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[Congressional Bills 103th Congress]
[From the U.S. Government Publishing Office]
[S. 223 Introduced in Senate (IS)]

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.

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

SECTION 1. SHORT TITLE AND TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Access to 
Affordable Health Care Act''.
    (b) Table of Contents.--The table of contents is as follows:

Sec. 2. Definitions.
           TITLE I--MANAGED COMPETITION IN HEALTH CARE PLANS

Sec. 100. Block grant program.
            Subtitle A--Health Plan Purchasing Cooperatives

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.
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.

SEC. 2. DEFINITIONS.

    (a) Eligibility.--As used in this Act:
            (1) Eligible individual.--The term ``eligible individual'' 
        means, with respect to a HPPC area, an individual who--
                    (A) is an eligible employee;
                    (B) is an eligible resident; or
                    (C) an eligible family member of an eligible 
                employee or eligible resident.
            (2) Eligible employee.--The term ``eligible employee'' 
        means, with respect to a HPPC area, an individual residing in 
        the area who is the employee of a small employer.
            (3) Eligible family member.--The term ``eligible family 
        member'' means, with respect to an eligible employee or other 
        principal enrollee, an individual who--
                    (A)(i) is the spouse of the employee or principal 
                enrollee; or
                    (ii) is an unmarried dependent child under 22 years 
                of age; including--
                            (I) an adopted child or recognized natural 
                        child; and
                            (II) a stepchild or foster child but only 
                        if the child lives with the employee or 
                        principal enrollee in a regular parent-child 
                        relationship;
                or such an unmarried dependent child regardless of age 
                who is incapable of self-support because of mental or 
                physical disability which existed before age 22;
                    (B) is a citizen or national of the United States, 
                an alien lawfully admitted to the United States for 
                permanent residence, or an alien otherwise lawfully 
                residing permanently in the United States under color 
                of law; and
                    (C) with respect to an eligible resident, is not a 
                medicare-eligible individual.
            (4) Eligible resident.--
                    (A) In general.--The term ``eligible resident'' 
                means, with respect to a HPPC area, an individual who 
                is not an eligible employee, is residing in the area, 
                and is a citizen or national of the United States, an 
                alien lawfully admitted for permanent residence, and an 
                alien otherwise permanently residing in the United 
                States under color of law.
                    (B) Exclusion of certain individuals offered 
                coverage through a large employer.--The term ``eligible 
                resident'' does not include an individual who--
                            (i) is covered under an AHP pursuant to an 
                        offer made under section 105(b)(1)(A); or
                            (ii) could be covered under an AHP as the 
                        principal enrollee pursuant to such an offer if 
                        such offer had been accepted.
                    (C) Treatment of medicare beneficiaries.--The term 
                ``eligible resident'' does not include a medicare-
                eligible beneficiary.
            (5) Enrollee unit.--The term ``enrollee unit'' means one 
        unit in the case of coverage on an individual basis or in the 
        case of coverage on a family basis.
            (6) Medicare beneficiary.--The term ``medicare 
        beneficiary'' means an individual who is entitled to benefits 
        under part A of title XVIII of the Social Security Act, 
        including an individual who is entitled to such benefits 
        pursuant to an enrollment under section 1818 or 1818A of such 
        Act.
            (7) Medicare-eligible individual.--The term ``medicare-
        eligible individual'' means an individual who--
                    (A) is a medicare beneficiary; or
                    (B) is not a medicare beneficiary but is eligible 
                to enroll under part A or part B of title XVIII of the 
                Social Security Act.
    (b) Abbreviations.--As used in this Act:
            (1) AHP; accountable health plan.--The terms ``accountable 
        health plan'' and ``AHP'' mean a health plan registered with 
        the Board under section 111(a).
            (2) Board.--The term ``Board'' means the Federal Health 
        Board established under subtitle C of title I.
            (3) HPPC; health plan purchasing cooperative.--The terms 
        ``health plan purchasing cooperative'' and ``HPPC'' mean a 
        health plan purchasing cooperative established under subtitle A 
        of title I.
            (4) Closed and open plans.--
                    (A) Closed.--A plan is `closed' if the plan is 
                limited by structure or law to a particular employer or 
                industry or is organized on behalf of a particular 
                group. A plan maintained pursuant to one or more 
                collective bargaining agreements between one or more 
                employee organizations and one or more employers shall 
                be considered to be a closed plan.
                    (B) Open.--A plan is ``open'' if the plan is not 
                closed (within the meaning of subparagraph (A)).
    (c) Other Terms.--As used in this Act:
            (1) Health plan.--The term ``health plan'' means a plan 
        that provides health benefits, whether directly, through 
        insurance, or otherwise, and includes a policy of health 
        insurance, a contract of a service benefit organization, or a 
        membership agreement with a health maintenance organization or 
        other prepaid health plan, and also includes an employee 
        welfare benefit plan or a multiple employer welfare plan (as 
        such terms are defined in section 3 of the Employee Retirement 
        Income Security Act of 1974).
            (2) Small employer.--
                    (A) In general.--Subject to subparagraph (B), the 
                term ``small employer'' means an employer that normally 
                employed fewer than 100 employees during a typical 
                business day in the previous year.
                    (B) Special rule for large employers.--Subject to 
                subparagraph (C), the Board shall provide a procedure 
                by which, in the case of an employer that is not a 
                small employer but normally employs fewer than 100 
                employees in a HPPC area (or other locality identified 
                by the Board) during a typical business day, the 
                employer, upon application, would be considered to be a 
                small employer with respect to such employees in the 
                HPPC area (or other locality). Such procedure shall be 
                designed so as to prevent the adverse selection of 
                employees with respect to which the previous sentence 
                is applied.
                    (C) State election.--Subject to section 101(a)(3), 
                a State may by law, with respect to employers in the 
                State, substitute for ``100'' in subparagraphs (A) and 
                (B) any greater number (not to exceed 10,001), so long 
                as such number is applied uniformly to all employers in 
                a HPPC area.
            (3) HPPC standard premium amount.--The term ``HPPC standard 
        premium amount'' means, with respect to an AHP offered by a 
        HPPC, the sum of--
                    (A) the standard premium amount established by the 
                AHP under section 115, and
                    (B) the HPPC overhead amount established under 
                section 104(a)(3).
            (4) Premium class.--The term ``premium class'' means a 
        class established under section 115(a)(2).
            (5) State.--The term ``State'' includes the District of 
        Columbia, Puerto Rico, the Virgin Islands, Guam, American 
        Samoa, and the Northern Mariana Islands.
            (6) Type of enrollment.--There are 4 ``types of 
        enrollment'':
                    (A) Coverage only of an individual (referred to in 
                this Act as enrollment ``on an individual basis'').
                    (B) Coverage of an individual and the individual's 
                spouse.
                    (C) Coverage of an individual and one child.
                    (D) Coverage of an individual and more than one 
                eligible family member.
        The types of coverage described in subparagraphs (B) through 
        (D) are collectively referred to in this Act as enrollment ``on 
        a family basis''.
            (7) Uniform set of effective benefits.--The term ``uniform 
        set of effective benefits'' means, for a year, such set of 
        benefits as specified by the Board under section 132(a).

           TITLE I--MANAGED COMPETITION IN HEALTH CARE PLANS

SEC. 100. BLOCK GRANT PROGRAM.

    (a) In General.--The Secretary shall award grants to States to 
enable such State to defray the costs associated with the 
implementation and administration of the requirements of this title in 
such States.
    (b) Amount of Grants.--The amount of a grant awarded to a State 
under this section shall be determined by the Secretary according to a 
formula developed by the Secretary to take into consideration the 
population, health care availability, and geographic make-up of the 
State as compared to other States.
    (c) Authorization of Appropriations.--There are authorized to be 
appropriated to enable the Secretary to award grants under subsection 
(a), such sums as may be necessary for each fiscal year.

            Subtitle A--Health Plan Purchasing Cooperatives

SEC. 101. ESTABLISHMENT AND ORGANIZATION; HPPC AREAS.

    (a) HPPC Areas.--
            (1) In general.--For purposes of carrying out this title, 
        subject to paragraphs (2) and (3), each State shall be 
        considered a HPPC area.
            (2) Alternative, intrastate areas.--Each State may provide 
        for the division of the State into HPPC areas so long as--
                    (A) all portions of each metropolitan statistical 
                area in a State are within the same HPPC area; and
                    (B) the number of individuals residing within a 
                HPPC area is not less than 100,000.
            (3) Alternative, interstate areas.--In accordance with 
        rules established by the Board, one or more contiguous States 
        may provide for the establishment of a HPPC area that includes 
        adjoining portions of the States so long as such area, if it 
        includes any part of a metropolitan statistical area, includes 
        all of such area. In the case of a HPPC serving a multi-state 
        area, section 2(c)(2)(C) shall only apply to the area if all 
        the States encompassed in the area agree to the number to be 
        substituted.
    (b) Establishment of HPPCs.--
            (1) In general.--Each State shall provide, by legislation 
        or otherwise, for the establishment by not later than July 1, 
        1994, as a not-for-profit corporation, with respect to each 
        HPPC area (specified under subsection (a)) of a health plan 
        purchasing cooperative (each in this subtitle referred to as a 
        ``HPPC'').
            (2) Single organization serving multiple hppc areas.--
        Nothing in this subsection shall be construed as preventing--
                    (A) a single corporation from being the HPPC for 
                more than one HPPC area; or
                    (B) a State from coordinating, through a single 
                entity, the activities of one or more HPPCs in the 
                State.
            (3) Interstate hppc areas.--HPPCs with respect to 
        interstate areas specified under subsection (a)(3) shall be 
        established in accordance with rules of the Board.
    (c) Board of Directors.--Each HPPC shall be governed by a Board of 
Directors appointed by the Governor or other chief executive officer of 
the State (or as otherwise provided under State law or by the Board in 
the case of a HPPC described in subsection (b)(3)).
    (d) Duties of HPPCs.--Each HPPC shall--
            (1) enter into agreements with accountable health plans 
        under section 102;
            (2) enter into agreements with small employers under 
        section 103;
            (3) enroll individuals under accountable health plans, in 
        accordance with section 104;
            (4) receive and forward adjusted premiums, in accordance 
        with section 105, including the reconciliation of low-income 
        assistance among accountable health plans;
            (5) provide for coordination with other HPPCs, in 
        accordance with section 106; and
            (6) carry out other functions provided for under this 
        title.

SEC. 102. AGREEMENTS WITH ACCOUNTABLE HEALTH PLANS (AHPS).

    (a) Agreements.--
            (1) Open ahps.--Each HPPC for a HPPC area shall enter into 
        an agreement under this section with each open accountable 
        health plan registered with the Board under subtitle B, that 
        serves residents of the area. Each such agreement under this 
        section, between an open AHP and a HPPC shall include (as 
        specified by the Board) provisions consistent with the 
        requirements of the succeeding subsections of this section. 
        Except as provided in paragraph (3)(A), a HPPC may not refuse 
        to enter into such an agreement with an open AHP which is 
        registered with the Board under subtitle B.
            (2) Closed ahps.--Each HPPC for a HPPC area shall enter 
        into a special agreement under this paragraph with each closed 
        AHP that serves residents of the area, in order to carry out 
        subsection (e). Except as otherwise specifically provided, any 
        reference in this Act to an agreement under this section shall 
        not be considered to be a reference to an agreement under this 
        paragraph.
            (3) Termination of agreement.--In accordance with 
        regulations of the Board--
                    (A) the HPPC may terminate an agreement under 
                paragraph (1) if the AHP's registration under subtitle 
                B is terminated or for other good cause shown; and
                    (B) the AHP may terminate either such agreement 
                only upon sufficient notice in order to provide for the 
                orderly enrollment of enrollees under other AHPs.
        The Board shall establish a process for the termination of 
        agreements under this paragraph.
    (b) Offer of Enrollment of Individuals.--
            (1) In general.--Under an agreement under this section 
        between an AHP and a HPPC, the HPPC shall offer, on behalf of 
        the AHP, enrollment in the AHP to eligible individuals (as 
        defined in section 2(a)(1)) at the applicable monthly premium 
        rates (specified under section 105(a)).
            (2) Timing of offer.--The offer of enrollment shall be 
        available--
                    (A) to eligible individuals who are employees of 
                small employers, during the 30-day period beginning on 
                the date of commencement of employment; and
                    (B) to other eligible individuals, at such time 
                (including an annual open enrollment period specified 
                by the Board) as the HPPC shall specify, consistent 
                with section 104(b).
    (c) Receipt of Gross Premiums.--
            (1) In general.--Under an agreement under this section 
        between a HPPC and an AHP, payment of premiums shall be made, 
        by individuals or employers on their behalf, directly to the 
        HPPC for the benefit of the AHP.
            (2) Timing of payment of premiums.--Premiums shall be 
        payable on a monthly basis (or, at the option of an eligible 
        individual described in section 2(a)(2)(B), on a quarterly 
        basis). The HPPC may provide for penalties and grace periods 
        for late payment.
            (3) AHPs retain risk of nonpayment.--Nothing in this 
        subsection shall be construed as placing upon a HPPC any risk 
        associated with failure to make prompt payment of premiums 
        (other than the portion of the premium representing the HPPC 
        overhead amount). Each eligible individual who enrolls with an 
        AHP through the HPPC is liable to the AHP for premiums.
    (d) Forwarding of Adjusted Premiums.--
            (1) In general.--Under an agreement under this section 
        between an AHP and a HPPC, subject to section 115(b), the HPPC 
        shall forward to each AHP in which an eligible individual has 
        been enrolled an amount equal to the sum of--
                    (A) the standard premium rate (established under 
                section 115) received for type of enrollment, and
                    (B) the product of--
                            (i) the lowest standard premium rate 
                        offered by an open AHP for the type of 
                        enrollment; and
                            (ii) a risk-adjustment factor (determined 
                        and adjusted in accordance with section 
                        136(b)).
            (2) Payments.--Payments shall be made by the HPPC under 
        this subsection within a period (specified by the Board and not 
        to exceed 7 days) after receipt of the premium from the 
        employer of the eligible individual or the eligible individual, 
        as the case may be.
            (3) Adjustments for differences in nonpayment rates.--In 
        accordance with rules established by the Board, each agreement 
        between an AHP and a HPPC under this section shall provide 
        that, if a HPPC determines that the rates of nonpayment of 
        premiums during grace periods established under subsection 
        (c)(2) vary appreciably among AHPs, the HPPC shall provide for 
        such adjustments in the payments made under this subsection as 
        will place each AHP in the same position as if the rates of 
        nonpayment were the same.

SEC. 103. AGREEMENTS WITH EMPLOYERS.

    (a) In General.--Each HPPC for a HPPC area shall offer each small 
employer that employs individuals in the area the opportunity to enter 
into an agreement under this section. Each agreement under this 
section, between an employer and a HPPC shall include (as specified by 
the Board) provisions consistent with the requirements specified in the 
succeeding subsections of this section.
    (b) Forwarding Information on Eligible Employees.--
            (1) In general.--Under an agreement under this section 
        between a small employer and a HPPC, the employer must forward 
        to the appropriate HPPC the name and address (and other 
        identifying information required by the HPPC) of each employee 
        (including part-time and seasonal employees).
            (2) Appropriate hppc.--In this subsection, the term 
        ``appropriate HPPC'' means the HPPC for the principal place of 
        business of the employer or (at the option of an employee) the 
        HPPC serving the place of residence of the employee.
    (c) Payroll Deduction.--
            (1) In general.--Under an agreement under this section 
        between a small employer and a HPPC, if the HPPC indicates to 
        the employer that an eligible employee is enrolled in an AHP 
        through the HPPC, the employer shall provide for the deduction, 
        from the employee's wages or other compensation, of the amount 
        of the premium due (less any employer contribution). In the 
        case of an employee who is paid wages or other compensation on 
        a monthly or more frequent basis, an employer shall not be 
        required to provide for payment of amounts to a HPPC other than 
        at the same time at which the amounts are deducted from wages 
        or other compensation. In the case of an employee who is paid 
        wages or other compensation less frequently than monthly, an 
        employer may be required to provide for payment of amounts to a 
        HPPC on a monthly basis.
            (2) Additional premiums.--If the amount withheld under 
        paragraph (1) is not sufficient to cover the entire cost of the 
        premiums, the employee shall be responsible for paying directly 
        to the HPPC the difference between the amount of such premiums 
        and the amount withheld.
    (d) Limited Employer Obligations.--Nothing in this section shall be 
construed as--
            (1) requiring an employer to provide directly for 
        enrollment of eligible employees under an accountable health 
        plan or other health plan;
            (2) requiring the employer to make, or preventing the 
        employer from making, information about such plans available to 
        such employees; or
            (3) requiring the employer to make, or preventing the 
        employer from making, an employer contribution for coverage of 
        such individuals under such a plan.

SEC. 104. ENROLLING INDIVIDUALS IN ACCOUNTABLE HEALTH PLANS THROUGH A 
              HPPC.

    (a) In General.--Each HPPC shall offer in accordance with this 
section eligible individuals the opportunity to enroll in an AHP for 
the HPPC area in which the individual resides.
    (b) Enrollment Process.--
            (1) In general.--Each HPPC shall establish an enrollment 
        process in accordance with rules established by the Board 
        consistent with this subsection.
            (2) Initial enrollment period.--Each eligible individual, 
        at the time the individual first becomes an eligible individual 
        in a HPPC area of a HPPC, have an initial enrollment period (of 
        not less than 30 days) in which to enroll in an AHP.
            (3) General enrollment period.--Each HPPC shall establish 
        an annual period, of not less than 30 days, during which 
        eligible individuals may enroll in an AHP or change in the AHP 
        in which the individual is enrolled.
            (4) Special enrollment periods.--In the case of individuals 
        who--
                    (A) through marriage, divorce, birth or adoption of 
                a child, or similar circumstances, experience a change 
                in family composition; or
                    (B) experience a change in employment status 
                (including a significant change in the terms and 
                conditions of employment);
        each HPPC shall provide for a special enrollment period in 
        which the individual is permitted to change the individual or 
        family basis of coverage or the AHP in which the individual is 
        enrolled. The circumstances under which such special enrollment 
        periods are required and the duration of such periods shall be 
        specified by the Board.
            (5) Transitional enrollment period.--Each HPPC shall 
        provide for a special transitional enrollment period (during a 
        period beginning in the months of October through December of 
        1994 as specified by the Board) during which eligible 
        individuals may first enroll.
    (c) Distribution of Comparative Information.--Each HPPC shall 
distribute, to eligible individuals and employers, information, in 
comparative form, on the prices, outcomes, enrollee satisfaction, and 
other information pertaining to the quality of the different AHPs for 
which it is offering enrollment. Each HPPC also shall make such 
information available to other interested persons.
    (d) Period of Coverage.--
            (1) Initial enrollment period.--In the case of an eligible 
        individual who enrolls with an AHP through a HPPC during an 
        initial enrollment period, coverage under the plan shall begin 
        on such date (not later than the first day of the first month 
        that begins at least 15 days after the date of enrollment) as 
        the Board shall specify.
            (2) General enrollment periods.--In the case of an eligible 
        individual who enrolls with an AHP through a HPPC during a 
        general enrollment period, coverage under the plan shall begin 
        on the 1st day of the 1st month beginning at least 15 days 
        after the end of such period.
            (3) Special enrollment periods.--
                    (A) In general.--In the case of an eligible 
                individual who enrolls with an AHP during a special 
                enrollment period described in subsection (b)(4), 
                coverage under the plan shall begin on such date (not 
                later than the first day of the first month that begins 
                at least 15 days after the date of enrollment) as the 
                Board shall specify, except that coverage of family 
                members shall begin as soon as possible on or after the 
                date of the event that gives rise to the special 
                enrollment period.
                    (B) Transitional special enrollment period.--In the 
                case of an eligible individual who enrolls with an AHP 
                during the transitional special enrollment period 
                described in subsection (b)(5), coverage under the plan 
                shall begin on January 1, 1995.
            (4) Minimum period of enrollment.--In order to avoid 
        adverse selection, each HPPC may require, consistent with rules 
        of the National Board, that enrollments with AHPs be for not 
        less than a specified minimum enrollment period (with 
        exceptions permitted for such exceptional circumstances as the 
        Board may recognize).

