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[Congressional Bills 103th Congress]
[From the U.S. Government Publishing Office]
[S. 2296 Placed on Calendar Senate (PCS)]

                                                       Calendar No. 525

103d CONGRESS

  2d Session

                                S. 2296

                          [Report No. 103-317]

_______________________________________________________________________

                                 A BILL

 To ensure individual and family security through health care coverage 
   for all Americans in a manner that contains the rate of growth in 
health care costs and promotes responsible health insurance practices, 
to promote choice in health care, and to ensure and protect the health 
                         care of all Americans.

_______________________________________________________________________

                July 19 (legislative day, July 11), 1994

                         Placed on the calendar

                                                       Calendar No. 525
103d CONGRESS
  2d Session
                                S. 2296

                          [Report No. 103-317]

 To ensure individual and family security through health care coverage 
   for all Americans in a manner that contains the rate of growth in 
health care costs and promotes responsible health insurance practices, 
to promote choice in health care, and to ensure and protect the health 
                         care of all Americans.

_______________________________________________________________________

                   IN THE SENATE OF THE UNITED STATES

                July 19 (legislative day, July 11), 1994

Mr. Kennedy, from the Committee on Labor and Human Resources, reported 
  the following original bill; which was read twice and placed on the 
                                calendar

_______________________________________________________________________

                                 A BILL

 
 To ensure individual and family security through health care coverage 
   for all Americans in a manner that contains the rate of growth in 
health care costs and promotes responsible health insurance practices, 
to promote choice in health care, and to ensure and protect the health 
                         care of all Americans.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Health Security Act''.

SEC. 2. FINDINGS.

    The Congress finds as follows:
            (1) Under the current health care system in the United 
        States--
                    (A) individuals risk losing their health care 
                coverage when they move, when they lose or change jobs, 
                when they become seriously ill, or when the coverage 
                becomes unaffordable;
                    (B) continued escalation of health care costs 
                threatens the economy of the United States, undermines 
                the international competitiveness of the Nation, and 
                strains Federal, State, and local budgets;
                    (C) an excessive burden of forms, paperwork, and 
                bureaucratic procedures confuses consumers and 
                overwhelms health care providers;
                    (D) fraud and abuse sap the strength of the health 
                care system; and
                    (E) health care is a critical part of the economy 
                of the United States and interstate commerce, consumes 
                a significant percentage of public and private 
                spending, and affects all industries and individuals in 
                the United States.
            (2) Under any reform of the health care system--
                    (A) health insurance and high quality health care 
                should be secure, uninterrupted, and affordable for all 
                individuals in the United States;
                    (B) comprehensive health care benefits that meet 
                the full range of health needs, including primary, 
                preventive, and specialized care, should be available 
                to all individuals in the United States;
                    (C) the current high quality of health care in the 
                United States should be maintained;
                    (D) individuals in the United States should be 
                afforded a meaningful opportunity to choose among a 
                range of health plans, health care providers, and 
                treatments;
                    (E) regulatory and administrative burdens should be 
                reduced;
                    (F) the rapidly escalating costs of health care 
                should be contained without sacrificing high quality or 
                impeding technological improvements;
                    (G) competition in the health care industry should 
                ensure that health plans and health care providers are 
                efficient and charge reasonable prices;
                    (H) a partnership between the Federal Government 
                and each State should allow the State and its local 
                communities to design an effective, high-quality system 
                of care that serves the residents of the State;
                    (I) all individuals should have a responsibility to 
                pay their fair share of the costs of health care 
                coverage;
                    (J) a health care system should build on the 
                strength of the employment-based coverage arrangements 
                that now exist in the United States;
                    (K) the penalties for fraud and abuse should be 
                swift and severe; and
                    (L) an individual's medical information should 
                remain confidential and should be protected from 
                unauthorized disclosure and use.

SEC. 3. PURPOSES.

    The purposes of this Act are as follows:
            (1) To guarantee comprehensive and secure health care 
        coverage.
            (2) To simplify the health care system for consumers and 
        health care professionals.
            (3) To control the cost of health care for employers, 
        employees, and others who pay for health care coverage.
            (4) To promote individual choice among health plans and 
        health care providers.
            (5) To ensure high quality health care.
            (6) To encourage all individuals to take responsibility for 
        their health care coverage.

                     TITLE I--HEALTH CARE SECURITY

      Subtitle A--Universal Coverage and Individual Responsibility

                       Part 1--Universal Coverage

Sec. 1001. Entitlement to health benefits.
Sec. 1002. Individual responsibilities.
Sec. 1003. Protection of consumer choice.
Sec. 1004. Health plan principles.
Sec. 1005. Applicable health plan providing coverage.
Sec. 1006. Treatment of other nonimmigrants.
Sec. 1007. Effective date of entitlement.
            Part 2--Treatment of Families and Special Rules

Sec. 1011. General rule of enrollment of family in same health plan.
Sec. 1012. Treatment of certain families.
Sec. 1013. Multiple employment situations.
Sec. 1014. Treatment of residents of States with Statewide single-payer 
                            systems.
                          Subtitle B--Benefits

                 Part 1--Comprehensive Benefit Package

Sec. 1101. Provision of comprehensive benefits by plans.
Sec. 1102. Hospital services.
Sec. 1103. Services of health professionals.
Sec. 1104. Emergency and ambulatory medical and surgical services.
Sec. 1105. Clinical preventive services.
Sec. 1106. Mental illness and substance abuse services.
Sec. 1107. Family planning services and services for pregnant women.
Sec. 1108. Hospice care.
Sec. 1109. Home health care.
Sec. 1110. Extended care services.
Sec. 1111. Ambulance services.
Sec. 1112. Outpatient laboratory, radiology, and diagnostic services.
Sec. 1113. Outpatient prescription drugs and biologicals.
Sec. 1114. Outpatient rehabilitation services.
Sec. 1115. Durable medical equipment, prosthetic devices, orthotics, 
                            and prosthetics.
Sec. 1116. Vision care.
Sec. 1117. Hearing aids for children.
Sec. 1118. Dental care.
Sec. 1119. Investigational treatments.
Sec. 1120. Optional services.
                          Part 2--Cost Sharing

Sec. 1131. Cost sharing.
Sec. 1132. Lower cost sharing.
Sec. 1133. Higher cost sharing.
Sec. 1134. Combination cost sharing.
Sec. 1135. Indexing dollar amounts relating to cost sharing.
                           Part 3--Exclusions

Sec. 1141. Exclusions.
               Part 4--Role of the National Health Board

Sec. 1151. Definition of benefits.
Sec. 1152. Acceleration of expanded benefits.
Sec. 1153. Authority with respect to clinical preventive services.
Sec. 1154. Establishment of standards regarding medical necessity.
Sec. 1155. Balance billing.
    Part 5--Additional Provisions Relating to Health Care Providers

Sec. 1161. Override of restrictive State practice laws.
Sec. 1162. Provision of items or services contrary to religious belief 
                            or moral conviction.
Sec. 1163. Duty to disclose incorrect test results.
                   Subtitle C--State Responsibilities

Sec. 1200. Participating State.
                 Part 1--General State Responsibilities

Sec. 1201. General State responsibilities.
Sec. 1202. Assuring community-rated premiums through establishment of 
                            health care coverage areas.
Sec. 1203. Use of incentives.
Sec. 1204. Restrictions on funding of additional benefits.
Sec. 1205. Consumer information and marketing.
Sec. 1206. State responsibilities with respect to worksite health 
                            promotion discounts.
Sec. 1207. Consumer advocate.
Sec. 1208. Election procedure for community-rated employers.
Sec. 1209. Coordinated health care services for children.
Sec. 1210. State responsibilities for utilization management.
Sec. 1211. Assuring family choice of health plans.
Sec. 1212. Oversight of health plan enrollment activities.
Sec. 1213. Administrative allowance percentage.
          Part 2--Requirements for State Single-payer Systems

Sec. 1221. Single-payer system described.
Sec. 1222. General requirements for single-payer systems.
Sec. 1223. Special rules for States operating Statewide single-payer 
                            systems.
Sec. 1224. Special rules for health care coverage area-specific single-
                            payer systems.
            Part 3--Reductions in Cost Sharing and Premiums

Sec. 1281. Reduction in cost sharing for low-income families.
Sec. 1282. Application process for cost-sharing reductions and premium 
                            discounts.
Sec. 1283. End-of-year reconciliation.
Sec. 1284. Eligibility error rates.
              Subtitle D--Consumer Purchasing Cooperatives

                      Part 1--General Requirements

Sec. 1301. Designation and organization of cooperatives.
Sec. 1302. Agreements with health plans.
Sec. 1303. Agreements with community-rated employers.
Sec. 1304. Enrolling individuals in health plans through a cooperative.
Sec. 1305. Cooperative fee.
Sec. 1306. Coordination among cooperatives.
Sec. 1307. Third-party contracting to perform duties.
           Part 2--Access to Health Plans Sponsored by FEHBP

Sec. 1321. Designation of FEHBP as a consumer purchasing cooperative.
Sec. 1322. Special rules for FEHBP supplemental plans.
                    Subtitle E--Employer Purchasers

    Part 1--Definitions and Responsibilities of Employer Purchasers

Sec. 1401. Definitions.
Sec. 1402. Election of large group purchasers.
Sec. 1403. Employee enrollment requirements.
Sec. 1404. Responsibilities and authority of employer purchasers.
Sec. 1405. Development of large employer group purchasers.
Sec. 1406. Timing and termination of employee elections.
Part 2--Requirements for Health Plans Offered by Large Group Purchasers

Sec. 1411. Establishment of standards applicable to employer sponsored 
                            plans.
Sec. 1412. Corrective actions for larger employer group health plans.
Sec. 1413. Disclosure and reserve requirements for large employer 
                            sponsored health plans.
Sec. 1414. Trusteeship by the Secretary of insolvent large employer 
                            sponsored health plans.
Sec. 1415. Assistance for low-wage families.
                        Subtitle F--Health Plans

Sec. 1500. Health plan defined.
                 Part 1--Requirements for Health Plans

Sec. 1501. Certified health plan.
Sec. 1502. Application of requirements.
Sec. 1503. Establishment of standards.
Sec. 1504. Certification and revocation of health plan certification.
Sec. 1505. Monitoring.
Sec. 1506. Association health plans.
Sec. 1507. Specified standard benefits; supplemental benefits and cost-
                            sharing policies.
Sec. 1508. Collection, provision of standardized information, and 
                            confidentiality.
Sec. 1509. Prohibition of discrimination.
Sec. 1510. Quality assurance standards.
Sec. 1511. Community-rating.
Sec. 1512. Financial solvency requirements and consumer protection 
                            against provider claims.
Sec. 1513. Grievance mechanisms.
Sec. 1514. Access to care.
Sec. 1515. Information and marketing standards.
Sec. 1516. Enrollment; availability, and renewability. 
Sec. 1517. Administrative provisions.
Sec. 1518. Information regarding a patient's right to self-
                            determination in health care services.
Sec. 1519. Rural and medically underserved areas.
Sec. 1520. Payment adjustments.
Sec. 1521. Preemption of certain State laws relating to health plans.
Sec. 1522. Contracts with consumer purchasing cooperatives.
Sec. 1523. Health plan arrangements with providers.
Sec. 1524. Health security cards.
Sec. 1525. Utilization management protocols and physician incentive 
                            plans.
     Part 2--Requirements Relating to Essential Community Providers

Sec. 1531. Health plan requirement.
Sec. 1532. Recommendation on continuation of requirement.
                  Subtitle G--Federal Responsibilities

           subpart a--establishment of national health board
Sec. 1601. Creation of National Health Board; membership.
Sec. 1602. Qualifications of Board members.
Sec. 1603. General duties and responsibilities.
Sec. 1604. Annual report.
Sec. 1605. Powers.
Ssubpart b--responsibilities relating to review and approval of state 
                                systems
Sec. 1611. Federal review and action on State systems.
Sec. 1612. Failure of participating States to meet conditions for 
                            compliance.
Sec. 1613. Reduction in payments for health programs by Secretary of 
                            Health and Human Services.
Sec. 1614. Review of Federal determinations.
Sec. 161subpart c--responsibilities in absence of state systems
Sec. 1621. Application of subpart.
Sec. 1622. Federal assumption of responsibilities in non-participating 
                            States.
Sec. 1623. Imposition of surcharge on premiums under federally-operated 
                            system.
Sec.subpart d--establishment of class factors for charging premiums
Ssubpart e--risk adjustment and reinsurance methodology for payment of 
                                 plans
Sec. 1641. Development of a risk adjustment and reinsurance 
                            methodology.
Sec. 1642. Incentives to enroll disadvantaged groups.
Sec. 1643. Research and demonstrations.
Sec. 1644subpart f--responsibilities for financial requirements
Sec. 1651. Capital standards for community-rated plans.
Sec. 1652. Standard forsubpart g--open enrollment
Sec. 1660. Periods of authorized changes in enrollment.
Sec. 1661. Distribution of comparative information.
  Part 2--Responsisubpart a--general responsibilitiesd Human Services
Sec. 1671. General responsibilities of Secretary of Health and Human 
                            Services.
Sec. 1672. Medical technology impact study.
Sec. 1673. Assistance with family collections.
Sec. 1674. Advisory opinions.
Sec. 16subpart b--certification of essential community providers
Sec. 1681. Certification.
Sec. 1682. Categories of providers automatically certified.
Sec. 1683. Standards for additional providers.
Sec. 1684. Certification process; review; termination of 
                            certifications.
Sec. 1685. Notification of participating States.
Sec. 1686. Definisubpart c--workplace wellness programs
Sec. 1687. Workplace wellness program.
Sec. 1688. Wellness discount methodology.
        Part 3--Specific Responsibilities of Secretary of Labor.

Sec. 1691. Responsibilities of Secretary of Labor.
Sec. 1692. Assistance with employer collections.
Sec. 1693. Penalties for failure of large employers to meet 
                            requirements.
Sec. 1694. Applicability of ERISA enforcement mechanisms for 
                            enforcement of certain requirements.
            Part 4--Collective Bargaining Dispute Resolution

Sec. 1695. Findings and purpose.
Sec. 1696. Application limited to transition period.
Sec. 1697. Request for appointment of board of inquiry.
Sec. 1698. Appointment of board of inquiry.
Sec. 1699. Public factfinding.
Sec. 1699A. Compensation of members of boards of inquiry.
Sec. 1699B.  Maintenance of status quo.
            Subtitle H--Miscellaneous Employer Requirements

Sec. 1701. Auditing of records.
Sec. 1702. Prohibition of certain employer discrimination.
Sec. 1703. Evasion of obligations.
Sec. 1704. Prohibition on self-funding of cost sharing benefits.
Sec. 1705. Employer retiree obligation.
Sec. 1706. Rules governing litigation involving retiree health 
                            benefits.
Sec. 1707. Participation in FEHBP.
Sec. 1708. Enforcement.
       Subtitle I--General Definitions; Miscellaneous Provisions

                      Part 1--General Definitions

Sec. 1901. Definitions relating to employment and income.
Sec. 1902. Other general definitions.
Sec. 1903. Reference to certain terms.
                    Part 2--Miscellaneous Provisions

Sec. 1911. Use of interim, final regulations.
Sec. 1912. Neutrality concerning union organizing.
Sec. 1913. Social Security Act references.
Sec. 1914. Antidiscrimination.
Sec. 1915. Coverage of benefits under Health Security Act.
Sec. 1916. Government required data.
Sec. 1917. Sense of the Committee concerning funding sources.
Sec. 1918. Sense of the Committee concerning medical savings accounts.

      Subtitle A--Universal Coverage and Individual Responsibility

                       PART 1--UNIVERSAL COVERAGE

SEC. 1001. ENTITLEMENT TO HEALTH BENEFITS.

    (a) In General.--In accordance with this part, each eligible 
individual is entitled to the comprehensive benefit package under 
subtitle B through the applicable health plan in which the individual 
is enrolled consistent with this title.
    (b) Health Security Card.--Each eligible individual is entitled to 
a health security card to be issued in accordance with this Act.
    (c) Eligible Individual Defined.--In this Act, the term ``eligible 
individual'' means an individual who is residing in the United States 
and who is--
            (1)(A) a citizen or national of the United States;
            (B) a citizen of another country legally residing in the 
        United States (as defined in section 1902(6)); or
            (C) a long-term nonimmigrant (as defined in section 
        1902(27)); and
            (2) not an exempt individual (as defined in section 
        1902(18)).
    (d) Treatment of Medicare-Eligible Individuals.--Subject to section 
1012(a), a medicare-eligible individual is entitled to health benefits 
under the medicare program instead of the entitlement under subsection 
(a).
    (e) Treatment of Prisoners.--A prisoner (as defined in section 
1902(37)) is entitled to health care services provided by the authority 
responsible for the prisoner instead of the entitlement under 
subsection (a).

SEC. 1002. INDIVIDUAL RESPONSIBILITIES.

    (a) In General.--In accordance with this Act, each eligible 
individual (other than a medicare-eligible individual)--
            (1) must enroll in an applicable health plan for the 
        individual, and
            (2) must pay any premium required, consistent with this 
        Act, with respect to such enrollment.
    (b) Limitation on Disenrollment.--No eligible individual shall be 
disenrolled from an applicable health plan until the individual--
            (1) is enrolled under another applicable health plan, or
            (2) becomes a medicare-eligible individual.

SEC. 1003. PROTECTION OF CONSUMER CHOICE.

    Nothing in this Act shall be construed as prohibiting the 
following:
            (1) An individual from purchasing any health care services.
            (2) An individual from purchasing supplemental insurance 
        (offered consistent with this Act) to cover health care 
        services not included within the comprehensive benefit package.
            (3) An individual who is not an eligible individual from 
        purchasing health insurance.
            (4) Employers from providing coverage for benefits in 
        addition to the comprehensive benefit package (subject to part 
        2 of subtitle E).
            (5) An individual from obtaining (at the expense of such 
        individual) health care from any health care provider of such 
        individual's choice.

SEC. 1004. HEALTH PLAN PRINCIPLES.

    In accordance with this Act, the following principles shall apply 
to all health plans:
            (1) No health plan may discriminate on the basis of medical 
        history, pre-existing medical conditions, or genetic 
        predisposition to medical conditions.
            (2) A health plan--
                    (A) shall offer an annual open enrollment period 
                and accept all eligible individuals for coverage;
                    (B) shall not impose a rider that serves to exclude 
                coverage to an individual; and
                    (C) shall not impose waiting periods before 
                coverage begins.
            (3) A health plan shall ensure that all medically necessary 
        or appropriate services, as defined in the benefits package, 
        are provided, including access to specialty care.
            (4) Health benefits coverage shall be portable from one 
        health plan to another.
Nothing in this section shall be construed so as to relieve a health 
plan of any obligation or requirement imposed under this Act.

SEC. 1005. APPLICABLE HEALTH PLAN PROVIDING COVERAGE.

    (a) Specification of Applicable Health Plan.--Except as otherwise 
provided:
            (1) General rule: community-rated health plans.--The 
        applicable health plan for a family is a community-rated health 
        plan for the health care coverage area in which the family 
        resides.
            (2) Experience-rated health plans.--In the case of a family 
        member that is eligible to enroll in an experienced-rated 
        health plan under subtitle B, the applicable health plan for 
        the family is such an experienced-rated health plan.
    (b) Choice of Plans for Certain Groups.--
            (1) Military personnel and families.--For military 
        personnel and families who elect a Uniformed Services Health 
        Plan of the Department of Defense under section 1073a(d) of 
        title 10, United States Code, as inserted by section 8001(a) of 
        this Act, that plan shall be the applicable health plan.
            (2) Veterans.--For veterans and families who elect to 
        enroll in a veterans health plan under section 1801 of title 
        38, United States Code, as inserted by section 8101(a) of this 
        Act, that plan shall be the applicable health plan.
            (3) American Indians.--For those individuals who are 
        eligible to enroll, and who elect to enroll, in a health 
        program of the Indian Health Service under section 8302(b) or 
        8306(b), that program shall be the applicable health plan.

SEC. 1006. TREATMENT OF OTHER NONIMMIGRANTS.

    (a) Certain Aliens Ineligible for Benefits.--An alien who is not an 
eligible individual or otherwise not made eligible under this Act for 
benefits is not eligible to obtain the comprehensive benefit package 
through enrollment in a health plan under this Act.
    (b) Diplomats and Other Foreign Government Officials.--Subject to 
conditions established by the National Health Board in consultation 
with the Secretary of State, a nonimmigrant under subparagraph (A) or 
(G) of section 101(a)(15) of the Immigration and Nationality Act may 
obtain the comprehensive benefit package through enrollment in the 
community-rated health plan for the health care coverage area in which 
the nonimmigrant resides.
    (c) Reciprocal Treatment of Other Nonimmigrants.--With respect to 
those classes of individuals who are lawful nonimmigrants but who are 
not long-term nonimmigrants (as defined in section 1902(27)) or 
described in subsection (b), such individuals may obtain such benefits 
through enrollment with community-rated health plans only in accordance 
with such reciprocal agreements between the United States and foreign 
states as may be entered into.
    (d) Construction.--The National Health Board shall adopt procedures 
that assure that each person who is eligible for enrollment in an 
applicable health plan is able to enroll in such a plan.

SEC. 1007. EFFECTIVE DATE OF ENTITLEMENT.

    (a) Community Rate Eligible Individuals.--
            (1) In general.--In the case of community rate eligible 
        individuals residing in a State, the entitlement under this 
        part (and requirements under section 1002) shall not take 
        effect until the State becomes a participating State (as 
        defined in section 1200).
            (2) Transitional rule for large group sponsors.--
                    (A) In general.--In the case of a State that 
                becomes a participating State before the general 
                effective date (as defined in subsection (c)) and for 
                periods before such date, under rules established by 
                the Board, an individual who is covered under a plan 
                (described in subparagraph (C)) based on the individual 
                (or the individual's spouse) being a qualifying 
                employee of a qualifying employer, the individual shall 
                not be treated under this Act as a community rate 
                eligible individual.
                    (B) Qualifying employer defined.--In subparagraph 
                (A), the term ``qualifying employer'' means an employer 
                that--
                            (i) is described in section 1401(2), or is 
                        participating in a multiemployer plan described 
                        in section 1401(6)(B) or plan described in 
                        section 1401(7), and
                            (ii) provides such notice to the State 
                        involved as the Board specifies.
                    (C) Benefits plan described.--A plan described in 
                this subparagraph is an employee benefit plan that--
                            (i) provides (through insurance or 
                        otherwise) the comprehensive benefit package, 
                        and
                            (ii) provides an employer contribution of 
                        at least 80 percent of the premium (or premium 
                        equivalent) for coverage.
    (b) Experience-Rate Eligible Individuals.--
            (1) In general.--In the case of experience rate eligible 
        individuals, the entitlement under this part shall not take 
        effect until the general effective date.
            (2) Transition.--For purposes of this Act and before the 
        general effective date, in the case of an eligible individual 
        who resides in a participating State, the individual is deemed 
        a community rate eligible individual until the individual 
        becomes an experience rate eligible individual, unless 
        subsection (a)(2)(A) applies to the individual.
    (c) General Effective Date Defined.--In this Act, the term 
``general effective date'' means January 1, 1998.

            PART 2--TREATMENT OF FAMILIES AND SPECIAL RULES

SEC. 1011. GENERAL RULE OF ENROLLMENT OF FAMILY IN SAME HEALTH PLAN.

    (a) In General.--Except as provided in this part or otherwise, all 
members of the same family (as defined in subsection (b)) shall be 
enrolled in the same applicable health plan.
    (b) Family Defined.--In this Act, unless otherwise provided, the 
term ``family''--
            (1) means, with respect to an eligible individual who is 
        not a child (as defined in subsection (c)), the individual; and
            (2) includes the following persons (if any):
                    (A) The individual's spouse if the spouse is an 
                eligible individual.
                    (B) The individual's children (and, if applicable, 
                the children of the individual's spouse) if they are 
                eligible individuals.
    (c) Classes of Family Enrollment; Terminology.--
            (1) In general.--In this Act, each of the following is a 
        separate class of family enrollment:
                    (A) Coverage only of an individual (referred to in 
                this Act as the ``individual'' enrollment or class of 
                enrollment).
                    (B) Coverage of a married couple without children 
                (referred to in this Act as the ``couple-only'' 
                enrollment or class of enrollment).
                    (C) Coverage of an unmarried individual and one or 
                more children (referred to in this Act as the ``single 
                parent'' enrollment or class of enrollment).
                    (D) Coverage of a married couple and one or more 
                children (referred to in this Act as the ``dual 
                parent'' enrollment or class of enrollment).
            (2) References to family and couple classes of 
        enrollment.--In this Act:
                    (A) Family.--The terms ``family enrollment'' and 
                ``family class of enrollment'', refer to enrollment in 
                a class of enrollment described in subparagraph (B), 
                (C), or (D) of paragraph (1).
                    (B) Couple.--The term ``couple class of 
                enrollment'' refers to enrollment in a class of 
                enrollment described in subparagraph (B) or (D) of 
                paragraph (1).
    (d) Spouse; Married; Couple.--
            (1) In general.--In this Act, the terms ``spouse'' and 
        ``married'' mean, with respect to a person, another individual 
        who is the spouse of the person or married to the person, as 
        determined under applicable State law.
            (2) Couple.--The term ``couple'' means an individual and 
        the individual's spouse.
    (e) Child Defined.--
            (1) In general.--In this Act, except as otherwise provided, 
        the term ``child'' means an eligible individual who (consistent 
        with paragraph (3))--
                    (A) is under 25 years of age, and
                    (B) is a dependent of an eligible individual.
        The Board may adjust the age limitation in subparagraph (A) 
        with respect to part-time or full-time students if the Board, 
        through a Congressional Budget Office study, determines that 
        such limitation necessitates adjustments for cost savings 
        purposes.
            (2) Application of state law.--Subject to paragraph (3), 
        determinations of whether a person is the child of another 
        person shall be made in accordance with applicable State law.
            (3) National rules.--The National Health Board may 
        establish such national rules respecting individuals who will 
        be treated as children under this Act as the Board determines 
        to be necessary. Such rules shall be consistent with the 
        following principles:
                    (A) Step child.--A child includes a step child who 
                is an eligible individual living with an adult in a 
                regular parent-child relationship.
                    (B) Disabled child.--A child includes an unmarried 
                dependent eligible individual regardless of age who is 
                incapable of self-support because of mental or physical 
                disability which existed before age 21.
                    (C) Certain intergenerational families.--A child 
                includes the grandchild of an individual if--
                            (i) the parent of the grandchild is a child 
                        and the parent and grandchild are living with 
                        the grandparent; or
                            (ii) the grandparent has legal custody of 
                        the grandchild.
                    (D) Treatment of emancipated minors and married 
                individuals.--An emancipated minor or married 
                individual shall not be treated as a child.
                    (E) Children placed for adoption.--A child includes 
                a child who is placed for adoption with an eligible 
                individual, except when the child is a child in State 
                supervised care.
    (f) Additional Rules.--The Board shall provide for such additional 
exceptions and special rules, including rules relating to--
            (1) families in which members are not residing in the same 
        area or in which children are not residing with their parents,
            (2) the treatment of eligible individuals who are under 25 
        years of age and who are not a dependent of an eligible 
        individual,
            (3) changes in family composition occurring during a year,
            (4) treatment of children in State supervised care, and
            (5) treatment of children of parents who are separated or 
        divorced,
as the Board finds appropriate.

SEC. 1012. TREATMENT OF CERTAIN FAMILIES.

    (a) Treatment of Medicare-Eligible Individuals Who are Qualifying 
Employees or Spouses of Qualifying Employees.--
            (1) In general.--Except as specifically provided, in the 
        case of an individual who is an individual described in 
        paragraph (2) with respect to 2 consecutive months in a year 
        (and it is anticipated would be in the following month and in 
        such following month would be a medicare-eligible individual 
        but for this paragraph), the individual shall not be treated as 
        a medicare-eligible individual under this Act during such 
        following month and the remainder of the year.
            (2) Individual described.--An individual described in this 
        paragraph with respect to a month is an individual who is a 
        qualifying employee or the spouse or family member of a 
        qualifying employee in the month.
    (b) Separate Treatment for Certain Groups of Individuals.--In the 
case of a family that includes one or more individuals in a group 
described in subsection (c)--
            (1) all the individuals in each such group within the 
        family shall be treated collectively as a separate family, and
            (2) all the individuals not described in any such group 
        shall be treated collectively as a separate family.
    (c) Groups of Individuals Described.--Each of the following is a 
group of individuals described in this subsection:
            (1) AFDC recipients (as defined in section 1902(2)).
            (2) Disabled SSI recipients (as defined in section 
        1902(14)) .
            (3) SSI recipients (as defined in section 1902(46)) who are 
        not disabled SSI recipients.
            (4) Electing veterans (as defined in subsection (d)(1)).
            (5) Active duty military personnel (as defined in 
        subsection (d)(2)).
            (6) Electing American Indians (as defined in subsection 
        (d)(3)).
            (7) Prisoners (as defined in section 1902(37)).
    (d) Special Rules.--In this Act:
            (1) Electing veterans.--
                    (A) Defined.--Subject to subparagraph (B), the term 
                ``electing veteran'' means a veteran who makes an 
                election to enroll with a health plan of the Department 
                of Veterans Affairs under chapter 18 of title 38, 
                United States Code, as added by section 8101(a)(1).
                    (B) Family exception.--Subparagraph (A) shall not 
                apply with respect to coverage under a health plan 
                referred to in such subparagraph if, for the area in 
                which the electing veteran resides, such health plan 
                offers coverage to family members of an electing 
                veteran and the veteran elects family enrollment under 
                such plan (instead of individual enrollment).
            (2) Active duty military personnel.--
                    (A) In general.--Subject to subparagraph (B), the 
                term ``active duty military personnel'' means an 
                individual on active duty in the Uniformed Services of 
                the United States.
                    (B) Exception.--If an individual described in 
                subparagraph (A) elects family coverage under section 
                1073a(e)(2)(A) of title 10, United States Code (as 
                added by section 8001(a)), then paragraph (5) of 
                subsection (c) shall not apply with respect to such 
                coverage.
            (3) Electing american indians.--
                    (A) In general.--Subject to subparagraph (B), the 
                term ``electing American Indian'' means an eligible 
                individual who makes an election under section 8302(b) 
                of this Act.
                    (B) Family election for all individuals eligible to 
                elect.--No such election shall be made with respect to 
                an individual in a family (as defined without regard to 
                this section) unless such election is made for all 
                eligible individuals (described in section 8302(a)) who 
                are family members of the family.
            (4) Multiple choice.--Eligible individuals who are 
        permitted to elect coverage under more than one health plan or 
        program referred to in this subsection may elect which of such 
        plans or programs will be the applicable health plan under this 
        Act.
    (e) Qualifying Students.--
            (1) In general.--In the case of a qualifying student 
        (described in paragraph (2)), the student may elect to enroll 
        in a community-rate health plan offered for the health care 
        coverage area in which the school is located.
            (2) Qualifying student.--In paragraph (1), the term 
        ``qualifying student'' means an individual who--
                    (A) but for this subsection would receive coverage 
                under a health plan as a child of another person, and
                    (B) is a full-time student at a school in a health 
                care coverage area that is different from the area (or, 
                in the case of a large group sponsor, such coverage 
                area as the Board may specify) providing the coverage 
                described in subparagraph (A).
          (3) Payment rules.--
                    (A) Continued treatment as family.--Except as 
                provided in subparagraph (B), nothing in this 
                subsection shall be construed as affecting the payment 
                liabilities between families and community-rated health 
                plans.
                    (B) Transfer payment.--In the case of an election 
                under paragraph (1), for transfer payments see section 
                1238.
    (f) Spouses Living in Different Health Care Coverage Areas.--The 
Board shall provide for such special rules in applying this Act in the 
case of a couple in which the spouses reside in different health care 
coverage areas as the Board finds appropriate.
    (g) Children in State-Supervised Care.--
            (1) In general.--In the case of a qualifying child in 
        State-supervised care (as described in paragraph (2)), the 
        child shall be considered as a family of one and enrolled by 
        the State agency who has been awarded temporary or permanent 
        custody of the child (or which has legal responsibility for the 
        child) in a fee-for-service plan unless the State agency has 
        established a special health service delivery system designated 
        to customize and more efficiently provide health services to 
        children in State-supervised care, in which case the State 
        agency will enroll the child in the plan appropriate to ensure 
        access to such a special health service delivery system.
            (2) Children in state-supervised care.--For purposes of 
        paragraph (1), the term ``child in State-supervised care'' 
        means any child who is residing away from his or her parents 
        and is temporarily or permanently, on a voluntary or 
        involuntary basis, under the responsibility of a public child 
        welfare or juvenile services agency or court. Such term 
        includes children who are not yet made wards of the court or 
        adjudicated as delinquents residing in emergency shelter care, 
        children in the physical custody of public or private agencies, 
        and children who are with foster parents, or other group or 
        residential care providers. Such term also includes children 
        who are legally adopted and for whom the Federal or State 
        government is providing adoption assistance payments.

SEC. 1013. MULTIPLE EMPLOYMENT SITUATIONS.

    (a) Multiple Employment of an Individual.--In the case of an 
individual who--
            (1)(A) is not married or (B) is married and whose spouse is 
        not a qualifying employee (as defined in section 1901(b)(1)),
            (2) is not a child, and
            (3) who is a qualifying employee both of a community rate 
        employer and of a experience rate employer (or of 2 large group 
        sponsor employers),
the individual may elect the applicable health plan to be either a 
community-rated health plan (for the health care coverage area in which 
the individual resides) or an experience-rated health plan (for an 
employer employing the individual).
    (b) Multiple Employment Within a Family.--
            (1) Married couple with employment community rate employer 
        and with a experience rate employer.--In the case of a married 
        individual--
                    (A) who is a qualifying employee of a community 
                rate employer and whose spouse is a qualifying employee 
                of a experience rate employer, or
                    (B) who is a qualifying employee of an experience 
                rate employer and whose spouse is a qualifying employee 
                of a community rate employer,
        the individual and the individual's spouse may elect the 
        applicable health plan to be either a community-rated health 
        plan (for the health care coverage area in which the couple 
        resides) or an experience-rated health plan (for an employer 
        employing the individual or the spouse).
            (2) Married couple with different employers.--In the case 
        of a married individual--
                    (A) who is a qualifying employee of a experience 
                rate employer, and
                    (B) whose spouse is a qualifying employee of a 
                different experience rate employer,
        the individual and the individual's spouse may elect the 
        applicable health plan to be an experience-rated health plan 
        for an employer employing either the individual or the spouse.

SEC. 1014. TREATMENT OF RESIDENTS OF STATES WITH STATEWIDE SINGLE-PAYER 
              SYSTEMS.

    (a) Universal Coverage.--Notwithstanding the previous provisions of 
this title, except as provided in part 2 of subtitle C, in the case of 
an individual who resides in a State that has a Statewide single-payer 
system under section 1223, universal coverage shall be provided 
consistent with section 1222(3).
    (b) Individual Responsibilities.--In the case of an individual who 
resides in a single-payer State, the responsibilities of such 
individual under such system shall supersede the obligations of the 
individual under section 1002.

                          Subtitle B--Benefits

                 PART 1--COMPREHENSIVE BENEFIT PACKAGE

SEC. 1101. PROVISION OF COMPREHENSIVE BENEFITS BY PLANS.

    (a) In General.--Subject to the provisions of section 1603, the 
comprehensive benefit package shall consist of the following items and 
services (as described in this part), subject to the cost sharing 
requirements described in part 3, the exclusions described in part 4, 
and the duties and authority of the National Health Board described in 
part 5:
            (1) Hospital services.
            (2) Services of health professionals.
            (3) Emergency and ambulatory medical and surgical services.
            (4) Clinical preventive services.
            (5) Mental illness and substance abuse services.
            (6) Family planning services and services for pregnant 
        women.
            (7) Hospice care.
            (8) Home health care.
            (9) Extended care services.
            (10) Ambulance services.
            (11) Outpatient laboratory, radiology, and diagnostic 
        services.
            (12) Outpatient prescription drugs and biologicals.
            (13) Outpatient rehabilitation services.
            (14) Durable medical equipment and prosthetic and orthotic 
        devices.
            (15) Vision care.
            (16) Hearing aids for children.
            (17) Dental care.
            (18) Investigational treatments.
            (19) Optional services, such as--
                    (A) health education classes; and
                    (B) extra contractual services.
    (b) No Other Limitations or Cost Sharing.--The items and services 
in the comprehensive benefit package shall not be subject to any 
duration or scope limitation or any deductible, copayment, or 
coinsurance amount that is not required or authorized under this Act.

SEC. 1102. HOSPITAL SERVICES.

    (a) Coverage.--The hospital services described in this section are 
the following items and services:
            (1) Inpatient hospital services.
            (2) Outpatient hospital services.
            (3) 24-hour a day hospital emergency services.
    (b) Limitation.--The hospital services described in this section do 
not include hospital services provided for the treatment of a mental or 
substance abuse disorder (which are subject to section 1106), except 
for medical detoxification as required for the management of medical 
conditions associated with withdrawal from alcohol or drugs (which is 
not covered under such section).

SEC. 1103. SERVICES OF HEALTH PROFESSIONALS.

    (a) Coverage.--The items and services described in this section 
are--
            (1) inpatient and outpatient health professional services, 
        including consultations, that are provided in--
                    (A) a home, office, or other ambulatory care 
                setting; or
                    (B) an institutional setting; and
            (2) services and supplies (including drugs and biologicals 
        which cannot be self-administered) furnished as an incident to 
        such health professional services, of kinds which are commonly 
        furnished in the office of a health professional and are 
        commonly either rendered without charge or included in the bill 
        of such professional.
    (b) Definitions.--Unless otherwise provided in this Act, for 
purposes of this Act:
            (1) Health professional.--The term ``health professional'' 
        means an individual who provides health professional services.
            (2) Health professional services.--The term ``health 
        professional services'' means professional services that--
                    (A) are lawfully provided by a physician; or
                    (B) would be described in subparagraph (A) if 
                provided by a physician, but are provided by another 
                person who is legally authorized to provide such 
                services in the State in which the services are 
                provided.

SEC. 1104. EMERGENCY AND AMBULATORY MEDICAL AND SURGICAL SERVICES.

    The items and services described in this section are 24 hour-a-day 
emergency services, and ambulatory medical and surgical services 
provided by a facility that is not a hospital and that is legally 
authorized to provide the services in the State in which they are 
provided.

SEC. 1105. CLINICAL PREVENTIVE SERVICES.

    (a) Coverage.--The clinical preventive services described in this 
section are the following items or services provided consistent with 
any periodicity schedule or other modification promulgated by the Board 
under section 1153, including regulations establishing periodicity 
schedules for high risk populations:
            (1) Age appropriate immunizations consistent with the 
        periodicity schedule recommended by the Advisory Council on 
        Immunization Practices, in consultation with the American 
        Academy of Pediatrics.
            (2) Age appropriate tests and clinician visits (including 
        preventive counseling and health advice) for individuals under 
        the age of 20, consistent with a periodicity schedule 
        recommended by the American Academy of Pediatrics and other 
        experts in clinical preventive services for children and 
        adolescents.
            (3) Clinician visits for individuals age 20 and over as 
        follows:
                    (A) Every 3 years for individuals age 20 through 
                39.
                    (B) Biannually for individuals age 40 through 64.
                    (C) Annually for individuals age 65 and over.
            (4) Cholesterol tests every 5 years for individuals age 20 
        and over.
            (5) Papanicolaou smears and pelvic exams for females who 
        are at risk for cervical cancer--
                    (A) annually between the ages of 13 through 64 
                unless three consecutive annual pap smears have been 
                negative and it has been determined that the female is 
                not at risk for sexually transmitted diseases, in which 
                case coverage shall be once every 2 years; and
                    (B) every 2 years for females age 65 and over.
            (6) Annual screening for chlamydia and gonorrhea for 
        sexually active females unless such individual is determined by 
        the health care provider not to be at risk for sexually 
        transmitted diseases.
            (7) Mammograms for females as follows:
                    (A) Ages 40 through 49, every 2 years in 
                consultation with their physician.
                    (B) Ages 50 through 64, every year.
                    (C) Age 65 and over, every 2 years.
    (b) Colorectal Cancer Screenings.--The comprehensive benefit 
package shall include any revisions to colorectal cancer screenings 
that are recommended by the U.S. Preventive Services Task Force in the 
periodic update of the Guide to Clinical Preventive Services planned 
for release in November, 1994. The National Health Board shall utilize 
any subsequent U.S. Preventive Services Task Force updates as its 
primary guidance in updating these clinical preventive services.
    (c) Clinician Visit.--For purposes of this section, the term 
``clinician visit'' includes the following health professional services 
(as defined in section 1102(c)):
            (1) A complete medical history.
            (2) An appropriate physical examination.
            (3) Risk assessment, including for domestic violence.
            (4) Targeted health advice and counseling, including 
        nutrition counseling.
            (5) The administration of age-appropriate immunizations and 
        tests specified in subsection (a).

SEC. 1106. MENTAL ILLNESS AND SUBSTANCE ABUSE SERVICES.

    (a) Coverage.--The mental illness and substance abuse services that 
are described in this section are the following items and services for 
eligible individuals, as defined in section 1001(c), including 
individuals with multiple mental disorders or mental retardation and 
mental illness, who satisfy the eligibility requirements in subsection 
(b):
            (1) Inpatient mental illness and substance abuse treatment 
        (described in subsection (d)).
            (2) Residential mental illness and substance abuse 
        treatment (described in subsection (e)).
            (3) Intensive nonresidential mental illness and substance 
        abuse treatment (described in subsection (f)).
            (4) Outpatient mental illness and substance abuse treatment 
        (described in subsection (g)), including case management, 
        screening and assessment, crisis services, and collateral 
        services.
    (b) Eligibility.--The eligibility requirements referred to in 
subsection (a) are as follows:
            (1) Inpatient, residential, nonres- idential, and 
        outpatient treatment.--An eligible individual is eligible to 
        receive coverage for inpatient and residential mental illness 
        and substance abuse treatment, intensive nonresidential mental 
        illness and substance abuse treatment, or outpatient mental 
        illness and substance abuse treatment (except case management, 
        screening and assessment, crisis services, and collateral 
        services) if the individual--
                    (A) has, or has had during the 1-year period 
                preceding the date of such treatment, a diagnosable 
                mental disorder or a diagnosable substance abuse 
                disorder or, in the case of a child 5 years of age or 
                less, is at risk of a mental disorder; and
                    (B) is experiencing, or is at significant risk of 
                experiencing, functional impairment in family, work, 
                school, or community activities.
        For purposes of this paragraph, an individual who has a 
        diagnosable mental disorder or a diagnosable substance abuse 
        disorder, is receiving treatment for such disorder, but does 
        not satisfy the functional impairment criterion in subparagraph 
        (B) shall be treated as satisfying such criterion if the 
        individual would satisfy such criterion without such treatment.
            (2) Case management.--An eligible individual is eligible to 
        receive coverage for case management if the individual is 
        eligible to receive coverage for, and is receiving, mental 
        illness and substance abuse treatment with respect to a 
        diagnosable mental disorder or a diagnosable substance abuse 
        disorder.
            (3) Screening and assessment and crisis services.--All 
        eligible individuals enrolled under a health plan are eligible 
        to receive coverage for outpatient mental illness and substance 
        abuse treatment consisting of screening and assessment and 
        crisis services.
            (4) Collateral services.--An eligible individual is 
        eligible to receive coverage for outpatient mental illness and 
        substance abuse treatment consisting of collateral services if 
        the individual is a family member (described in section 
        1011(b)) of an individual who is receiving inpatient and 
        residential mental illness and substance abuse treatment, 
        intensive nonresidential mental illness and substance abuse 
        treatment, or outpatient mental illness and substance abuse 
        treatment.
    (c) Health Professional.--
            (1) In general.--The National Health Board shall specify 
        those health professional services described in section 1103 
        that shall be treated as inpatient, residential, intensive 
        nonresidential, and outpatient mental illness and substance 
        abuse treatment.
            (2) Rule of construction.--Nothing in section 1861(e) of 
        the Social Security Act, including paragraph (4), shall be 
        construed as requiring that individuals receiving items and 
        services under this section be under the care of a physician 
        when such individuals are under the care of a mental health or 
        substance abuse health professional in a State in which such 
        care is permitted by State law.
    (d) Inpatient Treatment.--
            (1) Definition.--For purposes of this subtitle, the term 
        ``inpatient mental illness and substance abuse treatment'' 
        means the items and services described in paragraphs (1) 
        through (3) of section 1861(b) of the Social Security Act when 
        provided with respect to a diagnosable mental disorder or a 
        diagnosable substance abuse disorder to an inpatient of a 
        hospital or psychiatric hospital.
            (2) Limitations.--Coverage for inpatient mental illness and 
        substance abuse treatment is subject to the following 
        limitations:
                    (A) Inpatient hospital treatment for substance 
                abuse.--Such treatment, when provided in a hospital or 
                a psychiatric hospital with respect to a diagnosable 
                substance abuse disorder, is covered under this section 
                only for detoxification requiring the management of 
                psychiatric conditions associated with withdrawal from 
                alcohol or drugs. The items and services described in 
                this section do not include medical detoxification as 
                required for the management of medical conditions 
                associated with withdrawal from alcohol or drugs (which 
                is covered under section 1102).
                    (B) Annual limit.--Prior to January 1, 2001, such 
                treatment, when furnished to an inpatient of a hospital 
                or psychiatric hospital is subject to an aggregate 
                annual limit of 34 days, 15 of which may not be reduced 
                in substitution for other covered services. On or after 
                such date, such annual aggregate limit shall not apply.
    (e) Residential Treatment.--
            (1) Definition.--For purposes of this subtitle, the term 
        ``residential mental illness and substance abuse treatment'' 
        means the items and services provided with respect to a 
        diagnosable mental disorder or a diagnosable substance abuse 
        disorder to a resident of a residential treatment center, 
        residential detoxification center, crisis residential program, 
        mental illness residential treatment program, therapeutic 
        family home, therapeutic community, group treatment home, 
        community residential treatment program, or recovery center for 
        substance abuse.
            (2) Annual limit.--
                    (A) In general.--Prior to January 1, 2001, the 
                number of covered days of residential mental illness 
                and substance abuse treatment that are available to an 
                individual under the 34-day limit described in the 
                first sentence of subsection (d)(2)(B), shall be 
                reduced by 1 day for each 4 covered days of residential 
                mental illness and substance abuse treatment that are 
                provided to the individual, until such number is 
                reduced to 15. After such number is reduced to 15, no 
                residential treatment may be covered, except as 
                provided in subparagraph (B). On or after such date, 
                such annual aggregate limit shall not apply.
                    (B) Nonapplication.--The limit contained in 
                subparagraph (A) shall not apply to mental health and 
                substance abuse treatment provided in a therapeutic 
                community, halfway house, recovery center or other 
                comparably inexpensive residential mental health and 
                substance abuse treatment facility, as determined by 
                the National Health Board.
    (f) Intensive Nonresidential Treatment.--
            (1) Definition.--For purposes of this subtitle, the term 
        ``intensive nonresidential mental illness and substance abuse 
        treatment'' means diagnostic or therapeutic items or services 
        provided with respect to a diagnosable mental disorder or a 
        diagnosable substance abuse disorder to an individual--
                    (A) participating in a partial hospitalization 
                program, a mental health consumer-run service center, a 
                day treatment program, a psychiatric rehabilitation 
                program, or an ambulatory detoxification program; or
                    (B) receiving home-based mental illness services or 
                behavioral aide mental illness services.
            (2) Limitations.--Coverage for intensive nonresidential 
        mental illness and substance abuse treatment is subject to the 
        following limitations:
                    (A) Treatment purposes.--Such treatment is covered 
                only when provided--
                            (i) to avert the need for treatment in 
                        residential or inpatient settings;
                            (ii) to facilitate the earlier discharge of 
                        an individual receiving inpatient or 
                        residential care;
                            (iii) to restore the functioning of an 
                        individual with a diagnosable mental disorder 
                        or a diagnosable substance abuse disorder; or
                            (iv) to assist such an individual to 
                        develop the skills and gain access to the 
                        support services the individual needs to 
                        achieve the maximum level of functioning of the 
                        individual within the community.
                    (B) Detoxification.--Intensive nonresidential 
                substance abuse treatment consisting of detoxification 
                is covered only if it is provided in the context of a 
                treatment program.
    (g) Outpatient Treatment.--
            (1) Definition.--For purposes of this subtitle, the term 
        ``outpatient mental illness and substance abuse treatment'' 
        means the following services provided with respect to a 
        diagnosable mental disorder or a diagnosable substance abuse 
        disorder in an outpatient setting:
                    (A) Screening and assessment.
                    (B) Diagnosis.
                    (C) Medications management.
                    (D) Substance abuse counseling and relapse 
                prevention.
                    (E) Crisis services.
                    (F) Somatic treatment services.
                    (G) Psychotherapy.
                    (H) Case management.
                    (I) Collateral services.
            (2) Limitations.--Coverage for outpatient mental illness 
        and substance abuse treatment is subject to the following 
        limitations:
                    (A) Health professional services.--Such treatment 
                is covered only when it constitutes health professional 
                services (as defined in section 1103(b)(2)).
                    (B) Detoxification.--Outpatient substance abuse 
                treatment consisting of detoxification is covered only 
                if it is provided in the context of a treatment 
                program.
    (h) Management of Care for Mental Illness and Substance Abuse.--
            (1) Provision of treatment.--Quality managed care 
        techniques shall be utilized by health plans to ensure that all 
        necessary care is provided in the most appropriate, cost 
        effective setting, and that unnecessary care is not provided.
            (2) Quality managed care.--The term ``quality managed 
        care'' refers to the administration of benefits through the 
        methods of central intake, preauthorization, and utilization 
        review. Health plans may contract with specialized behavioral 
        care entities to administer benefits if such entities are 
        certified by the State as proficient in the use of quality 
        managed care techniques that facilitate the provision of 
        clinically appropriate, cost-effective, and confidential 
        treatment, providing continuity of care between and among 
        treatment providers.
            (3) Treatment decisions.--
                    (A) Treatment placement decisions shall be based 
                primarily on medical necessity. Criteria used for 
                placement shall be based on uniform assessment tools 
                recognized by treatment and other professional 
                organizations in the fields of mental illness and 
                substance abuse or approved for use by the National 
                Health Board and shall be publicly available.
                    (B) All treatment assessment and placement 
                decisions or review of such decisions shall be made by 
                personnel--
                            (i) licensed, certified, or otherwise 
                        credentialed by the State in the field for 
                        which the assessment or treatment is sought 
                        (such as mental health or substance abuse) and 
                        qualified to review utilization of the specific 
                        treatment delivered; and
                            (ii) with no financial stake in the outcome 
                        of such decisions.
            (4) Rule of construction.--Nothing in this section shall be 
        construed as prohibiting health plans from providing mental 
        health and substance abuse treatment through fee-for-service 
        arrangements.
    (i) Special Delivery Requirements for Services Provided to 
Children.--
            (1) Requiring services to be provided through organized 
        systems of care.--Health plans shall ensure that the mental 
        illness and substance abuse services described in this section 
        and furnished to an eligible person are furnished through 
        organized systems of care, as described in paragraph (2), if 
        the eligible person is a person under 22 years of age who has a 
        serious emotional disturbance or a substance abuse disorder, 
        and who is, or is at imminent risk of being, involved with one 
        or more public child-serving agencies, including child welfare, 
        special education, and juvenile or criminal justice.
            (2) Requirements of system of care.--As used in this 
        subsection, the term ``organized system of care'' means a 
        community-based service delivery network, which may consist of 
        public and private providers, that meets the following 
        requirements:
                    (A) The system has established linkages with 
                existing mental illness and substance abuse service 
                delivery programs in the plan service area (or is in 
                the process of developing or operating a system with 
                appropriate public agencies in the area to coordinate 
                the delivery of such services to individuals in the 
                area).
                    (B) The system provides for the participation and 
                coordination of multiple agencies and providers that 
                serve the needs of children in the area, including 
                agencies and providers involved with child welfare, 
                education, juvenile or criminal justice, health care, 
                mental health, and substance abuse prevention and 
                treatment.
                    (C) The system provides for the involvement of the 
                families of children to whom mental illness and 
                substance abuse services are provided in the planning 
                of treatment and the delivery of services.
                    (D) The system provides for the development and 
                implementation of individualized treatment plans by 
                multidisciplinary and multiagency teams, that are 
                recognized and followed by the applicable agencies and 
                providers in the area.
                    (E) The system ensures the delivery and 
                coordination of the range of mental illness and 
                substance abuse services required by individuals under 
                22 years of age who have a serious emotional 
                disturbance or a substance abuse disorder.
                    (F) The system provides for the management of the 
                individualized treatment plans described in 
                subparagraph (D) and for a flexible response to changes 
                in treatment needs over time.
            (3) Full implementation of plan.--Subject to paragraph 
        (2)(F), the State shall assure that public or philanthropic 
        resources are available to implement each child's plan, 
        including residential treatment in excess of the limit set 
        forth in subsection (e) if the State determines that such 
        treatment is clinically appropriate.
            (4) Rule of construction.--The organized system of care 
        shall not exclude health professionals whose services are 
        covered by the health plan selected by the child or the child's 
        legal guardian.
            (5) Requirements of states.--The State shall ensure that 
        public agencies furnishing services to children with serious 
        emotional disturbances, including mental health, child welfare, 
        special education, juvenile justice, and other agencies, 
        establish policies that result in effective collaboration and 
        coordination among such agencies and the health plans 
        established in the State. Such collaboration may include 
        policies to blend public funds with health plan resources to 
        meet such children's needs or risk adjustment payments to 
        health plans.

SEC. 1107. FAMILY PLANNING SERVICES AND SERVICES FOR PREGNANT WOMEN.

    The services described in this section are the following items and 
services:
            (1) Voluntary comprehensive family planning services, 
        including family planning counseling and education.
            (2) Contraceptive drugs and devices, subject to approval by 
        the Secretary under the Federal Food, Drug, and Cosmetic Act.
            (3) Services for pregnant women.

SEC. 1108. HOSPICE CARE.

    The hospice care described in this section is the items and 
services described in paragraph (1) of section 1861(dd) of the Social 
Security Act, as defined in paragraphs (2), (3), and (4)(A) of such 
section, except that all references to the Secretary of Health and 
Human Services in such paragraphs shall be treated as references to the 
National Health Board.

SEC. 1109. HOME HEALTH CARE.

    (a) Coverage.--The home health care described in this section is--
            (1) the items and services described in section 1861(m) of 
        the Social Security Act; and
            (2) home infusion drug therapy services.
    (b) Limitations.--Coverage for home health care is subject to the 
following limitations:
            (1) Inpatient treatment alternative.--Such care is covered 
        only as an alternative to inpatient treatment in a hospital, 
        skilled nursing facility, or rehabilitation facility as a 
        result of an illness, injury, disorder or other health 
        condition.
            (2) Reevaluation.--At the end of each 60-day period of home 
        health care, the need for continued care shall be reevaluated 
        by the person who is primarily responsible for providing the 
        home health care. Additional periods of care are covered only 
        if such person determines that the requirement in paragraph (1) 
        is satisfied.

SEC. 1110. EXTENDED CARE SERVICES.

    (a) Coverage.--The extended care services described in this section 
are the items and services described in section 1861(h) of the Social 
Security Act when provided to an inpatient of a skilled nursing 
facility or a rehabilitation facility.
    (b) Limitations.--Coverage for extended care services is subject to 
the following limitations:
            (1) Hospital services alternative.--Such services are 
        covered only as an alternative to treatment for inpatient 
        hospital services as a result of an illness, injury, disorder 
        or other health condition.
            (2) Annual limit.--Such services are subject to an 
        aggregate annual limit of 100 days, except that such limit may 
        be waived if the need for continued care is re-evaluated by the 
        prescribing health care professional and determined to be a 
        cost effective alternative to necessary hospital services.

SEC. 1111. AMBULANCE SERVICES.

    The ambulance services described in this section are covered only 
when indicated by the medical condition of the individual concerned. 
Such services include--
            (1) ground transportation by ambulance; or
            (2) air or water transportation by an aircraft or vessel 
        equipped for transporting an injured or sick individual in 
        cases in which there is no other method of transportation or 
        where the use of another method of transportation is 
        contraindicated by the medical condition of the individual 
        concerned.

SEC. 1112. OUTPATIENT LABORATORY, RADIOLOGY, AND DIAGNOSTIC SERVICES.

    The items and services described in this section are laboratory, 
radiology, and diagnostic services (including genetic testing and 
counseling) provided upon prescription to individuals who are not 
inpatients of a hospital, hospice, skilled nursing facility, or 
rehabilitation facility.

SEC. 1113. OUTPATIENT PRESCRIPTION DRUGS AND BIOLOGICALS.

    The items described in this section are the following:
            (1) Covered outpatient drugs described in section 1861(t) 
        of the Social Security Act--
                    (A) except that, for purposes of this section, a 
                medically accepted indication with respect to the use 
                of a covered outpatient drug includes any use which has 
                been approved by the Food and Drug Administration for 
                the drug, and includes another use of the drug if--
                            (i) the drug has been approved by the Food 
                        and Drug Administration; and
                            (ii) such use is supported by one or more 
                        citations which are included (or approved for 
                        inclusion) in one or more of the following 
                        compendia: the American Hospital Formulary 
                        Service-Drug Information, the American Medical 
                        Association Drug Evaluations, the United States 
                        Pharmacopoeia-Drug Information, and other 
                        authoritative compendia as identified by the 
                        Secretary, unless the Secretary has determined 
                        that the use is not medically appropriate or 
                        the use is identified as not indicated in one 
                        or more such compendia; or
                            (iii) such use is medically accepted based 
                        on supportive clinical evidence in peer 
                        reviewed medical literature appearing in 
                        publications which have been identified for 
                        purposes of this clause by the Secretary; and
                    (B) notwithstanding any exclusion from coverage 
                that may be made with respect to such a drug under 
                title XVIII of such Act pursuant to section 1862(a)(18) 
                of such Act.
            (2) Blood clotting factors when provided on an outpatient 
        basis.
            (3) Medical foods prescribed by a physician that comply 
        with the requirements of the Federal Food, Drug, and Cosmetic 
        Act and that treat inborn errors of metabolism identified by 
        the Secretary as rendering a person unable to sustain life 
        without significant mental or physical impairment by the 
        ingestion of conventional foods.
            (4) Accessories and supplies that are used directly with 
        drugs and biologics to achieve the therapeutic benefit of such 
        drugs or biologics.

SEC. 1114. OUTPATIENT REHABILITATION SERVICES.

    (a) Coverage.--The outpatient rehabilitation services described in 
this section are--
            (1) outpatient occupational therapy;
            (2) outpatient physical therapy;
            (3) outpatient respiratory therapy; and
            (4) outpatient speech-language pathology services and 
        audiology services.
    (b) Limitations.--Coverage for outpatient rehabilitation services 
is subject to the following limitations:
            (1) Restoration of capacity or minimization of 
        limitations.--Such services include only items or services used 
        to restore functional capacity or minimize limitations on 
        physical and cognitive functions as a result of an illness, 
        injury, disorder or other health condition.
            (2) Maintenance of function or prevention of 
        deterioration.--To the extent that the services described in 
        paragraph (1) are for the purpose of maintaining functioning or 
        preventing deterioration, such services shall be limited to--
                    (A) the initial evaluation and periodic oversight 
                of the patient's needs by a qualified rehabilitation 
                health professional;
                    (B) the designing by the qualified rehabilitation 
                health professional of a maintenance or prevention 
                program that is appropriate considering the capacity 
                and tolerance of the patient and the treatment 
                objectives;
                    (C) the instruction of the patient, family members, 
                or support personnel in carrying out the program; and
                    (D) reevaluations.
            (3) Reevaluation.--
                    (A) In general.--At the end of each 60-day period 
                of outpatient rehabilitation services (other than 
                services described in paragraph (2)), the need for 
                continued services shall be reevaluated by the person 
                who is primarily responsible for providing the 
                services. Additional periods of services are covered 
                only if such person determines that the requirement in 
                paragraph (1) is satisfied.
                    (B) Qualified rehabilitation health professional.--
                Periodically, outpatient rehabilitation services 
                described in paragraph (2) shall be reevaluated by a 
                qualified rehabilitation health professional.

SEC. 1115. DURABLE MEDICAL EQUIPMENT, PROSTHETIC DEVICES, ORTHOTICS, 
              AND PROSTHETICS.

    (a) Coverage.--The items and services described in this section 
are--
            (1) durable medical equipment;
            (2) prosthetic devices (other than dental devices) which 
        replace all or part of the function of an internal body organ 
        (including devices that are surgically inserted, devices that 
        are physically attached to the body, such as colostomy bags and 
        supplies directly related to colostomy care, and external 
        devices);
            (3) orthotics (leg, arm, back and neck braces) and 
        prosthetics (artificial legs, arms and eyes);
            (4)(A) accessories and supplies which are used directly 
        with equipment or devices described in paragraphs (1) through 
        (3) to achieve the therapeutic benefits of such equipment or 
        devices or to assure the proper functioning of such equipment 
        or device;
            (B) replacement of such equipment or devices when required 
        in cases of loss irreparable damage, wear, or because of a 
        change in the patient's condition; and
            (C) repair and maintenance of such equipment and devices; 
        and
            (5) fitting (including adjustments) and training for use of 
        the items described in paragraphs (1) through (4).
    (b) Limitation.--An item or service described in this section is 
covered only if it improves functional ability or prevents or minimizes 
deterioration in function.
    (c) Durable Medical Equipment.--For purposes of this subtitle, the 
term ``durable medical equipment'' has the meaning given such term in 
section 1861(n) of the Social Security Act.

SEC. 1116. VISION CARE.

    (a) Coverage.--The vision care described in this section is routine 
eye examinations, diagnosis, and treatment for defects in vision.
    (b) Limitation.--Eyeglasses and contact lenses are covered only for 
individuals less than 18 years of age, according to a periodicity 
schedule established by the Board.

SEC. 1117. HEARING AIDS FOR CHILDREN.

    The items described in this section are hearing aids for 
individuals up to age 18 when recommended by a physician or 
audiologist.

SEC. 1118. DENTAL CARE.

    (a) Coverage.--The dental care described in this section is the 
following:
            (1) Emergency dental treatment, including simple 
        extractions, for acute infections, bleeding, and injuries to 
        natural teeth and oral structures for conditions requiring 
        immediate attention to prevent risks to life or significant 
        medical complications, as specified by the National Health 
        Board.
            (2) Prevention and diagnosis of dental disease, including 
        oral dental examinations, radiographs, dental sealants, 
        fluoride application, and dental prophylaxis.
            (3) Treatment of dental disease, including routine 
        fillings, prosthetics for genetic defects, periodontal 
        maintenance, and endodontic services.
            (4) Space maintenance procedures to prevent orthodontic 
        complications.
            (5) Interceptive orthodontic treatment to prevent severe 
        malocclusion.
    (b) Limitations.--Coverage for dental care is subject to the 
following limitations:
            (1) Prior to January 1, 2001, the items and services 
        described in paragraphs (2) and (3) of subsection (a) are 
        covered only for individuals less than 18 years of age. On or 
        after such date, such items and services are covered for all 
        eligible individuals enrolled under a health plan, except that 
        dental sealants and endodontic services are not covered for 
        individuals 18 years of age or older.
            (2) The items and services described in subsection (a)(4) 
        are covered only for individuals at least 3 years of age but 
        less than 13 years of age when determined to be medically 
        necessary or appropriate to prevent future need for more costly 
        services otherwise covered under this section.
            (3) Prior to January 1, 2001, the items and services 
        described in subsection (a)(5) are not covered. On or after 
        such date, such items and services are covered only for 
        individuals at least 6 years of age, but less than 12 years of 
        age.

SEC. 1119. INVESTIGATIONAL TREATMENTS.

    (a) Coverage.--The items and services described in this section are 
qualifying investigational treatments (as defined in subsection (c)) 
that are administered for a disease, disorder, or other health 
conditions. A health plan shall allow individuals, when medically 
appropriate, to participate in an investigational therapy, and shall 
cover the patient care provided pursuant to investigational treatments 
as described in subsection (b).
    (b) Patient Care During Investigational Treatments.--The 
comprehensive benefit package includes an item or service described in 
any other section of this part, subject to the limitations and cost 
sharing requirements applicable to the item or service, when the item 
or service is provided to an individual in the course of an 
investigational treatment, if--
            (1) the treatment is a qualifying investigational 
        treatment; and
            (2) the item or service is required to provide patient care 
        pursuant to the design of the trial, except those services 
        normally paid for by other funding sources (as defined by the 
        National Health Board) such as the cost of the investigational 
        agent or device itself, and the costs of managing the research.
Items or services subject to the exception in paragraph (2), may be 
covered in addition to patient care at the discretion of the health 
plan so long as the plan makes a determination based on objective 
protocols applied consistently to all enrollees.
    (c) Definitions.--For purposes of this subtitle:
            (1) Qualifying investigational treatment.--The term 
        ``qualifying investigational treatment'' means a treatment--
                    (A) the effectiveness of which has not been 
                determined; and
                    (B) that is under clinical investigation as part of 
                an approved research trial.
            (2) Approved research trial.--The term ``approved research 
        trial'' means--
                    (A) a research trial approved by the Secretary of 
                Health and Human Services, the Director of the National 
                Institutes of Health, the Commissioner of the Food and 
                Drug Administration, the Secretary of Veterans Affairs, 
                the Secretary of Defense, or a qualified 
                nongovernmental research entity as defined in 
                guidelines of the National Institutes of Health; or
                    (B) a peer-reviewed and approved research program, 
                as defined by the Secretary of Health and Human 
                Services, conducted for the primary purpose of 
                determining whether or not a treatment is safe, 
                efficacious, or having any other characteristic of a 
                treatment which must be demonstrated in order for the 
                treatment to be medically necessary or appropriate.
        Nothing in this section shall be construed as limiting the 
        authority of the Commissioner of Food and Drugs over clinical 
        investigations of products within the Commissioner's 
        jurisdiction.

SEC. 1120. OPTIONAL SERVICES.

    (a) Health Education.--Health education and training programs, 
including community-based programs, may be provided at the discretion 
of the health plan to encourage the reduction of behavioral risk 
factors and to promote health activities. Such education and training 
programs may include smoking cessation, nutrition counseling, stress 
management, support groups, and physical training classes. This 
subsection shall not be construed to include or limit education or 
training that is provided in the course of the delivery of health 
professional services under section 1102. Health care providers may 
refer plan members to health education programs that best meet their 
needs based on an assessment of individual risks and learning styles. 
Health plans shall inform health providers about the availability of 
such health education programs annually, either at the time of paying 
the first claim to that provider, or in the case of a network plan, at 
the time of contracting with the provider.
    (b) Extra Contractual Services.--
            (1) In general.--A health plan may provide coverage to 
        individuals enrolled under the plan for extra contractual items 
        and services determined appropriate by the plan and the 
        individual (or in appropriate circumstances the parent or legal 
        guardian of the individual).
            (2) Definition.--As used in this section, the term ``extra 
        contractual items and services'' means, with respect to a 
        health plan, case management services and those medically 
        appropriate alternatives (either alternative items or services 
        or alternative care settings) to traditional covered items or 
        services that are determined by the health plan to be the most 
        cost effective way to provide appropriate treatment to the 
        enrolled individual.
    (c) Disputed Claims.--A decision by a health plan to permit or deny 
the provision of optional services shall not be subject to a benefit 
discrimination review or other review unless such review involves a 
claim of discrimination under this Act.

                          PART 2--COST SHARING

SEC. 1131. COST SHARING.

    (a) In General.--Each health plan shall offer to individuals 
enrolled under the plan one, but not more than one, of the following 
cost sharing schedules, which schedule shall be offered to all such 
enrollees:
            (1) Lower cost sharing (described in section 1132).
            (2) Higher cost sharing (described in section 1133).
            (3) Combination cost sharing (described in section 1134).
    (b) Cost Sharing for Low-Income Families.--For provisions relating 
to reducing cost sharing for certain low-income families, see section 
1281.
    (c) Deductibles, Cost Sharing, and Out-of-Pocket Limits on Cost 
Sharing.--
            (1) Application on an annual basis.--The deductibles and 
        out-of-pocket limits on cost sharing for a year under the 
        schedules referred to in subsection (a) shall be applied based 
        upon expenses incurred for items and services furnished in the 
        year.
            (2) Individual and family general deductibles.--
                    (A) Individual.--Subject to subparagraph (B), with 
                respect to an individual enrolled under a health plan 
                (regardless of the class of enrollment), any individual 
                general deductible in the cost sharing schedule offered 
                by the plan represents the amount of countable expenses 
                (as defined in subparagraph (C)) that the individual 
                may be required to incur in a year before the plan 
                incurs liability for expenses for such items and 
                services furnished to the individual.
                    (B) Family.--In the case of an individual enrolled 
                under a health plan under a family class of enrollment 
                (as defined in section 1011(c)(2)(A)), the individual 
                general deductible under subparagraph (A) shall not 
                apply to countable expenses incurred by any member of 
                the individual's family in a year at such time as the 
                family has incurred, in the aggregate, countable 
                expenses in the amount of the family general deductible 
                for the year.
                    (C) Countable expense.--In this paragraph, the term 
                ``countable expense'' means, with respect to an 
                individual for a year, an expense for an item or 
                service covered by the comprehensive benefit package 
                that is subject to the general deductible and for 
                which, but for such deductible and any other cost 
                sharing under this subtitle, a health plan is liable 
                for payment. The amount of countable expenses for an 
                individual for a year under this paragraph shall not 
                exceed the individual general deductible for the year.
            (3) Coinsurance and copayments.--After a general or 
        separate deductible that applies to an item or service covered 
        by the comprehensive benefit package has been satisfied for a 
        year, subject to paragraph (4), coinsurance and copayments are 
        amounts (expressed as a percentage of an amount otherwise 
        payable or as a dollar amount, respectively) that an individual 
        may be required to pay with respect to the item or service.
            (4) Individual and family limits on cost sharing.--
                    (A) Individual.--Subject to subparagraph (B), with 
                respect to an individual enrolled under a health plan 
                (regardless of the class of enrollment), the individual 
                out-of-pocket limit on cost sharing in the cost sharing 
                schedule offered by the plan represents the amount of 
                expenses that the individual may be required to incur 
                under the plan in a year because of a general 
                deductible, separate deductibles, copayments, and 
                coinsurance before the plan may no longer impose any 
                cost sharing with respect to items or services covered 
                by the comprehensive benefit package that are provided 
                to the individual.
                    (B) Family.--In the case of an individual enrolled 
                under a health plan under a family class of enrollment 
                (as defined in section 1011(c)(2)(A)), the family out-
                of-pocket limit on cost sharing in the cost sharing 
                schedule offered by the plan represents the amount of 
                expenses that members of the individual's family, in 
                the aggregate, may be required to incur under the plan 
                in a year because of a general deductible, separate 
                deductibles, copayments, and coinsurance before the 
                plan may no longer impose any cost sharing with respect 
                to items or services covered by the comprehensive 
                benefit package that are provided to any member of the 
                individual's family.
                    (C) Amount of out of pocket limits.--The amount of 
                the out of pocket limit described--
                            (i) in subparagraph (A) is $2,500, and
                            (ii) in subparagraph (B), is $3,000.

SEC. 1132. LOWER COST SHARING.

    (a) In General.--The lower cost sharing schedule referred to in 
section 1131 that is offered by a health plan--
            (1) shall have a deductible of $250 per inpatient hospital 
        admission, and shall not have any other required deductibles;
            (2) except as provided in paragraph (4)--
                    (A) shall prohibit payment of any coinsurance; and
                    (B) subject to section 1152, shall require payment 
                of the copayment for items or services as follows--
                            (i) for items and services described in 
                        sections 1102(a)(1), 1104, 1105, 1106(g)(1)(H), 
                        1107, 1108, 1109, 1110, 1111, 1112, 1115, 1117, 
                        and for clinician visits and associated 
                        services related to prenatal care and one 
                        postpartum visit, no copayment is permitted;
                            (ii) for items and services described in 
                        sections 1102(a)(2), 1103, 1106 (subject to 
                        clause (i)), 1113, 1114, 1115, and 1116, the 
                        copayment is $10 per visit (or per prescription 
                        in the case of items described in section 
                        1113);
                            (iii) for services described in section 
                        1118(a)(4) and 1118(a)(5), the copayment is $20 
                        per visit;
                            (iv) for items and services described in 
                        section 1102(a)(3) and 1104, the copayment is 
                        $25 per visit unless the patient has an 
                        emergency medical condition as defined in 
                        section 1867(e)(1) of the Social Security Act; 
                        and
                            (v) for items and services described in 
                        sections 1119, all cost sharing rules shall be 
                        determined by the health plans; and
            (3) shall require payment of coinsurance for an out-of-
        network item or service (as defined in section 1502(f)) in an 
        amount that is a percentage (determined under subsection (b)) 
        of the applicable payment rate for the item or service 
        established under section 1211(b), but only if the item or 
        service is subject to coinsurance under the higher cost sharing 
        schedule described in section 1133 or is a clinical preventive 
        service as defined in section 1104.
    (b) Out-of-Network Coinsurance Percentage.--
            (1) In general.--The National Health Board shall determine 
        a percentage referred to in subsection (a)(3). The percentage--
                    (A) may not be less than 20 percent; and
                    (B) shall be the same with respect to all out-of-
                network items and services that are subject to 
                coinsurance, except as provided in paragraph (2).
            (2) Exception.--The National Health Board may provide for a 
        percentage that is greater than a percentage determined under 
        paragraph (1) in the case of an out-of-network item or service 
        for which, under the higher cost sharing schedule described in 
        section 1133, the coinsurance is greater than 20 percent of the 
        applicable payment rate.

SEC. 1133. HIGHER COST SHARING.

    The higher cost sharing schedule referred to in section 1131 that 
is offered by a health plan--
            (1) shall have an annual individual general deductible of 
        $200 and an annual family general deductible of $400 that apply 
        with respect to expenses incurred for all items and services in 
        the comprehensive benefit package except--
                    (A) an item or service with respect to which a 
                separate individual deductible applies under paragraph 
                (2); or
                    (B) an item or service described in paragraph (3), 
                (4), or (5) with respect to which a deductible does not 
                apply;
            (2) shall require an individual to incur expenses in a year 
        for outpatient prescription drugs and biologicals (described in 
        section 1113) equal to $250 before the plan provides benefits 
        for such items to the individual;
            (3) shall require an individual to incur expenses in a year 
        for dental care described in section 1118, except the items and 
        services for prevention and diagnosis of dental disease 
        described in section 1118(a)(2), equal to $50 before the plan 
        provides benefits for such care to the individual;
            (4) may not require any deductible for clinical preventive 
        services (described in section 1105);
            (5) may not require any deductible for family planning 
        services as defined in section 1107(1), clinician visits and 
        associated services related to prenatal care or 1 post-partum 
        visit under section 1107;
            (6) may not require any deductible for the items and 
        services for prevention and diagnosis of dental disease 
        described in section 1126(a)(2);
            (7) shall prohibit payment of any copayment; and
            (8) subject to section 1152, shall require payment of 
        coinsurance for an item or service as follows--
                    (A) for items and services described in section 
                1105, family planning services and clinical visits and 
                associated services related to prenatal care and one 
                post partum visit, and case management services under 
                section 1106, no coinsurance is permitted;
                    (B) for items and services described in section 
                1118(a)(4) and 1118(a)(5), the coinsurance is 40 
                percent of the applicable payment rate;
                    (C) for outpatient services under section 
                1106(g)(1)(G)--
                            (i) the coinsurance with respect to the 
                        first five outpatient psychotherapy visits is 
                        20 percent of the applicable payment rate;
                            (ii) the coinsurance with respect to any 
                        subsequent outpatient psychotherapy visits is 
                        50 percent of the applicable payment rate; and
                            (iii) the coinsurance with respect to 
                        children for outpatient psychotherapy visits is 
                        20 percent of the applicable payment rate; and
                    (D) for all other items and services, the 
                coinsurance is 20 percent of the applicable payment 
                rate.
For purposes of this section, the term ``applicable payment rate'', 
when used with respect to an item or service, means the applicable 
payment rate for the item or service established under section 1523(e).

SEC. 1134. COMBINATION COST SHARING.

    (a) In General.--The combination cost sharing schedule referred to 
in section 1131 that is offered by a health plan shall require 
different cost sharing for in-network items and services than for out-
of-network items and services.
    (b) In-Network Items and Services.--With respect to an in-network 
item or service (as defined in section 1514(c)(1)), the combination 
cost sharing schedule that is offered by a health plan--
            (1) shall have a deductible of $250 per inpatient hospital 
        admission, and shall not have any other required deductibles;
            (2) shall prohibit payment of any coinsurance; and
            (3) shall require payment of a copayment in accordance with 
        the lower cost sharing schedule described in section 1132.
    (c) Out-of-Network Items and Services.--With respect to an out-of-
network item or service (as defined in section 1514(c)(2)), the 
combination cost sharing schedule that is offered by a health plan--
            (1) shall require an individual and a family to incur 
        expenses before the plan provides benefits for the item or 
        service in accordance with the deductibles under the higher 
        cost sharing schedule described in section 1133;
            (2) shall prohibit payment of any copayment; and
            (3) shall require payment of coinsurance in accordance with 
        such schedule, except with respect to clinical preventive 
        services obtained out-of-network that shall be subject to a 
        coinsurance percentage as determined by the National Health 
        Board under section 1132.

SEC. 1135. INDEXING DOLLAR AMOUNTS RELATING TO COST SHARING.

    (a) In General.--Any deductible, copayment, out-of-pocket limit on 
cost sharing, or other amount expressed in dollars in this subtitle for 
items or services provided in a year after 1994 shall be such amount 
increased by the product of the factors described in subsection (b) for 
the year and for each previous year after 1994, minus 1. Any increase 
(or decrease) under this subsection shall be rounded.
    (b) Factor.--
            (1) In general.--The factor described in this subsection 
        for a year is 1 plus the general health care inflation factor 
        (as specified in section 6001(a)(3) and determined under 
        paragraph (2)) for the year.
            (2) Determination.--In computing such factor for a year, 
        the percentage increase in the CPI for a year (referred to in 
        section 6001(b)) shall be determined based upon the percentage 
        increase in the average of the CPI for the 12-month period 
        ending with August 31 of the previous year over such average 
        for the preceding 12-month period.

                           PART 3--EXCLUSIONS

SEC. 1141. EXCLUSIONS.

    (a) Medical Necessity.--The comprehensive benefit package does not 
include--
            (1) an item or service that is not medically necessary or 
        appropriate; or
            (2) an item or service that the National Health Board may 
        determine is not medically necessary or appropriate in a 
        regulation promulgated under section 1154.
    (b) Additional Exclusions.--The comprehensive benefit package does 
not include the following items and services:
            (1) Custodial care, except in the case of hospice care 
        under section 1107.
            (2) Surgery and other procedures performed solely for 
        cosmetic purposes and hospital or other services incident 
        thereto, unless--
                    (A) required to correct a congenital anomaly; or
                    (B) required to restore or correct a part of the 
                body that has been altered as a result of--
                            (i) accidental injury;
                            (ii) disease; or
                            (iii) surgery that is otherwise covered 
                        under this subtitle.
            (3) Hearing aids, except as provided in section 1117.
            (4) Eyeglasses and contact lenses for individuals at least 
        18 years of age.
            (5) In vitro fertilization services.
            (6) Sex change surgery and related services.
            (7) Private duty nursing.
            (8) Personal comfort items, except in the case of hospice 
        care under section 1107.
            (9) Any dental procedures involving orthodontic care, 
        inlays, gold or platinum fillings, bridges, crowns, pin/post 
        retention, dental implants, surgical periodontal procedures, or 
        the preparation of the mouth for the fitting or continued use 
        of dentures, except as specifically described in section 1118.

               PART 4--ROLE OF THE NATIONAL HEALTH BOARD

SEC. 1151. DEFINITION OF BENEFITS.

    (a) In General.--The National Health Board may promulgate such 
regulations or establish such guidelines as may be necessary to assure 
uniformity in the application of the comprehensive benefit package 
across all health plans. All plans shall comply with any regulation or 
guidelines established by the Board under this section.
    (b) Flexibility in Delivery.--The regulations or guidelines under 
subsection (a) shall permit a health plan to deliver covered items and 
services to individuals enrolled under the plan using the providers and 
methods that the plan determines to be appropriate and consistent with 
standards of quality care and so long as the plan complies with the 
provisions of this Act.

SEC. 1152. ACCELERATION OF EXPANDED BENEFITS.

    (a) In General.--Subject to subsection (b), at any time prior to 
January 1, 2001, the National Health Board, in its discretion, may by 
regulation expand the comprehensive benefit package by--
            (1) adding any item or service that is added to the package 
        as of January 1, 2001; and
            (2) requiring that a cost sharing schedule described in 
        part 2 of this subtitle reflect (wholly or in part) any of the 
        cost sharing requirements that apply to the schedule as of 
        January 1, 2001.
No such expansion shall be effective except as of January 1 of a year.
    (b) Condition.--The Board may not expand the benefit package under 
subsection (a) which is to become effective with respect to a year, by 
adding any item or service or altering any cost sharing schedule, 
unless the Board estimates that the additional increase in per capita 
health care expenditures resulting from the addition or alteration, for 
each health care coverage area for the year, will not cause any health 
care coverage area to exceed its per capita target (as determined under 
section 6003).

SEC. 1153. AUTHORITY WITH RESPECT TO CLINICAL PREVENTIVE SERVICES.

    (a) In General.--With respect to clinical preventive services 
described in section 1104, the National Health Board--
            (1) shall specify and define specific items and services as 
        clinical preventive services for high risk populations within 1 
        year of the date of enactment of this Act and shall establish 
        and update a periodicity schedule for such items and services;
            (2) shall establish and update periodicity schedules for 
        the age-appropriate immunizations;
            (3) shall establish a periodicity schedule for age 
        appropriate tests and clinician visits for individuals under 
        the age of 20;
            (4) shall establish rules with respect to coverage for an 
        immunization, test, or clinician visit that is not provided to 
        an individual during the age range for such immunization, test, 
        or clinician visit that is specified in such section; and
            (5) may otherwise modify the items and services described 
        in such section, taking into account age and other risk 
        factors, but may not modify the cost sharing for any such item 
        or service.
    (b) Consultation.--In performing the functions described in 
subsection (a), the National Health Board shall consult with experts in 
clinical preventive services, including those specified in section 
1105.

SEC. 1154. ESTABLISHMENT OF STANDARDS REGARDING MEDICAL NECESSITY.

    The National Health Board may promulgate such regulations as may be 
necessary to carry out section 1141(a)(2) (relating to the exclusion of 
certain services that are not medically necessary or appropriate).

SEC. 1155. BALANCE BILLING.

    The Board shall provide for methods to ensure the prohibition of 
balance billing.

    PART 5--ADDITIONAL PROVISIONS RELATING TO HEALTH CARE PROVIDERS

SEC. 1161. OVERRIDE OF RESTRICTIVE STATE PRACTICE LAWS.

    No State may, through licensure or otherwise, restrict the practice 
of any class of health professionals beyond what is justified by the 
skills and training of such professionals.

SEC. 1162. PROVISION OF ITEMS OR SERVICES CONTRARY TO RELIGIOUS BELIEF 
              OR MORAL CONVICTION.

    A health professional or a health facility may not be required to 
provide an item or service in the comprehensive benefit package if the 
professional or facility objects to doing so on the basis of a 
religious belief or moral conviction.

SEC. 1163. DUTY TO DISCLOSE INCORRECT TEST RESULTS.

    (a) In General.--Any facility, including hospitals, clinics, and 
clinical laboratories, which provides diagnostic testing or other 
health care items or services covered under this Act shall promptly 
notify the individual provider who ordered the test of any errors in 
the test results. The individual provider who ordered the test must 
promptly notify the patient of the error if the new results affect the 
patient's diagnosis or treatment.
    (b) Regulations.--To carry out subsection (a), the Secretary shall 
promptly issue proposed regulations, and within 9 months of the date of 
enactment of this Act shall issue final regulations.

                   Subtitle C--State Responsibilities

SEC. 1200. PARTICIPATING STATE.

    (a) In General.--For purposes of the approval of a State health 
care system by the Board under section 1611, a State is a 
``participating State'' if the State meets the applicable requirements 
of this subtitle.
    (b) Submission of System Document.--
            (1) In general.--In order to be approved as a participating 
        State under section 1611, a State shall submit to the National 
        Health Board a document (in a form and manner specified by the 
        Board) that describes the State health care system that the 
        State is establishing (or has established).
            (2) Deadline.--If a State is not a participating State with 
        a State health care system in operation by January 1, 1998, the 
        provisions of subpart C of part 1 of subtitle F (relating to 
        responsibilities in absence of State systems) shall take 
        effect.
            (3) Submission of information subsequent to approval.--A 
        State approved as a participating State under section 1611 
        shall submit to the Board an annual update to the State health 
        care system not later than February 15 of each year following 
        the first year for which the State is a participating State. 
        The update shall contain--
                    (A) such information as the Board may require to 
                determine that the system shall meet the applicable 
                requirements of this Act for the succeeding year; and
                    (B) such information as the Board may require to 
                determine that the State operated the system during the 
                previous year in accordance with the Board's approval 
                of the system for such previous year.

                 PART 1--GENERAL STATE RESPONSIBILITIES

SEC. 1201. GENERAL STATE RESPONSIBILITIES.

    A participating State is responsible for:
            (1) Health care coverage area.--Establishing one or more 
        health care coverage areas (in accordance with section 1202).
            (2) Health plans.--Certifying and overseeing health plans 
        in accordance with subtitle F.
            (3) Providers.--Assessing such licensing fees as may be 
        necessary to adequately fund State health profession boards. 
        (Nothing in this paragraph shall preempt State authority to 
        license or register health care providers.) State health 
        professional boards shall--
                    (A) investigate complaints with a reasonable 
                probability of validity, and issue appropriate 
                sanctions;
                    (B) have adequate public, consumer, and non-
                physician representatives; and
                    (C) report all final disciplinary actions to the 
                National Practitioner Data Bank.
            (4) Premium adjustment.--Administering risk adjustment, 
        reinsurance and other premium adjustment programs consistent 
        with this Act.
            (5) Reductions in cost sharing.--Administering reductions 
        in cost sharing in accordance wuth section 1281 and 1282 and a 
        premium discount program in accordance with subtitle B of title 
        VI.
            (6) Cooperatives.--Certification of at least one consumer 
        purchasing cooperative in each area, consistent with the 
        provisions of subtitle D.
            (7) Other responsibilities.--Carrying out all other 
        responsibilities of participating States specified under this 
        Act.

SEC. 1202. ASSURING COMMUNITY-RATED PREMIUMS THROUGH ESTABLISHMENT OF 
              HEALTH CARE COVERAGE AREAS.

    (a) In General.--In accordance with this section, a participating 
State shall provide for the division of the State into 1 or more health 
care coverage areas.
    (b) Multiple Areas.--With respect to a health care coverage area--
            (1) no metropolitan statistical area in a State may be 
        incorporated into more than 1 such area in the State;
            (2) the number of individuals residing within such an area 
        may not be less than 150,000; and
            (3) no area incorporated in a health care coverage area may 
        be incorporated into another such area.
    (c) Boundaries.--
            (1) In general.--In establishing boundaries for health care 
        coverage areas, a State shall comply with the 
        antidiscrimination requirements of section 1914.
            (2) Coordinating multiple health care coverage areas.--
        Nothing in this section shall be construed as preventing a 
        State from coordinating the activities of one or more health 
        care coverage areas in the State.
            (3) Interstate health care coverage areas.--Health care 
        coverage areas with respect to interstate areas shall be 
        established in accordance with rules established by the Board.
            (4) Coordination in multi-state areas.--One or more States 
        may coordinate their operations in contiguous health care 
        coverage areas. Such coordination may include, the following 
        activities, adoption of joint operating rules, contracting with 
        health plans, enforcement activities, and establishment of fee 
        schedules for health providers.

SEC. 1203. USE OF INCENTIVES.

    (a) Use of Incentives to Enroll and Serve Disadvantaged Groups.--A 
State may provide--
            (1) for an additional adjustment to the risk-adjustment 
        methodology under section 1641(b), or in accordance with the 
        standards under section 1642, and other financial incentives to 
        community-rated health plans to ensure that such plans enroll 
        individuals who are members of disadvantaged groups or 
        populations vulnerable to discrimination due to their health 
        status, and
            (2) for appropriate extra services, such as outreach to 
        encourage enrollment and transportation and interpreting 
        services to ensure access to care, for certain population 
        groups that face barriers to access because of geographic 
        location, income levels, disability or racial or cultural 
        differences.
    (b) Use of Incentives to Address Needs in Areas with Inadequate 
Health Services.--
            (1) Payment adjustment.--To ensure that plans are available 
        to all eligible individuals residing in all portions of a 
        health care coverage area, a State may adjust payments to plans 
        or use other financial incentives to encourage health plans to 
        expand into areas that have inadequate health services.
            (2) Encouraging new plans.--Subject to section 1202(c), to 
        encourage the establishment of a new health plan in an area 
        that has inadequate health services, a State may--
                    (A) organize health providers to create such a plan 
                in such an area that is targeted at such area;
                    (B) provide assistance with the establishment and 
                administration of such a plan; and
                    (C) arrange favorable financing for such a plan.

SEC. 1204. RESTRICTIONS ON FUNDING OF ADDITIONAL BENEFITS.

    If a participating State provides benefits (either directly or 
through community-rated health plans or otherwise) in addition to those 
covered under the comprehensive benefit package, the State may not 
provide for payment for such benefits through funds provided under this 
Act.

SEC. 1205. CONSUMER INFORMATION AND MARKETING.

    (a) Consumer Information.--Before each open enrollment period, each 
State shall ensure the availability to eligible enrollees of 
information, in an easily understood and useful form, that allows such 
enrollees (and other community-rate eligible individuals) to make valid 
comparisons among community-rated health plans and veterans and 
Uniformed Services health plans offered in the State, including 
information about plan price, the characteristics and availability of 
participating health professionals and institutions, any restrictions 
on access to providers or services and a summary of the annual quality 
performance report described in section 5005. Such information shall be 
made available in a brochure, published not less often than annually, 
in accordance with section 1603(e). In the case of a health care 
coverage area that includes a significant number or proportion of 
residents with limited English speaking proficiency, the State shall 
ensure the availability of all written materials in languages other 
than English as appropriate to the health care coverage area.
    (b) Marketing.--Each participating State shall ensure that health 
plans meet the marketing requirements under section 1515.

SEC. 1206. STATE RESPONSIBILITIES WITH RESPECT TO WORKSITE HEALTH 
              PROMOTION DISCOUNTS.

    Each State shall provide for the administration of wellness 
discounts in accordance with rules established by the Secretary in 
accordance with section 1687. Such duties shall include the receipt of 
employer self-certification forms, enforcement of compliance, dispute 
resolution and implementation of wellness discounts in a manner 
consistent with section 1687.

SEC. 1207. CONSUMER ADVOCATE.

    (a) In General.--The Secretary shall establish (by grant or 
contract) and oversee a National Center of Consumer Advocacy to provide 
technical assistance, adequate training and support to States and 
Offices of Consumer Advocacy in each State (hereafter referred to in 
this section as the ``Office'') to carry out the duties of this 
section, including providing public education to consumers concerning 
this Act. The National Center of Consumer Advocacy shall be a national 
non-profit organization with public education and health policy 
expertise and shall have sufficient staff to carry out its duties and a 
demonstrated ability to represent and work with a broad spectrum of 
consumers, including vulnerable and under served populations. The 
Office in each State shall perform public outreach and provide 
education and assistance regarding consumer rights and responsibilities 
under this Act, and assist consumers in dealing with problems that 
arise with consumer purchasing cooperatives, large group purchasers, 
health plans, and health care providers operating in such State.
    (b) Contracts.--
            (1) Solicitation.--The Secretary shall solicit contracts 
        from private non-profit organizations to fulfill the duties of 
        the Office in the State. The Secretary may develop such 
        regulations and guidelines as necessary to oversee the process 
        of considering and awarding competitive contracts under this 
        section. In awarding such contracts, the Secretary shall 
        consult with the State and National Center of Consumer 
        Advocacy, and shall, at a minimum, consider the demonstrated 
        ability of the organization to represent and work with a broad 
        spectrum of consumers, including vulnerable and underserved 
        populations.
            (2) Contract period.--The contract period for the State 
        Offices of Consumer Advocacy and the National Center of 
        Consumer Advocacy under this section shall be not less than 4 
        years and not more than 7 years.
    (c) Functions and Responsibilities.--Each Office shall have 
sufficient staff, local offices throughout the State, and a State-wide 
toll-free hotline to carry out the duties of this section. Through 
direct contact and the hotline, the Office shall provide the following 
services in the State, including appropriate assistance to individuals 
with limited English language ability--
            (1) outreach and education relating to consumer rights and 
        responsibilities under this Act, including such rights and 
        services available through the Office;
            (2) assistance with enrollment in health plans, or 
        obtaining services or reimbursement from health plans;
            (3) assistance with filing an application for premium or 
        cost sharing subsidies;
            (4) information to enrollees about existing grievance 
        procedures and coordination with other entities to assist in 
        identifying, investigating, and resolving enrollee grievances 
        under this Act (including grievances before State medical 
        boards);
            (5) regular and timely access in the area to the services 
        provided through the Office and its local offices and timely 
        responses from representatives of the Office to complaints;
            (6) referrals to appropriate local providers of legal 
        assistance and to appropriate State and Federal agencies which 
        may be of assistance to aggrieved individuals in the area; and
            (7) conduct public hearings no less frequently than once a 
        year to identify and address community health care needs.
    (d) Access to Information.--The Secretary and the States shall 
ensure that, for purposes of carrying out the Office's duties under 
this section, the Office (and officers and employees of the Office in 
local offices) have appropriate access to relevant information subject 
to protections for confidentiality of enrollee information.
    (e) Evaluation and Report.--The Secretary shall have the right to 
evaluate the quality and effectiveness of the organization in carrying 
out the functions specified in the contract. The Office shall report to 
the Secretary and the State annually on the nature and patterns of 
consumer complaints received in the Office and its local offices during 
each year and any policy, regulatory, and legislative recommendations 
for needed improvements together with a record of the activities of the 
Office.
    (f) Funding.--The funding for the establishment of an Office in 
each State is specified in section 1213, of which $5,000,000 shall be 
for the National Center for Consumer Advocacy.
    (g) Conflicts of Interest.--The Secretary shall ensure that no 
individual involved in the designation of the Office, the Office 
itself, or of any delegate thereof is subject to a conflict of 
interest, including affiliation with (through ownership or common 
control) a health care facility, managed care organization, health 
insurance company or association of health care facilities or 
providers. No grantee under this part may have a direct involvement 
with the licensing, certification, or accreditation of a health care 
facility, a health care plan, or a provider of health care services.
    (h) Legal Counsel.--The Secretary shall ensure that adequate legal 
counsel is available, and is able, without conflict of interest, to 
assist the Office, and the local offices thereof in the performance of 
their official duties.
    (i) Coordination.--The Office shall coordinate its activities with 
all appropriate entities including Quality Improvement Foundations 
(established under section 5008) and the State's long term care 
ombudsman or other agency esignated to carry out client advocacy 
activities pursuant to section 2106.
    (j) Construction.--Nothing in this section shall replace grievance 
procedures established or otherwise required under this Act.

SEC. 1208. ELECTION PROCEDURE FOR COMMUNITY-RATED EMPLOYERS.

    (a) In General.--Each participating State shall establish a 
procedure (consistent with rules established by the Board) through 
which exempt employers, as defined in section 6117, may make an 
election to be treated as a community-rated employer. Such procedure 
shall set forth the form and manner that such election shall be made.
    (b) Notification.--The procedure shall require that employees of a 
exempt employer are notified of an election or a termination of an 
election under this section prior to the first annual open enrollment 
period (as defined in section 1660) following such election or 
termination.
    (c) Termination.--The procedures shall permit exempt employers to 
terminate an election made under this section. If an employer 
terminates an election, the termination shall be effective on the first 
date of the year following such termination.

SEC. 1209. COORDINATED HEALTH CARE SERVICES FOR CHILDREN.

    (a) Designation of State Agency.--The State shall designate an 
agency (hereafter referred to in this as the ``lead agency'') to 
coordinate the delivery of medical and social services to children with 
special health care needs. The lead agency shall:
            (1) Serve as an information resource for children with 
        special health care needs and their families and health 
        providers, providing technical assistance regarding available 
        specialty and support services and referral networks for these 
        children and their families.
            (2) Coordinate activities with all other State agencies 
        which provide services to children with special health care 
        needs and their families, and establish mechanisms to identify 
        and maximize resources available for these children and 
        families.
            (3) Provide assistance to the State in fulfilling functions 
        under section 1201 in certifying and monitoring the performance 
        of health plans in delivering appropriate services to children 
        in a timely and efficient manner.
            (4) Make recommendations to States, plans, and providers to 
        identify what services are lacking for children with special 
        health care needs.
    (b) Provision of Activities.--The lead agency shall provide the 
activities under subsection (a) for all children with special health 
care needs or children under foster care who are referred by a 
qualified health plan, other health or social service provider, or 
publicly funded programs where children receive services.

SEC. 1210. STATE RESPONSIBILITIES FOR UTILIZATION MANAGEMENT.

    (a) In General.--A State shall certify or recertify a health plan 
only if the State reviews the utilization management activities of the 
plan and determines that such activities meet the standards described 
in subsection (b), or such other standards as the National Health Board 
or other appropriate Federal agency may determine.
    (b) Standards Described.--The standards described in this 
subsection are as follows:
            (1) A health plan may not employ or contract with a 
        utilization management organization or utilization management 
        reviewer whose conditions of employment or contract terms 
        include reducing or limiting medically necessary or appropriate 
        services provided to individuals enrolled in a health plan.
            (2) Each health plan shall disclose to a participating 
        provider or an enrollee, upon request, the utilization review 
        protocols for controlling utilization and costs used to review 
        a plan of treatment recommended by the provider, and shall 
        provide a description of plan protocols for controlling 
        utilization and costs upon request to providers, enrollees, and 
        prospective enrollees.
            (3) Each health plan shall describe to an enrollee, 
        prospective enrollee, or participating provider, upon request, 
        the type of financial arrangements, if any, used by the plan 
        for controlling utilization and costs.
            (4) The protocols described in paragraph (2) shall be 
        applied consistently among utilization management reviewers 
        within any and each utilization management organization with 
        which a plan contracts.
            (5) Utilization management reviewers with whom a plan 
        contracts shall be available to consumers during normal 
        business hours for preauthorizations and other purposes, and 
        during non-business hours the health plan shall make available 
        a procedure for accessing medical care, preauthorization, or 
        other related services.

SEC. 1211. ASSURING FAMILY CHOICE OF HEALTH PLANS.

    (a) In General.--A participating State shall ensure that all 
community-rated individuals have a choice of health plans in which to 
enroll.
    (b) Guarantee of a Fee-for-Service Option.--
            (1) In general.--Each State shall ensure that at least one 
        fee-for-service plan (as defined in paragraph (2)) is offered 
        in each health care coverage area.
            (2) Fee-for-service plan defined.--
                    (A) In general.--For purposes of this Act, the term 
                ``fee-for-service plan'' means a health plan that--
                            (i) provides coverage for all items and 
                        services included in the comprehensive benefit 
                        package that are furnished by any lawful health 
                        care provider of the enrollee's choice, subject 
                        to reasonable restrictions (described in 
                        subparagraph (B)), and
                            (ii) makes payment to such a provider 
                        without regard to whether or not there is a 
                        contractual arrangement between the plan and 
                        the provider.
                    (B) Reasonable restrictions described.--The 
                reasonable restrictions on coverage permitted under a 
                fee-for-service plan (as specified by the National 
                Health Board) are as follows:
                            (i) Utilization review.
                            (ii) Prior approval for specified services.
                            (iii) Exclusion of providers on the basis 
                        of poor quality of care, based on evidence 
                        obtainable by the plan.
                Clause (ii) shall not be construed as permitting a plan 
                to require prior approval for health care services 
                through a gatekeeper or other process for services that 
                are not specified for services that are not specified.
            (3) Rule of construction.--Nothing in this Act shall be 
        construed to prevent a health plan from providing for a 
        different basis or level of payment than the fee schedule 
        established under this section as part of a contractual 
        agreement with participating providers under the plan.

SEC. 1212. OVERSIGHT OF HEALTH PLAN ENROLLMENT ACTIVITIES.

    (a) In General.--Each participating State shall provide for the 
general oversight of health plan enrollment activities, implement 
regulations promulgated by the Board under section 1660, and assure 
that each community-rated individual who resides in the State is 
enrolled in a community-rated plan or other applicable health plan of 
the individual's choosing. In carrying out this subsection, States 
shall ensure that individuals are permitted to enroll directly in 
health plans of their choice.
    (b) Enrollment Through Providers.--Each State shall establish a 
mechanism for enrolling eligible individuals who are not enrolled in a 
plan when the individual seeks health services in accordance with rules 
promulgated by the Board.
    (c) Enforcement of Enrollment Requirement.--In the case of a 
community-rated individual who resides in a State and fails to enroll 
in an applicable health plan as required under section 1002(a) such 
State shall require the payment of an amount equal to twice the family 
share of premiums that would have been payable under subtitle B of 
title VI if the individual had enrolled on a timely basis in the plan, 
unless the individual establishes to the satisfaction of the State good 
cause or financial hardship for the failure to enroll on a timely 
basis. The State shall provide, from the amounts collected under 
paragraph (2), for payments to plans under subsection (b).

SEC. 1213. ADMINISTRATIVE ALLOWANCE PERCENTAGE.

    (a) Specification by State.--Before obtaining bids under section 
6004 from health plans for a year, each State shall establish the 
administrative allowance for State administrative functions with 
respect to the oversight of health plan activities, the determination 
of enrollment, the determination of subsidy eligibility, and other 
responsibilities under this Act.
    (b) Administrative Allowance Percentage.--Subject to subsection 
(c), the State shall compute an administrative allowance percentage for 
each year equal to--
            (1) the administrative allowance determined under 
        subsection (a) for the year, divided by
            (2) the total of the amounts payable to community-rated 
        health plans under subpart A (as estimated by the State).
    (c) Limitation to 1.5 percent.--In no case shall an administrative 
allowance percentage exceed 1.5 percent.
    (d) Distribution of Percentage.--The administrative allowance 
percentage shall be divided as follows:
            (1) 1.48 percent for State administrative functions, and
            (2) .02 percent for the Office of the Consumer Advocate 
        described in section 1207.
    (e) Receipt of Funds.--A State shall perform the duties required of 
States under this Act as a condition of receiving funds described in 
subsection (d)(1).

          PART 2--REQUIREMENTS FOR STATE SINGLE-PAYER SYSTEMS

SEC. 1221. SINGLE-PAYER SYSTEM DESCRIBED.

    The Board shall approve the application of a State to operate a 
single-payer system if the Board finds that the system--
            (1) meets the requirements of section 1222;
            (2)(A) meets the requirements for a Statewide single-payer 
        system under section 1223, in the case of a system offered 
        throughout a State; or
            (B) meets the requirements for an area specific single-
        payer system under section 1224, in the case of a system 
        offered in a single health care coverage area of a State.

SEC. 1222. GENERAL REQUIREMENTS FOR SINGLE-PAYER SYSTEMS.

    Each single-payer system shall meet the following requirements:
            (1) Establishment by state.--The system is established 
        under State law, and State law provides for mechanisms to 
        enforce the requirements of the system.
            (2) Operation by state.--The system is operated by the 
        State or a designated agency of the State.
            (3) Enrollment of eligible individuals.--
                    (A) Mandatory enrollment of all community-rated 
                individuals.--The system provides for the enrollment of 
                all eligible individuals residing in the State (or, in 
                the case of an area-specific single-payer system, in 
                the health care coverage area) for whom the applicable 
                health plan would otherwise be a health care coverage 
                area health plan.
                    (B) Optional enrollment of medicare-eligible 
                individuals.--At the option of the State, the system 
                may provide for the enrollment of Medicare-eligible 
                individuals residing in the State (or, in the case of 
                an area-specific single-payer system, in the health 
                care coverage area) if the Secretary of Health and 
                Human Services has approved an application submitted by 
                the State under section 1893 of the Social Security Act 
                (as added by section 4001(a)) for the integration of 
                Medicare beneficiaries into plans of the State. Nothing 
                in this subparagraph shall be construed as requiring 
                that a State have a single-payer system in order to 
                provide for such integration.
                    (C) Optional enrollment of experience-rated 
                individuals in statewide plans.--At the option of the 
                State, a Statewide single-payer system may provide for 
                the enrollment of individuals residing in the State who 
                are otherwise eligible to enroll in an experience-rated 
                health plan under subtitle E.
                    (D) Options included in state system document.--A 
                State may not exercise any of the options described in 
                subparagraphs (A) or (B) for a year unless the State 
                included a description of the option in the submission 
                of its system document to the Board for the year under 
                section 1200(b).
                    (E) Exclusion of certain individuals.--A single-
                payer system may not require the enrollment of electing 
                veterans, active duty military personnel, and electing 
                American Indians (as defined in 1012(d)).
            (4) Direct payment to providers.--
                    (A) In general.--With respect to providers who 
                furnish items and services included in the 
                comprehensive benefit package to individuals enrolled 
                in the system, the State shall make payments directly 
                to such providers and assume (subject to subparagraph 
                (B)) all financial risk associated with making such 
                payments.
                    (B) Capitated payments permitted.--Nothing in 
                subparagraph (A) shall be construed to prohibit 
                providers furnishing items and services under the 
                system from receiving payments on a capitated, at-risk 
                basis based on prospectively determined rates.
            (5) Provision of comprehensive benefit package.--
                    (A) In general.--The system shall provide for 
                coverage of the comprehensive benefit package, 
                including the cost sharing provided under the package 
                (subject to subparagraph (B)), to all individuals 
                enrolled in the system.
                    (B) Imposition of reduced cost sharing.--The system 
                may decrease the cost sharing otherwise provided in the 
                comprehensive benefit package with respect to any 
                individuals enrolled in the system or any class of 
                services included in the package, so long as the system 
                does not increase the cost sharing otherwise imposed 
                with respect to any other individuals or services.
            (6) Cost containment.--The system shall provide for 
        mechanisms to ensure, in a manner satisfactory to the Board, 
        that--
                    (A) the rate of growth in health care spending will 
                not be higher than the target established under this 
                Act;
                    (B) the expenditures described in subparagraph (A) 
                are computed and effectively monitored;
                    (C) automatic, mandatory, nondiscretionary 
                reductions in payments to health care providers will be 
                imposed to the extent required to assure that such per 
                capita expenditures do not exceed the applicable target 
                referred to in subparagraph (A); and
                    (D) Federal payments to a single payer State or 
                health care coverage area shall be limited to the 
                payments that would have been made in the absence of 
                the implementation of the single payer system.
            (7) Requirements generally applicable to health plans.--The 
        system shall meet the requirements applicable to a health plan 
        under section 1502(1), except that--
                    (A) the system does not have the authority provided 
                to health plans under section 1516(d) (relating to 
                permissible limitations on the enrollment of eligible 
                individuals on the basis of limits on the plan's 
                capacity);
                    (B) the system is not required to meet the 
                requirements of section 1515 (relating to restrictions 
                on the marketing of plan materials); and
                    (C) the system is not required to meet the 
                requirements of section 1512(a) (relating to plan 
                solvency).

SEC. 1223. SPECIAL RULES FOR STATES OPERATING STATEWIDE SINGLE-PAYER 
              SYSTEM.

    (a) In General.--In the case of a State operating a Statewide 
single-payer system--
            (1) the State shall operate the system throughout the 
        State;
            (2) except as provided in subsection (b), the State shall 
        meet the requirements for participating States under part 1; 
        and
            (3) the State shall assume the functions described in 
        subsection (c) that are otherwise required to be performed by 
        health care coverage areas in participating States that do not 
        operate a Statewide single-payer system.
    (b) Exceptions to Certain Requirements for Participating States.--
In the case of a State operating a Statewide single-payer system, the 
State is not required to meet the following requirements otherwise 
applicable to participating States under part 1:
            (1) Establishment of health care coverage areas.--The 
        requirements of section 1202 (relating to the establishment of 
        health care coverage areas).
            (2) Health plans.--The requirements of subtitle F (relating 
        to health plans), other than requirements relating to 
        coordination of workers' compensation services and automobile 
        liability insurance.
            (3) Financial solvency.--Requirements relating to the 
        financial solvency of health plans in the State.
            (4) Other references inapplicable.--All other references in 
        this Act to health plans, or other entities, and the 
        requirements applicable thereto, that would not exist under a 
        State single payer system, shall not be applicable to a single 
        payer system, except as provided in subsection (c).
    (c) Assumption by State of Certain Requirements Applicable to 
Health Care Coverage Areas.--A State operating a Statewide single-payer 
system shall be subject to the following requirements otherwise 
applicable to health care coverage areas in other participating States 
subject to the requirement that all references to health care coverage 
areas shall, with respect to this section, be deemed to refer to the 
single payer State, and references to health plans shall not apply 
under this section or shall be considered as references, where 
appropriate, to health caregivers:
            (1) Enrollment; issuance of health security cards.--The 
        requirements of subsection (a) of section 1211 and section 1406 
        shall apply to the State, eligible individuals residing in the 
        State, and the single-payer system operated by the State in the 
        same manner as such requirements apply to a health care 
        coverage area, health care coverage area eligible individuals, 
        and health care coverage area health plans.
            (2) Reductions in cost sharing for low-income 
        individuals.--The requirement of section 1281 shall apply to 
        the State in the same manner as such requirement applies to a 
        health care coverage area.
            (3) Data collection; quality.--The data collection and 
        quality requirements of this Act shall apply to the State and 
        the single-payer system operated by the State in the same 
        manner as such requirement applies to a health care coverage 
        area and health plans offered in a health care coverage area.
            (4) Anti-discrimination.--In carrying out such activities 
        as it may have in common with entities in other States as 
        required under part 2 of subtitle D, a State may not 
        discriminate against health caregivers on the basis of mix of 
        health professionals, or location of the headquarters of the 
        plan, except as the State may specifically provide otherwise to 
        assure an equitable distribution of services or organizational 
        arrangement.
            (5) Coordination of enrollment activities.--A State shall 
        coordinate its activities, including enrollment and 
        disenrollment activities--
                    (A) in a manner specified by the Board; and
                    (B) in a manner that ensures continuous, 
                nonduplicative coverage of eligible individuals and 
                that minimizes administrative procedures and paperwork.
    (d) Financing.--
            (1) In general.--A State operating a Statewide single-payer 
        system shall provide for the financing of the system using, at 
        least in part, a payroll-based financing system that requires 
        employers to pay at least the amount that the employers would 
        be required to pay if the employers were subject to the 
        requirements of subtitle B of title VI defined as the 
        applicable percentage of the per capita cost of health care.
            (2) Use of financing methods.--Such a State may use, 
        consistent with paragraph (1), any other method of financing.
    (e) Single-Payer State Defined.--In this Act, the term ``single-
payer State'' means a State with a Statewide single-payer system in 
effect that has been approved by the Board in accordance with this 
part.

SEC. 1224. SPECIAL RULES FOR HEALTH CARE COVERAGE AREA-SPECIFIC SINGLE-
              PAYER SYSTEMS.

    (a) In General.--In the case of a State operating a health care 
coverage area specific single-payer system--
            (1) the State shall meet the requirements for participating 
        States under part 1; and
            (2) the health care coverage area in which the system is 
        operated shall meet the requirements of subsection (b).
    (b) Requirements for health care coverage area in Which System 
Operates.--A health care coverage area in which an area-specific single 
payer system is operated shall meet the requirements applicable to 
health care coverage areas under subtitle C, except that the health 
care coverage area is not required to meet the following requirements 
of such subtitle:
            (1) Contracts with health plans.--The requirements of 
        section 1302 (relating to contracts with health plans).
            (2) Choice of health plans offered.--The requirements of 
        section 1211 (relating to offering a choice of health plans to 
        eligible enrollees).
            (3) Addressing needs of areas with inadequate health 
        services.--The health care coverage area does not have any of 
        the authorities described in section 1203 (relating to 
        adjusting payments to plans and encouraging the establishment 
        of new plans).

            PART 3--REDUCTIONS IN COST SHARING AND PREMIUMS

SEC. 1281. REDUCTION IN COST SHARING FOR LOW-INCOME FAMILIES.

    (a) Reduction.--
            (1) In general.--Subject to subsection (b), in the case of 
        a family that is enrolled in a community-rated health plan and 
        that is either (A) an AFDC or SSI family or (B) is determined 
        under this subpart to have family adjusted income below 200 
        percent of the applicable poverty level, the family is entitled 
        to a reduction in cost sharing in accordance with this section.
            (2) Timing of reduction.--The reduction in cost sharing 
        shall only apply to items and services furnished after the date 
        the application for such reduction is approved under section 
        1282(c) and before the date of termination of the reduction 
        under this subpart, or, in the case of an AFDC or SSI family, 
        during the period in which the family is such a family.
            (3) Information to providers and plans.--Each State shall 
        provide, through electronic means and otherwise, health care 
        providers and community-rated health plans with access to such 
        information as may be necessary in order to provide for the 
        cost sharing reductions under this section.
    (b) Limitation.--No reduction in cost sharing under subsection 
(c)(1) shall be available for--
            (1) families residing in a health care coverage area if the 
        cooperative for the area determines that there are sufficient 
        low-cost plans (as defined in section 6104(b)(3)) that are 
        lower or combination cost sharing plans available in the area 
        to enroll AFDC and SSI families and families with family 
        adjusted income below 150 percent of the applicable poverty 
        level; or
            (2) for families with family adjusted income between 150 
        and 200 percent of the applicable poverty level.
    (c) Amount of Cost Sharing Reduction.--
            (1) In general.--Subject to paragraph (2), the reduction in 
        cost sharing under this section shall be such reduction as will 
        reduce cost sharing to the level of a lower or combination cost 
        sharing plan.
            (2) Special treatment of certain families.--
                    (A) AFDC, ssi and families below poverty.--In the 
                case of a family that--
                            (i) is enrolled in a community-rated health 
                        plan;
                            (ii) is an AFDC, SSI family or a family 
                        that is determined under this subpart to have a 
                        family adjusted income below 100 percent of the 
                        applicable poverty level; and
                            (iii) is enrolled in a lower or combination 
                        cost sharing plan or receiving a reduction in 
                        cost sharing under paragraph (1);
                the amount of cost sharing applied with respect to an 
                item or service (other than with respect to hospital 
                emergency room services for which there is no emergency 
                medical condition, as defined in section 1867(e)(1) of 
                the Social Security Act) shall be an amount equal to 20 
                percent of the cost sharing amount otherwise applicable 
                under subtitle B, rounded to the nearest dollar.
                    (B) Families with incomes between 100 and 150 
                percent of poverty.--In the case of a family that--
                            (i) is enrolled in a community-rated health 
                        plan;
                            (ii) is determined under this subpart to 
                        have family adjusted income between 100 and 150 
                        percent of the applicable poverty level;
                            (iii) is not an AFDC or SSI family; and
                            (iv) is enrolled in a lower or combination 
                        cost sharing plan or receiving a reduction in 
                        cost sharing under paragraph (1);
                the amount of cost sharing applied with respect to an 
                item or service (other than with respect to hospital 
                emergency room services for which there is no emergency 
                medical condition, as defined in section 1867(e)(1) of 
                the Social Security Act) shall be an amount equal to 40 
                percent of the cost sharing amount otherwise applicable 
                under subtitle B, rounded to the nearest dollar.
                    (C) Families with incomes between 150 and 200 
                percent of poverty.--In the case of a family that--
                            (i) is enrolled in a community-rated health 
                        plan;
                            (ii) is determined under this subpart to 
                        have family adjusted income between 150 and 200 
                        percent of the applicable poverty level; and
                            (iii) is not an AFDC or SSI family;
                the amount of cost sharing applied with respect to an 
                item or service (other than with respect to hospital 
                emergency room services for which there is no emergency 
                medical condition, as defined in section 1867(e)(1) of 
                the Social Security Act) shall be an amount equal to 40 
                percent of the cost sharing amount otherwise applicable 
                under subtitle B, rounded to the nearest dollar.
    (d) Administration.--
            (1) In general.--In the case of an approved family (as 
        defined in section 1282(b)(2)) enrolled in a community-rated 
        health plan, the State shall pay the plan for cost sharing 
        reductions (other than cost sharing reductions under subsection 
        (c)(2)(A), (B) and (C)) provided under this section out of 
        Federal subsidy payments provided in section 9100(b)(2)(A). 
        Payments made by health plans to providers shall include 
        appropriate payments for cost sharing reductions.
            (2) Estimated payments, subject to reconciliation.--Such 
        payment shall be made initially on the basis of reasonable 
        estimates of cost sharing reductions incurred by such a plan 
        with respect to approved families and shall be reconciled not 
        less often than quarterly based on actual claims for items and 
        services provided.
    (e) No Cost Sharing for American Indians and Certain Veterans and 
Military Personnel.--The provisions of section 6104(a)(3) shall apply 
to cost sharing reductions under this section in the same manner as 
such provisions apply to premium discounts under section 6104.

SEC. 1282. APPLICATION PROCESS FOR COST-SHARING REDUCTIONS AND PREMIUM 
              DISCOUNTS.

    (a) In General.--A community-rated family may apply for a 
determination of the family adjusted income or wage adjusted income of 
the family, for the purpose of establishing eligibility for cost 
sharing reductions under section 1281, and for premium discounts and 
reductions in liability under sections 6104 and 6112.
    (b) Action on Application.--
            (1) In general.--States shall act on such applications and 
        ensure due process in a timely manner prescribed by the Board.
            (2) Approved family defined.--As used in this part, the 
        term ``approved family'' means a family for which an 
        application under this section has been approved and not yet 
        terminated.
    (c) Help in Completing Applications.--Each State shall ensure 
adequate distribution and assist individuals in the filing of 
applications and income reconciliation statements under this subpart.
    (d) Family Adjusted Income.--
            (1) In general.--Except as otherwise provided, in this Act 
        the term ``family adjusted income'' means, with respect to a 
        family, the sum of the adjusted incomes (as defined in 
        paragraph (2)) for all members of the family (determined 
        without regard to section 1012).
            (2) Adjusted income.--In paragraph (1), the term ``adjusted 
        income'' means, with respect to an individual, adjusted gross 
        income (as defined in section 62(a) of the Internal Revenue 
        Code of 1986)--
                    (A) determined without regard to sections 135, 
                162(l), 911, 931, and 933 of such Code, and
                    (B) increased by the amount of interest received or 
                accrued by the individual which is exempt from tax.
            (3) Presence of additional dependents.--At the option of an 
        individual, a family may include (and not be required to 
        separate out) the income of other individuals who are claimed 
        as dependents of the family for income tax purposes, but such 
        individuals shall not be counted as part of the family for 
        purposes of determining the size of the family.
    (e) Requirement for Periodic Confirmation and Verification and 
Notices.--
            (1) Confirmation and verification requirement.--The 
        continued eligibility of a family for cost sharing reductions, 
        premium discounts and reductions in liability under this 
        section shall be conditioned upon the family's eligibility 
        being--
                    (A) confirmed periodically by the State; and
                    (B) verified (through the filing of a new 
                application under this section) by the State at the 
                time income reconciliation statements are required to 
                be filed under section 1283.
            (2) Notices of changes in income and employment status.--
        Each approved family shall promptly notify the State of any 
        material increase (as defined by the Secretary) in the family 
        adjusted income or wage adjusted income of the family.
    (f) Penalties for Inaccurate Information.--
            (1) Interest for understatements.--Each individual who 
        knowingly understates income reported in an application to a 
        State under this subpart or otherwise makes a material 
        misrepresentation of information in such an application shall 
        be liable to the State for excess payments made based on such 
        understatement or misrepresentation, and for interest on such 
        excess payments at a rate specified by the Secretary.
            (2) Penalties for misrepresentation.--In addition to the 
        liability established under paragraph (1), each individual who 
        knowingly misrepresents material information in an application 
        under this subpart to a State shall be liable to the State for 
        $2,000 or, if greater, three times the excess payments made 
        based on such misrepresentation.
    (g) Termination of Cost Sharing Reduction and Premium Discounts.--
The State shall, after notice to the family, terminate the reduction of 
cost sharing, premium discounts or reduction in liability for an 
approved family if the family fails to provide for confirmation or 
verification on a timely basis or the State otherwise determines that 
the family is no longer eligible for such reduction.
    (h) Treatment of AFDC and SSI Recipients.--
            (1) No application required.--AFDC and SSI families may not 
        be required to submit an application under this section.
            (2) Notice requirement for ssi recipients.--The Secretary 
        shall notify each State, in a manner specified by the Secretary 
        of the identity (and period of eligibility under the SSI 
        program) of each SSI recipient, unless such a recipient elects 
        (in a manner specified by the Secretary) not to accept the 
        reduction in cost sharing or premium discounts under this part.
    (i) Rules.--The Secretary shall issue rules related to the 
application procedure, confirmation and verification of eligibility, 
ensuring due process in enforcement of penalties for inaccurate 
information, and other issues related to the implmentation of cost 
sharing reductions, premium discounts and reductions in liability under 
this subpart.

SEC. 1283. END-OF-YEAR RECONCILIATION.

    (a) In General.--In the case of a family whose application for a 
premium discount or reduction of liability for a year has been approved 
before the end of the year under this subpart, the family shall, 
subject to subsection (c), file with the State an income reconciliation 
statement to verify the family's adjusted income or wage-adjusted 
income, as appropriate, for the previous year. Such a statement shall 
contain such information as the Secretary shall require. Each State 
shall coordinate the submission of such statements with the notice and 
payment of family payments due under section 1237.
    (b) Reconciliation of Premium Discount and Liability Assistance 
Based on Actual Income.--Based on and using the income reported in the 
reconciliation statement filed under subsection (a) with respect to a 
family, the State shall compute the amount of premium discount or 
reduction in liability that should have been provided under section 
6104 or section 6113 with respect for the family for the year involved. 
If the amount of such discount or liability reduction computed is--
            (1) greater than the amount that has been provided, the 
        family is liable to pay (directly or through an increase in 
        future family share of premiums or other payments) a total 
        amount equal to the amount of the excess payment, or
            (2) less than the amount that has been provided, the State 
        shall pay to the family (directly or through a reduction in 
        future family share of premiums or other payments) a total 
        amount equal to the amount of the deficit.
    (c) No Reconciliation for AFDC and SSI Families; No Reconciliation 
for Cost Sharing Reductions.--No reconciliation statement is required 
under this section--
            (1) with respect to cost sharing reductions provided under 
        section 1281, or
            (2) for a family that only claims a premium discount or 
        liability reduction under this subpart on the basis of being an 
        AFDC or SSI family.
    (d) Disqualification for Failure To File.--In the case of any 
family that is required to file a statement under this section in a 
year and that fails to file such a statement by the deadline specified, 
members of the family shall not be eligible for premium reductions 
under section 6104 or reductions in liability under section 6113 until 
such statement is filed. A State, using rules established by the 
Secretary, shall waive the application of this subsection if the family 
establishes, to the satisfaction of the State under such rules, good 
cause for the failure to file the statement on a timely basis.
    (e) Penalties for False Information.--Any individual that provides 
false information in a statement under subsection (a) is subject to the 
same liabilities as are provided under section 1282 for a 
misrepresentation of material fact described in such section.
    (f) Notice of Requirement.--Each State shall provide for written 
notice, at the end of each year, of the requirement of this section to 
each family which had received premium discount or reduction in 
liability under this subpart in any month during the preceding year and 
to which such requirement applies.
    (g) Transmittal of Information; Verification.--
            (1) In general.--Each participating State shall transmit 
        annually to the Secretary such information relating to the 
        income of families for the previous year as the Secretary may 
        require to verify such income under this subpart.
            (2) Verification.--Each participating State may use such 
        information as it has available to it, including information 
        made available to the State under section 6103(l)(7)(D)(x) of 
        the Internal Revenue Code of 1986, in verifying income of 
        families with applications filed under this subpart. The 
        Secretary of the Treasury may, consistent with section 6103 of 
        the Internal Revenue Code of 1986, permit return information to 
        be disclosed and used by a participating State in verifying 
        such income but only in accordance with such section.
    (h) Construction.--Nothing in this section shall be construed as 
authorizing reconciliation of any cost sharing reduction provided under 
this subpart.

SEC. 1284. ELIGIBILITY ERROR RATES.

    Each State shall make eligibility determinations for premium 
discounts, liability reductions, and cost sharing reductions under 
sections 6104 and 6123, section 6113, and section 1281, respectively, 
in a manner that maintains the error rates below an applicable maximum 
permissible error rate specified by the Secretary (or the Secretary of 
Labor with respect to section 6123). In specifying such a rate, the 
Secretary shall take into account maximum permissible error rates 
recognized by the Federal Government under comparable State-
administered programs.

              Subtitle D--Consumer Purchasing Cooperatives

                      PART 1--GENERAL REQUIREMENTS

SEC. 1301. DESIGNATION AND ORGANIZATION OF COOPERATIVES.

    (a) Designation of Cooperatives.--A State shall certify consumer 
purchasing cooperatives (in this Act referred to as ``cooperatives'') 
in accordance with this part. Each cooperative shall be chartered under 
State law and operated as a not-for-profit corporation.
    (b) Board of Directors.--Each cooperative shall be governed by a 
Board of Directors to be composed in equal numbers of representatives 
of community-rated employers, eligible employees, and eligible 
individuals.
    (c) Membership.--A cooperative shall accept all eligible employers 
and eligible individuals residing within the area served by the 
cooperative as members if such employers, employees or individuals 
request such membership. Members of a cooperative shall have voting 
rights to select Board members consistent with rules established by the 
State.
    (d) Duties of Cooperatives.--Each cooperative shall--
            (1) enter into agreements with health plans under section 
        1302;
            (2) enter into agreements with community-rated employers;
            (3) enroll eligible individuals in health plans;
            (4) make payments to health plans on behalf of community-
        rated employers and eligible individuals;
            (5) provide for coordination with other cooperatives;
            (6) provide information on health plans, in accordance with 
        section 1205; and
            (7) carry out other functions provided for under this 
        title.
    (e) Limitation on Activities.--A cooperative shall not--
            (1) perform any activity (including review, approval, or 
        enforcement) relating to payment rates for providers;
            (2) perform any activity (including certification or 
        enforcement) relating to compliance of health plans with the 
        requirements of this Act;
            (3) assume insurance risk; or
            (4) perform other activities identified by the State as 
        being inconsistent with the performance of its duties under 
        this Act.
    (f) Rules of Construction.--
            (1) Single organization serving multiple health care 
        coverage area.--Nothing in this section shall be construed as 
        preventing a single not-for-profit corporation from being the 
        cooperative for more than one health care coverage area.
            (2) Multiple cooperatives.--Noting in this section shall be 
        construed to prevent a State from designating or establishing 
        more than one cooperative in a health care coverage area.
            (3) Voluntary participation.--Nothing in this section shall 
        be construed as requiring any individual or community-rated 
        employer to purchase a health plan exclusively through a 
        cooperative.

SEC. 1302. AGREEMENTS WITH HEALTH PLANS.

    (a) Agreements.--
            (1) In general.--Except as provided in paragraph (2)(A) of 
        subsection (c)--
                    (A) each cooperative for a health care coverage 
                area shall enter into an agreement under this section 
                with each certified community-rated health plan and 
                each health plan of the Department of Veterans Affairs 
                and Uniformed Health Services Plan that serves 
                residents of the health care coverage area; and
                    (B) a cooperative may not refuse to enter into such 
                an agreement with a health plan which is certified by a 
                State as offering coverage in the health care coverage 
                area, nor may a community-rated health plan refuse to 
                enter into an agreement with a cooperative in 
                accordance with section 1522.
            (2) Community-rated premium.--Except as provided in 
        paragraph (2)(B) of subsection (c), a cooperative shall offer 
        plans at the community-rate (as defined in section 6000(a)(3)) 
        filed by the plan.
            (3) Termination of agreement.--The State shall establish a 
        process for the termination of agreements entered into under 
        this section and a process for appealing such termination under 
        this paragraph. In accordance with rules established by the 
        State--
                    (A) a cooperative may terminate an agreement with a 
                health plan if the health plan's certification for the 
                health care coverage area involved is terminated or if 
                the health plan fails to fulfill the requirements of 
                the agreement; and
                    (B) a health plan may appeal the termination of an 
                agreement with a cooperative under this paragraph to 
                the State in accordance with rules and procedures 
                established by the State.
    (b) Receipt of Gross Premiums.--
            (1) In general.--Under an agreement between a cooperative 
        and a health plan, payment of premiums shall be made directly 
        to the cooperative in accordance with rules promulgated by the 
        Board.
            (2) Forwarding of premiums.--Under an agreement between a 
        health plan and a cooperative, the cooperative shall forward to 
        each health plan in which an eligible individual has been 
        enrolled the amounts collected on the behalf of enrollees in 
        such plans.
    (c) Negotiating Cooperatives.--
            (1) In general.--A State may designate a cooperative as a 
        ``negotiating cooperative'' if such cooperative is the sole 
        State-certified cooperative in a health care coverage area.
            (2) Authorities and responsibilities of negotiating 
        cooperatives.--
                    (A) In general.--Negotiating cooperatives may 
                exclude plans from the plans offered to cooperative 
                members if such cooperatives offer at least three 
                plans, including at least one fee-for-service plan.
                    (B) Premiums.--A health plan may, through 
                negotiations with a negotiating cooperative, offer to 
                individuals enrolled through such cooperative a premium 
                that is less than the community-rated premium, but in 
                no case shall a plan bid a premium to a negotiating 
                cooperative that is higher than the filed per-capita 
                community-rated bid (described in section 6000(a)(1)).

SEC. 1303. AGREEMENTS WITH COMMUNITY-RATED EMPLOYERS.

    (a) In General.--Cooperatives for each health care coverage area 
shall offer to enter into an agreement under this section with each 
community-rated employer that employs individuals in the area and that 
desires to join the cooperative. Each arrangement between a community-
rated employer and a cooperative shall include provisions consistent 
with the requirements of this subtitle.
    (b) Election of Enrollment.--Qualified employees of a community-
rated employer may elect to enroll in a plan offered through the 
cooperative with which the employer has entered into an agreement, 
through a cooperative sponsored by the FEHBP or directly with a health 
plan selected by the employer (if such plan is not offered by the 
cooperative selected by the employer). Qualified employees not residing 
in the health care coverage area served by the cooperative selected by 
the employer shall enroll in a health plan consistent with rules 
promulgated by the Board. The cooperative selected by the employer 
shall be responsible for forwarding premium payments to the appropriate 
plan or cooperative for each qualified employee.
    (c) Forwarding Information on Eligible Employees.--Under an 
agreement between an employer and a cooperative, the employer must 
forward to the appropriate cooperative such information as may be 
required by the Secretary or the Board.

