:

‘‘Sec. 34A. Accountable health plan costs.’’.

12 (f) EFFECTIVE DATE.—The amendments made by

13 this section shall apply to taxable years beginning after

14 December 31, 1993.

15 SEC. 202. NO DEDUCTION FOR EMPLOYER HEALTH PLAN

16 EXPENSES IN EXCESS OF ACCOUNTABLE

17 HEALTH PLAN COSTS.

18 (a) IN GENERAL.—Section 162 of the Internal Reve19 nue Code of 1986 (relating to trade or business expenses)

20 is amended by redesignating subsection (m) as subsection

21 (n) and by inserting after subsection (l) the following new

22 subsection:

23 ‘‘(m) GENERAL RULE.—
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1 ‘‘(1) LIMITATION ON DEDUCTION.—No deduc2 tion shall be allowed under this section for the ex3 cess health plan expenses of any employer.

4 ‘‘(2) EXCESS HEALTH PLAN EXPENSES.—For

5 purposes of this subsection—

6 ‘‘(A) IN GENERAL.—The term ‘excess

7 health plan expenses’ means health plan ex8 penses paid or incurred by the employer for any

9 month with respect to any covered individual to

10 the extent such expenses do not meet the re11 quirements of subparagraphs (B), (C), and (D).

12 ‘‘(B) LIMIT TO ACCOUNTABLE HEALTH

13 PLANS.—Health plan expenses meet the re14 quirements of this subparagraph only if the ex15 penses are attributable to—

16 ‘‘(i) coverage of the covered individual

17 under an accountable health plan, or

18 ‘‘(ii) in the case of a small employer,

19 payment to a health plan purchasing coop20 erative for coverage under an accountable

21 health plan.

22 ‘‘(C) LIMIT ON PER EMPLOYEE CONTRIBU23 TION.—

24 ‘‘(i) IN GENERAL.—Health plan ex25 penses with respect to any employee meet
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1 the requirements of this subparagraph for

2 any month only to the extent that the

3 amount of such expenses does not exceed

4 the reference premium rate amount for the

5 month.

6 ‘‘(ii) TREATMENT OF HEALTH PLANS

7 OUTSIDE THE UNITED STATES.—For pur8 poses of clause (i), in the case of an em9 ployee residing outside the United States,

10 there shall be substituted for the reference

11 premium rate such reasonable amounts as

12 the Federal Health Board determines to be

13 comparable to the limit imposed under

14 clause (i).

15 ‘‘(iii) DEFINITION.—As used in clause

16 (i), the term ‘reference premium rate

17 amount’ means, with respect to an individ18 ual in a HPPC area, the lowest premium

19 established by an open accountable health

20 plan and offered in the area for the pre21 mium class applicable to such individual

22 (including, if appropriate, the HPPC over23 head amount established under section

24 105(b)(3) of the Access to Affordable

25 Health Care Act).
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1 ‘‘(D) REQUIREMENT OF LEVEL CONTRIBU2 TION.—Health plan expenses meet the require3 ments of this subparagraph for any month only

4 if the amount of the employer contribution (for

5 a premium class) does not vary based on the

6 accountable health plan selected.

7 ‘‘(3) EXCEPTION FOR MEDICARE-ELIGIBLE RE8 TIREES.—Paragraphs (1) and (2) shall not apply to

9 health plan expenses with respect to an individual

10 who is eligible for benefits under part A of title

11 XVIII of the Social Security Act if such expenses

12 are for a health plan that is not a primary payor

13 under section 1862(b) of such Act.

14 ‘‘(4) SPECIAL RULES.—

15 ‘‘(A) TREATMENT OF SELF-INSURED

16 PLANS.—In the case of a self-insured health

17 plan, the amount of contributions per employee

18 shall be determined for purposes of paragraph

19 (2)(C) in accordance with rules established by

20 the Federal Health Board which are based on

21 the principles of section 4980B(f)(4)(B) (as in

22 effect before the date of the enactment of this

23 subsection).

24 ‘‘(B) CONTRIBUTIONS TO CAFETERIA

25 PLANS.—Contributions under a cafeteria plan
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1 on behalf of an employee that may be used for

2 a group health plan coverage shall be treated

3 for purposes of this section as health plan ex4 penses paid or incurred by the employer.

5 ‘‘(5) EMPLOYEES HELD HARMLESS.—Nothing

6 in this section shall be construed as affecting the ex7 clusion from gross income of an employee under sec8 tion 106.

9 ‘‘(6) OTHER DEFINITIONS.—For purposes of

10 this subsection—

11 ‘‘(A) COVERED INDIVIDUAL.—The term

12 ‘covered individual’ means any beneficiary of a

13 group health plan.

14 ‘‘(B) GROUP HEALTH PLAN.—The term

15 ‘group health plan’ has the meaning given such

16 term by section 5000(b)(1).

17 ‘‘(C) HEALTH PLAN EXPENSES.—

18 ‘‘(i) IN GENERAL.—The term ‘health

19 plan expenses’ means employer expenses

20 for any group health plan, including ex21 penses for premiums as well as payment of

22 deductibles and coinsurance that would

23 otherwise be applicable.

24 ‘‘(ii) EXCLUSION OF CERTAIN DIRECT

25 EXPENSES.—Such term does not include
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1 expenses for direct services which are de2 termined by the Federal Health Board to

3 be primarily aimed at workplace health

4 care and health promotion or related popu5 lation-based preventive health activities.

6 ‘‘(D) ACCOUNTABLE HEALTH PLAN.—The

7 term ‘accountable health plan’ has the meaning

8 given such term by section 2(b)(1) of the Ac9 cess to Affordable Health Care Act.

10 ‘‘(E) SMALL EMPLOYER.—The term ‘small

11 employer’ means, for a taxable year, an em12 ployer that is a small employer (within the

13 meaning of section 2(c)(2) of the Access to Af14 fordable Health Care Act) for the most recent

15 calendar year ending before the end of the tax16 able year.’’.

17 (b) EFFECTIVE DATE.—

18 (1) IN GENERAL.—Except as otherwise pro19 vided in this subsection, the amendments made by

20 this section shall apply to expenses incurred for the

21 provision of health services for periods after Decem22 ber 31, 1993.

23 (2) TRANSITION FOR COLLECTIVE BARGAINING

24 AGREEMENTS.—The amendments made by this sec25 tion shall not apply to employers with respect to
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1 their employees, insofar as such employees are cov2 ered under a collective bargaining agreement ratified

3 before the date of the enactment of this Act, earlier

4 than the date of termination of such agreement (de5 termined without regard to any extension thereof

6 agreed to after the date of the enactment of this

7 Act), or January 1, 1996, whichever is earlier.

8 SEC. 203. INCREASE IN DEDUCTION FOR HEALTH PLAN

9 PREMIUM EXPENSES OF SELF-EMPLOYED IN10 DIVIDUALS.

11 (a) INCREASING DEDUCTION TO 100 PERCENT.—

12 Paragraph (1) of section 162(l) of the Internal Revenue

13 Code of 1986 (relating to special rules for health insur14 ance costs of self-employed individuals) is amended by

15 striking ‘‘25 percent of’’.

16 (b) MAKING PROVISION PERMANENT.—Section

17 162(l) of such Code is amended by striking paragraph (6).

18 (c) LIMITATION TO ACCOUNTABLE HEALTH

19 PLANS.—Paragraph (2) of section 162(l) of such Code is

20 amended by adding at the end thereof the following new

21 subparagraph:

22 ‘‘(C) DEDUCTION LIMITED TO ACCOUNT23 ABLE HEALTH PLAN COSTS.—No deduction

24 shall be allowed under this section for any

25 amount which would be excess health plan ex-
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1 penses (as defined in subsection (m)(2), deter2 mined without regard to subparagraph (D)

3 thereof) if the taxpayer were an employer.’’.

4 (d) EFFECTIVE DATE.—

5 (1) IN GENERAL.—Except as otherwise pro6 vided in this subsection, the amendments made by

7 this section shall apply to taxable years beginning

8 after December 31, 1993.

9 (2) EXCEPTION.—The amendment made by

10 subsection (c) shall apply to expenses for periods of

11 coverage beginning on or after January 1, 1994.

12 SEC. 204. DEDUCTION FOR HEALTH PLAN PREMIUM EX13 PENSES OF INDIVIDUALS.

14 (a) IN GENERAL.—Section 213 of the Internal Reve15 nue Code of 1986 (relating to medical, dental, etc., ex16 penses) amended by adding at the end the following new

17 subsection:

18 ‘‘(g) SPECIAL RULES FOR HEALTH PLAN PREMIUM

19 EXPENSES.—

20 ‘‘(1) IN GENERAL.—The deduction under sub21 section (a) shall be determined without regard to the

22 limitation based on adjusted gross income with re23 spect to amounts paid for premiums for coverage

24 under an accountable health plan.
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1 ‘‘(2) LIMIT.—The amount allowed as a deduc2 tion under paragraph (1) with respect to the cost of

3 providing coverage for any individual shall not ex4 ceed the applicable limit specified in section

5 162(m)(2)(C) reduced by the aggregate amount paid

6 by all other entities (including any employer or any

7 level of government) for coverage of such individual

8 under any health plan.

9 ‘‘(3) DEDUCTION ALLOWED AGAINST GROSS IN10 COME.—The deduction under this subsection shall

11 be taken into account in determining adjusted gross

12 income under section 62(a).

13 ‘‘(4) TREATMENT OF MEDICARE PROGRAM.—

14 Coverage under part A or part B of title XVIII of

15 the Social Security Act shall not be considered for

16 purposes of this subsection to be coverage under an

17 accountable health plan.’’.

18 (b) EFFECTIVE DATE.—The amendment made by

19 subsection (a) shall apply to taxable years beginning after

20 December 31, 1993.

21 SEC. 205. EXCLUSION FROM GROSS INCOME FOR EM22 PLOYER CONTRIBUTIONS TO ACCOUNTABLE

23 HEALTH PLANS.

24 (a) IN GENERAL.—Section 106 of the Internal Reve25 nue Code of 1986 (relating to contributions by employers
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1 to accident and health plans) is amended to read as fol2 lows:

3 ‘‘Gross income of an employee does not include em4 ployer-provided basic coverage under an accountable

5 health plan (as defined in section 162(m)(2)(B)).’’.

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

7 this section shall apply to taxable years beginning after

8 December 31, 1993.

9 TITLE III—OUTCOMES RE10 SEARCH AND PRACTICE

11 GUIDELINE DEVELOPMENT;

12 APPLICATION OF GUIDE13 LINES AS LEGAL STANDARD

14 SEC. 301. AUTHORIZATION FOR EXPANSION OF HEALTH

15 SERVICES RESEARCH.

16 Section 926(a) of the Public Health Service Act (42

17 U.S.C. 299c–5) is amended to read as follows:

18 (a) GENERAL AUTHORIZATION OF APPROPRIA19 TIONS.—For the purpose of carrying out this title, there

20 are authorized to be appropriated $120,000,000 for fiscal

21 year 1993, $155,000,000 for fiscal year 1994, and

22 $185,000,000 for fiscal year 1995.’’.
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1 SEC. 302. TREATMENT PRACTICE GUIDELINES AS A LEGAL

2 STANDARD.

3 Section 912 of the Public Health Service Act (42 U.S.C.

4 299b–1) is amended by adding at the end thereof the fol5 lowing new subsection:

6 ‘‘(g) TREATMENT PRACTICE GUIDELINES AS A

7 LEGAL STANDARD.—

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

9 paragraph (2) and notwithstanding any other provi10 sion of law, guidelines established under this section

11 may not be introduced in evidence or used in any ac12 tion brought in a Federal or State court arising

13 from the provision of a health care service to an in14 dividual.

15 ‘‘(2) PROVISION OF HEALTH CARE UNDER

16 GUIDELINES.—Notwithstanding any other provision

17 of law, in any action brought in a Federal or State

18 court arising from the provision of a health care

19 service to an individual, if the service was provided

20 to the individual in accordance with guidelines estab21 lished under this section, the guidelines—

22 ‘‘(A) may be introduced by a provider who

23 is a party to the action; and

24 ‘‘(B) if introduced, shall establish a rebut25 table presumption that the service prescribed by
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1 the guidelines is the appropriate standard of

2 medical care.’’.