SEC. 105. RECEIPT OF PREMIUMS.

    (a) Enrollment Charge.--The amount charged by a HPPC for coverage 
under an AHP in a HPPC area is equal to the sum of--
            (1) the standard premium rate established by the AHP under 
        section 115 for such coverage; and
            (2) the HPPC overhead amount established under subsection 
        (b)(3) for enrollment of individuals in the HPPC area.
    (b) HPPC Overhead Amount.--
            (1) HPPC budget.--Each HPPC shall establish a budget for 
        each year for each HPPC area in accordance with regulations 
        established by the Board.
            (2) HPPC overhead percentage.--The HPPC shall compute for 
        each HPPC area an overhead percentage which, when applied to 
        the standard premium amount for individual coverage for each 
        enrollee unit, will provide for revenues equal to the budget 
        for the HPPC area for the year. Such percentage may in no case 
        exceed 5 percentage points.
            (3) HPPC overhead amount.--The HPPC overhead amount for 
        enrollment, whether on an individual or family basis, in an AHP 
        for a HPPC area for a month is equal to the applicable HPPC 
        overhead percentage (computed under paragraph (2)) multiplied 
        by the standard premium amount for individual coverage under 
        the AHP for the month.

SEC. 106. COORDINATION AMONG HPPCS.

    (a) In General.--The Board shall establish rules consistent with 
this section for coordination among HPPCs in cases where small 
employers are located in one HPPC area and their employees reside in a 
different HPPC area (and are eligible for enrollment with AHPs located 
in the other area).
    (b) Coordination Rules.--Under the rules established under 
subsection (a)(1)--
            (1) HPPC for employer.--The HPPC for the principal place of 
        business of a small employer shall be responsible--
                    (A) for providing information to the employer's 
                employees on AHPs for areas in which employees reside;
                    (B)(i) for enrolling employees under the AHP 
                selected (even if the AHP selected is not in the same 
                HPPC area as the HPPC) and (ii) if the AHP chosen is 
                not in the same HPPC area as the HPPC, for forwarding 
                the enrollment information to the HPPC for the area in 
                which the AHP selected is located; and
                    (C) in the case of premiums to be paid through 
                payroll deduction, to receive such premiums and forward 
                them to the HPPC for the area in which the AHP selected 
                is located.
            (2) HPPC for employee residence.--The HPPC for the HPPC 
        area in which an employee resides shall be responsible for 
        providing other HPPCs with information concerning AHPs being 
        offered in other HPPC areas within the State.

              Subtitle B--Accountable Health Plans (AHPs)

           Part 1--Requirements for Accountable Health Plans

SEC. 111. REGISTRATION PROCESS; QUALIFICATIONS.

    (a) In General.--The Board shall provide a process whereby a health 
plan (as defined in section 2(c)(1)) may be registered with the Board 
by its sponsor as an accountable health plan.
    (b) Qualifications.--In order to be eligible to be registered, a 
plan must--
            (1) provide, in accordance with section 112, for coverage 
        of the uniform set of effective benefits specified by the 
        Board;
            (2) provide, in accordance with section 113, for the 
        collection and reporting to the Board of certain information 
        regarding its enrollees and provision of services;
            (3) not discriminate in enrollment or benefits, as required 
        under section 114;
            (4) establish standard premiums for the uniform set of 
        effective benefits, in accordance with section 115;
            (5) meet financial solvency requirements, in accordance 
        with section 116;
            (6) provide for effective grievance procedures and restrict 
        certain physician incentive plans, in accordance with section 
        117; and
            (7) in the case of an open plan (as defined in section 
        2(b)(4)(B)), meet certain additional requirements under section 
        118 (relating to acceptance of enrollees and participation as a 
        plan under the medicare program under the Social Security Act 
        and under the Federal employees health benefits program).
    (c) Minimum Size for Closed Plans.--No plan may be registered as a 
closed AHP under this section unless the plan covers at least a number 
of employees greater than the applicable number of employees specified 
in section 2(c)(2).
    (d) Medicare Requirement.--No plan may be registered as an AHP 
under this section unless the plan--
            (1) meets the requirement of section 118(c); or
            (2) provides for payment of the medicare adjustment amount 
        under section 119.

SEC. 112. SPECIFIED UNIFORM SET OF EFFECTIVE BENEFITS.

    (a) Benefits.--The Board shall not accept the registration of a 
health plan as an accountable health plan unless, subject to subsection 
(b), the plan--
            (1) offers only the uniform set of effective benefits, 
        specified by Board under section 132(a);
            (2) has entered into arrangements with a sufficient number 
        and variety of providers to provide for its enrollees the 
        uniform set of effective benefits without imposing cost-sharing 
        in excess of the cost-sharing described in paragraph (3);
            (3)(A) provides, subject to subsection (c), for imposition 
        of uniform cost-sharing (such as deductibles and copayments), 
        specified under such subsection as part of such set of 
        benefits; and
            (B) does not permit providers participating in the plan 
        under paragraph (2) to charge for covered services amounts in 
        excess of such cost-sharing; and
            (4) provides, in the case of individuals covered under more 
        than one accountable health plan, for coordination of coverage 
        under such plans in an equitable manner.
    (b) Treatment of Additional Benefits.--
            (1) In general.--Subject to paragraph (2), subsection (a) 
        shall not be construed as preventing an AHP from offering 
        benefits in addition to the uniform set of effective benefits 
        or for reducing the cost-sharing below the uniform cost-
        sharing, if such additional benefits or reductions in cost-
        sharing are offered, and priced, separately from the benefits 
        described in subsection (a).
            (2) No duplicative benefits.--An AHP may not offer under 
        paragraph (1) any additional benefits that have the effect of 
        duplicating the benefits required under subsection (a).

SEC. 113. COLLECTION AND PROVISION OF STANDARDIZED INFORMATION.

    (a) Provision of Information.--
            (1) In general.--Each AHP must provide the Board (at a 
        time, not less frequently than annually, and in an electronic, 
        standardized form and manner specified by the Board) such 
        information as the Board determines to be necessary, consistent 
        with this subsection and section 137, to evaluate the 
        performance of the AHP in providing the uniform set of 
        effective benefits to enrollees.
            (2) Information to be included.--Subject to paragraph (3), 
        information to be reported under this subsection shall include 
        at least the following:
                    (A) Information on the characteristics of enrollees 
                that may affect their need for or use of health 
                services.
                    (B) Information on the types of treatments and 
                outcomes of treatments with respect to the clinical 
                health, functional status, and well-being of enrollees.
                    (C) Information on enrollee satisfaction, based on 
                standard surveys prescribed by the Board.
                    (D) Information on health care expenditures, volume 
                and prices of procedures, and use of specialized 
                centers of care (for which information is submitted 
                under section 138).
                    (E) Information on the flexibility permitted by 
                plans to enrollees in their selection of providers.
            (3) Special treatment.--The Board may waive the provision 
        of such information under paragraph (2), or require such other 
        information, as the Board finds appropriate in the case of 
        newly established AHP for which such information is not 
        available.
    (b) Conditioning Certain Provider Payments.--
            (1) In general.--In order to assure the collection of all 
        information required from the direct providers of services for 
        which benefits are available through an AHP, each AHP may not 
        provide payment for services (other than emergency services) 
        furnished by a provider to meet the uniform set of effective 
        benefits unless the provider has given the AHP (or has given 
        directly to the National Board) standard information (specified 
        by the Board) respecting the services.
            (2) Forwarding information.--If information under paragraph 
        (1) is given to the AHP, the AHP is responsible for forwarding 
        the information to the Board.

SEC. 114. PROHIBITION OF DISCRIMINATION BASED ON HEALTH STATUS FOR 
              CERTAIN CONDITIONS; LIMITATION ON PRE-EXISTING CONDITION 
              EXCLUSIONS.

    (a) In General.--Except as provided under subsection (b), an AHP 
may not deny, limit, or condition the coverage under (or benefits of) 
the plan based on the health status, claims experience, receipt of 
health care, medical history, or lack of evidence of insurability, of 
an individual.
    (b) Treatment of Preexisting Condition Exclusions for Services.--
            (1) In general.--Subject to the succeeding provisions of 
        this subsection, an AHP may exclude coverage with respect to 
        services related to treatment of a preexisting condition, but 
        the period of such exclusion may not exceed 6 months beginning 
        on the date of coverage under the plan. The exclusion of 
        coverage shall not apply to services furnished to newborns and 
        to pregnant women.
            (2)  Crediting of previous coverage.--
                    (A) In general.--An AHP shall provide that if an 
                enrollee is in a period of continuous coverage (as 
                defined in subparagraph (B)(i)) as of the date of 
                initial coverage under such plan, any period of 
                exclusion of coverage with respect to a preexisting 
                condition for such services or type of services shall 
                be reduced by 1 month for each month in the period of 
                continuous coverage.
                    (B) Definitions.--As used in this paragraph:
                            (i) Period of continuous coverage.--The 
                        term ``period of continuous coverage'' means 
                        the period beginning on the date an individual 
                        is enrolled under an AHP (or, before July 1, 
                        1994, under any health plan that provides 
                        benefits with respect to such services) and 
                        ends on the date the individual is not so 
                        enrolled for a continuous period of more than 3 
                        months.
                            (ii) Preexisting condition.--The term 
                        ``preexisting condition'' means, with respect 
                        to coverage under an AHP, a condition which has 
                        been diagnosed or treated during the 3-month 
                        period ending on the day before the first date 
                        of such coverage (without regard to any waiting 
                        period).
            (3) Limitation.--This subsection shall not apply to 
        treatment which is not within the uniform set of effective 
        benefits.

SEC. 115. USE OF STANDARD PREMIUMS.

    (a) Standard Premiums for Open AHPs.--
            (1) In general.--Subject to subsection (b), each open AHP 
        shall establish a standard premium for the uniform set of 
        effective benefits within each HPPC area in which the plan is 
        offered. The amount of premium applicable for all individuals 
        within a premium class (established under paragraph (2)) is the 
        standard premium amount multiplied by the premium class factor 
        specified by the Board for that class under paragraph (2)(B). 
        Within a HPPC area for individuals within a premium class, the 
        standard premium for all individuals in the class shall be the 
        same.
            (2) Premium classes.--
                    (A) In general.--The Board shall establish premium 
                classes--
                            (i) based on types of enrollment (described 
                        in section 2(c)(6)); and
                            (ii) within each type of enrollment, based 
                        on age of principal enrollee.
                In carrying out clause (ii), the Board shall establish 
                reasonable age bands within which premium amounts will 
                not vary for a type of enrollment.
                    (B) Premium class factors.--
                            (i) In general.--For each premium class 
                        established under subparagraph (A), the Board 
                        shall establish a premium class factor that 
                        reflects, subject to clause (ii), the relative 
                        actuarial value of benefits for that class 
                        compared to the actuarial value of benefits for 
                        an average class.
                            (ii) Limit on variation in premium class 
                        factors.--The highest premium class factor may 
                        not exceed twice the lowest premium class 
                        factor and the weighted average of the premium 
                        class factors shall be 1.
            (3) Methodology.--Standard premiums are subject to 
        adjustment in accordance with section 102(d)(1).
    (b) Limitation on Premium Increases.--
            (1) Board action.--The Board shall establish annual limits 
        on the permissible percentage rate of increase for premiums 
        with respect to AHP's providing the uniform set of effective 
        benefits.
            (2) Increases.--Annual increases in premiums for an AHP may 
        not exceed the percentage limit established by the Board under 
        paragraph (1).

SEC. 116. FINANCIAL SOLVENCY REQUIREMENTS.

    (a) Solvency Protection.--
            (1) For insured plans.--In the case of an AHP that is an 
        insured plan (as defined by the Board) and is issued in a 
        State, in order for the plan to be registered under this 
        subtitle the Board must find that the State has established 
        satisfactory protection of enrollees with respect to potential 
        insolvency.
            (2) For other plans.--In the case of an AHP that is not an 
        insured plan, the Board may require the plan to provide for 
        such bond or provide other satisfactory assurances that 
        enrollees under the plan are protected with respect to 
        potential insolvency of the plan.
    (b) Protection Against Provider Claims.--In the case of a failure 
of an AHP to make payments with respect to the uniform set of basic 
benefits, under standards established by the Board, an individual who 
is enrolled under the plan is not liable to any health care provider or 
practitioner with respect to the provision of health services within 
such uniform set for payments in excess of the amount for which the 
enrollee would have been liable if the plan were to have made payments 
in a timely manner.

SEC. 117. GRIEVANCE MECHANISMS; ENROLLEE PROTECTIONS; WRITTEN POLICIES 
              AND PROCEDURES RESPECTING ADVANCE DIRECTIVES; AGENT 
              COMMISSIONS.

    (a) Effective Grievance Procedures.--Each AHP shall provide for 
effective procedures for hearing and resolving grievances between the 
plan and individuals enrolled under the plan, which procedures meet 
standards specified by the Board.
    (b) Restriction on Certain Physician Incentive Plans.--
            (1) In general.--A health plan may not be registered as an 
        AHP if it operates a physician incentive plan (as defined in 
        paragraph (2)) unless the requirements specified in clauses (i) 
        through (iii) of section 1876(i)(8)(A) of the Social Security 
        Act are met (in the same manner as they apply to eligible 
        organizations under section 1876 of such Act).
            (2) Physician incentive plan defined.--In this subsection, 
        the term ``physician incentive plan'' means any compensation or 
        other financial arrangement between the AHP and a physician or 
        physician group that may directly or indirectly have the effect 
        of reducing or limiting services provided with respect to 
        individuals enrolled under the plan.
    (c) Written Policies and Procedures Respecting Advance 
Directives.--A health plan may not be registered as an AHP unless the 
plan meets the requirements of section 1866(f) of the Social Security 
Act (relating to maintaining written policies and procedures respecting 
advance directives), insofar as such requirements would apply to the 
plan if the plan were an eligible organization.
    (d) Payment of Agent Commissions.--An AHP--
            (1) may pay a commission or other remuneration to an agent 
        or broker in marketing the plan to individuals or groups; but
            (2) may not vary such remuneration based, directly or 
        indirectly, on the anticipated or actual claims experience 
        associated with the group or individuals to which the plan was 
        sold.

SEC. 118. ADDITIONAL REQUIREMENTS OF OPEN AHPS.

    (a) Requirement of Agreement With HPPC.--In the case of a health 
plan which is an open plan (as defined in section 191(b)(4)(B)), in 
order to be registered as an AHP the plan must have in effect an 
agreement (described in section 102) with each HPPC for each HPPC area 
in which it is offered.
    (b) Requirement of Open Enrollment.--
            (1) In general.--In the case of a health plan which is an 
        open health plan, in order to be registered as an AHP the plan 
        must, subject to paragraph (3), not reject the enrollment of 
        any eligible individual whom a HPPC is authorized to enroll 
        under an agreement referred to in subsection (a) if the 
        individual applies for enrollment during an enrollment period.
            (2) Limitation on termination.--Subject to paragraph (3), 
        coverage of eligible individuals under an open AHP may not be 
        refused nor terminated except for--
                    (A) nonpayment of premiums;
                    (B) fraud or misrepresentation; or
                    (C) termination of the plan at the end of a year 
                (after notice and in accordance with standards 
                established by the Board).
            (3) Treatment of network plans.--
                    (A) Geographic limitations.--
                            (i) In general.--An AHP which is a network 
                        plan (as defined in subparagraph (D)) may deny 
                        coverage under the plan to an eligible 
                        individual who is located outside a service 
                        area of the plan, but only if such denial is 
                        applied uniformly, without regard to health 
                        status or insurability of individuals.
                            (ii) Service areas.--The Board shall 
                        establish standards for the designation by 
                        network plans of service areas in order to 
                        prevent discrimination based on health status 
                        of individuals or their need for health 
                        services.
                    (B) Size limits.--Subject to subparagraph (C), an 
                AHP which is a network plan may apply to the Board to 
                cease enrolling eligible individuals under the AHP (or 
                in a service area of the plan) if--
                            (i) it ceases to enroll any new eligible 
                        individuals; and
                            (ii) it can demonstrate that its financial 
                        or administrative capacity to serve previously 
                        covered groups or individuals (and additional 
                        individuals who will be expected to enroll 
                        because of affiliation with such previously 
                        covered groups or individuals) will be impaired 
                        if it is required to enroll other eligible 
                        individuals.
                    (C) First-come-first-served.--A network plan is 
                only eligible to exercise the limitations provided for 
                in subparagraphs (A) and (B) if it provides for 
                enrollment of eligible individuals on a first-come-
                first-served basis.
                    (D) Network plan.--In this paragraph, the term 
                ``network plan'' means an eligible organization (as 
                defined in section 1876(b) of the Social Security Act) 
                and includes a similar organization, specified in 
                regulations of the Board, as requiring a limitation on 
                enrollment of employer groups or individuals due to the 
                manner in which the organization provides health care 
                services.
    (c) Requirement of Participation in Medicare Risk-Based 
Contracting.--
            (1) In general.--In the case of a health plan which is an 
        open health plan and which is an eligible organization (as 
        defined in section 1876(b) of the Social Security Act), in 
        order to be registered as an AHP the plan must enter into a 
        risk-sharing contract under section 1876 of the Social Security 
        Act for the offering of benefits to medicare beneficiaries in 
        accordance with such section.
            (2) Expansion of medicare select program.--Subsection (c) 
        of section 4358 of the Omnibus Budget Reconciliation Act of 
        1990 (104 Stat. 1388-137) is amended by striking ``only apply 
        in 15 States'' and all that follows through the end and 
        inserting ``on and after January 1, 1992.''.
    (d) Participation in FEHBP.--
                    (1) In general.--In the case of a health plan which 
                is an open health plan, in order to be registered as an 
                AHP the plan must have entered into an agreement with 
                the Office of Personnel Management to offer a health 
                plan to Federal employees and annuitants, and family 
                members, under the Federal Employees Health Benefits 
                Program under chapter 89 of title 5, United States 
                Code, under the same terms and conditions offered by 
                the AHP for enrollment of individuals and small 
                employers through HPPCs.
            (2) Change in contribution and other fehbp rules.--
        Notwithstanding any other provision of law, effective January 
        1, 1994--
                    (A) enrollment shall not be permitted under a 
                health benefits plan under chapter 89 of title 5, 
                United States Code, unless the plan is an AHP, and
                    (B) the amount of the Federal Government 
                contribution under such chapter--
                            (i) for any premium class shall be the same 
                        for all AHPs in a HPPC area,
                            (ii) for any premium class shall not exceed 
                        the base individual premium (as defined in 
                        section 209(c)(3)), and
                            (iii) in the aggregate for any fiscal year 
                        shall be equal to the aggregate amount of 
                        Government contributions that would have been 
                        made but for this section.

