Calendar No. 525

103D CONGRESS

2D SESSION S. 2296

[Report No. 103–317]

A BILL

To ensure individual and family security through

Americans.and to ensure and protect the health care of allance practices, to promote choice in health care,care costs and promotes responsible health insurner that contains the rate of growth in healthhealth care coverage for all Americans in a manJULY 19 (legislative day, JULY 11), 1994

Placed on the calendar
II

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.

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

2 This Act may be cited as the ‘‘Health Security Act’’.

3 SEC. 2. FINDINGS.

4 The Congress finds as follows:

5 (1) Under the current health care system in the

6 United States—

7 (A) individuals risk losing their health care

8 coverage when they move, when they lose or

9 change jobs, when they become seriously ill, or

10 when the coverage becomes unaffordable;

11 (B) continued escalation of health care

12 costs threatens the economy of the United

13 States, undermines the international competi14 tiveness of the Nation, and strains Federal,

15 State, and local budgets;

16 (C) an excessive burden of forms, paper17 work, and bureaucratic procedures confuses

18 consumers and overwhelms health care provid19 ers;

20 (D) fraud and abuse sap the strength of

21 the health care system; and

22 (E) health care is a critical part of the

23 economy of the United States and interstate

24 commerce, consumes a significant percentage of

25 public and private spending, and affects all in26 dustries and individuals in the United States.
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1 (2) Under any reform of the health care sys2 tem—

3 (A) health insurance and high quality

4 health care should be secure, uninterrupted,

5 and affordable for all individuals in the United

6 States;

7 (B) comprehensive health care benefits

8 that meet the full range of health needs, includ9 ing primary, preventive, and specialized care,

10 should be available to all individuals in the

11 United States;

12 (C) the current high quality of health care

13 in the United States should be maintained;

14 (D) individuals in the United States should

15 be afforded a meaningful opportunity to choose

16 among a range of health plans, health care pro17 viders, and treatments;

18 (E) regulatory and administrative burdens

19 should be reduced;

20 (F) the rapidly escalating costs of health

21 care should be contained without sacrificing

22 high quality or impeding technological improve23 ments;

24 (G) competition in the health care industry

25 should ensure that health plans and health care
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1 providers are efficient and charge reasonable

2 prices;

3 (H) a partnership between the Federal

4 Government and each State should allow the

5 State and its local communities to design an ef6 fective, high-quality system of care that serves

7 the residents of the State;

8 (I) all individuals should have a respon9 sibility to pay their fair share of the costs of

10 health care coverage;

11 (J) a health care system should build on

12 the strength of the employment-based coverage

13 arrangements that now exist in the United

14 States;

15 (K) the penalties for fraud and abuse

16 should be swift and severe; and

17 (L) an individual’s medical information

18 should remain confidential and should be pro19 tected from unauthorized disclosure and use.

20 SEC. 3. PURPOSES.

21 The purposes of this Act are as follows:

22 (1) To guarantee comprehensive and secure

23 health care coverage.

24 (2) To simplify the health care system for con25 sumers and health care professionals.
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1 (3) To control the cost of health care for em2 ployers, employees, and others who pay for health

3 care coverage.

4 (4) To promote individual choice among health

5 plans and health care providers.

6 (5) To ensure high quality health care.

7 (6) To encourage all individuals to take respon8 sibility for their health care coverage.

9 TITLE I—HEALTH CARE

10 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.
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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.
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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.
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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

PART 1—NATIONAL HEALTH BOARD

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.

Sec. 1606. Funding.

SUBPART B—RESPONSIBILITIES RELATING TO REVIEW AND APPROVAL OF

STATE SYSTEMS

Sec. 1611. Federal review and action on State systems.
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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. 1615. Federal support for State implementation.

SUBPART 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. 1624. Return to State operation.

SUBPART D—ESTABLISHMENT OF CLASS FACTORS FOR CHARGING PREMIUMS

Sec. 1631. Premium class factors.

SUBPART 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. 1644. Technical assistance to States.

SUBPART F—RESPONSIBILITIES FOR FINANCIAL REQUIREMENTS

Sec. 1651. Capital standards for community-rated plans.

Sec. 1652. Standard for guaranty funds.

SUBPART G—OPEN ENROLLMENT

Sec. 1660. Periods of authorized changes in enrollment.

Sec. 1661. Distribution of comparative information.

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.

Sec. 1672. Medical technology impact study.

Sec. 1673. Assistance with family collections.

Sec. 1674. Advisory opinions.

Sec. 1675. Reports.

SUBPART 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. Definitions.

SUBPART C—WORKPLACE WELLNESS PROGRAMS

Sec. 1687. Workplace wellness program.

Sec. 1688. Wellness discount methodology.
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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.
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1 Subtitle A—Universal Coverage

2 and Individual Responsibility

3 PART 1—UNIVERSAL COVERAGE

4 SEC. 1001. ENTITLEMENT TO HEALTH BENEFITS.

5 (a) IN GENERAL.—In accordance with this part, each

6 eligible individual is entitled to the comprehensive benefit

7 package under subtitle B through the applicable health

8 plan in which the individual is enrolled consistent with this

9 title.

10 (b) HEALTH SECURITY CARD.—Each eligible individ11 ual is entitled to a health security card to be issued in

12 accordance with this Act.

13 (c) ELIGIBLE INDIVIDUAL DEFINED.—In this Act,

14 the term ‘‘eligible individual’’ means an individual who is

15 residing in the United States and who is—

16 (1)(A) a citizen or national of the United

17 States;

18 (B) a citizen of another country legally residing

19 in the United States (as defined in section 1902(6));

20 or

21 (C) a long-term nonimmigrant (as defined in

22 section 1902(27)); and

23 (2) not an exempt individual (as defined in sec24 tion 1902(18)).
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1 (d) TREATMENT OF MEDICARE-ELIGIBLE INDIVID2 UALS.—Subject to section 1012(a), a medicare-eligible in3 dividual is entitled to health benefits under the medicare

4 program instead of the entitlement under subsection (a).

5 (e) TREATMENT OF PRISONERS.—A prisoner (as de6 fined in section 1902(37)) is entitled to health care serv7 ices provided by the authority responsible for the prisoner

8 instead of the entitlement under subsection (a).

9 SEC. 1002. INDIVIDUAL RESPONSIBILITIES.

10 (a) IN GENERAL.—In accordance with this Act, each

11 eligible individual (other than a medicare-eligible individ12 ual)—

13 (1) must enroll in an applicable health plan for

14 the individual, and

15 (2) must pay any premium required, consistent

16 with this Act, with respect to such enrollment.

17 (b) LIMITATION ON DISENROLLMENT.—No eligible

18 individual shall be disenrolled from an applicable health

19 plan until the individual—

20 (1) is enrolled under another applicable health

21 plan, or

22 (2) becomes a medicare-eligible individual.

23 SEC. 1003. PROTECTION OF CONSUMER CHOICE.

24 Nothing in this Act shall be construed as prohibiting

25 the following:
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1 (1) An individual from purchasing any health

2 care services.

3 (2) An individual from purchasing supplemental

4 insurance (offered consistent with this Act) to cover

5 health care services not included within the com6 prehensive benefit package.

7 (3) An individual who is not an eligible individ8 ual from purchasing health insurance.

9 (4) Employers from providing coverage for ben10 efits in addition to the comprehensive benefit pack11 age (subject to part 2 of subtitle E).

12 (5) An individual from obtaining (at the ex13 pense of such individual) health care from any

14 health care provider of such individual’s choice.

15 SEC. 1004. HEALTH PLAN PRINCIPLES.

16 In accordance with this Act, the following principles

17 shall apply to all health plans:

18 (1) No health plan may discriminate on the

19 basis of medical history, pre-existing medical condi20 tions, or genetic predisposition to medical conditions.

21 (2) A health plan—

22 (A) shall offer an annual open enrollment

23 period and accept all eligible individuals for cov24 erage;
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1 (B) shall not impose a rider that serves to

2 exclude coverage to an individual; and

3 (C) shall not impose waiting periods before

4 coverage begins.

5 (3) A health plan shall ensure that all medically

6 necessary or appropriate services, as defined in the

7 benefits package, are provided, including access to

8 specialty care.

9 (4) Health benefits coverage shall be portable

10 from one health plan to another.

11 Nothing in this section shall be construed so as to relieve

12 a health plan of any obligation or requirement imposed

13 under this Act.

14 SEC. 1005. APPLICABLE HEALTH PLAN PROVIDING COV15 ERAGE.

16 (a) SPECIFICATION OF APPLICABLE HEALTH

17 PLAN.—Except as otherwise provided:

18 (1) GENERAL RULE: COMMUNITY-RATED

19 HEALTH PLANS.—The applicable health plan for a

20 family is a community-rated health plan for the

21 health care coverage area in which the family re22 sides.