3 TITLE IV—COOPERATIVE

4 AGREEMENTS BETWEEN HOS5 PITALS

6 SEC. 401. PURPOSE.

7 It is the purpose of this title to encourage cooperation

8 between hospitals in order to contain costs and achieve

9 a more efficient health care delivery system through the

10 elimination of unnecessary duplication and proliferation of

11 expensive medical or high technology services or equip12 ment.

13 SEC. 402. HOSPITAL TECHNOLOGY AND SERVICES SHARING

14 PROGRAM.

15 Part D of title VI of the Public Health Service Act

16 (42 U.S.C. 291k et seq.) is amended by adding at the end

17 thereof the following new section:

18 ‘‘SEC. 647. HOSPITAL TECHNOLOGY AND SERVICES SHAR19 ING DEMONSTRATION PROGRAM.

20 ‘‘(a) WAIVER.—The Attorney General, acting

21 through the Secretary, may grant a waiver of the anti22 trust laws, to permit two or more hospitals to enter into

23 a voluntary cooperative agreement under which such hos24 pitals provide for the sharing of medical technology and

25 services.
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1 ‘‘(b) ELIGIBLE APPLICANTS.—

2 ‘‘(1) IN GENERAL.—To be eligible to receive a

3 waiver under subsection (a), an entity shall be a hos4 pital and shall prepare and submit to the Secretary

5 an application at such time, in such manner, and

6 containing such information as the Secretary may

7 require, including—

8 ‘‘(A) a statement that such hospital desires

9 to negotiate and enter into a voluntary coopera10 tive agreement with at least one other hospital

11 operating in the State or region of the applicant

12 hospital for the sharing of medical technology

13 or services;

14 ‘‘(B) a description of the nature and scope

15 of the activities contemplated under the cooper16 ative agreement and any consideration that may

17 pass under such agreement to any other hos18 pital that may elect to become a party to the

19 agreement; and

20 ‘‘(C) any other information determined ap21 propriate by the Secretary.

22 ‘‘(2) DEVELOPMENT OF EVALUATION GUIDE23 LINES.—Not later than 90 days after the date of en24 actment of this section, the Administrator of the

25 Agency for Health Care Policy and Research shall
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1 develop evaluation guidelines with respect to applica2 tions submitted under paragraph (1).

3 ‘‘(3) EVALUATIONS OF APPLICATIONS.—The

4 Secretary, in consultation with the Administrator of

5 the Agency for Health Care Policy and Research,

6 shall evaluate applications submitted under para7 graph (1). In determining which applications to ap8 prove for purposes of granting waivers under sub9 section (a), the Secretary shall consider whether the

10 cooperative agreement described in each such appli11 cation is likely to result in—

12 ‘‘(A) a reduction of costs and an increase

13 in access to care;

14 ‘‘(B) the enhancement of the quality of

15 hospital or hospital-related care;

16 ‘‘(C) the preservation of hospital facilities

17 in geographical proximity to the communities

18 traditionally served by such facilities;

19 ‘‘(D) improvements in the cost-effective20 ness of high-technology services by the hospitals

21 involved;

22 ‘‘(E) improvements in the efficient utiliza23 tion of hospital resources and capital equip24 ment; or
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1 ‘‘(F) the avoidance of duplication of hos2 pital resources.

3 ‘‘(c) MEDICAL TECHNOLOGY AND SERVICES.—

4 ‘‘(1) IN GENERAL.—Cooperative agreements fa5 cilitated under this section shall provide for the

6 sharing of medical or high technology equipment or

7 services among the hospitals which are parties to

8 such agreements.

9 ‘‘(2) MEDICAL TECHNOLOGY.—For purposes of

10 this section, the term ‘medical technology’ shall in11 clude the drugs, devices, and medical and surgical

12 procedures utilized in medical care, and the organi13 zational and support systems within which such care

14 is provided.

15 ‘‘(3) ELIGIBLE SERVICES.—With respect to

16 services that may be shared under an agreement en17 tered into under this section, such services shall—

18 ‘‘(A) either have high capital costs or ex19 tremely high annual operating costs; and

20 ‘‘(B) be services with respect to which

21 there is a reasonable expectation that shared

22 ownership will avoid a significant degree of the

23 potential excess capacity of such services in the

24 community or region to be served under such

25 agreement.
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1 Such services may include mobile clinic services.

2 ‘‘(d) REPORT.—Not later than 5 years after the date

3 of enactment of this section, the Secretary shall prepare

4 and submit to the appropriate committees of Congress, a

5 report concerning the potential for cooperative agreements

6 of the type entered into under this section to—

7 ‘‘(1) contain health care costs;

8 ‘‘(2) increase the access of individuals to medi9 cal services; and

10 ‘‘(3) improve the quality of health care.

11 Such report shall also contain the recommendations of the

12 Secretary with respect to future programs to facilitate co13 operative agreements.

14 ‘‘(e) DEFINITION.—For purposes of this section, the

15 term ‘antitrust laws’ means—

16 ‘‘(1) the Act entitled ‘An Act to protect trade

17 and commerce against unlawful restraints and mo18 nopolies’, approved July 2, 1890, commonly known

19 as the ‘Sherman Act’ (26 Stat. 209; chapter 647; 15

20 U.S.C. 1 et seq.);

21 ‘‘(2) the Federal Trade Commission Act, ap22 proved September 26, 1914 (38 Stat. 717; chapter

23 311; 15 U.S.C. 41 et seq.);

24 ‘‘(3) the Act entitled ‘An Act to supplement ex25 isting laws against unlawful restraints and monopo-
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1 lies, and for other purposes’, approved October 15,

2 1914, commonly known as the ‘Clayton Act’ (38

3 Stat. 730; chapter 323; 15 U.S.C. 12 et seq.; 18

4 U.S.C. 402, 660, 3285, 3691; 29 U.S.C. 52, 53);

5 and

6 ‘‘(4) any State antitrust laws that would pro7 hibit the activities described in subsection (a).’’.

8 TITLE V—IMPROVED ACCESS TO

9 HEALTH CARE FOR RURAL

10 AND UNDERSERVED AREAS

11 Subtitle A—Revenue Incentives for

12 Practice in Rural Areas

13 SEC. 501. REVENUE INCENTIVES FOR PRACTICE IN RURAL

14 AREAS.

15 (a) NONREFUNDABLE CREDIT FOR CERTAIN PRI16 MARY HEALTH SERVICES PROVIDERS.—

17 (1) IN GENERAL.—Subpart A of part IV of sub18 chapter A of chapter 1 of the Internal Revenue Code

19 of 1986 (relating to nonrefundable personal credits)

20 is amended by inserting after section 25 the follow21 ing new section:

22 ‘‘SEC. 25A. PRIMARY HEALTH SERVICES PROVIDERS.

23 ‘‘(a) ALLOWANCE OF CREDIT.—In the case of a

24 qualified primary health services provider, there is allowed

25 as a credit against the tax imposed by this chapter for
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1 any taxable year in a mandatory service period an amount

2 equal to the product of—

3 ‘‘(1) the lesser of—

4 ‘‘(A) the number of months of such period

5 occurring in such taxable year, or

6 ‘‘(B) 36 months, reduced by the number of

7 months taken into account under this para8 graph with respect to such provider for all pre9 ceding taxable years (whether or not in the

10 same mandatory service period), multiplied by

11 ‘‘(2) $1,000 ($500 in the case of a qualified

12 health services provider who is a physician assistant

13 or a nurse practitioner).

14 ‘‘(b) QUALIFIED PRIMARY HEALTH SERVICES PRO15 VIDER.—For purposes of this section, the term ‘qualified

16 primary health services provider’ means any physician,

17 physician assistant, or nurse practitioner who for any

18 month during a mandatory service period is certified by

19 the Bureau to be a primary health services provider who—

20 ‘‘(1) is providing primary health services—

21 ‘‘(A) full time, and

22 ‘‘(B) to individuals at least 80 percent of

23 whom reside in a rural health professional

24 shortage area,
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1 ‘‘(2) is not receiving during such year a scholar2 ship under the National Health Service Corps Schol3 arship Program or a loan repayment under the Na4 tional Health Service Corps Loan Repayment Pro5 gram,

6 ‘‘(3) is not fulfilling service obligations under

7 such Programs, and

8 ‘‘(4) has not defaulted on such obligations.

9 ‘‘(c) MANDATORY SERVICE PERIOD.—For purposes

10 of this section, the term ‘mandatory service period’ means

11 the period of 60 consecutive calendar months beginning

12 with the first month the taxpayer is a qualified primary

13 health services provider.

14 ‘‘(d) DEFINITIONS AND SPECIAL RULES.—For pur15 poses of this section—

16 ‘‘(1) BUREAU.—The term ‘Bureau’ means the

17 Bureau of Health Care Delivery and Assistance,

18 Health Resources and Services Administration of the

19 United States Public Health Service.

20 ‘‘(2) PHYSICIAN.—The term ‘physician’ has the

21 meaning given to such term by section 1861(r) of

22 the Social Security Act.

23 ‘‘(3) PHYSICIAN ASSISTANT; NURSE PRACTI24 TIONER.—The terms ‘physician assistant’ and ‘nurse
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1 practitioner’ have the meanings given to such terms

2 by section 1861(aa)(3) of the Social Security Act.

3 ‘‘(4) PRIMARY HEALTH SERVICES PROVIDER.—

4 The term ‘primary health services provider’ means a

5 provider of primary health services (as defined in

6 section 330(b)(1) of the Public Health Service Act).

7 ‘‘(5) RURAL HEALTH PROFESSIONAL SHORTAGE

8 AREA.—The term ‘rural health professional shortage

9 area’ means—

10 ‘‘(A) a class 1 or class 2 health profes11 sional shortage area (as defined in section

12 332(a)(1)(A) of the Public Health Service Act)

13 in a rural area (as determined under section

14 1886(d)(2)(D) of the Social Security Act), or

15 ‘‘(B) an area which is determined by the

16 Secretary of Health and Human Services as

17 equivalent to an area described in subparagraph

18 (A) and which is designated by the Bureau of

19 the Census as not urbanized.

20 ‘‘(e) RECAPTURE OF CREDIT.—

21 ‘‘(1) IN GENERAL.—If, during any taxable year,

22 there is a recapture event, then the tax of the tax23 payer under this chapter for such taxable year shall

24 be increased by an amount equal to the product of—

25 ‘‘(A) the applicable percentage, and
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1 ‘‘(B) the aggregate unrecaptured credits

2 allowed to such taxpayer under this section for

3 all prior taxable years.

4 ‘‘(2) APPLICABLE RECAPTURE PERCENTAGE.—

5 ‘‘(A) IN GENERAL.—For purposes of this

6 subsection, the applicable recapture percentage

7 shall be determined from the following table:

‘‘If the recapture The applicable recapevent occurs during: ture percentage is:

Months 1–24 .............................................. 100

Months 25–36 ............................................ 75

Months 37–48 ............................................ 50

Months 49–60 ............................................ 25

Months 61 and thereafter .......................... 0.

8 ‘‘(B) TIMING.—For purposes of subpara9 graph (A), month 1 shall begin on the first day

10 of the mandatory service period.

11 ‘‘(3) RECAPTURE EVENT DEFINED.—

12 ‘‘(A) IN GENERAL.—For purposes of this

13 subsection, the term ‘recapture event’ means

14 the failure of the taxpayer to be a qualified pri15 mary health services provider for any month

16 during any mandatory service period.

17 ‘‘(B) CESSATION OF DESIGNATION.—The

18 cessation of the designation of any area as a

19 rural health professional shortage area after the

20 beginning of the mandatory service period for

21 any taxpayer shall not constitute a recapture

22 event.
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1 ‘‘(C) SECRETARIAL WAIVER.—The Sec2 retary may waive any recapture event caused by

3 extraordinary circumstances.