SEC. 119. ADDITIONAL REQUIREMENT OF CERTAIN AHPS.

    (a) Medicare Adjustment Payment Required.--Each AHP which does not 
meet the requirement of section 148(c) shall provide for payment to the 
Board of such amounts as may be required as to put the plan in the same 
financial position as the AHP would be in if it met such requirement.
    (b) Redistribution of Payments to Plans.--The Board shall provide 
for the distribution among AHPs meeting the requirement of section 
148(c) of amounts paid under subsection (a) in such manner as reflects 
the relative financial impact of such requirement among such plans.

     Part 2--Preemption of State Laws for Accountable Health Plans

SEC. 120. PREEMPTION FROM STATE BENEFIT MANDATES.

    Effective as of January 1, 1994, no State shall establish or 
enforce any law or regulation that--
            (1) requires the offering, as part of an AHP, of any 
        services, category of care, or services of any class or type of 
        provider that is different from the uniform set of effective 
        benefits;
            (2) specifies the individuals to be covered under an AHP or 
        the duration of such coverage; or
            (3) requires a right of conversion from a group health plan 
        that is an AHP to an individual health plan.

SEC. 121. PREEMPTION OF STATE LAW RESTRICTIONS ON NETWORK PLANS.

    (a) Limitation on Restrictions on Network Plans.--Effective as of 
January 1, 1994--
            (1) A State may not by law or regulation prohibit or 
        unreasonably limit a network plan from including incentives for 
        enrollees to use the services of participating providers.
            (2) A State may not prohibit or unreasonably limit a 
        network plan from limiting coverage of services to those 
        provided by a participating provider.
            (3)(A) Subject to subparagraph (B), a State may not 
        prohibit or unreasonably limit the negotiation of rates and 
        forms of payments for providers under a network plan.
            (B) Subparagraph (A) shall not apply where the amount of 
        payments with respect to a category of services or providers is 
        established under a Statewide system applicable to all non-
        Federal payors with respect to such services or providers.
            (4) A State may not prohibit or unreasonably limit a 
        network plan from limiting the number of participating 
        providers.
            (5) A State may not prohibit or unreasonably limit a 
        network plan from requiring that services be provided (or 
        authorized) by a practitioner selected by the enrollee from a 
        list of available participating providers.
    (b) Definitions.--As used in this section:
            (1) Network plan.--The term ``network plan'' means an AHP--
                    (A) which--
                            (i) limits coverage of the uniform set of 
                        basic benefits to those provided by 
                        participating providers; or
                            (ii) provides, with respect to such 
                        services provided by persons who are not 
                        participating providers, for deductibles or 
                        other cost-sharing which are in excess of those 
                        permitted under the uniform set of basic 
                        benefits for participating providers;
                    (B) which has a sufficient number and distribution 
                of participating providers to assure that the uniform 
                set of basic benefits is--
                            (i) available and accessible to each 
                        enrollee, within the area served by the plan, 
                        with reasonable promptness and in a manner 
                        which assures continuity; and
                            (ii) when medically necessary, available 
                        and accessible 24 hours a day and seven days a 
                        week; and
                    (C) which provides benefits for the uniform set of 
                basic benefits not furnished by participating providers 
                if the services are medically necessary and immediately 
                required because of an unforeseen illness, injury, or 
                condition.
            (2) Participating provider.--The term ``participating 
        provider'' means an entity or individual which provides, sells, 
        or leases health care services under a contract with a network 
        plan, which contract does not permit--
                    (A) cost-sharing in excess of the cost-sharing 
                permitted under the uniform set of basic benefits with 
                respect to basic benefits; and
                    (B) any enrollee charges (for such services covered 
                under such set) in excess of such cost-sharing.

SEC. 122. PREEMPTION OF STATE LAWS RESTRICTING UTILIZATION REVIEW 
              PROGRAMS.

    (a) In General.--Effective January 1, 1994, no State law or 
regulation shall prohibit or regulate activities under a utilization 
review program (as defined in subsection (b)).
    (b) Utilization Review Program Defined.--In this section, the term 
``utilization review program'' means a system of reviewing the medical 
necessity and appropriateness of patient services (which may include 
inpatient and outpatient services) using specified guidelines. Such a 
system may include preadmission certification, the application of 
practice guidelines, continued stay review, discharge planning, 
preauthorization of ambulatory procedures, and retrospective review.

                    Subtitle C--Federal Health Board

SEC. 131. ESTABLISHMENT OF FEDERAL HEALTH BOARD.

    (a) In General.--There is hereby established a Federal Health 
Board.
    (b) Composition and Terms.--
            (1) Appointment.--The Board shall be composed of 5 members 
        appointed by the President by and with the advice and consent 
        of the Senate. In appointing members to the Board, the 
        President shall provide that all members shall demonstrate 
        experience with and knowledge of the health care system.
            (2) Chairperson.--The President shall designate one of the 
        members to be Chairperson of the Board.
            (3) Terms.--Each member of the Board shall be appointed for 
        a term of 7 years, except that, of the members first appointed, 
        1 shall each be appointed for terms of 3, 4, 5, 6, and 7 years, 
        as designated by the President at the time of appointment. 
        Members appointed to fill vacancies shall serve for the 
        remainder of the terms of the vacating members.
            (4) Party affiliation.--Not more than 3 members of the 
        Board shall be of the same political party.
            (5) Other employment prohibited.--A member of the Board may 
        not, during the term as a member, engage in any other business, 
        vocation, profession, or employment.
            (6) Quorum.--Three members of the Board shall constitute a 
        quorum, except that 2 members may hold hearings.
            (7) Meetings.--The Board shall meet at the call of the 
        Chairman or 3 members of the Board.
            (8) Compensation.--Each member of the Board shall be 
        entitled to compensation at the rate provided for level II of 
        the Executive Schedule, subject to such amounts as are provided 
        in advance in appropriation Acts.
    (c) Personnel.--
            (1) In general.--The Board shall appoint an Executive 
        Director and such additional officers and employees as it 
        considers necessary to carry out its functions under this Act. 
        Except as otherwise provided in any other provision of law, 
        such officers and employees shall be appointed, and their 
        compensation shall be fixed, in accordance with title 5, United 
        States Code.
            (2) Experts and consultants.--The Board may procure the 
        services of experts and consultants in accordance with the 
        provisions of section 3109 of title 5, United States Code.
    (d) Miscellaneous Provisions.--
            (1) Gifts, bequests, and devises.--The Board may accept, 
        use, and dispose of gifts, bequests, or devises of services or 
        property for the purpose of aiding or facilitating its work.
            (2) Mails.--The Board may use the United States mails in 
        the same manner and under the same conditions as other 
        departments and agencies of the United States.

SEC. 132. SPECIFICATION OF UNIFORM SET OF EFFECTIVE BENEFITS.

    (a) Specification of Uniform Set of Effective Benefits.--
            (1) In general.--The Board shall specify, by not later than 
        October 1 of each year (beginning with 1993), the uniform set 
        of effective benefits to apply under this title for the 
        following year.
            (2) Specification of health care conditions.--
                    (A) In general.--Such benefits shall include the 
                full range of legally authorized treatment for any 
                health condition for which the Board determines a 
                treatment has been shown to reasonably improve or 
                significantly ameliorate the condition. The Board may 
                exclude health conditions the treatment of which do not 
                impact on clinical health or functional status of 
                individuals.
                    (B) Coverage of clinical preventive services.--Such 
                benefits shall include the full range of effective 
                clinical preventive services (including appropriate 
                screening, counseling, and immunization and 
                chemoprophylaxis), specified by the Board, appropriate 
                to age and other risk factors.
                    (C) Coverage for persons with severe mental 
                illness.--The Board shall establish guidelines 
                concerning nondiscrimination towards individuals with 
                severe mental illnesses and coverage for the treatment 
                of severe mental illnesses. Such guidelines shall 
                ensure that coverage of such individuals is equitable 
                and commensurate with the coverage provided to other 
                individuals.
                    (D) Exclusion for ineffective treatments.--The 
                Board may exclude from the benefits such treatments as 
                the Board determines, based on clinical information, 
                have not been reasonably shown to improve a health 
                condition or significantly ameliorate a health 
                condition. Except as specifically excluded, the actual 
                specific treatments, procedures, and care (such as the 
                use of particular providers or services) which may be 
                used under a plan or be used with respect to health 
                conditions shall be left up to the plan.
                    (E) Nondiscrimination.--In determining the uniform 
                set of effective benefits, the Board shall not 
                discriminate against individuals with serious mental 
                illnesses.
            (3) Deductibles and cost-sharing.--
                    (A) In general.--Subject to subparagraph (B), such 
                set shall include uniform deductibles and cost-sharing 
                associated with such benefits.
                    (B) Treatment of network plans.--In the case of a 
                network plan (as defined in section 121(b)), the plan 
                may provide for charging deductibles and cost-sharing 
                in excess of the uniform deductibles and cost-sharing 
                under subparagraph (A) in the case of services provided 
                by providers that are not participating providers (as 
                defined in such section).
    (b) Basis for Benefits.--In establishing such set, the Board shall 
judge medical treatments, procedures, and related health services based 
on--
            (1) their effectiveness in improving the health status of 
        individuals; and
            (2) their long-term impact on maintaining and improving 
        health and productivity and on reducing the consumption of 
        health care services.
    (c) Basis for Cost-Sharing.--In establishing cost-sharing that is 
part of the uniform set of effective benefits, the Board shall--
            (1) include only such cost-sharing as will restrain 
        consumers from seeking unnecessary services;
            (2) not impose cost-sharing for covered clinical preventive 
        services;
            (3) balance the effect of the cost-sharing in reducing 
        premiums and in affecting utilization of appropriate services; 
        and
            (4) limit the total cost-sharing that may be incurred by an 
        individual (or enrollee unit) in a year.

SEC. 133. HEALTH BENEFITS AND DATA STANDARDS BOARD.

    (a) Establishment.--The Board shall provide for the initial 
organization, as a nonprofit corporation in the District of Columbia, 
of the Health Benefits and Data Standards Board (in this section 
referred to as the ``Benefits and Data Board''), under the direction of 
a board of directors consisting of 5 directors.
    (b) Appointment of Directors.--
            (1) Solicitation.--The Board shall solicit nominations for 
        the initial board of directors of the Benefits and Data Board 
        from organizations that represent the various groups with an 
        interest in the health care system and the functions of the 
        Board.
            (2) Continuation.--The by-laws of the Benefits and Data 
        Board shall provide for the board of directors subsequently to 
        be appointed by the board in a manner that ensures a broad 
        range of representation of through groups with an interest in 
        providing and purchasing health care.
            (3) Terms of directors.--The term of each member of the 
        board of directors shall be for 7 years, except that in order 
        to provide for staggered terms, the terms of the members 
        initially appointed shall be for 3, 4, 5, 6, and 7 years. In 
        the case of a vacancy by death or resignation, the replacement 
        shall be appointed for the remainder of the term. No individual 
        may serve as a director of the board for more than 14 years.
    (c) Functions.--
            (1) In general.--The Benefits and Data Board shall make 
        recommendations to the Board concerning each of the following:
                    (A) The uniform set of effective benefits.
                    (B) The standards for information collection from 
                AHPs.
                    (C) Auditing standards to ensure the accuracy of 
                such information.
        Before making recommendations concerning the standards 
        described in subparagraph (B), the Benefits and Data Board 
        shall consult with the Agency for Health Care Policy and 
        Research regarding the Agency's need for information in 
        performing its activities.
            (2) Assessments.--The Benefits and Data Board shall provide 
        the Board with its assessment of--
                    (A) medical technology;
                    (B) practice variations;
                    (C) the effectiveness of medical practices and drug 
                therapies based on research performed by the Agency for 
                Health Care Policy and Research;
                    (D) information from clinical and epidemiologic 
                studies; and
                    (E) information provided by AHPs, including AHP-
                specific information on clinical health, functional 
                status, well-being, and plan satisfaction of enrolled 
                individuals.
            (3) National health data system.--The Benefits and Data 
        Board shall provide the Board with its assistance in the 
        development of the standards for the national data reporting 
        system under section 137.
    (d) Funding.--
            (1) In general.--In order to provide funding for the 
        Benefits and Data Board, the National Health Board shall 
        establish an annual registration fee for AHPs which is imposed 
        on a per-covered-individual-basis and is sufficient, in the 
        aggregate, to provide each year for not more than the amount 
        specified in paragraph (2) for the operation of the Benefits 
        and Data Board.
            (2) Amount of funds.--The amount specified in this 
        paragraph for each of fiscal years 1994 and 1995, is 
        $50,000,000, and, for each succeeding fiscal year, is 
        $25,000,000.

SEC. 134. HEALTH PLAN STANDARDS BOARD.

    (a) Establishment.--The Board shall provide for the initial 
organization, as a nonprofit corporation in the District of Columbia, 
of the Health Plan Standards Board (in this section referred to as the 
``Plan Standards Board''), under the direction of a board of directors 
consisting of 5 directors.
    (b) Appointment of Directors.--
            (1) Solicitation.--The Board shall solicit nominations for 
        the initial board of directors of the Plan Standards Board from 
        organizations that represent the various groups with an 
        interest in the health care system and the functions of the 
        Board.
            (2) Continuation.--The by-laws of the Plan Standards Board 
        shall provide for the board of directors subsequently to be 
        appointed by the board in a manner that ensures a broad range 
        of representation of through groups with an interest in 
        providing and purchasing health care.
            (3) Terms of directors.--The term of each member of the 
        board of directors shall be for 7 years, except that in order 
        to provide for staggered terms, the terms of the members 
        initially appointed shall be for 3, 4, 5, 6, and 7 years. In 
        the case of a vacancy by death or resignation, the replacement 
        shall be appointed for the remainder of the term. No individual 
        may serve as a director of the board for more than 12 years.
    (c) Functions.--
            (1) In general.--The Plan Standards Board shall make 
        recommendations to the Board concerning the standards for AHPs 
        (other than standards relating to the uniform set of effective 
        benefits and the national health data system) and for HPPCs.
            (2) Assessment of risk-adjustment factors.--The Plan 
        Standards Board shall provide the Board with its assessment of 
        the risk-adjustment factors under section 136.
    (d) Funding.--In order to provide funding for the Plan Standards 
Board, the National Health Board shall establish an annual registration 
fee for AHPs which is imposed on a per-covered-individual-basis and is 
sufficient, in the aggregate, to provide each year for not more than 60 
percent of the amount specified in section 133(d)(2) for the operation 
of the Plan Standards Board.

SEC. 135. REGISTRATION OF ACCOUNTABLE HEALTH PLANS.

    (a) In General.--The Board shall register those health plans that 
meet the standards under subtitle B.
    (b) Treatment of State Certification.--If the Board determines that 
a State superintendent of insurance, State insurance commissioner, or 
other State official provides for the imposition of standards that the 
Board finds are equivalent to the standards established under subtitle 
B for registration of a health benefit plan as an AHP, the Board may 
provide for registration as AHPs of health plans that such official 
certifies as meeting the standards for registration. Nothing in this 
subsection shall require a health plan to be certified by such an 
official in order to be registered by the Board.
    (c) Medicaid Waiver.--The Board shall develop criteria and 
procedures under which the Secretary may grant a waiver to a State to 
permit that State to enroll individuals, otherwise eligible for 
enrollment under title XIX of the Social Security Act, under ACP's 
through a HPPC. The waiver shall permit the State to use funds made 
available under such title XIX for the enrollment of medicaid eligible 
individuals through a HPPC. The State shall ensure that individuals 
enrolled in a AHP under such a waiver are guaranteed at least those 
minimum benefits that such individual would have been entitled to under 
such title XIX.

SEC. 136. SPECIFICATION OF RISK-ADJUSTMENT FACTORS.

    (a) In General.--The Board shall establish rules for the process of 
risk-adjustment of premiums among AHPs by HPPCs under section 102(d).
    (b) Process.--
            (1) Identification of relative risk.--The Board shall 
        determine risk-adjustment factors that are correlated with 
        increased or diminished risk for consumption of the type of 
        health services included in the uniform set of effective 
        benefits. To the maximum extent practicable, such factors shall 
        be determined without regard to the methodology used by 
        individual AHPs in the provision of such benefits. In 
        determining such factors, with respect to an individual who is 
        identified as having--
                    (A) a lower-than-average risk for consumption of 
                the services, the factor shall be a number, less than 
                zero, reflecting the degree of such lower risk;
                    (B) an average risk for consumption of the 
                services, the factor shall be zero; or
                    (C) a higher-than-average risk for consumption of 
                the services, the factor shall be a number, greater 
                than zero, reflecting the degree of such higher risk.
            (2) Adjustment of factors.--In applying under section 
        102(d)(1)(B) the risk-adjustment factors determined under 
        paragraph (1), each HPPC shall adjust such factors, in 
        accordance with a methodology established by the Board, so that 
        the sum of such factors is zero for all enrollee units in each 
        HPPC area for which a premium payment is forwarded under 
        section 102(d) for each premium payment period.

SEC. 137. NATIONAL HEALTH DATA SYSTEM.

    (a) Standardization of Information.--
            (1) In general.--The Board shall establish standards for 
        the periodic reporting by AHPs of information under section 
        113(a).
            (2) Patient confidentiality.--The standards shall be 
        established in a manner that protects the confidentiality of 
        individual enrollees, but may provide for the disclosure of 
        information which discloses particular providers within an AHP.
    (b) Analysis of Information.--The Board shall analyze the 
information reported in order to distribute it in a form, consistent 
with subsection (a)(2), that--
            (1) reports, on a national, State, and community basis, the 
        levels and trends of health care expenditures, the rates and 
        trends in the provision of individual procedures, and the price 
        levels and rates of price change for such procedures; and
            (2) permits the direct comparison of different AHPs on the 
        basis of the ability of the AHPs to maintain and improve 
        clinical health, functional status, and well-being and to 
        satisfy enrolled individuals.
The reports under paragraph (1) shall include both aggregate and per 
capita measures for areas and shall include comparative data of 
different areas. The comparison under paragraph (2) may also be made to 
show changes in the performance of AHPs over time.
    (c) Distribution of Information.--
            (1) In general.--The Board shall provide, through the HPPCs 
        and directly to AHPs, for the distribution of its analysis on 
        individual AHPs. Such distribution shall occur at least 
        annually before each general enrollment period.
            (2) Annual report on expenditures.--The Board shall publish 
        annually (beginning with 1996) a report on expenditures on, and 
        volumes and prices of, procedures. Such report shall be 
        distributed to each AHP, each HPPC, each Governor, and each 
        State legislature.
            (3) Annual reports.--The Board shall also publish an annual 
        report, based on analyses under this section, that identifies--
                    (A) procedures for which, as reflected in 
                variations in use or rates of increase, there appear to 
                be the greatest need to develop valid clinical 
                protocols for clinical decision-making and review;
                    (B) procedures for which, as reflected in price 
                variations and price inflation, there appear to be the 
                greatest need for strengthening competitive purchasing; 
                and
                    (C) States and localities for which, as reflected 
                in expenditure levels and rates of increase, there 
                appear to be the greatest need for additional cost 
                control measures.
            (4) Special distributions.--The Board may, whenever it 
        deems appropriate, provide for the distribution--
                    (A) to an AHP of such information relating to the 
                plan as may be appropriate in order to encourage the 
                plan to improve its delivery of care; and
                    (B) to business, consumer, and other groups and 
                individuals of such information as may improve their 
                ability to effect improvements in the outcomes, 
                quality, and efficiency of health services.
            (5) Access by agency for health care policy and research.--
        The Board shall make available to the Agency for Health Care 
        Policy and Research information obtained under section 113(a) 
        in a manner consistent with subsection (a)(2).
    (d) Standardized Forms.--Not later than October 1, 1994, the Board, 
in consultation with representatives of local governments, insurers, 
health care providers, and consumers shall develop a plan to accelerate 
electronic billing and computerization of medical records and shall 
develop standardized claim forms and billing procedures for use by all 
AHP's under this title.