23 (2) EXPERIENCE-RATED HEALTH PLANS.—In

24 the case of a family member that is eligible to enroll

25 in an experienced-rated health plan under subtitle B,
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1 the applicable health plan for the family is such an

2 experienced-rated health plan.

3 (b) CHOICE OF PLANS FOR CERTAIN GROUPS.—

4 (1) MILITARY PERSONNEL AND FAMILIES.—For

5 military personnel and families who elect a Uni6 formed Services Health Plan of the Department of

7 Defense under section 1073a(d) of title 10, United

8 States Code, as inserted by section 8001(a) of this

9 Act, that plan shall be the applicable health plan.

10 (2) VETERANS.—For veterans and families who

11 elect to enroll in a veterans health plan under sec12 tion 1801 of title 38, United States Code, as in13 serted by section 8101(a) of this Act, that plan shall

14 be the applicable health plan.

15 (3) AMERICAN INDIANS.—For those individuals

16 who are eligible to enroll, and who elect to enroll, in

17 a health program of the Indian Health Service under

18 section 8302(b) or 8306(b), that program shall be

19 the applicable health plan.

20 SEC. 1006. TREATMENT OF OTHER NONIMMIGRANTS.

21 (a) CERTAIN ALIENS INELIGIBLE FOR BENEFITS.—

22 An alien who is not an eligible individual or otherwise not

23 made eligible under this Act for benefits is not eligible to

24 obtain the comprehensive benefit package through enroll25 ment in a health plan under this Act.
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1 (b) DIPLOMATS AND OTHER FOREIGN GOVERNMENT

2 OFFICIALS.—Subject to conditions established by the Na3 tional Health Board in consultation with the Secretary of

4 State, a nonimmigrant under subparagraph (A) or (G) of

5 section 101(a)(15) of the Immigration and Nationality Act

6 may obtain the comprehensive benefit package through en7 rollment in the community-rated health plan for the health

8 care coverage area in which the nonimmigrant resides.

9 (c) RECIPROCAL TREATMENT OF OTHER

10 NONIMMIGRANTS.—With respect to those classes of indi11 viduals who are lawful nonimmigrants but who are not

12 long-term nonimmigrants (as defined in section 1902(27))

13 or described in subsection (b), such individuals may obtain

14 such benefits through enrollment with community-rated

15 health plans only in accordance with such reciprocal agree16 ments between the United States and foreign states as

17 may be entered into.

18 (d) CONSTRUCTION.—The National Health Board

19 shall adopt procedures that assure that each person who

20 is eligible for enrollment in an applicable health plan is

21 able to enroll in such a plan.

22 SEC. 1007. EFFECTIVE DATE OF ENTITLEMENT.

23 (a) COMMUNITY RATE ELIGIBLE INDIVIDUALS.—

24 (1) IN GENERAL.—In the case of community

25 rate eligible individuals residing in a State, the enti-
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1 tlement under this part (and requirements under

2 section 1002) shall not take effect until the State

3 becomes a participating State (as defined in section

4 1200).

5 (2) TRANSITIONAL RULE FOR LARGE GROUP

6 SPONSORS.—

7 (A) IN GENERAL.—In the case of a State

8 that becomes a participating State before the

9 general effective date (as defined in subsection

10 (c)) and for periods before such date, under

11 rules established by the Board, an individual

12 who is covered under a plan (described in sub13 paragraph (C)) based on the individual (or the

14 individual’s spouse) being a qualifying employee

15 of a qualifying employer, the individual shall

16 not be treated under this Act as a community

17 rate eligible individual.

18 (B) QUALIFYING EMPLOYER DEFINED.—In

19 subparagraph (A), the term ‘‘qualifying em20 ployer’’ means an employer that—

21 (i) is described in section 1401(2), or

22 is participating in a multiemployer plan de23 scribed in section 1401(6)(B) or plan de24 scribed in section 1401(7), and
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1 (ii) provides such notice to the State

2 involved as the Board specifies.

3 (C) BENEFITS PLAN DESCRIBED.—A plan

4 described in this subparagraph is an employee

5 benefit plan that—

6 (i) provides (through insurance or

7 otherwise) the comprehensive benefit pack8 age, and

9 (ii) provides an employer contribution

10 of at least 80 percent of the premium (or

11 premium equivalent) for coverage.

12 (b) EXPERIENCE-RATE ELIGIBLE INDIVIDUALS.—

13 (1) IN GENERAL.—In the case of experience

14 rate eligible individuals, the entitlement under this

15 part shall not take effect until the general effective

16 date.

17 (2) TRANSITION.—For purposes of this Act and

18 before the general effective date, in the case of an

19 eligible individual who resides in a participating

20 State, the individual is deemed a community rate eli21 gible individual until the individual becomes an expe22 rience rate eligible individual, unless subsection

23 (a)(2)(A) applies to the individual.
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1 (c) GENERAL EFFECTIVE DATE DEFINED.—In this

2 Act, the term ‘‘general effective date’’ means January 1,

3 1998.

4 PART 2—TREATMENT OF FAMILIES AND SPECIAL

5 RULES

6 SEC. 1011. GENERAL RULE OF ENROLLMENT OF FAMILY IN

7 SAME HEALTH PLAN.

8 (a) IN GENERAL.—Except as provided in this part

9 or otherwise, all members of the same family (as defined

10 in subsection (b)) shall be enrolled in the same applicable

11 health plan.

12 (b) FAMILY DEFINED.—In this Act, unless otherwise

13 provided, the term ‘‘family’’—

14 (1) means, with respect to an eligible individual

15 who is not a child (as defined in subsection (c)), the

16 individual; and

17 (2) includes the following persons (if any):

18 (A) The individual’s spouse if the spouse is

19 an eligible individual.

20 (B) The individual’s children (and, if appli21 cable, the children of the individual’s spouse) if

22 they are eligible individuals.

23 (c) CLASSES OF FAMILY ENROLLMENT; TERMINOL24 OGY.—
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1 (1) IN GENERAL.—In this Act, each of the fol2 lowing is a separate class of family enrollment:

3 (A) Coverage only of an individual (re4 ferred to in this Act as the ‘‘individual’’ enroll5 ment or class of enrollment).

6 (B) Coverage of a married couple without

7 children (referred to in this Act as the ‘‘couple8 only’’ enrollment or class of enrollment).

9 (C) Coverage of an unmarried individual

10 and one or more children (referred to in this

11 Act as the ‘‘single parent’’ enrollment or class

12 of enrollment).

13 (D) Coverage of a married couple and one

14 or more children (referred to in this Act as the

15 ‘‘dual parent’’ enrollment or class of enroll16 ment).

17 (2) REFERENCES TO FAMILY AND COUPLE

18 CLASSES OF ENROLLMENT.—In this Act:

19 (A) FAMILY.—The terms ‘‘family enroll20 ment’’ and ‘‘family class of enrollment’’, refer

21 to enrollment in a class of enrollment described

22 in subparagraph (B), (C), or (D) of paragraph

23 (1).

24 (B) COUPLE.—The term ‘‘couple class of

25 enrollment’’ refers to enrollment in a class of
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1 enrollment described in subparagraph (B) or

2 (D) of paragraph (1).

3 (d) SPOUSE; MARRIED; COUPLE.—

4 (1) IN GENERAL.—In this Act, the terms

5 ‘‘spouse’’ and ‘‘married’’ mean, with respect to a

6 person, another individual who is the spouse of the

7 person or married to the person, as determined

8 under applicable State law.

9 (2) COUPLE.—The term ‘‘couple’’ means an in10 dividual and the individual’s spouse.

11 (e) CHILD DEFINED.—

12 (1) IN GENERAL.—In this Act, except as other13 wise provided, the term ‘‘child’’ means an eligible in14 dividual who (consistent with paragraph (3))—

15 (A) is under 25 years of age, and

16 (B) is a dependent of an eligible individual.

17 The Board may adjust the age limitation in sub18 paragraph (A) with respect to part-time or full-time

19 students if the Board, through a Congressional

20 Budget Office study, determines that such limitation

21 necessitates adjustments for cost savings purposes.

22 (2) APPLICATION OF STATE LAW.—Subject to

23 paragraph (3), determinations of whether a person

24 is the child of another person shall be made in ac25 cordance with applicable State law.
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1 (3) NATIONAL RULES.—The National Health

2 Board may establish such national rules respecting

3 individuals who will be treated as children under this

4 Act as the Board determines to be necessary. Such

5 rules shall be consistent with the following prin6 ciples:

7 (A) STEP CHILD.—A child includes a step

8 child who is an eligible individual living with an

9 adult in a regular parent-child relationship.

10 (B) DISABLED CHILD.—A child includes

11 an unmarried dependent eligible individual re12 gardless of age who is incapable of self-support

13 because of mental or physical disability which

14 existed before age 21.