4 ‘‘(4) NO CREDITS AGAINST TAX.—Any increase

5 in tax under this subsection shall not be treated as

6 a tax imposed by this chapter for purposes of deter7 mining the amount of any credit under subpart A,

8 B, or D of this part.’’.

9 (2) CLERICAL AMENDMENT.—The table of sec10 tions for subpart A of part IV of subchapter A of

11 chapter 1 of such Code is amended by inserting

12 after the item relating to section 25 the following

13 new item:

‘‘Sec. 25A. Primary health services providers.’’.

14 (3) EFFECTIVE DATE.—The amendments made

15 by this subsection shall apply to taxable years begin16 ning after December 31, 1993.

17 (b) NATIONAL HEALTH SERVICE CORPS LOAN RE18 PAYMENTS EXCLUDED FROM GROSS INCOME.—

19 (1) IN GENERAL.—Part III of subchapter B of

20 chapter 1 of the Internal Revenue Code of 1986 (re21 lating to items specifically excluded from gross in22 come) is amended by redesignating section 136 as

23 section 137 and by inserting after section 135 the

24 following new section:
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1 ‘‘SEC. 136. NATIONAL HEALTH SERVICE CORPS LOAN RE2 PAYMENTS.

3 ‘‘(a) GENERAL RULE.—Gross income shall not in4 clude any qualified loan repayment.

5 ‘‘(b) QUALIFIED LOAN REPAYMENT.—For purposes

6 of this section, the term ‘qualified loan repayment’ means

7 any payment made on behalf of the taxpayer by the Na8 tional Health Service Corps Loan Repayment Program

9 under section 338B(g) of the Public Health Service Act.’’.

10 (2) CONFORMING AMENDMENT.—Paragraph (3)

11 of section 338B(g) of the Public Health Service Act

12 is amended by striking ‘‘Federal, State, or local’’

13 and inserting ‘‘State or local’’.

14 (3) CLERICAL AMENDMENT.—The table of sec15 tions for part III of subchapter B of chapter 1 of

16 the Internal Revenue Code of 1986 is amended by

17 striking the item relating to section 136 and insert18 ing the following:

‘‘Sec. 136. National Health Service Corps loan repayments.

‘‘Sec. 137. Cross references to other Acts.’’.

19 (4) EFFECTIVE DATE.—The amendments made

20 by this subsection shall apply to payments made

21 under section 338B(g) of the Public Health Service

22 Act after the date of the enactment of this Act.

23 (c) EXPENSING OF MEDICAL EQUIPMENT.—
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1 (1) IN GENERAL.—Section 179 of the Internal

2 Revenue Code of 1986 (relating to election to ex3 pense certain depreciable business assets) is amend4 ed—

5 (A) by striking paragraph (1) of subsection

6 (b) and inserting the following:

7 ‘‘(1) DOLLAR LIMITATION.—

8 ‘‘(A) GENERAL RULE.—The aggregate cost

9 which may be taken into account under sub10 section (a) for any taxable year shall not exceed

11 $10,000.

12 ‘‘(B) RURAL HEALTH CARE PROPERTY.—

13 In the case of rural health care property, the

14 aggregate cost which may be taken into account

15 under subsection (a) for any taxable year shall

16 not exceed $25,000, reduced by the amount

17 otherwise taken into account under subsection

18 (a) for such year.’’; and

19 (B) by adding at the end of subsection (d)

20 the following new paragraph:

21 ‘‘(11) RURAL HEALTH CARE PROPERTY.—For

22 purposes of this section, the term ‘rural health care

23 property’ means section 179 property used by a phy24 sician (as defined in section 1861(r) of the Social

25 Security Act) in the active conduct of such physi-
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1 cian’s full-time trade or business of providing pri2 mary health services (as defined in section 330(b)(1)

3 of the Public Health Service Act) in a rural health

4 professional shortage area (as defined in section

5 25A(d)(5)).’’.

6 (2) EFFECTIVE DATE.—The amendments made

7 by this subsection shall apply to property placed in

8 service after December 31, 1993, in taxable years

9 ending after such date.

10 (d) DEDUCTION FOR STUDENT LOAN PAYMENTS BY

11 MEDICAL PROFESSIONALS PRACTICING IN RURAL

12 AREAS.—

13 (1) INTEREST ON STUDENT LOANS NOT TREAT14 ED AS PERSONAL INTEREST.—Section 163(h)(2) of

15 the Internal Revenue Code of 1986 (defining per16 sonal interest) is amended by striking ‘‘and’’ at the

17 end of subparagraph (D), by striking the period at

18 the end of subparagraph (E) and inserting ‘‘, and’’,

19 and by adding at the end thereof the following new

20 subparagraph:

21 ‘‘(F) any qualified medical education interest

22 (within the meaning of subsection (k)).’’.

23 (2) QUALIFIED MEDICAL EDUCATION INTEREST

24 DEFINED.—Section 163 of such Code (relating to in25 terest expenses) is amended by redesignating sub-
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1 section (k) as subsection (l) and by inserting after

2 subsection (j) the following new subsection:

3 ‘‘(k) QUALIFIED MEDICAL EDUCATION INTEREST OF

4 MEDICAL PROFESSIONALS PRACTICING IN RURAL

5 AREAS.—

6 ‘‘(1) IN GENERAL.—For purposes of subsection

7 (h)(2)(F), the term ‘qualified medical education in8 terest’ means an amount which bears the same ratio

9 to the interest paid on qualified educational loans

10 during the taxable year by an individual performing

11 services under a qualified rural medical practice

12 agreement as—

13 ‘‘(A) the number of months during the tax14 able year during which such services were per15 formed, bears to

16 ‘‘(B) the number of months in the taxable

17 year.

18 ‘‘(2) DOLLAR LIMITATION.—The aggregate

19 amount which may be treated as qualified medical

20 education interest for any taxable year with respect

21 to any individual shall not exceed $5,000.

22 ‘‘(3) QUALIFIED RURAL MEDICAL PRACTICE

23 AGREEMENT.—For purposes of this subsection—

24 ‘‘(A) IN GENERAL.—The term ‘qualified

25 rural medical practice agreement’ means a writ-
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1 ten agreement between an individual and an ap2 plicable rural community under which the indi3 vidual agrees—

4 ‘‘(i) in the case of a medical doctor,

5 upon completion of the individual’s resi6 dency (or internship if no residency is re7 quired), or

8 ‘‘(ii) in the case of a registered nurse,

9 nurse practitioner, or physician’s assistant,

10 upon completion of the education to which

11 the qualified education loan relates,

12 to perform full-time services as such a medical

13 professional in the applicable rural community

14 for a period of 24 consecutive months. An indi15 vidual and an applicable rural community may

16 elect to have the agreement apply for 36 con17 secutive months rather than 24 months.

18 ‘‘(B) SPECIAL RULE FOR COMPUTING PE19 RIODS.—An individual shall be treated as meet20 ing the 24 or 36 consecutive month requirement

21 under subparagraph (A) if, during each 12-con22 secutive month period within either such period,

23 the individual performs full-time services as a

24 medical doctor, registered nurse, nurse practi25 tioner, or physician’s assistant, whichever ap-
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1 plies, in the applicable rural community during

2 9 of the months in such 12-consecutive month

3 period. For purposes of this subsection, an indi4 vidual meeting the requirements of the preced5 ing sentence shall be treated as performing

6 services during the entire 12-month period.

7 ‘‘(C) APPLICABLE RURAL COMMUNITY.—

8 The term ‘applicable rural community’ means—

9 ‘‘(i) any political subdivision of a

10 State which—

11 ‘‘(I) has a population of 5,000 or

12 less, and

13 ‘‘(II) has a per capita income of

14 $15,000 or less, or

15 ‘‘(ii) an Indian reservation which has

16 a per capita income of $15,000 or less.

17 ‘‘(4) QUALIFIED EDUCATIONAL LOAN.—The

18 term ‘qualified educational loan’ means any indebt19 edness to pay qualified tuition and related expenses

20 (within the meaning of section 117(b)) and reason21 able living expenses—

22 ‘‘(A) which are paid or incurred—

23 ‘‘(i) as a candidate for a degree as a

24 medical doctor at an educational institu-
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1 tion described in section 170(b)(1)(A)(ii),

2 or

3 ‘‘(ii) in connection with courses of in4 struction at such an institution necessary

5 for certification as a registered nurse,

6 nurse practitioner, or physician’s assistant,

7 and

8 ‘‘(B) which are paid or incurred within a

9 reasonable time before or after such indebted10 ness is incurred.

11 ‘‘(5) RECAPTURE.—If an individual fails to

12 carry out a qualified rural medical practice agree13 ment during any taxable year, then—

14 ‘‘(A) no deduction with respect to such

15 agreement shall be allowable by reason of sub16 section (h)(2)(F) for such taxable year and any

17 subsequent taxable year, and

18 ‘‘(B) there shall be included in gross in19 come for such taxable year the aggregate

20 amount of the deductions allowable under this

21 section (by reason of subsection (h)(2)(F)) for

22 all preceding taxable years.

23 ‘‘(6) DEFINITIONS.—For purposes of this sub24 section, the terms ‘registered nurse’, ‘nurse practi25 tioner’, and ‘physician’s assistant’ have the meaning
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1 given such terms by section 1861 of the Social Secu2 rity Act.’’.

3 (3) DEDUCTION ALLOWED IN COMPUTING AD4 JUSTED GROSS INCOME.—Section 62(a) of such

5 Code is amended by inserting after paragraph (13)

6 the following new paragraph:

7 ‘‘(14) INTEREST ON STUDENT LOANS OF RURAL

8 HEALTH PROFESSIONALS.—The deduction allowable

9 by reason of section 163(h)(2)(F) (relating to stu10 dent loan payments of medical professionals practic11 ing in rural areas).’’.

12 (4) EFFECTIVE DATE.—The amendments made

13 by this subsection shall apply to taxable years begin14 ning after December 31, 1993.

15 Subtitle B—Public Health Service

16 Act Provisions

17 SEC. 511. NATIONAL HEALTH SERVICE CORPS.

18 Section 338H(b) of the Public Health Service Act (42

19 U.S.C. 254q(b)) is amended—

20 (1) in paragraph (1), by striking ‘‘and such

21 sums’’ and all that follows through the end thereof

22 and inserting ‘‘$118,900,000 for each of the fiscal

23 years 1993 through 1996.’’; and

24 (2) in paragraph (2)—
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1 (A) by redesignating subparagraphs (A)

2 and (B) as subparagraphs (B) and (C), respec3 tively; and

4 (B) by inserting before subparagraph (B)

5 (as so redesignated) the following new subpara6 graph:

7 ‘‘(A) IN GENERAL.—Of the amount appro8 priated under paragraph (1) for each fiscal

9 year, the Secretary shall utilize 25 percent of

10 such amount to carry out section 338A and 75

11 percent of such amount to carry out section

12 338B.’’.

13 SEC. 512. ESTABLISHMENT OF GRANT PROGRAM.

14 Subpart I of part D of title III of the Public Health

15 Service Act (42 U.S.C. 254b et seq.) is amended by adding

16 at the end thereof the following new section:

17 ‘‘SEC. 330A. COMMUNITY BASED PRIMARY HEALTH CARE

18 GRANT PROGRAM.

19 ‘‘(a) ESTABLISHMENT.—The Secretary shall estab20 lish and administer a program to provide allotments to

21 States to enable such States to provide grants for the cre22 ation or enhancement of community based primary health

23 care entities that provide services to pregnant women and

24 children up to age three.

25 ‘‘(b) ALLOTMENTS TO STATES.—
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1 ‘‘(1) IN GENERAL.—From the amounts avail2 able for allotment under subsection (h) for a fiscal

3 year, the Secretary shall allot to each State an

4 amount equal to the product of the grant share of

5 the State (as determined under paragraph (2)) mul6 tiplied by the amount available for allotment for

7 such fiscal year.