SEC. 138. MEASURES OF QUALITY OF CARE OF SPECIALIZED CENTERS OF CARE.

    (a) Collection of Information.--The Board shall provide a process 
whereby a specialized center of care (as defined in subsection (c)) may 
submit to the Board such clinical and other information bearing on the 
quality of care provided with respect to the uniform set of effective 
benefits at the center as the Board may specify. Such information shall 
include sufficient information to take into account outcomes and the 
risk factors associated with individuals receiving care through the 
center. Such information shall be provided at such frequency (not less 
often than annually) as the Board specifies.
    (b) Measures of Quality.--Using information submitted under 
subsection (a) and information reported under section 137, the Board 
shall--
            (1) analyze the performance of such centers with respect to 
        the quality of care provided;
            (2) rate the performance of such a center with respect to a 
        class of services relative to the performance of other 
        specialized centers of care and relative to the performance of 
        AHPs generally; and
            (3) publish such ratings.
    (c) Use of Service Mark for Specialized Centers of Care.--The Board 
may establish a service mark for specialized centers of care the 
performance of which has been rated under subsection (b). Such service 
mark shall be registrable under the Trademark Act of 1946, and the 
Board shall apply for the registration of such service mark under such 
Act. For purposes of such Act, such service mark shall be deemed to be 
used in commerce. For purposes of this subsection, the ``Trademark Act 
of 1946'' refers to the Act entitled ``An Act to provide for the 
registration and protection of trademarks used in commerce, to carry 
out the provisions of international conventions, and for other 
purposes'', approved July 5, 1946 (15 U.S.C. 1051 et seq.).
    (d) Specialized Center of Care Defined.--In this section, the term 
``specialized center of care'' means an institution or other organized 
system for the provision of specific services, which need not be multi-
disciplinary, and does not include (except as the Board may provide) 
individual practitioners.

SEC. 139. REPORT ON IMPACT OF ADVERSE SELECTION; RECOMMENDATIONS ON 
              MANDATED PURCHASE OF COVERAGE.

    (a) Study.--The Board shall study--
            (1) the extent to which those eligible individuals (as 
        defined in subsection (c)) who enroll with AHPs have 
        significantly greater needs for health care services than the 
        population of eligible individuals as a whole; and
            (2) methods for reducing adverse impacts that may result 
        from such adverse selection.
    (b) Report.--By not later than January 1, 1996, the Board shall 
submit to Congress a report on the study under subsection (a) and on 
appropriate methods for reducing adverse impacts that may result from 
adverse selection in enrollment. The report shall specifically 
include--
            (1) an examination of the impact of establishing a 
        requirement that all eligible individuals obtain health 
        coverage through enrollment with an AHP; and
            (2) a recommendation as to whether (and, if so, how) to 
        impose such a requirement.
    (c) Eligible Individual Defined.--In this section, the term 
``eligible individual''--
            (1) includes individuals who would be eligible individuals 
        but for section 2(a)(4)(B), but
            (2) does not include individuals eligible to enroll for 
        benefits under part B of title XVIII of the Social Security 
        Act.

        TITLE II--TAX INCENTIVES TO INCREASE HEALTH CARE ACCESS

SEC. 201. CREDIT FOR ACCOUNTABLE HEALTH PLAN COSTS.

    (a) In General.--Subpart C of part IV of subchapter A of chapter 1 
of the Internal Revenue Code of 1986 (relating to refundable personal 
credits) is amended by inserting after section 34 the following new 
section:

``SEC. 34A. ACCOUNTABLE HEALTH PLAN COSTS.

    ``(a) Allowance of Credit.--
            ``(1) In general.--In the case of an eligible individual, 
        there shall be allowed as a credit against the tax imposed by 
        this subtitle for the taxable year an amount equal to the 
        applicable percentage of the accountable health plan costs paid 
        by such individual during the taxable year.
            ``(2) Applicable percentage.--For purposes of paragraph 
        (1), the term `applicable percentage' means 60 percent reduced 
        (but not below zero) by 10 percentage points for each $1,000 
        (or fraction thereof) by which the taxpayer's adjusted gross 
        income for the taxable year exceeds the applicable dollar 
        amount.
            ``(3) Applicable dollar amount.--For purposes of this 
        subsection, the term `applicable dollar amount' means--
                    ``(A) in the case of a taxpayer filing a joint 
                return, $28,000,
                    ``(B) in the case of any other taxpayer (other than 
                a married individual filing a separate return), 
                $18,000, and
                    ``(C) in the case of a married individual filing a 
                separate return, zero.
        For purposes of this subsection, the rule of section 219(g)(4) 
        shall apply.
    ``(b) Accountable Health Plan Costs.--For purposes of this 
section--
            ``(1) In general.--The term `accountable health plan costs' 
        means amounts paid during the taxable year for insurance which 
        constitutes medical care (within the meaning of section 213(g). 
        For purposes of the preceding sentence, the rules of section 
        213(d)(6) shall apply.
            ``(2) Dollar limit on accountable health plan costs.--The 
        amount of the accountable health care costs paid during any 
        taxable year which may be taken into account under subsection 
        (a)(1) shall not exceed the reference premium amount for the 
        taxable year.
            ``(3) Election not to take credit.--A taxpayer may elect 
        for any taxable year to have amounts described in paragraph (1) 
        not treated as accountable health plan costs.
            ``(4) Definition.--As used in paragraph (2), the term 
        `reference premium rate amount' means, with respect to an 
        individual in a HPPC area, the lowest premium established by an 
        open accountable health plan and offered in the area for the 
        premium class applicable to such individual (including, if 
        appropriate, the HPPC overhead amount established under section 
        105(b)(3) of the Access to Affordable Health Care Act) applied 
        for the taxable year period involved.
    ``(c) Eligible Individual.--For purposes of this section, the term 
`eligible individual' means, with respect to any period, an individual 
who is not covered during such period by a health plan maintained by an 
employer of such individual or such individual's spouse.
    ``(d) Special Rules.--For purposes of this section--
            ``(1) Coordination with advance payment and minimum tax.--
        Rules similar to the rules of subsections (g) and (h) of 
        section 32 shall apply to any credit to which this section 
        applies.
            ``(2) Medicare-eligible individuals.--No expense shall be 
        treated as an accountable health plan cost if it is an amount 
        paid for insurance for an individual for any period with 
        respect to which such individual is entitled (or, on 
        application without the payment of an additional premium, would 
        be entitled to) benefits under part A of title XVIII of the 
        Social Security Act.
            ``(3) Subsidized expenses.--No expense shall be treated as 
        an accountable health plan cost to the extent--
                    ``(A) such expense is paid, reimbursed, or 
                subsidized (whether by being disregarded for purposes 
                of another program or otherwise) by the Federal 
                Government, a State or local government, or any agency 
                or instrumentality thereof, and
                    ``(B) the payment, reimbursement, or subsidy of 
                such expense is not includible in the gross income of 
                the recipient.
    ``(e) Regulations.--The Secretary shall prescribe such regulations 
as may be necessary to carry out the purposes of this section.''.
    (b) Advance Payment of Credit.--
            (1) In general.--Chapter 25 of the Internal Revenue Code of 
        1986 is amended by inserting after section 3507 the following 
        new section:

``SEC. 3507A. ADVANCE PAYMENT OF ACCOUNTABLE HEALTH PLAN COSTS.

    ``(a) General Rule.--Except as otherwise provided in this section, 
every employer making payment of wages with respect to whom an 
accountable health plan costs eligibility certificate is in effect 
shall, at the time of paying such wages, make an additional payment 
equal to such employee's accountable health plan costs advance amount.
    ``(b) Accountable Health Plan Costs Eligibility Certificate.--For 
purposes of this title, an accountable health plan costs eligibility 
certificate is a statement furnished by an employee to the employer 
which--
            ``(1) certifies that the employee will be eligible to 
        receive the credit provided by section 34A for the taxable 
        year,
            ``(2) certifies that the employee does not have an 
        accountable health plan costs eligibility certificate in effect 
        for the calendar year with respect to the payment of wages by 
        another employer,
            ``(3) states whether or not the employee's spouse has an 
        accountable health plan costs eligibility certificate in 
        effect, and
            ``(4) estimates the amount of accountable health plan costs 
        (as defined in section 34A(b)) for the calendar year.
For purposes of this section, a certificate shall be treated as being 
in effect with respect to a spouse if such a certificate will be in 
effect on the first status determination date following the date on 
which the employee furnishes the statement in question.
    ``(c) Accountable Health Plan Costs Advance Amount.--
            ``(1) In general.--For purposes of this title, the term 
        `accountable health plan costs advance amount' means, with 
        respect to any payroll period, the amount determined--
                    ``(A) on the basis of the employee's wages from the 
                employer for such period,
                    ``(B) on the basis of the employee's estimated 
                accountable health plan costs included in the 
                accountable health plan costs eligibility certificate, 
                and
                    ``(C) in accordance with tables provided by the 
                Secretary.
            ``(2) Advance amount tables.--The tables referred to in 
        paragraph (1)(D) shall be similar in form to the tables 
        prescribed under section 3402 and, to the maximum extent 
        feasible, shall be coordinated with such tables and the tables 
        prescribed under section 3507(c).
    ``(d) Other Rules.--For purposes of this section, rules similar to 
the rules of subsections (d) and (e) of section 3507 shall apply.
    ``(e) Regulations.--The Secretary shall prescribe such regulations 
as may be necessary to carry out the purposes of this section.''.
            (2) Conforming amendment.--The table of sections for 
        chapter 25 of such Code is amended by adding after the item 
        relating to section 3507 the following new item:

                              ``Sec. 3507A. Advance payment of 
                                        accountable health plan costs 
                                        credit.''.
    (c) Coordination With Deductions for Health Insurance Expenses.--
            (1) Self-employed individuals.--Section 162(l) of the 
        Internal Revenue Code of 1986, as amended by section 203, is 
        further amended by adding after paragraph (5) the following new 
        paragraph:
            ``(6) Coordination with health insurance premium credit.--
        Paragraph (1) shall not apply to any amount taken into account 
        in computing the amount of the credit allowed under section 
        34A.''.
            (2) Medical, dental, etc., expenses.--Subsection (e) of 
        section 213 of such Code is amended by inserting ``or section 
        34A'' after ``section 21''.
    (d) Termination of Health Insurance Credit.--Section 32 of the 
Internal Revenue Code of 1986 (relating to earned income credit) is 
amended by adding at the end thereof the following new subsection:
    ``(d) Termination of Health Insurance Credit.--In the case of 
taxable years beginning after December 31, 1991, the health insurance 
credit percentage shall be equal to 0 percent.''
    (e) Clerical Amendment.--The table of sections for subpart A of 
part IV of subchapter A of chapter 1 of the Internal Revenue Code of 
1986 is amended by inserting after the item relating to section 34 the 
following new item:

                              ``Sec. 34A. Accountable health plan 
                                        costs.''.
    (f) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 1993.

SEC. 202. NO DEDUCTION FOR EMPLOYER HEALTH PLAN EXPENSES IN EXCESS OF 
              ACCOUNTABLE HEALTH PLAN COSTS.

    (a) In General.--Section 162 of the Internal Revenue Code of 1986 
(relating to trade or business expenses) is amended by redesignating 
subsection (m) as subsection (n) and by inserting after subsection (l) 
the following new subsection:
    ``(m) General Rule.--
            ``(1) Limitation on deduction.--No deduction shall be 
        allowed under this section for the excess health plan expenses 
        of any employer.
            ``(2) Excess health plan expenses.--For purposes of this 
        subsection--
                    ``(A) In general.--The term `excess health plan 
                expenses' means health plan expenses paid or incurred 
                by the employer for any month with respect to any 
                covered individual to the extent such expenses do not 
                meet the requirements of subparagraphs (B), (C), and 
                (D).
                    ``(B) Limit to accountable health plans.--Health 
                plan expenses meet the requirements of this 
                subparagraph only if the expenses are attributable to--
                            ``(i) coverage of the covered individual 
                        under an accountable health plan, or
                            ``(ii) in the case of a small employer, 
                        payment to a health plan purchasing cooperative 
                        for coverage under an accountable health plan.
                    ``(C) Limit on per employee contribution.--
                            ``(i) In general.--Health plan expenses 
                        with respect to any employee meet the 
                        requirements of this subparagraph for any month 
                        only to the extent that the amount of such 
                        expenses does not exceed the reference premium 
                        rate amount for the month.
                            ``(ii) Treatment of health plans outside 
                        the united states.--For purposes of clause (i), 
                        in the case of an employee residing outside the 
                        United States, there shall be substituted for 
                        the reference premium rate such reasonable 
                        amounts as the Federal Health Board determines 
                        to be comparable to the limit imposed under 
                        clause (i).
                            ``(iii) Definition.--As used in clause (i), 
                        the term `reference premium rate amount' means, 
                        with respect to an individual in a HPPC area, 
                        the lowest premium established by an open 
                        accountable health plan and offered in the area 
                        for the premium class applicable to such 
                        individual (including, if appropriate, the HPPC 
                        overhead amount established under section 
                        105(b)(3) of the Access to Affordable Health 
                        Care Act).
                    ``(D) Requirement of level contribution.--Health 
                plan expenses meet the requirements of this 
                subparagraph for any month only if the amount of the 
                employer contribution (for a premium class) does not 
                vary based on the accountable health plan selected.
            ``(3) Exception for medicare-eligible retirees.--Paragraphs 
        (1) and (2) shall not apply to health plan expenses with 
        respect to an individual who is eligible for benefits under 
        part A of title XVIII of the Social Security Act if such 
        expenses are for a health plan that is not a primary payor 
        under section 1862(b) of such Act.
            ``(4) Special rules.--
                    ``(A) Treatment of self-insured plans.--In the case 
                of a self-insured health plan, the amount of 
                contributions per employee shall be determined for 
                purposes of paragraph (2)(C) in accordance with rules 
                established by the Federal Health Board which are based 
                on the principles of section 4980B(f)(4)(B) (as in 
                effect before the date of the enactment of this 
                subsection).
                    ``(B) Contributions to cafeteria plans.--
                Contributions under a cafeteria plan on behalf of an 
                employee that may be used for a group health plan 
                coverage shall be treated for purposes of this section 
                as health plan expenses paid or incurred by the 
                employer.
            ``(5) Employees held harmless.--Nothing in this section 
        shall be construed as affecting the exclusion from gross income 
        of an employee under section 106.
            ``(6) Other definitions.--For purposes of this subsection--
                    ``(A) Covered individual.--The term `covered 
                individual' means any beneficiary of a group health 
                plan.
                    ``(B) Group health plan.--The term `group health 
                plan' has the meaning given such term by section 
                5000(b)(1).
                    ``(C) Health plan expenses.--
                            ``(i)  In general.--The term `health plan 
                        expenses' means employer expenses for any group 
                        health plan, including expenses for premiums as 
                        well as payment of deductibles and coinsurance 
                        that would otherwise be applicable.
                            ``(ii) Exclusion of certain direct 
                        expenses.--Such term does not include expenses 
                        for direct services which are determined by the 
                        Federal Health Board to be primarily aimed at 
                        workplace health care and health promotion or 
                        related population-based preventive health 
                        activities.
                    ``(D) Accountable health plan.--The term 
                `accountable health plan' has the meaning given such 
                term by section 2(b)(1) of the Access to Affordable 
                Health Care Act.
                    ``(E) Small employer.--The term `small employer' 
                means, for a taxable year, an employer that is a small 
                employer (within the meaning of section 2(c)(2) of the 
                Access to Affordable Health Care Act) for the most 
                recent calendar year ending before the end of the 
                taxable year.''.
    (b) Effective Date.--
            (1) In general.--Except as otherwise provided in this 
        subsection, the amendments made by this section shall apply to 
        expenses incurred for the provision of health services for 
        periods after December 31, 1993.
            (2) Transition for collective bargaining agreements.--The 
        amendments made by this section shall not apply to employers 
        with respect to their employees, insofar as such employees are 
        covered under a collective bargaining agreement ratified before 
        the date of the enactment of this Act, earlier than the date of 
        termination of such agreement (determined without regard to any 
        extension thereof agreed to after the date of the enactment of 
        this Act), or January 1, 1996, whichever is earlier.

SEC. 203. INCREASE IN DEDUCTION FOR HEALTH PLAN PREMIUM EXPENSES OF 
              SELF-EMPLOYED INDIVIDUALS.

    (a) Increasing Deduction to 100 Percent.--Paragraph (1) of section 
162(l) of the Internal Revenue Code of 1986 (relating to special rules 
for health insurance costs of self-employed individuals) is amended by 
striking ``25 percent of''.
    (b) Making Provision Permanent.--Section 162(l) of such Code is 
amended by striking paragraph (6).
    (c) Limitation to Accountable Health Plans.--Paragraph (2) of 
section 162(l) of such Code is amended by adding at the end thereof the 
following new subparagraph:
                    ``(C) Deduction limited to accountable health plan 
                costs.--No deduction shall be allowed under this 
                section for any amount which would be excess health 
                plan expenses (as defined in subsection (m)(2), 
                determined without regard to subparagraph (D) thereof) 
                if the taxpayer were an employer.''.
    (d) Effective Date.--
            (1) In general.--Except as otherwise provided in this 
        subsection, the amendments made by this section shall apply to 
        taxable years beginning after December 31, 1993.
            (2) Exception.--The amendment made by subsection (c) shall 
        apply to expenses for periods of coverage beginning on or after 
        January 1, 1994.

SEC. 204. DEDUCTION FOR HEALTH PLAN PREMIUM EXPENSES OF INDIVIDUALS.