15 (C) CERTAIN INTERGENERATIONAL FAMI16 LIES.—A child includes the grandchild of an in17 dividual if—

18 (i) the parent of the grandchild is a

19 child and the parent and grandchild are

20 living with the grandparent; or

21 (ii) the grandparent has legal custody

22 of the grandchild.

23 (D) TREATMENT OF EMANCIPATED MI24 NORS AND MARRIED INDIVIDUALS.—An emanci-
23

•S 2296 PCS

1 pated minor or married individual shall not be

2 treated as a child.

3 (E) CHILDREN PLACED FOR ADOPTION.—

4 A child includes a child who is placed for adop5 tion with an eligible individual, except when the

6 child is a child in State supervised care.

7 (f) ADDITIONAL RULES.—The Board shall provide

8 for such additional exceptions and special rules, including

9 rules relating to—

10 (1) families in which members are not residing

11 in the same area or in which children are not resid12 ing with their parents,

13 (2) the treatment of eligible individuals who are

14 under 25 years of age and who are not a dependent

15 of an eligible individual,

16 (3) changes in family composition occurring

17 during a year,

18 (4) treatment of children in State supervised

19 care, and

20 (5) treatment of children of parents who are

21 separated or divorced,

22 as the Board finds appropriate.
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•S 2296 PCS

1 SEC. 1012. TREATMENT OF CERTAIN FAMILIES.

2 (a) TREATMENT OF MEDICARE-ELIGIBLE INDIVID3 UALS WHO ARE QUALIFYING EMPLOYEES OR SPOUSES OF

4 QUALIFYING EMPLOYEES.—

5 (1) IN GENERAL.—Except as specifically pro6 vided, in the case of an individual who is an individ7 ual described in paragraph (2) with respect to 2 con8 secutive months in a year (and it is anticipated

9 would be in the following month and in such follow10 ing month would be a medicare-eligible individual

11 but for this paragraph), the individual shall not be

12 treated as a medicare-eligible individual under this

13 Act during such following month and the remainder

14 of the year.

15 (2) INDIVIDUAL DESCRIBED.—An individual de16 scribed in this paragraph with respect to a month is

17 an individual who is a qualifying employee or the

18 spouse or family member of a qualifying employee in

19 the month.

20 (b) SEPARATE TREATMENT FOR CERTAIN GROUPS

21 OF INDIVIDUALS.—In the case of a family that includes

22 one or more individuals in a group described in subsection

23 (c)—

24 (1) all the individuals in each such group within

25 the family shall be treated collectively as a separate

26 family, and
25

•S 2296 PCS

1 (2) all the individuals not described in any such

2 group shall be treated collectively as a separate

3 family.

4 (c) GROUPS OF INDIVIDUALS DESCRIBED.—Each of

5 the following is a group of individuals described in this

6 subsection:

7 (1) AFDC recipients (as defined in section

8 1902(2)).

9 (2) Disabled SSI recipients (as defined in sec10 tion 1902(14)) .

11 (3) SSI recipients (as defined in section

12 1902(46)) who are not disabled SSI recipients.

13 (4) Electing veterans (as defined in subsection

14 (d)(1)).

15 (5) Active duty military personnel (as defined

16 in subsection (d)(2)).

17 (6) Electing American Indians (as defined in

18 subsection (d)(3)).

19 (7) Prisoners (as defined in section 1902(37)).

20 (d) SPECIAL RULES.—In this Act:

21 (1) ELECTING VETERANS.—

22 (A) DEFINED.—Subject to subparagraph

23 (B), the term ‘‘electing veteran’’ means a vet24 eran who makes an election to enroll with a

25 health plan of the Department of Veterans Af-
26

•S 2296 PCS

1 fairs under chapter 18 of title 38, United

2 States Code, as added by section 8101(a)(1).

3 (B) FAMILY EXCEPTION.—Subparagraph

4 (A) shall not apply with respect to coverage

5 under a health plan referred to in such sub6 paragraph if, for the area in which the electing

7 veteran resides, such health plan offers cov8 erage to family members of an electing veteran

9 and the veteran elects family enrollment under

10 such plan (instead of individual enrollment).

11 (2) ACTIVE DUTY MILITARY PERSONNEL.—

12 (A) IN GENERAL.—Subject to subpara13 graph (B), the term ‘‘active duty military per14 sonnel’’ means an individual on active duty in

15 the Uniformed Services of the United States.

16 (B) EXCEPTION.—If an individual de17 scribed in subparagraph (A) elects family cov18 erage under section 1073a(e)(2)(A) of title 10,

19 United States Code (as added by section

20 8001(a)), then paragraph (5) of subsection (c)

21 shall not apply with respect to such coverage.

22 (3) ELECTING AMERICAN INDIANS.—

23 (A) IN GENERAL.—Subject to subpara24 graph (B), the term ‘‘electing American In-
27

•S 2296 PCS

1 dian’’ means an eligible individual who makes

2 an election under section 8302(b) of this Act.

3 (B) FAMILY ELECTION FOR ALL INDIVID4 UALS ELIGIBLE TO ELECT.—No such election

5 shall be made with respect to an individual in

6 a family (as defined without regard to this sec7 tion) unless such election is made for all eligible

8 individuals (described in section 8302(a)) who

9 are family members of the family.

10 (4) MULTIPLE CHOICE.—Eligible individuals

11 who are permitted to elect coverage under more than

12 one health plan or program referred to in this sub13 section may elect which of such plans or programs

14 will be the applicable health plan under this Act.

15 (e) QUALIFYING STUDENTS.—

16 (1) IN GENERAL.—In the case of a qualifying

17 student (described in paragraph (2)), the student

18 may elect to enroll in a community-rate health plan

19 offered for the health care coverage area in which

20 the school is located.

21 (2) QUALIFYING STUDENT.—In paragraph (1),

22 the term ‘‘qualifying student’’ means an individual

23 who—
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•S 2296 PCS

1 (A) but for this subsection would receive

2 coverage under a health plan as a child of an3 other person, and

4 (B) is a full-time student at a school in a

5 health care coverage area that is different from

6 the area (or, in the case of a large group spon7 sor, such coverage area as the Board may speci8 fy) providing the coverage described in subpara9 graph (A).

10 (3) PAYMENT RULES.—

11 (A) CONTINUED TREATMENT AS FAM12 ILY.—Except as provided in subparagraph (B),

13 nothing in this subsection shall be construed as

14 affecting the payment liabilities between fami15 lies and community-rated health plans.

16 (B) TRANSFER PAYMENT.—In the case of

17 an election under paragraph (1), for transfer

18 payments see section 1238.

19 (f) SPOUSES LIVING IN DIFFERENT HEALTH CARE

20 COVERAGE AREAS.—The Board shall provide for such

21 special rules in applying this Act in the case of a couple

22 in which the spouses reside in different health care cov23 erage areas as the Board finds appropriate.

24 (g) CHILDREN IN STATE-SUPERVISED CARE.—
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•S 2296 PCS

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

2 child in State-supervised care (as described in para3 graph (2)), the child shall be considered as a family

4 of one and enrolled by the State agency who has

5 been awarded temporary or permanent custody of

6 the child (or which has legal responsibility for the

7 child) in a fee-for-service plan unless the State agen8 cy has established a special health service delivery

9 system designated to customize and more efficiently

10 provide health services to children in State-super11 vised care, in which case the State agency will enroll

12 the child in the plan appropriate to ensure access to

13 such a special health service delivery system.

14 (2) CHILDREN IN STATE-SUPERVISED CARE.—

15 For purposes of paragraph (1), the term ‘‘child in

16 State-supervised care’’ means any child who is resid17 ing away from his or her parents and is temporarily

18 or permanently, on a voluntary or involuntary basis,

19 under the responsibility of a public child welfare or

20 juvenile services agency or court. Such term includes

21 children who are not yet made wards of the court or

22 adjudicated as delinquents residing in emergency

23 shelter care, children in the physical custody of pub24 lic or private agencies, and children who are with

25 foster parents, or other group or residential care
30

•S 2296 PCS

1 providers. Such term also includes children who are

2 legally adopted and for whom the Federal or State

3 government is providing adoption assistance pay4 ments.

5 SEC. 1013. MULTIPLE EMPLOYMENT SITUATIONS.

6 (a) MULTIPLE EMPLOYMENT OF AN INDIVIDUAL.—

7 In the case of an individual who—

8 (1)(A) is not married or (B) is married and

9 whose spouse is not a qualifying employee (as de10 fined in section 1901(b)(1)),

11 (2) is not a child, and

12 (3) who is a qualifying employee both of a com13 munity rate employer and of a experience rate em14 ployer (or of 2 large group sponsor employers),

15 the individual may elect the applicable health plan to be

16 either a community-rated health plan (for the health care

17 coverage area in which the individual resides) or an experi18 ence-rated health plan (for an employer employing the in19 dividual).