SEC. 1304. ENROLLING INDIVIDUALS IN HEALTH PLANS THROUGH A COOPERATIVE.

    (a) In General.--Each cooperative shall offer community-rate 
eligible individuals the opportunity to enroll in any health plan which 
has an agreement with the cooperative for the health care coverage area 
in which the individual resides.
    (b) Enrollment Process.--Each cooperative shall establish an 
enrollment process in accordance with rules established by the Board, 
including a process for enrolling those qualified employees of a 
community-rated employer who elect not to participate in the 
cooperative with which the employer has entered into an agreement.
    (c) Enrollment Fees.--The Board shall promulgate rules regarding 
payment of cooperative fees by employees exercising an election under 
section 1303(b).

SEC. 1305. COOPERATIVE FEE.

    (a) In General.--Each cooperative shall charge members a uniform 
membership fee to cover the cost of activities undertaken by the 
cooperative (including all administrative costs incurred by the 
cooperative).
    (b) Disclosure.--Each cooperative shall, prior to the time of 
enrollment, publish the membership fee of such cooperative. Such fees 
shall be calculated and identified as a separate charge from the 
premium charged by the health plans offered by the cooperative. A 
comparison of fees charged by each cooperative in a health care 
coverage area shall be incorporated into the plan brochure described in 
section 1205.
    (c) Multiple Cooperatives.--In health care coverage areas in which 
States have certified multiple cooperatives, such cooperatives may 
compete for members on the basis of the fees described in this section.

SEC. 1306. COORDINATION AMONG COOPERATIVES.

    The State shall establish rules consistent with this section for 
coordination among cooperatives with respect to enrollment, payment of 
premiums, and provision of out-of-area benefits and services.

SEC. 1307. THIRD-PARTY CONTRACTING TO PERFORM DUTIES.

    (a) In General.--Each cooperative may contract with qualified, 
independent third parties for any service necessary to carry out the 
powers and duties of the cooperative pursuant to the requirements 
established under this section.
    (b) Restriction on Persons Eligible for Third-Party Contract.--No 
person may act, directly or through an affiliated company, both as a 
health plan serving the cooperative and as an independent third party 
contractor as described in subsection (a) within a given health care 
coverage area.

           PART 2--ACCESS TO HEALTH PLANS SPONSORED BY FEHBP

SEC. 1321. DESIGNATION OF FEHBP AS A CONSUMER PURCHASING COOPERATIVE.

    (a) In General.--The Federal Employees Health Benefits Program 
(FEHBP) shall serve as a consumer purchasing cooperative in each health 
care coverage area designated by each State. The responsibilities and 
authorities provided to the FEHBP under this part shall be carried out 
by the Federal Office of Personnel Management.
    (b) Responsibilities and Authorities of FEHBP-Sponsored 
Cooperatives.--
            (1) Exemption from cooperative organizational 
        requirements.--The organizational requirements specified in 
        part 1 with respect to State certification (under section 
        1301(a)), governance (under section 1301(b)), and restrictions 
        on the authority of cooperatives to negotiate with health plans 
        (under section 1302(a)), shall not apply to a cooperative 
        sponsored by the FEHBP.
            (2) General responsibilities and authorities.--A 
        cooperative sponsored by the FEHBP shall undertake all the 
        duties and retain all the privileges specified in part 1, 
        including section 1302 (regarding requirements of plans to 
        contract with, and not undersell, cooperatives).
    (c) Satisfaction of State Requirement To Certify A Cooperative.--
Compliance with the requirements of this part with respect to the 
establishment of a cooperative sponsored by the FEHBP shall satisfy a 
State's requirement to certify at least one consumer purchasing 
cooperative under section 1201(6).
    (d) Requirement of OPM.--The Federal Office of Personnel Management 
is hereby authorized to take such actions as are appropriate to fulfill 
its responsibilities under this part.

SEC. 1322. SPECIAL RULES FOR FEHBP SUPPLEMENTAL PLANS.

    (a) FEHBP Supplemental Plans.--
            (1) Development.--The Office of Personnel Management shall 
        develop FEHBP supplemental health benefit policies. The Office 
        of Personnel Management shall meet and confer with 
        representatives of Federal employees regarding the supplemental 
        health benefit policies and the cost sharing policies to be 
        offered (including premium contributions, if any, to be made by 
        the Federal Government with respect to such policies for 
        Federal employees and annuitants) through a process to be 
        established by the National Partnership Council.
            (2) Offering.--The Federal Government shall offer FEHBP 
        supplemental health benefit policies developed in accordance 
        with paragraph (1) and cost sharing policies as provided in 
        section 1523 to Federal employees, annuitants, and any other 
        community rate eligible individual (as defined in section 
        1902(9)).
    (b) Definitions.--For purposes of this section:
            (1) Annuitant.--The term ``annuitant'' means an 
        ``annuitant'' as defined by section 8901 of title 5, United 
        States Code.
            (2) FEHBP.--The term ``FEHBP'' means the health insurance 
        program under chapter 89 of title 5, United States Code.
            (3) Federal employee.--The term ``Federal employee'' means 
        an ``employee'' as defined by section 8901 of title 5, United 
        States Code.

                    Subtitle E--Employer Purchasers

    PART 1--DEFINITIONS AND RESPONSIBILITIES OF EMPLOYER PURCHASERS

SEC. 1401. DEFINITIONS.

    (a) Large Group Purchaser Defined.--In this Act, the term ``large 
group purchaser'' means--
            (1) an employer that--
                    (A) is a current large employer (as defined in 
                subsection (e)(2)),
                    (B) is a dual choice employer (as defined in 
                subsection (e)(4)) that has elected to become a large 
                employer, and
                    (C) is not an excluded employer described in 
                subsection (b)(2); or
            (2) an eligible purchaser (described in subsection (b) if--
                    (A) the sponsor elects, in a form and manner 
                specified by the Secretary of Labor consistent with 
                this subpart, to be treated as a large group purchaser 
                under this title and such election has not been 
                terminated under section 1403; and
                    (B) the purchaser has filed with the Secretary of 
                Labor a document describing how the sponsor shall carry 
                out activities as such a large group purchaser 
                consistent with part 2.
    (b) Eligible Large Group Purchaser.--
            (1) In general.--In this subpart, each of the following is 
        an eligible large group purchaser:
                    (A) New large employer.--An employer that--
                            (i) is a new large employer (as defined in 
                        subsection (e)(2)) as of the date of an 
                        election under subsection (a)(1), and
                            (ii) is not an excluded employer described 
                        in paragraph (2).
                    (B) Plan sponsor of a multiemployer plan.--A plan 
                sponsor described in section 3(16)(B)(iii) of Employee 
                Retirement Income Security Act of 1974, but only with 
                respect to a group health plan that is a multiemployer 
                plan (as defined in subsection (e)(3)) maintained by 
                the sponsor and only if--
                            (i) such plan offered health benefits as of 
                        September 1, 1993, and
                            (ii) as of both September 1, 1993, and 
                        January 1, 1996, such plan covers more than 
                        1,000 full-time employees in the United States, 
                        or the plan is maintained by one or more 
                        affiliates of the same labor organization, or 
                        one or more affiliates of labor organizations 
                        representing employees in the same industry, 
                        covering more than 1,000 employees.
            (2) Excluded employers.--For purposes of this section, any 
        of the following are excluded employers described in this 
        paragraph:
                    (A) An employer whose primary business is employee 
                leasing.
                    (B) The Federal government (other than the United 
                States Postal Service).
    (c) Individuals Eligible To Enroll in Experience-Rated Plans.--For 
purposes of part 1 of subtitle A, subject to subsection (d)--
            (1) Full-time employees of large employers.--Each eligible 
        individual who is a full-time employee (as defined in section 
        1901(b)(2)(C)) of--
                    (A) a current large employer, or
                    (B) a new large employer that has an election in 
                effect as a large group purchaser,
        is eligible to enroll in an experience-rated plan offered by 
        such purchaser.
            (2) Multiemployer purchasers.--
                    (A) Participants.--Each participant and beneficiary 
                (as defined in subparagraph (B)) under a multiemployer 
                plan, with respect to which an eligible purchaser of 
                the plan described in subsection (b)(1)(B) has an 
                election in effect as a large group purchaser, is 
                eligible to enroll in an experience-rated plan offered 
                by such purchaser.
                    (B) Participant and beneficiary defined.--In 
                subparagraph (A), the terms ``participant'' and 
                ``beneficiary'' have the meaning given such terms in 
                section 3 of the Employee Retirement Income Security 
                Act of 1974.
            (3) Ineligible to enroll in community-rated plan.--Except 
        as provided in section 1013, an experience-rated individual is 
        not eligible to enroll under a community-rated plan.
    (d) Exclusion of Certain Individuals.--In accordance with rules of 
the Board, the following individuals shall not be treated as 
experience-rated individuals:
            (1) AFDC recipients.
            (2) SSI recipients.
            (3) Individuals who are described in section 1004(b) 
        (relating to veterans, military personnel, and Indians) and who 
        elect an applicable health plan described in such section.
            (4) Employees who are part-time, seasonal or temporary 
        workers (as defined by the Board), other than such workers who 
        are treated as experience-rated individuals pursuant to a 
        collective bargaining agreement (as defined by the Secretary of 
        Labor).
            (5) Electing migrant and seasonal agricultural workers 
        (described in section 1005(b)(4)).
    (e) Additional Definitions.--As used in this subtitle:
            (1) Group health plan.--The term ``group health plan'' 
        means an employee welfare benefit plan (as defined in section 
        3(1) of the Employee Retirement Income Security Act of 1974) 
        providing medical care (as defined in section 213(d) of the 
        Internal Revenue Code of 1986) to participants or beneficiaries 
        (as defined in section 3 of the Employee Retirement Income 
        Security Act of 1974) directly or through insurance, 
        reimbursement, or otherwise.
            (2) Large employer.--The term ``large employer'' means an 
        employer with more than 1000 full-time employees in the United 
        States. Such term includes the United States Postal Service. A 
        large group purchaser shall offer a choice of health plans to 
        qualified employees in accordance with section 1403 and meet 
        the enrollment requirements described in such section.
            (3) Small employer.--The term ``small employer'' means an 
        employer with 500 or less full-time employees. A small employer 
        shall offer a choice of health plan to qualified employees in 
        accordance with section 1403 and meet the enrollment 
        requirements described in such section. A small employer under 
        this subtitle is a community-rated employer described in title 
        I and title VI of this Act.
            (4) Dual choice employer.--
                    (A) In general.--The term ``dual choice employer'' 
                means an employer with more than 500 but less than 1000 
                full-time employees.
                    (B) Election.--A dual choice employer may elect to 
                be considered as either a small employer or a large 
                employer for purposes of this Act. The status of the 
                employer as a small employer or a large employer after 
                such an election shall remain in effect for a period of 
                not less than 3 years. A dual choice employer electing 
                to be a large employer shall not be eligible for 
                discounts under title VI.
            (5) Employer sponsored health plan.--The term ``employer 
        sponsored health plan'' means a group health plan with an 
        enrollment of at least 500 individuals that is established and 
        maintained by a large employer. The health plan may be operated 
        as a fee-for-service plan (as described in section 
        1211(b)(2)(A)) or as a network plan (as described in section 
        1514(c)(4)). The employer shall retain the insurance risk and 
        meet requirements specified by the Secretary of Labor for such 
        plans in accordance with section 1406. The Secretary shall 
        ensure that employer sponsored health plans meet the 
        requirements of this paragraph.
            (6) Multiemployer plan.--The term ``multiemployer plan'' 
        has the meaning given such term in section 3(37) of the 
        Employee Retirement Income Security Act of 1974, and includes 
        any plan that is treated as such a plan under title I of such 
        Act.

SEC. 1402. ELECTION OF LARGE GROUP PURCHASERS.

    (a) In General.--Not later than 6 months after the date of 
enactment of this Act, the Secretary of Labor shall promulgate 
regulations for the election of new large employers and multiemployer 
plans as large group purchasers and for the termination of such 
elections of multiemployer plans.
    (b) Dual Choice Employers.--If the number of full-time employees of 
a dual choice employer changes during the coverage year such that the 
employer has fewer than 500 or more than 1000 employees, the status of 
such employer shall be retained only throughout that year. The employer 
shall notify the Secretary of Labor of change in employer status in 
such a manner as the Secretary shall prescribe.

SEC. 1403. EMPLOYEE ENROLLMENT REQUIREMENTS.

    (a) Establishment of Employer Enrollment Function.--
            (1) In general.--Each employer shall make available 
        enrollment in at least three health plans, one of which shall 
        be a fee-for-service plan, to each eligible employee of such 
        employer.
            (2) Assurance of enrollment.--Each employer shall ensure 
        that each eligible individual is enrolled in a health plan and 
        receives continuous coverage pursuant to regulations 
        promulgated by the Secretary of Labor and consistent with the 
        appropriate provisions of subtitle F. The methods and 
        procedures prescribed in such regulations shall ensure the 
        enrollment of such individuals at the time such individuals 
        first become eligible individuals with respect to the employer.
            (3) Information.--The Secretary shall promulgate 
        regulations regarding the provision of information to employees 
        by employers to effectuate enrollment under this section.
            (4) Construction.--Nothing in this section shall be 
        construed to prevent an employer from complying with this 
        subsection through the offering of plans provided by a single 
        carrier.
            (5) Small employers.--Each small employer shall offer, at 
        the age-adjusted community rate in the area, at least three 
        State-certified health plans, one of which shall be a fee-for-
        service plan, and shall join a consumer purchasing cooperative. 
        A small employer may satisfy the requirement that it offer at 
        least three health plans by joining a consumer purchasing 
        cooperative.
    (b) Forwarding of Enrollment Information.--
            (1) Information regarding plans.--An employer must provide 
        each employee of such employer (including any part-time or 
        seasonal employee) with information regarding all qualified 
        health plans offered in the health care coverage area in which 
        the employer is located and, if the employee resides in another 
        health care coverage area, information regarding how to obtain 
        information on qualified health plans offered to residents of 
        such other health care coverage area.
            (2) Information regarding employees.--An employer must 
        forward the name and address (and any other necessary 
        identifying information specified by the Secretary) of each 
        eligible employee--
                    (A) to the qualified health plan in which such 
                employee is enrolled, or
                    (B) to the cooperative (if any) through which such 
                enrollment is made.
    (c) Payroll Deduction.--The employer, upon authorization by the 
employee, shall provide for the deduction, from the employee's wages or 
other compensation, of the premium amount due (less any employer 
contribution) to the plan or purchasing cooperative in accordance with 
section 6209. This subsection shall only apply to plans and purchasing 
cooperatives made available by the employer.
    (d) No Requirement To Enroll in Employer-Provided Plan.--An 
eligible employee of a community-rated employer may elect not to enroll 
in a health plan offered by an employer under this section. In addition 
to such plans, such an employee may enroll in a health plan offered 
through a purchasing cooperative of the employers choosing, in an 
association health plan (as described in section 1508) or through a 
plan offered by the Federal Employees Health Benefits Program.

SEC. 1404. RESPONSIBILITIES AND AUTHORITY OF EMPLOYER PURCHASERS.

    (a) Selection of Plans by Majority of Employees.--Each employer 
shall make the selections of health plans under this subsection on an 
annual basis. In making each such selection, a employer shall comply 
with any selection made by at least 50 percent of the eligible 
employees of the employer. The Secretary of Labor shall prescribe rules 
which shall govern the manner in which employees may make such a 
selection.
    (b) Specific Requirements of Larger Group Purchasers.--
            (1) Contracts with plans.--Each large group purchaser may--
                    (A) negotiate with a State-certified health plan to 
                enter into a contract with the plan for the enrollment 
                of such individuals under the plan; or
                    (B) offer to individuals an appropriate employer 
                sponsored health plan (as defined in section 
                1401(e)(5));
        or offer a combination of the plans described in this 
        paragraph.
            (2) Terms of contracts with state-certified health plans.--
        Contracts under this section between a large group purchaser 
        and a State-certified health plan may contain such provisions 
        (not inconsistent with the requirements of this title) as the 
        large group purchaser and plan may provide, except that in no 
        case does such contract remove the obligation of the large 
        group purchaser to provide for health benefits to large group 
        purchaser eligible individuals consistent with this part.
            (3) Plan and information requirements.--
                    (A) In general.--A large group purchaser shall 
                provide a written submission to the Secretary of Labor 
                (in such form as the Secretary may require) detaining 
                how the large group purchaser will carry out its 
                activities under this part.
                    (B) Annual information.--An employer group 
                purchaser shall provide to the Secretary of Labor each 
                year, in such form and manner as the Secretary may 
                require, such information as the Secretary may require 
                in order to monitor the compliance of the purchaser 
                with the requirements of this part.
            (4) Management of funds.--
                    (A) Management of funds.--The management of funds 
                by an large group purchaser shall be subject to the 
                applicable fiduciary requirements of part 4 of subtitle 
                B of title I of the Employee Retirement Income Security 
                Act of 1974, together with the applicable enforcement 
                provisions of part 5 of subtitle B of title I of such 
                Act.
                    (B) Management of finances and records; accounting 
                system.--Each large group purchaser shall comply with 
                standards relating to the management of finances and 
                records and accounting systems as the Secretary of 
                Labor shall specify.
    (c) Large Group Purchaser Transition.--Each large group purchaser 
must provide coverage--
            (1) as of the first day of any month in which an individual 
        first becomes a large group sponsor eligible individual, and
            (2) through the end of the month in the case of a large 
        group sponsor eligible individual who loses such eligibility 
        during the month unless covered under paragraph (1).
    (d) Employee Share.--The premiums charged by a large group 
purchaser to an employee for enrollment in a plan offered by such a 
purchaser (not taking into account any employer premium payment under 
section 6131) shall vary only by class of family enrollment (as 
specified under section 6131) and by geographic area. The Secretary of 
Labor shall promulgate regulations regarding the designation of 
geographic area by large group purchasers. Such regulations shall 
provide for such exceptions to the requirements under this section with 
respect to a sponsor described in section 1401(b)(1)(B), as may be 
appropriate.

SEC. 1405. DEVELOPMENT OF LARGE EMPLOYER GROUP PURCHASERS.

    (a) In General.--Nothing in this title shall be construed as 
prohibiting 2 or more large employers from forming a purchasing group 
with respect to the employees of such employer or employers. Such 
entities shall comply with the requirements applicable to health plans 
offered by large group purchasers under this subtitle.
    (b) No Use of Individual and Community-Rated Employer Purchasing 
Cooperatives.--A large employer shall be ineligible to purchase health 
insurance through an individual and community-rated employer purchasing 
cooperative.

SEC. 1406. TIMING AND TERMINATION OF EMPLOYER ELECTIONS.

    (a) Regulations.--Not later than 6 months after the date of 
enactment of this Act, the Secretary of Labor shall promulgate 
regulations for employer elections.
    (b) Elective Termination.--A large group sponsor (other than a 
large employer) may terminate an election under this part by filing 
with the National Health Board and the Secretary of Labor a notice of 
intent to terminate.
    (c) Effective Date of Termination.--In the case of a termination of 
an election under this section, in accordance with rules established by 
the Secretary of Labor--
            (1) subject to section 6022(a)(1), the termination shall 
        take effect as of the effective date of enrollments in 
        experience-rated plans made during the next open enrollment 
        period (as provided in section 1403), and
            (2) the enrollment of eligible individuals in experience-
        rated plans of the sponsor shall be terminated as of such date 
        and such individuals shall be enrolled in other applicable 
        health plans effective on such date.
    (d) Notice to Board.--If an election with respect to a large group 
sponsor is terminated pursuant to subsection (b), the Secretary of 
Labor shall notify the National Health Board of the termination of the 
election.

PART 2--REQUIREMENTS FOR HEALTH PLANS OFFERED BY LARGE GROUP PURCHASERS

SEC. 1411. ESTABLISHMENT OF STANDARDS APPLICABLE TO EMPLOYER SPONSORED 
              PLANS.

    (a) In General.--The Secretary of Labor shall develop and publish 
standards applicable to employer sponsored plans (as defined in section 
1401(e)(5)) offered by large group purchasers relating to the 
requirements described in subsection (b). The Secretary shall develop 
and publish such standards by not later than the date that is 6 months 
after the date of enactment of this Act. Such standards shall be the 
certified health plan standards applicable to employer sponsored plans 
under this part.
    (b) Requirements Specified.--
            (1) In general.--The requirements referred to in subsection 
        (a) are applicable plan requirements specified in subtitle F.
            (2) Other requirements.--The standards referred to in 
        subsection (a) shall include standards--
                    (A) relating to financial solvency, reserve and 
                guaranty fund requirements, as the Secretary of Labor 
                shall specify, except that such standards shall be 
                consistent with the applicable rules under part 4 of 
                title I of the Employee Retirement Income Security Act 
                of 1974;
                    (B) relating to the payments of premiums; and
                    (C) relating to claims grievance procedures, in 
                accordance with subtitle C of title V.

SEC. 1412. CORRECTIVE ACTIONS FOR HEALTH PLANS OFFERED BY LARGE 
              EMPLOYERS.

    (a) In General.--The plan sponsor of each large employer plan shall 
determine semiannually whether the requirements of this part are met. 
In any case in which the plan sponsor determines that there is reason 
to believe that there is or will be a failure to meet such 
requirements, or the Secretary of Labor makes such a determination and 
so notifies the plan sponsor, the plan sponsor shall, within 90 days 
after making such determination or receiving such notification, notify 
such Secretary (in such form and manner as such Secretary may prescribe 
by regulation) of a description of the corrective actions (if any) that 
the plan sponsor has taken or plans to take in response to such 
recommendations. The plan sponsor shall thereafter report to such 
Secretary, in such form and frequency as such Secretary may specify to 
the plan sponsor, regarding corrective action taken by the plan sponsor 
until such requirements are met. Such Secretary may make a 
determination that a large employer plan has ceased to be a large 
employer plan only if such Secretary is satisfied that the necessary 
corrective action cannot reasonably be expected to occur on a timely 
basis necessary to avoid failure to provide benefits for which the plan 
is obligated.
    (b) Disqualified or Termination of Plan.--
            (1) In general.--In any case in which the plan sponsor of a 
        large employer plan determines that there is reason to believe 
        that the plan will cease to be a large employer sponsored 
        health plan or will terminate, the plan sponsor shall so inform 
        the Secretary of Labor, shall develop a plan for winding up the 
        affairs of the plan in connection with such disqualification or 
        termination in a manner which will result in timely payment of 
        all benefits for which the plan is obligated, and shall submit 
        such plan in writing to such Secretary. Actions required under 
        this subparagraph shall be taken in such form and manner as may 
        be prescribed in regulations jointly prescribed by such 
        Secretary.
            (2) Actions required in connection with disqualification or 
        termination.--
                    (A) In general.--In any case in which--
                            (i) the Secretary of Labor has been 
                        notified under paragraph (1) of a failure of a 
                        large employer sponsored health plan to meet 
                        the requirements of this part and has not been 
                        notified by the plan sponsor that corrective 
                        action has restored compliance with such 
                        requirements, and
                            (ii) such Secretary determines that the 
                        continuing failure to meet such requirements 
                        can be reasonably expected to result in a 
                        continuing failure to pay benefits for which 
                        the plan is obligated,
                the plan sponsor and the large employer shall comply 
                with the requirements of subparagraph (B) or (C), as 
                applicable.
                    (B) Actions by plan sponsor.--Upon a determination 
                by the Secretary of Labor under subparagraph (A)(ii), 
                the plan sponsor shall, at the direction of such 
                Secretary, terminate the plan and, in the course of the 
                termination, take such actions as such Secretary may 
                require as necessary to ensure that the affairs of the 
                plan will be, to the maximum extent possible, wound up 
                in a manner which will result in timely payment of all 
                benefits for which the plan is obligated.
                    (C) Actions by large employer.--Upon a 
                determination by the Secretary of Labor under 
                subparagraph (A)(ii), the large employer shall provide 
                for such contingency coverage for all eligible 
                employees of the employer in accordance with 
                regulations which shall be prescribed by such 
                Secretary. Such regulations may provide for temporary 
                coverage of such employees under a plan provided by a 
                purchasing group in the appropriate area, a plan 
                provided under chapter 89 of title 5, United States 
                Code, or other appropriate means established in such 
                regulations.

SEC. 1413. DISCLOSURE AND RESERVE REQUIREMENTS FOR LARGE EMPLOYER 
              PURCHASER HEALTH PLANS.

    (a) In General.--The Secretary of Labor shall ensure that each 
large group purchaser health plan which is an employer sponsored health 
plan maintains plan assets in trust as provided in section 403 of the 
Employee Retirement Income Security Act of 1974--
            (1) without any exemption under section 403(b)(4) of such 
        Act, and
            (2) in amounts which the Secretary determines are 
        sufficient to provide at any time for payment to health care 
        providers of all outstanding balances owed by the plan at such 
        time and consistent with standards for State certified health 
        plans.
The requirements of the preceding sentence may be met through letters 
of credit, bonds, or other appropriate security to the extent provided 
in regulations of the Secretary.
    (b) Disclosure.--Each employer sponsored health plan shall notify 
the Secretary at such time as the financial reserve requirements of 
this section are not being met. The Secretary may assess a civil money 
penalty of not more than $100,000 against any large group purchaser for 
any failure to provide such notification in such form and manner and 
within such time periods as the Secretary may prescribe by regulation.

SEC. 1414. TRUSTEESHIP BY THE SECRETARY OF INSOLVENT LARGE EMPLOYER 
              PURCHASED HEALTH PLANS.

    (a) Appointment of Secretary as Trustee for Insolvent Plans.--
Whenever the Secretary of Labor determines that a large employer 
sponsored health plan will be unable to provide benefits when due or is 
otherwise in a financially hazardous condition as defined in 
regulations of the Secretary, the Secretary shall, upon notice to the 
plan, apply to the appropriate United States district court for 
appointment of the Secretary as trustee to administer the plan for the 
duration of the insolvency. The plan may appear as a party and other 
interested persons may intervene in the proceedings at the discretion 
of the court. The court shall appoint the Secretary trustee if the 
court determines that the trusteeship is necessary to protect the 
interests of the enrolled individuals or health care providers or to 
avoid any unreasonable deterioration of the financial condition of the 
plan or any unreasonable increase in the liability of the large group 
purchaser Health Plan Insolvency Fund. The trusteeship of the Secretary 
shall continue until the conditions described in the first sentence of 
this subsection are remedied or the plan is terminated.
    (b) Powers as Trustee.--The Secretary of Labor, upon appointment as 
trustee under subsection (a), shall have the power--
            (1) to do any act authorized by the plan, this Act, or 
        other applicable provisions of law to be done by the plan 
        administrator or any trustee of the plan,
            (2) to require the transfer of all (or any part) of the 
        assets and records of the plan to the Secretary as trustee,
            (3) to invest any assets of the plan which the Secretary 
        holds in accordance with the provisions of the plan, 
        regulations of the Secretary, and applicable provisions of law,
            (4) to do such other acts as the Secretary determines to be 
        necessary to continue operation of the plan without increasing 
        the potential liability of the large group purchaser Health 
        Plan Insolvency Fund, if such acts may be done under the 
        provisions of the plan,
            (5) to require the large group purchaser, the plan 
        administrator, any contributing employer, and any employee 
        organization representing covered individuals to furnish any 
        information with respect to the plan which the Secretary as 
        trustee may reasonably need in order to administer the plan,
            (6) to collect for the plan any amounts due the plan and to 
        recover reasonable expenses of the trusteeship,
            (7) to commence, prosecute, or defend on behalf of the plan 
        any suit or proceeding involving the plan,
            (8) to issue, publish, or file such notices, statements, 
        and reports as may be required under regulations of the 
        Secretary or by any order of the court,
            (9) to terminate the plan and liquidate the plan assets in 
        accordance with applicable provisions of this Act and other 
        provisions of law, to restore the plan to the responsibility of 
        the large group purchaser, or to continue the trusteeship,
            (10) to provide for the enrollment of individuals covered 
        under the plan in an appropriate health plan, and
            (11) to do such other acts as may be necessary to comply 
        with this Act or any order of the court and to protect the 
        interests of enrolled individuals and health care providers.
    (c) Notice of Appointment.--As soon as practicable after the 
Secretary's appointment as trustee, the Secretary shall give notice of 
such appointment to--
            (1) the plan administrator,
            (2) each enrolled individual,
            (3) each employer who may be liable for contributions to 
        the plan, and
            (4) each employee organization which, for purposes of 
        collective bargaining, represents enrolled individuals.
    (d) Additional Duties.--Except to the extent inconsistent with the 
provisions of this Act or part 4 of subtitle B of title I of the 
Employee Retirement Income Security Act of 1974, or as may be otherwise 
ordered by the court, the Secretary of Labor, upon appointment as 
trustee under this section, shall be subject to the same duties as 
those of a trustee under section 704 of title 11, United States Code, 
and shall have the duties of a fiduciary for purposes of such part 4.
    (e) Other Proceedings.--An application by the Secretary of Labor 
under this subsection may be filed notwithstanding the pendency in the 
same or any other court of any bankruptcy, mortgage foreclosure, or 
equity receivership proceeding, or any proceeding to reorganize, 
conserve, or liquidate such plan or its property, or any proceeding to 
enforce a lien against property of the plan.
    (f) Jurisdiction of Court.--
            (1) In general.--Upon the filing of an application for the 
        appointment as trustee or the issuance of a decree under this 
        subsection, the court to which the application is made shall 
        have exclusive jurisdiction of the plan involved and its 
        property wherever located with the powers, to the extent 
        consistent with the purposes of this subsection, of a court of 
        the United States having jurisdiction over cases under chapter 
        11 of title 11, United States Code. Pending an adjudication 
        under this section such court shall stay, and upon appointment 
        by it of the Secretary of Labor as trustee, such court shall 
        continue the stay of, any pending mortgage foreclosure, equity 
        receivership, or other proceeding to reorganize, conserve, or 
        liquidate the plan, the large group purchaser, or property of 
        such plan or purchaser, and any other suit against any 
        receiver, conservator, or trustee of the plan, the purchaser, 
        or property of the plan or purchaser. Pending such adjudication 
        and upon the appointment by it of the Secretary as trustee, the 
        court may stay any proceeding to enforce a lien against 
        property of the plan or the large group purchaser or any other 
        suit against the plan or the purchaser.
            (2) Venue.--An action under this subsection may be brought 
        in the judicial district where the plan administrator resides 
        or does business or where any asset of the plan is situated. A 
        district court in which such action is brought may issue 
        process with respect to such action in any other judicial 
        district.
    (g) Personnel.--In accordance with regulations of the Secretary of 
Labor, the Secretary shall appoint, retain, and reasonably compensate 
accountants, actuaries, and other professional service personnel as may 
be necessary in connection with the Secretary's service as trustee 
under this section.

                        Subtitle F--Health Plans

SEC. 1500. HEALTH PLAN DEFINED.

    (a) In General.--In this Act, the term ``health plan'' means a plan 
that provides the comprehensive benefit package and meets the 
requirements of this Act applicable to health plans.
    (b) State-Certified Health Plan.--In this Act, the term ``State-
certified health plan'' means a health plan that has been certified by 
a State under section 1504 (or, in the case in which the Board is 
exercising certification authority under this title, that has been 
certified by the Board).
    (c) Domiciliary State.--For purposes this section, the State which 
has certified a cooperative is the State in which the cooperative is 
domiciled.

                 PART 1--REQUIREMENTS FOR HEALTH PLANS

SEC. 1501. CERTIFIED HEALTH PLAN.

    (a) In General.--To be certified under this title a health plan 
must meet the applicable standards under section 1503 for a certified 
health plan.
    (b) Special Rules for Large Group Purchasers.--Employer sponsored 
health plans offered by large group purchasers shall meet applicable 
standards in accordance with subtitle E.
    (c) Construction.--Whenever in this title a requirement or standard 
is imposed on a health plan, the requirement or standard is deemed to 
have been imposed on the insurer or health plan sponsor of the plan in 
relation to that plan.

SEC. 1502. APPLICATION OF REQUIREMENTS.

    No plan shall be treated under this Act as a health plan--
            (1) unless the plan is an employer sponsored health plan or 
        a State-certified plan; or
            (2) on and after the effective date of a finding by the 
        applicable regulatory authority that the plan has failed to 
        comply with such applicable requirements.

SEC. 1503. ESTABLISHMENT OF STANDARDS.

    In order for a health plan to be eligible to be certified as a 
health plan by a State, the health plan shall meet the requirements of 
this Act, as described in regulations promulgated by the Board or the 
Secretary, including standards requiring that the plan shall--
            (1) provide for the effective delivery of covered services 
        throughout each designated service area for which it is 
        certified;
            (2) provide for coverage of the comprehensive benefits 
        package described in subtitle B;
            (3) provide for the collection and reporting of data;
            (4) not discriminate in enrollment or benefits;
            (5) establish community-rated premiums for the 
        comprehensive benefits;
            (6) meet financial solvency and financial management 
        standards promulgated by the Board;
            (7) provide for effective grievance procedures;
            (8) demonstrate an ability to ensure that enrollees have 
        adequate access to providers of health care;
            (9) meet information, disclosure and marketing 
        requirements;
            (10) meet requirements for open enrollment, availability, 
        and renewability;
            (11) meet requirements with respect to rural and 
        underserved areas;
            (12) meet requirements with respect to participation in a 
        payment adjustment program;
            (13) meet quality standards;
            (14) enter into agreements with cooperatives; and
            (15) meet other applicable requirements of this Act 
        pursuant to the Board or to regulations promulgated by the 
        Secretary.

SEC. 1504. CERTIFICATION AND REVOCATION OF HEALTH PLAN CERTIFICATION.

    (a) Certification.--A participating State shall--
            (1) certify each health plan, review the continued 
        compliance of each plan with the certification requirements and 
        recertify each plan not less frequently than once during every 
        3-year period if the State determines that the plan continues 
        to meet the criteria for certification, including demonstrating 
        that the policies of the plan have not discriminated on the 
        basis of any of the categories described in section 1914; and
            (2) review enrollee disenrollment from health plans in 
        order to determine whether there is a pattern of disenrollment 
        that does not reflect the distribution of such plans' 
        reenrolling members with respect to age, income, health 
        condition, prior utilization of health services, place of 
        residence and other potential risk characteristics.
Evidence of any of the disenrollment patterns described in paragraph 
(2) may be cause for the denial of a certification or for the 
application of one or more interim sanctions described in section 1505.
    (b) Revocation.--The State may revoke a plan's certification as a 
certified health plan for any health care coverage area or refuse to 
recertify a plan only upon a determination by the State that the health 
plan no longer meets the requirements of this section, pursuant to 
procedures established by the Board.

SEC. 1505. MONITORING.

    A participating State shall monitor the performance of each State-
certified health plan to ensure that it continues to meet the criteria 
for certification. If during such monitoring the State determined that 
a health plan fails to deliver care of adequate quality, either with 
respect to the overall enrollment population or the vulnerable 
population, fails to meet applicable standards relating to financial 
solvency and stability, or fails to meet any other criteria for 
certification or recertification, the State shall impose sanctions on 
the plan. Such sanctions may include fines and the limitation or 
prohibition of further enrollment until such time as the plan develops 
and complies with a corrective action plan.

SEC. 1506. ASSOCIATION HEALTH PLANS.

    (a) Application.--This section shall apply to any association 
health plan that is in operation on June 1, 1994 and that meets the 
requirements for being considered an multiple employer welfare 
arrangement under section 3(40) of the Employee Retirement Income 
Security Act of 1974 (29 U.S.C. 1002(40)).
    (b) Application of Standards.--An association health plan shall 
meet the requirements of a State-certified community-rated health plan.
    (c) Requirements.--The sponsoring entity of the association health 
plan--
            (1) shall be organized and maintained in good faith, with 
        appropriate bylaws that specifically state the purpose, as a 
        trade association, industry association, professional 
        association, chamber of commerce, a religious organization, or 
        a public entity association and that the entity has been 
        established and maintained for substantial purposes other than 
        to provide the health care required under this section; and
            (2) is and has been in operation (together with its 
        immediate predecessor, if any) for a continuous period of not 
        less than 3 years and receives the active support of its 
        membership.
    (d) Treatment of Existing Entities.--Any arrangement that, as of 
June 1, 1994, has been in effect for not less than 18 months and with 
respect to which there is a pending application with the State 
insurance commissioner for a certificate of operation as a health plan, 
shall be treated for purposes of this subtitle as a qualified health 
plan (if such plan otherwise meets the requirements of this Act) unless 
the State can demonstrate that--
            (1) fraudulent or material misrepresentations have been 
        made by the sponsor in the application;
            (2) the plan that is the subject of the application, on its 
        face, fails to meet the requirements for a complete 
        application; or
            (3) a financial impairment exists with respect to the 
        applicant that is sufficient to demonstrate the applicant's 
        inability to continue its operations.
    (e) Treatment of Multiple Employer Welfare Arrangements.--
            (1) MEWAs.--The Secretary of Labor shall promulgate 
        regulations that prohibit the insuring of employees under a 
        multiple employer welfare arrangement as defined under section 
        3(40) of the Employee Retirement Income Security Act of 1974 
        (29 U.S.C. 1002(40)) unless the arrangement meets the standards 
        for an association health plan under subtitle F or is certified 
        by a State or a consumer purchasing cooperative in accordance 
        with subtitle D.
            (2) Repeal of erisa provisions.--
                    (A) Paragraph (40) of section 3 of such Act (29 
                U.S.C. 1002(40)) is repealed.
                    (B) Paragraph 6 of section 514(b) of such Act (29 
                U.S.C. 1144(b)(6)) is repealed.

SEC. 1507. SPECIFIED STANDARD BENEFITS; SUPPLEMENTAL BENEFITS AND COST-
              SHARING POLICIES.

    (a) Standard Benefits and Other Requirements.--A State shall not 
accept the certification of a health plan as a certified health plan 
unless the plan provides the comprehensive benefits package required 
under this Act.
    (b) Treatment of Supplementary Health Benefits.--
            (1) In general.--Subsection (a) shall not be construed as 
        preventing a health plan, carrier, or insurer from offering (in 
        a manner that is separate from the offering of health plans) 
        supplemental insurance policies, pursuant to the State 
        certification plan and regulations promulgated by the Board.
            (2) No duplicative health benefits.--A health plan or any 
        other carrier or insurer may not offer any policy for 
        supplementary health benefits under paragraph (1) that 
        duplicates the comprehensive benefits or is linked in any 
        manner to the plan's comprehensive benefits package.
            (3) Regulation of supplemental plans.--The Secretary shall 
        provide appropriate rules for the regulation of supplemental 
        benefit policies and plans, including rules providing for the 
        guaranteed issue and the community rating of supplemental 
        policies.
    (c) Treatment of Cost-Sharing Policies.--
            (1) Rules for offering of policies.--A cost sharing policy 
        may be offered to an individual only if--
                    (A) the policy is offered by the certified health 
                plan in which the individual is enrolled;
                    (B) the certified health plan offers the policy to 
                all individuals enrolled in the plan;
                    (C) the plan offers each such individual a choice 
                of a policy that provides standard coverage and a 
                policy that provides maximum coverage (in accordance 
                with standards established by the Board); and
                    (D) the policy is offered only during the annual 
                open enrollment period for community-rated health plans 
                (described in section 1516).
            (2) Prohibition of coverage of copayments.--Each cost 
        sharing policy may not provide any benefits relating to any 
        copayments established under subtitle B.
            (3) Equivalent coverage for all services.--Each cost 
        sharing policy must provide coverage for items and services in 
        the comprehensive benefit package to the same extent as the 
        policy provides coverage for all items and services in the 
        package.
            (4) Requirements for pricing.--
                    (A) In general.--The price of any cost sharing 
                policy shall--
                            (i) be the same for each individual to whom 
                        the policy is offered;
                            (ii) take into account any expected 
                        increase in utilization resulting from the 
                        purchase of the policy by individuals enrolled 
                        in the community-rated health plan; and
                            (iii) not result in a loss-ratio of less 
                        than 90 percent.
                    (B) Loss-ratio defined.--In subparagraph (A)(iii), 
                a ``loss-ratio'' is the ratio of the premium returned 
                to the consumer in payout relative to the total premium 
                collected.

SEC. 1508. COLLECTION, PROVISION OF STANDARDIZED INFORMATION, AND 
              CONFIDENTIALITY.

    Each health plan must provide information required in accordance 
with subtitles A and B of title V.

SEC. 1509. PROHIBITION OF DISCRIMINATION.

    (a) In General.--Each health plan shall comply with the 
antidiscrimination requirements of section 1914.
    (b) Antidiscrimination.--
            (1) In general.--No health plan may discriminate on the 
        basis of--
                    (A) the method through which a family seeks 
                enrollment under the plan; or
                    (B) the provider's status as a member of a health 
                care profession for the purposes of selecting among 
                providers of health services for participation in a 
                provider network, provided that the State authorizes 
                members of that profession to render the services in 
                question and that such services are covered in the 
                comprehensive benefits package described in subtitle B.
            (2) Rule of construction.--Nothing in paragraph (1)(B) 
        shall be construed as requiring any health plan to--
                    (A) include in a network any individual provider;
                    (B) establish any defined ratio of different 
                categories of health professionals;
                    (C) maintain any specific reimbursement methodology 
                other than that which is established in other 
                provisions of this Act; and
                    (D) establish any specific utilization review or 
                internal quality standards other than that required in 
                other provisions of this Act.

SEC. 1510. QUALITY ASSURANCE STANDARDS.

    (a) In General.--Each health plan shall comply with the plan 
performance standards in accordance with subtitle A of title V. Each 
health plan shall establish procedures, including ongoing quality 
improvement procedures, to ensure that the health care services 
provided to enrollees under the plan will be provided under reasonable 
standards of quality of care consistent with prevailing professionally 
recognized standards of medical practice and the quality standards 
established under subtitle A of title V.
    (b) Internal Quality Assurance Program.--Each health plan shall 
establish, and communicate to its enrollees and its providers, an 
ongoing internal program, including periodic reporting, to monitor and 
evaluate the quality and cost effectiveness of its health care 
services, pursuant to standards established by the National Quality 
Council.

SEC. 1511. COMMUNITY-RATING.

    (a) In General.--The Secretary shall promulgate regulations for 
community rating as modified by age. Such regulations pertaining to 
adjustments in the community rate for age shall terminate on December 
31, 1998, except that the Board at any time may make a recommendation 
to Congress to maintain a form of modified community rating during the 
transition.
    (b) Marketing Fees.--Notwithstanding this section, a health plan 
may impose a marketing fee for individuals enrolling in a plan through 
an agent. Such fees shall be a uniform percentage of the premium 
established under section 6102(a)(1). In no case shall a plan impose a 
marketing fee for individuals enrolled through a cooperative or through 
a direct enrollment process established pursuant to section 1660.

SEC. 1512. FINANCIAL SOLVENCY REQUIREMENTS AND CONSUMER PROTECTION 
              AGAINST PROVIDER CLAIMS.

    (a) Solvency Protection.--Each health plan shall meet financial 
solvency requirements to assure protection of enrollees with respect to 
potential insolvency. Health plans must provide a financial plan and 
meet capital requirements established by the Board under section 1651. 
Health plans may utilize reinsurance, provide risk sharing, and other 
appropriate measures established by the Board.
    (b) Protection Against Provider Claims.--In the case of a failure 
of a health plan to make payments with respect to the comprehensive 
benefits for any reason, an individual who is enrolled under the plan 
is not liable to any health care provider with respect to the provision 
of health services within such set of benefits 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. 1513. GRIEVANCE MECHANISMS.

    A health plan shall establish grievance procedures that enrollees 
may utilize in pursuing complaints in accordance with subtitle C of 
title V.

SEC. 1514. ACCESS TO CARE.

    (a) Point-Of-Service Option.--Each health plan that is a low-cost 
sharing plan (as described in section 1131) shall offer enrollees the 
opportunity to obtain coverage for out-of-network items and services, 
except that such point-of-service option must be offered, and priced 
separately from the benefits offered through the plan's network. A 
health plan providing coverage to an enrollee for out-of-network items 
and services may charge an alternative premium and require alternative 
cost-sharing to take into account such coverage, consistent with 
regulations promulgated by the Secretary.
    (b) Treatment of Cost-Sharing.--Each health plan, in providing 
benefits in the comprehensive benefit package shall include in its 
payments to providers such additional reimbursement as may be necessary 
to reflect cost sharing reductions to which individuals are entitled 
under section 1281.
    (c) Definitions.--
            (1) In-network items and services.--For purposes of this 
        Act, the term ``in-network'', when used with respect to items 
        or services described in this subtitle, means items or services 
        provided to an individual enrolled under a health plan by a 
        health care provider who is a member of a provider network of 
        the plan (as defined in paragraph (3)).
            (2) Out-of-network items and services.--For purposes of 
        this Act, the term ``out-of network'', when used with respect 
        to items or services described in this subtitle, means items or 
        services provided to an individual enrolled under a health plan 
        by a health care provider who is not a member of a provider 
        network of the plan (as defined in paragraph (3)).
            (3) Provider network defined.--A ``provider network'' 
        means, with respect to a health plan, providers who have 
        entered into an agreement with the plan under which such 
        providers are obligated to provide items and services in the 
        comprehensive benefit package to individuals enrolled in the 
        plan, or have an agreement to provide services on a fee-for-
        service basis.
            (4) Network plan defined.--For purposes of this Act, a 
        ``network plan'' means a health plan that utilizes a provider 
        network described in paragraph (3) and that meets the 
        requirements of section 1523(c).
    (d) Relation to Detention.--A health plan is not required to 
provide any reimbursement to any detention facility for services 
performed in that facility for detainees in the facility.

SEC. 1515. INFORMATION AND MARKETING STANDARDS.

    (a) In General.--Each health plan shall provide information in 
accordance with sections 1205 and 1603(e), other applicable information 
requirements of this Act and rules promulgated by the Board.
    (b) Marketing Methods; Advertising Materials.--A health plan may 
utilize direct marketing, agency, or other arrangements to distribute 
health plan information, subject to applicable State fair marketing 
practices laws and standards established by the State, including 
standards to prevent selective marketing. All advertising, promotional 
materials, and other communications with health plan members and the 
general public must be factually accurate and responsive to the needs 
of served populations. A health plan may not distribute marketing 
materials to an area smaller than the entire designated service area of 
the plan.
    (c) Payment of Agent Commissions.--A health plan--
            (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.
    (d) Materials in Appropriate Languages.--In the case of a health 
care coverage area that includes a significant number or proportion of 
residents with limited English proficiency, the State shall provide all 
materials under this Act at an appropriate reading level and in the 
native languages of such residents, as appropriate.

SEC. 1516. ENROLLMENT; AVAILABILITY, AND RENEWABILITY.

    (a) Enrollment Requirements.--Each health plan shall establish an 
enrollment process consistent with this paragraph. To be certified as a 
health plan, the plan shall accept the enrollment of every eligible 
individual who seeks such enrollment (including individuals enrolling 
directly with the plan or through a cooperative) and comply with all 
rules and procedures regarding enrollment established by the State and 
by the Board. No plan may engage in any practice that has the effect of 
attracting or limiting enrollees on the basis of personal 
characteristics, such as occupation or affiliation with any person or 
entity, or those characteristics described in section 1914.
    (b) No Limits on Coverage; No Pre-Existing Condition Limits.--A 
health plan may not--
            (1) terminate, restrict, or limit coverage for the 
        comprehensive benefit package in any portion of the plan's 
        service area, except as provided in this section;
            (2) cancel coverage for any community rate eligible 
        individual until that individual is enrolled in another 
        applicable health plan;
            (3) exclude any eligible individual from coverage because 
        of existing medical conditions or genetic predisposition to 
        medical conditions;
            (4) impose waiting periods before coverage begins; or
            (5) impose a rider that serves to exclude coverage of 
        particular eligible individuals.
    (c) Renewability; Limitation on Termination.--Coverage of eligible 
individuals, except as provided in this section, under a health plan in 
a health care coverage area shall be renewed at the option of such 
eligible individuals, and coverage may not be terminated except after 
notice and in accordance with subsection (g).
    (d) Capacity Limitations.--
            (1) In general.--With the approval of the applicable 
        regulatory authority, a health plan may limit enrollment 
        because of the plan's capacity to deliver services or to 
        maintain financial stability. If such a limitation is imposed, 
        the limitation may not be imposed on a basis referred to in 
        subsection (a).
            (2) Restrictions.--If such a limitation is imposed--
                    (A) the plan may only enroll individuals under the 
                plan consistent with priorities established by the 
                State consistent with paragraph (3); and
                    (B) the plan may not discriminate based on the 
                method through which a family seeks enrollment under 
                the plan.
            (3) State oversight.--Each State shall, in accordance with 
        rules promulgated by the Board, establish procedures and 
        methods to assure equal opportunity of enrollment for all 
        families, regardless of when during the open enrollment period 
        or the method by which the enrollment has been sought.
    (e) Treatment of Network Plans.--
            (1) Geographic limitations.--A health plan which is a 
        network plan as defined in section 1514(c)(4) may deny 
        enrollment 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.
            (2) Service areas.--The State shall establish standards, 
        consistent with guidelines promulgated by the Secretary, for 
        the designation by network plans of service areas in order to 
        prevent discrimination in violation of section 1914.
    (f) Termination of Plans.--A health plan may elect not to renew or 
make available a health plan in a health care coverage area, or not to 
utilize a particular type of delivery system in a health care coverage 
area, but only if the health plan--
            (1) elects not to renew all of its health plans in such 
        health care coverage area or not to use the delivery system in 
        such health care coverage area; and
            (2) provides notice to the State and each individual 
        covered under the plan of such termination at least 180 days 
        before the date of expiration of either the plan or use of the 
        delivery system.
In such case, a health plan may not provide for the issuance of any 
health plan in such health care coverage area, or to utilize such 
delivery system in that health care coverage area during a 5-year 
period beginning on the date of the termination of the last plan not so 
renewed. For purposes of this paragraph the term ``delivery system'' 
means an open-network, closed network, or nonnetwork health care 
delivery system.

SEC. 1517. ADMINISTRATIVE PROVISIONS.

    (a) Capability.--Each health plan shall demonstrate to the 
certifying authority the capability to administer the plan.
    (b) Utilization Management.--Each health plan shall demonstrate to 
the certifying authority, through written management procedures, an 
appropriate utilization management process. The Secretary shall 
establish guidelines under this subsection for utilization management.

SEC. 1518. INFORMATION REGARDING A PATIENT'S RIGHT TO SELF-
              DETERMINATION IN HEALTH CARE SERVICES.

    Each health plan shall provide written information to each 
individual enrolling in such plan of such individual's right under 
State law (whether statutory or as recognized by the courts of the 
State) to make decisions concerning medical care, including the right 
to accept or refuse medical treatment and the right to formulate 
advance directives (as defined in section 1866(f)(3) of the Social 
Security Act (42 U.S.C. 1395cc(f)(3))), and the written policies of the 
qualified health plan with respect to such right.

SEC. 1519. RURAL AND MEDICALLY UNDERSERVED AREAS.

    (a) In General.--If, in accordance with appropriate rules 
established by the Secretary, a State determines that there is 
inadequate access in the provision of health services by health plans 
in any area of a State, the State may authorize--
            (1) a health plan to be the only health plan in the area; 
        or
            (2) two or more health plans to take joint action to 
        develop and implement a program.
    (b) Medically Underserved Area Defined.--For purposes of this 
subtitle the term ``medically underserved area'' means an urban or 
rural area designated by the Board as an area with a shortage of health 
professionals or of health services or facilities.

SEC. 1520. PAYMENT ADJUSTMENTS.

    Each health plan shall participate in any risk adjustment, 
reinsurance, or other premium adjustment program implemented by the 
State in accordance with section 1641. Provisions of this section 
concerning risk adjustment and reinsurance shall not apply to health 
plans offered by large group purchasers.

SEC. 1521. PREEMPTION OF CERTAIN STATE LAWS RELATING TO HEALTH PLANS.

    (a) Laws Restricting Plans Other Than Fee-for-Service Plans.--
Except as may otherwise be provided in this section, no State law shall 
apply to any services provided under a health plan that is not a fee-
for-service plan (or a fee-for-service component of a plan) if such law 
has the effect of prohibiting or otherwise restricting plans from--
            (1) limiting the number and type of health care providers 
        who participate in the plan;
            (2) requiring enrollees to obtain health services (other 
        than emergency services) from participating providers or from 
        providers authorized by the plan;
            (3) requiring enrollees to obtain a referral for treatment 
        by a specialized physician or health institution;
            (4) establishing different payment rates for participating 
        providers and providers outside the plan;
            (5) creating incentives to encourage the use of 
        participating providers; or
            (6) requiring the use of single-source suppliers for 
        pharmacy, non-serviced medical equipment, and other health 
        products and services.
    (b) Preemption of State Corporate Practice Acts.--Any State law 
related to the corporate practice of medicine and to provider ownership 
of health plans or other providers shall not apply to arrangements 
between health plans that are not fee-for-service plans and their 
participating providers.

SEC. 1522. CONTRACTS WITH CONSUMER PURCHASING COOPERATIVES.

    (a) Contracts with Cooperatives.--A certified health plan provided 
by a carrier shall enter into contracts with each cooperative in the 
designated service area served by the plan seeking such a contract.
    (b) Pricing.--No health plan shall offer a rate to a cooperative 
that is more than the filed per-capita community rate (as described in 
section 6000(a)(1)).

SEC. 1523. HEALTH PLAN ARRANGEMENTS WITH PROVIDERS.

    (a) Provider Verification.--Plans shall ensure that all health care 
providers reimbursed by the plan are authorized under State law to 
provide applicable services. Each health plan shall--
            (1) verify the credentials of practitioners and facilities;
            (2) ensure that all providers participating in the plan 
        meet applicable State licensing and certification standards;
            (3) ensure that each health care provider participating in 
        the plan annually discloses information regarding operations, 
        ownership, finances, and workforce necessary to evaluate the 
        providers compliance with this Act;
            (4) oversee the quality and performance of participating 
        providers, consistent with section 1510; and
            (5) investigate and resolve consumer complaints against 
        participating providers.
    (b) Requirements for Nonnetwork Plans.--Each health plan must enter 
into such agreements or have such other arrangements as may be 
necessary with an appropriate mix, number, and distribution of 
qualified health professionals to ensure the provision of all services 
covered by the comprehensive benefit package to eligible individuals 
enrolled in the plan.
    (c)  Requirements for Network Plans.--A health plan that requires 
coinsurance for an out-of-network item or service shall comply with the 
following requirements:
            (1) Agreements.--Each health plan must enter into such 
        agreements or have such other arrangements as may be necessary 
        with an appropriate mix, number, and distribution of qualified 
        health professionals to ensure the provision of all services 
        covered by the comprehensive benefit package to eligible 
        individuals enrolled in the plan.
            (2) Gatekeeper.--With respect to each health plan that 
        utilizes a gatekeeper or similar process to approve health care 
        services prior to or following the provision of such services, 
        such gatekeepers shall include specialists or a care 
        coordinator from an interdisciplinary team if medically 
        necessary or appropriate given the nature, severity, or 
        complexity of each patient's chronic disease, disorder, or 
        other health condition.
            (3) Continued care.--Each health plan shall develop a 
        process to ensure the access of enrollees to--
                    (A) obstetrician-gynecologists for medically 
                necessary or appropriate primary care without 
                gatekeeper approval prior to each visit, and
                    (B) relevant specialists for the continued care of 
                patient-enrollees with chronic diseases, disorders, or 
                health conditions without gatekeeper approval prior to 
                each visit, when the continued care is medically 
                indicated.
            (4) Eligible centers of specialized treatment expertise.--
                    (A) In general.--Each health plan shall provide 
                access through agreements (as defined in subparagraph 
                (B)) to eligible centers of specialized treatment 
                expertise (as defined in subparagraphs (C) and (D)), 
                including centers outside the health care coverage area 
                or State, to ensure that enrollees receive the 
                specialized treatment expertise of such centers when 
                medically indicated. For children such specialized 
                treatment expertise shall specifically be in 
                pediatrics. A health plan shall be deemed to be in 
                accordance with this paragraph if the agreement of such 
                plan provides that, with respect to health conditions 
                within the specialized treatment expertise of the 
                center involved, the plan will, at the enrollees 
                request--
                            (i) refer medical cases involving such 
                        conditions to such center;
                            (ii) inform plan members of the 
                        availability of referral care; and
                            (iii) establish an appeal mechanism in 
                        which plan participants may challenge denials 
                        of referrals to such center or may request that 
                        their specialized care be provided at an 
                        alternative center as described in subparagraph 
                        (E).
                    (B) Agreements.--An agreement between a health plan 
                and a center of specialized treatment expertise shall--
                            (i) be a written provider participation 
                        agreement with the center; or
                            (ii) be a written agreement under which the 
                        plan shall make payment to the center such that 
                        services provided will be reimbursable at the 
                        plan's normal rate for equivalent services or, 
                        with respect to a plan that does not pay 
                        providers on a fee-for-service basis, based on 
                        payment methodologies and rates used under the 
                        applicable methodology and rates or the most 
                        closely applicable Medicare payment 
                        methodologies under such program as the 
                        Secretary may specify in regulations.
                    (C) Specialized treatment expertise.--For purposes 
                of this subtitle, the term ``specialized treatment 
                expertise'', with respect to the treatment of a health 
                condition by an eligible center, means expertise in 
                diagnosing and treating unusual diseases or conditions, 
                diagnosing and treating diseases or conditions which 
                are unusually difficult to diagnose or treat, and 
                providing other specialized health care.
                    (D) Eligible centers.--Eligible centers under this 
                paragraph shall be designated to diagnose and provide 
                care for patients with specified categories of 
                conditions and diseases. Such centers may include 
                academic health centers and teaching hospitals, and 
                other designated centers and systems of advanced care 
                that meet strict objective criteria established by the 
                Secretary including--
                            (i) specialized credentials for caring for 
                        patients with the specified categories of 
                        conditions and diseases;
                            (ii) staff with experience in caring for a 
                        significant number of patients with the 
                        specified categories of conditions and 
                        diseases; and
                            (iii) excellent measured outcomes in the 
                        diagnosis and treatment of patients with the 
                        specified categories of conditions and 
                        diseases.
                    (E) Access to alternative centers.--
                            (i) In general.--Patients in need of 
                        specialized treatment expertise may request 
                        that specialized care be provided at an 
                        alternative center. As used in this 
                        subparagraph, the term ``alternative center'' 
                        means a center of specialized treatment 
                        expertise with which the health plan of the 
                        patient does not have a written agreement as 
                        described in subparagraph (B). Plans shall have 
                        a procedure for making decisions regarding such 
                        requests and have an appeals process for 
                        patients who are refused coverage at an 
                        alternative center for specialized treatment.
                            (ii) Reimbursement.--Care provided at an 
                        alternative center shall be reimbursed by the 
                        health plan at the plan's normal rate for 
                        equivalent services or, with respect to a plan 
                        that does not pay providers on a fee-for-
                        service basis, based on payment methodologies 
                        and rates used under the applicable methodology 
                        and rates or the most closely applicable 
                        Medicare payment methodologies under such 
                        program as the Secretary may specify in 
                        regulations.
                    (F) Limitation.--A State may not establish rules or 
                policies that require or encourage health plans to give 
                preference to centers of specialized treatment 
                expertise within the State or within the health care 
                coverage area. A health plan shall not prohibit an 
                academic health center, teaching hospital, or other 
                center for specialized care with which it contracts 
                from contracting with one or more other plans.
    (d) Emergency and Urgent Care Services.--
            (1) In general.--Each health plan must cover emergency and 
        urgent care services provided to enrollees, without regard to 
        whether or not the provider furnishing such services has a 
        contractual (or other) arrangement with the plan to provide 
        items or services to enrollees of the plan and in the case of 
        emergency services without regard to prior authorization.
            (2) Payment amounts.--In the case of emergency and urgent 
        care provided to an enrollee outside of a health plan's service 
        area, the payment amounts of the plan shall be based on the 
        applicable fee schedule described in subsection (e).
    (e) Application of Fee Schedule.--
            (1) In general.--Subject to paragraphs (2) and (3), each 
        qualified health plan that provides for payment for services on 
        a fee-for-service basis and has not established an agreement or 
        contractual arrangement with providers specifying a basis for 
        payment shall make such payment to such providers under a fee 
        schedule established by the plan.
            (2) Rule of construction.--Nothing in the paragraph (1) 
        shall be construed to prevent a health plan from providing for 
        a different basis or level of payment than the fee schedule 
        established under such paragraph as part of a contractual 
        agreement with participating providers under the plan.
            (3) Reduction for providers voluntarily reducing charges.--
        If a provider under a health plan voluntarily agrees to reduce 
        the amount charged to an individual enrolled under the plan, 
        the plan shall reduce the amount otherwise determined under the 
        fee schedule applicable under paragraph (1) by the proportion 
        of the reduction in such amount charged.
            (4) Reduction for noncomplying plan.--Each community-rated 
        health plan that is a noncomplying plan shall provide for 
        reductions in payments under the fee schedule to providers that 
        are not participating providers in accordance with section 
        6012(b).
    (f) Prohibition Against Balance Billing; Requirement of Direct 
Billing.--
            (1) Prohibition of balance billing.--A provider may not 
        charge or collect from an enrollee a fee in excess of the 
        applicable payment amount under the applicable fee schedule 
        under subsection (e), and the health plan and its enrollees are 
        not legally responsible for payment of any amount in excess of 
        such applicable payment amount for items and services covered 
        under the comprehensive benefits package.
            (2) Direct billing.--
                    (A) In general.--A provider may not charge or 
                collect from an enrollee amounts that are payable by 
                the health plan (including any cost sharing reduction 
                assistance payable by the plan) and shall submit 
                charges to such plan in accordance with any applicable 
                requirements of subtitle B of title V (relating to 
                health information systems).
                    (B) Prohibition.--An individual or entity that 
                performs ancillary health services, such as clinical 
                laboratory services or other services as defined by the 
                Secretary, may not present or cause to be presented, a 
                claim, bill, or demand for payment to any person other 
                than the individual receiving such services, or to the 
                health plan of the individual, except that the 
                Secretary may by regulation establish appropriate 
                exceptions to the requirement of this subparagraph.
            (3) Coverage under agreements with plans.--The agreements 
        or other arrangements entered into under section 1514(c)(2) 
        between a health plan and the health care providers providing 
        the comprehensive benefit package to individuals enrolled with 
        the plan shall prohibit a provider from engaging in balance 
        billing described in paragraph (1).
            (4) Rule of construction.--Nothing in this Act shall be 
        construed to--
                    (A) require or force an individual to receive 
                health care solely through the individual's health 
                plan; or
                    (B) prohibit any individual from privately 
                contracting with any health care provider and paying 
                for the treatment or service provided by such provider 
                on a cash basis or any other basis as agreed to between 
                the individual and the provider.
    (g) Imposition of Participating Provider Assessment in Case of a 
Noncomplying Plan.--Each community-rated health plan shall provide that 
if the plan is a noncomplying plan for a year under section 6012, 
payments to participating providers shall be reduced by the applicable 
network reduction percentage under such section.
    (h) Providers Outside Area.--A State may not limit the ability of 
any plan to contract with a provider of health services located outside 
of the geographic boundaries of a health care coverage area or the 
State, so long as the provider is authorized under State law to provide 
such services.

SEC. 1524. HEALTH SECURITY CARDS.

    Each health plan shall issue a health security card to each 
individual enrolled in such plan in accordance with subtitle B of title 
V and regulations promulgated by the Board.

SEC. 1525. UTILIZATION MANAGEMENT PROTOCOLS AND PHYSICIAN INCENTIVE 
              PLANS.

    (a) Requiring Consumer Disclosure.--Each health plan shall disclose 
to enrollees (and prospective enrollees) and providers the protocols 
and financial incentives used by the plan, including utilization 
management protocols and physician incentive plans (as defined in 
subsection (b)), for controlling utilization and costs.
    (b) Utilization Management.--Each health plan shall provide that 
all treatment assessment and placement decisions, or review of such 
decisions, shall be made by personnel--
            (1) licensed, certified or otherwise credentialed by the 
        State in the field for which the assessment or treatment is 
        sought; and
            (2) qualified to review utilization of the specific 
        treatment delivered.
    (c) Physician Incentive Plan Defined.--As used in this section, the 
term ``physician incentive plan'' means any compensation arrangement 
between a health plan, a utilization management organization or other 
organization 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 with the organization.
    (d) Limitations on Physician Incentive Plans.--A health plan, or 
any provider or group of providers with whom the health plan contracts, 
may not operate a physician incentive plan (as defined in subsection 
(c)) unless the following requirements are complied with:
            (1) The physician incentive plan provides that no specific 
        payment may be made directly or indirectly under the plan to a 
        physician or physician group or utilization management 
        organization as an inducement to reduce or limit medically 
        necessary or appropriate services provided to individuals 
        enrolled with the organization.
            (2) If the health plan places a physician or physician 
        group at financial risk for services not provided by the 
        physician or physician group, the physician incentive plan 
        shall provide stop-loss protection for the physician or 
        physician group that is adequate and appropriate, based on 
        standards developed by the Board that take into account the 
        number of physicians placed at such financial risk in the group 
        or under the plan and the number of individuals enrolled with 
        the organization who receive services from the physician or the 
        physician group.
            (3) The health plan and any physician or physician group 
        with whom the health plan contracts shall provide the Board 
        with descriptive information regarding the physician incentive 
        plan, sufficient to permit the Board to determine whether the 
        plan is in compliance with the requirements of this subsection.

     PART 2--REQUIREMENTS RELATING TO ESSENTIAL COMMUNITY PROVIDERS

SEC. 1531. HEALTH PLAN REQUIREMENT.

    (a) In General.--Each health plan shall, with respect to each 
electing essential community provider (as defined in subsection (d), 
other than a provider of school health services) located within the 
plan's service area, either--
            (1) enter into a written provider participation agreement 
        (described in subsection (b)) with the provider, or
            (2) enter into a written agreement under which the plan 
        shall make payment to the provider in accordance with 
        subsection (c).
    (b) Participation Agreement.--A participation agreement between a 
health plan and an electing essential community provider under this 
subsection shall provide that the health plan agrees to treat the 
provider in accordance with terms and conditions at least as favorable 
as those that are applicable to other providers participating in the 
health plan with respect to each of the following:
            (1) The scope of services for which payment is made by the 
        plan to the provider.
            (2) The rate of payment for covered care and services.
            (3) The availability of financial incentives to 
        participating providers.
            (4) Limitations on financial risk provided to other 
        participating providers.
            (5) Assignment of enrollees to participating providers.
            (6) Access by the provider's patients to providers in 
        medical specialties or subspecialties participating in the 
        plan.
    (c) Payments for Providers Without Participation Agreements.--
            (1) In general.--Payment in accordance with this subsection 
        is payment based, as elected by the electing essential 
        community provider, either--
                    (A) on the fee schedule developed by the State; or
                    (B) on payment methodologies and rates used under 
                the applicable Medicare payment methodology and rates 
                (or the most closely applicable methodology under such 
                program as the Secretary of Health and Human Services 
                specifies in regulations).
            (2) Special rule for federally qualified health centers.--
        With respect to each federally qualified health center (as such 
        term is defined in section 1861(aa) of the Social Security Act) 
        that is an essential community provider, a health plan shall 
        make payments based on the reasonable cost rates applicable 
        under section 1833(a)(3) of the Social Security Act, except 
        that the federally qualified health center may accept other 
        payment amounts.
            (3) No application of gate-keeper limitations.--Payment in 
        accordance with this subsection may be subject to utilization 
        review, but may not be subject to otherwise applicable gate-
        keeper requirements under the plan.
    (d) Election.--
            (1) In general.--In this part, the term ``electing 
        essential community provider'' means, with respect to a health 
        plan, an essential community provider that elects this subpart 
        to apply to the health plan.
            (2) Form of election.--An election under this subsection 
        shall be made in a form and manner specified by the Secretary, 
        and shall include notice to the health plan involved. Such an 
        election may be made annually with respect to a health plan, 
        except that the plan and provider may agree to make such an 
        election on a more frequent basis.
    (e) Special Rule for Providers of School Health Services.--A health 
plan shall pay, to each provider of school health services located in 
the plan's service area an amount determined by the Secretary for such 
services furnished to enrollees of the plan.

SEC. 1532. RECOMMENDATION ON CONTINUATION OF REQUIREMENT.

    (a) Studies.--In order to prepare recommendations under subsection 
(b), the Secretary shall conduct studies regarding essential community 
providers, including studies that assess--
            (1) the definition of essential community provider,
            (2) the sufficiency of the funding levels for providers, 
        including the special rule for federally qualified health 
        centers under section 1531(c)(2), for both covered and 
        uncovered benefits under this Act,
            (3) the effects of contracting requirements relating to 
        such providers on such providers, health plans, and enrollees,
            (4) the impact of the payment rules for such providers, and
            (5) the impact of national health reform on such providers.
    (b) Recommendations to Congress.--The Secretary shall submit to 
Congress, by not later than March 1, 2001, specific recommendations 
respecting whether, and to what extent, section 1531 should continue to 
apply to some or all essential community providers. Such 
recommendations may include a description of the particular types of 
such providers and circumstances under which such section should 
continue to apply.

                  Subtitle G--Federal Responsibilities

                     PART 1--NATIONAL HEALTH BOARD

           Subpart A--Establishment of National Health Board

SEC. 1601. CREATION OF NATIONAL HEALTH BOARD; MEMBERSHIP.

    (a) In General.--There is hereby created in the Executive Branch a 
National Health Board.
    (b) Composition.--The Board is composed of 9 members appointed by 
the President, by and with the advice and consent of the Senate.
    (c) Chair.--The President shall designate one of the members as 
chair. The chair serves a term concurrent with that of the President. 
The chair may serve a maximum of 3 terms. The chair shall serve as the 
chief executive officer of the Board.
    (d) Terms.--
            (1) In general.--Except as provided in paragraphs (2) and 
        (4), the term of each member of the Board, except the chair, is 
        4 years and begins when the term of the predecessor of that 
        member ends.
            (2) Initial terms.--The initial terms of the members of the 
        Board (other than the chair) first taking office after the date 
        of the enactment of this Act, shall expire as designated by the 
        President, three at the end of one year, three at the end of 
        two years, and three at the end of three years.
            (3) Reappointment.--A member (other than the chair) may be 
        reappointed for one additional term.
            (4) Continuation in office.--Upon the expiration of a term 
        of office, a member shall continue to serve until a successor 
        is appointed and qualified.
    (e) Vacancies.--
            (1) In general.--Whenever a vacancy shall occur, other than 
        by expiration of term, a successor shall be appointed by the 
        President, by and with the consent of the Senate, to fill such 
        vacancy, and is appointed for the remainder of the term of the 
        predecessor.
            (2) No impairment of function.--A vacancy in the membership 
        of the Board does not impair the authority of the remaining 
        members to exercise all of the powers of the Board.
            (3) Acting chair.--The Board may designate a Member to act 
        as chair during any period in which there is no chair 
        designated by the President.
    (f) Meetings; Quorum.--
            (1) Meetings.--At meetings of the Board the chair shall 
        preside, and in the absence of the chair, the Board shall elect 
        a member to act as chair pro tempore.
            (2) Quorum.--Four members of the Board shall constitute a 
        quorum thereof.

SEC. 1602. QUALIFICATIONS OF BOARD MEMBERS.

    (a) Citizenship.--Each member of the Board shall be a citizen of 
the United States.
    (b) Basis of Selection.--Board members will be selected on the 
basis of their experience and expertise in relevant subjects, including 
the practice of medicine, nursing, or other clinical practices, health 
care financing and delivery, state health systems, consumer protection, 
business, law, and delivery of care to vulnerable populations, 
including children, individuals with disabilities, and individuals in 
rural and urban underserved areas.
    (c) Exclusive Employment.--During the term of appointment, Board 
members shall serve as employees of the Federal Government and shall 
hold no other employment.
    (d) Prohibition of Conflict of Interest.--A member of the Board may 
not have a pecuniary interest in or hold an official relation to any 
health care plan, health care provider, insurance company, 
pharmaceutical company, medical equipment company, or other affected 
industry. Before entering upon the duties as a member of the Board, the 
member shall certify under oath compliance with this requirement.
    (e) Post-Employment Restrictions.--After leaving the Board, former 
members are subject to post-employment restrictions applicable to 
comparable Federal employees.
    (f) Compensation of Board Members.--Each member of the Board (other 
than the chair) shall receive an annual salary at the annual rate 
payable from time to time for level IV of the Executive Schedule. The 
chair of the Board, during the period of service as chair, shall 
receive an annual salary at the annual rate payable from time to time 
for level III of the Executive Schedule.

SEC. 1603. GENERAL DUTIES AND RESPONSIBILITIES.

    (a) Comprehensive Benefit Package.--
            (1) Interpretation.--The Board shall interpret the 
        comprehensive benefit package, adjust the delivery of 
        preventive services under section 1153, and take such steps as 
        may be necessary to assure that the comprehensive benefit 
        package is available on a uniform national basis to all 
        eligible individuals.
            (2) Fiscal analysis by national health board.--
                    (A) In general.--Not later than 6 months prior to 
                the effective date of this Act, the National Health 
                Board, in cooperation with the Congressional Budget 
                Office, shall undertake and conclude a fiscal analysis 
                of--
                            (i) the cost of the comprehensive benefits 
                        package under section 1101;
                            (ii) the ability of the health care 
                        system's cost containment mechanisms, as 
                        defined in this Act, to control health care 
                        spending and Federal health expenditures based 
                        on current economic projections; and
                            (iii) the impact of new health care 
                        financial obligations under this Act on the 
                        Federal budget deficit, in current economic 
                        terms, and the source of any projected spending 
                        increases, including those described in clauses 
                        (i) and (ii), provider reimbursement rates, and 
                        administrative expenses.
                    (B) Submission or report.--The Board shall prepare 
                and submit a preliminary analysis under this paragraph 
                not later than January 1, 1997, and submit a final 
                report not later than July 1, 1997, and July 1 of each 
                year thereafter.
                    (C) Requirement of report.--In a report submitted 
                under this paragraph, the Board shall specify the 
                source and amount of any Federal budget deficit 
                increases in order that Congress may more adequately 
                assess other sources of funding or spending reductions 
                that may be appropriate to maintain the benefit package 
                without adjustments.
                    (D) Report.--Based on the fiscal analysis contained 
                in a report under this paragraph, if the Board 
                concludes that the Federal government's obligation to 
                contribute to the health care system (through the 
                provision of subsidies to employers and families) will 
                result in previously unprojected increases in the 
                Federal budget deficit, the Board shall report and make 
                corrective recommendations to the President and the 
                Congress.
            (3) Report and recommendations.--
                    (A) In general.--If determined to be necessary by 
                the Board, in consultation with the Congressional 
                Budget Office, to prevent significant Federal deficit 
                increases attributable to the provisions of this Act 
                (or subsequent amendments to this Act), the Board shall 
                include in the reports under paragraph (2)(B), 
                adjustments in specific aspects of the comprehensive 
                benefits package (such as scope of benefits, co-
                payments, deductibles, and phase-in's for additional 
                benefits) to achieve savings consistent with the 
                findings in a report under paragraph (2).
                    (B) No board adjustments.--If the report of the 
                Board under paragraph (2) contains no adjustments in 
                the benefit package, the benefit package described in 
                section 1101 shall become effective, except that the 
                President may take action under section 9100(e)(4) as 
                the President determines appropriate.
                    (C) Board adjustments.--If the report of the Board 
                under paragraph (2) contains adjustments in the benefit 
                package, the adjustments shall apply unless a joint 
                resolution disapproving the adjustments is passed by 
                Congress within 45 legislative days of the date of the 
                submission of the report. The provisions of section 
                6006(d) shall apply to Congressional consideration of a 
                joint resolution considered under this paragraph.
                    (D) Authority of president.--The requirements of 
                this section shall not be limited in any way by section 
                9100(e)(4) or any other provision of this Act.
            (4) Scope of recommendations.--The Board may make 
        adjustments in the services covered under the benefit package, 
        including any periodicity tables; copayment, deductible, and 
        out-of-pocket requirements; and phase-in schedules for 
        additional health benefits. The Board may not require co-
        payments for preventive health services, but may re-classify 
        services described in section 1101 as preventive services.
            (5) Recommendations.--The Board may recommend to the 
        President and the Congress appropriate revisions to such 
        package. Such recommendations may reflect changes in 
        technology, health care needs, health care costs, and methods 
        of service delivery.
    (b) Administration of Cost Containment Provisions.--The Board shall 
oversee the cost containment requirements of subtitle A of title VI and 
certify compliance with such requirements.
    (c) Coverage and Families.--The Board shall develop and implement 
standards relating to the eligibility of individuals for coverage in 
applicable health plans under subtitle A of title I and may provide 
such additional exceptions and special rules relating to the treatment 
of family members under section 1012 as the Board finds appropriate.
    (d) Quality Management and Improvement.--The Board shall establish 
and have ultimate responsibility for a performance-based system of 
quality management and improvement as required by section 5001.
    (e) Information System and Information related Functions.--
            (1) In general.--The Board shall--
                    (A) develop and implement standards to establish a 
                national health information system to measure quality 
                as required by section 5101;
                    (B) provide model format and content requirements 
                for summary plan descriptions; and
                    (C) provide model format and content requirements 
                for comparative plan brochures under section 1205.
            (2) Information related functions.--
                    (A) Designation.--The Board shall provide for the 
                use of entities in the national health data network to 
                perform information related functions under this 
                section with respect to employers, States, contracting 
                entities, and consumer purchasing cooperatives.
                    (B) Functions.--The functions referred to in 
                subparagraph (A) shall include--
                            (i) receipt of information submitted by 
                        employers under section 1702,
                            (ii) from the information received, 
                        transmittal to States, and
                            (iii) such other functions as the Board 
                        specifies.
    (f) Participating State Requirements.--Consistent with the 
provisions of subtitle C, the Board shall--
            (1) establish requirements for participating States,
            (2) monitor State compliance with those requirements,
            (3) provide technical assistance, and
in a manner that ensures access to the comprehensive benefit package 
for all eligible individuals.
    (g) Development of Premium Class Factors.--The Board shall 
establish premium class factors under subpart D of this part.
    (h) Development of Reinsurance and Risk-Adjustment Methodology.--
The Board shall develop a methodology for the reinsurance and risk-
adjustment of premium payments to community-rated health plans in 
accordance with subpart E of this part.
    (i) Financial Requirements.--The Board shall establish minimum 
capital requirements and requirements for guaranty funds and financial 
reporting and auditing standards under subpart F of this part.
    (j) Standards for Health Plan Grievance Procedures.--The Board 
shall establish standards for health plan grievance procedures that are 
used by enrollees in pursuing complaints.
    (k) National Open Enrollment Periods.--The Board shall specify 
those periods which shall include a national, uniform open enrollment 
period, in which eligible individuals may change the applicable health 
plan in which they enrolled.
    (l) Fiduciary requirements.--The Board shall, in consultation with 
the Secretary of Labor, develop and promulgate fiduciary requirements 
for the management of funds by States, plans, cooperatives, and 
employers.

SEC. 1604. ANNUAL REPORT.

    (a) In General.--The Board shall prepare and send to the President 
and Congress an annual report addressing the overall implementation of 
the new health care system.
    (b) Matters To Be Included.--The Board shall include in each annual 
report under this section the following:
            (1) Information on Federal and State implementation.
            (2) Data related to quality improvement.
            (3) Recommendations or changes in the administration, 
        regulation and laws related to health care and coverage.
            (4) A full account of all actions taken during the previous 
        year.

SEC. 1605. POWERS.

    (a) Staff; Contract Authority.--The Board shall have authority, 
subject to the provisions of the civil-service laws and chapter 51 and 
subchapter III of chapter 53 of title 5, United States Code, to appoint 
such officers and employees as are necessary to carry out its 
functions. To the extent provided in advance in appropriations Acts, 
the Board may contract with any person (including an agency of the 
Federal Government) for studies and analysis as required to execute its 
functions. Any employee of the Executive Branch may be detailed to the 
Board to assist the Board in carrying out its duties.
    (b) Establishment of Advisory Committees.--The Board may establish 
advisory committees, including committees to advise the Board on the 
health care needs of disadvantaged and vulnerable populations, 
including children and individuals with physical, cognitive and other 
mental disabilities.
    (c) Access to Information.--The Board may secure directly from any 
department or agency of the United States information necessary to 
enable it to carry out its functions, to the extent such information is 
otherwise available to a department or agency of the United States. 
Upon request of the chair, the head of that department or agency shall 
furnish that information to the Board.
    (d) Delegation of Authority.--Except as otherwise provided in this 
Act, the Board may delegate any function to such officers and employees 
as the Board may designate and may authorize such successive 
redelegations of such functions with the Board as the Board deems to be 
necessary or appropriate. No delegation of functions by the Board shall 
relieve the Board of responsibility for the administration of such 
functions.
    (e) Rulemaking.--The National Health Board is authorized to 
establish such rules as may be necessary to carry out this Act.

SEC. 1606. FUNDING.

    (a) Authorization of Appropriations.--There are authorized to be 
appropriated to the Board such sums as may be necessary for fiscal 
years 1994, 1995, 1996, 1997, and 1998.
    (b) Submission of Budget.--Under the procedures of chapter 11 of 
title 31, United States Code, the budget for the Board for a fiscal 
year shall be reviewed by the Director of the Office of Management and 
Budget and submitted to the Congress as part of the President's 
submission of the Budget of the United States for the fiscal year.

 Subpart B--Responsibilities Relating to Review and Approval of State 
                                Systems

SEC. 1611. FEDERAL REVIEW AND ACTION ON STATE SYSTEMS.

    (a) Approval of State Systems by National Board.--
            (1) In general.--The National Health Board shall approve a 
        State health care system for which a document is submitted 
        under section 1200(b) unless the Board finds that the system 
        (as set forth in the document) does not (or will not) provide 
        for the State meeting the responsibilities for participating 
        States under this Act.
            (2) Regulations.--The Board shall issue regulations, not 
        later than July 1, 1995, prescribing the requirements for State 
        health care systems under subtitle C, except that in the case 
        of a document submitted under section 1200(b) before the date 
        of issuance of such regulations, the Board shall take action on 
        such document notwithstanding the fact that such regulations 
        have not been issued.
            (3) No approval permitted for years prior to 1996.--The 
        Board may not approve a State health care system under this 
        subpart for any year prior to 1996.
    (b) Review of Completeness of Documents.--
            (1) In general.--If a State submits a document under 
        subsection (a)(1), the Board shall notify the State, not later 
        than 7 working days after the date of submission, whether or 
        not the document is complete and provides the Board with 
        sufficient information to approve or disapprove the document.
            (2) Additional information on incomplete document.--If the 
        Board notifies a State that the State's document is not 
        complete, the State shall be provided such additional period 
        (not to exceed 45 days) as the Board may by regulation 
        establish in which to submit such additional information as the 
        Board may require. Not later than 7 working days after the 
        State submits the additional information, the Board shall 
        notify the State respecting the completeness of the document.
    (c) Action on Completed Documents.--
            (1) In general.--The Board shall make a determination (and 
        notify the State) on whether the State's document provides for 
        implementation of a State system that meets the applicable 
        requirements of subtitle C--
                    (A) in the case of a State that did not require the 
                additional period described in subsection (b)(2) to 
                file a complete document, not later than 90 days after 
                notifying a State under subsection (b) that the State's 
                document is complete, or
                    (B) in the case of a State that required the 
                additional period described in subsection (b)(2) to 
                file a complete document, not later than 90 days after 
                notifying a State under subsection (b) that the State's 
                document is complete.
            (2) Review of coverage area.--The Board shall review State 
        designation of health care coverage area boundaries to 
        determine whether such boundaries comply with sections 1202 and 
        1914, and in particular, the requirements of such sections 
        concerning non-discrimination in the establishment of coverage 
        area boundaries.
            (3) Plans deemed approved.--If the Board does not meet the 
        applicable deadline for making a determination and providing 
        notice under paragraph (1) with respect to a State's document, 
        the Board shall be deemed to have approved the State's document 
        for purposes of this Act.
    (d) Opportunity to Respond to Rejected Document.--
            (1) In general.--If (within the applicable deadline under 
        subsection (c)(1)) the Board notifies a State that its document 
        does not provide for implementation of a State system that 
        meets the applicable requirements of subtitle C, the Board 
        shall provide the State with a period of 30 days in which to 
        submit such additional information and assurances as the Board 
        may require.
            (2) Deadline for response.--Not later than 30 days after 
        receiving such additional information and assurances, the Board 
        shall make a determination (and notify the State) on whether 
        the State's document provides for implementation of a State 
        system that meets the applicable requirements of subtitle C.
            (3) Plan deemed approved.--If the Board does not meet the 
        deadline established under paragraph (2) with respect to a 
        State, the Board shall be deemed to have approved the State's 
        document for purposes of this Act.
    (e) Approval of Previously Terminated States.--If the Board has 
approved a State system under this part for a year but subsequently 
terminated the approval of the system under section 1612(b)(2), the 
Board shall approve the system for a succeeding year if the State--
            (1) demonstrates to the satisfaction of the Board that the 
        failure that formed the basis for the termination no longer 
        exists, and
            (2) provides reasonable assurances that the types of 
        actions (or inactions) which formed the basis for such 
        termination will not recur.
    (f) Revisions to State System.--
            (1) Submission.--A State may revise a system approved for a 
        year under this section, except that such revision shall not 
        take effect unless the State has submitted to the Board a 
        document describing such revision and the Board has approved 
        such revision.
            (2) Actions on amendments.--Not later than 60 days after a 
        document is submitted under paragraph (1), the Board shall make 
        a determination (and notify the State) on whether the 
        implementation of the State system, as proposed to be revised, 
        meets the applicable requirements of subtitle C. If the Board 
        fails to meet the requirement of the preceding sentence, the 
        Board shall be deemed to have approved the implementation of 
        the State system as proposed to be revised.
            (3) Rejection of amendments.--Subsection (d) shall apply to 
        an amendment submitted under this subsection in the same manner 
        as it applies to a completed document submitted under 
        subsection (b).
    (g) Notification of Non-Participating States.--If a State fails to 
submit a document for a State system by the deadline referred to in 
section 1200, or such a document is not approved under subsection (c), 
the Board shall immediately notify the Secretary of Health and Human 
Services of the State's failure for purposes of applying subpart C in 
that State.

SEC. 1612. FAILURE OF PARTICIPATING STATES TO MEET CONDITIONS FOR 
              COMPLIANCE.

    (a) In General.--In the case of a participating State, if the Board 
determines that the operation of the State system under subtitle C 
fails to meet the applicable requirements of this Act, sanctions shall 
apply against the State in accordance with subsection (b).
    (b) Type of Sanction Applicable.--The sanctions applicable under 
this part are as follows:
            (1) If the Board determines that the State's failure does 
        not substantially jeopardize the ability of eligible 
        individuals in the State to obtain coverage for the 
        comprehensive benefit package the Board shall notify the 
        Secretary who shall reduce payment with respect to the State in 
        accordance with section 1613.
            (2) If the Board determines that the failure substantially 
        jeopardizes the ability of eligible individuals in the State to 
        obtain coverage for the comprehensive benefit package--
                    (A) the Board shall terminate its approval of the 
                State system; and
                    (B) the Board shall notify the Secretary of Health 
                and Human Services, who shall assume the 
                responsibilities described in section 1622.
    (c) Termination of Sanction.--
            (1) Compliance by state.--A State against which a sanction 
        is imposed may submit information at any time to the Board to 
        demonstrate that the failure that led to the imposition of the 
        sanction has been corrected.
            (2) Termination of sanction.--If the Board determines that 
        the failure that led to the imposition of a sanction has been 
        corrected in the case of the sanction described in subsection 
        (b)(1)(A), the Board shall notify the Secretary of Health and 
        Human Services.
    (d) Protection of Access to Benefits.--The Board and the Secretary 
of Health and Human Services shall exercise authority to take actions 
under this section with respect to a State only in a manner that 
assures the continuous coverage of eligible individuals enrolled in 
community-rated health plans.

SEC. 1613. REDUCTION IN PAYMENTS FOR HEALTH PROGRAMS BY SECRETARY OF 
              HEALTH AND HUMAN SERVICES.

    (a) In General.--Upon receiving notice from the Board under section 
1612(b)(1)(B), the Secretary of Health and Human Services shall reduce 
the amount of any of the payments described in subsection (b) that 
would otherwise be made to individuals and entities in the State by 
such amount as the Secretary determines to be appropriate.
    (b) Payments Described.--The payments described in this subsection 
are as follows:
            (1) Payments to academic health centers in the State under 
        subtitle B of title III.
            (2) Payments to individuals and entities in the State for 
        health research activities under section 301 and title IV of 
        the Public Health Service Act.
            (3) Payments to hospitals in the State under part 4 of 
        subtitle E of title III (relating to payments to hospitals 
        serving vulnerable populations)

SEC. 1614. REVIEW OF FEDERAL DETERMINATIONS.

    Any State affected by a determination by the Board under this 
subpart may appeal such determination in accordance with section 5231.

SEC. 1615. FEDERAL SUPPORT FOR STATE IMPLEMENTATION.

    (a) Planning Grants.--
            (1) In general.--Not later than 90 days after the date of 
        the enactment of this Act, the Secretary shall make available 
        to each State a planning grant to assist a State in the 
        development of a health care system to become a participating 
        State under subtitle C.
            (2) Formula.--The Secretary shall establish a formula for 
        the distribution of funds made available under this subsection.
            (3) Authorization of appropriations.--There are authorized 
        to be appropriated $50,000,000 in each of fiscal years 1995 and 
        1996 for grants under this subsection.
    (b) Grants for Start-up Support.--
            (1) In general.--The Secretary shall make available to 
        States, upon their enacting enabling legislation to become 
        participating States, grants to assist in the establishment of 
        consumer purchasing cooperatives.
            (2) Formula.--The Secretary shall establish a formula for 
        the distribution of funds made available under this subsection.
            (3) State matching funds required.--Funds are payable to a 
        State under this subsection only if the State provides 
        assurances, satisfactory to the Secretary, that amounts of 
        State funds (at least equal to the amount made available under 
        this subsection) are expended for the purposes described in 
        paragraph (1).
            (4) Authorization of appropriations.--There are authorized 
        to be appropriated $313,000,000 for fiscal year 1996, 
        $625,000,000 for fiscal year 1997, and $313,000,000 for fiscal 
        year 1998 for grants under this subsection.

        Subpart C--Responsibilities in Absence of State Systems

SEC. 1621. APPLICATION OF SUBPART.

    (a) Initial Application.--This subpart shall apply with respect to 
a State as of January 1, 1998, unless--
            (1) the State submits a document for a State system under 
        section 1611(a)(1) by July 1, 1997, and
            (2) the Board determines under section 1611 that such 
        system meets the requirements of part 1 of subtitle C.
    (b) Termination of Approval of System of Participating State.--In 
the case of a participating State for which the Board terminates 
approval of the State system under section 1612(b)(2), this subpart 
shall apply with respect to the State as of such date as is appropriate 
to assure the continuity of coverage for the comprehensive benefit 
package for eligible individuals in the State.

SEC. 1622. FEDERAL ASSUMPTION OF RESPONSIBILITIES IN NON-PARTICIPATING 
              STATES.

    (a) Notice.--When the Board determines that this subpart will apply 
to a State for a calendar year, the Board shall notify the Secretary of 
Health and Human Services.
    (b) Establishment of Community-Rating System.--Upon receiving 
notice under subsection (a), the Secretary shall take such steps as are 
necessary to ensure that the comprehensive benefit package is provided 
to eligible individuals in the State during the year.
    (c) Establishment of Guaranty Fund.--
            (1) Establishment.--The Secretary must ensure that there is 
        a guaranty fund that meets the requirements established by the 
        Board under section 1652, in order to provide financial 
        protection to health care providers and others in the case of a 
        failure of a community-rated health plan under a health care 
        system established and operated by the Secretary under this 
        section.
            (2) Assessments to provide guaranty funds.--In the case of 
        a failure of one or more community-rated health plans, the 
        Secretary may require each community-rated health plan to pay 
        an assessment to the Secretary in an amount not to exceed 2 
        percent of the premiums of such plans paid by or on behalf of 
        community rate eligible individuals during a year for so long 
        as necessary to generate sufficient revenue to cover any 
        outstanding claims against the failed plan.

SEC. 1623. IMPOSITION OF SURCHARGE ON PREMIUMS UNDER FEDERALLY-OPERATED 
              SYSTEM.

    (a) In General.--If this subpart applies to a State for a calendar 
year, the premiums charged by community-rated health plans in the State 
shall be equal to premiums that would otherwise be charged, increased 
by 15 percent. Such 15 percent increase shall be used to reimburse the 
Secretary for any administrative or other expenses incurred as a result 
of establishing and operating the system.
    (b) Treatment of Surcharge as Part of Premium.--For purposes of 
determining the compliance of a State for which this subpart applies in 
a year with the requirements for budgeting under subtitle A of title VI 
for the year, the 15 percent increase described in subsection (a) shall 
be treated as part of the premium for payment to a State.

SEC. 1624. RETURN TO STATE OPERATION.

    (a) Application Process.--After the establishment and operation of 
a system by the Secretary in a State under section 1622, the State may 
at any time apply to the Board for the approval of a State system in 
accordance with the procedures described in section 1611.
    (b) Timing.--If the Board approves the system of a State for which 
the Secretary has operated during a year, the Secretary shall terminate 
the operation of the system, and the State shall establish and operate 
its approved system, as of January 1 of the first year beginning after 
the Board approves the State system. The termination of the Secretary's 
system and the operation of the State's system shall be conducted in a 
manner that assures the continuous coverage of eligible individuals in 
the State under community-rated health plans.

    Subpart D--Establishment of Class Factors for Charging Premiums

SEC. 1631. PREMIUM CLASS FACTORS.

    (a) In General.--For each class of family enrollment (as specified 
in section 1011(c)), for purposes of title VI, the Board shall 
establish a premium class factor that reflects, subject to subsection 
(b), the relative actuarial value of the comprehensive benefit package 
of the class of family enrollment compared to such value of such 
package for individual enrollment.
    (b) Conditions.--In establishing such factors, the factor for the 
class of individual enrollment shall be 1 and the factor for the 
couple-only class of family enrollment shall be 2.

 Subpart E--Risk Adjustment and Reinsurance Methodology for Payment of 
                                 Plans

SEC. 1641. DEVELOPMENT OF A RISK ADJUSTMENT AND REINSURANCE 
              METHODOLOGY.

    (a) Development.--
            (1) Initial development.--Not later than April 1, 1995, the 
        Board shall develop a risk adjustment and reinsurance 
        methodology in accordance with this subpart.
            (2) Improvements.--The Board shall make such improvements 
        in such methodology as may be appropriate to achieve the 
        purposes described in subsection (b)(1).
    (b) Risk Adjustment Methodology.--
            (1) Purposes.--Such risk adjustment methodology shall 
        provide for the adjustment of payments to community-rated 
        health plans for the purposes of--
                    (A) assuring that payments to such plans reflect 
                the expected relative utilization and expenditures for 
                such services by each plan's enrollees compared to the 
                average utilization and expenditures for community rate 
                eligible individuals, and
                    (B) protecting health plans that enroll a 
                disproportionate share of community rate eligible 
                individuals with respect to whom expected utilization 
                of health care services (included in the comprehensive 
                benefit package) and expected health care expenditures 
                for such services are greater than the average level of 
                such utilization and expenditures for community rate 
                eligible individuals.
            (2) Factors to be considered.--In developing such risk 
        adjustment methodology, the Board shall take into account the 
        following factors:
                    (A) Demographic characteristics.
                    (B) Health status, including prior use of health 
                services.
                    (C) Geographic area of residence.
                    (D) Socio-economic status.
                    (E) Subject to paragraph (5), (i) the proportion of 
                enrollees who are SSI recipients and (ii) the 
                proportion of enrollees who are AFDC recipients.
                    (F) Any other factors determined by the Board to be 
                material to the purposes described in paragraph (1).
            (3) Zero sum.--The risk adjustment methodology shall assure 
        that the total payments to health plans after application of 
        the methodology are the same as the amount of payments that 
        would have been made without application of the methodology.
            (4) Treatment of ssi/afdc adjustment.--The Board is not 
        required to apply the factor described in clause (i) or (ii) of 
        paragraph (2)(E) if the Board determines that the application 
        of the other risk adjustment factors described in paragraph (2) 
        is sufficient to adjust premiums to take into account the 
        enrollment in plans of AFDC recipients and SSI recipients.
            (5) Special consideration for mental illness and mental 
        retardation.--In developing the methodology under this section, 
        the Board shall give consideration to the unique problems of 
        adjusting payments to health plans with respect to individuals 
        with mental illness and mental retardation.
            (6) Special consideration for veterans, military, and 
        indian health plans.--In developing the methodology under this 
        section, the Board shall give consideration to the special 
        enrollment and funding provisions relating to plans described 
        in section 1004(b).
            (7) Adjustment to account for use of estimates.--If the 
        total payments made to all community-rated health plans in a 
        year under section 1239 exceeds, or is less than, the total of 
        such payments estimated by the State in the application of the 
        methodology under this subsection, because of a difference 
        between--
                    (A) the State's estimate of the distribution of 
                enrolled families in different risk categories (assumed 
                in the application of risk factors under this 
                subsection in making payments to community-rated health 
                plans), and
                    (B) the actual distribution of such enrolled 
                families in such categories,
        the methodology under this subsection shall provide for an 
        adjustment in the application of such methodology in the second 
        succeeding year in a manner that would reduce, or increase, 
        respectively, by the amount of such excess (or deficit) the 
        total of such payments made to all such plans.
    (c) Mandatory Reinsurance.--
            (1) In general.--The methodology developed under this 
        section shall include a system of mandatory reinsurance as a 
        component of the risk adjustment methodology.
            (2) Requirement in certain cases.--The Board shall reduce 
        or eliminate such a system of reinsurance at such time as the 
        Board determines that an adequate prospective payment 
        adjustment for health status has been developed and is ready 
        for implementation.
            (3) Reinsurance system.--The Board, in developing the 
        methodology for a mandatory reinsurance system under this 
        subsection, shall--
                    (A) provide for health plans to make payments to 
                state-established reinsurance programs for the purpose 
                of eliminating incentives for plans to discriminate 
                against individuals on the basis of their expected 
                utilization of health services; and
                    (B) specify the manner of creation, structure, and 
                operation of the system in each State, including--
                            (i) the manner (which may be prospective or 
                        retrospective) in which health plans make 
                        payments to the system, and
                            (ii) the type and level of reinsurance 
                        coverage provided by the system.
    (d) Confidentiality of Information.--The methodology shall be 
developed in a manner consistent with privacy standards promulgated 
under section 5120(a). In developing such standards, the Board shall 
take into account any potential need of States for certain individually 
identifiable health information in order to carry out risk-adjustment 
and reinsurance activities under this Act, but only to the minimum 
extent necessary to carry out such activities and with protections 
provided to minimize the identification of the individuals to whom the 
information relates.
    (e) State Experimentation.--The Board is authorized to undertake 
experimentation with alternative reinsurance and risk adjustments 
methods in one or more different States, with the approval of the 
States adopting such experiments, to determine the most appropriate 
method to be used on a national basis.
    (f) State-Specific Adjusters.--States may, with the approval of the 
Board, add such risk adjusters to the national risk adjustment and 
reinsurance methodology that reflect State specific patters of disease 
or population characteristics.

SEC. 1642. INCENTIVES TO ENROLL DISADVANTAGED GROUPS.

    The Board shall establish standards under which States may provide 
(under section 1203) for an additional adjustment in the risk-
adjustment methodology developed under section 1641 in order to provide 
a financial incentive for community-rated health plans to enroll 
individuals who are members of disadvantaged groups or populations 
vulnerable to discrimination due to their health status.

SEC. 1643. RESEARCH AND DEMONSTRATIONS.

    The Secretary shall conduct and support research and demonstration 
projects to develop and improve, on a continuing basis, the risk 
adjustment and reinsurance methodology under this subpart.

SEC. 1644. TECHNICAL ASSISTANCE TO STATES.

    The Board shall provide technical assistance to States in 
implementing the methodology developed under this subpart.

         Subpart F--Responsibilities for Financial Requirements

SEC. 1651. CAPITAL STANDARDS FOR COMMUNITY-RATED PLANS.

    (a) In General.--The Board shall establish, in consultation with 
the States, minimum capital requirements for carriers, for purposes of 
section 1512.
    (b) $500,000 Minimum.--Subject to subsection (c), under such 
requirements there shall be not less than $500,000 of capital 
maintained for each carrier.
    (c) Additional Capital Requirements.--The Board shall establish 
standards that provide for additional capital. The amount of such 
additional capital required shall reflect factors likely to affect the 
financial stability of a carrier, including the following:
            (1) Projected plan enrollment and number of providers 
        participating in plans of the carrier.
            (2) Market share and strength of competition.
            (3) Extent and nature of risk-sharing with participating 
        providers and the financial stability of risk-sharing 
        providers.
            (4) Prior performance of the carrier, risk history, and 
        liquidity of assets.
    (d) Community- and Provider-Based Plans.--
            (1) In general.--States shall consider alternative 
        financial instruments and methods for community- and provider-
        based plans (as defined in paragraph (2)) to meet the capital 
        and solvency standards developed in accordance with this 
        section. Provisions made for such plans shall ensure the fiscal 
        integrity and financial solvency of such plans.
            (2) Eligible plans.--Plans eligible for special 
        consideration by States must be public or not-for-profit 
        entities that are owned, or in which a majority share of the 
        plan's investment is held by--
                    (A) health care providers who practice in the plan;
                    (B) individuals who live in the area, or not-for-
                profit organizations located in the area serviced by 
                the plan;
                    (C) a combination of individuals and organizations 
                described in subparagraphs (A) and (B); or
                    (D) organizations located outside the service area 
                which provide for control over local operations by 
                individuals described in subparagraphs (A) or (B).
    (e) Development of Standards by NAIC.--The Board may request the 
National Association of Insurance Commissioners to develop model 
standards for the additional capital requirements described in 
subsection (c) and to present such standards to the Board not later 
than July 1, 1995. The Board may accept such standards as the standards 
to be applied under subsection (c) or modify the standards in any 
manner it finds appropriate.

SEC. 1652. STANDARD FOR GUARANTY FUNDS.

    (a) In General.--In consultation with the States, the Board shall 
establish standards for guaranty funds established by States.
    (b) Guaranty Fund Standards.--The standards established under 
subsection (a) for a guaranty fund shall include the following:
            (1) Each fund must have a method to generate sufficient 
        resources to pay health providers and others in the case of a 
        failure of a health plan in order to meet obligations with 
        respect to--
                    (A) services rendered by the health plan for the 
                comprehensive benefit package, including any 
                supplemental coverage for cost sharing provided by the 
                health plan, and
                    (B) services rendered prior to health plan 
                insolvency and services to patients after the 
                insolvency but prior to their enrollment in other 
                health plans.
            (2) The fund is liable for all claims against the plan by 
        health care providers with respect to their provision of items 
        and services covered under the comprehensive benefit package to 
        enrollees of the failed plan. Such claims, in full, shall take 
        priority over all other claims. The fund also is liable, to the 
        extent and in the manner provided in accordance with rules 
        established by the Board, for other claims, including other 
        claims of such providers and the claims of contractors, 
        employees, governments, or any other claimants.
            (3) The fund stands as a creditor for any payments owed the 
        plan to the extent of the payments made by the fund for 
        obligations of the plan.
            (4) The fund has authority to borrow against future 
        assessments in order to meet the obligations of failed plans 
        participating in the fund.

                       Subpart G--Open Enrollment

SEC. 1660. PERIODS OF AUTHORIZED CHANGES IN ENROLLMENT.

    (a) Annual Open Enrollment Period.--
            (1) In general.--For purposes of section 1211 and section 
        1502(a)(1), in order to encourage periodic family choice in the 
        selection of health plans, the National Health Board shall 
        specify a uniform, national annual open enrollment period 
        during which all eligible individuals are permitted the 
        opportunity to change enrollment among the health plans offered 
        to them under this Act.
            (2) Effectiveness of change of enrollment.--Except as the 
        National Health Board may provide, changes in enrollment during 
        an annual open enrollment period under paragraph (1) shall take 
        effect as of the first date of the following year.
    (b) Additional Periods of Authorized Changes in Enrollment.--The 
National Health Board also shall specify--
            (1) such other periods and occurrences (including the 
        insolvency of carriers or large group purchasers, changes in 
        residence, and appropriate changes in employment) for which an 
        individual is authorized to change enrollment in health plans, 
        and
            (2) when such change of enrollment becomes effective.
    (c) Direct Enrollment.--
            (1) In general.--The Board shall establish methods and 
        procedures for the direct enrollment of individuals in the 
        health plans of their choice.
            (2) Enrollment processes.--The Board shall provide 
        standards for State to ensure the broad availability of 
        enrollment forms, including direct enrollment through the mail, 
        and other such processes as the Board may designate.
            (3) No marketing fee.--Individuals enrolling in plans 
        through the processes described in paragraph (2) shall be 
        eligible for the community-rated premium (described in section 
        6000) filed by the health plan selected by the individual, 
        without incurring a marketing fee, a surcharge or any other 
        payment that represents an addition to the community-rated 
        premium, whether such charge is imposed by the health plan, an 
        agent of the plan, or any other entity.
    (d) Disenrollment for Cause.--
            (1) In general.--In addition to the annual open enrollment 
        period held under subsection (a), the Board shall establish 
        procedures by which eligible individuals enrolled in a plan may 
        disenroll from the plan for good cause (as defined by Board) at 
        any time during a year and enroll in another plan. Such 
        procedures shall be implemented by participating States in a 
        manner that ensures continuity of coverage for the 
        comprehensive benefit package for such individuals during the 
        year.
            (2) Disenrollment for cause.--
                    (A) In general.--In addition to the periods of 
                authorized change in enrollment under paragraph (1), 
                the National Health Board shall define good cause and 
                establish procedures under which eligible individuals 
                enrolled in a health plan provided by a carrier may 
                disenroll from the plan for good cause at any time 
                during a year and enroll in another applicable health 
                plan.
                    (B) Assuring continuity of coverage.--The 
                procedures under this paragraph shall be implemented in 
                a manner that ensures continuity of coverage for the 
                comprehensive benefit package for individuals changing 
                enrollment during the year.
                    (C) Additional remedies.--The Board may provide 
                rules under which an individual who changes enrollment 
                from a plan for good cause due to a pattern of 
                underservice under a plan, the carrier providing the 
                health plan is liable, to the subsequent health plan in 
                which the individual is enrolled, for excess costs (as 
                identified in accordance with such rules) during a 
                reasonable period of the anticipated duration of 
                enrollment with the original health plan.
    (e) Change of Enrollment.--In this section and subtitle E, the term 
``change of enrollment'' includes, with respect to an individual--
            (1) a change in the health plan in which the individual is 
        enrolled,
            (2) a change in the type of family enrollment, and
            (3) the enrollment of the individual at the time the 
        individual first becomes an eligible individual.
    (f) Provider-Based Enrollment Mechanisms.--The Board shall 
promulgate rules regarding the establishment by States of provider-
based enrollment mechanisms for individuals seeking care who are not 
enrolled in a health plan. Such rules shall include provisions 
requiring health plans to pay providers for care delivered to 
individuals prior to the individual's enrollment in the plan.
    (g) Coordination of Enrollment Activities.--Each State shall 
coordinate its activities, including plan enrollment and disenrollment 
activities, with other States in a manner specified by the National 
Health Board that ensures continuous, nonduplicative coverage of 
community-rated and experience-rated individuals in health plans and 
that minimizes administrative procedures and paperwork.

SEC. 1661. DISTRIBUTION OF COMPARATIVE INFORMATION.

    The Board shall specify a period of time prior to open enrollment 
during which States must provide for the distribution to community-rate 
eligible individuals enrollment materials and comparative information 
on health plans.

  PART 2--RESPONSIBILITIES OF DEPARTMENT OF HEALTH AND HUMAN SERVICES

                  Subpart A--General Responsibilities

SEC. 1671. GENERAL RESPONSIBILITIES OF SECRETARY OF HEALTH AND HUMAN 
              SERVICES.

    (a) In General.--Except as otherwise specifically provided under 
this Act (or with respect to administration of provisions in the 
Internal Revenue Code of 1986 or in the Employee Retirement Income 
Security Act of 1974), the Secretary of Health and Human Services shall 
administer and implement all of the provisions of this Act, except 
those duties delegated to the National Health Board, any other 
executive agency, or to any State.
    (b) Financial Management Standards.--The Secretary, in consultation 
with the Secretaries of Labor and the Treasury, shall establish, for 
purposes of section 1512, standards relating to the management of 
finances, maintenance of records, accounting practices, auditing 
procedures, and financial reporting for States, consumer purchasing 
cooperatives and health plans. Such standards shall take into account 
current Federal laws and regulations relating to fiduciary 
responsibilities and financial management of funds.
    (c) Auditing State Performance.--The Secretary shall perform 
periodic financial and other audits of States to assure that such 
States are carrying out their responsibilities under this Act 
consistent with this Act. Such audits shall include audits of State 
performance in the areas of--
            (1) assuring enrollment of all community rate eligible 
        individuals in health plans,
            (2) management of premium and cost sharing discounts and 
        reductions provided;
            (3) financial management (including the financial 
        activities of cooperatives and State-designated contracting 
        entities); and
            (4) assuring enforcement of the antidiscrimination 
        provisions of this Act.
    (d) Standards for Utilization Management Programs.--
            (1) In general.--Not later than 12 months after the date of 
        enactment of this Act, the Secretary, in consultation with 
        interested parties which may include one or more accrediting 
        organizations, shall promulgate uniform Federal standards for 
        utilization management programs, to include the activities 
        described in section 1210(b).
            (2) Compliance.--States shall ensure compliance with the 
        Federal standards established under paragraph (1), consistent 
        with their role in certifying health plans.
            (3) Review and update.--The Secretary shall periodically 
        review and update utilization management standards to reflect 
        appropriate policies and practices in health care delivery.

SEC. 1672. MEDICAL TECHNOLOGY IMPACT STUDY.

    (a) Assessment of the Comprehensive Impact of Medical 
Technologies.--
            (1) In general.--The Secretary, acting through the 
        Administrator of the Agency for Health Care Policy and Research 
        (hereafter referred to in this section as the 
        ``Administrator''), shall undertake an interdisciplinary study 
        (to be known as the ``Medical Technology Impact Study'') to 
        assess the overall economic costs, economic benefits, and 
        effect on patient outcomes of medical technologies used in 
        treating each of a list of target diseases and conditions. The 
        Secretary shall submit the report of the Administrator to 
        Congress (in accordance with subsection (c)) concerning the 
        results of the study and may provide any recommendations 
        determined to be necessary to ensure the availability, access, 
        and appropriate use of medical technologies to improve the 
        quality of health care in the United States.
            (2) Purpose.--The purpose of the study under paragraph (1) 
        is to assess the impact of old, new and emerging medical 
        technologies on health care costs, social costs, and patient 
        outcomes, and to identify the factors, including government and 
        private payor reimbursement policies, that impede or encourage 
        innovation that improves patient outcomes. Congress intends 
        that the study complement the technology assessment, outcomes 
        research, and guideline development activities authorized under 
        title IX of the Public Health Service Act by providing a 
        comprehensive context for understanding the economic and social 
        factors related to the development and use of medical 
        technologies.
            (3) Definitions.--As used in this section:
                    (A) Economic benefits.--The term economic benefits 
                may include, based on available data--
                            (i) reductions in the economic costs of 
                        disease;
                            (ii) increases in employment attributable 
                        to the medical technology industry;
                            (iii) increases in Federal and State tax 
                        revenues attributable to the medical technology 
                        industry and its employees;
                            (iv) improvements in the balance of trade 
                        deficit attributable to the medical technology 
                        industry; and
                            (v) other benefits that are determined by 
                        the Advisory Committee to be relevant to 
                        assessing the impact of medical technology.
                    (B) Economic costs.--The term ``economic costs'' 
                may include, based on available data--
                            (i) the financial costs to the health care 
                        system of diagnosing and treating disease, 
                        including the costs of nontreatment and 
                        palliative care;
                            (ii) the financial costs to employers 
                        resulting from worker illness, including the 
                        costs of productivity losses and worker 
                        absenteeism;
                            (iii) the financial costs to families 
                        resulting from illness of a family member, 
                        including costs associated with loss of income, 
                        hiring of caretakers, and long term and hospice 
                        care;
                            (iv) the financial costs to government of 
                        illness, including reductions in income tax 
                        revenues attributable to worker illness and 
                        worker related injuries and increases in 
                        transfer payments, including unemployment, 
                        disability, welfare, and survivor benefit 
                        payments, made to individuals and families on 
                        account of illness; and
                            (v) other costs that are determined by the 
                        Advisory Committee to be relevant to assessing 
                        the impact of medical technology.
                    (C) Patient outcomes.--The term ``patient 
                outcomes'' may include--
                            (i) changes in clinical outcomes, including 
                        stabilization of patients with progressive 
                        disease or health conditions, resulting from 
                        the use of safe and effective medical 
                        technology in prevention, diagnosis, or 
                        treatment;
                            (ii) changes in mortality, morbidity, and 
                        health service use, including stabilization of 
                        patients with progressive diseases;
                            (iii) changes in quality of life, including 
                        ability to perform activities of daily living, 
                        ability to return to work, relief from 
                        discomfort or pain, alleviation of fatigue, and 
                        improved mental functioning and well-being; and
                            (iv) other outcomes that are determined by 
                        the advisory committee to be relevant to 
                        assessing the impact of medical technology.
                    (D) Medical technologies.--The term ``medical 
                technologies'' includes drugs, biologics (including 
                vaccines), medical devices, drug delivery systems, and 
                surgical services and other procedures for preventing, 
                diagnosing, and treating diseases or health conditions.
                    (E) Medical technology industry.--The term 
                ``medical technology industry'' includes the 
                biotechnology, pharmaceutical, and medical device 
                industries, and such other industries that invent, 
                develop, or market medical technologies.
    (b) Advisory Committee.--
            (1) In general.--The Administrator shall establish an 
        Advisory Committee to assist the Agency in preparing the 
        reports required under subsection (c). Except as provided in 
        paragraph (3), no member of the advisory committee shall be an 
        employee of the Federal Government.
            (2) Membership.--The Advisory Committee shall be balanced 
        in its representation of interested parties and shall be 
        composed of at least two individuals appointed by the President 
        of the Institute of Medicine and two individuals from each of 
        the following categories:
                    (A) Experts in medical technology assessment.
                    (B) Experts in objective measures of improved 
                patient outcomes, such as clinical outcomes, mortality, 
                morbidity, and health service use.
                    (C) Experts in subjective measures of improved 
                patient outcomes, such as quality of life.
                    (D) Experts in quantifying the economic costs of 
                disease to the health care system, including public and 
                private payers.
                    (E) Experts in quantifying the economic impact of 
                the medical technology industry.
                    (F) Experts in health statistics and epidemiology.
                    (G) Physicians and other health care providers.
                    (H) Officers or employees of health plans and other 
                health care payers.
                    (I) Experts in the ethical implications of health 
                care.
                    (J) Experts in private sector financial market 
                investment in the medical technology industry.
                    (K) Consumers and members of patient advocacy 
                groups.
                    (L) Health professional organizations.
                    (M) Officers or employees of biotechnology 
                companies.
                    (N) Officers or employees of medical device 
                companies.
                    (O) Officers or employees of pharmaceutical 
                companies.
            (3) Ex officio.--The following individuals or their 
        designees shall serve as ex officio members of the Advisory 
        Committee:
                    (A) The Director of the National Institutes of 
                Health.
                    (B) The Commissioner of Food and Drugs.
                    (C) The Director of the Centers for Disease Control 
                and Prevention.
                    (D) The Administrator of the Health Care Financing 
                Administration.
                    (E) The Under Secretary of Commerce for Technology.
                    (F) The Director of the Congressional Office of 
                Technology Assessment.
    (c) Interdisciplinary Study and Report.--
            (1) In general.--The Administrator, in consultation with 
        the Advisory Committee established under subsection (b), shall 
        determine which diseases or conditions should be studied in the 
        Medical Technology Impact Study. In carrying out the medical 
        technology assessment required under this subsection, the 
        Administrator shall consider various factors, including those 
        outlined in section 904(b)(2) of the Public Health Service Act 
        and government and private payor reimbursement policies that 
        impede or encourage innovation that improves patient outcomes. 
        The diseases or conditions studied in such Study shall be those 
        considered to be high priority according to the following 
        criteria:
                    (A) Aggregate economic costs to the United States.
                    (B) Overall importance to public heath.
                    (C) Potential for improvements in patient outcomes.
                    (D) Significant changes expected in management of 
                the condition.
                    (E) Other criteria identified by the Advisory 
                Committee.
            (2) Design.--The Administrator, in consultation with the 
        Advisory Committee established under subsection (b), and the 
        Institute of Medicine pursuant to paragraph (3), shall develop 
        a design, based on the list of target diseases and conditions, 
        for undertaking the Medical Technology Impact Study.
            (3) Contract.--The Secretary shall request the Institute of 
        Medicine of the National Academy of Sciences to enter into a 
        contract to review the Study design and report to the 
        Administrator concerning any recommendations for revising such 
        design, in the interest of assuring that it reflects the best 
        available scientific methodologies.
            (4) Publication.--The Administrator shall publish the study 
        design and list of target diseases and conditions, the 
        recommendations of the Institute of Medicine, and the response 
        of the Administrator to such recommendations in the Federal 
        Register for a 60-day period for public comment. Any such 
        comments shall be considered by the Administrator in completing 
        the proposed study design for submission to the Secretary.
            (5) Design report.--The Secretary shall report to Congress 
        concerning the proposed design of the Medical Technology Impact 
        Study, together with recommendations for appropriations 
        necessary to carry out the Study.
            (6) Grants and contracts.--Beginning in the first fiscal 
        year for which Congress appropriates funds consistent with 
        paragraph (5), and ending on September 30 of that year, the 
        Administrator shall enter into grants and contracts with 
        appropriate entities to conduct any investigations and analyses 
        that may be required to carry out the design of the Medical 
        Technology Impact Study.
            (7) Report on findings.--The Administrator, in consultation 
        with the Advisory Committee, shall develop a draft 
        comprehensive report concerning the findings of the Study, 
        shall make copies of the draft report available to the public 
        and publish a notice in the Federal Register providing for a 
        60-day period of public comment. Any such comments shall be 
        considered by the Administrator in completing and submitting 
        the final report to the Secretary.
            (8) Final report.--Not later than 3 years after the date of 
        enactment of this section, the Secretary shall submit the 
        report of the Administrator to Congress, and may include any 
        recommendations determined necessary to assure the 
        availability, access and appropriate use of medical 
        technologies to improve the quality of health care in the 
        United States.
    (d) Authorization of Appropriations.--There are authorized to be 
appropriated such sums as may be necessary to carry out this section.

SEC. 1673. ASSISTANCE WITH FAMILY COLLECTIONS.

    The Secretary shall provide States with such technical and other 
assistance as may promote the efficient collection of other amounts 
owed by families under this Act. Such assistance may include the 
assessment of civil monetary penalties, not to exceed $5,000 or three 
times the amount of the liability owed, whichever is greater, in the 
case of repeated failure to pay (as specified in rules of the 
Secretary).

SEC. 1674. ADVISORY OPINIONS.

    (a) In General.--Community- and provider-based plans and 
individuals and organizations seeking to establish such plans shall be 
eligible to receive advisory opinions from appropriate Federal 
entities, including opinions concerning whether their arrangement 
complies with Federal self-referral, fraud and abuse, and anti-trust 
laws.
    (b) Regulations.--The Secretary shall issue regulations setting 
forth the procedures for obtaining advisory opinions described in 
subsection (a).
    (c) Timing of Opinions.--Advisory opinions shall be issued not 
later than 90 days after receipt of a request for such opinions from a 
plan.
    (d) Fees.--Applicants shall pay a fee, the amount of which to be 
determined by the Secretary, to cover the costs of providing the 
opinion.

SEC. 1675. REPORTS.

    (a) Dental Care.--The Secretary shall undertake studies to 
determine--
            (1) the costs of providing--
                    (A) preventive dental care to all adults;
                    (B) restorative dental care to all adults; and
                    (C) preventive dental care to adults with 
                developmental, cognitive, and other mental 
                disabilities; and
            (2) the best oral health care practice and the cost or 
        savings of providing such care prior to 2001. The Secretary 
        shall report to the National Health Board and the Congress not 
        later than September 1, 1995 concerning such study.
    (b) In Vitro Fertilization.--The Secretary shall undertake a study 
to determine the costs of providing coverage for in vitro fertilization 
in the comprehensive benefits package. The Secretary shall report to 
the National Health Board and the Congress not later than September 1, 
1995 concerning such study.

       Subpart B--Certification of Essential Community Providers

SEC. 1681. CERTIFICATION.

    For purposes of this Act, the Secretary shall certify as an 
``essential community provider'' any health care provider or 
organization that--
            (1) is within any of the categories of providers and 
        organizations specified in section 1682(a), or
            (2) meets the standards for certification under section 
        1683(a).

SEC. 1682. CATEGORIES OF PROVIDERS AUTOMATICALLY CERTIFIED.

    (a) In General.--The categories of providers and organizations, 
including subrecipients, specified in this subsection are as follows:
            (1) Covered entities as defined in section 340B(a)(4) of 
        the Public Health Service Act (42 U.S.C. 256b(a)(4)), except 
        that subsections (a)(4)(L)(iii) and (a)(7) of such section 
        shall not apply.
            (2) School health services centers under title III of this 
        Act.
            (3)(A) Nonprofit hospitals meeting the criteria for public 
        hospitals which are eligible entities under section 340B of the 
        Public Health Service Act, except that subsection 
        (a)(4)(L)(iii) of such section shall not apply.
            (B) Nonprofit hospitals with a minimum of 200 beds, located 
        in urban areas where--
                    (i) the cumulative total of its services provided 
                to individuals who are entitled to benefits under title 
                XVIII of the Social Security Act or under a State plan 
                under title XIX of such Act equals a minimum of 65 
                percent; and
                    (ii) a minimum of 20 percent of its services are 
                provided to individuals eligible for assistance under 
                such title XIX;
            (C) A Medicare dependent small rural hospital under section 
        1886(d)(8)(iii) of the Social Security Act.
            (D) Children's hospitals meeting comparable criteria 
        determined appropriate by the Secretary.
            (4) Public and private, nonprofit mental health and 
        substance abuse providers receiving funds under title V or XIX 
        of the Public Health Service Act.
            (5) Runaway homeless youth centers or transitional living 
        programs for homeless youth providing health services under the 
        Runaway Homeless Youth Act of 1974 (42 U.S.C. 5701 et seq.).
            (6) Public or nonprofit maternal and child health providers 
        that receive funding under title V of the Social Security Act.
            (7) Rural health clinics as defined under section 
        1861(aa)(2) of the Social Security Act.
    (b) Study of Federally Certified Rural Health Clinics.--The 
Secretary shall conduct an evaluation of the Rural Health Clinics 
program as defined in section 1861(aa)(2) of the Social Security Act to 
examine the causes of the growth in the program and the characteristics 
of providers certified as rural health clinics and the characteristics 
of the population served by rural health clinics to ensure that the 
program meets the needs of rural underserved communities. The Secretary 
shall report the findings of such evaluation, together with any 
recommended changes in the rural health clinics program, to the 
Congress not later than January 1, 1996.

SEC. 1683. STANDARDS FOR ADDITIONAL PROVIDERS.

    (a) Standards.--The Secretary shall publish standards for the 
certification of additional categories of health care providers and 
organizations as essential community providers, including the 
categories described in subsection (b). Such a health care provider or 
organization shall not be certified unless the Secretary determines, 
under such standards, that health plans operating in the area served by 
the applicant would not otherwise be able to assure adequate access to 
items and services included in the comprehensive benefit package if 
such a provider was not so certified.
    (b) Categories To Be Included.--The categories described in this 
subsection are as follows:
            (1) Certain health professionals.--A health professional 
        who--
                    (A) for at least 20 hours per week--
                            (i) is located in an area (or areas) 
                        designated as a health professional shortage 
                        area (under section 332 of the Public Health 
                        Service Act) or serves a population (or 
                        populations) designated as a medically 
                        underserved population (under section 330 of 
                        the Public Health Service Act); or
                            (ii)(I) is located or provides services in 
                        a neighborhood or community whose residents are 
                        at risk of underservice; and
                            (II) is available to patients at such 
                        location on evenings and weekends; and
                    (B) if the health professional is a physician--
                            (i) is licensed to practice in the 
                        jurisdiction; and
                            (ii) is either--
                                    (I) granted privileges to practice 
                                at one or more hospitals; or
                                    (II) has a consultation and 
                                referral arrangement with one or more 
                                physicians who are granted privileges 
                                to practice at one or more hospitals.
            (2) Institutional providers.--Public and private nonprofit 
        hospitals and other public and nonprofit institutional health 
        care providers, including family planning clinics, located in 
        health professional shortage areas (as defined under section 
        332 of the Public Health Service Act) or providing health 
        services to medically underserved populations (as defined under 
        title III of this Act).
            (3) Other providers.--Other public and private nonprofit 
        agencies and organizations that--
                    (A) are located in such an area or providing health 
                services to such a population, and
                    (B) provide health care and services essential to 
                residents of such an area or such populations.

SEC. 1684. CERTIFICATION PROCESS; REVIEW; TERMINATION OF 
              CERTIFICATIONS.

    (a) Certification Process.--
            (1) Publication of procedures.--The Secretary shall 
        publish, not later than 6 months after the date of the 
        enactment of this Act, the procedures to be used by health care 
        professionals, providers, agencies, and organizations seeking 
        certification under this subpart, including the form and manner 
        in which an application for such certification is to be made.
            (2) Timely determination.--The Secretary shall make a 
        determination upon such an application not later than 60 days 
        (or 15 days in the case of a certification for an entity 
        described in section 1682) after the date the complete 
        application has been submitted. The determination on an 
        application for certification of an entity described in section 
        1682 shall only involve the verification that the entity is an 
        entity described in such section.
    (b) Review of Certifications.--The Secretary shall periodically 
review whether professionals, providers, agencies, and organizations 
certified under this subpart continue to meet the requirements for such 
certification.
    (c) Termination or Denial of Certification.--
            (1) Preliminary finding.--If the Secretary preliminarily 
        finds that an entity seeking certification under this section 
        does not meet the requirements for such certification or such 
        an entity certified under this subpart fails to continue to 
        meet the requirements for such certification, the Secretary 
        shall notify the entity of such preliminary finding and permit 
        the entity an opportunity, under subtitle C of title V, to 
        rebut such findings.
            (2) Final determination.--If, after such opportunity, the 
        Secretary continues to find that such an entity continues to 
        fail to meet such requirements, the Secretary shall terminate 
        the certification and shall notify the entity, the State, large 
        group purchasers, of such termination and the effective date of 
        the termination.

SEC. 1685. NOTIFICATION OF PARTICIPATING STATES.

    (a) In General.--Not less often than annually the Secretary shall 
notify each participating State of essential community providers that 
have been certified under this subpart.
    (b) Contents.--Such notice shall include sufficient information to 
permit each State to notify health plans of the identity of each entity 
certified as an essential community provider, including--
            (1) the location of the provider within each plan's service 
        area,
            (2) the health services furnished by the provider, and
            (3) other information necessary for health plans to carry 
        out part 3 of subtitle E.

SEC. 1686. DEFINITIONS.

    As used in subpart:
            (1) Subrecipient.--The term ``subrecipient'' means, with 
        respect to a recipient of a grant under a particular authority, 
        an entity that--
                    (A) is receiving funding from such a grant under a 
                contract with the principal recipient of such a grant, 
                and
                    (B) meets the requirements established to be a 
                recipient of such a grant.
            (2) Health professional.--The term ``health professional'' 
        means a physician, nurse, nurse practitioner, certified nurse 
        midwife, physician assistant, psychologist, dentist, 
        pharmacist, chiropractor, clinical social worker, and other 
        health care professional recognized by the Secretary.
            (3) Children's hospital.--The term ``children's hospital'' 
        means those hospitals whose inpatients are certified by the 
        Secretary or the State to be predominantly under the age of 18.

                 Subpart C--Workplace Wellness Programs

SEC. 1687. WORKPLACE WELLNESS PROGRAM.

    (a) In General.--The Secretary shall perform responsibilities 
required under this Act with respect to the development of 
certification criteria and other duties required under this Act 
relating to workplace wellness programs.
    (b) Application of Section.--Employers maintaining qualified 
worksite health promotion programs meeting the requirements of 
subsection (d) shall be entitled to the worksite health promotion 
rebate specified in subsection (c).
    (c) Worksite Health Promotion Rebate.--Employers maintaining a 
qualified worksite health promotion programs shall be paid a rebate by 
the State in an amount determined using the methodology developed by 
the Secretary.
    (d) Requirements for Qualified Worksite Health Promotion 
Programs.--
            (1) Establishment of levels.--The Secretary shall establish 
        not less than two levels of qualified worksite health promotion 
        programs and determine the program elements (or combination of 
        program elements) necessary for an employer to qualify at each 
        level. In establishing such levels, the Secretary shall take 
        into consideration the special characteristics of small 
        businesses (as defined in section 6123(c)) and incorporate 
        provisions providing small businesses the opportunity to 
        qualify at all levels.
            (2) Program elements.--Program elements that the Secretary 
        should consider for inclusion in qualified worksite health 
        promotion programs are the following:
                    (A) Education, screening, counseling, follow-up, 
                treatment or referral programs to reduce lifestyle and 
                other modifiable risk factors such as cholesterol, 
                inactivity, nutrition and weight management, HIV, 
                sexually transmitted diseases, cancer prevention, or 
                smoking.
                    (B) Education, screening, counseling, follow-up, 
                monitoring or referral for chronic health risks or 
                problems such as high blood pressure or diabetes.
                    (C) Promotion of exercise and fitness through 
                education or the provision of exercise facilities at 
                the worksite, adjoining the worksite, or at a proximate 
                location with transportation provided from the 
                worksite.
                    (D) Employee assistance programs that provide 
                counseling and assistance with respect to other areas 
                of personal concern that may adversely affect job 
                performance such as substance abuse, stress or 
                parenting.
                    (E) Workplace health and safety education and 
                prevention programs that go beyond those required by 
                law.
                    (F) Prenatal counseling and education.
                    (G) Consumer education regarding health care 
                services including programs on the development of 
                living wills.
            (3) Minimum participation rates.--The Secretary shall have 
        the authority to establish minimum employee participation rates 
        as a condition of employer qualification under a qualified 
        worksite health promotion program.
            (4) Guidelines.--The Secretary shall develop guidelines to 
        ensure that employers who sponsor qualified worksite health 
        promotion program do not discriminate among employees as to 
        either eligibility for participation or program benefits.
            (5) Application.--The Secretary shall develop an 
        application form and supporting material to be used by 
        employers to certify that they qualify for one of the worksite 
        health promotion program levels established by the Secretary.