    (a) In General.--Section 213 of the Internal Revenue Code of 1986 
(relating to medical, dental, etc., expenses) amended by adding at the 
end the following new subsection:
    ``(g) Special Rules for Health Plan Premium Expenses.--
            ``(1) In general.--The deduction under subsection (a) shall 
        be determined without regard to the limitation based on 
        adjusted gross income with respect to amounts paid for premiums 
        for coverage under an accountable health plan.
            ``(2) Limit.--The amount allowed as a deduction under 
        paragraph (1) with respect to the cost of providing coverage 
        for any individual shall not exceed the applicable limit 
        specified in section 162(m)(2)(C) reduced by the aggregate 
        amount paid by all other entities (including any employer or 
        any level of government) for coverage of such individual under 
        any health plan.
            ``(3) Deduction allowed against gross income.--The 
        deduction under this subsection shall be taken into account in 
        determining adjusted gross income under section 62(a).
            ``(4) Treatment of medicare program.--Coverage under part A 
        or part B of title XVIII of the Social Security Act shall not 
        be considered for purposes of this subsection to be coverage 
        under an accountable health plan.''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to taxable years beginning after December 31, 1993.

SEC. 205. EXCLUSION FROM GROSS INCOME FOR EMPLOYER CONTRIBUTIONS TO 
              ACCOUNTABLE HEALTH PLANS.

    (a) In General.--Section 106 of the Internal Revenue Code of 1986 
(relating to contributions by employers to accident and health plans) 
is amended to read as follows:
    ``Gross income of an employee does not include employer-provided 
basic coverage under an accountable health plan (as defined in section 
162(m)(2)(B)).''.
    (b) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 1993.

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

SEC. 301. AUTHORIZATION FOR EXPANSION OF HEALTH SERVICES RESEARCH.

    Section 926(a) of the Public Health Service Act (42 U.S.C. 299c-5) 
is amended to read as follows:
    (a) General Authorization of Appropriations.--For the purpose of 
carrying out this title, there are authorized to be appropriated 
$120,000,000 for fiscal year 1993, $155,000,000 for fiscal year 1994, 
and $185,000,000 for fiscal year 1995.''.

SEC. 302. TREATMENT PRACTICE GUIDELINES AS A LEGAL STANDARD.

  Section 912 of the Public Health Service Act (42 U.S.C. 299b-1) is 
amended by adding at the end thereof the following new subsection:
    ``(g) Treatment Practice Guidelines as a Legal Standard.--
            ``(1) In General.--Except as provided in paragraph (2) and 
        notwithstanding any other provision of law, guidelines 
        established under this section may not be introduced in 
        evidence or used in any action brought in a Federal or State 
        court arising from the provision of a health care service to an 
        individual.
            ``(2) Provision of health care under guidelines.--
        Notwithstanding any other provision of law, in any action 
        brought in a Federal or State court arising from the provision 
        of a health care service to an individual, if the service was 
        provided to the individual in accordance with guidelines 
        established under this section, the guidelines--
                    ``(A) may be introduced by a provider who is a 
                party to the action; and
                    ``(B) if introduced, shall establish a rebuttable 
                presumption that the service prescribed by the 
                guidelines is the appropriate standard of medical 
                care.''.

           TITLE IV--COOPERATIVE AGREEMENTS BETWEEN HOSPITALS

SEC. 401. PURPOSE.

    It is the purpose of this title to encourage cooperation between 
hospitals in order to contain costs and achieve a more efficient health 
care delivery system through the elimination of unnecessary duplication 
and proliferation of expensive medical or high technology services or 
equipment.

SEC. 402. HOSPITAL TECHNOLOGY AND SERVICES SHARING PROGRAM.

    Part D of title VI of the Public Health Service Act (42 U.S.C. 291k 
et seq.) is amended by adding at the end thereof the following new 
section:

``SEC. 647. HOSPITAL TECHNOLOGY AND SERVICES SHARING DEMONSTRATION 
              PROGRAM.

    ``(a) Waiver.--The Attorney General, acting through the Secretary, 
may grant a waiver of the anti-trust laws, to permit two or more 
hospitals to enter into a voluntary cooperative agreement under which 
such hospitals provide for the sharing of medical technology and 
services.
    ``(b) Eligible Applicants.--
            ``(1) In general.--To be eligible to receive a waiver under 
        subsection (a), an entity shall be a hospital and shall prepare 
        and submit to the Secretary an application at such time, in 
        such manner, and containing such information as the Secretary 
        may require, including--
                    ``(A) a statement that such hospital desires to 
                negotiate and enter into a voluntary cooperative 
                agreement with at least one other hospital operating in 
                the State or region of the applicant hospital for the 
                sharing of medical technology or services;
                    ``(B) a description of the nature and scope of the 
                activities contemplated under the cooperative agreement 
                and any consideration that may pass under such 
                agreement to any other hospital that may elect to 
                become a party to the agreement; and
                    ``(C) any other information determined appropriate 
                by the Secretary.
            ``(2) Development of evaluation guidelines.--Not later than 
        90 days after the date of enactment of this section, the 
        Administrator of the Agency for Health Care Policy and Research 
        shall develop evaluation guidelines with respect to 
        applications submitted under paragraph (1).
            ``(3) Evaluations of applications.--The Secretary, in 
        consultation with the Administrator of the Agency for Health 
        Care Policy and Research, shall evaluate applications submitted 
        under paragraph (1). In determining which applications to 
        approve for purposes of granting waivers under subsection (a), 
        the Secretary shall consider whether the cooperative agreement 
        described in each such application is likely to result in--
                    ``(A) a reduction of costs and an increase in 
                access to care;
                    ``(B) the enhancement of the quality of hospital or 
                hospital-related care;
                    ``(C) the preservation of hospital facilities in 
                geographical proximity to the communities traditionally 
                served by such facilities;
                    ``(D) improvements in the cost-effectiveness of 
                high-technology services by the hospitals involved;
                    ``(E) improvements in the efficient utilization of 
                hospital resources and capital equipment; or
                    ``(F) the avoidance of duplication of hospital 
                resources.
    ``(c) Medical Technology and Services.--
            ``(1) In general.--Cooperative agreements facilitated under 
        this section shall provide for the sharing of medical or high 
        technology equipment or services among the hospitals which are 
        parties to such agreements.
            ``(2) Medical technology.--For purposes of this section, 
        the term `medical technology' shall include the drugs, devices, 
        and medical and surgical procedures utilized in medical care, 
        and the organizational and support systems within which such 
        care is provided.
            ``(3) Eligible services.--With respect to services that may 
        be shared under an agreement entered into under this section, 
        such services shall--
                    ``(A) either have high capital costs or extremely 
                high annual operating costs; and
                    ``(B) be services with respect to which there is a 
                reasonable expectation that shared ownership will avoid 
                a significant degree of the potential excess capacity 
                of such services in the community or region to be 
                served under such agreement.
        Such services may include mobile clinic services.
    ``(d) Report.--Not later than 5 years after the date of enactment 
of this section, the Secretary shall prepare and submit to the 
appropriate committees of Congress, a report concerning the potential 
for cooperative agreements of the type entered into under this section 
to--
            ``(1) contain health care costs;
            ``(2) increase the access of individuals to medical 
        services; and
            ``(3) improve the quality of health care.
Such report shall also contain the recommendations of the Secretary 
with respect to future programs to facilitate cooperative agreements.
    ``(e) Definition.--For purposes of this section, the term 
`antitrust laws' means--
            ``(1) the Act entitled `An Act to protect trade and 
        commerce against unlawful restraints and monopolies', approved 
        July 2, 1890, commonly known as the `Sherman Act' (26 Stat. 
        209; chapter 647; 15 U.S.C. 1 et seq.);
            ``(2) the Federal Trade Commission Act, approved September 
        26, 1914 (38 Stat. 717; chapter 311; 15 U.S.C. 41 et seq.);
            ``(3) the Act entitled `An Act to supplement existing laws 
        against unlawful restraints and monopolies, and for other 
        purposes', approved October 15, 1914, commonly known as the 
        `Clayton Act' (38 Stat. 730; chapter 323; 15 U.S.C. 12 et seq.; 
        18 U.S.C. 402, 660, 3285, 3691; 29 U.S.C. 52, 53); and
            ``(4) any State antitrust laws that would prohibit the 
        activities described in subsection (a).''.

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.

    (a) Nonrefundable Credit for Certain Primary Health Services 
Providers.--
            (1) In general.--Subpart A of part IV of subchapter A of 
        chapter 1 of the Internal Revenue Code of 1986 (relating to 
        nonrefundable personal credits) is amended by inserting after 
        section 25 the following new section:

``SEC. 25A. PRIMARY HEALTH SERVICES PROVIDERS.

    ``(a) Allowance of Credit.--In the case of a qualified primary 
health services provider, there is allowed as a credit against the tax 
imposed by this chapter for any taxable year in a mandatory service 
period an amount equal to the product of--
            ``(1) the lesser of--
                    ``(A) the number of months of such period occurring 
                in such taxable year, or
                    ``(B) 36 months, reduced by the number of months 
                taken into account under this paragraph with respect to 
                such provider for all preceding taxable years (whether 
                or not in the same mandatory service period), 
                multiplied by
            ``(2) $1,000 ($500 in the case of a qualified health 
        services provider who is a physician assistant or a nurse 
        practitioner).
    ``(b) Qualified Primary Health Services Provider.--For purposes of 
this section, the term `qualified primary health services provider' 
means any physician, physician assistant, or nurse practitioner who for 
any month during a mandatory service period is certified by the Bureau 
to be a primary health services provider who--
            ``(1) is providing primary health services--
                    ``(A) full time, and
                    ``(B) to individuals at least 80 percent of whom 
                reside in a rural health professional shortage area,
            ``(2) is not receiving during such year a scholarship under 
        the National Health Service Corps Scholarship Program or a loan 
        repayment under the National Health Service Corps Loan 
        Repayment Program,
            ``(3) is not fulfilling service obligations under such 
        Programs, and
            ``(4) has not defaulted on such obligations.
    ``(c) Mandatory Service Period.--For purposes of this section, the 
term `mandatory service period' means the period of 60 consecutive 
calendar months beginning with the first month the taxpayer is a 
qualified primary health services provider.
    ``(d) Definitions and Special Rules.--For purposes of this 
section--
            ``(1) Bureau.--The term `Bureau' means the Bureau of Health 
        Care Delivery and Assistance, Health Resources and Services 
        Administration of the United States Public Health Service.
            ``(2) Physician.--The term `physician' has the meaning 
        given to such term by section 1861(r) of the Social Security 
        Act.
            ``(3) Physician assistant; nurse practitioner.--The terms 
        `physician assistant' and `nurse practitioner' have the 
        meanings given to such terms by section 1861(aa)(3) of the 
        Social Security Act.
            ``(4) Primary health services provider.--The term `primary 
        health services provider' means a provider of primary health 
        services (as defined in section 330(b)(1) of the Public Health 
        Service Act).
            ``(5) Rural health professional shortage area.--The term 
        `rural health professional shortage area' means--
                    ``(A) a class 1 or class 2 health professional 
                shortage area (as defined in section 332(a)(1)(A) of 
                the Public Health Service Act) in a rural area (as 
                determined under section 1886(d)(2)(D) of the Social 
                Security Act), or
                    ``(B) an area which is determined by the Secretary 
                of Health and Human Services as equivalent to an area 
                described in subparagraph (A) and which is designated 
                by the Bureau of the Census as not urbanized.
    ``(e) Recapture of Credit.--
            ``(1) In general.--If, during any taxable year, there is a 
        recapture event, then the tax of the taxpayer under this 
        chapter for such taxable year shall be increased by an amount 
        equal to the product of--
                    ``(A) the applicable percentage, and
                    ``(B) the aggregate unrecaptured credits allowed to 
                such taxpayer under this section for all prior taxable 
                years.
            ``(2) Applicable recapture percentage.--
                    ``(A) In general.--For purposes of this subsection, 
                the applicable recapture percentage shall be determined 
                from the following table:

                    ``If the recapture
                                                  The applicable recap-
                      event 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.    
                    ``(B) Timing.--For purposes of subparagraph (A), 
                month 1 shall begin on the first day of the mandatory 
                service period.
            ``(3) Recapture event defined.--
                    ``(A) In general.--For purposes of this subsection, 
                the term `recapture event' means the failure of the 
                taxpayer to be a qualified primary health services 
                provider for any month during any mandatory service 
                period.
                    ``(B) Cessation of designation.--The cessation of 
                the designation of any area as a rural health 
                professional shortage area after the beginning of the 
                mandatory service period for any taxpayer shall not 
                constitute a recapture event.
                    ``(C) Secretarial waiver.--The Secretary may waive 
                any recapture event caused by extraordinary 
                circumstances.
            ``(4) No credits against tax.--Any increase in tax under 
        this subsection shall not be treated as a tax imposed by this 
        chapter for purposes of determining the amount of any credit 
        under subpart A, B, or D of this part.''.
            (2) Clerical amendment.--The table of sections for subpart 
        A of part IV of subchapter A of chapter 1 of such Code is 
        amended by inserting after the item relating to section 25 the 
        following new item:

                              ``Sec. 25A. Primary health services 
                                        providers.''.
            (3) Effective date.--The amendments made by this subsection 
        shall apply to taxable years beginning after December 31, 1993.
    (b) National Health Service Corps Loan Repayments Excluded from 
Gross Income.--
            (1) In general.--Part III of subchapter B of chapter 1 of 
        the Internal Revenue Code of 1986 (relating to items 
        specifically excluded from gross income) is amended by 
        redesignating section 136 as section 137 and by inserting after 
        section 135 the following new section:

``SEC. 136. NATIONAL HEALTH SERVICE CORPS LOAN REPAYMENTS.

    ``(a) General Rule.--Gross income shall not include any qualified 
loan repayment.
    ``(b) Qualified Loan Repayment.--For purposes of this section, the 
term `qualified loan repayment' means any payment made on behalf of the 
taxpayer by the National Health Service Corps Loan Repayment Program 
under section 338B(g) of the Public Health Service Act.''.
            (2) Conforming amendment.--Paragraph (3) of section 338B(g) 
        of the Public Health Service Act is amended by striking 
        ``Federal, State, or local'' and inserting ``State or local''.
            (3) Clerical amendment.--The table of sections for part III 
        of subchapter B of chapter 1 of the Internal Revenue Code of 
        1986 is amended by striking the item relating to section 136 
        and inserting the following:

                              ``Sec. 136. National Health Service Corps 
                                        loan repayments.
                              ``Sec. 137. Cross references to other 
                                        Acts.''.
            (4) Effective date.--The amendments made by this subsection 
        shall apply to payments made under section 338B(g) of the 
        Public Health Service Act after the date of the enactment of 
        this Act.
    (c) Expensing of Medical Equipment.--
            (1) In general.--Section 179 of the Internal Revenue Code 
        of 1986 (relating to election to expense certain depreciable 
        business assets) is amended--
                    (A) by striking paragraph (1) of subsection (b) and 
                inserting the following:
            ``(1) Dollar limitation.--
                    ``(A) General rule.--The aggregate cost which may 
                be taken into account under subsection (a) for any 
                taxable year shall not exceed $10,000.
                    ``(B) Rural health care property.--In the case of 
                rural health care property, the aggregate cost which 
                may be taken into account under subsection (a) for any 
                taxable year shall not exceed $25,000, reduced by the 
                amount otherwise taken into account under subsection 
                (a) for such year.''; and
                    (B) by adding at the end of subsection (d) the 
                following new paragraph:
            ``(11) Rural health care property.--For purposes of this 
        section, the term `rural health care property' means section 
        179 property used by a physician (as defined in section 1861(r) 
        of the Social Security Act) in the active conduct of such 
        physician's full-time trade or business of providing primary 
        health services (as defined in section 330(b)(1) of the Public 
        Health Service Act) in a rural health professional shortage 
        area (as defined in section 25A(d)(5)).''.
            (2) Effective date.--The amendments made by this subsection 
        shall apply to property placed in service after December 31, 
        1993, in taxable years ending after such date.
    (d) Deduction for Student Loan Payments by Medical Professionals 
Practicing in Rural Areas.--
            (1) Interest on student loans not treated as personal 
        interest.--Section 163(h)(2) of the Internal Revenue Code of 
        1986 (defining personal interest) is amended by striking 
        ``and'' at the end of subparagraph (D), by striking the period 
        at the end of subparagraph (E) and inserting ``, and'', and by 
        adding at the end thereof the following new subparagraph:
            ``(F) any qualified medical education interest (within the 
        meaning of subsection (k)).''.
            (2) Qualified medical education interest defined.--Section 
        163 of such Code (relating to interest expenses) is amended by 
        redesignating subsection (k) as subsection (l) and by inserting 
        after subsection (j) the following new subsection:
    ``(k) Qualified Medical Education Interest of Medical Professionals 
Practicing in Rural Areas.--
            ``(1) In general.--For purposes of subsection (h)(2)(F), 
        the term `qualified medical education interest' means an amount 
        which bears the same ratio to the interest paid on qualified 
        educational loans during the taxable year by an individual 
        performing services under a qualified rural medical practice 
        agreement as--
                    ``(A) the number of months during the taxable year 
                during which such services were performed, bears to
                    ``(B) the number of months in the taxable year.
            ``(2) Dollar limitation.--The aggregate amount which may be 
        treated as qualified medical education interest for any taxable 
        year with respect to any individual shall not exceed $5,000.
            ``(3) Qualified rural medical practice agreement.--For 
        purposes of this subsection--
                    ``(A) In general.--The term `qualified rural 
                medical practice agreement' means a written agreement 
                between an individual and an applicable rural community 
                under which the individual agrees--
                            ``(i) in the case of a medical doctor, upon 
                        completion of the individual's residency (or 
                        internship if no residency is required), or
                            ``(ii) in the case of a registered nurse, 
                        nurse practitioner, or physician's assistant, 
                        upon completion of the education to which the 
                        qualified education loan relates,
                to perform full-time services as such a medical 
                professional in the applicable rural community for a 
                period of 24 consecutive months. An individual and an 
                applicable rural community may elect to have the 
                agreement apply for 36 consecutive months rather than 
                24 months.
                    ``(B) Special rule for computing periods.--An 
                individual shall be treated as meeting the 24 or 36 
                consecutive month requirement under subparagraph (A) 
                if, during each 12-consecutive month period within 
                either such period, the individual performs full-time 
                services as a medical doctor, registered nurse, nurse 
                practitioner, or physician's assistant, whichever 
                applies, in the applicable rural community during 9 of 
                the months in such 12-consecutive month period. For 
                purposes of this subsection, an individual meeting the 
                requirements of the preceding sentence shall be treated 
                as performing services during the entire 12-month 
                period.
                    ``(C) Applicable rural community.--The term 
                `applicable rural community' means--
                            ``(i) any political subdivision of a State 
                        which--
                                    ``(I) has a population of 5,000 or 
                                less, and
                                    ``(II) has a per capita income of 
                                $15,000 or less, or
                            ``(ii) an Indian reservation which has a 
                        per capita income of $15,000 or less.
            ``(4) Qualified educational loan.--The term `qualified 
        educational loan' means any indebtedness to pay qualified 
        tuition and related expenses (within the meaning of section 
        117(b)) and reasonable living expenses--
                    ``(A) which are paid or incurred--
                            ``(i) as a candidate for a degree as a 
                        medical doctor at an educational institution 
                        described in section 170(b)(1)(A)(ii), or
                            ``(ii) in connection with courses of 
                        instruction at such an institution necessary 
                        for certification as a registered nurse, nurse 
                        practitioner, or physician's assistant, and
                    ``(B) which are paid or incurred within a 
                reasonable time before or after such indebtedness is 
                incurred.
            ``(5) Recapture.--If an individual fails to carry out a 
        qualified rural medical practice agreement during any taxable 
        year, then--
                    ``(A) no deduction with respect to such agreement 
                shall be allowable by reason of subsection (h)(2)(F) 
                for such taxable year and any subsequent taxable year, 
                and
                    ``(B) there shall be included in gross income for 
                such taxable year the aggregate amount of the 
                deductions allowable under this section (by reason of 
                subsection (h)(2)(F)) for all preceding taxable years.
            ``(6) Definitions.--For purposes of this subsection, the 
        terms `registered nurse', `nurse practitioner', and 
        `physician's assistant' have the meaning given such terms by 
        section 1861 of the Social Security Act.''.
            (3) Deduction allowed in computing adjusted gross income.--
        Section 62(a) of such Code is amended by inserting after 
        paragraph (13) the following new paragraph:
            ``(14) Interest on student loans of rural health 
        professionals.--The deduction allowable by reason of section 
        163(h)(2)(F) (relating to student loan payments of medical 
        professionals practicing in rural areas).''.
            (4) Effective date.--The amendments made by this subsection 
        shall apply to taxable years beginning after December 31, 1993.