20 (b) MULTIPLE EMPLOYMENT WITHIN A FAMILY.—

21 (1) MARRIED COUPLE WITH EMPLOYMENT COM22 MUNITY RATE EMPLOYER AND WITH A EXPERIENCE

23 RATE EMPLOYER.—In the case of a married individ24 ual—
31

•S 2296 PCS

1 (A) who is a qualifying employee of a com2 munity rate employer and whose spouse is a

3 qualifying employee of a experience rate em4 ployer, or

5 (B) who is a qualifying employee of an ex6 perience rate employer and whose spouse is a

7 qualifying employee of a community rate em8 ployer,

9 the individual and the individual’s spouse may elect

10 the applicable health plan to be either a community11 rated health plan (for the health care coverage area

12 in which the couple resides) or an experience-rated

13 health plan (for an employer employing the individ14 ual or the spouse).

15 (2) MARRIED COUPLE WITH DIFFERENT EM16 PLOYERS.—In the case of a married individual—

17 (A) who is a qualifying employee of a expe18 rience rate employer, and

19 (B) whose spouse is a qualifying employee

20 of a different experience rate employer,

21 the individual and the individual’s spouse may elect

22 the applicable health plan to be an experience-rated

23 health plan for an employer employing either the in24 dividual or the spouse.
32

•S 2296 PCS

1 SEC. 1014. TREATMENT OF RESIDENTS OF STATES WITH

2 STATEWIDE SINGLE-PAYER SYSTEMS.

3 (a) UNIVERSAL COVERAGE.—Notwithstanding the

4 previous provisions of this title, except as provided in part

5 2 of subtitle C, in the case of an individual who resides

6 in a State that has a Statewide single-payer system under

7 section 1223, universal coverage shall be provided consist8 ent with section 1222(3).

9 (b) INDIVIDUAL RESPONSIBILITIES.—In the case of

10 an individual who resides in a single-payer State, the re11 sponsibilities of such individual under such system shall

12 supersede the obligations of the individual under section

13 1002.

14 Subtitle B—Benefits

15 PART 1—COMPREHENSIVE BENEFIT PACKAGE

16 SEC. 1101. PROVISION OF COMPREHENSIVE BENEFITS BY

17 PLANS.

18 (a) IN GENERAL.—Subject to the provisions of sec19 tion 1603, the comprehensive benefit package shall consist

20 of the following items and services (as described in this

21 part), subject to the cost sharing requirements described

22 in part 3, the exclusions described in part 4, and the du23 ties and authority of the National Health Board described

24 in part 5:

25 (1) Hospital services.

26 (2) Services of health professionals.
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•S 2296 PCS

1 (3) Emergency and ambulatory medical and

2 surgical services.

3 (4) Clinical preventive services.

4 (5) Mental illness and substance abuse services.

5 (6) Family planning services and services for

6 pregnant women.

7 (7) Hospice care.

8 (8) Home health care.

9 (9) Extended care services.

10 (10) Ambulance services.

11 (11) Outpatient laboratory, radiology, and diag12 nostic services.

13 (12) Outpatient prescription drugs and

14 biologicals.

15 (13) Outpatient rehabilitation services.

16 (14) Durable medical equipment and prosthetic

17 and orthotic devices.

18 (15) Vision care.

19 (16) Hearing aids for children.

20 (17) Dental care.

21 (18) Investigational treatments.

22 (19) Optional services, such as—

23 (A) health education classes; and

24 (B) extra contractual services.
34

•S 2296 PCS

1 (b) NO OTHER LIMITATIONS OR COST SHARING.—

2 The items and services in the comprehensive benefit pack3 age shall not be subject to any duration or scope limitation

4 or any deductible, copayment, or coinsurance amount that

5 is not required or authorized under this Act.

6 SEC. 1102. HOSPITAL SERVICES.

7 (a) COVERAGE.—The hospital services described in

8 this section are the following items and services:

9 (1) Inpatient hospital services.

10 (2) Outpatient hospital services.

11 (3) 24-hour a day hospital emergency services.

12 (b) LIMITATION.—The hospital services described in

13 this section do not include hospital services provided for

14 the treatment of a mental or substance abuse disorder

15 (which are subject to section 1106), except for medical de16 toxification as required for the management of medical

17 conditions associated with withdrawal from alcohol or

18 drugs (which is not covered under such section).

19 SEC. 1103. SERVICES OF HEALTH PROFESSIONALS.

20 (a) COVERAGE.—The items and services described in

21 this section are—

22 (1) inpatient and outpatient health professional

23 services, including consultations, that are provided

24 in—
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•S 2296 PCS

1 (A) a home, office, or other ambulatory

2 care setting; or

3 (B) an institutional setting; and

4 (2) services and supplies (including drugs and

5 biologicals which cannot be self-administered) fur6 nished as an incident to such health professional

7 services, of kinds which are commonly furnished in

8 the office of a health professional and are commonly

9 either rendered without charge or included in the bill

10 of such professional.

11 (b) DEFINITIONS.—Unless otherwise provided in this

12 Act, for purposes of this Act:

13 (1) HEALTH PROFESSIONAL.—The term

14 ‘‘health professional’’ means an individual who pro15 vides health professional services.

16 (2) HEALTH PROFESSIONAL SERVICES.—The

17 term ‘‘health professional services’’ means profes18 sional services that—

19 (A) are lawfully provided by a physician; or

20 (B) would be described in subparagraph

21 (A) if provided by a physician, but are provided

22 by another person who is legally authorized to

23 provide such services in the State in which the

24 services are provided.
36

•S 2296 PCS

1 SEC. 1104. EMERGENCY AND AMBULATORY MEDICAL AND

2 SURGICAL SERVICES.

3 The items and services described in this section are

4 24 hour-a-day emergency services, and ambulatory medi5 cal and surgical services provided by a facility that is not

6 a hospital and that is legally authorized to provide the

7 services in the State in which they are provided.

8 SEC. 1105. CLINICAL PREVENTIVE SERVICES.

9 (a) COVERAGE.—The clinical preventive services de10 scribed in this section are the following items or services

11 provided consistent with any periodicity schedule or other

12 modification promulgated by the Board under section

13 1153, including regulations establishing periodicity sched14 ules for high risk populations:

15 (1) Age appropriate immunizations consistent

16 with the periodicity schedule recommended by the

17 Advisory Council on Immunization Practices, in con18 sultation with the American Academy of Pediatrics.

19 (2) Age appropriate tests and clinician visits

20 (including preventive counseling and health advice)

21 for individuals under the age of 20, consistent with

22 a periodicity schedule recommended by the American

23 Academy of Pediatrics and other experts in clinical

24 preventive services for children and adolescents.

25 (3) Clinician visits for individuals age 20 and

26 over as follows:
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•S 2296 PCS

1 (A) Every 3 years for individuals age 20

2 through 39.

3 (B) Biannually for individuals age 40

4 through 64.

5 (C) Annually for individuals age 65 and

6 over.

7 (4) Cholesterol tests every 5 years for individ8 uals age 20 and over.

9 (5) Papanicolaou smears and pelvic exams for

10 females who are at risk for cervical cancer—

11 (A) annually between the ages of 13

12 through 64 unless three consecutive annual pap

13 smears have been negative and it has been de14 termined that the female is not at risk for sexu15 ally transmitted diseases, in which case cov16 erage shall be once every 2 years; and

17 (B) every 2 years for females age 65 and

18 over.

19 (6) Annual screening for chlamydia and gonor20 rhea for sexually active females unless such individ21 ual is determined by the health care provider not to

22 be at risk for sexually transmitted diseases.

23 (7) Mammograms for females as follows:

24 (A) Ages 40 through 49, every 2 years in

25 consultation with their physician.
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•S 2296 PCS

1 (B) Ages 50 through 64, every year.

2 (C) Age 65 and over, every 2 years.

3 (b) COLORECTAL CANCER SCREENINGS.—The com4 prehensive benefit package shall include any revisions to

5 colorectal cancer screenings that are recommended by the

6 U.S. Preventive Services Task Force in the periodic up7 date of the Guide to Clinical Preventive Services planned

8 for release in November, 1994. The National Health

9 Board shall utilize any subsequent U.S. Preventive Serv10 ices Task Force updates as its primary guidance in updat11 ing these clinical preventive services.

12 (c) CLINICIAN VISIT.—For purposes of this section,

13 the term ‘‘clinician visit’’ includes the following health pro14 fessional services (as defined in section 1102(c)):

15 (1) A complete medical history.

16 (2) An appropriate physical examination.

17 (3) Risk assessment, including for domestic vio18 lence.

19 (4) Targeted health advice and counseling, in20 cluding nutrition counseling.