SEC. 1688. WELLNESS DISCOUNT METHODOLOGY.

    (a) Requirement.--The Secretary shall develop a methodology 
consistent with subsection (b) in order to ensure that--
            (1) families entitled to a wellness discount by virtue of 
        employment of a family member by an employer maintaining a 
        qualified worksite health promotion program under section 
        1687(d) receive a credit toward their family share of premium 
        (as defined in section 6101(b)(1)) equal to the wellness 
        discount specified by the plan in which the family elects to 
        enroll; and
            (2) employers maintaining qualified programs receive a 
        rebate annually, based on the average worksite health promotion 
        discount in the health care coverage area, weighted by the 
        enrollment of employees of all employers offering certified 
        wellness programs in the area.
    (b) Methodology.--The methodology developed by the Secretary under 
subsection (a) shall--
            (1) ensure that each family enrolled in a community-rated 
        plan that offers a wellness discount receives the discount 
        provided by the plan chosen by the family regardless of whether 
        the family has enrolled in the plan through a consumer 
        purchasing cooperative directly or through the plan, or through 
        some other means;
            (2) ensure that a separate rebate is computed for each 
        worksite health promotion program level established by the 
        Secretary under section 1687; and
            (3) ensure that any wellness discount offered by health 
        plans are not taken into account in the Board's determination 
        of plan and area compliance with the per-capita premium targets 
        described in subtitle A of title VI of this Act.

        PART 3--SPECIFIC RESPONSIBILITIES OF SECRETARY OF LABOR

SEC. 1691. RESPONSIBILITIES OF SECRETARY OF LABOR.

    (a) In General.--The Secretary of Labor is responsible--
            (1) under subtitle E, for the enforcement of requirements 
        applicable to community-rated employers (including requirements 
        relating to payment of premiums) and the administration of 
        large group purchasers;
            (2) under subtitle E, with respect to elections by eligible 
        purchasers to become large group purchasers and the termination 
        of such elections;
            (3) for the temporary assumption of the operation of self-
        insured employer sponsored health plans that are insolvent;
            (4) for carrying out any other responsibilities assigned to 
        the Secretary under this Act; and
            (5) for administering title I of the Employee Retirement 
        Income Security Act of 1974 as it relates to group health plans 
        maintained by large group purchasers.
    (b) Agreements with States.--The Secretary of Labor may enter into 
agreements with States in order to enforce responsibilities of 
employers and large group purchasers, and requirements of employer 
sponsored health plans, under subtitle B of title I of the Employee 
Retirement Income Security Act of 1974.
    (c) Consultation with Board.--In carrying out activities under this 
Act with respect to large group purchasers, employer sponsored health 
plans, and employers, the Secretary of Labor shall consult with the 
National Health Board.
    (d) Study on Seasonal Workers.--Not later than 6 months after the 
date of enactment of this Act, the Secretary of Labor, in consultation 
with the Secretary and such other Federal departments and experts as 
determined appropriate, shall prepare and submit to the appropriate 
committees of Congress, a report concerning the impact of requiring 
employers of seasonal workers to make premium contributions for such 
workers. The report shall analyze and make recommendations concerning 
the fiscal and administrative (including paperwork) burdens on 
employers, employees, and health plans.
    (e) Employer-Related Requirements.--
            (1) In general.--The Secretary of Labor, in consultation 
        with the Secretary, shall be responsible for assuring that 
        employers--
                    (A) make payments of any employer premiums (and 
                withhold and make payment of the family share of 
                premiums with respect to qualifying employees) and 
                provide discounts to employees as required under this 
                Act, including auditing of collection activities with 
                respect to such payments,
                    (B) submit timely reports as required under this 
                Act, and
                    (C) otherwise comply with requirements imposed on 
                employers under this Act.
            (2) Audit and similar authorities.--The Secretary of 
        Labor--
                    (A) may carry out such audits (directly or through 
                contract) and such investigations of employers and 
                States, consumer purchasing cooperatives and large 
                group purchasers,
                    (B) may exercise such authorities under section 504 
                of Employee Retirement Income Security Act of 1974 (in 
                relation to activities under this Act),
                    (C) may, with the permission of the Board, provide 
                (through contract or otherwise) for such collection 
                activities (in relation to amounts owed to States, 
                consumer purchasing cooperatives and large group 
                purchasers, and for the benefit of such States, 
                consumer purchasing cooperatives and large group 
                purchasers), and
                    (D) may impose such civil penalties under section 
                6210,
        as may be necessary to carry out such Secretary's 
        responsibilities under this section.
            (3) Auditing of employer payments.--
                    (A) In general.--Each State is responsible for 
                auditing the records of community-rated employers to 
                assure that employer payments (including the payment of 
                amounts withheld) were made in the appropriate amount 
                as provided under subpart A of part 2 of subtitle B of 
                title VI.
                    (B) Employers with employees residing in different 
                community-rating areas.--In the case of a community-
                rated employer which has employees who reside in more 
                than one community-rating area, the Secretary of Labor, 
                in consultation with the Secretary, shall establish a 
                process for the coordination of State auditing 
                activities among the States involved.
                    (C) Appeal.--In the case of an audit conducted by a 
                State on an employer under this paragraph, an employer 
                or other State that is aggrieved by the determination 
                in the audit is entitled to review of such audit by the 
                Secretary of Labor in a manner to be provided by such 
                Secretary.
    (f) Authority.--The Secretary of Labor is authorized to issue such 
regulations as may be necessary to carry out section 1704 and 
responsibilities of the Secretary under this Act (including under title 
XI).

SEC. 1692. ASSISTANCE WITH EMPLOYER COLLECTIONS.

    The Secretary of Labor shall provide States with such technical and 
other assistance as may promote the efficient collection of all amounts 
owed under this Act by employers. Such assistance may include the 
assessment of civil monetary penalties, not to exceed $5,000 or three 
times the amount of the liability owed, whichever is greater, in the 
case of repeated failure to pay (as specified in rules of the Secretary 
of Labor).

SEC. 1693. PENALTIES FOR FAILURE OF LARGE EMPLOYERS TO MEET 
              REQUIREMENTS.

    (a) In General.--If the Secretary of Labor finds that a large group 
purchaser has failed substantially to meet the applicable requirements 
of subtitle E, the Secretary shall impose a civil money penalty of not 
to exceed $10,000 for each such violation.
    (b) Excess Increase in Premium Equivalent.--If the Secretary of 
Labor finds that a large group purchaser that is a large employer is in 
violation of the requirements of section 6022 (relating to prohibition 
against excess increase in premium expenditures), the Secretary shall 
require that the purchaser enter into contracts with all carriers 
providing community-rated plans in community-rating areas in which 
their experience-rated individuals reside, under which the purchaser--
            (1) makes payment to the carriers based on an appropriate 
        community rate (determined by the Secretary of Labor based on 
        the final filed per capita premium rate, subject to appropriate 
        risk adjustment and not subject to any employer discount), and
            (2) makes payments to the State of an amount provided under 
        section 6124.

SEC. 1694. APPLICABILITY OF ERISA ENFORCEMENT MECHANISMS FOR 
              ENFORCEMENT OF CERTAIN REQUIREMENTS.

    The provisions of sections 502 (relating to civil enforcement), 504 
(relating to investigative authority) and 506 (relating to criminal 
enforcement) of the Employee Retirement Income Security Act of 1974 
shall apply to enforcement by the Secretary of Labor of the applicable 
requirements for large group purchasers in the same manner and to same 
extent as such provisions apply to enforcement of title I of such Act.

            PART 4--COLLECTIVE BARGAINING DISPUTE RESOLUTION

SEC. 1695. FINDINGS AND PURPOSE.

    (a) Finding.--Congress finds that--
            (1) consistent with the intention of this Act to eliminate 
        waste and inefficiency in the health care industry, it is 
        important to avoid costly and disruptive labor disputes; and
            (2) such disputes are particularly likely to take place 
        during the period of transition to a restructured health care 
        delivery system because of disruptions to established 
        employment relationships resulting from that restructuring.
    (b) Purpose.--It is the purpose of this part to expand the role of 
the Federal Mediation and Conciliation Service, acting through the 
Boards of Inquiry provided for in limited terms under section 8(g) of 
the National Labor Relations Act (29 U.S.C. 158(g)) and section 213 of 
the Labor Management Relations Act of 1947 (29 U.S.C. 183), to avoid 
labor disputes by providing for public fact finding in contract 
negotiations.

SEC. 1696. APPLICATION LIMITED TO TRANSITION PERIOD.

    The provisions of this part are intended to avoid costly and 
disruptive labor disputes during the period of transition to a 
restructured health care delivery system, and shall be repealed 
effective upon the end of calendar year 2000.

SEC. 1697. REQUEST FOR APPOINTMENT OF BOARD OF INQUIRY.

    (a) In General.--A health care entity (as defined in section 
3082(a)) or a labor organization that has been lawfully certified or 
recognized as the representative of the employees of a health care 
entity for the purpose of engaging in collective bargaining concerning 
wages, hours and other terms and conditions of employment, may request 
that the Director of the Federal Mediation and Conciliation Service 
(hereafter referred to in this part as the ``Director'') appoint an 
impartial Health Care Board of Inquiry to investigate the issues 
involved in a collective bargaining dispute between the entity and the 
labor organization.
    (b) Time for Request.--Such request may be made no earlier than 60 
days after notice of the existence of a contract dispute has been 
provided to--
            (1) the Federal Mediation and Conciliation Service in 
        accordance with clause (A) or (B) of the last sentence of 
        section 8(d) of the Labor Management Relations Act (29 U.S.C. 
        158(d)); or
            (2) where the health care entity is otherwise exempt from 
        coverage under such Act, any comparable State or territorial 
        agency established to mediate and conciliate disputes to which 
        notice is required to be given under applicable State law.

SEC. 1698. APPOINTMENT OF BOARD OF INQUIRY.

    (a) In General.--Except as provided in subsection (b), the Director 
shall appoint a Health Care Board of Inquiry not later than 10 days 
after receipt of a request under section 1696. Each such Board shall be 
composed of such number of individuals as the Director may deem 
desirable. No member appointed under this section shall have any 
interest or involvement in the health care institutions or the employee 
organizations involved in the dispute.
    (b) Limitation.--With respect to the appointment of a Health Care 
Board of Inquiry under paragraph (1), if the Director determines that--
            (1) the health care entity is--
                    (A) otherwise exempt from coverage under the Labor 
                Management Relations Act, as amended (29 U.S.C. 141 et 
                seq.); and
                    (B) subject to State laws containing procedures for 
                the resolution of impasses in collective bargaining 
                that are comparable to those that would be followed by 
                a Board of Inquiry under this section; or
            (2) the parties involved have agreed to procedures for the 
        resolution of the impasse in collective bargaining that are 
        comparable to those that would be followed by a Board of 
        Inquiry;
the Director may refuse the request for the appointment of such a 
Board.

SEC. 1699. PUBLIC FACTFINDING.

    A Health Care Board of Inquiry appointed under this part shall 
investigate the issues involved in the dispute and make a written 
report thereon to the parties and to the Director within 30 days after 
the establishment of such a Board. The written report shall contain the 
findings of fact together with the Board's recommendations for settling 
the dispute, with the objective of achieving a prompt, peaceful and 
just settlement of the dispute. The Board shall arrange for publication 
of such report within the community served by the health care entity 
involved.

SEC. 1699A. COMPENSATION OF MEMBERS OF BOARDS OF INQUIRY.

    (a) Employees if Federal Government.--Members of any board 
established under this part who are otherwise employed by the Federal 
Government shall serve without compensation but shall be reimbursed for 
travel, subsistence, and other necessary expenses incurred by such 
members in carrying out its duties under this section.
    (b) Other Members.--Members of any board established under this 
section who are not subject to subsection (a) shall receive 
compensation at a rate prescribed by the Director but not to exceed the 
daily rate prescribed for GS-128 of the General Schedule under section 
5332 of title 5, United States Code, including travel for each day they 
are engaged in the performance of their duties under this section and 
shall be entitled to reimbursement for travel, subsistence, and other 
necessary expenses incurred by them in carrying out their duties under 
this part.

SEC. 1699B. MAINTENANCE OF STATUS QUO.

    After the establishment of a board under section 1697, and for 15 
days after any such board has issued its report, no change in the 
status quo in effect prior to the expiration of the contract in the 
case of negotiations for a contract renewal, or in effect prior to the 
time the parties began their bargaining in the case of an initial 
beginning negotiation, except by agreement, shall be made by the 
parties to the controversy.

            Subtitle H--Miscellaneous Employer Requirements

SEC. 1701. AUDITING OF RECORDS.

    Each community-rated employer shall maintain such records, and 
provide the State for the area in which the employer maintains the 
principal place of employment (as specified by the Secretary of Labor) 
with access to such records, as may be necessary to verify and audit 
the information reported under this subtitle.

SEC. 1702. PROHIBITION OF CERTAIN EMPLOYER DISCRIMINATION.

    No employer may discriminate with respect to an employee on the 
basis of the family status of the employee or on the basis of the class 
of family enrollment selected with respect to the employee.

SEC. 1703. EVASION OF OBLIGATIONS.

    It shall be unlawful for any employer or other person to discharge, 
fine, suspend, expel, discipline, discriminate or otherwise take 
adverse action against any employee if a purpose of such action is to 
interfere with the employee's attainment of status as a qualifying 
employee, as a full time employee, or as a part-time employee, or if a 
purpose of such action is to evade or avoid any obligation under this 
Act.

SEC. 1704. PROHIBITION ON SELF-FUNDING OF COST SHARING BENEFITS.

    (a) Prohibition.--A community-rated employer (and an experience-
rated employer with respect to employees who are community rate 
eligible individuals) may provide benefits to employees that consist of 
the benefits included in a cost sharing policy (as defined in section 
1507(c)) only through a contribution toward the purchase of a cost 
sharing policy which is funded primarily through insurance.
    (b) Individual and Employer Responsibilities.--In the case of an 
individual who resides in a single-payer State and an employer with 
respect to employees who reside in such a State, the responsibilities 
of such individual and employer under such system shall supersede the 
obligations of the individual and employer under this subtitle.

SEC. 1705. EMPLOYER RETIREE OBLIGATION.

    (a) In General.--If an employer was providing, as of October 1, 
1993, a threshold payment (specified in subsection (c)) for a person 
who was a qualifying retired beneficiary (as defined in subsection (b)) 
as of such date, the employer shall pay, to or on behalf of that 
beneficiary for each month beginning with January 1998, an amount that 
is not less than the amount specified in subsection (d), but only if 
and for so long as the person remains a qualifying retired beneficiary.
    (b) Qualifying Retired Beneficiary.--In this section, the term 
``qualifying retired beneficiary'' means a person who is an eligible 
retiree or qualified spouse or child (as such terms are defined in 
subsections (b) and (c) of section 6114).
    (c) Threshold Payment.--The term ``threshold payment'' means, for 
an employer with respect to a health benefit plan providing coverage to 
a qualifying retired beneficiary, a payment--
            (1) for coverage of any item or service described in 
        section 1101, and
            (2) the amount of which is at least 20 percent of the 
        amount of the premium (or premium equivalent) for such coverage 
        with respect to the beneficiary (and dependents).
    (d) Amount.--The amount specified in this subsection is 20 percent 
of the weighted average premium for the health care coverage area in 
which the beneficiary resides and for the applicable class of family 
enrollment.
    (e) Nature of Obligation.--The requirement of this section shall be 
in addition to any other requirement imposed on an employer under this 
Act or otherwise.
    (f) Protection of Collective Bargaining Rights.--Nothing in this 
Act (including this section) shall be construed as affecting collective 
bargaining rights or rights under collective bargaining agreements.

SEC. 1706. RULES GOVERNING LITIGATION INVOLVING RETIREE HEALTH 
              BENEFITS.

    (a) Maintenance of Benefits.--
            (1) In general.--If--
                    (A) retiree health benefits or plan or plan sponsor 
                payments in connection with such benefits are to be or 
                have been terminated or reduced under an employee 
                welfare benefit plan; and
                    (B) an action is brought by any participant or 
                beneficiary to enjoin or otherwise modify such 
                termination or reduction,
        the court without requirement of any additional showing shall 
        promptly order the plan and plan sponsor to maintain the 
        retiree health benefits and payments at the level in effect 
        immediately before the termination or reduction while the 
        action is pending in any court. No security or other 
        undertaking shall be required of any participant or beneficiary 
        as a condition for issuance of such relief. An order requiring 
        such maintenance of benefits may be refused or dissolved only 
        upon determination by the court, on the basis of clear and 
        convincing evidence, that the action is clearly without merit.
            (2) Modifications.--Nothing in this section shall preclude 
        a court from modifying the obligation of a plan or plan sponsor 
        to the extent retiree benefits are otherwise being paid under 
        section 6208.
    (b) Burden of Proof.--In addition to the relief authorized in 
subsection (a) or otherwise available, if, in any action described in 
subsection (a), the terms of the employee welfare benefit plan summary 
plan description or other materials distributed to employees at the 
time of a participant's retirement or disability are silent or are 
ambiguous, either on their face or after consideration of extrinsic 
evidence, as to whether retiree health benefits and payments may be 
terminated or reduced for a participant and his or her beneficiaries 
after the participant's retirement or disability, then the benefits and 
payments shall not be terminated or reduced for the participant and his 
or her beneficiaries unless the plan or plan sponsor establishes by a 
preponderance of the evidence that the summary plan description and 
other materials about retiree benefits--
            (1) were distributed to the participant at least 90 days in 
        advance of retirement or disability;
            (2) did not promise retiree health benefits for the 
        lifetime of the participant and his or her spouse; and
            (3) clearly and specifically disclosed that the plan 
        allowed such termination or reduction as to the participant 
        after the time of his or her retirement or disability.
The disclosure described in paragraph (3) must have been made 
prominently and in language which can be understood by the average plan 
participant.
    (c) Representation.--Notwithstanding any other provision of law, an 
employee representative of any retired employee or the employee's 
spouse or dependents may--
            (1) bring an action described in this section on behalf of 
        such employee, spouse, or dependents; or
            (2) appear in such an action on behalf of such employee, 
        spouse or dependents.
    (d) Retiree Health Benefits.--For the purposes of this section, the 
term ``retiree health benefits'' means health benefits (including 
coverage) which are provided to--
            (1) retired or disabled employees who, immediately before 
        the termination or reduction, are entitled to receive such 
        benefits upon retirement or becoming disabled; and
            (2) their spouses and dependents.
    (e) Effective Date.--The amendments made by this section shall 
apply to actions relating to terminations or reductions of retiree 
health benefits which are pending or brought, on or after July 20, 
1993.

SEC. 1707. PARTICIPATION IN FEHBP.

    (a) In General.--A qualifying employee of an American employer (as 
defined in section 3121(h) of the Internal Revenue Code of 1986) who is 
employed by such an employer outside the United States may elect to 
purchase coverage through designated health plans participating in 
FEHBP.
    (b) Voluntary Participation.--Participation by an employee 
described in subsection (a) shall be at the discretion of such 
employee, and employer payments on behalf of such employee shall be 
voluntary.
    (c) Regulations.--The National Health Board, in consultation with 
the Office of Personnel Management, shall issue regulations governing 
the provision and reimbursement of items and services included in the 
comprehensive benefit package, premium payments by employers and 
employees, and the establishment of separate risk pools for Federal and 
non-Federal employees abroad.

SEC. 1708. ENFORCEMENT.

    In the case of a person that violates a requirement of this 
subtitle, the Secretary of Labor may impose a civil money penalty, in 
an amount not to exceed $10,000, for each violation with respect to 
each individual.

       Subtitle I--General Definitions; Miscellaneous Provisions

                      PART 1--GENERAL DEFINITIONS

SEC. 1901. DEFINITIONS RELATING TO EMPLOYMENT AND INCOME.

    (a) In General.--Except as otherwise specifically provided, in this 
Act the following definitions and rules apply:
            (1) Employer, employee, employment, and wages defined.--
        Except as provided in this section--
                    (A) the terms ``wages'' and ``employment'' have the 
                meanings given such terms under section 3121 of the 
                Internal Revenue Code of 1986,
                    (B) the term ``employee'' has the meaning given 
                such term under section 3121 of such Code, subject to 
                the provisions of chapter 25 of such Code, and
                    (C) the term ``employer'' has the same meaning as 
                the term ``employer'' as used in such section 3121.
            (2) Exceptions.--For purposes of paragraph (1)--
                    (A) Employment.--
                            (i) Employment included.--Paragraphs (1), 
                        (2), (5), (7) (other than clauses (i) through 
                        (iv) of subparagraph (C) and clauses (i) 
                        through (v) of subparagraph (F)), (8), (9), 
                        (10), (11), (13), (15), (18), and (19) of 
                        section 3121(b) of the Internal Revenue Code of 
                        1986 shall not apply.
                            (ii) Exclusion of inmates as employees.--
                        Employment shall not include services performed 
                        in a penal institution by an inmate thereof or 
                        in a hospital or other health care institution 
                        by a patient thereof.
                    (B) Wages.--
                            (i) In general.--Paragraph (1) of section 
                        3121(a) of the Internal Revenue Code of 1986 
                        shall not apply.
                            (ii) Tips not included.--The term ``wages'' 
                        does not include cash tips.
                    (C) Exclusion of certain foreign employment.--The 
                term ``employee'' does not include an individual with 
                respect to service, if the individual is not a citizen 
                or resident of the United States and the service is 
                performed outside the United States.
            (3) Aggregation rules for employers.--For purposes of this 
        Act--
                    (A) all employers treated as a single employer 
                under subsection (a) or (b) of section 52 of the 
                Internal Revenue Code of 1986 shall be treated as a 
                single employer, and
                    (B) under regulations of the Secretary of Labor, 
                all employees of organizations which are under common 
                control with one or more organizations which are exempt 
                from income tax under subtitle A of the Internal 
                Revenue Code of 1986 shall be treated as employed by a 
                single employer.
        The regulations prescribed under subparagraph (B) shall be 
        based on principles similar to the principles which apply to 
        taxable organizations under subparagraph (A).
            (4) Employer premium.--The term ``employer premium'' refers 
        to the premium established and imposed under part 2 of subtitle 
        B of title VI.
    (b) Qualifying Employee; Full-Time Employment.--
            (1) Qualifying employee.--
                    (A) In general.--In this Act, the term ``qualifying 
                employee'' means, with respect to an employer for a 
                month, an employee (other than a covered child, as 
                defined in subparagraph (C)) who is employed by the 
                employer for at least 40 hours (as determined under 
                paragraph (3)) in the month, subject to the limitation 
                set forth in subparagraph (D).
                    (B) No special treatment of medicare beneficiaries, 
                ssi recipients, afdc recipients, and others.--
                Subparagraph (A) shall apply regardless of whether or 
                not the employee is a medicare-eligible individual, an 
                SSI recipient, an AFDC recipient, an individual 
                described in section 1004(b), an eligible individual or 
                is authorized to be so employed.
                    (C) Covered child defined.--In subparagraph (A), 
                the term ``covered child'' means an eligible individual 
                who is a child and is enrolled under a health plan as a 
                family member described in section 1011(b)(2)(B).
                    (D) Qualifying employees.--As used in this Act--
                            (i) the term qualifying employee shall not 
                        include, with respect to an employer for a 
                        month, an employee of a nonelecting small 
                        employer (as defined in section 6220);
                            (ii) the term ``nonqualifying employee'' 
                        means, with respect to an employer for a month, 
                        an employee (who otherwise would be a 
                        qualifying employee) of a nonelecting small 
                        employer;
                            (iii) the term ``qualifying employee'' 
                        shall not include, with respect to an employer 
                        for a month, a part-time employee during the 
                        first month (four-week period) of such 
                        employee's employment; and
                            (iv) the term ``qualifying employee'' shall 
                        include, with respect to an employer for a 
                        month, a part-time employee beginning with the 
                        second month of such employee's employment.
            (2) Full-time equivalent employees; part-time employees.--
                    (A) In general.--For purposes of this Act, a 
                qualifying employee who is employed by an employer--
                            (i) for at least 120 hours in a month, is 
                        counted as 1 full-time equivalent employee for 
                        the month and shall be deemed to be employed on 
                        a full-time basis, or
                            (ii) for at least 40 hours, but less than 
                        120 hours, in a month, is counted as a fraction 
                        of a full-time equivalent employee in the month 
                        equal to the full-time employment ratio (as 
                        defined in subparagraph (B)) for the employee 
                        and shall be deemed to be employed on a part-
                        time basis.
                    (B) Full-time employment ratio defined.--For 
                purposes of this Act, the term ``full-time employment 
                ratio'' means, with respect to a qualifying employee of 
                an employer in a month, the lesser of 1 or the ratio 
                of--
                            (i) the number of hours of employment such 
                        employee is employed by such employer for the 
                        month (as determined under paragraph (3)), to
                            (ii) 120 hours.
                    (C) Full-time employee.--For purposes of this Act, 
                the term ``full-time employee'' means, with respect to 
                an employer, an employee who is employed on a full-time 
                basis (as specified in subparagraph (A)) by the 
                employer.
                    (D) Part-time employee.--For purposes of this Act, 
                the term ``part-time employee'' means, with respect to 
                an employer, an employee who is employed on a part-time 
                basis (as specified in subparagraph (A)) by the 
                employer.
                    (E) Consideration of industry practice.--As 
                provided under rules established by the Board, an 
                employee who is not described in subparagraph (C) or 
                (D) shall be considered to be employed on a full-time 
                or part-time basis by an employer (and to be a full-
                time or part-time employee of an employer) for a month 
                (or for all months in a 12-month period) if the 
                employee is employed by that employer on a continuing 
                basis that, taking into account the structure or nature 
                of employment in the industry, represents full or part-
                time employment in that industry.
                    (F) Institutions of higher education.--
                Notwithstanding any other provision in this section--
                            (i)(I) employees of an Institution of 
                        higher education (as defined in section 1201(a) 
                        of the Higher Education Act of 1965), or of an 
                        elementary or secondary school (as defined in 
                        section 1471 of the Elementary and Secondary 
                        Education Act of 1965), who are exempt under 
                        section 13 of the Fair Labor Standards Act, 
                        shall be deemed to be full-time employees if 
                        they work the hours that constitute full-time 
                        employment as defined at such institution;
                            (II) part-time employment shall be 
                        considered proportional to such hours for full-
                        time employees; and
                            (III) part-time employees who work at least 
                        one-third of the hours that constitute full-
                        time employment as defined at such institution 
                        shall be eligible for proportional employer 
                        premium contributions; and
                            (ii) regular employees of institutions of 
                        higher education or elementary and secondary 
                        schools who are not paid during the summer 
                        months or other periods of the year, but are 
                        assured employment at the end of such periods, 
                        shall be eligible for year-round employer 
                        premium contributions if such individuals are 
                        not eligible to collect unemployment 
                        compensation for the periods for which they 
                        would receive health care premium contributions 
                        from the employer covered by this subsection.
            (3) Hours of employment.--
                    (A) In general.--For purposes of this Act, the 
                Board shall specify the method for computing hours of 
                employment for employees of an employer consistent with 
                this paragraph. The Board shall take into account rules 
                used for purposes of applying the Fair Labor Standards 
                Act.
                    (B) Hourly wage earners.--In the case of an 
                individual who receives compensation (in the form of 
                hourly wages or compensation) for the performance of 
                services, the individual is considered to be 
                ``employed'' by an employer for an hour if compensation 
                is payable with respect to that hour of employment, 
                without regard to whether or not the employee is 
                actually performing services during such hours.
            (4) Treatment of salaried employees and employees paid on 
        contingent or bonus arrangements.--In the case of an employee 
        who receives compensation on a salaried basis or on the basis 
        of a commission (or other contingent or bonus basis), rather 
        than an hourly wage, the Board shall establish rules for the 
        conversion of the compensation to hours of employment, taking 
        into account the minimum monthly compensation levels for 
        workers employed on a full-time basis under the Fair Labor 
        Standards Act and other factors the Board considers relevant.
    (c) Definitions Relating to Self-Employment.--In this Act:
            (1) Net earnings from self-employment.--The term ``net 
        earnings from self-employment'' has the meaning given such term 
        under section 1402(a) of the Internal Revenue Code of 1986.
            (2) Self-employed individual.--The term ``self-employed 
        individual'' means, for a year, an individual who has net 
        earnings from self-employment for the year.

SEC. 1902. OTHER GENERAL DEFINITIONS.

    Except as otherwise specifically provided, in this Act the 
following definitions apply:
            (1) AFDC family.--The term ``AFDC family'' means a family 
        composed entirely of one or more AFDC recipients.
            (2) AFDC recipient.--The term ``AFDC recipient'' means, for 
        a month, an individual who is receiving aid or assistance under 
        any plan of the State approved under title I, X, XIV, or XVI, 
        or part A or part E of title IV, of the Social Security Act for 
        the month.
            (3) Applicable health plan.--The term ``applicable health 
        plan'' means, with respect to an eligible individual, the 
        health plan specified pursuant to section 1004 and part 2 of 
        subtitle A.
            (4) Carrier.--The term ``carrier'' means a licensed 
        insurance company, a hospital or medical service corporation 
        (including an existing Blue Cross or Blue Shield organization, 
        within the meaning of section 833(c)(2) of Internal Revenue 
        Code of 1986), a health maintenance organization, or other 
        entity licensed or certified by the State to provide health 
        insurance or health benefits. The Board may issue regulations 
        that provide for affiliated carriers to be treated as a single 
        carrier where appropriate under this Act.
            (5) Case management.--The term ``case management'' means 
        services that assist individuals in gaining access to needed 
        medical, social, educational, and other services.
            (6) Citizen of another country legally residing in the 
        united states.--The term ``citizen of another country legally 
        residing in the United States'' means any of the following:
                    (A) An alien lawfully admitted for permanent 
                residence (within the meaning of section 101(a)(20) of 
                the Immigration and Nationality Act).
                    (B) An alien granted work authorization by the 
                Immigration and Naturalization Service.
                    (C) An alien permanently residing in the United 
                States under color of law, including (but not limited 
                to) any of the following:
                            (i) An alien who is admitted as a refugee 
                        under section 207 of the Immigration and 
                        Nationality Act.
                            (ii) An alien who is granted asylum under 
                        section 208 of such Act.
                            (iii) An alien whose deportation is 
                        withheld under section 243(h) of such Act.
                            (iv) An alien who is admitted for temporary 
                        residence under section 210, 210A, or 245A of 
                        such Act.
                            (v) An alien who has been paroled into the 
                        United States under section 212(d)(5) of such 
                        Act for an indefinite period or who has been 
                        granted extended voluntary departure, temporary 
                        protected status, or deferred enforced 
                        departure.
                            (vi) An alien who is the spouse or 
                        unmarried child under 21 years of age of a 
                        citizen of the United States, or the parent of 
                        such a citizen if the citizen is over 21 years 
                        of age, and with respect to whom an application 
                        for adjustment to lawful permanent residence is 
                        pending.
                            (vii) An alien within such other 
                        classification of aliens permanently residing 
                        under color of law for purposes of this Act 
                        only as the National Health Board may establish 
                        by regulation. Such regulation shall include 
                        categories of such aliens who are included in 
                        regulations as in effect on the date of the 
                        enactment of this Act under title XIX of the 
                        Social Security Act and other categories within 
                        a public health priority.
            (7) Combination cost sharing plan.--The term ``combination 
        cost sharing plan'' means a health plan that provides 
        combination cost sharing schedule (consistent with section 
        1134).
            (8) Community-rated employer.--The term ``community-rated 
        employer'' means, with respect to an employee, an employer that 
        is not an experience-rated employer with respect to such 
        employee.
            (9) Community-rated plan.--The term ``community-rated 
        plan'' means a health plan certified by a State under section 
        1503 that is provided to community-rated individuals.
            (10) Community rate eligible individual.--The term 
        ``community rate eligible individual'' means an eligible 
        individual with respect to whom a community-rated plan is an 
        applicable health plan.
            (11) Comprehensive benefit package.--The term 
        ``comprehensive benefit package'' means the package of health 
        benefits provided under subtitle B.
            (12) Consumer price index; cpi.--The terms ``consumer price 
        index'' and ``CPI'' mean the Consumer Price Index for all urban 
        consumers (U.S. city average), as published by the Bureau of 
        Labor Statistics.
            (13) Cost sharing policy.--The term ``cost sharing policy'' 
        means a health insurance policy or health benefit plan offered 
        to an community rate eligible individual which provides 
        coverage for deductibles, coinsurance, and copayments imposed 
        as part of the comprehensive benefit package under subtitle B, 
        whether imposed under a higher cost sharing plan or with 
        respect to out-of-network providers.
            (14) Covered wages defined.--In this section, the term 
        ``covered wages'' means wages paid an employee of an employer 
        during a month in which the employee was a qualifying employee 
        of the employer.
            (15) Diagnosable mental disorder and diagnosable substance 
        abuse disorder.--The terms ``diagnosable mental disorder'' and 
        ``diagnosable substance abuse disorder'' mean a disorder that--
                    (A) is listed in the Diagnostic and Statistical 
                Manual of Mental Disorders, Fourth Edition, Revised or 
                a revised version of such manual (except V Codes for 
                Conditions Not Attributable to a Mental Disorder That 
                Are a Focus of Attention or Treatment);
                    (B) is the equivalent of a disorder described in 
                subparagraph (A), but is listed in the International 
                Classification of Diseases, 9th Revision, Clinical 
                Modification, Third Edition or a revised version of 
                such text; or
                    (C) is listed in any authoritative text specifying 
                diagnostic criteria for mental disorders or substance 
                abuse disorders that is identified by the National 
                Health Board.
            (16) Disabled ssi recipient.--The term ``disabled SSI 
        recipient'' means an individual who--
                    (A) is an SSI recipient, and
                    (B) has been determined to be disabled for purposes 
                of the supplemental security income program (under 
                title XVI of the Social Security Act).
            (17) Essential community provider.--The term ``essential 
        community provider'' means an entity certified as such a 
        provider under subpart B of part 2 of subtitle F.
            (18) Experience-rated employer.--The term ``experience-
        rated employer'' means--
                    (A) a large employer that is a large group 
                purchaser, and
                    (B) another employer that participates in a 
                experience-rated plan sponsored by a large group 
                purchaser described in paragraph (6) or (7) of section 
                1401.
            (19) Exempt individual.--The term ``exempt individual'' 
        means an individual that has been granted an exemption from 
        paying Social Security Taxes under section 1402(g) of the 
        Internal Revenue Code of 1986, or an individual who would be 
        eligible for an exemption under such section if the individual 
        were self-employed.
            (20) Experience-rated individual.--The term ``experience-
        rated individual'' means, with respect to a large group 
        purchaser, an eligible individual with respect to whom an 
        experience-rated plan sponsored by the purchaser is the 
        applicable health plan.
            (21) Experience-rated plan.--The term ``experience-rated 
        plan'' means either--
                    (A) an employer sponsored health plan (as defined 
                in section 1401(e)(5)) offered by a large group 
                purchaser, or
                    (B) an insured health plan offered by a carrier to 
                a large group purchaser.
            (22) Fee-for-service plan.--The term ``fee-for-service 
        plan'' means a health plan described in section 1211(b)(2)(A).
            (23) First year.--The term ``first year'' means, with 
        respect to--
                    (A) a State that is a participating State in a year 
                before 1998, the year in which the State first is a 
                participating State, or
                    (B) any other State, 1998.
            (24) Health care coverage area.--The term ``health care 
        coverage area'' means an area specified by a State under 
        section 1202.
            (25) Health plan sponsor.--The term ``health plan sponsor'' 
        means--
                    (A) with respect to a community-rated plan, the 
                carrier providing the plan,
                    (B) with respect to an insured experience-rated 
                plan, the carrier providing the plan, and
                    (C) with respect to a self-funded experience-rated 
                plan, the large group purchaser providing the plan.
            (26) Higher cost sharing plan.--The term ``higher cost 
        sharing plan'' means a health plan that provides a higher cost 
        sharing schedule (consistent with section 1133).
            (27) Hospital.--The term ``hospital'' has the meaning given 
        such term in section 1861(e) of the Social Security Act, except 
        that such term shall include--
                    (A) in the case of an item or service provided to 
                an individual whose applicable health plan is specified 
                pursuant to section 1005(b)(1), a facility of the 
                uniformed services under title 10, United States Code, 
                that is primarily engaged in providing services to 
                inpatients that are equivalent to the services provided 
                by a hospital defined in such section 1861(e);
                    (B) in the case of an item or service provided to 
                an individual whose applicable health plan is specified 
                pursuant to section 1005(b)(2), a facility operated by 
                the Department of Veterans Affairs that is primarily 
                engaged in providing services to inpatients that are 
                equivalent to the services provided by a hospital 
                defined in such section 1861(e); and
                    (C) in the case of an item or service provided to 
                an individual whose applicable health plan is specified 
                pursuant to section 1005(b)(3), a facility operated by 
                the Indian Health Service that is primarily engaged in 
                providing services to inpatients that are equivalent to 
                the services provided by a hospital defined in such 
                section 1861(e).
            (28) Inpatient hospital services.--The term ``inpatient 
        hospital services'' means items and services described in 
        paragraphs (1) through (3) of section 1861(b) of the Social 
        Security Act when provided to an inpatient of a hospital. The 
        National Health Board shall specify those health professional 
        services described in section 1103 that shall be treated as 
        inpatient hospital services when provided to an inpatient of a 
        hospital.
            (29) Long-term nonimmigrant.--The term ``long-term 
        nonimmigrant'' means a nonimmigrant described in subparagraph 
        (E), (H), (I), (J), (K), (L), (M), (N), (O), (Q), or (R) of 
        section 101(a)(15) of the Immigration and Nationality Act or an 
        alien within such other classification of nonimmigrant as the 
        National Health Board may establish by regulation.
            (30) Lower cost sharing plan.--The term ``lower cost 
        sharing plan'' means a health plan that provides a lower cost 
        sharing schedule (consistent with section 1132).
            (31) Medicare program.--The term ``medicare program'' means 
        the health insurance program under title XVIII of the Social 
        Security Act.
            (32) Medicare-eligible individual.--The term ``medicare-
        eligible individual'' means, subject to section 1012(a), an 
        individual who is entitled to benefits under part A of the 
        medicare program.
            (33) Medications management.--
                    (A) In general.--The term ``medications 
                management'' refers to the prescription, use, 
                monitoring, and review of medication for treatment of a 
                mental disorder or pharmacotherapy for the treatment of 
                a substance abuse disorder, including no more than 
                minimal medical psychotherapy or counseling.
                    (B) Visit.--For purposes of medications management, 
                the term ``visit'' means one week of treatment.
            (34) Move.--The term ``move'' means, respect to an 
        individual, a change of residence of the individual from one 
        health care coverage area to another health care coverage area.
            (35) National health board; board.--The terms ``National 
        Health Board'' and ``Board'' mean the National Health Board 
        created under section 1601.
            (36) Non-qualifying employee.--The term ``non-qualifying 
        employee'' means, with respect to an employer for a month, an 
        employee (who otherwise would be a qualifying employee) of a 
        nonelecting small employer.
            (37) Participating provider.--The term ``participating 
        provider'' means, with respect to a health plan, a provider of 
        health care services who is a member of a provider network of 
        the plan.
            (38) Placed for adoption.--The term ``placed for adoption'' 
        in connection with any placement for adoption of a child with 
        any person, means the assumption and retention by such person 
        of a legal obligation for total or partial support of such 
        child in anticipation of the adoption of such child.
            (39) Poverty level.--
                    (A) In general.--The term ``applicable poverty 
                level'' means, for a family for a year, the official 
                poverty line (as defined by the Office of Management 
                and Budget, and revised annually in accordance with 
                section 673(2) of the Omnibus Budget Reconciliation Act 
                of 1981) applicable to a family of the size involved 
                (as determined under subparagraph (B)) for 1994 
                adjusted by the percentage increase or decrease 
                described in subparagraph (C) for the year involved.
                    (B) Family size.--In applying the applicable 
                poverty level to--
                            (i) an individual enrollment, the family 
                        size is deemed to be one person;
                            (ii) a couple-only enrollment, the family 
                        size is deemed to be two persons;
                            (iii) a single parent enrollment, the 
                        family size is deemed to be three persons; or
                            (iv) a dual parent enrollment, the family 
                        size is deemed to be four persons.
                    (C) Percentage adjustment.--The percentage increase 
                or decrease described in this subparagraph for a year 
                is the percentage increase or decrease by which the 
                average CPI for the 12-month-period ending with August 
                31 of the preceding year exceeds such average for the 
                12-month period ending with August 31, 1993.
                    (D) Rounding.--Any adjustment made under 
                subparagraph (A) for a year shall be rounded to the 
                nearest multiple of $100.
            (40) Prisoner.--The term ``prisoner'' means, as specified 
        by the Board, an eligible individual during a period of 
        imprisonment under Federal, State, or local authority after 
        conviction as an adult.
            (41) Psychiatric hospital.--The term ``psychiatric 
        hospital'' has the meaning given such term in section 1861(f) 
        of the Social Security Act, except that such term shall 
        include--
                    (A) in the case of an item or service provided to 
                an individual whose applicable health plan is specified 
                pursuant to section 1005(b)(1), a facility of the 
                uniformed services under title 10, United States Code, 
                that is engaged in providing services to inpatients 
                that are equivalent to the services provided by a 
                psychiatric hospital;
                    (B) in the case of an item or service provided to 
                an individual whose applicable health plan is specified 
                pursuant to section 1005(b)(2), a facility operated by 
                the Department of Veterans Affairs that is engaged in 
                providing services to inpatients that are equivalent to 
                the services provided by a psychiatric hospital; and
                    (C) in the case of an item or service provided to 
                an individual whose applicable health plan is specified 
                pursuant to section 1005(b)(3), a facility operated by 
                the Indian Health Service that is engaged in providing 
                services to inpatients that are equivalent to the 
                services provided by a psychiatric hospital.
            (42) Rehabilitation facility.--The term ``rehabilitation 
        facility'' means an institution (or a distinct part of an 
        institution) which is established and operated for the purpose 
        of providing diagnostic, therapeutic, and rehabilitation 
        services to individuals for rehabilitation from illness, 
        injury, disorder or other health condition. An entity 
        qualifying as a hospital for purposes of section 1102 may also 
        qualify as a rehabilitation facility for purposes of section 
        1110.
            (43) Reside.--
                    (A) An individual is considered to reside in the 
                location in which the individual maintains a primary 
                residence (as established under rules of the National 
                Health Board).
                    (B) Under such rules and subject to section 1516, 
                in the case of an individual who maintains more than 
                one residence, the primary residence of the individual 
                shall be determined taking into account the proportion 
                of time spent at each residence.
                    (C) In the case of a couple only one spouse of 
                which is a qualifying employee, except as the Board may 
                provide, the residence of the employee shall be the 
                residence of the couple.
            (44) Secretary.--The term ``Secretary'' means the Secretary 
        of Health and Human Services.
            (45) Self-funded plan.--The term ``self-funded plan'' means 
        (as defined in regulations of the Secretary of Labor) a health 
        plan provided by a large group purchaser and which is not 
        provided by or through a carrier.
            (46) Sexual orientation.--The term ``sexual orientation'' 
        means homosexual, bisexual, or heterosexual orientation, real 
        or perceived, as manifested by identity, acts, statements, or 
        associations.
            (47) Skilled nursing facility.--The term ``skilled nursing 
        facility'' means an institution (or a distinct part of an 
        institution) which is primarily engaged in providing to 
        residents--
                    (A) skilled nursing care and related services for 
                residents who require medical or nursing care; or
                    (B) rehabilitation services to residents for 
                rehabilitation from illness, injury, disorder or other 
                health condition.
            (48) SSI family.--The term ``SSI family'' means a family 
        composed entirely of one or more SSI recipients.
            (49) SSI recipient.--The term ``SSI recipient'' means, for 
        a month, an individual--
                    (A) with respect to whom supplemental security 
                income benefits are being paid under title XVI of the 
                Social Security Act for the month,
                    (B) who is receiving a supplementary payment under 
                section 1616 of such Act or under section 212 of Public 
                Law 93-66 for the month, or
                    (C) who is receiving monthly benefits under section 
                1619(a) of the Social Security Act (whether or not 
                pursuant to section 1616(c)(3) of such Act) for the 
                month.
            (50) State.--The term ``State'' includes the District of 
        Columbia, Puerto Rico, the Virgin Islands, Guam, American 
        Samoa, and the Northern Mariana Islands.
            (51) State medicaid plan.--The term ``State medicaid plan'' 
        means a plan of medical assistance of a State approved under 
        title XIX of the Social Security Act.
            (52) Supplemental health benefit policy.--
                    (A) In general.--The term ``supplemental health 
                benefit policy'' means a health insurance policy or 
                health benefit plan offered to a community rate 
                eligible individual which provides--
                            (i) coverage for services and items not 
                        included in the comprehensive benefit package, 
                        or
                            (ii) coverage for items and services 
                        included in such package but not covered 
                        because of a limitation in amount, duration, or 
                        scope provided under this title,
                or both.
                    (B) Exclusions.--Such term does not include the 
                following:
                            (i) A cost sharing policy.
                            (ii) A long-term care insurance policy.
                            (iii) Insurance that limits benefits with 
                        respect to specific diseases (or conditions).
                            (iv) Hospital or nursing home indemnity 
                        insurance.
                            (v) A medicare supplemental policy (as 
                        defined in section 1882(g) of the Social 
                        Security Act).
                            (vi) Insurance with respect to accidents.
            (53) United States.--The term ``United States'' means the 
        50 States, the District of Columbia, Puerto Rico, the Virgin 
        Islands, Guam, American Samoa, and Northern Mariana Islands.

SEC. 1903. REFERENCE TO CERTAIN TERMS.

    In any provision in this Act (other than this I, subtitle J of 
title III, title VI, and subtitle E of title VIII), including any 
amendment made by such a provision of this Act--
            (1) any reference to a ``corporate alliance employer'' is 
        deemed a reference to an ``experience-rated employer'';
            (2) any reference to a ``corporate alliance'' is deemed a 
        reference either to an ``experience-rated employer'' or a 
        ``large group purchaser'', as specified by the Board;
            (3) any reference to a ``corporate alliance eligible 
        individual'' is deemed a reference to an ``experience-rated 
        individual'';
            (4) any reference to a ``regional alliance'' is deemed a 
        reference either to a contracting entity, a State, or a 
        consumer purchasing cooperative, as specified by the Board;
            (5) any reference to an ``alliance area'' is deemed a 
        reference to a ``community-rating area'';
            (6) any reference to a ``regional alliance eligible 
        individual'' is deemed a reference to a ``community-rated 
        individual'';
            (7) any reference to an ``alliance eligible individual'' is 
        deemed a reference to a ``community-rated individual'' and to 
        an ``experience rated individual'';
            (8) any reference to a ``regional alliance health plan'' is 
        deemed a reference to a ``community-rated plan'';
            (9) any reference to a ``corporate alliance health plan'' 
        is deemed a reference to an ``experience-rated plan''; and
            (10) any reference to a ``health plan'' is deemed a 
        reference either to a health plan or a carrier, as specified by 
        the Board.

                    PART 2--MISCELLANEOUS PROVISIONS

SEC. 1911. USE OF INTERIM, FINAL REGULATIONS.

    In order to permit the timely implementation of the provisions of 
this Act, the National Health Board, the Secretary of Health and Human 
Services, the Secretary of Labor are each authorized to issue 
regulations under this Act on an interim basis that become final on the 
date of publication, subject to change based on subsequent public 
comment.

SEC. 1912. NEUTRALITY CONCERNING UNION ORGANIZING.

    Amounts appropriated to carry out this Act may not be utilized to 
assist, promote or deter union organizing.

SEC. 1913. SOCIAL SECURITY ACT REFERENCES.

    Except as may otherwise be provided, any reference in this title, 
or in title V or VI, to a provision of the Social Security Act shall be 
to that provision of the Social Security Act as in effect on the date 
of the enactment of this Act.

SEC. 1914. ANTIDISCRIMINATION.

    (a) In General.--Neither the National Health Board nor any State, 
health plan, consumer purchasing cooperative, large group purchaser, 
employer, or other entity subject to this Act shall directly or through 
contractual arrangements--
            (1) deny or limit access to or the availability of health 
        care services, or otherwise discriminate in connection with the 
        provision of health care services; or
            (2) limit, segregate or classify an individual in any way 
        which would deprive or tend to deprive such individual of 
        health care services, or otherwise adversely affect his or her 
        access to health care services;
on the basis of race, national origin, sex, religion, language, income, 
age, sexual orientation, disability, health status, or anticipated need 
for health services.
    (b) Definition.--As used in this section, the term ``in connection 
with the provision of health care services'' includes, but is not 
limited to--
            (1) establishing the boundaries for health care coverage 
        areas under section 1202 and for premium areas, enrolling 
        persons in a health care plan or marketing a health care plan, 
        and selecting providers or setting the terms or conditions 
        under which providers participate in a health care plan or 
        provider network; and
            (2) determining the scope of services provided by a health 
        care plan, and providing such services and determining the site 
        or location of health care facilities.
    (c) Regulations.--Not later than 1 year after the date of enactment 
of this Act, the Secretary of Health and Human Services shall issue 
regulations to carry out this section.
    (d) Effect on Other Laws. Nothing in this Act shall be construed to 
limit the scope of, or the availability of relief under, any other 
Federal or State law prohibiting discrimination or providing relief 
therefore.
    (e) Benefits.--Nothing in this Act shall be construed to require or 
prohibit the provision of benefits to an employee for the benefit of 
his or her same-sex partner.
    (f) Outreach Unaffected.--Nothing in this section shall be 
construed to prevent a person from engaging in activities to encourage 
the enrollment of community rated individuals residing in underserved 
areas.

SEC. 1915. COVERAGE OF BENEFITS UNDER HEALTH SECURITY ACT.

    (a) Davis-Bacon Act.--Subsection (b)(2) of the first section of the 
Davis Bacon Act (40 U.S.C. 276a(b)(2)) is amended in the matter 
following subparagraph (B) by inserting after ``local law'' the 
following: ``(other than benefits provided pursuant to the Health 
Security Act)''.
    (b) Service Contract Act of 1965.--The second sentence of section 
2(a)(2) of the Service Contract Act of 1965 (41 U.S.C. 351(a)(2)) is 
amended by inserting after ``local law'' the following: ``(other than 
benefits provided pursuant to the Health Security Act)''.

SEC. 1916. GOVERNMENT REQUIRED DATA.

    The set of data referred to in section 5114(a)(5) shall include 
data on--
            (1) enrollment and disenrollment in health plans;
            (2) clinical encounters and other items and services 
        provided by health care providers;
            (3) administrative, operational and financial aspects 
        regarding composition, transactions and activities of 
        participating States, health plans, health care providers, 
        employers and individuals that are necessary to determine 
        compliance with this Act or an Act amended by this Act;
            (4) terms of agreement between health plans and the health 
        care providers who are members of provider networks of the 
        plans;
            (5) payment of benefits in cases in which benefits may be 
        payable under a health plan and any other insurance policy or 
        health program;
            (6) utilization management by health plans and health care 
        providers;
            (7) the information collected and reported by the Board or 
        disseminated by other individuals or entities as part of the 
        National Quality Management Program under subtitle A;
            (8) health care and payment grievances and the resolutions 
        of such grievances; and
            (9) any other fact that may be necessary to determine 
        whether a health plan or a health care provider has complied 
        with a Federal statute pertaining to fraud or misrepresentation 
        in the provision or purchasing of health care or in the 
        submission of a claim for benefits or payment under a health 
        plan.

SEC. 1917. SENSE OF THE COMMITTEE CONCERNING FUNDING SOURCES.

    (a) Financing.--It is the sense of the Committee on Labor and Human 
Resources of the Senate that when the Health Security Act is enacted it 
should include the following sources of financing not within the 
jurisdiction of the Committee:
            (1) The net savings and revenues included in S.1757, the 
        Health Security Act which are outside the jurisdiction of the 
        Committee.
            (2) The extension to all employers that are not community-
        rated employers the 1 percent payroll assessment applied to 
        corporate alliances under S.1757, the Health Security Act.
            (3) An increase in the cigarette tax of 75 cents per pack 
        in excess of the amount specified in S.1757, the Health 
        Security Act.
            (4) A phased-in 1 percent premium assessment equal to the 
        additional amount provided for biomedical research under title 
        III of this Act.
    (b) Research and Development Tax Credit.--It is the sense of the 
Committee on Labor and Human Resources of the Senate that when health 
reform legislation is enacted it should include the following provision 
not within the jurisdiction of the Committee:
            (1) The permanent extension of the research and development 
        tax credit.

SEC. 1918. SENSE OF THE COMMITTEE CONCERNING MEDICAL SAVINGS ACCOUNTS.

    It is the sense of the Committee on Labor and Human Resources of 
the Senate that provisions encouraging the establishment of medical 
savings accounts be included in any health reform bill passed by the 
Senate, in conjunction with a comprehensive benefit package described 
in subtitle B of this title.

                        TITLE II--LONG-TERM CARE

   Part 1--State Programs for Home and Community-based Services for 
              subpart a--home and community-based services
Sec. 2101. State programs for home and community-based services for 
                            individuals with disabilities.
Sec. 2102. State plans.
Sec. 2103. Individuals with disabilities defined.
Sec. 2104. Home and community-based services covered under State plan.
Sec. 2105. Cost sharing.
Sec. 2106. Quality assurance and safeguards.
Sec. 2107. Advisory groups.
Sec. 2108. Payments to States.
Sec. 2109. Total Federal budget; allotments to States.
Secsubpart b--state programs for extended services for children with 
                       special health care needs
Sec. 2111. State programs for extended services for children with 
                            special health care needs.
Sec. 2112. Extended services covered under the State plan.
Sec. 2213. Children eligible for services.
Sec. 2114. Application and administration.
Sec. 2115. Cost-sharing.
Sec. 2116. Program evaluation.
Sec. 2117. Total Federal budget and Federal allotment to States.
    Part 2--Long-term Care Insurance Improvement and Accountability

Sec. 2201. Short title.
Sec. 2202. Establishment of Federal standards for long-term care 
                            insurance.
                           Part 3--Life Care

Sec. 2301. Short title.
Sec. 2302. Life care: public insurance program for nursing home care.
Sec. 2303. Sense of the Committee concerning PACE (Program of All-
                            Inclusive Care for the Elderly).

   PART 1--STATE PROGRAMS FOR HOME AND COMMUNITY-BASED SERVICES FOR 
                     INDIVIDUALS WITH DISABILITIES

              Subpart A--Home and Community-Based Services

SEC. 2101. STATE PROGRAMS FOR HOME AND COMMUNITY-BASED SERVICES FOR 
              INDIVIDUALS WITH DISABILITIES.

    (a) In General.--Each State that has a plan for the home and 
community-based services to individuals with disabilities submitted to 
and approved by the Secretary under section 2102(b) is entitled to 
payment in accordance with section 2108.
    (b) Entitlement to Services.--Nothing in this part shall be 
construed to create a right to services for individuals or a 
requirement that a State with an approved plan expend the entire amount 
of funds to which it is entitled under this subtitle, except that 
nothing in this subtitle shall be construed to restrict or modify an 
individual's right under existing Federal or State law to enforce the 
obligations of States entered into pursuant to this Act.
    (c) Designation of Agency.--Not later than 6 months after the date 
of enactment of this Act, the Secretary shall designate an agency 
responsible for program administration under this subtitle.

SEC. 2102. STATE PLANS.

    (a) Plan Requirements.--In order to be approved under subsection 
(b), a State plan for home and community-based services for individuals 
with disabilities must meet the following requirements:
            (1) Eligibility.--
                    (A) In general.--Within the amounts provided by the 
                State (and under section 2108) for such plan, the plan 
                shall provide that services under the plan will be 
                available to individuals with disabilities (as defined 
                in section 2103(a)) in the State.
                    (B) Initial screening.--The plan shall provide a 
                process for the initial screening of individuals who 
                appear to have some reasonable likelihood of being an 
                individual with disabilities. Any such process shall 
                require the provision of assistance to individuals who 
                wish to apply but whose disability limits their ability 
                to do so. Except as provided in subparagraph (C), the 
                initial screening, as well as the determination of 
                disability (as defined under section 2103(b)(1)) and 
                the comprehensive assessment and individualized plan of 
                care (as defined under section 2104(b)(1)(A) and (B)) 
                and 2104(b)(2) (A) and (B) shall be provided by public 
                or private nonprofit agencies that--
                            (i) do not provide home and community-based 
                        services covered under the State plan, with the 
                        exception of care management services;
                            (ii) do not provide nursing facility 
                        services; and
                            (iii) do not have a direct or indirect 
                        ownership or control interest in an entity that 
                        provides home and community-based services or 
                        nursing facility services.
                    (C) Screening agency exceptions.--The provisions of 
                subparagraph (B)(i), (ii) and (iii) shall not apply to 
                providers of residential care. The State agency may 
                elect to waive the provisions of subparagraph (B)(i), 
                (ii), and (iii) in areas of the State in which there is 
                an insufficiency of available service providers.
                    (D) Restrictions.--The plan may not limit the 
                eligibility of individuals with disabilities based on--
                            (i) income,
                            (ii) age,
                            (iii) geography,
                            (iv) nature, severity, or category of 
                        disability,
                            (v) residential setting (other than an 
                        institutional setting), or
                            (vi) other grounds specified by the 
                        Secretary;
                except that during the initial phase-in period the 
                Secretary may permit a State to limit eligibility based 
                on level of disability or geography (if the State 
                assures a balance between urban and rural areas).
                    (E) Continuation of services.--The plan must 
                provide assurances that, in the case of an individual 
                receiving medical assistance for home and community-
                based services under the State medicaid plan as of the 
                date of the enactment of this Act, the State will 
                continue to make available (either under this plan, 
                under the State medicaid plan, or otherwise) to such 
                individual an appropriate level of assistance for home 
                and community-based services, taking into account the 
                level of assistance provided as of such date and the 
                individual's need for home and community-based 
                services.
            (2) Services.--
                    (A) Needs assessment.--Not later than the end of 
                the second year of implementation, the plan or its 
                amendments shall include the results of a statewide 
                assessment of the needs of individuals with 
                disabilities, in a format required by the Secretary. 
                The needs assessment shall include demographic data 
                concerning the number of individuals within each 
                category of disability described in this Act, and the 
                services available to meet the needs of such 
                individuals.
                    (B) Specification.--Consistent with section 2104, 
                the plan shall specify--
                            (i) the services made available under the 
                        plan,
                            (ii) the extent and manner in which such 
                        services are allocated and made available to 
                        individuals with disabilities, and
                            (iii) the manner in which services under 
                        the plan are coordinated with each other and 
                        with health and long-term care services 
                        available outside the plan for individuals with 
                        disabilities.
                    (C) Taking into account informal care.--A State 
                plan may take into account, in determining the amount 
                and array of services made available to covered 
                individuals with disability, the availability of 
                informal care. Any individual care plan that includes 
                informal care shall be required to verify the 
                availability of the informal care.
                    (D) Allocation.--The State plan--
                            (i) shall specify how it will allocate 
                        services under the plan, during and after the 
                        7-fiscal-year phase-in period beginning with 
                        fiscal year 1996, among covered individuals 
                        with disabilities,
                            (ii) shall attempt to meet the needs of 
                        individuals with a variety of disabilities and, 
                        within the limits of available funding, be 
                        sufficient in amount, duration, and scope to 
                        provide a substantial assistance in living 
                        independently,
                            (iii) shall include services that are 
                        determined to be necessary to help all 
                        categories of individuals with disabilities, 
                        regardless of their age or the nature of their 
                        disabling conditions,
                            (iv) shall demonstrate that services are 
                        allocated equitably, in accordance with the 
                        needs assessment required under subparagraph 
                        (A), and
                            (v) shall ensure that--
                                    (I) the proportion of the 
                                population of low-income individuals 
                                with disabilities in the State that 
                                represents individuals with 
                                disabilities who are provided home and 
                                community-based services either under 
                                the plan, under the State medicaid 
                                plan, or under both, is not less than,
                                    (II) the proportion of the 
                                population of the State that represents 
                                individuals who are low-income 
                                individuals.
                    (E) Limitation on licensure or certification.--The 
                State may not subject consumer-directed providers of 
                personal assistance services to licensure, 
                certification, or other requirements which the 
                Secretary finds not to be necessary for the health and 
                safety of individuals with disabilities.
                    (F) Consumer choice.--To the extent feasible, the 
                State shall follow the choice of an individual with 
                disabilities (or that individual's designated 
                representative who may be a family member) regarding 
                which covered services to receive and the providers who 
                will provide such services.
            (3) Cost sharing.--The plan shall impose cost sharing with 
        respect to covered services only in accordance with section 
        2105.
            (4) Types of providers and requirements for 
        participation.--The plan shall specify--
                    (A) the types of service providers eligible to 
                participate in the program under the plan, which shall 
                include consumer-directed providers, except that the 
                plan--
                            (i) may not limit such benefits to services 
                        provided by registered nurses or licensed 
                        practical nurses; and
                            (ii) may not limit such benefits to 
                        services provided by agencies or providers 
                        certified under title XVIII of the Social 
                        Security Act; and
                    (B) any requirements for participation applicable 
                to each type of service provider.
            (5) Budget.--The plan shall specify how the State will 
        manage Federal and State funds available under the plan for 
        each fiscal year during the period beginning with fiscal year 
        1996 and ending with fiscal year 2003 and for each 5-fiscal-
        year periods thereafter to serve all categories of individuals 
        with disabilities and meet the requirements of this subsection. 
        If the Secretary makes an adjustment under section 
        2109(a)(5)(C) for a year, each State shall update the 
        specifications under this paragraph to reflect the impact of 
        such an adjustment.
            (6) Provider reimbursement.--
                    (A) Payment methods.--The plan shall specify the 
                payment methods to be used to reimburse providers for 
                services furnished under the plan. Such methods may 
                include retrospective reimbursement on a fee-for-
                service basis, prepayment on a capitation basis, 
                payment by cash or vouchers to individuals with 
                disabilities, or any combination of these methods. In 
                the case of payment for consumer-directed services, 
                including the use of cash or vouchers, the plan shall 
                specify how the plan will assure compliance with 
                applicable employment tax and health care coverage 
                provisions.
                    (B) Payment rates.--The plan shall specify the 
                methods and criteria to be used to set payment rates 
                for--
                            (i) agency administered services furnished 
                        under the plan; and
                            (ii) consumer-directed services furnished 
                        under the plan, including cash payments or 
                        vouchers to individuals with disabilities, 
                        except that such payments shall be adequate to 
                        cover amounts required under the applicable 
                        employment tax provisions of the Internal 
                        Revenue Code of 1986 (as added or amended by 
                        title VII of the Health Security Act) and the 
                        health care coverage provisions under this Act.
                    (C) Plan payment as payment in full.--The plan 
                shall restrict payment under the plan for covered 
                services to those providers that agree to accept the 
                payment under the plan (at the rates established 
                pursuant to subparagraph (B)) and any cost sharing 
                permitted or provided for under section 2105 as payment 
                in full for services furnished under the plan.
            (7) Quality assurance and safeguards.--The State plan shall 
        provide for quality assurance and safeguards for applicants and 
        beneficiaries in accordance with section 2106.
            (8) Advisory group.--The State plan shall--
                    (A) assure the establishment and maintenance of an 
                advisory group under section 2107(b), and
                    (B) include the documentation prepared by the group 
                under section 2107(b)(4).
            (9) Administration and access.--
                    (A) State agency.--The plan shall designate a State 
                agency or agencies to administer (or to supervise the 
                administration of) the plan.
                    (B) Information and assistance center.--The plan 
                shall provide for a single point of access to 
                information about the system for individuals with 
                disabilities. The plan may designate separate entry 
                points for individuals under the age of 22, for 
                individuals age 65 years and older, or for other 
                appropriate classification of individuals.
                    (C) Coordination.--The plan shall specify how it 
                will--
                            (i) integrate services provided under the 
                        plan, including eligibility prescreening, 
                        service coordination, and referrals for 
                        individuals with disabilities who are 
                        ineligible for services under this part, with 
                        the State medicaid plan, titles V and XX of the 
                        Social Security Act, programs under the Older 
                        Americans Act of 1965, programs under the 
                        Developmental Disabilities Assistance and Bill 
                        of Rights Act, the Individuals with 
                        Disabilities Education Act, and any other 
                        Federal or State programs that provide services 
                        or assistance targeted to individuals with 
                        disabilities, and
                            (ii) coordinate with health plans.
                    (D) Administrative expenditures.--The plan shall 
                contain assurances that not more than 10 percent of 
                expenditures under the plan for all quarters in any 
                fiscal year shall be for administrative costs, except 
                that, in fiscal years 1996 through 2002, administrative 
                expenditures for the design, development, and 
                installation of mechanical claims processing systems, 
                information retrieval, and infrastructure development 
                may exceed the limit described in this subparagraph by 
                not more than an additional 10 percent of total 
                expenditures. Quality assurance activities shall not be 
                included as administrative costs. The Secretary shall 
                have the authority to waive the administrative limit.
            (10) Reports and information to secretary; audits.--The 
        plan shall provide that the State will furnish to the 
        Secretary--
                    (A) such reports, and will cooperate with such 
                audits, as the Secretary determines are needed 
                concerning the State's administration of its plan under 
                this part, including the processing of claims under the 
                plan, and
                    (B) such data and information as the Secretary may 
                require in a uniform format as specified by the 
                Secretary.
            (11) Use of state funds for matching.--The plan shall 
        provide assurances that Federal funds will not be used to 
        provide for the State share of expenditures under this part.
            (12) Health care worker redeployment requirement.--The plan 
        provides for compliance with the requirement of section 
        3083(a).
            (13) Terminology.--The plan shall adhere to uniform 
        definitions of terms, as specified by the Secretary.
    (b) Approval of Plans.--The Secretary shall approve a plan 
submitted by a State if the Secretary determines that the plan--
            (1) was developed by the State after a public comment 
        period of not less than 30 days, and
            (2) meets the requirements of subsection (a).
The approval of such a plan shall take effect as of the first day of 
the first fiscal year beginning after the date of such approval (except 
that any approval made before January 1, 1996, shall be effective as of 
January 1, 1996). In order to budget funds allotted under this part, 
the Secretary may establish a deadline for the submission of such a 
plan before the beginning of a fiscal year as a condition of its 
approval effective with that fiscal year. Any significant changes to 
the State plan shall be submitted to the Secretary in the form of plan 
amendments and shall be subject to approval by the Secretary.
    (c) Monitoring.--The Secretary shall annually monitor the 
compliance of State plans with the requirements of this subtitle 
according to specified performance standards. States that fail to 
comply with such requirements may be subject to the withholding of 
Federal funds for services or administration until such time as 
compliance is achieved.
    (d) Technical Assistance.--The Secretary shall ensure the 
availability of ongoing technical assistance to States under this 
section. Such assistance shall include serving as a clearinghouse for 
information regarding successful practices in providing long-term care 
services.
    (e) Regulations.--The Secretary shall issue such regulations as may 
be appropriate to carry out this part on a timely basis.

SEC. 2103. INDIVIDUALS WITH DISABILITIES DEFINED.

    (a) In General.--In this part, the term ``individual with 
disabilities'' means any individual within one or more of the following 
4 categories of individuals:
            (1) Individuals requiring help with activities of daily 
        living.--Except as provided in section 2103(a)(4) an individual 
        of any age who--
                    (A) requires hands-on or standby assistance, 
                supervision, or cueing (as defined in regulations) to 
                perform three or more activities of daily living (as 
                defined in subsection (c)), and
                    (B) is expected to require such assistance, 
                supervision, or cueing over a period of at least 90 
                days.
            (2) Individuals with severe cognitive or mental 
        impairment.--An individual of any age--
                    (A) whose score, on a standard mental status 
                protocol (or protocols) appropriate for measuring the 
                individual's particular condition specified by the 
                Secretary, indicates either severe cognitive impairment 
                or severe mental impairment, or both;
                    (B) who--
                            (i) requires hands-on or standby 
                        assistance, supervision, or cueing with one or 
                        more activities of daily living,
                            (ii) requires hands-on or standby 
                        assistance, supervision, or cueing with at 
                        least such instrumental activity (or 
                        activities) of daily living related to 
                        cognitive or mental impairment as the Secretary 
                        specifies, or
                            (iii) displays symptoms of one or more 
                        serious behavioral problems (that is on a list 
                        of such problems specified by the Secretary) 
                        which create a need for supervision to prevent 
                        harm to self or others; and
                    (C) who is expected to meet the requirements of 
                subparagraphs (A) and (B) over a period of at least 90 
                days.
        Not later than 2 years after the date of enactment of this Act, 
        the Secretary shall make recommendations regarding the most 
        appropriate duration of disability under this paragraph.
            (3) Individuals with severe or profound mental 
        retardation.--An individual of any age who has severe or 
        profound mental retardation (as determined according to a 
        protocol specified by the Secretary).
            (4) Young children with severe disabilities.--An individual 
        under 6 years of age who--
                    (A) has a severe disability or chronic medical 
                condition that limits functioning in a manner that is 
                comparable in severity to the standards established 
                under paragraphs (1), (2), or (3), and
                    (B) is expected to have such a disability or 
                condition and require such services over a period of at 
                least 90 days.
    (b) Determination.--
            (1) In general.--In formulating eligibility criteria under 
        subsection (a), the Secretary shall establish criteria for 
        assessing the functional level of disability among all 
        categories of individuals with disabilities that are comparable 
        in severity, regardless of the age or the nature of the 
        disabling condition of the individual. The determination of 
        whether an individual is an individual with disabilities shall 
        be made, by persons or entities specified under the State plan, 
        using a uniform protocol consisting of an initial screening and 
        preliminary assessment specified by the Secretary. A State may 
        not impose cost sharing with respect to the preliminary 
        assessment. A State may collect additional information, at the 
        time of obtaining information to make such determination, in 
        order to provide for the assessment and plan described in 
        section 2104(b) or for other purposes. The State shall 
        establish a fair hearing process for appeals of such 
        determinations.
            (2) Individuals with comparable disabilities.--Not more 
        than 2 percent of a State's allotment for services under this 
        part may be expended for the provision of services to 
        individuals with severe disabilities that are comparable in 
        severity to the criteria described in subsection (a), but who 
        fail to meet the criteria described in any single category.
            (3) Periodic reassessment.--The determination that an 
        individual is an individual with disabilities shall be 
        considered to be effective under the State plan for a period of 
        not more than 6 months (or for such longer period in such cases 
        as a significant change in an individual's condition that may 
        affect such determination is unlikely). A reassessment shall be 
        made if there is a significant change in an individual's 
        condition that may affect such determination.
    (c) Reassessments.--The Secretary shall reassess the validity of 
the eligibility criteria described in subsection (a) as new knowledge 
regarding the assessments of functional disabilities becomes available. 
The Secretary shall report to the Committee on Labor and Human 
Resources of the Senate and the Committee on Energy and Commerce of the 
House of Representatives on its findings not later than 5 years after 
the date of enactment of this Act.
    (d) Activity of Daily Living Defined.--In this part, the term 
``activity of daily living'' means any of the following: eating, 
toileting, dressing, bathing, and transferring.

SEC. 2104. HOME AND COMMUNITY-BASED SERVICES COVERED UNDER STATE PLAN.

    (a) Specification.--
            (1) In general.--Subject to the succeeding provisions of 
        this section, the State plan under this part shall specify--
                    (A) the home and community-based services available 
                under the plan to individuals with disabilities (or to 
                such categories of such individuals), and
                    (B) any limits with respect to such services, 
                except that within the limits of available funding, 
                such services shall be sufficient in amount, duration, 
                and scope to provide substantial assistance in living 
                independently.
            (2) Flexibility in meeting individual needs.--Subject to 
        subsection (e)(1)(B), such services may be delivered in an 
        individual's home, a range of community residential 
        arrangements, or outside the home.
    (b) Requirement for Care Management.--
            (1) In general.--The State shall make available to each 
        category of individual with disabilities care management 
        services that at a minimum include--
                    (A) a comprehensive assessment of the individual's 
                need for home and community-based services (regardless 
                of whether all needed services are available under the 
                plan),
                    (B) an individualized plan of care based on such 
                assessment,
                    (C) services consistent with such plan of care,
                    (D) arrangements for the provision of such 
                services, and
                    (E) monitoring of the delivery of services.
            (2) Home and community-based services.--The State shall 
        provide for home and community-based services to an individual 
        with disabilities only if--
                    (A) a comprehensive assessment of the individual's 
                need for home and community-based services (regardless 
                of whether all needed services are available under the 
                plan) has been made,
                    (B) an individualized plan of care based on such 
                assessment is developed, and
                    (C) such services are provided consistent with such 
                plan of care.
        The Secretary shall develop a uniform comprehensive assessment 
        tool that shall be used by the States under subparagraph (A). 
        Alternative comprehensive assessment tools may be used by the 
        States only with the approval of the Secretary. The Secretary 
        shall provide guidance to the States with regard to the 
        appropriate qualifications for individuals who conduct 
        comprehensive assessments.
            (3) Involvement of individuals.--The individualized plan of 
        care under paragraphs (1)(B) and (2)(B) for an individual with 
        disabilities shall--
                    (A) be developed by qualified individuals 
                (specified under the State plan),
                    (B) be developed and implemented in close 
                consultation with the individual or the individual's 
                designated representative,
                    (C) be approved by the individual (or the 
                individual's designated representative), and
                    (D) be reviewed and updated not less often than 
                every 6 months.
            (4) Plan of care.--The plan of care under paragraphs (1)(B) 
        and (2)(B) shall--
                    (A) specify which services specified under the 
                individual plan will be provided under the State plan 
                under this part,
                    (B) identify (to the extent possible) how the 
                individual will be provided any services specified 
                under the plan of care and not provided under the State 
                plan, and
                    (C) specify how the provision of services to the 
                individual under the plan will be coordinated with the 
                provision of other health care services to the 
                individual.
        The State shall make reasonable efforts to identify and arrange 
        for services described in subparagraph (B). Nothing in this 
        subsection shall be construed as requiring a State (under the 
        State plan or otherwise) to provide all the services specified 
        in such a plan.
    (c) Mandatory Coverage of Personal Assistance Services.--The State 
plan shall include, in the array of services made available to each 
category of individuals with disabilities, both agency-administered and 
consumer-directed personal assistance services (as defined in 
subsection (g)).
    (d) Additional Services.--
            (1) Types of services.--Subject to subsection (e), services 
        available under a State plan under this part shall include any 
        (or all) of the following:
                    (A) Homemaker and chore assistance.
                    (B) Home modifications.
                    (C) Respite services.
                    (D) Assistive devices, as defined in the Technology 
                Related Assistance for Individuals with Disabilities 
                Act.
                    (E) Adult day services.
                    (F) Habilitation and rehabilitation.
                    (G) Supported employment.
                    (H) Home health services.
                    (I) Transportation.
                    (J) Any other care or assistive services (approved 
                by the Secretary) that the State determines will help 
                individuals with disabilities to remain in their homes 
                and communities.
            (2) Criteria for selection of services.--The State plan 
        shall specify--
                    (A) the methods and standards used to select the 
                types, and the amount, duration, and scope, of services 
                to be covered under the plan and to be available to 
                each category of individuals with disabilities, and
                    (B) how the types, and the amount, duration, and 
                scope, of services specified, within the limits of 
                available funding, provide substantial assistance in 
                living independently to individuals within each of the 
                4 categories of individuals with disabilities.
        Not later than the date on which the plan is fully phased-in, 
        the State shall ensure that a full array of services is 
        available to meet the needs of individuals with disabilities.
    (e) Exclusions and Limitations.--A State plan may not provide for 
coverage of--
            (1) room and board,
            (2) services furnished in a hospital, nursing facility, 
        intermediate care facility for the mentally retarded, or other 
        institutional setting specified by the Secretary, or
            (3) items and services to the extent coverage is provided 
        for the individual under a health plan or the medicare program.
    (f) Payment for Services.--A State plan may provide for the use 
of--
            (1) vouchers,
            (2) cash payments directly to individuals with 
        disabilities,
            (3) capitation payments to health plans, and
            (4) payment to providers,
to pay for covered services.
    (g) Personal Assistance Services.--
            (1) In general.--In this section, the term ``personal 
        assistance services'' means those services specified under the 
        State plan as personal assistance services and shall include at 
        least hands-on and standby assistance, supervision, and cueing 
        with activities of daily living and for people with primarily 
        mental, cognitive or sensory impairments such instrumental 
        activities of daily living as deemed necessary or appropriate, 
        whether agency-administered or consumer-directed (as defined in 
        paragraph (2)). Such services shall include services that are 
        determined to be necessary to help all categories of 
        individuals with disabilities, regardless of their age or the 
        nature of their disabling conditions,
            (2) Consumer-directed.--In this part:
                    (A) In general.--The term ``consumer-directed'' 
                means, with reference to personal assistance services 
                or the provider of such services, services that are 
                provided by an individual who is selected and managed 
                (and, at the option of the service recipient, trained) 
                by the individual receiving the services.
                    (B) State responsibilities.--A State plan shall 
                ensure that where services are provided in a consumer-
                directed manner, the State shall create or contract 
                with an entity, other than the consumer or the 
                individual provider, to--
                            (i) inform both recipients and providers of 
                        rights and responsibilities under all 
                        applicable Federal labor and tax law; and
                            (ii) assume responsibility for providing 
                        effective billing, payments for services, tax 
                        withholding, unemployment insurance, and 
                        workers' compensation coverage, and act as the 
                        employer of the home care provider.
                    (C) Right of consumers.--Notwithstanding the State 
                responsibilities described in subparagraph (B), service 
                recipients, and, where appropriate, their designated 
                representative, shall retain the right to independently 
                select, hire, terminate, and direct (including manage, 
                train, schedule, and verify services provided) the work 
                of a home care provider.
            (3) Agency administered.--The term ``agency-administered'' 
        means, with respect to such services, services that are not 
        consumer-directed.

SEC. 2105. COST SHARING.

    (a) No Cost Sharing for Poorest.--The State plan may not impose any 
cost sharing for individuals with income (as determined under 
subsection (c)) less than 150 percent of the official poverty level 
(referred to in section 1902(30)) applicable to a family of the size 
involved (determined without regard to section 1902(30)(B)).
    (b) Sliding Scale for Remainder.--The State plan shall impose cost 
sharing in the form of coinsurance (based on the amount paid under the 
State plan for a service)--
            (1) at a rate of 10 percent for individuals with 
        disabilities with income not less than 150 percent, and less 
        than 200 percent, of such official poverty line (as so 
        applied);
            (2) at a rate of 20 percent for such individuals with 
        income not less than 200 percent, and less than 250 percent, of 
        such official poverty line (as so applied); and
            (3) at a rate of 25 percent for such individuals with 
        income equal to at least 250 percent of such official poverty 
        line (as so applied).
    (c) Recommendation of the Secretary.--The Secretary shall make 
recommendations to the States as to how to reduce cost-sharing for 
individuals with extraordinary out-of-pocket costs for whom the cost-
sharing provisions of section 2105 could jeopardize their ability to 
take advantage of the services offered under this Act. The Secretary 
shall establish a methodology for reducing the cost-sharing burden for 
individuals with exceptionally high out-of-pocket costs under this Act.
    (d) Determination of Income for Purposes of Cost Sharing.--The 
State plan shall specify the process to be used to determine the income 
of an individual with disabilities for purposes of this section. Such 
standards shall include a uniform Federal definition of income and any 
allowable deductions from income.

SEC. 2106. QUALITY ASSURANCE AND SAFEGUARDS.

    (a) Minimum Requirements for Providers.--
            (1) In general.--Providers of home and community-based 
        services under this subtitle must, as a condition of 
        participation under this subtitle, meet such requirements for 
        quality assurance and safeguards as shall be established by the 
        Secretary under this section. Such requirements will include at 
        a minimum:
                    (A) Quality assurance.--Not later than January 1, 
                1995, the Secretary shall promulgate regulations 
                specifying how the States will ensure and monitor the 
                quality of services, including--
                            (i) safeguarding the health and safety of 
                        individuals with disabilities, including the 
                        use of periodic surveys of providers;
                            (ii) the minimum standards for agency 
                        providers, including certification, and how 
                        such standards will be enforced;
                            (iii) the minimum competency requirements, 
                        including education and training requirements, 
                        for agency provider employees who provide 
                        direct services under this part and how the 
                        competency of such employees will be enforced;
                            (iv) obtaining meaningful consumer input, 
                        including consumer surveys that measure the 
                        extent to which participants receive the 
                        services described in the plan of care and 
                        participant satisfaction with such services;
                            (v) participation in quality assurance 
                        activities; and
                            (vi) the role of existing State consumer 
                        protection and advocacy resources, particularly 
                        the long-term care ombudsman (under the Older 
                        Americans Act of 1965) and the Protection and 
                        Advocacy Agency (under the Developmental 
                        Disabilities Assistance and Bill of Rights Act) 
                        in assuring quality of services and protecting 
                        the rights of individuals with disabilities.
                    (B) Safeguards.--Not later than January 1, 1995, 
                the Secretary shall promulgate regulations providing 
                the following:
                            (i) Confidentiality.--The regulations shall 
                        provide safeguards which restrict the use of 
                        disclosure of information concerning applicants 
                        and beneficiaries to purposes directly 
                        connected with the administration of the plan 
                        (including performance reviews under this 
                        section).
                            (ii) Safeguards against abuse.--The 
                        regulations shall provide safeguards against 
                        physical, emotional, or financial abuse or 
                        exploitation (specifically including 
                        appropriate safeguards in cases where payment 
                        for program benefits is made by cash payment or 
                        vouchers given directly to individuals with 
                        disabilities.
            (2) No delegation to states.--The Secretary's authority 
        under this subsection shall not be delegated to States.
            (3) No prevention of more stringent requirements by states 
        .--Nothing in this section shall be construed as preventing 
        States from imposing requirements that are more stringent than 
        the requirements established by the Secretary under this 
        subsection.
    (b) Federal Standards.--The State plan shall adhere to Federal 
quality standards in the following areas:
            (1) Case review of a specified sample of client records.
            (2) Random home visits for a specified percentage of cases.
            (3) The mandatory reporting of abuse, neglect, or 
        exploitation.
            (4) The establishment of a formal client grievance 
        mechanism, including a fair hearing process.
            (5) State licensure or certification for agency providers 
        that offer home health services.
            (6) Minimum training requirements for agency-directed home 
        care workers.
            (7) The development of a registry of provider agencies or 
        home care workers against whom any complaints have been 
        sustained, which shall be available to the public.
            (8) Sanctions to be imposed on States or providers, 
        including disqualification from the program, if minimum 
        standards are not met.
            (9) Surveys of client satisfaction.
            (10) State optional training programs for informal 
        caregivers.
    (c) Funding.--A State that is entitled to a payment in accordance 
with section 2108 shall receive a separate allocation that may be 
expended only for client advocacy activities. The State may use such 
funds to augment the budgets of the long-term care ombudsman (under the 
Older Americans Act of 1965) and the Protection and Advocacy Agency 
(under the Developmental Disabilities Assistance and Bill of Rights 
Act) or may establish a separate and independent agency to administer a 
new program designed to advocate for client rights.
    (d) Functions.--
            (1) In general.--A client advocacy office established under 
        this section shall--
                    (A) identify, investigate, and resolve complaints 
                that--
                            (i) are made by, or on behalf of, clients; 
                        and
                            (ii) relate to action, inaction, or 
                        decisions, that may adversely affect the 
                        health, safety, welfare, or rights of the 
                        clients (including the welfare and rights of 
                        the clients with respect to the appointment and 
                        activities of guardians and representative 
                        payees), of--
                                    (I) providers, or representatives 
                                of providers, of long-term care 
                                services;
                                    (II) public agencies; or
                                    (III) health and social service 
                                agencies;
                    (B) provide services to assist the clients in 
                protecting the health, safety, welfare, and rights of 
                the clients;
                    (C) inform the clients about means of obtaining 
                services provided by providers or agencies described in 
                subparagraph (A)(ii) or services described in 
                subparagraph (B);
                    (D) ensure that the clients have regular and timely 
                access to the services provided through the office and 
                that the clients and complainants receive timely 
                responses from representatives of the office to 
                complaints; and
                    (E) represent the interests of the clients before 
                governmental agencies and seek administrative, legal, 
                and other remedies to protect the health, safety, 
                welfare, and rights of the clients with regard to the 
                provisions of this title and related concerns under 
                this Act.
            (2) Contracts and arrangements.--
                    (A) In general.--Except as provided in subparagraph 
                (B), the State agency may establish and operate the 
                office, and carry out the program, directly, or by 
                contract or other arrangement with any public agency or 
                nonprofit private organization.
                    (B) Licensing and certification organizations; 
                associations.--The State agency may not enter into the 
                contract or other arrangement described in subparagraph 
                (A) with an agency or organization that is responsible 
                for licensing, certifying, or providing long-term care 
                services in the State.
    (e) Safeguards.--
            (1) Confidentiality.--The State plan shall provide 
        safeguards which restrict the use or disclosure of information 
        concerning applicants and beneficiaries to purposes directly 
        connected with the administration of the plan (including 
        performance reviews under section 2602).
            (2) Safeguards against abuse.--The State plans shall 
        provide safeguards against physical, emotional, or financial 
        abuse or exploitation (specifically including appropriate 
        safeguards in cases where payment for program benefits is made 
        by cash payments or vouchers given directly to individuals with 
        disabilities). All providers of services shall be required to 
        register with the State agency.
    (f) Issuance of Regulations.--Not later than 1 year after the date 
of enactment of this Act, the Secretary shall issue regulations 
implementing the quality provisions of this section.

SEC. 2107. ADVISORY GROUPS.

    (a) Federal Advisory Group.--
            (1) Establishment.--The Secretary shall establish an 
        advisory group, to advise the Secretary and States on all 
        aspects of the program under this part.
            (2) Composition.--The group shall be composed of 
        individuals with disabilities and their representatives, 
        providers, Federal and State officials, and local community 
        implementing agencies. A majority of its members shall be 
        individuals with disabilities and their representatives.
    (b) State Advisory Groups.--
            (1) In general.--Each State plan shall provide for the 
        establishment and maintenance of an advisory group to advise 
        the State on all aspects of the State plan under this part.
            (2) Composition.--Members of each advisory group shall be 
        appointed by the Governor (or other chief executive officer of 
        the State) and shall include individuals with disabilities and 
        their representatives, providers, State officials, and local 
        community implementing agencies. A majority of its members 
        shall be individuals with disabilities and their 
        representatives. The members of the advisory group shall be 
        selected from the those nominated as described in section 
        2107(b)(3).
            (3) Selection of members.--Each State shall establish a 
        process whereby all residents of the State, including 
        individuals with disabilities and their representatives, shall 
        be given the opportunity to nominate members to the advisory 
        group.
            (4) Particular concerns.--Each advisory group shall--
                    (A) before the State plan is developed, advise the 
                State on guiding principles and values, policy 
                directions, and specific components of the plan,
                    (B) meet regularly with State officials involved in 
                developing the plan, during the development phase, to 
                review and comment on all aspects of the plan,
                    (C) participate in the public hearings to help 
                assure that public comments are addressed to the extent 
                practicable,
                    (D) report to the Governor and make available to 
                the public any differences between the group's 
                recommendations and the plan,
                    (E) report to the Governor and make available to 
                the public specifically the degree to which the plan is 
                consumer-directed, and
                    (F) meet regularly with officials of the designated 
                State agency (or agencies) to provide advice on all 
                aspects of implementation and evaluation of the plan.

SEC. 2108. PAYMENTS TO STATES.

    (a) In General.--Subject to section 2102(a)(9)(D) (relating to 
limitation on payment for administrative costs), the Secretary, in 
accordance with the Cash Management Improvement Act, shall authorize 
payment to each State with a plan approved under this part, for each 
quarter (beginning on or after January 1, 1996), from its allotment 
under section 2109(b), an amount equal to--
            (1) the Federal matching percentage (as defined in 
        subsection (b)) of amount demonstrated by State claims to have 
        been expended during the quarter for home and community-based 
        services under the plan for individuals with disabilities; plus
            (2) an amount equal to 90 percent of the amount 
        demonstrated by the State to have been expended during the 
        quarter for quality assurance activities under the plan; plus
            (3) an amount equal to 90 percent of amount expended during 
        the quarter under the plan for activities (including 
        preliminary screening) relating to determination of eligibility 
        and performance of needs assessment; plus
            (4) an amount equal to 90 percent (or, beginning with 
        quarters in fiscal year 2003, 75 percent) of the amount 
        expended during the quarter for the design, development, and 
        installation of mechanical claims processing systems and for 
        information retrieval; plus
            (5) an amount equal to 90 percent (or, beginning with 
        quarters in fiscal year 2003, the Federal matching percentage) 
        of the amount expended during the quarter for infrastructure 
        development, as defined by the Secretary; plus
            (6) an amount equal to 50 percent of the remainder of the 
        amounts expended during the quarter as found necessary by the 
        Secretary for the proper and efficient administration of the 
        State plan; plus
            (7) an amount equal to .5 percent of the State's total 
        allotment for client advocacy activities described in section 
        2106(c).
    (b) Federal Matching Percentage.--
            (1) In general.--In subsection (a), the term ``Federal 
        matching percentage'' means, with respect to a State, the 
        reference percentage specified in paragraph (2) increased by 
        17.5 percentage points, except that the Federal matching 
        percentage shall in no case be less than 67.5 percent or more 
        than 95 percent.
            (2) Reference percentage.--
                    (A) In general.--The reference percentage specified 
                in this paragraph is 100 percent less the State 
                percentage specified in subparagraph (B), except that--
                            (i) the percentage under this paragraph 
                        shall in no case be less than 50 percent or 
                        more than 83 percent, and
                            (ii) the percentage for Puerto Rico, the 
                        Virgin Islands, Guam, the Northern Mariana 
                        Islands, and American Samoa shall be 50 
                        percent.
                    (B) State percentage.--The State percentage 
                specified in this subparagraph is that percentage which 
                bears the same ratio to 45 percent as the square of the 
                per capita income of such State bears to the square of 
                the per capita income of the continental United States 
                (including Alaska) and Hawaii.
    (c) Payments on Estimates with Retrospective Adjustments.--The 
method of computing and making payments under this section shall be as 
follows:
            (1) The Secretary shall, prior to the beginning of each 
        quarter, estimate the amount to be paid to the State under 
        subsection (a) for such quarter, based on a report filed by the 
        State containing its estimate of the total sum to be expended 
        in such quarter, and such other information as the Secretary 
        may find necessary.
            (2) From the allotment available therefore, the Secretary 
        shall provide for payment of the amount so estimated, reduced 
        or increased, as the case may be, by any sum (not previously 
        adjusted under this section) by which the Secretary finds that 
        the estimate of the amount to be paid the State for any prior 
        period under this section was greater or less than the amount 
        which should have been paid.
    (d) Application of Rules Regarding Limitations on Provider-Related 
Donations and Health Care Related Taxes.--The provisions of section 
1903(w) of the Social Security Act shall apply to payments to States 
under this section in the same manner as they apply to payments to 
States under section 1903(a) of such Act .

SEC. 2109. APPROPRIATION; ALLOTMENTS TO STATES.

    (a) Appropriation.--
            (1) Fiscal years 1996 through 2003.--Subject to paragraph 
        (5)(C), for purposes of this part, the appropriation authorized 
        under this part for each of fiscal years 1996 through 2003 is 
        the following:
                    (A) For fiscal year 1996, $3,900,000,000.
                    (B) For fiscal year 1997, $6,800,000,000.
                    (C) For fiscal year 1998, $9,600,000,000.
                    (D) For fiscal year 1999, $12,900,000,000.
                    (E) For fiscal year 2000, $16,400,000,000.
                    (F) For fiscal year 2001, $23,400,000,000.
                    (G) For fiscal year 2002, $31,100,000,000.
                    (H) For fiscal year 2003, $33,600,000,000.
            (2) Subsequent fiscal years.--For purposes of this part, 
        the total Federal budget for State plans under this part for 
        each fiscal year after fiscal year 2003 is the total Federal 
        budget under this subsection for the preceding fiscal year 
        multiplied by--
                    (A) a factor (described in paragraph (3)) 
                reflecting the change in the CPI for the fiscal year, 
                and
                    (B) a factor (described in paragraph (4)) 
                reflecting the change in the number of individuals with 
                disabilities for the fiscal year.
            (3) CPI increase factor.--For purposes of paragraph (2)(A), 
        the factor described in this paragraph for a fiscal year is the 
        ratio of--
                    (A) the annual average index of the consumer price 
                index for the preceding fiscal year, to--
                    (B) such index, as so measured, for the second 
                preceding fiscal year.
            (4) Disabled population factor.--For purposes of paragraph 
        (2)(B), the factor described in this paragraph for a fiscal 
        year is 100 percent plus (or minus) the percentage increase (or 
        decrease) change in the disabled population of the United 
        States (as determined for purposes of the most recent update 
        under subsection (b)(3)(D)).
            (5) Additional funds due to medicaid offsets.--
                    (A) In general.--Each participating State must 
                provide the Secretary with information concerning 
                offsets and reductions in the medicaid program 
                resulting from home and community-based services 
                provided disabled individuals under this part, that 
                would have been paid for such individuals under the 
                State medicaid plan but for the provision of similar 
                services under the program under this part. At the time 
                a State first submits its plan under this title and 
                before each subsequent fiscal year (through fiscal year 
                2003), the State also must provide the Secretary with 
                such budgetary information (for each fiscal year 
                through fiscal year 2003), as the Secretary determines 
                to be necessary to carry out this paragraph.
                    (B) Reports.--Each State with a program under this 
                part shall submit such reports to the Secretary as the 
                Secretary may require in order to monitor compliance 
                with subparagraph (A). The Secretary shall specify the 
                format of such reports and establish uniform data 
                reporting elements.
                    (C) Adjustments to federal budget.--
                            (i) In general.--For each fiscal year 
                        (beginning with fiscal year 1996 and ending 
                        with fiscal year 2003) and based on a review of 
                        information submitted under subparagraph (A), 
                        the Secretary shall determine the amount by 
                        which the total Federal budget under subsection 
                        (a) will increase. The amount of such increase 
                        for a fiscal year shall be limited to the 
                        reduction in Federal expenditures of medical 
                        assistance (as determined by Secretary) that 
                        would have been made under title XIX of the 
                        Social Security Act for home and community 
                        based services for disabled individuals but for 
                        the provision of similar services under the 
                        program under this part.
                            (ii) Annual publication.--The Secretary 
                        shall publish before the beginning of such 
                        fiscal year, the revised total Federal budget 
                        under this subsection for such fiscal year (and 
                        succeeding fiscal years before fiscal year 
                        2003).
                    (D) No duplicate payment.--No payment may be made 
                to a State under this section for any services to the 
                extent that the State received payment for such 
                services under section 1903(a) of the Social Security 
                Act or title I of this Act.
                    (E) Construction.--Nothing in this subsection shall 
                be construed as requiring States to determine 
                eligibility for medical assistance under the State 
                medicaid plan on behalf of individuals receiving 
                assistance under this part.
    (b) Allotments to States.--
            (1) In general.--The Secretary shall allot to each State 
        for each fiscal year an amount that bears the same ratio to the 
        total Federal budget for the fiscal year (specified under 
        paragraph (1) or (2) of subsection (a)) as the State allotment 
        factor (under paragraph (2) for the State for the fiscal year) 
        bears to the sum of such factors for all States for that fiscal 
        year. One-half of one percent of the allotment provided under 
        this paragraph shall be used exclusively for client advocacy 
        activities.
            (2) State allotment factor.--
                    (A) In general.--For each State for each fiscal 
                year, the Secretary shall compute a State allotment 
                factor equal to the sum of--
                            (i) the base allotment factor (specified in 
                        subparagraph (B)), and
                            (ii) the low income allotment factor 
                        (specified in subparagraph (C)),
                for the State for the fiscal year.
                    (B) Base allotment factor.--The base allotment 
                factor, specified in this subparagraph, for a State for 
                a fiscal year is equal to the product of the following:
                            (i) Number of individuals with 
                        disabilities.--The number of individuals with 
                        disabilities in the State (determined under 
                        paragraph (3)) for the fiscal year.
                            (ii) 80 percent of the national per capita 
                        budget.--80 percent of the national average per 
                        capita budget amount (determined under 
                        paragraph (4)) for the fiscal year.
                            (iii) Wage adjustment factor.--The wage 
                        adjustment factor (determined under paragraph 
                        (5)) for the State for the fiscal year.
                            (iv) Federal matching rate.--The Federal 
                        matching rate (determined under section 
                        2108(b)) for the fiscal year.
                    (C) Low income allotment factor.--The low income 
                allotment factor, specified in this subparagraph, for a 
                State for a fiscal year is equal to the product of the 
                following:
                            (i) Number of individuals with 
                        disabilities.--The number of individuals with 
                        disabilities in the State (determined under 
                        paragraph (3)) for the fiscal year.
                            (ii) 10 percent of the national per capita 
                        budget.--10 percent of the national average per 
                        capita budget amount (determined under 
                        paragraph (4)) for the fiscal year.
                            (iii) Wage adjustment factor.--The wage 
                        adjustment factor (determined under paragraph 
                        (5)) for the State for the fiscal year.
                            (iv) Federal matching rate.--The Federal 
                        matching rate (determined under section 
                        2108(b)) for the fiscal year.
                            (v) Low income index.--The low income index 
                        (determined under paragraph (6)) for the State 
                        for the preceding fiscal year.
            (3) Number of individuals with disabilities.--The number of 
        individuals with disabilities in a State for a fiscal year 
        shall be determined as follows:
                    (A) Base.--The Secretary shall determine the number 
                of individuals in the State by age, sex, and income 
                category, based on the 1990 decennial census, adjusted 
                (as appropriate) by the March 1994 current population 
                survey.
                    (B) Disability prevalence level by population 
                category.--The Secretary shall determine, for each such 
                age, sex, and income category, the national average 
                proportion of the population of such category that 
                represents individuals with disabilities. The Secretary 
                may conduct periodic surveys in order to determine such 
                proportions.
                    (C) Base disabled population in a state.--The 
                number of individuals with disabilities in a State in 
                1994 is equal to the sum of the products, for such each 
                age, sex, and income category, of--
                            (i) the population of individuals in the 
                        State in the category (determined under 
                        subparagraph (A)), and
                            (ii) the national average proportion for 
                        such category (determined under subparagraph 
                        (B)).
                    (D) Update.--The Secretary shall determine the 
                number of individuals with disabilities in a State in a 
                fiscal year equal to the number determined under 
                subparagraph (C) for the State increased (or decreased) 
                by the percentage increase (or decrease) in the 
                disabled population of the State as determined under 
                the current population survey from 1994 to the year 
                before the fiscal year involved.
            (4) National per capita budget amount.--The national 
        average per capita budget amount, for a fiscal year, is--
                    (A) the total Federal budget specified under 
                subsection (a) for the fiscal year; divided by
                    (B) the sum, for the fiscal year, of the numbers of 
                individuals with disabilities (determined under 
                paragraph (3)) for all the States for the fiscal year.
            (5) Wage adjustment factor.--The wage adjustment factor, 
        for a State for a fiscal year, is equal to the ratio of--
                    (A) the average hourly wages for service workers 
                (other than household or protective services) in the 
                State, to
                    (B) the national average hourly wages for service 
                workers (other than household or protective services).
        The hourly wages shall be determined under this paragraph based 
        on data from the most recent decennial census for which such 
        data are available.
            (6) Low income index.--The low income index for each State 
        for a fiscal year is the ratio, determined for the preceding 
        fiscal year, of--
                    (A) the percentage of the State's population that 
                has income below 150 percent of the poverty level, to
                    (B) the percentage of the population of the United 
                States that has income below 150 percent of the poverty 
                level.
        Such percentages shall be based on data from the most recent 
        decennial census for which such data are available, adjusted by 
        data from the most recent current population survey as 
        determined appropriate by the Secretary.
    (c) Carry-Over.--With respect to fiscal years 1996 through 2003, a 
State shall be permitted to carry-over not more than 25 percent of the 
allotment of such State for expenditures in the subsequent year.
    (d) State Entitlement.--This part constitutes budget authority in 
advance of appropriations Acts, and represents the obligation of the 
Federal Government to provide for the payment to States of amounts 
described in subsection (a).

SEC. 2110. FEDERAL EVALUATIONS.

    Not later than December 31, 2000, December 31, 2003, and each 
December 31 thereafter, the Secretary shall provide to Congress 
analytical reports that evaluate--
            (1) the extent to which individuals with low incomes and 
        disabilities are equitably served;
            (2) the adequacy and equity of service plans to individuals 
        with similar levels of disability across States;
            (3) the comparability of program participation across 
        States, described by level and type of disability; and
            (4) the ability of service providers to sufficiently meet 
        the demand for services.
    Not later than 18 months after the date of enactment of this Act, 
the Secretary shall report to Congress concerning the feasibility of 
providing reimbursement under health plans and other payers of health 
services for full geriatric assessment, when recommended by a 
physician.

   Subpart B--State Programs for Extended Services for Children With 
                       Special Health Care Needs

SEC. 2111. STATE PROGRAMS FOR EXTENDED SERVICES FOR CHILDREN WITH 
              SPECIAL HEALTH CARE NEEDS.

    (a) Purpose.--The purpose of this subpart is to provide financial 
assistance to the States to assist each State in developing and 
implementing, or expanding and enhancing, a family-centered, culturally 
competent, community-centered, comprehensive statewide system of 
extended services and benefits for children with special health care 
needs.
    (b) Payment.--Each State that has a plan for the provision of 
extended services for children with special health care needs submitted 
to and approved by the Secretary under section 2114 is entitled to 
payment subject to section 2117. Approval of a plan shall be contingent 
upon adequacy of funding and fulfillment of criteria established and 
published by the Secretary.

SEC. 2112. EXTENDED SERVICES COVERED UNDER THE STATE PLAN.

    (a) Specification.--
            (1) In general.--Subject to the succeeding provisions of 
        this section, the State plan under this subpart shall specify--
                    (A) the extended services available under the plan 
                to eligible children, and
                    (B) any limits with respect to such services.
            (2) Flexibility in meeting individual needs.--Subject to 
        subsection (e)(1)(B), such services may be delivered in an 
        individual's home, a range of community residential 
        arrangements, or outside the home.
    (b) Requirement for Needs Assessment and Plan of Care.--
            (1) In general.--The State plan shall provide for extended 
        services to an eligible child only if--
                    (A) a comprehensive assessment of the child's need 
                for home and community-based services (regardless of 
                whether all needed services are available under the 
                plan) has been made,
                    (B) an individualized plan of care based on such 
                assessment is developed, and
                    (C) such services are provided consistent with such 
                plan of care.
            (2) Involvement of individuals.--The individualized plan of 
        care under paragraph (1)(B) for an eligible child shall--
                    (A) be developed by qualified individuals 
                (specified under the State plan),
                    (B) be developed and implemented in close 
                consultation with the child's designated representative 
                and the child where appropriate,
                    (C) be approved by the child's designated 
                representative and the child where appropriate, and
                    (D) be reviewed and updated not less often than 
                every 6 months.
            (3) Plan of care.--The plan of care under paragraph (1)(B) 
        shall--
                    (A) specify which services specified under the 
                individual plan will be provided under the State plan 
                under this part,
                    (B) identify (to the extent possible) how the child 
                will be provided any services specified under the plan 
                of care and not provided under the State plan, and
                    (C) specify how the provision of services to the 
                child under the plan will be coordinated with the 
                provision of other health care services to the child.
        The State shall make reasonable efforts to identify and arrange 
        for services described in subparagraph (B). Nothing in this 
        subsection shall be construed as requiring a State (under the 
        State plan or otherwise) to provide all the services specified 
        in such a plan.
    (c) Extended Services Covered Under the State Plan.--
            (1) In general.--The State plan shall include the following 
        extended services:
                    (A) Developmentally appropriate personal assistance 
                services that are family centered and provided in a 
                culturally competent manner, and which meet the 
                standards of 2104(g).
                    (B) Care management.
                    (C) Homemaker and chore assistance.
                    (D) Home modifications.
                    (E) Respite services.
                    (F) Assistive technology devices and assistive 
                technology services as defined in the Technology 
                Related Assistance for Individuals with Disabilities 
                Act.
                    (G) Habilitation and rehabilitation.
                    (H) Home health services.
                    (I) Transportation.
                    (J) Any other care or assistive services (approved 
                by the Secretary) that the State determines will help 
                maximize a child's ability to function independently, 
                appropriately, and effectively in an age-appropriate 
                manner, or will facilitate the caregiver's ability to 
                care for the child outside of an institution.
            (2) Criteria for selection of services.--The State plan 
        shall specify--
                    (A) the methods and standards used to select the 
                types, and the amount, duration, and scope, of services 
                to be covered under the plan and to be available to 
                eligible children, and
                    (B) how the types, and the amount, duration, and 
                scope, of services specified meet the needs of eligible 
                children.
    (d) No Individual Entitlement.--Nothing in this section shall be 
construed to create an entitlement for eligible children.
    (e) Exclusions and Limitations.--
            (1) In general.--A State plan may not provide for coverage 
        of--
                    (A) room and board,
                    (B) services furnished in a hospital, nursing 
                facility, intermediate care facility for the mentally 
                retarded, or other institutional setting specified by 
                the Secretary, or
                    (C) items and services for which the child may 
                receive payment under title I or title IV of this Act.
    (f) Payment for Services.--A State plan may provide for the use 
of--
            (1) vouchers,
            (2) cash payments directly to a child's designated 
        representative,
            (3) capitation payments to health plans, and
            (4) payment to providers,
to pay for covered services.

SEC. 2113. CHILDREN ELIGIBLE FOR SERVICES.

    (a) Eligibility Criteria.--
            (1) In general.--Children with special health care needs 
        shall be eligible for extended services and benefits under this 
        subpart.
            (2) Child with special health care needs.--As used in this 
        subpart, the term ``child with special health care needs'' 
        means an individual between the ages of birth to 21 years who--
                    (A) is not eligible for medical assistance under 
                title IV of this Act;
                    (B) has a significant functional limitation under 
                paragraph (3); and
                    (C) is in need of extended services under paragraph 
                (4).
            (3) Significant Functional Limitation.--
                    (A) In general.--As used in this subpart, the term 
                ``significant functional limitation'' means--
                            (i) in the case of an individual 6 years of 
                        age or older, a significant physical or mental 
                        impairment as defined pursuant to State policy 
                        to the extent that such policy is established 
                        without regard to type of disability; and
                            (ii) in the case of infants and young 
                        children, birth to age 5, inclusive, a 
                        substantial developmental delay or specific 
                        congenital or acquired conditions with a high 
                        probability of resulting in a disability if 
                        services are not provided.
                    (B) Presumptive significant functional 
                limitation.--An individual who has a disability or who 
                is blind pursuant to the eligibility requirements of 
                title XVI of the Social Security Act (42 U.S.C. 1381 et 
                seq.) shall be considered to have--
                            (i) in the case of an individual 6 years of 
                        age or older, a significant physical or mental 
                        impairment as defined pursuant to State policy 
                        to the extent that such policy is established 
                        without regard to type of disability; and
                            (ii) in the case of infants and young 
                        children, birth to age 5, inclusive, a 
                        substantial developmental delay or specific 
                        congenital or acquired conditions with a high 
                        probability of resulting in a disability if 
                        services are not provided.
            (4) Child in need of extended services.--As used in this 
        subpart, the term ``child in need of extended services'' means 
        an individual between the ages of birth to 21 years of age who 
        requires services identified in section 2112(c) in order to 
        maximize or restore function, or prevent or limit disability.

SEC. 2114. APPLICATION AND ADMINISTRATION.

    (a) Application for State Participation.--
            (1) In general.--A State desiring a grant under this 
        subpart shall submit an application, as an addendum to the 
        State application under section 2102, identifying in the State 
        plan--
                    (A) the population to be served under this subpart;
                    (B) the manner in which funds made available would 
                be utilized, and the services to be provided;
                    (C) how the State will define individuals qualified 
                to develop individualized pediatric plans of care as 
                defined in section 2112(b)(3); and
                    (D) how the State will assure that the range of 
                services available under section 2112 will also be 
                available to individuals with disabilities under the 
                age of 21 who are eligible for services under subpart A 
                to the maximum extent possible consistent with funds 
                available to carry out subpart A; and
                    (E) any other information the Secretary may 
                require.
            (2) Evaluation of program.--An applicant under this section 
        shall agree to provide an evaluation of the effectiveness, 
        including cost effectiveness when measurable, of offering the 
        benefits and services under the State plan to children with 
        special health care needs.
    (b) Number of Programs.--
            (1) Request for applications.--The Secretary shall publish 
        a request for applications under this section not later than 1 
        year after the date of the enactment of this Act.
            (2) Maximum number of grants.--The Secretary shall make 
        grants available under this subpart for the maximum number of 
        State programs, in accordance with the current funding level in 
        section 2117, that is compatible with services and benefits to 
        be offered under section 2112 for eligible children with 
        special health care needs residing in such State.
            (3) Formula.--The provisions of subsection (b)(2) shall 
        remain in effect through fiscal year 2003, at which time the 
        Secretary shall establish a formula by which to distribute 
        funds under this subpart, in accordance with section 2117, to 
        all States that have a plan approved in accordance with section 
        2111 to provide the benefits described in section 2112.
    (c) Administration.--
            (1) State agency.--The State shall designate a State agency 
        or designee to administer (or to supervise the administration 
        of) the program under this subpart.
            (2) Coordination.--The State agency or designee shall 
        specify how the agency or designee will coordinate its 
        activities with health plans and other service providers, and 
        with the agency administering subpart A.
            (3) Requirement for coordination of care.--The State 
        program under this subpart shall provide for coordinated 
        services and benefits as described in section 2112 to a family 
        with children with special health care needs integrating 
        services whenever possible in accordance with section 
        2102(a)(9)(C).

SEC. 2115. COST-SHARING.

    (a) No Cost Sharing for Poorest.--The State plan may not impose any 
cost sharing for individuals with income (as determined under 
subsection (c)) less than 150 percent of the official poverty level 
(referred to in section 1902(38)(A)) applicable to a family of the size 
involved (determined without regard to section 1902(38)(B)).
    (b) Sliding Scale for Remainder.--The State plan shall impose cost 
sharing in the form of coinsurance (based on the amount paid under the 
State plan for a service)--
            (1) at a rate of 10 percent for individuals with 
        disabilities with income not less than 150 percent, and less 
        than 200 percent, of such official poverty line (as so 
        applied);
            (2) at a rate of 20 percent for such individuals with 
        income not less than 200 percent, and less than 250 percent, of 
        such official poverty line (as so applied); and
            (3) at a rate of 25 percent for such individuals with 
        income equal to at least 250 percent of such official poverty 
        line (as so applied).
    (c) Determination of Income for Purposes of Cost Sharing.--The 
State plan shall specify the process to be used to determine the income 
of an individual with disabilities for purposes of this section. In 
making these income determinations, the State shall at a minimum comply 
with standards established by the Secretary. Such standards shall 
include a uniform Federal definition of income and shall allow 
deductions from income for disability-related expenses not covered 
under other titles of this Act as promulgated by the Secretary.
    (d) Recommendation for Reductions.--The Secretary shall make 
recommendations to the States as how to reduce cost-sharing based on 
income standards established under subsection (c) for individuals with 
extraordinary out of pocket costs for whom the cost-sharing provisions 
of section 2115 could jeopardize their ability to take advantage of the 
services offered under this Act.
    (e) Request for Payment Plan.--If copayments under subsection (b) 
for services utilized by the child pursuant to section 2112(b)(1) 
exceed 10 percent of the child's income or the income of their 
designated representative--
            (1) the child or child's designated representative may 
        request that the State provide a payment schedule for these 
        amounts that shall not exceed 10 percent of monthly income, and
            (2) States may accept such requests from individuals and 
        provide payment plans without interest or finance charges.

SEC. 2116. PROGRAM EVALUATION.

    The Secretary shall evaluate the programs under this subpart, and 
shall submit to Congress interim reports detailing the utilization, 
cost, and cost efficiency of the programs.

SEC. 2117. TOTAL FEDERAL BUDGET AND FEDERAL ALLOTMENT TO STATES.

    (a) Total Federal Budget.--The amount available to carry out State 
plans under this subpart shall be an amount equal to the total of a 2 
percent set-aside from the amounts for each fiscal year beginning in 
fiscal year 1996 pursuant to section 2109.
    (b) Federal Matching Percentage.--States shall contribute to the 
program an amount consistent with the requirements in section 
2108(b)(1).
    (c) Remaining Funds.--Funds remaining under subsection (a) at the 
end of each fiscal year shall be made available to States under section 
2108 for the following fiscal year.

    PART 2--LONG-TERM CARE INSURANCE IMPROVEMENT AND ACCOUNTABILITY

SEC. 2201. SHORT TITLE.

    This part may be cited as the ``Long-Term Care Insurance 
Improvement and Accountability Act''.

SEC. 2202. ESTABLISHMENT OF FEDERAL STANDARDS FOR LONG-TERM CARE 
              INSURANCE.

    The Public Health Service Act is amended by adding at the end 
thereof the following new title:

                     ``TITLE XXVII--LONG-TERM CARE

              ``PART 1--LONG-TERM CARE INSURANCE STANDARDS

       ``Subpart A--Promulgation of Standards and Model Benefits

``SEC. 2701. STANDARDS.

    ``(a) Application of Standards.--
            ``(1) NAIC.--
                    ``(A) In general.--The Secretary shall request that 
                the National Association of Insurance Commissioners 
                (hereafter in this part referred to as the `NAIC')--
                            ``(i) develop specific standards that 
                        incorporate the requirements of this part; and
                            ``(ii) report to the Secretary concerning 
                        such standards.
                    ``(B) Application.--If, within 12 months after the 
                date of the enactment of this part, the NAIC develops 
                the model standards under subparagraph (A)(i), the 
                Secretary shall have 60 days in which to determine 
                whether such standards implement the requirements of 
                this part. If such standards are approved by the 
                Secretary, they shall be the standards that apply as 
                provided in this part.
            ``(2) Default.--If the NAIC does not promulgate the model 
        standards under paragraph (1) by the deadline established in 
        that paragraph, the Secretary shall promulgate, within 12 
        months after such deadline, a regulation that provides 
        standards that incorporate the requirements of this part and 
        such standards shall apply as provided for in this part.
            ``(3) Relation to state law.--Nothing in this part shall be 
        construed as preventing a State from applying standards that 
        provide greater protection to policyholders of long-term care 
        insurance policies than the standards promulgated under this 
        part, except that such State standards may not be inconsistent 
        or in conflict with any of the requirements of this part.
    ``(b) Deadline for Application of Standards.--
            ``(1) In general.--Subject to paragraph (2), the date 
        specified in this subsection for a State is--
                    ``(A) the date the State adopts the standards 
                established under subsection (a)(1); or
                    ``(B) the date that is 1 year after the first day 
                of the first regular legislative session that begins 
                after the date such standards are first established 
                under subsection (a)(2);
        whichever is earlier.
            ``(2) State requiring legislation.--In the case of a State 
        which the Secretary identifies, in consultation with the NAIC, 
        as--
                    ``(A) requiring State legislation (other than 
                legislation appropriating funds) in order for the 
                standards established under subsection (a) to be 
                applied; but
                    ``(B) having a legislature which is not scheduled 
                to meet within 1 year following the beginning of the 
                next regular legislative session in which such 
                legislation may be considered;
        the date specified in this subsection is the first day of the 
        first calendar quarter beginning after the close of the first 
        legislative session of the State legislature that begins on or 
        after January 1, 1995. For purposes of the previous sentence, 
        in the case of a State that has a 2-year legislative session, 
        each year of such session shall be deemed to be a separate 
        regular session of the State legislature.
    ``(c) Items Included in Standards.--The standards promulgated under 
subsection (a) shall include--
            ``(1) minimum Federal standards for long-term care 
        insurance consistent with the provisions of this part;
            ``(2) standards for the enhanced protection of consumers 
        with long-term care insurance; and
            ``(3) procedures for the modification of the standards 
        established under paragraph (1) in a manner consistent with 
        future laws to expand existing Federal or State long-term care 
        benefits or establish a comprehensive Federal or State long-
        term care benefit program.
    ``(d) Consultation.--In establishing standards and models of 
benefits under this section, the Secretary shall, after consultation 
with representatives of carriers, consumer groups, and providers of 
long-term care services--
            ``(1) recommend the appropriate inflationary index to be 
        used with respect to the inflation protection benefit portion 
        of the standards;
            ``(2) recommend the uniform needs assessment mechanism to 
        be used in determining the eligibility of individuals for 
        benefits under a policy;
            ``(3) recommend appropriate standards for the regulation of 
        the insurance aspects of supported housing arrangements; and
            ``(4) perform such other activities as determined 
        appropriate by the Secretary.

    ``Subpart B--Establishment and Implementation of Long-Term Care 
                       Insurance Policy Standards

``SEC. 2711. IMPLEMENTATION OF POLICY STANDARDS.

    ``(a) In General.--
            ``(1) Regulatory program.--No long-term care policy (as 
        defined in section (2721)) may be issued, sold, or offered for 
        sale as a long-term care insurance policy in a State on or 
        after the date specified in section 2701(b) unless--
                    ``(A) the Secretary determines that the State has 
                established a regulatory program that--
                            ``(i) provides for the application and 
                        enforcement of the standards established under 
                        section 2701(a); and
                            ``(ii) complies with the requirements of 
                        subsection (b);
                by the date specified in section 2701(b), and the 
                policy has been approved by the State commissioner or 
                superintendent of insurance under such program; or
                    ``(B) if the State has not established such a 
                program, or if the State's regulatory program has been 
                decertified, the policy has been certified by the 
                Secretary (in accordance with such procedures as the 
                Secretary may establish) as meeting the standards 
                established under section 2701(a) by the date specified 
                in section 2701(b).
        For purposes of this subsection, the advertising or soliciting 
        with respect to a policy, directly or indirectly, shall be 
        deemed the offering for sale of the policy.
            ``(2) Review of state regulatory programs.--The Secretary 
        shall review regulatory programs described in paragraph (1)(A) 
        at least biannually to determine if they continue to provide 
        for the application and enforcement of the standards and 
        procedures established under section 2701(a) and (b). If the 
        Secretary determines that a State regulatory program no longer 
        meets such standards and requirements, before making a final 
        determination, the Secretary shall provide the State an 
        opportunity to adopt such a plan of correction as would permit 
        the program to continue to meet such standards and 
        requirements. If the Secretary makes a final determination that 
        the State regulatory program, after such an opportunity, fails 
        to meet such standards and requirements, the Secretary shall 
        assume responsibility under paragraph (1)(B) with respect to 
        certifying policies in the State and shall exercise full 
        authority under section 2701 for carriers, agents, or 
        associations or its subsidiary in the State plans in the State.
    ``(b) Additional Requirements for Approval of State Regulatory 
Programs.--For purposes of subsection (a)(1)(A)(ii), the requirements 
of this subsection for a State regulatory program are as follows:
            ``(1) Enforcement.--The enforcement under the program--
                    ``(A) shall be designed in a manner so as to secure 
                compliance with the standards within 30 days after the 
                date of a finding of noncompliance with such standards; 
                and
                    ``(B) shall provide for notice in the annual report 
                required under paragraph (5) to the Secretary of cases 
                where such compliance is not secured within such 30-day 
                period.
            ``(2) Process.--The enforcement process under each State 
        regulatory program shall provide for--
                    ``(A) procedures for individuals and entities to 
                file written, signed complaints respecting alleged 
                violations of the standards;
                    ``(B) responding to such complaints within 90 days;
                    ``(C) the investigation of--
                            ``(i) those complaints which have a 
                        reasonable probability of validity, and
                            ``(ii) such other alleged violations of the 
                        standards as the program finds appropriate; and
                    ``(D) the imposition of appropriate sanctions 
                (which include, in appropriate cases, the imposition of 
                a civil money penalty as provided for in section 2718) 
                in the case of a carrier, agent, or association or its 
                subsidiary determined to have violated the standards.
            ``(3) Private actions.--An individual may commence a civil 
        action in an appropriate State or United States district court 
        to enforce the provisions of this title and may be awarded 
        appropriate relief and reasonable attorney's fees.
            ``(4) Consumer access to compliance information.--
                    ``(A) In general.--A State regulatory program must 
                provide for consumer access to complaints filed with 
                the State commissioner or superintendent of insurance 
                with respect to long-term care insurance policies.
                    ``(B) Confidentiality.--The access provided under 
                subparagraph (A) shall be limited to the extent 
                required to protect the confidentiality of the identity 
                of individual policyholders.
            ``(5) Process for approval of premiums.--
                    ``(A) In general.--Each State regulatory program 
                shall--
                            ``(i) provide for a process for approving 
                        or disapproving proposed premium increases or 
                        decreases with respect to long-term care 
                        insurance policies; and
                            ``(ii) establish a policy for receipt and 
                        consideration of public comments before 
                        approving such a premium increase or decrease.
                    ``(B) Conditions for approval.--No premium increase 
                shall be approved (or deemed approved) under 
                subparagraph (A) unless the proposed increase is 
                accompanied by an actuarial memorandum which--
                            ``(i) includes a description of the 
                        assumptions that justify the increase, 
                        including a financial report on expenditures;
                            ``(ii) contains such information as may be 
                        required under the Standards; and
                            ``(iii) is made available to the public.
                    ``(C) Application.--Except as provided in 
                subparagraph (D), this paragraph shall not apply to a 
                group long-term care insurance policy issued to a group 
                described in section 4(E)(1) of the NAIC Long Term Care 
                Insurance Model Act (effective January 1991), except 
                that such group policy shall, pursuant to guidelines 
                developed by the NAIC, provide notice to policyholders 
                and certificate holders of any premium change under 
                such group policy.
                    ``(D) Exception.--Subparagraph (C) shall not apply 
                to--
                            ``(i) group conversion policies;
                            ``(ii) the group continuation feature of a 
                        group policy if the insurer separately rates 
                        employee and continuation coverages; and
                            ``(iii) group policies where the function 
                        of the employer is limited solely to collecting 
                        premiums (through payroll deductions or dues 
                        checkoff) and remitting them to the insurer.
                    ``(E) Construction.--Nothing in this paragraph 
                shall be construed as preventing the NAIC from 
                promulgating standards, or a State from enacting and 
                enforcing laws, with respect to premium rates or loss 
                ratios for all, including group, long-term care 
                insurance policies.
            ``(6) Annual reports.--Each State regulatory program shall 
        provide for annual reports to be submitted to the Secretary on 
        the implementation and enforcement of the standards in the 
        State, including information concerning violations in excess of 
        30 days.
            ``(7) Access to other information.--The State regulatory 
        program must provide for consumer access to actuarial 
        memoranda, including financial information, provided under 
        paragraph (4).
            ``(8) Default.--In the case of a State without a regulatory 
        program approved under subsection (a), the Secretary shall 
        provide for the enforcement activities described in subsection 
        (c).
    ``(c) Secretarial Enforcement Authority.--
            ``(1) In general.--The Secretary shall exercise authority 
        under this section in the case of a State that does not have a 
        regulatory program approved under this section.
            ``(2) Complaints and investigations.--The Secretary shall 
        establish procedures--
                    ``(A) for individuals and entities to file written, 
                signed complaints respecting alleged violations of the 
                requirements of this part;
                    ``(B) for responding on a timely basis to such 
                complaints; and
                    ``(C) for the investigation of--
                            ``(i) those complaints that have a 
                        reasonable probability of validity; and
                            ``(ii) such other alleged violations of the 
                        requirements of this part as the Secretary 
                        determines to be appropriate.
        In conducting investigations under this subsection, agents of 
        the Secretary shall have reasonable access necessary to enable 
        such agents to examine evidence of any carrier, agent, or 
        association or its subsidiary being investigated.
            ``(3) Hearings.--
                    ``(A) In general.--Prior to imposing an order 
                described in paragraph (4) against a carrier, agent, or 
                association or its subsidiary under this section for a 
                violation of the requirements of this part, the 
                Secretary shall provide the carrier, agent, association 
                or subsidiary with notice and, upon request made within 
                a reasonable time (of not less than 30 days, as 
                established by the Secretary by regulation) of the date 
                of the notice, a hearing respecting the violation.
                    ``(B) Conduct of hearing.--Any hearing requested 
                under subparagraph (A) shall be conducted before an 
                administrative law judge. If no hearing is so 
                requested, the Secretary's imposition of the order 
                shall constitute a final and unappealable order.
                    ``(C) Authority in hearings.--In conducting 
                hearings under this paragraph--
                            ``(i) agents of the Secretary and 
                        administrative law judges shall have reasonable 
                        access necessary to enable such agents and 
                        judges to examine evidence of any carrier, 
                        agent, or association or its subsidiary being 
                        investigated; and
                            ``(ii) administrative law judges, may, if 
                        necessary, compel by subpoena the attendance of 
                        witnesses and the production of evidence at any 
                        designated place or hearing.
                In case of contumacy or refusal to obey a subpoena 
                lawfully issued under this subparagraph and upon 
                application of the Secretary, an appropriate district 
                court of the United States may issue an order requiring 
                compliance with such subpoena and any failure to obey 
                such order may be punished by such court as a contempt 
                thereof.
                    ``(D) Issuance of orders.--If an administrative law 
                judge determines in a hearing under this paragraph, 
                upon the preponderance of the evidence received, that a 
                carrier, agent, or association or its subsidiary named 
                in the complaint has violated the requirements of this 
                part, the administrative law judge shall state the 
                findings of fact and issue and cause to be served on 
                such carrier, agent, association, or subsidiary an 
                order described in paragraph (4).
            ``(4) Cease and desist order with civil money penalty.--
                    ``(A) In general.--Subject to the provisions of 
                subparagraphs (B) through (F), an order under this 
                paragraph--
                            ``(i) shall require the agent, association 
                        or its subsidiary, or a carrier--
                                    ``(I) to cease and desist from such 
                                violations; and
                                    ``(II) to pay a civil penalty in an 
                                amount not to exceed $15,000 in the 
                                case of each agent, and not to exceed 
                                $25,000 for each association or its 
                                subsidiary or a carrier for each such 
                                violation; and
                            ``(ii) may require the agent, association 
                        or its subsidiary, or a carrier to take such 
                        other remedial action as is appropriate.
                    ``(B) Corrections within 30 days.--No order shall 
                be imposed under this paragraph by reason of any 
                violation if the carrier, agent, or association or its 
                subsidiary establishes to the satisfaction of the 
                Secretary that--
                            ``(i) such violation was due to reasonable 
                        cause and was not intentional and was not due 
                        to willful neglect; and
                            ``(ii) such violation is corrected within 
                        the 30-day period beginning on the earliest 
                        date the carrier, agent, association, or 
                        subsidiary knew, or exercising reasonable 
                        diligence could have known, that such a 
                        violation was occurring.
                    ``(C) Waiver by secretary.--In the case of a 
                violation under this part that is due to reasonable 
                cause and not to willful neglect, the Secretary may 
                waive part or all of the civil money penalty imposed 
                under subparagraph (A)(i)(II) to the extent that 
                payment of such penalty would be grossly excessive 
                relative to the violation involved and to the need for 
                deterrence of violations.
                    ``(D) Administrative appellate review.--The 
                decision and order of an administrative law judge under 
                this paragraph shall become the final agency decision 
                and order of the Secretary unless, within 30 days, the 
                Secretary modifies or vacates the decision and order, 
                in which case the decision and order of the Secretary 
                shall become a final order under this paragraph.
                    ``(E) Judicial review.--A carrier, agent, or 
                association or its subsidiary or any other individual 
                adversely affected by a final order issued under this 
                paragraph may, within 45 days after the date the final 
                order is issued, file a petition in the Court of 
                Appeals for the appropriate circuit for review of the 
                order.
                    ``(F) Enforcement of orders.--If a carrier, agent, 
                or association or its subsidiary fails to comply with a 
                final order issued under this paragraph against the 
                carrier, agent, association or subsidiary after 
                opportunity for judicial review under subparagraph (E), 
                the Secretary shall file a suit to seek compliance with 
                the order in any appropriate district court of the 
                United States. In any such suit, the validity and 
                appropriateness of the final order shall not be subject 
                to review.

``SEC. 2712. REGULATION OF SALES PRACTICES.

    ``(a) Duty of Good Faith and Fair Dealing.--
            ``(1) In general.--Each agent (as defined in section 2733) 
        or association that is selling or offering for sale a long-term 
        care insurance policy has the duty of good faith and fair 
        dealing to the purchaser or potential purchaser of such a 
        policy.
            ``(2) Policy replacement form.--With respect to any person 
        who elects to replace or effect a change in a long-term care 
        insurance policy, the individual that is selling such policy 
        shall ensure that such person completes a policy replacement 
        form developed by the NAIC. A copy of such form shall be 
        provided to such person and additional copies shall be 
        delivered by the selling individual to the old policy issuer 
        and the new issuer and kept on file for inspection by the State 
        regulatory agency.
            ``(3) Prohibited practices.--An agent or association is 
        considered to have violated paragraph (1) if the agent or 
        association engages in any of the following practices:
                    ``(A) Twisting.--Knowingly making any misleading 
                representation (including the inaccurate completion of 
                medical histories) or incomplete or fraudulent 
                comparison of any long-term care insurance policy or 
                insurers for the purpose of inducing, or tending to 
                induce, any person to retain or effect a change with 
                respect to a long-term care insurance policy.
                    ``(B) High pressure tactics.--Employing any method 
                of marketing having the effect of, or intending to, 
                induce the purchase of long-term care insurance policy 
                through force, fright, threat or undue pressure, 
                whether explicit or implicit.
                    ``(C) Cold lead advertising.--Making use directly 
                or indirectly of any method of marketing which fails to 
                disclose in a conspicuous manner that a purpose of the 
                method of marketing is solicitation of insurance and 
                that contact will be made by an insurance agent or 
                insurance company.
                    ``(D) Others.--Engaging in such other practices 
                determined inappropriate under guidelines issued by the 
                NAIC.
    ``(b) Financial Standards.--The NAIC shall develop recommended 
financial minimum standards (including both income and asset criteria) 
for the purpose of advising individuals as to the costs and amounts of 
insurance needed when considering the purchase of a long-term care 
insurance policy.
    ``(c) Prohibition of Sale or Issuance to Medicaid Beneficiaries.--
An agent, an association, or a carrier may not knowingly sell or issue 
a long-term care insurance policy to an individual who is eligible for 
medical assistance under title XIX of the Social Security Act.
    ``(d) Prohibition of Sale or Issuance of Duplicate Service Benefit 
Policies.--An agent, association or its subsidiary, or a carrier may 
not sell or issue a service-benefit long-term care insurance policy to 
an individual--
            ``(1) knowing that the policy provides for coverage that 
        duplicates coverage already provided in another service-benefit 
        long-term care insurance policy held by such individual (unless 
        the policy is intended to replace such other policy); or
            ``(2) for the benefit of an individual unless the 
        individual (or a representative of the individual) provides a 
        written statement to the effect that the coverage--
                    ``(A) does not duplicate other coverage in effect 
                under a service-benefit long-term care insurance 
                policy; or
                    ``(B) will replace another service-benefit long-
                term care insurance policy.
In this subsection, the term `service-benefit long-term care insurance 
policy' means a long-term care insurance policy which provides for 
benefits based on the type and amount of services furnished.
    ``(e) Prohibition Based on Eligibility for Other Benefits.--A 
carrier may not sell or issue a long-term care insurance policy that 
reduces, limits or coordinates the benefits provided under the policy 
on the basis that the policyholder has or is eligible for other long-
term care insurance coverage or benefits.
    ``(f) Provision of Outline of Coverage.--No agent, association or 
its subsidiary, or carrier may sell or offer for a sale a long-term 
care insurance policy without providing to every individual purchaser 
or potential purchaser (or representative) an outline of coverage that 
complies with the standards established under section 2701(a).
    ``(g) Penalties.--Any agent who sells, offers for sale, or issues a 
long-term care insurance policy in violation of this section may be 
imprisoned not more than 5 years, or fined in accordance with title 18, 
United States Code, and, in addition, is subject to a civil money 
penalty of not to exceed $15,000 for each such violation. Any 
association or its subsidiary or carrier that sells, offers for sale, 
or issues a long-term care insurance policy in violation of this 
section may be fined in accordance with title 18, United States Code, 
and in addition, is subject to a civil money penalty of not to exceed 
$25,000 for each violation. Nothing in this subsection shall be 
construed as preempting or otherwise limiting the penalties that may be 
imposed by a State for conduct that violates this section.
    ``(h) Agent Training and Certification Requirements.--The NAIC, 
shall establish requirements for long-term care insurance agent 
training and certification that--
            ``(1) specify requirements for training insurance agents 
        who desire to sell or offer for sale long-term care insurance 
        policies; and
            ``(2) specify procedures for certifying and recertifying 
        agents who have completed such training and who are as 
        qualified to sell or offer for sale long-term care insurance 
        policies.