            Subtitle B--Public Health Service Act Provisions

SEC. 511. NATIONAL HEALTH SERVICE CORPS.

    Section 338H(b) of the Public Health Service Act (42 U.S.C. 
254q(b)) is amended--
            (1) in paragraph (1), by striking ``and such sums'' and all 
        that follows through the end thereof and inserting 
        ``$118,900,000 for each of the fiscal years 1993 through 
        1996.''; and
            (2) in paragraph (2)--
                    (A) by redesignating subparagraphs (A) and (B) as 
                subparagraphs (B) and (C), respectively; and
                    (B) by inserting before subparagraph (B) (as so 
                redesignated) the following new subparagraph:
                    ``(A) In general.--Of the amount appropriated under 
                paragraph (1) for each fiscal year, the Secretary shall 
                utilize 25 percent of such amount to carry out section 
                338A and 75 percent of such amount to carry out section 
                338B.''.

SEC. 512. ESTABLISHMENT OF GRANT PROGRAM.

    Subpart I of part D of title III of the Public Health Service Act 
(42 U.S.C. 254b et seq.) is amended by adding at the end thereof the 
following new section:

``SEC. 330A. COMMUNITY BASED PRIMARY HEALTH CARE GRANT PROGRAM.

    ``(a) Establishment.--The Secretary shall establish and administer 
a program to provide allotments to States to enable such States to 
provide grants for the creation or enhancement of community based 
primary health care entities that provide services to pregnant women 
and children up to age three.
    ``(b) Allotments to States.--
            ``(1) In general.--From the amounts available for allotment 
        under subsection (h) for a fiscal year, the Secretary shall 
        allot to each State an amount equal to the product of the grant 
        share of the State (as determined under paragraph (2)) 
        multiplied by the amount available for allotment for such 
        fiscal year.
            ``(2) Grant share.--
                    ``(A) In general.--For purposes of paragraph (1), 
                the grant share of a State shall be the product of the 
                need-adjusted population of the State (as determined 
                under subparagraph (B)) multiplied by the Federal 
                matching percentage of the State (as determined under 
                subparagraph (C)), expressed as a percentage of the sum 
                of the products of such factors for all States.
                    ``(B) Need-adjusted population.--
                            ``(i) In general.--For purposes of 
                        subparagraph (A), the need-adjusted population 
                        of a State shall be the product of the total 
                        population of the State (as estimated by the 
                        Secretary of Commerce) multiplied by the need 
                        index of the State (as determined under clause 
                        (ii)).
                            ``(ii) Need index.--For purposes of clause 
                        (i), the need index of a State shall be the 
                        ratio of--
                                    ``(I) the weighted sum of the 
                                geographic percentage of the State (as 
                                determined under clause (iii)), the 
                                poverty percentage of the State (as 
                                determined under clause (iv)), and the 
                                multiple grant percentage of the State 
                                (as determined under clause (v)); to
                                    ``(II) the general population 
                                percentage of the State (as determined 
                                under clause (vi)).
                            ``(iii) Geographic percentage.--
                                    ``(I) In general.--For purposes of 
                                clause (ii)(I), the geographic 
                                percentage of the State shall be the 
                                estimated population of the State that 
                                is residing in nonurbanized areas (as 
                                determined under subclause (II)) 
                                expressed as a percentage of the total 
                                nonurbanized population of all States.
                                    ``(II) Nonurbanized population.--
                                For purposes of subclause (I), the 
                                estimated population of the State that 
                                is residing in non-urbanized areas 
                                shall be one minus the urbanized 
                                population of the State (as determined 
                                using the most recent decennial 
                                census), expressed as a percentage of 
                                the total population of the State (as 
                                determined using the most recent 
                                decennial census), multiplied by the 
                                current estimated population of the 
                                State.
                            ``(iv) Poverty percentage.--For purposes of 
                        clause (ii)(I), the poverty percentage of the 
                        State shall be the estimated number of people 
                        residing in the State with incomes below 200 
                        percent of the income official poverty line (as 
                        determined by the Office of Management and 
                        Budget) expressed as a percentage of the total 
                        number of such people residing in all States
                            ``(v) Multiple grant percentage.--For 
                        purposes of clause (ii)(I), the multiple grant 
                        percentage of the State shall be the amount of 
                        Federal funding received by the State under 
                        grants awarded under sections 329, 330 and 340, 
                        expressed as a percentage of the total amounts 
                        received under such grants by all States. With 
                        respect to a State, such amount shall not 
                        exceed twice the general population percentage 
                        of the State under clause (vi) or be less than 
                        one half of the States general population 
                        percentage.
                            ``(vi) General population percentage.--For 
                        purposes of clause (ii)(II), the general 
                        population percentage of the State shall be the 
                        total population of the State (as determined by 
                        the Secretary of Commerce) expressed as a 
                        percentage of the total population of all 
                        States.
                    ``(C) Federal matching percentage.--
                            ``(i) In general.--For purposes of 
                        subparagraph (A), the Federal matching 
                        percentage of the State shall be equal to one 
                        less the State matching percentage (as 
                        determined under clause (ii)).
                            ``(ii) State matching percentage.--For 
                        purposes of clause (ii), the State matching 
                        percentage of the State shall be 0.25 
                        multiplied by the ratio of the total taxable 
                        resource percentage (as determined under clause 
                        (iii)) to the need-adjusted population of the 
                        State (as determined under subparagraph (B)).
                            ``(iii) Total taxable resource 
                        percentage.--For purposes of clause (ii), the 
                        total taxable resources percentage of the State 
                        shall be the total taxable resources of a State 
                        (as determined by the Secretary of the 
                        Treasury) expressed as a percentage of the sum 
                        of the total taxable resources of all States.
            ``(3) Annual estimates.--
                    ``(A) In general.--If the Secretary of Commerce 
                does not produce the annual estimates required under 
                paragraph (2)(B)(iv), such estimates shall be 
                determined by multiplying the percentage of the 
                population of the State that is below 200 percent of 
                the income official poverty line as determined using 
                the most recent decennial census by the most recent 
                estimate of the total population of the State. Except 
                as provided in subparagraph (B), the calculations 
                required under this subparagraph shall be made based on 
                the most recent 3 year average of the total taxable 
                resources of individuals within the State.
                    ``(B) District of columbia.--Notwithstanding 
                subparagraph (A), the calculations required under such 
                subparagraph with respect to the District of Columbia 
                shall be based on the most recent 3 year average of the 
                personal income of individuals residing within the 
                District as a percentage of the personal income for all 
                individuals residing within the District, as determined 
                by the Secretary of Commerce.
            ``(4) Matching requirement.--A State that receives an 
        allotment under this section shall make available State 
        resources (either directly or indirectly) to carry out this 
        section in an amount that shall equal the State matching 
        percentage for the State (as determined under paragraph 
        (2)(C)(II)) divided by the Federal matching percentage (as 
        determined under paragraph (2)(C)).
    ``(c) Application.--
            ``(1) In general.--To be eligible to receive an allotment 
        under this section, a State shall prepare and submit an 
        application to the Secretary at such time, in such manner, and 
        containing such information as the Secretary may by regulation 
        require.
            ``(2) Assurances.--A State application submitted under 
        paragraph (1) shall contain an assurance that--
                    ``(A) the State will use amounts received under 
                it's allotment consistent with the requirements of this 
                section; and
                    ``(B) the State will provide, from non-Federal 
                sources, the amounts required under subsection (b)(4).
    ``(d) Use of Funds.--
            ``(1) In general.--The State shall use amounts received 
        under this section to award grants to eligible public and 
        nonprofit private entities, or consortia of such entities, 
        within the State to enable such entities or consortia to 
        provide services of the type described in paragraph (2) of 
        section 329(h) to pregnant women and children up to age three.
            ``(2) Eligibility.--To be eligible to receive a grant under 
        paragraph (1), an entity or consortium shall--
                    ``(A) prepare and submit to the administering 
                entity of the State, an application at such time, in 
                such manner and containing such information as such 
                administering entity may require, including a plan for 
                the provision of services;
                    ``(B) provide assurances that services will be 
                provided under the grant at fee rates established or 
                determined in accordance with section 330(e)(3)(F); and
                    ``(C) provide assurances that in the case of 
                services provided to individuals with health insurance, 
                such insurance shall be used as the primary source of 
                payment for such services.
            ``(3) Target populations.--Entities or consortia receiving 
        grants under paragraph (1) shall, in providing the services 
        described in paragraph (3), substantially target populations of 
        pregnant women and children within the State who--
                    ``(A) lack the health care coverage, or ability to 
                pay, for primary or supplemental health care services; 
                or
                    ``(B) reside in medically underserved or health 
                professional shortage areas, areas certified as 
                underserved under the rural health clinic program, or 
                other areas determined appropriate by the State, within 
                the State.
            ``(4) Priority.--In awarding grants under paragraph (1), 
        the State shall--
                    ``(A) give priority to entities or consortia that 
                can demonstrate through the plan submitted under 
                paragraph (2) that--
                            ``(i) the services provided under the grant 
                        will expand the availability of primary care 
                        services to the maximum number of pregnant 
                        women and children who have no access to such 
                        care on the date of the grant award; and
                            ``(ii) the delivery of services under the 
                        grant will be cost-effective; and
                    ``(B) ensure that an equitable distribution of 
                funds is achieved among urban and rural entities or 
                consortia.
    ``(e) Reports and Audits.--Each State shall prepare and submit to 
the Secretary annual reports concerning the State's activities under 
this section which shall be in such form and contain such information 
as the Secretary determines appropriate. Each such State shall 
establish fiscal control and fund accounting procedures as may be 
necessary to assure that amounts received under this section are being 
disbursed properly and are accounted for, and include the results of 
audits conducted under such procedures in the reports submitted under 
this subsection.
    ``(f) Payments.--
            ``(1) Entitlement.--Each State for which an application has 
        been approved by the Secretary under this section shall be 
        entitled to payments under this section for each fiscal year in 
        an amount not to exceed the State's allotment under subsection 
        (b) to be expended by the State in accordance with the terms of 
        the application for the fiscal year for which the allotment is 
        to be made.
            ``(2) Method of payments.--The Secretary may make payments 
        to a State in installments, and in advance or, by way of 
        reimbursement, with necessary adjustments on account of 
        overpayments or underpayments, as the Secretary may determine.
            ``(3) State spending of payments.--Payments to a State from 
        the allotment under subsection (b) for any fiscal year must be 
        expended by the State in that fiscal year or in the succeeding 
        fiscal year.
    ``(g) Definition.--As used in this section, the term `administering 
entity of the State' means the agency or official designated by the 
chief executive officer of the State to administer the amounts provided 
to the State under this section.
    ``(h) Funding.--Notwithstanding any other provision of law, the 
Secretary shall use 50 percent of the amounts that the Secretary is 
required to utilize under section 330B(h) in each fiscal year to carry 
out this section.''.

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.

    (a) In General.--Subpart I of part D of title III of the Public 
Health Service Act (42 U.S.C. 254b et seq.) (as amended by section 512) 
is further amended by adding at the end thereof the following new 
section:

``SEC. 330B. 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.

    ``(a) Establishment of Health Services Access Program.--From 
amounts appropriated under this section, the Secretary shall, acting 
through the Bureau of Health Care Delivery Assistance, award grants 
under this section to federally qualified health centers (hereinafter 
referred to in this section as `FQHC's') and other entities and 
organizations submitting applications under this section (as described 
in subsection (c)) for the purpose of providing access to services for 
medically underserved populations (as defined in section 330(b)(3)) or 
in high impact areas (as defined in section 329(a)(5)) not currently 
being served by a FQHC.
    ``(b) Eligibility for Grants.--
            ``(1) In general.--The Secretary shall award grants under 
        this section to entities or organizations described in this 
        paragraph and paragraph (2) which have submitted a proposal to 
        the Secretary to expand such entities or organizations 
        operations (including expansions to new sites (as determined 
        necessary by the Secretary)) to serve medically underserved 
        populations or high impact areas not currently served by a FQHC 
        and which--
                    ``(A) have as of January 1, 1992, been certified by 
                the Secretary as a FQHC under section 1905(l)(2)(B) of 
                the Social Security Act; or
                    ``(B) have submitted applications to the Secretary 
                to qualify as FQHC's under such section 1905(l)(2)(B); 
                or
                    ``(C) have submitted a plan to the Secretary which 
                provides that the entity will meet the requirements to 
                qualify as a FQHC when operational.
            ``(2) Non fqhc entities.--
                    ``(A) Eligibility.--The Secretary shall also make 
                grants under this section to public or private 
                nonprofit agencies, health care entities or 
                organizations which meet the requirements necessary to 
                qualify as a FQHC except, the requirement that such 
                entity have a consumer majority governing board and 
                which have submitted a proposal to the Secretary to 
                provide those services provided by a FQHC as defined in 
                section 1905(l)(2)(B) of the Social Security Act and 
                which are designed to promote access to primary care 
                services or to reduce reliance on hospital emergency 
                rooms or other high cost providers of primary health 
                care services, provided such proposal is developed by 
                the entity or organizations (or such entities or 
                organizations acting in a consortium in a community) 
                with the review and approval of the Governor of the 
                State in which such entity or organization is located.
                    ``(B) Limitation.--The Secretary shall provide in 
                making grants to entities or organizations described in 
                this paragraph that no more than 10 percent of the 
                funds provided for grants under this section shall be 
                made available for grants to such entities or 
                organizations.
    ``(c) Application Requirements.--
            ``(1) In general.--In order to be eligible to receive a 
        grant under this section, a FQHC or other entity or 
        organization must submit an application in such form and at 
        such time as the Secretary shall prescribe and which meets the 
        requirements of this subsection.
            ``(2) Requirements.--An application submitted under this 
        section must provide--
                    ``(A)(i) for a schedule of fees or payments for the 
                provision of the services provided by the entity 
                designed to cover its reasonable costs of operations; 
                and
                    ``(ii) for a corresponding schedule of discounts to 
                be applied to such fees or payments, based upon the 
                patient's ability to pay (determined by using a sliding 
                scale formula based on the income of the patient);
                    ``(B) assurances that the entity or organization 
                provides services to persons who are eligible for 
                benefits under title XVIII of the Social Security Act, 
                for medical assistance under title XIX of such Act or 
                for assistance for medical expenses under any other 
                public assistance program or private health insurance 
                program; and
                    ``(C) assurances that the entity or organization 
                has made and will continue to make every reasonable 
                effort to collect reimbursement for services--
                            ``(i) from persons eligible for assistance 
                        under any of the programs described in 
                        subparagraph (B); and
                            ``(ii) from patients not entitled to 
                        benefits under any such programs.
    ``(d) Limitations on Use of Funds.--
            ``(1) In general.--From the amounts awarded to an entity or 
        organization under this section, funds may be used for purposes 
        of planning but may only be expended for the costs of--
                    ``(A) assessing the needs of the populations or 
                proposed areas to be served;
                    ``(B) preparing a description of how the needs 
                identified will be met;
                    ``(C) development of an implementation plan that 
                addresses--
                            ``(i) recruitment and training of 
                        personnel; and
                            ``(ii) activities necessary to achieve 
                        operational status in order to meet FQHC 
                        requirements under section 1905(l)(2)(B) of the 
                        Social Security Act.
            ``(2) Recruiting, training and compensation of staff.--From 
        the amounts awarded to an entity or organization under this 
        section, funds may be used for the purposes of paying for the 
        costs of recruiting, training and compensating staff (clinical 
        and associated administrative personnel (to the extent such 
        costs are not already reimbursed under title XIX of the Social 
        Security Act or any other State or Federal program)) to the 
        extent necessary to allow the entity to operate at new or 
        expanded existing sites.
            ``(3) Facilities and equipment.--From the amounts awarded 
        to an entity or organization under this section, funds may be 
        expended for the purposes of acquiring facilities and equipment 
        but only for the costs of--
                    ``(A) construction of new buildings (to the extent 
                that new construction is found to be the most cost-
                efficient approach by the Secretary);
                    ``(B) acquiring, expanding, or modernizing of 
                existing facilities;
                    ``(C) purchasing essential (as determined by the 
                Secretary) equipment; and
                    ``(D) amortization of principal and payment of 
                interest on loans obtained for purposes of site 
                construction, acquisition, modernization, or expansion, 
                as well as necessary equipment.
            ``(4) Services.--From the amounts awarded to an entity or 
        organization under this section, funds may be expended for the 
        payment of services but only for the costs of--
                    ``(A) providing or arranging for the provision of 
                all services through the entity necessary to qualify 
                such entity as a FQHC under section 1905(l)(2)(B) of 
                the Social Security Act;
                    ``(B) providing or arranging for any other service 
                that a FQHC may provide and be reimbursed for under 
                title XIX of such Act; and
                    ``(C) providing any unreimbursed costs of providing 
                services as described in section 330(a) to patients.
    ``(e) Priorities in the Awarding of Grants.--
            ``(1) Certified fqhc's.--The Secretary shall give priority 
        in awarding grants under this section to entities which have, 
        as of January 1, 1992, been certified as a FQHC under section 
        1905(l)(2)(B) of the Social Security Act and which have 
        submitted a proposal to the Secretary to expand their 
        operations (including expansion to new sites) to serve 
        medically underserved populations for high impact areas not 
        currently served by a FQHC. The Secretary shall give first 
        priority in awarding grants under this section to those FQHCs 
        or other entities which propose to serve populations with the 
        highest degree of unmet need, and which can demonstrate the 
        ability to expand their operations in the most efficient 
        manner.
            ``(2) Qualified fqhc's.--The Secretary shall give second 
        priority in awarding grants to entities which have submitted 
        applications to the Secretary which demonstrate that the entity 
        will qualify as a FQHC under section 1905(l)(2)(B) of the 
        Social Security Act before it provides or arranges for the 
        provision of services supported by funds awarded under this 
        section, and which are serving or proposing to serve medically 
        underserved populations or high impact areas which are not 
        currently served (or proposed to be served) by a FQHC.
            ``(3) Expanded services and projects.--The Secretary shall 
        give third priority in awarding grants in subsequent years to 
        those FQHCs or other entities which have provided for expanded 
        services and project and are able to demonstrate that such 
        entity will incur significant unreimbursed costs in providing 
        such expanded services.
    ``(f) Return of Funds to Secretary for Costs Reimbursed From Other 
Sources.--To the extent that an entity or organization receiving funds 
under this section is reimbursed from another source for the provision 
of services to an individual, and does not use such increased 
reimbursement to expand services furnished, areas served, to compensate 
for costs of unreimbursed services provided to patients, or to promote 
recruitment, training, or retention of personnel, such excess revenues 
shall be returned to the Secretary.
    ``(g) Termination of Grants.--
            ``(1) Failure to meet fqhc requirements.--
                    ``(A) In general.--With respect to any entity that 
                is receiving funds awarded under this section and which 
                subsequently fails to meet the requirements to qualify 
                as a FQHC under section 1905(l)(2)(B) or is an entity 
                that is not required to meet the requirements to 
                qualify as a FQHC under section 1905(l)(2)(B) of the 
                Social Security Act but fails to meet the requirements 
                of this section, the Secretary shall terminate the 
                award of funds under this section to such entity.
                    ``(B) Notice.--Prior to any termination of funds 
                under this section to an entity, the entities shall be 
                entitled to 60 days prior notice of termination and, as 
                provided by the Secretary in regulations, an 
                opportunity to correct any deficiencies in order to 
                allow the entity to continue to receive funds under 
                this section.
            ``(2) Requirements.--Upon any termination of funding under 
        this section, the Secretary may (to the extent practicable)--
                    ``(A) sell any property (including equipment) 
                acquired or constructed by the entity using funds made 
                available under this section or transfer such property 
                to another FQHC, provided, that the Secretary shall 
                reimburse any costs which were incurred by the entity 
                in acquiring or constructing such property (including 
                equipment) which were not supported by grants under 
                this section; and
                    ``(B) recoup any funds provided to an entity 
                terminated under this section.
    ``(h) Authorization of Appropriations.--There are authorized to be 
appropriated to carry out this section, $400,000,000 for fiscal year 
1993, $800,000,000 for fiscal year 1994, $1,200,000,000 for fiscal year 
1995, $1,600,000,000 for fiscal year 1996, and $1,600,000,000 for 
fiscal year 1997.''.
    (b) Effective Date.--The amendments made by subsection (a) shall 
become effective with respect to services furnished by a federally 
qualified health center or other qualifying entity described in this 
section beginning on or after October 1, 1993.
    (c) Study and Report on Services Provided by Community Health 
Centers and Hospitals.--
            (1) In general.--The Secretary of Health and Human Services 
        (hereinafter referred to in this subsection as the 
        ``Secretary'') shall provide for a study to examine the 
        relationship and interaction between community health centers 
        and hospitals in providing services to individuals residing in 
        medically underserved areas. The Secretary shall ensure that 
        the National Rural Research Centers participate in such study.
            (2) Report.--The Secretary shall provide to the appropriate 
        committees of Congress a report summarizing the findings of the 
        study within 90 days of the end of each project year and shall 
        include in such report recommendations on methods to improve 
        the coordination of and provision of services in medically 
        underserved areas by community health centers and hospitals.
            (3) Authorization.--There are authorized to be appropriated 
        to carry out the study provided for in this subsection $150,000 
        for each of fiscal years 1993 and 1994.