21 (5) The administration of age-appropriate im22 munizations and tests specified in subsection (a).
39

•S 2296 PCS

1 SEC. 1106. MENTAL ILLNESS AND SUBSTANCE ABUSE SERV2 ICES.

3 (a) COVERAGE.—The mental illness and substance

4 abuse services that are described in this section are the

5 following items and services for eligible individuals, as de6 fined in section 1001(c), including individuals with mul7 tiple mental disorders or mental retardation and mental

8 illness, who satisfy the eligibility requirements in sub9 section (b):

10 (1) Inpatient mental illness and substance

11 abuse treatment (described in subsection (d)).

12 (2) Residential mental illness and substance

13 abuse treatment (described in subsection (e)).

14 (3) Intensive nonresidential mental illness and

15 substance abuse treatment (described in subsection

16 (f)).

17 (4) Outpatient mental illness and substance

18 abuse treatment (described in subsection (g)), in19 cluding case management, screening and assessment,

20 crisis services, and collateral services.

21 (b) ELIGIBILITY.—The eligibility requirements re22 ferred to in subsection (a) are as follows:

23 (1) INPATIENT, RESIDENTIAL, NONRES24 IDENTIAL, AND OUTPATIENT TREATMENT.—An eligi25 ble individual is eligible to receive coverage for inpa26 tient and residential mental illness and substance
40

•S 2296 PCS

1 abuse treatment, intensive nonresidential mental ill2 ness and substance abuse treatment, or outpatient

3 mental illness and substance abuse treatment (ex4 cept case management, screening and assessment,

5 crisis services, and collateral services) if the individ6 ual—

7 (A) has, or has had during the 1-year pe8 riod preceding the date of such treatment, a

9 diagnosable mental disorder or a diagnosable

10 substance abuse disorder or, in the case of a

11 child 5 years of age or less, is at risk of a men12 tal disorder; and

13 (B) is experiencing, or is at significant risk

14 of experiencing, functional impairment in fam15 ily, work, school, or community activities.

16 For purposes of this paragraph, an individual who

17 has a diagnosable mental disorder or a diagnosable

18 substance abuse disorder, is receiving treatment for

19 such disorder, but does not satisfy the functional im20 pairment criterion in subparagraph (B) shall be

21 treated as satisfying such criterion if the individual

22 would satisfy such criterion without such treatment.

23 (2) CASE MANAGEMENT.—An eligible individual

24 is eligible to receive coverage for case management

25 if the individual is eligible to receive coverage for,
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•S 2296 PCS

1 and is receiving, mental illness and substance abuse

2 treatment with respect to a diagnosable mental dis3 order or a diagnosable substance abuse disorder.

4 (3) SCREENING AND ASSESSMENT AND CRISIS

5 SERVICES.—All eligible individuals enrolled under a

6 health plan are eligible to receive coverage for out7 patient mental illness and substance abuse treat8 ment consisting of screening and assessment and

9 crisis services.

10 (4) COLLATERAL SERVICES.—An eligible indi11 vidual is eligible to receive coverage for outpatient

12 mental illness and substance abuse treatment con13 sisting of collateral services if the individual is a

14 family member (described in section 1011(b)) of an

15 individual who is receiving inpatient and residential

16 mental illness and substance abuse treatment, inten17 sive nonresidential mental illness and substance

18 abuse treatment, or outpatient mental illness and

19 substance abuse treatment.

20 (c) HEALTH PROFESSIONAL.—

21 (1) IN GENERAL.—The National Health Board

22 shall specify those health professional services de23 scribed in section 1103 that shall be treated as inpa24 tient, residential, intensive nonresidential, and out-
42

•S 2296 PCS

1 patient mental illness and substance abuse treat2 ment.

3 (2) RULE OF CONSTRUCTION.—Nothing in sec4 tion 1861(e) of the Social Security Act, including

5 paragraph (4), shall be construed as requiring that

6 individuals receiving items and services under this

7 section be under the care of a physician when such

8 individuals are under the care of a mental health or

9 substance abuse health professional in a State in

10 which such care is permitted by State law.

11 (d) INPATIENT TREATMENT.—

12 (1) DEFINITION.—For purposes of this subtitle,

13 the term ‘‘inpatient mental illness and substance

14 abuse treatment’’ means the items and services de15 scribed in paragraphs (1) through (3) of section

16 1861(b) of the Social Security Act when provided

17 with respect to a diagnosable mental disorder or a

18 diagnosable substance abuse disorder to an inpatient

19 of a hospital or psychiatric hospital.

20 (2) LIMITATIONS.—Coverage for inpatient men21 tal illness and substance abuse treatment is subject

22 to the following limitations:

23 (A) INPATIENT HOSPITAL TREATMENT FOR

24 SUBSTANCE ABUSE.—Such treatment, when

25 provided in a hospital or a psychiatric hospital
43

•S 2296 PCS

1 with respect to a diagnosable substance abuse

2 disorder, is covered under this section only for

3 detoxification requiring the management of psy4 chiatric conditions associated with withdrawal

5 from alcohol or drugs. The items and services

6 described in this section do not include medical

7 detoxification as required for the management

8 of medical conditions associated with with9 drawal from alcohol or drugs (which is covered

10 under section 1102).

11 (B) ANNUAL LIMIT.—Prior to January 1,

12 2001, such treatment, when furnished to an in13 patient of a hospital or psychiatric hospital is

14 subject to an aggregate annual limit of 34 days,

15 15 of which may not be reduced in substitution

16 for other covered services. On or after such

17 date, such annual aggregate limit shall not

18 apply.

19 (e) RESIDENTIAL TREATMENT.—

20 (1) DEFINITION.—For purposes of this subtitle,

21 the term ‘‘residential mental illness and substance

22 abuse treatment’’ means the items and services pro23 vided with respect to a diagnosable mental disorder

24 or a diagnosable substance abuse disorder to a resi25 dent of a residential treatment center, residential de-
44

•S 2296 PCS

1 toxification center, crisis residential program, mental

2 illness residential treatment program, therapeutic

3 family home, therapeutic community, group treat4 ment home, community residential treatment pro5 gram, or recovery center for substance abuse.

6 (2) ANNUAL LIMIT.—

7 (A) IN GENERAL.—Prior to January 1,

8 2001, the number of covered days of residential

9 mental illness and substance abuse treatment

10 that are available to an individual under the 34-

11 day limit described in the first sentence of sub12 section (d)(2)(B), shall be reduced by 1 day for

13 each 4 covered days of residential mental illness

14 and substance abuse treatment that are pro15 vided to the individual, until such number is re16 duced to 15. After such number is reduced to

17 15, no residential treatment may be covered, ex18 cept as provided in subparagraph (B). On or

19 after such date, such annual aggregate limit

20 shall not apply.

21 (B) NONAPPLICATION.—The limit con22 tained in subparagraph (A) shall not apply to

23 mental health and substance abuse treatment

24 provided in a therapeutic community, halfway

25 house, recovery center or other comparably in-
45

•S 2296 PCS

1 expensive residential mental health and sub2 stance abuse treatment facility, as determined

3 by the National Health Board.

4 (f) INTENSIVE NONRESIDENTIAL TREATMENT.—

5 (1) DEFINITION.—For purposes of this subtitle,

6 the term ‘‘intensive nonresidential mental illness and

7 substance abuse treatment’’ means diagnostic or

8 therapeutic items or services provided with respect

9 to a diagnosable mental disorder or a diagnosable

10 substance abuse disorder to an individual—

11 (A) participating in a partial hospitaliza12 tion program, a mental health consumer-run

13 service center, a day treatment program, a psy14 chiatric rehabilitation program, or an ambula15 tory detoxification program; or

16 (B) receiving home-based mental illness

17 services or behavioral aide mental illness serv18 ices.

19 (2) LIMITATIONS.—Coverage for intensive

20 nonresidential mental illness and substance abuse

21 treatment is subject to the following limitations:

22 (A) TREATMENT PURPOSES.—Such treat23 ment is covered only when provided—

24 (i) to avert the need for treatment in

25 residential or inpatient settings;
46

•S 2296 PCS

1 (ii) to facilitate the earlier discharge

2 of an individual receiving inpatient or resi3 dential care;

4 (iii) to restore the functioning of an

5 individual with a diagnosable mental dis6 order or a diagnosable substance abuse

7 disorder; or

8 (iv) to assist such an individual to de9 velop the skills and gain access to the sup10 port services the individual needs to

11 achieve the maximum level of functioning

12 of the individual within the community.

13 (B) DETOXIFICATION.—Intensive

14 nonresidential substance abuse treatment con15 sisting of detoxification is covered only if it is

16 provided in the context of a treatment program.

17 (g) OUTPATIENT TREATMENT.—

18 (1) DEFINITION.—For purposes of this subtitle,

19 the term ‘‘outpatient mental illness and substance

20 abuse treatment’’ means the following services pro21 vided with respect to a diagnosable mental disorder

22 or a diagnosable substance abuse disorder in an out23 patient setting:

24 (A) Screening and assessment.

25 (B) Diagnosis.
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•S 2296 PCS

1 (C) Medications management.

2 (D) Substance abuse counseling and re3 lapse prevention.