``SEC. 2713. ADDITIONAL RESPONSIBILITIES FOR CARRIERS.

    ``(a) Refund of Premiums.--If an application for a long-term care 
insurance policy (or for a certificate under a group long-term care 
insurance policy) is denied or an applicant returns a policy or 
certificate within 30 days of the date of its issuance pursuant to 
subsection 2717, the carrier shall refund directly to the applicant, or 
in the case of an employer to whomever remits the premium, and not by 
delivery by the agent, not later than 30 days after the date of the 
denial or return, any premiums paid with respect to such a policy (or 
certificate).
    ``(b) Mailing of Policy.--If an application for a long-term care 
insurance policy (or for a certificate under a group long-term care 
insurance policy) is approved, the carrier shall provide every 
individual applicant the policy (or certificate) of insurance and 
outline of coverage not later than 30 days after the date of the 
approval.
    ``(c) Information on Denials of Claims.--If a claim under a long-
term care insurance policy is denied, the carrier shall, within 15 days 
of the date of a written request by the policyholder or certificate 
holder (or representative)--
            ``(1) provide a written explanation of the reasons for the 
        denial;
            ``(2) make available all medical and patient records 
        directly relating to such denial; and
            ``(3) provide a written explanation of the manner in which 
        to appeal the denial.
Except as provided in subsection (e) of section 2715, no claim under 
such a policy may be denied on the basis of a failure to disclose a 
condition at the time of issuance of the policy if the application for 
the policy failed to request information respecting the condition.
    ``(d) Reporting of Information.--A carrier that issues one or more 
long-term care insurance policies shall periodically (not less often 
than annually) report, in a form and in a manner determined by the 
NAIC, to the Commissioner, superintendent or director of insurance of 
each State in which the policy is delivered, and shall make available 
to the Secretary, upon request, information in a form and manner 
determined by the NAIC concerning--
            ``(1) the long-term care insurance policies of the carrier 
        that are in force;
            ``(2) the most recent premiums for such policies and the 
        premiums imposed for such policies since their initial 
        issuance;
            ``(3) the lapse rate, replacement rate, and rescission 
        rates by policy;
            ``(4) the names of that 10 percent of its agents that--
                    ``(A) have the greatest lapse and replacement rate; 
                and
                    ``(B) have produced at least $50,000 of long-term 
                care insurance sales in the previous year; and
            ``(5) the claims denied (expressed as a number and as a 
        percentage of claims submitted) by policy.
Information required under this subsection shall be reported in a 
format specified in the standards established under section 2701(a). 
For purposes of paragraph (3), there shall be included (but reported 
separately) data concerning lapses due to the death of the 
policyholder. For purposes of paragraph (4), there shall not be 
included as a claim any claim that is denied solely because of the 
failure to meet a deductible, waiting period, or exclusionary period.
    ``(e) Standards on Compensation for Sale of Policies.--
            ``(1) In general.--A carrier that issues one or more long-
        term care insurance policies may provide a commission or other 
        compensation to an agent or other representative for the sale 
        of such a policy only if the first year commission or other 
        first year compensation to be paid does not exceed 200 percent 
        of the commission or other compensation paid for selling or 
        servicing the policy in the second year, or if the first year 
        commission or other compensation to be paid does not exceed 50 
        percent of the premium paid on the first year policy, until the 
        NAIC promulgates mandatory standards concerning compensation 
        for the sale of such policies.
            ``(2) Subsequent years.--The commission or other 
        compensation provided for the sale of long-term care insurance 
        policies in years subsequent to the first year of the policy 
        shall be the same as that provided in the second subsequent 
        year and shall be provided for no fewer than 5 subsequent 
        years.
            ``(3) Limitation.--No carrier shall provide compensation to 
        its agents for the sale of a long-term care insurance policy 
        and no agent shall receive compensation greater than the 
        renewal compensation payable by the replacing carrier on 
        renewal policies if an existing policy is replaced.
            ``(4) Compensation defined.--As used in this subsection, 
        the term `compensation' includes pecuniary or nonpecuniary 
        remuneration of any kind relating to the sale or renewal of the 
        policy, including but not limited to deferred compensation, 
        bonuses, gifts, prizes, awards, and finders fees.

``SEC. 2714. RENEWABILITY STANDARDS FOR ISSUANCE, AND BASIC FOR 
              CANCELLATION OF POLICIES.

    ``(a) In General.--No long-term care insurance policy may be 
canceled or nonrenewed for any reason other than nonpayment of premium, 
material misrepresentation or fraud.
    ``(b) Continuation and Conversion Rights for Group Policies.--
            ``(1) In general.--Each group long-term care insurance 
        policy shall provide covered individuals with a basis for 
        continuation or conversion in accordance with this subsection.
            ``(2) Basis for continuation.--For purposes of paragraph 
        (1), a policy provides a basis for continuation of coverage if 
        the policy maintains coverage under the existing group policy 
        when such coverage would otherwise terminate and which is 
        subject only to the continued timely payment of premium when 
        due. A group policy which restricts provision of benefits and 
        services to or contains incentives to use certain providers or 
        facility, may provide continuation benefits which are 
        substantially equivalent to the benefits of the existing group 
        policy.
            ``(3) Basis for conversion.--For purposes of paragraph (1), 
        a policy provides a basis for conversion of coverage if the 
        policy entitles each individual--
                    ``(A) whose coverage under the group policy would 
                otherwise be terminated for any reason; and
                    ``(B) who has been continuously insured under the 
                policy (or group policy which was replaced) for at 
                least 6 months before the date of the termination;
        to issuance of a policy providing benefits identical to, 
        substantially equivalent to, or in excess of, those of the 
        policy being terminated, without evidence of insurability.
            ``(4) Treatment of substantial equivalence.--In determining 
        under this subsection whether benefits are substantially 
        equivalent, consideration should be given to the difference 
        between managed care and non-managed care plans.
            ``(5) Group replacement of policies.--If a group long-term 
        care insurance policy is replaced by another long-term care 
        insurance policy purchased by the same policyholder, the 
        succeeding issuer shall offer coverage to all persons covered 
        under the old group policy on its date of termination. Coverage 
        under the new group policy shall not result in any exclusion 
        for preexisting conditions that would have been covered under 
        the group policy being replaced.
    ``(c) Standards for Issuance.--
            ``(1) In general.--
                    ``(A) Guarantee.--An agent, association or carrier 
                that sells or issues long-term care insurance policies 
                shall guarantee that such policies shall be sold or 
                issued to an individual, or eligible individual in the 
                case of a group plan, if such individual meets the 
                minimum medical underwriting requirements of such 
                policy.
                    ``(B) Premium for converted policy.--If a group 
                policy from which conversion is made is a replacement 
                for a previous group policy, the premium for the 
                converted policy shall be calculated on the basis of 
                the insured's age at the inception of coverage under 
                the group policy from which conversion is made. Where 
                the group policy from which conversion is made replaced 
                previous group coverage, the premium for the converted 
                policy shall be calculated on the basis of the 
                insured's age at inception of coverage under the group 
                policy replaced.
            ``(2) Upgrade for current policies.--The NAIC shall 
        establish standards, including those providing guidance on 
        medical underwriting and age rating, with respect to the access 
        of individuals to policies offering upgraded benefits.
            ``(3) Rate stabilization.--The NAIC shall establish 
        standards for premium rate stabilization.
    ``(d) Effect of Incapacitation.--
            ``(1) In general.--
                    ``(A) Prohibition.--Except as provided in paragraph 
                (2), a long-term care insurance policy in effect as of 
                the effective date of the standards established under 
                section 2701(a) may not be canceled for nonpayment if 
                the policy holder is determined by a long-term care 
                provider, physician or other health care provider, 
                independent of the issuer of the policy, to be 
                cognitively or mentally incapacitated so as to not make 
                payments in a timely manner.
                    ``(B) Reinstatement.--A long-term care policy shall 
                include a provision that provides for the reinstatement 
                of such coverage, in the event of lapse, if the insurer 
                is provided with proof of cognitive or mental 
                incapacitation. Such reinstatement option shall remain 
                available for a period of not less than 5 months after 
                termination and shall allow for the collection of past 
                due premium.
            ``(2) Permitted cancellation.--A long-term care insurance 
        policy may be canceled under paragraph (1) for nonpayment if--
                    ``(A) the period of such nonpayment is in excess of 
                30 days; and
                    ``(B) notice of intent to cancel is provided to the 
                policyholder or designated representative of the policy 
                holder not less than 30 days prior to such 
                cancellation, except that notice may not be provided 
                until the expiration of 30 days after a premium is due 
                and unpaid.
        Notice under this paragraph shall be deemed to have been given 
        as of 5 days after the mailing date.

``SEC. 2715. BENEFIT STANDARDS.

    ``(a) Use of Standard Definitions and Terminology, Uniform Format, 
and Standard Benefits.--Each long-term care insurance policy shall, 
with respect to services, providers or facilities, pursuant to 
standards established under section 2701(a)--
            ``(1) use uniform language and definitions, except that 
        such language and definitions may take into account the 
        differences between States with respect to definitions and 
        terminology used for long-term care services and providers; and
            ``(2) use a uniform format for presenting the outline of 
        coverage under such a policy;
as prescribed under guidelines issued by the NAIC and periodically 
updated.
    ``(b) Disclosure.--
            ``(1) Outline of coverage.--
                    ``(A) Requirement.--Each carrier that sells or 
                offers for sale a long-term care insurance policy shall 
                provide an outline of coverage to each individual 
                policyholder under such policy that meets the 
                applicable standards established pursuant to section 
                2701(a), complies with the requirements of subparagraph 
                (B), and is in a uniform format as prescribed in 
                guidelines issued by the NAIC and periodically updated.
                    ``(B) Contents.--The outline of coverage for each 
                long-term care insurance policy shall include at least 
                the following:
                            ``(i) A description of the benefits and 
                        coverage under the policy.
                            ``(ii) A statement of the exclusions, 
                        reductions, and limitations contained in the 
                        policy.
                            ``(iii) A statement of the terms under 
                        which the policy (or certificate) may be 
                        continued in force or discontinued, the terms 
                        for continuation or conversion, and any 
                        reservation in the policy of a right to change 
                        premiums.
                            ``(iv) Consumer protection information, 
                        including the manner in which to file a claim 
                        and to register complaints.
                            ``(v) A statement, in bold face type on the 
                        face of the document in language that is 
                        understandable to an average individual, that 
                        the outline of coverage is a summary only, not 
                        a contract of insurance, and that the policy 
                        (or master policy) contains the contractual 
                        provisions that govern, except that such 
                        summary shall substantially and accurately 
                        reflect the contents of the policy or the 
                        master policy.
                            ``(vi) A description of the terms, 
                        specified in section 2717, under which a policy 
                        or certificate may be returned and premium 
                        refunded.
                            ``(vii) Information on--
                                    ``(I) national average costs for 
                                nursing facility and home health care 
                                and information (in graphic form) on 
                                the relationship of the value of the 
                                benefits provided under the policy to 
                                such national average costs and State 
                                average costs; and
                                    ``(II) other public and private 
                                long-term care insurance products and 
                                long-term care programs where made 
                                available by the Federal Government or 
                                by a State government.
                            ``(viii) A statement of the percentage 
                        limit on annual premium increases that is 
                        provided under the policy pursuant to this 
                        section.
            ``(2) Certificates.--A certificate issued pursuant to a 
        group long-term care insurance policy shall include--
                    ``(A) a description of the principal benefits and 
                coverage provided in the policy;
                    ``(B) a statement of the principal exclusions, 
                reductions, and limitations contained in the policy; 
                and
                    ``(C) a statement that the group master policy 
                determines governing contractual provisions.
            ``(3) Long-term care as part of life insurance.--In the 
        case of a long-term care insurance policy issued as a part of, 
        or a rider on, a life insurance policy, at the time of policy 
        delivery there shall be provided a policy summary that 
        includes--
                    ``(A) an explanation of how the long-term care 
                benefits interact with other components of the policy 
                (including deductions from death benefits);
                    ``(B) an illustration of the amount of benefits, 
                the length of benefit, and the guaranteed lifetime 
                benefits (if any) for each covered person; and
                    ``(C) any exclusions, reductions, and limitations 
                on benefits of long-term care.
            ``(4) Additional information.--The NAIC shall develop 
        recommendations with respect to informing consumers of the 
        long-term economic viability of carriers issuing long-term care 
        insurance policies.
    ``(c) Limiting Conditions on Benefits; Minimum Benefits.--
            ``(1) In general.--A long-term care insurance policy may 
        not condition or limit eligibility--
                    ``(A) for benefits for a type of services to the 
                need for or receipt of any other services;
                    ``(B) for any benefit on the medical necessity for 
                such benefit;
                    ``(C) for benefits furnished by licensed or 
                certified providers in compliance with conditions which 
                are in addition to those required for licensure or 
                certification under State law, except that if no State 
                licensure or certification laws exists, in compliance 
                with qualifications developed by the NAIC; or
                    ``(D) for residential care (if covered under the 
                policy) only--
                            ``(i) to care provided in facilities which 
                        provide a higher level of care; or
                            ``(ii) to care provided in facilities which 
                        provide for 24-hour or other nursing care not 
                        required in order to be licensed by the State.
            ``(2) Home health care or community-based services.--If a 
        long-term care insurance policy provides benefits for the 
        payment of specified home health care or community-based 
        services, the policy--
                    ``(A) may not limit such benefits to services 
                provided by registered nurses or licensed practical 
                nurses;
                    ``(B) may not require benefits for such services to 
                be provided by a nurse or therapist that can be 
                provided by a home health aide or licensed or certified 
                home care worker, except that if no State licensure or 
                certification laws exists, in compliance with 
                qualifications developed by the NAIC;
                    ``(C) may not limit such benefits to services 
                provided by agencies or providers certified under title 
                XVIII of the Social Security Act; and
                    ``(D) must provide, at a minimum, benefits for 
                personal care services (including home health aide and 
                home care worker services as defined by the NAIC) home 
                health services, adult day care, and respite care in an 
                individual's home or in another setting in the 
                community, or any of these benefits on a respite care 
                basis.
            ``(3) Nursing facility services.--If a long-term care 
        insurance policy provides benefits for the payment of specified 
        nursing facility services, the policy must provide such 
        benefits with respect to all nursing facilities (as defined in 
        section 1919(a) of the Social Security Act or until such time 
        as subsequently provided for by the NAIC in establishing 
        uniform language and definitions under section 2715(a)(1)) in 
        the State.
            ``(4) Per diem policies.--
                    ``(A) Definition.--For purposes of this part, the 
                term `per diem long-term care insurance policy' means a 
                long-term care insurance policy (or certificate under a 
                group long-term care insurance policy) that provides 
                for benefit payments on a periodic basis due to 
                cognitive impairment or loss of functional capacity 
                without regard to the expenses incurred or services 
                rendered during the period to which the payments 
                relate.
                    ``(B) Limitation.--No per diem long-term care 
                insurance policy (or certificate) may condition, limit 
                or otherwise exclude benefit payments based on the 
                receipt of any type services from any type providers of 
                long-term care service providers.
    ``(d) Prohibition of Discrimination.--A long-term care insurance 
policy may not treat benefits under the policy in the case of an 
individual with Alzheimer's disease, with any related progressive 
degenerative dementia of an organic origin, with any organic or 
inorganic mental illness, or with mental retardation or any other 
cognitive or mental impairment differently from an individual having a 
functional impairment for which benefits may be made available.
    ``(e) Limitation on Use of Preexisting Condition Limits.--
            ``(1) Initial issuance.--
                    ``(A) In general.--Subject to subparagraph (B), a 
                long-term care insurance policy may not exclude or 
                condition benefits based on a medical condition for 
                which the policyholder received treatment or was 
                otherwise diagnosed before the issuance of the policy.
                    ``(B) 6-month limit.--
                            ``(i) In general.--No long-term care 
                        insurance policy or certificate issued under 
                        this part shall utilize a definition of 
                        `preexisting condition' that is more 
                        restrictive than the following: The term 
                        `preexisting condition' means a condition for 
                        which medical advice or treatment was 
                        recommended by, or received from a provider of 
                        health care services, within 6 months preceding 
                        the effective date of coverage of an insured 
                        individual.
                            ``(ii) Prohibition on exclusion of 
                        coverage.--No long-term care insurance policy 
                        or certificate may exclude coverage for a loss 
                        or confinement that is the result of a 
                        preexisting condition unless such loss or 
                        confinement begins within 6 months following 
                        the effective date of the coverage of the 
                        insured individual.
            ``(2) Replacement policies.--If a long-term care insurance 
        policy replaces another long-term care insurance policy, the 
        issuer of the replacing policy shall waive any time periods 
        applicable to preexisting conditions, waiting period, 
        elimination periods and probationary periods in the new policy 
        for similar benefits to the extent such time was spent under 
        the original policy.
    ``(f) Eligibility for Benefits.--
            ``(1) Long-term care policies.--Each long-term care 
        insurance policy shall--
                    ``(A) describe the level of benefits available 
                under the policy; and
                    ``(B) specify in clear, understandable terms, the 
                level (or levels) of physical, cognitive, or mental 
                impairment required in order to receive benefits under 
                the policy.
            ``(2) Functional assessment.--In order to submit a claim 
        under any long-term care insurance policy, each claimant shall 
        have a professional functional assessment of his or her 
        functional or cognitive abilities. Such initial assessment 
        shall be conducted by an individual or entity, meeting the 
        qualifications established by the NAIC to assure the 
        professional competence and credibility of such individual or 
        entity and that such individual meets any applicable State 
        licensure and certification requirements. The individual or 
        entity conducting such assessment may not control, or be 
        controlled by, the issuer of the policy. For purposes of this 
        paragraph and paragraph (4), the term `control' means the 
        direct or indirect possession of the power to direct the 
        management and policies of a person. Control is presumed to 
        exist, if any person directly or indirectly, owns, controls, 
        holds with the power to vote, or holds proxies representing at 
        least 10 percent of the voting securities of another person.
            ``(3) Claims review.--Except as provided in paragraph (1), 
        each long-term care insurance policy shall be subject to final 
        claims review by the carrier pursuant to the terms of the long-
        term care insurance policy.
            ``(4) Appeals process.--
                    ``(A) In general.--Each long-term care insurance 
                policy shall provide for a timely and independent 
                appeals process, meeting standards established by the 
                NAIC, for individuals who dispute the results of the 
                claims review, conducted under paragraph (3), of the 
                policyholder's functional assessment, conducted under 
                paragraph (2).
                    ``(B) Independent assessment.--An appeals process 
                under this paragraph shall include, at the request of 
                the claimant, an independent assessment of the 
                claimant's functional or cognitive abilities.
                    ``(C) Conduct.--An independent assessment under 
                subparagraph (B) shall be conducted by an individual or 
                entity meeting the qualifications established by the 
                NAIC to assure the professional competence and 
                credibility of such individual or entity and any 
                applicable State licensure and certification 
                requirements and may not be conducted--
                            ``(i) by an individual who has a direct or 
                        indirect significant or controlling interest 
                        in, or direct affiliation or relationship with, 
                        the issuer of the policy;
                            ``(ii) by an entity that provides services 
                        to the policyholder or certificate holder for 
                        which benefits are available under the long-
                        term care insurance policy; or
                            ``(iii) by an individual or entity in 
                        control of, or controlled by, the issuer of the 
                        policy.
            ``(5) Standard assessments.--Not later than 2 years after 
        the date of enactment of this part, the advisory committee 
        established under section 2701(d) shall recommend uniform needs 
        assessment mechanisms for the determination of eligibility for 
        benefits under such assessments.
    ``(g) Inflation Protection.--
            ``(1) Option to purchase.--A carrier may not offer a long-
        term care insurance policy unless the carrier also offers to 
        the proposed policyholder, including each group policyholder, 
        the option to purchase a policy that provides for increases in 
        benefit levels, with benefit maximums or reasonable durations 
        that are meaningful, to account for reasonably anticipated 
        increases in the costs of long-term care services covered by 
        the policy. A carrier may not offer to a policyholder an 
        inflation protection feature that is less favorable to the 
        policyholder than one following:
                    ``(A) With respect to policies that provide for 
                automatic periodic increases in benefits, the policy 
                provides for an annual increase in benefits in a manner 
                so that such increases are computed annually at a rate 
                of not less than 5 percent.
                    ``(B) With respect to policies that provide for 
                periodic opportunities to elect an increase in 
                benefits, the policy guarantees that the insured 
                individual will have the right to periodically increase 
                the benefit levels under the policy without providing 
                evidence of insurability or health status so long as 
                the option for the previous period was not declined. 
                The amount of any such additional benefit may not be 
                less than the difference between--
                            ``(i) the existing policy benefit; and
                            ``(ii) such existing benefit compounded 
                        annually at a rate of at least 5 percent for 
                        the period beginning on the date on which the 
                        existing benefit is purchased and extending 
                        until the year in which the offer of increase 
                        is made.
                    ``(C) With respect to service benefit policies, the 
                policy covers a specified percentage of the actual or 
                reasonable charges and does not include a maximum 
                specified indemnity amount or limit.
            ``(2) Exception.--The requirements of paragraph (1) shall 
        not apply to life insurance policies or riders containing 
        accelerated long-term care benefits.
            ``(3) Required information.--Carriers shall include the 
        following information in or together with the outline of 
        coverage provided under this part:
                    ``(A) A graphic comparison of the benefit levels of 
                a policy that increases benefits over the policy period 
                with a policy that does not increase benefits. Such 
                comparison shall show benefit levels over not less than 
                a 20-year period.
                    ``(B) Any expected premium increases or additional 
                premiums required to pay for any automatic or optional 
                benefit increases, whether the individual who purchases 
                the policy obtains the inflation protection initially 
                or whether such individual delays purchasing such 
                protection until a future time.
            ``(4) Continuation of protection.--Inflation protection 
        benefit increases under this subsection under a policy that 
        contains such protection shall continue without regard to an 
        insured's age, claim status or claim history, or the length of 
        time the individual has been insured under the policy.
            ``(5) Constant premium.--An offer of inflation protection 
        under this subsection that provides for automatic benefit 
        increases shall include an offer of a premium that the carrier 
        expects to remain constant. Such offer shall disclose in a 
        conspicuous manner that the premium may change in the future 
        unless the premium is guaranteed to remain constant.
            ``(6) Rejection.--Inflation protection under this 
        subsection shall be included in a long-term care insurance 
        policy unless a carrier obtains a written rejection of such 
        protection signed by the policyholder.

``SEC. 2716. NONFORFEITURE.

    ``(a) In General.--Each long-term care insurance policy (or 
certificate) shall provide that if the policy lapses after the policy 
has been in effect for a minimum period (specified under the standards 
under section 2701(a)), the policy will provide, without payment of any 
additional premiums, nonforfeiture benefits as determined appropriate 
by the NAIC.
    ``(b) Establishment of Standards.--The standards under section 
2701(a) shall provide that the percentage or amount of benefits under 
subsection (a) must increase based upon the policyholder's equity in 
the policy.

``SEC. 2717. LIMIT OF PERIOD OF CONTESTABILITY AND RIGHT TO RETURN.

    ``(a) Contestability.--A carrier may not cancel or renew a long-
term care insurance policy or deny a claim under the policy based on 
fraud or intentional misrepresentation relating to the issuance of the 
policy unless notice of such fraud or misrepresentation is provided 
within a time period to be determined by the NAIC.
    ``(b) Right to Return.--Each applicant for a long-term care 
insurance policy shall have the right to return the policy (or 
certificates) within 30 days of the date of its delivery (and to have 
the premium refunded) if, after examination of the policy or 
certificate, the applicant is not satisfied for any reason.

``SEC. 2718. CIVIL MONEY PENALTY.

    ``(a) Carrier.--Any carrier, association or its subsidiary that 
sells or offers for sale a long-term care insurance policy and that--
            ``(1) fails to make a refund in accordance with section 
        2713(a);
            ``(2) fails to transmit a policy in accordance with section 
        2713(b);
            ``(3) fails to provide, make available, or report 
        information in accordance with subsections (c) or (d) of 
        section 2713;
            ``(4) provides a commission or compensation in violation of 
        section 2713(e);
            ``(5) fails to provide an outline of coverage in violation 
        of section 2715(b)(1); or
            ``(6) issues a policy without obtaining certain information 
        in violation of section 2715(f);
is subject to a civil money penalty of not to exceed $25,000 for each 
such violation.
    ``(b) Agents.--Any agent that sells or offers for sale a long-term 
care insurance policy and that--
            ``(1) fails to make a refund in accordance with section 
        2713(a);
            ``(2) fails to transmit a policy in accordance with section 
        2713(b);
            ``(3) fails to provide, make available, or report 
        information in accordance with subsections (c) or (d) of 
        section 2713;
            ``(4) fails to provide an outline of coverage in violation 
        of section 2715(b)(1); or
            ``(5) issues a policy without obtaining certain information 
        in violation of section 2715(f);
is subject to a civil money penalty of not to exceed $15,000 for each 
such violation.
    ``(c) Effect on State Law.--Nothing in this section shall be 
construed as preempting or otherwise limiting the penalties that may be 
imposed by a State for the types of conduct described in this section.

    ``Subpart C--Long-Term Care Insurance Policies, Definition and 
                              Endorsements

``SEC. 2721. LONG-TERM CARE INSURANCE POLICY DEFINED.

    ``(a) In General.--As used in this section, the term `long-term 
care insurance policy' means any insurance policy, rider or certificate 
advertised, marketed, offered or designed to provide coverage for not 
less than 12 consecutive months for each covered person on an expense 
incurred, indemnity prepaid or other basis, for one or more necessary 
diagnostic, preventive, therapeutic, rehabilitative, maintenance or 
personal care services, provided in a setting other than an acute care 
unit of a hospital. Such term includes--
            ``(1) group and individual annuities and life insurance 
        policies, riders or certificates that provide directly, or that 
        supplement long-term care insurance; and
            ``(2) a policy, rider or certificates that provides for 
        payment of benefits based on cognitive impairment or the loss 
        of functional capacity.
    ``(b) Issuance.--Long-term care insurance policies may be issued 
by--
            ``(1) carriers;
            ``(2) fraternal benefit societies;
            ``(3) nonprofit health, hospital, and medical service 
        corporations;
            ``(4) prepaid health plans;
            ``(5) health maintenance organizations; or
            ``(6) any similar organization to the extent they are 
        otherwise authorized to issue life or health insurance.
    ``(c) Policies Excluded.--The term `long-term care insurance 
policy' shall not include any insurance policy, rider or certificate 
that is offered primarily to provide basic Medicare supplement 
coverage, basic hospital expense coverage, basic medical-surgical 
expense coverage, hospital confinement indemnity coverage, major 
medical expense coverage, disability income or related asset-protection 
coverage, accident only coverage, specified disease or specified 
accident coverage, or limited benefit health coverage. With respect to 
life insurance, such term shall not include life insurance policies, 
riders or certificates that accelerate the death benefit specifically 
for one or more of the qualifying events of terminal illness, medical 
conditions requiring extraordinary medical intervention, or permanent 
institutional confinement, and that provide the option of a lump-sum 
payment for those benefits and in which neither the benefits nor the 
eligibility for the benefits is conditioned upon the receipt of long-
term care.
    ``(d) Applications.--Notwithstanding any other provision of this 
part, this part shall apply to any product advertised, marketed or 
offered as a long-term insurance policy, rider or certificate.

``SEC. 2722. CODE OF CONDUCT WITH RESPECT TO ENDORSEMENTS.

    ``Not later than 1 year after the date of enactment of this part 
the NAIC shall issue guidelines that shall apply to organizations and 
associations, other than employers and labor organizations that do not 
accept compensation, and their subsidiaries that provide endorsements 
of long-term care insurance policies, or that permit such policies to 
be offered for sale through the organization or association. Such 
guidelines shall include at minimum the following:
            ``(1) In endorsing or selling long-term care insurance 
        policies, the primary responsibility of an organization or 
        association shall be to educate their members concerning such 
        policies and assist such members in making informed decisions. 
        Such organizations and associations may not function primarily 
        as sales agents for insurance companies.
            ``(2) Organizations and associations shall provide 
        objective information regarding long-term care insurance 
        policies sold or endorsed by such organizations and 
        associations to ensure that members of such organizations and 
        associations have a balanced and complete understanding of both 
        the strengths and weaknesses of the policies that are being 
        endorsed or sold.
            ``(3) Organizations and associations selling or endorsing 
        long-term care insurance policies shall disclose in marketing 
        literature provided to their members concerning such policies 
        the manner in which such policies and the insurance company 
        issuing such policies were selected. If the organization or 
        association and the insurance company have interlocking 
        directorates, the organization or association shall disclose 
        such fact to their members.
            ``(4) Organizations and associations selling or endorsing 
        long-term care insurance policies shall disclose in marketing 
        literature provided to their members concerning such policies 
        the nature and amount of the compensation arrangements 
        (including all fees, commissions, administrative fees and other 
        forms of financial support that the organization or association 
        receives) from the endorsement or sale of the policy to its 
        members.
            ``(5) The Boards of Directors of organizations and 
        associations selling or endorsing long-term care insurance 
        policies, if such organizations and associations have a Board 
        of Directors, shall review and approve such insurance policies, 
        the compensation arrangements and the marketing materials used 
        to promote sales of such policies.''.

                           PART 3--LIFE CARE

SEC. 2301. SHORT TITLE.

    This part may be cited as the ``Life Care Act''.

SEC. 2302. LIFE CARE: PUBLIC INSURANCE PROGRAM FOR NURSING HOME CARE.

    Title XXVII of the Public Health Service Act (as added by section 
2301) is amended by adding at the end thereof the following new part:

  ``PART 2--LIFE CARE: PUBLIC INSURANCE PROGRAM FOR NURSING HOME CARE

``SEC. 2741. ESTABLISHMENT OF VOLUNTARY LONG-TERM CARE INSURANCE 
              PROGRAM.

    ``The Secretary shall establish a voluntary insurance program for 
individuals 35 years of age and over to cover the nursing home stays of 
such individuals. The Secretary shall establish a process for 
enrollment in the Life Care program.

``SEC. 2742. BENEFITS.

    ``(a) In General.--
            ``(1) Eligibility for coverage.--Subject to subsection (c), 
        an individual who meets the eligibility criteria prescribed in 
        section 2743 shall be eligible under the program established 
        under this part for coverage for necessary services described 
        in subsection (b) (in the amounts described in subsection (c)) 
        that are provided to the individual by a nursing facility while 
        the individual is an inpatient of the facility.
            ``(2) Nonforfeiture.--The Secretary shall establish 
        standards to ensure the nonforfeiture of benefits for which 
        premiums have been paid.
    ``(b) Types.--Coverage may be provided under this part for--
            ``(1) nursing care provided by or under the supervision of 
        a registered professional nurse;
            ``(2) physical, occupational, or speech therapy furnished 
        by a facility or by others under arrangements with a facility;
            ``(3) medical social work services;
            ``(4) drug, biological, supply, appliance, and equipment 
        for use in the facility, that is ordinarily furnished by the 
        facility for the care and treatment of an inpatient;
            ``(5) such other services necessary to the functioning of a 
        patient, including personal care and assistance with activities 
        of daily living, as are generally provided by a nursing home 
        facility; and
            ``(6) with respect to the initial 6 months of covered 
        residence in a nursing facility, such room and board costs as 
        are not covered by beneficiary copayment.
    ``(c) Coverage Amount.--
            ``(1) In general.--The amount of coverage provided with 
        respect to an eligible individual for the services described in 
        subsection (b) shall, based on an election made by the 
        individual, not exceed $30,000, $60,000, or $90,000 over the 
        lifetime of the eligible individual. Such amounts shall be 
        adjusted by the Secretary to reflect increases in the Consumer 
        Price Index.
            ``(2) Asset protection.--An eligible individual shall be 
        entitled to the asset protection provided under section 2748.
    ``(d) Payment.--Amounts provided under this part with respect to an 
eligible individual for the services described in subsection (b) shall 
be paid from the general fund of the Treasury of the United States.
    ``(e) Residential Care Facilities.--The Secretary shall consider 
the feasibility of making payments under this part for services 
delivered in residential care facilities. Not later than 2 years after 
the date of enactment of this Act, the Secretary shall report its 
findings to the Congress with respect to the feasibility of making such 
payments.

``SEC. 2743. ELIGIBILITY.

    ``(a) In General.--An individual shall be eligible for benefits 
under this part if--
            ``(1) the individual--
                    ``(A) is a legal resident of the United States and 
                has elected coverage under subsection (c); and
                    ``(B) has been determined by a Screening Agency 
                through a screening process (conducted in accordance 
                with section 2747)--
                            ``(i)(I) to require hands-on or standby 
                        assistance, supervision, or cueing (as defined 
                        in regulations) to perform three or more 
                        activities of daily living; or
                            ``(II) to require hands-on or standby 
                        assistance, supervision, or cueing with at 
                        least such instrumental activity (or 
                        activities) of daily living related to 
                        cognitive or mental impairment as the Secretary 
                        specifies; or
                            ``(III) to display symptoms of one or more 
                        serious behavioral problems (that is on a list 
                        of such problems specified by the Secretary) 
                        which create a need for supervision to prevent 
                        harm to self or others; or
                            ``(IV) has achieved a score, on a standard 
                        mental status protocol (or protocols) 
                        appropriate for measuring the individual's 
                        particular condition specified by the 
                        Secretary, that indicates either severe 
                        cognitive impairment or severe mental 
                        impairment, or both; and
                            ``(ii) to require such assistance, 
                        supervision, or cueing over a period of at 
                        least 90 days; and
            ``(2)(A) the individual has filed an application for such 
        benefits, and is in need of, benefits covered under this part; 
        or
            ``(B) the legal guardian of the individual has filed an 
        application on behalf of an individual who is in need of 
        benefits covered under this part; or
            ``(C) the representative of an individual who is 
        cognitively impaired and who is in need of benefits covered 
        under this part has filed an application on behalf of the 
        individual.
    ``(b) Current Individuals.--An individual who is in a hospital or 
nursing home on the date of the enrollment of the individual in the 
program established under this part shall be ineligible for coverage 
under this section until the individual's first spell of illness 
beginning after such date.
    ``(c) Election of Coverage.--
            ``(1) In general.--Subject to this subsection, an 
        individual shall have the option to purchase coverage under 
        this part when the individual is 35 years of age, 45 years of 
        age, 55 years of age, or 65 years of age.
            ``(2) Initial year.--During the 1-year period beginning on 
        the date on which final regulations that implement this part 
        are issued, an individual who is 35 years of age or older shall 
        be eligible to purchase insurance under this part, except that 
        such an individual shall not be eligible to purchase such 
        insurance--
                    ``(A) while confined to a hospital or nursing home;
                    ``(B) within the 6-month period after the 
                individual's confinement in a nursing home; or
                    ``(C) within the 90-day period after the 
                individual's confinement in a hospital.
        Individuals described in the matter preceding subparagraph (A) 
        shall become eligible to receive benefits under this part on 
        the expiration of the 3-year period beginning on the date such 
        individuals purchase insurance under this part.
            ``(3) Extension beyond initial year.--If an individual is 
        confined to a nursing home or hospital during a period that 
        extends beyond the first year after the effective date of this 
        part, an individual shall be eligible to enroll in the program 
        established by this part during the 60-day period beginning 
        after the individual's spell of illness.
            ``(4) Subsequent years.--During years subsequent to the 1-
        year period referred to in paragraph (2), an individual shall 
        be eligible to purchase insurance under this part within 6 
        months of the 35th, 45th, 55th or 65th birthday of the 
        individual.
            ``(5) Activation of benefits.--To receive coverage under 
        the insurance program established by this part, an individual 
        shall have purchased such coverage not later than 1 month prior 
        to admission to a nursing facility, unless the reason for the 
        need of services is a result of an accident or stroke 
        subsequent to the date that such individual enrolled for 
        coverage under this part.
    ``(d) Public Education.--In the 12 months preceding the initial 
enrollment period, the Secretary shall, either directly or through 
grants and contracts, conduct a public service and education campaign 
designed to inform potentially eligible individuals as to the nature of 
the benefits and the limited enrollment period. In conducting such 
campaigns the Secretary shall make information available to individuals 
through the open enrollment process for obtaining health care benefits 
under this Act.

``SEC. 2744. PREMIUM RATES.

    ``(a) In General.--The Secretary shall determine one premium rate 
for individuals electing to purchase coverage under this part at age 35 
(or between the ages of 35 and 44 during the initial enrollment 
period), a separate rate for those individuals who elect coverage at 
age 45 (or between the ages of 45 and 54 during the initial enrollment 
period), a separate rate for those individuals who elect such coverage 
at age 55 (or between that ages of 55 and 64 during the initial 
enrollment period), and a separate rate for those individuals who elect 
such coverage at age 65 (or at age 65 and over during the initial 
enrollment period). During the initial enrollment period, the Secretary 
shall establish actuarily fair, age-rated premiums for persons age 65 
and over.
    ``(b) Revision.--The Secretary shall revise premium rates annually 
to increase such rates to reflect the amount of the increase in the 
cost of living adjustment with respect to benefits under title II of 
the Social Security Act.
    ``(c) Rates.--In developing premium rates under the program 
established under this part, the Secretary shall establish rates that 
are expected to cover 100 percent of the reimbursement amount provided 
under this part for nursing home stays for those individuals enrolled 
in the program.
    ``(d) Waiver.--An individual electing to purchase coverage under 
this part shall not be required to pay premiums during any period in 
which such individual is receiving benefits under this part.
    ``(e) Payment.--Premiums shall be paid under this section into the 
general fund of the Treasury of the United States.

``SEC. 2745. QUALIFIED SERVICE PROVIDERS.

    ``(a) In General.--To be considered as a covered nursing home 
service under this part, such service must have been provided by a 
qualified service provider.
    ``(b) Types.--A provider shall be considered a qualified service 
provider under this part if the provider is a nursing facility that is 
certified by the State and meets the requirements of this part and any 
other standards established by the Secretary by regulation for the safe 
and efficient provision of services covered under this part.

``SEC. 2746. REIMBURSEMENT.

    ``(a) Amount.--Monthly reimbursement for nursing facility services 
under this part shall equal 65 percent (or during the initial 6 months 
of coverage, 80 percent) of the amount the Secretary determines to be 
reasonable and appropriate to cover the cost of care provided under 
this part.
    ``(b) Prospective Payment.--To the extent feasible, the Secretary 
shall establish a prospective payment mechanism for payment for nursing 
home services under this part that takes into account the expected 
resource utilization of individual patients based on their degree of 
disability, the methodology recommended for reimbursement of skilled 
nursing facilities under title XVIII of the Social Security Act, and 
other factors determining service requirements.
    ``(c) Room and Board Payment.--An individual receiving benefits 
under this program shall be responsible for the payment of an amount 
for room and board that is equal to--
            ``(1) with respect to the initial 6 months of residence in 
        a nursing facility, 20 percent of the average per diem rate 
        paid by the Secretary to nursing facilities receiving 
        reimbursement under this part; and
            ``(2) with respect to subsequent periods of residence, 35 
        percent of the average per diem rate paid by the Secretary to 
        nursing facilities receiving reimbursement under this part. 
        Payments under subsection (a) and (c) shall be considered 
        payment in full for services received under this section.
    ``(d) Priority Payers.--Notwithstanding any other provision of this 
part, reimbursement for nursing facility services provided under this 
part to an individual shall, to the extent available, be made under the 
Medicare program, under Department of Veterans Affairs' programs, or 
under private insurance policies prior to reimbursement under this 
part.

``SEC. 2747. LONG-TERM CARE SCREENING AGENCY.

    ``(a) Establishment.--The Secretary shall contract with entities to 
act as Long-Term Care Screening Agencies (hereafter referred to in this 
part as the `Screening Agency') for each designated area of a State. It 
shall be the responsibility of such agency to assess the eligibility of 
individuals residing in the geographic jurisdiction of the Agency, for 
services provided under this part according to the requirements of this 
part and regulations prescribed by the Secretary. In entering into such 
contracts, the Secretary shall give preference to State governmental 
entities and private nonprofit agencies.
    ``(b) Eligibility.--The Screening Agency shall determine the 
eligibility of an individual under this part based on the results of a 
preliminary telephone interview or written questionnaire (completed by 
the applicant, by the caregiver of the applicant, or by the legal 
guardian or representative of the applicant) that shall be validated 
through the use of a screening tool administered in person to each 
applicant determined eligible through initial telephone or written 
questionnaire interviews not later than 15 days from the date on which 
such individual initially applied for services under this part.
    ``(c) Questionnaires and Screening Tools.--
            ``(1) In general.--The Secretary shall establish a 
        telephone or written questionnaire and a screening tool to be 
        used by the Screening Agency to determine the eligibility of an 
        individual for services under this part consistent with 
        requirements of this part and the standards established by the 
        Secretary by regulation.
            ``(2) Questionnaires.--The questionnaire shall include 
        questions about the functional impairment and mental status of 
        an individual and other criteria that the Secretary shall 
        prescribe by regulation.
            ``(3) Screening tools.--The screening tool should measure 
        functional impairment caused by physical or cognitive 
        conditions as well as information concerning cognition 
        disability, behavioral problems (such as wandering or abusive 
        and aggressive behavior), and any other criteria that the 
        Secretary shall prescribe by regulation. The screening tool 
        shall be administered in person.
    ``(d) Notification.--Not later than 15 days after the date on which 
an individual initially applied for services under this part (by 
telephone or written questionnaire), the Screening Agency shall notify 
such individual that such individual is not eligible for benefits, or 
that such individuals must schedule an in-person screening to determine 
final eligibility for benefits under this part. The Screening Agency 
shall notify such individual of its final decision not later than 2 
working days after the in-person screening.
    ``(e) In-Person Screening.--An individual (or the legal guardian or 
representative of such individual) whose application for benefits under 
this part is denied on the basis of information provided through a 
telephone or written questionnaire, shall be notified of such 
individual's right to an in-person screening by a nurse or appropriate 
health care professionals.
    ``(f) Appeals.--The Secretary shall establish a mechanism for 
hearings and appeals in cases in which individuals contest the 
eligibility findings of the Screening Agency.
    ``(g) Payment.--
            ``(1) Payment for screening.--The Screening Agency may 
        require payment from individuals only in accordance with 
        standards established by the Secretary.
            ``(2) No payment for poorest.--The Screening Agency may not 
        require payment for individuals with incomes of less than 150 
        percent of the official poverty line.

``SEC. 2748. ASSET PROTECTION.

    ``Notwithstanding any other provision of law, the assets an 
eligible individual may retain and be determined eligible for nursing 
facility benefits, including payments of room and board under this 
part, under State Medicaid programs (in accordance with section 
1902(a)(10)) shall be increased by the amount of coverage ($30,000, 
$60,000, or $90,000) elected under section 2742.

``SEC. 2749. RELATION TO PRIVATE INSURANCE.

    ``(a) In General.--Except as provided in subsection (b), an insurer 
may not offer a long-term care insurance policy to an individual who 
has purchased coverage under this part if the coverage under such 
policy duplicates the coverage provided under this part.
    ``(b) Development of Standard Packages.--The Secretary shall 
develop standard long-term care insurance benefits packages that 
insurers may offer to insured individuals under this part. Such 
packages shall provide coverage for benefits that compliment, but do 
not duplicate, those covered under this part.

``SEC. 2750. DEFINITIONS.

    ``As used in this part:
            ``(1) Nursing facility.--The term `nursing facility' 
        means--
                    ``(A) a skilled nursing facility (as defined in 
                section 1819(a) of the Social Security Act); or
                    ``(B) a facility that is a nursing facility (as 
                defined in section 1919(a) of such Act) which meets the 
                requirements of section 1819(b)(4)(C) of such Act 
                (relating to nursing care).
            ``(2) Spell of illness.--The term `spell of illness' means 
        a period of consecutive days beginning with the first day on 
        which an individual is furnished services as an inpatient in a 
        hospital or nursing facility and ending with the close of the 
        first 6 consecutive months thereafter during which the 
        individual is no longer an inpatient of a nursing facility, or 
        90 days after the individual is no longer an inpatient in a 
        hospital.

``SEC. 2751. REPORTS.

    ``(a) In General.--Prior to the promulgation of regulations 
implementing this title, the Secretary shall report to Congress on--
            ``(1) the actuarially-sound premium rates to be used in the 
        implementation of this Act, including whether the premiums will 
        cover 100 percent of the benefits paid out, and whether Federal 
        funds will be required to support the payment of benefits;
            ``(2) an assessment of the impact of such premium rates on 
        the affordability of coverage under this Act;
            ``(3) a projected enrollment of individuals by age 
        category; and
            ``(4) an estimate of current and projected enrollment of 
        individuals, by age category in coverage under private long-
        term care insurance.
    ``(b) Life Care Report.--Not later than 2 years after the 
promulgation of regulations implementing this title, the Secretary 
shall report to Congress on the following aspects of the Life Care Act:
            ``(1) The current and projected premium rates.
            ``(2) The current and projected enrollment of individuals, 
        by age category and an estimate of current and projected 
        enrollment of individuals by age category in private long-term 
        care insurance.
            ``(3) The projected use of benefits and the impact of use 
        on premium rates.
            ``(4) An assessment of the impact of projected premium 
        rates on the affordability of coverage under this Act.
    ``(c) Recommendations.--The Secretary shall make recommendations to 
Congress regarding necessary revisions to the Life Care Act as a result 
of the findings provided in the reports submitted under this 
section.''.

SEC. 2303. SENSE OF THE COMMITTEE CONCERNING PACE (PROGRAM OF ALL-
              INCLUSIVE CARE FOR THE ELDERLY).

    (a) Findings.--The Committee on Labor and Human Resources of the 
Senate finds that--
            (1) a serious shortcoming in the Nation's current health 
        care delivery system is its ability to integrate acute and 
        long-term care services;
            (2) the pioneering efforts of the On Lok program in San 
        Francisco, which has been replicated as PACE (Program of All-
        inclusive Care for the Elderly), provides a comprehensive range 
        of acute and long-term care services to frail, nursing home 
        eligible individuals, allowing them to avoid unwanted 
        institutionalization;
            (3) two of the current PACE sites are located in East 
        Boston, Massachusetts and Columbia, South Carolina;
            (4) these programs have done a remarkable job in keeping 
        elderly, low-income, severely disabled individuals in their 
        homes and have proven to be both popular and cost-effective;
            (5) payments to PACE providers are capitated and, 
        therefore, require waivers of Medicare and Medicaid rules; and
            (6) at the present time, only 15 PACE sites are authorized.
    (b) Sense of the Committee.--It is the sense of the Committee on 
Labor and Human Resources of the Senate that--
            (1) the number of PACE sites should be expanded 
        substantially; and
            (2) the Committee on Finance of the Senate, which has 
        jurisdiction over Medicare and Medicaid, should take action on 
        this critical issue to allow a greater number of individuals 
        with disabilities to take advantage of a successful model for 
        integrated service delivery.

                  TITLE III--PUBLIC HEALTH INITIATIVES

        Subtitle A--Workforce Priorities Under Federal Payments

 Part 1--Institutional Costs of Graduate Medical Education; Workforce 
       subpart a--national council regarding workforce priorities
Sec. 3001subpart b--authorized positions in specialty training
Sec. 3011. Cooperation regarding approved physician training programs.
Sec. 3012. Annual authorization of number of specialty positions; 
                            requirements regarding primary health care.
Sec. 3013. Alsubpart c--costs of graduate medical education
      Chapter 1--Operation of Approved Physician Training Programs

Sec. 3031. Federal formula payments to qualified entities for the costs 
                            of the operation of approved physician 
                            training programs.
Sec. 3032. Application for payments.
Sec. 3033. Availability of funds for payments; annual amount of 
                            payments.
                 Chapter 2--Medical School Fund Account

Sec. 3041. Federal payments to the medical school fund.
Sec. 3042. Application for payments.
Sec. 3043. Availability of funds for payments; annual amount of 
                            payments.
                   Chapter 3--Academic Health Centers

Sec. 3051. Federal formula payments to academic health centers.
Sec. 3052. Request for payments.
Sec. 3053. Availability of funds for payments; annual amount of 
                     subpart d--general provisions
Sec. 3055. Definitisubpart e--transitional provisions
Sec. 3061. Transitional payments to institutions.
 Part 2--Institutional Costs of Graduate Nursing Education; Workforce 
                               Priorities

Sec. 3071. Authorized graduate nurse training positions; institutional 
                            costs.
Sec. 3072. Applicability of part 1 provisions.
                    subpart a--workforce development
Sec. 3081. Programs of the secretary of health and human services.
Sec. 3082. Programs of the secretary of labor.
Sec. 3083. Requirement for certain programs regarding redeployment of 
      subpart b--transitional provisions for workforce provisions
Sec. 3091. Application.
Sec. 3092. Definitions.
Sec. 3093. Obligations of displacing employer and affiliated 
                            enterprises in event of displacement.
Sec. 3094. Employment with successors.
Sec. 3095. Collective bargaining obligations during transition period.
Sec. 3096. General provisions.
                  Subtitle B--Academic Health Centers

Sec. 3131. Discretionary grants regarding access to centers.
                Subtitle C--Health Research Initiatives

                 Part 1--Programs for Certain Agencies

Sec. 3201. Biomedical and behavioral research.
Sec. 3202. Health services research.
                      Part 2--Funding for Program

Sec. 3211. Authorizations of appropriations.
    Subtitle D--Core Functions of Public Health Programs; National 
                Initiatives Regarding Preventive Health

                            Part 1--Funding

Sec. 3301. Authorizations of appropriations.
            Part 2--Core Functions of Public Health Programs

Sec. 3311. Purposes.
Sec. 3312. Grants to States for core functions of public health.
Sec. 3313. Submission of information.
Sec. 3314. Reports.
Sec. 3315. Application for grant.
Sec. 3316. Allocations for certain activities.
Sec. 3317. Definitions.
Sec. 3318. Single application and uniform reporting systems for core 
                            functions of public health and public 
                            health categorical grant programs 
                            administered by the Centers for Disease 
                            Control and Prevention.
  Part 3--National Initiatives Regarding Health Promotion and Disease 
                       subpart a--general grants
Sec. 3331. Grants for national prevention initiatives.
Sec. 3332. Priorities.
Sec. 3333. Submission of information.
Secsubpart b--development of telemedicine on rural underserved areas
Sec. 3341. Grants for development of rural telemedicine.
Sec. 3342. Report and evaluation of telemedicine.
Sec. 3343. Recommendation on reimbursement of telemedicine.
   Subtitle E--Health Services for Medically Underserved Populations

             Pasubpart a--authorization of appropriationse
subpart b--development of community health groups and health care sites 
                              and services
Sec. 3421. Grants and contracts for development of plans and networks 
                            and the expansion and development of health 
                            care sites and services.
Sec. 3422. Certain uses of awards.
Sec. 3423. Application.
Ssubpart c--capital cost of development of community health groups and 
                             other purposes
Sec. 3441. Direct loans and grants.
Sec. 3442. Certain requirements.
Sec. 3443. Defaults; right of recovery.
Sec. 3444. Provisions regarding construction or expansion of 
                            facilities.
Sec. 3445. Application for assistance.
Sec. 3446. Adsubpart d--enabling and supplemental services
Sec. 3461. Grants and contracts for enabling and supplemental services.
Sec. 3462. Authorizations of appropriations.
                 Part 2--National Health Service Corps

Sec. 3471. Authorizations of appropriations.
Sec. 3472. Allocation for participation of nurses in scholarship and 
                            loan repayment programs.
Sec. 3473. Allocation for participation of psychiatrists, 
                            psychologists, and clinical social workers 
                            in scholarship and loan repayment programs.
      Part 3--Payments to Hospitals Serving Vulnerable Populations

Sec. 3481. Payments to hospitals.
Sec. 3482. Identification of eligible hospitals.
Sec. 3483. Amount of payments.
Sec. 3484. Base year.
                     Part 4--Sense of the Committee

Sec. 3491. Sense of the Committee.
               Subtitle F--Mental Health; Substance Abuse

           Part 1--Authoritsubpart a--reportticipating States
Sec. 3511. Report on integration of mental health systems.
Sec. 3512. Reports during transition period.
Part 2--Assistance for State Managed Mental Health and Substance Abuse 
                                Programs

Sec. 3531. Availability of assistance.
Sec. 3532. Plan requirements.
Sec. 3533. Additional Federal responsibilities.
Sec. 3534. Authorization of appropriations.
   Subtitle G--Comprehensive School Health Education; School-Related 
                            Health Services

   Part 1--Healthy Students-Healthy Schools Grants for School Health 
                               Education

Sec. 3601. Purposes.
Sec. 3602. Healthy students-health schools.
Sec. 3603. Healthy students-healthy schools interagency task force.
Sec. 3604. Duties of the secretary.
                 Psubpart a--development and operations
Sec. 3681. Authorizations of appropriations.
Sec. 3682. Eligibility for grants.
Sec. 3683. Preferences.
Sec. 3684. Planning and development grants.
Sec. 3685. Gsubpart b--capital costs of developing projects
Sec. 3691. Loans and loan guarantees regarding projects.
Sec. 3692. Funding.
              Subtitle H--Public Health Service Initiative

Sec. 3695. Public health service initiative.
       Subtitle I--Additional Provisions Regarding Public Health

Sec. 3901. Curriculum development and implementation regarding domestic 
                            violence and women's health.
               Subtitle J--Occupational Safety and Health

Sec. 3903. Occupational injury and illness prevention.
                    Subtitle K--Full funding for WIC

Sec. 3905. Full funding of WIC.
                 Subtitle L--Border Health Improvement

Sec. 3908. Border health commission.

        Subtitle A--Workforce Priorities Under Federal Payments

 PART 1--INSTITUTIONAL COSTS OF GRADUATE MEDICAL EDUCATION; WORKFORCE 
                               PRIORITIES

       Subpart A--National Council Regarding Workforce Priorities

SEC. 3001. NATIONAL COUNCIL ON GRADUATE MEDICAL EDUCATION.

    (a) In General.--There is established within the Department of 
Health and Human Services a council to be known as the National Council 
on Graduate Medical Education.
    (b) Duties.--The Secretary shall carry out subpart B acting through 
the National Council.
    (c) Composition.--
            (1) In general.--The membership of the National Council 
        shall include between 12 and 18 individuals who are appointed 
        to the Council from among individuals who are not officers or 
        employees of the United States. Such individuals shall be 
        appointed by the Secretary, and shall include individuals from 
        each of the following categories:
                    (A) Consumers of health care services, at least one 
                of whom resides in a rural area.
                    (B) Physicians who are faculty members of medical 
                schools.
                    (C) Physicians in private practice who are not 
                physicians described in subparagraph (B).
                    (D) Officers or employees of regional and corporate 
                health alliances.
                    (E) Officers or employees of health care plans that 
                participate in such alliances.
                    (F) Executives of teaching hospitals.
                    (G) Nurses.
                    (H) Primary care physicians, at least one of whom 
                practices in a rural area.
                    (I) Such other individuals as the Secretary 
                determines to be appropriate.
            (2) Ex officio members; other federal officers or 
        employees.--The membership of the National Council shall 
        include individuals designated by the Secretary to serve as 
        members of the Council from among Federal officers or employees 
        who are appointed by the President, or by the Secretary or 
        other Federal officers who are appointed by the President with 
        the advice and consent of the Senate.
    (d) Chair.--The Secretary shall, from among members of the National 
Council appointed under subsection (c)(1), designate an individual to 
serve as the Chair of the Council.
    (e) Definitions.--For purposes of this subtitle:
            (1) The term ``academic health center'' means an entity 
        defined in section 3051(c)(1).
            (2) The term ``medical school'' means a school of medicine 
        (as defined in section 799 of the Public Health Service Act) or 
        a school of osteopathic medicine (as defined in such section).
            (3) The term ``National Council'' means the council 
        established in subsection (a).

         Subpart B--Authorized Positions in Specialty Training

SEC. 3011. COOPERATION REGARDING APPROVED PHYSICIAN TRAINING PROGRAMS.

    (a) In General.--With respect to an approved physician training 
program in a medical specialty, a funding agreement with a qualified 
applicant for payments under section 3031 for a calendar year is that 
the qualified applicant will ensure that the number of individuals 
enrolled in the program in the subsequent academic year is in 
accordance with this subpart.
    (b) Definitions.--
            (1) Approved program.--For purposes of this subtitle:
                    (A) The term ``approved physician training 
                program'', with respect to the medical speciality 
                involved, means a residency or other postgraduate 
                program that trains physicians and meets the following 
                conditions:
                            (i) Participation in the program may be 
                        counted toward certification in the medical 
                        specialty.
                            (ii) The program is accredited by the 
                        Accreditation Council on Graduate Medical 
                        Education, or approved by the Council on 
                        Postgraduate Training of the American 
                        Osteopathic Association.
                    (B) The term ``approved physician training 
                program'' includes any postgraduate program described 
                in subparagraph (A) that provides health services in an 
                ambulatory setting, without regard to whether the 
                program provides inpatient hospital services.
                    (C) The term ``approved physician training 
                program'' includes any postgraduate program described 
                in subparagraph (A), whether operated by academic 
                health centers, teaching hospitals, multispecialty 
                group practices, ambulatory care providers, prepaid 
                health plans, or other entities.
                    (D) The term ``approved physician training 
                program'' includes any postgraduate program described 
                in subparagraph (A) that provides fellowship training 
                in family medicine, general internal medicine or 
                general pediatrics, and provides training for a faculty 
                position in family medicine, general medicine or 
                general pediatrics.
            (2) Qualified applicant; subpart definition.--For purposes 
        of this subpart, the term ``qualified applicant'', with respect 
        to an academic year, means an entity that trains individuals in 
        an approved physician program that receives payments under 
        subpart C for the calendar year in which the academic year 
        begins.
            (3) Other definitions.--For purposes of this subtitle:
                    (A)(i) The term ``academic year'' means the 1-year 
                period beginning on July 1. The academic year beginning 
                July 1, 1993, is academic year 1993-94.
                    (ii) With respect to the funding agreement 
                described in subsection (a), the term ``subsequent 
                academic year'' means the academic year beginning July 
                1 of the calendar year for which payments are to be 
                made under the agreement.
                    (B) The term ``funding agreement'', with respect to 
                payments under section 3031 to a qualified applicant, 
                means that the Secretary may make the payments only if 
                the qualified applicant makes the agreement involved.
                    (C) The term ``medical specialty'' includes all 
                medical, surgical, and other physician specialties and 
                subspecialties.

SEC. 3012. ANNUAL AUTHORIZATION OF NUMBER OF SPECIALTY POSITIONS; 
              REQUIREMENTS REGARDING PRIMARY HEALTH CARE.

    (a) Annual Authorization of Number of Positions.--In the case of 
each medical specialty, the National Council shall, pursuant to section 
3011, designate for each academic year the number of individuals 
nationwide who are authorized to be enrolled in eligible programs. The 
preceding sentence is subject to subsection (c)(2).
    (b) Primary Health Care.--
            (1) In general.--Subject to paragraph (2), in carrying out 
        subsection (a) for an academic year, the National Council shall 
        ensure that, of the class of training participants entering 
        eligible programs for academic year 2000-2001 or any subsequent 
        academic year, the percentage of such class that completes 
        eligible programs in primary health care is not less than 55 
        percent (without regard to the academic year in which the 
        members of the class complete the programs).
            (2) Rule of construction.--The requirement of paragraph (1) 
        regarding a percentage applies in the aggregate to training 
        participants entering eligible programs for the academic year 
        involved, and not individually to any eligible program.
    (c) Designations Regarding 3-Year Periods.--
            (1) Designation periods.--For each medical specialty, the 
        National Council shall make the annual designations under 
        subsection (a) for periods of 3 academic years.
            (2) Initial period.--The first designation period 
        established by the National Council after the date of the 
        enactment of this Act shall be the academic years 2000-2001 
        through 2002-03.
    (d) Certain Considerations in Designating Annual Numbers.--
            (1) In general.--Factors considered by the National Council 
        in designating the annual number of specialty positions for an 
        academic year for a medical specialty shall include the extent 
        to which there is a need for additional practitioners in the 
        speciality, as indicated by the following:
                    (A) The characteristics of diseases, disorders, or 
                health conditions treated, including--
                            (i) the incidence and prevalence (in the 
                        general population and in various other 
                        populations) of the diseases, disorders, or 
                        other health conditions with which the 
                        specialty is concerned;
                            (ii) the intensity of care required for 
                        each of these diseases, disorders, or health 
                        conditions;
                            (iii) the relevant training received and 
                        experience attained by primary care and 
                        specialist physicians in caring for each of 
                        these diseases, disorders, or health 
                        conditions; and
                            (iv) when sufficient data becomes 
                        available, the extent to which individuals with 
                        certain diseases, disorders, or health 
                        conditions have better health outcomes when 
                        treated by health specialists than by primary 
                        care physicians.
                    (B) The number of physicians who will be practicing 
                in the specialty in the academic year.
                    (C) The number of physicians who will be practicing 
                in the specialty at the end of the 5-year period 
                beginning on the first day of the academic year.
            (2) Recommendations of private organizations.--In 
        designating the annual number of specialty positions for an 
        academic year for a medical specialty, the National Council 
        shall consider the recommendations of organizations 
        representing physicians in the specialty, organizations 
        representing academic medicine, and the recommendations of 
        organizations representing consumers of the services of such 
        physicians.
            (3) Total of respective annual numbers.--
                    (A) For academic year 2000-2001 and subsequent 
                academic years, the National Council shall ensure that 
                the total of the respective annual numbers designated 
                under subsection (a) for an academic year is a total 
                that--
                            (i) bears a relationship to the number of 
                        individuals who graduated from medical schools 
                        in the United States in the preceding academic 
                        year; and
                            (ii) is consistent with the purposes of 
                        this subpart.
                    (B) For each of the academic years 2000-2001 
                through 2004-05, the total determined under 
                subparagraph (A) shall be reduced by a percentage 
                determined by the National Council.
    (e) Interim Voluntary Targets.--
            (1) Establishment.--Not later than July 1, 1996, the 
        National Council shall establish targets with respect to the 
        aggregate number of individuals enrolled in approved physician 
        training programs for each specialty to be achieved by the year 
        2000.
            (2) Voluntary compliance.--Specialties that meet and 
        continue to be in compliance with the aggregate targets 
        established under paragraph (1), as determined by the National 
        Council, shall not be subject to the mandatory allocation 
        system described in section 3013.
            (3) Measure of compliance.--To be considered in compliance 
        with the targets under paragraph (2), a specialty shall 
        demonstrate, not later than July 1, 1998, that the number of 
        individuals enrolled in approved physician training programs of 
        the specialty is not less than the number of individuals 
        enrolled in such programs as of July 1, 1994, increased or 
        decreased, as the case may be, by 45 percent of the difference 
        between such enrollment and the target enrollment established 
        under paragraph (1) and, not later than January 1, 2000, have 
        increased or decreased by 90 percent of such difference, and, 
        by January 1, 2001, are deemed by the National Council to be in 
        compliance with the target.
            (4) Loss of compliance.--The National Council may, at any 
        time, determine that a specialty is not in compliance with the 
        targets established under paragraph (1) and initiate, with 
        respect to that specialty, the system of mandatory allocations 
        described under section 3013.
    (f) Study.--Not later than January 1, 2005, the Secretary shall 
arrange for the completion, by the Institute of Medicine or other 
similar entity, of an independent study concerning the effect of 
medical workforce regulation and planning. The results of such study 
together with recommendations concerning the appropriateness of 
modifying or eliminating workforce regulations shall be compiled in a 
report and transmitted by the Secretary to the President and the 
Congress.
    (g) Definitions.--For purposes of this subtitle:
            (1) The term ``annual number of specialty positions'', with 
        respect to a medical specialty, means the number designated by 
        the National Council under subsection (a) for eligible programs 
        for the academic year involved.
            (2) The term ``designation period'' means a 3-year period 
        under subsection (c)(1) for which designations under subsection 
        (a) are made by the National Council.
            (3) The term ``primary health care'' means the following 
        medical specialties: Family medicine, general internal 
        medicine, general pediatrics, geriatric medicine, obstetrics 
        and gynecology, and medical specialties (including psychiatry), 
        if any, that have been designated to be medical shortage 
        specialties or protected medical specialties by the Council on 
        Graduate Medical Education, or other similar physician advisory 
        body authorized by Congress to provide an ongoing assessment of 
        physician workforce trends, and identify needs and be advisory 
        to the Secretary, the Committee on Labor and Human Resources 
        and the Committee on Finance of the Senate and the Committee on 
        Energy and Commerce and the Committee on Ways and Means of the 
        House of Representatives. Only those participants in programs 
        with a significant primary care training emphasis will be 
        considered to have completed an eligible program in primary 
        care for the purposes of subsection (b)(1). Determination of 
        meeting the definition of a ``significant primary care training 
        emphasis'' will be made by the National Board.
            (4) The term ``specialty position'' means a position as a 
        training participant.
            (5) The term ``training participant'' means an individual 
        who is enrolled in an approved physician training program.

SEC. 3013. ALLOCATIONS AMONG SPECIALITIES AND PROGRAMS.

    (a) In General.--For each academic year, the National Council shall 
for each medical specialty make allocations among eligible programs of 
the annual number of specialty positions that the Council has 
designated for such year. The preceding sentence is subject to 
subsection (b)(3).
    (b) Allocations Regarding 3-Year Period.--
            (1) In general.--For each medical specialty, the National 
        Council shall make the annual allocations under subsection (a) 
        for periods of 3 academic years.
            (2) Advance notice to programs.--With respect to the first 
        academic year of an allocation period established by the 
        National Council, the National Council shall, not later than 
        July 1 of the preceding academic year, notify each eligible 
        program of the allocations made for the program for each of the 
        academic years of the period.
            (3) Initial period.--The first allocation period 
        established by the National Council after the date of the 
        enactment of this Act shall be the academic years 2000-2001 
        through 2002-03.
    (c) Certain Considerations.--
            (1) Geographic areas; quality of programs.--In making 
        allocations under subsection (a) for eligible programs of the 
        various geographic areas, the National Council shall include 
        among the factors considered the historical distribution among 
        the areas of approved physician training programs, and the 
        quality of such programs.
            (2) Underrepresentation of minority groups and women.--In 
        making an allocation under subsection (a) for an eligible 
        program, the National Council shall include among the factors 
        considered the following:
                    (A) The extent to which the population of training 
                participants in the program includes training 
                participants who are members of racial or ethnic 
                minority groups and women.
                    (B) With respect to a racial or ethnic group or 
                women represented among the training participants, the 
                extent to which the group is underrepresented in the 
                field of medicine generally and in the various medical 
                specialities.
            (3) Underserved rural and inner-city communities.--In 
        making allocations under subsection (a) for eligible programs, 
        the National Council shall consider the extent to which the 
        population of training participants in the program includes 
        training participants who have resided in rural or inner-city 
        communities and the proportion of past participants in the 
        program who are practicing in rural or inner-city communities.
            (4) Recommendations of private organizations.--In making 
        allocations under subsection (a) for eligible programs, the 
        National Council shall consider the recommendations of 
        organizations representing physicians in the medical 
        specialties, the recommendations of organizations representing 
        academic medicine and the recommendations of organizations 
        representing consumers of the services of such physicians.
    (d) Definitions.--For purposes of this subtitle, the term 
``allocation period'' means a 3-year period under subsection (b)(1) for 
which allocations under subsection (a) are made by the National 
Council.

      CHAPTER 1--OPERATION OF APPROVED PHYSICIAN TRAINING PROGRAMS

SEC. 3031. FEDERAL FORMULA PAYMENTS TO QUALIFIED ENTITIES FOR THE COSTS 
              OF THE OPERATION OF APPROVED PHYSICIAN TRAINING PROGRAMS.

    (a) In General.--In the case of a qualified entity that in 
accordance with section 3032 submits to the Secretary an application 
for calendar year 1996 or any subsequent calendar year, the Secretary 
shall make payments for such year to the qualified entity for the 
purpose specified in subsection (b). The Secretary shall make the 
payments in an amount determined in accordance with section 3033, and 
may administer the payments as a contract, grant, or cooperative 
agreement.
    (b) Payments for Operation of Approved Physician Training 
Programs.--The purpose of payments under subsection (a) is to assist a 
qualified applicant with the costs of operation of an approved 
physician training program. A funding agreement for such payments is 
that the qualified applicant involved will expend the payments only for 
such purpose.
    (c) Qualified Applicant; Subpart Definition.--
            (1) In general.--For purposes of this subpart, the term 
        ``qualified applicant'', with respect to the calendar year 
        involved, means an entity--
                    (A) that trains individuals in approved physician 
                training programs;
                    (B) that submits to the Secretary an application 
                for such year in accordance with section 3032; and
                    (C) if the entity has an approved physician 
                training program in primary health care, that rotates 
                individuals enrolled in the program to health centers 
                or other community programs in underserved urban or 
                rural areas.
            (2) Entities included.--The term ``qualified applicant'' 
        may include a teaching hospital, medical school, group 
        practice, an entity representing two or more parties engaged in 
        a formal association, a community health center or another 
        entity operating an approved physician training program.
    (d) Treatment of Podiatric and Dental Residency Programs.--For the 
purposes of chapters 1 and 3 of subpart C, an approved physician 
training program includes training programs approved by the Commission 
on Dental Accreditation or the Council of Podiatric Medical Education 
of the American Podiatric Medical Association. This subsection shall 
not apply for purposes of subpart B.

SEC. 3032. APPLICATION FOR PAYMENTS.

    (a) In General.--
            (1) In general.--For purposes of section 3031(a), an 
        application for payments under such section for a calendar year 
        is in accordance with this section if--
                    (A) the eligible entity involved submits the 
                application not later than the date specified by the 
                Secretary;
                    (B) the application demonstrates that the condition 
                described in subsection (b) is met with respect to the 
                program;
                    (C) the application contains each funding agreement 
                described in this part and the application provides 
                such assurances of compliance with the agreements as 
                the Secretary may require; and
                    (D) the application is in such form, is made in 
                such manner, and contains such agreements, assurances, 
                and information as the Secretary determines to be 
                necessary to carry out this part.
            (2) Certain entities.--If an applicant under paragraph (1) 
        is an entity representing two or more parties--
                    (A) the application shall contain a written 
                agreement, signed by all participants, in which all of 
                the participants agree as to the manner in which the 
                payments will be allocated; and
                    (B) the applicant shall agree to submit additional 
                documentation, if requested by the National Council, 
                that demonstrates that the funds are distributed in the 
                manner agreed upon by all participants.
    (b) Certain Conditions.--An eligible entity meets the condition 
described in this subsection for receiving payments under section 3031 
for a calendar year if--
            (1) the entity agrees to use such funds only to support an 
        approved physician training program;
            (2) with respect to--
                    (A) a specialty for which programs have received 
                allocations under section 3013, the entity agrees that 
                funds will only be used to support approved training 
                programs for which the number of specialists in 
                training is consistent with the allotment under section 
                3013; and
                    (B) a specialty for which a voluntary program has 
                received allocations under section 3012(e), the entity 
                agrees that funds will only be used to support approved 
                training programs for which the number of specialists 
                in training is consistent with the targets under 
                section 3012(e); and
            (3) the application of the entity contains a written 
        agreement, signed by all participants, in which all 
        participants agree to the manner in which the payments will be 
        allocated; and
            (4) the entity agrees to submit additional documentation, 
        if requested by the National Council, that demonstrates that 
        the funds will be distributed in a manner agreed upon by all 
        participants.

SEC. 3033. AVAILABILITY OF FUNDS FOR PAYMENTS; ANNUAL AMOUNT OF 
              PAYMENTS.

    (a) Annual Health Professions Workforce Account.--Subject to 
paragraph (2), the amount available for a calendar year for making 
payments under sections 3031 and 3061 (constituting an account to be 
known as the annual health professions workforce account) is the 
following, as applicable to the calendar year:
            (1) In the case of calendar year 1996, $3,200,000,000.
            (2) In the case of calendar year 1997, $3,550,000,000.
            (3) In the case of calendar year 1998, $4,800,000,000.
            (4) In the case of each of the calendar years 1999 and 
        2000, $5,800,000,000.
            (5) In the case of each subsequent calendar year, the 
        amount specified in paragraph (4) increased by the product of 
        such amount and the general health care inflation factor for 
        such year (as defined in subsection (d)).
    (b) Amount of Payments for Individual Eligible entities.--
            (1) In general.--Payment amounts with respect to any 
        physician training program under this section shall be equal to 
        the product of the number of full time equivalent training 
        participants in the program, and the per resident amount for 
        the training program.
            (2) Per resident amount.--The per resident amount for a 
        training program shall be equal to--
                    (A) with respect to--
                            (i) the first calendar years during which 
                        the program is in operation, 90 percent;
                            (ii) the second calendar years during which 
                        the program is in operation, 80 percent;
                            (iii) the third calendar years during which 
                        the program is in operation, 70 percent;
                            (iv) the fourth calendar years during which 
                        the program is in operation, 60 percent; and
                            (v) the fifth and subsequent calendar years 
                        during which the program is in operation, 50 
                        percent;
                of the all payer hospital per resident cost; and
                    (B) with respect to--
                            (i) the first calendar years during which 
                        the program is in operation, 10 percent;
                            (ii) the second calendar years during which 
                        the program is in operation, 20 percent;
                            (iii) the third calendar years during which 
                        the program is in operation, 30 percent;
                            (iv) the fourth calendar years during which 
                        the program is in operation, 40 percent; and
                            (v) the fifth and subsequent calendar years 
                        during which the program is in operation, 50 
                        percent;
                of the geographically adjusted national average per 
                resident amount.
            (3) Adjustment factor.--Payments under this section shall 
        be subject to an adjustment factor, as determined by the 
        Secretary, so that total payments in any year will not exceed 
        the amounts specified in section 3033(a) and as provided in 
        section 3033(c).
            (4) Additional provisions regarding national average 
        cost.--
                    (A) The Secretary shall in accordance with 
                paragraph (1)(B) determine, for academic year 1992-93, 
                an amount equal to the national average described in 
                such paragraph with respect to training a participant 
                in an approved physician training program in the 
                medical specialty involved. The national average 
                applicable under such paragraph for a calendar year for 
                such programs is, subject to subparagraph (B), the 
                amount determined under the preceding sentence 
                increased by the amount necessary to offset the effects 
                of inflation occurring since academic year 1992-93, as 
                determined through use of the consumer price index.
                    (B) The national average determined under 
                subparagraph (A) and applicable to a calendar year 
                shall, in the case of the eligible entity involved, be 
                adjusted by a factor to reflect regional differences in 
                the applicable wage and wage-related costs.
            (5) Funding level and allocation method.--Not later than 
        January 1, 1998, the Secretary shall complete a study to 
        determine the effect of the funding level and allocation method 
        described in subsection (a) and paragraphs (1) and (2) of this 
        subsection on the operation of training programs and shall 
        compile the findings and recommendations derived from such 
        study in a report to be submitted to the President and the 
        Congress.
    (c) Limitation.--If, subject to subsection (a)(2), the annual 
health professions workforce account available for a calendar year is 
insufficient for providing each eligible entity with the amount of 
payments determined under subsection (b) for the entity for such year, 
the Secretary shall make such pro rata reductions in the amounts so 
determined as may be necessary to ensure that the total of payments 
made under section 3031 for such year equals the total of such account.
    (d) Definitions.--For purposes of this subtitle:
            (1) The term ``annual health professions workforce 
        account'' means the account established pursuant to subsection 
        (a)(1).
            (2) The term ``consumer price index'' has the meaning given 
        such term in section 1902(11).
            (3) The term ``general health care inflation factor'', with 
        respect to a year, has the meaning given such term in section 
        6001(a)(3) for such year.

                 CHAPTER 2--MEDICAL SCHOOL FUND ACCOUNT

SEC. 3041. FEDERAL PAYMENTS TO THE MEDICAL SCHOOL FUND.

    (a) In General.--In the case of an eligible medical school that in 
accordance with section 3042 submits to the Secretary an application 
for academic year 1996, or any subsequent academic year, the Secretary 
shall make payments for such year to the school for the purpose 
specified in subsection (b). The Secretary shall make the payments in 
an amount determined in accordance with section 3043, and shall 
administer the payments as a grant.
    (b) Payments for the Medical School Fund.--The purpose specified in 
this subsection is to assist an eligible medical school with the direct 
costs of academic programs, including the education of medical students 
(especially in ambulatory and preventive medicine), graduate students 
in biomedical sciences, and otherwise unfunded faculty research. A 
funding agreement for such payments is that the medical school involved 
will expend the payments only for direct expenses determined as 
allowable by the Secretary.
    (c) Eligible medical school; Subpart Definition.--For purposes of 
this subpart, the term ``eligible medical school'' with respect to the 
academic year involved, means an approved medical school that submits 
to the Secretary an application for such year in accordance with 
section 3043.

SEC. 3042. APPLICATION FOR PAYMENTS.

    For purposes of section 3041(a), an application for payments under 
such section for an academic year is in accordance with this section 
if--
            (1) the dean (or appropriate presiding official) of the 
        eligible medical school submits the application not later than 
        the date specified by the Secretary;
            (2) the application contains each funding agreement 
        described in this subpart and provides such assurances of 
        compliance with the agreements as the Secretary may require; 
        and
            (3) the application is in such form, is made in such 
        manner, and contains such agreements, assurances, and 
        information as the Secretary determines to be necessary to 
        carry out this part.

SEC. 3043. AVAILABILITY OF FUNDS FOR PAYMENTS; ANNUAL AMOUNT OF 
              PAYMENTS.

    (a) Annual Medical School Fund Account.--Subject to section 3043, 
the amount available for an academic year for making payments under 
section 3041 (constituting an account to be known as the annual medical 
school fund account) shall be the following, as applicable to the 
academic year:
            (1) In the case of academic year 1996, $200,000,000.
            (2) In the case of academic year 1997, $300,000,000.
            (3) In the case of academic year 1998, $400,000,000.
            (4) In the case of academic year 1999, $500,000,000.
            (5) In the case of academic year 2000, $600,000,000.
            (6) In the case of each subsequent calendar year, the 
        amount specified in paragraph (5) increased by the product of 
        such amount and the general health care inflation factor (as 
        defined in subsection (d)).
    (b) Amount of Payments for Individual Eligible Programs.--Subject 
to the annual medical school fund account available for an academic 
year, the amount of payment required under section 3041 to be made to 
an eligible medical school for the academic year is an amount equal to 
the sum of--
            (1) the product of \3/4\ of the fund account available and 
        the proportion of full-time equivalent students at the eligible 
        medical school in academic year 1993-1994 compared to all full-
        time equivalent students enrolled in eligible medical schools 
        nationwide in academic year 1993-1994; and
            (2) the product of \1/4\ of the fund account available and 
        the proportion of research conducted by the faculty at the 
        eligible medical school compared to all research conducted by 
        the faculty at all eligible medical schools nationwide.
The Secretary shall establish a method for measuring faculty research 
contributions.
    (c) Studies.--
            (1) Funding level and allocation method.--Not later than 
        January 1, 1998, the Secretary shall arrange for an independent 
        study and report to be completed, by the Institute of Medicine 
        or other similar entity, concerning the amount of and 
        allocation method for medical school funding. Such report shall 
        be submitted to the President and the Congress and shall 
        include findings and recommendation as to the appropriateness 
        of modifying funding levels or allocation.
            (2) Not later than January 1, 2000, the Secretary shall 
        arrange for an independent study and report to be completed, by 
        the Institute of Medicine or other similar entity, concerning 
        the impact of health reform on undergraduate and graduate 
        medical education. Such report shall be submitted to the 
        President and the Congress and shall include appropriate 
        findings and recommendations.
    (d) Definitions.--As used in this subtitle:
            (1) The term ``annual medical school fund account'' means 
        the account established under subsection (a).
            (2) The term ``general health care inflation factor'' with 
        respect to a year, has the meaning given such term in section 
        6001(a)(3) for such year.

                   CHAPTER 3--ACADEMIC HEALTH CENTERS

SEC. 3051. FEDERAL FORMULA PAYMENTS TO ACADEMIC HEALTH CENTERS.

    (a) In General.--In the case of a qualified academic health center 
or qualified teaching hospital that in accordance with section 3052 
submits to the Secretary a written request for calendar year 1996 or 
any subsequent calendar year, the Secretary shall make payments for 
such year to the center or hospital for the purpose specified in 
subsection (b). The Secretary shall make the payments in an amount 
determined in accordance with section 3053, and may administer the 
payments as a contract, grant, or cooperative agreement.
    (b) Payments for Costs Attributable to Academic Nature of 
Institutions.--The purpose of payments under subsection (a) is to 
assist eligible institutions with costs that are not routinely incurred 
by other entities in providing health services, but are incurred by 
such institutions in providing health services by virtue of the 
academic nature of such institutions. Such costs include--
            (1) with respect to productivity in the provision of health 
        services, costs resulting from the reduced rate of productivity 
        of faculty due to teaching responsibilities;
            (2) the uncompensated costs of clinical research; and
            (3) exceptional costs associated with the treatment of 
        health conditions with respect to which an eligible institution 
        has specialized expertise (including treatment of rare 
        diseases, treatment of unusually severe conditions, and 
        providing other specialized health care).
    (c) Definitions.--
            (1) Academic health center.--For purposes of this subtitle, 
        the term ``academic health center'' means an entity that 
        operates a teaching hospital that carries out an approved 
        physician training program.
            (2) Teaching hospital.--For purposes of this subtitle, the 
        term ``teaching hospital'' means a hospital that operates an 
        approved physician training program (as defined in section 
        3011(b) or section 3031(d)).
            (3) Qualified center or hospital.--For purposes of this 
        subtitle:
                    (A) The term ``qualified academic health center'' 
                means an academic health center that operates a 
                teaching hospital.
                    (B) The term ``qualified teaching hospital'' means 
                any teaching hospital other than a teaching hospital 
                that is operated by an academic health center.
            (4) Eligible institution.--For purposes of this subtitle, 
        the term ``eligible institution'', with respect to a calendar 
        year, means a qualified academic health center, or a qualified 
        teaching hospital, that submits to the Secretary a written 
        request in accordance with section 3052.

SEC. 3052. REQUEST FOR PAYMENTS.

  (a) In General.--For purposes of section 3051, a written request for 
payments under such section is in accordance with this section if the 
qualified academic health center or qualified teaching hospital 
involved submits the request not later than the date specified by the 
Secretary; the request is accompanied by each funding agreement 
described in this part; and the request is in such form, is made in 
such manner, and contains such agreements, assurances, and information 
as the Secretary determines to be necessary to carry out this part.
    (b) Continued Status as Academic Health Center.--A funding 
agreement for payments under section 3051 is that the qualified 
academic health center or qualified teaching hospital involved will 
maintain status as such a center or hospital, respectively. For 
purposes of this subtitle, the term ``funding agreement'', with respect 
to payments under section 3051 to such a center or hospital, means that 
the Secretary may make the payments only if the center or hospital 
makes the agreement involved.

SEC. 3053. AVAILABILITY OF FUNDS FOR PAYMENTS; ANNUAL AMOUNT OF 
              PAYMENTS.

    (a) Annual Academic Health Center Account.--The amount available 
for a calendar year for making payments under section 3051 
(constituting an account to be known as the annual academic health 
center account) is the following, as applicable to the calendar year:
            (1) In the case of calendar year 1996, $6,280,000,000.
            (2) In the case of calendar year 1997, $7,250,000,000.
            (3) In the case of calendar year 1998, $8,220,000,000.
            (4) In the case of calendar year 1999, $9,400,000,000.
            (5) In the case of calendar year 2000, $10,640,000,000.
            (6) In the case of each subsequent calendar year, the 
        amount specified in paragraph (5) increased by the product of 
        such amount and the general health care inflation factor (as 
        defined in subsection (d)).
    (b) Amount of Payments for Individual Eligible Institutions.--
            (1) Formula.--The amount of payments required in section 
        3051 to be made to an eligible institution for a calendar year 
        is an amount equal to the product of--
                    (A) the annual academic health center account 
                available for the calendar year; and
                    (B) the percentage constituted by the ratio of--
                            (i) the product of--
                                    (I) the sum, for all discharges of 
                                individuals, of the amounts otherwise 
                                paid on behalf of such individuals; and
                                    (II) an adjustment factor equal to 
                                1.200 multiplied by (((1+r) to the nth 
                                power) - 1), where ``r'' equals the 
                                ratio of the hospital's full-time 
                                equivalent interns and residents to 
                                beds and ``n'' equals .405; and
                            (ii) the sum of the respective amounts 
                        determined under clause (i) for eligible 
                        institutions.
            (2) Adjustment factor.--Payments under this section shall 
        be subject to an adjustment factor, as determined by the 
        Secretary, so that total payments in any year will not exceed 
        the amounts specified in section 3033(a) and as provided in 
        section 3033(c).
    (c) Report Regarding Modifications in Formula.--Not later than July 
1, 2000, the Secretary shall submit to the Congress a report containing 
any recommendations of the Secretary for the modification of the 
program of formula payments described in this chapter. In preparing 
such report the Secretary shall consider--
            (1) the costs described in subsection (b) incurred by 
        academic health centers;
            (2) the adequacy of the formula payments established in 
        this chapter to cover such costs, taking into account any 
        additional revenues to cover such costs paid by other payers, 
        including private health plans;
            (3) the importance to the maintenance of a quality national 
        health care system of academic health centers in providing for 
        the training of health professionals, in conducting clinical 
        research, and in providing innovative, technically advanced 
        care; and
            (4) the overall impact of the reformed health care system 
        on the ability of academic health centers to perform such 
        functions.
    (d) Definition.--For purposes of this subtitle:
            (1) The term ``annual academic health center account'' 
        means the account established pursuant to subsection (a).
            (2) The term ``general health care inflation factor'', with 
        respect to a year, has the meaning given such term in section 
        6001(a)(3) for such year.

                     Subpart D--General Provisions

SEC. 3055. DEFINITIONS.

    For purposes of this subtitle:
            (1) The term ``academic year'' has the meaning given such 
        term in section 3011(b).
            (2) The term ``allocation period'' has the meaning given 
        such term in section 3013(d).
            (3) The term ``annual health professions workforce 
        account'' has the meaning given such term in section 3033(d).
            (4) The term ``annual number of specialty positions'' has 
        the meaning given such term in section 3012(e).
            (5) The term ``approved physician training program'' has 
        the meaning given such term in section 3011(b).
            (6) The term ``consumer price index'' has the meaning given 
        such term in section 3033(d).
            (7) The term ``designation period'' has the meaning given 
        such term in section 3012(e).
            (8) The term ``eligible entity'' has the meaning given such 
        term in section 3011(b), in the case of subpart B; and has the 
        meaning given such term in section 3031(c), in the case of 
        subpart C.
            (9) The term ``funding agreement'' has the meaning given 
        such term in section 3011(b).
            (10) The term ``general health care inflation factor'' has 
        the meaning given such term in section 3033(d).
            (11) The term ``medical school'' has the meaning given such 
        term in section 3001(e).
            (12) The term ``medical specialty'' has the meaning given 
        such term in section 3011(b).
            (13) The term ``National Council'' has the meaning given 
        such term in section 3001(e).
            (14) The term ``primary health care'' has the meaning given 
        such term in section 3012(e).
            (15) The term ``specialty position'' has the meaning given 
        such term in section 3012(e).
            (16) The term ``training participant'' has the meaning 
        given such term in section 3012(e).

                   Subpart E--Transitional Provisions

SEC. 3061. TRANSITIONAL PAYMENTS TO INSTITUTIONS.

    (a) Payments Regarding Effects of Subpart B Allocations.--For each 
of the four calendar years specified in subsection (b)(2), in the case 
of an eligible entity that submits to the Secretary an application for 
such year in accordance with subsection (d), the Secretary shall make 
payments for the year to the entity for the purpose specified in 
subsection (c). The Secretary shall make the payments in an amount 
determined in accordance with subsection (e), and may administer the 
payments as a contract, grant, or cooperative agreement.
    (b) Eligible Entities Losing Specialty Positions; Relevant Years 
Regarding Payments.--
            (1) Eligible entities losing specialty positions.--The 
        Secretary may make payments under subsection (a) to an eligible 
        entity only if, with respect to the calendar year involved, the 
        entity meets the following conditions:
                    (A) The entity operates or operated in the year 
                preceding the initiation of transitional payments one 
                or more programs that--
                            (i) are or were at the time they terminated 
                        approved physician training programs; and
                            (ii) are or were at the time they 
                        terminated receiving payments under section 
                        3031 for such year.
                    (B) The aggregate number of speciality positions in 
                such programs (in the medical specialities with respect 
                to which such payments are made) is below the aggregate 
                number of such positions at the entity for academic 
                year 1993-94 as a result of allocations under subpart 
                B, or as a result of voluntary changes under section 
                3012(e) prior to January 1, 2000.
            (2) Relevant years.--The Secretary may make payments under 
        subsection (a) to an eligible entity only for the first four 
        calendar years after the initial calendar year for which the 
        entity meets the conditions described in paragraph (1).
            (3) Eligible entity.--For purposes of this section, the 
        term ``eligible entity'' means an entity that submits to the 
        Secretary an application in accordance with subsection (d).
    (c) Purpose of Payments.--The purpose of payments under subsection 
(a) is to assist an eligible entity with the costs of operation. A 
funding agreement for such payments is that the entity involved will 
expend the payments only for such purpose.
    (d) Application for Payments.--For purposes of subsection (a), an 
application for payments under such subsection is in accordance with 
this subsection if--
            (1) the eligible entity involved submits the application 
        not later than the date specified by the Secretary;
            (2) the application demonstrates that the entity meets the 
        conditions described in subsection (b)(1) and that the entity 
        has cooperated with the approved physician training programs of 
        the entity in meeting the condition described in section 
        3032(b);
            (3) the application contains each funding agreement 
        described in this subpart and the application provides such 
        assurances of compliance with the agreements as the Secretary 
        may require; and
            (4) the application is in such form, is made in such 
        manner, and contains such agreements, assurances, and 
        information as the Secretary determines to be necessary to 
        carry out this subpart.
    (e) Amount of Payments.--
            (1) In general.--Subject to the annual health professions 
        workforce account available for the calendar year involved, the 
        amount of payments required in subsection (a) to be made to an 
        eligible entity for such year is the product of the amount 
        determined under paragraph (2) and the applicable percentage 
        specified in paragraph (3).
            (2) Number of specialty positions lost.--For purposes of 
        paragraph (1), the amount determined under this paragraph for 
        an eligible entity for the calendar year involved is the 
        product of--
                    (A) an amount equal to the aggregate number of 
                full-time equivalent specialty positions lost; and
                    (B) the amount that would be received under section 
                3033 for each speciality position lost.
            (3) Applicable percentage.--For purposes of paragraph (1), 
        the applicable percentage for a calendar year is the following, 
        as applicable to such year:
                    (A) For the first calendar year after calendar year 
                1995 for which the eligible entity involved meets the 
                conditions described in subsection (b)(1), 100 percent.
                    (B) For the second such year, 75 percent.
                    (C) For the third such year, 50 percent.
                    (D) For the fourth such year, 25 percent.
            (4) Determination of specialty positions lost.--
                    (A) For purposes of this subsection, the aggregate 
                number of specialty positions lost, with respect to a 
                calendar year, is the difference between--
                            (i) the aggregate number of specialty 
                        positions described in subparagraph (B) that 
                        are estimated for the eligible entity involved 
                        for the academic year beginning in such 
                        calendar year; and
                            (ii) the aggregate number of such specialty 
                        positions at the entity for academic year 1993-
                        94.
                    (B) For purposes of subparagraph (A), the specialty 
                positions described in this subparagraph are specialty 
                positions in the medical specialities with respect to 
                which payments under section 3031 are made to the 
                approved physician training programs of the eligible 
                entities involved.
            (5) Additional provision regarding national average 
        salary.--
                    (A) The Secretary shall determine, for academic 
                year 1992-93, an amount equal to the national average 
                described in paragraph (2)(B). The national average 
                applicable under such paragraph for a calendar year is, 
                subject to subparagraph (B), the amount determined 
                under the preceding sentence increased by an amount 
                necessary to offset the effects of inflation occurring 
                since academic year 1992-93, as determined through use 
                of the consumer price index.
                    (B) The national average determined under 
                subparagraph (A) and applicable to a calendar year 
                shall, in the case of the eligible entity involved, be 
                adjusted by a factor to reflect regional differences in 
                the applicable wage and wage-related costs.

 PART 2--INSTITUTIONAL COSTS OF GRADUATE NURSING EDUCATION; WORKFORCE 
                               PRIORITIES

SEC. 3071. AUTHORIZED GRADUATE NURSE TRAINING POSITIONS; INSTITUTIONAL 
              COSTS.

    (a) Program Regarding Graduate Nurse Training Programs.--The 
Secretary shall, in accordance with this part, carry out a program with 
respect to graduate nurse training programs that is equivalent to the 
program carried out under part 1 with respect to approved physician 
training programs.
    (b) Definitions.--For purposes of this part:
            (1) The term ``graduate nurse training programs'' means 
        programs for advanced nurse education, programs for education 
        as nurse practitioners, programs for education as nurse 
        midwives, programs for education as nurse anesthetists, and 
        such other programs for training in clinical nurse specialties 
        as are determined by the Secretary to require advanced 
        education.
            (2) The term ``graduate nurse training position'' means a 
        position as an individual who is enrolled in a graduate nurse 
        training program.
            (3) The term ``programs for advanced nurse education'' 
        means programs meeting the conditions to be programs for which 
        awards of grants and contracts may be made under section 821 of 
        the Public Health Service Act.
            (4) The term ``programs for education as nurse 
        practitioners'' means programs meeting the conditions to be 
        programs for which awards of grants and contracts may be made 
        under section 822 of the Public Health Service Act for 
        education as a nurse practitioners.
            (5) The term ``programs for education as nurse midwives'' 
        means programs meeting the conditions to be programs for which 
        awards of grants and contracts may be made under section 822 of 
        the Public Health Service Act for education as nurse midwives.
            (6) The term ``programs for education as nurse 
        anesthetists'' means programs meeting the conditions to be 
        programs for which awards of grants may be made under section 
        831 of the Public Health Service Act for education as nurse 
        anesthetists.

SEC. 3072. APPLICABILITY OF PART 1 PROVISIONS.

    (a) In General.--The provisions of part 1 apply to the program 
carried out under section 3071 to the same extent and in the same 
manner as such provisions apply to the program carried out under part 
1, subject to the subsequent provisions of this section. Section 3061 
does not apply for purposes of the preceding sentence.
    (b) National Council.--With respect to section 3001 as applied to 
this part, the council shall be known as the National Council on 
Graduate Nurse Education (in this part referred to as the ``National 
Council''). The provisions of section 851 of the Public Health Service 
Act regarding the composition of the council under such section apply 
to the composition of the National Council to the same extent and in 
the same manner as such provisions apply to the council under such 
section 851.
    (c) Allocation of Graduate Nurse Training Positions; Formula 
Payments for Operating Costs.--With respect to subparts B and C of part 
1 as applied to this part--
            (1) the funding agreement described in section 3011 is to 
        be made by graduate nurse training programs;
            (2) the applicable accrediting bodies described in section 
        3011 for graduate nurse training programs are the National 
        League of Nursing and others determined to be appropriate by 
        the Secretary;
            (3) designations under section 3012 and allocations under 
        section 3013 apply to graduate nurse training positions; and
            (4) payments under section 3031 are to be made to graduate 
        nurse training programs, subject to the requirements for such 
        payments.

SEC. 3073. FUNDING.

    (a) In General.--With respect to section 3033 as applied to this 
part, the provisions of this section apply.
    (b) Annual Graduate Nurse Training Account.--The amount available 
for each of the calendar years 1996 through 2000 for making payments 
pursuant to section 3072(c)(4) to graduate nurse training programs 
(constituting an account to be known as the annual graduate nurse 
training account) is $200,000,000.

                        PART 3--RELATED PROGRAMS

                    Subpart A--Workforce Development

SEC. 3081. PROGRAMS OF THE SECRETARY OF HEALTH AND HUMAN SERVICES.

    (a) In General.--
            (1) Funding.--For purposes of carrying out the programs 
        described in this section, there is authorized to be 
        appropriated $100,000,000 for each of the fiscal years 1995 and 
        1996, and $150,000,000 for each of the fiscal years 1997 
        through 2000 (in addition to amounts that may otherwise be 
        authorized to be appropriated for carrying out the programs).
            (2) Administration.--The programs described in this section 
        and carried out with amounts made available under subsection 
        (a) shall be carried out by the Secretary of Health and Human 
        Services.
    (b) Primary Care Physician and Physician Assistant Training.--For 
purposes of subsection (a), the programs described in this section 
include programs to support projects to train additional numbers of 
primary care physicians and physician assistants, including projects to 
enhance community-based generalist training for medical students, 
residents, and practicing physicians; to retrain mid-career physicians 
previously certified in a nonprimary care medical specialty; to expand 
the supply of physicians with special training to serve in rural and 
inner-city medically underserved areas; to support expansion of 
service-linked educational networks that train a range of primary care 
providers in community settings; to provide for training in managed 
care, cost-effective practice management, and continuous quality 
improvement; to provide interdisciplinary training for medical 
students, residents or practicing physicians, and dental students, 
residents, and dental hygienists, to deliver primary care to 
individuals with mental, physical, and developmental disabilities, 
including mental retardation, particularly those who are more than 18 
years of age; and to develop additional information on primary care 
workforce issues as required to meet future needs in health care.
    (c) Training of Underrepresented Racial and Ethnic Minorities and 
Disadvantaged Persons.--For purposes of subsection (a), the programs 
described in this section include a program to support projects to 
increase the number of racial and ethnic underrepresented minority and 
disadvantaged persons in medicine, osteopathy, dentistry, advanced 
practice nursing, public health, psychology, and other health 
professions, including projects to provide continuing financial 
assistance for such persons entering health professions training 
programs; for financial assistance for facility renovation or 
construction; to increase support for recruitment and retention of such 
persons in the health professions; to maintain efforts to foster 
interest in health careers among such persons at the preprofessional 
level; and to increase the number of racial and ethnic minority health 
professions faculty at programs that have a significant number of 
underrepresented racial and ethnic minorities.
    (d) Expanding Rural Health Career Opportunities and Retention 
Efforts.--
            (1) In general.--For purposes of subsection (a), the 
        programs described in this section include programs to support 
        projects to increase the number of individuals living in rural, 
        underserved communities who enter the fields of medicine, 
        osteopathy, dentistry, advanced practice nursing, public 
        health, psychology, and other health professions, and to 
        encourage the retention of such health care professionals in 
        rural, underserved communities.
            (2) Rural health career training.--Projects to increase the 
        number of individuals recruited from rural, underserved areas 
        include projects--
                    (A) to provide continuing financial assistance for 
                such persons entering health professions education and 
                training programs;
                    (B) to increase efforts to foster interest in 
                health careers among such persons at the 
                preprofessional level;
                    (C) to foster the development of training curricula 
                appropriate to rural health care settings; and
                    (D) to increase support for recruitment of such 
                persons in the health professions.
            (3) Retention of rural health care providers.--Projects to 
        encourage the retention of individuals providing health care in 
        rural, underserved areas include projects--
                    (A) to establish State and regional locum tenans 
                programs in rural health care settings so that 
                substitute health care providers are available when 
                permanent staff is absent from the health care setting;
                    (B) to implement programs to foster 
                interdisciplinary team approaches to rural health 
                training and practice; and
                    (C) to develop state-of-the-art network 
                telecommunications and telemedicine systems to link 
                rural health professionals to other health care 
                providers and academic health care centers.
    (e) Nurse Training.--For purposes of subsection (a), the programs 
described in this section include a program to support projects to 
support midlevel provider training and address priority nursing 
workforce needs, including projects to train additional nurse 
practitioners and nurse midwives; to support baccalaureate-level nurse 
training programs providing preparation for careers in teaching, 
community health service, and specialized clinical care; to train 
additional nurse clinicians and nurse anesthetists; to support 
interdisciplinary school-based community nursing programs; and to 
promote research on nursing workforce issues.
    (f) Inappropriate Practice Barriers; Full Utilization of Skills.--
For purposes of subsection (a), the programs described in this section 
include a program--
            (1) to develop and encourage the adoption of model 
        professional practice statutes for advanced practice nurses and 
        physician assistants, and to otherwise support efforts to 
        remove inappropriate barriers to practice by such nurses and 
        such physician assistants; and
            (2) to promote the full utilization of the professional 
        education and clinical skills of advanced practice nurses and 
        physician assistants.
    (g) Advisory Board on Health Care Workforce Development.--
            (1) In general.--The Secretary shall establish an Advisory 
        Board known as the National Advisory Board on Health Care 
        Workforce Development to advise, consult with, and make 
        recommendations to the Secretary and to the Secretary of Labor 
        on matters relating to--
                    (A) health care worker supply and its adequacy to 
                assure proper health care delivery system staffing in 
                both rural and urban areas; and
                    (B) the impact of this Act, and of related changes 
                in law regarding health care, on health care workers 
                and the needs of such workers, including needs 
                regarding education, training, and other career 
                development matters.
            (2) Composition.--The Board established under paragraph (1) 
        shall be composed of the following members with expertise in 
        health care workforce issues appointed by the Secretary in 
        consultation with the Secretary of Labor:
                    (A) Five representatives of labor organizations 
                representing health care workers.
                    (B) Five representatives of health institutions.
                    (C) Two representatives from health care education 
                organizations.
                    (D) Two representatives from consumer 
                organizations.
            (3) Assistance.--The Secretary shall provide the Board with 
        such administrative assistance as may be necessary for the 
        Board to carry out this subsection.
    (h) Other Programs.--For purposes of subsection (a), the programs 
described in this section include a program to train health 
professionals and administrators in managed care, cost-effective 
practice management, continuous quality improvement practices, and 
provision of culturally sensitive care.
    (i) Relationship to Existing Programs.--This section may be carried 
out through programs established in title VII or VIII of the Public 
Health Service Act, as appropriate and as consistent with the purposes 
of such programs.
    (j) Mental Retardation and Other Developmental Disabilities.--Title 
VII of the Public Health Service Act is amended by inserting after 
section 778, the following new section:

``SEC. 779. MENTAL RETARDATION AND OTHER DEVELOPMENTAL DISABILITIES.

    ``(a) In General.--The Secretary may make grants and enter into 
contracts with university affiliated programs, schools of medicine, and 
schools of dentistry to assist in meeting the costs of such programs or 
schools to--
            ``(1) improve the interdisciplinary training of primary 
        care physicians and dentists in the health care services needs 
        of individuals with mental, physical, and developmental 
        disabilities, including mental retardation, particularly those 
        who are more than 18 years of age;
            ``(2) develop, evaluate, and disseminate curricula relating 
        to the health care service needs of individuals with mental, 
        physical, and developmental disabilities, including mental 
        retardation, particularly those individuals who are more than 
        18 years of age;
            ``(3) support the training and retraining of faculty to 
        provide such instruction; and
            ``(4) support continuing education of health professionals 
        who provide health care services and support to individuals 
        with mental, physical, and developmental disabilities, 
        including mental retardation, particularly those who are more 
        than 18 years of age.
    ``(b) Authorization of Appropriations.--For purposes of carrying 
out this section, there are authorized to be appropriated, $10,000,000 
for each of the fiscal years 1995 through 2000.''.

SEC. 3082. PROGRAMS OF THE SECRETARY OF LABOR.

    (a) In General.--
            (1) Funding.--For purposes of carrying out the programs 
        described in this section, and for carrying out section 3083, 
        there is authorized to be appropriated $200,000,000 for fiscal 
        year 1994 and each subsequent fiscal year (in addition to 
        amounts that may otherwise be authorized to be appropriated for 
        carrying out the programs).
            (2) Administration.--The programs described in this section 
        and carried out with amounts made available under subsection 
        (a) shall be carried out by the Secretary of Labor (in this 
        section referred to as the ``Secretary'').
    (b) Retraining Programs; Advanced Career Positions; Workforce 
Adjustment Programs.--
            (1) In general.--For purposes of subsection (a), the 
        programs described in this section are the following:
                    (A) A program for skills upgrading and occupational 
                retraining (including retraining health care workers 
                for more advanced positions as technicians, nurses, and 
                physician assistants), and for quality and workforce 
                improvement.
                    (B) A demonstration program to assist workers in 
                health care institutions in obtaining advanced career 
                positions.
                    (C) A program to develop and operate health care 
                and health insurance industry worker job banks in local 
                employment services agencies or one-stop career 
                centers, subject to the following:
                            (i) Such job banks shall be available to 
                        all health care providers in the community 
                        involved.
                            (ii) Such job banks shall begin operation 
                        not later than 90 days after the date of the 
                        enactment of this Act.
                            (iii)(I) With respect to each affected 
                        community, the local employment service agency 
                        or one-stop career center serving such 
                        community shall be allocated not less than one 
                        counselor whose responsibility it shall be to 
                        develop and operate health and insurance 
                        industry worker job banks. Where the impact of 
                        health care industry restructuring in the 
                        affected community is such that the functions 
                        required under this clause cannot be adequately 
                        provided by one counselor, additional 
                        counselors shall be allocated to carry out such 
                        functions.
                            (II) Such counselor shall solicit job 
                        openings from local health care industry 
                        employers, maintain frequent contacts with 
                        these and other employers, and monitor and 
                        update all job listings appropriate for 
                        displaced health care and health insurance 
                        industry workers seeking employment.
                            (III) The local employment service agency 
                        or one-stop career center shall provide 
                        directly, or facilitate the provision of, labor 
                        exchange services to displaced health care and 
                        insurance industry workers, including 
                        assessment, counseling, testing, job-search 
                        assistance, job referral and placement, and 
                        referral to training and educational programs, 
                        where appropriate.
                            (IV) The Secretary of Labor shall develop 
                        performance goals for the effective performance 
                        of such job banks with respect to the number 
                        and quality of jobs listed, the degree of 
                        participation by employers in the affected 
                        community, and success in placement of job bank 
                        users in jobs listed, taking into account 
                        specific geographic, economic and labor market 
                        characteristics of the community served.
                    (D) A program to provide for joint labor-management 
                decision-making in the health care sector on workplace 
                matters related to the restructuring of the health care 
                delivery system provided for in this Act.
                    (E) A program to collect data regarding the 
                adequacy of the supply of health care workers by 
                occupation and sector of the health industry in light 
                of existing and projected demand for such workers.
                    (F)(i) A program to encourage the adoption and 
                utilization of high performance, high quality health 
                care delivery systems, including employee participation 
                committees and employee team systems that will 
                contribute to more effective health care by increasing 
                the role and the area of independent decisionmaking of 
                health care workers.
                    (ii) For purposes of this subparagraph, the term 
                ``employee participation committees'' means committees 
                of workers independently selected by and from a 
                facility's nonmanagerial workforce, or selected by 
                unions where collective bargaining agreements are in 
                effect, and which operate independently without 
                employer interference and consult with management on 
                issues of efficiency, productivity, and quality of 
                care, except that an employee participation committee 
                established under and operating in conformity with this 
                subparagraph shall not be considered a labor 
                organization within the meaning of section 2(5) of the 
                National Labor Relations Act or a representative within 
                the meaning of section 1, sixth, of the Railway Labor 
                Act.
            (2) Use of funds.--Amounts made available under subsection 
        (a) for carrying out this section may be expended for program 
        support, faculty development, trainee support, workforce 
        analysis, and dissemination of information, as necessary to 
        produce required performance outcomes.
    (c) Certain Requirements for Programs.--In carrying out the 
programs described in subsection (b), the Secretary shall, with respect 
to the organizations and employment positions involved, provide for the 
following:
            (1) Explicit, clearly defined skill requirements developed 
        for all the positions and projections of the number of openings 
        for each position.
            (2) Opportunities for internal career movement.
            (3) Opportunities to work while training or completing an 
        educational program.
            (4) Evaluation and dissemination.
            (5) Training opportunities in several forms, as 
        appropriate.
    (d) Administrative Requirements.--In carrying out the programs 
described in subsection (b), the Secretary shall, with respect to the 
organizations and employment positions involved, provide for the 
following:
            (1) Joint labor-management implementation and 
        administration.
            (2) Discussion with employees as to training needs for 
        career advancement.
            (3) Commitment to a policy of internal hirings and 
        promotion.
            (4) Provision of support services.
            (5) Consultations with employers and with organized labor.

SEC. 3083. REQUIREMENT FOR CERTAIN PROGRAMS REGARDING REDEPLOYMENT OF 
              HEALTH CARE WORKERS.

    (a) State Programs for Home and Community-Based Services for 
Individuals with Disabilities.--With respect to the plan required in 
section 2102(a) (for State programs for home and community-based 
services for individuals with disabilities under part 1 of subtitle B 
of title II), the plan shall, in addition to requirements under such 
part, provide for the following:
            (1) Before initiating the process of implementing the State 
        program under such plan, negotiations will be commenced with 
        labor unions representing the employees of the affected 
        hospitals or other facilities.
            (2) Negotiations under paragraph (1) will address the 
        following:
                    (A) The impact of the implementation of the program 
                upon the workforce.
                    (B) Methods to redeploy workers to positions in the 
                proposed system, in the case of workers affected by the 
                program.
            (3) The plan will provide evidence that there has been 
        compliance with paragraphs (1) and (2), including a description 
        of the results of the negotiations.
    (b) Plan for Integration of Mental Health Systems.--With respect to 
the plan required in section 3511(a) (relating to the integration of 
the mental health and substance abuse services of a State and its 
political subdivisions with the mental health and substance abuse 
services included in the comprehensive benefit package under title I), 
the plan shall, in addition to requirements under such section, provide 
for the following:
            (1) Before initiating the process of implementing the 
        integration of such services, negotiations will be commenced 
        with labor unions representing the employees of the affected 
        hospitals or other facilities.
            (2) Negotiations under paragraph (1) will address the 
        following:
                    (A) The impact of the proposed changes upon the 
                workforce.
                    (B) Methods to redeploy workers to positions in the 
                proposed system, in the case of workers affected by the 
                proposed changes.
            (3) The plan will provide evidence that there has been 
        compliance with paragraphs (1) and (2), including a description 
        of the results of the negotiations.

       Subpart B--Transitional Provisions for Workforce Stability

SEC. 3091. APPLICATION.

    (a) Limitation to Transition Period.--The provisions of this 
subpart are intended to minimize, to the extent possible, disruptions 
in established employment relationships during the period of transition 
to a restructured health care delivery system, and shall terminate 
December 31, 2000.
    (b) Health Care Entities Covered by Subpart.--The provisions of 
this subpart, including references to displacing employers, hiring 
employers, successors and contractors, apply only to health care 
entities that employ more than 25 individuals.

SEC. 3092. DEFINITIONS.

    (a) Health Care Entity.--As used in this subpart, the term ``health 
care entity'' includes individuals, sole proprietorships, partnerships, 
associations, business trusts, corporations, governmental institutions, 
and public agencies (including state governments and political 
subdivisions thereof) that--
            (1) provide health care services under title I (including 
        nonmandatory health care services under title I) or under the 
        amendments made or programs referred to in titles IV and VIII; 
        or
            (2) provide necessary related services, including 
        administrative, food service, janitorial or maintenance 
        services, to an entity that provides health care services (as 
        described in subparagraph (1));
except that an entity that solely manufactures or provides goods or 
equipment to a health care entity shall not be considered a health care 
entity.
    (b) Affiliated Enterprise.--As used in this subpart, the term 
``affiliated enterprise'' means a health care entity that, together 
with the displacing employer, is considered a single employer as 
defined under 414 of the Internal Revenue Code of 1986.
    (c) Preference Eligible Employee.--As used in this subpart, the 
term ``preference eligible employee'' means an employee who--
            (1) has been employed for in excess of 1 year by a health 
        care entity; and
            (2) has been displaced by or has received notice of an 
        impending displacement by such entity.
    (d) Displacement.--As used in this subpart, the term 
``displacement'' includes a layoff, termination, significant cutback in 
paid work hours, or other loss of employment, except that a discharge 
for just cause shall not constitute a displacement within the meaning 
of this paragraph.

SEC. 3093. OBLIGATIONS OF DISPLACING EMPLOYER AND AFFILIATED 
              ENTERPRISES IN EVENT OF DISPLACEMENT.

    (a) Notice.--A health care entity which displaces a preference 
eligible employee shall provide such employee with--
            (1) written notice, no later than the date of displacement, 
        of employment rights under this subpart, including employment 
        rights with respect to affiliated enterprises of the displacing 
        employer; and
            (2) notice of any existing or subsequent vacancies with the 
        displacing employer or an affiliated enterprise, which notice 
        may be given by posting of such vacancies wherever notices to 
        applicants for employment are customarily posted, by listing 
        such vacancies with the local employment services agency, or in 
        such other manner as the Secretary of Labor, by regulation, may 
        hereafter specify.
Any such vacancy shall remain open for applications by preference 
eligible employees for not less than 14 calendar days from the date on 
which the initial notice is provided.
    (b) Hiring Preference.--
            (1) In general.--A qualified preference eligible employee 
        who applies during the notice period described in subsection 
        (a)(2) for a vacant position with the displacing employer or an 
        affiliated enterprise, which position is in the employee's 
        occupational specialty and is located in the same State or 
        Standard Metropolitan Statistical Area in which the employee 
        was employed prior to the displacement, shall be given the 
        right to accept or decline the position before the employer may 
        offer the position to a nonpreference eligible employee.
            (2) Multiple applications.--When considering applications 
        from more than one qualified preference eligible employee, the 
        hiring health care entity shall have discretion as to which of 
        such employees will be offered the position.
            (3) Employment qualifications.--Nothing in this subsection 
        shall be construed to prohibit the hiring health care entity 
        from establishing reasonable employment qualifications for a 
        vacancy to which this subpart applies, except that employees 
        who performed essentially the same work prior to their 
        displacement shall be deemed presumptively qualified for 
        comparable positions.
    (c) Termination of Preference Eligibility.--A displaced employee's 
preference eligibility shall terminate--
            (1) at such time as the displaced employee obtains 
        substantially equivalent employment with the displacing 
        employer; or
            (2) if the employee does not obtain such employment--
                    (A) with respect to health care entities other than 
                the displacing employer, 2 years after the date of the 
                displacement; or
                    (B) with respect to the displacing employer, upon 
                the termination of this subpart pursuant to section 
                3081(a).

SEC. 3094. EMPLOYMENT WITH SUCCESSORS.

    A health care entity that succeeds another health care entity 
through merger, consolidation, acquisition, contract, or other similar 
manner shall provide employees of the previous health care entity who 
would otherwise be displaced the right to continued employment in the 
job positions held by such employees prior thereto, unless the employer 
can establish that such positions no longer exist.

SEC. 3095. COLLECTIVE BARGAINING OBLIGATIONS DURING TRANSITION PERIOD.

    (a) Continuation of Previously Recognized Bargaining 
Representatives and Agreements.--If a majority of the employees in an 
appropriate bargaining unit consists of employees who were previously 
covered by a bargaining agreement or represented by an exclusive 
representative with respect to terms and conditions of employment, and 
there has not been a substantial change in the operations performed by 
the employees in that unit, the employer shall recognize such 
representative as the exclusive representative for the unit and shall 
assume the bargaining agreement, except that where application of this 
subsection would result in the recognition of more than one bargaining 
representative for a single unit, the question concerning which 
representative shall be recognized as the exclusive representative for 
the unit shall be resolved in accordance with applicable Federal or 
State law.
    (b) Joint Employer Status.--If employees of a contractor are 
assigned on a regular basis to perform work on the premises of a 
contracting entity and the tasks performed by these employees are 
functionally integrated with the operations of the contracting entity 
on whose premises such employees work, both the contractor and the 
contracting entity shall be considered joint employers of the employees 
with respect to work performed on those premises for purposes of 
determining compliance with labor relations laws. Employees of such 
joint employers may not be excluded from a bargaining unit within 
either entity on the basis of such joint employer status.

SEC. 3096. GENERAL PROVISIONS.

    (a) Regulations.--Not later than 120 days after the date of 
enactment of this Act, the Secretary shall promulgate regulations to 
implement the requirements of section 3093.
    (b) Other Laws.--The standards and requirements of this subpart 
shall not preempt or excuse noncompliance with any other applicable 
Federal or State law, regulation or municipal ordinance that 
establishes additional notice and preference standards or requirements 
concerning employee dislocation, employee representation, or collective 
bargaining.
    (c) Rules of Construction.--Nothing in this subpart shall be 
construed--
            (1) to excuse or otherwise limit the obligation of an 
        employer to comply with any collective bargaining agreement or 
        any employment benefit plan that provides rights to employees 
        in addition to those provided under this subpart; or
            (2) to require an employer to recognize or bargain with a 
        labor organization in violation of State law.
    (d) Enforcement.--Unless otherwise specifically provided in this 
subpart, the enforcement provisions of section 107 of the Family and 
Medical Leave Act of 1993 (29 U.S.C. 2617) shall apply with respect to 
the enforcement of the individual rights, including notice 
requirements, provided under section 3093. The collective bargaining 
and contractual rights provided under sections 3094 and 3095 shall be 
enforced through administrative and judicial procedures otherwise 
provided under Federal or State law with respect to such rights.

                  Subtitle B--Academic Health Centers

SEC. 3131. DISCRETIONARY GRANTS REGARDING ACCESS TO CENTERS.

    (a) Rural Information and Referral Systems.--The Secretary may make 
grants to eligible centers for the establishment and operation of 
information and referral systems to provide the services of such 
centers to rural health plans.
    (b) Other Purposes Regarding Urban and Rural Areas.--The Secretary 
may make grants to community- and provider-based health plans under 
section 1651(d) to carry out activities (other than activities carried 
out under subsection (a)) for the purpose of providing the services of 
eligible centers to residents of rural or urban communities who 
otherwise would not have adequate access to such services.
    (c) Authorization of Appropriations.--For the purpose of carrying 
out this section, there are authorized to be appropriate, $3,000,000 
for fiscal year 1995, $4,000,000 for fiscal year 1996, and $5,000,000 
for each of the fiscal years 1997 through 2000.

                Subtitle C--Health Research Initiatives

                 PART 1--PROGRAMS FOR CERTAIN AGENCIES

SEC. 3201. BIOMEDICAL AND BEHAVIORAL RESEARCH.

    (a) Findings.--Congress finds the following:
            (1) Nearly 4 of 5 peer reviewed research projects deemed 
        worthy of funding by the National Institutes of Health are not 
        funded.
            (2) Less than 2 percent of the nearly one trillion dollars 
        our Nation spends on health care is devoted to health research, 
        while the defense industry spends 15 percent of its budget on 
        research.
            (3) Public opinion surveys have shown that Americans want 
        more Federal resources put into health research and support by 
        having a portion of their health insurance premiums set aside 
        for this purpose.
            (4) Ample evidence exists to demonstrate that health 
        research has improved the quality of health care in the United 
        States. Advances such as the development of vaccines, the cure 
        of many childhood cancers, drugs that effectively treat a host 
        of diseases and disorders, a process to protect our Nation's 
        blood supply from the HIV virus, progress against 
        cardiovasculor disease including heart attack and stroke, and 
        new strategies for the early detection and treatment of 
        diseases such as colon, breast, and prostate cancer clearly 
        demonstrates the benefits of health research.
            (5) Among the most effective methods to control health care 
        costs are the prevention of intentional and unintentional 
        injury and the prevention and cure of disease and disability, 
        thus, health research which holds the promise of prevention of 
        intentional and unintentional injury and cure and prevention of 
        disease and disability is a critical component of any 
        comprehensive health care reform plan.
            (6) The state of our Nation's research facilities at the 
        National Institutes of Health and at universities is 
        deteriorating significantly. Renovation and repair of these 
        facilities are badly needed to maintain and improve the quality 
        of research.
            (7) Because the Omnibus Budget Reconciliation Act of 1993 
        freezes discretionary spending for the next 5 years, the 
        Nation's investment in health research through the National 
        Institutes of Health is likely to decline in real terms unless 
        corrective legislative action is taken.
            (8) A health research fund is needed to maintain our 
        Nation's commitment to health research and to increase the 
        percentage of approved projects which receive funding at the 
        National Institutes of Health to at least 33 percent.
            (9) Private sector investment in research and development 
        has been responsible for the vast majority of new developments 
        in pharmaceuticals, medical devices, biotechnology and other 
        health care innovations. Over 90 percent of the most prescribed 
        drugs in the United States were discovered by the research-
        based pharmaceutical industry.
            (10) United States industry is the preeminent world leader 
        in the research, development and delivery of innovative 
        therapies that improve the quality of care for people 
        throughout the world.
            (11) Global health care budgets may constrict private 
        sector investment in research and development. Further, they 
        may be inconsistent with the goal of developing promising new 
        cost effective treatment therapies.
    (b) Availability of Funds.--
            (1) In general.--With respect to each calendar year, the 
        Secretary shall pay, from funds in the Treasury not otherwise 
        appropriated, for activities under this section in an amount 
        equal to 0.25 percent in 1996, 0.50 percent in 1997, 0.75 
        percent in 1998, and 1.0 percent in 1999 and subsequent years, 
        of all private premiums required to be paid under this Act.
            (2) For purposes of this subsection, the term ``private 
        health premiums'' means all premium related payments made by 
        employers, individuals, and families for coverage under this 
        Act.
    (c) Purposes for Expenditures.--Part A of title IV of the Public 
Health Service Act (42 U.S.C. 281 et seq.) is amended by adding at the 
end thereof the following new section:

``SEC. 404F. EXPENDITURES FOR HEALTH RESEARCH.

    ``(a) In General.--From amounts made available under section 3201 
of the Health Security Act, the Secretary shall distribute--
            ``(1) 2 percent of such amounts during any fiscal year to 
        the Office of the Director of the National Institutes of Health 
        to be allocated at the Director's discretion for the following 
        activities:
                    ``(A) for carrying out the responsibilities of the 
                Office of the Director, in including the Office of 
                Research on Women's Health and the Office of Research 
                on Minority Health, the Office of Alternative Medicine 
                and the Office of Rare Diseases Research; and
                    ``(B) for construction and acquisition of equipment 
                for or facilities of or used by the National Institutes 
                of Health;
            ``(2) 2 percent of such amounts for transfer to the 
        National Center for Research Resources to carry out section 
        1502 of the National Institutes of Health Revitalization Act of 
        1993 concerning Biomedical and Behavioral Research Facilities;
            ``(3) 1 percent of such amounts during any fiscal year for 
        carrying out section 301 and part D of title IV with respect to 
        health information communications; and
            ``(4) the remainder of such amounts during any fiscal year 
        to member institutes of the National Institutes of Health and 
        Centers in the same proportion to the total amount received 
        under this section, as the amount of annual appropriations 
        under appropriations Acts for each member institute and Centers 
        for the fiscal year bears to the total amount of appropriations 
        under appropriations Acts for all member institutes and Centers 
        of the National Institutes of Health for the fiscal year.
    ``(b) Plans of Allocation.--The amounts transferred under 
subsection (a) shall be allocated by the Director of NIH or the various 
directors of the institutes and centers, as the case may be, pursuant 
to allocation plans developed by the various advisory councils to such 
directors, after consultation with such directors.''.

SEC. 3202. HEALTH SERVICES RESEARCH.

    Section 902 of the Public Health Service Act (42 U.S.C. 299a), as 
amended by section 2(b) of Public Law 102-410 (106 Stat. 2094), is 
amended by adding at the end the following subsection:
    ``(f) Research on Health Care Reform.--
            ``(1) In general.--In carrying out section 901(b), the 
        Administrator shall conduct and support research on the reform 
        of the health care system of the United States, as directed by 
        the National Board.
            ``(2) Priorities.--In carrying out paragraph (1), the 
        Administrator shall give priority to the following:
                    ``(A) Conducting and supporting research on the 
                appropriateness and effectiveness of alternative 
                clinical strategies (including community-based programs 
                and preventive services), the quality and outcomes of 
                care, and administrative simplification.
                    ``(B) Conducting and supporting research on the 
                appropriateness and effectiveness of alternative 
                community-based and clinical strategies including 
                integrating preventive services into primary care, the 
                effectiveness of preventive counseling and health 
                education, and the efficacy and cost-effectiveness of 
                clinical preventive services.
                    ``(C) Conducting and supporting research on 
                consumer choice and information resources; the effects 
                of health care reform on health delivery systems; 
                workplace injury and illness prevention; intentional 
                and unintentional injury prevention; methods for risk 
                adjustment; factors influencing access to health care 
                for vulnerable populations, including children, persons 
                with low-income, persons with disabilities, or 
                individuals with chronic or complex health conditions, 
                and primary care.
                    ``(D) The development of clinical practice 
                guidelines consistent with section 913, the 
                dissemination of such guidelines consistent with 
                section 903, and the assessment of the effectiveness of 
                such guidelines.''.

                      PART 2--FUNDING FOR PROGRAM

SEC. 3211. AUTHORIZATIONS OF APPROPRIATIONS.

    (a) Health Services Research.--For the purpose of carrying out 
activities pursuant to the amendments made by section 3202, there are 
authorized to be appropriated $150,000,000 for fiscal year 1995, 
$400,000,000 for fiscal year 1996, $500,000,000 for fiscal year 1997, 
and $600,000,000 for each of the fiscal years 1998 through 2000.
    (b) Relation to Other Funds.--The authorization of appropriations 
established in subsection (a) are in addition to any other 
authorizations of appropriations that are available for the purposes 
described in such subsection.
    (c) Trigger and Release of Monies.--No expenditure shall be made 
pursuant to section 3201(c) during any fiscal year in which the annual 
amount appropriated for the National Institutes of Health is less than 
the amount so appropriated for the prior fiscal year. With respect to 
amounts available for expenditure pursuant to section 3201(c) which, as 
a result of the application of this subsection remain unexpended, such 
amounts shall be obligated by the Secretary of Health and Human 
Services under the public health initiative under subtitle H.

    Subtitle D--Core Functions of Public Health Programs; National 
                Initiatives Regarding Preventive Health

                            PART 1--FUNDING

SEC. 3301. AUTHORIZATIONS OF APPROPRIATIONS.

    (a) Core Functions of Public Health Programs.--For the purpose of 
carrying out part 2, there are authorized to be appropriated 
$150,000,000 for fiscal year 1995, $225,000,000 for fiscal year 1996, 
$325,000,000 for fiscal year 1997, $425,000,000 for fiscal year 1998, 
$500,000,000 for fiscal year 1999, and $625,000,000 for fiscal year 
2000.
    (b) National Initiatives Regarding Health Promotion and Disease 
Prevention.--For the purpose of carrying out part 3, there are 
authorized to be appropriated $125,000,000 for each of the fiscal years 
1996 through 1998, and $150,000,000 for each of the fiscal years 1999 
and 2000.
    (c) Relation to Other Funds.--The authorizations of appropriations 
established in subsections (a) and (b) are in addition to any other 
authorizations of appropriations that are available for the purposes 
described in such subsections.

            PART 2--CORE FUNCTIONS OF PUBLIC HEALTH PROGRAMS

SEC. 3311. PURPOSES.

    Subject to the subsequent provisions of this subtitle, the purposes 
of this part are to strengthen the capacity of State and local public 
health agencies to carry out the following functions:
            (1) To monitor and protect the health of communities 
        against communicable diseases and exposure to toxic 
        environmental pollutants, occupational hazards, harmful 
        products, and poor quality health care.
            (2) To identify and control outbreaks of infectious disease 
        and patterns of chronic disease and injury.
            (3) To inform and educate health care consumers and 
        providers about their roles in preventing injury, preventing 
        and controlling disease and the appropriate use of medical 
        services.
            (4) To develop and test new prevention and public health 
        control interventions.
            (5) To integrate and coordinate the prevention programs and 
        services of health plans, community-based providers, local 
        health departments, State health departments, health alliances, 
        and other sectors of State and local government that affect 
        health, including education, labor, transportation, welfare, 
        criminal justice, environment, agriculture, and housing.
            (6) To conduct research on the effectiveness and cost-
        effectiveness of public health programs.

SEC. 3312. GRANTS TO STATES FOR CORE FUNCTIONS OF PUBLIC HEALTH.