SEC. 514. RURAL MENTAL HEALTH OUTREACH GRANTS.

    Part D of title V of the Public Health Service Act (42 U.S.C. 290dd 
et seq.) is amended by adding at the end thereof the following new 
section:

``SEC. 544. RURAL MENTAL HEALTH OUTREACH GRANTS.

    ``(a) In General.--The Secretary may award competitive grants to 
eligible entities to enable such entities to develop and implement a 
plan for mental health outreach programs in rural areas.
    ``(b) Eligible Entities.--To be eligible to receive a grant under 
subsection (a) an entity shall--
            ``(1) prepare and submit to the Secretary an application at 
        such time, in such form and containing such information as the 
        Secretary may require, including a description of the 
        activities that the entity intends to undertake using grant 
        funds; and
            ``(2) meet such other requirements as the Secretary 
        determines appropriate.
    ``(c) Priority.--In awarding grants under subsection (a), the 
Secretary shall give priority to applications that place emphasis on 
mental health services for the elderly or children. Priority shall also 
be given to applications that involve relationships between the 
applicant and rural managed care cooperatives.
    ``(d) Matching Requirement.--An entity that receives a grant under 
subsection (a) shall make available (directly or through donations from 
public or private entities), non-Federal contributions toward the costs 
of the operations of the network in an amount equal to the amount of 
the grant.
    ``(e) Authorization of Appropriations.--There are authorized to be 
appropriated to carry out this section, $5,000,000 for each of the 
fiscal years 1993 through 1997.''.

SEC. 515. HEALTH PROFESSIONS TRAINING.

    (a) Medically Underserved Area Training Incentives.--Subsection (a) 
of section 791 of the Public Health Service Act (42 U.S.C. 292 et seq.) 
is amended to read as follows:
    ``(a) Priorities in Awarding of Grants.--
    ``(1) Allocation of competitive grant funds.--In awarding 
competitive grants under this title or title VIII, the Secretary shall, 
among applicants that meet the eligibility requirements under such 
titles, give priority to entities submitting applications that--
                    ``(A) can demonstrate that such entities--
                            ``(i) have a high permanent rate for 
                        placing graduates in practice settings which 
                        serve residents of medically underserved 
                        communities; and
                            ``(ii) have a curriculum that includes--
                                    ``(I) the rotation of medical 
                                students and residents to clinical 
                                settings the focus of which is to serve 
                                medically underserved communities;
                                    ``(II) the appointment of health 
                                professionals whose practices serve 
                                medically underserved communities to 
                                act as preceptors to supervise training 
                                in such settings;
                                    ``(III) classroom instruction on 
                                practice opportunities involving 
                                medically underserved communities;
                                    ``(IV) service contingent 
                                scholarship or loan repayment programs 
                                for students and residents to encourage 
                                practice in or service to underserved 
                                communities;
                                    ``(V) the recruitment of students 
                                who are most likely to elect to 
                                practice in or provide service to 
                                medically underserved communities;
                                    ``(VI) other training methodologies 
                                that demonstrate a significant 
                                commitment to the expansion of the 
                                proportion of graduates that elect to 
                                practice in or serve the needs of 
                                medically underserved communities; or
                    ``(B) contain an organized plan for the expeditious 
                development of the placement rate and curriculum 
                described in subparagraph (A).
            ``(2) Service in medically underserved communities.--Not 
        less than 50 percent of the amounts appropriated for fiscal 
        year 1996, and for each subsequent fiscal year, for competitive 
        grants under this title or title VIII, shall be used to award 
        grants to institutions that are otherwise eligible for grants 
        under such titles, and that can demonstrate that--
                    ``(A) not less than 15 percent of the graduates of 
                such institutions during the preceding 2-year period 
                are engaged in full-time practice serving the needs of 
                medically underserved communities; or
                    ``(B) the number of the graduates of such 
                institutions that are practicing in a medically 
                underserved community has increased by not less than 50 
                percent over that proportion of such graduates for the 
                previous 2-year period.
            ``(3) Waivers.--A health professions school may petition 
        the Secretary for a temporary waiver of the priorities of this 
        subsection. Such waiver shall be approved if the health 
        professions school demonstrates that the State in which such 
        school is located is not suffering from a shortage of primary 
        care providers, as determined by the Secretary. Such waiver 
        shall not be for a period in excess of 2 years.
            ``(4) Definitions.--As used in this subsection:
                    ``(A) Graduate.--The term `graduate' means, unless 
                otherwise specified, an individual who has successfully 
                completed all training and residency requirements 
                necessary for full certification in the health 
                professions discipline that such individual has 
                selected.
                    ``(B) Medically underserved community.--The term 
                `medically underserved community' means--
                            ``(i) an area designated under section 332 
                        as a health professional shortage area;
                            ``(ii) an area designated as a medically 
                        underserved area under this Act;
                            ``(iii) populations served by migrant 
                        health centers under section 329, community 
                        health centers under section 330, or Federally 
                        qualified health centers under section 
                        1905(l)(2)(B) of the Social Security Act;
                            ``(iv) a community that is certified as 
                        underserved by the Secretary for purposes of 
                        participation in the rural health clinic 
                        program under title XVIII of the Social 
                        Security Act; or
                            ``(v) a community that meets the criteria 
                        for the designation described in subparagraph 
                        (A) or (B) but that has not been so 
                        designated.''.
    (b) Medically Underserved Area Training Grants.--Part E of title 
VII of such Act is amended by adding at the end thereof the following 
new section:

``SEC. 779. MEDICALLY UNDERSERVED AREA TRAINING GRANT PROGRAM.

    ``(a) Grants.--The Secretary shall award grants to health 
professions institutions to expand training programs that are targeted 
at those individuals desiring to practice in or serve the needs of 
medically underserved communities.
    ``(b) Plan.--As part of an application submitted for a grant under 
this section, the applicant shall prepare and submit a plan that 
describes the proposed use of funds that may be provided to the 
applicant under the grant.
    ``(c) Priority.--In awarding grants under this section, the 
Secretary shall give priority to applicants that demonstrate the 
greatest likelihood of expanding the proportion of graduates who choose 
to practice in or serve the needs of medically underserved areas.
    ``(d) Use of Funds.--An institution that receives a grant under 
this section shall use amounts received under such grant to establish 
or enhance procedures or efforts to--
            ``(1) rotate health professions students from such 
        institution to clinical settings the focus of which is to serve 
        the residents of medically underserved communities;
            ``(2) appoint health professionals whose practices serve 
        medically underserved areas to serve as preceptors to supervise 
        training in such settings;
            ``(3) provide classroom instruction on practice 
        opportunities involving medically underserved communities;
            ``(4) provide service contingent scholarship or loan 
        repayment programs for students and residents to encourage 
        practice in or service to underserved communities;
            ``(5) recruit students who are most likely to elect to 
        practice in or provide service to medically underserved 
        communities; or
            ``(6) provide other training methodologies that demonstrate 
        a significant commitment to the expansion of the proportion of 
        graduates that elect to practice in or serve the needs of 
        medically underserved communities.
    ``(e) Administration.--
            ``(1) Required contribution.--An institution that receives 
        a grant under this section shall contribute, from non-Federal 
        sources, either in cash or in-kind, an amount equal to the 
        amount of the grant to the activities to be undertaken with the 
        grant funds.
            ``(2) Limitation.--An institution that receives a grant 
        under this section, shall use amounts received under such grant 
        to supplement, not supplant, amounts made available by such 
        institution for activities of the type described in subsection 
        (d) in the fiscal year preceding the year for which the grant 
        is received.
    ``(f) Definitions.--As used in this section:
            ``(1) Graduate.--The term `graduate' means, unless 
        otherwise specified, an individual who has successfully 
        completed all training and residency requirements necessary for 
        full certification in the health professions discipline that 
        such individual has selected.
            ``(2) Medically underserved community.--The term `medically 
        underserved community' means--
                    ``(A) an area designated under section 332 as a 
                health professional shortage area;
                    ``(B) an area designated as a medically underserved 
                area under this Act;
                    ``(C) populations served by migrant health centers 
                under section 329, community health centers under 
                section 330, or Federally qualified health centers 
                under section 1905(l)(2)(B) of the Social Security Act;
                    ``(D) a community that is certified as underserved 
                by the Secretary for purposes of participation in the 
                rural health clinic program under title XVIII of the 
                Social Security Act; or
                    ``(E) a community that meets the criteria for the 
                designation described in subparagraph (A) or (B) but 
                that has not been so designated.
    ``(g) Authorization of Appropriations.--There are authorized to be 
appropriated to carry out this section, $15,000,000 for each of the 
fiscal years 1993 and 1994, and such sums as may be necessary for each 
of the fiscal years 1995 through 1997.''.
    (c) Health Professions Training Grants.--Part E of title VII of 
such Act (as amended by subsection (b)) is further amended by adding at 
the end thereof the following new section:

``SEC. 780. HEALTH PROFESSIONS INTEGRATION GRANT PROGRAM.

    ``(a) Grants.--The Secretary shall award grants to eligible 
regional consortia to enhance and expand coordination among various 
health professions programs, particularly in medically underserved 
rural areas.
    ``(b) Eligible Regional Consortium.--
            ``(1) In general.--To be eligible to receive a grant under 
        subsection (a), an entity must--
                    ``(A) be a regional consortium consisting of at 
                least one medical school and at least one other health 
                professions school that is not a medical school; and
                    ``(B) prepare and submit an application containing 
                a plan of the type described in paragraph (2).
            ``(2) Plan.--As part of the application submitted by a 
        consortium under paragraph (1)(B), the consortium shall prepare 
        and submit a plan that describes the proposed use of funds that 
        may be provided to the consortium under the grant.
    ``(c) Use of Funds.--A consortium that receives a grant under this 
section shall use amounts received under such grant to establish or 
enhance--
            ``(1) strategies for better clinical cooperation among 
        different types of health professionals;
            ``(2) classroom instruction on integrated practice 
        opportunities, particularly targeted toward rural areas;
            ``(3) integrated clinical clerkship programs that make use 
        of students in differing health professions schools; or
            ``(4) other training methodologies that demonstrate a 
        significant commitment to the expansion of clinical cooperation 
        among different types of health professionals, particularly in 
        underserved rural areas.
    ``(d) Limitation.--A consortium that receives a grant under this 
section, shall use amounts received under such grant to supplement, not 
supplant, amounts made available by such institution for activities of 
the type described in subsection (c) in the fiscal year preceding the 
year for which the grant is received.
    ``(e) Authorization of Appropriations.--There are authorized to be 
appropriated to carry out this section, $7,000,000 for each of the 
fiscal years 1993 and 1994, and such sums as may be necessary for each 
of the fiscal years 1995 through 1997.''.

SEC. 516. RURAL HEALTH EXTENSION NETWORKS.

    Title XVII of the Public Health Service Act (42 U.S.C. 300u et 
seq.) is amended by adding at the end thereof the following new 
section:

``SEC. 1709. RURAL HEALTH EXTENSION NETWORKS.

    ``(a) Grants.--The Secretary, acting through the Health Resources 
and Services Administration, may award competitive grants to eligible 
entities to enable such entities to facilitate the development of 
networks among rural and urban health care providers to preserve and 
share health care resources and enhance the quality and availability of 
health care in rural areas. Such networks may be statewide or 
regionalized in focus.
    ``(b) Eligible Entities.--To be eligible to receive a grant under 
subsection (a) an entity shall--
            ``(1) be a rural health extension network that meets the 
        requirements of subsection (c);
            ``(2) prepare and submit to the Secretary an application at 
        such time, in such form and containing such information as the 
        Secretary may require; and
            ``(3) meets such other requirements as the Secretary 
        determines appropriate.
    ``(c) Networks.--For purposes of subsection (b)(1), a rural health 
extension network shall be an association or consortium of three or 
more rural health care providers, and may include one or more urban 
health care provider, for the purposes of applying for a grant under 
this section and using amounts received under such grant to provide the 
services described in subsection (d).
    ``(d) Services.--
            ``(1) In general.--An entity that receives a grant under 
        subsection (a) shall use amounts received under such grant to--
                    ``(A) provide education and community decision-
                making support for health care providers in the rural 
                areas served by the network;
                    ``(B) utilize existing health care provider 
                education programs, including but not limited to, the 
                program for area health education centers under section 
                746, to provide educational services to health care 
                providers in the areas served by the network;
                    ``(C) make appropriately trained facilitators 
                available to health care providers located in the areas 
                served by the network to assist such providers in 
                developing cooperative approaches to health care in 
                such area;
                    ``(D) facilitate linkage building through the 
                organization of discussion and planning groups and the 
                dissemination of information concerning the health care 
                resources where available, within the area served by 
                the network;
                    ``(E) support telecommunications and consultative 
                projects to link rural hospitals and other health care 
                providers, and urban or tertiary hospitals in the areas 
                served by the network; or
                    ``(F) carry out any other activity determined 
                appropriate by the Secretary.
            ``(2) Education.--In carrying out activities under 
        paragraph (1)(B), an entity shall support the development of an 
        information and resource sharing system, including elements 
        targeted towards high risk populations and focusing on health 
        promotion, to facilitate the ability of rural health care 
        providers to have access to needed health care information. 
        Such activities may include the provision of training to enable 
        individuals to serve as coordinators of health education 
        programs in rural areas.
            ``(3) Collection and dissemination of data.--The chief 
        executive officer of a State shall designate a State agency 
        that shall be responsible for collecting and regularly 
        disseminating information concerning the activities of the 
        rural health extension networks in that State.
    ``(e) Matching Requirement.--An entity that receives a grant under 
subsection (a) shall make available (directly or through donations from 
public or private entities), non-Federal contributions towards the 
costs of the operations of the network in an amount equal to the amount 
of the grant.
    ``(f) Authorization of Appropriations.--There are authorized to be 
appropriated to carry out this section, $10,000,000 for each of the 
fiscal years 1993 through 1997.
    ``(g) Definition.--As used in this section and section 1710, the 
term `rural health care providers' means health care professionals and 
hospitals located in rural areas. The Secretary shall ensure that for 
purposes of this definition, rural areas shall include any area that 
meets any applicable Federal or State definition of rural area.''.

SEC. 517. RURAL MANAGED CARE COOPERATIVES.

    Title XVII of the Public Health Service Act (42 U.S.C. 300u et 
seq.) as amended by section 516 is further amended by adding at the end 
thereof the following new section:

``SEC. 1710. RURAL MANAGED CARE COOPERATIVES.