4 (E) Crisis services.

5 (F) Somatic treatment services.

6 (G) Psychotherapy.

7 (H) Case management.

8 (I) Collateral services.

9 (2) LIMITATIONS.—Coverage for outpatient

10 mental illness and substance abuse treatment is sub11 ject to the following limitations:

12 (A) HEALTH PROFESSIONAL SERVICES.—

13 Such treatment is covered only when it con14 stitutes health professional services (as defined

15 in section 1103(b)(2)).

16 (B) DETOXIFICATION.—Outpatient sub17 stance abuse treatment consisting of detoxifica18 tion is covered only if it is provided in the con19 text of a treatment program.

20 (h) MANAGEMENT OF CARE FOR MENTAL ILLNESS

21 AND SUBSTANCE ABUSE.—

22 (1) PROVISION OF TREATMENT.—Quality man23 aged care techniques shall be utilized by health plans

24 to ensure that all necessary care is provided in the
48

•S 2296 PCS

1 most appropriate, cost effective setting, and that un2 necessary care is not provided.

3 (2) QUALITY MANAGED CARE.—The term

4 ‘‘quality managed care’’ refers to the administration

5 of benefits through the methods of central intake,

6 preauthorization, and utilization review. Health

7 plans may contract with specialized behavioral care

8 entities to administer benefits if such entities are

9 certified by the State as proficient in the use of

10 quality managed care techniques that facilitate the

11 provision of clinically appropriate, cost-effective, and

12 confidential treatment, providing continuity of care

13 between and among treatment providers.

14 (3) TREATMENT DECISIONS.—

15 (A) Treatment placement decisions shall be

16 based primarily on medical necessity. Criteria

17 used for placement shall be based on uniform

18 assessment tools recognized by treatment and

19 other professional organizations in the fields of

20 mental illness and substance abuse or approved

21 for use by the National Health Board and shall

22 be publicly available.

23 (B) All treatment assessment and place24 ment decisions or review of such decisions shall

25 be made by personnel—
49

•S 2296 PCS

1 (i) licensed, certified, or otherwise

2 credentialed by the State in the field for

3 which the assessment or treatment is

4 sought (such as mental health or substance

5 abuse) and qualified to review utilization of

6 the specific treatment delivered; and

7 (ii) with no financial stake in the out8 come of such decisions.

9 (4) RULE OF CONSTRUCTION.—Nothing in this

10 section shall be construed as prohibiting health plans

11 from providing mental health and substance abuse

12 treatment through fee-for-service arrangements.

13 (i) SPECIAL DELIVERY REQUIREMENTS FOR SERV14 ICES PROVIDED TO CHILDREN.—

15 (1) REQUIRING SERVICES TO BE PROVIDED

16 THROUGH ORGANIZED SYSTEMS OF CARE.—Health

17 plans shall ensure that the mental illness and sub18 stance abuse services described in this section and

19 furnished to an eligible person are furnished through

20 organized systems of care, as described in paragraph

21 (2), if the eligible person is a person under 22 years

22 of age who has a serious emotional disturbance or

23 a substance abuse disorder, and who is, or is at im24 minent risk of being, involved with one or more pub-
50

•S 2296 PCS

1 lic child-serving agencies, including child welfare,

2 special education, and juvenile or criminal justice.

3 (2) REQUIREMENTS OF SYSTEM OF CARE.—As

4 used in this subsection, the term ‘‘organized system

5 of care’’ means a community-based service delivery

6 network, which may consist of public and private

7 providers, that meets the following requirements:

8 (A) The system has established linkages

9 with existing mental illness and substance

10 abuse service delivery programs in the plan

11 service area (or is in the process of developing

12 or operating a system with appropriate public

13 agencies in the area to coordinate the delivery

14 of such services to individuals in the area).

15 (B) The system provides for the participa16 tion and coordination of multiple agencies and

17 providers that serve the needs of children in the

18 area, including agencies and providers involved

19 with child welfare, education, juvenile or crimi20 nal justice, health care, mental health, and sub21 stance abuse prevention and treatment.

22 (C) The system provides for the involve23 ment of the families of children to whom mental

24 illness and substance abuse services are pro-
51

•S 2296 PCS

1 vided in the planning of treatment and the de2 livery of services.

3 (D) The system provides for the develop4 ment and implementation of individualized

5 treatment plans by multidisciplinary and multi6 agency teams, that are recognized and followed

7 by the applicable agencies and providers in the

8 area.

9 (E) The system ensures the delivery and

10 coordination of the range of mental illness and

11 substance abuse services required by individuals

12 under 22 years of age who have a serious emo13 tional disturbance or a substance abuse dis14 order.

15 (F) The system provides for the manage16 ment of the individualized treatment plans de17 scribed in subparagraph (D) and for a flexible

18 response to changes in treatment needs over

19 time.

20 (3) FULL IMPLEMENTATION OF PLAN.—Subject

21 to paragraph (2)(F), the State shall assure that

22 public or philanthropic resources are available to im23 plement each child’s plan, including residential treat24 ment in excess of the limit set forth in subsection (e)
52

•S 2296 PCS

1 if the State determines that such treatment is clini2 cally appropriate.

3 (4) RULE OF CONSTRUCTION.—The organized

4 system of care shall not exclude health professionals

5 whose services are covered by the health plan se6 lected by the child or the child’s legal guardian.

7 (5) REQUIREMENTS OF STATES.—The State

8 shall ensure that public agencies furnishing services

9 to children with serious emotional disturbances, in10 cluding mental health, child welfare, special edu11 cation, juvenile justice, and other agencies, establish

12 policies that result in effective collaboration and co13 ordination among such agencies and the health plans

14 established in the State. Such collaboration may in15 clude policies to blend public funds with health plan

16 resources to meet such children’s needs or risk ad17 justment payments to health plans.

18 SEC. 1107. FAMILY PLANNING SERVICES AND SERVICES

19 FOR PREGNANT WOMEN.

20 The services described in this section are the follow21 ing items and services:

22 (1) Voluntary comprehensive family planning

23 services, including family planning counseling and

24 education.
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•S 2296 PCS

1 (2) Contraceptive drugs and devices, subject to

2 approval by the Secretary under the Federal Food,

3 Drug, and Cosmetic Act.

4 (3) Services for pregnant women.

5 SEC. 1108. HOSPICE CARE.

6 The hospice care described in this section is the items

7 and services described in paragraph (1) of section

8 1861(dd) of the Social Security Act, as defined in para9 graphs (2), (3), and (4)(A) of such section, except that

10 all references to the Secretary of Health and Human Serv11 ices in such paragraphs shall be treated as references to

12 the National Health Board.

13 SEC. 1109. HOME HEALTH CARE.

14 (a) COVERAGE.—The home health care described in

15 this section is—

16 (1) the items and services described in section

17 1861(m) of the Social Security Act; and

18 (2) home infusion drug therapy services.

19 (b) LIMITATIONS.—Coverage for home health care is

20 subject to the following limitations:

21 (1) INPATIENT TREATMENT ALTERNATIVE.—

22 Such care is covered only as an alternative to inpa23 tient treatment in a hospital, skilled nursing facility,

24 or rehabilitation facility as a result of an illness, in25 jury, disorder or other health condition.
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•S 2296 PCS

1 (2) REEVALUATION.—At the end of each 60-

2 day period of home health care, the need for contin3 ued care shall be reevaluated by the person who is

4 primarily responsible for providing the home health

5 care. Additional periods of care are covered only if

6 such person determines that the requirement in

7 paragraph (1) is satisfied.

8 SEC. 1110. EXTENDED CARE SERVICES.

9 (a) COVERAGE.—The extended care services de10 scribed in this section are the items and services described

11 in section 1861(h) of the Social Security Act when pro12 vided to an inpatient of a skilled nursing facility or a reha13 bilitation facility.

14 (b) LIMITATIONS.—Coverage for extended care serv15 ices is subject to the following limitations:

16 (1) HOSPITAL SERVICES ALTERNATIVE.—Such

17 services are covered only as an alternative to treat18 ment for inpatient hospital services as a result of an

19 illness, injury, disorder or other health condition.

20 (2) ANNUAL LIMIT.—Such services are subject

21 to an aggregate annual limit of 100 days, except

22 that such limit may be waived if the need for contin23 ued care is re-evaluated by the prescribing health

24 care professional and determined to be a cost effec25 tive alternative to necessary hospital services.
55

•S 2296 PCS

1 SEC. 1111. AMBULANCE SERVICES.

2 The ambulance services described in this section are

3 covered only when indicated by the medical condition of

4 the individual concerned. Such services include—

5 (1) ground transportation by ambulance; or

6 (2) air or water transportation by an aircraft or

7 vessel equipped for transporting an injured or sick

8 individual in cases in which there is no other method

9 of transportation or where the use of another meth10 od of transportation is contraindicated by the medi11 cal condition of the individual concerned.