8 ‘‘(2) GRANT SHARE.—

9 ‘‘(A) IN GENERAL.—For purposes of para10 graph (1), the grant share of a State shall be

11 the product of the need-adjusted population of

12 the State (as determined under subparagraph

13 (B)) multiplied by the Federal matching per14 centage of the State (as determined under sub15 paragraph (C)), expressed as a percentage of

16 the sum of the products of such factors for all

17 States.

18 ‘‘(B) NEED-ADJUSTED POPULATION.—

19 ‘‘(i) IN GENERAL.—For purposes of

20 subparagraph (A), the need-adjusted popu21 lation of a State shall be the product of

22 the total population of the State (as esti23 mated by the Secretary of Commerce) mul24 tiplied by the need index of the State (as

25 determined under clause (ii)).
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1 ‘‘(ii) NEED INDEX.—For purposes of

2 clause (i), the need index of a State shall

3 be the ratio of—

4 ‘‘(I) the weighted sum of the geo5 graphic percentage of the State (as

6 determined under clause (iii)), the

7 poverty percentage of the State (as

8 determined under clause (iv)), and the

9 multiple grant percentage of the State

10 (as determined under clause (v)); to

11 ‘‘(II) the general population per12 centage of the State (as determined

13 under clause (vi)).

14 ‘‘(iii) GEOGRAPHIC PERCENTAGE.—

15 ‘‘(I) IN GENERAL.—For purposes

16 of clause (ii)(I), the geographic per17 centage of the State shall be the esti18 mated population of the State that is

19 residing in nonurbanized areas (as de20 termined under subclause (II)) ex21 pressed as a percentage of the total

22 nonurbanized population of all States.

23 ‘‘(II) NONURBANIZED POPU24 LATION.—For purposes of subclause

25 (I), the estimated population of the
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1 State that is residing in non-urban2 ized areas shall be one minus the ur3 banized population of the State (as

4 determined using the most recent de5 cennial census), expressed as a per6 centage of the total population of the

7 State (as determined using the most

8 recent decennial census), multiplied by

9 the current estimated population of

10 the State.

11 ‘‘(iv) POVERTY PERCENTAGE.—For

12 purposes of clause (ii)(I), the poverty per13 centage of the State shall be the estimated

14 number of people residing in the State

15 with incomes below 200 percent of the in16 come official poverty line (as determined

17 by the Office of Management and Budget)

18 expressed as a percentage of the total

19 number of such people residing in all

20 States

21 ‘‘(v) MULTIPLE GRANT PERCENT22 AGE.—For purposes of clause (ii)(I), the

23 multiple grant percentage of the State

24 shall be the amount of Federal funding re25 ceived by the State under grants awarded
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1 under sections 329, 330 and 340, ex2 pressed as a percentage of the total

3 amounts received under such grants by all

4 States. With respect to a State, such

5 amount shall not exceed twice the general

6 population percentage of the State under

7 clause (vi) or be less than one half of the

8 States general population percentage.

9 ‘‘(vi) GENERAL POPULATION PER10 CENTAGE.—For purposes of clause (ii)(II),

11 the general population percentage of the

12 State shall be the total population of the

13 State (as determined by the Secretary of

14 Commerce) expressed as a percentage of

15 the total population of all States.

16 ‘‘(C) FEDERAL MATCHING PERCENTAGE.—

17 ‘‘(i) IN GENERAL.—For purposes of

18 subparagraph (A), the Federal matching

19 percentage of the State shall be equal to

20 one less the State matching percentage (as

21 determined under clause (ii)).

22 ‘‘(ii) STATE MATCHING PERCENT23 AGE.—For purposes of clause (ii), the

24 State matching percentage of the State

25 shall be 0.25 multiplied by the ratio of the
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1 total taxable resource percentage (as deter2 mined under clause (iii)) to the need-ad3 justed population of the State (as deter4 mined under subparagraph (B)).

5 ‘‘(iii) TOTAL TAXABLE RESOURCE

6 PERCENTAGE.—For purposes of clause (ii),

7 the total taxable resources percentage of

8 the State shall be the total taxable re9 sources of a State (as determined by the

10 Secretary of the Treasury) expressed as a

11 percentage of the sum of the total taxable

12 resources of all States.

13 ‘‘(3) ANNUAL ESTIMATES.—

14 ‘‘(A) IN GENERAL.—If the Secretary of

15 Commerce does not produce the annual esti16 mates required under paragraph (2)(B)(iv),

17 such estimates shall be determined by multiply18 ing the percentage of the population of the

19 State that is below 200 percent of the income

20 official poverty line as determined using the

21 most recent decennial census by the most recent

22 estimate of the total population of the State.

23 Except as provided in subparagraph (B), the

24 calculations required under this subparagraph

25 shall be made based on the most recent 3 year
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1 average of the total taxable resources of individ2 uals within the State.

3 ‘‘(B) DISTRICT OF COLUMBIA.—Notwith4 standing subparagraph (A), the calculations re5 quired under such subparagraph with respect to

6 the District of Columbia shall be based on the

7 most recent 3 year average of the personal in8 come of individuals residing within the District

9 as a percentage of the personal income for all

10 individuals residing within the District, as de11 termined by the Secretary of Commerce.

12 ‘‘(4) MATCHING REQUIREMENT.—A State that

13 receives an allotment under this section shall make

14 available State resources (either directly or indi15 rectly) to carry out this section in an amount that

16 shall equal the State matching percentage for the

17 State (as determined under paragraph (2)(C)(II))

18 divided by the Federal matching percentage (as de19 termined under paragraph (2)(C)).

20 ‘‘(c) APPLICATION.—

21 ‘‘(1) IN GENERAL.—To be eligible to receive an

22 allotment under this section, a State shall prepare

23 and submit an application to the Secretary at such

24 time, in such manner, and containing such informa25 tion as the Secretary may by regulation require.
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1 ‘‘(2) ASSURANCES.—A State application sub2 mitted under paragraph (1) shall contain an assur3 ance that—

4 ‘‘(A) the State will use amounts received

5 under it’s allotment consistent with the require6 ments of this section; and

7 ‘‘(B) the State will provide, from non-Fed8 eral sources, the amounts required under sub9 section (b)(4).

10 ‘‘(d) USE OF FUNDS.—

11 ‘‘(1) IN GENERAL.—The State shall use

12 amounts received under this section to award grants

13 to eligible public and nonprofit private entities, or

14 consortia of such entities, within the State to enable

15 such entities or consortia to provide services of the

16 type described in paragraph (2) of section 329(h) to

17 pregnant women and children up to age three.

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

19 grant under paragraph (1), an entity or consortium

20 shall—

21 ‘‘(A) prepare and submit to the admin22 istering entity of the State, an application at

23 such time, in such manner and containing such

24 information as such administering entity may
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1 require, including a plan for the provision of

2 services;

3 ‘‘(B) provide assurances that services will

4 be provided under the grant at fee rates estab5 lished or determined in accordance with section

6 330(e)(3)(F); and

7 ‘‘(C) provide assurances that in the case of

8 services provided to individuals with health in9 surance, such insurance shall be used as the

10 primary source of payment for such services.

11 ‘‘(3) TARGET POPULATIONS.—Entities or con12 sortia receiving grants under paragraph (1) shall, in

13 providing the services described in paragraph (3),

14 substantially target populations of pregnant women

15 and children within the State who—

16 ‘‘(A) lack the health care coverage, or abil17 ity to pay, for primary or supplemental health

18 care services; or

19 ‘‘(B) reside in medically underserved or

20 health professional shortage areas, areas cer21 tified as underserved under the rural health

22 clinic program, or other areas determined ap23 propriate by the State, within the State.

24 ‘‘(4) PRIORITY.—In awarding grants under

25 paragraph (1), the State shall—
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1 ‘‘(A) give priority to entities or consortia

2 that can demonstrate through the plan submit3 ted under paragraph (2) that—

4 ‘‘(i) the services provided under the

5 grant will expand the availability of pri6 mary care services to the maximum num7 ber of pregnant women and children who

8 have no access to such care on the date of

9 the grant award; and

10 ‘‘(ii) the delivery of services under the

11 grant will be cost-effective; and

12 ‘‘(B) ensure that an equitable distribution

13 of funds is achieved among urban and rural en14 tities or consortia.

15 ‘‘(e) REPORTS AND AUDITS.—Each State shall pre16 pare and submit to the Secretary annual reports concern17 ing the State’s activities under this section which shall be

18 in such form and contain such information as the Sec19 retary determines appropriate. Each such State shall es20 tablish fiscal control and fund accounting procedures as

21 may be necessary to assure that amounts received under

22 this section are being disbursed properly and are ac23 counted for, and include the results of audits conducted

24 under such procedures in the reports submitted under this

25 subsection.
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1 ‘‘(f) PAYMENTS.—

2 ‘‘(1) ENTITLEMENT.—Each State for which an

3 application has been approved by the Secretary

4 under this section shall be entitled to payments

5 under this section for each fiscal year in an amount

6 not to exceed the State’s allotment under subsection

7 (b) to be expended by the State in accordance with

8 the terms of the application for the fiscal year for

9 which the allotment is to be made.

10 ‘‘(2) METHOD OF PAYMENTS.—The Secretary

11 may make payments to a State in installments, and

12 in advance or, by way of reimbursement, with nec13 essary adjustments on account of overpayments or

14 underpayments, as the Secretary may determine.

15 ‘‘(3) STATE SPENDING OF PAYMENTS.—Pay16 ments to a State from the allotment under sub17 section (b) for any fiscal year must be expended by

18 the State in that fiscal year or in the succeeding fis19 cal year.

20 ‘‘(g) DEFINITION.—As used in this section, the term

21 ‘administering entity of the State’ means the agency or

22 official designated by the chief executive officer of the

23 State to administer the amounts provided to the State

24 under this section.
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1 ‘‘(h) FUNDING.—Notwithstanding any other provi2 sion of law, the Secretary shall use 50 percent of the

3 amounts that the Secretary is required to utilize under

4 section 330B(h) in each fiscal year to carry out this sec5 tion.’’.

6 SEC. 513. ESTABLISHMENT OF NEW PROGRAM TO PROVIDE

7 FUNDS TO ALLOW FEDERALLY QUALIFIED

8 HEALTH CENTERS AND OTHER ENTITIES OR

9 ORGANIZATIONS TO PROVIDE EXPANDED

10 SERVICES TO MEDICALLY UNDERSERVED IN11 DIVIDUALS.

12 (a) IN GENERAL.—Subpart I of part D of title III

13 of the Public Health Service Act (42 U.S.C. 254b et seq.)

14 (as amended by section 512) is further amended by adding

15 at the end thereof the following new section:

16 ‘‘SEC. 330B. ESTABLISHMENT OF NEW PROGRAM TO PRO17 VIDE FUNDS TO ALLOW FEDERALLY QUALI18 FIED HEALTH CENTERS AND OTHER ENTI19 TIES OR ORGANIZATIONS TO PROVIDE EX20 PANDED SERVICES TO MEDICALLY UNDER21 SERVED INDIVIDUALS.

22 ‘‘(a) ESTABLISHMENT OF HEALTH SERVICES AC23 CESS PROGRAM.—From amounts appropriated under this

24 section, the Secretary shall, acting through the Bureau of

25 Health Care Delivery Assistance, award grants under this
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1 section to federally qualified health centers (hereinafter re2 ferred to in this section as ‘FQHC’s’) and other entities

3 and organizations submitting applications under this sec4 tion (as described in subsection (c)) for the purpose of

5 providing access to services for medically underserved pop6 ulations (as defined in section 330(b)(3)) or in high im7 pact areas (as defined in section 329(a)(5)) not currently

8 being served by a FQHC.

9 ‘‘(b) ELIGIBILITY FOR GRANTS.—

10 ‘‘(1) IN GENERAL.—The Secretary shall award

11 grants under this section to entities or organizations

12 described in this paragraph and paragraph (2) which

13 have submitted a proposal to the Secretary to ex14 pand such entities or organizations operations (in15 cluding expansions to new sites (as determined nec16 essary by the Secretary)) to serve medically under17 served populations or high impact areas not cur18 rently served by a FQHC and which—

19 ‘‘(A) have as of January 1, 1992, been cer20 tified by the Secretary as a FQHC under sec21 tion 1905(l)(2)(B) of the Social Security Act;

22 or

23 ‘‘(B) have submitted applications to the

24 Secretary to qualify as FQHC’s under such sec25 tion 1905(l)(2)(B); or
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1 ‘‘(C) have submitted a plan to the Sec2 retary which provides that the entity will meet

3 the requirements to qualify as a FQHC when

4 operational.