    (a) In General.--The Secretary shall make grants to States that 
submit applications as prescribed in section 3313 in an amount which 
bears the same ratio to the available amounts for that fiscal year as 
the amounts provided by the Secretary under the provisions of law 
listed in section 1902(2) of the Public Health Service Act to the State 
for fiscal year 1981 bear to the total amount appropriated for such 
provisions of law for fiscal year 1981.
    (b) Core Functions of Public Health Programs.--For purposes of 
subsection (a), the functions described in this subsection are, subject 
to subsection (c), as follows:
            (1)(A) Data collection, activities related to population 
        health (including the population of individuals ineligible for 
        the comprehensive benefit package) measurement and outcomes 
        monitoring, including the acquisition and installation of 
        hardware and software, personnel training and technical 
        assistance to operate and support automated and integrated 
        information systems, the regular collection and analysis of 
        public health data, vital statistics, and personal health 
        services data and analysis for planning and needs assessment 
        purposes of data collected from health plans through the 
        information system under title V of this Act.
            (B) Data measures under this paragraph must include an 
        ethnic identifier on all forms. To the extent feasible, ethnic 
        identifiers should be classified by ethnic sub-group 
        populations. Access to data must be ensured for research 
        organizations and data clearinghouses. Population health 
        measurement and outcome monitoring should focus on health 
        status differentials between racial, and ethnic groups, by 
        subpopulation, and gender differences.
            (2) Activities to protect the environment and to assure the 
        safety of housing, workplaces, food and water, including the 
        following activities:
                    (A) Monitoring and improving the overall public 
                health quality and safety of communities.
                    (B) Assessing exposure to high lead levels and 
                water contamination.
                    (C) Providing support for poison control centers.
                    (D) Monitoring sewage and solid waste disposal, 
                radiation exposure, radon exposure, and noise levels.
                    (E) Abatement of lead-related hazards.
                    (F) Assuring recreation, home and worker safety.
                    (G) Public information and education programs that 
                help to reduce intentional and unintentional injuries, 
                including training parents and children on use of 
                safety devices.
                    (H) Enforcing public health safety and sanitary 
                codes.
                    (I) Other activities relating to promoting the 
                public health of communities.
            (3) Investigation and control of adverse health conditions, 
        including improvements in emergency treatment preparedness, 
        injury prevention, cooperative activities to reduce violence 
        levels in homes and communities, activities to control the 
        outbreak of disease, exposure related conditions and other 
        threats to the health status of individuals.
            (4) Public information and education programs to reduce 
        risks to health such as use of tobacco, alcohol and other 
        drugs, sexual activities that increase the risk to HIV 
        transmission and sexually transmitted diseases, domestic 
        violence, poor diet, physical inactivity, and low childhood 
        immunization levels.
            (5) Accountability and quality assurance activities, 
        including monitoring the quality of personal health services 
        furnished by health plans and providers of medical and health 
        services in a manner consistent with the overall quality of 
        care monitoring activities undertaken under title V, and 
        monitoring communities' overall access to health services.
            (6) Provision of public health laboratory services to 
        complement private clinical laboratory services and that screen 
        for diseases and conditions such as metabolic diseases in 
        newborns, provide toxicology assessments of blood lead levels 
        and other environmental toxins, diagnose sexually transmitted 
        diseases, tuberculosis and other diseases requiring partner 
        notification, test for infectious and food-borne diseases, and 
        monitor the safety of water and food supplies.
            (7) Training and education to assure provision of care by 
        all health professionals, with special emphasis placed on the 
        training of public health professions including 
        epidemiologists, biostatisticians, health educators, public 
        health administrators, sanitarians and laboratory technicians.
            (8) Leadership, policy development and administration 
        activities, including needs assessment, the setting of public 
        health standards, the development of community public health 
        policies, and the development of community public health 
        coalitions.
    (c) Restrictions on Use of Grant.--
             (1) In general.--A funding agreement for a grant under 
        subsection (a) for a State is that the grant will not be 
        expended--
                    (A) to provide inpatient services;
                    (B) to make cash payments to intended recipients of 
                health services;
                    (C) to purchase or improve land, purchase, 
                construct, or permanently improve (other than minor 
                remodeling) any building or other facility, or purchase 
                major medical equipment;
                    (D) to satisfy any requirement for the expenditure 
                of non-Federal funds as a condition for the receipt of 
                Federal funds; or
                    (E) to provide financial assistance to any entity 
                other than a public or nonprofit private entity.
            (2) Limitation on administrative expenses.--A funding 
        agreement for a grant under subsection (a) is that the State 
        involved will not expend more than 10 percent of the grant for 
        administrative expenses with respect to the grant.
    (d) Maintenance of Effort.--A funding agreement for a grant under 
subsection (a) is that the State involved will maintain expenditures of 
non-Federal amounts for core health functions at a level that is not 
less than the level of such expenditures maintained by the State for 
the fiscal year preceding the first fiscal year for which the State 
receives such a grant.

SEC. 3313. SUBMISSION OF INFORMATION.

    The Secretary may make a grant under section 3312 only if the State 
involved submits to the Secretary the following information:
            (1) A description of existing deficiencies in the State's 
        public health system (at the State level and the local level), 
        using standards of sufficiency developed by the Secretary.
            (2) A description of health status measures to be improved 
        within the State (at the State level and the local level) 
        through expanded public health functions.
            (3) Measurable outcomes and process objectives for 
        improving health status and core health functions for which the 
        grant is to be expended.
            (4) Information regarding each such function, which--
                    (A) identifies the amount of State and local 
                funding expended on each such function for the fiscal 
                year preceding the fiscal year for which the grant is 
                sought; and
                    (B) provides a detailed description of how 
                additional Federal funding will improve each such 
                function by both the State and local public health 
                agencies.
            (5) A description of the core health functions to be 
        carried out at the local level, and a specification for each 
        such function of--
                    (A) the communities in which the function will be 
                carried out; and
                    (B) the amount of the grant to be expended for the 
                function in each community so specified.

SEC. 3314. REPORTS.

    A funding agreement for a grant under section 3312 is that the 
States involved will, not later than the date specified by the 
Secretary, submit to the Secretary a report describing--
            (1) the purposes for which the grant was expended; and
            (2) describing the extent of progress made by the State in 
        achieving measurable outcomes and process objectives described 
        in section 3313(3).

SEC. 3315. APPLICATION FOR GRANT.

    The Secretary may make a grant under section 3312 only if an 
application for the grant is submitted to the Secretary, the 
application contains each agreement described in this part, the 
application contains the information required in section 3314, and the 
application is in such form, is made in such manner, and contains such 
agreements, assurances, and information as the Secretary determines to 
be necessary to carry out this part.

SEC. 3316. ALLOCATIONS FOR CERTAIN ACTIVITIES.

    Of the amounts made available under section 3301 for a fiscal year 
for carrying out this part, the Secretary may reserve not more than 5 
percent for carrying out the following activities:
            (1) Technical assistance with respect to planning, 
        development, and operation of core health functions carried out 
        under section 3312, including provision of biostatistical and 
        epidemiological expertise and provision of laboratory 
        expertise.
            (2) Development and operation of a national information 
        network among State and local health agencies.
            (3) Program monitoring and evaluation of core health 
        functions carried out under section 3312.
            (4) Development of a unified electronic reporting mechanism 
        to improve the efficiency of administrative management 
        requirements regarding the provision of Federal grants to State 
        public health agencies.

SEC. 3317. DEFINITIONS.

    For purposes of this part:
            (1) The term ``funding agreement'', with respect to a grant 
        under section 3312 to a State, means that the Secretary may 
        make the grant only if the State makes the agreement involved.
            (2) The term ``core health functions'', with respect to a 
        State, means the functions described in section 3312(b).

SEC. 3318. SINGLE APPLICATION AND UNIFORM REPORTING SYSTEMS FOR CORE 
              FUNCTIONS OF PUBLIC HEALTH AND PUBLIC HEALTH CATEGORICAL 
              GRANT PROGRAMS ADMINISTERED BY THE CENTERS FOR DISEASE 
              CONTROL AND PREVENTION.

    (a) Single Application.--
            (1) In general.--The Secretary, acting through the Director 
        of the Centers for Disease Control and Prevention, shall 
        establish a single consolidated application to enable States to 
        apply for the Core Functions of Public Health Grants Program 
        and any or all of the Public Health Service Act categorical 
        programs described in subsection (b).
            (2) Requirements.--The application developed under 
        paragraph (1) shall--
                    (A) be designed so that information collected will 
                be consistent with the requirements of this part 
                including subsection (b);
                    (B) be designed and implemented not later than 1 
                year after the date of enactment of this Act; and
                    (C) be developed with resources made available 
                under section 3316 (not resources made available for 
                the programs described in subsection (b)).
            (3) State public health officers.--In developing the single 
        consolidated application form to be used under this subsection 
        the Secretary shall consult with Federal, State and local 
        public health agencies.''.
            (4) Eligibility.--States and local governments that have 
        grants, contracts or cooperative agreements in effect with the 
        Centers for Disease Control and Prevention on the date of 
        enactment of this Act shall be eligible to use a single 
        application under this section to apply for any or all of the 
        Public Health Service Act categorical programs described in 
        subsection (b).
    (b) Eligible Public Health Service Act Programs.--Eligible Public 
Health Service Act categorical programs described in this subsection 
are the following:
            (1) The Preventive Health and Health Services Block Grant 
        under section 1903 of the Public Health Service Act.
            (2) The Childhood Lead Poisoning Prevention Program under 
        section 317A of the Public Health Service Act.
            (3) The Sexually Transmitted Diseases Program under section 
        318 of the Public Health Service Act.
            (4) The Prevention of Sexually Transmitted Diseases-Related 
        Infertility Program under section 318A of the Public Health 
        Service Act.
            (5) The Breast and Cervical Cancer Early Detection Program 
        under sections 1501 through 1509 of the Public Health Service 
        Act.
            (6) The National Program of Cancer Registries under section 
        399H of the Public Health Service Act.
            (7) The Injury Control and Prevention Program under 
        sections 391 through 394 of the Public Health Service Act.
            (8) The preventive health for prostate cancer program under 
        section 317D of the Public Health Service Act.
            (9) The birth defects data program under section 317C of 
        the Public Health Service Act.
            (10) Programs under subtitle D of this title.
            (11) Other relevant programs as determined appropriate by 
        the Secretary.
    (c) Allocation of Funds.--In awarding grants to States and local 
governments under a single application under this section, the 
Secretary shall delineate to each grantee the amounts to be dedicated 
to each of the programs described in subsection (b) and ensure that 
funding allotments for each of such programs are consistent with the 
requirements of Federal law.
    (d) Uniform Core Functions of Public Health Reporting System.--
            (1) Development.--The Secretary, acting through the 
        Director of the Office of Disease Prevention and Health 
        Promotion and the Director of the Centers for Disease Control 
        and Prevention, in consultation with other relevant Federal and 
        State health agencies with data collection responsibilities, 
        shall develop and implement a Uniform Core Public Health 
        Functions Reporting System to collect program and fiscal data 
        concerning the programs described in subsection (b).
            (2) Requirements.--The system developed under paragraph (1) 
        shall--
                    (A) use outcomes consistent with the goals of 
                Healthy People 2000;
                    (B) be designed so that information collected will 
                be consistent with the requirements of this part 
                including subsection (b);
                    (C) be designed and implemented not later than 2 
                years after the date of enactment of this Act; and
                    (D) be developed with resources made available 
                under section 3316 of this Act (not resources made 
                available for the programs described in subsection 
                (b)).
            (3) State public health officers.--In developing the data 
        set to be used under Uniform Core Public Health Functions 
        Reporting System the Secretary shall consult with Federal, 
        State and local public health agencies.
    (e) Study.--
            (1) In general.--Within a reasonable period of time after 
        the date of enactment of this Act, the Secretary shall request 
        that the Institute of Medicine conduct a study concerning--
                    (A) the effects of consolidating any or all of the 
                grant programs administered by the Centers for Disease 
                Control and Prevention and described in subsection (b) 
                into a Core Functions of Public Health Block Grant 
                Program;
                    (B) the development of alternative methods for 
                implementing a block grant program or categorical grant 
                program; and
                    (C) alternative formulas for allocating State 
                grants that incorporate measures of health status, 
                population and degree of poverty.
        In particular, the impact of program consolidation on the 
        targeted recipients, including women and vulnerable 
        populations, shall be addressed in the study. If the Institute 
        of Medicine declines to do the study, the Secretary shall make 
        grants to or enter into contracts with a public or nonprofit 
        private entity with relevant expertise for the conduct of such 
        a study.
            (2) Report.--Not later than 1 year after the date of the 
        receipt of the contract under paragraph (1), the contract 
        recipient shall prepare and submit to the Secretary, the Energy 
        and Commerce Committee of the House of Representatives, and the 
        Committee on Labor and Human Resources of the Senate a report 
        that contains the results of the study conducted under 
        paragraph (1).
            (3) Issuance of plan.--Not later than 1 year after the date 
        on which the report under paragraph (2) is received by the 
        Secretary and the committees referred to in such paragraph, the 
        Secretary shall issue a plan in response to the report. Such a 
        plan shall include the identification of relevant changes in 
        authorizing language.

  PART 3--NATIONAL INITIATIVES REGARDING HEALTH PROMOTION AND DISEASE 
                               PREVENTION

                       Subpart A--General Grants

SEC. 3331. GRANTS FOR NATIONAL PREVENTION INITIATIVES.

    (a) In General.--The Secretary may make grants to entities 
described in subsection (b) for the purpose of carrying out projects to 
develop and implement innovative community-based strategies to provide 
for health promotion and disease prevention activities for which there 
is a significant need, as identified under section 1701 of the Public 
Health Service Act.
    (b) Eligible Entities.--The entities referred to in subsection (a) 
are agencies of State or local government, private nonprofit 
organizations (including research institutions), and coalitions that 
link two or more of these groups.
    (c) Certain Activities.--The Secretary shall ensure that projects 
carried out under subsection (a)--
            (1) reflect approaches that take into account the special 
        needs and concerns of the affected populations;
            (2) are targeted to the most needy and vulnerable 
        population groups and geographic areas of the Nation;
            (3) examine links between various high priority preventable 
        health problems and the potential community-based remedial 
        actions; and
            (4) establish or strengthen the links between the 
        activities of agencies engaged in public health activities with 
        those of health alliances, health care providers, and other 
        entities involved in the personal health care delivery system 
        described in title I.

SEC. 3332. PRIORITIES.

    (a) Establishment.--
            (1) Annual statement.--The Secretary shall for each fiscal 
        year develop a statement of proposed priorities for grants 
        under section 3331 for the fiscal year.
            (2) Allocations among priorities.--With respect to the 
        amounts available under section 3301(b) for the fiscal year for 
        carrying out this part, each statement under paragraph (1) for 
        a fiscal year shall include a specification of the percentage 
        of the amount to be devoted to projects addressing each of the 
        proposed priorities established in the statement.
            (3) Process for establishing priorities.--
                    (A) Preference.--In establishing priorities for 
                grants under this part, preference shall be given to 
                projects that--
                            (i) reduce the prevalence of chronic 
                        diseases including cardiovascular disease, 
                        stroke, diabetes, and cancer;
                            (ii) prevent violence against women by 
                        training providers and other health care 
                        professionals to identify victims of domestic 
                        violence, to provide appropriate examination 
                        and treatment, and to refer the victims for 
                        appropriate social and legal services; and
                            (iii) establish community health advisor 
                        programs described in subparagraph (B).
                    (B) Community health advisor programs.--For 
                purposes of subparagraph (A)(iii), the term ``community 
                health advisor program'' means a program that performs 
                the following functions:
                            (i) Provides outreach services to inform 
                        the community of the availability of program 
                        services.
                            (ii) Collaborate efforts with health care 
                        providers and related entities to facilitate 
                        the provision of health services and health 
                        related social services.
                            (iii) Provide public education on health 
                        promotion and disease prevention and efforts to 
                        facilitate the use of available health services 
                        and health-related social services.
                            (iv) Provide health-related counseling.
                            (v) Make referrals for available health 
                        services and health-related social services.
                            (vi) Improve the ability of individuals to 
                        use health services and health-related social 
                        services under Federal, State, and local 
                        programs, through assisting individuals in 
                        establishing eligibility under the programs.
                            (vii) Establish a community health advisor 
                        training program.
                            (viii) Provide services in the language and 
                        cultural context most appropriate for the 
                        individuals served by the program.
                            (ix) Provide compensation for the services 
                        of, and opportunities for training and 
                        employment of, community health advisors.
                            (x) Such other services as the Secretary 
                        determines to be appropriate, which may include 
                        transportation and translation services.
                    (C) Publication of statement.--Not later than 
                January 1 of each fiscal year, the Secretary shall 
                publish a statement under paragraph (1) in the Federal 
                Register. A period of 60 days shall be allowed for the 
                submission of public comments and suggestions 
                concerning the proposed priorities. After analyzing and 
                considering comments on the proposed priorities, the 
                Secretary shall publish in the Federal Register final 
                priorities (and associated reservations of funds) for 
                approval of projects for the following fiscal year.
                    (D) Definition of community health advisor.--For 
                purposes of subparagraph (B), the term ``community 
                health advisor'' means an individual--
                            (i) who has demonstrated the capacity to 
                        carry out one or more of the authorized program 
                        services;
                            (ii) who, for not less than 1 year, has 
                        been a resident of the community in which the 
                        community health advisor program involved is to 
                        be operated; and
                            (iii) is a member of a socioeconomic group 
                        to be served by the program.
    (b) Applicability to Making of Grants.--
            (1) In general.--The Secretary may make grants under 
        section 3331 for projects that the Secretary determines--
                    (A) are consistent with the applicable final 
                statement of priorities and otherwise meets the 
                objectives described in subsection (a); and
                    (B) will assist in meeting a health need or concern 
                of a population within a defined health care coverage 
                area or other service area.
            (2) Special consideration for certain projects.--In making 
        grants under section 3331, the Secretary shall give special 
        consideration to applicants that will carry out projects that, 
        in addition to being consistent with the applicable published 
        priorities under subsection (a) and otherwise meeting the 
        requirements of this part, have the potential for replication 
        in other communities.

SEC. 3333. SUBMISSION OF INFORMATION.

    The Secretary may make a grant under section 3331 only if the 
applicant involved submits to the Secretary the following information:
            (1) A description of the activities to be conducted, and 
        the manner in which the activities are expected to contribute 
        to meeting one or more of the priority health needs specified 
        under section 3332 for the fiscal year for which the grant is 
        initially sought.
            (2) A description of the total amount of Federal funding 
        requested, the geographic area and populations to be served, 
        and the evaluation procedures to be followed.
            (3) Such other information as the Secretary determines to 
        be appropriate.

SEC. 3334. APPLICATION FOR GRANT.

    The Secretary may make a grant under section 3331 only if an 
application for the grant is submitted to the Secretary, the 
application contains each agreement described in this part, the 
application contains the information required in section 3333, and the 
application is in such form, is made in such manner, and contains such 
agreements, assurances, and information as the Secretary determines to 
be necessary to carry out this part.

   Subpart B--Development of Telemedicine in Rural Underserved Areas

SEC. 3341. GRANTS FOR DEVELOPMENT OF RURAL TELEMEDICINE.

    (a) In General.--
            (1) Grants awarded.--The Secretary, acting through the 
        Office of Rural Health Policy, shall award grants to eligible 
        entities that have applications approved under subsection (b) 
        for the purpose of expanding access to health care services for 
        individuals in rural areas through the use of telemedicine. 
        Grants shall be awarded under this section to encourage the 
        initial development of rural telemedicine networks, expand 
        existing networks, link existing networks together, or link 
        such networks to existing fiber optic telecommunications 
        systems.
            (2) Eligible entity defined.--For purposes of this section, 
        the term ``eligible entity'' means public or nonprofit entities 
        in nonmetropolitan areas (as defined by the Department of 
        Commerce) in a consortium of community-based providers that 
        includes at least three of the following:
                    (A) community or migrant health centers;
                    (B) local health departments;
                    (C) community mental health centers;
                    (D) nonprofit hospitals
                    (E) private practice health professionals, 
                including rural health clinics; or
                    (F) other publicly funded health or social services 
                agencies.
    (b) Application.--To be eligible to receive a grant under this 
section an eligible entity shall prepare and submit to the Secretary 
for approval an application at such time, in such manner, and 
containing such information as the Secretary may require, including a 
description of the use to which the entity will apply any amounts 
received under the grant.
    (c) Preference in Awarding Grants.--The Secretary shall, in 
awarding grants under this section give preference to applicants that--
            (1) are health care providers in a rural health care 
        network or that propose to form such a network, if a majority 
        of the providers in such network are located in a medically 
        underserved area or health professional shortage area;
            (2) can demonstrate broad geographic coverage in the rural 
        areas of the State, or States, in which the applicant is 
        located;
            (3) propose to use the amounts provided under the grant to 
        develop plans for, or to establish, telemedicine systems that 
        will link rural hospitals and other rural health care providers 
        to other hospitals and health care providers;
            (4) will use the amounts provided under the grant for a 
        broad range of health care applications such as teleradiology, 
        telepathology, interactive video consultation and remote 
        educational services, and to promote greater efficiency in the 
        use of health care resources and administrative activities; and
            (5) propose to use local matching funds to finance 
        projects.
    (d) Use of Amounts.--Amounts received under a grant awarded under 
this section shall be utilized for the development of telemedicine 
networks involving three or more providers. Such amounts may be used to 
cover the costs associated with the development of telemedicine 
networks and the acquisition or construction of telecommunications 
facilities and equipment including--
            (1) the development and acquisition through lease or 
        purchase of computer hardware and software, audio and visual 
        equipment, computer network equipment, telecommunications 
        transmission facilities, telecommunications terminal equipment, 
        interactive video equipment, data terminal equipment, and other 
        facilities and equipment that would further the purposes of 
        this section;
            (2) the provision of technical assistance and instruction 
        for the development and use of such programming equipment or 
        facilities;
            (3) the development and acquisition of instructional 
        programming;
            (4) demonstration projects for teaching or training medical 
        students, residents, and other health professions students in 
        rural training sites about the applications of telemedicine;
            (5) transmission costs, maintenance of equipment, and 
        compensation of specialists and referring practitioners;
            (6) demonstration projects to use telemedicine to 
        facilitate collaboration between physicians and nonphysician 
        primary care practitioners such as physician assistants, nurse 
        practitioners, and certified nurse-midwives; or
            (7) such other uses that are consistent with achieving the 
        purposes of this section as approved by the Secretary.

SEC. 3342. REPORT AND EVALUATION OF TELEMEDICINE.

    Three years after the first grant is awarded under section 3341 the 
Secretary shall submit a report to Congress that evaluates all 
telemedicine projects funded through the Department of Health and Human 
Services. Such report shall evaluate--
            (1) whether telemedicine expands access to health care 
        services;
            (2) the cost effectiveness of telemedicine services; and
            (3) the quality of telemedicine services delivered.

SEC. 3343. RECOMMENDATIONS ON REIMBURSEMENT OF TELEMEDICINE.

    The Secretary, in consultation with the Office of Rural Health and 
the Health Care Financing Administration, shall issue regulations 
regarding reimbursement for telemedicine services provided under title 
XVIII of the Social Security Act no later than July 1, 1996.

   Subtitle E--Health Services for Medically Underserved Populations

             PART 1--INITIATIVES FOR ACCESS TO HEALTH CARE

               Subpart A--Authorization of Appropriations

SEC. 3411. AUTHORIZATIONS OF APPROPRIATIONS.

    (a) Improving Access to Health Services.--
            (1) Subpart b.--
                    (A) Except as provided in subparagraph (B), for the 
                purpose of carrying out subpart B, there are authorized 
                to be appropriated $52,500,000 for fiscal year 1995, 
                $122,500,000 for fiscal year 1996, $192,500,000 for 
                fiscal year 1997, $157,500,000 for fiscal year 1998, 
                $122,500,000 for fiscal year 1999, and $52,500,000 for 
                fiscal year 2000.
                    (B) With respect to awards to federally qualified 
                health centers (as defined in section 1861(aa)(4) of 
                the Social Security Act) under subpart B, there are 
                authorized to be appropriated $97,500,000 for fiscal 
                year 1995, $227,500,000 for fiscal year 1996, 
                $357,500,000 for fiscal year 1997, $292,500,000 for 
                fiscal year 1998, $227,500,000 for fiscal year 1999, 
                and $97,500,000 for fiscal year 2000.
            (2) Subpart c.--
                    (A) For the purpose of providing loans under 
                subpart C, there are authorized to be appropriated such 
                sums as may be necessary to support a loan level of 
                $200,000,000 for each of the fiscal years 1995 through 
                2000.
                    (B) For the purpose of making grants under subpart 
                C, there are authorized to be appropriated $35,000,000 
                for each of the fiscal year 1995 through 2000.
    (b) Relation to Other Funds.--The authorizations of appropriations 
established in subsection (a) are in addition to any other 
authorizations of appropriations that are available for the purpose 
described in such subsection.
    (c) Eligible Entities.--For purposes of this part, the term 
``eligible entities'' means--
            (1) covered entities as defined in section 340B(a)(4) of 
        the Public Health Service Act (42 U.S.C. 256b(a)(4)), except 
        that subsection (a)(4)(L)(iii) and (a)(7) of such section shall 
        not apply;
            (2) school health service sites under title III of this 
        Act;
            (3) nonprofit hospitals meeting the criteria for public 
        hospitals which are eligible entities under section 340B of the 
        Public Health Service Act, except that subsection 
        (a)(4)(L)(iii) of such section shall not apply, and children's 
        hospitals meeting comparable criteria as determined appropriate 
        by the Secretary;
            (4) public and private, nonprofit community mental health 
        centers and substance abuse treatment providers receiving funds 
        from the Substance Abuse and Mental Health Services 
        Administration;
            (5) runaway homeless youth centers or transitional living 
        programs for homeless youth for the provision of health 
        services under the Runaway Homeless Youth Act of 1974 (42 
        U.S.C. 5701 et seq.);
            (6) rural referral centers under section 1886(d)(5)(C) of 
        the Social Security Act, except that such eligibility is 
        restricted to the receipt of grants under section 3441; and
            (7) public or nonprofit entities in nonmetropolitan areas 
        (as defined by the Department of Commerce) in a consortium of 
        community-based providers that includes at least three of the 
        following:
                    (A) community or migrant health centers;
                    (B) local health departments;
                    (C) community mental health centers;
                    (D) nonprofit hospitals;
                    (E) private practice health professionals, 
                including rural health clinics; or
                    (F) other publicly funded health or social services 
                agencies;
        except that such eligibility is restricted to the receipt of 
        grants or contracts under section 3421(a).
    (d) Priority.--In making awards from amounts appropriated under 
subsection (a)(1)(B) and section 3462, the Secretary shall give the 
highest priority to providing adequate assistance to federally 
qualified health centers in order to ensure the provision of 
comprehensive primary health care services, other covered services and 
benefits, and enabling services to medically underserved populations 
that were served by such centers prior to the date of enactment of this 
Act, except that such federally qualified health centers must continue 
to meet the requirements for designation under section 1861(aa)(4) of 
the Social Security Act.
    (e) Equitable Distribution.--The Secretary shall, in awarding 
grants, entering into contracts, and making loans under this part, 
assure an equitable distribution of funds between rural and urban 
areas.

Subpart B--Development of Community Health Groups and Health Care Sites 
                              and Services

SEC. 3421. GRANTS AND CONTRACTS FOR DEVELOPMENT OF PLANS AND NETWORKS 
              AND THE EXPANSION AND DEVELOPMENT OF HEALTH CARE SITES 
              AND SERVICES.

    (a) In General.--The Secretary may make grants to and enter into 
contracts with eligible entities described in section 3411(c) for--
            (1) the development of community health groups whose 
        principal purpose is to provide the comprehensive benefit 
        package under title I in one or more health professional 
        shortage areas or to provide such items and services to a 
        significant number of individuals who are members of a 
        medically underserved population; and
            (2) the expansion of existing health delivery sites and 
        services and the development of new health delivery sites and 
        services.
    (b) Service Area.--In making an award under subsection (a), the 
Secretary shall designate the geographic area with respect to which the 
community health group involved is to provide health services.
    (c) Priority.--In making awards under subsection (a)(1), the 
Secretary shall give priority to proposals in which a greater number of 
eligible entities and other health care providers, especially providers 
in community-and provider-based health plans under section 1651(d), are 
participants in the community health group, except in areas such as 
rural areas, where providers are severely limited in number.
    (d) Limitation on Awards.--The Secretary may not make awards under 
subsection (a)(1) for more than 5 years to the same community health 
group.
    (e) Definitions.--For purposes of this subpart:
            (1) The term ``community health group'' means--
                    (A) a community health network that--
                            (i) is a public or nonprofit private 
                        consortium of health care providers that 
                        principally provides some of the items and 
                        services of the basic benefit package to 
                        medically underserved populations, and 
                        residents of health professional shortage 
                        areas;
                            (ii) has an agreement with one or more 
                        health plans; and
                            (iii) has a written agreement governing the 
                        participation of health care providers in the 
                        consortium to which each participating provider 
                        is a party; or
                    (B) a community health plan that--
                            (i) is a public or nonprofit private entity 
                        that principally provides all of the items and 
                        services of the basic benefit package to 
                        medically underserved populations, and 
                        residents of health professional shortage 
                        areas;
                            (ii) is a participant in one or more health 
                        alliances; and
                            (iii) has a written agreement governing the 
                        participation of health care providers in the 
                        consortium to which each participating provider 
                        is a party.
            (2) The term ``health professional shortage areas'' means 
        health professional shortage areas designated under section 332 
        of the Public Health Service Act.
            (3) The term ``medically underserved population'' means a 
        medically underserved population designated under section 
        330(b)(3) of the Public Health Service Act, populations 
        residing in health professional shortage areas under section 
        332 of the Public Health Service Act, and populations eligible 
        for premium subsidies and cost sharing reductions based on 
        income under title I.

SEC. 3422. CERTAIN USES OF AWARDS.

    (a) In General.--Amounts awarded under section 3421 may be expended 
for--
            (1) the development of a community health group, including 
        entering into contracts between the recipient of the award and 
        health care providers who are to participate in the group;
            (2) the expansion, development and on-going operation of 
        health delivery sites and services; and
            (3) activities under paragraphs (1) and (2) which include--
                    (A) the recruitment, compensation, and training of 
                health professionals and administrative staff;
                    (B) the purchase and upgrading of equipment, 
                supplies, and information systems including 
                telemedicine systems; and
                    (C) the establishment of reserves required for 
                furnishing services on a prepaid or capitated basis, 
                except that eligible entities may use non-cash 
                mechanisms (including bonds, letters of credit and 
                federally guaranteed reinsurance pools) for 
                establishing and maintaining financial reserves.
    (b) Loans and Grants.--The Secretary may expend, in any fiscal 
year, not to exceed 10 percent of the amounts appropriated to carry out 
this subpart to make loans and grants to eligible entities to support 
the types of activities described in section 3441, subject to the 
requirements of subpart C, except that, with respect to amounts 
available for non-federally qualified health center activities, such 
funds may be used to convert facilities from providers of acute care 
service to providers of primary, emergency or long-term care.

SEC. 3423. APPLICATION.

    The Secretary may not make an award to an entity under section 3421 
until such entity submits and application to the Secretary, in such 
form and containing such assurances and information as the Secretary 
determines appropriate, including--
            (1) an assessment of the need that the medically 
        underserved population or populations proposed to be served by 
        the applicant have for health services and for enabling 
        services (as defined in section 3461);
            (2) a description of how the applicant will design the 
        proposed community health plan or practice network (including 
        the service sites involved) for such populations based on the 
        assessment of need;
            (3) a description of efforts to secure financial and 
        professional assistance and support for the project; and
            (4) evidence of significant community involvement in the 
        initiation, development and ongoing operation of the project.

SEC. 3424. PURPOSES AND CONDITIONS.

    Grants shall be made under this subpart for the purposes and 
subject to all of the conditions under which eligible entities 
otherwise receive funding to provide health services to medically 
underserved populations under the Public Health Service Act. The 
Secretary shall prescribe comparable purposes and conditions for 
eligible entities not receiving funding under the Public Health Service 
Act.

 Subpart C--Capital Cost of Development of Community Health Groups and 
                             Other Purposes

SEC. 3441. DIRECT LOANS AND GRANTS.

    (a) In General.--The Secretary shall make grants and loans to--
            (1) eligible entities (as defined in section 3412(c));
            (2) hospitals designated by the Secretary as essential 
        access community hospitals under section 1820(i)(1) of the 
        Social Security Act; or
            (3) rural primary care hospitals under section 1820(i)(2) 
        of such Act;
for the capital costs of developing community health groups (as defined 
in section 3421(e)) and expanding existing health delivery sites or 
developing new health delivery sites.
    (b) Use of Assistance.--
            (1) In general.--The capital costs for which grants and 
        loans made pursuant to subsection (a) may be expended are, 
        subject to paragraphs (2) and (3), the following:
                    (A) The acquisition, modernization, expansion or 
                construction of facilities, or the conversion of 
                unneeded hospital facilities to facilities that will 
                assure or enhance the provision and accessibility of 
                health care and enabling services to medically 
                underserved populations.
                    (B) The purchase of major equipment, including 
                equipment necessary for the support of external and 
                internal information systems.
                    (C) The establishment of reserves required for 
                furnishing services on a prepaid or capitated basis.
                    (D) Such other capital costs as the Secretary may 
                determine are necessary to achieve the objectives of 
                this section.
            (2) Priorities regarding use of funds.--In providing grants 
        and loans under subsection (a) for an entity, the Secretary 
        shall give priority to authorizing the use of amounts for 
        projects for the renovation and modernization of medical 
        facilities necessary to prevent or eliminate safety hazards 
        including asbestos removal, avoid noncompliance with licensure 
        or accreditation standards, or projects to replace obsolete 
        facilities.
            (3) Limitation.--The Secretary may authorize the use of 
        grants and loans under subsection (a) for the construction of 
        new buildings only if the Secretary determines that appropriate 
        facilities are not available through acquiring, modernizing, 
        expanding or converting existing buildings, or that 
        construction new buildings will cost less.
    (c) Amount of Assistance.--
            (1) In general.--The principal amount of loans under 
        subsection (a) may cover up to 90 percent of the costs 
        involved.
            (2) Grants.--Grants under this subsection may not exceed 75 
        percent of the costs involved.
    (d) Interest Subsidies.--Amounts provided under this section may be 
used to provide interest subsidies for loans provided under this 
section where such subsidies are necessary to make a project financial 
feasible.

SEC. 3442. CERTAIN REQUIREMENTS.

    (a) In General.--The Secretary may approve a loan under section 
3441 only if--
            (1) the Secretary is reasonably satisfied that the 
        applicant for the project for which the loan would be made will 
        be able to make payments of principal and interest thereon when 
        due; and
            (2) the applicant provides the Secretary with reasonable 
        assurances that there will be available to it such additional 
        funds as may be necessary to complete the project or 
        undertaking with respect to which such loan is requested.
    (b) Terms and Conditions.--Any loan made under section 3441 shall, 
subject to the Federal Credit Reform Act of 1990, meet such terms and 
conditions (including provisions for recovery in case of default) as 
the Secretary, in consultation with the Secretary of the Treasury, 
determines to be necessary to carry out the purposes of such section 
while adequately protecting the financial interests of the United 
States. Terms and conditions for such loans shall include provisions 
regarding the following:
            (1) Security.
            (2) Maturity date.
            (3) Amount and frequency of installments.
            (4) Rate of interest, which shall be at a rate comparable 
        to the rate of interest prevailing on the date the loan is 
        made.

SEC. 3443. DEFAULTS; RIGHT OF RECOVERY.

    (a) Defaults.--
            (1) In general.--The Secretary may take such action as may 
        be necessary to prevent a default on loans under section 3441, 
        including the waiver of regulatory conditions, deferral of loan 
        payments, renegotiation of loans, and the expenditure of funds 
        for technical and consultative assistance, for the temporary 
        payment of the interest and principal on such a loan, and for 
        other purposes.
            (2) Foreclosure.--The Secretary may take such action, 
        consistent with State law respecting foreclosure procedures, as 
        the Secretary deems appropriate to protect the interest of the 
        United States in the event of a default on a loan made pursuant 
        to section 3441, including selling real property pledged as 
        security for such a loan and for a reasonable period of time 
        taking possession of, holding, and using real property pledged 
        as security for such a loan.
            (3) Waivers.--The Secretary may, for good cause, but with 
        due regard to the financial interests of the United States, 
        waive any right of recovery which the Secretary has by reasons 
        of the failure of a borrower to make payments of principal of 
        and interest on a loan made pursuant to section 3441, except 
        that if such loan is sold and guaranteed, any such waiver shall 
        have no effect upon the Secretary's guarantee of timely payment 
        of principal and interest.
    (b) Twenty-Year Obligation; Right of Recovery; Subordination; 
Waivers.--
            (1) In general.--With respect to an eligible entity for 
        which a grant or loan was made under section 3441, the 
        Secretary may award the grant or loan only if the applicant 
        involved agrees that the applicant will be liable to the United 
        States for the amount of the grant or loan, together with an 
        amount representing interest, if at any time during the 20-year 
        period beginning on the date of completion of the activities 
        involved, the entity--
                    (A) ceases to be an eligible entity utilized by a 
                community health group, or by another public or 
                nonprofit private entity that provides health services 
                in one or more health professional shortage areas or 
                that provides such services to a significant number of 
                individuals who are members of a medically underserved 
                population; or
                    (B) is sold or transferred to any entity other than 
                an entity that is--
                            (i) a community health group or other 
                        entity described in subparagraph (A); and
                            (ii) approved by the Secretary as a 
                        purchaser or transferee regarding the facility.
            (2) Subordination; waivers.--With respect to essential 
        community providers, the Secretary may subordinate or waive the 
        right of recovery under paragraph (1), and any other Federal 
        interest that may be derived by virtue of a grant or loan under 
        section 3441, if the Secretary determines that subordination or 
        waiver will further the objectives of this part.

SEC. 3444. PROVISIONS REGARDING CONSTRUCTION OR EXPANSION OF 
              FACILITIES.

    (a) Submission of Information.--In the case of a project for 
construction, conversion, expansion or modernization of a facility, the 
Secretary may provide loans under section 3441 only if the applicant 
submits to the Secretary the following:
            (1) A description of the site.
            (2) Plans and specifications which meet requirements 
        prescribed by the Secretary.
            (3) Information reasonably demonstrating that title to such 
        site is vested in one or more of the entities filing the 
        application (unless the agreement described in subsection 
        (b)(1) is made).
            (4) A specification of the type of assistance being 
        requested under section 3441.
    (b) Agreements.--In the case of a project for construction, 
conversion, expansion or modernization of a facility, the Secretary may 
provide loans under section 3441 only if the applicant makes the 
following agreements:
            (1) Title to such site will be vested in one or more of the 
        entities filing the application (unless the assurance described 
        in subsection (a)(3) has been submitted under such subsection).
            (2) Adequate financial support will be available for 
        completion of the project and for its maintenance and operation 
        when completed.
            (3) All laborers and mechanics employed by contractors or 
        subcontractors in the performance of work on a project will be 
        paid wages at rates not less than those prevailing on similar 
        construction in the locality as determined by the Secretary of 
        Labor in accordance with the Act of March 3, 1931 (40 U.S.C. 
        276a et seq; commonly known as the Davis-Bacon Act), and the 
        Secretary of Labor shall have with respect to such labor 
        standards the authority and functions set forth in 
        Reorganization Plan Numbered 14 of 1950 (15 FR 3176; 5 U.S.C. 
        Appendix) and section 276c of title 40.
            (4) The facility will be made available to all persons 
        seeking service regardless of their ability to pay.

SEC. 3445. APPLICATION FOR ASSISTANCE.

    The Secretary may provide loans under section 3441 only if an 
application for such assistance is submitted to the Secretary, the 
application contains each agreement described in this subpart, the 
application contains the information required in section 3444(a), and 
the application is in such form, is made in such manner, and contains 
such agreements, assurances, and information as the Secretary 
determines to be necessary to carry out this subpart.

SEC. 3446. ADMINISTRATION OF PROGRAMS.

    This subpart, and any other program of the Secretary that provides 
loans, shall be carried out by a centralized loan unit established 
within the Department of Health and Human Services.

             Subpart D--Enabling and Supplemental Services

SEC. 3461. GRANTS AND CONTRACTS FOR ENABLING AND SUPPLEMENTAL SERVICES.

    (a) In General.--The Secretary may make grants to and enter into 
contracts with eligible entities to assist such entities in providing 
the services described in subsections (b) and (c) for the purpose of 
increasing the capacity of individuals to utilize the items and 
services included in the comprehensive benefits package under title I, 
and to provide access to essential supplemental services that are not 
fully reimbursable under title I prior to January 2001,.
    (b) Enabling Services.--Enabling services shall include 
transportation, community and patient outreach, patient and family 
education, translation services, case management, home visiting, and 
such other services as the Secretary determines to be appropriate in 
carrying out the purpose described in such subsection.
    (c) Supplemental Services.--Supplemental services shall include 
items or services described in section 1106 or section 1118 of this Act 
that would otherwise be excluded from coverage prior to January 1, 
2001.
    (d) Certain Requirements Regarding Project Area.--The Secretary may 
make an award of a grant or contract under subsection (a) only if the 
applicant involved--
            (1) submits to the Secretary--
                    (A) information demonstrating that the medically 
                underserved populations in the community to be served 
                under the award have a need for enabling services; and
                    (B) a proposed budget for providing such services;
            (2) the applicant for the award agrees that the medically 
        underserved residents of the community will be consulted with 
        respect to the design and implementation of the project carried 
        out with the award;
            (3) agrees that the services will not be denied because the 
        individual is unable to pay for such services; and
            (4) agrees that the applicant will utilize existing 
        resources to the maximum extent practicable.
    (e) Application for Awards of Assistance.--The Secretary may make 
an award of a grant or contract under subsection (a) only if an 
application for the award is submitted to the Secretary, the 
application contains each agreement described in this subpart, and the 
application is in such form, is made in such manner, and contains such 
agreements, assurances, and information as the Secretary determines to 
be necessary to carry out this subpart.

SEC. 3462. AUTHORIZATIONS OF APPROPRIATIONS.

    (a) Enabling Services.--For the purpose of carrying out section 
3461(b), there are authorized to be appropriated $35,000,000 for fiscal 
year 1996, $140,000,000 for each of the fiscal years 1997 through 1999, 
and $175,000,000 for fiscal year 2000.
    (b) Supplemental Services.--For the purpose of carrying out section 
3461(c), there are authorized to be appropriated $100,000,000 for 
fiscal year 1995, $150,000,000 for fiscal year 1996, and $250,000,000 
for each of the fiscal years 1997 through 2000.
    (c) Federally Qualified Health Centers.--With respect to federally 
qualified health centers (as defined in section 1861(aa)(4) of the 
Social Security Act), for the purpose of carrying out section 3461(b), 
there are authorized to be appropriated $65,000,000 for fiscal year 
1996, $260,000,000 for each of the fiscal years 1997 through 1999, and 
$325,000,000 for fiscal year 2000.
    (d) Relation to Other Funds.--The authorizations of appropriations 
established in subsection (a) are in addition to any other 
authorizations of appropriations that are available for the purpose 
described in such subsection.

                 PART 2--NATIONAL HEALTH SERVICE CORPS

SEC. 3471. AUTHORIZATIONS OF APPROPRIATIONS.

    (a) Additional Funding; General Corps Program; Allocations 
Regarding Nurses.--For the purpose of carrying out subpart II of part D 
of title III of the Public Health Service Act, and for the purpose of 
carrying out section 3472, there are authorized to be appropriated 
$150,000,000 for fiscal year 1996, $150,000,000 for fiscal year 1997, 
and $250,000,000 for each of the fiscal years 1998 through 2000.
    (b) Relation to Other Funds.--The authorizations of appropriations 
established in subsection (a) are in addition to any other 
authorizations of appropriations that are available for the purpose 
described in such subsection.

SEC. 3472. ALLOCATION FOR PARTICIPATION OF NURSES IN SCHOLARSHIP AND 
              LOAN REPAYMENT PROGRAMS.

    Of the amounts appropriated under section 3471, the Secretary shall 
reserve such amounts as may be necessary to ensure that, of the 
aggregate number of individuals who are participants in the Scholarship 
Program under section 338A of the Public Health Service Act, or in the 
Loan Repayment Program under section 338B of such Act, the total number 
who are being educated as nurse practitioners, nurse midwives, or nurse 
anesthetists or are serving as nurse practitioners, nurse midwives, or 
nurse anesthetists, respectively, is increased to 20 percent.

SEC. 3473. ALLOCATION FOR PARTICIPATION OF PSYCHIATRISTS, 
              PSYCHOLOGISTS, AND CLINICAL SOCIAL WORKERS IN SCHOLARSHIP 
              AND LOAN REPAYMENT PROGRAMS.

    Of the amounts appropriate under section 3471, the Secretary shall 
reserve such amounts as may be necessary to ensure that of the 
aggregate number of individuals who are participants in the scholarship 
program under section 338A of the Public Health Service Act, the number 
who are being educated as psychiatrists, psychologists, and clinical 
social workers or are serving as psychiatrists, psychologists, and 
clinical social workers, respectively, is increased to 15 percent.

      PART 3--PAYMENTS TO HOSPITALS SERVING VULNERABLE POPULATIONS

SEC. 3481. PAYMENTS TO HOSPITALS.

    (a) Entitlement Status.--The Secretary shall make payments in 
accordance with this part to eligible hospitals described in section 
3482. The preceding sentence--
            (1) is an entitlement in the Secretary on behalf of such 
        eligible hospitals (but is not an entitlement in the State in 
        which any such hospital is located or in any individual 
        receiving services from any such hospital); and
            (2) constitutes budget authority in advance of 
        appropriations Acts and represents the obligation of the 
        Federal Government to provide funding for such payments in the 
        amounts, and for the fiscal years, specified in subsection (b).
    (b) Appropriations.--
            (1) In general.--For purposes of subsection (a)(2), the 
        amounts and fiscal years specified in this subsection are (in 
        the aggregate for all eligible hospitals) $1,300,000,000 for 
        the fiscal year in which the general effective date occurs and 
        for each subsequent fiscal year.
            (2) Special rule for years before general effective date.--
                    (A) In general.--For each of the fiscal years 1996 
                and 1997, the amount specified in this subsection for 
                purposes of subsection (a)(2) shall be equal to the 
                aggregate DSH percentage of the amount otherwise 
                determined under paragraph (1).
                    (B) Aggregate dsh percentage defined.--In 
                subparagraph (A), the ``aggregate DSH percentage'' for 
                a year is the amount (expressed as a percentage) equal 
                to--
                            (i) the total amount of payment made by the 
                        Secretary under section 1903(a) of the Social 
                        Security Act during the base year with respect 
                        to payment adjustments made under section 
                        1923(c) of such Act for hospitals in the States 
                        in which eligible hospitals for the year are 
                        located; divided by
                            (ii) the total amount of payment made by 
                        the Secretary under section 1903(a) of such Act 
                        during the base year with respect to payment 
                        adjustments made under section 1923(c) of such 
                        Act for hospitals in all States.
    (c) Payments Made on Quarterly Basis.--Payments to an eligible 
hospital under this section for a year shall be made on a quarterly 
basis during the year.

SEC. 3482. IDENTIFICATION OF ELIGIBLE HOSPITALS.

    (a) State Identification.--In accordance with the criteria 
described in subsection (b) and such procedures as the Secretary may 
require, each State shall identify the hospitals in the State that meet 
such criteria and provide the Secretary with a list of such hospitals.
    (b) Criteria for Eligibility.--A hospital meets the criteria 
described in this subsection if the hospital's low-income utilization 
rate for the base year under section 1923(b)(3) of the Social Security 
Act (as such section is in effect on the day before the date of the 
enactment of this Act) is not less than 25 percent.

SEC. 3483. AMOUNT OF PAYMENTS.

    (a) Distribution of Allocation for Low-Income Assistance.--
            (1) Allocation from total amount.--Of the total amount 
        available for payments under this section in a year, 66.66 
        percent shall be allocated to hospitals for low-income 
        assistance in accordance with this subsection.
            (2) Determination of hospital payment amount.--The amount 
        of payment to an eligible hospital from the allocation made 
        under paragraph (1) during a year shall be the equal to the 
        hospital's low-income percentage of the allocation for the 
        year.
    (b) Distribution of Allocation for Assistance for Uncovered 
Services.--
            (1) Allocation from total amount; determination of state-
        specific portion of allocation.--Of the total amount available 
        for payments under this section in a year, 33.33 percent shall 
        be allocated to hospitals for assistance in furnishing hospital 
        services that are not covered services under title I (in 
        accordance with regulations of the Secretary) or in furnishing 
        hospital services to individuals, including those residing in 
        Southwestern border States, who are not eligible individuals 
        under title I, in accordance with this subsection. The amount 
        available for payments to eligible hospitals in a State shall 
        be equal to an amount determined in accordance with a 
        methodology specified by the Secretary that shall take into 
        consideration the volume of such services provided by hospital 
        in the State as compared to the volume of such services 
        provided by all eligible hospitals.
            (2) Determination of hospital payment amount.--The amount 
        of payment to an eligible hospital in a State from the amount 
        available for payments to eligible hospitals in the State under 
        paragraph (1) during a year shall be the equal to the 
        hospital's low-income percentage of such amount for the year.
    (c) Low-Income Percentage Defined.--
            (1) In general.--In this subsection, an eligible hospital's 
        ``low-income percentage'' for a year is equal to the amount 
        (expressed as a percentage) of the total low-income days for 
        all eligible hospitals for the year that are attributable to 
        the hospital.
            (2) Low-income days described.--For purposes of paragraph 
        (1), an eligible hospital's low-income days for a year shall be 
        equal to the product of--
                    (A) the total number of inpatient days for the 
                hospital for the year (as reported to the Secretary by 
                the State in which the hospital is located, in 
                accordance with a reporting schedule and procedures 
                established by the Secretary); and
                    (B) the hospital's low-income utilization rate for 
                the base year under section 1923(b)(3) of the Social 
                Security Act (as such section is in effect on the day 
                before the date of the enactment of this Act).

SEC. 3484. BASE YEAR.

    In this part, the ``base year'' is, with respect to a State and 
hospitals in a State, the year immediately prior to the year in which 
the general effective date occurs.

                     PART 4--SENSE OF THE COMMITTEE

SEC. 3491. SENSE OF THE COMMITTEE.

    It is the sense of the Committee on Labor and Human Resources of 
the Senate that when the Health Security Act is enacted, it and 
subsequent appropriations Acts should appropriately recognize the 
success of community and migrant health centers as a proven, cost-
effective model for the delivery of health care services to those 
populations which are medically underserved because of economic, 
geographic, and cultural barriers.

               Subtitle F--Mental Health; Substance Abuse

           PART 1--AUTHORITIES REGARDING PARTICIPATING STATES

SEC. 3510. INTEGRATION OF MENTAL HEALTH AND SUBSTANCE ABUSE SYSTEMS.

    (a) In General.--As a condition of being a participating State 
under title I, each State shall, not later than January 1, 2001, 
achieve the integration of the mental illness and substance abuse 
services of the State and its political subdivisions with the mental 
illness and substance abuse services offered by health plans pursuant 
to title I of this Act. A State may petition the Secretary for a waiver 
of the requirement of this subsection under the circumstances described 
in section 3511(b)(7).
    (b) Certification of Readiness.--
            (1) Petition.--A State may petition the Secretary to 
        integrate the mental illness and substance abuse services of 
        the State and its political subdivisions with the mental 
        illness and substance abuse services offered by health plans 
        pursuant to title I of this Act prior to January 1, 2001.
            (2) State readiness to integrate.--Upon receiving such a 
        petition, the Secretary shall, based on the reports submitted 
        pursuant to subsections (b) and (c) of section 3511 and the 
        criteria promulgated pursuant to paragraph (3), ascertain the 
        State's readiness to integrate its mental illness and substance 
        abuse services with the mental illness and substance abuse 
        services offered by health plans pursuant to title I of this 
        Act and certify whether the State is prepared to conduct such 
        an integration.
            (3) Criteria.--The certification by the Secretary of a 
        State's readiness to integrate under paragraph (2) shall be 
        based on objective criteria promulgated by the Secretary after 
        consultation with the States.
    (c) Application of Provisions.--Upon the issuance of a 
certification of readiness by the Secretary for a State, the limits set 
forth in subsections (d)(2)(B) and (e)(2)(A) of section 1106 shall not 
apply to the provision of mental illness and substance abuse services 
in the State.

SEC. 3511. REPORT ON INTEGRATION OF MENTAL HEALTH SYSTEMS.

    (a) In General.--As a condition of being a participating State 
under title I, each State shall, not later than October 1, 1998, submit 
to the Secretary a report containing the information described in 
subsection (b) on (including a plan for) the measures to be implemented 
by the State to achieve the integration of the mental illness and 
substance abuse services of the State and its political subdivisions 
with the mental illness and substance abuse services that are included 
in the comprehensive benefit package under title I. The plan required 
in the preceding sentence shall meet the conditions described in 
section 3083(b). In addition, each State shall submit to the Secretary 
a report containing the information described in subsection (c) for 
each year in which the State participates under title I up to and 
including the year 2001 or the date on which an unlimited benefit for 
mental illness and substance abuse services is provided, whichever 
occurs later.
    (b) Required Contents of Integration Report.--With respect to the 
provision of items and services relating to mental illness and 
substance abuse, the report of a State under subsection (a) shall, at a 
minimum, contain the following information:
            (1) Information on the number of individuals served by or 
        through mental illness and substance abuse programs 
        administered by State and local agencies and the proportion who 
        are eligible persons under title I.
            (2) Information on the extent to which each health provider 
        furnishing mental illness and substance abuse services under a 
        State program participates or will participate in one or more 
        regional or corporate alliance health plans, and, in the case 
        of providers that do not so participate, the reasons for the 
        lack of participation.
            (3) With respect to the two years preceding the year in 
        which the State becomes a participating State under title I--
                    (A) the amount of funds expended by the State and 
                its political subdivisions for each of such years for 
                items and services that are included in the 
                comprehensive benefit package under such title;
                    (B) the amount of funds expended for medically 
                necessary and appropriate items and services not 
                included in such benefit package, including medical 
                care, other health care, and supportive services 
                related to the provision of health care.
            (4) An estimate of the amount that the State will expend to 
        furnish items and services not included in such package once 
        the expansion of coverage for mental illness and substance 
        abuse services is implemented in the year 2001.
            (5) A description of how the State will assure that all 
        individuals served by mental illness and substance abuse 
        programs funded by the State will be enrolled in a health plan 
        and how mental illness and substance abuse services not covered 
        under the benefit package will continue to be furnished to such 
        enrollees.
            (6) A description of the conditions under which the 
        integration of mental illness and substance abuse providers 
        into regional and corporate alliances can be achieved, and an 
        identification of changes in participation and certification 
        requirements that are needed to achieve the integration of such 
        programs and providers into health plans.
            (7) If the integration of mental illness and substance 
        abuse programs operated by the State into one or more health 
        plans is not medically appropriate or feasible for one or more 
        groups of individuals treated under State programs, a 
        description of the reasons that integration is not feasible or 
        appropriate and a plan for assuring the coordination for such 
        individuals of the care and services covered under the 
        comprehensive benefit package with the additional items and 
        services furnished by such programs.
            (8) A description of the manner in which the resources that 
        the State and its political subdivisions currently spend on 
        mental health and substance abuse services will be used to 
        facilitate integration.
    (c) Required Contents of Transition Report.--With respect to the a 
report required under this subsection, the report shall, at a minimum, 
contain the following information:
            (1) The amount of funds expended for substance abuse and 
        mental health services by the source of revenue, including, 
        Federal block grant funds, under title XIX of the Public Health 
        Service Act, Federal categorical grant funds, State and local 
        revenues and health plan payments.
            (2) The amount of funds expended for supportive services to 
        individuals enrolled in substance abuse and mental health 
        treatment programs, including transportation, child care, 
        educational and vocational training and coordination with other 
        public systems such as the social service, child welfare and 
        juvenile and criminal justice systems, by source of revenue.
            (3) The amount of funds expended on medically necessary and 
        appropriate items and services not covered or reimbursed in the 
        comprehensive benefit package by source of revenue.
            (4) The amount of funds expended by the State on substance 
        abuse and mental illness services for individuals who are not 
        eligible to receive the comprehensive benefit package pursuant 
        to this Act, and the source of revenue for such services.
    (d) General Provisions.--Reports under subsections (b) and (c) 
shall be provided at the time and in the manner prescribed by the 
Secretary. The Secretary shall also determine what, if any, reports 
shall be submitted in years following the implementation of an 
unlimited benefit for mental illness and substance abuse services.
    (e) Reporting Requirement.--Each State shall report annually to the 
Secretary on the incidence and prevalence of mental illness and 
substance abuse disorders in the prison population, changes in such 
incidence and prevalence in the prison population, and potential 
causative factors with respect to such changes, including an estimate 
of the extent to which the denial of treatment, or the provision of 
inadequate treatment, to individuals with mental illness and substance 
abuse disorders is contributing to the criminal activity of such 
individuals.

PART 2--ASSISTANCE FOR STATE MANAGED MENTAL HEALTH AND SUBSTANCE ABUSE 
                                PROGRAMS

SEC. 3531. AVAILABILITY OF ASSISTANCE.

    (a) In General.--The Secretary shall make grants to States for the 
development and operation of comprehensive managed mental health and 
substance abuse programs that are integrated with the health delivery 
system established under this Act. Such programs shall--
            (1) promote the development of integrated delivery systems 
        for the management of the mental health and substance abuse 
        services provided under the comprehensive benefits package;
            (2) give priority to providing services to low-income 
        adults with serious mental illness or substance abuse disorders 
        and children with serious emotional disturbance or substance 
        abuse disorders and provide for the phase-in of such services 
        for all eligible persons within 5 years;
            (3) ensure that individuals participating in the program 
        have access to all medically necessary mental health and 
        substance abuse services;
            (4) promote the linkage of mental health and substance 
        abuse services with primary and preventive health care 
        services; and
            (5) meet such other requirements as the Secretary may 
        impose.
    (b) Exception.--Nothing in this part shall be construed as 
preventing States that have separate administrative entities for mental 
health and for substance abuse services from establishing separate 
comprehensive managed care programs for such services and receiving 
assistance under this part for either or both programs.

SEC. 3532. PLAN REQUIREMENTS.

    In order to receive a grant under this part, a State must have a 
plan for a comprehensive managed mental health and substance abuse 
program which is approved by the Secretary. Such plan shall--
            (1) describe the management, access, and referral structure 
        that the State will use to promote and achieve integration of 
        mental health and substance abuse services with the health 
        delivery system established under this Act for eligible 
        individuals in the State;
            (2) describe how the State will ensure that providers of 
        specialized services will meet appropriate standards and 
        provide assurances that the State has complied with section 
        1504 as it affects mental health and substance abuse services;
            (3) describe payment, utilization review, and other 
        mechanisms that the State will use to encourage appropriate 
        service delivery and management of costs;
            (4) describe uniform patient placement criteria that the 
        State will use to ensure placement in appropriate substance 
        abuse treatment programs;
            (5) describe the processes the State will use to ensure 
        that individuals will continue to have access to treatment 
        through referrals from nonhealth public entities, such as the 
        juvenile or criminal justice systems, or social service 
        systems;
            (6) specify the methods the State will use to ensure that 
        individuals receiving services under the program have access to 
        all medically necessary and appropriate mental health and 
        substance abuse services;
            (7) define terms that will be used by the State in 
        determining the eligibility of individuals for services under 
        the program;
            (8) describe how health plans will use services under the 
        comprehensive managed mental health and substance abuse 
        programs established under this part;
            (9) describe the role of local government in financing and 
        managing the integrated mental illness and substance abuse 
        treatment system;
            (10) describe the sources of funding, including Medicaid 
        and the block grants authorized by title XIX of the Public 
        Health Service Act, that will be used by the State, other than 
        the grant received under this part, to operate the program, and 
        provide the status of any request for a Medicaid waiver made by 
        the State to the Secretary;
            (11) describe how the State provided for broad-based public 
        input in the development of the plan, and the mechanism that 
        will be used for ongoing public comment on and review of 
        amendments to the plan; and
            (12) describe grievance procedures that will be available 
        for individuals dissatisfied with their health plan's 
        participation in the comprehensive managed mental health and 
        substance abuse program, and mechanisms that will be available 
        to review the performance of health plans and fee-for-service 
        arrangements to ensure against under treatment.

SEC. 3533. ADDITIONAL FEDERAL RESPONSIBILITIES.

    The Secretary shall, upon the submission of a State's plan under 
section 3532, ensure the timely consideration of any Medicaid waiver 
requests submitted by the State, affirm that section 1504 has been 
implemented, and ensure the timely implementation of section 
1641(b)(5).

SEC. 3534. AUTHORIZATION OF APPROPRIATIONS.

    There are authorized to be appropriated for grants under this part, 
$100,000,000 for each of the fiscal years 1995 through 2000.

   Subtitle G--Comprehensive School Health Education; School-Related 
                            Health Services

   PART 1--HEALTHY STUDENTS-HEALTHY SCHOOLS GRANTS FOR SCHOOL HEALTH 
                               EDUCATION

SEC. 3601. PURPOSES.

    It is the purpose of this part--
            (1) to support the development and implementation of 
        comprehensive age appropriate health education programs in 
        public schools for children and youth kindergarten through 
        grade 12; and
            (2) to increase access to preventive and primary health 
        care services for children and youth through school-based or 
        school-linked health service sites in accordance with locally 
        determined needs.

SEC. 3602. HEALTHY STUDENTS-HEALTHY SCHOOLS GRANTS.

    (a) In General.--The Secretary, in consultation with the Secretary 
of Education, shall award grants to State educational agencies in 
eligible States to integrate comprehensive school health education in 
schools within the State, with priority given within States to those 
communities in greatest need as defined by section 3683(a).
    (b) Eligible Uses of Funds.--Funds made available under this 
section shall be used--
            (1) to implement comprehensive school health education 
        programs, as defined in subsection (f)(1) through grants to 
        local educational agencies;
            (2) to provide staff development and technical assistance 
        to local educational agencies, schools, local health agencies, 
        and other community organizations involved in providing 
        comprehensive school health education programs;
            (3) to evaluate and report to the Secretary on the progress 
        made towards attaining the goals and objectives described under 
        subsection (c)(1)(A); and
            (4) to conduct such other activities to achieve the 
        objectives of this subpart as the Secretary may require.
    (c) Application.--An application for a grant under subsection (a), 
shall be jointly developed by the State educational agency and the 
State health agencies of the State involved, and shall contain--
            (1) a State plan for comprehensive school health education 
        programs, that outlines--
                    (A) the goals and objectives of the State for 
                school health education programs, and the manner in 
                which the State will allocate funds to local 
                educational agencies in order to achieve these goals 
                and objectives;
                    (B) the manner in which the State will coordinate 
                programs under this part with other Federal, State and 
                local health education programs and resources, and 
                school health services;
                    (C) the manner in which comprehensive school health 
                education programs will be coordinated with other 
                Federal, State and local education programs (such as 
                programs under titles I, II, and IV of the Elementary 
                and Secondary Education Act of 1965), with the school 
                improvement plan of the State, if any, under title III 
                of the Goals 2000: Educate America Act, and with any 
                similar programs;
                    (D) the manner in which the State shall work with 
                State and local educational agencies and with State and 
                local health agencies to reduce barriers to 
                implementing school health education programs;
                    (E) the manner in which the State will monitor the 
                implementation of such programs by local educational 
                agencies and establish outcome criteria by which to 
                evaluate their effectiveness in achieving progress 
                towards the goals and objectives described in 
                subparagraph (A);
                    (F) the manner in which the State will provide 
                staff development and technical assistance to local 
                educational agencies, and build capacity for 
                professional development of health educators; and
                    (G) the manner in which such school health 
                education programs will be, to the extent practicable, 
                culturally competent and linguistically appropriate and 
                responsive to the diverse needs of the students served;
            (2) a description of the respective roles of the State 
        educational agency, local educational agencies, the State 
        health agency and local health agencies in developing and 
        implementing the State's school health education plan and 
        resulting programs;
            (3) a description of the input of the local community 
        (including students and parents) in the development and 
        operation of comprehensive school health education programs;
            (4) an assurance that communities identified in section 
        3683(a) receive priority as locations for comprehensive school 
        health education programs for all grades to the extent that a 
        State does not implement a statewide program; and
            (5) an assurance that grants to local educational agencies 
        under subsection (b)(1) are contingent upon submission by such 
        agencies of a plan consistent with the requirements for the 
        State plan as required under this subsection.
    (d) Waivers of Statutory and Regulatory Requirements.--
            (1) Waivers.-- Except as provided in paragraph (4), upon 
        the request of an entity and under a relevant program described 
        in paragraph (2), the Secretary of Health and Human Services 
        and the Secretary of Education may grant to the entity a waiver 
        of any requirement of such program regarding the use of funds, 
        or of the regulations issued for the program by the Secretary 
        involved, if the following conditions are met with respect to 
        such program:
                    (A) The Secretary involved determines that the 
                requirements of such program impede the ability of the 
                State educational agency to achieve more effectively 
                the purposes described in section 3601.
                    (B) The Secretary involved determines that, with 
                respect to the use of funds under such program, the 
                requested use of the funds by the entity would be 
                consistent with the purposes described in section 3601.
                    (C) The State educational agency provides all 
                interested local educational agencies in the State with 
                notice and an opportunity to comment on the proposal 
                and makes these comments available to the Secretary.
            (2) Relevant programs.--For purposes of paragraph (1), the 
        programs described in this subparagraph are the following:
                    (A) In the case of programs administered by the 
                Secretary of Health and Human Services, the following:
                            (i) The program known as the Prevention, 
                        Treatment, and Rehabilitation Model Projects 
                        for High Risk Youth, carried out under section 
                        517 of the Public Health Service Act.
                            (ii) The program known as the State and 
                        Local Comprehensive School Health Programs to 
                        Prevent Important Health Problems and Improve 
                        Educational Outcomes, carried out under such 
                        Act.
                    (B) In the case of programs administered by the 
                Secretary of Education, any program carried out under 
                part B of the Drug-Free Schools and Communities Act of 
                1986, except that a component of such comprehensive 
                school health education must be consistent with the 
                statutory intent and purposes of such Act.
            (3) Waiver period.--A waiver under this paragraph shall be 
        for a period not to exceed 3 years, unless the Secretary 
        involved determines that--
                    (A) the waiver has been effective in enabling the 
                State to carry out the activities for which it was 
                requested and has contributed to improved performance 
                of comprehensive health education programs; and
                    (B) such extension is in the public interest;
            (4) Waivers not authorized.--The Secretary involved under 
        paragraph (1), may not waive, under this section, any statutory 
        or regulatory requirements relating to--
                    (A) comparability of services;
                    (B) maintenance of effort;
                    (C) parental participation and involvement;
                    (D) the distribution of funds to States or to local 
                educational agencies or other recipients of funds under 
                the programs described in paragraph (2);
                    (E) maintenance of records;
                    (F) applicable civil rights requirements; or
                    (G) the requirements of sections 438 and 439 of the 
                General Education Provisions Act.
            (5) Termination of waiver.--The Secretary involved under 
        paragraph (1) shall terminate a waiver under this subsection if 
        the Secretary determines that the performance of the State 
        affected by the waiver has been inadequate to justify a 
        continuation of the waiver or if it is no longer necessary to 
        achieve its original purpose.
    (e) Definitions.--As used in this section:
            (1) Comprehensive school health education.--The term 
        ``comprehensive school health education'' means a planned, 
        sequential program of health education that addresses the 
        physical, emotional and social dimensions of student health in 
        kindergarten through grade 12. Such program shall--
                    (A) be designed to assist students in developing 
                the knowledge and behavioral skills needed to make 
                positive health choices and maintain and improve their 
                health, prevent disease and injuries, and reduce risk 
                behaviors which adversely impact health;
                    (B) be comprehensive and include a variety of 
                components addressing personal health, community and 
                environmental health, injury prevention and safety, 
                nutritional health, the effects of substance use and 
                abuse, consumer health regarding the benefits and 
                appropriate use of medical services including 
                immunizations and other clinical preventive services, 
                and other components deemed appropriate by the local 
                educational agencies;
                    (C) be designed to be linguistically and culturally 
                competent and responsive to the needs of the students 
                served; and
                    (D) address locally relevant priorities as 
                determined by parents, students, teachers, and school 
                administrators and health officials.
            (2) Eligible state.--The term ``eligible State'' means a 
        State with a memorandum of understanding or a written 
        cooperative agreement entered into by the agencies responsible 
        for health and education concerning the planning and 
        implementation of comprehensive school health education 
        programs. Among these States a priority shall be given to 
        qualified States as defined in section 3682(c).
            (3) State educational agency.--The term ``State educational 
        agency'' means the officer or agency primarily responsible for 
        the State supervision of public elementary and secondary 
        schools.
            (4) Local educational agency.--The term ``local educational 
        agency'' means a public board of education or other public 
        authority legally constituted within a State for either 
        administrative control or direction of, or to perform a service 
        function for, public elementary or secondary schools in a city, 
        county, township, school district, or other political 
        subdivision of a State, or such combination of school districts 
        or counties as are recognized in a State as an administrative 
        agency for its public elementary or secondary schools. Such 
        term includes any other public institution or agency having 
        administrative control and direction of a public elementary or 
        secondary school.
    (f) Authorized Funding.--For the purpose of carrying out this 
section, out of the funds available under section 3695(b)(2), there are 
made available, not to exceed $15,000,000 for fiscal year 1995, 
$20,000,000 for fiscal year 1996, $25,000,000 for fiscal year 1997, 
$30,000,000 for fiscal year 1998, $40,000,000 for fiscal year 1999, and 
$50,000,000 for fiscal year 2000.

SEC. 3603. HEALTHY STUDENTS-HEALTHY SCHOOLS INTERAGENCY TASK FORCE.

    (a) Establishment.--Not later than 120 days after the date of 
enactment of this Act, the Secretary shall establish a Healthy 
Students-Healthy Schools Interagency Task Force to be composed of 
representatives of the Office of Disease Prevention and Health 
Promotion, the National Institutes of Health, the Centers for Disease 
Control and Prevention, the Health Resources and Services 
Administration, the Office of School Health Education within the 
Department of Education, and other Federal agencies and departments 
which have responsibility for components of school health and 
education.
    (b) Co-chairpersons.--The Assistant Secretary for Health and the 
Assistant Secretary for Elementary and Secondary Education shall serve 
as co-chairpersons of the task force established under subsection (a).
    (c) Functions and Activities.--The task force established under 
subsection (a) shall--
            (1) review and coordinate all Federal efforts in school 
        health education and health services;
            (2) provide scientific and technical advice concerning the 
        development and implementation of model comprehensive school 
        health education programs and curricula;
            (3) develop model student learning objectives and 
        assessment instruments that shall be made available to all 
        States;
            (4) develop a uniform grant application form (a form that 
        serves as the principal document containing the core 
        information concerning a particular entity) and procedures that 
        may be used with respect to all school health education-related 
        programs (including supplementary information procedures to be 
        implemented when an entity that has already submitted an 
        application form is applying for additional assistance) that 
        require the submission of an application; and
            (5) recommend to the Secretary, for inclusion in the 
        biennial report required by section 3604(2), methods for 
        effectively linking school health education and health services 
        research findings at the Federal level with implementation at 
        the State and local levels.
    (d) Consolidation of Initiatives.--Not later than 12 months after 
the date of enactment of this Act, the task force established under 
subsection (a) shall prepare and submit to the Congress a report 
containing the recommendations of the task force for the consolidation 
of Federal school health education initiatives.

SEC. 3604. DUTIES OF THE SECRETARY.

    The Secretary shall--
            (1) establish and maintain a national clearinghouse, using 
        advanced technologies to the maximum extent practicable, and 
        mechanisms for the diverse dissemination of school health 
        education material, including written, audio-visual, and 
        electronically conveyed information to educators, schools, 
        health care providers, and other individuals, organizations, 
        and governmental entities;
            (2) submit a biennial report to the Committee on Labor and 
        Human Resources of the Senate and the appropriate committees of 
        the House of Representatives on the implementation and 
        contribution of comprehensive school health education programs 
        funded under this part toward achieving relevant National 
        Healthy People 2000 objectives established by the Secretary; 
        and
            (3) encourage coordination among Federal agencies, State 
        and local governments, educators, school health providers, 
        community-based organizations, and private sector entities to 
        support development of comprehensive school health education 
        programs and school health services.

                 PART 5--SCHOOL-RELATED HEALTH SERVICES

                  Subpart A--Development and Operation

SEC. 3681. AUTHORIZATION OF APPROPRIATIONS.

    (a) Funding for School-Related Health Services.--For the purpose of 
carrying out this subpart, there are authorized to be appropriated 
$100,000,000 for fiscal year 1995, $200,000,000 for fiscal year 1996, 
$325,000,000 for fiscal year 1997, $450,000,000 for fiscal year 1998, 
$575,000,000 for fiscal year 1999, and $700,000,000 for fiscal year 
2000.
    (b) Funding for Planning and Development Grants.--Of amounts made 
available under this section, not to exceed $10,000,000 for each of 
fiscal years 1995 and 1996 may be utilized to carry out section 3684.

SEC. 3682. ELIGIBILITY FOR GRANTS.

    (a) In General.--
            (1) Planning and development grants.--Entities eligible to 
        apply for and receive grants under section 3684 are--
                    (A) State health agencies that apply on behalf of 
                local community partnerships; or
                    (B) local community partnerships in States in which 
                health agencies have not successfully applied.
            (2) Operational grants.--Entities eligible to apply for and 
        receive grants under section 3685 are--
                    (A) a qualified State as designated under 
                subsection (c) that apply on behalf of local community 
                partnerships; or
                    (B) local community partnerships in States that are 
                not designated under subparagraph (A).
    (b) Local Community Partnerships.--
            (1) In general.--A local community partnership under 
        subsection (a)(1)(B) and (a)(2)(B) is an entity that, at a 
        minimum includes--
                    (A) a local health care provider, which may be a 
                local public health department, with experience in 
                delivering services to children and youth or medically 
                underserved populations;
                    (B) local educational agency on behalf of one or 
                more public schools; and
                    (C) one community-based organization located in the 
                community to be served that has a history of providing 
                services to at-risk children and youth.
            (2) Rural communities.--In rural communities, local 
        partnerships should seek to include, to the fullest extent 
        practicable, providers and community-based organizations with 
        experience in serving the target population.
            (3) Parent and community participation.--An applicant 
        described in subsection (a) shall, to the maximum extent 
        feasible, involve broad-based community participation 
        (including parents of the youth to be served).
    (c) Qualified State.--A qualified State under subsection (a)(2)(A) 
is a State that, at a minimum--
            (1) demonstrates an organizational commitment (including a 
        strategic plan) to providing a broad range of health, health 
        education and support services to at-risk youth; and
            (2) has a memorandum of understanding or cooperative 
        agreement jointly entered into by the State agencies 
        responsible for health and education regarding the planned 
        delivery of health and support services in school-based or 
        school-linked centers.

SEC. 3683. PREFERENCES.

    In making grants under sections 3684 and 3685, the Secretary shall 
give priority to applicants whose-communities to be served show the 
most substantial level of need for health services among children and 
youth.

SEC. 3684. PLANNING AND DEVELOPMENT GRANTS.

    (a) In General.--The Secretary may make grants during fiscal years 
1995 and 1996 to entities eligible under section 3862 to develop 
school-based or school-linked health service sites.
    (b) Use of Funds.--Amounts provided under a grant under this 
section may be used for the following:
            (1) Planning for the provision of school health services, 
        including--
                    (A) an assessment of the need for health services 
                among youth in the communities to be served;
                    (B) the health services to be provided and how new 
                services will be integrated with existing services;
                    (C) assessing and planning for the modernization 
                and expansion of existing facilities and equipment to 
                accommodate such services; and
                    (D) an affiliation with relevant health plans.
            (2) recruitment and training of staff for the 
        administration and delivery of school health services;
            (3) the establishment of local community partnerships as 
        described in section 3682 (b);
            (4) in the case of States, the development of memorandums 
        of understanding or cooperative agreements for the coordinated 
        delivery of health and support services through school health 
        service sites; and
            (5) other activities necessary to assume operational 
        status.
    (c) Application for Grants.--To be eligible to receive a grant 
under this section an entity described in section 3682 (a) shall submit 
an application in a form and manner prescribed by the Secretary.
    (d) Number of Grants.--Not more than one planning grant may be made 
to a single applicant. A planning grant may not exceed 2 years in 
duration.
    (e) Amount Available for Development Grant.--The Secretary may 
award not to exceed--
            (1) $150,000 to entities under section 3682(a)(1)(A) and to 
        localities planning for a citywide or countywide school health 
        services delivery system; and
            (2) $50,000 to entities under section 3682(a)(1)(B).

SEC. 3685. GRANTS FOR OPERATION OF SCHOOL HEALTH SERVICES.

    (a) In General.--The Secretary may make grants to eligible entities 
described in section 3682(a)(2) that submit applications consistent 
with the requirements of this section, to pay the cost of operating 
school-based or school-linked health service sites.
    (b) Use of Grant.--Amounts provided under a grant under this 
section may be used for the following--
            (1) health services, including diagnosis and treatment of 
        simple illnesses and minor injuries;
            (2) preventive health services, including health screenings 
        follow-up health care, mental health, and preventive health 
        education;
            (3) enabling services, as defined in section 3461(b), and 
        other necessary support services;
            (4) training, recruitment, and compensation of health 
        professionals and other staff necessary for the administration 
        and delivery of school health services; and
            (5) referral services, including the linkage of individuals 
        to health plans, and community-based health and social service 
        providers.
    (c) Application for Grant.--To be eligible to receive a grant under 
this section an entity described in section 3682(a)(2) shall submit an 
application in a form and manner prescribed by the Secretary. In order 
to receive a grant under this section, an applicant must include in the 
application the following information--
            (1) a description of the services to be furnished by the 
        applicant;
            (2) the amounts and sources of funding that the applicant 
        will expend, including estimates of the amount of payments the 
        applicant will receive from health plans and other sources;
            (3) a description of local community partnerships, 
        including parent and community participation;
            (4) a description of the linkages with other health and 
        social service providers; and
            (5) such other information as the Secretary determines to 
        be appropriate.
    (d) Assurances.--In order to receive a grant under this section, an 
applicant must meet the following conditions--
            (1) school health service sites will, directly or 
        indirectly, provide a broad range of health services, in 
        accordance with the determinations of the local community 
        partnership, that may include--
                    (A) diagnosis and treatment of simple illnesses and 
                minor injuries;
                    (B) preventive health services, including health 
                screenings and follow-up health care, mental health and 
                preventive health education;
                    (C) enabling services, as defined in section 
                3461(b);
                    (D) referrals (including referrals regarding mental 
                health and substance abuse) with follow-up to ensure 
                that needed services are received;
            (2) the applicant provides services recommended by the 
        health provider, in consultation with the local community 
        partnership, and with the approval of the local education 
        agency;
            (3) the applicant provides the services under this 
        subsection to adolescents, and other school age children and 
        their families as deemed appropriate by the local partnership;
            (4) the applicant maintains agreements with community-based 
        health care providers with a history of providing services to 
        such populations for the provision of health care services not 
        otherwise provided directly or during the hours when school 
        health services are unavailable;
            (5) the applicant establishes an affiliation with relevant 
        health plans and will establish reimbursement procedures and 
        will make every reasonable effort to collect appropriate 
        reimbursement for services provided; and
            (6) the applicant agrees to supplement and not supplant the 
        level of State or local funds under the direct control of the 
        applying State or participating local education or health 
        authority expended for school health services as defined by 
        this Act;
            (7) services funded under this Act will be coordinated with 
        existing school health services provided at a participating 
        school; and
            (8) for applicants in rural areas, the assurances required 
        under paragraph (4) shall be fulfilled to the maximum extent 
        possible.
    (e) State Laws.--Notwithstanding any other provision in this part, 
no school based health clinic may provide services, to any minor, when 
to do so is a violation of State laws or regulations pertaining to 
informed consent for medical services to minors.
    (f) Limitation on Administrative Funds.--In the case of a State 
applying on behalf of local educational partnerships, the applicant may 
retain not more than 5 percent of grants awarded under this subpart for 
administrative costs.
    (g) Duration of Grant.--A grant under this section shall be for a 
period determined appropriate by the Secretary.
    (h) Amount of Grant.--The annual amount of a grant awarded under 
this section shall not be more than $200,000 per school-based or 
school-linked health service site.
    (i) Federal Share.--
            (1) In general.--Subject to paragraph (3), a grant for 
        services awarded under this section may not exceed--
                    (A) 90 percent of the non-reimbursed cost of the 
                activities to be funded under the program for the first 
                2 fiscal years for which the program receives 
                assistance under this section; and
                    (B) 75 percent of the non-reimbursed cost of such 
                activities for subsequent years for which the program 
                receives assistance under this section.
The remainder of such costs shall be made available as provided in 
paragraph (2).
            (2) Form of non-federal share.--The non-Federal share 
        required by paragraph (1) may be in cash or in-kind, fairly 
        evaluated, including facilities, equipment, personnel, or 
        services, but may not include amounts provided by the Federal 
        Government. In-kind contributions may include space within a 
        school facilities, school personnel, program use of school 
        transportation systems, outposted health personnel, and 
        extension of health provider medical liability insurance.
            (3) Waiver.--The Secretary may waive the requirements of 
        paragraph (1) for any year in accordance with criteria 
        established by regulation. Such criteria shall include a 
        documented need for the services provided under this section 
        and an inability of the grantee to meet the requirements of 
        paragraph (1) despite a good faith effort.
    (j) Training and Technical Assistance.--Entities that receive 
assistance under this section may use not to exceed 10 percent of the 
amount of such assistance to provide staff training and to secure 
necessary technical assistance. To the maximum extent feasible, 
technical assistance should be sought through local community-based 
entities. The limitation contained in this subsection shall apply to 
individuals employed to assist in obtaining funds under this part. 
Staff training should include the training of teachers and other school 
personnel necessary to ensure appropriate referral and utilization of 
services, and appropriate linkages between class-room activities and 
services offered.
    (k) Report and Monitoring.--The Secretary will submit to the 
Committee on Labor and Human Resources in the Senate and the Committee 
on Energy and Commerce in the House of Representatives a biennial 
report on the activities funded under this Act, consistent with the 
ongoing monitoring activities of the Department. Such reports are 
intended to advise the relevant Committees of the availability and 
utilization of services, and other relevant information about program 
activities.

            Subpart B--Capital Costs of Developing Projects

SEC. 3691. FUNDING.

    Amounts available to the Secretary under section 3412 for the 
purpose of carrying out subparts B and C of part 2 of subtitle E are, 
in addition to such purpose, available to the Secretary for the purpose 
of carrying out this subpart.

              Subtitle H--Public Health Service Initiative

SEC. 3695. PUBLIC HEALTH SERVICE INITIATIVE.

    (a) In General.--Subject to subsection (c), the Secretary of Health 
and Human Services shall pay, from funds in the Treasury not otherwise 
appropriated, individuals and entities that are eligible to receive 
assistance pursuant to the provisions referred to in paragraphs (1) 
through (13) of subsection (b), to the extent of the amounts specified 
under subsection (b).
    (b) Amounts Specified.--The amounts specified in subsection (a) 
with respect to a fiscal year shall be--
            (1) with respect to the health services research activities 
        authorized under the amendments made by section 3202, 
        $150,000,000 for fiscal year 1995, $400,000,000 for fiscal year 
        1996, $500,000,000 for fiscal year 1997, and $600,000,000 for 
        each of the fiscal years 1998 through 2000;
            (2) with respect to the core functions of public health 
        programs authorized under part 2 of subtitle D of title III, 
        $150,000,000 for fiscal year 1995, $225,000,000 for fiscal year 
        1996, $325,000,000 for fiscal year 1997, $425,000,000 for 
        fiscal year 1998, $500,000,000 for fiscal year 1999, and 
        $625,000,000 for fiscal year 2000;
            (3) with respect to the national initiatives regarding 
        health promotion and disease prevention under part 3 of 
        subtitle D of title III, $125,000,000 for each of the fiscal 
        years 1996 through 1998, and $150,000,000 for each of the 
        fiscal years 1999 and 2000;
            (4) with respect to occupational injury and illness 
        prevention under section 3903, $150,000,000 for each of the 
        fiscal years 1995 through 2000;
            (5) with respect to activities for the development of plans 
        and networks under subpart B of part 2 of subtitle E of title 
        III--
                    (A) $52,500,000 for fiscal year 1995, $122,500,000 
                for fiscal year 1996, $192,500,000 for fiscal year 
                1997, $157,500,000 for fiscal year 1998, $122,500,000 
                for fiscal year 1999, and $52,500,000 for fiscal year 
                2000; and
                    (B) with respect to awards to federally qualified 
                health centers (as defined in section 1861(aa)(4) of 
                the Social Security Act) under such subpart, 
                $97,500,000 for fiscal year 1995, $227,500,000 for 
                fiscal year 1996, $357,500,000 for fiscal year 1997, 
                $292,500,000 for fiscal year 1998, $227,500,000 for 
                fiscal year 1999, and $97,500,000 for fiscal year 2000;
            (6) with respect to capital costs under subpart C of part 2 
        of subtitle E of title III, $50,000,000 for each of the fiscal 
        years 1995 through 2000;
            (7) with respect to enabling services under subpart D of 
        part 2 of subtitle E of title III--
                    (A) $35,000,000 for fiscal year 1996, $140,000,000 
                for each of the fiscal years 1997 through 1999, and 
                $175,000,000 for fiscal year 2000; and
                    (B) with respect to awards to federally qualified 
                health centers (as defined in section 1861(aa)(4) of 
                the Social Security Act) under such subpart, 
                $65,000,000 for fiscal year 1996, $260,000,000 for each 
                of the fiscal years 1997 through 1999, and $325,000,000 
                for fiscal year 2000;
            (8) with respect to supplemental services under subpart D 
        of part 1 of subtitle E of title III, $100,000,000 for fiscal 
        year 1995, $150,000,000 for fiscal year 1996, and $250,000,000 
        for each of the fiscal years 1997 through 2000;
            (9) with respect to the National Health Service Corps 
        program referred to under section 3471, $150,000,000 for each 
        of the fiscal years 1996 and 1997, and $250,000,000 for each of 
        the fiscal years 1998 through 2000;
            (10) with respect to school-related health service programs 
        under subpart A of part 5 of subtitle G of title III, 
        $100,000,000 for fiscal year 1995, $200,000,000 for fiscal year 
        1996, $325,000,000 for fiscal year 1997, and $450,000,000 for 
        fiscal year 1998, $575,000,000 for fiscal year 1999, and 
        $700,000,000 for fiscal year 2000;
            (11) with respect to the development and operation of 
        comprehensive managed mental health and substance abuse 
        programs under section 3534, $100,000,000 for each of the 
        fiscal years 1995 through 2000;
            (12) with respect to programs of the Secretary of Health 
        and Human Services under section 3081, $100,000,000 for each of 
        the fiscal years 1995 and 1996, and $150,000,000 for each of 
        the fiscal years 1997 through 2000; and
            (13) with respect to programs of the Secretary of Labor 
        under section 3082, $200,000,000 for each of the fiscal years 
        1995 through 2000.
    (c) Authority to Transfer Funds.--The Committee on Appropriations 
of the House of Representatives and the Committee on Appropriations of 
the Senate, acting through appropriations Acts, may transfer the 
amounts specified under subsection (b) in each fiscal year among the 
programs referred to in such subsection.

       Subtitle I--Additional Provisions Regarding Public Health

SEC. 3901. CURRICULUM DEVELOPMENT AND IMPLEMENTATION REGARDING DOMESTIC 
              VIOLENCE AND WOMEN'S HEALTH.

    (a) In General.--The Secretary shall make grants to eligible 
entities for the purpose of implementing and developing for trainees a 
curriculum that includes training in identification, treatment and 
referral of victims of domestic violence and women's health needs.
    (b) Eligible Entities.--For purposes of subsection (a), eligible 
entities are any school of medicine, school of osteopathic medicine, 
school of public health, graduate program in mental health practice, 
school of nursing as defined in section 853 of the Public Health 
Service Act, a program to train physician assistants, a program for 
training allied health professionals, and a program for training of 
family medicine physicians, general internists, general pediatricians, 
geriatricians, and obstetrician/gynecologists.
    (c) Curriculum.--A curriculum developed under this section shall 
include--
            (1) identification of victims of domestic violence and 
        maintaining complete medical records that include documentation 
        of the examination, treatment provided, and referral made and 
        recording the location and nature of the victim's injuries;
            (2) examining and treating such victims within the scope of 
        the health professional's discipline, training, and practice, 
        including at a minimum providing medical advice regarding the 
        dynamics and nature of domestic violence;
            (3) referring the victims to public and nonprofit entities 
        that provide support services for such victims;
            (4) training in the identification and diagnosis of 
        diseases afflicting women and other medical disorders as they 
        affect women;
            (5) training in the treatment of such diseases and 
        disorders with emphasis on the unique needs of women; and
            (6) research into the causes of such diseases and 
        disorders, including determination of appropriate means of 
        prevention.
    (d) Allocation of Appropriations.--Of the amounts made available 
under section 3301(b) for a fiscal year, the Secretary shall reserve 
not to exceed $20,000,000 for a fiscal year for carrying out this 
section.

               Subtitle J--Occupational Safety and Health

SEC. 3903. OCCUPATIONAL INJURY AND ILLNESS PREVENTION.

    (a) In General.--The Secretary of Health and Human Services and the 
Secretary of Labor shall work together to develop and implement a 
comprehensive program to expand and coordinate initiatives to prevent 
occupational injuries and illnesses.
    (b) Secretary of Labor.--The Secretary of Labor after consultation 
with the Secretary of Health and Human Services shall directly or by 
grants or contracts--
            (1) provide for training and education programs for 
        employees and employers in the recognition and control of 
        workplace hazards and methods and measures to prevent 
        occupational injuries and illnesses;
            (2) develop model educational materials for training and 
        educating employees and employers on the recognition and 
        control of workplace hazards, including a core curriculum for 
        general safety and health training and materials related to 
        specific safety and health hazards; and
            (3) provide programs and services for technical assistance 
        to employers and employees on the recognition and control of 
        workplace safety and health hazards including programs for 
        onsite consultation.
Technical assistance and consultative services under paragraph (3) 
shall be provided in a manner that is separate from the enforcement 
programs conducted by the Secretary of Labor.
    (c) Secretary of Health and Human Services.--The Secretary of 
Health and Human Services after consultation with the Secretary of 
Labor shall directly or by grants or contracts--
            (1) provide education programs for training occupational 
        safety and health professionals including professionals in the 
        fields of occupational medicine, occupational health nursing, 
        industrial hygiene, safety engineering, toxicology and 
        epidemiology;
            (2) provide education programs for other health 
        professionals and health care providers and the public to 
        improve the recognition, treatment and prevention of 
        occupationally related injuries and illnesses;
            (3) conduct surveillance programs to identify patterns and 
        to determine the prevalence of occupational illnesses, injuries 
        and deaths related to exposure to particular safety and health 
        hazards;
            (4) conduct investigations and evaluations to determine if 
        workplace exposures to toxic chemicals, harmful physical agents 
        or potentially hazardous conditions pose a risk to exposed 
        employees; and
            (5) conduct research, demonstrations and experiments 
        relating to occupational safety and health to identify the 
        causes of and major factors contributing to occupational 
        illnesses and injuries.
    (d) National Advisory Board.--
            (1) Establishment.--There is established a National 
        Advisory Board for Occupational Injury and Illness Prevention 
        to provide oversight, advice and direction on the occupational 
        injury and illness prevention programs and initiatives 
        conducted by the Secretary of Labor and Secretary of Health and 
        Human Services.
            (2) Composition.--The Board shall be composed of 10 members 
        appointed by the Secretary of Labor, 5 of whom are to be 
        designated by the Secretary of Health and Human Services. Such 
        members shall be composed of representatives of employers, 
        employees, and occupational safety and health professionals.
    (e) Director of NIOSH.--The responsibilities of the Secretary of 
Health and Human Services established under this section shall be 
carried out by the Director of the National Institute for Occupational 
Safety and Health.
    (f) Authorization of Appropriations.--For the purposes of carrying 
out this section there are authorized to be appropriated $150,000,000 
for each of the fiscal years 1995 through 2000

                    Subtitle K--Full Funding for WIC

SEC. 3905. FULL FUNDING FOR WIC.

    Section 17 of the Child Nutrition Act of 1966 (42 U.S.C. 1786) is 
amended--
            (1) in the second sentence of subsection (a)--
                    (A) by striking ``authorized'' and inserting 
                ``established''; and
                    (B) by striking ``, up to the authorization levels 
                set forth in subsection (g) of this section,'' and 
                inserting ``, up to the levels made available under 
                this section,'';
            (2) in subsection (c)--
                    (A) in the first sentence of paragraph (1), by 
                striking ``may'' and inserting ``shall'';
                    (B) in paragraph (2), by striking ``appropriated'' 
                and inserting ``made available'';
            (3) in subsection (g)--
                    (A) by striking paragraph (1) and inserting the 
                following new paragraph:
    ``(1)(A) There are authorized to be--
            ``(i) appropriated to carry out this section such amounts 
        as are necessary for each of fiscal years 1995 through 2000; 
        and
            ``(ii) made available such amounts as are necessary for the 
        Secretary of the Treasury to fulfill the requirements of 
        subparagraph (B).
    ``(B)(i) Out of any money in the Treasury not otherwise 
appropriated, the Secretary of the Treasury shall provide to the 
Secretary of Agriculture, on January 1 of each fiscal year, to carry 
out this subsection--
            ``(I) $254,000,000 for fiscal year 1996;
            ``(II) $407,000,000 for fiscal year 1997;
            ``(III) $384,000,000 for fiscal year 1998;
            ``(IV) $398,000,000 for fiscal year 1999; and
            ``(V) $411,000,000 for fiscal year 2000.
    ``(ii) The Secretary of Agriculture shall be entitled to receive 
the funds and shall accept the funds.
    ``(C) In lieu of obligating the funds made available under 
subparagraph (B) to carry out this subsection, if the amount 
appropriated (in addition to the amount appropriated under subparagraph 
(B)(i)) to carry out this subsection for--
            ``(i) fiscal year 1996 is less than $3,660,000,000, the 
        amount referred to in subparagraph (B)(i)(I) shall be obligated 
        by the Secretary, during the period beginning December 31, 
        1995, and ending June 30, 1996, to increase the special 
        assistance factor prescribed under section 11(a) of the 
        National School Lunch Act (42 U.S.C. 1759a(a)) for free lunches 
        served under the school lunch program (as established under 
        section 4 of such Act (42 U.S.C. 1753));
            ``(ii) fiscal year 1997 is less than $3,759,000,000, the 
        amount referred to in subparagraph (B)(i)(II) shall be 
        obligated by the Secretary, during the period beginning 
        December 31, 1996, and ending June 30, 1997, to increase the 
        special assistance factor prescribed under section 11(a) of 
        such Act for free lunches served under the school lunch program 
        (as established under section 4 of such Act);
            ``(iii) fiscal year 1998 is less than $3,861,000,000, the 
        amount referred to in subparagraph (B)(i)(III) shall be 
        obligated by the Secretary, during the period beginning 
        December 31, 1997, and ending June 30, 1998, to increase the 
        special assistance factor prescribed under section 11(a) of 
        such Act for free lunches served under the school lunch program 
        (as established under section 4 of such Act);
            ``(iv) fiscal year 1999 is less than $3,996,000,000, the 
        amount referred to in subparagraph (B)(i)(IV) shall be 
        obligated by the Secretary, during the period beginning 
        December 31, 1998, and ending June 30, 1999, to increase the 
        special assistance factor prescribed under section 11(a) of 
        such Act for free lunches served under the school lunch program 
        (as established under section 4 of such Act); and
            ``(v) fiscal year 2000 is less than $4,136,000,000, the 
        amount referred to in subparagraph (B)(i)(V) shall be obligated 
        by the Secretary, during the period beginning December 31, 
        1999, and ending June 30, 2000, to increase the special 
        assistance factor prescribed under section 11(a) of such Act 
        for free lunches served under the school lunch program (as 
        established under section 4 of such Act).
    ``(D) Any increase in the special assistance factor prescribed 
under section 11(a) of such Act as a result of subparagraph (C) shall 
not affect any annual adjustment in the factor under section 11(a)(3) 
of such Act.'';
                    (B) in the first sentence of paragraph (4), by 
                striking ``appropriated'' and inserting ``made 
                available''; and
                    (C) in paragraph (5), by striking ``appropriated'' 
                and inserting ``made available'';
            (4) in subsection (h)--
                    (A) in paragraph (1)--
                            (i) in subparagraph (A), by striking 
                        ``appropriated'' both places it appears and 
                        inserting ``made available''; and
                            (ii) in subparagraph (C), by striking 
                        ``appropriated'' both places it appears and 
                        inserting ``made available''; and
                    (B) in the first sentence of paragraph (2)(A), by 
                striking ``1990, 1991, 1992, 1993 and 1994'' and 
                inserting ``1990 through 2000''; and
            (5) in subsection (l), by striking ``funds appropriated'' 
        and inserting ``funds made available''.

                 Subtitle L--Border Health Improvement

SEC. 3908. BORDER HEALTH COMMISSION.

    (a) Establishment.--The President is authorized and encouraged to 
conclude an agreement with Mexico to establish a binational commission 
to be known as the United States-Mexico Border Health Commission.
    (b) Duties.--It should be the duty of the Commission--
            (1) to conduct a comprehensive needs assessment in the 
        United States-Mexico Border Area for the purposes of 
        identifying, evaluating, preventing, and resolving health 
        problems and potential health problems that affect the general 
        population of the area;
            (2) to develop and implement a comprehensive plan for 
        carrying out the actions recommended by the needs assessment 
        through--
                    (A) assisting in the coordination of public and 
                private efforts to prevent potential health problems 
                and resolve existing health problems;
                    (B) assisting in the coordination of public and 
                private efforts to educate the population, in a 
                culturally competent manner, concerning such potential 
                and existing health problems; and
                    (C) developing and implementing culturally 
                competent programs to prevent and resolve such health 
                problems and to educate the population, in a culturally 
                competent manner, concerning such health problems where 
                a new program is necessary to meet a need that is not 
                being met through other public or private efforts; and
            (3) to formulate recommendations to the Governments of the 
        United States and Mexico concerning a fair and reasonable 
        method by which the government of one country could reimburse a 
        public or private person in the other country for the cost of a 
        health care service that such person furnishes to a citizen or 
        resident alien of the first country who is unable, through 
        insurance or otherwise, to pay for the service.
    (c) Other Authorized Functions.--In addition to the duties 
described in subsection (b), the Commission should be authorized to 
perform the following functions as the Commission determines to be 
appropriate--
            (1) to conduct or support investigations, research, or 
        studies designed to identify, study, and monitor, on an on-
        going basis, health problems that affect the general population 
        in the United States-Mexico Border Area;
            (2) to conduct or support a binational, public-private 
        effort to establish a comprehensive and coordinated system, 
        which uses advanced technologies to the maximum extent 
        possible, for gathering health-related data and monitoring 
        health problems in the United States-Mexico Border Area; and
            (3) to provide financial, technical, or administrative 
        assistance to public or private persons who act to prevent or 
        resolve such problems or who educate the population concerning 
        such health problems.
    (d) Membership.--
            (1) Number and appointment of united states section.--The 
        United States section of the Commission should be composed of 
        13 members. The section should consist of the following 
        members:
                    (A) The Secretary of Health and Human Services or 
                the Secretary's delegate.
                    (B) The commissioners of health or chief health 
                officer from the States of Texas, New Mexico, Arizona, 
                and California or such commissioners' delegates.
                    (C) Two individuals residing in United States-
                Mexico Border Area in each of the States of Texas, New 
                Mexico, Arizona, and California who are nominated by 
                the chief executive officer of the respective States 
                and appointed by the President from among individuals--
                            (i) who have a demonstrated interest or 
                        expertise in health issues of the United 
                        States-Mexico Border Area; and
                            (ii) whose name appears on a list of 6 
                        nominees submitted to the President by the 
                        chief executive officer of the State where the 
                        nominee resides.
            (2) Commissioner.--The Commissioner of the United States 
        section of the Commission should be the Secretary of Health and 
        Human Services or such individual's delegate to the Commission. 
        The Commissioner should be the leader of the section.
            (3) Compensation.--Members of the United States section of 
        the Commission who are not employees of the United States--
                    (A) shall each receive compensation at a rate of 
                not to exceed the daily equivalent of the annual rate 
                of basic pay payable for positions at GS-15 of the 
                General Schedule under section 5332 of title 5, United 
                States Code, for each day such member is engaged in the 
                actual performance of the duties of the Commission; and
                    (B) shall be allowed travel expenses, including per 
                diem in lieu of subsistence at rates authorized for 
                employees of agencies under subchapter I of chapter 57 
                of title 5, United States Code, while away from their 
                homes or regular places of business in the performance 
                of services of the Commission.
    (e) Regional Offices.--The Commission should designate or establish 
one border health office in each of the States of Texas, New Mexico, 
Arizona, and California. Such office should be located within the 
United States-Mexico Border Area, and should be coordinated with--
            (1) State border health offices; and
            (2) local nonprofit organizations designated by the State's 
        governor and directly involved in border health issues.
If feasible to avoid duplicative efforts, the Commission offices should 
be located in existing State or local nonprofit offices. The Commission 
should provide adequate compensation for cooperative efforts and 
resources.
    (f) Reports.--Not later than February 1 of each year that occurs 
more than 1 year after the date of the establishment of the Commission, 
the Commission should submit an annual report to both the United States 
Government and the Government of Mexico regarding all activities of the 
Commission during the preceding calendar year.
    (g) Definitions.--As used in this section:
            (1) Commission.--The term ``Commission'' means the United 
        States-Mexico Border Health Commission.
            (2) Health problem.--The term ``health problem'' means a 
        disease or medical ailment or an environmental condition that 
        poses the risk of disease or medical ailment. Such term 
        includes diseases, ailments, or risks of disease or ailment 
        caused by or related to environmental factors, control of 
        animals and rabies, control of insect and rodent vectors, 
        disposal of solid and hazardous waste, and control and 
        monitoring of air quality.
            (3) Resident alien.--The term ``resident alien'', when used 
        in reference to a country, means an alien lawfully admitted for 
        permanent residence to the United States or otherwise 
        permanently residing in the United States under color of law 
        (including residence as an asylee, refugee, or parolee).
            (4) Secretary.--The term ``Secretary'' means the Secretary 
        of Health and Human Services.
            (5) United states-mexico border area.--The term ``United 
        States-Mexico Border Area'' means the area located in the 
        United States and Mexico within 100 kilometers of the border 
        between the United States and Mexico.

                TITLE V--QUALITY AND CONSUMER PROTECTION

                       table of contents of title

                TITLE V--QUALITY AND CONSUMER PROTECTION

             Subtitle A--Quality Management and Improvement

Sec. 5001. National Quality Council.
Sec. 5002. National goals and performance measures of quality.
Sec. 5003. Standards and performance measures for health plans.
Sec. 5004. Plan data analysis and consumer surveys.
Sec. 5005. Evaluation and reporting of quality performance.
Sec. 5006. Development and dissemination of practice guidelines.
Sec. 5007. Research on health care quality.
Sec. 5008. Quality improvement foundations.
Sec. 5009. Authorization of appropriations.
Sec. 5010. Role of States in quality assurance.
Sec. 5011. Role of health plans in quality management. 
Sec. 5012. Information on health care providers.
Sec. 5013. Conforming amendments to Public Health Service Act.
     Subtitle B--Information Systems, Privacy, and Administrative 
                             Simplification

               Partsubpart a--purpose and definitionsork
Sec. 5101. Purpose.
Secsubpart b--requirements on health care providers and health plans
Sec. 5103. Requirements with respect to certain transactions and data.
Sec. 5104. Availability of standard health care data.
Sec. 5105. Timetables for compliance with requirements.
Sec.subpart c--standards and certification for indexing systems and 
                             clearinghouses
Sec. 5108. Establishment of standards.
Sec. 5109. Certification procedure.
Sec. 5110. State operation of indexing systems and clearinghouses.
Sec.subpart d--standards for transactions, data elements, and index 
                                markers.
Sec. 5112. General requirements on board.
Sec. 5113. Financial and administrative transactions.
Sec. 5114. Elements of health care data.
Sec. 5115. Index markers.
Sec. 5116. Timetasubpart e--accessing health care data
Sec. 5117. Accessing financial and administrative data in connection 
                            with a financial and administrative 
                            transaction.
Sec. 5118. Accessing data for authorized purposes.
Sec. 5119. Health information protection organizations.
Sec. 5120. Access by the Board and other Federal agencies.
Sec. 5121. Access to health care data by the States.
Sec. 5122. Length of time data should be accessible.
Sec. 5123. Timetables for subpart f--penaltiesmpliance.
Sec. 5124. General penalty for failure to comply with requirements and 
                            standards.
Sec. 5125. Penalties relsubpart g--miscellaneous
Sec. 5126. Imposition of additional requirements.
Sec. 5127. Rules regarding coordination of benefits.
Sec. 5128. Effect on State law.
Sec. 5129. Health care data continuity.
Sec. 5130. Protection of commercial information.
Sec. 5131. Authorizsubpart h--assistance to the board
Sec. 5132. General requirement on Board.
Sec.subpart i--demonstration projects for community-based clinical 
                          information systems
Sec. 5135. Grants fosubpart j--health security cards
Sec. 5136. Health security cards.
             subpart a--short title; findings and purposes
Sec. 5160. Short title.
Sec. 5161. Findings subpart b--judicial proceedings
Sesubpart c--limitation on disclosure of protected health information.
Sec. 5163. Definitions.
Sec. 5164. General limitations on disclosure.
Sec. 5165. Authorizations for disclosure of protected health 
                            information.
Sec. 5166. Treatment; financial and administrative transactions.
Sec. 5167. Oversight.
Sec. 5168. Next of kin and directory information.
Sec. 5169. Public health
Sec. 5170. Emergency circumstances.
Sec. 5171. Judicial and administrative purposes.
Sec. 5172. Health research.
Sec. 5173. Law enforcement.
Sec. 5174. Subpoenas and warrants.
Sec. 5175. Access procedures for law enforcement subpoenas and 
                            warrants.
Sec. 5176. Challenge procedures for law enforcement subpoenas.
Sec. 5177. Access and challenge procedures for subpoenas other than law 
                            enforcement subpoenas.
Sec. 5178. Security.
Sec. 5179. Inspection of protected health information.
Sec. 5180. Amendment of protected health information.
Sec. 5181. Accounting for disclosures.
Sec. 5182. Standards for electronic documents and communications.
Sec. 5183. Rights of incompetents.
Sec. 5184. Rights of minors.
Sec. 5185. No liability for permissible disclosures.
Sec. 5186. No liability for institutional review board determinations.
Sec. 5187. Good faith reliance on certification.
Sec. 5188. Civil penalty.
Sec. 5189. Civil action.
Sec. 5190. Relationship to other laws.
Sec. 5191. Prior written consent.
Sec. 5192. Provider identifiable data.
     Part 3--Interim Requirements for Administrative Simplification

Sec. 5195. Standard benefit forms.
                  Subtitle C--Remedies and Enforcement

   Part 1--Review of Bensubpart a--general rulesEnrolled Individuals
Sec. 5201. Health plan claims procedure.
Sec. 5202. Review in area complaint review offices of grievances based 
                            on acts or practices by health plans.
Sec. 5203. Initial proceedings in complaint review offices.
Sec. 5204. Hearings before hearing officers in complaint review 
                            offices.
Sec. 5205. Review by Federal Health Plan Review Board.
Sec. 5206. Civil msubpart b--early resolution programs
Sec. 5211. Establishment of early resolution programs in complaint 
                            review offices.
Sec. 5212. Initiation of participation in mediation proceedings.
Sec. 5213. Mediation proceedings.
Sec. 5214. Legal effect of participation in mediation proceedings.
Sec. 5215. Enforcement of settlement agreements.
Sec. 5216. Due process for health care providers.
         Part 2--Additional Remedies and Enforcement Provisions

Sec. 5231. Judicial review of Federal action on State systems.
Sec. 5232. Administrative and judicial review relating to cost 
                            containment.
Sec. 5233. Civil enforcement.
Sec. 5234. Priority of certain bankruptcy claims.
Sec. 5235. Private right to enforce State responsibilities.
Sec. 5236. Private right to enforce Federal responsibilities in 
                            operating a system in a State.
Sec. 5237. Private right to enforce responsibilities of cooperatives.
Sec. 5237A. Enforcement of consumer protections.
Sec. 5238. Discrimination claims.
Sec. 5239. Nondiscrimination in federally assisted programs.
Sec. 5240. Civil and administration action by essential community 
                            provider.
Sec. 5241. Facial constitutional challenges.
Sec. 5242. Treatment of plans as parties in civil actions.
Sec. 5243. Whistleblower protections.
Sec. 5244. General nonpreemption of rights and remedies.
                    Subtitle D--Medical Malpractice

                        Part 1--Liability Reform

Sec. 5301. Federal tort reform.
Sec. 5302. State-based alternative dispute resolution mechanisms.
Sec. 5303. Limitation on amount of attorney's contingency fees.
Sec. 5304. Reduction of awards for recovery from collateral sources.
Sec. 5305. Periodic payment of awards.
   Part 2--Other Provisions Relating to Medical Malpractice Liability

Sec. 5311. State malpractice reform demonstration projects.

   Subtitle E--Expanded Efforts To Combat Health Care Fraud and Abuse

                      Part 1--Improved Enforcement

Sec. 5401. All-payer health care fraud and abuse control program.
Sec. 5402. Establishment of all-payer health care fraud and abuse 
                            control account.
Sec. 5403. Use of funds by inspector general.
Sec. 5404. Rewards for information leading to prosecution and 
                            conviction.
              Part 2--Civil Penalties and Rights of Action

Sec. 5411. Civil monetary penalties.
Sec. 5412. Permitting parties to bring actions on own behalf.
Sec. 5413. Exclusion from program participation.
                   Part 3--Amendments to Criminal Law

Sec. 5421. Health care fraud.
Sec. 5422. Theft or embezzlement.
Sec. 5423. False statements.
Sec. 5424. Bribery and graft.
Sec. 5425. Injunctive relief relating to health care offenses.
Sec. 5426. Grand jury disclosure.
Sec. 5427. Forfeitures for violations of fraud statutes.
              Part 4--Amendments to Civil False Claims Act

Sec. 5431. Amendments to civil false claims act.
                         Part 5--Effective Date

Sec. 5441. Effective date.

                    Subtitle F--Repeal of Exemption

Sec. 5501. Repeal of exemption for health insurance.

             Subtitle A--Quality Management and Improvement

SEC. 5001. NATIONAL QUALITY COUNCIL.

    (a) Establishment.--Not later than 1 year after the date of 
enactment of this Act, the National Health Board shall establish a 
council to be known as the National Quality Council to oversee a 
performance based program of quality management and improvement 
designed to enhance the quality, appropriateness, and effectiveness of 
health care services and access to such services.
    (b) Appointment.--The National Quality Council shall consist of 15 
members appointed by the President, with the advice and consent of the 
Senate, who are broadly representative of the population of the United 
States and shall include--
            (1) individuals and health care providers distinguished in 
        the fields of medicine, public health, health care quality, and 
        related fields of health services research. Such members shall 
        constitute at least one-third of the Council's membership;
            (2) individuals representing consumers of health care 
        services. Such members shall constitute at least one-third of 
        the Council's membership; and
            (3) other individuals representing purchasers of health 
        care; health plans; States; and nationally recognized health 
        care accreditation organizations.
    (c) Duties.--The National Quality Council shall:
            (1) develop national goals and performance measures of 
        quality;
            (2) develop uniform quality goals and performance measures 
        for plans;
            (3) design and oversee national surveys of plans and 
        consumers;
            (4) design and oversee the production of Consumer Report 
        Cards;
            (5) establish and oversee State-based Quality Improvement 
        Foundations; and
            (6) evaluate the impact of the implementation of this Act 
        on the quality of health care services in the United States and 
        the access of consumers to such services.
    (d) Consultation.--In carrying out these duties, the National 
Quality Council shall establish a process of consultation with 
appropriate interested parties.
    (e) Terms.--
            (1) In general.--Except as provided in paragraph (2), 
        members of the Council shall serve for a term of 4 years.
            (2) Staggered rotation.--Of the members first appointed to 
        the Council under subsection (b), the President shall appoint 
        members to serve for a term of between 1 and 4 years so that no 
        more than one third of the Council seats are vacated each year.
            (3) Service beyond term.--A member of the Council may 
        continue to serve after the expiration of the term of the 
        member until a successor is appointed.
    (f) Vacancies.--If a member of the Council does not serve the full 
term applicable under subsection (e), the individual appointed to fill 
the resulting vacancy shall be appointed for the remainder of the term 
of the predecessor of the individual.
    (g) Chair.--The President shall designate an individual to serve as 
the chair of the Council.
    (h) Meetings.--The Council shall meet not less than once during 
each 4-month period and shall otherwise meet at the call of the 
President or the chair.
    (i) Compensation and Reimbursement of Expenses.--Members of the 
Council shall receive compensation for each day (including travel time) 
engaged in carrying out the duties of the Council. Such compensation 
may not be in an amount in excess of the maximum rate of basic pay 
payable for level IV of the Executive Schedule under section 5315 of 
title 5, United States Code.
    (j) Conflicts of Interest.--Members of the Council shall disclose 
upon appointment to the Council or at any subsequent time that it may 
occur, conflicts of interest.
    (k) Staff.--The National Health Board shall provide to the Council 
such staff, information, and other assistance as may be necessary to 
carry out the duties of the Council.
    (l) Health Care Provider.--For purposes of this subtitle, the term 
``health care provider'' means an individual who, or entity that, 
provides an item or service to an individual that is covered under the 
health plan (as defined in section 1500) in which the individual is 
enrolled.

SEC. 5002. NATIONAL GOALS AND PERFORMANCE MEASURES OF QUALITY.

    (a) In General.--The National Quality Council shall develop a set 
of national goals and performance measures of quality for both the 
general population and for population subgroups defined by demographic 
characteristics and health status. The goals and measures shall 
incorporate standards identified by the Secretary of Health and Human 
Services for meeting public health objectives utilizing, but not 
limited to, goals delineated in Healthy People 2000.
    (b) Subject of Measures.--National measures of quality performance 
shall be selected in a manner that provides statistical and other 
information on at least the following subjects:
            (1) Outcomes of health care services and procedures.
            (2) Health promotion.
            (3) Prevention of diseases, disorders, and other health 
        conditions.
            (4) Access to care and appropriateness of care.

SEC. 5003. STANDARDS AND PERFORMANCE MEASURES FOR HEALTH PLANS.

    (a) In General.--The National Quality Council shall establish 
national standards and performance measures for health plans, which may 
be used to assess the provision of health care services and access to 
such services, both for the general population and population subgroups 
defined by demographic characteristics and health status. In subject 
matter areas with which the National Quality Council determines that 
sufficient information and consensus exist, the Council shall establish 
goals for performance by health plans consistent with the national 
goals and performance measures established under section 5002. These 
quality measures shall relate to, at a minimum:
            (1) Access to health care services by consumers, including 
        provider to patient ratios, waiting times for appointments, 
        travel distances, and community involvement and outreach.
            (2) Appropriateness of health care services, including 
        failure to provide appropriate services and continuity of care.
            (3) Consumer satisfaction with care and compliance with 
        members rights, including dissenrollment, referral, patterns of 
        claims denials and out-of-network utilization patterns.
            (4) Quality improvement and accountability, including 
        showing that the plan can continuously monitor and improve the 
        quality of health care provided.
            (5) Provider credentialing and competency.
            (6) Management of clinical, and administrative and 
        financial information.
            (7) Utilization management including criteria for 
        monitoring underutilization, techniques and provider feedback 
        to minimize interference with the provider-patient 
        relationship, and supervision of utilization determinations by 
        qualified medical professionals.
    (b) Certification of Plans.--The National Quality Council shall 
provide information and technical assistance to the Board and the 
States on the use of national standards and performance measures in 
this section for State certification of health plans.

SEC. 5004. PLAN DATA ANALYSIS AND CONSUMER SURVEYS.

    (a) In General.--The National Quality Council shall conduct (either 
directly or through contract) periodic surveys of health care consumers 
and plans to gather information concerning the quality measures 
established in sections 5002 and 5003. The surveys shall monitor 
consumer reaction to the implementation of this Act and, in 
coordination with relevant data from health plans and other sources, be 
designed to assess the impact of this Act both for the general 
population of the United States and for populations vulnerable to 
discrimination or to receiving inadequate care due to health status, 
demographic characteristics, or geographic location.
    (b) Survey Administration and Data Analysis.--The National Quality 
Council shall approve a standard design for the consumer surveys and 
sampling of relevant plan data which shall be administered by the 
Administrator for Health Care Policy and Research or such other 
appropriate entity the Council shall designate on a plan-by-plan and 
State-by-State basis. Sufficient consumer survey and plan data shall be 
collected and verified to provide for reliable and valid analysis. A 
State may add survey questions on quality measures of local interest to 
surveys conducted in the State. The plan-level survey shall include a 
subset of consumer survey responses related to consumer satisfaction, 
perceived health status, access, and such other survey items designated 
by the Council.
    (c) Sampling Strategies.--The National Quality Council shall 
approve sampling strategies that ensure that appropriate survey samples 
adequately measure populations that are considered to be at risk of 
receiving inadequate health care or may be difficult to reach through 
consumer-sampling methods, including individuals who--
            (1) fail to enroll in a health plan;
            (2) resign from a plan; or
            (3) are vulnerable to discrimination or to receiving 
        inadequate care due to health status, demographic 
        characteristics, or geographic location.
    (d) Survey Integration.--To the extent feasible, the consumer and 
plan surveys shall be integrated with existing Federal surveys.

SEC. 5005. EVALUATION AND REPORTING OF QUALITY PERFORMANCE.

    (a) Performance Reports.--
            (1) Health plan reports.--Each State annually shall publish 
        and make available to the public a performance report in a 
        standard format, designated by the National Quality Council, 
        outlining the performance of each health plan offered in the 
        State, on the set of national measures of quality performance 
        in section 5002 and 5003. The report shall include the results 
        of a smaller number of such measures for health care providers 
        if the available information is statistically meaningful. The 
        report shall also include the results of consumer surveys 
        described in section 5004 that were conducted in the State 
        during the year that is the subject of the report and be based 
        on the data collected and analyzed in section 5004.
            (2) Consumer Report Cards.--The health plan reports shall 
        be summarized in a consumer report card as specified by the 
        National Quality Council and made available by the State to all 
        individuals in the State.
            (3) Quality reports.--The National Quality Council annually 
        shall provide recommendations to the Congress, the National 
        Health Board, and the Secretary a summary report that--
                    (A) outlines in a standard format the performance 
                of each State;
                    (B) discusses State-level and national trends 
                relating to health care quality; and
                    (C) presents data for each State from health plan 
                reports and consumer surveys that were conducted during 
                the year that is the subject of the report.
            (4) State reports.--The National Quality Council annually 
        shall provide to each State a summary report that--
                    (A) outlines in a standard format the performance 
                of each health plan;
                    (B) discusses State-level and national trends 
                relating to health care quality; and
                    (C) presents data for each health plan from health 
                plan reports and consumer surveys that were conducted 
                during the year that is the subject of the report.
    (b) Public Availability of Information in National Practitioner 
Data Bank on Defendants, Awards, and Settlements.--
            (1) In general.--Section 427(a) of the Health Care Quality 
        Improvement Act (42 U.S.C. 11137 (a)) is amended by adding at 
        the end the following new sentence: ``Not later than January 1, 
        1996, the Secretary shall promulgate regulations under which 
        individuals seeking to enroll in health plans under the Health 
        Security Act shall be able to obtain information reported under 
        this part with respect to physicians and other licensed health 
        practitioners participating in such plans for whom information 
        has been reported under this part on repeated occasions.''.
            (2) Access to data bank for point-of-service contractors 
        under medicare.--Section 427(a) of such Act (42 U.S.C. 
        11137(a)) is amended--
                    (A) by inserting ``to sponsors of point-of-service 
                networks under section 1990 of the Social Security 
                Act,'', and
                    (B) in the heading, by inserting ``Related'' after 
                ``Care''.

SEC. 5006. DEVELOPMENT AND DISSEMINATION OF PRACTICE GUIDELINES.

    (a) Development of Guidelines.--The National Quality Council may 
advise the Secretary and the Administrator for Health Care Policy and 
Research on priorities for the development and periodic review and 
updating of clinically relevant guidelines established under section 
912 of the Public Health Service Act.
    (b) Health Service Utilization Protocols.--The National Quality 
Council shall establish standards and procedures for evaluating the 
clinical appropriateness of protocols used to manage health service 
utilization.

SEC. 5007. RESEARCH ON HEALTH CARE QUALITY.

    The National Quality Council may make recommendations to the 
Secretary and the Administrator for Agency for Health Care Policy and 
Research concerning priorities for research with respect to the 
quality, appropriateness, and effectiveness of health care.

SEC. 5008. QUALITY IMPROVEMENT FOUNDATIONS.

    (a) Establishment.--The National Quality Council shall oversee the 
operation of quality improvement foundations to perform the duties 
specified in subsection (c).
    (b) Structure and Membership.--
            (1) Grant process.--The Secretary, in consultation with the 
        States and the Council, shall select a number of regional 
        foundations through a competitive grantmaking process. The 
        Secretary shall allow for foundations to serve only one State 
        if the State so requests.
            (2) Eligible applicants.--Eligible applicants shall meet 
        the following conditions:
                    (A) The entity shall be a not-for-profit entity.
                    (B) The entity shall have a board which includes--
                            (i) representatives of health care 
                        providers from throughout the State, including 
                        both practicing providers and experts in the 
                        field of quality measurement and improvement, 
                        which together shall comprise at least one-
                        fourth of the advisory board's membership;
                            (ii) at least one representative of 
                        Academic Health Centers or schools defined in 
                        section 799 of the Public Health Service Act, 
                        which shall comprise up to one-fourth of the 
                        membership;
                            (iii) representatives of consumers, who 
                        shall comprise one-fourth of the membership; 
                        and
                            (iv) representatives of purchasers of 
                        health care, health plans, the State, and other 
                        interested parties.
                    (C) Staffing.--Each entity shall have sufficient, 
                competent staff of experts possessing the skills and 
                knowledge necessary to enable the foundation perform 
                its duties.
    (c) Duties.--
            (1) In general.--Each quality improvement foundation shall 
        carry out the duties described in paragraph (2) for the region 
        in which the foundation is located. The foundation shall 
        establish a program of activities incorporating such duties and 
        shall be able to demonstrate the involvement of a broad cross-
        section of the providers and health care institutions 
        throughout the region. A foundation may apply for and conduct 
        research described in section 5007.
            (2) Duties described.--The duties described in this 
        paragraph include the following:
                    (A) Collaboration with and technical assistance to 
                providers and health plans in ongoing efforts to 
                improve the quality of health care provided to 
                individuals in the State.
                    (B) Population-based monitoring of practice 
                patterns and patient outcomes, and auditing samples of 
                such data to assure its validity.
                    (C) Developing programs in lifetime learning for 
                health professionals to improve the quality of health 
                care by ensuring that health professionals remain 
                abreast of new knowledge, acquire new skills, and adopt 
                new roles as technology and societal demands change.
                    (D) Disseminating information about successful 
                quality improvement programs, practice guidelines, and 
                research findings, including information on innovative 
                staffing of health professionals.
                    (E) Assist in developing innovative patient 
                education systems that enhance patient involvement in 
                decisions relating to their health care.
                    (F) Issuing a report to the public regarding the 
                foundation's activities for the previous year including 
                areas of success during the previous year and areas for 
                opportunities in improving health outcomes for the 
                community, and the adoption of guidelines.
                    (G) Providing notice to the State or appropriate 
                entity if the foundation finds, after reasonable 
                opportunities for improvement, that a provider or plan 
                appears unwilling or unable to successfully engage in 
                quality improvement activities related to the services 
                described.

SEC. 5009. AUTHORIZATION OF APPROPRIATIONS.

    For the purposes of carrying out this subtitle, there are 
authorized to be appropriated such sums as may be necessary for fiscal 
years 1995 through 2000.

SEC. 5010. ROLE OF STATES IN QUALITY ASSURANCE.

    Each State shall--
            (1) disseminate to consumers information related to quality 
        and access to aid in their selection of plans in accordance 
        with section 1206;
            (2) disseminate information on the quality of health plans 
        and health care providers contained in reports of the National 
        Quality Council under section 5005;
            (3) ensure through collaboration with the Quality 
        Improvement Foundation that performance and quality standards 
        are continually improved; and
            (4) ensure that educational programs are developed in 
        cooperation with quality improvement foundations to assist 
        consumers in using quality and other information in choosing 
        health plans.

SEC. 5011. ROLE OF HEALTH PLANS IN QUALITY MANAGEMENT.

    Each health plan shall--
            (1) measure and disclose performance on quality measures as 
        designated by this Act;
            (2) furnish information required under subtitle B of this 
        title and provide such other reports and information on the 
        quality of care delivered by health care providers who are 
        members of a provider network of the plan (as defined in 
        section 1502 (h)(3)) as may be required under this Act; and
            (3) maintain quality management systems that--
                    (A) use the national measures of quality 
                performance developed by the National Quality Council 
                under section 5003; and
                    (B) measure the quality of health care furnished to 
                enrollees under the plan by all health care providers 
                of the plan.

SEC. 5012. INFORMATION ON HEALTH CARE PROVIDERS.

    Each State shall make available to consumers, upon request, 
information concerning providers of health care services or supplies. 
Such information shall include--
            (1) the identity of any provider that has been convicted, 
        under Federal or State law, of a criminal offense relating to 
        fraud, corruption, breach of fiduciary responsibility, or other 
        financial misconduct in connection with the delivery of a 
        health care service or supply;
            (2) the identity of any provider that has been convicted, 
        under Federal or State law, of a criminal offense relating to 
        neglect or abuse of patients in connection with the delivery of 
        a health care service or supply;
            (3) the identity of any provider that has been convicted, 
        under Federal or State law, of a criminal offense relating to 
        the unlawful manufacture, distribution, prescription, or 
        dispensing of a controlled substance; and
            (4) the identity of any provider whose license to provide 
        health care services or supplies has been revoked, suspended, 
        restricted, or not renewed, by a State licensing authority for 
        reasons relating to the provider's professional competence, 
        professional performance, or financial integrity, or any 
        provider who surrendered such a license while a formal 
        disciplinary proceeding was pending before such an authority, 
        if the proceeding concerned the provider's professional 
        competence, professional performance, or financial integrity.

SEC. 5013. CONFORMING AMENDMENTS TO PUBLIC HEALTH SERVICE ACT.

    Title IX of the Public Health Service Act is amended--
            (1) in section 903(a)(4) (42 U.S.C. 299a-1(a)(4)), by 
        inserting ``and Quality Improvement Foundations'' after 
        ``health agencies'';
            (2) in section 904(c)(1) (42 U.S.C. 299a-2(c)(1)), by 
        inserting ``the National Quality Council and'' after ``in 
        consultation with'';
            (3) in section 912(b)(4) (42 U.S.C. 299b-1(b)(4))--
                    (A) by inserting ``outcomes,'' before ``risks''; 
                and
                    (B) by inserting before the semicolon ``to the 
                extent feasible given the availability of unbiased, 
                reliable, and valid data'';
            (4) in section 914 (42 U.S.C. 299b-3)--
                    (A) in subsection (a)(2)(B)--
                            (i) by inserting ``the National Quality 
                        Council,'' after ``shall consult with''; and
                            (ii) by inserting before the period ``and 
                        relevant sections of the Health Security Act'';
                    (B) in subsection (c), by inserting ``Quality 
                Improvement Foundations and other'' after ``carried out 
                through''; and
                    (C) in subsection (f)--
                            (i) by striking ``to Administrator'' in the 
                        subsection heading;
                            (ii) by striking ``Administrator'' and 
                        inserting ``National Quality Council and the''; 
                        and
            (5) in section 927 (42 U.S.C. 299c-6), by adding at the end 
        thereof the following new paragraphs:
            ``(5) The term `National Quality Council' means the Council 
        established under section 5001 of the Health Security Act.
            ``(6) The term ``Quality Improvement Foundations'' means 
        the Foundations established under section 5008 of the Health 
        Security Act.''.

     Subtitle B--Information Systems, Privacy, and Administrative 
                             Simplification

               PART 1--NATIONAL HEALTH CARE DATA NETWORK

                   Subpart A--Purpose and Definitions

SEC. 5101. PURPOSE.

    It is the purpose of this part to improve the efficiency and 
effectiveness of the health care system by requiring health plans and 
health care providers in the health care system to--
            (1) standardize certain health care transactions and data 
        in a manner established by the Board;
            (2) transmit standard index markers with respect to such 
        standardized data to entities that are certified by the Board; 
        and
            (3) make standardized data electronically available for 
        disclosure as authorized under this subtitle.

SEC. 5102. DEFINITIONS.

    For purposes of this part:
            (1) Certified clearinghouse.--
                    (A) In general.--The term ``certified 
                clearinghouse'' means a clearinghouse that is certified 
                under section 5109.
                    (B) Clearinghouse.--The term ``clearinghouse'' 
                means a public or private entity that has the ability 
                to--
                            (i) process nonstandard health care data 
                        into standard health care data; or
                            (ii) store standard health care data and 
                        make such data available to another entity.
            (2) Certified indexing system.--
                    (A) In general.--The term ``certified indexing 
                system'' means an indexing system that is certified 
                under section 5109.
                    (B) Indexing system.--The term ``indexing system'' 
                means a public or private entity that stores standard 
                index markers and has the ability to comply with 
                section 5108(b).
            (3) Health care data network.--The term ``health care data 
        network'' means the health care information system that is 
        formed through the application of the requirements under this 
        part.
            (4) Health care provider.--The term ``health care 
        provider'' includes a provider of services (as defined in 
        section 1861(u) of the Social Security Act), a physician, a 
        laboratory (as defined in section 353(a) of the Public Health 
        Service Act), a supplier, and any other person furnishing 
        health care.
            (5) Health information protection organization.--The term 
        ``health information protection organization'' means a private 
        entity or an entity operated by a State that has the capability 
        to access standard health care data through entities in the 
        national health care data network and process such data into 
        data that is non-identifiable health information.
            (6) Health plan.--The term ``health plan'' has the meaning 
        given such term in section 1500 and includes--
                    (A) workers compensation or similar insurance 
                insofar as it relates to workers compensation medical 
                benefits (as defined by the Board);
                    (B) automobile medical insurance insofar as it 
                relates to automobile insurance medical benefits (as 
                defined by the Board); and
                    (C) a Federal, State, or local program that pays 
                for, or provides directly for, the provision of health 
                care.
            (7) Index marker.--The term ``index marker'' means data 
        that indicate the location of specific standard health care 
        data, the unique identifier of the holder of such data, and 
        information necessary to access such data.
            (8) Non-identifiable health information.--The term ``non-
        identifiable health information'' means health care data that 
        is not protected health information as defined in section 5163.
            (9) Protected health information.--The term ``protected 
        health information'' has the meaning given such term in section 
        5163.
            (10) Standard.--The term ``standard'' when referring to a 
        transaction or to data means the transaction or data meets any 
        standard established by the Board under subpart D that applies 
        to such transaction or data.

   Subpart B--Requirements on Health Care Providers and Health Plans

SEC. 5103. REQUIREMENTS WITH RESPECT TO CERTAIN TRANSACTIONS AND DATA.