12 SEC. 1112. OUTPATIENT LABORATORY, RADIOLOGY, AND DI13 AGNOSTIC SERVICES.

14 The items and services described in this section are

15 laboratory, radiology, and diagnostic services (including

16 genetic testing and counseling) provided upon prescription

17 to individuals who are not inpatients of a hospital, hospice,

18 skilled nursing facility, or rehabilitation facility.

19 SEC. 1113. OUTPATIENT PRESCRIPTION DRUGS AND

20 BIOLOGICALS.

21 The items described in this section are the following:

22 (1) Covered outpatient drugs described in sec23 tion 1861(t) of the Social Security Act—

24 (A) except that, for purposes of this sec25 tion, a medically accepted indication with re26 spect to the use of a covered outpatient drug in-
56

•S 2296 PCS

1 cludes any use which has been approved by the

2 Food and Drug Administration for the drug,

3 and includes another use of the drug if—

4 (i) the drug has been approved by the

5 Food and Drug Administration; and

6 (ii) such use is supported by one or

7 more citations which are included (or ap8 proved for inclusion) in one or more of the

9 following compendia: the American Hos10 pital Formulary Service-Drug Information,

11 the American Medical Association Drug

12 Evaluations, the United States Pharma13 copoeia-Drug Information, and other au14 thoritative compendia as identified by the

15 Secretary, unless the Secretary has deter16 mined that the use is not medically appro17 priate or the use is identified as not indi18 cated in one or more such compendia; or

19 (iii) such use is medically accepted

20 based on supportive clinical evidence in

21 peer reviewed medical literature appearing

22 in publications which have been identified

23 for purposes of this clause by the Sec24 retary; and
57

•S 2296 PCS

1 (B) notwithstanding any exclusion from

2 coverage that may be made with respect to such

3 a drug under title XVIII of such Act pursuant

4 to section 1862(a)(18) of such Act.

5 (2) Blood clotting factors when provided on an

6 outpatient basis.

7 (3) Medical foods prescribed by a physician that

8 comply with the requirements of the Federal Food,

9 Drug, and Cosmetic Act and that treat inborn errors

10 of metabolism identified by the Secretary as render11 ing a person unable to sustain life without signifi12 cant mental or physical impairment by the ingestion

13 of conventional foods.

14 (4) Accessories and supplies that are used di15 rectly with drugs and biologics to achieve the thera16 peutic benefit of such drugs or biologics.

17 SEC. 1114. OUTPATIENT REHABILITATION SERVICES.

18 (a) COVERAGE.—The outpatient rehabilitation serv19 ices described in this section are—

20 (1) outpatient occupational therapy;

21 (2) outpatient physical therapy;

22 (3) outpatient respiratory therapy; and

23 (4) outpatient speech-language pathology serv24 ices and audiology services.
58

•S 2296 PCS

1 (b) LIMITATIONS.—Coverage for outpatient rehabili2 tation services is subject to the following limitations:

3 (1) RESTORATION OF CAPACITY OR MINIMIZA4 TION OF LIMITATIONS.—Such services include only

5 items or services used to restore functional capacity

6 or minimize limitations on physical and cognitive

7 functions as a result of an illness, injury, disorder

8 or other health condition.

9 (2) MAINTENANCE OF FUNCTION OR PREVEN10 TION OF DETERIORATION.—To the extent that the

11 services described in paragraph (1) are for the pur12 pose of maintaining functioning or preventing dete13 rioration, such services shall be limited to—

14 (A) the initial evaluation and periodic over15 sight of the patient’s needs by a qualified reha16 bilitation health professional;

17 (B) the designing by the qualified rehabili18 tation health professional of a maintenance or

19 prevention program that is appropriate consid20 ering the capacity and tolerance of the patient

21 and the treatment objectives;

22 (C) the instruction of the patient, family

23 members, or support personnel in carrying out

24 the program; and

25 (D) reevaluations.
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•S 2296 PCS

1 (3) REEVALUATION.—

2 (A) IN GENERAL.—At the end of each 60-

3 day period of outpatient rehabilitation services

4 (other than services described in paragraph

5 (2)), the need for continued services shall be re6 evaluated by the person who is primarily re7 sponsible for providing the services. Additional

8 periods of services are covered only if such per9 son determines that the requirement in para10 graph (1) is satisfied.

11 (B) QUALIFIED REHABILITATION HEALTH

12 PROFESSIONAL.—Periodically, outpatient reha13 bilitation services described in paragraph (2)

14 shall be reevaluated by a qualified rehabilitation

15 health professional.

16 SEC. 1115. DURABLE MEDICAL EQUIPMENT, PROSTHETIC

17 DEVICES, ORTHOTICS, AND PROSTHETICS.

18 (a) COVERAGE.—The items and services described in

19 this section are—

20 (1) durable medical equipment;

21 (2) prosthetic devices (other than dental de22 vices) which replace all or part of the function of an

23 internal body organ (including devices that are sur24 gically inserted, devices that are physically attached

25 to the body, such as colostomy bags and supplies di-
60

•S 2296 PCS

1 rectly related to colostomy care, and external de2 vices);

3 (3) orthotics (leg, arm, back and neck braces)

4 and prosthetics (artificial legs, arms and eyes);

5 (4)(A) accessories and supplies which are used

6 directly with equipment or devices described in para7 graphs (1) through (3) to achieve the therapeutic

8 benefits of such equipment or devices or to assure

9 the proper functioning of such equipment or device;

10 (B) replacement of such equipment or devices

11 when required in cases of loss irreparable damage,

12 wear, or because of a change in the patient’s condi13 tion; and

14 (C) repair and maintenance of such equipment

15 and devices; and

16 (5) fitting (including adjustments) and training

17 for use of the items described in paragraphs (1)

18 through (4).

19 (b) LIMITATION.—An item or service described in

20 this section is covered only if it improves functional ability

21 or prevents or minimizes deterioration in function.

22 (c) DURABLE MEDICAL EQUIPMENT.—For purposes

23 of this subtitle, the term ‘‘durable medical equipment’’ has

24 the meaning given such term in section 1861(n) of the

25 Social Security Act.
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•S 2296 PCS

1 SEC. 1116. VISION CARE.

2 (a) COVERAGE.—The vision care described in this

3 section is routine eye examinations, diagnosis, and treat4 ment for defects in vision.

5 (b) LIMITATION.—Eyeglasses and contact lenses are

6 covered only for individuals less than 18 years of age, ac7 cording to a periodicity schedule established by the Board.

8 SEC. 1117. HEARING AIDS FOR CHILDREN.

9 The items described in this section are hearing aids

10 for individuals up to age 18 when recommended by a phy11 sician or audiologist.

12 SEC. 1118. DENTAL CARE.

13 (a) COVERAGE.—The dental care described in this

14 section is the following:

15 (1) Emergency dental treatment, including sim16 ple extractions, for acute infections, bleeding, and

17 injuries to natural teeth and oral structures for con18 ditions requiring immediate attention to prevent

19 risks to life or significant medical complications, as

20 specified by the National Health Board.

21 (2) Prevention and diagnosis of dental disease,

22 including oral dental examinations, radiographs,

23 dental sealants, fluoride application, and dental pro24 phylaxis.
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•S 2296 PCS

1 (3) Treatment of dental disease, including rou2 tine fillings, prosthetics for genetic defects, periodon3 tal maintenance, and endodontic services.

4 (4) Space maintenance procedures to prevent

5 orthodontic complications.

6 (5) Interceptive orthodontic treatment to pre7 vent severe malocclusion.

8 (b) LIMITATIONS.—Coverage for dental care is sub9 ject to the following limitations:

10 (1) Prior to January 1, 2001, the items and

11 services described in paragraphs (2) and (3) of sub12 section (a) are covered only for individuals less than

13 18 years of age. On or after such date, such items

14 and services are covered for all eligible individuals

15 enrolled under a health plan, except that dental

16 sealants and endodontic services are not covered for

17 individuals 18 years of age or older.

18 (2) The items and services described in sub19 section (a)(4) are covered only for individuals at

20 least 3 years of age but less than 13 years of age

21 when determined to be medically necessary or appro22 priate to prevent future need for more costly services

23 otherwise covered under this section.

24 (3) Prior to January 1, 2001, the items and

25 services described in subsection (a)(5) are not cov-
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•S 2296 PCS

1 ered. On or after such date, such items and services

2 are covered only for individuals at least 6 years of

3 age, but less than 12 years of age.

4 SEC. 1119. INVESTIGATIONAL TREATMENTS.

5 (a) COVERAGE.—The items and services described in

6 this section are qualifying investigational treatments (as

7 defined in subsection (c)) that are administered for a dis8 ease, disorder, or other health conditions. A health plan

9 shall allow individuals, when medically appropriate, to par10 ticipate in an investigational therapy, and shall cover the

11 patient care provided pursuant to investigational treat12 ments as described in subsection (b).