5 ‘‘(2) NON FQHC ENTITIES.—

6 ‘‘(A) ELIGIBILITY.—The Secretary shall

7 also make grants under this section to public or

8 private nonprofit agencies, health care entities

9 or organizations which meet the requirements

10 necessary to qualify as a FQHC except, the re11 quirement that such entity have a consumer

12 majority governing board and which have sub13 mitted a proposal to the Secretary to provide

14 those services provided by a FQHC as defined

15 in section 1905(l)(2)(B) of the Social Security

16 Act and which are designed to promote access

17 to primary care services or to reduce reliance on

18 hospital emergency rooms or other high cost

19 providers of primary health care services, pro20 vided such proposal is developed by the entity

21 or organizations (or such entities or organiza22 tions acting in a consortium in a community)

23 with the review and approval of the Governor of

24 the State in which such entity or organization

25 is located.
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1 ‘‘(B) LIMITATION.—The Secretary shall

2 provide in making grants to entities or organi3 zations described in this paragraph that no

4 more than 10 percent of the funds provided for

5 grants under this section shall be made avail6 able for grants to such entities or organizations.

7 ‘‘(c) APPLICATION REQUIREMENTS.—

8 ‘‘(1) IN GENERAL.—In order to be eligible to

9 receive a grant under this section, a FQHC or other

10 entity or organization must submit an application in

11 such form and at such time as the Secretary shall

12 prescribe and which meets the requirements of this

13 subsection.

14 ‘‘(2) REQUIREMENTS.—An application submit15 ted under this section must provide—

16 ‘‘(A)(i) for a schedule of fees or payments

17 for the provision of the services provided by the

18 entity designed to cover its reasonable costs of

19 operations; and

20 ‘‘(ii) for a corresponding schedule of dis21 counts to be applied to such fees or payments,

22 based upon the patient’s ability to pay (deter23 mined by using a sliding scale formula based on

24 the income of the patient);
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1 ‘‘(B) assurances that the entity or organi2 zation provides services to persons who are eli3 gible for benefits under title XVIII of the Social

4 Security Act, for medical assistance under title

5 XIX of such Act or for assistance for medical

6 expenses under any other public assistance pro7 gram or private health insurance program; and

8 ‘‘(C) assurances that the entity or organi9 zation has made and will continue to make

10 every reasonable effort to collect reimbursement

11 for services—

12 ‘‘(i) from persons eligible for assist13 ance under any of the programs described

14 in subparagraph (B); and

15 ‘‘(ii) from patients not entitled to ben16 efits under any such programs.

17 ‘‘(d) LIMITATIONS ON USE OF FUNDS.—

18 ‘‘(1) IN GENERAL.—From the amounts award19 ed to an entity or organization under this section,

20 funds may be used for purposes of planning but may

21 only be expended for the costs of—

22 ‘‘(A) assessing the needs of the populations

23 or proposed areas to be served;

24 ‘‘(B) preparing a description of how the

25 needs identified will be met;
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1 ‘‘(C) development of an implementation

2 plan that addresses—

3 ‘‘(i) recruitment and training of per4 sonnel; and

5 ‘‘(ii) activities necessary to achieve

6 operational status in order to meet FQHC

7 requirements under section 1905(l)(2)(B)

8 of the Social Security Act.

9 ‘‘(2) RECRUITING, TRAINING AND COMPENSA10 TION OF STAFF.—From the amounts awarded to an

11 entity or organization under this section, funds may

12 be used for the purposes of paying for the costs of

13 recruiting, training and compensating staff (clinical

14 and associated administrative personnel (to the ex15 tent such costs are not already reimbursed under

16 title XIX of the Social Security Act or any other

17 State or Federal program)) to the extent necessary

18 to allow the entity to operate at new or expanded ex19 isting sites.

20 ‘‘(3) FACILITIES AND EQUIPMENT.—From the

21 amounts awarded to an entity or organization under

22 this section, funds may be expended for the purposes

23 of acquiring facilities and equipment but only for the

24 costs of—
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1 ‘‘(A) construction of new buildings (to the

2 extent that new construction is found to be the

3 most cost-efficient approach by the Secretary);

4 ‘‘(B) acquiring, expanding, or modernizing

5 of existing facilities;

6 ‘‘(C) purchasing essential (as determined

7 by the Secretary) equipment; and

8 ‘‘(D) amortization of principal and pay9 ment of interest on loans obtained for purposes

10 of site construction, acquisition, modernization,

11 or expansion, as well as necessary equipment.

12 ‘‘(4) SERVICES.—From the amounts awarded

13 to an entity or organization under this section, funds

14 may be expended for the payment of services but

15 only for the costs of—

16 ‘‘(A) providing or arranging for the provi17 sion of all services through the entity necessary

18 to qualify such entity as a FQHC under section

19 1905(l)(2)(B) of the Social Security Act;

20 ‘‘(B) providing or arranging for any other

21 service that a FQHC may provide and be reim22 bursed for under title XIX of such Act; and

23 ‘‘(C) providing any unreimbursed costs of

24 providing services as described in section 330(a)

25 to patients.
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1 ‘‘(e) PRIORITIES IN THE AWARDING OF GRANTS.—

2 ‘‘(1) CERTIFIED FQHC’S.—The Secretary shall

3 give priority in awarding grants under this section

4 to entities which have, as of January 1, 1992, been

5 certified as a FQHC under section 1905(l)(2)(B) of

6 the Social Security Act and which have submitted a

7 proposal to the Secretary to expand their operations

8 (including expansion to new sites) to serve medically

9 underserved populations for high impact areas not

10 currently served by a FQHC. The Secretary shall

11 give first priority in awarding grants under this sec12 tion to those FQHCs or other entities which propose

13 to serve populations with the highest degree of

14 unmet need, and which can demonstrate the ability

15 to expand their operations in the most efficient man16 ner.

17 ‘‘(2) QUALIFIED FQHC’S.—The Secretary shall

18 give second priority in awarding grants to entities

19 which have submitted applications to the Secretary

20 which demonstrate that the entity will qualify as a

21 FQHC under section 1905(l)(2)(B) of the Social Se22 curity Act before it provides or arranges for the pro23 vision of services supported by funds awarded under

24 this section, and which are serving or proposing to

25 serve medically underserved populations or high im-
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1 pact areas which are not currently served (or pro2 posed to be served) by a FQHC.

3 ‘‘(3) EXPANDED SERVICES AND PROJECTS.—

4 The Secretary shall give third priority in awarding

5 grants in subsequent years to those FQHCs or other

6 entities which have provided for expanded services

7 and project and are able to demonstrate that such

8 entity will incur significant unreimbursed costs in

9 providing such expanded services.

10 ‘‘(f) RETURN OF FUNDS TO SECRETARY FOR COSTS

11 REIMBURSED FROM OTHER SOURCES.—To the extent

12 that an entity or organization receiving funds under this

13 section is reimbursed from another source for the provi14 sion of services to an individual, and does not use such

15 increased reimbursement to expand services furnished,

16 areas served, to compensate for costs of unreimbursed

17 services provided to patients, or to promote recruitment,

18 training, or retention of personnel, such excess revenues

19 shall be returned to the Secretary.

20 ‘‘(g) TERMINATION OF GRANTS.—

21 ‘‘(1) FAILURE TO MEET FQHC REQUIRE22 MENTS.—

23 ‘‘(A) IN GENERAL.—With respect to any

24 entity that is receiving funds awarded under

25 this section and which subsequently fails to
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1 meet the requirements to qualify as a FQHC

2 under section 1905(l)(2)(B) or is an entity that

3 is not required to meet the requirements to

4 qualify as a FQHC under section 1905(l)(2)(B)

5 of the Social Security Act but fails to meet the

6 requirements of this section, the Secretary shall

7 terminate the award of funds under this section

8 to such entity.

9 ‘‘(B) NOTICE.—Prior to any termination

10 of funds under this section to an entity, the en11 tities shall be entitled to 60 days prior notice of

12 termination and, as provided by the Secretary

13 in regulations, an opportunity to correct any de14 ficiencies in order to allow the entity to con15 tinue to receive funds under this section.

16 ‘‘(2) REQUIREMENTS.—Upon any termination

17 of funding under this section, the Secretary may (to

18 the extent practicable)—

19 ‘‘(A) sell any property (including equip20 ment) acquired or constructed by the entity

21 using funds made available under this section

22 or transfer such property to another FQHC,

23 provided, that the Secretary shall reimburse

24 any costs which were incurred by the entity in

25 acquiring or constructing such property (includ-
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1 ing equipment) which were not supported by

2 grants under this section; and

3 ‘‘(B) recoup any funds provided to an en4 tity terminated under this section.

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

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

7 $400,000,000 for fiscal year 1993, $800,000,000 for fis8 cal year 1994, $1,200,000,000 for fiscal year 1995,

9 $1,600,000,000 for fiscal year 1996, and $1,600,000,000

10 for fiscal year 1997.’’.

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

12 subsection (a) shall become effective with respect to serv13 ices furnished by a federally qualified health center or

14 other qualifying entity described in this section beginning

15 on or after October 1, 1993.

16 (c) STUDY AND REPORT ON SERVICES PROVIDED BY

17 COMMUNITY HEALTH CENTERS AND HOSPITALS.—

18 (1) IN GENERAL.—The Secretary of Health and

19 Human Services (hereinafter referred to in this sub20 section as the ‘‘Secretary’’) shall provide for a study

21 to examine the relationship and interaction between

22 community health centers and hospitals in providing

23 services to individuals residing in medically under24 served areas. The Secretary shall ensure that the
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1 National Rural Research Centers participate in such

2 study.

3 (2) REPORT.—The Secretary shall provide to

4 the appropriate committees of Congress a report

5 summarizing the findings of the study within 90

6 days of the end of each project year and shall in7 clude in such report recommendations on methods to

8 improve the coordination of and provision of services

9 in medically underserved areas by community health

10 centers and hospitals.

11 (3) AUTHORIZATION.—There are authorized to

12 be appropriated to carry out the study provided for

13 in this subsection $150,000 for each of fiscal years

14 1993 and 1994.

15 SEC. 514. RURAL MENTAL HEALTH OUTREACH GRANTS.

16 Part D of title V of the Public Health Service Act

17 (42 U.S.C. 290dd et seq.) is amended by adding at the

18 end thereof the following new section:

19 ‘‘SEC. 544. RURAL MENTAL HEALTH OUTREACH GRANTS.

20 ‘‘(a) IN GENERAL.—The Secretary may award com21 petitive grants to eligible entities to enable such entities

22 to develop and implement a plan for mental health out23 reach programs in rural areas.

24 ‘‘(b) ELIGIBLE ENTITIES.—To be eligible to receive

25 a grant under subsection (a) an entity shall—
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1 ‘‘(1) prepare and submit to the Secretary an

2 application at such time, in such form and contain3 ing such information as the Secretary may require,

4 including a description of the activities that the en5 tity intends to undertake using grant funds; and

6 ‘‘(2) meet such other requirements as the Sec7 retary determines appropriate.

8 ‘‘(c) PRIORITY.—In awarding grants under sub9 section (a), the Secretary shall give priority to applications

10 that place emphasis on mental health services for the el11 derly or children. Priority shall also be given to applica12 tions that involve relationships between the applicant and

13 rural managed care cooperatives.

14 ‘‘(d) MATCHING REQUIREMENT.—An entity that re15 ceives a grant under subsection (a) shall make available

16 (directly or through donations from public or private enti17 ties), non-Federal contributions toward the costs of the

18 operations of the network in an amount equal to the

19 amount of the grant.

20 ‘‘(e) AUTHORIZATION OF APPROPRIATIONS.—There

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

22 $5,000,000 for each of the fiscal years 1993 through

23 1997.’’.
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1 SEC. 515. HEALTH PROFESSIONS TRAINING.