    (a) Enrollment and Disenrollment Data.--With respect to each 
enrollment and disenrollment transaction, a health plan shall be 
responsible for ensuring the transmission of a standard index marker 
for the standard enrollment and disenrollment data described in section 
5114(a)(1) to a certified indexing system.
    (b) Financial and Administrative Transactions and Data.--
            (1) Financial and administrative transactions.--Any 
        financial and administrative transaction described in section 
        5113 that is conducted by a health care provider or a health 
        plan shall be conducted in accordance with standards 
        established by the Board under such section and the financial 
        and administrative data transmitted in connection with such a 
        financial and administrative transaction shall be standard 
        data.
            (2) Financial and administrative data.--
                    (A) In general.--A health plan shall be responsible 
                for ensuring the transmission to a certified indexing 
                system of a standard index marker for any standard 
                financial and administrative data held by a health plan 
                as a result of a financial and administrative 
                transaction.
                    (B) Special rule for certain health plans.--In the 
                case of a health plan that does not file claims, such 
                plan shall be responsible for ensuring the transmission 
                to a certified indexing system of a standard index 
                marker for the financial and administrative data 
                determined appropriate by the Board.
    (c) Quality-Related Patient Medical Record Data.--
            (1) In general.--A health care provider (including a health 
        care provider that consists of a health maintenance 
        organization) shall be responsible for ensuring the 
        transmission to a certified indexing system of a standard index 
        marker for the standard quality-related patient medical record 
        data described in section 5114(a)(3).
            (2) Transmission to health plans.--A health care provider 
        may satisfy the requirement under paragraph (1) by transmitting 
        standard quality-related patient medical record data to a 
        health plan. If a health care provider transmits data in 
        accordance with the preceding sentence, the health plan to 
        which such data is transmitted shall be responsible for 
        ensuring the transmission of a standard index marker for such 
        data to a certified indexing system.
            (3) Requirements not applicable to complete medical 
        records.--Nothing in this section shall be construed as 
        preventing a health service provider or health benefit plan 
        from storing and maintaining patient medical records in a form 
        and manner selected by such providers or plans (so long as such 
        providers and plans are able to comply with the reporting 
        requirements of this subtitle).
    (d) Government Required Data.--A health plan or health care 
provider shall be responsible for ensuring the transmission to a 
certified indexing system of a standard index marker for the standard 
Government required data described in section 5114(a)(5).
    (e) Satisfaction of Requirements.--
            (1) Financial and administrative data.--A health care 
        provider or health plan may satisfy the requirement imposed on 
        such provider or plan under subsection (b)(1) by--
                    (A) directly transmitting standard financial and 
                administrative data; or
                    (B) submitting nonstandard financial and 
                administrative data to a certified clearinghouse for 
                processing into standard data and transmission.
            (2) Index markers.--A health care provider or health plan 
        may satisfy a requirement imposed on such provider or plan 
        under subsection (a), (b)(2), (c), or (d) by--
                    (A) transmitting a standard index marker for 
                standard data directly to a certified indexing system; 
                or
                    (B) entering into a contract with a certified 
                clearinghouse under which the clearinghouse transmits a 
                standard index marker for such data directly to a 
                certified indexing system.
            (3) Timeliness.--A health care provider or health plan 
        shall be determined to have satisfied a requirement imposed 
        under subsection (a), (b), (c), or (d) only if the action 
        required under such subsection is completed in a timely manner, 
        as determined by the Board.
    (f) Forms Not To Include Patient Medical Records.--Nothing in this 
section shall be construed as giving the National Health Board the 
authority to require the disclosure and transmission of complete 
patient medical records without Congressional approval.
    (g) Enforcement.--The National Health Board shall ensure that the 
requirements of this part are satisfied.

SEC. 5104. AVAILABILITY OF STANDARD HEALTH CARE DATA.

    (a) In General.--A health care provider or health plan shall be 
capable of disclosing all standard health care data with respect to 
which a standard index marker has been transmitted to a certified 
indexing system under section 5103 when such disclosure is authorized 
under part 2.
    (b) Satisfaction.--A health care provider or health plan may 
satisfy the requirement imposed under subsection (a) by--
            (1) being capable of disclosing standard health care data 
        directly; or
            (2) entering into a contract with a certified clearinghouse 
        under which the clearinghouse is capable of disclosing such 
        data.
    (c) Construction.--Nothing in this section shall be construed to 
require a health plan or health care provider to disclose health care 
data under this section.

SEC. 5105. TIMETABLES FOR COMPLIANCE WITH REQUIREMENTS.

    (a) Initial Compliance.--
            (1) In general.--Not later than 12 months after the date on 
        which standards are established under subpart D with respect to 
        a type of financial and administrative transaction, a type of 
        data, or index markers for such data a health plan or health 
        care provider shall comply with the requirements of this 
        subpart with respect to such transaction, data, or index 
        marker.
            (2) Additional data.--Not later than 12 months after the 
        date on which the Board makes an addition to a set of health 
        care data under subpart D, a health plan or health care 
        provider shall comply with the requirements of this subpart 
        with respect to such data.
    (b) Compliance with Modified Standards.--
            (1) In general.--If the Board modifies a standard 
        established under subpart D, a health plan or health care 
        provider shall be required to transmit or receive data in 
        accordance with the modified standard at such time as the Board 
        determines appropriate taking into account the time needed to 
        comply due to the nature and extent of the modification.
            (2) Special rule.--In the case of modifications to 
        standards that do not occur within the 12-month period 
        beginning on the date such standards are established, the time 
        determined appropriate by the Board under paragraph (1) shall 
        be no sooner than the last day of the 90-day period beginning 
        on the date such modified standard is established and no later 
        than the last day of the 12-month period beginning on the date 
        such modified standard is established.

SEC. 5106. PREEMPTION OF STATE ``QUILL PEN'' LAWS.

    A requirement under this part or a standard established by the 
Board under this part shall supersede any contrary provision of State 
law, including a provision of State law that requires medical or health 
plan records (including billing information) to be maintained in 
written rather than electronic form, except where the Board determines 
that the provision is necessary to prevent fraud and abuse, with 
respect to controlled substances, or for other purposes.

    Subpart C--Standards and Certification for Indexing Systems and 
                             Clearinghouses

SEC. 5108. ESTABLISHMENT OF STANDARDS.

    (a) In General.--The Board shall establish standards with respect 
to the operation of indexing systems and clearinghouses, including 
standards ensuring that--
            (1) such entities develop, operate, and cooperate with one 
        another to form a national health care data network;
            (2) such entities meet all of the requirements under part 2 
        that are applicable to such entities;
            (3) such entities make public information concerning their 
        performance, as measured by uniform indicators such as 
        accessibility, transaction responsiveness, administrative 
        efficiency, reliability, dependability, and any other indicator 
        determined appropriate by the Board;
            (4) such entities have the highest security procedures that 
        are practicable with respect to the processing of health care 
        data; and
            (5) indexing systems meet the additional requirements for 
        such systems described in subsection (b).
    (b) Additional Requirements For Indexing Systems.--The additional 
requirements for indexing systems that are referred to in subsection 
(a)(6) are as follows:
            (1) Indexing standard health care data.--An indexing system 
        shall have the capability to index the standard health care 
        data that is made available to the system.
            (2) Interoperability.--
                    (A) Availability of data.--An indexing system shall 
                make any index marker received by such system pursuant 
                to the requirements of subpart B available to all other 
                certified indexing systems operating in the national 
                health care data network.
                    (B) Ability to access data.--An indexing system 
                shall have the ability to receive index markers from 
                all other certified indexing systems operating in the 
                national health care data network.
            (3) Rates charged.--The rate that an indexing system 
        applies to a service performed for another indexing system 
        shall not exceed the amount of the weighted average of the 
        rates such system applies to the same service performed for 
        health plans or health care providers.
    (c) Timetable for Establishment.--The Board shall establish 
standards under this section not later than 9 months after the date of 
the enactment of this part.

SEC. 5109. CERTIFICATION PROCEDURE.

    (a) In General.--Not later than 12 months after the date of the 
enactment of this part, the Board shall establish a certification 
procedure for indexing systems and clearinghouses which ensures that 
certified entities are qualified to meet the requirements of this 
subtitle.
    (b) Application.--The procedure established by the Board under 
subsection (a) shall provide that each entity described in such 
subsection desiring to be certified as an indexing system or 
clearinghouse shall apply to the Board for certification in such form 
and in such manner as the Board determines appropriate.
    (c) Audits and Reports.--The procedure established under subsection 
(a) shall provide for audits by the Board and reports by certified 
entities at such intervals as the Board determines appropriate in order 
to monitor compliance with the standards established under section 
5108.
    (d) Recertification.--An indexing system or clearinghouse must be 
recertified under this section at least every 3 years.
    (e) Loss of Certification.--
            (1) Mandatory termination.--If an indexing system or 
        clearinghouse violates a requirement imposed on such system or 
        clearinghouse under part 2, the entity's certification under 
        this section shall be terminated unless the Board determines 
        that appropriate corrective action has been taken.
            (2) Discretionary termination.--If an indexing system or 
        clearinghouse violates a requirement of this part and a penalty 
        has been imposed under section 5124 with respect to such 
        violation, the Board shall review the certification of such 
        system or clearinghouse and may terminate such certification.

SEC. 5110. STATE OPERATION OF INDEXING SYSTEMS AND CLEARINGHOUSES.

    (a) In General.--A State may operate an indexing system or a 
clearinghouse that is certified under section 5109.
    (b) Exclusive State Systems Permitted.--A State operating a 
certified indexing system or a certified clearinghouse may require each 
health plan or health care provider in the State to use such system or 
clearinghouse to satisfy the requirements imposed on such plan or 
provider under subpart B.

SEC. 5111. ENSURING AVAILABILITY OF DATA.

    The Board shall establish a procedure under which health plans and 
health care providers which do not have access to certified indexing 
systems and clearinghouses are able to make health care data available 
to the health care data network in accordance with the purposes of this 
part.

    Subpart D--Standards for Transactions, Data Elements, and Index 
                                Markers.

SEC. 5112. GENERAL REQUIREMENTS ON BOARD.

    In establishing standards under this subpart, the Board shall, to 
the maximum extent practicable (consistent with the requirements of 
this Act)--
            (1) require the use of data that are verifiable, timely, 
        accurate, reliable, useful, complete, and relevant;
            (2) establish standards that are consistent with the 
        objective of reducing the costs of providing and paying for 
        health care;
            (3) incorporate standards in use and generally accepted 
        that are recommended by recognized public or private standard 
        setting or development groups, including the American National 
        Standard Institute's ASC X12, the Healthcare Informatics 
        Standards Planning Panel, and the Department of Health and 
        Human Services; and
            (4) promote the development of standards necessary to 
        fulfill the requirements of this Act.
The Board shall insure that new standards are developed in 
collaboration with Federal health agencies, participating States, 
health plans, representatives of providers, employers and consumers, 
experts in public health, and nationally recognized standard setting 
groups.

SEC. 5113. FINANCIAL AND ADMINISTRATIVE TRANSACTIONS.

    (a) In General.--The Board shall establish the standards necessary 
for health care providers and health plans to conduct the following 
transactions relating to the financing or administering of health care:
            (1) Eligibility.
            (2) Payment and remittance advice.
            (3) Claims.
            (4) Encounters.
            (5) Claims status.
            (6) Coordination of benefits.
            (7) First report of injury.
            (8) Claim attachments.
            (9) Referrals, certification, and authorization.
            (10) Any other transactions determined appropriate by the 
        Board.
    (b) Special Rule.--Any standards established by the Board under 
subsection (a) that relate to coordination of benefits shall be 
consistent with the rules and procedures developed by the Board under 
section 5127.

SEC. 5114. ELEMENTS OF HEALTH CARE DATA.

    (a) In General.--The Board shall establish standards necessary to 
make the following health care data uniform and compatible for 
electronic transmission through a national health care data network:
            (1) enrollment and disenrollment data;
            (2) financial and administrative data that the Board 
        determines is appropriate for transmission in connection with a 
        financial and administrative transaction described in section 
        5113;
            (3) a set of quality-related patient medical record data 
        that the Board determines is necessary in order to conduct 
        meaningful quality measurement;
            (4) patient medical record data that is not included in a 
        set of quality-related patient medical record data established 
        by the Board under paragraph (3);
            (5) a set of health care data that is not described in 
        paragraphs (1) through (3) and that is required by the Board, a 
        State, or the National Center for Consumer Advocacy for such 
        entity to perform its functions under this Act.
    (b) Additions.--The Board may make additions to the sets of health 
care data established under paragraphs (1), (2), (3), and (5) of 
subsection (a) as the Board determines appropriate.
    (c) Certain Data Elements.--
            (1) Unique identifiers.--The Board shall establish a system 
        to provide for a unique identifier for each individual, 
        employer, health plan, and health care provider.
            (2) Code sets.--The Board shall select code sets for any 
        appropriate data elements from among the code sets that are 
        maintained by private and public entities such as the American 
        National Standards Institute, the National Uniform Billing 
        Committee, or the Department of Health and Human Services.
    (d) Format of Data Elements.--The Board shall establish standards 
with respect to the format in which data elements shall be transmitted.
    (e) Definitions.--For purposes of this section:
            (1) Definition.--The term ``code set'' means any set of 
        codes used for encoding data elements, including tables of 
        terms, medical diagnostic codes, or medical procedure codes.
            (2) Patient medical record data defined.--The term 
        ``patient medical record data'' means health care data derived 
        from a clinical encounter that relates to the physical or 
        mental condition of an individual and that is not financial and 
        administrative data.
            (3) Quality measurement defined.--The term ``quality 
        measurement'' means monitoring and measuring the quality of 
        health care consistent with the measures established by the 
        National Quality Council under section 5002.

SEC. 5115. INDEX MARKERS.

    The Board shall establish the standards necessary for a health care 
provider or health plan to ensure the transmission of an index marker 
with respect to standard health care data to a certified indexing 
system.

SEC. 5116. TIMETABLES FOR ESTABLISHMENT.

    (a) Initial Standards.--The Board shall establish standards 
relating to--
            (1) financial and administrative transactions not later 
        than 9 months after the date of the enactment of this part 
        (except in the case of standards for claims attachments which 
        shall be established not later than 24 months after the date of 
        the enactment of this part);
            (2) the first set of enrollment data not later than 9 
        months after the date of the enactment of this part;
            (3) financial and administrative data not later than 9 
        months after the date of the enactment of this part (except in 
        the case of standards with respect to data transmitted in 
        connection with claims attachments which shall be established 
        not later than 24 months after the date of the enactment of 
        this part);
            (4) the first set of quality-related patient medical record 
        data not later than 24 months after the date of the enactment 
        of this part;
            (5) patient medical record data that is not included in a 
        set of quality-related patient medical record data not later 
        than 7 years after the date of the enactment of this part;
            (6) the first set of Government required data not later 
        than 9 months after the date of the enactment of this part;
            (7) index markers for standard data not later than 9 months 
        after the date of the enactment of this part; and
            (8) any addition to a set of health care data under this 
        part, in conjunction with making such an addition.
    (b) Modifications to Standards.--
            (1) In general.--Except as provided in paragraph (2), the 
        Board shall review the standards established under this subpart 
        no more frequently than every 6 months but at least every 12 
        months, and shall modify such standards as determined 
        appropriate.
            (2) Special rules.--
                    (A) Modifications during first 12-month period.--
                The Board shall not modify any standards established 
                under this subpart during the 12-month period beginning 
                on the date such standards are established unless the 
                Board determines that a modification is necessary in 
                order to permit health plans and health care providers 
                to comply with the requirements of subpart B.
                    (B) Code sets.--
                            (i) Recommended modifications.--The Board 
                        shall establish a procedure under which an 
                        entity described in section 5114(b)(2)(A) may 
                        submit any modification to a code set selected 
                        by the Board that is determined appropriate by 
                        the entity.
                            (ii) Additional rules.--A code set selected 
                        by the Board may not be modified more 
                        frequently than once annually unless the Board 
                        determines that a modification is necessary in 
                        order to permit health plans and health care 
                        providers to comply with the requirements of 
                        subpart B. If such a code set is modified under 
                        the preceding sentence, the modified set shall 
                        include instructions on how data elements that 
                        were encoded prior to such modification are to 
                        be converted or translated so as to preserve 
                        the value of the elements. Any modification 
                        under this subparagraph shall be implemented in 
                        a manner that minimizes the disruption and cost 
                        to health plans and health care providers of 
                        complying with such modification.
                    (C) Evaluation of standards.--The Board may 
                establish a process to measure or verify the 
                consistency of standards established or modified under 
                this subpart with the requirements of this Act. Such 
                process may include demonstration projects and analyses 
                of the costs of implementation of such standards and 
                modifications.

                 Subpart E--Accessing Health Care Data

SEC. 5117. ACCESSING FINANCIAL AND ADMINISTRATIVE DATA IN CONNECTION 
              WITH A FINANCIAL AND ADMINISTRATIVE TRANSACTION.

    The Board shall establish technical standards under which a health 
care provider or health plan may access financial and administrative 
data through entities in the national health care data network in 
connection with a financial and administrative transaction when such 
access is authorized under part 2.

SEC. 5118. ACCESSING DATA FOR AUTHORIZED PURPOSES.

    The Board shall establish technical standards that shall apply to 
any request to access standard health care data that is not described 
in section 5117, including standards relating to access by enrollees, 
through entities in the national health care data network. Such 
technical standards shall provide any such request shall be satisfied--
            (1) if the request is for data that is protected health 
        information and is authorized for disclosure under part 2; or
            (2) if the request is for data that is non-identifiable 
        health information, by obtaining such data through a health 
        information protection organization certified under section 
        5119.

SEC. 5119. HEALTH INFORMATION PROTECTION ORGANIZATIONS.

    (a) Right to Access Data.--The Board shall establish standards 
under which a health information protection organization that is 
certified under subsection (d) may access health care data through 
entities in the national health care data network.
    (b) Limitation on Disclosure.--A health information protection 
organization that is certified under subsection (d) may disclose health 
care data--
            (1) if the data is non-identifiable health information; or
            (2) if the data is protected health care information only 
        when such disclosure is authorized under part 2.
    (c) Standards for Operation.--The Board shall establish standards 
with respect to the operation of health information protection 
organizations, including standards ensuring that such organizations 
have the highest security procedures that are practicable with respect 
to processing health care data.
    (d) Certification by the Board.--
            (1) Establishment.--Not later than 12 months after the date 
        of the enactment of this part, the Board shall establish a 
        certification procedure for health information protection 
        organizations which ensures that certified organizations are 
        qualified to meet the requirements of this section.
            (2) Application.--Each entity desiring to be certified as a 
        health information protection organization shall apply to the 
        Board for certification in a form and manner determined 
        appropriate by the Board.
            (3) Audits and reports.--The procedure established under 
        paragraph (1) shall provide for audits by the Board and reports 
        by an entity certified under paragraph (2) at such intervals as 
        the Board determines appropriate in order to monitor such 
        entity's compliance with the requirements of this section and 
        the standards established by the Board under this section.
            (4) Recertification.--A health information protection 
        organization must be recertified under this subsection at least 
        every 3 years.
    (e) Loss of Certification.--
            (1) Mandatory termination.--If a health information 
        protection organization violates a requirement imposed on such 
        organization under part 2, the organization's certification 
        under this section shall be terminated unless the Board 
        determines that appropriate corrective action has been taken.
            (2) Discretionary termination.--If a health information 
        protection organization violates a requirement of this part, 
        the Board shall review the certification of such organization 
        and may terminate such certification.

SEC. 5120. ACCESS BY THE BOARD AND OTHER FEDERAL AGENCIES.

    (a) In General.--The Board or any other Federal agency may access 
health care data through entities in the national health care data 
network only when authorized under part 2.
    (b) Access Through Health Information Protection Organizations.--
            (1) In general.--Health information protection 
        organizations certified under section 5119 shall make available 
        to the Board or another Federal agency pursuant to a cost 
        reimbursement contract (as defined under the Federal 
        Acquisition Regulation), any health care information that is 
        requested by such agency.
            (2) Certain information available to health information 
        protection organizations at no charge.--If a health information 
        protection organization needs data from a health plan or health 
        care provider in order to comply with a request of the Board or 
        another a Federal agency under paragraph (1) that relates to a 
        requirement on such agency under this Act, such plan or 
        provider shall make such data available to such organization at 
        no charge.
    (c) Disclosure.--
            (1) In general.--Health care data accessed by the Board or 
        another Federal agency under this section shall be disclosed 
        only as authorized under the provisions of this Act.
            (2) Disclosure for public use functions.--The Board and any 
        other Federal agency shall make the non-identifiable health 
        care information accessed by such agency under this section 
        available to private, not-for-profit organizations for public 
        use functions (as determined by the Board through regulations) 
        in an affordable and timely manner.

SEC. 5121. ACCESS TO HEALTH CARE DATA BY THE STATES.

    (a) In General.--The Board shall establish standards under which a 
State may access health care data through entities in the national 
health care data network.
    (b) Access Through Health Information Protection Organizations.--
Health information protection organizations certified under section 
5119 shall make health care data available to the States in accordance 
with section 5119 pursuant to a cost reimbursement contract (as defined 
under the Federal Acquisition Regulation).

SEC. 5122. LENGTH OF TIME DATA SHOULD BE ACCESSIBLE.

    The Board shall establish standards with respect to the length of 
time any specific standard health care data should be accessible 
through the health care data network.

SEC. 5123. TIMETABLES FOR ESTABLISHMENT AND COMPLIANCE.

    (a) Initial Standards.--The Board shall establish standards under 
this subpart not later than 9 months after the date of the enactment of 
this part and such standards shall be effective upon establishment.
    (b) Modifications to Standards.--
            (1) In general.--Except as provided in paragraph (2), the 
        Board shall review the standards established under this subpart 
        no more frequently than every 6 months but at least every 12 
        months, and shall modify such standards as determined 
        appropriate by the Board. Any modifications to standards 
        established under this subpart shall be effective upon 
        establishment.
            (2) Special rule.--The Board shall not modify any standards 
        established under this subpart during the 12-month period 
        beginning on the date such standards are established unless the 
        Board determines that a modification is necessary in order to 
        permit compliance with the requirements of this subpart.

                          Subpart F--Penalties

SEC. 5124. GENERAL PENALTY FOR FAILURE TO COMPLY WITH REQUIREMENTS AND 
              STANDARDS.

    (a) In General.--Except as provided in section 5125, the Board 
shall impose on a health plan, health care provider, indexing system, 
or clearinghouse that violates a requirement or standard imposed under 
this part a penalty of not more than $1,000 for each violation. The 
provisions of section 1128A of the Social Security Act (other than 
subsections (a) and (b) and the second sentence of subsection (f)) 
shall apply to the imposition of a civil money penalty under this 
subsection in the same manner as such provisions apply to the 
imposition of a penalty under section 1128A of such Act.
    (b) Limitations.--
            (1) Noncompliance not discovered exercising reasonable 
        diligence.--A penalty may not be imposed under subsection (a) 
        if it is established to the satisfaction of the Board that the 
        person liable for the penalty did not know, and by exercising 
        reasonable diligence would not have known, that such person 
        failed to comply with the requirement or standard described in 
        subsection (a).
            (2) Failures due to reasonable cause.--
                    (A) In general.--Except as provided in 
                subparagraphs (B) and (C), a penalty may not be imposed 
                under subsection (a) if--
                            (i) the failure to comply was due to 
                        reasonable cause and not to willful neglect; 
                        and
                            (ii) the failure to comply is corrected 
                        during the 30-day period beginning on the 1st 
                        date the person liable for the penalty knew, or 
                        by exercising reasonable diligence would have 
                        known, that the failure to comply occurred.
                    (B) Plans and providers.--
                            (i) No penalty.--If a health plan or health 
                        care provider demonstrates to the Board that a 
                        failure to comply occurred because the plan or 
                        provider was unable to comply, no penalty may 
                        be imposed under subsection (a) until such time 
                        as the plan or provider is able to comply.
                            (ii) Assistance.--The Board shall provide 
                        technical assistance to a health plan or health 
                        care provider described in clause (i) to obtain 
                        compliance. Such assistance shall be provided 
                        in any manner determined appropriate by the 
                        Board.
                    (C) Indexing systems and clearinghouses.--In the 
                case of an indexing system or clearinghouse, the period 
                referred to in subparagraph (A)(ii) may be extended as 
                determined appropriate by the Board based on the nature 
                and extent of the failure to comply.
            (3) Reduction.--In the case of a failure to comply which is 
        due to reasonable cause and not to willful neglect, any penalty 
        under subsection (a) that is not entirely waived under 
        paragraph (2) may be waived to the extent that the payment of 
        such penalty would be excessive relative to the compliance 
        failure involved.

SEC. 5125. PENALTIES RELATING TO ACCESSING DATA.

    A person who violates a standard established under sections 5117, 
5118, and 5119 shall--
            (1) be fined not more than $50,000, imprisoned not more 
        than 1 year, or both;
            (2) if the offense is committed under false pretenses, be 
        fined not more than $100,000, imprisoned not more than 5 years, 
        or both; and
            (3) if the offense is committed with intent to sell, 
        transfer, or use health care data for commercial advantage, 
        personal gain, or malicious harm, fined not more than $250,000, 
        imprisoned not more than 10 years, or both.

                        Subpart G--Miscellaneous

SEC. 5126. IMPOSITION OF ADDITIONAL REQUIREMENTS.

    (a) In General.--A health plan or health care provider may not 
impose a standard on another plan or provider that is in addition to 
the standards established by the Board under this part unless--
            (1) such plan or provider voluntarily agrees to such 
        standard; or
            (2) a waiver is granted under subsection (b) to establish 
        such standard.
    (b) Conditions for Waivers.--
            (1) In general.--A health plan or health care provider may 
        request a waiver from the Board in order to require another 
        plan or provider to comply with a standard that is in addition 
        to the standards imposed by the Board under this part.
            (2) Consideration of waiver requests.--In determining 
        whether to grant a waiver under this subsection the Board shall 
        consider the value of the data to be exchanged for research or 
        other purposes determined appropriate by the Board, the 
        administrative cost of the additional standard, the burden of 
        the additional standard, and the burden of the timing of the 
        imposition of the additional standard.
            (3) Anonymous reporting.--If a health plan or health care 
        provider attempts to impose a standard in addition to the 
        standards imposed under this part, the plan or provider on 
        which such additional standard is being imposed may contact the 
        Board. The Board shall develop a procedure under which the 
        contacting plan or provider shall remain anonymous. The Board 
        shall notify the plan or provider imposing the additional 
        standard that the additional standard may not be imposed unless 
        the other plan or provider voluntarily agrees to such standard 
        or a waiver is obtained under this subsection.

SEC. 5127. RULES REGARDING COORDINATION OF BENEFITS.

    Not later than 9 months after the date of the enactment of this 
part, the Board shall develop rules and procedures for determining and 
coordinating the financial obligations of health plans when health care 
benefits are payable under 2 or more health plans.

SEC. 5128. EFFECT ON STATE LAW.

    (a) In General.--Except as provided in subsection (b), the 
provisions of this part shall supersede any provisions of the law of 
any State to the extent that the provisions of this part conflict with 
such provisions of law.
    (b) Exception.--Nothing in this part shall supersede any provision 
of State law that requires health plans or health care providers to use 
an indexing system or a clearinghouse that is certified under section 
5109 and that is operated by the State to satisfy the requirements 
imposed on such plan or provider under subpart B.

SEC. 5129. HEALTH CARE DATA CONTINUITY.

    (a) Data Held by Health Plans and Providers.--Any health care data 
held by a health plan or health care provider that ceases to function 
shall be obtained by the State in connection with the execution of the 
State's responsibilities under section 1204. The State shall ensure 
that such health care data is transferred to a health plan or health 
care provider under procedures developed by the Board.
    (b) Data Held by Indexing Systems and Clearinghouses.--If an 
indexing system or clearinghouse is decertified or ceases to function 
in a manner that would threaten the continued existence of health care 
data or index markers held by such system or clearinghouse, such data 
or index markers shall be transferred to a certified indexing system or 
clearinghouse designated by the Board.

SEC. 5130. PROTECTION OF COMMERCIAL INFORMATION.

    In establishing standards under this part, the Board shall ensure 
that the trade secrets and confidential commercial information of 
entities operating in the health care data network is protected from--
            (1) use other than as described in this title; and
            (2) release to or access by third parties.

SEC. 5131. AUTHORIZATION OF APPROPRIATIONS.

    There are authorized to be appropriated such sums as may be 
necessary for each of the fiscal years 1995 through 2000, to carry out 
the purposes of this subtitle.

                   Subpart H--Assistance to the Board

SEC. 5132. GENERAL REQUIREMENT ON BOARD.

    In complying with any requirements imposed under this part, the 
Board shall rely on recommendations of the Health Care Data Advisory 
Panel established under section 5133 and shall consult with appropriate 
Federal agencies.

SEC. 5133. HEALTH CARE DATA ADVISORY PANEL.

    (a) Establishment.--There is established a panel to be known as the 
Health Care Data Advisory Panel.
    (b) Duty.--The panel shall provide assistance to the Board in 
complying with the requirements imposed on the Board under this part 
and part 2. In performing such duty, the Panel shall receive technical 
assistance from appropriate Federal agencies.
    (c) Membership.--
            (1) In general.--The Panel shall consist of 15 members to 
        be appointed by the President not later than 60 days after the 
        date of the enactment of this part. The Panel shall designate 1 
        member as the Chair.
            (2) Expertise.--The membership of the Panel shall consist 
        of individuals who are of recognized standing and distinction 
        and who possess the demonstrated capacity to discharge the 
        duties imposed on the Panel.
            (3) Terms.--Each member of the Panel shall be appointed for 
        a term of 5 years, except that the members first appointed 
        shall serve staggered terms such that the terms of no more than 
        3 members expire at one time.
            (4) Vacancies.--
                    (A) In general.--A vacancy on the Panel shall be 
                filled in the manner in which the original appointment 
                was made and shall be subject to any conditions which 
                applied with respect to the original appointment.
                    (B) Filling unexpired term.--An individual chosen 
                to fill a vacancy shall be appointed for the unexpired 
                term of the member replaced.
                    (C) Expiration of terms.--The term of any member 
                shall not expire before the date on which the member's 
                successor takes office.
            (5) Conflicts of interest.--Members of the Panel shall 
        disclose upon appointment to the Panel or at any subsequent 
        time that it may occur, conflicts of interest.
    (d) Meetings.--
            (1) In general.--Except as provided in paragraph (2), the 
        Panel shall meet at the call of the Chair.
            (2) Initial meeting.--Not later than 30 days after the date 
        on which all members of the Panel have been appointed, the 
        Panel shall hold its first meeting.
            (3) Quorum.--A majority of the members of the Panel shall 
        constitute a quorum, but a lesser number of members may hold 
        hearings.
    (e) Power To Hold Hearings.--The Panel may hold such hearings, sit 
and act at such times and places, take such testimony, and receive such 
evidence as the Panel considers advisable to carry out the purposes of 
this section.
    (f) Other Administrative Provisions.--Subparagraphs (C), (D), and 
(H) of section 1886(e)(6) of the Social Security Act shall apply to the 
Panel in the same manner as they apply to the Prospective Payment 
Assessment Commission.
    (g) Reports.--
            (1) In general.--The Panel shall annually prepare and 
        submit to Congress and the Board a report on--
                    (A) the status of the national health care data 
                network established pursuant to this part, including--
                            (i) whether the network is fulfilling the 
                        purpose described in section 5101; and
                            (ii) information relating to the cost and 
                        quality of health care rendered by health care 
                        providers;
                    (B) the savings and costs of the network; and
                    (C) any legislative recommendations related to the 
                network.
            (2) Availability to the public.--Any information in the 
        report submitted to Congress under paragraph (1) shall be made 
        available to the public unless such information may not be 
        disclosed by law.
    (h) Duration.--Notwithstanding section 14(a) of the Federal 
Advisory Committee Act, the Panel shall continue in existence until 
otherwise provided by law.
    (i) Authorization of Appropriations.--
            (1) In general.--There are authorized to be appropriated 
        such sums as may be necessary to carry out the purposes of this 
        section.
            (2) Availability.--Any sums appropriated under the 
        authorization contained in this subsection shall remain 
        available, without fiscal year limitation, until expended.

    Subpart I--Demonstration Projects for Community-Based Clinical 
                          Information Systems

SEC. 5135. GRANTS FOR DEMONSTRATION PROJECTS.

    (a) In General.--The Board may make grants for demonstration 
projects to promote the development and use of electronically 
integrated community-based clinical information systems and 
computerized patient medical records.
    (b) Applications.--
            (1) Submission.--To apply for a grant under this subpart 
        for any fiscal year, an applicant shall submit an application 
        to the Board in accordance with the procedures established by 
        the Board.
            (2) Criteria for approval.--The Board may not approve an 
        application submitted under paragraph (1) unless the 
        application includes assurances satisfactory to the Board 
        regarding the following:
                    (A) Use of existing technology.--Funds received 
                under this subpart will be used to apply 
                telecommunications and information systems technology 
                that is in existence on the date the application is 
                submitted in a manner that improves the quality of 
                health care, reduces the costs of such care, and 
                protects the privacy and confidentiality of information 
                relating to the physical or mental condition of an 
                individual.
                    (B) Use of existing information systems.--Funds 
                received under this subpart will be used--
                            (i) to enhance telecommunications or 
                        information systems that are operating on the 
                        date the application is submitted;
                            (ii) to integrate telecommunications or 
                        information systems that are operating on the 
                        date the application is submitted; or
                            (iii) to connect additional users to 
                        telecommunications or information networks or 
                        systems that are operating on the date the 
                        application is submitted.
                    (C) Matching funds.--The applicant will make 
                available funds for the demonstration project in an 
                amount that equals at least 50 percent of the cost of 
                the project.
    (c) Geographic Diversity.--In making any grants under this subpart, 
the Board shall, to the extent practicable, make grants to persons 
representing different geographic areas of the United States, including 
urban and rural areas.
    (d) Review and Sanctions.--The Board shall review at least annually 
the compliance of a person receiving a grant under this subpart with 
the provisions of this subpart. The Board shall establish a procedure 
for determining whether such a person has failed to comply 
substantially within the provisions of this subpart and the sanctions 
to be imposed for any such noncompliance.
    (e) Annual Report.--The Board shall include in the annual report 
under section 1705 of the Public Health Service Act (42 U.S.C. 300u-4) 
a description of the activities carried out under this subpart.

                    Subpart J--Health Security Cards

SEC. 5136. HEALTH SECURITY CARDS.

    (a) Permissible Uses of Card.--A health security card that is 
issued to an eligible individual under section 1001(b) may be used by 
an individual or entity, in accordance with regulations promulgated by 
the Board, only for the purpose of providing or assisting the eligible 
individual in obtaining an item or service that is covered under--
            (1) the applicable health plan in which the individual is 
        enrolled (as defined in section 1902);
            (2) a policy consisting of a supplemental health policy 
        (described in part 2 of subtitle E of title I), a cost sharing 
        policy (described in such part), or both;
            (3) a FEHBP supplemental plan (described in subtitle C of 
        title VIII);
            (4) a FEHBP medicare supplemental plan (described in such 
        subtitle); or
            (5) such other programs as the Board may specify.
    (b) Form of Card and Encoded Information.--The Board shall 
establish standards respecting the form of health security cards and 
the information to be encoded in electronic form on the cards. Such 
information shall include--
            (1) the identity of the individual to whom the card is 
        issued;
            (2) the applicable health plan in which the individual is 
        enrolled;
            (3) any policy described in paragraph (2), (3), or (4) of 
        subsection (a) in which the individual is enrolled; and
            (4) any other information that the Board determines to be 
        necessary in order for the card to serve the purpose described 
        in subsection (a).
    (c) Unique Identifier Numbers.--The unique identifier number system 
developed by the Board under section 5114(b) shall be used in encoding 
the information described in subsection (b).
    (d) Trademark Registration.--The Board shall take appropriate steps 
to ensure the registration of health security cards and other indicia 
relating to such cards as trademarks or service marks (as appropriate) 
under the Trademark Act of 1946. 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. et seq.).

                     PART 2--PRIVACY OF INFORMATION

             Subpart A--Short Title; Findings and Purposes

SEC. 5160. SHORT TITLE.

    This part may be cited as the ``Health Care Privacy Protection 
Act''.

SEC. 5161. FINDINGS AND PURPOSES.

    (a) Findings.--The Congress finds as follows:
            (1) The improper disclosure of personally identifiable 
        health care information may cause significant harm to a 
        person's interests in privacy, health care, and reputation and 
        may unfairly affect the ability of a person to obtain 
        employment, education, insurance, and credit.
            (2) The movement of people and health care-related 
        information across State lines, availability of access to and 
        exchange of health care-related information from automated data 
        banks and networks, and emergence of multistate health care 
        providers and payors create a need for uniform Federal law 
        governing the disclosure of health care information.
    (b) Purpose.--The purpose of this Act is to establish effective 
mechanisms to protect the privacy of persons with respect to personally 
identifiable health care information that is created or maintained as 
part of health treatment, enrollment, payment, testing, or research 
processes.

                    Subpart B--Judicial Proceedings

SEC. 5162. PRIVACY OF PERSONALLY IDENTIFIABLE HEALTH CARE INFORMATION.

    (a) Offense.--Part I of title 18, United States Code, is amended by 
inserting after chapter 84, the following new chapter:

     ``CHAPTER 84A--PRIVACY OF PERSONALLY IDENTIFIABLE HEALTH CARE 
                              INFORMATION

``Sec.
``1755. Wrongful disclosure of personally identifiable health care 
                            information.
``1756. Misuse of health security card or unique identifier.
``Sec. 1755. Wrongful disclosure of protected health information
    ``(a) Definition.--The term `protected health information' shall 
have the meaning given such term under section 5163 of the Health 
Security Act.
    ``(b) Offense.--A person who knowingly--
            ``(1) obtains protected health information relating to an 
        individual in violation of subpart C of the Health Care Privacy 
        Protection Act; or
            ``(2) discloses protected health information to another 
        person in violation of subpart C of the Health Care Privacy 
        Protection Act,
shall be punished as provided in subsection (c).
    ``(c) Penalties.--A person who violates subsection (b) shall--
            ``(1) be fined not more than $50,000, imprisoned not more 
        than 1 year, or both;
            ``(2) if the offense is committed under false pretenses, be 
        fined not more than $100,000, imprisoned not more than 5 years, 
        or both; and
            ``(3) if the offense is committed with intent to sell, 
        transfer, or use protected health information for commercial 
        advantage, personal gain, or malicious harm, fined not more 
        than $250,000, imprisoned not more than 10 years, or both.
``Sec. 1756. Misuse of health security card or unique identifier
    ``A person who--
            ``(1) requires the display of, requires the use of, or uses 
        a health security card that is issued under the Health Security 
        Act for any purpose other than obtaining or paying for health 
        care; or
            ``(2) requires the disclosure of, requires the use of, or 
        uses a unique identifier number for any purpose that is not 
        authorized by the National Health Board,
shall be fined not more than $25,000, imprisoned not more than 2 years, 
or both.''.
    (b) Technical Amendment.--The part analysis for part I of title 18, 
United States Code, is amended by inserting after the item related to 
chapter 84, the following new item:

``84A. Privacy of personally identifiable health care          1755.''.
    information.

  Subpart C--Limitations on Disclosure of Protected Health Information

SEC. 5163. DEFINITIONS.

    In this subpart:
            (1) Enrollee.--The term ``enrollee'' means an individual 
        who is covered under a health plan. The term includes a 
        deceased individual who was covered under a health plan.
            (2) Enrollee representative.--The term ``enrollee 
        representative'' means any individual legally empowered to make 
        decisions concerning the provision of health care to an 
        enrollee (where the enrollee lacks the legal capacity under 
        State law to make such decisions) or the administrator or 
        executor of the estate of a deceased enrollee.
            (3) Health care.--The term ``health care''--
                    (A) means--
                            (i) a preventative, diagnostic, 
                        therapeutic, rehabilitative, maintenance, or 
                        palliative care, counseling, service, or 
                        procedure--
                                    (I) with respect to the physical or 
                                mental condition of an individual; or
                                    (II) affecting the structure or 
                                function of the human body or any part 
                                of the human body; or
                            (ii) any sale or dispensing of a drug, 
                        device, equipment, or other item to an 
                        individual, or for the use of an individual, 
                        pursuant to a prescription; but
                    (B) does not include any item or service that is 
                not furnished for the purpose of examining, 
                maintaining, or improving the health of an individual.
            (4) Health care provider.--The term ``health care 
        provider'' means a person who is licensed, certified, 
        registered, or otherwise authorized by law to provide an item 
        or service that constitutes health care in the ordinary course 
        of business or practice of a profession.
            (5) Health information trustee.--The term ``health 
        information trustee'' means--
                    (A) a health care provider, health plan, health 
                oversight agency, certified indexing system, certified 
                clearinghouse, certified health information protection 
                organization, or employer, insofar as it creates, 
                receives, maintains, uses, or transmits protected 
                health information; and
                    (B) any person who obtains protected health 
                information under section 5169, 5170, 5171, 5172, 5173, 
                5174, or 5177.
            (6) Health oversight agency.--The term ``health oversight 
        agency'' means a person that--
                    (A) performs or oversees the performance of an 
                assessment, evaluation, determination, or investigation 
                relating to the licensing, accreditation, or 
                certification of health care providers; or
                    (B)(i) performs or oversees the performance of an 
                assessment, evaluation, determination, or investigation 
                relating to the effectiveness of, compliance with, or 
                applicability of legal, fiscal, medical, or scientific 
                standards or aspects of performance related to the 
                delivery of, or payment for, health care or relating to 
                health care fraud or fraudulent claims for payment 
                regarding health; and
                    (ii) is a public agency, acting on behalf of a 
                public agency, acting pursuant to a requirement of a 
                public agency, or carrying out activities under a 
                Federal or State statute governing the assessment, 
                evaluation, determination, or investigation.
            (7) Health plan.--The term ``health plan'' shall have the 
        meaning given such term under section 5102(6).
            (8) Health researcher.--The term ``health researcher'' 
        means a person who conducts a biomedical, public health, health 
        services or health statistics research project or a research 
        project on social and behavioral factors relating to health, 
        that has been approved by--
                    (A) an institutional review board for the 
                organization sponsoring the project;
                    (B) an institutional review board for each health 
                information trustee that maintains protected health 
                information intended to be used in the project; or
                    (C) an institutional review board established or 
                designated by the Board.
            (9) Institutional review board.--The term ``institutional 
        review board'' means--
                    (A) a board established in accordance with 
                regulations of the Board under section 491(a) of the 
                Public Health Service Act (42 U.S.C. 289);
                    (B) a similar board established by the Board for 
                the protection of human subjects in research conducted 
                by the Board; or
                    (C) a similar board established under regulations 
                of a Federal Government authority other than the Board.
            (10) Law enforcement inquiry.--The term ``law enforcement 
        inquiry'' means an investigation or official proceeding 
        inquiring into whether there is a violation of, or failure to 
        comply with, any criminal or civil statute or any regulation, 
        rule, or order issued pursuant to such a statute.
            (11) Person.--The term ``person'' includes an authority of 
        the United States, a State, or a political subdivision of a 
        State.
            (12) Protected health information.--The term ``protected 
        health information'' means any information, whether oral or 
        recorded in any form or medium, that--
                    (A)(i) is created or received by a health care 
                provider, health plan, health oversight agency, public 
                health authority, certified indexing system, certified 
                clearinghouse, or certified health information 
                protection organization; or
                    (ii) is created or received by an employer through 
                the process of testing, screening, or assisting 
                applicants or employees; and
                    (B) relates to the past, present, or future 
                physical or mental health or condition of an enrollee, 
                the provision of health care to an enrollee, past, 
                present, or future payment for the provision of health 
                care to an enrollee, or demographic data collected from 
                the enrollee and--
                            (i) identifies an individual; or
                            (ii) with respect to which there is a 
                        reasonable basis to believe that the 
                        information can be used to identify an 
                        individual.
            (12) Public health authority.--The term ``public health 
        authority'' means an authority or instrumentality of the United 
        States, a State, or a political subdivision of a State that is 
        (A) responsible for public health matters; and (B) engaged in 
        such activities as injury reporting, public health 
        surveillance, and public health investigation or intervention.
            (13) References to certain certified entities.--
                    (A) Certified indexing system.--The term 
                ``certified indexing system'' shall have the meaning 
                given such term under section 5102.
                    (B) Certified clearinghouse.--The term ``certified 
                clearinghouse'' shall have the meaning given such term 
                under section 5102.
                    (C) Certified health information protection 
                organization.--The term ``certified health information 
                protection organization'' means a health information 
                protection organization (as defined in section 5102(5)) 
                that is certified under section 5119.

SEC. 5164. GENERAL LIMITATIONS ON DISCLOSURE.

    (a) In General.--
            (1) Disclosure within a trustee.--A health information 
        trustee may disclose protected health information to an 
        officer, employee, or agent of the trustee only for a purpose 
        that is compatible with and related to the purpose for which 
        the information--
                    (A) was collected; or
                    (B) was received by that trustee.
            (2) Disclosure outside a trustee.--A health information 
        trustee may disclose protected health information to a person 
        other than an officer, employee, or agent of the trustee only 
        for a purpose that is authorized under this Act.
            (3) Scope of disclosure.--
                    (A) In general.--Every disclosure of protected 
                health information by a health information trustee 
                shall be limited to the minimum amount of information 
                necessary to accomplish the purpose for which the 
                information is disclosed.
                    (B) Guidelines.--Not later than July 1, 1996, the 
                Board, after notice and opportunity for public comment, 
                shall issue guidelines to implement subparagraph (A), 
                which shall take into account the technical 
                capabilities of the record systems used to maintain 
                protected health information and the costs of limiting 
                disclosure.
            (4) Identification of disclosed information as protected 
        information.--Except with respect to protected health 
        information that is disclosed under section 5179, and except as 
        provided in paragraph (5), a health information trustee may not 
        disclose protected health information unless such information 
        is clearly identified as protected health information that is 
        subject to this section.
            (5) Routine disclosures subject to written agreement.--A 
        health information trustee who routinely discloses protected 
        health information to a person may satisfy the identification 
        requirement in paragraph (4) through a written agreement 
        between the trustee and the person with respect to the 
        protected health information.
            (6) Agreement to limit disclosure.--A health information 
        trustee who receives protected health information from any 
        person pursuant to a written agreement to restrict disclosure 
        of the information to a greater extent than would otherwise be 
        required under this section shall comply with the terms of the 
        agreement, except in circumstances in which disclosure of the 
        information is required by law notwithstanding the agreement.
            (7) No general requirement to disclose.--Except as provided 
        in the section 5179 relating to inspection, nothing in this 
        section shall be construed to require a health information 
        trustee to disclose protected health information not otherwise 
        required to be disclosed by law.
    (b) Disclosure by Officer, Employee, or Agent.--No officer, 
employee, or agent of a health information trustee may disclose 
protected health information, except insofar as the health information 
trustee is permitted to disclose such information for a purpose that is 
authorized under this Act.

SEC. 5165. AUTHORIZATIONS FOR DISCLOSURE OF PROTECTED HEALTH 
              INFORMATION.

    (a) Written Authorizations.--A health care provider and health plan 
may disclose protected health information pursuant to an authorization 
executed by the enrollee who is the subject of the information, if each 
of the following requirements is met:
            (1) Writing.--The authorization is in writing, signed by 
        the enrollee who is the subject of the information, and dated 
        on the date of such signature.
            (2) Separate form.--The authorization is not on a form used 
        to authorize or facilitate the provision of, or payment for, 
        health care.
            (3) Trustee described.--The trustee is specifically named 
        or generically described in the authorization as authorized to 
        disclose such information.
            (4) Recipient described.--The person to whom the 
        information is to be disclosed is specifically named or 
        generically described in the authorization as a person to whom 
        such information may be disclosed.
            (5) Statement of intended disclosures.--The authorization 
        contains an acknowledgment that the enrollee who is the subject 
        of the information has received a statement of the disclosures 
        that the person to receive the protected health information 
        intends to make, which statement shall be in writing, on a form 
        that is distinct from the authorization for disclosure, and 
        which statement must be received by the enrollee authorizing 
        the disclosure on or before such authorization is executed.
            (6) Information described.--The information to be disclosed 
        is described in the authorization.
            (7) Authorization timely received.--The authorization is 
        received by the trustee during a period described in subsection 
        (c)(1).
            (8) Disclosure timely made.--The disclosure occurs during a 
        period described in subsection (c)(2).
    (b) Authorizations Requested in Connection With Provision of Health 
Care.--
            (1) In general.--A health information trustee may not 
        request that an individual person provide to any other person 
        an authorization described in subsection (a) on a day on 
        which--
                    (A) the trustee provides health care to the 
                individual requested to provide the authorization; or
                    (B) in the case of a trustee that is a health 
                facility, the individual is admitted into the facility 
                as a resident or inpatient in order to receive health 
                care.
            (2) Exception.--Paragraph (1) does not apply if a health 
        information trustee requests that an individual provide an 
        authorization described in subsection (a) for the purpose of 
        assisting the individual in obtaining counseling or social 
        services from a person other than the trustee.
    (c) Time Limitations on Authorizations.--
            (1) Receipt by trustee.--For purposes of subsection (a)(7), 
        an authorization is timely received if it is received by the 
        trustee during--
                    (A) the 1-year period beginning on the date on 
                which the authorization is signed under subsection 
                (a)(1), if the authorization permits the disclosure of 
                protected health information to a person who provides 
                health counseling or social services to individuals; or
                    (B) the 30-day period beginning on the date on 
                which the authorization is signed under subsection 
                (a)(1), if the authorization permits the disclosure of 
                protected health information to a person other than a 
                person described in subparagraph (A).
            (2) Disclosure by trustee.--For purposes of subsection 
        (a)(8), a disclosure is timely made if it occurs before--
                    (A) the date or event (if any) specified in the 
                authorization upon which the authorization expires; and
                    (B) the expiration of the 6-month period beginning 
                on the date on which the trustee receives the 
                authorization.
    (d) Revocation or Amendment of Authorization.--
            (1) In general.--An individual may in writing revoke or 
        amend an authorization described in subsection (a), in whole or 
        in part, at any time, except when--
                    (A) disclosure of protected health information has 
                been authorized to permit validation of expenditures 
                for health care; or
                    (B) action has been taken in reliance on the 
                authorization.
            (2) Notice of revocation.--A health information trustee who 
        discloses protected health information pursuant to an 
        authorization that has been revoked shall not be subject to any 
        liability or penalty under this subpart if--
                    (A) the reliance was in good faith;
                    (B) the trustee had no notice of the revocation; 
                and
                    (C) the disclosure was otherwise in accordance with 
                the requirements of this subpart.
    (e) Deceased Individual.--The Board shall develop and establish 
through regulation a procedure for obtaining protected health 
information relating to a deceased individual when there is no 
administrator or executor of such individual's estate.
    (f) Model Authorizations.--The Board, after notice and opportunity 
for public comment, shall develop and disseminate model written 
authorizations of the type described in subsection (a) and model 
statements of intended disclosures of the type described in paragraph 
(a)(5).
    (g) Effect of Authorization on Privileges.--The execution by an 
individual of an authorization that meets the requirements of this 
section for the purpose of receiving health care or providing for the 
payment for health care shall not be construed to affect any privilege 
that the individual may have under common or statutory law in a court 
of a State or the United States.
    (h) Additional Requirements of Trustee.--A health information 
trustee may impose requirements for an authorization that are in 
addition to the requirements in this subsection.
    (i) Copy.--A health information trustee who discloses protected 
health information pursuant to an authorization under this section 
shall maintain a copy of the authorization as part of the information.
    (j) Rule of Construction.--This section shall not be construed--
            (1) to require a health information trustee to disclose 
        protected health information; or
            (2) to limit the right of a health information trustee to 
        charge a fee for the disclosure or reproduction of protected 
        health information.
    (k) Subpoenas.--If a health information trustee discloses protected 
health information pursuant to an authorization in order to comply with 
a subpoena, the authorization--
            (1) shall specifically authorize the disclosure for the 
        purpose of permitting the trustee to comply with the subpoena; 
        and
            (2) shall otherwise meet the requirements in this 
        subsection.

SEC. 5166. TREATMENT; FINANCIAL AND ADMINISTRATIVE TRANSACTIONS.

    (a) Disclosure of Information.--
            (1) In general.--A health care provider, health plan, or 
        employer may disclose protected health information to a health 
        care provider for the purpose of providing health care to an 
        enrollee if the enrollee who is the subject of the information 
        has not previously objected to the disclosure in writing.
            (2) Providing for payment.--A health care provider, health 
        plan, employer, or certified indexing system may disclose 
        protected health information to a health plan for the purpose 
        of providing for the payment for health care furnished to an 
        enrollee.
            (3) Cooperative.--A health care provider or health plan may 
        disclose protected health information to a consumer purchasing 
        cooperative established under subtitle D of title I in 
        connection with a financial and administrative transaction 
        described in section 5113.
            (4) Indexing systems.--A health care provider or health 
        plan may disclose protected health information to a certified 
        indexing system or certified clearinghouse for the purpose of 
        carrying out the functions of such system or clearinghouse 
        under part 1.
    (b) Scope of Disclosure.--The disclosure of protected health 
information under this section shall be limited to the minimum amount 
necessary to accomplish the purpose for which the disclosure is 
authorized.

SEC. 5167. OVERSIGHT.

    (a) In General.--A health information trustee may disclose 
protected health information to a health oversight agency for a purpose 
authorized by law.
    (b) Scope of Disclosure.--The disclosure of protected health 
information under this section shall be limited to the minimum amount 
necessary to accomplish the purpose for which the disclosure is 
authorized.
    (c) Use in Action Against Enrollees.--Protected health information 
about an enrollee that is disclosed under this section may not be used 
in, or disclosed to any person for use in, any administrative, civil, 
or criminal action or investigation directed against the enrollee who 
is the subject of the information, except in an action or investigation 
arising out of and directly related to receipt of health care or 
payment for health care or an action involving a fraudulent claim 
related to health.

SEC. 5168. NEXT OF KIN AND DIRECTORY INFORMATION.

    (a) Next of Kin.--A health care provider or person that receives 
protected health information under section 5170 may disclose protected 
health information to the next of kin or enrollee representative of the 
enrollee who is the subject of the information or to an individual with 
whom that enrollee has a personal relationship if--
            (1) the enrollee who is the subject of the information has 
        not previously objected to the disclosure after being notified 
        of the right to object; and
            (2) the information disclosed relates to health care 
        currently being provided to that enrollee.
    (b) Directory Information.--A health care provider and a person 
receiving protected health information under section 5170 may disclose 
information to any person if--
            (1) the information does not reveal specific information 
        about the physical or mental condition of the enrollee who is 
        the subject of the information or health care provided to that 
        person;
            (2) the enrollee who is the subject of the information has 
        not objected in writing to the disclosure after being notified 
        of the right to object; and
            (3) the information consists only of 1 or more of the 
        following items:
                    (A) The name of the enrollee who is the subject of 
                the information.
                    (B) If the enrollee who is the subject of the 
                information is receiving health care from a health care 
                provider on a premises controlled by the provider--
                            (i) the location of the enrollee on the 
                        premises; and
                            (ii) the general health status of the 
                        enrollee, described as critical, poor, fair, 
                        stable, or satisfactory or in terms denoting 
                        similar conditions.
    (c) Identification of Dead Person.--A health care provider, health 
plan, employer, certified indexing system, or certified clearinghouse 
may disclose protected health information if necessary to assist in the 
identification of a dead person.
    (d) Minimum Disclosure.--The disclosure of protected health 
information under this section shall be limited to the minimum amount 
necessary to accomplish the purpose for which the disclosure is 
authorized.

SEC. 5169. PUBLIC HEALTH.

    (a) In General.--A health care provider, health plan, public health 
authority, employer, or person that receives protected health 
information under section 5170 may disclose protected health 
information to a public health authority or other person authorized by 
law for use in legally authorized--
            (1) disease or injury reporting;
            (2) public health surveillance; or
            (3) public health investigation or intervention.
    (b) Scope of Disclosure.--The disclosure of protected health 
information under this section shall be limited to the minimum amount 
necessary to accomplish the purpose for which the disclosure is 
authorized.

SEC. 5170. EMERGENCY CIRCUMSTANCES.

    (a) In General.--A health care provider, health plan, employer, 
certified indexing system, certified clearinghouse, or person that 
receives protected health information under this section may disclose 
protected health information in emergency circumstances when necessary 
to protect the health or safety of an individual from imminent harm.
    (b) Scope of Disclosure.--The disclosure of protected health 
information under this section shall be limited to the minimum amount 
necessary to accomplish the purpose for which the disclosure is 
permitted and shall be limited to persons who need the information to 
take action to protect the health or safety of the enrollee.
    (c) Use in Action Against Enrollee.--Protected health information 
about an enrollee that is disclosed under this section may not be used 
in, or disclosed to any person for use in, any administrative, civil, 
or criminal action or investigation directed against the enrollee.

SEC. 5171. JUDICIAL AND ADMINISTRATIVE PURPOSES.

    (a) In General.--A health care provider, health plan, health 
oversight agency, or employer may disclose protected health 
information--
            (1) pursuant to the Federal Rules of Civil Procedure, the 
        Federal Rules of Criminal Procedure, or comparable rules of 
        other courts or administrative agencies in connection with 
        litigation or proceedings to which the enrollee who is the 
        subject of the information is a party and in which the enrollee 
        has placed the enrollee's physical or mental condition in 
        issue;
            (2) if ordered by a court in connection with an examination 
        of an enrollee; or
            (3) pursuant to a law requiring the reporting of specific 
        medical information to law enforcement authorities.
    (b) Scope of Disclosure.--The disclosure of protected health 
information under this section shall be limited to the minimum amount 
necessary to accomplish the purpose for which the disclosure is 
permitted.
    (c) Limit on Additional Disclosure.--A person that receives 
protected health information under this section may use the information 
and disclose such information only for the purpose for which it was 
received.

SEC. 5172. HEALTH RESEARCH.

    (a) In General.--Subject to subsection (d), a health information 
trustee may disclose protected health information to a health 
researcher if an institutional review board has determined that the 
research project engaged in by the health researcher--
            (1) requires use of the protected health information for 
        the effectiveness of the project; and
            (2) is of sufficient importance to outweigh the intrusion 
        into the privacy of the enrollee who is the subject of the 
        information that would result from the disclosure.
    (b) Obligations of Recipient.--A person who receives protected 
health information pursuant to subsection (a)--
            (1) shall remove or destroy, at the earliest opportunity 
        consistent with the purposes of the project, information that 
        would enable an enrollee to be identified, unless--
                    (A) an institutional review board has determined 
                that there is a health or research justification for 
                retention of such identifiers; and
                    (B) there is an adequate plan to protect the 
                identifiers from disclosure that is inconsistent with 
                this section; and
            (2) shall use protected health information solely for 
        purposes of the health research project for which disclosure 
        was authorized under this section.
    (c) Scope of Disclosure.--The disclosure of protected health 
information under this section shall be limited to the minimum amount 
necessary to accomplish the research purpose for which the disclosure 
is authorized.
    (d) Research Requiring Direct Contact.--Protected information may 
not be disclosed to a health researcher for a research project that 
includes direct contact with an enrollee who is the subject of 
protected health information unless the enrollee has been given notice 
by the health information trustee that such contact is possible, has 
been given the opportunity to object to the disclosure, and has not 
objected.

SEC. 5173. LAW ENFORCEMENT.

    (a) In General.--A health care provider, health plan, health 
oversight agency, employer, or other person that receives protected 
health information under section 5170 may disclose protected health 
information to a law enforcement agency (other than a health oversight 
agency governed by section 5167) if the information is requested for 
use--
            (1) in an investigation or prosecution of a health 
        information trustee;
            (2) in the identification of a victim or witness in a law 
        enforcement inquiry; or
            (3) in connection with the investigation of criminal 
        activity committed against the trustee or on premises 
        controlled by the trustee.
    (b) Certification.--When a law enforcement agency (other than a 
health oversight agency) requests that a health information trustee 
disclose protected health information under this subsection, the law 
enforcement agency shall provide the trustee with a written 
certification that--
            (1) specifies the information requested;
            (2) states that the information is needed for a lawful 
        purpose under this section; and
            (3) is signed by a supervisory official of a rank 
        designated by the head of the agency.
    (c) Scope of Disclosure.--The disclosure of protected health 
information under this section shall be limited to the minimum amount 
necessary to accomplish the purposes for which the disclosure is 
permitted.
  (d) Restrictions on Additional Disclosure.--Protected health 
information about an enrollee that is disclosed to a law enforcement 
agency under this section--
            (1) may not be disclosed for, or used in, any 
        administrative, civil, or criminal action or investigation 
        against the enrollee, except in an action or investigation 
        arising out of and directly related to the action or 
        investigation for which the information was obtained; and
            (2) may not be otherwise used or disclosed by the law 
        enforcement agency, unless the use or disclosure is necessary 
        to fulfill the purpose for which the information was obtained 
        and is not otherwise prohibited by law.

SEC. 5174. SUBPOENAS AND WARRANTS.

    (a) In General.--A health care provider, health plan, health 
oversight agency, employer, or person that receives protected health 
information under section 5170 may disclose protected health 
information under this section if the disclosure is pursuant to--
            (1) a subpoena issued under the authority of a grand jury, 
        and the trustee is provided a written certification by the 
        grand jury seeking the information that the grand jury has 
        complied with the applicable access provisions of section 5175;
            (2) an administrative subpoena or a judicial subpoena or 
        warrant, and the trustee is provided a written certification by 
        the person seeking the information that the person has complied 
        with the applicable access provisions of section 5175 or 5176; 
        or
            (3) an administrative subpoena or a judicial subpoena or 
        warrant, and the disclosure otherwise meets the conditions of 
        section 5167, 5169, 5170, 5171, or 5173.
    (b) Restrictions on Additional Disclosure.--Protected health 
information about an enrollee that is received under--
            (1) subsection (a) may not be disclosed for, or used in, 
        any administrative, civil, or criminal action or investigation 
        against the enrollee, except in an action or investigation 
        arising out of and directly related to the inquiry for which 
        the information was obtained;
            (2) subsection (a)(2) may not be otherwise disclosed by the 
        recipient unless the disclosure is necessary to fulfill the 
        purpose for which the information was obtained; and
            (3) subsection (a)(3) may not be disclosed by the recipient 
        unless the recipient complies with the conditions and 
        restrictions on disclosure with which the recipient would have 
        been required to comply if the disclosure had been made under 
        section 5168, 5169, 5170, 5171, or 5173.

SEC. 5175. ACCESS PROCEDURES FOR LAW ENFORCEMENT SUBPOENAS AND 
              WARRANTS.

    (a) Probable Cause Requirement.--A government authority may not 
obtain protected health information about an enrollee under section 
5174(a) (1) or (2) for use in a law enforcement inquiry unless there is 
probable cause to believe that the information is relevant to a 
legitimate law enforcement inquiry being conducted by the government 
authority.
    (b) Warrants.--A government authority that obtains protected health 
information about an enrollee under circumstances described in 
subsection (a) and pursuant to a warrant shall, not later than 30 days 
after the date the warrant was executed, serve the enrollee with, or 
mail to the last known address of the enrollee, a notice that protected 
health information about the enrollee was so obtained.
    (c) Subpoenas.--Except as provided in subsection (d), a government 
authority may not obtain protected health information about an enrollee 
under circumstances described in subsection (a) and pursuant to a 
subpoena unless a copy of the subpoena has been served on the enrollee 
on or before the date of return of the subpoena, together with a notice 
of the enrollee's right to challenge the subpoena in accordance with 
section 5176, and--
            (1) 30 days have passed from the date of service on the 
        enrollee and within that time period the enrollee has not 
        initiated a challenge in accordance with section 5176; or
            (2) disclosure is ordered by a court after challenge under 
        section 5176.
    (d) Application for Delay.--
            (1) In general.--A government authority may apply ex parte 
        and under seal to an appropriate court to delay (for an initial 
        period of not longer than 90 days) serving a copy of a subpoena 
        or notice required under subsection (b) or (c) with respect to 
        a law enforcement inquiry. The government authority may apply 
        to the court for extensions of the delay.
            (2) Reasons for delay.--An application for a delay, or 
        extension of a delay, under this subsection shall state, with 
        reasonable specificity, the reasons why the delay or extension 
        is being sought.
            (3) Ex parte order.--The court shall enter an ex parte 
        order delaying, or extending the delay of, notice and an order 
        prohibiting the disclosure of the request for or disclosure of 
        the protected health information and an order requiring the 
        disclosure of the protected health information if the court 
        finds that--
                    (A) the inquiry being conducted is within the 
                lawful jurisdiction of the government authority seeking 
                the protected health information;
                    (B) there is probable cause to believe that the 
                protected health information being sought is relevant 
                to a legitimate law enforcement inquiry;
                    (C) the government authority's need for the 
                information outweighs the privacy interest of the 
                enrollee who is the subject of the information; and
                    (D) there is reasonable ground to believe that 
                receipt of notice by the enrollee will result in--
                            (i) endangering the life or physical safety 
                        of any individual;
                            (ii) flight from prosecution;
                            (iii) destruction of or tampering with 
                        evidence or the information being sought; or
                            (iv) intimidation of potential witnesses.

SEC. 5176. CHALLENGE PROCEDURES FOR LAW ENFORCEMENT SUBPOENAS.

    (a) Motion To Quash Subpoena.--Within 30 days after the date of 
service of a subpoena of a government authority seeking protected 
health information about an enrollee under section 5174 (a) (1) or (2), 
or notice that protected health information has been obtained by a 
government authority, the enrollee may file a motion to quash the 
subpoena--
            (1) in the case of a State judicial subpoena, in the court 
        which issued the subpoena;
            (2) in the case of a subpoena issued under the authority of 
        a State that is not a State judicial subpoena, in a court of 
        competent jurisdiction;
            (3) in the case of a subpoena issued under the authority of 
        a Federal court, in the United States district court for the 
        district in which the enrollee resides or in which the subpoena 
        was issued; or
            (4) in the case of any other subpoena issued under the 
        authority of the United States, in the United States district 
        court for the district in which the enrollee resides or in 
        which the subpoena was issued.
    (b) Copy.--A copy of the motion shall be served by the enrollee 
upon the government authority by registered or certified mail.
    (c) Proceedings.--The government authority may file with the court 
such papers, including affidavits and other sworn documents, as sustain 
the validity of the subpoena. The enrollee may file with the court 
reply papers in response to the government authority's filing. The 
court, upon the request of the enrollee or the government authority or 
both, may proceed in camera. The court may conduct such proceedings as 
it deems appropriate to rule on the motion, but shall endeavor to 
expedite its determination.
    (d) Standard for Decision.--A court may deny a motion under 
subsection (a) if it finds there is probable cause to believe the 
protected health information being sought is relevant to a legitimate 
law enforcement inquiry being conducted by the government authority, 
unless the court finds the enrollee's privacy interest outweighs the 
government authority's need for the information. The enrollee shall 
have the burden of demonstrating that the enrollee's privacy interest 
outweighs the need established by the government authority for the 
information.
    (e) Specific Considerations With Respect to Privacy Interest.--In 
reaching its determination, the court shall consider--
            (1) the particular purpose for which the information was 
        collected;
            (2) the degree to which disclosure of the information will 
        embarrass, injure, or invade the privacy of the enrollee;
            (3) the effect of the disclosure on the enrollee's future 
        health care;
            (4) the importance of the inquiry being conducted by the 
        government authority, and the importance of the information to 
        that inquiry; and
            (5) any other factor deemed relevant by the court.
    (f) Attorney's Fees.--In the case of a motion brought under 
subsection (a) in which the enrollee has substantially prevailed, the 
court may assess against the government authority a reasonable 
attorney's fee and other litigation costs (including expert's fees) 
reasonably incurred.
    (g) No Interlocutory Appeal.--A ruling denying a motion to quash 
under this section shall not be deemed to be a final order, and no 
interlocutory appeal may be taken therefrom by the enrollee. An appeal 
of such a ruling may be taken by the enrollee within such period of 
time as is provided by law as part of any appeal from a final order in 
any legal proceeding initiated against the enrollee arising out of or 
based upon the protected health information disclosed.

SEC. 5177. ACCESS AND CHALLENGE PROCEDURES FOR SUBPOENAS OTHER THAN LAW 
              ENFORCEMENT SUBPOENAS.

    (a) In General.--A private party may not obtain protected health 
information from a health care provider, health plan, employer, or 
person that receives protected health information under section 5170 
pursuant to a subpoena unless--
            (1) a copy of the subpoena together with a notice of the 
        enrollee's right to challenge the subpoena by filing a motion 
        to quash under subsection (b), has been served upon the 
        enrollee who is the subject of the protected health information 
        on or before the date on which the subpoena was served; and
            (2)(A) 30 days have passed since the date of service, and 
        within that time period the enrollee has not filed a motion 
        under subsection (b); or
            (B) disclosure is ordered by a court under that subsection.
    (b) Motion To Quash.--Within 30 days after service of a subpoena 
seeking protected health information under subsection (a), the enrollee 
who is the subject of the protected health information may file in any 
court of competent jurisdiction a motion to quash the subpoena, with a 
copy served on the person seeking the information. The enrollee may 
oppose or seek to limit the subpoena on any ground that would be 
available if the enrollee were in sole possession of the information, 
including privacy and relevance.
    (c) Standard for Decision.--The court shall grant a motion under 
subsection (b) unless the respondent demonstrates that--
            (1) there is reasonable ground to believe the information 
        is relevant to a lawsuit or other judicial or administrative 
        proceeding; and
            (2) the need of the respondent for the information 
        outweighs the privacy interest of the enrollee.
    (d) Specific Considerations With Respect to Privacy Interest.--In 
determining under subsection (c) whether the need of the respondent for 
the information outweighs the privacy interest of the enrollee, the 
court shall consider--
            (1) the particular purpose for which the information was 
        collected;
            (2) the degree to which disclosure of the information would 
        embarrass, injure, or invade the privacy of the enrollee;
            (3) the effect of the disclosure on the enrollee's future 
        health care;
            (4) the importance of the information to the lawsuit or 
        proceeding; and
            (5) any other relevant factor.
    (e) Attorney's Fees.--In the case of a motion brought under 
subsection (b) in which the enrollee has substantially prevailed, the 
court may assess against the respondent a reasonable attorney's fee and 
other litigation costs and expenses (including expert's fees) 
reasonably incurred.

SEC. 5178. SECURITY.

    (a) In General.--A health information trustee shall establish and 
maintain appropriate administrative, technical, and physical 
safeguards--
            (1) to ensure the integrity and confidentiality of 
        protected health information created or received by the 
        trustee; and
            (2) to protect against any anticipated threats or hazards 
        to the security or integrity of such information.
    (b) Specific Security Measures.--The security measures adopted by a 
health information trustee shall include the following:
            (1) officers, employees, and agents of the trustee who have 
        access to protected health information created or received by 
        the trustee shall be regularly trained in the requirements 
        governing such information;
            (2) complete, accurate, and readily available documentation 
        of security features shall be maintained, if the maintenance of 
        such documentation is practicable, taking into account the 
        technical capabilities of the system used to maintain protected 
        health information and the costs of such maintenance; and
            (3) appropriate signs and warnings shall be posted to 
        advise of the need to secure protected health information.
    (c) Regulations.--The Board shall promulgate regulations regarding 
security measures for protected health information.

SEC. 5179. INSPECTION OF PROTECTED HEALTH INFORMATION.

    (a) Inspection of Protected Health Information.--
            (1) In general.--Except as provided in paragraph (3), a 
        health care provider or health plan--
                    (A) shall permit an enrollee who is the subject of 
                protected health information to inspect any such 
                information that the provider or plan maintains;
                    (B) shall permit the enrollee to have a copy of the 
                information;
                    (C) shall permit a person who has been designated 
                in writing by the enrollee who is the subject of the 
                information to inspect, or to have a copy of, the 
                information on behalf of the enrollee or to accompany 
                the enrollee during the inspection; and
                    (D) may offer to explain or interpret information 
                that is inspected or copied under this subsection.
            (2) Use of indexing systems.--Except as provided in 
        paragraph (3), a health plan or health care provider shall, 
        upon written request of an enrollee--
                    (A) determine the identity of previous providers to 
                the enrollee; and
                    (B) obtain protected health information regarding 
                the enrollee.
        The plan or provider may obtain such information through use of 
        a certified indexing system.
            (3) Exceptions.--A health care provider or health plan is 
        not required by this section to permit inspection or copying of 
        protected health information if any of the following conditions 
        apply:
                    (A) Mental health treatment notes.--The information 
                consists of psychiatric, psychological, or mental 
                health treatment notes, and the provider or plan 
                determines, based on reasonable medical judgment, that 
                inspection or copying of the notes would cause 
                sufficient harm to the enrollee who is the subject of 
                the notes so as to outweigh the desirability of 
                permitting access, and the provider or plan has not 
                disclosed the notes to any person not directly engaged 
                in treating the enrollee, except with the authorization 
                of the enrollee or under compulsion of law.
                    (B) Information about others.--The information 
                relates to an individual other than the enrollee 
                seeking to inspect or have a copy of the information 
                and the provider or plan determines, based on 
                reasonable medical judgment, that inspection or copying 
                of the information would cause sufficient harm to 1 or 
                both of the individuals so as to outweigh the 
                desirability of permitting access.
                    (C) Endangerment to life or safety.--The provider 
                or plan determines that disclosure of the information 
                could reasonably be expected to endanger the life or 
                physical safety of any individual.
                    (D) Confidential source.--The information 
                identifies or could reasonably lead to the 
                identification of a person (other than a health care 
                provider) who provided information under a promise of 
                confidentiality to a health care provider concerning 
                the enrollee who is the subject of the information.
                    (E) Administrative purposes.--The information--
                            (i) is used by the provider or plan solely 
                        for administrative purposes and not in the 
                        provision of health care to the enrollee who is 
                        the subject of the information; and
                            (ii) has not been disclosed by the provider 
                        or plan to any other person.
            (3) Inspection and copying of segregable portion.--A health 
        care provider or health plan shall permit inspection and 
        copying under paragraph (1) of any reasonably segregable 
        portion of a record after deletion of any portion that is 
        exempt under paragraph (2).
            (4) Conditions.--A health care provider or health plan 
        may--
                    (A) require a written request for the inspection 
                and copying of protected health information under this 
                subsection; and
                    (B) charge a reasonable fee (not greater than the 
                actual cost) for--
                            (i) permitting inspection of information 
                        under this subsection; and
                            (ii) providing a copy of protected health 
                        information under this subsection.
            (5) Statement of reasons for denial.--If a health care 
        provider or health plan denies a request for inspection or 
        copying under this subsection, the provider or plan shall 
        provide the enrollee who made the request (or the enrollee's 
        designated representative) with a written statement of the 
        reasons for the denial.
            (6) Deadline.--A health care provider or health plan shall 
        comply with or deny a request for inspection or copying of 
        protected health information under this subsection within the 
        30-day period beginning on the date on which the provider or 
        plan receives the request.

SEC. 5180. AMENDMENT OF PROTECTED HEALTH INFORMATION.

    (a) In General.--A health care provider or health plan that is 
required to comply with section 5179 shall, within the 45-day period 
beginning on the date on which the provider or plan receives from an 
enrollee a written request that the provider or plan correct or amend 
the information--
            (1) make the correction or amendment requested;
            (2) inform the enrollee of the correction or amendment that 
        has been made;
            (3) inform any certified indexing system or certified 
        clearinghouse to which the uncorrected or unamended portion of 
        the information was previously disclosed, of the correction or 
        amendment; and
            (4) inform any person who is identified by the enrollee, 
        who is not an officer, employee or agent of the provider or 
        plan, and to whom the uncorrected or unamended portion of the 
        information was previously disclosed, of the correction or 
        amendment that has been made.
    (b) Refusal to Correct.--If the provider or plan refuses to make 
the corrections, the provider or plan shall inform the enrollee of--
            (1) the reasons for the refusal of the provider or plan to 
        make the correction or amendment;
            (2) any procedures for further review of the refusal; and
            (3) the enrollee's right to file with the provider or plan 
        a concise statement setting forth the requested correction or 
        amendment and the enrollee's reasons for disagreeing with the 
        refusal of the provider or plan.
    (c) Bases For Request To Correct or Amend.--An enrollee may request 
correction or amendment of protected health information about the 
enrollee under paragraph (a) if the information is not timely, 
accurate, relevant to the system of records, or complete.
    (d) Statement of Disagreement.--After an enrollee has filed a 
statement of disagreement under paragraph (b)(3), the provider or plan, 
in any subsequent disclosure of the disputed portion of the 
information--
            (1) shall include a copy of the enrollee's statement; and
            (2) may include a concise statement of the reasons of the 
        provider or plan for not making the requested correction or 
        amendment.
    (e) Rule of Construction.--This section shall not be construed to 
require a health care provider or health plan to conduct a formal, 
informal, or other hearing or proceeding concerning a request for a 
correction or amendment to protected health information the provider or 
plan maintains.
    (f) Correction.--For purposes of paragraph (a), a correction is 
deemed to have been made to protected health information when 
information that is not timely, accurate, relevant to the system of 
records, or complete is clearly marked as incorrect or when 
supplementary correct information is made part of the information.
    (g) Notice of Information Practices.--
            (1) Preparation of written notice.--A health care provider 
        or health plan shall prepare a written notice of information 
        practices describing the following:
                    (A) Personal rights of an enrollee.--The rights 
                under this section of an enrollee who is the subject of 
                protected health information, including the right to 
                inspect and copy such information and the right to seek 
                amendments to such information, and the procedures for 
                authorizing disclosures of protected health information 
                and for revoking such authorizations.
                    (B) Procedures of provider or plan.--The procedures 
                established by the provider or plan for the exercise of 
                the rights of enrollees about whom protected health 
                information is maintained.
                    (C) Authorized disclosures.--The disclosures of 
                protected health information that are authorized.
            (2) Dissemination of notice.--A health care provider or 
        health plan--
                    (A) shall, upon request, provide any enrollee with 
                a copy of the notice of information practices described 
                in paragraph (1); and
                    (B) shall make reasonable efforts to inform 
                enrollees in a clear and conspicuous manner of the 
                existence and availability of the notice.
            (3) Model notice.--The Board, after notice and opportunity 
        for public comment, shall develop and disseminate a model 
        notice of information practices for use by health care 
        providers and health plans under this section.

SEC. 5181. ACCOUNTING FOR DISCLOSURES.

    (a) In General.--A health care provider or health plan that is 
required to comply with sections 5179 and 5180 shall create and 
maintain, with respect to any protected health information disclosed, a 
record of--
            (1) the date and purpose of the disclosure;
            (2) the name of the person to whom or to which the 
        disclosure was made;
            (3) the address of the person to whom or to which the 
        disclosure was made or the location to which the disclosure was 
        made; and
            (4) the information disclosed, if the recording of the 
        information disclosed is practicable, taking into account the 
        technical capabilities of the system used to maintain the 
        record and the costs of such maintenance.
    (b) Disclosure Record Part of Information.--A record created and 
maintained under paragraph (a) shall be maintained as part of the 
protected health information to which the record pertains, except for 
requests from and disclosures to health oversight agencies.
    (c) Certified Indexing Systems and Certified Clearinghouses.--
            (1) In general.--Certified indexing systems and certified 
        clearinghouses shall account for disclosures of protected 
        health information in the manner prescribed under subsection 
        (a).
            (2) Special rule.--Paragraph (1) shall not apply to 
        disclosures made in connection with financial and 
        administrative transactions and to health information 
        protection organizations (as such terms are defined under part 
        1) for the creation of health information that is non-
        identifiable health information.

SEC. 5182. STANDARDS FOR ELECTRONIC DOCUMENTS AND COMMUNICATIONS.

    The Board, after notice and opportunity for public comment, shall 
promulgate standards with respect to the creation, transmission, 
receipt, and maintenance, in electronic form, of each written document 
required or authorized under this subpart. When a signature is required 
with respect to a written document under any other provision of this 
subpart, such standards shall provide for an electronic substitute that 
serves the functional equivalent of a signature.

SEC. 5183. RIGHTS OF INCOMPETENTS.

    (a) Effect of Declaration of Incompetence.--Except as provided in 
section 5184, if an enrollee has been declared to be incompetent by a 
court of competent jurisdiction, the rights of the enrollee under this 
subpart shall be exercised and discharged in the best interests of the 
enrollee through the enrollee's representative.
    (b) No Court Declaration.--Except as provided in section 5184, if a 
health care provider determines that an enrollee, who has not been 
declared to be incompetent by a court of competent jurisdiction, 
suffers from a medical condition that prevents the enrollee from acting 
knowingly or effectively on the enrollee's own behalf, the right of the 
enrollee to authorize disclosure may be exercised and discharged in the 
best interest of the enrollee by the enrollee's next of kin.

SEC. 5184. RIGHTS OF MINORS.

    (a) Individuals Who Are 18 or Legally Capable.--In the case of an 
enrollee--
            (1) who is 18 years of age or older, all rights of the 
        enrollee shall be exercised by the enrollee; or
            (2) who, acting alone, has the legal right, as determined 
        by State law, to apply for and obtain a type of medical 
        examination, care, or treatment and who has sought such 
        examination, care, or treatment, the enrollee shall exercise 
        all rights of an enrollee under this subpart with respect to 
        protected health information relating to such examination, 
        care, or treatment.
    (b) Individuals Under 18.--Except as provided in subsection (a)(2), 
in the case of an enrollee who is--
            (1) under 14 years of age, all the enrollee's rights under 
        this subpart shall be exercised through the parent or legal 
        guardian of the enrollee; or
            (2) 14, 15, 16, or 17 years of age, the rights of 
        inspection and amendment, and the right to authorize disclosure 
        of protected health information of the enrollee may be 
        exercised either by the enrollee or by the parent or legal 
        guardian of the enrollee.

SEC. 5185. NO LIABILITY FOR PERMISSIBLE DISCLOSURES.

    A health information trustee who makes a disclosure of protected 
health information about an enrollee that is permitted by this subpart 
shall not be liable to the enrollee for the disclosure under common 
law.

SEC. 5186. NO LIABILITY FOR INSTITUTIONAL REVIEW BOARD DETERMINATIONS.

    If the members of an institutional review board make a 
determination in good faith that--
            (1) a health research project is of sufficient importance 
        to outweigh the intrusion into the privacy of an enrollee; and
            (2) the effectiveness of the project requires use of 
        protected health information,
the members, the board, and the parent institution of the board shall 
not be liable to the enrollee as a result of the determination.

SEC. 5187. GOOD FAITH RELIANCE ON CERTIFICATION.

    A health information trustee who relies in good faith on a 
certification by a government authority or other person and discloses 
protected health information about an enrollee in accordance with this 
subpart shall not be liable to the enrollee for such disclosure.

SEC. 5188. CIVIL PENALTY.

    (a) Violation.--Any health information trustee who the Board 
determines has substantially failed to comply with this subpart shall 
be subject, in addition to any other penalties that may be prescribed 
by law, to a civil penalty of not more than $10,000 for each such 
violation.
    (b) Procedures for Imposition of Penalties.--Section 1128A of the 
Social Security Act (42 U.S.C. 1320a-7a), other than subsections (a) 
and (b) and the second sentence of subsection (f) of that section, 
shall apply to the imposition of a civil monetary penalty under this 
section in the same manner as such provisions apply with respect to the 
imposition of a penalty under section 1128A of that Act.

SEC. 5189. CIVIL ACTION.

    (a) In General.--An individual who is aggrieved by conduct in 
violation of this subpart may bring a civil action to recover--
            (1) the greater of actual damages or liquidated damages of 
        $5,000;
            (2) punitive damages;
            (3) a reasonable attorney's fee and expenses of litigation;
            (4) costs of litigation; and
            (5) such preliminary and equitable relief as the court 
        determines to be appropriate.
    (b) Limitation.--No action may be commenced under this section more 
than 3 years after the date on which the violation was or should 
reasonably have been discovered.

SEC. 5190. RELATIONSHIP TO OTHER LAWS.

    (a) State Law.--Except as provided in subsections (b), (c), and 
(d), this subpart preempts any State law to the extent that such law is 
inconsistent with this subpart.
    (b) Laws Relating to Public Health.--Nothing in this subpart is 
intended to preempt or operate to the exclusion of any State public 
health law that prevents or regulates disclosure of protected health 
information otherwise allowed under this Act.
    (c) Privileges.--Nothing in this subpart is intended to preempt or 
modify State common or statutory law to the extent such law concerns a 
privilege of a witness or person in a court of the State. This subpart 
does not supersede or modify Federal common or statutory law to the 
extent such law concerns a privilege of a witness or person in a court 
of the United States.
    (d) Certain Duties Under State or Federal Law.--This subpart shall 
not be construed to preempt, supersede, or modify the operation of--
            (1) any law that provides for the reporting of vital 
        statistics such as birth or death information;
            (2) any law requiring the reporting of abuse or neglect 
        information about any individual; or
            (3) subpart II of part E of title XXVI of the Public Health 
        Service Act (relating to notifications of emergency response 
        employees of possible exposure to infectious diseases); or
            (4) any federal law that prevents or regulates disclosure 
        of protected health information.

SEC. 5191. PRIOR WRITTEN CONSENT.

    Except as otherwise provided in this title, no individually 
identifiable health care information may be disclosed, shared or 
otherwise transmitted without the prior, valid, written consent of the 
individuals about whom the information is maintained. Such consent may 
not be provided on a form that is used to authorize or facilitate the 
provision of, or payment for, health care. A separate consent shall be 
obtained for each proposed disclosure under this section. With respect 
to minors or individuals deemed incapable of giving valid written 
consent, State law shall apply as appropriate.

SEC. 5192. PROVIDER IDENTIFIABLE DATA.

    The Board shall establish standards for the disclosure and 
transmission of provider identifiable data.

     PART 3--INTERIM REQUIREMENTS FOR ADMINISTRATIVE SIMPLIFICATION

SEC. 5195. STANDARD BENEFIT FORMS.

    (a) Development.--Not later than 1 year after the date of the 
enactment of this Act, the National Health Board shall develop, 
promulgate, and publish in the Federal Register the following standard 
health care benefit forms:
            (1) An enrollment and disenrollment form to be used to 
        record enrollment and disenrollment in a health benefit plan.
            (2) A clinical encounter record to be used by health 
        benefit plans and health service providers.
            (3) A claim form to be used in the submission of claims for 
        benefits or payment under a health benefit plan.
    (b) Instructions, Definitions, and Codes.--Each standard form 
developed under subsection (a) shall include instructions for 
completing the form that--
            (1) specifically define, to the extent practicable, the 
        data elements contained in the form; and
            (2) standardize any codes or data sets to be used in 
        completing the form.
    (c) Requirements for Adoption of Forms.--
            (1) Health service providers.--On or after the date that is 
        270 days after the publication of the standard forms developed 
        under subsection (a), a health service provider that furnishes 
        items or services in the United States for which payment may be 
        made under a health benefit plan may not--
                    (A) maintain records of clinical encounters 
                involving such items or services that are required to 
                be maintained by the National Health Board in a paper 
                form that is not the clinical encounter record 
                promulgated by the Board; or
                    (B) submit any claim for benefits or payment for 
                such services to such plan in a paper form that is not 
                the claim form promulgated by the National Health 
                Board.
            (2) Health benefit plans.--On or after the date that is 270 
        days after the publication of the standard forms developed 
        under subsection (a), a health benefit plan may not--
                    (A) record enrollment and disenrollment in a paper 
                form that is not the enrollment and disenrollment form 
                promulgated by the National Health Board;
                    (B) maintain records of clinical encounters that 
                are required to be maintained by the National Health 
                Board in a paper form that is not the clinical 
                encounter record promulgated by the Board; or
                    (C) reject a claim for benefits or payment under 
                the plan on the basis of the form or medium in which 
                the claim is submitted if--
                            (i) the claim is submitted on the claim 
                        form promulgated by the National Health Board; 
                        and
                            (ii) the plan accepts claims submitted in 
                        paper form.
    (d) Definitions.--For purposes of this subtitle:
            (1) Health benefit plan.--
                    (A) In general.--The term ``health benefit plan'' 
                means, except as provided in subparagraphs (B) through 
                (D), any public or private entity or program that 
                provides for payments for health care services, 
                including--
                            (i) a group health plan (as defined in 
                        section 5000(b)(1) of the Internal Revenue Code 
                        of 1986); and
                            (ii) any other health insurance 
                        arrangement, including any arrangement 
                        consisting of a hospital or medical expense 
                        incurred policy or certificate, hospital or 
                        medical service plan contract, or health 
                        maintenance organization subscriber contract.
                    (B) Plans excluded.--Such term does not include--
                            (i) accident-only, credit, or disability 
                        income insurance;
                            (ii) coverage issued as a supplement to 
                        liability insurance;
                            (iii) an individual making payment on the 
                        individual's own behalf (or on behalf of a 
                        relative or other individual) for deductibles, 
                        coinsurance, or services not covered under a 
                        health benefit plan; and
                            (iv) such other plans as the National 
                        Health Board may determine, because of the 
                        limitation of benefits to a single type or kind 
                        of health care, such as dental services or 
                        hospital indemnity plans, or other reasons 
                        should not be subject to the requirements of 
                        this section.
                    (C) Plans included.--Such term includes--
                            (i) workers compensation or similar 
                        insurance insofar as it relates to workers 
                        compensation medical benefits (as defined in 
                        section 10000(3)) provided by or through health 
                        plans; and
                            (ii) automobile medical insurance insofar 
                        as it relates to automobile insurance medical 
                        benefits (as defined in section 10100(2)) 
                        provided by or through health plans.
                    (D) Treatment of direct provision of services.--
                Such term does not include a Federal or State program 
                that provides directly for the provision of health 
                services to beneficiaries.
            (2) Health service provider.--The term ``health service 
        provider'' includes a provider of services (as defined in 
        section 1861(u) of the Social Security Act), physician, 
        supplier, and other person furnishing health care services. 
        Such term includes a Federal or State program that provides 
        directly for the provision of health services to beneficiaries.
    (e) Interim Nature of Requirements.--Any requirement with respect 
to a standard form imposed under this part shall cease to be effective 
upon a determination by the Board that the health care data network (as 
defined in section 5102(3)) is operational.

                  Subtitle C--Remedies and Enforcement

   PART 1--REVIEW OF BENEFIT DETERMINATIONS FOR ENROLLED INDIVIDUALS

                        Subpart A--General Rules

SEC. 5201. HEALTH PLAN CLAIMS PROCEDURE.

    (a) Definitions.--For purposes of this section--
            (1) Claim.--The term ``claim'' means a claim for payment or 
        provision of benefits under a health plan, a request for 
        preauthorization of items or services which is submitted to a 
        health plan prior to receipt of the items or services, or the 
        denial, reduction or termination of any service or request for 
        a referral or reimbursement.
            (2) Individual claimant.--The term ``individual claimant'' 
        with respect to a claim means any individual who submits the 
        claim to a health plan in connection with the individual's 
        enrollment under the plan, or on whose behalf the claim is 
        submitted to the plan by a provider.
            (3) Provider claimant.--The term ``provider claimant'' with 
        respect to a claim means any provider who submits the claim to 
        a health plan with respect to items or services provided to an 
        individual enrolled under the plan.
    (b) General Rules Governing Treatment of Claims.--
            (1) Adequate notice of disposition of claim.--In any case 
        in which a claim is submitted in complete form to a health 
        plan, the plan shall provide to the individual claimant and any 
        provider claimant with respect to the claim a written notice of 
        the plan's approval or denial of the claim within 15 days after 
        the date of the submission of the claim. The notice to the 
        individual claimant shall be written in language calculated to 
        be understood by the typical individual enrolled under the plan 
        and in a form which takes into account accessibility to the 
        information by individuals whose primary language is not 
        English. In the case of a denial of the claim, the notice shall 
        be provided within 5 days after the date of the determination 
        to deny the claim, and shall set forth the specific reasons for 
        the denial. Such notice shall include an explanation of the 
        specific reasons and facts underlying the decision to reduce or 
        fail to provide services or pay the claim. The notice of a 
        denial shall clearly explain the right to appeal the denial 
        under paragraph (2) and a description of the process for 
        appealing such decision sufficient to allow the claimant to 
        initiate an appeal and submit evidence to the decision maker in 
        support of the position of the claimant. Failure by any plan to 
        comply with the requirements of this paragraph with respect to 
        any claim submitted to the plan shall be treated as approval by 
        the plan of the claim.
            (2) Plan's duty to review denials upon timely request.--The 
        plan shall review its denial of the claim if an individual 
        claimant or provider claimant with respect to the claim submits 
        to the plan a written request for reconsideration of the claim 
        after receipt of written notice from the plan of the denial. 
        The plan shall allow any such claimant not less than 60 days, 
        after receipt of written notice from the plan of the denial, to 
        submit the claimant's request for reconsideration of the claim.
            (3) Time limit for review.--The plan shall complete any 
        review required under paragraph (2), and shall provide the 
        individual claimant and any provider claimant with respect to 
        the claim written notice of the plan's decision on the claim 
        after reconsideration pursuant to the review, within 30 days 
        after the date of the receipt of the request for 
        reconsideration.
            (4) De novo reviews.--Any review required under paragraph 
        (2)--
                    (A) shall be de novo,
                    (B) shall be conducted by an individual who did not 
                make the initial decision denying the claim and who is 
                authorized to approve the claim, and
                    (C) shall include review by a qualified physician 
                in the same speciality as the treating physician if the 
                resolution of any issues involved requires medical 
                expertise.
    (c) Treatment of Urgent Requests to Plans for Preauthorization.--
            (1) In general.--This subsection applies in the case of any 
        claim submitted by an individual claimant or a provider 
        claimant consisting of a request for preauthorization of items 
        or services (other than emergency services which under section 
        1406(b) may not be subject to preauthorization) which is 
        accompanied by an attestation that--
                    (A) failure to immediately provide the items or 
                services could reasonably be expected to result in--
                            (i) placing the health of the individual 
                        claimant (or, with respect to an individual 
                        claimant who is a pregnant woman, the health of 
                        the woman or her unborn child) in serious 
                        jeopardy,
                            (ii) serious impairment to bodily 
                        functions, or
                            (iii) serious dysfunction of any bodily 
                        organ or part,
                or
                    (B) immediate provision of the items or services is 
                necessary because the individual claimant has made or 
                is at serious risk of making an attempt to harm such 
                individual claimant or another individual.
            (2) Shortened time limit for consideration of requests for 
        preauthorization.--Notwithstanding subsection (b)(1), a health 
        plan shall approve or deny any claim described in paragraph (1) 
        within 12 hours after submission of the claim to the plan. 
        Failure by the plan to comply with the requirements of this 
        paragraph with respect to the claim shall be treated as 
        approval by the plan of the claim.
            (3) Expedited exhaustion of plan remedies.--Any claim 
        described in paragraph (1) which is denied by the plan shall be 
        treated as a claim with respect to which all remedies under the 
        plan provided pursuant to this section are exhausted, 
        irrespective of any review provided under subsection (b)(2).
            (4) Denial of previously authorized claims not permitted.--
        In any case in which a health plan approves a claim described 
        in paragraph (1)--
                    (A) the plan may not subsequently deny payment or 
                provision of benefits pursuant to the claim, unless the 
                plan makes a showing of an intentional 
                misrepresentation of a material fact by the individual 
                claimant, and
                    (B) in the case of a violation of subparagraph (A) 
                in connection with the claim, all remedies under the 
                plan provided pursuant to this section with respect to 
                the claim shall be treated as exhausted.
    (d) Time Limit for Determination of Incompleteness of Claim.--For 
purposes of this section--
            (1) any claim submitted by an individual claimant and 
        accepted by a provider serving under contract with a health 
        plan and any claim described in subsection (b)(1) shall be 
        treated with respect to the individual claimant as submitted in 
        complete form, and
            (2) any other claim for benefits under the plan shall be 
        treated as filed in complete form as of 10 days after the date 
        of the submission of the claim, unless the plan provides to the 
        individual claimant and any provider claimant, within such 
        period, a written notice of any required matter remaining to be 
        filed in order to complete the claim.
Any filing by the individual claimant or the provider claimant of 
additional matter requested by the plan pursuant to paragraph (2) shall 
be treated for purposes of this section as an initial filing of the 
claim.
    (e) Additional Notice and Disclosure Requirements for Health 
Plans.--In the case of a denial of a claim for benefits under a health 
plan, the plan shall include, together with the specific reasons 
provided to the individual claimant and any provider claimant under 
subsection (b)(1)--
            (1) if the denial is based in whole or in part on a 
        determination that the claim is for an item or service which is 
        not covered by the comprehensive benefit package or exceeds 
        payment rates under the applicable fee schedule, the factual 
        basis for the determination,
            (2) if the denial is based in whole or in part on exclusion 
        of coverage with respect to services because the services are 
        determined to comprise an experimental treatment or 
        investigatory procedure, the medical basis for the 
        determination and a description of the process used in making 
        the determination, and
            (3) if the denial is based in whole or in part on a 
        determination that the treatment is not medically necessary or 
        appropriate or is inconsistent with the plan's practice 
        guidelines, the medical basis for the determination, the 
        guidelines used in making the determination, and a description 
        of the process used in making the determination.
    (f) Waiver of Rights Prohibited.--A health plan may not require any 
party to waive any right under the plan or this Act as a condition for 
approval of any claim under the plan, except to the extent otherwise 
specified in a formal settlement agreement.

SEC. 5202. REVIEW IN AREA COMPLAINT REVIEW OFFICES OF GRIEVANCES BASED 
              ON ACTS OR PRACTICES BY HEALTH PLANS.

    (a) Complaint Review Offices.--
            (1) In general.--In accordance with rules which shall be 
        prescribed by the Secretary of Labor, in consultation with the 
        National Health Board, each State shall establish and maintain 
        a complaint review office for each health care coverage area 
        established by such State. According to designations which 
        shall be made by each State under regulations of the Secretary 
        of Labor, in consultation with such Board, the complaint review 
        office for a health care coverage area established by such 
        State shall also serve as the complaint review office for large 
        group sponsors operating in the State with respect to 
        individuals who are enrolled under health plans maintained by 
        such sponsors and who reside within the area of the health care 
        coverage area.
            (2) Health systems not established by states.--In the case 
        of any health care system established in any State by the 
        Secretary of Health and Human Services, the Secretary of Health 
        and Human Services shall assume all duties and obligations of 
        such State under this part in accordance with the applicable 
        regulations of the Secretary of Labor, in consultation with the 
        National Health Board, under this part.
    (b) Filings of Complaints by Aggrieved Persons.--In the case of any 
person who is aggrieved by--
            (1) any act or practice engaged in by any health plan which 
        consists of or results in denial of payment or provision of 
        benefits under the plan or delay in the payment or provision of 
        benefits, or
            (2) any act or practice engaged in by any other plan 
        maintained in a health care coverage area or by a large group 
        sponsor which consists of or results in denial of payment or 
        provision of benefits under a supplemental benefit policy 
        described in section 1421(b)(1) or a cost sharing policy 
        described in section 1421(b)(2) or delay in the payment or 
        provision of the benefits,
if the denial or delay consists of a failure to comply with the terms 
of the plan (including the provision of benefits in full when due in 
accordance with the terms of the plan), or with the applicable 
requirements of this Act, such person may file a complaint with the 
appropriate complaint review office.
    (c) Exhaustion of Plan Remedies.--Any complaint including a claim 
to which section 5201 applies may not be filed until the complainant 
has exhausted all remedies provided under the plan with respect to the 
claim in accordance with such section.
    (d) Form of Complaint.--The complaint shall be in writing under 
oath or affirmation, shall set forth the complaint in a manner 
calculated to give notice of the nature of the complaint, and shall 
contain such information as may be prescribed in regulations of the 
Secretary of Labor.
    (e) Notice of Filing.--The complaint review office shall serve by 
certified mail a notice of the complaint (including the date, place, 
and circumstances of the alleged violation) on the person or persons 
alleged in the complaint to have committed the violation within 10 days 
after the filing of the complaint.
    (f) Time Limitation.--Complaints may not be brought under this 
section with respect to any violation later than one year after the 
date on which the complaining party knows or should have reasonably 
known that a violation has occurred. This subsection shall not prevent 
the subsequent amending of a complaint.

SEC. 5203. INITIAL PROCEEDINGS IN COMPLAINT REVIEW OFFICES.

    (a) Elections.--Whenever a complaint is brought to the complaint 
review office under section 5202(b), the complaint review office shall 
provide the complainant with an opportunity, in such form and manner as 
shall be prescribed in regulations of the Secretary of Labor, to elect 
one of the following:
            (1) to forego further proceedings in the complaint review 
        office and rely on remedies available in a court of competent 
        jurisdiction, with respect to any matter in the complaint,
            (2) to submit the complaint as a dispute under the Early 
        Resolution Program established under subpart B and thereby 
        suspend further review proceedings under this section pending 
        termination of proceedings under the Program, or
            (3) in any case in which an election under paragraph (2) is 
        not made, or such an election was made but resolution of all 
        matters in the complaint was not obtained upon termination of 
        proceedings pursuant to the election by settlement agreement or 
        otherwise, to proceed with the complaint to a hearing in the 
        complaint review office under section 5204 regarding the 
        unresolved matters.
    (b) Duty of Complaint Review Office.--The complaint review office 
shall provide (in a linguistically appropriate manner) an explanation 
to complainants bringing complaints to the office concerning the legal 
and other ramifications of each option available under this section.
    (c) Effect of Participation in Early Resolution Program.--Any 
matter in a complaint brought to the complaint review office which is 
included in a dispute which is timely submitted to the Early Resolution 
Program established under subpart B shall not be assigned to a hearing 
under section 5204 unless the proceedings under the Program with 
respect to the dispute are terminated without settlement or resolution 
of the dispute with respect to such matter. Upon termination of any 
proceedings regarding a dispute submitted to the Program, the 
applicability of this section to any matter in a complaint which was 
included in the dispute shall not be affected by participation in the 
proceedings, except to the extent otherwise required under the terms of 
any settlement agreement or other formal resolution obtained in the 
proceedings.

SEC. 5204. HEARINGS BEFORE HEARING OFFICERS IN COMPLAINT REVIEW 
              OFFICES.

    (a) Hearing Process.--
            (1) Assignment of complaints to hearing officers and notice 
        to parties.--
                    (A) In general.--In the case of an election under 
                section 5203(a)(3)--
                            (i) the complaint review office shall 
                        assign the complaint, and each motion in 
                        connection with the complaint, to a hearing 
                        officer employed by the State in the office; 
                        and
                            (ii) the hearing officer shall have the 
                        power to issue and cause to be served upon the 
                        plan named in the complaint a copy of the 
                        complaint and a notice of hearing before the 
                        hearing officer at a place fixed in the notice, 
                        not less than 5 days after the serving of the 
                        complaint.
                    (B) Qualifications for hearing officers.--No 
                individual may serve in a complaint review office as a 
                hearing officer unless the individual meets standards 
                which shall be prescribed by the Secretary of Labor. 
                Such standards shall include experience, training, 
                ability to communicate with the enrollee, affiliations, 
                diligence, absence of actual or potential conflicts of 
                interest, and other qualifications deemed relevant by 
                the Secretary of Labor. At no time shall a hearing 
                officer have any official, financial, or personal 
                conflict of interest with respect to issues in 
                controversy before the hearing officer.
            (2) Amendment of complaints.--Any such complaint may be 
        amended by the hearing officer conducting the hearing, upon the 
        motion of the complainant, in the hearing officer's discretion 
        at any time prior to the issuance of an order based thereon.
            (3) Answers.--The party against whom the complaint is filed 
        shall have the right to file an answer to the original or 
        amended complaint and to appear in person or otherwise and give 
        testimony at the place and time fixed in the complaint.
    (b) Additional Parties.--In the discretion of the hearing officer 
conducting the hearing, any other person may be allowed to intervene in 
the proceeding and to present testimony.
    (c) Hearings.--
            (1) De novo hearing.--Each hearing officer shall hear 
        complaints and motions de novo.
            (2) Testimony.--The testimony taken by the hearing officer 
        shall be reduced to writing. Thereafter, the hearing officer, 
        in his or her discretion, upon notice may provide for the 
        taking of further testimony or hear argument.
            (3) Authority of hearing officers.--The hearing officer may 
        compel by subpoena the attendance of witnesses and the 
        production of evidence at any designated place or hearing. In 
        case of contumacy or refusal to obey a subpoena lawfully issued 
        under this paragraph and upon application of the hearing 
        officer, an appropriate district court of the United States may 
        issue an order requiring compliance with the subpoena and any 
        failure to obey the order may be punished by the court as a 
        contempt thereof. The hearing officer may also seek enforcement 
        of the subpoena in a State court of competent jurisdiction.
            (4) Expedited hearings.--Notwithstanding section 5203 and 
        the preceding provisions of this section, upon receipt of a 
        complaint containing a claim described in section 5201(c)(1), 
        the complaint review office shall promptly provide the 
        complainant with the opportunity to make an election under 
        section 5203(a)(3) and assignment to a hearing on the complaint 
        before a hearing officer. The complaint review office shall 
        ensure that such a hearing commences not later than 24 hours 
        after receipt of the complaint by the complaint hearing office 
        and not later than 3 days after the receipt of a complaint, the 
        Complaint Review Office shall provide a decision.
    (d) Decision of Hearing Officer.--
            (1) In general.--Not later than 120 days after the date on 
        which a complaint is assigned under this section, the hearing 
        officer shall decide if the preponderance of the evidence 
        justifies the denial of services and whether to decide in favor 
        of the complainant with respect to each alleged act or 
        practice. Each such decision--
                    (A) shall include the hearing officer's findings of 
                fact, and
                    (B) shall constitute the hearing officer's final 
                disposition of the proceedings.
            (2) Decisions finding in favor of complainant.--If the 
        hearing officer's decision includes a determination that any 
        party named in the complaint has engaged in or is engaged in an 
        act or practice described in section 5202(b), the hearing 
        officer shall issue and cause to be served on such party an 
        order which requires such party--
                    (A) to cease and desist from such act or practice,
                    (B) to provide the benefits due under the terms of 
                the plan and to otherwise comply with the terms of the 
                plan and the applicable requirements of this Act,
                    (C) to pay to the complainant prejudgment interest 
                on the actual costs incurred in obtaining the items and 
                services at issue in the complaint,
                    (D) to pay to the prevailing complainant a 
                reasonable attorney's fee, reasonable expert witness 
                fees, and other reasonable costs relating to the 
                hearing on the charges on which the complainant 
                prevails, and
                    (E) to provide other appropriate relief.
            (3) Decisions not in favor of complainant.--If the hearing 
        officer's decision includes a determination that the party 
        named in the complaint has not engaged in or is not engaged in 
        an act or practice referred to in section 5202(b), the hearing 
        officer--
                    (A) shall include in the decision a dismissal of 
                the charge in the complaint relating to the act or 
                practice, and
                    (B) upon a finding that such charge is frivolous, 
                shall issue and cause to be served on the complainant 
                an order which requires the complainant to pay to such 
                party a reasonable attorney's fee, reasonable expert 
                witness fees, and other reasonable costs relating to 
                the proceedings on such charge.
            (4) Submission and service of decisions.--The hearing 
        officer shall submit each decision to the complaint review 
        office at the conclusion of the proceedings and the office 
        shall cause a copy of the decision to be served on the parties 
        to the proceedings.
    (e) Review.--
            (1) In general.--The decision of the hearing officer shall 
        be final and binding upon all parties. Except as provided in 
        paragraph (2), any party to the complaint may, within 30 days 
        after service of the decision by the complaint review office, 
        file an appeal of the decision with the Federal Health Plan 
        Review Board under section 5205 in such form and manner as may 
        be prescribed by such Board.
            (2) Exception.--The decision in the case of an expedited 
        hearing under subsection (c)(4) shall not be subject to review.
    (f) Court Enforcement of Orders.--
            (1) In general.--If a decision of the hearing officer in 
        favor of the complainant is not appealed under section 5205, 
        the complainant may petition any court of competent 
        jurisdiction for enforcement of the order. In any such 
        proceeding, the order of the hearing officer shall not be 
        subject to review.
            (2) Awarding of costs.--In any action for court enforcement 
        under this subsection, a prevailing complainant shall be 
        entitled to a reasonable attorney's fee, reasonable expert 
        witness fees, and other reasonable costs relating to such 
        action.

SEC. 5205. REVIEW BY FEDERAL HEALTH PLAN REVIEW BOARD.

    (a) Establishment and Membership.--The Secretary of Labor, in 
consultation with the National Health Board, shall establish by 
regulation a Federal Health Plan Review Board (hereinafter in this 
subtitle referred to as the ``Review Board''). The Review Board shall 
be composed of 5 members appointed by the Secretary of Labor, in 
consultation with the National Health Board, from among persons who by 
reason of training, education, or experience are qualified to carry out 
the functions of the Review Board under this subtitle, and be balanced 
to fairly represent all interested parties. The Secretary of Labor, in 
consultation with the National Health Board, shall prescribe such rules 
as are necessary for the orderly transaction of proceedings by the 
Review Board. Every official act of the Review Board shall be entered 
of record, and its hearings and records shall be open to the public.
    (b) Review Process.--The Review Board shall ensure, in accordance 
with rules prescribed by the Secretary of Labor, in consultation with 
the National Health Board, that reasonable notice is provided for each 
appeal before the Review Board of a hearing officer's decision under 
section 5304, and shall provide for the orderly consideration of 
arguments by any party to the hearing upon which the hearing officer's 
decision is based. In the discretion of the Review Board, any other 
person may be allowed to intervene in the proceeding and to present 
written argument. The National Health Board may intervene in the 
proceeding as a matter of right.
    (c) Scope of Review.--The Review Board shall review the decision of 
the hearing officer from which the appeal is made, except that the 
review shall be only for the purposes of determining--
            (1) whether the determination is supported by substantial 
        evidence on the record considered as a whole,
            (2) in the case of any interpretation by the hearing 
        officer of contractual terms (irrespective of the extent to 
        which extrinsic evidence was considered), whether the 
        determination is supported by a preponderance of the evidence,
            (3) whether the determination is in excess of statutory 
        jurisdiction, authority, or limitations, or in violation of a 
        statutory right, or
            (4) whether the determination is without observance of 
        procedure required by law.
    (d) Decision of Review Board.--The decision of the hearing officer 
as affirmed or modified by the Review Board (or any reversal by the 
Review Board of the hearing officer's final disposition of the 
proceedings) shall become the final order of the Review Board and 
binding on all parties, subject to review under subsection (e). The 
Review Board shall cause a copy of its decision to be served on the 
parties to the proceedings not later than 5 days after the date of the 
decision.
    (e) Review of Final Orders.--
            (1) In general.--Not later than 60 days after the entry of 
        the final order, any person aggrieved by any such final order 
        under which the amount or value in controversy exceeds $10,000 
        may seek a review of the order in the United States court of 
        appeals for the circuit in which the violation is alleged to 
        have occurred or in which the complainant resides.
            (2) Further review.--Upon the filing of the record with the 
        court, the jurisdiction of the court shall be exclusive and its 
        judgment shall be final, except that the judgment shall be 
        subject to review by the Supreme Court of the United States 
        upon writ of certiorari or certification as provided in section 
        1254 of title 28 of the United States Code.
            (3) Enforcement decree in original review.--If, upon appeal 
        of an order under paragraph (1), the United States court of 
        appeals does not reverse the order, the court shall have the 
        jurisdiction to make and enter a decree enforcing the order of 
        the Review Board.
    (f) Awarding of Attorneys' Fees and Other Costs and Expenses.--In 
any proceeding before the Review Board under this section or any 
judicial proceeding under subsection (e), the Review Board or the court 
(as the case may be) shall award to a prevailing complainant reasonable 
costs and expenses (including a reasonable attorney's fee) on the 
causes on which the complainant prevails.

SEC. 5206. CIVIL MONEY PENALTIES.

    (a) Denial or Delay in Payment or Provision of Benefits.--
            (1) In general.--The Secretary of Labor, in consultation 
        with the National Health Board, may assess a civil penalty 
        against any health plan, or against any other plan in 
        connection with benefits provided thereunder under a 
        supplemental benefit policy described in section 1421(b)(1) or 
        a cost sharing policy described in section 1421(b)(2), for 
        unreasonable denial or delay in the payment or provision of 
        benefits thereunder, in an amount not to exceed--
                    (A) $25,000 per violation, or $75,000 per violation 
                in the case of a finding of bad faith on the part of 
                the plan, and
                    (B) in the case of a finding of a pattern or 
                practice of such violations engaged in by the plan, 
                $1,000,000 in addition to the total amount of penalties 
                assessed under subparagraph (A) with respect to such 
                violations.
        For purposes of subparagraph (A), each violation with respect 
        to any single individual shall be treated as a separate 
        violation.
            (2) Civil action to enforce civil penalty.--The Secretary 
        of Labor, in consultation with the National Health Board, may 
        commence a civil action in any court of competent jurisdiction 
        to enforce a civil penalty assessed under paragraph (1).
            (3) Supplemental plans.--Nothing in this section shall be 
        construed to limit the rights and remedies available under 
        State law with respect to supplemental benefit plans.
    (b) Civil Penalties for Certain Other Actions.--The Secretary of 
Labor, in consultation with the National Health Board, may assess a 
civil penalty described in section 5412(b)(1) against any experience-
rated health plan, or against any other plan sponsored by a large group 
sponsor in connection with benefits provided thereunder under a cost 
sharing policy described in section 1421(b)(2), for any action 
described in section 5412(a). The Secretary of Labor, in consultation 
with the National Health Board, may initiate proceedings to impose such 
penalty in the same manner as the Secretary of Health and Human 
Services may initiate proceedings under section 5412 with respect to 
actions described in section 5412(a).

                  Subpart B--Early Resolution Programs

SEC. 5211. ESTABLISHMENT OF EARLY RESOLUTION PROGRAMS IN COMPLAINT 
              REVIEW OFFICES.

    (a) Establishment of Programs.--Each State shall establish and 
maintain an Early Resolution Program in each complaint review office in 
such State. The Program shall include--
            (1) the establishment and maintenance of forums for 
        mediation of disputes in accordance with this subpart, and
            (2) the establishment and maintenance of such forums for 
        other forms of alternative dispute resolution (including 
        binding arbitration) as may be prescribed in regulations of the 
        Secretary of Labor, in consultation with the National Health 
        Board.
Each State shall ensure that the standards applied in Early Resolution 
Programs administered in such State which apply to any form of 
alternative dispute resolution described in paragraph (2) and which 
relate to time requirements, qualifications of facilitators, 
arbitrators, or other mediators, and confidentiality are at least 
equivalent to the standards which apply to mediation proceedings under 
this subpart.
    (b) Duties of Complaint Review Offices.--Each complaint review 
office in a State--
            (1) shall administer its Early Resolution Program in 
        accordance with regulations of the Secretary of Labor, in 
        consultation with the National Health Board,
            (2) shall, pursuant to subsection (a)(1)--
                    (A) recruit and train individuals to serve as 
                facilitators for mediation proceedings under the Early 
                Resolution Program from attorneys who have the 
                requisite expertise for such service, which shall be 
                specified in regulations of the Secretary of Labor, in 
                consultation with the National Health Board,
                    (B) provide meeting sites, maintain records, and 
                provide facilitators with administrative support staff, 
                and
                    (C) establish and maintain attorney referral 
                panels,
            (3) shall ensure that, upon the filing of a complaint with 
        the office, the complainant is adequately apprised of the 
        complainant's options for review under this part, and
            (4) shall monitor and evaluate the Program on an ongoing 
        basis.

SEC. 5212. INITIATION OF PARTICIPATION IN MEDIATION PROCEEDINGS.

    (a) Eligibility of Cases for Submission to Early Resolution 
Program.--A dispute may be submitted to the Early Resolution Program 
only if the following requirements are met with respect to the dispute:
            (1) Nature of dispute.--The dispute consists of an 
        assertion by an individual enrolled under a health plan of one 
        or more claims against the health plan for payment or provision 
        of benefits, or against any other plan community-rated health 
        plan or large group sponsor sponsoring the health plan with 
        respect to benefits provided under a supplemental benefit 
        policy described in section 1421(b)(1) or a cost sharing policy 
        described in section 1421(b)(2), based on alleged coverage 
        under the plan, and a denial of the claims, or a denial of 
        appropriate reimbursement based on the claims, by the plan.
            (2) Nature of disputed claim.--Each claim consists of--
                    (A) a claim for payment or provision of benefits 
                under the plan; or
                    (B) a request for information or documents the 
                disclosure of which is required under this Act 
                (including claims of entitlement to disclosure based on 
                colorable claims to rights to benefits under the plan).
    (b) Filing of Election.--A complainant with a dispute which is 
eligible for submission to the Early Resolution Program may make the 
election under section 5203(a)(2) to submit the dispute to mediation 
proceedings under the Program not later than 15 days after the date the 
complaint is filed with the complaint review office under section 
5202(b).
    (c) Agreement to Participate.--
            (1) Election by claimant.--A complainant may elect 
        participation in the mediation proceedings only by entering 
        into a written participation agreement (including an agreement 
        to comply with the rules of the Program and consent for the 
        complaint review office to contact the health plan regarding 
        the agreement), and by releasing plan records to the Program 
        for the exclusive use of the facilitator assigned to the 
        dispute.
            (2) Participation by plans or health benefits 
        contractors.--Each party whose participation in the mediation 
        proceedings has been elected by a claimant pursuant to 
        paragraph (1) shall participate in, and cooperate fully with, 
        the proceedings. The claims review office shall provide such 
        party with a copy of the participation agreement described in 
        paragraph (1), together with a written description of the 
        Program. Such party shall submit the copy of the agreement, 
        together with its authorized signature signifying receipt of 
        notice of the agreement, to the claims review office, and shall 
        include in the submission to the claims review office a copy of 
        the written record of the plan claims procedure completed 
        pursuant to section 5201 with respect to the dispute and all 
        relevant plan documents. The relevant documents shall include 
        all documents under which the plan is or was administered or 
        operated, including copies of any insurance contracts under 
        which benefits are or were provided and any fee or 
        reimbursement schedules for health care providers.

SEC. 5213. MEDIATION PROCEEDINGS.

    (a) Role of Facilitator.--In the course of mediation proceedings 
under the Early Resolution Program, the facilitator assigned to the 
dispute shall prepare the parties for a conference regarding the 
dispute and serve as a neutral mediator at such conference, with the 
goal of achieving settlement of the dispute.
    (b) Preparations for Conference.--In advance of convening the 
conference, after identifying the necessary parties and confirming that 
the case is eligible for the Program, the facilitator shall analyze the 
record of the claims procedure conducted pursuant to section 5201 and 
any position papers submitted by the parties to determine if further 
case development is needed to clarify the legal and factual issues in 
dispute, and whether there is any need for additional information and 
documents.
    (c) Conference.--Upon convening the conference, the facilitator 
shall assist the parties in identifying undisputed issues and exploring 
settlement. If settlement is reached, the facilitator shall assist in 
the preparation of a written settlement agreement. If no settlement is 
reached, the facilitator shall present the facilitator's evaluation, 
including an assessment of the parties' positions, the likely outcome 
of further administrative action or litigation, and suggestions for 
narrowing the issues in dispute.
    (d) Time Limit.--The facilitator shall ensure that mediation 
proceedings with respect to any dispute under the Early Resolution 
Program shall be completed within 120 days after the election to 
participate. The parties may agree to one extension of the proceedings 
by not more than 30 days if the proceedings are suspended to obtain an 
agency ruling or to reconvene the conference in a subsequent session.
    (e) Inapplicability of Formal Rules.--Formal rules of evidence 
shall not apply to mediation proceedings under the Early Resolution 
Program. All statements made and evidence presented in the proceedings 
shall be admissible in the proceedings. The facilitator shall be the 
sole judge of the proper weight to be afforded to each submission. The 
parties to mediation proceedings under the Program shall not be 
required to make statements or present evidence under oath.
    (f) Representation.--Parties may participate pro se or be 
represented by attorneys throughout the proceedings of the Early 
Resolution Program.
    (g) Confidentiality.--
            (1) In general.--Under regulations of the Secretary of 
        Labor, rules similar to the rules under section 574 of title 5, 
        United States Code (relating to confidentiality in dispute 
        resolution proceedings) shall apply to the mediation 
        proceedings under the Early Resolution Program.
            (2) Civil remedies.--The Secretary of Labor may assess a 
        civil penalty against any person who discloses information in 
        violation of the regulations prescribed pursuant to paragraph 
        (1) in the amount of three times the amount of the claim 
        involved. The Secretary of Labor may bring a civil action to 
        enforce such civil penalty in any court of competent 
        jurisdiction.

SEC. 5214. LEGAL EFFECT OF PARTICIPATION IN MEDIATION PROCEEDINGS.

    (a) Process Nonbinding.--Findings and conclusions made in the 
mediation proceedings of the Early Resolution Program shall be treated 
as advisory in nature and nonbinding. Except as provided in subsection 
(b), the rights of the parties under subpart A shall not be affected by 
participation in the Program.
    (b) Resolution Through Settlement Agreement.--If a case is settled 
through participation in mediation proceedings under the Program, the 
facilitator shall assist the parties in drawing up an agreement which 
shall constitute, upon signature of the parties, a binding contract 
between the parties, which shall be enforceable under section 5215.
    (c) Preservation of Rights of Non-Parties.--The settlement 
agreement shall not have the effect of waiving or otherwise affecting 
any rights to review under subpart A, or any other right under this Act 
or the plan, with respect to any person who is not a party to the 
settlement agreement.

SEC. 5215. ENFORCEMENT OF SETTLEMENT AGREEMENTS.

    (a) Enforcement.--Any party to a settlement agreement entered 
pursuant to mediation proceedings under this subpart may petition any 
court of competent jurisdiction for the enforcement of the agreement, 
by filing in the court a written petition praying that the agreement be 
enforced. In such a proceeding, the order of the hearing officer shall 
not be subject to review.
    (b) Court Review.--It shall be the duty of the court to advance on 
the docket and to expedite to the greatest possible extent the 
disposition of any petition filed under this section, with due 
deference to the role of settlement agreements under this part in 
achieving prompt resolution of disputes involving health plans.
    (c) Awarding of Attorney's Fees and Other Costs and Expenses.--In 
any action by an individual enrolled under a health plan for court 
enforcement under this section, a prevailing plaintiff shall be 
entitled to reasonable costs and expenses (including a reasonable 
attorney's fee and reasonable expert witness fees) on the charges on 
which the plaintiff prevails.

SEC. 5216. DUE PROCESS FOR HEALTH CARE PROVIDERS.

    (a) Publicly Available Standards and Process.--Each health plan 
shall establish and utilize--
            (1) publicly available standards for contracting with 
        health care providers; and
            (2) a publicly available process for dismissing such 
        providers or failing to renew contracts with such providers.
    (b) Notice Requirement.--
            (1) In general.--The process established by a health plan 
        under subsection (a) shall include reasonable notification to a 
        health care provider of a decision to dismiss such provider or 
        not to renew a contract with such provider before such decision 
        takes effect.
            (2) Exception.--The notice required under paragraph (1) 
        shall not apply if failure to dismiss a provider or renewing a 
        provider's contract would adversely affect the health or safety 
        of a patient.
            (3) Contents of notice.--Each notice to a health care 
        provider under paragraph (1) shall contain the reasons for the 
        dismissal or failure to renew. Such reasons shall be consistent 
        with the standards established under subsection (a).
    (c) Review.--The process established by a health plan under 
subsection (a) shall include an opportunity for review of the health 
plan's action by a health care provider who is dismissed by a health 
plan or with respect to whom a health plan fails to renew a contract. 
Such review shall be conducted by--
            (1) the provider's peers who have contracts with, or are 
        employed by, the health plan; and
            (2) if there is mutual consent of the provider and the 
        health plan, one or more enrollees in the health plan.
A health care provider may have an attorney present in connection with 
any review under this subsection if the provider notifies the health 
plan that an attorney will be present in advance of the review 
proceeding.
    (d) Effect on Other Laws.--The provisions of this section shall not 
supersede any other provision of Federal or State law.

         PART 2--ADDITIONAL REMEDIES AND ENFORCEMENT PROVISIONS

SEC. 5231. JUDICIAL REVIEW OF FEDERAL ACTION ON STATE SYSTEMS.

    (a) In General.--Any State that is aggrieved by a determination by 
the National Health Board under subpart B of part 1 of subtitle F of 
title I shall be entitled to judicial review of such determination in 
accordance with this section.
    (b) Judicial Review.--
            (1) Jurisdiction.--The courts of appeals of the United 
        States (other than the United States Court of Appeals for the 
        Federal Circuit) shall have jurisdiction to review a 
        determination described in subsection (a), to affirm the 
        determination, or to set it aside, in whole or in part. A 
        judgment of a court of appeals in such an action shall be 
        subject to review by the Supreme Court of the United States 
        upon certiorari or certification as provided in section 1254 of 
        title 28, United States Code.
            (2) Petition for review.--A State that desires judicial 
        review of a determination described in subsection (a) shall, 
        within 30 days after it has been notified of such 
        determination, file with the United States court of appeals for 
        the circuit in which the State is located a petition for review 
        of such determination. A copy of the petition shall be 
        transmitted by the clerk of the court to the National Health 
        Board, and the Board shall file in the court the record of the 
        proceedings on which the determination or action was based, as 
        provided in section 2112 of title 28, United States Code.
            (3) Scope of review.--The findings of fact of the National 
        Health Board, if supported by substantial evidence, shall be 
        conclusive; but the court, for good cause shown, may remand the 
        case to the Board to take further evidence, and the Board may 
        make new or modified findings of fact and may modify its 
        previous action, and shall certify to the court the record of 
        the further proceedings. Such new or modified findings of fact 
        shall likewise be conclusive if supported by substantial 
        evidence.

SEC. 5232. ADMINISTRATIVE AND JUDICIAL REVIEW RELATING TO COST 
              CONTAINMENT.

    There shall be no administrative or judicial review of any 
determination by the National Health Board respecting any matter under 
subtitle A of title VI.

SEC. 5233. CIVIL ENFORCEMENT.

    Unless otherwise provided in this Act, the district courts of the 
United States shall have jurisdiction of civil actions brought by--
            (1) the Secretary of Labor, in consultation with the 
        National Health Board, to enforce any final order of such 
        Secretary or to collect any civil monetary penalty assessed by 
        such Secretary under this Act; and
            (2) the Secretary of Health and Human Services to enforce 
        any final order of such Secretary or to collect any civil 
        monetary penalty assessed by such Secretary under this Act.

SEC. 5234. PRIORITY OF CERTAIN BANKRUPTCY CLAIMS.

    Section 507(a)(8) of title 11, United States Code, is amended to 
read as follows:
            ``(8) Eighth, allowed unsecured claims--
                    ``(A) based upon any commitment by the debtor to 
                the Federal Deposit Insurance Corporation, the 
                Resolution Trust Corporation, the Director of the 
                Office of Thrift Supervision, the Comptroller of the 
                Currency, or the Board of Governors of the Federal 
                Reserve System, or their predecessors or successors, to 
                maintain the capital of an insured depository 
                institution;
                    ``(B) for payments under subtitle B of title IV of 
                the Health Security Act owed to a State (as defined in 
                section 1301 of such Act);
                    ``(C) for payments owed to an experienced-rated 
                health plan under trusteeship of the Secretary of Labor 
                under section 1395 of the Health Security Act; or
                    ``(D) for assessments and related amounts owed to 
                the Secretary of Labor under section 1397 of the Health 
                Security Act.''.

SEC. 5235. PRIVATE RIGHT TO ENFORCE STATE RESPONSIBILITIES.

    The failure of a participating State to carry out a responsibility 
applicable to participating States under this Act constitutes a 
deprivation of rights secured by this Act for the purposes of section 
1977 of the Revised Statutes of the United States (42 U.S.C. 1983). In 
an action brought under such section, the court shall exercise 
jurisdiction without regard to whether the aggrieved person has 
exhausted any administrative or other remedies that may be provided by 
law.

SEC. 5236. PRIVATE RIGHT TO ENFORCE FEDERAL RESPONSIBILITIES IN 
              OPERATING A SYSTEM IN A STATE.

    (a) In General.--The failure of the Secretary of Health and Human 
Services to carry out a responsibility under section 1522 (relating to 
State participation) confers an enforceable right of action on any 
person who is aggrieved by such failure. Such a person may commence a 
civil action against the Secretary in an appropriate State court or 
district court of the United States.
    (b) Exhaustion of Remedies.--In an action under subsection (a), the 
court shall exercise jurisdiction without regard to whether the 
aggrieved person has exhausted any administrative or other remedies 
that may be provided by law.
    (c) Relief.--In an action under subsection (a), if the court finds 
that a failure described in such subsection has occurred, the aggrieved 
person may recover compensatory damages and the court may award any 
other appropriate relief.
    (d) Attorney's Fees.--In an action under subsection (a), the court, 
in its discretion, may allow the prevailing party, other than the 
United States, a reasonable attorney's fee (including expert fees) as 
part of the costs, and the United States shall be liable for costs the 
same as a private person.

SEC. 5237. PRIVATE RIGHT TO ENFORCE RESPONSIBILITIES OF COOPERATIVES.

    (a) In General.--The failure of a consumer purchasing cooperative, 
large group sponsor, or health plan to carry out a responsibility 
applicable to the entity under this Act confers an enforceable right of 
action on any person who is aggrieved by such failure. Such a person 
may commence a civil action against the cooperative, large group 
sponsor or health plan in an appropriate State court or district court 
of the United States.
    (b) Exhaustion of Remedies.--
            (1) In general.--Except as provided in paragraph (2), in an 
        action under subsection (a) the court may not exercise 
        jurisdiction until the aggrieved person has exhausted any 
        administrative remedies that may be provided by law.
            (2) No exhaustion required.--In an action under subsection 
        (a), the court shall exercise jurisdiction without regard to 
        whether the aggrieved person has exhausted any administrative 
        or other remedies that may be provided by law if the action 
        relates to--
                    (A) whether the person is an eligible individual 
                within the meaning of section 1001(c);
                    (B) whether the person is eligible for a premium 
                discount under subpart A of part 1 of subtitle B of 
                title VI;
                    (C) whether the person is eligible for a reduction 
                in cost sharing under subpart D of part 3 of subtitle D 
                of title I; or
                    (D) enrollment or disenrollment in a health plan.
    (c) Relief.--In an action under subsection (a), if the court finds 
that a failure described in such subsection has occurred, the court may 
award any appropriate relief.
    (d) Attorney's Fees.--In any action under subsection (a), the 
court, in its discretion, may allow the prevailing party, other than 
the United States, a reasonable attorney's fee (including expert fees) 
as part of the costs, and the United States shall be liable for costs 
the same as a private person.

SEC. 5237A. ENFORCEMENT OF CONSUMER PROTECTIONS.