    ``(a) Grants.--The Secretary, acting through the Health Resources 
and Services Administration, may award competitive grants to eligible 
entities to enable such entities to develop and administer cooperatives 
in rural areas that will establish an effective case management and 
reimbursement system designed to support the economic viability of 
essential public or private health services, facilities, health care 
systems and health care resources in such rural areas.
    ``(b) Eligible Entities.--To be eligible to receive a grant under 
subsection (a) an entity shall--
            ``(1) prepare and submit to the Secretary an application at 
        such time, in such form and containing such information as the 
        Secretary may require, including a description of the 
        cooperative that the entity intends to develop and operate 
        using grant funds; and
            ``(2) meet such other requirements as the Secretary 
        determines appropriate.
    ``(c) Cooperatives.--
            ``(1) In general.--Amounts provided under a grant awarded 
        under subsection (a) shall be used to establish and operate a 
        cooperative made up of all types of health care providers, 
        hospitals, primary access hospitals, other alternate rural 
        health care facilities, physicians, rural health clinics, rural 
        nurse practitioners and physician assistant practitioners, 
        public health departments and others located in, but not 
        restricted to, the rural areas to be served by the cooperative.
            ``(2) Board of directors.--A cooperative established under 
        paragraph (1) shall be administered by a board of directors 
        elected by the members of the cooperative, a majority of whom 
        shall represent rural providers from the local community and 
        include representatives from the local community. Such 
        directors shall serve at the pleasure of such members.
            ``(3) Executive director.--The members of a cooperative 
        established under paragraph (1) shall elect an executive 
        director who shall serve as the chief operating officer of the 
        cooperative. The executive director shall be responsible for 
        conducting the day to day operation of the cooperative 
        including--
                    ``(A) maintaining an accounting system for the 
                cooperative;
                    ``(B) maintaining the business records of the 
                cooperative;
                    ``(C) negotiating contracts with provider members 
                of the cooperative; and
                    ``(D) coordinating the membership and programs of 
                the cooperative.
            ``(4) Reimbursements.--
                    ``(A) Negotiations.--A cooperative established 
                under paragraph (1) shall facilitate negotiations among 
                member health care providers and third party payers 
                concerning the rates at which such providers will be 
                reimbursed for services provided to individuals for 
                which such payers may be liable.
                    ``(B) Agreements.--Agreements reached under 
                subparagraph (A) shall be binding on the members of the 
                cooperative.
                    ``(C) Employers.--Employer entities may become 
                members of a cooperative established under paragraph 
                (a) in order to provide, through a member third party 
                payer, health insurance coverage for employees of such 
                entities. Deductibles shall only be charged to 
                employees covered under such insurance if such 
                employees receive health care services from a provider 
                that is not a member of the cooperative if similar 
                services would have been available from a member 
                provider.
                    ``(D) Malpractice insurance.--A cooperative 
                established under subsection (a) shall be responsible 
                for identifying and implementing a malpractice 
                insurance program that shall include a requirement that 
                such cooperative assume responsibility for the payment 
                of a portion of the malpractice insurance premium of 
                providers members.
            ``(5) Managed care and practice standards.--A cooperative 
        established under paragraph (1) shall establish joint case 
        management and patient care practice standards programs that 
        health care providers that are members of such cooperative must 
        meet to be eligible to participate in agreements entered into 
        under paragraph (4). Such standards shall be developed by such 
        provider members and shall be subject to the approval of a 
        majority of the board of directors. Such programs shall include 
        cost and quality of care guidelines including a requirement 
        that such providers make available preadmission screening, 
        selective case management services, joint patient care practice 
        standards development and compliance and joint utilization 
        review.
            ``(6) Confidentiality.--Patients records, records of peer 
        review, utilization review, and quality assurance proceedings 
        conducted by the cooperative should be considered confidential 
        and protected from release outside of the cooperative. The 
        provider members of the cooperative shall be indemnified by the 
        cooperative for the good faith participation by such members in 
        such the required activities.
    ``(d) Linkages.--A cooperative shall create linkages among member 
health care providers, employers, and payers for the joint consultation 
and formulation of the types, rates, costs, and quality of health care 
provided in rural areas served by the cooperative.
    ``(e) Matching Requirement.--An entity that receives a grant under 
subsection (a) shall make available (directly or through donations from 
public or private entities), non-Federal contributions towards the 
costs of the operations of the network in an amount equal to the amount 
of the grant.
    ``(f) Authorization of Appropriations.--There are authorized to be 
appropriated to carry out this section, $15,000,000 for each of the 
fiscal years 1993 through 1997.''.

                      TITLE VI--MALPRACTICE REFORM

SEC. 601. PRELITIGATION SCREENING PANEL GRANTS.

    Part B of title IX of the Public Health Service Act (42 U.S.C. 299b 
et seq.) is amended by adding at the end the following new section:

``SEC. 915. PRELITIGATION SCREENING PANEL GRANTS.

    ``(a) Establishment.--The Assistant Secretary, acting through the 
Administrator, shall establish a program of grants to assist States in 
establishing prelitigation panels.
    ``(b) Use of Funds.--A State may use a grant awarded under 
subsection (a) to establish prelitigation panels that--
            ``(1) identify claims of professional negligence that merit 
        compensation;
            ``(2) encourage early resolution of meritorious claims 
        prior to commencement of a lawsuit; and
            ``(3) encourage early withdrawal or dismissal of 
        nonmeritorious claims.
    ``(c) Award of Grants.--The Secretary shall allocate grants under 
this section in accordance with criteria issued by the Secretary.
    ``(d) Application.--To be eligible to receive a grant under this 
section, a State, acting through the appropriate State health 
authority, shall submit an application at such time, in such manner, 
and containing such agreements, assurances, and information as the 
Assistant Secretary determines to be necessary to carry out this 
section.
    ``(e) Authorization of Appropriations.--There are authorized to be 
appropriated to carry out this section such sums as may be necessary 
for each of the 1994 through 1997 fiscal years.''.

           TITLE VII--HEALTH PROMOTION AND DISEASE PREVENTION

SEC. 701. DISEASE PREVENTION AND HEALTH PROMOTION PROGRAMS TREATED AS 
              MEDICAL CARE.

    (a) In General.--For purposes of section 213(d)(1) of the Internal 
Revenue Code of 1986 (defining medical care), qualified expenditures 
(as defined by the Secretary of Health and Human Services) for disease 
prevention and health promotion programs shall be considered amounts 
paid for medical care.
    (b) Effective Date.--Subsection (a) shall apply to amounts paid in 
taxable years beginning after December 31, 1992.

SEC. 702. WORKSITE WELLNESS GRANT PROGRAM.

    (a) Grants.--The Secretary of Health and Human Services (hereafter 
referred to as the ``Secretary'') shall award grants to States (through 
State health departments or other State agencies working in 
consultation with the State health agency) to enable such States to 
provide assistance to businesses with not to exceed 100 employees for 
the establishment and operation of worksite wellness programs for their 
employees.
    (b) Application.--To be eligible for a grant under subsection (a), 
a State shall prepare and submit to the Secretary an application at 
such time, in such manner, and containing such information as the 
Secretary may require, including--
            (1) a description of the manner in which the State intends 
        to use amounts received under the grant; and
            (2) assurances that the State will only use amounts 
        provided under such grant to provide assistance to businesses 
        that can demonstrate that they are in compliance with minimum 
        program characteristics (relative to scope and regularity of 
        services offered) that are developed by the Secretary in 
        consultation with experts in public health and representatives 
        of small business.
Grants shall be distributed to States based on the population of 
individuals employed by small businesses.
    (c) Program Characteristics.--In developing minimum program 
characteristics under subsection (b)(2), the Secretary shall ensure 
that all activities established or enhanced under a grant under this 
section have clearly defined goals and objectives and demonstrate how 
receipt of such assistance will help to achieve established State or 
local health objectives based on the National Health Promotion and 
Disease Prevention Objectives.
    (d) Use of Funds.--Amounts received under a grant awarded under 
subsection (a) shall be used by a State to provide grants to businesses 
(as described in subsection (a)), nonprofit organizations, or public 
authorities, or to operate State-run worksite wellness programs.
    (e) Special Emphasis.--In funding business worksite wellness 
projects under this section, a State shall give special emphasis to--
            (1) the development of joint wellness programs between 
        employers;
            (2) the development of employee assistance programs dealing 
        with substance abuse;
            (3) maximizing the use and coordination with existing 
        community resources such as nonprofit health organizations; and
            (4) encourage participation of dependents of employees and 
        retirees in wellness programs.
    (f) Authorization of Appropriations.--There are authorized to be 
appropriated to carry out this section, such sums as may be necessary 
in each of the fiscal years 1994 through 1998.

SEC. 703. EXPANDING AND IMPROVING SCHOOL HEALTH EDUCATION.

    (a) Authorization of Appropriations.--There are authorized to be 
appropriated to carry out subsection (b), such sums as may be necessary 
for each of the fiscal years 1994 through 1998.
    (b) General Use of Funds.--The Secretary of Health and Human 
Services shall use amounts appropriated under subsection (a) to expand 
comprehensive school health education programs administered by the 
Centers for Disease Control and Prevention under sections 301 and 311 
of the Public Health Service Act (42 U.S.C. 241 and 243).
    (c) Specific Use of Funds.--In meeting the requirement of 
subsection (b), the Secretary of Health and Human Services shall expand 
the number of children receiving planned, sequential kindergarten 
through 12th grade comprehensive school education as a component of 
comprehensive programs of school health, including
            (1) physical education programs that promote lifelong 
        physical activity;
            (2) healthy school food service selections;
            (3) programs that promote a healthy and safe school 
        environment;
            (4) schoolsite health promotion for faculty and staff;
            (5) integrated school and community health promotion 
        efforts; and
            (6) school nursing disease prevention and health promotion 
        services.
    (d) Coordination of Existing Programs.--The Secretary of Health and 
Human Services, the Secretary of Education and the Secretary of 
Agriculture shall work cooperatively to coordinate existing school 
health education programs within their Departments in a manner that 
maximized the efficiency and effectiveness of Federal expenditures in 
this area.

             TITLE VIII--PRESCRIPTION DRUG COST CONTAINMENT

SEC. 801. REDUCTION IN POSSESSIONS TAX CREDIT FOR EXCESSIVE 
              PHARMACEUTICAL INFLATION.

    (a) In General.--Section 936 of the Internal Revenue Code of 1986 
(relating to Puerto Rico and possession tax credit) is amended by 
adding at the end the following new subsection:
    ``(i) Reduction for Excessive Pharmaceutical Inflation.--
            ``(1) In general.--In the case of any manufacturer of 
        single source drugs or innovator multiple source drugs, the 
        amount by which the credit under this section for the taxable 
        year (determined without regard to this subsection) exceeds the 
        manufacturer's wage base for such taxable year shall be reduced 
        by the product of--
                    ``(A) the amount of such excess, multiplied by
                    ``(B) the sum of the reduction percentages for each 
                single source drug or innovator multiple source drug of 
                the manufacturer for such taxable year.
            ``(2) Manufacturer's wage base.--For purposes of this 
        subsection--
                    ``(A) In general.--The manufacturer's wage base for 
                any taxable year is equal to the total amount of wages 
                paid during such taxable year by the manufacturer to 
                eligible employees in Puerto Rico with respect to the 
                manufacture of single source drugs and innovator 
                multiple source drugs.
                    ``(B) Eligible employees.--The term `eligible 
                employee' means any employee of the manufacturer (as 
                defined in section 3121(d)) who is a bona fide resident 
                of Puerto Rico and subject to tax by Puerto Rico on 
                income from sources within and without Puerto Rico 
                during the entire taxable year.
                    ``(C) Wages.--The term `wages' has the meaning 
                given such term by section 3121(a).
            ``(3) Reduction percentage.--For purposes of this 
        subsection--
                    ``(A) In general.--The reduction percentage for any 
                drug for any taxable year is the percentage determined 
                by multiplying--
                            ``(i) the sales percentage for such drug 
                        for such taxable year, by
                            ``(ii) the price increase percentage for 
                        such drug for such taxable year.
                    ``(B) Sales percentage.--The sales percentage for 
                any drug for any taxable year is the percentage 
                determined by dividing--
                            ``(i) the total sales of such drug by the 
                        manufacturer for such taxable year, by
                            ``(ii) the total sales of all single source 
                        drugs and innovator multiple source drugs by 
                        the manufacturer for such taxable year.
                    ``(C) Price increase percentage.--The price 
                increase percentage for any drug for any taxable year 
                is the percentage determined by multiplying--
                            ``(i) 20, times
                            ``(ii) the excess (if any) of--
                                    ``(I) the percentage increase in 
                                the average manufacturer's price for 
                                such drug for the taxable year over 
                                such average price for the base taxable 
                                year, over
                                    ``(II) the percentage increase in 
                                the Consumer Price Index (as defined in 
                                section 1(g)(5)) for the taxable year 
                                over the base taxable year.
                    ``(D) Total sales.--
                            ``(i) Domestic sales only.--Total sales 
                        shall only include sales for use or consumption 
                        in the United States.
                            ``(ii) Sales to related parties not 
                        included.--Total sales shall not include sales 
                        to any related party (as defined in section 
                        267(b)).
                    ``(E) Average manufacturer's price.--The term 
                `average manufacturer's price' for any taxable year 
                means the average price paid to the manufacturer by 
                wholesalers or direct buyers and purchasers for each 
                single source drug or innovator multiple source drug 
                sold to the various classes of purchasers.
                    ``(F) Base taxable year.--The base taxable year for 
                any single source drug or innovator multiple source 
                drug is the later of--
                            ``(i) the last taxable year ending in 1991, 
                        or
                            ``(ii) the first taxable year beginning 
                        after the date on which the marketing of such 
                        drug begins.
            ``(4) Other definitions.--For purposes of this subsection--
                    ``(A) Manufacturer.--
                            ``(i) In general.--The term `manufacturer' 
                        means any person which is engaged in--
                                    ``(I) the production, preparation, 
                                propagation, compounding, conversion, 
                                or processing of prescription drug 
                                products, either directly or indirectly 
                                by extraction from substances of 
                                natural origin, or independently by 
                                means of chemical synthesis, or by a 
                                combination of extraction and chemical 
                                synthesis, or
                                    ``(II) in the packaging, 
                                repackaging, labeling, relabeling, or 
                                distribution of prescription drug 
                                products.
                        Such term does not include a wholesale 
                        distributor of drugs or a retail pharmacy 
                        licensed under State law.
                            ``(ii) Controlled groups.--For purposes of 
                        clause (i)--
                                    ``(I) Controlled group of 
                                corporations.--All corporations which 
                                are members of the same controlled 
                                group of corporations shall be treated 
                                as 1 person. For purposes of the 
                                preceding sentence, the term 
                                `controlled group of corporations' has 
                                the meaning given to such term by 
                                section 1563(a), except that `more than 
                                50 percent' shall be substituted for 
                                `at least 80 percent' each place it 
                                appears in section 1563(a)(1), and the 
                                determination shall be made without 
                                regard to subsections (a)(4) and 
                                (e)(3)(C) of section 1563.
                                    ``(II) Partnerships, 
                                proprietorships, etc., which are under 
                                common control.--Under regulations 
                                prescribed by the Secretary, all trades 
                                or business (whether or not 
                                incorporated) which are under common 
                                control shall be treated as 1 person. 
                                The regulations prescribed under this 
                                subclause shall be based on principles 
                                similar to the principles which apply 
                                in the case of subclause (I).
                    ``(B) Single source drug.--The term `single source 
                drug' means a drug or biological which is produced or 
                distributed under an original new drug application or 
                product licensing application, including a drug product 
                or biological marketed by any cross-licensed producers 
                or distributors operating under the new drug 
                application or product licensing application.
                    ``(C) Innovator multiple source drug.--The term 
                `innovator multiple source drug' means a multiple 
                source drug (within the meaning of section 
                1927(k)(7)(A)(i) of the Social Security Act) that was 
                originally marketed under an original new drug 
                application or a product licensing application approved 
                by the Food and Drug Administration.
            ``(5) Special rules.--For purposes of this subsection--
                    ``(A) Dosage treatment.--Except as provided by the 
                Secretary, each dosage form and strength of a single 
                source drug or innovator multiple source drug shall be 
                treated as a separate drug.
                    ``(B) Rounding of percentages.--Any percentage 
                shall be rounded to the nearest hundredth of a 
                percent.''.
    (b) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 1993.

                          TITLE IX--FINANCING

SEC. 901. REPEAL OF DOLLAR LIMITATION ON AMOUNT OF WAGES SUBJECT TO 
              HOSPITAL INSURANCE TAX.

    (a) Hospital Insurance Tax.--
            (1) Paragraph (1) of section 3121(a) of the Internal 
        Revenue Code of 1986 (defining wages) is amended--
                    (A) by inserting ``in the case of the taxes imposed 
                by sections 3101(a) and 3111(a)'' after ``(1)'',
                    (B) by striking ``applicable contribution base (as 
                determined under subsection (x))'' each place it 
                appears and inserting ``contribution and benefit base 
                (as determined under section 230 of the Social Security 
                Act)'', and
                    (C) by striking ``such applicable contribution 
                base'' and inserting ``such contribution and benefit 
                base''.
            (2) Section 3121 of such Code is amended by striking 
        subsection (x).
    (b) Self-Employment Tax.--
            (1) Subsection (b) of section 1402 of such Code is 
        amended--
                    (A) by striking ``(1) that part of net'' and 
                inserting ``(1) in the case of the tax imposed by 
                section 1401(a), that part of net'',
                    (B) by striking ``applicable contribution base (as 
                determined under subsection (k))'' and inserting 
                ``contribution and benefit base (as determined under 
                section 230 of the Social Security Act)'',
                    (C) by inserting ``and'' after ``section 
                3121(b),'', and
                    (D) by striking ``and (C) includes'' and all that 
                follows through ``3111(b)''.
            (2) Section 1402 of such Code is amended by striking 
        subsection (k).
    (c) Railroad Retirement Tax.--
            (1) Subparagraph (A) of section 3231(e)(2) of such Code is 
        amended by adding at the end thereof the following new clause:
                            ``(iii) Hospital insurance taxes.--Clause 
                        (i) shall not apply to--
                                    ``(I) so much of the rate 
                                applicable under section 3201(a) or 
                                3221(a) as does not exceed the rate of 
                                tax in effect under section 3101(b), 
                                and
                                    ``(II) so much of the rate 
                                applicable under section 3211(a)(1) as 
                                does not exceed the rate of tax in 
                                effect under section 1402(b).''
            (2) Clause (i) of section 3231(e)(2)(B) of such Code is 
        amended to read as follows:
                            ``(i) Tier 1 taxes.--Except as provided in 
                        clause (ii), the term `applicable base' means 
                        for any calendar year the contribution and 
                        benefit base determined under section 230 of 
                        the Social Security Act for such calendar 
                        year.''
    (d) Increased Revenues Not Deposited in Hospital Insurance Trust 
Fund.--Section 1817(a) of the Social Security Act (42 U.S.C. 1395i(a)) 
is amended by adding at the end the following new sentence: ``For 
purposes of this subsection, the amount of taxes imposed by sections 
1401(b), 3101(b), 3111(b) of the Internal Revenue Code of 1986 shall be 
determined without regard to the amendments made by section 221 of the 
Managed Competition Act of 1992.''.
    (e) Technical Amendments.--
            (1) Paragraph (1) of section 6413(c) of the Internal 
        Revenue Code of 1986 is amended by striking ``section 3101 or 
        section 3201'' and inserting ``section 3101(a) or section 
        3201(a) (to the extent the rate applicable under section 
        3201(a) as does not exceed the rate of tax in effect under 
        section 3101(a))''.
            (2) Subparagraphs (B) and (C) of section 6413(c)(2) of such 
        Code are each amended by striking ``section 3101'' each place 
        it appears and inserting ``section 3101(a)''.
            (3) Subsection (c) of section 6413 of such Code is amended 
        by striking paragraph (3).
            (4) Sections 3122 and 3125 of such Code are each amended by 
        striking ``applicable contribution base limitation'' and 
        inserting ``contribution and benefit base limitation''.
    (f) Effective Date.--The amendments made by this section shall 
apply to 1994 and later calendar years.

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