2 (a) MEDICALLY UNDERSERVED AREA TRAINING IN3 CENTIVES.—Subsection (a) of section 791 of the Public

4 Health Service Act (42 U.S.C. 292 et seq.) is amended

5 to read as follows:

6 ‘‘(a) PRIORITIES IN AWARDING OF GRANTS.—

7 ‘‘(1) ALLOCATION OF COMPETITIVE GRANT FUNDS.—

8 In awarding competitive grants under this title or title

9 VIII, the Secretary shall, among applicants that meet the

10 eligibility requirements under such titles, give priority to

11 entities submitting applications that—

12 ‘‘(A) can demonstrate that such entities—

13 ‘‘(i) have a high permanent rate for

14 placing graduates in practice settings

15 which serve residents of medically under16 served communities; and

17 ‘‘(ii) have a curriculum that in18 cludes—

19 ‘‘(I) the rotation of medical stu20 dents and residents to clinical settings

21 the focus of which is to serve medi22 cally underserved communities;

23 ‘‘(II) the appointment of health

24 professionals whose practices serve

25 medically underserved communities to
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1 act as preceptors to supervise training

2 in such settings;

3 ‘‘(III) classroom instruction on

4 practice opportunities involving medi5 cally underserved communities;

6 ‘‘(IV) service contingent scholar7 ship or loan repayment programs for

8 students and residents to encourage

9 practice in or service to underserved

10 communities;

11 ‘‘(V) the recruitment of students

12 who are most likely to elect to prac13 tice in or provide service to medically

14 underserved communities;

15 ‘‘(VI) other training methodolo16 gies that demonstrate a significant

17 commitment to the expansion of the

18 proportion of graduates that elect to

19 practice in or serve the needs of medi20 cally underserved communities; or

21 ‘‘(B) contain an organized plan for the ex22 peditious development of the placement rate

23 and curriculum described in subparagraph (A).

24 ‘‘(2) SERVICE IN MEDICALLY UNDERSERVED

25 COMMUNITIES.—Not less than 50 percent of the
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1 amounts appropriated for fiscal year 1996, and for

2 each subsequent fiscal year, for competitive grants

3 under this title or title VIII, shall be used to award

4 grants to institutions that are otherwise eligible for

5 grants under such titles, and that can demonstrate

6 that—

7 ‘‘(A) not less than 15 percent of the grad8 uates of such institutions during the preceding

9 2-year period are engaged in full-time practice

10 serving the needs of medically underserved com11 munities; or

12 ‘‘(B) the number of the graduates of such

13 institutions that are practicing in a medically

14 underserved community has increased by not

15 less than 50 percent over that proportion of

16 such graduates for the previous 2-year period.

17 ‘‘(3) WAIVERS.—A health professions school

18 may petition the Secretary for a temporary waiver of

19 the priorities of this subsection. Such waiver shall be

20 approved if the health professions school dem21 onstrates that the State in which such school is lo22 cated is not suffering from a shortage of primary

23 care providers, as determined by the Secretary. Such

24 waiver shall not be for a period in excess of 2 years.

25 ‘‘(4) DEFINITIONS.—As used in this subsection:
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1 ‘‘(A) GRADUATE.—The term ‘graduate’

2 means, unless otherwise specified, an individual

3 who has successfully completed all training and

4 residency requirements necessary for full certifi5 cation in the health professions discipline that

6 such individual has selected.

7 ‘‘(B) MEDICALLY UNDERSERVED COMMU8 NITY.—The term ‘medically underserved com9 munity’ means—

10 ‘‘(i) an area designated under section

11 332 as a health professional shortage area;

12 ‘‘(ii) an area designated as a medi13 cally underserved area under this Act;

14 ‘‘(iii) populations served by migrant

15 health centers under section 329, commu16 nity health centers under section 330, or

17 Federally qualified health centers under

18 section 1905(l)(2)(B) of the Social Secu19 rity Act;

20 ‘‘(iv) a community that is certified as

21 underserved by the Secretary for purposes

22 of participation in the rural health clinic

23 program under title XVIII of the Social

24 Security Act; or
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1 ‘‘(v) a community that meets the cri2 teria for the designation described in sub3 paragraph (A) or (B) but that has not

4 been so designated.’’.

5 (b) MEDICALLY UNDERSERVED AREA TRAINING

6 GRANTS.—Part E of title VII of such Act is amended by

7 adding at the end thereof the following new section:

8 ‘‘SEC. 779. MEDICALLY UNDERSERVED AREA TRAINING

9 GRANT PROGRAM.

10 ‘‘(a) GRANTS.—The Secretary shall award grants to

11 health professions institutions to expand training pro12 grams that are targeted at those individuals desiring to

13 practice in or serve the needs of medically underserved

14 communities.

15 ‘‘(b) PLAN.—As part of an application submitted for

16 a grant under this section, the applicant shall prepare and

17 submit a plan that describes the proposed use of funds

18 that may be provided to the applicant under the grant.

19 ‘‘(c) PRIORITY.—In awarding grants under this sec20 tion, the Secretary shall give priority to applicants that

21 demonstrate the greatest likelihood of expanding the pro22 portion of graduates who choose to practice in or serve

23 the needs of medically underserved areas.

24 ‘‘(d) USE OF FUNDS.—An institution that receives

25 a grant under this section shall use amounts received
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1 under such grant to establish or enhance procedures or

2 efforts to—

3 ‘‘(1) rotate health professions students from

4 such institution to clinical settings the focus of

5 which is to serve the residents of medically under6 served communities;

7 ‘‘(2) appoint health professionals whose prac8 tices serve medically underserved areas to serve as

9 preceptors to supervise training in such settings;

10 ‘‘(3) provide classroom instruction on practice

11 opportunities involving medically underserved com12 munities;

13 ‘‘(4) provide service contingent scholarship or

14 loan repayment programs for students and residents

15 to encourage practice in or service to underserved

16 communities;

17 ‘‘(5) recruit students who are most likely to

18 elect to practice in or provide service to medically

19 underserved communities; or

20 ‘‘(6) provide other training methodologies that

21 demonstrate a significant commitment to the expan22 sion of the proportion of graduates that elect to

23 practice in or serve the needs of medically under24 served communities.

25 ‘‘(e) ADMINISTRATION.—
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1 ‘‘(1) REQUIRED CONTRIBUTION.—An institu2 tion that receives a grant under this section shall

3 contribute, from non-Federal sources, either in cash

4 or in-kind, an amount equal to the amount of the

5 grant to the activities to be undertaken with the

6 grant funds.

7 ‘‘(2) LIMITATION.—An institution that receives

8 a grant under this section, shall use amounts re9 ceived under such grant to supplement, not sup10 plant, amounts made available by such institution

11 for activities of the type described in subsection (d)

12 in the fiscal year preceding the year for which the

13 grant is received.

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

15 ‘‘(1) GRADUATE.—The term ‘graduate’ means,

16 unless otherwise specified, an individual who has

17 successfully completed all training and residency re18 quirements necessary for full certification in the

19 health professions discipline that such individual has

20 selected.

21 ‘‘(2) MEDICALLY UNDERSERVED COMMUNITY.—

22 The term ‘medically underserved community’

23 means—

24 ‘‘(A) an area designated under section 332

25 as a health professional shortage area;
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1 ‘‘(B) an area designated as a medically un2 derserved area under this Act;

3 ‘‘(C) populations served by migrant health

4 centers under section 329, community health

5 centers under section 330, or Federally quali6 fied health centers under section 1905(l)(2)(B)

7 of the Social Security Act;

8 ‘‘(D) a community that is certified as un9 derserved by the Secretary for purposes of par10 ticipation in the rural health clinic program

11 under title XVIII of the Social Security Act; or

12 ‘‘(E) a community that meets the criteria

13 for the designation described in subparagraph

14 (A) or (B) but that has not been so designated.

15 ‘‘(g) AUTHORIZATION OF APPROPRIATIONS.—There

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

17 $15,000,000 for each of the fiscal years 1993 and 1994,

18 and such sums as may be necessary for each of the fiscal

19 years 1995 through 1997.’’.

20 (c) HEALTH PROFESSIONS TRAINING GRANTS.—

21 Part E of title VII of such Act (as amended by subsection

22 (b)) is further amended by adding at the end thereof the

23 following new section:
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1 ‘‘SEC. 780. HEALTH PROFESSIONS INTEGRATION GRANT

2 PROGRAM.

3 ‘‘(a) GRANTS.—The Secretary shall award grants to

4 eligible regional consortia to enhance and expand coordi5 nation among various health professions programs, par6 ticularly in medically underserved rural areas.

7 ‘‘(b) ELIGIBLE REGIONAL CONSORTIUM.—

8 ‘‘(1) IN GENERAL.—To be eligible to receive a

9 grant under subsection (a), an entity must—

10 ‘‘(A) be a regional consortium consisting of

11 at least one medical school and at least one

12 other health professions school that is not a

13 medical school; and

14 ‘‘(B) prepare and submit an application

15 containing a plan of the type described in para16 graph (2).

17 ‘‘(2) PLAN.—As part of the application submit18 ted by a consortium under paragraph (1)(B), the

19 consortium shall prepare and submit a plan that de20 scribes the proposed use of funds that may be pro21 vided to the consortium under the grant.

22 ‘‘(c) USE OF FUNDS.—A consortium that receives a

23 grant under this section shall use amounts received under

24 such grant to establish or enhance—

25 ‘‘(1) strategies for better clinical cooperation

26 among different types of health professionals;
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1 ‘‘(2) classroom instruction on integrated prac2 tice opportunities, particularly targeted toward rural

3 areas;

4 ‘‘(3) integrated clinical clerkship programs that

5 make use of students in differing health professions

6 schools; or

7 ‘‘(4) other training methodologies that dem8 onstrate a significant commitment to the expansion

9 of clinical cooperation among different types of

10 health professionals, particularly in underserved

11 rural areas.

12 ‘‘(d) LIMITATION.—A consortium that receives a

13 grant under this section, shall use amounts received under

14 such grant to supplement, not supplant, amounts made

15 available by such institution for activities of the type de16 scribed in subsection (c) in the fiscal year preceding the

17 year for which the grant is received.

18 ‘‘(e) AUTHORIZATION OF APPROPRIATIONS.—There

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

20 $7,000,000 for each of the fiscal years 1993 and 1994,

21 and such sums as may be necessary for each of the fiscal

22 years 1995 through 1997.’’.
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1 SEC. 516. 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) be a rural health extension network that

17 meets the requirements of subsection (c);

18 ‘‘(2) prepare and submit to the Secretary an

19 application at such time, in such form and contain20 ing such information as the Secretary may require;

21 and

22 ‘‘(3) meets such other requirements as the Sec23 retary determines appropriate.

24 ‘‘(c) NETWORKS.—For purposes of subsection (b)(1),

25 a rural health extension network shall be an association

26 or consortium of three or more rural health care providers,
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1 and may include one or more urban health care provider,

2 for the purposes of applying for a grant under this section

3 and using amounts received under such grant to provide

4 the services described in subsection (d).

5 ‘‘(d) SERVICES.—

6 ‘‘(1) IN GENERAL.—An entity that receives a

7 grant under subsection (a) shall use amounts re8 ceived under such grant to—

9 ‘‘(A) provide education and community de10 cision-making support for health care providers

11 in the rural areas served by the network;

12 ‘‘(B) utilize existing health care provider

13 education programs, including but not limited

14 to, the program for area health education cen15 ters under section 746, to provide educational

16 services to health care providers in the areas

17 served by the network;

18 ‘‘(C) make appropriately trained

19 facilitators available to health care providers lo20 cated in the areas served by the network to as21 sist such providers in developing cooperative ap22 proaches to health care in such area;

23 ‘‘(D) facilitate linkage building through the

24 organization of discussion and planning groups

25 and the dissemination of information concern-
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1 ing the health care resources where available,

2 within the area served by the network;

3 ‘‘(E) support telecommunications and con4 sultative projects to link rural hospitals and

5 other health care providers, and urban or ter6 tiary hospitals in the areas served by the net7 work; or

8 ‘‘(F) carry out any other activity deter9 mined appropriate by the Secretary.

10 ‘‘(2) EDUCATION.—In carrying out activities

11 under paragraph (1)(B), an entity shall support the

12 development of an information and resource sharing

13 system, including elements targeted towards high

14 risk populations and focusing on health promotion,

15 to facilitate the ability of rural health care providers

16 to have access to needed health care information.