    (a) Covered Violations.--The provisions of this section shall apply 
with respect to a health plan that fails to fulfill a duty imposed on 
the plan under section 1204 and subtitle A of this title.
    (b) Administrative Enforcement and Civil Penalties.--The penalties 
described in section 1867(d)(1) of the Social Security Act and the 
procedures described in section 1128A of such Act (other than the first 
two sentences of subsection (a) and subsection (b)) shall apply to 
health plans described in subsection (a). In addition to such 
penalties, an amount not to exceed $1,000,000 may be assessed in the 
case of a finding of a pattern or practice of such violations. The 
Secretary shall establish procedures whereby, when a consumer has 
disenrolled from a health plan violating the duties described in 
subsection (a), successor health plans may recover from the original 
health plan for health care costs attributable to such violations.
    (c) Correction of Substantial Violations.--Upon an administrative 
or judicial finding of a substantial violation of the duties described 
in subsection (a), the State or court may--
            (1) inform all current enrollees of the plan of the 
        violation and that they may disenroll immediately from that 
        plan and enroll with another community-rated health plan; and
            (2) notify the health plan that it shall immediately cease 
        enrollment activities until it has obtained certifications from 
        the appropriate certifying entity or court that the violation 
        has been corrected.
Such actions shall not be taken without providing the health plan with 
a reasonable opportunity to correct such violations, except where 
providing such an opportunity would risk health or safety.

SEC. 5238. DISCRIMINATION CLAIMS.

    (a) Civil Action by Aggrieved Person.--
            (1)  In general.--Any person who is aggrieved by a 
        violation of section 1914 may commence a civil action against 
        the party or parties committing such violation in an 
        appropriate State court or district court of the United States.
            (2) Standards.--The standards used to determine whether a 
        violation has occurred in a complaint alleging discrimination 
        on the basis of age or disability under section 1914 shall be 
        the standards applied under the Age Discrimination Act of 1975 
        (42 U.S.C. 6101 et seq.) and the Americans with Disabilities 
        Act of 1990 (42 U.S.C. 12101 et. seq.).
            (3) Relief.--In any action under paragraph (1), if the 
        court finds a violation of section 1914, the court may award 
        such equitable and injunctive relief as it deems appropriate, 
        and may award to the aggrieved person any sums lost as a result 
        of the violation. If the court finds that the party or parties 
        committing a violation engaged in intentional discrimination in 
        violation of section 1914, the aggrieved person may recover 
        compensatory damages. If the court finds that the party or 
        parties committing such violation did so with malice or 
        reckless indifference to the federally protected rights of the 
        aggrieved person, the aggrieved person may recover punitive 
        damages under this section against a defendant other than a 
        government, government agency or political subdivision.
            (4)  Attorneys' fees.--In any action under paragraph (1), 
        the court, in its discretion, may allow the prevailing party, 
        other than the United States, a reasonable attorney's fee 
        (including expert fees and other litigation expenses) as part 
        of the costs, and the United States shall be liable for costs 
        the same as a private person.
    (b) Action by Secretary.--Whenever the Secretary of Health and 
Human Services finds that a party has failed to comply with section 
1914 or with an applicable regulation issued under such section, the 
Secretary shall notify the party. If within a reasonable period of time 
the party fails or refuses to comply, the Secretary may--
            (1) refer the matter to the Attorney General with a 
        recommendation that an appropriate civil action be instituted;
            (2) terminate or limit the participation of such party in 
        the programs authorized by this Act;
            (3) withhold Federal financial assistance to the party; or
            (4) take such other action as may be provided by law.
    (c) Action by Attorney General.--When a matter is referred to the 
Attorney General under subsection (b)(1), the Attorney General may 
bring a civil action in a district court of the United States for such 
relief as may be appropriate, including injunctive relief. In a civil 
action under this section, the court--
            (1) may grant any equitable relief that the court considers 
        to be appropriate;
            (2) may award such other relief as the court considers to 
        be appropriate, including in cases of intentional 
        discrimination compensatory and punitive damages; and
            (3) may, to vindicate the public interest when requested by 
        the Attorney General, assess a civil money penalty against the 
        party in an amount--
                    (A) not exceeding $50,000 for a first violation; 
                and
                    (B) not exceeding $100,000 for any subsequent 
                violation.

SEC. 5239. NONDISCRIMINATION IN FEDERALLY ASSISTED PROGRAMS.

    Federal payments under subtitle C of title VI shall be treated as 
Federal financial assistance for purposes of section 504 of the 
Rehabilitation Act of 1973 (29 U.S.C. 794), section 303 of the Age 
Discrimination Act of 1975 (42 U.S.C. 6102), and section 601 of the 
Civil Rights Act of 1964 (42 U.S.C. 2000d).

SEC. 5240. CIVIL AND ADMINISTRATION ACTION BY ESSENTIAL COMMUNITY 
              PROVIDER.

    (a) In General.--An electing essential community provider (as 
defined in section 1431(d)) who is aggrieved by the failure of a health 
plan to fulfill a duty imposed on the plan by section 1431 may commence 
a civil action against the plan in an appropriate State court or 
district court of the United States.
    (b) Relief.--In an action under subsection (a), if the court finds 
that the health plan has failed to fulfill a duty imposed on the plan 
by section 1431, the electing essential community provider may recover 
compensatory damages and the court may order any other appropriate 
relief.
    (c) Attorney's Fees.--In any action under subsection (a), the 
court, in its discretion, may allow the prevailing party, other than 
the United States, a reasonable attorney's fee (including expert fees) 
as part of the costs, and the United States shall be liable for costs 
the same as a private person.
    (d) State Complaint System Required.--Prior to commencing an action 
under subsection (a), the aggrieved essential community provider may 
first elect to utilize the administrative process provided under this 
subsection as follows:
            (1) The Secretary shall prescribe regulations governing 
        administrative grievance actions by essential community 
        providers that shall be consistent with the requirements of 
        section 5204 and that shall provide for the consolidation of 
        complaints (at the election of the essential community 
        providers) in cases involving multiple complaints against a 
        single health plan.
            (2) A State shall make available to each electing essential 
        community provider that is aggrieved by an action of a health 
        plan under section 1431, the opportunity to file a complaint in 
        the complaint review office established under section 5202. In 
        the case of essential community providers located in a 
        cooperative established in any State by the Secretary, the 
        Secretary shall assume all of the duties and obligations of 
        such State under this section.

SEC. 5241. FACIAL CONSTITUTIONAL CHALLENGES.

    (a) Jurisdiction.--The United States District Court for the 
District of Columbia shall have original and exclusive jurisdiction of 
any civil action brought to invalidate this Act or a provision of this 
Act on the ground of its being repugnant to the Constitution of the 
United States on its face and for every purpose. In any action 
described in this subsection, the district court may not grant any 
temporary order or preliminary injunction restraining the enforcement, 
operation, or execution of this Act or any provision of this Act.
    (b) Convening of Three-Judge Court.--An action described in 
subsection (a) shall be heard and determined by a district court of 
three judges in accordance with section 2284 of title 28, United States 
Code.
    (c) Consolidation.--When actions described in subsection (a) 
involving a common question of law or fact are pending before a 
district court, the court shall order all the actions consolidated.
    (d) Direct Appeal to Supreme Court.--In any action described in 
subsection (a), an appeal may be taken directly to the Supreme Court of 
the United States from any final judgment, decree, or order in which 
the district court--
            (1) holds this Act or any provision of this Act invalid; 
        and
            (2) makes a determination that its holding will materially 
        undermine the application of the Act as whole.
    (e) Construction.--This section does not limit--
            (1) the right of any person--
                    (A) to a litigation concerning the Act or any 
                portion of the Act; or
                    (B) to petition the Supreme Court for review of any 
                holding of a district court by writ of certiorari at 
                any time before the rendition of judgment in a court of 
                appeals; or
            (2) the authority of the Supreme Court to grant a writ of 
        certiorari for the review described in paragraph (1)(B).

SEC. 5242. TREATMENT OF PLANS AS PARTIES IN CIVIL ACTIONS.

    (a) In General.--A health plan may sue or be sued under this Act as 
an entity. Service of summons, subpoena, or other legal process of a 
court or hearing officer upon a trustee or an administrator of any such 
plan in his capacity as such shall constitute service upon the plan. In 
a case where a plan has not designated in applicable plan documents an 
individual as agent for the service of legal process, service upon the 
Secretary of Health and Human Services (in the case of a community-
rated health plan) or the Secretary of Labor (in the case of an 
experienced-rated health plan) shall constitute such service. The 
Secretary, not later than 15 days after receipt of service under the 
preceding sentence, shall notify the administrator or any trustee of 
the plan of receipt of such service.
    (b) Other Parties.--Any money judgment under this Act against a 
plan referred to in subsection (a) shall be enforceable only against 
the plan as an entity and shall not be enforceable against any other 
person unless liability against such person is established in his 
individual capacity under this Act.

SEC. 5243. WHISTLEBLOWER PROTECTIONS.

    (a) In General.--A health care entity (as defined in section 
11101(7)) or a health plan may not discharge, discriminate or otherwise 
take adverse action against any employee with respect to compensation, 
terms, conditions or privileges of employment because the employee (or 
any person acting pursuant to the request of the employee) provided 
information to any Federal, State or private supervisory agency or 
entity regarding a possible violation of any provision of this Act or 
any regulation issued under this Act.
    (b) Civil Action.--An employee or former employee who believes that 
such employee has been discharged, discriminated or otherwise subject 
to adverse action in violation of subsection (a) may file a civil 
action in the appropriate United States district court within 2 years 
of the date of such discharge, discrimination or adverse action.
    (c) Determination of Court.--If a court in an action under 
subsection (b) determines that a violation of subsection (a) has 
occurred, the court may order the health care entity or plan that 
committed the violation--
            (1) to reinstate the employee to his or her former 
        position;
            (2) to pay compensatory damages to the employee;
            (3) to pay reasonable costs and attorneys fees incurred by 
        the employee in bringing such action; and
            (4) to take such other appropriate actions to remedy any 
        past discrimination.

SEC. 5244. GENERAL NONPREEMPTION OF RIGHTS AND REMEDIES.

    Nothing in this title shall be construed to deny, impair, or 
otherwise adversely affect a right or remedy available under law to any 
person, except to the extent the right or remedy is inconsistent with 
this title.

                    Subtitle D--Medical Malpractice

                        PART 1--LIABILITY REFORM

SEC. 5301. FEDERAL TORT REFORM.

    (a) Applicability.--
            (1) In general.--Except as provided in section 5302, this 
        part shall apply with respect to any medical malpractice 
        liability action brought in any State or Federal court, except 
        that this part shall not apply to a claim or action for damages 
        arising from a vaccine-related injury or death to the extent 
        that title XXI of the Public Health Service Act applies to the 
        claim or action.
            (2) Effect on sovereign immunity and choice of law or 
        venue.--Nothing in this part shall be construed to--
                    (A) waive or affect any defense of sovereign 
                immunity asserted by any State under any provision of 
                law;
                    (B) waive or affect any defense of sovereign 
                immunity asserted by the United States;
                    (C) affect the applicability of any provision of 
                the Foreign Sovereign Immunities Act of 1976;
                    (D) preempt State choice-of-law rules with respect 
                to claims brought by a foreign nation or a citizen of a 
                foreign nation; or
                    (E) affect the right of any court to transfer venue 
                or to apply the law of a foreign nation or to dismiss a 
                claim of a foreign nation or of a citizen of a foreign 
                nation on the ground of inconvenient forum.
            (3) Federal court jurisdiction not established on federal 
        question grounds.--Nothing in this part shall be construed to 
        establish any jurisdiction in the district courts of the United 
        States over medical malpractice liability actions on the basis 
        of section 1331 or 1337 of title 28, United States Code.
    (b) Definitions.--In this subtitle, the following definitions 
apply:
            (1) Alternative dispute resolution system; ADR.--The term 
        ``alternative dispute resolution system'' or ``ADR'' means a 
        system that provides for the resolution of medical malpractice 
        claims in a manner other than through medical malpractice 
        liability actions.
            (2) Claimant.--The term ``claimant'' means any person who 
        alleges a medical malpractice claim, and any person on whose 
        behalf such a claim is alleged, including the decedent in the 
        case of an action brought through or on behalf of an estate.
            (3) Health care professional.--The term ``health care 
        professional'' means any individual who provides health care 
        services in a State and who is required by the laws or 
        regulations of the State to be licensed or certified by the 
        State to provide such services in the State.
            (4) Health care provider.--The term ``health care 
        provider'' means any organization or institution that is 
        engaged in the delivery of health care services in a State and 
        that is required by the laws or regulations of the State to be 
        licensed or certified by the State to engage in the delivery of 
        such services in the State.
            (5) Injury.--The term ``injury'' means any illness, 
        disease, or other harm that is the subject of a medical 
        malpractice liability action or a medical malpractice claim.
            (6) Medical malpractice liability action.--The term 
        ``medical malpractice liability action'' means a cause of 
        action brought in a State or Federal court against a health 
        care provider or health care professional by which the 
        plaintiff alleges a medical malpractice claim.
            (7) Medical malpractice claim.--The term ``medical 
        malpractice claim'' means a claim brought against a health care 
        provider or health care professional in which a claimant 
        alleges that injury was caused by the provision of (or the 
        failure to provide) health care services, except that such term 
        does not include--
                    (A) any claim based on an allegation of an 
                intentional tort;
                    (B) any claim based on an allegation that a product 
                is defective that is brought against any individual or 
                entity that is not a health care professional or health 
                care provider; or
                    (C) any claim brought pursuant to subtitle C of 
                this title.

SEC. 5302. STATE-BASED ALTERNATIVE DISPUTE RESOLUTION MECHANISMS.

    (a) Application to Malpractice Claims Under Plans.--Prior to or 
immediately following the commencement of any medical malpractice 
action, the parties shall participate in the alternative dispute 
resolution system administered by the State under subsection (b). Such 
participation shall be in lieu of any other provision of Federal or 
State law or any contractual agreement made by or on behalf of the 
parties prior to the commencement of the medical malpractice action.
    (b) Adoption of Mechanism by State.--Each State shall--
            (1) maintain or adopt at least one of the alternative 
        dispute resolution methods satisfying the requirements 
        specified under subsection (c) and (d) for the resolution of 
        medical malpractice claims arising from the provision of (or 
        failure to provide) health care services to individuals 
        enrolled in a health plan; and
            (2) clearly disclose to enrollees (and potential enrollees) 
        the availability and procedures for consumer grievances, 
        including a description of the alternative dispute resolution 
        method or methods adopted under this subsection.
    (c) Specification of Permissible Alternative Dispute Resolution 
Methods.--
            (1) In general.--The Board shall, by regulation, develop 
        alternative dispute resolution methods for the use by States in 
        resolving medical malpractice claims under subsection (a). Such 
        methods shall include at least the following:
                    (A) Arbitration.--The use of arbitration, a nonjury 
                adversarial dispute resolution process which may, 
                subject to subsection (d), result in a final decision 
                as to facts, law, liability or damages.
                    (B) Claimant-requested binding arbitration.--For 
                claims involving a sum of money that falls below a 
                threshold amount set by the Board, the use of 
                arbitration not subject to subsection (d). Such binding 
                arbitration shall be at the sole discretion of the 
                claimant.
                    (C) Mediation.--The use of mediation, a settlement 
                process coordinated by a neutral third party without 
                the ultimate rendering of a formal opinion as to 
                factual or legal findings.
                    (D) Early neutral evaluation.--The use of early 
                neutral evaluation, in which the parties make a 
                presentation to a neutral attorney or other neutral 
                evaluator for an assessment of the merits, to encourage 
                settlement. If the parties do not settle as a result of 
                assessment and proceed to trial, the neutral 
                evaluator's opinion shall be kept confidential.
                    (E) Certificate of merit.--The requirement that a 
                medical malpractice plaintiff submit to the court 
                before trial a written report by a qualified specialist 
                that includes the specialist's determination that, 
                after a review of the available medical record and 
                other relevant material, there is a reasonable and 
                meritorious cause for the filing of the action against 
                the defendant.
            (2) Standards for establishing methods.--In developing 
        alternative dispute resolution methods under paragraph (1), the 
        Board shall assure that the methods promote the resolution of 
        medical malpractice claims in a manner that--
                    (A) is affordable for the parties involved;
                    (B) provides for timely resolution of claims;
                    (C) provides for the consistent and fair resolution 
                of claims; and
                    (D) provides for reasonably convenient access to 
                dispute resolution for individuals enrolled in plans.
            (3) Waiver authority.--Upon application of a State, the 
        Board may grant the State the authority to fulfill the 
        requirement of subsection (b) by adopting a mechanism other 
        than a mechanism established by the Board pursuant to this 
        subsection, except that such mechanism must meet the standards 
        set forth in paragraph (2).
    (d) Further Redress.--Except with respect to the claimant-requested 
binding arbitration method set forth in subsection (c)(1)(B), and 
notwithstanding any other provision of a law or contractual agreement, 
a plan enrollee dissatisfied with the determination reached as a result 
of an alternative dispute resolution method applied under this section 
may, after the final resolution of the enrollee's claim under the 
method, bring a cause of action to seek damages or other redress with 
respect to the claim to the extent otherwise permitted under State law. 
The results of any alternative dispute resolution procedure are 
inadmissible at any subsequent trial, as are all statements, offers, 
and other communications made during such procedures, unless otherwise 
admissible under State law.

SEC. 5303. LIMITATION ON AMOUNT OF ATTORNEY'S CONTINGENCY FEES.

    (a) In General.--An attorney who represents, on a contingency fee 
basis, a plaintiff in a medical malpractice liability action may not 
charge, demand, receive, or collect for services rendered in connection 
with such action (including the resolution of the claim that is the 
subject of the action under any alternative dispute resolution system) 
in excess of--
            (1) 33\1/3\ percent of the first $150,000 of the total 
        amount recovered by judgment or settlement in such action; plus
            (2) 25 percent of any amount recovered above the amount 
        described in paragraph (1);
unless otherwise determined under State law. Such amount shall be 
computed after deductions are made for all the expenses associated with 
the claim other than those attributable to the normal operating 
expenses of the attorney.
    (b) Calculation of Periodic Payments.--In the event that a judgment 
or settlement includes periodic or future payments of damages, the 
amount recovered for purposes of computing the limitation on the 
contingency fee under subsection (a) may, in the discretion of the 
court, be based on the cost of the annuity or trust established to make 
the payments. In any case in which an annuity or trust is not 
established to make such payments, such amount shall be based on the 
present value of the payments.
    (c) Contingency Fee Defined.--As used in this section, the term 
``contingency fee'' means any fee for professional legal services which 
is, in whole or in part, contingent upon the recovery of any amount of 
damages, whether through judgment or settlement.

SEC. 5304. REDUCTION OF AWARDS FOR RECOVERY FROM COLLATERAL SOURCES.

    (a) Reduction of Award.--The total amount of damages recovered by a 
plaintiff in a medical malpractice liability action shall be reduced by 
an amount that equals--
            (1) the amount of any payment which the plaintiff has 
        received or to which the plaintiff is presently entitled on 
        account of the same injury for which the damages are awarded, 
        including payment under--
                    (A) Federal or State disability or sickness 
                programs;
                    (B) Federal, State, or private health insurance 
                programs;
                    (C) private disability insurance programs;
                    (D) employer wage continuation programs; and
                    (E) any other program, if the payment is intended 
                to compensate the plaintiff for the same injury for 
                which damages are awarded; less
            (2) the amount of any premiums or any other payments that 
        the plaintiff has paid to be eligible to receive the payment 
        described in paragraph (1) and any portion of the award subject 
        to a subrogation lien or claim.
    (b) Subrogation.--The court may reduce a subrogation lien or claim 
described in subsection (a)(2) by an amount representing reasonable 
costs incurred in securing the award subject to the lien or claim.
    (c) Inapplicability of Section.--This section shall not apply to 
any case in which the court determines that the reduction of damages 
pursuant to subsection (a) would compound the effect of any State law 
limitation on damages so as to render the plaintiff less than fully 
compensated for his or her injuries.

SEC. 5305. PERIODIC PAYMENT OF AWARDS.

    (a) In General.--A party to a medical malpractice liability action 
may petition the court to instruct the trier of fact to award any 
future damages on an appropriate periodic basis. If the court, in its 
discretion, so instructs the trier of fact, and damages are awarded on 
a periodic basis, the court may require the defendant to purchase an 
annuity or other security instrument (typically based on future damages 
discounted to present value) adequate to assure payments of future 
damages.
    (b) Failure or Inability To Pay.--With respect to an award of 
damages described in subsection (a), if a defendant fails to make 
payments in a timely fashion, or if the defendant becomes or is at risk 
of becoming insolvent, upon such a showing the claimant may petition 
the court for an order requiring that remaining balance be discounted 
to present value and paid to the claimant in a lump-sum.
    (c) Modification of Payment Schedule.--The court shall retain 
authority to modify the payment schedule based on changed 
circumstances.
    (d) Future Damages Defined.--As used in this section, the term 
``future damages'' means any economic or noneconomic loss other than 
that incurred or accrued as of the time of judgment.

SEC. 5306. CONSTRUCTION.

    Nothing in this subtitle shall be construed to preempt any State 
law that sets a maximum limit on total damages.

   PART 2--OTHER PROVISIONS RELATING TO MEDICAL MALPRACTICE LIABILITY

SEC. 5311. STATE MALPRACTICE REFORM DEMONSTRATION PROJECTS.

    (a) Establishment.--The Secretary shall award grants to States for 
the establishment of malpractice reform demonstration projects in 
accordance with this section. Each such project shall be designed to 
assess the fairness and effectiveness of one or more of the following 
models:
            (1) No-fault liability.
            (2) Enterprise liability.
            (3) Practice guidelines.
    (b) Definitions.--For purposes of this section:
            (1) Medical adverse event.--The term ``medical adverse 
        event'' means an injury that is the result of medical 
        management as opposed to a disease process that creates 
        disability lasting at least one month after discharge, or that 
        prolongs a hospitalization for more than one month, and for 
        which compensation is available under a no-fault medical 
        liability system established under this section.
            (2) No-fault medical liability system.--The terms ``no-
        fault medical liability system'' and ``system'' mean a system 
        established by a State receiving a grant under this section 
        which replaces the common law tort liability system for medical 
        injuries with respect to certain qualified health care 
        organizations and qualified insurers and which meets the 
        requirements of this section.
            (3) Provider.--The term ``provider'' means physician, 
        physician assistant, or other individual furnishing health care 
        services in affiliation with a qualified health care 
        organization.
            (4) Qualified health care organization.--The term 
        ``qualified health care organization'' means a hospital, a 
        hospital system, a managed care network, or other entity 
        determined appropriate by the Secretary which elects in a State 
        receiving a grant under this section to participate in a no-
        fault medical liability system and which meets the requirements 
        of this section.
            (5) Qualified insurer.--The term ``qualified insurer'' 
        means a health care malpractice insurer, including a self-
        insured qualified health care organization, which elects in a 
        State receiving a grant under this section to participate in a 
        no-fault medical liability system and which meets the 
        requirements of this section.
            (6) Enterprise liability.--The term ``enterprise 
        liability'' means a system in which State law imposes 
        malpractice liability on the health plan in which a physician 
        participates in place of personal liability on the physician in 
        order to achieve improved quality of care, reductions in 
        defensive medical practices, and better risk management.
            (7) Practice guidelines.--The term ``practice guidelines'' 
        means guidelines established by the Agency for Health Care 
        Policy and Research pursuant to the Public Health Service Act 
        or this Act.
    (c) Applications by States.--
            (1) In general.--Each State desiring to establish a 
        malpractice reform demonstration project shall submit an 
        application to the Secretary at such time and in such manner as 
        the Secretary shall require.
            (2) Contents of application.--An application under 
        paragraph (1) shall include--
                    (A) an identification of the State agency or 
                agencies that will administer the demonstration project 
                and be the grant recipient of funds for the State;
                    (B) a description of the manner in which funds 
                granted to a State will be expended and a description 
                of fiscal control, accounting, and audit procedures to 
                ensure the proper dispersal of and accounting for funds 
                received under this section; and
                    (C) such other information as the Secretary 
                determines appropriate.
            (3) Consideration of applications.--In reviewing all 
        applications received from States desiring to establish 
        malpractice demonstration projects under paragraph (1), the 
        Secretary shall consider--
                    (A) data regarding medical malpractice and 
                malpractice litigation patterns in each State;
                    (B) the contributions that any demonstration 
                project will make toward reducing malpractice and costs 
                associated with health care injuries;
                    (C) diversity among the populations serviced by the 
                systems;
                    (D) geographic distribution; and
                    (E) such other criteria as the Secretary determines 
                appropriate.
    (d) Evaluation and Reports.--
            (1) By the states.--Each State receiving a grant under this 
        section shall conduct on-going evaluations of the effectiveness 
        of any demonstration project established in such State and 
        shall submit an annual report to the Secretary concerning the 
        results of such evaluations at such times and in such manner as 
        the Secretary shall require.
            (2) By the secretary.--The Secretary shall submit an annual 
        report to Congress concerning the fairness and effectiveness of 
        the demonstration projects conducted under this section. Such 
        report shall analyze the reports received by the Secretary 
        under paragraph (1).
    (e) Funding.--
            (1) In general.--There are authorized to be appropriated 
        such sums as may be necessary to carry out the purposes of this 
        section.
            (2) Limitations on expenditures.--
                    (A) Administrative expenses.--Not more than 10 
                percent of the amount of each grant awarded to a State 
                under this section may be used for administrative 
                expenses.
                    (B) Waiver of cost limitations.--The limitation 
                under subparagraph (A) may be waived as determined 
                appropriate by the Secretary.
    (f) Eligibility for No-Fault Demonstration.--A State is eligible to 
receive a no-fault liability demonstration grant if the application of 
the State under subsection (c) includes--
            (1) an identification of each qualified health care 
        organization selected by the State to participate in the 
        system, including--
                    (A) the location of each organization;
                    (B) the number of patients generally served by each 
                organization;
                    (C) the types of patients generally served by each 
                organization;
                    (D) an analysis of any characteristics of each 
                organization which makes such organization appropriate 
                for participation in the system;
                    (E) whether the organization is self-insured for 
                malpractice liability; and
                    (F) such other information as the Secretary 
                determines appropriate;
            (2) an identification of each qualified insurer selected by 
        the State to participate in the system, including--
                    (A) a schedule of the malpractice insurance 
                premiums generally charged by each insurer under the 
                common law tort liability system; and
                    (B) such other information as the Secretary 
                determines appropriate;
            (3) a description of the procedure under which qualified 
        health care organizations and insurers elect to participate in 
        the system;
            (4) a description of the system established by the State to 
        assure compliance with the requirements of this section by each 
        qualified health care organization and insurer; and
            (5) a description of procedures for the preparation and 
        submission to the State of an annual report by each qualified 
        health care organization and qualified insurer participating in 
        a system that shall include--
                    (A) a description of activities conducted under the 
                system during the year; and
                    (B) the extent to which the system exceeded or 
                failed to meet relevant performance standards including 
                compensation for and deterrence of medical adverse 
                events.
    (g) Eligibility for Enterprise Liability Demonstration.--A State is 
eligible to receive an enterprise liability demonstration grant if the 
State--
            (1) has entered into an agreement with a health plan (other 
        than a fee-for-service plan) operating in the State under which 
        the plan assumes legal liability with respect to any medical 
        malpractice claim arising from the provision of (or failure to 
        provide) services under the plan by any physician participating 
        in the plan; and
            (2) has provided that, under the law of the State, a 
        physician participating in a plan that has entered into an 
        agreement with the State under paragraph (1) may not be liable 
        in damages or otherwise for such a claim and the plan may not 
        require such physician to indemnify the plan for any such 
        liability.
    (h) Eligibility for Practice Guidelines Demonstration.--A State is 
eligible to receive a practice guidelines demonstration grant if the 
law of the State provides that in the resolution of any medical 
malpractice action, compliance or non-compliance with an appropriate 
practice guideline shall be admissible at trial as a rebuttable 
presumption regarding medical negligence.

   Subtitle E--Expanded Efforts To Combat Health Care Fraud and Abuse

                      PART 1--IMPROVED ENFORCEMENT

SEC. 5401. ALL-PAYER HEALTH CARE FRAUD AND ABUSE CONTROL PROGRAM.

    (a) In General.--Not later than January 1, 1995, the Secretary and 
the Attorney General of the United States shall establish a joint 
program--
            (1) to coordinate Federal, State, and local law enforcement 
        programs to control fraud and abuse with respect to the 
        delivery of and payment for health care in the United States,
            (2) to conduct investigations (including consumer complaint 
        investigations), audits, evaluations, and inspections relating 
        to the delivery of and payment for health care in the United 
        States, and
            (3) to facilitate the enforcement of this subtitle and 
        other statutes applicable to health care fraud and abuse.
    (b) Coordination With Law Enforcement Agencies.--In carrying out 
the program under subsection (a), the Secretary and the Attorney 
General shall consult with, and arrange for the sharing of data and 
resources with Federal, State and local law enforcement agencies, State 
Medicaid Fraud Control Units, and State agencies responsible for the 
licensing and certification of health care providers.
    (c) Coordination With Consumer Purchasing Cooperatives and Health 
Plans.--In carrying out the program under subsection (a), the Secretary 
and the Attorney General shall consult with, and arrange for the 
sharing of data with representatives of consumer purchasing 
cooperatives and health plans.
    (d) Authorities of Attorney General and Secretary.--In carrying out 
duties under subsection (a), the Attorney General and the Secretary are 
authorized--
            (1) to conduct, supervise, and coordinate audits, civil and 
        criminal investigations, inspections, and evaluations relating 
        to the program established under such subsection;
            (2) to have access (including on-line access as requested 
        and available) to all records available to consumer purchasing 
        cooperatives and health plans relating to the activities 
        described in paragraph (1) (subject to restrictions based on 
        the confidentiality of certain information under part 2 of 
        subtitle B); and
            (3) to require the issuance of advisory opinions, fraud 
        alerts, and other appropriate educational material to assist in 
        compliance with the provisions of this subtitle.
    (e) Qualified Immunity for Providing Information.--The provisions 
of section 1157(a) of the Social Security Act (relating to limitation 
on liability) shall apply to a person providing information or 
communications to the Secretary or the Attorney General in conjunction 
with their performance of duties under this section, in the same manner 
as such section applies to information provided to organizations with a 
contract under part B of title XI of such Act.
    (f) Use of Powers Under Inspector General Act of 1978.--In carrying 
out duties and responsibilities under the program established under 
subsection (a), the Inspector General is authorized to exercise all 
powers granted under the Inspector General Act of 1978 to the same 
manner and extent as provided in that Act.
    (g) Definitions.--In this subtitle:
            (1) Health care.--The term ``health care'' includes long-
        term care benefits under title II of this Act.
            (2) Inspector general.--The term ``Inspector General'' 
        means the Inspector General of the Department of Health and 
        Human Services.

SEC. 5402. ESTABLISHMENT OF ALL-PAYER HEALTH CARE FRAUD AND ABUSE 
              CONTROL ACCOUNT.

    (a) Establishment.--
            (1) In general.--There is hereby established an account to 
        be known as the ``All-Payer Health Care Fraud and Abuse Control 
        Account'' (in this section referred to as the ``Anti-Fraud 
        Account''). The Anti-Fraud Account shall consist of such gifts 
        and bequests as may be made as provided in paragraph (2) and 
        such amounts as may be deposited in such Anti-Fraud Account as 
        provided in section 5411(d)(2). It shall also include the 
        following:
                    (A) All criminal fines imposed in cases involving a 
                Federal health care offense (as defined in subsection 
                (d)).
                    (B) Penalties and damages imposed under the False 
                Claims Act (31 U.S.C. 3729 et seq.), in cases involving 
                claims related to the provision of health care items 
                and services (other than funds awarded to a relator or 
                for restitution).
                    (C) Administrative penalties and assessments 
                imposed under section 5411 (except as otherwise 
                provided by law).
                    (D) Amounts resulting from the forfeiture of 
                property by reason of a Federal health care offense.
        Any such funds received on or after the date of the enactment 
        of this Act shall be deposited in the Anti-Fraud Account.
            (2) Authorization to accept gifts.--The Anti-Fraud Account 
        is authorized to accept on behalf of the United States money 
        gifts and bequests made unconditionally to the Anti-Fraud 
        Account, for the benefit of the Anti-Fraud Account or any 
        activity financed through the Anti-Fraud Account.
    (b) Use of Funds.--
            (1) In general.--Amounts in the Anti-Fraud Account shall be 
        available without appropriation and until expended as 
        determined jointly by the Secretary and the Attorney General of 
        the United States in carrying out the All-Payer Health Care 
        Fraud and Abuse Control Program established under section 5401 
        (including the administration of the Program), and may be used 
        to cover costs incurred in operating the Program, including 
        costs of--
                    (A) prosecuting health care matters (through 
                criminal, civil and administrative proceedings);
                    (B) investigations (including equipment, salaries, 
                administratively uncontrollable work, travel, and 
                training of law enforcement personnel);
                    (C) financial and performance audits of health care 
                programs and operations;
                    (D) inspections and other evaluations;
                    (E) rewards paid under section 5404; and
                    (F) provider and consumer education (including the 
                provision of advisory opinions) regarding compliance 
                with the provisions of this subtitle.
        Twenty percent of the amounts available in the Anti-Fraud 
        Account for any fiscal year shall be used for costs described 
        in subparagraph (F).
            (2) Funds used to supplement agency appropriations.--It is 
        intended that disbursements made from the Anti-Fraud Account to 
        any Federal agency be used to increase and not supplant the 
        recipient agency's appropriated operating budget.
    (c) Annual Report.--The Secretary and the Attorney General shall 
submit jointly an annual report to Congress on the amount of revenue 
which is generated and disbursed by the Anti-Fraud Account in each 
fiscal year.
    (d) Federal Health Care Offense Defined.--For purposes of 
subsection (a)(1)(A) and section 5404(a), the term ``Federal health 
care offense'' means a violation of, or a criminal conspiracy to 
violate--
            (1) sections 226, 668, 1033, or 1347 of title 18, United 
        States Code;
            (2) section 1128B of the Social Security Act;
            (3) sections 287, 371, 664, 666, 1001, 1027, 1341, 1343, or 
        1954 of title 18, United States Code, if the violation or 
        conspiracy relates to health care fraud;
            (4) sections 501 or 511 of the Employee Retirement Income 
        Security Act of 1974, if the violation or conspiracy relates to 
        health care fraud; or
            (5) sections 301, 303(a)(2), or 303 (b) or (e) of the 
        Federal Food Drug and Cosmetic Act, if the violation or 
        conspiracy relates to health care fraud.

SEC. 5403. USE OF FUNDS BY INSPECTOR GENERAL.

    (a) Reimbursements for Investigations.--
            (1) In general.--The Inspector General is authorized to 
        receive and retain for current use reimbursement for the costs 
        of conducting investigations, when such restitution is ordered 
        by a court, voluntarily agreed to by the payer, or otherwise.
            (2) Crediting.--Funds received by the Inspector General as 
        reimbursement for costs of conducting investigations shall be 
        deposited to the credit of the appropriation from which 
        initially paid, or to appropriations for similar purposes 
        currently available at the time of deposit, and shall remain 
        available for obligation for 1 year from the date of their 
        deposit.
            (3) Exception for forfeitures.--This subsection does not 
        apply to investigative costs paid to the Inspector General from 
        the Department of Justice Asset Forfeiture Fund, which monies 
        shall be deposited and expended in accordance with subsection 
        (b).
    (b) HHS Office of Inspector General Asset Forfeiture Proceeds 
Fund.--
            (1) In general.--There is hereby established the ``HHS 
        Office of Inspector General Asset Forfeiture Proceeds Fund,'' 
        to be administered by the Inspector General, which shall be 
        available to the Inspector General without fiscal year 
        limitation for expenses relating to the investigation of 
        matters within the jurisdiction of the Inspector General.
            (2) Deposits.--There shall be deposited in the Fund all 
        proceeds from forfeitures that have been transferred to the 
        Inspector General from the Department of Justice Asset 
        Forfeiture Fund under section 524 of title 28, United States 
        Code.

SEC. 5404. REWARDS FOR INFORMATION LEADING TO PROSECUTION AND 
              CONVICTION.

    (a) In General.--In special circumstances, the Secretary and the 
Attorney General of the United States may jointly make a payment of up 
to $10,000 to a person who furnishes information unknown to the 
Government relating to a possible prosecution of a Federal health care 
offense (as defined in section 5402(d)).
    (b) Ineligible Persons.--A person is not eligible for a payment 
under subsection (a) if--
            (1) the person is a current or former officer or employee 
        of a Federal or State government agency or instrumentality who 
        furnishes information discovered or gathered in the course of 
        government employment;
            (2) the person knowingly participated in the offense;
            (3) the information furnished by the person consists of 
        allegations or transactions that have been disclosed to the 
        public--
                    (A) in a criminal, civil, or administrative 
                proceeding;
                    (B) in a congressional, administrative or General 
                Accounting Office report, hearing, audit, or 
                investigation; or
                    (C) by the news media, unless the person is the 
                original source of the information; or
            (4) when, in the judgment of the Attorney General, it 
        appears that a person whose illegal activities are being 
        prosecuted or investigated could benefit from the award.
    (c) Definition.--For the purposes of subsection (b)(3)(C), the term 
``original source'' means a person who has direct and independent 
knowledge of the information that is furnished and has voluntarily 
provided the information to the Government prior to disclosure by the 
news media.
    (d) No Judicial Review.--Neither the failure of the Secretary and 
the Attorney General to authorize a payment under subsection (a) nor 
the amount authorized shall be subject to judicial review.

              PART 2--CIVIL PENALTIES AND RIGHTS OF ACTION

SEC. 5411. CIVIL MONETARY PENALTIES.

    (a) Actions Subject to Penalty.--Any person who is determined by 
the Secretary to have committed any action with respect to an 
applicable health plan that would subject the person to a penalty under 
paragraphs (1) through (3) of section 1128A(a) of the Social Security 
Act if the action was taken with respect to title V, XVIII, XIX, or XX 
of such Act, shall be subject to a penalty in accordance with 
subsection (b).
    (b) Penalties Described.--
            (1) General rule.--In the case of a person who the 
        Secretary determines has committed an action described in 
        subsection (a), the person shall be subject to the civil 
        monetary penalty (together with any additional assessment) to 
        which the person would be subject under section 1128A of the 
        Social Security Act if the action on which the determination is 
        based had been committed with respect to title V, XVIII, XIX, 
        or XX of such Act, by substituting ``$10,000'' for ``$2,000'', 
        and ``3 times the amount claimed'' for ``twice the amount 
        claimed''.
            (2) Interest on penalties.--Interest shall accrue on the 
        civil monetary penalties and assessments imposed by a final 
        determination of the Secretary under this subsection, in 
        accordance with an annual rate established by the Secretary 
        under the Federal Claims Collection Act. The rate of interest 
        charged shall be the rate in effect on the date the 
        determination becomes final and shall remain fixed at that rate 
        until the entire amount due is paid. In addition, the Secretary 
        is authorized to recover the costs of collection in any case 
        where such penalties and assessments are not paid within 30 
        days after the determination becomes final, or in the case of a 
        compromised amount, where payments are more than 90 days past 
        due. In lieu of actual costs, the Secretary is authorized to 
        impose a charge of up to 10 percent of the amount of such 
        penalties and assessments owed to cover the costs of 
        collection.
            (3) Determinations to exclude permitted.--In addition to 
        any civil monetary penalty or assessment imposed under this 
        subsection, the Secretary may make a determination in the same 
        proceeding to exclude a provider from participation in all 
        applicable health plans for the delivery of or payment for 
        health care items or services (in accordance with section 
        5414(c)).
    (c) Procedures for Imposition of Penalties.--
            (1) Applicability of procedures under social security 
        act.--Except as otherwise provided in paragraph (2), the 
        provisions of section 1128A of the Social Security Act (other 
        than subsections (a) and (b) and the second sentence of 
        subsection (f)) shall apply to the imposition of a civil 
        monetary penalty, assessment, or exclusion under this section 
        in the same manner as such provisions apply with respect to the 
        imposition of a penalty, assessment, or exclusion under section 
        1128A of such Act.
            (2) Authority of secretary of labor and states to impose 
        penalties, assessments, and exclusions.--
                    (A) In general.--The Secretary of Labor or a State 
                may initiate an action to impose a civil monetary 
                penalty, assessment, or exclusion under this section 
                with respect to actions relating to a large group 
                sponsor if authorized by the Attorney General of the 
                United States and the Secretary pursuant to regulations 
                promulgated by the Secretary in consultation with the 
                Attorney General.
                    (B) Requirements described.--Under the regulations 
                promulgated under subparagraph (A), the Attorney 
                General and the Secretary shall review an action 
                proposed by the Secretary of Labor or a State, and not 
                later than 60 days after receiving notice of the 
                proposed action from the Secretary of Labor or the 
                State, shall--
                            (i) approve the proposed action to be taken 
                        by the Secretary of Labor or the State;
                            (ii) disapprove the proposed action; or
                            (iii) assume responsibility for initiating 
                        a criminal, civil, or administrative action 
                        based on the information provided in the 
                        notice.
                    (C) Action deemed approved if deadline missed.--If 
                the Attorney General and the Secretary fail to respond 
                to a proposed action by the Secretary of Labor or a 
                State within the period described in subparagraph (B), 
                the Attorney General and the Secretary shall be deemed 
                to have approved the proposed action to be taken by the 
                Secretary of Labor or the State.
    (d) Treatment of Amounts Recovered.--Any amounts recovered under 
this section shall be paid to the Secretary and disposed of as follows:
            (1) Such portions of the amounts recovered as is determined 
        to have been improperly paid from an applicable health plan for 
        the delivery of or payment for health care items or services 
        shall be repaid to such plan (and enrollees of such plan as 
        appropriate).
            (2) The remainder of the amounts recovered shall be 
        deposited in the All-Payer Health Care Fraud and Abuse Control 
        Account established under section 5402.
    (e) Notification of Licensing Authorities.--Whenever the 
Secretary's determination to impose a penalty, assessment, or exclusion 
under this section becomes final, the Secretary shall notify the 
appropriate State or local licensing agency or organization (including 
the agency specified in section 1864(a) and 1902(a)(33) of the Social 
Security Act) that such a penalty, assessment, or exclusion has become 
final and the reasons therefor.

SEC. 5412. PERMITTING PARTIES TO BRING ACTIONS ON OWN BEHALF.

    (a) In General.--Subject to subsections (b) and (c), a health plan 
or large group sponsor that suffers harm or monetary loss exceeding the 
sum or value of $10,000 (excluding interest) as a result of any 
activity of an individual or entity which makes the individual or 
entity subject to a civil monetary penalty under section 5411 may, in a 
civil action against the individual or entity in the United States 
District Court, obtain treble damages and costs including attorneys' 
fees against the individual or entity and such equitable relief as is 
appropriate.
    (b) Requirements for Bringing Action.--A person may bring a civil 
action under this section only if--
            (1) the person provides the Secretary with written notice 
        of--
                    (A) the person's intent to bring an action under 
                this section,
                    (B) the identities of the individuals or entities 
                the person intends to name as defendants to the action, 
                and
                    (C) all information the person possesses regarding 
                the activity that is the subject of the action that may 
                materially affect the Secretary's decision to initiate 
                a proceeding to impose a civil monetary penalty under 
                section 5411 against the defendants, and
            (2) one of the following conditions is met:
                    (A) During the 60-day period that begins on the 
                date the Secretary receives the written notice 
                described in paragraph (1), the Secretary does not 
                notify the person that the Secretary intends to 
                initiate an investigation to determine whether to 
                impose a civil monetary penalty under section 5411 
                against the defendants.
                    (B) The Secretary notifies the person during the 
                60-day period described in subparagraph (A) that the 
                Secretary intends to initiate an investigation to 
                determine whether to impose a civil monetary penalty 
                under such section against the defendants, and the 
                Secretary subsequently notifies the person that the 
                Secretary no longer intends to initiate an 
                investigation or proceeding to impose a civil monetary 
                penalty against the defendants.
                    (C) After the expiration of the 1-year period that 
                begins on the date written notice is provided to the 
                Secretary, the Secretary has not initiated a proceeding 
                to impose a civil monetary penalty against the 
                defendants.
    (c) Treatment of Excess Awards.--If a person is awarded any amounts 
in an action brought under this section that are in excess of the 
damages suffered by the person as a result of the defendant's 
activities, 20 percent of such amounts shall be withheld from the 
person for payment into the All-Payer Health Care Fraud and Abuse 
Control Account established under section 5402(a).
    (d) Statute of Limitations.--No action may be brought under this 
section more than 6 years after the date of the activity with respect 
to which the action is brought.
    (e) No Limitation on Other Actions.--Nothing in this section shall 
limit the right of any person to pursue any other right of action or 
remedy available under the law.
    (f) Pendent Jurisdiction.--Nothing in this section shall be 
construed, by reason of a claim arising under this section, to confer 
on the Courts of the United States jurisdiction over any State law 
claim.

SEC. 5413. EXCLUSION FROM PROGRAM PARTICIPATION.

    (a) Mandatory Exclusion.--
            (1) In general.--Except as provided in paragraph (2), the 
        Secretary shall exclude an individual or entity from 
        participation in any applicable health plan if the individual 
        or entity--
                    (A) is excluded from participation in a public 
                program under, or is otherwise described in, section 
                1128(a) of the Social Security Act (relating to 
                individuals and entities convicted of health care-
                related crimes or patient abuse);
                    (B) has been convicted after the date of the 
                enactment of this section, under Federal or State law, 
                in connection with the delivery of a health care item 
                or service of a criminal offense consisting of a felony 
                relating to fraud, theft, embezzlement, breach of 
                fiduciary responsibility, or other financial 
                misconduct; or
                    (C) has been convicted after such date, under 
                Federal or State law, of a criminal offense consisting 
                of a felony relating to the unlawful manufacture, 
                distribution, prescription, or dispensing of a 
                controlled substance.
            (2) Waiver permitted.--
                    (A) In general.--When, in the opinion of the 
                Secretary, mandatory exclusion of an individual or 
                entity would significantly harm the public health or 
                pose a significant risk to the public health, the 
                Secretary may waive such exclusion and shall apply such 
                other appropriate penalties as authorized under this 
                subtitle.
                    (B) Application for waiver of exclusion.--
                            (i) In general.--An individual or entity 
                        subject to mandatory exclusion under this 
                        subsection may apply to the Secretary, in a 
                        manner specified by the Secretary in 
                        regulations, for waiver of the exclusion.
                            (ii) Secretarial response.--The Secretary 
                        may waive the exclusion for the reasons 
                        described in subparagraph (A).
                    (C) Notification of termination.--The Secretary 
                shall promptly notify each sponsor of an applicable 
                health plan and each entity that administers a State 
                health care program described in section 1128(h) of the 
                Social Security Act of each termination of exclusion 
                made under this paragraph.
    (b) Permissive Exclusion.--The Secretary may exclude an individual 
or entity from participation in any applicable health plan if the 
individual or entity--
            (1) is excluded from participation in a public program 
        under, or is otherwise described in, section 1128(b) of the 
        Social Security Act (other than paragraphs (3), (6)(A), (6)(C), 
        (6)(D), (10), or (13) of such section);
            (2) has been convicted after the date of the enactment of 
        this section, under Federal or State law, in connection with 
        the delivery of a health care item or service of a criminal 
        offense consisting of a misdemeanor relating to fraud, theft, 
        embezzlement, breach of fiduciary responsibility, or other 
        financial misconduct; or
            (3) has been convicted after the date of the enactment of 
        this section, under Federal or State law, of a criminal offense 
        consisting of a misdemeanor relating to the unlawful 
        manufacture, distribution, prescription, or dispensing of a 
        controlled substance.
    (c) Notice, Effective Date, and Period of Exclusion.--
            (1) Notice of exclusion.--An exclusion under this section 
        or section 5411(b)(3) shall be effective at such time and upon 
        such reasonable notice to the public and to the individual or 
        entity excluded as may be specified in regulations consistent 
        with paragraph (2).
            (2) Effective date of exclusion.--Such an exclusion shall 
        be effective with respect to services furnished to an 
        individual on or after the effective date of the exclusion.
            (3) Period of exclusion.--
                    (A) In general.--The Secretary shall specify, in 
                the notice of exclusion under paragraph (1) and the 
                notice under section 5411(e), the minimum period (or, 
                in the case of an exclusion of an individual excluded 
                from participation in a public program under, or is 
                otherwise described in, section 1128(b)(12) of the 
                Social Security Act, the period) of the exclusion.
                    (B) Minimum period for mandatory exclusions.--In 
                the case of a mandatory exclusion under subsection (a), 
                the minimum period of exclusion shall be not less than 
                2 years.
                    (C) Minimum period for certain permissive 
                exclusions.--
                            (i) Fraud, obstruction of investigation, 
                        and controlled substance conviction.--In the 
                        case of an exclusion of an individual excluded 
                        from participation in a public program under, 
                        or is otherwise described in, paragraph (1) or 
                        (2) of section 1128(b) of the Social Security 
                        Act or paragraph (2) or (3) of subsection (b) 
                        of this section, the period of exclusion shall 
                        be a minimum of 1 year, unless the Secretary 
                        determines that a longer period is necessary 
                        because of aggravating circumstances.
                            (ii) Suspensions.--In the case of an 
                        exclusion of an individual or entity excluded 
                        from participation in a public program under, 
                        or is otherwise described in, paragraph (4), 
                        (5)(A), or (5)(B) of section 1128(b) of the 
                        Social Security Act, the period of the 
                        exclusion shall not be less than the period 
                        during which the individual's or entity's 
                        license to provide health care is revoked, 
                        suspended or surrendered, or the individual or 
                        the entity is excluded or suspended from a 
                        Federal or State health care program.
                            (iii) Unnecessary services.--In the case of 
                        an exclusion of an individual or entity 
                        described in paragraph (6)(B) of section 
                        1128(b) of the Social Security Act, the period 
                        of the exclusion shall be not less than 1 year.
                            (iv) Denial of immediate access.--In the 
                        case of an exclusion of an individual described 
                        in paragraph (12) of section 1128(b) of the 
                        Social Security Act, the period of the 
                        exclusion shall be equal to the sum of--
                                    (I) the length of the period in 
                                which the individual failed to grant 
                                the immediate access described in that 
                                paragraph, and
                                    (II) an additional period, not to 
                                exceed 90 days, set by the Secretary.
    (d) Notice to Entities Administering Public Programs for the 
Delivery of or Payment for Health Care Items or Services.--
            (1) In general.--The Secretary shall exercise the authority 
        under this section in a manner that results in an individual's 
        or entity's exclusion from all applicable health plans for the 
        delivery of or payment for health care items or services.
            (2) Notification requirements.--The Secretary shall 
        promptly notify each sponsor of an applicable health plan and 
        each entity that administers a State health care program 
        described in section 1128(h) of the Social Security Act of the 
        fact and circumstances of each exclusion (together with the 
        period thereof) effected against an individual or entity under 
        this section or under section 5411(b)(3).
    (e) Notice to State Licensing Agencies.--The provisions of section 
1128(e) of the Social Security Act shall apply to this section in the 
same manner as such provisions apply to sections 1128 and 1128A of such 
Act.
    (f) Notice, Hearing, and Judicial Review.--
            (1) In general.--Subject to paragraph (2), any individual 
        or entity that is excluded (or directed to be excluded) from 
        participation under this section is entitled to reasonable 
        notice and opportunity for a hearing thereon by the Secretary 
        to the same extent as is provided in section 205(b) of the 
        Social Security Act, and to judicial review of the Secretary's 
        final decision after such hearing as is provided in section 
        205(g) of such Act, except that such action shall be brought in 
        the Court of Appeals of the United States for the judicial 
        circuit in which the individual or entity resides, or has a 
        principal place of business, or, if the individual or entity 
        does not reside or have a principal place of business within 
        any such judicial circuit, in the United States Court of 
        Appeals for the District of Columbia Circuit.
            (2) Administrative hearing.--Unless the Secretary 
        determines that the health or safety of individuals receiving 
        services warrants the exclusion taking effect earlier, any 
        individual or entity that is the subject of an adverse 
        determination based on paragraphs (6)(B), (7), (8), (9), (11), 
        (12), (14), or (15) of section 1128(b) of the Social Security 
        Act, shall be entitled to a hearing by an administrative law 
        judge (as provided under section 205(b) of the Social Security 
        Act) on the determination before any exclusion based upon the 
        determination takes effect. If a hearing is requested, the 
        exclusion shall be effective upon the issuance of an order by 
        the administrative law judge upholding the determination of the 
        Secretary to exclude.
            (3) Special rules.--The provisions of section 205(h) of the 
        Social Security Act shall apply with respect to this section or 
        section 5411(b)(3) to the same extent as such provisions apply 
        with respect to title II of such Act.
    (g) Application for Termination of Exclusion.--
            (1) In general.--An individual or entity excluded (or 
        directed to be excluded) from participation under this section 
        or section 5411(b)(3) may apply to the Secretary, in a manner 
        specified by the Secretary in regulations and at the end of the 
        minimum period of exclusion (or, in the case of an individual 
        or entity described in section 1128(b)(12), the period of 
        exclusion) provided under this section or section 5411(b)(3) 
        and at such other times as the Secretary may provide, for 
        termination of the exclusion.
            (2) Secretarial response.--The Secretary may terminate the 
        exclusion if the Secretary determines, on the basis of the 
        conduct of the applicant which occurred after the date of the 
        notice of exclusion or which was unknown to the Secretary at 
        the time of the exclusion, that--
                    (A) there is no basis under this section or section 
                5411(b)(3) for a continuation of the exclusion, and
                    (B) there are reasonable assurances that the types 
                of actions which formed the basis for the original 
                exclusion have not recurred and will not recur.
            (3) Notification of termination.--The Secretary shall 
        promptly notify each sponsor of an applicable health plan and 
        each entity that administers a State health care program 
        described in section 1128(h) of the Social Security Act of each 
        termination of exclusion made under this subsection.
    (h) Convicted Defined.--In this section, the term ``convicted'' has 
the meaning given such term in section 1128(i) of the Social Security 
Act.
    (i) Request for Exclusion.--The sponsor of any applicable health 
plan (including a State in the case of a consumer purchasing 
cooperative and the Secretary of Labor in the case of a large group 
sponsor) may request that the Secretary of Health and Human Services 
exclude an individual or entity with respect to actions under such a 
plan in accordance with this section.
    (j) Effect of Exclusion.--Notwithstanding any other provision of 
this Act, no payment may be made under a health plan for the delivery 
of or payment for any item or service (other than an emergency item or 
service, not including items or services furnished in an emergency room 
of a hospital) furnished--
            (1) by an individual or entity during the period when such 
        individual or entity is excluded pursuant to this section or 
        section 5411(b)(3) from participation in a health plan; or
            (2) at the medical direction or on the prescription of a 
        physician during the period when the physician is excluded 
        pursuant to this section or section 5411(b)(3) from 
        participation in a health plan and the person furnishing the 
        item or service knew or had reason to know of the exclusion 
        (after a reasonable time period after reasonable notice has 
        been furnished to the person).

                   PART 3--AMENDMENTS TO CRIMINAL LAW

SEC. 5421. HEALTH CARE FRAUD.

    (a) In General.--Chapter 63 of title 18, United States Code, is 
amended by adding at the end the following:
``Sec. 1347. Health care fraud
    ``(a) Whoever knowingly executes, or attempts to execute, a scheme 
or artifice--
            ``(1) to defraud any consumer purchasing cooperative, 
        health plan, or other person, in connection with the delivery 
        of or payment for health care benefits, items, or services; or
            ``(2) to obtain, by means of false or fraudulent pretenses, 
        representations, or promises, any of the money or property 
        owned by, or under the custody or control of, any consumer 
        purchasing cooperative, health plan, or person in connection 
        with the delivery of or payment for health care benefits, 
        items, or services;
shall be fined under this title or imprisoned not more than 10 years, 
or both. If the violation results in serious bodily injury (as defined 
in section 1365 of this title) such person shall be imprisoned for life 
or any term of years.
    ``(b) As used in this section--
            ``(1) the terms `consumer purchasing cooperative' and 
        `health plan' have the meanings given those terms in title I of 
        the Health Security Act; and
            ``(2) the term `health care' includes long-term care under 
        title II of the Health Security Act.''.
    (b) Clerical Amendment.--The table of sections at the beginning of 
chapter 63 of title 18, United States Code, is amended by adding at the 
end the following:

``1347. Health care fraud.''.

SEC. 5422. THEFT OR EMBEZZLEMENT.

    (a) In General.--Chapter 31 of title 18, United States Code, is 
amended by adding at the end the following:
``Sec. 668. Theft or embezzlement in connection with health care
    ``(a) Whoever embezzles, steals, willfully and unlawfully converts 
to the use of any person other than the rightful owner, or 
intentionally misapplies any of the moneys, securities, premiums, 
credits, property, or other assets of a consumer purchasing 
cooperative, health plan, or of any fund connected with such a 
cooperative or plan, shall be fined under this title or imprisoned not 
more than 10 years, or both.
    ``(b) As used in this section, the terms `consumer purchasing 
cooperative' and `health plan' have the meanings given those terms in 
title I of the Health Security Act.''.
    (b) Clerical Amendment.--The table of sections at the beginning of 
chapter 31 of title 18, United States Code, is amended by adding at the 
end the following:

``668. Theft or embezzlement in connection with health care.''.

SEC. 5423. FALSE STATEMENTS.

    (a) In General.--Chapter 47 of title 18, United States Code, is 
amended by adding at the end the following:
``Sec. 1033. False statements relating to health care matters
    ``(a) Whoever, in any matter involving a consumer purchasing 
cooperative or health plan, knowingly and willfully falsifies, 
conceals, or covers up by any trick, scheme, or device a material fact, 
or makes any false, fictitious, or fraudulent statements or 
representations, or makes or uses any false writing or document knowing 
the same to contain any false, fictitious, or fraudulent statement or 
entry, shall be fined under this title or imprisoned not more than 5 
years, or both.
    ``(b) As used in this section, the terms `consumer purchasing 
cooperative' and `health plan' have the meanings given those terms 
under title I of the Health Security Act.''.
    (b) Clerical Amendment.--The table of sections at the beginning of 
chapter 47 of title 18, United States Code, is amended by adding at the 
end the following:

``1033. False statements relating to health care matters.''.

SEC. 5424. BRIBERY AND GRAFT.

    (a) In General.--Chapter 11 of title 18, United States Code, is 
amended by adding at the end the following:
``Sec. 226. Bribery and graft in connection with health care
    ``(a) Whoever--
            ``(1) directly or indirectly, corruptly gives, offers, or 
        promises anything of value to a health care official, or offers 
        or promises a health care official to give anything of value to 
        any other person, with intent--
                    ``(A) to influence any of the health care 
                official's actions, decisions, or duties relating to a 
                consumer purchasing cooperative or health plan;
                    ``(B) to influence such an official to commit or 
                aid in the committing, or collude in or allow, any 
                fraud, or make opportunity for the commission of any 
                fraud, on a consumer purchasing cooperative or health 
                plan; or
                    ``(C) to induce such an official to engage in any 
                conduct in violation of the lawful duty of such 
                official; or
            ``(2) being a health care official, directly or indirectly, 
        corruptly demands, seeks, receives, accepts, or agrees to 
        accept anything of value personally or for any other person or 
        entity, the giving of which violates paragraph (1) of this 
        subsection;
shall be fined under this title or imprisoned not more than 15 years, 
or both.
    ``(b) Whoever, otherwise than as provided by law for the proper 
discharge of any duty, directly or indirectly gives, offers, or 
promises anything of value to a health care official, for or because of 
any of the health care official's actions, decisions, or duties 
relating to a consumer purchasing cooperative or health plan, shall be 
fined under this title or imprisoned not more than two years, or both.
    ``(c) As used in this section--
            ``(1) the term `health care official' means--
                    ``(A) an administrator, officer, trustee, 
                fiduciary, custodian, counsel, agent, or employee of 
                any consumer purchasing cooperative or health plan;
                    ``(B) an officer, counsel, agent, or employee, of 
                an organization that provides services under contract 
                to any consumer purchasing cooperative or health plan;
                    ``(C) an official or employee of a State agency 
                having regulatory authority over any consumer 
                purchasing cooperative or health plan;
                    ``(D) an officer, counsel, agent, or employee of a 
                health care sponsor;
            ``(2) the term `health care sponsor' means any individual 
        or entity serving as the sponsor of a consumer purchasing 
        cooperative or health plan for purposes of the Health Security 
        Act, and includes the joint board of trustees or other similar 
        body used by two or more employers to administer a consumer 
        purchasing cooperative or health plan for purposes of such Act; 
        and
            ``(3) the terms `consumer purchasing cooperative' and 
        `health plan' have the meanings given those terms under title I 
        of the Health Security Act.''.
    (b) Clerical Amendment.--The table of chapters at the beginning of 
chapter 11 of title 18, United States Code, is amended by adding at the 
end the following:

``226. Bribery and graft in connection with health care.''.

SEC. 5425. INJUNCTIVE RELIEF RELATING TO HEALTH CARE OFFENSES.

    Section 1345(a)(1) of title 18, United States Code, is amended--
            (1) by striking ``or'' at the end of subparagraph (A);
            (2) by inserting ``or'' at the end of subparagraph (B); and
            (3) by adding at the end the following:
            ``(C) committing or about to commit a Federal health care 
        offense (as defined in section 5402(d) of the Health Security 
        Act);''.

SEC. 5426. GRAND JURY DISCLOSURE.

    Section 3322 of title 18, United States Code, is amended--
            (1) by redesignating subsections (c) and (d) as subsections 
        (d) and (e), respectively; and
            (2) by inserting after subsection (b) the following:
    ``(c) A person who is privy to grand jury information concerning a 
health law violation--
            ``(1) received in the course of duty as an attorney for the 
        Government; or
            ``(2) disclosed under rule 6(e)(3)(A)(ii) of the Federal 
        Rules of Criminal Procedure;
may disclose that information to an attorney for the Government to use 
in any civil proceeding related to a Federal health care offense (as 
defined in section 5402(d) of the Health Security Act).''.

SEC. 5427. FORFEITURES FOR VIOLATIONS OF FRAUD STATUTES.

    Section 982(a) of title 18, United States Code, is amended by 
inserting after paragraph (5) the following:
    ``(6) The court, in imposing sentence on a person convicted of a 
Federal health care offense (as defined in section 5402(d) of the 
Health Security Act), shall order such person to forfeit to the United 
States any property, real or personal, constituting or traceable to the 
gross proceeds obtained, directly or indirectly, as a result of the 
commission of the offense.''.

              PART 4--AMENDMENTS TO CIVIL FALSE CLAIMS ACT

SEC. 5431. AMENDMENTS TO CIVIL FALSE CLAIMS ACT.

    Section 3729 of title 31, United States Code, is amended--
            (1) in subsection (a)(7), by inserting ``or to a health 
        plan'' after ``property to the Government'';
            (2) in the matter following subsection (a)(7), by inserting 
        ``or health plan'' before ``sustains because of the act of that 
        person,'';
            (3) at the end of the first sentence of subsection (a), by 
        inserting ``or health plan'' before ``sustains because of the 
        act of the person.'';
            (4) in subsection (c)--
                    (A) by inserting ``the term'' after ``section,''; 
                and
                    (B) by adding at the end the following: ``The term 
                also includes any request or demand, whether under 
                contract of otherwise, for money or property which is 
                made or presented to a health plan.''; and
            (5) by adding at the end the following:
    ``(f) Health Plan Defined.--For purposes of this section, the term 
`health plan' has the meaning given such term under section 1400 of the 
Health Security Act.''.

                         PART 5--EFFECTIVE DATE

SEC. 5441. EFFECTIVE DATE.

    Except as otherwise provided in this subtitle, the provisions of, 
and amendments made by, this subtitle shall be effective on and after 
January 1, 1995.

                    Subtitle F--Repeal of Exemption

SEC. 5501. REPEAL OF EXEMPTION FOR HEALTH INSURANCE.

    (a) In General.--Section 3 of the Act of March 9, 1945 (15 U.S.C. 
1013), known as the McCarran-Ferguson Act, is amended by adding at the 
end the following:
    ``(c) Notwithstanding that the business of insurance is regulated 
by State law, nothing in this Act shall limit the applicability of the 
following Acts to the business of insurance to the extent that such 
business relates to the provision of health benefits:
            ``(1) The Sherman Act (15 U.S.C. 1 et seq.).
            ``(2) The Clayton Act (15 U.S.C. 12 et seq.).
            ``(3) Federal Trade Commission Act (15 U.S.C. 41 et seq.).
            ``(4) The Act of June 19, 1936 (49 Stat. 1526; 15 U.S.C. 
        21a et seq.), known as the Robinson-Patman Antidiscrimination 
        Act.''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
take effect on the first day of the sixth month beginning after the 
date of the enactment of this Act.

   TITLE VI--PREMIUM CAPS; PREMIUM-BASED FINANCING; AND PLAN PAYMENTS

                       table of contents of title

   TITLE VI--PREMIUM CAPS; PREMIUM-BASED FINANCING; AND PLAN PAYMENTS

Sec. 6000. General definitions.
                        Subtitle A--Premium Caps

       Parsubpart a--computation of targets and accepted bidseas
Sec. 6001. Computation of health care coverage area inflation factors.
Sec. 6002. Board determination of national per capita baseline premium 
                            target.
Sec. 6003. Determination of area per capita premium targets.
Sec. 6004. Initial rate filing and bid negotiation process.
Sec. 6005. State financial incentives.
Sec. 6006. Recommendations to eliminate regional variations in area 
                            targets due to variation in practice 
                            patterns; congressional consideration.
Sec. 6007. Reference to limitation on administrative and judicial 
                            review of certain determinations.
Sec. 6subpart b--plan and provider payment reductions to maintain 
                      expenditures within targets
Sec. 6011. Plan payment reduction.
Sec. 6012. Provider payment reduction.
         Part 2--Health Expenditures of Large Group Purchasers

Sec. 6021. Calculation of premium equivalents.
Sec. 6022. Sanctions for large group purchaser for excess increase in 
                            expenditures.
                Part 3--Treatment of Single-payer States

Sec. 6031. Special rules for single-payer States.
                     Part 4--Transition Provisions

Sec. 6041. Monitoring prices and expenditures.
Sec. 6042. Health care utilization research program.
                 Subtitle B--Premium-Related Financings

                    Partsubpart a--family shareents
Sec. 6101. Family share of premium.
Sec. 6102. Amount of premium.
Sec. 6103. Family credit.
Sec. 6104. Premium discount based on income.
Sec. 6105. Excess premium credit.
Sec. 6106. Large group purchaser opt-in credit.
Sec. 6107. Family collection shortfall add-on.
Sec. 6108. No loss of coverage.
Sec. 61subpart b--repayment of family credit by certain families
Sec. 6110. Repayment of family credit by certain families.
Sec. 6111. No liability for families employed full-time; reduction in 
                            liability for part-time employment.
Sec. 6112. Limitation of liability based on income.
Sec. 6113. Payments by nonqualifying employees.
Sec. 6114. Special treatment of certain retirees and qualified spouses 
                            and children.
Sec. 6115. Special treatment of certain medicare beneficiaries.
      subpart a--small employers exempt from coverage obligations
Sec. 6116. Exemption from coverage obligations.
Sec. 6117. Small employer defined.
Sec. 6118. Election.
Sec. 6119. Treatment of small employers.
Sec. 6120. Nonelecsubpart b--community-rated employers
Sec. 6121. Employer premium payment required.
Sec. 6122. Computation of base employment monthly premium.
Sec. 6123. Premium discount for certain employers.
Sec. 6124. Payment adjustment for certain large employers.
Sec. 6125. Employer collection shortfall add-on.
Sec. 6126. Applicatsubpart c--large group purchasers
Sec. 6131. Large employer premium payment required.
Sec. 6132. Assistance for low-wage families.
Sec. 6133. Excess increase in premium equivalent.
Sec. 6134. Cost control.
Sec. 6135. Coordination of payments.
   Subtitle C--Payments to Health Plans and Miscellaneous Provisions

Sec. 6200. Assistance to plans.
Sec. 6201. Computation of blended plan payment amount.
Sec. 6203. Payment to community-rated health plans.
Sec. 6204. Calculation and publication of general family share and 
                            general employer premium amounts.
Sec. 6205. Adjustment of payments to health plans.
Sec. 6206. Employer payment requirement.
Sec. 6207. Requirement for employer payment and reconciliation 
                            reporting.
Sec. 6208. Equal voluntary contribution requirement.
Sec. 6209. Payment arrangements.
Sec. 6210. Enforcement of premium obligations.
Sec. 6211. Determination of uniform per capita conversion factor.
Sec. 6212. Certain employees and employers ineligible for premium 
                            assistance.

SEC. 6000. GENERAL DEFINITIONS.

    (a) Definitions Relating to Per Capita Premium Rates.--In this 
title:
            (1) Filed per capita community bid.--The term ``filed per 
        capita community bid'' means the per capita premium bid that is 
        filed with a State for a community-rated plan offered in a 
        health care coverage area under subpart A of part 1 and is 
        available to all community rate eligible individuals enrolling 
        directly with a health plan.
            (2) Accepted per capita cooperative bid.--The term 
        ``accepted per capita cooperative bid'' means the per capita 
        premium rate agreed upon by a cooperative and a plan taking 
        into account any discount to such bid negotiated under section 
        1302(c)(2).
            (3) Final community rate.--The term ``final community 
        rate'' means the filed per capita community bid, taking into 
        account any voluntary reduction in such bid made under section 
        6004(e).
            (4) Final cooperative rate.--The term ``final cooperative 
        bid'' means the accepted per capita cooperative bid, taking 
        into account any voluntary reductions in such bid made under 
        section 6004(e).
    (b) Definitions Related To Weighted Average Per Capita Premium 
Rates.--In this title:
            (1) Weighted average accepted bid.--The term ``weighted 
        average accepted bid'' means, for a health care coverage area 
        for a year, the average across all plans of--
                    (A) the filed per capita community bid for each 
                community-rated health plan offered in a health care 
                coverage area weighted to reflect the relative 
                enrollment (net of any enrollment through a 
                cooperative) of community rate eligible individuals 
                among such plans; and
                    (B) the accepted per capita cooperative bid for 
                each community-rated health plan offered in a health 
                care coverage area weighted to reflect the relative 
                enrollment of community rate eligible individuals 
                through a cooperative among such plans.
            (2) Weighted average discount rate.--The term ``weighted 
        average discount rate'' means, for a health care coverage area 
        for a year, the lesser of--
                    (A) the per capita premium target for the health 
                care coverage area (as defined in section 6003) for the 
                year; or
                    (B) the average across all plans of the lesser of--
                            (i) the final community rate; or
                            (ii) the final cooperative rate, 
                        (applicable only for plans offered through the 
                        cooperative);
                for each community-rated health plan, weighted to 
                reflect the total enrollment of community rate eligible 
                individuals among such plans.
            (3) Weighted average premium.--The term ``weighted average 
        premium'' means, for a class of enrollment and with respect to 
        a health care coverage area for the year, the product of--
                    (A) the weighted average discount rate (as defined 
                in paragraph (2));
                    (B) the uniform per capita conversion factor 
                (established under section 6211 for the area; and
                    (C) the premium class factor established by the 
                Board for that class under section 1631.
    (d) Incorporation of Other Definitions.--Except as otherwise 
provided in this title, the definitions of terms in subtitle J of title 
I of this Act shall apply to this title.

                        Subtitle A--Premium Caps

       PART 1--HEALTH EXPENDITURES OF HEALTH CARE COVERAGE AREAS

          Subpart A--Computation of Targets and Accepted Bids

SEC. 6001. COMPUTATION OF HEALTH CARE COVERAGE AREA INFLATION FACTORS.

    (a) Computation.--
            (1) In general.--This section provides for the computation 
        of factors that limit the growth of premiums for the 
        comprehensive benefit package in community-rated health plans. 
        The Board shall compute and publish, not later than March 1 of 
        each year (beginning with 1995) the health care coverage area 
        inflation factor (as defined in paragraph (2)) for each health 
        care coverage area for the following year.
            (2) Health care coverage areas inflation factor.--In this 
        part, the term ``health care coverage area inflation factor'' 
        means, for a year for a health care coverage area--
                    (A) the general health care inflation factor for 
                the year (as defined in paragraph (3));
                    (B) adjusted under subsection (c) (to take into 
                account material changes in the demographic and socio-
                economic characteristics of the population of community 
                rate eligible individuals);
                    (C) decreased by the percentage adjustment (if any) 
                provided with respect to the health care coverage area 
                under subsection (d) (relating to adjustment for 
                previous excess expenditures); and
                    (D) in the case of the year 2001, increased by a 
                factor that the Board determines to reflect the ratio 
                of (i) the actuarial value of the increase in benefits 
                provided in that year under the comprehensive benefit 
                package to (ii) the actuarial value of the benefits 
                that would have been in such package in the year 
                without regard to the increase.
        For purposes of subparagraph (D)(i), the actuarial value of the 
        increase with respect to mental illness and substance abuse 
        services (included within the comprehensive benefit package) 
        shall not exceed an actuarial value based on the amount of the 
        total expenditures that would have been made in 2001 by States 
        and subdivisions of States for mental illness and substance 
        abuse services (included in such package as of 2001) if this 
        Act had not been enacted.
            (3) General health care inflation factor.--
                    (A) 1996 through 2000.--In this part, the term 
                ``general health care inflation factor'', for a year, 
                means the percentage increase in the CPI (as specified 
                under subsection (b)) for the year plus the following:
                            (i) For 1996, 1.5 percentage points.
                            (ii) For 1997, 1.0 percentage points.
                            (iii) For 1998, 0.5 percentage points.
                            (iv) For 1999 and for 2000, 0 percentage 
                        points.
                    (B) Years after 2000.--
                            (i) Recommendation to congress.--In 1999, 
                        the Board shall submit to Congress 
                        recommendations, after consultation with the 
                        Federal Reserve Board, on what the general 
                        health care inflation factor should be for 
                        years beginning with 2001.
                            (ii) Failure of congress to act.--If the 
                        Congress fails to enact a law specifying the 
                        general health care inflation factor for a year 
                        after 2000, the Board, in January of the year 
                        before the year involved, shall compute such 
                        factor for the year involved. Such factor shall 
                        be the product of the factors described in 
                        subparagraph (C) for that fiscal year, minus 1.
                            (iii) Study by federal reserve board.--Not 
                        later than January 1, 1999, the Federal Reserve 
                        Board shall conduct a study, and report to the 
                        National Health Board, concerning what the 
                        general health care inflation factor should be 
                        for years beginning with 2001. Such study shall 
                        consider whether continued indexing with 
                        respect to such factor is advisable and whether 
                        the consumer price index should be used (in 
                        whole or in part, modified or unmodified) with 
                        respect to premium caps for future years. The 
                        recommendations of the Federal Reserve Board 
                        under such study shall be considered in the 
                        recommendations submitted under clause (i).
                    (C) Factors.--The factors described in this 
                subparagraph for a year are the following:
                            (i) CPI.--1 plus the percentage change in 
                        the CPI for the year, determined based upon the 
                        percentage change in the average of the CPI for 
                        the 12-month period ending with August 31 of 
                        the previous fiscal year over such average for 
                        the preceding 12-month period.
                            (ii) Real gdp per capita.--1 plus the 
                        average annual percentage change in the real, 
                        per capita gross domestic product of the United 
                        States during the 3-year period ending in the 
                        preceding calendar year, determined by the 
                        Board based on data supplied by the Department 
                        of Commerce.
    (b) Projection of Increase in CPI.--
            (1) In general.--For purposes of this section, the Board 
        shall specify, as of the time of publication, the annual 
        percentage increase in the CPI (as defined in section 1902(9)) 
        for the following year.
            (2) Data to be used.--Such increase shall be the projection 
        of the CPI contained in the budget of the United States 
        transmitted by the President to the Congress in the year.
    (c) Special Adjustment for Material Changes in Demographic 
Characteristics of Population.--
            (1) Adjustment for large group purchaser opt-in.--
                    (A) In general.--The Board shall develop a method 
                for adjusting the health care coverage area inflation 
                factor for each health care coverage area in order to 
                reflect material changes in the demographic 
                characteristics of community rate eligible individuals 
                residing in the coverage area (in comparison with such 
                characteristics for the previous year) as a result of 
                the termination of an election of one or more large 
                group purchasers under section 1406.
                    (B) Basis for adjustments.--Adjustments under this 
                paragraph (whether an increase or decrease) shall be 
                based on the characteristics and factors used for 
                making adjustments in payments under section 6124.
            (2) Adjustment for area trend compared to national trend.--
                    (A) In general.--The Board shall develop a method 
                for adjusting the health care coverage area inflator 
                factor for each health care coverage area in order to 
                reflect material changes in the demographic 
                characteristics (including at least age, gender, and 
                socio-economic status) and health status of community 
                rate eligible individuals residing in the coverage area 
                in comparison with the average change in such 
                characteristics for such individuals residing in the 
                United States. The adjustment under this paragraph 
                shall be for changes not taken into account in the 
                adjustment under paragraph (1).
                    (B) Neutral adjustment.--Such method (and any 
                annual adjustment under this paragraph) shall be 
                designed to result in the adjustment effected under 
                this paragraph for a year not changing the weighted 
                average of the health care coverage area inflation 
                factors.
            (3) Application.--The Board shall provide, on an annual 
        basis, for an adjustment of health care coverage area inflation 
        factors under this subsection using such methods.
    (d) Consultation Process.--The Board shall have a process for 
consulting with representatives of States before establishing the 
health care coverage area inflation factors for each year under this 
section.

SEC. 6002. BOARD DETERMINATION OF NATIONAL PER CAPITA BASELINE PREMIUM 
              TARGET.

    (a) In General.--Not later than January 1, 1995, the Board shall 
determine a national per capita baseline premium target. Such target is 
equal to--
            (1) the national average per capita current coverage health 
        expenditures (determined under subsection (b)),
            (2) updated under subsection (c).
    (b) Determination of National Average Per Capita Current Coverage 
Health Expenditures.--
            (1) In general.--The Board shall determine the national 
        average per capita current coverage health expenditures equal 
        to--
                    (A) total covered current health care expenditures 
                (described in paragraph (2)), divided by
                    (B) the estimated population in the United States 
                of community rate eligible individuals (as determined 
                by the Board as of 1993 under paragraph (4)) for whom 
                such expenditures were determined.
        The population under subparagraph (B) shall not include SSI 
        recipients or AFDC recipients.
            (2) Current health care expenditures.--For purposes of 
        paragraph (1)(A), the Board shall determine current health care 
        expenditures as follows:
                    (A) Determination of total expenditures.--The Board 
                shall first determine the amount of total payments made 
                for items and services included in the comprehensive 
                benefit package (determined without regard to cost 
                sharing) in the United States in 1993.
                    (B) Removal of certain expenditures not to be 
                covered in the comprehensive benefit package.--The 
                amount so determined shall be decreased by the 
                proportion of such amount that is attributable to any 
                of the following:
                            (i) Medicare beneficiaries (other than such 
                        beneficiaries who are community rate eligible 
                        individuals).
                            (ii) AFDC recipients or SSI recipients.
                            (iii) Expenditures which are paid for 
                        through workers' compensation or automobile or 
                        other liability insurance.
                            (iv) Expenditures by parties (including the 
                        Federal Government) that the Board determines 
                        will not be payable by community-rated plans 
                        for coverage of the comprehensive benefit 
                        package under this Act (as defined in section 
                        1101).
                    (C) Addition of projected expenditures for 
                uninsured and underinsured individuals.--The amount so 
                determined and adjusted shall be increased to take into 
                account increased utilization of, and expenditures for, 
                items and services covered under the comprehensive 
                benefit package likely to occur, as a result of 
                coverage under a community-rated health plan of 
                individuals who, as of 1993 were uninsured or 
                underinsured with respect to the comprehensive benefit 
                package. In making such determination, such 
                expenditures shall be based on the estimated average 
                cost for such services in 1993 (and not on private 
                payment rates established for such services). In making 
                such determination, the estimated amount of 
                uncompensated care in 1993 shall be removed and will 
                not include adjustments to offset payments below costs 
                by public programs.
                    (D) Addition of costs of administration.--The 
                amount so determined and adjusted shall be increased by 
                an estimated percentage (determined by the Board, but 
                no more than 15 percent) that reflects the proportion 
                of premiums that are required for health plan 
                administration for State administration (including 
                costs for administration of income-related premium 
                discounts and cost sharing reductions) and for State 
                premium taxes (which taxes shall be limited to such 
                amounts in 1993 as are attributable to the health 
                benefits to be included in the comprehensive benefit 
                package). Such adjustments shall not include any 
                marketing fees (described in section 1511) or 
                cooperative fees (described in section 1305).
                    (E) Decrease for cost sharing.--The amount so 
                determined and adjusted shall be decreased by a 
                percentage that reflects (i) the estimated average 
                percentage of total amounts payable for items and 
                services covered under the comprehensive benefit 
                package that will be payments in the form of cost 
                sharing under a higher cost sharing plan, and (ii) the 
                percentage reduction in utilization estimated to result 
                from the application of high cost sharing.
            (3) Special rules.--
                    (A) Benefits used.--The determinations under this 
                section shall be based on the comprehensive benefit 
                package as in effect in 1996.
                    (B) Assuming no change in expenditure pattern.--The 
                determination under paragraph (2) shall be made without 
                regard to any change in the pattern of expenditures 
                that may result from the enrollment of AFDC recipients 
                and SSI recipients in community-rated health plans.
            (4) Eligible individuals.--In this subsection, the 
        determination of who are community rate eligible individuals 
        under this subsection shall be made as though this Act was 
        fully in effect in each State as of 1993.
    (c) Updating.--
            (1) In general.--Subject to paragraph (3), the Board shall 
        update the amount determined under subsection (b)(1) for each 
        of 1994 and 1995 by the appropriate update factor described in 
        paragraph (2) for the year.
            (2) Appropriate update factor.--In paragraph (1), the 
        appropriate update factor for a year is 1 plus the annual 
        percentage increase for the year (as determined by the 
        Secretary, based on actual or projected information) in private 
        sector health care spending for items and services included in 
        the comprehensive benefit package (as of 1996).
            (3) Limit.--The total, cumulative update under this 
        subsection shall not exceed 15 percent.

SEC. 6003. DETERMINATION OF AREA PER CAPITA PREMIUM TARGETS.

    (a) Initial Determination.--Not later than January 1, 1995, the 
Board shall determine, for each health care coverage area for 1996, a 
health care coverage area per capita premium target. Such target shall 
equal--
            (1) the national per capita baseline premium target 
        (determined by the Board under section 6002),
            (2) updated by the health care coverage area inflation 
        factor (as determined under section 6001(a)(2)) for 1996, and
            (3) adjusted by the adjustment factor for the health care 
        coverage area (determined under subsection (c)).
    (b) Subsequent Determinations.--
            (1) Determination.--Not later than March 1 of each year 
        (beginning with 1996) the Board shall determine, for each 
        health care coverage area for the succeeding year a health care 
        coverage area per capita premium target.
            (2) General rule.--Subject to subsection (e), such target 
        shall equal--
                    (A) the health care coverage area per capita target 
                determined under this section (without regard to 
                subsection (e)) for the health care coverage area for 
                the previous year,
                    (B) updated by the health care coverage area 
                inflation factor (as determined in section 6001(a)) for 
                the year.
            (3) Adjustment for previous excess rate of increase in 
        expenditures.--Such target for a year is subject to a decrease 
        under section 6001(d).
    (c) Adjustment Factors for Health Care Coverage Areas for Initial 
Determination.--
            (1) In general.--The Board shall establish an adjustment 
        factor for each health care coverage area in a manner 
        consistent with this subsection.
            (2) Considerations.--In establishing the factor for each 
        health care coverage area, the Board shall consider, using 
        information of the type described in paragraph (3), the 
        difference between the national average of the factors taken 
        into account in determining the national per capita baseline 
        premium target and such factors for the health care coverage 
        area, including variations in health care expenditures and in 
        rates of uninsurance and underinsurance in the different areas 
        and including variations in the proportion of expenditures for 
        services provided by academic health centers in the different 
        areas.
            (3) Type of information.--The type of information described 
        in this paragraph is--
                    (A) information on variations in premiums across 
                States and across health care coverage areas within a 
                State (based on surveys and other data);
                    (B) information on variations in per capita health 
                spending by State, as measured by the Secretary;
                    (C) information on variations across States in per 
                capita spending under the medicare program and in such 
                spending among health care coverage areas within a 
                State under such program;
                    (D) area rating factors commonly used by actuaries;
                    (E) information on variations in the extent to 
                which States and health care coverage areas need 
                additional investment because they have successfully 
                controlled health care costs; and
                    (F) information on variations among States and 
                health care coverage areas due to underutilization of 
                health care services resulting from geographic barriers 
                and lack of access to health care services, 
                particularly in underserved rural and urban areas.
            (4) Application of factors in neutral manner.--The 
        application of the adjustment factors under this subsection for 
        1996 shall be done in a manner so that the weighted average of 
        the health care coverage area per capita premium targets for 
        1996 is equal to the national per capita baseline premium 
        target determined under section 6002. Such weighted average 
        shall be based on the Board's estimate of the expected 
        distribution of community rate eligible individuals (taken into 
        account under section 6002) among the health care coverage 
        areas.
            (5) Consultation process.--The Board shall have a process 
        for consulting with representatives of States and purchasing 
        cooperative before establishing the adjustment for health care 
        coverage areas under this subsection.
    (d) Treatment of Certain States.--
            (1) Non-participating.--In the case of a State that is not 
        a participating State or otherwise has not established health 
        care coverage areas, the entire State shall be treated under 
        the provisions of this part as composing a single health care 
        coverage area.
            (2) Changes in area boundaries.--In the case of a State 
        that changes the boundaries of its health care coverage areas 
        (including the establishment of such areas after 1996), the 
        Board shall provide a method for computing a health care 
        coverage area per capita premium target for each health care 
        coverage area affected by such change in a manner that--
                    (A) reflects the factors taken into account in 
                establishing the adjustment factors for health care 
                coverage areas under subsection (c), and
                    (B) results in the weighted average of the newly 
                computed regional targets for the health care coverage 
                areas affected by the change equal to the weighted 
                average of the regional targets for the health care 
                coverage areas as previously established.
    (e) Adjustment for Previous Excess Rate of Increase in 
Expenditures.--
            (1) In general.--If the actual weighted average accepted 
        bid for a health care coverage area for a year (as determined 
        by the Board based on actual enrollment in the first month of 
        the year) exceeds the health care coverage area per capita 
        premium target (determined under this section) for the year, 
        then the health care coverage area per capita premium target 
        shall be reduced, by \1/2\ of the excess percentage (described 
        in paragraph (2)) for the year, for each of the 2 succeeding 
        years.
            (2) Excess percentage.--The excess percentage described in 
        this paragraph for a year is the percentage by which--
                    (A) the actual weighted average accepted bid 
                (referred to in paragraph (1)) for a health care 
                coverage area for the year, exceeds
                    (B) the health care coverage area per capita 
                premium target (determined under this section) for the 
                year.

SEC. 6004. INITIAL RATE FILING AND BID NEGOTIATION PROCESS.

    (a) Filing and Bidding Process.--
            (1) Filing community bids.--
                    (A) In general.--Not later than July 1 before the 
                first year, and not later than August 1 of each 
                succeeding year, each plan seeking to participate as a 
                community-rated health plan, with respect to the health 
                care coverage area, in the following year shall file a 
                per capita community bid in the manner specified under 
                subsection (c).
                    (B) Submission of bids to cooperatives.--Each plan 
                filing a per capita community bid with respect to a 
                health care coverage area under subparagraph (A) shall 
                also submit to the cooperative of such health care 
                coverage area a per capita premium bid (not to exceed 
                the rate filed under subparagraph (A) for such plan) 
                for coverage of the comprehensive benefit package as 
                specified in section 1101 in the manner described under 
                subsection (c).
                    (C) Establishment of rules and procedures for 
                filing premium bids.--In accordance with section 1660, 
                each participating State shall establish rules and 
                procedures for the filing of premium rates and 
                submission of premium bids by plans.
                    (D) Disclosure.--In conjunction with the filing of 
                per capita community bids, the State may determine to 
                disclose (or not to disclose) the health care coverage 
                area per capita premium target for the health care 
                coverage area (determined under section 6003) for the 
                year involved.
                    (E) Condition.--Each community bid filed and 
                cooperative bid submitted under this subsection with 
                respect to a community-rated health plan shall be 
                conditioned upon the plan's agreement to accept any 
                payment reduction that may be imposed under section 
                6011.
            (2) Negotiation process.--Following the bidding process 
        under paragraph (1), a cooperative may conduct negotiations 
        with health plans relating to the premiums to be charged for 
        such community-rated health plans within a cooperative. Such 
        negotiations may result in the resubmission of bids to the 
        cooperative, but in no case shall a health plan resubmit a bid 
        that exceeds its prior bid.
            (3) Legally binding bids.--All rates filed and bids 
        submitted under this subsection must be legally binding with 
        respect to the plans involved.
            (4) Acceptance.--
                    (A) Per capita community bid.--The final community 
                rate for a community-rated health plan under this 
                subsection shall be considered to be the accepted bid 
                for such plan, except as provided in subsection (e).
                    (B) Per capita cooperative bid.--The final 
                cooperative bid submitted to a cooperative for a 
                community-rated health plan under this subsection shall 
                be considered to be the accepted bid for such plan, 
                except as provided in subsection (e).
            (5) Assistance.--The Board shall provide States and 
        cooperatives with such information and technical assistance as 
        may assist such States and cooperatives in carrying out the 
        provisions of this subsection.
    (b) Submission of Information to Board.--By not later than 
September 1 of each year for which community per capita bids are filed 
under subsection (a), each State shall submit to the Board a report 
that discloses for each community-rating area--
            (1) information regarding the per capita community bid 
        filed and accepted cooperative bids negotiated under subsection 
        (a) by the different plans;
            (2)(A) for the first year, any information the Board may 
        request concerning an estimation of the--
                    (i) enrollment likely in each such plan of 
                community rate eligible individuals through 
                cooperatives; and
                    (ii) the enrollment likely in each such plan of 
                community rate eligible individuals by enrollment 
                mechanisms other than cooperatives in accordance with 
                section 1660, or
            (B) for a succeeding year--
                    (i) the actual distribution of enrollment of 
                community rate eligible individuals in community-rated 
                health plans through cooperatives; and
                    (ii) the actual distribution of enrollment of 
                community rate eligible individuals in community-rated 
                health plans through enrollment mechanisms other than 
                cooperatives, in accordance with section 1660;
        in the year in which the report is transmitted; and
            (3) limitations on capacity of community-rated health 
        plans.
    (c) Computation of Weighted Average Accepted Bid.--
            (1) In general.--For each health care coverage area the 
        Board shall determine a weighted average accepted bid for each 
        year for which rates are filed with the State under subsection 
        (a). Such determination shall be based on information on 
        accepted bids for the year, submitted under subsection (b)(1), 
        and shall take into account, subject to paragraph (2), the 
        information on enrollment distribution submitted under 
        subsection (b)(2).
            (2) Enrollment distribution rules.--In making the 
        determination under paragraph (1) for a health care coverage 
        area, the Board shall establish rules respecting the treatment 
        of enrollment in plans that are discontinued or are newly 
        offered.
            (3) Exclusion of worksite health promotion discounts.--For 
        purposes of calculating the weighted average accepted bid and 
        enforcing the per capita premium targets in a health care 
        coverage area in a State, the Board shall consider the accepted 
        bids for the year, without consideration or inclusion of any 
        worksite health promotion discount.
    (d) Notice to Certain States.--
            (1) In general.--By not later than October 1 of each year 
        for which rates are filed with a State, the Board shall notify 
        a State--
                    (A) if the weighted average accepted bid 
                (determined under subsection (c)) for the health care 
                coverage area is greater than the health care coverage 
                area per capita premium target for such area 
                (determined under section 6003) for the year, and
                    (B) of the weighted average discount rate for the 
                health care coverage area.
            (2) Notice of premium reductions.--If notice is provided to 
        a State under paragraph (1), the Board shall notify the State 
        and each noncomplying plan of any plan payment reduction 
        computed under section 6011 for such a plan and the opportunity 
        to voluntarily reduce the accepted bid under subsection (e) in 
        order to avoid such a reduction.
    (e) Voluntary Reduction of Accepted Bids.--After the Board has 
determined under subsection (c) the weighted average accepted bid for a 
health care coverage area and the Board has determined plan payment 
reductions, before such date as the Board may specify (in order to 
provide for an open enrollment period), a noncomplying plan has the 
opportunity to voluntarily reduce its filed community bid (and if 
applicable, its accepted cooperative bid) by the amount of the plan 
payment reduction that would otherwise apply to the plan. Such 
reduction shall not affect the amount of the plan payment reduction for 
any other plan for that year.

SEC. 6005. STATE FINANCIAL INCENTIVES.

    (a) Election.--Any participating State may elect to assume 
responsibility for containment of health care expenditures in the State 
consistent with this part. Such responsibility shall include submitting 
annual reports to the Board on any activities undertaken by the State 
to contain such expenditures. A participating State may regulate the 
rates charged by providers furnishing health care items and services to 
all private payers. Such regulation of rates may not cause an 
experienced-rated health plan to be charged, directly or indirectly, 
rates different from those charged other community-rated health plans 
for the same items and services or otherwise discriminate against 
experience-rated health plans.
    (b) Financial Incentive.--In the case of a State that has made an 
election under subsection (a), if the Board determines for a particular 
year (beginning with the first year) that the statewide weighted 
average of the weighted average discount rates (based on actual average 
enrollment for the year), for health care coverage areas in the State, 
is less than the statewide weighted average of the health care coverage 
area per capita premium targets (based upon such enrollment) for such 
areas for the year, then the amount of the State maintenance-of-effort 
payment under section 9001(b), for the following year, shall be reduced 
by \1/2\ of the product of--
            (1) the amount by which the amount of such statewide 
        average target exceeds the amount of such statewide average 
        accepted bid, divided by the amount of such target; and
            (2) the total of the amount of the Federal payments made in 
        that particular year to the State under subtitle B of title IX.
    (c) Alternative State Provider Payment Systems.--Notwithstanding 
any other provision of law, in the case of an alternative State 
provider payment system that has been approved by the Secretary and in 
continuous operation since July 1, 1977, the payment rates and 
methodologies required under the State system for services provided in 
that State shall apply to all purchasers and payors, including those 
under employee welfare benefit plans authorized under the Employee 
Retirement Income Security Act of 1974, workers' compensation programs 
under State law, the Federal Employees' Compensation Act under chapter 
81 of title 5, United States Code, and Federal employee health benefit 
plans under chapter 89 of title 5, United States Code.

SEC. 6006. RECOMMENDATIONS TO ELIMINATE REGIONAL VARIATIONS IN AREA 
              TARGETS DUE TO VARIATION IN PRACTICE PATTERNS; 
              CONGRESSIONAL CONSIDERATION.

    (a) Establishment of Advisory Commission on Regional Variations in 
Health Expenditures.--The chair of the Board shall establish, by not 
later than 60 days after the date of appointment of the first chair, an 
advisory commission on regional variations in health expenditures.
    (b) Composition.--The advisory commission shall be composed of 
consumers, employers, providers, representatives of health plans, 
States, individuals with expertise in the financing of health care, 
individuals with expertise in the economics of health care, and 
representatives of diverse geographic areas.
    (c) Elimination of Regional Variation in Premiums Due to Practice 
Pattern.--
            (1) Commission study.--The advisory commission shall 
        examine methods of reducing or eliminating variation in health 
        care coverage area per capita premium targets that are clearly 
        due to variation in practice patterns not justified by 
        differences in need for health care services, presence of 
        academic health centers or other facilities meeting research, 
        training, or care needs broader than those of the population in 
        the area, or other factors (such as health care input prices 
        and demographic factors), by 2002.
            (2) Commission report.--The advisory commission shall 
        submit to the Board a report that specifies one or more methods 
        for reducing or eliminating the variation described in 
        paragraph (1).
            (3) Board recommendations.--The Board, after reviewing the 
        report and such other studies as it deems appropriate and after 
        consulting with the Prospective Payment Assessment Commission, 
        the Physician Payment Review Commission and such other experts 
        as it deems appropriate, shall submit to Congress, by not later 
        October 1, 1996, detailed recommendations respecting the 
        specific method to be used to reduce or eliminate the variation 
        described in paragraph (1) by 2006. Such recommendations shall 
        not propose the reduction or elimination of differences in per 
        capita premium targets that are not the result of inappropriate 
        differences in practice patterns and shall be designed to avoid 
        unnecessary disruption in the health care systems and economies 
        of affected regions.
    (d) Congressional Consideration.--
            (1) In general.--Detailed recommendations submitted under 
        subsection (c)(3) shall apply under this subtitle unless a 
        joint resolution (described in paragraph (2)) disapproving such 
        recommendations is enacted, in accordance with the provisions 
        of paragraph (3), before the end of the 60-day period beginning 
        on the date on which such recommendations were submitted. For 
        purposes of applying the preceding sentence and paragraphs (2) 
        and (3), the days on which either House of Congress is not in 
        session because of an adjournment of more than three days to a 
        day certain shall be excluded in the computation of a period.
            (2) Joint resolution of disapproval.--A joint resolution 
        described in this paragraph means only a joint resolution which 
        is introduced within the 10-day period beginning on the date on 
        which the Board submits recommendations under subsection (e)(3) 
        and--
                    (A) which does not have a preamble;
                    (B) the matter after the resolving clause of which 
                is as follows: ``That Congress disapproves the 
                recommendations of the National Health Board concerning 
                elimination of regional variation in health care 
                coverage area premiums, as submitted by the Board on 
                ______________.'', the blank space being filled in with 
                the appropriate date; and
                    (C) the title of which is as follows: ``Joint 
                resolution disapproving recommendations of the National 
                Health Board concerning elimination of regional 
                variation in health care coverage area premiums, as 
                submitted by the Board on ______________.'', the blank 
                space being filled in with the appropriate date.
            (3) Procedures for consideration of resolution of 
        disapproval.--Subject to paragraph (4), the provisions of 
        section 2908 (other than subsection (a)) of the Defense Base 
        Closure and Realignment Act of 1990 shall apply to the 
        consideration of a joint resolution described in paragraph (2) 
        in the same manner as such provisions apply to a joint 
        resolution described in section 2908(a) of such Act.
            (4) Special rules.--For purposes of applying paragraph (3) 
        with respect to such provisions--
                    (A) any reference to the Committee on Armed 
                Services of the House of Representatives shall be 
                deemed a reference to an appropriate Committee of the 
                House of Representatives (specified by the Speaker of 
                the House of Representatives at the time of submission 
                of recommendations under subsection (c)(3)) and any 
                reference to the Committee on Armed Services of the 
                Senate shall be deemed a reference to an appropriate 
                Committee of the Senate (specified by the Majority 
                Leader of the Senate at the time of submission of 
                recommendations under subsection (c)(3)); and
                    (B) any reference to the date on which the 
                President transmits a report shall be deemed a 
                reference to the date on which the Board submits a 
                recommendation under subsection (c)(3).
    (e) Elimination of Regional Variation State Payment Amounts.--
            (1) Commission study.--The advisory commission shall 
        examine methods of reducing inappropriate variation among 
        States in the level of payments required under subtitle A of 
        title IX by 2002.
            (2) Commission report.--The advisory commission shall 
        submit to the Board a report that specifies one or more methods 
        for reducing the variation described in paragraph (1).
            (3) Board recommendations.--The Board shall submit to 
        Congress, by not later than July 1, 1995, detailed 
        recommendations respecting the specific method to be used to 
        reduce the variation described in paragraph (1) by 2002 in a 
        budget neutral manner with respect to total government payments 
        and payments by the Federal Government. In submitting 
        recommendations under this paragraph, the Board shall consider 
        the fiscal capacity of the States.
            (4) Congressional consideration.--
                    (A) In general.--Subject to the succeeding 
                provisions of this paragraph, the provisions of 
                subsection (d) shall apply to recommendations under 
                paragraph (3) in the same manner as they apply to 
                recommendations under subsection (c)(3).
                    (B) Special rules.--In applying subparagraph (A)--
                            (i) the following shall be substituted for 
                        the matter after the resolving clause described 
                        in subsection (d)(2)(B): ``That Congress 
                        disapproves the recommendations of the National 
                        Health Board concerning reduction of regional 
                        variation in State payments, as submitted by 
                        the Board on ______________.''; and
                            (ii) the following shall be substituted for 
                        the title described in subsection (d)(2)(C): 
                        ``Joint resolution disapproving recommendations 
                        of the National Health Board concerning 
                        reducing regional variation in State payments, 
                        as submitted by the Board on ______________.''.
    (f) Information.--The advisory commission shall provide the Board, 
States, and community-rated health plans with information about 
regional differences in health care costs and practice patterns.

SEC. 6007. REFERENCE TO LIMITATION ON ADMINISTRATIVE AND JUDICIAL 
              REVIEW OF CERTAIN DETERMINATIONS.

    For limitation on administrative and judicial review of certain 
determinations under this part, see section 5232.

SEC. 6008. APPLICATION OF MARKETING AND COOPERATIVE FEES.

    Cooperative fees (as described in section 1305) and health plan 
marketing fees (as described in section 1511(b)) shall not be 
incorporated into the calculation of plan and health care coverage 
areas' compliance with the premium targets established in this part or 
in the determination of eligibility for discounts under subtitle B of 
this title.

      Subpart B--Plan and Provider Payment Reductions to Maintain 
                      Expenditures within Targets

SEC. 6011. PLAN PAYMENT REDUCTION.

    (a) Plan Payment Reduction.--In order to assure that premium-
related payments to community-rated health plans offered in a health 
care coverage area are consistent with the applicable area per capita 
target for the health care coverage area (computed under this 
subtitle), payment to a noncomplying plan (as defined in subsection 
(b)(2)) for a year is subject to a reduction in plan payment by the 
amount equal to plan payment reduction specified in subsection (c) for 
the year.
    (b) Noncomplying Health Care Coverage Area and Noncomplying Plan 
Defined.--In this part:
            (1) Noncomplying health care coverage area.--The term 
        ``noncomplying health care coverage area'' means, for a year, a 
        health care coverage area for which the weighted average 
        accepted bid (computed under section 6004(c)) exceeds the 
        health care coverage area per capita premium target for the 
        year.
            (2) Noncomplying plan.--The term ``noncomplying plan'' 
        means, for a year, a community rated health plan offered in a 
        noncomplying health care coverage area if the applicable 
        premium rate for the year exceeds the maximum complying bid (as 
        defined in subsection (d)) for the year. No plan shall be a 
        noncomplying plan for a year before the first year in which the 
        plan is offered as a community rated health plan under this 
        Act.
    (c) Amount of Plan Payment Reduction.--
            (1) In general.--The amount of the plan payment reduction, 
        for a noncomplying plan offered in a health care coverage area, 
        is the area-wide reduction percentage (as defined in paragraph 
        (2)) of the excess bid amount (as defined in paragraph (3)) for 
        the plan.
            (2) Area-wide reduction percentage.--
                    (A) In general.--In paragraph (1), the term ``area-
                wide reduction percentage'' means, for a noncomplying 
                plan offered in a health care coverage area for a 
                year--
                            (i) the amount by which--
                                    (I) the weighted average accepted 
                                bid (computed under section 6004(c)(1)) 
                                for the health care coverage area for 
                                the year, exceeds (II) the health care 
                                coverage area per capita target for the 
                                area for the year; divided by
                                    (ii) the sum, for noncomplying 
                                plans offered in the health care 
                                coverage area, of the plan proportions 
                                of area excess bid amounts (described 
                                in subparagraph (B)(i)) for the year.
                    (B) Plan proportion of health care coverage area 
                excess bid amount described.--
                            (i) In general.--The ``plan proportion of 
                        area excess bid amount'' described in this 
                        clause, for a noncomplying plan, is the product 
                        of--
                                    (I) the excess bid amount (as 
                                defined in paragraph (3)) for the plan, 
                                and
                                    (II) the plan enrollment proportion 
                                (as defined in clause (ii)) for the 
                                plan.
                            (ii) Plan enrollment proportion.--In clause 
                        (i)(II), the term ``plan enrollment 
                        proportion'' means, with respect to a health 
                        plan offered in a health care coverage area, 
                        the total enrollment of community-rate eligible 
                        individuals enrolled in such plan expressed as 
                        a percentage of the total enrollment of 
                        community-rate eligible individuals in all 
                        community-rated plans offered in the health 
                        care coverage area. Such proportion shall be 
                        computed based on the information used in 
                        computing the weighted average accepted bid for 
                        the area under section 6004(c)(1).
            (3) Excess bid amount.--In this subsection, the ``excess 
        bid amount'', with respect to a noncomplying plan for a year, 
        is the amount by which--
                    (A) the accepted bid for the year (not taking into 
                account any voluntary reduction under section 6004(e)), 
                exceeds
                    (B) the maximum complying bid (as defined in 
                subsection (d)) for the plan for the year.
    (d) Community-Rated Health Plans With an Accepted Cooperative Bid 
Not Equal to the Final Community Rate for Such Plan.--
            (1) In general.--For the purposes of this section (relating 
        to determining plan compliance and plan payment reduction), if 
        a community-rated health plan has more than one applicable 
        premium rate, such health plan shall be treated as a separate 
        health plan with respect to each applicable premium rate and 
        the enrollment in each such health plan shall be considered to 
        be the number of community-rated individuals enrolled in the 
        community-rated plan at the applicable premium rate.
            (2) The applicable final premium rate with respect to a 
        community rated health plan shall be--
                    (A) for a community-rated plan offered through the 
                state-designated enrollment process (or through any 
                other manner of enrollment other than through a 
                cooperative), the final community rate; or
                    (B) for a community rated health plan offered 
                through a cooperative, the final cooperative rate for 
                such cooperative.
    (e) Maximum Complying Bid.--
            (1) In general.--In this part for the first year and for 
        subsequent years, the ``maximum complying bid'' for each 
        community-rated health plan, is the health care coverage area 
        per capita premium target for the area (determined under 
        section 6003) for the year.
            (2) Special rules for new plans.--
                    (A) In general.--Subject to subparagraph (B), in 
                the case of a community rated health plan that is first 
                offered in a health care coverage area in a year after 
                the first year the maximum complying bid shall be the 
                health care coverage area per capita premium target for 
                the year.
                    (B) Authority.--The Board or a State may establish 
                rules to modify the application of subparagraph (A) for 
                community-rated health plans in the State in order--
                            (i) to prevent abusive premium practices by 
                        entities previously offering plans, or
                            (ii) to encourage the availability of all 
                        types of plans in the State and to permit 
                        establishment of new plans.

SEC. 6012. PROVIDER PAYMENT REDUCTION.

    (a) Participating Providers.--
            (1) In general.--Each community-rated health plan in the 
        health care coverage area, as part of its contract or agreement 
        with any participating provider or group of participating 
        providers shall--
                    (A) include a provision that provides that if the 
                plan is a noncomplying plan for a year, payments to the 
                provider (or group) shall be reduced by the applicable 
                network reduction percentage (described in paragraph 
                (2)) for the year; and
                    (B) not include any provision which the State 
                determines otherwise varies the payments to such 
                providers (or group) because of, or in relation to, a 
                plan payment reduction under section 6011 or otherwise 
                is intended to nullify the effect of subparagraph (A).
        For purposes of this section, a plan described in section 
        6011(d) shall be treated as a single plan with the total 
        enrollment of such plan equal to the sum of the amounts 
        described in section 6011(d)(1). The Board may issue 
        regulations relating to the requirements of this paragraph.
            (2) Applicable network reduction percentage.--
                    (A) In general.--Subject to subparagraph (B), the 
                ``applicable network reduction percentage'', with 
                respect to participating providers of a noncomplying 
                plan for a year equals--
                            (i) the plan payment reduction amount for 
                        the plan for the year (as determined under 
                        section 6011(c)), divided by
                            (ii) the final accepted bid for the plan 
                        for the year, adjusted under subparagraph (B).
                    (B) Induced volume offset.--The Board shall provide 
                for an appropriate increase of the percentage reduction 
                computed under subparagraph (A) to take into account 
                any estimated increase in volume of services provided 
                that may reasonably be anticipated as a consequence of 
                applying a reduction in payment under this subsection. 
                The Board may compute and apply such increase 
                differently for different classes of providers or 
                services or different types of health plans (as the 
                Board may define).
    (b) Other Providers.--
            (1) In general.--Each community rated health plan that is a 
        noncomplying plan in a year shall provide for a reduction in 
        the amount of payments to providers (or groups of providers) 
        that are not participating providers under the applicable fee 
        schedule under section 1523 by the applicable non-network 
        reduction percentage (described in paragraph (2)) for the year.
            (2) Applicable nonnetwork reduction percentage.--
                    (A) In general.--Subject to subparagraph (B), the 
                ``applicable nonnetwork reduction percentage'', with 
                respect to nonparticipating providers of a noncomplying 
                plan for a year is--
                            (i) the plan payment reduction amount for 
                        the plan for the year (as determined under 
                        section 6011(c)), divided by
                            (ii) the final accepted bid for the plan 
                        for the year, adjusted under subparagraph (B).
                    (B) Induced volume offset.--The Board shall provide 
                for an appropriate increase of the percentage reduction 
                computed under subparagraph (A) to take into account 
                any estimated increase in volume of services provided 
                that may reasonably be anticipated as a consequence of 
                applying a reduction in payment under this subsection. 
                The Board may compute and apply such increase 
                differently for different classes of providers or 
                services or different types of health plans (as the 
                Board may define).
    (c) Application to Cost Sharing and to Balance Billing 
Restrictions.--For purposes of applying section 1523 (relating to 
balance billing limitations) and part 2 of subtitle B of title I 
(relating to computation of cost sharing), the payment basis otherwise 
used for computing any limitation on billing or cost sharing shall be 
such payment basis as adjusted by any reductions effected under this 
section.

         PART 2--HEALTH EXPENDITURES OF LARGE GROUP PURCHASERS

SEC. 6021. CALCULATION OF PREMIUM EQUIVALENTS.

    (a) In General.--By January 1, 1998, the Board shall develop a 
methodology for calculating an annual per capita expenditure equivalent 
for amounts paid for coverage for the comprehensive benefit package 
within a large group purchaser.
    (b) Adjustment Permitted.--Such methodology shall permit a large 
group purchaser to petition the Secretary of Labor for an adjustment of 
the inflation adjustment that would otherwise apply to compensate for 
material changes in the demographic characteristics of the experience 
rate eligible individuals receiving coverage through plans offered in a 
health care coverage area.
    (c) Reporting.--In 2001 and each subsequent year, each large group 
purchaser shall report to the Secretary of Labor, in a form and manner 
specified by the Secretary, the average of the annual per capita 
expenditure equivalent for the previous 3-year period.

SEC. 6022. SANCTIONS FOR LARGE GROUP PURCHASER FOR EXCESS INCREASE IN 
              EXPENDITURES.

    (a) Sanction.--
            (1) Actions against large employers.--If a large group 
        purchaser that is a large employer has two excess years (as 
        defined in subsection (b)) in a 3-year-period, then, effective 
        beginning with the second year following the second excess year 
        in such period, the Secretary of Labor shall take action under 
        section 1402.
            (2) Termination of sponsorship for other large group 
        purchasers.--If a large group purchaser that is not a large 
        employer has two excess years (as defined in subsection (b)) in 
        a 3-year-period, then, effective beginning with the second year 
        following the second excess year in such period--
                    (A) the Secretary of Labor shall terminate the 
                election of the large group purchaser under section 
                1402; and
                    (B) an employer that was an experience-rated 
                employer with respect to such purchaser shall become a 
                community-rated employer (unless the employer has 
                become an experience-rated employer of another such 
                large group purchaser).
            (3) Initial 3-year period.--Paragraph (1) shall apply to 
        the 3-year period beginning on January 1, 1998.
    (b) Excess Year.--
            (1) In general.--In subsection (a), the term ``excess 
        year'' means, for a large group purchaser, a year (after 2000) 
        for which the rate of increase for the large group purchaser 
        (specified in paragraph (2)) for the year, exceeds the national 
        corporate inflation factor (specified in paragraph (3)) for the 
        year.
            (2) Rate of increase for large group purchaser.--The rate 
        of increase for a large group purchaser for a year, specified 
        in this paragraph, is the percentage by which the average of 
        the annual per capita expenditure equivalent for the large 
        group purchaser (reported under section 6021 (c)) for the 3-
        year period ending with such year, exceeds the average of the 
        annual per capita expenditure equivalent for the large group 
        purchaser (reported under such subsection) for the 3-year 
        period ending with the previous year.
            (3) National corporate inflation factor.--The national 
        corporate inflation factor for a year, specified in this 
        paragraph, is the average of the general health care inflation 
        factors (as defined in section 6001(a)(3)) for each of the 3 
        years ending with such year.

                PART 3--TREATMENT OF SINGLE-PAYER STATES

SEC. 6031. SPECIAL RULES FOR SINGLE-PAYER STATES.

    In the case of a Statewide single-payer State, for purposes of 
section 1222(6), the Board shall compute a Statewide per capita premium 
target for each year in the same manner as the health care coverage 
area per capita premium target is determined under section 6003.

                     PART 4--TRANSITION PROVISIONS

SEC. 6041. MONITORING PRICES AND EXPENDITURES.

    (a) In General.--The Secretary shall establish a program to monitor 
prices and expenditures in the health care system in the United States.
    (b) Reports.--The Secretary shall periodically report to the 
President on--
            (1) the rate of increase in expenditures in each sector of 
        the health care system, and
            (2) how such rates compare with rate of overall increase in 
        health care spending and rate of increase in the consumer price 
        index.
    (c) Access to Information.--
            (1) In general.--The Secretary may obtain, through surveys 
        or otherwise, information on prices and expenditures for health 
        care services. The Secretary may compel health care providers 
        and third party payers to disclose such information as is 
        necessary to carry out the program under this section.
            (2) Confidentiality.--Non-public information obtained under 
        this subsection with respect to individual patients is 
        confidential.
    (d) Periodic Reports.--The Secretary shall periodically issue 
public reports on the matters described in subsection (b).

SEC. 6042. HEALTH CARE UTILIZATION RESEARCH PROGRAM.

    To assist health plans in determining the appropriate cost of 
services to populations not previously covered by private health 
insurance, the Secretary of Health and Human Services shall conduct a 
program of research on the characteristics and health care utilization 
patterns of such populations, including Medicaid eligible individuals, 
unemployed individuals, and out-of-labor force individuals. Not later 
than 6 months after the date of enactment of this Act, such program 
shall be completed and a report concerning such program shall be 
submitted by the Secretary to health plans in such form as the 
Secretary determines is the most useful to such plans

                 Subtitle B--Premium-Related Financings

                    PART 1--FAMILY PREMIUM PAYMENTS

                        Subpart A--Family Share

SEC. 6101. FAMILY SHARE OF PREMIUM.

    (a) Requirement.--Each family enrolled in a community-rated health 
plan or in a, experienced-rated health plan in a class of family 
enrollment is responsible for payment of the family share of premium 
payable respecting such enrollment. Such premium may be paid by an 
employer or other person on behalf of such a family.
    (b) Family Share of Premium Defined.--
            (1) In general.--In this subtitle, the term ``family share 
        of premium'' means, with respect to enrollment of a family--
                    (A) in a community-rated health plan, the amount 
                specified in paragraph (2) for the class, or
                    (B) in an experienced-rated health plan, the amount 
                specified in paragraph (3) for the class.
            (2) Community-rated plans.--
                    (A) In general.--The amount specified in this 
                paragraph for a health plan based on a class of family 
                enrollment is the sum of the base amounts described in 
                subparagraph (B) reduced (but not below zero) by the 
                sum of the amounts described in subparagraph (C).
                    (B) Base.--The base amounts described in this 
                subparagraph (for a plan for a class of enrollment) are 
                as follows:
                            (i) Plan premium.--The applicable premium 
                        specified in section 6102(a) with respect to 
                        such class of enrollment.
                            (ii) Family collection shortfall.--20 
                        percent of the family collection shortfall add-
                        on (computed under section 6107 for such 
                        class).
                            (iii) Marketing fee.--Any applicable 
                        marketing fee as described in section 1511(b).
                    (C) Credits and discounts.--The amounts described 
                in this subparagraph (for a plan for a class of 
                enrollment) are as follows:
                            (i) Family credit.--The amount of the 
                        family credit under section 6103(a).
                            (ii) Income related discount.--The amount 
                        of any income-related discount provided under 
                        section 6104(a)(1).
                            (iii) Excess premium credit.--The amount of 
                        any excess premium credit provided under 
                        section 6105.
                            (iv) Large group sponsor opt-in credit.--
                        The amount of any large group sponsor opt-in 
                        credit provided under section 6106.
                            (v) Additional credit for ssi and afdc 
                        recipients.--In the case of an SSI or AFDC 
                        family or for whom the amount described in 
                        clause (ii) is equal to the amount described in 
                        section 6104(b)(1)(A), the amount described in 
                        subparagraph (B)(ii).
                    (D) Limit on miscellaneous credits.--In no case 
                shall the family share, due to credits under 
                subparagraph (C), be less than zero.
                    (E) Limitation.--In no case shall the family share 
                for a particular plan be greater than the premium 
                otherwise payable under section 6101 due to the 
                application of the worksite health promotion discount 
                under section 6102(a)(1) and the worksite health 
                promotion adjustment to the credit under section 6103.
            (3) Experience-rated plans.--
                    (A) In general.--The amount specified in this 
                paragraph for an experience-rated health plan based on 
                a class of family enrollment is the premium described 
                in subparagraph (B) reduced (but not below zero) by the 
                sum of the amounts described in subparagraph (C).
                    (B) Premium.--The premium described in this 
                subparagraph (for a plan for a class of enrollment) is 
                the premium specified under section 1404 with respect 
                to the plan and class of enrollment involved.
                    (C) Credits and discounts.--The amounts described 
                in this subparagraph (for a plan for a class of 
                enrollment) are as follows:
                            (i) Family credit.--The amount of the 
                        family credit under section 6103(b).
                            (ii) Income related discount.--The amount 
                        of any income-related discount provided under 
                        section 6104(a)(2).

SEC. 6102. AMOUNT OF PREMIUM.

    (a) Community-Rated Plans.--The amount of the applicable premium 
charged by a community-rated health plan for all families in a class of 
family enrollment under a community-rated health plan offered in the 
health care coverage area--
            (1) with respect to a family enrolled through a mechanism 
        other than a cooperative, equal to the product of--
                    (A) the final community rate for the plan (as 
                defined in section 6000(a)(3)),
                    (B) the uniform per capita conversion factor (as 
                specified in section 6211) for the health care coverage 
                area, and
                    (C) the premium class factor established by the 
                Board for that class under section 1631;
        increased for any applicable marketing fees (described in 
        section 1511); or
            (2) with respect to a family enrolled through a 
        cooperative, equal to the product of--
                    (A) the final cooperative rate for the plan (as 
                defined in section 6000(a)(4));
                    (B) the uniform per capita conversion factor 
                (described under section 6211) for the health care 
                coverage area;
                    (C) the premium class factor established by Board 
                for that class under section 1631.
    (b) Reference to Other Premiums.--The amount of the premium charged 
by a large group purchaser for all families in a class of family 
enrollment under an experience-rated health plan offered by the 
purchaser is specified under section 1404.
    (c) Special Rules for Divided Families.--In the case of an 
individual who is a qualifying employee of an employer, if the 
individual has a spouse or child who is not treated as part of the 
individual's family because of section 1012--
            (1) the combined premium for both families under this 
        section shall be computed as though such section had not 
        applied if such combined premium is less than the total of the 
        premiums otherwise applicable (without regard to this 
        subsection),
            (2) the large group purchaser and the entity described in 
        section 1252 shall divide such combined premium between the 
        families proportionally (consistent with rules established by 
        the Board), and
            (3) in such case, credits and other amounts shall be pro-
        rated in a manner consistent with rules established by the 
        Board.

SEC. 6103. FAMILY CREDIT.

    (a) Community-Rated Plans.--The credit provided under this section 
for a family enrolled in a community-rated plan for a class of family 
enrollment is equal to 80 percent of the weighted average premium (as 
defined in section 6000(b)) for community-rated plans offered in the 
health care coverage area for the class.
    (b) Experience-Rated Plans.--The credit provided under this section 
for a family enrolled in an experience-rated health plan for a class of 
family enrollment is equal to the minimum employer premium payment 
required under section 6131 with respect to the family.

SEC. 6104. PREMIUM DISCOUNT BASED ON INCOME.

    (a) In General.--
            (1) Enrollees in community-rated plans.--Subject to 
        paragraph (2), each family enrolled with a community-rated or 
        experience-rated plan is entitled to a premium discount under 
        this section, in the amount specified in subsection (b)(1) if 
        the family--
                    (A) is an AFDC or SSI family;
                    (B) is determined, under subtitle C of title I, to 
                have family adjusted income below 150 percent of the 
                applicable poverty level; or
                    (C) is a family described in subsection (c)(3) for 
                which the family obligation amount under subsection (c) 
                for the year would otherwise exceed a specified percent 
                of family adjusted income described in such subsection.
            (2) No liability for indians and certain veterans and 
        military personnel.--
                    (A) In general.--In the case of an individual 
                described in subparagraph (B), because the applicable 
                health plan does not impose any premium for such an 
                individual, the individual is not eligible for any 
                premium discount under this section.
                    (B) Individuals described.--An individual described 
                in this subparagraph is--
                            (i) an electing veteran (as defined in 
                        section 1012(d)(1)) who is enrolled under a 
                        health plan of the Department of Veterans 
                        Affairs and who, under the laws and rules as in 
                        effect as of December 31, 1994, has a service-
                        connected disability or who is unable to defray 
                        the expenses of necessary care as determined 
                        under section 1722(a) of title 38, United 
                        States Code;
                            (ii) active duty military personnel (as 
                        defined in section 1012(d)(2)); and
                            (iii) an electing Indian (as defined in 
                        section 1012(d)(3)).
            (3) Monthly application to afdc and ssi families.--
        Paragraph (1)(A) (and the family obligation amount under 
        subsection (c) insofar as it relates to an AFDC or SSI family) 
        shall be applied to the premium or family obligation amount 
        only for months in which the family is such an AFDC or SSI 
        family.
    (b) Amount of Premium Discount.--
            (1) In general.--Subject to the succeeding paragraphs of 
        this subsection, the amount of the premium discount under this 
        subsection for a family under a class of family enrollment is 
        equal to--
                    (A) 20 percent of--
                            (i) for a family enrolled in a community-
                        rated plan offered in a community-rating area, 
                        the weighted average premium for community-
                        rated plans offered in the community-rating 
                        area, increased by any amount provided under 
                        paragraph (2); or
                            (ii) for a family enrolled in an 
                        experience-rated plan offered in a premium 
                        area, the weighted average premium for 
                        experience-rated plans offered in the premium 
                        area (as determined under section 
                        6131(b)(1)(A)) or, if less, the amount 
                        determined under clause (i) for the community-
                        rating area in which the family resides;
                reduced (but not below zero) by--
                    (B) the sum of--
                            (i) the family obligation amount described 
                        in subsection (c); and
                            (ii) the amount of any employer payment 
                        (not required under part 2) towards the family 
                        share of premiums for covered members of the 
                        family.
            (2) Increase for community-rated families to assure 
        enrollment in at-or-below-average-cost plan.--In the case of a 
        family enrolled in a community-rated plan, if a State 
        determines that a family eligible for a discount under this 
        section is unable to enroll in an at-or-below-average-cost plan 
        (as defined in paragraph (3)) that serves the area in which the 
        family resides, the amount of the premium discount under this 
        subsection is increased to the extent that such amount will 
        permit the family to enroll in a community-rated plan without 
        the need to pay a family share of premium under this part in 
        excess of the sum described in paragraph (1)(B).
            (3) At-or-below-average-cost plan defined.--In this 
        section, the term ``at-or-below-average-cost plan'' means a 
        community-rated plan the premium for which does not exceed, for 
        the class of family enrollment involved, the weighted average 
        premium for the community-rating area.
    (c) Family Obligation Amount.--
            (1) Determination.--Subject to paragraphs (2) and (3), the 
        family obligation amount under this subsection is determined as 
        follows:
                    (A) No obligation if income below income threshold 
                amount or if afdc or ssi family.--If the family 
                adjusted income (as defined in section 1282(d)) of the 
                family is less than the income threshold amount 
                (specified in paragraph (4)) or if the family is an 
                AFDC or SSI family, the family obligation amount is 
                zero.
                    (B) Income above income threshold amount.--If such 
                income is at least such income threshold amount and the 
                family is not an AFDC or SSI family, the family 
                obligation amount is the sum of the following:
                            (i) For income (above income threshold 
                        amount) up to the poverty level.--The product 
                        of the initial marginal rate (specified in 
                        paragraph (2)) and the amount by which--
                                    (I) the family adjusted income (not 
                                including any portion that exceeds the 
                                applicable poverty level for the class 
                                of family involved), exceeds;
                                    (II) such income threshold amount.
                            (ii) Graduated phase out of discount up to 
                        150 percent of poverty level.--The product of 
                        the final marginal rate (specified in paragraph 
                        (2)) and the amount by which the family 
                        adjusted income exceeds 100 percent (but is 
                        less than 150 percent) of the applicable 
                        poverty level.
            (2) Marginal rates.--In paragraph (1), for a year:
                    (A) Initial marginal rate.--The initial marginal 
                rate is the ratio of--
                            (i) 3 percent of the applicable poverty 
                        level for the class of enrollment involved for 
                        the year; to
                            (ii) the amount by which such poverty level 
                        exceeds such income threshold amount.
                    (B) Final marginal rate.--The final marginal rate 
                is 5.7 percent.
            (3) Limitation to 3.9 percent for all families.--
                    (A) In general.--In no case shall the family 
                obligation amount under this subsection for the year 
                exceed 3.9 percent.
                    (B) Indexing of percentage.--
                            (i) In general.--The percentage specified 
                        in subparagraph (A) shall be adjusted for any 
                        year after 1994 so that the percentage for the 
                        year bears the same ratio to the percentage so 
                        specified as the ratio of--
                                    (I) 1 plus the general health care 
                                inflation factor (as defined in section 
                                6001(a)(3)) for the year, bears to
                                    (II) 1 plus the percentage 
                                specified in section 1135 (relating to 
                                indexing of dollar amounts related to 
                                cost sharing) for the year.
                            (ii) Rounding.--Any adjustment under clause 
                        (i) for a year shall be rounded to the nearest 
                        multiple of 1/10 of 1 percentage point.
            (4) Income threshold amount.--
                    (A) In general.--For purposes of this subtitle, the 
                income threshold amount specified in this paragraph is 
                $1,000 (adjusted under subparagraph (B)).
                    (B) Indexing.--For the 1-year period beginning on 
                January 1, 1995, the income threshold amount specified 
                in subparagraph (A) shall be increased or decreased by 
                the same percentage as the percentage increase or 
                decrease by which the average CPI (described in section 
                1902(12)) for the 12-month-period ending with August 31 
                of the preceding year exceeds such average for the 12-
                month period ending with August 31. 1993.
                    (C) Rounding.--Any increase or decrease under 
                subparagraph (B) for a year shall be rounded to the 
                nearest multiple of $10.

SEC. 6105. EXCESS PREMIUM CREDIT.

    (a) In General.--If plan payment reductions are made for one or 
more community-rated health plans offered in a health care coverage 
area for plan payments in a year under section 6021, all families 
enrolling in community-rated health plans shall receive a credit under 
this section, in the amount described in subsection (b), in the case of 
each family enrolled in a community-rated health plan offered in the 
health care coverage area for premiums in the year.
    (b) Amount of Credit.--
            (1) In general.--Subject to paragraph (2), the amount of 
        the credit under this subsection, for a family enrolled in a 
        class of family enrollment in a health care coverage area for a 
        year, is the amount that would be the weighted average premium 
        for such area, class, and year, if the per capita excess 
        premium amount (determined under subsection (c)) for the area 
        for the year were substituted for the weighted average discount 
        rate for the health care coverage area for the year.
            (2) Adjustment to account for use of estimates.--Subject to 
        section 9201, if the total payments made to all community-rated 
        health plans in a year under section 6203 exceeds (or is less 
        than) the total of such payments estimated by the State (based 
        on the weighted average discount rate under subsection (c)(1)), 
        because of a difference between--
                    (A) the State's estimate of the distribution of 
                enrolled families between excess premium plans and 
                other plans, and
                    (B) the actual distribution of such enrolled 
                families among such plans,
        the amount of the credit under this section in the second 
        succeeding year shall be reduced (or increased, respectively) 
        by the amount of such excess (or deficit) in the total of such 
        payments made to all such plans.
    (c) Per Capita Excess Premium Amount.--The per capita excess 
premium amount, for a health care coverage area for a year, is the 
amount by which--
            (1) the weighted average discount rate (as defined in 
        section 6000(a)(2)) for the area for the year, exceeds
            (2) the health care coverage area per capita premium target 
        for the area for the year.

SEC. 6106. LARGE GROUP PURCHASER OPT-IN CREDIT.

    (a) In General.--If community-rated individuals are owed a payment 
adjustment under section 6124 for a year, then the State shall provide 
for a credit under this section equal to 20 percent of the amount 
described in subsection (b), in the case of each family enrolled in a 
community-rated plan offered in the health care coverage area.
    (b) Amount of Credit.--The amount described in this subsection, for 
a family enrolled in a class of family enrollment for a health care 
coverage area for a year, is the amount that would be the weighted 
average premium for such area, class, and year, if the per capita large 
group purchaser opt-in amount (determined under subsection (c)) for the 
area for the year were substituted for the weighted average discount 
rate for the area for the year.
    (c) Per Capita Large Group Purchaser Opt-in Amount.--The per capita 
large group purchaser opt-in amount, for a health care coverage area 
for a year, is--
            (1) the total amount of the payment adjustments owed for 
        the year under section 6124, divided by
            (2) the estimated average number of community rate eligible 
        individuals in the health care coverage area during the year 
        (reduced by the average number of such individuals whose family 
        share of premiums, determined without regard to this section 
        and section 6107, is zero).

SEC. 6107. FAMILY COLLECTION SHORTFALL ADD-ON.

    (a) In General.--The family collection shortfall add-on, for a 
health care coverage area for a class of enrollment for a year, is the 
amount that would be the weighted average premium for such area, class, 
and year, if the per capita collection shortfall amount (determined 
under subsection (b)) for the area for the year were substituted for 
the weighted average discount rate for the health care coverage area 
for the year.
    (b) Computation of Per Capita Adjustment for Collection 
Shortfalls.--
            (1) Per capita collection shortfall amount.--The per capita 
        collection shortfall amount, for a health care coverage area 
        for a year, under this subsection is equal to--
                    (A) the amount estimated under paragraph (2)(A) for 
                the year, divided by
                    (B) the estimated average number of community rate 
                eligible individuals in the health care coverage area 
                during the year (reduced by the average number of such 
                individuals whose family share of premiums, determined 
                without regard to this section and section 6106, is 
                zero).
            (2) Aggregate collection shortfall.--
                    (A) In general.--Each State shall estimate, for 
                each year (beginning with the first year) the total 
                amount of payments which the State can reasonably 
                identify as owed to community-rated health plans under 
                this Act (taking into account any premium reduction or 
                discount under this subtitle and including amounts owed 
                under subpart B and not taking into account any 
                penalties) for the year and not likely to be collected 
                (after making collection efforts described in section 
                6209) during a period specified by the Secretary 
                beginning on the first day of the year.
                    (B) Exclusion of government debts.--The amount 
                under subparagraph (A) shall not include any payments 
                owed to a community-rated health plan by the Federal, 
                State, or local governments.
                    (C) Adjustment for previous shortfall estimation 
                discrepancy.--Subject to section 9201, the amount 
                estimated under this paragraph for a year shall be 
                adjusted to reflect over (or under) estimations in the 
                amounts so computed under this paragraph for previous 
                years (based on actual collections), taking into 
                account interest payable based upon borrowings (or 
                savings) attributable to such over or under 
                estimations.
    (c) Apportionment of Adjustment.--The Board shall implement a 
method for the distribution of the aggregate collection shortfall 
amount for each health care coverage area (as described in (b)(2)) 
across premiums in the area. Such method shall reflect a blend of each 
plan's share of the area's aggregate shortfall and the unadjusted per-
capita collection shortfall amount.