17 Such activities may include the provision of training

18 to enable individuals to serve as coordinators of

19 health education programs in rural areas.

20 ‘‘(3) COLLECTION AND DISSEMINATION OF

21 DATA.—The chief executive officer of a State shall

22 designate a State agency that shall be responsible

23 for collecting and regularly disseminating informa24 tion concerning the activities of the rural health ex25 tension networks in that State.
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1 ‘‘(e) MATCHING REQUIREMENT.—An entity that re2 ceives a grant under subsection (a) shall make available

3 (directly or through donations from public or private enti4 ties), non-Federal contributions towards the costs of the

5 operations of the network in an amount equal to the

6 amount of the grant.

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

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

9 $10,000,000 for each of the fiscal years 1993 through

10 1997.

11 ‘‘(g) DEFINITION.—As used in this section and sec12 tion 1710, the term ‘rural health care providers’ means

13 health care professionals and hospitals located in rural

14 areas. The Secretary shall ensure that for purposes of this

15 definition, rural areas shall include any area that meets

16 any applicable Federal or State definition of rural area.’’.

17 SEC. 517. RURAL MANAGED CARE COOPERATIVES.

18 Title XVII of the Public Health Service Act (42

19 U.S.C. 300u et seq.) as amended by section 516 is further

20 amended by adding at the end thereof the following new

21 section:

22 ‘‘SEC. 1710. RURAL MANAGED CARE COOPERATIVES.

23 ‘‘(a) GRANTS.—The Secretary, acting through the

24 Health Resources and Services Administration, may

25 award competitive grants to eligible entities to enable such
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1 entities to develop and administer cooperatives in rural

2 areas that will establish an effective case management and

3 reimbursement system designed to support the economic

4 viability of essential public or private health services, fa5 cilities, health care systems and health care resources in

6 such rural areas.

7 ‘‘(b) ELIGIBLE ENTITIES.—To be eligible to receive

8 a grant under subsection (a) an entity shall—

9 ‘‘(1) prepare and submit to the Secretary an

10 application at such time, in such form and contain11 ing such information as the Secretary may require,

12 including a description of the cooperative that the

13 entity intends to develop and operate using grant

14 funds; and

15 ‘‘(2) meet such other requirements as the Sec16 retary determines appropriate.

17 ‘‘(c) COOPERATIVES.—

18 ‘‘(1) IN GENERAL.—Amounts provided under a

19 grant awarded under subsection (a) shall be used to

20 establish and operate a cooperative made up of all

21 types of health care providers, hospitals, primary ac22 cess hospitals, other alternate rural health care fa23 cilities, physicians, rural health clinics, rural nurse

24 practitioners and physician assistant practitioners,

25 public health departments and others located in, but
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1 not restricted to, the rural areas to be served by the

2 cooperative.

3 ‘‘(2) BOARD OF DIRECTORS.—A cooperative es4 tablished under paragraph (1) shall be administered

5 by a board of directors elected by the members of

6 the cooperative, a majority of whom shall represent

7 rural providers from the local community and in8 clude representatives from the local community.

9 Such directors shall serve at the pleasure of such

10 members.

11 ‘‘(3) EXECUTIVE DIRECTOR.—The members of

12 a cooperative established under paragraph (1) shall

13 elect an executive director who shall serve as the

14 chief operating officer of the cooperative. The execu15 tive director shall be responsible for conducting the

16 day to day operation of the cooperative including—

17 ‘‘(A) maintaining an accounting system for

18 the cooperative;

19 ‘‘(B) maintaining the business records of

20 the cooperative;

21 ‘‘(C) negotiating contracts with provider

22 members of the cooperative; and

23 ‘‘(D) coordinating the membership and

24 programs of the cooperative.

25 ‘‘(4) REIMBURSEMENTS.—
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1 ‘‘(A) NEGOTIATIONS.—A cooperative es2 tablished under paragraph (1) shall facilitate

3 negotiations among member health care provid4 ers and third party payers concerning the rates

5 at which such providers will be reimbursed for

6 services provided to individuals for which such

7 payers may be liable.

8 ‘‘(B) AGREEMENTS.—Agreements reached

9 under subparagraph (A) shall be binding on the

10 members of the cooperative.

11 ‘‘(C) EMPLOYERS.—Employer entities may

12 become members of a cooperative established

13 under paragraph (a) in order to provide,

14 through a member third party payer, health in15 surance coverage for employees of such entities.

16 Deductibles shall only be charged to employees

17 covered under such insurance if such employees

18 receive health care services from a provider that

19 is not a member of the cooperative if similar

20 services would have been available from a mem21 ber provider.

22 ‘‘(D) MALPRACTICE INSURANCE.—A coop23 erative established under subsection (a) shall be

24 responsible for identifying and implementing a

25 malpractice insurance program that shall in-
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1 clude a requirement that such cooperative as2 sume responsibility for the payment of a por3 tion of the malpractice insurance premium of

4 providers members.

5 ‘‘(5) MANAGED CARE AND PRACTICE STAND6 ARDS.—A cooperative established under paragraph

7 (1) shall establish joint case management and pa8 tient care practice standards programs that health

9 care providers that are members of such cooperative

10 must meet to be eligible to participate in agreements

11 entered into under paragraph (4). Such standards

12 shall be developed by such provider members and

13 shall be subject to the approval of a majority of the

14 board of directors. Such programs shall include cost

15 and quality of care guidelines including a require16 ment that such providers make available

17 preadmission screening, selective case management

18 services, joint patient care practice standards devel19 opment and compliance and joint utilization review.

20 ‘‘(6) CONFIDENTIALITY.—Patients records,

21 records of peer review, utilization review, and quality

22 assurance proceedings conducted by the cooperative

23 should be considered confidential and protected from

24 release outside of the cooperative. The provider

25 members of the cooperative shall be indemnified by
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1 the cooperative for the good faith participation by

2 such members in such the required activities.

3 ‘‘(d) LINKAGES.—A cooperative shall create linkages

4 among member health care providers, employers, and pay5 ers for the joint consultation and formulation of the types,

6 rates, costs, and quality of health care provided in rural

7 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 1993 through

17 1997.’’.

18 TITLE VI—MALPRACTICE

19 REFORM

20 SEC. 601. PRELITIGATION SCREENING PANEL GRANTS.

21 Part B of title IX of the Public Health Service Act

22 (42 U.S.C. 299b et seq.) is amended by adding at the end

23 the following new section:
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1 ‘‘SEC. 915. PRELITIGATION SCREENING PANEL GRANTS.

2 ‘‘(a) ESTABLISHMENT.—The Assistant Secretary,

3 acting through the Administrator, shall establish a pro4 gram of grants to assist States in establishing prelitigation

5 panels.

6 ‘‘(b) USE OF FUNDS.—A State may use a grant

7 awarded under subsection (a) to establish prelitigation

8 panels that—

9 ‘‘(1) identify claims of professional negligence

10 that merit compensation;

11 ‘‘(2) encourage early resolution of meritorious

12 claims prior to commencement of a lawsuit; and

13 ‘‘(3) encourage early withdrawal or dismissal of

14 nonmeritorious claims.

15 ‘‘(c) AWARD OF GRANTS.—The Secretary shall allo16 cate grants under this section in accordance with criteria

17 issued by the Secretary.

18 ‘‘(d) APPLICATION.—To be eligible to receive a grant

19 under this section, a State, acting through the appropriate

20 State health authority, shall submit an application at such

21 time, in such manner, and containing such agreements,

22 assurances, and information as the Assistant Secretary

23 determines to be necessary to carry out this section.

24 ‘‘(e) AUTHORIZATION OF APPROPRIATIONS.—There

25 are authorized to be appropriated to carry out this section
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1 such sums as may be necessary for each of the 1994

2 through 1997 fiscal years.’’.

3 TITLE VII—HEALTH PROMOTION

4 AND DISEASE PREVENTION

5 SEC. 701. DISEASE PREVENTION AND HEALTH PROMOTION

6 PROGRAMS TREATED AS MEDICAL CARE.

7 (a) IN GENERAL.—For purposes of section 213(d)(1)

8 of the Internal Revenue Code of 1986 (defining medical

9 care), qualified expenditures (as defined by the Secretary

10 of Health and Human Services) for disease prevention and

11 health promotion programs shall be considered amounts

12 paid for medical care.

13 (b) EFFECTIVE DATE.—Subsection (a) shall apply to

14 amounts paid in taxable years beginning after December

15 31, 1992.

16 SEC. 702. WORKSITE WELLNESS GRANT PROGRAM.

17 (a) GRANTS.—The Secretary of Health and Human

18 Services (hereafter referred to as the ‘‘Secretary’’) shall

19 award grants to States (through State health departments

20 or other State agencies working in consultation with the

21 State health agency) to enable such States to provide as22 sistance to businesses with not to exceed 100 employees

23 for the establishment and operation of worksite wellness

24 programs for their employees.
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1 (b) APPLICATION.—To be eligible for a grant under

2 subsection (a), a State shall prepare and submit to the

3 Secretary an application at such time, in such manner,

4 and containing such information as the Secretary may re5 quire, including—

6 (1) a description of the manner in which the

7 State intends to use amounts received under the

8 grant; and

9 (2) assurances that the State will only use

10 amounts provided under such grant to provide as11 sistance to businesses that can demonstrate that

12 they are in compliance with minimum program char13 acteristics (relative to scope and regularity of serv14 ices offered) that are developed by the Secretary in

15 consultation with experts in public health and rep16 resentatives of small business.

17 Grants shall be distributed to States based on the popu18 lation of individuals employed by small businesses.

19 (c) PROGRAM CHARACTERISTICS.—In developing

20 minimum program characteristics under subsection (b)(2),

21 the Secretary shall ensure that all activities established or

22 enhanced under a grant under this section have clearly

23 defined goals and objectives and demonstrate how receipt

24 of such assistance will help to achieve established State
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1 or local health objectives based on the National Health

2 Promotion and Disease Prevention Objectives.

3 (d) USE OF FUNDS.—Amounts received under a

4 grant awarded under subsection (a) shall be used by a

5 State to provide grants to businesses (as described in sub6 section (a)), nonprofit organizations, or public authorities,

7 or to operate State-run worksite wellness programs.

8 (e) SPECIAL EMPHASIS.—In funding business work9 site wellness projects under this section, a State shall give

10 special emphasis to—

11 (1) the development of joint wellness programs

12 between employers;

13 (2) the development of employee assistance pro14 grams dealing with substance abuse;

15 (3) maximizing the use and coordination with

16 existing community resources such as nonprofit

17 health organizations; and

18 (4) encourage participation of dependents of

19 employees and retirees in wellness programs.

20 (f) AUTHORIZATION OF APPROPRIATIONS.—There

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

22 such sums as may be necessary in each of the fiscal years

23 1994 through 1998.
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1 SEC. 703. EXPANDING AND IMPROVING SCHOOL HEALTH

2 EDUCATION.

3 (a) AUTHORIZATION OF APPROPRIATIONS.—There

4 are authorized to be appropriated to carry out subsection

5 (b), such sums as may be necessary for each of the fiscal

6 years 1994 through 1998.

7 (b) GENERAL USE OF FUNDS.—The Secretary of

8 Health and Human Services shall use amounts appro9 priated under subsection (a) to expand comprehensive

10 school health education programs administered by the

11 Centers for Disease Control and Prevention under sections

12 301 and 311 of the Public Health Service Act (42 U.S.C.

13 241 and 243).

14 (c) SPECIFIC USE OF FUNDS.—In meeting the re15 quirement of subsection (b), the Secretary of Health and

16 Human Services shall expand the number of children re17 ceiving planned, sequential kindergarten through 12th

18 grade comprehensive school education as a component of

19 comprehensive programs of school health, including

20 (1) physical education programs that promote

21 lifelong physical activity;

22 (2) healthy school food service selections;

23 (3) programs that promote a healthy and safe

24 school environment;

25 (4) schoolsite health promotion for faculty and

26 staff;
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1 (5) integrated school and community health

2 promotion efforts; and

3 (6) school nursing disease prevention and

4 health promotion services.

5 (d) COORDINATION OF EXISTING PROGRAMS.—The

6 Secretary of Health and Human Services, the Secretary

7 of Education and the Secretary of Agriculture shall work

8 cooperatively to coordinate existing school health edu9 cation programs within their Departments in a manner

10 that maximized the efficiency and effectiveness of Federal

11 expenditures in this area.

12 TITLE VIII—PRESCRIPTION

13 DRUG COST CONTAINMENT

14 SEC. 801. REDUCTION IN POSSESSIONS TAX CREDIT FOR

15 EXCESSIVE PHARMACEUTICAL INFLATION.

16 (a) IN GENERAL.—Section 936 of the Internal Reve17 nue Code of 1986 (relating to Puerto Rico and possession

18 tax credit) is amended by adding at the end the following

19 new subsection:

20 ‘‘(i) REDUCTION FOR EXCESSIVE PHARMACEUTICAL

21 INFLATION.—

22 ‘‘(1) IN GENERAL.—In the case of any manu23 facturer of single source drugs or innovator multiple

24 source drugs, the amount by which the credit under

25 this section for the taxable year (determined without
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1 regard to this subsection) exceeds the manufactur2 er’s wage base for such taxable year shall be reduced

3 by the product of—

4 ‘‘(A) the amount of such excess, multiplied

5 by

6 ‘‘(B) the sum of the reduction percentages

7 for each single source drug or innovator mul8 tiple source drug of the manufacturer for such

9 taxable year.

10 ‘‘(2) MANUFACTURER’S WAGE BASE.—For pur11 poses of this subsection—

12 ‘‘(A) IN GENERAL.—The manufacturer’s

13 wage base for any taxable year is equal to the

14 total amount of wages paid during such taxable

15 year by the manufacturer to eligible employees

16 in Puerto Rico with respect to the manufacture

17 of single source drugs and innovator multiple

18 source drugs.

19 ‘‘(B) ELIGIBLE EMPLOYEES.—The term

20 ‘eligible employee’ means any employee of the

21 manufacturer (as defined in section 3121(d))

22 who is a bona fide resident of Puerto Rico and

23 subject to tax by Puerto Rico on income from

24 sources within and without Puerto Rico during

25 the entire taxable year.
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1 ‘‘(C) WAGES.—The term ‘wages’ has the

2 meaning given such term by section 3121(a).

3 ‘‘(3) REDUCTION PERCENTAGE.—For purposes

4 of this subsection—

5 ‘‘(A) IN GENERAL.—The reduction per6 centage for any drug for any taxable year is the

7 percentage determined by multiplying—

8 ‘‘(i) the sales percentage for such

9 drug for such taxable year, by

10 ‘‘(ii) the price increase percentage for

11 such drug for such taxable year.

12 ‘‘(B) SALES PERCENTAGE.—The sales per13 centage for any drug for any taxable year is the

14 percentage determined by dividing—

15 ‘‘(i) the total sales of such drug by

16 the manufacturer for such taxable year, by

17 ‘‘(ii) the total sales of all single source

18 drugs and innovator multiple source drugs

19 by the manufacturer for such taxable year.

20 ‘‘(C) PRICE INCREASE PERCENTAGE.—The

21 price increase percentage for any drug for any

22 taxable year is the percentage determined by

23 multiplying—

24 ‘‘(i) 20, times

25 ‘‘(ii) the excess (if any) of—
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1 ‘‘(I) the percentage increase in

2 the average manufacturer’s price for

3 such drug for the taxable year over

4 such average price for the base tax5 able year, over

6 ‘‘(II) the percentage increase in

7 the Consumer Price Index (as defined

8 in section 1(g)(5)) for the taxable

9 year over the base taxable year.

10 ‘‘(D) TOTAL SALES.—

11 ‘‘(i) DOMESTIC SALES ONLY.—Total

12 sales shall only include sales for use or

13 consumption in the United States.

14 ‘‘(ii) SALES TO RELATED PARTIES

15 NOT INCLUDED.—Total sales shall not in16 clude sales to any related party (as defined

17 in section 267(b)).

18 ‘‘(E) AVERAGE MANUFACTURER’S

19 PRICE.—The term ‘average manufacturer’s

20 price’ for any taxable year means the average

21 price paid to the manufacturer by wholesalers

22 or direct buyers and purchasers for each single

23 source drug or innovator multiple source drug

24 sold to the various classes of purchasers.
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1 ‘‘(F) BASE TAXABLE YEAR.—The base tax2 able year for any single source drug or innova3 tor multiple source drug is the later of—

4 ‘‘(i) the last taxable year ending in

5 1991, or

6 ‘‘(ii) the first taxable year beginning

7 after the date on which the marketing of

8 such drug begins.

9 ‘‘(4) OTHER DEFINITIONS.—For purposes of

10 this subsection—

11 ‘‘(A) MANUFACTURER.—

12 ‘‘(i) IN GENERAL.—The term ‘manu13 facturer’ means any person which is en14 gaged in—

15 ‘‘(I) the production, preparation,

16 propagation, compounding, conver17 sion, or processing of prescription

18 drug products, either directly or indi19 rectly by extraction from substances

20 of natural origin, or independently by

21 means of chemical synthesis, or by a

22 combination of extraction and chemi23 cal synthesis, or
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1 ‘‘(II) in the packaging, repackag2 ing, labeling, relabeling, or distribu3 tion of prescription drug products.

4 Such term does not include a wholesale

5 distributor of drugs or a retail pharmacy

6 licensed under State law.

7 ‘‘(ii) CONTROLLED GROUPS.—For

8 purposes of clause (i)—

9 ‘‘(I) CONTROLLED GROUP OF

10 CORPORATIONS.—All corporations

11 which are members of the same con12 trolled group of corporations shall be

13 treated as 1 person. For purposes of

14 the preceding sentence, the term ‘con15 trolled group of corporations’ has the

16 meaning given to such term by section

17 1563(a), except that ‘more than 50

18 percent’ shall be substituted for ‘at

19 least 80 percent’ each place it appears

20 in section 1563(a)(1), and the deter21 mination shall be made without re22 gard to subsections (a)(4) and

23 (e)(3)(C) of section 1563.

24 ‘‘(II) PARTNERSHIPS, PROPRI25 ETORSHIPS, ETC., WHICH ARE UNDER
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1 COMMON CONTROL.—Under regula2 tions prescribed by the Secretary, all

3 trades or business (whether or not in4 corporated) which are under common

5 control shall be treated as 1 person.

6 The regulations prescribed under this

7 subclause shall be based on principles

8 similar to the principles which apply

9 in the case of subclause (I).

10 ‘‘(B) SINGLE SOURCE DRUG.—The term

11 ‘single source drug’ means a drug or biological

12 which is produced or distributed under an origi13 nal new drug application or product licensing

14 application, including a drug product or biologi15 cal marketed by any cross-licensed producers or

16 distributors operating under the new drug ap17 plication or product licensing application.

18 ‘‘(C) INNOVATOR MULTIPLE SOURCE

19 DRUG.—The term ‘innovator multiple source

20 drug’ means a multiple source drug (within the

21 meaning of section 1927(k)(7)(A)(i) of the So22 cial Security Act) that was originally marketed

23 under an original new drug application or a

24 product licensing application approved by the

25 Food and Drug Administration.
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1 ‘‘(5) SPECIAL RULES.—For purposes of this

2 subsection—

3 ‘‘(A) DOSAGE TREATMENT.—Except as

4 provided by the Secretary, each dosage form

5 and strength of a single source drug or innova6 tor multiple source drug shall be treated as a

7 separate drug.

8 ‘‘(B) ROUNDING OF PERCENTAGES.—Any

9 percentage shall be rounded to the nearest hun10 dredth of a percent.’’.

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

12 this section shall apply to taxable years beginning after

13 December 31, 1993.

14 TITLE IX—FINANCING

15 SEC. 901. REPEAL OF DOLLAR LIMITATION ON AMOUNT OF

16 WAGES SUBJECT TO HOSPITAL INSURANCE

17 TAX.

18 (a) HOSPITAL INSURANCE TAX.—

19 (1) Paragraph (1) of section 3121(a) of the In20 ternal Revenue Code of 1986 (defining wages) is

21 amended—

22 (A) by inserting ‘‘in the case of the taxes

23 imposed by sections 3101(a) and 3111(a)’’ after

24 ‘‘(1)’’,
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1 (B) by striking ‘‘applicable contribution

2 base (as determined under subsection (x))’’

3 each place it appears and inserting ‘‘contribu4 tion and benefit base (as determined under sec5 tion 230 of the Social Security Act)’’, and

6 (C) by striking ‘‘such applicable contribu7 tion base’’ and inserting ‘‘such contribution and

8 benefit base’’.

9 (2) Section 3121 of such Code is amended by

10 striking subsection (x).

11 (b) SELF-EMPLOYMENT TAX.—

12 (1) Subsection (b) of section 1402 of such Code

13 is amended—

14 (A) by striking ‘‘(1) that part of net’’ and

15 inserting ‘‘(1) in the case of the tax imposed by

16 section 1401(a), that part of net’’,

17 (B) by striking ‘‘applicable contribution

18 base (as determined under subsection (k))’’ and

19 inserting ‘‘contribution and benefit base (as de20 termined under section 230 of the Social Secu21 rity Act)’’,

22 (C) by inserting ‘‘and’’ after ‘‘section

23 3121(b),’’, and

24 (D) by striking ‘‘and (C) includes’’ and all

25 that follows through ‘‘3111(b)’’.
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1 (2) Section 1402 of such Code is amended by

2 striking subsection (k).

3 (c) RAILROAD RETIREMENT TAX.—

4 (1) Subparagraph (A) of section 3231(e)(2) of

5 such Code is amended by adding at the end thereof

6 the following new clause:

7 ‘‘(iii) HOSPITAL INSURANCE TAXES.—

8 Clause (i) shall not apply to—

9 ‘‘(I) so much of the rate applica10 ble under section 3201(a) or 3221(a)

11 as does not exceed the rate of tax in

12 effect under section 3101(b), and

13 ‘‘(II) so much of the rate applica14 ble under section 3211(a)(1) as does

15 not exceed the rate of tax in effect

16 under section 1402(b).’’

17 (2) Clause (i) of section 3231(e)(2)(B) of such

18 Code is amended to read as follows:

19 ‘‘(i) TIER 1 TAXES.—Except as pro20 vided in clause (ii), the term ‘applicable

21 base’ means for any calendar year the con22 tribution and benefit base determined

23 under section 230 of the Social Security

24 Act for such calendar year.’’
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1 (d) INCREASED REVENUES NOT DEPOSITED IN HOS2 PITAL INSURANCE TRUST FUND.—Section 1817(a) of the

3 Social Security Act (42 U.S.C. 1395i(a)) is amended by

4 adding at the end the following new sentence: ‘‘For pur5 poses of this subsection, the amount of taxes imposed by

6 sections 1401(b), 3101(b), 3111(b) of the Internal Reve7 nue Code of 1986 shall be determined without regard to

8 the amendments made by section 221 of the Managed

9 Competition Act of 1992.’’.

10 (e) TECHNICAL AMENDMENTS.—

11 (1) Paragraph (1) of section 6413(c) of the In12 ternal Revenue Code of 1986 is amended by striking

13 ‘‘section 3101 or section 3201’’ and inserting ‘‘sec14 tion 3101(a) or section 3201(a) (to the extent the

15 rate applicable under section 3201(a) as does not ex16 ceed the rate of tax in effect under section

17 3101(a))’’.

18 (2) Subparagraphs (B) and (C) of section

19 6413(c)(2) of such Code are each amended by strik20 ing ‘‘section 3101’’ each place it appears and insert21 ing ‘‘section 3101(a)’’.

22 (3) Subsection (c) of section 6413 of such Code

23 is amended by striking paragraph (3).

24 (4) Sections 3122 and 3125 of such Code are

25 each amended by striking ‘‘applicable contribution
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1 base limitation’’ and inserting ‘‘contribution and

2 benefit base limitation’’.

3 (f) EFFECTIVE DATE.—The amendments made by

4 this section shall apply to 1994 and later calendar years.

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