SEC. 6108. NO LOSS OF COVERAGE.

    In no case shall the failure to pay amounts owed under this Act 
result in an individual's or family's loss of coverage.

SEC. 6109. APPLICATION OF ADJUSTMENTS.

    Per-capita adjustments described in sections 6105, 6106, 6107 and 
6125 shall be converted into adjustments applicable to each class of 
premium under a methodology to be established by the Board.

       Subpart B--Repayment of Family Credit by Certain Families

SEC. 6110. REPAYMENT OF FAMILY CREDIT BY CERTAIN FAMILIES.

    (a) In General.--Subject to the succeeding provisions of this 
subpart, each family which is provided a family credit under section 
6103(a) for a class of enrollment is liable for repayment of an amount 
equal to the base employment monthly premium (applicable to such class) 
for the month under section 6122.
    (b) Reduction for Self-Employment Payments.--The liability of a 
family under this section for a year shall be reduced (but not below 
zero) by the amount of any employer payments made in the year under 
section 6126 based on the net earnings from self-employment of a family 
member.

SEC. 6111. NO LIABILITY FOR FAMILIES EMPLOYED FULL-TIME; REDUCTION IN 
              LIABILITY FOR PART-TIME EMPLOYMENT.

    (a) In General.--The amount of any liability under section 6110 
shall be reduced, in accordance with rules established by the National 
Health Board consistent with this section, based on employer premiums 
payable under section 6121 with respect to the employment of a family 
member who is a qualifying employee or with respect to a family member. 
In no case shall the reduction under this section result in any payment 
owing to a family.
    (b) Credit for Full-Time and Part-Time Employment.--
            (1) In general.--Under rules of the Board, in the case of a 
        family enrolled under a class of family enrollment, if a family 
        member is a qualifying employee for a month and (except in the 
        case described in section 6114(a)) the employer is liable for 
        payment under section 6121 based on such employment--
                    (A) Full-time employment credit.--If the employment 
                is on a full-time basis (as defined in section 
                1901(b)(2)(A)) the liability under section 6110 shall 
                be reduced by the credit amount described in 
                subparagraph (C).
                    (B) Part-time employment credit.--If the employment 
                is on a part-time basis (as defined in section 
                1901(b)(2)(A)) the liability under section 6110 shall 
                be reduced by the employment ratio (as defined in 
                section 1901(b)(2)(B)) of the credit amount described 
                in subparagraph (C).
                    (C) Full-time monthly credit.--The amount of the 
                credit under this subparagraph, with respect to 
                employment by an employer in a month, is \1/12\ (or, if 
                applicable, the fraction described in paragraph (2)) of 
                the amount owed under section 6110, based on the class 
                of enrollment, for the year.
            (2) Coverage during only part of a year.--In the case of a 
        family that is not enrolled in a community-rated health plan 
        for all the months in a year, the fraction described in this 
        paragraph is 1 divided by the number of months in the year in 
        which the family was enrolled in such a plan.
            (3) Aggregation of credits.--For purposes of paragraph 
        (1)--
                    (A) Individuals.--In the case of an individual who 
                is a qualifying employee of more than one employer in a 
                month, the credit for the month shall equal the sum of 
                the credits earned with respect to employment by each 
                employer. Such sum may exceed the credit amount 
                described in paragraph (1)(C).
                    (B) Couples.--In the case of a couple each spouse 
                of which is a qualifying employee in a month, the 
                credit for the month shall equal the sum of the credits 
                earned with respect to employment by each spouse. Such 
                sum may exceed the credit amount described in paragraph 
                (1)(C).
    (c) Treatment of Change of Enrollment Status.--In the case of a 
family for which the class of family enrollment changes during a year, 
the Board shall establish rules for appropriate conversion and 
allocation of the credit amounts under the previous provisions of this 
section in a manner that reflects the relative values of the base 
employment monthly premiums (as determined under section 6122) among 
the different classes of family enrollment.

SEC. 6112. LIMITATION OF LIABILITY BASED ON INCOME.

    (a) In General.--In the case of an eligible family described in 
subsection (b), the repayment amount required under this subpart (after 
taking into account any work credit earned under section 6111) with 
respect to a year shall not exceed the amount of liability described in 
subsection (c) for the year.
    (b) Eligible Family Described.--An eligible family described in 
this subsection is a family which is determined, under section 1282 by 
the State for the health care coverage area in which the family 
resides, to have wage-adjusted income (as defined in subsection (d)) 
below 300 percent of the applicable poverty level.
    (c) Amount of Liability.--
            (1) Determination.--Subject to subsection (f), in the case 
        of a family enrolled in a class of enrollment with wage-
        adjusted income (as defined in subsection (d)), the amount of 
        liability under this subsection is determined as follows:
                    (A) No obligation if income below income threshold 
                amount or if afdc or ssi family.--If such income is 
                than the income threshold amount (specified in section 
                6104(c)(4)) or if the family is an AFDC or SSI family, 
                the amount of liability is zero.
                    (B) Income above income threshold amount.--If such 
                income is at least such income threshold amount and the 
                family is not an AFDC or SSI family, the amount of 
                liability is the sum of the following:
                            (i) Four percent of income (above income 
                        threshold amount) up to the poverty level.--The 
                        initial marginal rate (specified in paragraph 
                        (2)(A)) of the amount by which--
                                    (I) the wage-adjusted income (not 
                                including any portion that exceeds the 
                                applicable poverty level for the class 
                                of family involved), exceeds
                                    (II) such income threshold amount.
                            (ii) Second marginal rate.--The second 
                        marginal rate (specified in paragraph (2)(B) of 
                        the amount by which--
                                    (I) the wage adjusted income (not 
                                including any portion that exceeds 
                                twice the applicable poverty level for 
                                the class of family involved), exceeds
                                    (II) the applicable poverty level 
                                for the class of family enrollment.
                            (iii) Final marginal rate.--Where wage-
                        adjusted income exceeds 200 percent of the 
                        applicable poverty level, the final marginal 
                        rate (specified in paragraph (2)(C)) of the 
                        amount by which the wage-adjusted income 
                        exceeds 100 percent of the applicable poverty 
                        level.
            (2) Marginal rates.--In paragraph (1)--
                    (A) Initial marginal rate.--The initial marginal 
                rate, for a year for a class of enrollment, is the 
                ratio of--
                            (i) 4 percent of the applicable poverty 
                        level for the class of enrollment for the year, 
                        to
                            (ii) the amount by which such poverty level 
                        exceeds such income threshold amount.
                    (B) Second marginal rate.--The second marginal 
                rate, for a year for the class of enrollment, is 7.6 
                percent.
                    (C) Final marginal rate.--The final marginal rate, 
                for a year for a class of enrollment, is the ratio of--
                            (i) the amount by which (I) the amount of 
                        the repayment amount described in section 
                        6111(a) exceeds (II) 5.8 percent of twice the 
                        applicable poverty level (for the class and 
                        year); to
                            (ii) 200 percent of such poverty level.
            (3) Second marginal rate.--
                    (A) In general.--If, for a class of enrollment for 
                a health care coverage area in a State, the second 
                marginal rate exceeds the final marginal rate, the 
                State may adjust such marginal rates as provided in 
                subparagraph (B).
                    (B) Same rate applicable.--Under an adjustment made 
                by a State under subparagraph (A), the second marginal 
                rate and the final marginal rate shall be the same and 
                shall be the ratio of--
                            (i) the amount by which (I) the amount of 
                        the repayment amount described in section 
                        6111(a) exceeds (II) 4 percent of the 
                        applicable poverty level (for the class and 
                        year); to
                            (ii) 200 percent of such poverty level.
            (4) Monthly application to afdc and ssi families.--
        Paragraph (1) insofar as it relates to an AFDC or SSI family 
        shall be applied so as to reduce to zero the liability amount 
        only for months in which the family is such an AFDC or SSI 
        family.
    (d) Wage-Adjusted Income Defined.--In this subtitle, the term 
``wage-adjusted income'' means, for a family, family adjusted income of 
the family (as defined in section 1282), reduced by the sum of the 
following:
            (1)(A) Subject to subparagraph (B), the amount of any wages 
        included in such family's income that is received for 
        employment which is taken into account in the computation of 
        the amount of employer premiums under section 6121 (without 
        consideration of section 6126).
            (B) The reduction under subparagraph (A) shall not exceed 
        for a year $5,000 (adjusted under section 6104(c)(3)(B)) 
        multiplied by the number of months (including portions of 
        months) of employment with respect to which employer premiums 
        were payable under section 6121 (determined in a manner 
        consistent with section 1901(b)(3)).
            (2) The amount of net earnings from self employment of the 
        family taken into account under section 6126.
            (3) The amount of unemployment compensation included in 
        income under section 85 of the Internal Revenue Code of 1986.
    (e) Determinations.--A family's wage-adjusted income and the amount 
of liability under subsection (c) shall be determined by the applicable 
health care coverage area upon application by a family under subpart B 
of part 3 of subtitle D of title I.
    (f) No Liability for Indians and Certain Veterans and Military 
Personnel.--The provisions of paragraph (3) of section 6104(a) shall 
apply to the reduction in liability under this section in the same 
manner as such paragraph applies to the premium discount under section 
6104.

SEC. 6113. PAYMENTS BY NONQUALIFYING EMPLOYEES.

    (a) In General.--In the case of an eligible family described in 
paragraph (b), the net liability of the family under this section shall 
be the amount described in subsection (c), limited by the amount 
described in subsection (d) plus the amount described in subsection 
(e).
    (b) Eligible Family Described.--The family described in this 
paragraph is a family that has one or more nonqualifying employees and 
has no full-time qualifying employees. The Board shall develop rules 
for applying this section to families whose employment status with 
respect to exempt employers changes during the year.
    (c) Amount.--The amount described in this subsection is the sum 
of--
            (1) the family share as defined in section 6101 (including 
        any discounts under 6104); and
            (2) the family credit repayment amount described in subpart 
        B of title VI (including any reductions under section 6113); 
        reduced by--
            (3) the amount (if any) by which that the premium specified 
        in 6102(a) with respect to such family exceeds the weighted 
        average premium (applicable to the family).
    (d) Limit.--The limit described in this subsection is the 
following:
            (1) for a family with family adjusted income of less than 
        150 percent of the applicable poverty level, 4 percent of 
        family adjusted income;
            (2) for a family with family adjusted income of at least 
        150 percent but less than 175 percent of the applicable poverty 
        level, 4.5 percent of family adjusted income;
            (3) for a family with family adjusted income of at least 
        175 percent but less than 225 percent of the applicable poverty 
        level, 5 percent of family adjusted income; and
            (4) for a family with family adjusted income of at least 
        225 percent but less than 400 percent of the applicable poverty 
        level, 6 percent of family adjusted income.
    (e) The amount described in this subsection is the amount in 
subsection (c)(3).
    (f) Indexing of Percentages.--
            (1) In general.--The percentage of family adjusted income 
        specified in paragraphs (1) through (4) of subsection (d) shall 
        be adjusted for any year after 1994 so that the percentage for 
        the year bears the same ratio to the percentage so specified as 
        the ratio of--
                    (A) 1 plus the general health care inflation factor 
                (as defined in section 6001(a)(3)) for the year, bears 
                to
                    (B) 1 plus the percentage specified in section 1135 
                (relating to indexing of dollar amounts related to cost 
                sharing) for the year.
            (2) Rounding.--Any adjustment under paragraph (1) for a 
        year shall be rounded to the nearest multiple of 1/10 of 1 
        percentage point.

SEC. 6114. SPECIAL TREATMENT OF CERTAIN RETIREES AND QUALIFIED SPOUSES 
              AND CHILDREN.

    (a) Treatment as Full-Time Employee.--Subject to subsection (d), an 
individual who is an eligible retiree (as defined in subsection (b)) or 
a qualified spouse or child (as defined in subsection (c)) for a month 
in a year (beginning with 1998) is considered, for purposes of section 
6112, to be a full-time employee described in such section in such 
month.
    (b) Eligible Retiree Defined.--In this section, the term ``eligible 
retiree'' means, for a month, an individual who establishes to the 
satisfaction of the State (for the health care coverage area in which 
the individual resides), pursuant to rules of the Secretary, that the 
individual, as of the first day of the month--
            (1) is at least 55, but less than 65, years of age,
            (2) is not employed on a full-time basis (as defined in 
        section 1901(b)(2)(A)),
            (3) would be eligible (under section 226(a) of the Social 
        Security Act) for hospital insurance benefits under part A of 
        title XVIII of such Act if the individual were 65 years of age 
        based only on the employment of the individual, or has 
        completed 40 quarters of employment through a State or local 
        government, or has completed 40 quarters of employment through 
        a State or local government, and
            (4) is not a medicare-eligible individual.
    (c) Qualified Spouse or Child Defined.--In subsection (a), the term 
``qualified spouse or child'' means, in relation to an eligible retiree 
for a month, an individual who establishes to the satisfaction of the 
community-rated health plan (for the health care coverage area in which 
the individual resides) under rules of the Secretary that the 
requirements in one of the following paragraphs is met with respect to 
the individual:
            (1) The individual (A) is under 65 years of age and is (and 
        has been for a period of at least one year) married to an 
        eligible retiree or (B) is a child of the eligible retiree.
            (2) In the case of a person who was an eligible retiree at 
        the time of the person's death--
                    (A) the individual was (and had for a period of at 
                least one year been) married to the retiree at the time 
                of the person's death,
                    (B) the individual is under 65 years of age,
                    (C) the individual is not employed on a full-time 
                basis (as defined in section 1901(b)(2)(A)),
                    (D) the individual is not remarried, and
                    (E) the deceased spouse would still be an eligible 
                retiree in the month if such spouse had not died.
            (3) The individual is a child of an individual described in 
        paragraph (2).
    (d) Application.--An individual may not be determined to be an 
eligible retiree or qualified spouse or child unless an application has 
been filed with the State. Such application shall contain such 
information as the Secretary may require to establish such status and 
verify information in the application. Any material misrepresentation 
in the application is subject to a penalty in the same manner as a 
misrepresentation described in section 1282.

SEC. 6115. SPECIAL TREATMENT OF CERTAIN MEDICARE BENEFICIARIES.

    In the case of an individual who would be a medicare-eligible 
individual in a month but for the application of section 1012(a) on the 
basis of employment (in the month or a previous month) of the 
individual or the individual's spouse or parent, the individual (or 
spouse or parent, as the case may be) so employed is considered, for 
purposes of section 6112, to be a full-time employee described in such 
section in such month.

                   PART 2--EMPLOYER PREMIUM PAYMENTS

         Subpart A--Employers Exempt From Coverage Obligations

SEC. 6116. EXEMPTION FROM COVERAGE OBLIGATIONS.

    An exempt employer as defined section 6117 shall be exempt from 
requirements described in this part, except the requirement described 
in section 6120, unless the employer elects under section 6118 to be 
treated as a community-rated employer.

SEC. 6117. EXEMPT EMPLOYER DEFINED.

    (a) In General.--In this section--
            (1) the term ``exempt employer'' means an employer that 
        does not employ, on average, more than 10 full-time equivalent 
        employees;
            (2) and is an employer with average annual wages per full-
        time equivalent employee of less than $24,000; and
            (3) the average number of full-time equivalent employees 
        shall be determined by averaging the number of full-time 
        equivalent employees employed by the employer in each countable 
        month during the year.
    (b) Countable Month.--In paragraph (1), the term ``countable 
month'' means, for an employer, a month in which the employer employs 
any qualifying employee.
    (c) Determinations.--The number of full-time equivalent employees 
shall be determined using the rules under section 1901(b)(2).
    (d) Exempt Employer.--The term ``exempt employer'' shall not 
include an individual described in section 6126(c)(2).

SEC. 6118. ELECTION.

    A exempt employer may elect to be treated as a community-rated 
employer under the procedures described in section.

SEC. 6119. TREATMENT OF EXEMPT EMPLOYERS.

    (a) In General.--
            (1) Community rated employer.--An exempt employer shall be 
        treated as a community rated employer as of the first date of 
        the first year following an election made under section 6118.
            (2) Eligibility for discounts.--An exempt employer making 
        an election under section 6118 shall be eligible for discounts 
        under 6123.

SEC. 6120. NONELECTING EXEMPT EMPLOYER.

    (a) In General.--The term ``nonelecting exempt employer'' means an 
exempt employer that has not made an election under section 6118.
    (b) Assessment in Lieu of Participation.--Each State shall 
establish a mechanism to collect an assessment of payroll from each 
non-electing employer to be used to defray the cost of subsidies to the 
employees of such employer.
    (c) Amount of Assessment.--For purposes of subsection (b)--
            (1) with respect to employers with 5 or fewer full-time 
        equivalent employees, the assessment of payroll under such 
        subsection shall be 1 percent; and
            (2) with respect to employers with more than 6 but less 
        than 11 full-time equivalent employees, the assessment of 
        payroll under such subsection shall be 2 percent.

                  Subpart B--Community-Rated Employers

SEC. 6121. EMPLOYER PREMIUM PAYMENT REQUIRED.

    (a) Requirement.--
            (1) In general.--Each community-rated employer described in 
        paragraph (2) for a month shall pay at least an amount equal to 
        the sum across all qualifying employees of the amount specified 
        in subsection (b) for each such qualifying employee of the 
        employer. Such payments shall be made in accordance with 
        section 1345(c).
            (2) Employer described.--An employer described in this 
        paragraph for a month is an employer that--
                    (A) in a month employs one or more qualifying 
                employees (as defined in section 1901(b)(1)); and
                    (B) is not exempt under section 3127 of the 
                Internal Revenue Code of 1986 from the taxes imposed in 
                section 3111 of such code.
            (3) Treatment of certain employment by experience-rated 
        employers.--An experience-rated employer shall be deemed, for 
        purposes of this subpart, to be a community-rated employer with 
        respect to qualifying employees who are not experience rate 
        eligible individuals.
    (b) Premium Payment Amount.--
            (1) In general.--Except as provided in section 6123 
        (relating to a discount for certain employers), section 6124 
        (relating to large employers electing coverage through 
        community-rated health plans), section 6125 (relating to the 
        employer collection shortfall add-on), and section 6127 
        (relating to qualified worksite health promotion programs, the 
        amount of the employer premium payment, for a month for each 
        qualifying employee of the employer who is residing in a health 
        care coverage area, is the payment amount computed under 
        paragraph (2) with respect to such employee in such area.
            (2) Payment amount for each employee in a class of family 
        enrollment.--Subject to paragraph (4), the payment amount under 
        this paragraph, for an employer for each qualifying employee 
        residing in a health care coverage area, is the product of--
                    (A) the base employment monthly premium determined 
                under section 6122 for the applicable class of family 
                enrollment (as defined in paragraph (3)) for the 
                previous month for the health care coverage area, and
                    (B) the full-time employment ratio (as defined in 
                section 1901 for the previous month.
            (3) Applicable class of family enrollment.--The applicable 
        class of family enrollment described in this paragraph is the 
        class of family enrollment selected by the qualifying employee.
            (4) Treatment of certain employees.--In applying this 
        subpart in the case of a qualifying employee (other than a 
        medicare-eligible individual) who is not enrolled in any health 
        plan--
                    (A) the employee is deemed enrolled in a community-
                rated health plan (for the health care coverage area in 
                which the individual resides) in the dual parent class 
                of enrollment, and
                    (B) if the employee's residence is not known, the 
                employee is deemed to reside in the health care 
                coverage area in which the employee principally is 
                employed for the employer.
            (5) Transitional rules for first month in first year for a 
        state.--In the case of an employer for a State in the first 
        month of the State's first year--
                    (A) the premium amount for each qualifying employee 
                for such month shall be computed by substituting 
                ``month'' for ``previous month'' in paragraph (2);
                    (B) payment for such month shall be made on the 
                first of the month based on an estimate of the payment 
                for such month;
                    (C) an adjustment shall be made to the payment in 
                the following month to reflect the difference between 
                the payment in the first month and the payment in the 
                following month (calculated without regard to the 
                adjustment under this subparagraph); and
                    (D) the reconciliation of premiums for such first 
                month under section 1602(c) shall be included in the 
                reconciliation of premiums for the following 12 months.
            (6) Special rules for divided families.--In the case of an 
        individual who is a qualifying employee of an employer, if the 
        individual has a spouse or child who is not treated as part of 
        the individual's family because of section 1012--
                    (A) the employer premium payment under this section 
                shall be computed as though such section had not 
                applied, and
                    (B) the State shall provide for proportional 
                payments (consistent with rules established by the 
                Secretary) to the health plans (if different) of the 
                qualifying employee and of the employee's spouse and 
                children.
            (7) Special rules for certain employees residing abroad.--
        The Office of Personnel Management shall determine the 
        appropriate (voluntary) employer premium amount with respect to 
        each employee described in section 1707 electing to purchase 
        coverage through the FEHBP.
    (c) Application During Transition Period.--
            (1) In general.--For purposes of applying this subpart in 
        the case of an employer described in paragraph (3), there shall 
        only be taken into account qualifying employees (and wages of 
        such employees) who reside in a participating State.
            (2) Exception.--Paragraph (1) shall not apply in 
        determining the average number of full-time equivalent 
        employees or whether an employer is a medium employer.
            (3) Employer described.--An employer described in this 
        paragraph is an employer that employs one or more qualifying 
        employees in a participating State and one or more qualifying 
        employees in a State that is not a participating State.
    (d) Exemption From Premium Payments.--An employer shall be exempt 
from the payment of health care premiums for exempt individuals defined 
in section 1902(19).

SEC. 6122. COMPUTATION OF BASE EMPLOYMENT MONTHLY PREMIUM.

    (a) In General.--Each State shall provide for the computation for 
each year (beginning with the first year) of a base employment monthly 
premium for each class of family enrollment as follows:
            (1) Individual enrollment.--The base employment monthly 
        premium for the individual class of enrollment is equal to \1/
        12\ of 80 percent of the credit-adjusted weighted average 
        premium (as defined in paragraph (4)) for the health care 
        coverage area for the individual class of enrollment.
            (2) Couple-only enrollment.--
                    (A) In general.--The base employment monthly 
                premium for the couple-only class of enrollment is 
                equal to \1/12\ of 80 percent of the product described 
                in subparagraph (B), divided by the sum described in 
                subparagraph (C).
                    (B) Total premiums for couple-only enrollments.--
                The product described in this subparagraph is--
                            (i) the credit-adjusted weighted average 
                        premium for such health care coverage area for 
                        the couple-only class of enrollment, multiplied 
                        by
                            (ii) the sum, for all the months in the 
                        year, of the number of covered families 
                        receiving coverage through community-rated 
                        health plans within such class of enrollment in 
                        each such month.
                    (C) Number of workers and extra workers.--The sum 
                described in this subparagraph is--
                            (i) the sum specified in subparagraph 
                        (B)(ii), plus
                            (ii) the number of additional workers 
                        (determined under subsection (b)(1)), for 
                        families receiving coverage within such class 
                        from community-rated health plans offered for 
                        the health care coverage area.
            (3) Single and dual parent enrollments.--
                    (A) In general.--The base employment monthly 
                premium for the single parent and dual parent classes 
                of enrollment is equal to \1/12\ of 80 percent of the 
                sum described in subparagraph (B), divided by the sum 
                described in subparagraph (C).
                    (B) Total premiums for single and dual parent 
                enrollments.--The sum described in this subparagraph is 
                the sum of the products described in the following 
                clauses:
                            (i) Total premiums for single parent 
                        enrollment.--The product of--
                                    (I) the credit-adjusted weighted 
                                average premium for the health care 
                                coverage area for the single parent 
                                class of enrollment, multiplied by
                                    (II) the sum, for all the months in 
                                the year, of the number of covered 
                                families receiving coverage through 
                                community-rated health plans within 
                                such class of enrollment in each such 
                                month.
                            (ii) Total premiums for dual parent 
                        enrollment.--The product of--
                                    (I) the credit-adjusted weighted 
                                average premium for such health care 
                                coverage area for the dual parent class 
                                of enrollment, multiplied by
                                    (II) the sum, for all the months in 
                                the year, of the number of covered 
                                families receiving coverage through 
                                community-rated health plans within 
                                such class of enrollment in each such 
                                month.
                    (C) Number of workers and extra workers.--The sum 
                described in this subparagraph is--
                            (i) the sum specified in subparagraph 
                        (B)(i)(II); plus
                            (ii) the sum specified in subparagraph 
                        (B)(ii)(II); plus
                            (iii) the number of additional workers 
                        (determined under subsection (b)(1)), for 
                        families receiving coverage within the dual 
                        parent class of enrollment from community-rated 
                        health plans offered for the health care 
                        coverage area.
            (4) Credit-adjusted weighted average premium defined.--In 
        this subsection, the term ``credit-adjusted weighted average 
        premium'' means, for a class of enrollment and a health care 
        coverage area, the weighted average premium for the class and 
        area, reduced by the amount described in section 6106(b) for 
        such class and area.
    (b) Determination of Additional Workers for Couple-Only and Dual 
Parent Class.--
            (1) In general.--Subject to paragraph (4), the State shall 
        determine, for each couple class of family enrollment and in a 
        manner specified by the Board, an estimated total number of 
        additional workers equal to--
                    (A) 12 times the health care coverage area-wide 
                monthly average number of premium payments (as 
                determined under paragraph (2)) for covered families 
                (as defined in paragraph (3)) within such class of 
                enrollment, minus
                    (B) the sum described in subsection (a)(2)(B)(ii) 
                or (a)(3)(B)(ii)(II) for the couple-only and dual 
                parent classes, respectively.
            (2) Computation of health care coverage area-wide monthly 
        average number.--
                    (A) In general.--In determining the health care 
                coverage area-wide monthly average number of premium 
                payments under paragraph (1)(A), a covered family shall 
                count for a month as 1, or, if greater, the number 
                computed under subparagraph (B) (but in no case greater 
                than 2).
                    (B) Counting of families in which both spouses are 
                qualifying employees.--The number computed under this 
                subparagraph over all families within a couple-only or 
                dual parent class of enrollment in which both spouses 
                are qualifying employees is determined on a health care 
                coverage area-wide basis based on the following:
                            (i) For such a spouse, determine, using the 
                        rules under section 1902 how many full-time 
                        equivalent employees the spouse is counted as, 
                        but not to exceed 1 for either spouse.
                            (ii) Add the 2 numbers determined under 
                        clause (i) for spouses in such families.
            (3) Covered family defined.--In this subsection, the term 
        ``covered family'' means a family other than--
                    (A) an SSI family or AFDC family,
                    (B) a family in which a spouse is a medicare-
                eligible individual, or
                    (C) a family that is enrolled in a health plan 
                other than a community-rated health plan.
            (4) Adjustment to account for use of estimates.--Subject to 
        section 9201, if the total receipts of a State for all 
        community-rated health plans in a year under this subpart 
        exceeds, or is less than, the total of such receipts estimated 
        for the State (based on the base employment monthly premium 
        under subsection (a)), because of a difference between--
                    (A) the State's estimate of the estimated total 
                number of additional workers for the State and the 
                estimate of the number of covered families, and
                    (B) the actual total number of additional workers 
                and the actual number of covered families,
        the estimated total number of additional workers to be applied 
        under this section in the second succeeding year shall be 
        reduced, or increased, respectively, in a manner that results 
        in total receipts of the State under this subpart in such 
        succeeding year being increased or decreased by the amount of 
        such excess (or deficit).
    (c) Basis for Determinations.--
            (1) Premiums.--The determinations of premiums and families 
        under plans under this section shall be made in a manner 
        determined by the Board and based on the premiums and families 
        used by the Board in carrying out subtitle A and shall be based 
        on estimates on an annualized basis.
            (2) Employment.--The determinations of employment under 
        this section for the first year for a State shall be based on 
        estimates of employment established by the State in accordance 
        with standards promulgated by the Secretary of Labor in 
        consultation with the National Health Board.
            (3) Reports.--In accordance with rules established by the 
        Secretary of Labor in consultation with the National Health 
        Board, the State may require large group purchaser employers to 
        submit such periodic information on employment as may be 
        necessary to monitor the determinations made under this 
        section, including months and extent of employment.
    (d) Timing of Determination.--Determinations under this section for 
a year shall be made by not later than December 1, or such other date 
as the Board may specify, before the beginning of the year.

SEC. 6123. PREMIUM DISCOUNT FOR CERTAIN EMPLOYERS.

    (a) Employer Discount.--
            (1) In general.--Subject to section 6124(c) and section 
        6125 (relating to the employer collection shortfall add-on), 
        the amount of the employer premium payment required under 
        section 6121(b) for a community-rated employer for any year for 
        a qualifying employee shall not exceed the limiting percentage 
        (as defined in subsection (b)) of such qualifying employee's 
        wages for that year.
            (2) Exclusion of federal government employers.--Paragraph 
        (1) shall not apply to the Federal Government.
    (b) Limiting Percentage Defined.--In subsection (a)--
            (1) Any employer.--For an employer that is not a medium-
        sized employer (as defined in subsection (c)) or an exempt 
        employer (as defined in subsection 6117), the limiting 
        percentage is 12 percent.
            (2) Medium-sized employers.--For an employer that is a 
        medium-sized employer and that has an average number of full-
        time equivalent employees and average annual wages per full-
        time equivalent employee (as determined under subsection (d)), 
        the limiting percentage is the applicable percentage determined 
        based on following table:
 

----------------------------------------------------------------------------------------------------------------
  Average number of                                                                                             
full-time equivalent  $0-$12,000  $12,001-$15,000  $15,001-$18,000  $18,001-$21,000  $21,001-$24,000  $24,001 or
      employees                                                                                          more   
----------------------------------------------------------------------------------------------------------------
Fewer than 15.......     4.2%           5.5%             6.8%             8.1%             9.4%           12%   
15 but fewer than 25     5.5%           6.8%             8.1%             9.4%            10.7%           12%   
25 but fewer than 50     6.8%           8.1%             9.4%            10.7%             12%            12%   
50 but not over 75..     8.1%           9.4%            10.7%             12%              12%            12%   
----------------------------------------------------------------------------------------------------------------

            (3) Small employers.--For an employer that is an exempt 
        employer and elects to be a community-rated employer (in 
        accordance of section 6119), the limiting percentage is the 
        limiting percentage described in paragraph (2).
            (4) Experience-rated employers.--The value of discounts 
        provided to an experience-rated employer shall not exceed the 
        amount that the employer would receive if the employer was 
        treated as a community-rated employer.
    (c) Medium-sized Employer Defined.--
            (1) In general.--In this section--
                    (A) the term ``medium sized employer'' means an 
                employer that does not employ, on average, less than 11 
                full-time equivalent employees or more than 75 full-
                time equivalent employees; and
                    (B) the average number of full-time equivalent 
                employees shall be determined by averaging the number 
                of full-time equivalent employees employed by the 
                employer in each countable month during the year.
            (2) Countable month.--In paragraph (1), the term 
        ``countable month'' means, for an employer, a month in which 
        the employer employs any qualifying employee.
            (3) Determinations.--The number of full-time equivalent 
        employees shall be determined using the rules under section 
        1901(b)(2).
    (d) Average Annual Wages per Full-Time Equivalent Employee 
Defined.--
            (1) In general.--In this section, the term ``average annual 
        wages per full-time equivalent employee'' means, for an 
        employer for a year--
                    (A) the total wages paid in the year to individuals 
                who, at the time of payment of the wages, are 
                qualifying employees of the employer; divided by
                    (B) the number of full-time equivalent employees of 
                the employer in the year.
            (2) Determination.--The Board may establish rules relating 
        to the computation of the average annual wages for employers.
    (e) Determinations.--For purposes of this section, the number of 
employees and average wages shall be determined on an annual basis.
    (f) Treatment of Certain Self-Employed Individuals.--In the case of 
an individual who is a partner in a partnership, is a 2-percent 
shareholder in an S corporation (within the meaning of section 1372 of 
the Internal Revenue Code of 1986), or is any other individual who 
carries on a trade or business as a sole proprietorship, for purposes 
of this section--
            (1) the individual is deemed to be an employee of the 
        partnership, S corporation, or proprietorship, and
            (2) the individual's net earnings from self employment 
        attributable to the partnership, S corporation, or sole 
        proprietorship are deemed to be wages from the partnership, S 
        corporation, or proprietorship.
    (g) Application to Employers.--An employer that claims that this 
section applies--
            (1) shall provide notice to the State of the claim at the 
        time of making payments under this subpart; and
            (2) shall make available such information (and provide 
        access to such information) as the State may require (in 
        accordance with regulations of the Secretary of Labor) to audit 
        the determination of--
                    (A) whether the employer is a medium employer, and, 
                if so, the average number of full-time equivalent 
                employees and average annual wages of the employer; and
                    (B) the total wages paid by the employer for 
                qualifying employees.
    (h) Treatment of Multi-Area Employers.--In the case in which this 
section is applied to an employer that makes employer premium payments 
in more than one health care coverage areas, the reduction under this 
section shall be applied in a pro-rated manner to the premium payments 
made to all such areas.

SEC. 6124. PAYMENT ADJUSTMENT FOR CERTAIN LARGE EMPLOYERS.

    (a) Application of Section.--Except as otherwise provided in this 
subsection, this section shall apply to the employers described in 
section 6133.
    (b) Additional Amount.--
            (1) In general.--If an employer subject to this section for 
        a year has an excess risk proportion (specified in paragraph 
        (3)) of greater than zero with respect to a health care 
        coverage area, then the employer shall provide, on a monthly 
        basis, for payment to the premium clearinghouse for such area 
        of an amount equal to \1/12\ of the excess risk amount 
        described in paragraph (2) for the year.
            (2) Excess risk amount.--The excess risk amount described 
        in this paragraph, for an employer for a year with respect to a 
        health care coverage area, is equal to the product of the 
        following:
                    (A) The final weighted average per capita premium 
                rate for the area for the year.
                    (B) The total average number of community-rate 
                eligible individuals who--
                            (i) are full-time employees (or family 
                        members of such employees) of the employer, and
                            (ii) residing in the area,
                in the year.
                    (C) The excess risk proportion (specified in 
                paragraph (3)) for the employer for such area.
            (3) Excess risk proportion.--
                    (A) In general.--The ``excess risk proportion'', 
                specified in this paragraph, with respect to an 
                employer and a health care coverage area, is a 
                percentage that reflects, for the year involved, the 
                amount by which--
                            (i) the average demographic risk for 
                        employees (and family members) described in 
                        paragraph (2)(B) residing in the area, exceeds
                            (ii) the average demographic risk for all 
                        community-rate eligible individuals residing in 
                        the area.
                    (B) Measurement of demographic risk.--
                            (i) In general.--Demographic risk under 
                        subparagraph (A) shall be measured, in a manner 
                        specified by the Board, based on the 
                        demographic characteristics described in 
                        section 6001(c)(1)(A), that relate to the 
                        actuarial value of the comprehensive benefit 
                        package.
                            (ii) Provision of information.--Each 
                        employer to which this section applies shall 
                        submit, to each State for which an additional 
                        payment may be required under this section, 
                        such information (and at such time) as the 
                        Board may require in order to determine the 
                        demographic risk referred to in subparagraph 
                        (A)(i).

SEC. 6125. EMPLOYER COLLECTION SHORTFALL ADD-ON.

    (a) In General.--The amount payable by an employer under this 
subpart shall be increased by the amount computed under subsection (b).
    (b) Amount.--The amount under this subsection for an employer is 
equal to the premium payment amount that would be payable under section 
6121(a) if the per capita collection shortfall amount (computed under 
section 6107(b)(1)) for the year were substituted for the weighted 
average discount rate for the year. The weighted average discount rate 
is used under section 6000(b)(1) in computing the weighted average 
premium, which in turn is used under section 6122(a)(1) in computing 
the base employment monthly premium, which in turn is used under 
section 6121(b)(2)(A) in computing the employer premium amount.
    (c) Discount Not Applicable.--Section 6123 shall not apply to the 
increase in the amount payable by virtue of this section.

SEC. 6126. APPLICATION TO SELF-EMPLOYED INDIVIDUALS.

    (a) In General.--A self-employed individual (as defined in section 
1901(c)(2)) shall be considered, for purposes of this subpart to be an 
employer of himself or herself and to pay wages to himself or herself 
equal to the amount of net earnings from self-employment (as defined in 
section 1901(c)(1)).
    (b) Credit for Employer Premiums.--
            (1) In general.--In the case of a self-employed individual, 
        the amount of any employer premium payable by virtue of 
        subsection (a) in a year shall be reduced (but not below zero) 
        by the sum of the following:
                    (A) Subject to paragraph (2), the amount of any 
                employer premiums payable under this subpart 
                (determined not taking into account any adjustment in 
                the premium amounts under section 6123 or 6124) with 
                respect to the employment of that individual in the 
                year.
                    (B) The product of (i) the number of months in the 
                year the individual was employed on a full-time basis 
                by a experience-rated employer, and (ii) the employer 
                premium that would have been payable for such months 
                under this subpart (determined not taking into account 
                any adjustment in the premium amounts under section 
                6123 or 6124) for the class of enrollment if such 
                employer had been a community-rated employer.
    (c) Special Rule for Certain Self-Employed Individuals.--
            (1) In general.--In the case of certain self-employed 
        individuals described in paragraph (2), the payment obligation 
        under this section shall be limited to the liability described 
        in subsection (c) of section 6113 (substituting the amount of 
        net earnings from self employment (defined in section 
        1901(c)(1)) of such individual for wage adjusted income).
            (2) Self-employed individuals.--The individuals described 
        in this paragraph are self-employed individuals (as defined in 
        section 1901(c)(2)) for a year who are not employers with 
        respect to other qualifying employees in such year.
            (3) Special rule for certain closely-held businesses.--
                    (A) In general.--In the case of an individual who--
                            (i) has wage-adjusted income (as defined in 
                        section 6113(d), determined without regard to 
                        paragraphs (1)(B) and (2) thereof) that exceeds 
                        300 percent (or such higher percentage as the 
                        Board may establish) of the applicable poverty 
                        level, and
                            (ii) is both a substantial owner and an 
                        employee of a closely held business,
                the amount of any reduction under paragraph (1)(A) that 
                is attributable to the individual's employment by that 
                business shall be appropriately reduced in accordance 
                with rules prescribed by the Board, in order to prevent 
                individuals from avoiding payment of the full amount 
                owed through fraudulent or secondary employment 
                arrangements.
                    (B) Closely held business.--For purposes of 
                subparagraph (A), a business is ``closely held'' if it 
                is an employer that meets the requirements of section 
                542(a)(2) of the Internal Revenue Code of 1986 or 
                similar requirements as appropriate in the case of a 
                partnership or other entity.

                   Subpart C--Large Group Purchasers

SEC. 6131. LARGE EMPLOYER PREMIUM PAYMENT REQUIRED.

    (a) Per Employee Premium Payment.--Subject to section 6124, each 
experience-rated employer of a large group purchaser that in a month in 
a year employs a qualifying employee who is--
            (1) enrolled in an experience-rated health plan offered by 
        the purchaser, shall provide for a payment toward the premium 
        for the plan for such employee in an amount at least equal to 
        the large group employer premium payment specified in 
        subsection (b); or
            (2) is not so enrolled, shall make employer premium 
        payments with respect to such employment under subpart B in the 
        same manner as if the employer were a community-rated employer 
        (except as otherwise provided in such subpart).
    (b) Large Group Employer Premium.--
            (1) Amount.--
                    (A) In general.--The amount of the large employer 
                premium payment for a month in a year for a class of 
                family enrollment for a family residing in a premium 
                area (established under section 1404(e)) is 80 percent 
                of the weighted average monthly premium of the 
                experience-rated health plans offered by the large 
                group purchaser for that class of enrollment for 
                families residing in that area.
                    (B) Application to self-insured plans.--In applying 
                this paragraph in the case of one or more experience-
                rated health plans that are self-insured plans--
                            (i) the ``premium'' for the plan is the 
                        actuarial equivalent of such premium, based 
                        upon the methodology (or such other consistent 
                        methodology) used under section 6021(a) 
                        (relating to application of premium caps to 
                        experience-rated health plans), and
                            (ii) the premium amount, for different 
                        classes and, if applicable, for different 
                        premium areas, shall be computed in a manner 
                        based on such factors as may bear a reasonable 
                        relationship to costs for the provision of the 
                        comprehensive benefit package to the different 
                        classes in such areas.
                The Secretary of Labor shall establish rules to carry 
                out this subparagraph.
            (2) Low-wage employees.--In the case of a low-wage employee 
        entitled to a premium discount under section 6104(a)(2), the 
        amount of the employer premium payment for a month in a year 
        for a class of family enrollment shall be increased by the 
        amount of such premium discount.
    (c) Determinations.--
            (1) Basis.--Determinations under this section shall be made 
        based on such information as the Secretary of Labor shall 
        specify.
            (2) Timing.--Determinations of the monthly premiums under 
        this section for months in a year shall be made not later than 
        December 1 of the previous year.
    (d) Exemption From Premium Payments.--An employer shall be exempt 
from the payment of health care premiums for exempt individuals defined 
in section 1902(16).

SEC. 6132. ASSISTANCE FOR LOW-WAGE FAMILIES.

    (a) In General.--Each large group purchaser shall make an 
additional contribution towards the enrollment in health plans of the 
purchaser by certain low-wage families in accordance with section 
6131(b)(2).
    (b) Reduction in Cost Sharing.--An experience-rated health plan 
shall provide reductions in cost sharing to levels specified in section 
1281 to experience-rated individuals who would be eligible for such 
reductions were they enrolled in a community-rated plan.

SEC. 6133. EXCESS INCREASE IN PREMIUM EQUIVALENT.

    If the Secretary of Labor finds that a large group purchaser (other 
than a large employer) is in violation of the requirements of section 
6022 (relating to prohibition against excess increase in premium 
expenditures), the Secretary shall terminate the sponsorship in 
accordance with such section.

SEC. 6134. COST CONTROL.

    Each large group purchaser shall control covered expenditures in a 
manner that meets the requirements of part 2 of subtitle A of this 
title.

SEC. 6135. COORDINATION OF PAYMENTS.

    In the case of a married couple in which one spouse is a qualifying 
employee of a community-rated plan or another large group purchaser, 
the large group purchaser shall make such payments as are required 
under this Act to the plan in which the family is enrolled pursuant to 
rules issued by the Secretary of Labor.

   Subtitle C--Payments to Health Plans and Miscellaneous Provisions

SEC. 6200. ASSISTANCE TO PLANS.

    States shall be responsible for assisting health plans and 
cooperatives in the collection of premium payments. A State may 
establish administrative systems (including arrangements with private 
entities) to facilitate the collection of premiums from employers and 
families and the distribution of such premiums to health plans, 
consistent with rules promulgated by the Board.

SEC. 6201. COMPUTATION OF BLENDED PLAN PAYMENT AMOUNT.

    (a) In General.--For purposes of section 6203, the payment amount 
for a community-rated health plan in a health care coverage area in a 
year is equal to a blended payment amount reflecting the final accepted 
bid for each plan, the number of enrollees in each premium class, and 
the proportion of AFDC and SSI beneficiaries throughout the health care 
coverage area served by the plan.
    (b) Methodology.--The Board shall establish a methodology by which 
the blended payment amount described in subsection (a) shall be 
computed and applied.
    (c) Applicable Rates.--For purposes of establishing the metholodogy 
described in subsection (b), if a community-rated health plan has more 
than one applicable premium rate (as described in section 6011(d)(2)), 
such health plan shall be treated as a separate health plan with 
respect to each applicable premium rate and the enrollment in each such 
health plan shall be considered to be the number of individuals 
enrolled in the community-rated plan at the applicable premium rate.

SEC. 6203. PAYMENT TO COMMUNITY-RATED HEALTH PLANS.

    (a) Computation of Blended Plan Payment Amount.--For purposes of 
making payment adjustments to plans under this section, a State shall 
compute, under section 6201(a), a blended plan payment amount for each 
community-rated health plan for enrollment for a year.
    (b) Amount of Payment to Plans.--
            (1) In general.--Subject to subsection (d) and section 
        6121(b)(5)(B), a State shall provide for payment to each 
        community-rated health plan, in which a community-rated 
        individual or family is enrolled, an amount equal to the net 
        blended payment amount (described in paragraph (2)), adjusted 
        (consistent with subsection (c)) to take into account the 
        relative actuarial risk associated with the coverage with 
        respect to the individual or family.
            (2) Net blended payment amount.--The net blended payment 
        amount described in this paragraph is the blended plan payment 
        amount (determined under section 6201(a)), reduced by--
                    (A) such amount multiplied by the sum of--
                            (i) the administrative allowance 
                        percentage, computed under section 1213, and
                            (ii) 1.5 percentage points,
                    (B) any plan payment reduction imposed under 
                section 6011 for the plan for the year.
    (c) Application of Risk Adjustment and Reinsurance Methodology.--A 
State shall use the reinsurance and risk adjustment methodology 
developed under section 1641 in making payments to health plans under 
this section, except as provided in section 1642.
    (d) Treatment of Veterans, Military, and Indian Health Plans and 
Programs.--
            (1) Veterans health plan.--In applying this subtitle (and 
        title VI) in the case of a community-rated health plan that is 
        a veterans health plan of the Department of Veterans Affairs, 
        the following rules apply:
                    (A) For purposes of applying subtitle A of title 
                VI, families enrolled under the plan shall not be taken 
                into account.
                    (B) The provisions of subtitle A of title VI shall 
                not apply to the plan, other than such provisions as 
                require the plan to submit a per capita amount for each 
                health care coverage area on a timely basis, which 
                amount shall be treated as the final accepted bid of 
                the plan for the area for purposes of subtitle B of 
                such title and this subtitle. This amount shall not be 
                subject to negotiation and not subject to reduction 
                under section 6011.
                    (C) For purposes of computing the blended plan per 
                capita payment amount under section 6201(a), the AFDC 
                and SSI proportions (under section 6202(a)) are deemed 
                to be 0 percent.
            (2) Uniformed services health plan.--In applying this 
        subtitle (and title VI) in the case of a community-rated health 
        plan that is a Uniformed Services Health Plan of the Department 
        of Defense, the following rules apply:
                    (A) For purposes of applying subtitle A of title 
                VI, families enrolled under the plan shall not be taken 
                into account.
                    (B) The provisions of subtitle A of title VI shall 
                not apply to the plan, other than such provisions as 
                require the plan to submit a per capita amount on a 
                timely basis, which amount shall be treated as the 
                final accepted bid of the plan for the area involved 
                for purposes of subtitle B of such title and this 
                subtitle. This amount shall not be subject to 
                negotiation and not subject to reduction under section 
                6011. The Board, in consultation with the Secretary of 
                Defense, shall establish rules relating to the area (or 
                areas) in which such a bid shall apply.
                    (C) For purposes of computing the blended plan per 
                capita payment amount under section 6201(a), the AFDC 
                and SSI proportions (under section 6202(a)) are deemed 
                to be 0 percent.
            (3) Indian health programs.--In applying this subtitle (and 
        title VI) in the case of a health program of the Indian Health 
        Service, the following rules apply:
                    (A) Except as provided in this paragraph, the plan 
                shall not be considered or treated to be a community-
                rated health plan and for purposes of applying title 
                VI, families enrolled under the program shall not be 
                taken into account.
                    (B) In accordance with rules established by the 
                Secretary, States (or contracting entities under 
                section 1252, at the election of the State) shall act 
                as agents for the collection of employer premium 
                payments (including payments of large group purchasers) 
                required under subtitle B of title VI with respect to 
                qualifying employees who are enrolled under a health 
                program of the Indian Health Service. The Secretary 
                shall permit States to retain a nominal fee to 
                compensate them for such collection activities. In 
                applying this subparagraph, the family share of premium 
                for such employees is deemed to be zero for electing 
                Indians (as defined in section 1012(d)(3)) and for 
                other employees is the amount of the premium 
                established under section 8306(b)(4)(A), employees are 
                deemed to be residing in the area of residence (or area 
                of employment), as specified under rules of the 
                Secretary, and the class of enrollment shall be such 
                class (or classes) as specified under rules of the 
                Secretary.

SEC. 6204. CALCULATION AND PUBLICATION OF GENERAL FAMILY SHARE AND 
              GENERAL EMPLOYER PREMIUM AMOUNTS.

    (a) Family Share.--Each State shall compute and publish the 
following components of the general family share of premiums for each 
health care coverage area designated by the State:
            (1) Plan premiums.--For each plan offered, the applicable 
        premiums for such plan for each class of family enrollment 
        (including the amount of any family collection shortfall).
            (2) Qualified worksite health promotion.--For each plan 
        offered, the premium discount for each level of qualified 
        worksite health promotion program.
            (3) Family credit.--The family credit amount for each class 
        of family enrollment, under section 6103.
            (4) Excess premium credit.--The amount of any excess 
        premium credit provided under section 6105 for each class of 
        family enrollment.
            (5) Large group purchaser opt-in credit.--The amount of any 
        large group purchaser opt-in credit provided under section 6106 
        for each class of family enrollment.
    (b) Employer Premiums.--Each State shall compute and publish the 
following components of the general employer premium payment amount for 
each health care coverage area designated by the State:
            (1) Base employer monthly premium per worker.--The base 
        employer monthly premium determined under section 6122 for each 
        class of family enrollment.
            (2) Qualified worksite health promotion.--The base monthly 
        premium discount for each level of qualified worksite health 
        promotion program.
            (3) Employer collection shortfall add-on.--The employer 
        collection shortfall add-on computed under section 6125(b).
    (e) Reconciliation of Family Share.--
            (1) In general.--Each State shall provide for the 
        reconciliation of family payments in cases where the State 
        determines that there has been an overpayment or underpayment 
        by or on the behalf of such families in accordance with rules 
        promulgated by the Board.
            (2) Provisions.--In carrying out paragraph (1), a State 
        shall provide notice of amounts owed or due to such families, 
        distribute information on the availability of premium discounts 
        and reductions to such families and include income 
        reconciliation forms for families that are provided with 
        premium discounts.
            (3) Notice of amount owed.--If a State determines that a 
        family has paid any family share required under section 6101 
        and is not required to repay any amount under section 6111 for 
        a year, the State shall provide notice of such determination to 
        the family. Such notice shall include a prominent statement 
        that the family is not required to make any additional payment 
        and is not required to file any additional information with the 
        State.
            (4) Coordination of payments for families that have changed 
        residence over the year.--The State in which the community-
        rated plan in which a family is enrolled in December of each 
        year (in this section referred to as the ``final State'') is 
        responsible for the collection of any amounts owed by the 
        family under this subpart, without regard to whether the family 
        resided in the State during the entire year in accordance with 
        rules promulgated by the Board.

SEC. 6205. ADJUSTMENT OF PAYMENTS TO HEALTH PLANS.

    (a) In General.--States shall develop and implement payment 
adjustment mechanisms and collect such information as may be necessary 
for ensuring that payments to health plans are appropriate and 
sufficient.
    (b) Adjustments.--Mechanisms under subsection (a) shall include 
methods for risk adjustment and reinsurance (in accordance with section 
1641 and 1642), the payment of premium discounts (in accordance with 
subtitle B of title VI), payment adjustments to reflect each area's 
share of AFDC and SSI beneficiaries (in accordance with subtitle C of 
title VI), and other adjustments necessary to reconcile the amounts 
collected by plans with the amounts plans are owed.

SEC. 6206. EMPLOYER PAYMENT REQUIREMENT.

    (a) In General.--Each employer shall provide for payments required 
under section 6121 or 6131 in accordance with the applicable provisions 
of this Act.
    (b) Employers in Single-Payer States.--In the case of an employer 
with respect to employees who reside in a single-payer State, the 
responsibilities of such employer under such system shall supersede the 
obligations of the employer under subsection (a), except as the Board 
may provide.
    (c) Employers Participating Multiemployer Plan.--In the case of an 
employer participating in a multiemployer plan, which plan elects to 
serve as a community-rated employer on behalf of its participating 
employers, the employer's payment obligation under section 6121 shall 
be deemed satisfied if the employer pays to the multiemployer plan at 
least the premium payment amount specified in section 6121(b) and the 
plan has assumed legal obligations of such an employer under such 
section.

SEC. 6207. REQUIREMENT FOR EMPLOYER PAYMENT AND RECONCILIATION 
              REPORTING.

    (a) Reporting of End-of-Year Information to Qualifying Employees.--
            (1) In general.--Each employer shall provide with respect 
        to each individual who was a qualifying employee of the 
        employer during any month in the previous year information 
        described in paragraph (2) with respect to the employee.
            (2) Information to be supplied.--The information described 
        in this paragraph, with respect to a qualifying employee, is 
        the following (as specified by the Secretary):
                    (A) Health care coverage area information.----With 
                respect to each health care coverage area (or other 
                appropriate area with respect to a large group 
                purchaser) through which the individual obtained health 
                coverage:
                            (i) The total number of months of full-time 
                        equivalent employment (as determined under 
                        section 1901(b)(2)) for each class of 
                        enrollment.
                            (ii) The amount of wages attributable to 
                        qualified employment and the amount of covered 
                        wages (as defined in paragraph (4)).
                            (iii) The total amount deducted from wages 
                        and paid for the family share of the premium.
                            (iv) Such other information as the 
                        Secretary of Labor may specify.
    (b) Reporting of Information for Use of States.--Each employer 
(including experience-rated employers) shall provide, in accordance 
with section 1604(e)(4), the following information.
            (1) Annual basis.--The information described in this 
        paragraph, with respect to an employer, is the following (as 
        specified by the Secretary of Labor):
                    (A) Health care coverage area information.--With 
                respect to each health care coverage area to which 
                employer premium payments were payable in the year:
                            (i) For each qualifying employee in the 
                        year--
                                    (I) The total number of months of 
                                full-time equivalent employment (as 
                                determined under section 1901(b)(2)) 
                                for the employee for each class of 
                                enrollment.
                                    (II) The total amount deducted from 
                                wages and paid for the family share of 
                                the premium of the qualifying employee.
                            (ii) The total employer premium payment 
                        made under section 6121 for the year with 
                        respect to the employment of all qualifying 
                        employees residing in the coverage area and, in 
                        the case of an employer that has obtained (or 
                        seeks to obtain) a premium discount under 
                        section 6123, the total employer premium 
                        payment that would have been owed for such 
                        employment for the year but for such section.
                            (iii) The number of full-time equivalent 
                        employees (determined under section 1901(b)(2)) 
                        for each class of family enrollment in the year 
                        (and for each month in the year in the case of 
                        an employer that has obtained or is seeking a 
                        premium discount under section 6123).
                            (iv) In the case of an employer to which 
                        section 6124 applies in a year, such additional 
                        information as the Secretary of Labor may 
                        require for purposes of that section.
                            (v) The amounts paid (and payable) pursuant 
                        to section 6125.
                            (vi) The amount of covered wages for each 
                        qualifying employee.
            (2) Monthly basis.--
                    (A) In general.--The information described in this 
                paragraph for a month for an employer is such 
                information as the Secretary of Labor may specify 
                regarding--
                            (i) the identity of each eligible 
                        individual who changed qualifying employee 
                        status with respect to the employer in the 
                        month; and
                            (ii) in the case of such an individual 
                        described in subparagraph (B)(i)--
                                    (I) the consumer purchasing 
                                cooperative for the area in which the 
                                individual resides, and
                                    (II) the individual's class of 
                                family enrollment.
                    (B) Changes in qualifying employee status 
                described.--For purposes of subparagraph (A), an 
                individual is considered to have changed qualifying 
                employee status in a month if the individual either (i) 
                is a qualifying employee of the employer in the month 
                and was not a qualifying employee of the employer in 
                the previous month, or (ii) is not a qualifying 
                employee of the employer in the month but was a 
                qualifying employee of the employer in the previous 
                month.
            (3) Initial information.--Each employer, at such time 
        before the first year in which qualifying employees of the 
        employer are enrolled in community-rated health plans as the 
        Board may specify, shall provide for the reporting of such 
        information relating to employment of eligible individuals as 
        the Board may specify.
    (c) Reconciliation of Employer Premium Payments.--
            (1) Provision of information.--Each employer (whether or 
        not the employer claimed (or claims) an employer premium 
        discount under section 6123 for a year) that is liable for 
        employer premium payments for any month in a year shall provide 
        such information as may be required (consistent with rules of 
        the Secretary of Labor) to determine the appropriate amount of 
        employer premium payments that should have been made for all 
        months in the year (taking into account any employer premium 
        discount under section 6123 for the employer). Such 
        reconciliation process shall be conducted by the State (with 
        respect to community-rated employers) and by the Secretary of 
        Labor (with respect to experience-rated employers).
            (2) Deadline.--Such information shall be provided not later 
        than the beginning of February of the following year with the 
        payment to be made for that month.
            (3) Reconciliation.--
                    (A) Continuing employers.--Based on such 
                information, the employer shall adjust the amount of 
                employer premium payment made in the month in which the 
                information is provided to reflect the amount by which 
                the payments in the previous year were greater or less 
                than the amount of payments that should have been made.
                    (B) Discontinuing employers.--In the case of a 
                person that ceases to be an employer in a year, such 
                adjustment shall be made in the form of a payment to, 
                or from, the State involved.
            (4) Special treatment of self-employed individuals.--Except 
        as the Secretary of Labor may provide, individuals who are 
        employers only by virtue of the operation of section 6126 shall 
        have employer premium payments attributable to such section 
        reconciled (in the manner previously described in this 
        subsection) under the process for the collection of the family 
        share of premiums under section 6204 rather than under this 
        subsection.
    (d) Notice to Certain Individuals Who Are Not Employees.--
            (1) In general.--A person that carries on a trade or 
        business shall notify in writing each individual described in 
        paragraph (2) that the person is not obligated to make any 
        employer health care premium payment (under section 6121) in 
        relation to the services performed by the individual for the 
        person.
            (2) Individual described.--An individual described in this 
        paragraph, with respect to a person, is an individual who 
        normally performs services for the person in the person's trade 
        or business for more than 40 hours per month but who is not an 
        employee of the person (within the meaning of section 1901(a)).
            (3) Timing; effective date.--Such notice shall be provided 
        within a reasonable time after the individual begins performing 
        services for the person, except that in no event is such a 
        notice required to be provided with respect to services 
        performed before January 1, 1998.
            (4) Exceptions.--The Secretary shall issue regulations 
        providing exceptions to the notice requirement of paragraph (1) 
        with respect to individuals performing services on an 
        irregular, incidental, or casual basis.
            (5) Model notice.--The Secretary shall publish a model 
        notice that is easily understood by the average reader and that 
        persons may use to satisfy the requirements of paragraph (1).
    (e) Special Rules for Self-Employed.--
            (1) In general.--In the case of an individual who is 
        treated as an employer under section 6126, the individual shall 
        provide, under subsection (f), information described in 
        paragraph (2) with respect to net earnings from self-employment 
        income of the individual in each year.
            (2) Information to be supplied.--The information described 
        in this paragraph, with respect to an individual, is such 
        information as may be necessary to compute the amount payable 
        under section 6131 by virtue of section 6126.
    (f) Deadline.--Information required to be provided by an employer 
for a year under this section--
            (1) to a qualifying employee shall be provided not later 
        than the date the employer is required under law to provide for 
        statements under section 6051 of the Internal Revenue Code of 
        1986 for that year, or
            (2) to a State (through the national health care data 
        network) shall be provided not later than the date by which 
        information is required to be filed with the Secretary pursuant 
        to agreements under section 232 of the Social Security Act for 
        that year.
    (g) Information Clearinghouse Functions.--
            (1) Designation.--The Board shall, through the national 
        health care data network, perform information clearinghouse 
        functions under this section with respect to employers, States, 
        the Federal Government, and consumer purchasing cooperatives.
            (2) Functions.--The functions referred to in paragraph (1) 
        shall include--
                    (A) receipt of information submitted by employers 
                under subsection (b),
                    (B) from the information received, transmittal of 
                information required to appropriate entities, and
                    (C) such other functions as the Board specifies.

SEC. 6208. EQUAL VOLUNTARY CONTRIBUTION REQUIREMENT.

    (a) In General.--
            (1) Equal voluntary employer premium payment requirement.--
                    (A) Community-rated health plans.--If an employer 
                makes available a voluntary employer premium payment 
                (as defined in subsection (d)) on behalf of a full-time 
                employee (as defined in section 1901(b)(2)(C)) who is 
                enrolled in a community-rated health plan of a health 
                care coverage area in a class of family enrollment, the 
                employer shall make available such a voluntary employer 
                premium payment in the same dollar amount to all 
                qualifying employees (as defined in section 1901(b)(1)) 
                of the employer who are enrolled in any community-rated 
                health plan of the same coverage area in the same class 
                of family enrollment.
                    (B) Experience-rated health plans.--If an 
                experience-rated employer makes available a voluntary 
                employer premium payment on behalf of a full-time 
                employee who is enrolled in an experience-rated health 
                plan of a large group purchaser in a class of family 
                enrollment in a premium area, the employer shall make 
                available such a voluntary employer premium payment in 
                the same dollar amount to all qualifying employees of 
                the employer enrolled in any experience-rated health 
                plan of the same purchaser in the same class of family 
                enrollment in the same premium area.
                    (C) Treatment of part-time employees.--In applying 
                subparagraphs (A) and (B) in the case of a qualifying 
                employee employed on a part-time basis (within the 
                meaning of section 1901(b)(2)(A)(ii)), the dollar 
                amount shall be equal to the full-time employment ratio 
                (as defined in section 1901(b)(2)(B)) multiplied by the 
                dollar amount otherwise required.
            (2) Limit on voluntary employer premium payments.--
                    (A) Community-rated health plans.--An employer may 
                not make available a voluntary employer premium payment 
                on behalf of an employee (enrolled in a community-rated 
                health plan of a health care coverage area in a class 
                of family enrollment) in an amount that exceeds the 
                maximum amount that could be payable as the family 
                share of premium (described in section 6101(b)(2)) for 
                the most expensive community-rated health plan of the 
                same area for the same class of family enrollment.
                    (B) Experience-rated health plans.--An employer may 
                not make available a voluntary employer premium payment 
                on behalf of an employee (enrolled in an experience-
                rated health plan of a large group purchaser in a class 
                of family enrollment in a premium area, in an amount 
                that exceeds the maximum amount that could be payable 
                as the family share of premium (described in section 
                6101(b)(3)) for the most expensive experience-rated 
                health plan of the same purchaser for the same class of 
                family enrollment in the same premium area.
                    (C) Exclusion of plans without material 
                enrollment.--Subparagraphs (A) and (B) shall not take 
                into account any health plan that does not have 
                material enrollment (as determined in accordance with 
                regulations of the Secretary of Labor).
            (3) Nondiscrimination among plans selected.--An employer 
        may not discriminate in the wages or compensation paid, or 
        other terms or conditions of employment, with respect to an 
        employee based on the health plan (or premium of such a plan) 
        in which the employee is enrolled.
    (b) Rebate Required in Certain Cases.--
            (1) In general.--Subject to subsection (c), if--
                    (A) an employer makes available a voluntary 
                employer premium payment on behalf of an employee, and
                    (B)(i) the sum of the amount of the applicable 
                family credit (under section 6103) and the voluntary 
                employer premium payment, exceeds (ii) the premium for 
                the plan selected,
        the employer must rebate to the employee an amount equal to the 
        excess described in subparagraph (B).
            (2) Treatment of multiple full-time employment in a 
        family.--In the case of--
                    (A) an individual who is an employee of more than 
                one employer, or
                    (B) a couple for which both spouses are employees,
                if more than one employer provides for voluntary 
                employer premium payments, the individual or couple may 
                elect to have paragraph (1) applied with respect to all 
                employment.
    (c) Exception for Collective Bargaining Agreement.--Subsections (a) 
and (b) (other than subsection (a)(2)) shall not apply with respect to 
voluntary employer premium payments made pursuant to a bona fide 
collective bargaining agreement.
    (d) Voluntary Employer Premium Payment.--In this section, the term 
``voluntary employer premium payment'' means any payment designed to be 
used exclusively (or primarily) towards the cost of the family share of 
premiums for a health plan. Such term does not include any employer 
premiums required to be paid under part 3 of subtitle B of title VI.

SEC. 6209. PAYMENT ARRANGEMENTS.

    (a) Collection of Family Share.--
            (1) Withholding.--
                    (A) In general.--In the case of a family that 
                includes a qualifying employee of an employer, the 
                employer shall deduct from the wages of the qualifying 
                employee (in a manner consistent with any rules of the 
                Secretary of Labor) the amount of the family share of 
                the premium for the plan in which the family is 
                enrolled.
                    (B) Multiple employment.--In the case of a family 
                that includes more than one qualifying employee, the 
                family shall choose the employer to which subparagraph 
                (A) will apply.
                    (C) Payment.--Amounts withheld under this paragraph 
                shall be maintained in a manner consistent with 
                standards established by the Secretary of Labor and 
                paid in a manner consistent with the payment of 
                employer premiums under subtitle C.
                    (D) Satisfaction of liability.--An amount deducted 
                from wages of a qualifying employee by an employer is 
                deemed to have been paid by the employee and to have 
                satisfied the employee's obligation under subsection 
                (a) to the extent of such amount.
            (2) Other methods.--In the case of a family that does not 
        include a qualifying employee, the State shall require payment 
        to be made prospectively. Such payment may be required to be 
        made not less frequently than monthly. The Secretary may issue 
        regulations in order to assure the timely and accurate 
        collection of the family share due.
    (b) Timing and Method of Payment of Employer Premiums.--
            (1) Frequency of payment.--Payment of employer premiums 
        under section 6121 for a month shall be made not less 
        frequently than monthly (or quarterly in the case of such 
        payments made by virtue of section 6126). The Secretary of 
        Labor may establish a method under which employers that pay 
        wages on a weekly or biweekly basis are permitted to make such 
        employer payments on such a weekly or biweekly basis.
            (2) Electronic transfer.--A State may require those 
        employers that have the capacity to make payments by electronic 
        transfer to make payments under this subsection by electronic 
        transfer.

SEC. 6210. ENFORCEMENT OF PREMIUM OBLIGATIONS.

    (a) In General.--The Secretary of Labor, in consultation with the 
Secretary of Health and Human Services, shall establish an expedited 
collection process to be implemented in the event of non-payment of 
premiums by an employer or an individual.
    (b) Penalties.--The Secretary of Health and Human Services (in the 
case of non-payment by individuals) and the Secretary of Labor (in the 
case of non-payment by employers) may impose appropriate penalties 
including premium surcharges and civil monetary penalties in the amount 
of $5,000, or three times the amount of the liability owed, whichever 
is more, to enforce the collection of amounts established under 
subtitle B of this title.
    (c) Delegation.--The Federal Government may delegate its 
responsibilities under this section to a State, upon agreement by such 
State, if in the judgment of the Secretary of Health and Human Services 
and the Secretary of Labor such State would provide for the effective 
enforcement of premium obligations. Such States may utilize the 
assistance referred to in sections 1673 and 1692 to enforce premium 
payments under this section.

SEC. 6211. DETERMINATION OF UNIFORM PER CAPITA CONVERSION FACTOR.

    Each State, based on direction from the National Health Board, 
shall specify, not later than April 1 of each year (beginning with the 
year prior to the first year) a uniform per capita conversion factor to 
be used under section 6102(a)(2) in converting the accepted bid for 
each plan for the year into the premium for an individual enrollment 
for such plan for the year. SSI or AFDC recipients shall not be 
included for purposes of computing the conversion factor.

SEC. 6212. CERTAIN EMPLOYEES AND EMPLOYERS INELIGIBLE FOR PREMIUM 
              ASSISTANCE.

    An employee described in section 1707, and the employer of such 
employee, shall be considered ineligible for any premium discounts 
under this title or other reductions in cost sharing. Such employee 
shall be required to pay a surcharge to the Office of Personnel 
Management to reflect additional administrative expenses relating to 
the reimbursement of covered services abroad.

     TITLE VIII--HEALTH AND HEALTH-RELATED PROGRAMS OF THE FEDERAL 
                               GOVERNMENT

                       table of contents of title

     TITLE VIII--HEALTH AND HEALTH-RELATED PROGRAMS OF THE FEDERAL 
                               GOVERNMENT

 Subtitle E--Amendments to the Employee Retirement Income Security Act 
                                of 1974

Sec. 8401. Group health plan defined.
Sec. 8402. Limitation on coverage of group health plans under title I 
                            of ERISA.
Sec. 8403. Revision of Cobra Continuation Coverage Requirements.
Sec. 8404. Additional amendments relating to group health plans.
Sec. 8405. Plan claims procedures.
Sec. 8406. Preemption of Hawaii Prepaid Health Care Act.

 Subtitle E--Amendments to the Employee Retirement Income Security Act 
                                of 1974

SEC. 8401. GROUP HEALTH PLAN DEFINED.

    Section 3 of the Employee Retirement Income Security Act of 1974 
(29 U.S.C. 1002) is amended by adding at the end the following new 
paragraph:
    ``(42) The term `group health plan' means an employee welfare 
benefit plan which provides medical care (as defined in section 213(d) 
of the Internal Revenue Code of 1986) to participants or beneficiaries 
directly or through insurance, reimbursement, or otherwise.''.

SEC. 8402. LIMITATION ON COVERAGE OF GROUP HEALTH PLANS UNDER TITLE I 
              OF ERISA.

    (a) In General.--Section 4 of the Employee Retirement Income 
Security Act of 1974 (29 U.S.C. 1003) is amended--
            (1) in subsection (a), by striking ``subsection (b)'' and 
        inserting ``subsections (b) and (c)'';
            (2) in subsection (b), by striking ``The provisions'' and 
        inserting ``Except as provided in subsection (c), the 
        provisions''; and
            (3) by adding at the end the following new subsection:
    ``(c) Coverage of Group Health Plans.--
            ``(1) Limited inclusion.--This title shall apply to a group 
        health plan only to the extent provided in this subsection.
            ``(2) Coverage under certain provisions with respect to 
        certain plans.--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), parts 1, 4, and 6 of subtitle B shall 
                apply to--
                            ``(i) a group health plan which is 
                        maintained by--
                                    ``(I) a large group purchaser (as 
                                defined in section 1401(a) of the 
                                Health Security Act), or
                                    ``(II) a member of a large group 
                                purchaser (as so defined) whose 
                                eligible sponsor is described in 
                                section 1401(b)(1)(C) (relating to 
                                rural electric cooperatives and rural 
                                telephone cooperative associations), 
                                and
                            ``(ii) a group health plan not described in 
                        clause (i) which provides benefits which are 
                        permitted under paragraph (4) of section 1003 
                        of the Health Security Act.
                    ``(B) Supplemental plans.--The Secretary shall 
                provide by regulation for treatment as a separate group 
                health plan of any arrangement which would otherwise be 
                treated under this title as part of a group health plan 
                to the extent necessary to carry out the purposes of 
                this title.
            ``(3) Definitions and enforcement provisions.--Sections 3, 
        501, 502, 503, 504, 505, 506, 507, 508, 509, 510, 511, and 514 
        and the preceding subsections of this section shall apply to a 
        group health plan to the extent necessary to effectively carry 
        out, and enforce the requirements under the provisions of this 
        title as they apply pursuant to this subsection.
            ``(4) Civil actions.--Section 502(a)(1)(B) of this Act 
        (with respect to the cause of action for the recovery of 
        benefits) shall not apply to action by participants, 
        beneficiaries and fiduciaries governed under subtitle C of 
        title V of the Health Security Act.
            ``(5) Applicability of preemption rules.--Section 514 shall 
        apply in the case of any group health plan to which parts 1, 4, 
        and 6 of subtitle B apply under paragraph (2).''.
    (b) State-Certified Plan.--Section 514 of the Employee Retirement 
Income Security Act of 1974 is amended--
            (1) in subsection (b)(2)(A), by inserting ``, State-
        certified health plans (as defined in section 1500 of the 
        Health Security Act of 1994),'' after ``insurance''; and
            (2) in subsection (b)(2)(B), by inserting ``, State-
        certified health plan,'' before ``other insurer''.
    (c) Reporting and Disclosure Requirements Applicable to Group 
Health Plans.--
            (1) In general.--Part 1 of subtitle B of title I of such 
        Act is amended--
                    (A) in the heading for section 110 (29 U.S.C. 
                1030), by adding ``by pension plans'' at the end;
                    (B) by redesignating section 111 (29 U.S.C. 1031) 
                as section 112; and
                    (C) by inserting after section 110 the following 
                new section:

                 ``special rules for group health plans

    ``Sec. 111. (a) In General.--The Secretary may by regulation 
provide special rules for the application of this part to group health 
plans which are consistent with the purposes of this title and the 
Health Security Act and which take into account the special needs of 
participants, beneficiaries, and health care providers under such 
plans.
    ``(b) Expeditious Reporting and Disclosure.--Such special rules may 
include rules providing for--
            ``(1) reductions in the periods of time referred to in this 
        part,
            ``(2) increases in the frequency of reports and disclosures 
        required under this part, and
            ``(3) such other changes in the provisions of this part as 
        may result in more expeditious reporting and disclosure of plan 
        terms and changes in such terms to the Secretary and to plan 
        participants and beneficiaries,
to the extent that the Secretary determines that the rules described in 
this subsection are necessary to ensure timely reporting and disclosure 
of information consistent with the purposes of this part and the Health 
Security Act as they relate to group health plans.
    ``(c) Additional Requirements.--Such special rules may include 
rules providing for reporting and disclosure to the Secretary and to 
participants and beneficiaries of additional information or at 
additional times with respect to group health plans to which this part 
applies under section 4(c)(2), if such reporting and disclosure would 
be comparable to and consistent with similar requirements applicable 
under the Health Security Act with respect to plans maintained by 
regional alliances (as defined in such section 1301 of such Act) and 
applicable regulations of the Secretary of Health and Human Services 
prescribed thereunder.''.
            (2) Clerical amendment.--The table of contents in section 1 
        of such Act is amended by striking the items relating to 
        sections 110 and 111 and inserting the following new items:

``Sec. 110. Alternative methods of compliance by pension plans.
``Sec. 111. Special rules for group health plans.
``Sec. 112. Repeal and effective date.''.
    (d) Applicability of Certain ERISA Protections to Enrolled 
Individuals.--The provisions of sections 510 (relating to interference 
with rights protected under the Act) and 511 (relating to coercive 
interference) of the Employee Retirement Income Security Act of 1974 
shall apply, in relation to the provisions of this Act, with respect to 
individuals enrolled or eligible to enroll under large group purchaser 
health plans in the same manner and to the same extent as such 
provisions apply, in relation to the provisions of the Employee 
Retirement Income Security Act of 1974, with respect to participants 
and beneficiaries enrolled or eligible to enroll in and under employee 
welfare benefit plans covered by title I of such Act.

SEC. 8403. REVISION OF COBRA CONTINUATION COVERAGE REQUIREMENTS.

    (a) Amendments to the Employee Retirement Income Security Act of 
1974.--
            (1) Period of coverage.--Subparagraph (D) of section 
        605(1)(D) of the Employee Retirement Income Security Act of 
        1974 (29 U.S.C. 1161(2)) is amended--
                    (A) by striking ``or'' at the end of clause (i), by 
                striking the period at the end of clause (ii) and 
                inserting ``, or'', and by adding at the end the 
                following new clause:
                            ``(iii) eligible for coverage under a 
                        qualified health plan in accordance with title 
                        I of the Health Security Act.'';
                    (B) by adding at the end thereof the following:
                ``An individual whose employment has been terminated by 
                an employer offering health plans through a large group 
                purchaser must elect within 30 days of the termination 
                to either remain in the plan provided by the employer 
                for a period of not to exceed 12 months or until the 
                individual is covered under another health plan, 
                whichever is less, or purchase from another plan in the 
                marketplace.''; and
                    (C) by striking ``or medicare entitlement'' in the 
                heading and inserting ``, medicare entitlement, or 
                qualified health plan eligibility''.
            (2) Qualified beneficiary.--Section 607(3) of such Act (29 
        U.S.C. 1167(2)) is amended by adding at the end the following 
        new subparagraph:
                    ``(D) Special rule for individuals covered by 
                health security act.--The term `qualified beneficiary' 
                shall not include any individual who, upon termination 
                of coverage under a group health plan, is eligible for 
                coverage under a qualified health plan in accordance 
                with title I of the Health Security Act.''
            (3) Repeal upon implementation of act.--
                    (A) In general.--Part 6 of subtitle B of title I of 
                such Act (29 U.S.C. 601 et seq.) is amended by striking 
                sections 601 through 608 and by redesignating section 
                609 as section 601.
                    (B) Conforming amendments.--
                            (i) Section 502(a)(7) of such Act (29 
                        U.S.C. 1132(a)(7)) is amended by striking 
                        ``609(a)(2)(A)'' and inserting 
                        ``601(a)(2)(A)''.
                            (ii) Section 502(c)(1) is amended by 
                        striking ``paragraph (1) or (4) of section 
                        606''.
                            (iii) Section 514 of such Act (29 U.S.C. 
                        1144) is amended by striking ``609'' each place 
                        it appears in subsections (b)(7) and (b)(8) and 
                        inserting ``601''.
                            (iv) The table of contents in section 1 of 
                        such Act is amended by striking the items 
                        relating to sections 601 through 609 and 
                        inserting the following new item:

``Sec. 601. Additional standards for group health plans.''
            (4) Effective date.--
                    (A) Paragraphs (1) and (2).--The amendments made by 
                paragraphs (1) and (2) shall take effect on the date of 
                the enactment of this Act.
                    (B) Paragraph (3).--The amendments made by 
                paragraph (3) shall take effect on the first January 1 
                following the full implementation of universal 
                coverage.
    (b) Amendment to Public Health Service Act.--
            (1) Period of coverage.--Subparagraph (D) of section 
        2202(2) of the Public Health Service Act (42 U.S.C. 300bb-2(2)) 
        is amended--
                    (A) by striking ``or'' at the end of clause (i), by 
                striking the period at the end of clause (ii) and 
                inserting ``, or'', and by adding at the end the 
                following new clause:
                            ``(iii) eligible for coverage under a 
                        qualified health plan in accordance with title 
                        I of the Health Security Act,'', and
                    (B) by striking ``or medicare entitlement'' in the 
                heading and inserting ``, medicare entitlement, or 
                qualified health plan eligibility''.
            (2) Qualified beneficiary.--Section 2208(3) of such Act (42 
        U.S.C. 300bb-8(3)) is amended by adding at the end the 
        following new subparagraph:
                    ``(C) Special rule for individuals covered by 
                act.--The term `qualified beneficiary' shall not 
                include any individual who, upon termination of 
                coverage under a group health plan, is eligible for 
                coverage under a qualified health plan in accordance 
                with title I of the Health Security Act.''.
            (3) Repeal upon implementation of health security act.--
                    (A) In general.--Title XXII of such Act (42 U.S.C. 
                300bb-1 et seq.) is hereby repealed.
                    (B) Conforming amendment.--The table of contents of 
                such Act is amended by striking the item relating to 
                title XXII.
            (4) Effective date.--
                    (A) Paragraphs (1) and (2).--The amendments made by 
                paragraphs (1) and (2) shall take effect on the date of 
                the enactment of this Act.
                    (B) Paragraph (3).--The amendments made by 
                paragraph (3) shall take effect on the first January 1 
                following the full implementation of universal 
                coverage.

SEC. 8404. ADDITIONAL AMENDMENTS RELATING TO GROUP HEALTH PLANS.

    (a) Regulations of the National Health Board Regarding Cases of 
Adoption.--Section 601(c) of the Employee Retirement Income Security 
Act of 1974 (as redesignated by section 8403) is amended by adding at 
the end the following new paragraph:
            ``(4) Regulations by national health board.--The preceding 
        provisions of this subsection shall apply except to the extent 
        otherwise provided in regulations of the National Health Board 
        under the Health Security Act.''.
    (b) Coverage of Pediatric Vaccines.--Section 601(d) of such Act (as 
redesignated by section 8403) is amended by adding at the end the 
following new sentence: ``The preceding sentence shall cease to apply 
to a group health plan upon becoming a large group purchaser health 
plan pursuant to an effective election of the plan sponsor to be a 
large group purchaser under section 1401 of the Health Security Act.''.
    (c) Technical Corrections.--Effective as if included in the 
enactment of the Omnibus Budget Reconciliation Act of 1993--
            (1) Subsection (a)(2)(B)(ii) of section 609 of the Employee 
        Retirement Income Security Act of 1974 is amended by striking 
        ``section 13822'' and inserting ``section 13623''.
            (2) Subsection (a)(4) of such section 609 is amended by 
        striking ``section 13822'' and inserting ``section 13623''.
            (3) Subsection (d) of such section 609 is amended by 
        striking ``section 13830'' and inserting ``section 13631''.

SEC. 8405. PLAN CLAIMS PROCEDURES.

    Section 503 of the Employee Retirement Income Security Act of 1974 
(29 U.S.C. 1133) is amended--
            (1) by inserting ``(a) In General.--'' after ``Sec. 503.''; 
        and
            (2) by adding at the end the following new subsection:
    ``(b) Group Health Plans.--In addition to the requirements of 
subsection (a), a group health plan to which parts 1, 4, and 5 apply 
under section 4(c)(2) shall comply with the requirements of section 
5201 of the Health Security Act (relating to health plan claims 
procedure).''.

SEC. 8406. PREEMPTION OF HAWAII PREPAID HEALTH CARE ACT.

    (a) In General.--Section 514(b)(5) of the Employee Retirement 
Income Security Act of 1974 (29 U.S.C. 1144(b)(5)) is amended to read 
as follows:
            ``(5)(A) Except as provided in subparagraphs (B) and (C), 
        subsection (a) shall not apply to the Hawaii Prepaid Health 
        Care Act (Haw. Rev. Stat. Sec. Sec. 393-1 through 393-51).
            ``(B) Nothing in subparagraph (A) shall be construed to 
        exempt from subsection (a) any State tax law relating to 
        employee benefits plans.
            ``(C) If the Secretary of Labor notifies the Governor of 
        the State of Hawaii that as the result of an amendment to the 
        Hawaii Prepaid Health Care Act enacted after the date of the 
        enactment of this paragraph--
                    ``(i) the proportion of the population with health 
                care coverage under such Act is less than such 
                proportion on such date, or
                    ``(ii) the level of benefit coverage provided under 
                such Act is less than the actuarial equivalent of such 
                level of coverage on such date,
        subparagraph (A) shall not apply with respect to the 
        application of such amendment to such Act after the date of 
        such notification.''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
take effect on the date of the enactment of this Act.

                TITLE IX--AGGREGATE GOVERNMENT PAYMENTS

                       table of contents of title

                TITLE IX--AGGREGATE GOVERNMENT PAYMENTS

     Subtitle B--Aggregate Federal Payments to Participating State

Sec. 9100. Capped Federal payments.
     Subtitle C--Borrowing Authority to Cover Cash-flow Shortfalls

Sec. 9200. Borrowing authority to cover cash-flow shortfalls.
Sec. 9201. Contingencies.

     Subtitle B--Aggregate Federal Payments to Participating State

SEC. 9100. CAPPED FEDERAL PAYMENTS.

    (a) Capped Entitlement.--
            (1) Payment.--The Secretary shall provide for each calendar 
        quarter (beginning on or after January 1, 1996) for payment to 
        each participating State of an amount equal to the capped 
        Federal payment amount (as defined in subsection (b)(1)) for 
        each State for the quarter.
            (2) Entitlement.--This section constitutes budget authority 
        in advance of appropriations Acts, and represents the 
        obligation of the Federal Government to provide for the payment 
        to States of the capped Federal payment amount under this 
        section.
    (b) Capped Federal Payment Amount.--
            (1) In general.--In this section, the term ``capped Federal 
        payment amount'' means, for a State for a calendar quarter in a 
        year and subject to paragraph (6) and subsection (e), the 
        amount by which--
                    (A) \1/4\ of the total payment obligation 
                (described in paragraph (2)) owed to community-rated 
                and experience-rated plans in a State for the year, 
                exceeds
                    (B) \1/4\ of the total amounts receivable 
                (described in paragraph (3)) by community-rated and 
                experience-rated plans for the year.
            (2) Total payment obligation.--The total payment obligation 
        described in this paragraph in a State for a year is the total 
        amount payable to community-rated and experience-rated plans 
        for the following:
                    (A) Plan payments (and certain cost sharing 
                reductions).--Payments to community-rated health plans 
                under section 6203 (including amounts attributable to 
                cost sharing reductions under section 1281, not 
                including a reduction under subsection (c)(2) thereof) 
                and equivalent payments to experience-rated plans.
                    (B) Administrative expenses.--Payments to plans 
                retained by the State for administration (in accordance 
                with section 1213).
            (3) Total amounts receivable.--The total amounts receivable 
        in a State for a year is the sum of the following:
                    (A) Premiums.--The amount payable to community-
                rated and experience-rated plans for the family share 
                of premiums (and premium equivalents), employer 
                premiums (and premium equivalents), and liabilities 
                owed to health plans under subtitle B of title VI, not 
                taking into account any failure to make or collect such 
                payments.
                    (B) Other government payments.--The amounts payable 
                to health plans under sections 9001, 9011, and 9101, 
                payable under section 1894 of the Social Security Act 
                (as added by section 4003) during the year and payable 
                under paragraph (4)(C).
                    (C) Payment to health plans.--Each participating 
                State is responsible for paying to community-rated 
                health plans a share of its savings under this Act. 
                Such amount shall equal 25 percent of the net reduction 
                in the projected expenditures of the State for health 
                care and related services that the National Health 
                Board estimates the State will experience as the result 
                of the enactment of this Act. A State may request the 
                National Health Board to review its estimate and shall 
                be entitled to present its case to the Board under 
                procedures to be established by the Board. This 
                subparagraph shall not be construed as providing a 
                State with a right to bring suit for such payment.
                    (D) Additional amount.--The amount collected by the 
                State under section 6120.
            (4) No payment for certain amounts.--
                    (A) In general.--Each participating State is 
                responsible, under section 1284, for the payment of 
                amounts attributable to administrative errors 
                (described in subparagraph (B)).
                    (B) Administrative errors described.--The 
                administrative errors described in this subparagraph 
                include the following:
                            (i) An eligibility error rate for premium 
                        discounts, liability reductions, and cost 
                        sharing reductions under sections 6104 and 
                        6123, section 6113, and section 1281, 
                        respectively, to the extent the applicable 
                        error rate exceeds the maximum permissible 
                        error rate, specified by the applicable 
                        Secretary under section 1284, with respect to 
                        the section involved.
                            (ii) Misappropriations or other State 
                        expenditures that the Secretary finds are 
                        attributable to malfeasance or misfeasance by 
                        the State.
            (5) Special rules for single-payer states.--In applying 
        this subsection in the case of a single-payer State, the 
        Secretary shall develop and apply a methodology for computing 
        an amount of payment (with respect to each calendar quarter) 
        that is equivalent to the amount of payment that would have 
        been made to the State for the quarter if the State were not a 
        single-payer State.
            (6) Large group purchasers.--The Secretary, in consultation 
        with the Secretary of Labor, shall withhold an appropriate 
        amount from the capped Federal payment amount as may be 
        necessary to make payments to plans offered by large group 
        purchasers.
    (c) Determination of Capped Federal Payment Amounts.--
            (1) Reports.--At such time as the Secretary may require 
        before the beginning of each fiscal year, each State shall 
        submit to the Secretary such information as the Secretary may 
        require to estimate the capped Federal payment amount under 
        this section for the succeeding calendar year (and the portion 
        of such year that falls in such fiscal year).
            (2) Estimation.--Before the beginning of each year, the 
        Secretary shall estimate the capped Federal payment amount for 
        calendar quarters in such year. Such estimate shall be based on 
        factors including prior financial experience in the State, 
        future estimates of income, wages, and employment, and other 
        characteristics of the area found relevant by the Secretary. 
        The Secretary shall transmit to Congress, on a timely basis 
        consistent with the timely appropriation of funds under this 
        section, a report that specifies an estimate of the total 
        capped Federal amounts owed to States under this section for 
        the fiscal and calendar year involved.
    (d) Payments to States.--Subject to subsection (e), the provisions 
of section 9101(b) apply to payments under this section in the same 
manner as they apply to payments under section 9101.
    (e) Cap on Payments.--
            (1) In general.--The total amount of the capped Federal 
        payments made under this section for quarters in a fiscal year 
        may not exceed the cap specified under paragraph (2) for the 
        fiscal year.
            (2) Cap.--Subject to paragraphs (3) and (6)--
                    (A) Fiscal years 1996 through 2000.--The cap under 
                this paragraph for fiscal years 1996 through 2000 is 
                $285,000,000,000. Six months prior to the beginning of 
                fiscal year 1996, the National Health Board, in 
                consultation with the Director of the Office of 
                Management and Budget, shall determine the 
                apportionment of this amount among the fiscal years for 
                the period described in the preceding sentence.
                    (B) Subsequent fiscal year.--The cap under this 
                paragraph for a fiscal year after fiscal year 2000 is 
                the cap under this paragraph for the previous fiscal 
                year (not taking into account paragraph (3)) multiplied 
                by the product of the factors described in subparagraph 
                (C) for that fiscal year and for each previous year 
                after fiscal year 2000.
                    (C) Factor.--The factor described in this 
                subparagraph for a fiscal year is 1 plus the following:
                            (i) CPI.--The percentage change in the CPI 
                        for the fiscal year, determined based upon the 
                        percentage change in the average of the CPI for 
                        the 12-month period ending with May 31 of the 
                        previous fiscal year over such average for the 
                        preceding 12-month period.
                            (ii) Population.--The average annual 
                        percentage change in the population of the 
                        United States during the 3-year period ending 
                        in the preceding calendar year, determined by 
                        the Board based on data supplied by the Bureau 
                        of the Census.
                            (iii) Real gdp per capita.--The average 
                        annual percentage change in the real, per 
                        capita gross domestic product of the United 
                        States during the 3-year period ending in the 
                        preceding calendar year, determined by the 
                        Board based on data supplied by the Department 
                        of Commerce.
            (3) Carryforward.--If the total of the capped Federal 
        payment amounts for all States for all calendar quarters in a 
        fiscal year is less than the cap specified in paragraph (2) for 
        the fiscal year, then the amount of such surplus shall be 
        accumulated and will be available in the case of a year in 
        which the cap would otherwise be breached.
            (4) Notification.--
                    (A) In general.--If the Secretary anticipates that 
                the amount of the cap, plus any carryforward from a 
                previous year accumulated under paragraph (3), will not 
                be sufficient for a fiscal year, the Secretary shall 
                notify the President, the Congress, and each State. 
                Such notification shall include information about the 
                anticipated amount of the shortfall and the anticipated 
                time when the shortfall will first occur.
                    (B) Required action.--Within 30 days after 
                receiving such a notice, the President shall submit to 
                Congress a report containing specific legislative 
                recommendations for actions which would eliminate the 
                shortfall.
            (5) Congressional consideration.--
                    (A) Expedited consideration.--If a joint resolution 
                the substance of which approves the specific 
                recommendations submitted under paragraph (4)(B) is 
                introduced, subject to subparagraph (B), the provisions 
                of section 2908 (other than subsection (a)) of the 
                Defense Base Closure and Realignment Act of 1990 shall 
                apply to the consideration of the joint resolution in 
                the same manner as such provisions apply to a joint 
                resolution described in section 2908(a) of such Act.
                    (B) Special rules.--For purposes of applying 
                subparagraph (A) with respect to such provisions, any 
                reference to the Committee on Armed Services of the 
                House of Representatives shall be deemed a reference to 
                an appropriate Committee of the House of 
                Representatives (specified by the Speaker of the House 
                of Representatives at the time of submission of 
                recommendations under paragraph (4)) and any reference 
                to the Committee on Armed Services of the Senate shall 
                be deemed a reference to an appropriate Committee of 
                the Senate (specified by the Majority Leader of the 
                Senate at the time of submission of such 
                recommendations).
            (6) Method for adjusting the cap for changes in 
        inflation.--If the inflation rate, as measured by the 
        percentage increase in the CPI, is projected to be 
        significantly different from the inflation rate projected by 
        the Council of Economic Advisors to the President as of October 
        1993, the Secretary may adjust the caps under paragraph (2) so 
        as to reflect such deviation from the projection.

     Subtitle C--Borrowing Authority to Cover Cash-flow Shortfalls

SEC. 9200. BORROWING AUTHORITY TO COVER CASH-FLOW SHORTFALLS.

    (a) In General.--The Secretary shall make available loans to States 
in order to cover any period of temporary cash-flow shortfall 
attributable to any of the following:
            (1) Any estimation discrepancy (including those described 
        in subsection (e)(1)).
            (2) A period of temporary cash-flow shortfall attributable 
        to an administrative error (described in subsection (e)(2)).
            (3) A period of temporary cash-flow shortfall relating to 
        the relative timing during the year in which amounts are 
        received and payments are required to be made.
    (b) Terms and Conditions.--
            (1) In general.--Loans shall be made under this section 
        under terms and conditions, consistent with this subsection, 
        specified by the Secretary, in consultation with the Secretary 
        of the Treasury and taking into account Treasury cash 
        management rules.
            (2) Period.--Loans under this section shall be repayable 
        with interest over a period of not to exceed 2 years.
            (3) Interest rate.--The rate of interest on such loans 
        shall be at a rate determined by the Secretary of the Treasury 
        taking into consideration the current average rate on 
        outstanding marketable obligations of the United States.
            (4) Appropriate payment adjustments.--As a condition of 
        providing a loan under subsection (a)(1), the Secretary shall 
        require the State to make such adjustments under the 
        appropriate estimation adjustment provision (described in 
        subsection (f)) in order to assure the repayment of the amount 
        so borrowed.
            (5) Limitation on loan balance outstanding.--The total 
        balance of loans outstanding at any time to a State shall not 
        exceed--
                    (A) for the first year, 25 percent of the estimated 
                total premiums for the State for such year, or
                    (B) for a subsequent year, 25 percent of the actual 
                total premiums for the State for the previous year.
    (c) Repayment.--
            (1) Estimation discrepancies and timing.--Loans made under 
        paragraphs (1) and (3) of subsection (a) shall be repaid 
        through a reduction in the payment amounts otherwise required 
        to be made under section 9102 to the State.
            (2) Administrative error.--Loans made under subsection 
        (a)(2) shall be repaid through a temporary increase in the 
        amount of the State maintenance-of-effort payment required 
        under section 9001.
    (d) Reports.--The Secretary shall annually report to Congress on 
the loans made (and loan amounts repaid) under this section.
    (e) Sources of Discrepancy Described.--
            (1) Estimation discrepancies.--The estimation discrepancies 
        described in this paragraph are discrepancies in estimating the 
        following:
                    (A) The average premium payments per family under 
                section 6122(b).
                    (B) The AFDC and SSI proportions under section 
                6202.
                    (C) The distribution of enrolled families in 
                different risk categories for purposes of section 
                1351(c).
                    (D) The distribution of enrollment in excess 
                premium plans (for purposes of calculating and applying 
                the reduced weighted average accepted bid under section 
                6105(c)(1)).
                    (E) The collection shortfalls (used in computing 
                the family collection shortfall add-on under section 
                6107).
            (2) Administrative errors.--The administrative errors 
        described in this paragraph are errors described in section 
        9201(b)(4)(B)(ii).
    (f) Estimation Adjustment Provisions Described.--The estimation 
adjustment provisions, referred to in subsection (b)(4)) are the 
following adjustments (corresponding to the respective estimation 
discrepancies specified in subsection (d)(1)):
            (1) Adjustments for average premium payments per family 
        under section 6122(b)(4).
            (2) Adjustments in the AFDC and SSI proportions under 
        section 6202(d).
            (3) Adjustments pursuant to the methodology described in 
        section 1641.
            (4) Adjustments in excess premium credit pursuant to 
        section 6105(b)(2).
            (5) Adjustment in the collection shortfall add-on under 
        section 6107(b)(2)(C)).
    (g) Advances; Limitations on Advances.--
            (1) In general.--Subject to paragraph (2), the Secretary of 
        the Treasury is authorized to advance to the Secretary, under 
        terms and conditions determined by the Secretary of the 
        Treasury, amounts sufficient to cover the loans made to States 
        by the Secretary under this section.
            (2) Limitation.--The total balance of Treasury advances 
        outstanding at any time to the Secretary under paragraph (1) 
        shall not exceed $3,500,000,000.

SEC. 9201. CONTINGENCIES.

    Each State shall provide that any surplus of funds resulting from 
an estimation discrepancy described in section 9200(e)(1), up to a 
reasonable amount specified by the Secretary, shall be held in a 
contingency fund established by the State and used to fund any future 
shortfalls resulting from such a discrepancy.

             TITLE X--WORKERS COMPENSATION MEDICAL SERVICES

                       table of contents of title

             TITLE X--WORKERS COMPENSATION MEDICAL SERVICES

Sec. 10000. Application of information requirements.
Sec. 10001. Provision of care in disputed cases.
Sec. 10002. Demonstration projects.
Sec. 10003. Commission on workers compensation medical services.

SEC. 10000. APPLICATION OF INFORMATION REQUIREMENTS.

    (a) In General.--The provisions of--
            (1) part 3 of subtitle B of title V (relating to use of 
        standard forms); and
            (2) section 1916(2) (relating to health care information);
shall apply to the provision of workers compensation medical services 
provided by a health plan or health care provider in the same manner as 
such provisions apply with respect to the provision of services 
included in the comprehensive benefit package.
    (b) Information.--Subject to the provisions of part 2 of subtitle B 
of title V, health plans and health care providers that render workers 
compensation medical services shall provide to the worker and to the 
workers compensation carrier, the employer or both, as appropriate, 
relevant health care information necessary to assist the worker in the 
safe and timely return to work.
    (c) Compliance With Duties and Requirements.--The health plan and 
its providers shall comply with legal duties and reporting requirements 
under State workers compensation laws, and other Federal and State 
laws, including laws regarding the reporting of occupational injuries 
and diseases.
    (d) Rules.--The Secretary of Labor shall promulgate rules to 
clarify the responsibilities of health plans and health care providers 
in carrying out the provisions referred to in subsection (a).

SEC. 10001. PROVISION OF CARE IN DISPUTED CASES.

    (a) In General.--In cases in which a workers compensation claim is 
challenged by the employer, the workers compensation carrier, or both, 
a health plan shall provide or pay for all medical care included in the 
comprehensive benefits package according to the applicable workers 
compensation fee schedule, if any, until such time as a determination 
is made through the adjudication process that the claim is compensable 
as a workers compensation claim. If such a determination is made, the 
workers compensation carrier (or the employer, if self insured) shall 
reimburse the health plan (for the cost of services delivered to the 
member for the work-related illness or injury) and the worker (for any 
copayments, deductibles or coinsurance costs incurred for such 
services).
    (b) Applicability.--Subsection (a) shall not apply in a case where 
compensation has been accepted by the insurer or the employer, or paid 
without prejudice.

SEC. 10002. DEMONSTRATION PROJECTS.

    (a) Authorization.--The Secretary of Health and Human Services and 
the Secretary of Labor are authorized to conduct demonstration projects 
under this section in one or more States with respect to treatment of 
work-related injuries and illnesses.
    (b) Development of Work-Related Protocols.--
            (1) In general.--The Secretary of Health and Human Services 
        and the Secretary of Labor, in consultation with the States and 
        such experts on work-related injuries and illnesses as each 
        such Secretary finds appropriate, shall develop protocols for 
        the appropriate treatment of work-related conditions.
            (2) Testing of protocols.--The Secretary of Health and 
        Human Services and the Secretary of Labor shall enter into 
        contracts with one or more community-rated health plans to test 
        the validity of the protocols developed under subsection (a).
    (c) Development of Capitation Payment Models.--The Secretary of 
Health and Human Services and the Secretary of Labor shall develop, 
using protocols developed under subsection (b) if possible, methods of 
providing for payment by workers compensation carriers to health plans 
on a per case basis, capitated payment for the treatment of specified 
work-related injuries and illnesses.

SEC. 10003. COMMISSION ON WORKERS COMPENSATION MEDICAL SERVICES.

    (a) Establishment.--There is created a Commission on Workers 
Compensation Medical Services (in this section referred to as the 
``Commission'').
    (b) Composition.--
            (1) In general.--The Commission shall consist of 15 members 
        appointed in accordance with paragraph (2). Members of the 
        Commission shall include--
                    (A) one or more individuals representing State 
                workers compensation commissioners;
                    (B) one or more individuals representing State 
                workers compensation funds;
                    (C) one or more individuals representing labor 
                organizations;
                    (D) one or more members representing employers 
                (other than workers compensation insurance carriers);
                    (E) one or more members representing workers 
                compensation insurance carriers;
                    (F) one or more members of the medical profession 
                having expertise in occupational health; and
                    (G) one or more educators or researchers having 
                expertise in the field of occupational health.
        Eight members of the Commission shall constitute a quorum.
            (2) Appointments.--Members of the Commission shall be 
        appointed by the President and shall include--
                    (A) three members appointed from among individuals 
                recommended by the Speaker of the House of 
                Representatives;
                    (B) three members appointed from among individuals 
                recommended by the Minority Leader of the House of 
                Representatives;
                    (C) three members appointed from among individuals 
                recommended by the Majority Leader of the Senate; and
                    (D) three members appointed from among individuals 
                recommended by the Minority Leader of the Senate.
            (3) No compensation except travel expenses.--Members of the 
        Commission shall serve without compensation, but each member 
        shall receive travel expenses, including per diem in lieu of 
        subsistence, in accordance with sections 5702 and 5703 of title 
        5, United States Code.
    (c) Duties.--
            (1) In general.--The Commission shall study the 
        relationship of workers compensation medical services to the 
        new health system under this Act in terms of impact on the cost 
        of workers compensation medical services, access to appropriate 
        care for injured workers, and quality of medical care and its 
        impact on functional and vocational outcomes for injured 
        workers.
            (2) Evaluation issues to be addressed.--In its 
        deliberations under paragraph (1), the Commission shall 
        consider the following issues in examining the relationship 
        between health plans and workers compensation medical services:
                    (A) The impact of health reform on workers 
                compensation medical costs and premium rates charged to 
                employers for workers compensation insurance.
                    (B) The extent and impact of cost-shifting and 
                price discrimination between the workers compensation 
                medical system and traditional health insurers.
                    (C) The impact of experience rating adjustments 
                resulting from workers compensation medical services on 
                workplace safety.
                    (D) The advantages and disadvantages of maintaining 
                separate financing, payment and delivery systems for 
                workers compensation medical services, including the 
                impact on--
                            (i) the quality of medical care delivered 
                        to workers injured or made ill on the job;
                            (ii) the incentives for employers to 
                        maintain safe work-places; and
                            (iii) workers compensation indemnity 
                        benefit costs, medical costs and the overall 
                        costs of the workers compensation system.
                    (E) The advisability and appropriateness of 
                transferring financial responsibility for some or all 
                workers compensation medical benefits to health plans.
                    (F) The impact of State-to-State variations in 
                medical and rehabilitation benefits on costs, access 
                and quality of care.
                    (G) The options that are available to accomplish 
                the delivery of workers compensation benefits not 
                included in the comprehensive benefit package in 
                integrated systems
                    (H) Whether capitated rates can be developed for 
                workers compensation medical benefits, and the impact 
                of using such rates on medical and indemnity costs, 
                access, and quality of care.
                    (I) The impact of provider choice, with respect to 
                an injured worker, on workers compensation medical 
                costs, wage-loss benefits costs, and quality of care.
    (d) Staff Support.--The Secretary of Health and Human Services and 
the Secretary of Labor shall provide staff support for the Commission.
    (e) Reports.--The Commission shall submit a final report on its 
work to the President, the Committee on Labor and Human Resources of 
the Senate and the Committee on Education and Labor of the House of 
Representatives, by not later than October 1, 2000. Such report shall 
include a recommendation as to whether a transfer of financial 
responsibility for some or all medical benefits to health plans should 
be effected, and a detailed implementation plan should such a transfer 
be recommended. Prior to the submission of the final report, the 
Commission shall submit such interim reports on issues addressed by the 
Commission as the members of the Commission determine to be 
appropriate.

                TITLE XI--TRANSITIONAL INSURANCE REFORM

                       table of contents of title

Sec. 11001. Imposition of requirements.
Sec. 11002. Enforcement.
Sec. 11003. Requirements relating to preserving current coverage.
Sec. 11004. Restrictions on premium increases during transition.
Sec. 11005. Requirements relating to portability.
Sec. 11006. Requirements limiting reduction of benefits.
Sec. 11007. National transitional health insurance risk pool.
Sec. 11008. Definitions.
Sec. 11009. Termination.

SEC. 11001. IMPOSITION OF REQUIREMENTS.

    (a) In General.--The Secretary and the Secretary of Labor shall 
apply the provisions of this title to assure, to the extent possible, 
the maintenance of current health care coverage and benefits during the 
period between the enactment of this Act and the dates its provisions 
are implemented in the various States.
    (b) Enforcement.--
            (1) Health insurance plans.--The Secretary shall enforce 
        the requirements of this title with respect to health insurance 
        plans. The Secretary shall promulgate regulations to carry out 
        the requirements under this title with respect to health 
        insurance plans. The Secretary shall promulgate regulations 
        with respect to section 11004 within 90 days after the date of 
        the enactment of this Act.
            (2) Self-insured plans.--The Secretary of Labor shall 
        enforce the requirements of this title with respect to self-
        insured plans. Such Secretary shall promulgate regulations to 
        carry out the requirements under this title as they relate to 
        self-funded plans.
            (3) Arrangements with states.--The Secretary and the 
        Secretary of Labor may enter into arrangements with a State to 
        enforce the requirements of this title with respect to health 
        insurance plans and self-insured plans issued or sold, or 
        established and maintained, in the State.
    (c) Preemption.--The requirements of this title do not preempt any 
State law unless State law directly conflicts with such requirements. 
The provision of additional protections under State law shall not be 
considered to directly conflict with such requirements. The Secretary 
(or, in the case of a self-insured plan, the Secretary of Labor) may 
issue letter determinations with respect to whether this Act preempts a 
provision of State law.
    (d) Interim Final Regulations.--Section 1911 shall apply to 
regulations issued to carry out this title. The Secretary may consult 
with States and the National Association of Insurance Commissioners in 
issuing regulations and guidelines under this title.
    (e) Construction.--The provisions of this title shall be construed 
in a manner that assures, to the greatest extent practicable, 
continuity of health benefits under health benefit plans in effect on 
the effective date of this Act.
    (f) Special Rules for Acquisitions and Transfers.--The Secretary 
may issue regulations regarding the application of this title in the 
case of health insurance plans (or groups of such plans) which are 
transferred from one insurer to another insurer through assumption, 
acquisition, or otherwise.

SEC. 11002. ENFORCEMENT.

    (a) In General.--Any health insurer or health benefit plan sponsor 
that violates a requirement of this title shall be subject to a civil 
money penalty of not more than $25,000 for each such violation. The 
provisions of section 1128A of the Social Security Act (other than 
subsections (a) and (b)) shall apply to civil money penalties under 
this subsection in the same manner as they apply to a penalty or 
proceeding under section 1128A(a) of such Act.
    (b) Equitable Remedies.--
            (1) In general.--A civil action may be brought by the 
        applicable Secretary--
                    (A) to enjoin any act or practice which violates 
                any provision of this title, or
                    (B) to obtain other appropriate equitable relief 
                (i) to redress such violations, or (ii) to enforce any 
                provision of this title, including, in the case of a 
                wrongful termination of (or refusal to renew) coverage, 
                reinstating coverage effective as of the date of the 
                violation.

SEC. 11003. REQUIREMENTS RELATING TO PRESERVING CURRENT COVERAGE.

    (a) Prohibition of Termination.--
            (1) Group health insurance plans.--Each health insurer that 
        provides a group health insurance plan may not terminate (or 
        fail to renew) coverage for any covered employee if the 
        employer of the employee continues the plan, except in the case 
        of--
                    (A) nonpayment of required premiums,
                    (B) fraud, or
                    (C) misrepresentation of a material fact relating 
                to an application for coverage or claim for benefits.
            (2) Individual health insurance plans.--Each health insurer 
        that provides coverage to a covered individual under an 
        individual health insurance plan may not terminate (or fail to 
        renew) coverage for such individual (or a covered dependent), 
        except in the case of--
                    (A) nonpayment of required premiums,
                    (B) fraud, or
                    (C) misrepresentation of a material fact relating 
                to an application for coverage or claim for benefits.
            (2) Effective date of title.--
                    (A) In general.--This subsection shall take effect 
                on the effective date of this title and shall apply to 
                coverage on or after such date.
                    (B) Definition.--Except as otherwise provided, in 
                this title the term ``effective date of this title'' 
                means the date of the enactment of this Act.
    (b) Acceptance of New Members in a Group Health Insurance Plan.--
            (1) In general.--In the case of a health insurer that 
        provides a group health insurance plan that is in effect on the 
        effective date of this title, the insurer is required--
                    (A) to accept all individuals, and their eligible 
                dependents, who become full-time employees (as defined 
                in section 1901(b)(2)(C)) of an employer covered after 
                such effective date;
                    (B) to establish and apply premium rates that are 
                consistent with section 11004(b); and
                    (C) to limit the application of pre-existing 
                condition restrictions in accordance with section 
                11005.
            (2) Consistent application of rules relating to dependents 
        and waiting periods.--In this subsection, the term ``eligible 
        dependent'', with respect to a group health insurance plan, has 
        the meaning provided under the plan as of October 27, 1993, or, 
        in the case of a plan not established as of such date, as of 
        the date of establishment of the plan.

SEC. 11004. RESTRICTIONS ON PREMIUM INCREASES DURING TRANSITION.

    (a) Division of Health Insurance Plans by Sector.--For purposes of 
this section, each health insurer shall divide its health insurance 
business into the following 3 sectors:
            (1) Health insurance for groups with at least 100 covered 
        lives (in this section referred to as the ``large group 
        sector'')
            (2) Health insurance for groups with fewer than 100 covered 
        lives (in this section referred to as the ``small group 
        sector'').
            (3) Health insurance for individuals, and not for groups 
        (in this section referred to as the ``individual sector'').
    (b) Premium Changes to Reflect Changes in Group or Individual 
Characteristics or Terms of Coverage.--
            (1) Application.--The provisions of this subsection shall 
        apply to changes in premiums that reflect--
                    (A) changes in the number of individuals covered 
                under a plan;
                    (B) changes in the group or individual 
                characteristics (including age, gender, family 
                composition or geographic area but not including health 
                status, claims experience or duration of coverage under 
                the plan) of individuals covered under a plan;
                    (C) changes in the level of benefits (including 
                changes in cost-sharing) under the plan; and
                    (D) changes in any material terms and conditions of 
                the health insurance plan (other than factors related 
                to health status, claims experience, and duration of 
                coverage under the plan).
            (2) Specification of reference rate for each sector.--Each 
        health insurer shall calculate a reference rate for each such 
        sector. The reference rate for a sector shall be calculated so 
        that, if it were applied using the rate factors specified under 
        paragraph (3), the average premium rate for individuals and 
        groups in that sector would approximate the average premium 
        rate charged individuals and groups in the sector as of the 
        effective date of this title.
            (3) Single set of rate factors within each sector.--
                    (A) In general.--Each health insurer shall develop 
                for each sector a single set of rate factors which will 
                be used to calculate any changes in premium that relate 
                to the reasons described in subparagraphs (B) through 
                (D) of paragraph (1).
                    (B) Standards.--Such rate factors--
                            (i) shall relate to reasonable and 
                        objective differences in demographic 
                        characteristics, in the design and in levels of 
                        coverage, and in other terms and conditions of 
                        a contract,
                            (ii) shall not relate to expected health 
                        status, claims experience, or duration of 
                        coverage of the one or more groups or 
                        individuals, and
                            (iii) shall comply with regulations 
                        established under subsection (f).
            (4) Computation of premium changes.--
                    (A) In general.--Changes in premium rates that 
                relate to the reasons described in paragraph (1) shall 
                be calculated using the rate factors developed pursuant 
                to paragraph (3).
                    (B) Application to changes in number of covered 
                individuals.--In the case of a change in premium rates 
                related to the reason described in paragraph (1)(A), 
                the change in premium rates shall be calculated to 
                reflect, with respect to the enrollees who enroll or 
                disenroll in a health insurance plan, the sum of the 
                products, for such individuals, of the reference rate 
                (determined under paragraph (2)) and the rate factors 
                (specified under paragraph (3)) applicable to such 
                enrollees.
                    (C) Application of other factors.--
                            (i) In general.--In the case of a change in 
                        premium rates related to a reason described in 
                        subparagraph (B), (C), or (D) of paragraph (1), 
                        the change in premium rates with respect to 
                        each health insurance plan in each sector shall 
                        reflect the rate factors specified under 
                        paragraph (3) applicable to the reason as 
                        applied to the current premium charged for the 
                        health insurance plan. Such rate factors shall 
                        be applied in a manner so that the resulting 
                        adjustment, to the extent possible, reflects 
                        the premium that would have been charged under 
                        the plan if the reason for the change in 
                        premium had existed at the time that the 
                        current premium rate was calculated.
                            (ii) No reflection of change in health 
                        status.--In applying the rate factors under 
                        this subparagraph, the adjustment shall not 
                        reflect any change in the health status, claims 
                        experience or duration of coverage with respect 
                        to any employer or individual covered under the 
                        plan.
            (5) Limitation on application.--This subsection shall only 
        apply--
                    (A) to changes in premiums occurring on or after 
                the date of the enactment of this Act to groups and 
                individuals covered as of such date, and
                    (B) with respect to groups and individuals 
                subsequently covered, to changes in premiums subsequent 
                to such coverage.
            (6) Application to community-rated plans.--Nothing in this 
        subsection shall require the application of rate factors 
        related to individual or group characteristics with respect to 
        community-rated plans.
    (c) Limitations on Changes in Premiums Related to Increases in 
Health Care Costs and Utilization.--
            (1) Application.--The provisions of this subsection shall 
        apply to changes in premiums that reflect increases in health 
        care costs and utilization.
            (2) Equal increase for all plans in all sectors.--
                    (A) In general.--Subject to subparagraph (B), the 
                annual percentage increase in premiums by a health 
                insurer for health insurance plans in the individual 
                sector, small group sector, and large group sector, to 
                the extent such increase reflect increases in health 
                care costs and utilization, shall be the same for all 
                such plans in those sectors.
                    (B) Special rule for large group sector.--The 
                annual percentage increase in premiums by a health 
                insurer for health insurance plans in the large group 
                sector may vary among such plans based on the claims 
                experience of an employer (to the extent the experience 
                is credible), so long as the weighted average of such 
                increases for all such plans in the sector complies 
                with the requirement of subparagraph (A).
                    (C) Geographic application.--Subparagraphs (A) and 
                (B)--
                            (i) may be applied on a national level, or
                            (ii) may vary based on geographic area, but 
                        only if (I) such areas are sufficiently large 
                        to provide credible data on which to calculate 
                        the variation and (II) the variation is due to 
                        reasonable factors related to the objective 
                        differences among such areas in costs and 
                        utilization of health services.
                    (D) Exceptions to accommodate state rate reform 
                efforts.--Subparagraphs (A) and (B) shall not apply, in 
                accordance with guidelines of the Secretary, to the 
                extent necessary to permit a State to narrow the 
                variations in premiums among health insurance plans 
                offered by health insurers to similarly situated groups 
                or individuals within a sector.
                    (E) Exception for rates subject to prior 
                approval.--Subparagraphs (A) and (B) shall not apply to 
                premiums that are subject to prior approval by a State 
                insurance commissioner (or similar official) and are 
                approved by such official.
                    (F) Other reasons specified by the secretary.--The 
                Secretary may specify through regulations such other 
                exceptions to the provisions of this subsection as the 
                Secretary determines are required to enhance stability 
                of the health insurance market and continued 
                availability of coverage.
            (3) Even application throughout a year.--In applying the 
        provisions of this subsection to health insurance plans that 
        are renewed in different months of a year, the annual 
        percentage increase shall be applied in a consistent, even 
        manner so that any variations in the rate of increase applied 
        in consecutive months are even and continuous during the year.
            (4) Petition for exception.--A health insurer may petition 
        the Secretary (or a State acting under a contract with the 
        Secretary under section 11001(b)(3)) for an exception from the 
        application of the provisions of this subsection. The Secretary 
        may approve such an exception if--
                    (A) the health insurer demonstrates that the 
                application of this subsection would threaten the 
                financial viability of the insurer, and
                    (B) the health insurer offers an alternative method 
                for increasing premiums that is not substantially 
                discriminatory to any sector or to any group or 
                individual covered by a health insurance plan offered 
                by the insurer.
    (d) Prior Approval for Certain Rate Increases.--
            (1) In general.--If the percentage increase in the premium 
        rate for the individual and small group sector exceeds a 
        percentage specified by the Secretary under paragraph (2), 
        annualized over any 12-month period, the increase shall not 
        take effect unless the Secretary (or a State acting under a 
        contract with the Secretary under section 11001(b)(3)) has 
        approved the increase.
            (2) Percentage.--The Secretary shall specify, for each 12-
        month period beginning after the date of the enactment of this 
        Act, a percentage that will apply under paragraph (1). Such 
        percentage shall be determined taking into consideration the 
        rate of increase in health care costs and utilization, previous 
        trends in health insurance premiums, and the conditions in the 
        health insurance market. Within 30 days after the date of the 
        enactment of this Act, the Secretary shall first specify a 
        percentage under this paragraph.
    (e) Documentation of Compliance.--
            (1) Period for conformance.--Effective 1 year after the 
        date of the enactment of this Act, the premium for each health 
        insurance plan shall be conformed in a manner that complies 
        with the provisions of this section.
            (2) Methodology.--Each health insurer shall document the 
        methodology used in applying subsections (b) and (c) with 
        respect to each sector (and each applicable health plan). Such 
        documentation shall be sufficient to permit the auditing of the 
        application of such methodology to determine if such 
        application was consistent with such subsections.
            (3) Certification.--For each 6-month period in which this 
        section is effective, each health insurer shall file a 
        certification with the Secretary (or with a State with which 
        the Secretary has entered into an arrangement under section 
        11001(b)(3)) that the insurer is in compliance with such 
        requirements.
    (f) Regulations.--The Secretary shall establish regulations to 
carry out this section. Such regulations may include guidelines 
relating to the permissible variation that results from the use of 
demographic or other characteristics in the development of rate 
factors. Such guidelines may be based on the guidelines currently used 
by States in applying rate limitations under State insurance 
regulations.
    (g) Effective Period.--This section shall apply to premium 
increases occurring during the period beginning on the date of the 
enactment of this Act and ending, for a health insurance plan provided 
in a State, on the first day of the State's first year.

SEC. 11005. REQUIREMENTS RELATING TO PORTABILITY.

    (a) Treatment of Preexisting Condition Exclusions.--
            (1) In general.--Subject to the succeeding provisions of 
        this subsection, a group health benefit plan 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. The exclusion of coverage shall not apply to 
        services furnished to newborns or in the case of a plan that 
        did not apply such exclusions as of the effective date of this 
        title.
            (2)  Crediting of previous coverage.--
                    (A) In general.--A group health benefit plan shall 
                provide that if an individual covered under such plan 
                is in a period of continuous coverage (as defined in 
                subparagraph (B)(i)) with respect to particular 
                services 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, 
                        with respect to particular services, the period 
                        beginning on the date an individual is enrolled 
                        under a group or individual health benefit 
                        plan, self-insured plan, the medicare program, 
                        a State medicaid plan, or other health benefit 
                        arrangement which 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 a health benefits plan, a 
                        condition which has been diagnosed or treated 
                        during the 6-month period ending on the day 
                        before the first date of such coverage (without 
                        regard to any waiting period).
    (b) Waiting Periods.--A self-insured plan, and an employer with 
respect to a group health insurance plan, may not discriminate among 
employees in the establishment of a waiting period before making health 
insurance coverage available based on the health status, claims 
experience, receipt of health care, medical history, or lack of 
evidence of insurability, of the employee or the employee's dependents.

SEC. 11006. REQUIREMENTS LIMITING REDUCTION OF BENEFITS.

    (a) In General.--A self-insured sponsor may not make a modification 
of benefits described in subsection (b).
    (b) Modification of Benefits Described.--
            (1) In general.--A modification of benefits described in 
        this subsection is any reduction or limitation in coverage, 
        effected on or after the effective date of this title, with 
        respect to any medical condition or course of treatment for 
        which the anticipated cost is likely to exceed $5,000 in any 
        12-month period.
            (2) Treatment of termination.--A modification of benefits 
        includes the termination of a plan if the sponsor, within a 
        period (specified by the Secretary of Labor) establishes a 
        substitute plan that reflects the reduction or limitation 
        described in paragraph (1).
    (c) Remedy.--Any modification made in violation of this section 
shall not be effective and the self-insured sponsor shall continue to 
provide benefits as though the modification (described in subsection 
(b)) had not occurred.

SEC. 11007. NATIONAL TRANSITIONAL HEALTH INSURANCE RISK POOL.

    (a) Establishment.--In order to assure access to health insurance 
during the transition, the Secretary is authorized to establish a 
National Transitional Health Insurance Risk Pool (in this section 
referred to as the ``national risk pool'') in accordance with this 
section.
    (b) Administration.--
            (1) In general.--The Secretary may administer the national 
        risk pool through contracts with--
                    (A) one or more existing State health insurance 
                risk pools,
                    (B) one or more private health insurers, or
                    (C) such other contracts as the Secretary deems 
                appropriate.
            (2) Coordination with state risk pools.--The Secretary may 
        enter into such arrangements with existing State health 
        insurance risk pools to coordinate the coverage under such 
        pools with the coverage under the national risk pool. Such 
        coordination may address eligibility and funding of coverage 
        for individuals currently covered under State risk pools.
    (c) Eligibility for Coverage.--The national risk pool shall provide 
health insurance coverage to individuals who are unable to secure 
health insurance coverage from private health insurers because of their 
health status or condition (as determined in accordance with rules and 
procedures specified by the Secretary).
    (d) Benefits.--
            (1) In general.--Benefits and terms of coverage provided 
        through the national risk pool shall include items and 
        services, conditions of coverage, and cost sharing (subject to 
        out-of-pocket limits on cost sharing) comparable to the 
        benefits and terms of coverage available in State health 
        insurance risk pools.
            (2) Payment rates.--Payments under the national risk pool 
        for covered items and services shall be made at rates 
        (specified by the Secretary) based on payment rates for 
        comparable items and services under the medicare program. 
        Providers who accept payment from the national risk pool shall 
        accept such payment as payment in full for the service, other 
        than for cost sharing provided under the national risk pool.
    (e) Premiums.--
            (1) In general.--Premiums for coverage in the national risk 
        pool shall be set in a manner specified by the Secretary.
            (2) Variation.--Such premiums shall vary based upon age, 
        place of residence, and other traditional underwriting factors 
        other than on the basis of health status or claims experience.
            (3) Limitation.--The premiums charged individuals shall be 
        set at a level that is no less than 150 percent of the premiums 
        that the Secretary estimates would be charged to a population 
        of average risk for the covered benefits.
    (f) Treatment of Shortfalls.--
            (1) Estimates.--The Secretary shall estimate each year the 
        extent to which the total premiums collected under subsection 
        (e) in the year are insufficient to cover the expenses of the 
        national risk pool with respect to the year.
            (2) Temporary borrowing authority.--The Secretary of the 
        Treasury is authorized to advance to the Secretary amounts 
        sufficient to cover the amount estimated under paragraph (1) 
        during the year before assessments are collected under 
        paragraph (3), except that the total balance of such Treasury 
        advances at any time shall not exceed $1,500,000,000. The 
        Secretary shall repay such amounts, with interest at a rate 
        specified by the Secretary of the Treasury, from the 
        assessments under paragraph (3).
            (3) Assessments.--
                    (A) In general.--Each health benefit plan sponsor 
                shall be liable for an assessment in the amount 
                specified in subparagraph (C).
                    (B) Amount.--For each year for which amounts are 
                advanced under paragraph (2), the Secretary shall--
                            (i) estimate the total amount of premiums 
                        (and premium equivalents) for health benefits 
                        under health benefit plans for the succeeding 
                        year, and
                            (ii) calculate a percentage equal to (I) 
                        the total amounts repayable by the Secretary to 
                        the Secretary of the Treasury under paragraph 
                        (2) for the year, divided by the amount 
                        determined under clause (i).
                    (C) Assessment amount.--The amount of an assessment 
                for a sponsor of a health benefit plan for a year shall 
                be equal to the percentage calculated under 
                subparagraph (B)(ii) (or, if less, \1/2\ of 1 percent) 
                of the total amount of premiums (and premium 
                equivalents) for health benefits under the plan for the 
                previous year.
                    (D) Self-insured plans.--The amount of premiums 
                (and premium equivalents) under this paragraph shall be 
                estimated--
                            (i) by the Secretary for health insurance 
                        plans, and
                            (ii) by the Secretary of Labor for self-
                        insured plans.
                Such estimates may be based on a methodology that 
                requires plans liable for assessment to file 
                information with the applicable Secretary.

SEC. 11008. DEFINITIONS.

    In this title:
            (1) Applicable secretary.--The term ``applicable 
        Secretary'' means--
                    (A) the Secretary with respect to health insurance 
                plans and insurers, or
                    (B) the Secretary of Labor with respect to self-
                insured plans and self-insured plan sponsors.
            (2) Covered employee.--The term ``covered employee'' means 
        an employee (or dependent of such an employee) covered under a 
        group health benefits plan.
            (3) Covered individual.--The ``covered individual'' means, 
        with respect to a health benefit plan, an individual insured, 
        enrolled, eligible for benefits, or otherwise covered under the 
        plan.
            (4) Group health benefits plan.--The term ``group health 
        benefits plan'' means a group health insurance plan and a self-
        insured plan.
            (5) Group health insurance plan.--
                    (A) In general.--The term ``group health insurance 
                plan'' means a health insurance plan offered primarily 
                to employers for the purpose of providing health 
                insurance to the employees (and dependents) of the 
                employer.
                    (B) Inclusion of association plans and mewas.--Such 
                term includes--
                            (i) any arrangement in which coverage for 
                        health benefits is offered to employers through 
                        an association, trust, or other arrangement, 
                        and
                            (ii) a multiple employer welfare 
                        arrangement (as defined in section 3(40) of the 
                        Employee Retirement Income Security Act of 
                        1974), whether funded through insurance or 
                        otherwise.
            (6) Health benefits plan.--The term ``health benefits 
        plan'' means health insurance plan and a self-insured health 
        benefit plan.
            (7) Health benefit plan sponsor.--The term ``health benefit 
        plan sponsor'' means, with respect to a health insurance plan 
        or self-insured plan, the insurer offering the plan or the 
        self-insured sponsor for the plan, respectively.
            (8) Health insurance plan.--
                    (A) In general.--Except as provided in subparagraph 
                (B), the term ``health insurance plan'' means any 
                contract of health insurance, including any hospital or 
                medical service policy or certificate, any major 
                medical policy or certificate, any hospital or medical 
                service plan contract, or health maintenance 
                organization subscriber contract offered by an insurer.
                    (B) Exception.--Such term does not include any of 
                the following--
                            (i) coverage only for accident, dental, 
                        vision, disability income, or long-term care 
                        insurance, or any combination thereof,
                            (ii) medicare supplemental health 
                        insurance,
                            (iii) coverage issued as a supplement to 
                        liability insurance,
                            (iv) worker's compensation or similar 
                        insurance, or
                            (v) automobile medical payment insurance,
                or any combination thereof.
                    (C) Stop loss insurance not covered.--Such term 
                does not include any aggregate or specific stop-loss 
                insurance or similar coverage applicable to a self-
                insured plan. The Secretary may develop rules 
                determining the applicability of this subparagraph with 
                respect to minimum premium plans or other partially 
                insured plans.
            (9) Health insurer.--The term ``health insurer'' means a 
        licensed insurance company, a prepaid hospital or medical 
        service plan, a health maintenance organization, or other 
        entity providing a plan of health insurance or health benefits 
        with respect to which the State insurance laws are not 
        preempted under section 514 of the Employee Retirement Income 
        Security Act of 1974.
            (10) Individual health insurance plan.--
                    (A) In general.--The term ``individual health 
                insurance plan'' means any health insurance plan 
                directly purchased by an individual or offered 
                primarily to individuals (including families) for the 
                purpose of permitting individuals (without regard to an 
                employer contribution) to purchase health insurance 
                coverage.
                    (B) Inclusion of association plans.--Such term 
                includes any arrangement in which coverage for health 
                benefits is offered to individuals through an 
                association, trust, list-billing arrangement, or other 
                arrangement in which the individual purchaser is 
                primarily responsible for the payment of any premium 
                associated with the contract.
                    (C) Treatment of certain association plans.--In the 
                case of a health insurance plan sponsored by an 
                association, trust, or other arrangement that provides 
                health insurance coverage both to employers and to 
                individuals, the plan shall be treated as--
                            (i) a group health insurance plan with 
                        respect to such employers, and
                            (ii) an individual health insurance plan 
                        with respect to such individuals.
            (11) Self-insured plan.--The term ``self-insured plan'' 
        means an employee welfare benefit plan or other arrangement 
        insofar as the plan or arrangement provides benefits with 
        respect to some or all of the items and services included in 
        the comprehensive benefit package (as in effect as of January 
        1, 1996) that is funded in a manner other than through the 
        purchase of one or more health insurance plans. Such term shall 
        not include a group health insurance plan described in 
        paragraph (5)(B)(ii).
            (12) Self-insured sponsor.--The term ``self-insured 
        sponsor'' includes, with respect to a self-insured plan, any 
        entity which establishes or maintains the plan.
            (13) State commissioner of insurance.--The term ``State 
        commissioner of insurance'' includes a State superintendent of 
        insurance.

SEC. 11009. TERMINATION.

    (a) Health Insurance Plans.--The provisions of this title shall not 
apply to a health insurance plan provided in a State on and after the 
first day of the first year for the State.
    (b) Self-Insured Plans.--The provisions of this title shall not 
apply to a self-insured plan that--
            (1) is sponsored by a sponsor that is an eligible sponsor 
        of a large group sponsor (described in section 1311(b)(1)), as 
        of the effective date of the election under section 1312(c); or
            (2) is sponsored by a sponsor that is not such an eligible 
        sponsor, with respect to individuals or groups in a State on 
        and after the first day of the first year for the State.
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