13 (b) PATIENT CARE DURING INVESTIGATIONAL

14 TREATMENTS.—The comprehensive benefit package in15 cludes an item or service described in any other section

16 of this part, subject to the limitations and cost sharing

17 requirements applicable to the item or service, when the

18 item or service is provided to an individual in the course

19 of an investigational treatment, if—

20 (1) the treatment is a qualifying investigational

21 treatment; and

22 (2) the item or service is required to provide

23 patient care pursuant to the design of the trial, ex24 cept those services normally paid for by other fund25 ing sources (as defined by the National Health
64

•S 2296 PCS

1 Board) such as the cost of the investigational agent

2 or device itself, and the costs of managing the re3 search.

4 Items or services subject to the exception in paragraph

5 (2), may be covered in addition to patient care at the dis6 cretion of the health plan so long as the plan makes a

7 determination based on objective protocols applied consist8 ently to all enrollees.

9 (c) DEFINITIONS.—For purposes of this subtitle:

10 (1) QUALIFYING INVESTIGATIONAL TREAT11 MENT.—The term ‘‘qualifying investigational treat12 ment’’ means a treatment—

13 (A) the effectiveness of which has not been

14 determined; and

15 (B) that is under clinical investigation as

16 part of an approved research trial.

17 (2) APPROVED RESEARCH TRIAL.—The term

18 ‘‘approved research trial’’ means—

19 (A) a research trial approved by the Sec20 retary of Health and Human Services, the Di21 rector of the National Institutes of Health, the

22 Commissioner of the Food and Drug Adminis23 tration, the Secretary of Veterans Affairs, the

24 Secretary of Defense, or a qualified nongovern-
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•S 2296 PCS

1 mental research entity as defined in guidelines

2 of the National Institutes of Health; or

3 (B) a peer-reviewed and approved research

4 program, as defined by the Secretary of Health

5 and Human Services, conducted for the primary

6 purpose of determining whether or not a treat7 ment is safe, efficacious, or having any other

8 characteristic of a treatment which must be

9 demonstrated in order for the treatment to be

10 medically necessary or appropriate.

11 Nothing in this section shall be construed as limiting

12 the authority of the Commissioner of Food and

13 Drugs over clinical investigations of products within

14 the Commissioner’s jurisdiction.

15 SEC. 1120. OPTIONAL SERVICES.

16 (a) HEALTH EDUCATION.—Health education and

17 training programs, including community-based programs,

18 may be provided at the discretion of the health plan to

19 encourage the reduction of behavioral risk factors and to

20 promote health activities. Such education and training

21 programs may include smoking cessation, nutrition coun22 seling, stress management, support groups, and physical

23 training classes. This subsection shall not be construed to

24 include or limit education or training that is provided in

25 the course of the delivery of health professional services
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•S 2296 PCS

1 under section 1102. Health care providers may refer plan

2 members to health education programs that best meet

3 their needs based on an assessment of individual risks and

4 learning styles. Health plans shall inform health providers

5 about the availability of such health education programs

6 annually, either at the time of paying the first claim to

7 that provider, or in the case of a network plan, at the

8 time of contracting with the provider.

9 (b) EXTRA CONTRACTUAL SERVICES.—

10 (1) IN GENERAL.—A health plan may provide

11 coverage to individuals enrolled under the plan for

12 extra contractual items and services determined ap13 propriate by the plan and the individual (or in ap14 propriate circumstances the parent or legal guardian

15 of the individual).

16 (2) DEFINITION.—As used in this section, the

17 term ‘‘extra contractual items and services’’ means,

18 with respect to a health plan, case management

19 services and those medically appropriate alternatives

20 (either alternative items or services or alternative

21 care settings) to traditional covered items or services

22 that are determined by the health plan to be the

23 most cost effective way to provide appropriate treat24 ment to the enrolled individual.
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•S 2296 PCS

1 (c) DISPUTED CLAIMS.—A decision by a health plan

2 to permit or deny the provision of optional services shall

3 not be subject to a benefit discrimination review or other

4 review unless such review involves a claim of discrimina5 tion under this Act.

6 PART 2—COST SHARING

7 SEC. 1131. COST SHARING.

8 (a) IN GENERAL.—Each health plan shall offer to in9 dividuals enrolled under the plan one, but not more than

10 one, of the following cost sharing schedules, which sched11 ule shall be offered to all such enrollees:

12 (1) Lower cost sharing (described in section

13 1132).

14 (2) Higher cost sharing (described in section

15 1133).

16 (3) Combination cost sharing (described in sec17 tion 1134).

18 (b) COST SHARING FOR LOW-INCOME FAMILIES.—

19 For provisions relating to reducing cost sharing for certain

20 low-income families, see section 1281.

21 (c) DEDUCTIBLES, COST SHARING, AND OUT-OF22 POCKET LIMITS ON COST SHARING.—

23 (1) APPLICATION ON AN ANNUAL BASIS.—The

24 deductibles and out-of-pocket limits on cost sharing

25 for a year under the schedules referred to in sub-
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•S 2296 PCS

1 section (a) shall be applied based upon expenses in2 curred for items and services furnished in the year.

3 (2) INDIVIDUAL AND FAMILY GENERAL

4 DEDUCTIBLES.—

5 (A) INDIVIDUAL.—Subject to subpara6 graph (B), with respect to an individual en7 rolled under a health plan (regardless of the

8 class of enrollment), any individual general de9 ductible in the cost sharing schedule offered by

10 the plan represents the amount of countable ex11 penses (as defined in subparagraph (C)) that

12 the individual may be required to incur in a

13 year before the plan incurs liability for expenses

14 for such items and services furnished to the in15 dividual.

16 (B) FAMILY.—In the case of an individual

17 enrolled under a health plan under a family

18 class of enrollment (as defined in section

19 1011(c)(2)(A)), the individual general deduct20 ible under subparagraph (A) shall not apply to

21 countable expenses incurred by any member of

22 the individual’s family in a year at such time as

23 the family has incurred, in the aggregate,

24 countable expenses in the amount of the family

25 general deductible for the year.
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•S 2296 PCS

1 (C) COUNTABLE EXPENSE.—In this para2 graph, the term ‘‘countable expense’’ means,

3 with respect to an individual for a year, an ex4 pense for an item or service covered by the

5 comprehensive benefit package that is subject

6 to the general deductible and for which, but for

7 such deductible and any other cost sharing

8 under this subtitle, a health plan is liable for

9 payment. The amount of countable expenses for

10 an individual for a year under this paragraph

11 shall not exceed the individual general deduct12 ible for the year.

13 (3) COINSURANCE AND COPAYMENTS.—After a

14 general or separate deductible that applies to an

15 item or service covered by the comprehensive benefit

16 package has been satisfied for a year, subject to

17 paragraph (4), coinsurance and copayments are

18 amounts (expressed as a percentage of an amount

19 otherwise payable or as a dollar amount, respec20 tively) that an individual may be required to pay

21 with respect to the item or service.

22 (4) INDIVIDUAL AND FAMILY LIMITS ON COST

23 SHARING.—

24 (A) INDIVIDUAL.—Subject to subpara25 graph (B), with respect to an individual en-
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•S 2296 PCS

1 rolled under a health plan (regardless of the

2 class of enrollment), the individual out-of3 pocket limit on cost sharing in the cost sharing

4 schedule offered by the plan represents the

5 amount of expenses that the individual may be

6 required to incur under the plan in a year be7 cause of a general deductible, separate

8 deductibles, copayments, and coinsurance before

9 the plan may no longer impose any cost sharing

10 with respect to items or services covered by the

11 comprehensive benefit package that are pro12 vided to the individual.

13 (B) FAMILY.—In the case of an individual

14 enrolled under a health plan under a family

15 class of enrollment (as defined in section

16 1011(c)(2)(A)), the family out-of-pocket limit

17 on cost sharing in the cost sharing schedule of18 fered by the plan represents the amount of ex19 penses that members of the individual’s family,

20 in the aggregate, may be required to incur

21 under the plan in a year because of a general

22 deductible, separate deductibles, copayments,

23 and coinsurance before the plan may no longer

24 impose any cost sharing with respect to items

25 or services covered by the comprehensive benefit
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•S 2296 PCS

1 package that are provided to any member of the

2 individual’s family.

3 (C) AMOUNT OF OUT OF POCKET LIM4 ITS.—The amount of the out of pocket limit de5 scribed—

6 (i) in subparagraph (A) is $2,500,

7 and

8 (ii) in subparagraph (B), is $3,000.

9 SEC. 1132. LOWER COST SHARING.

10 (a) IN GENERAL.—The lower cost sharing schedule

11 referred to in section 1131 that is offered by a health

12 plan—

13 (1) shall have a deductible of $250 per inpa14 tient hospital admission, and shall not have any

15 other required deductibles;

16 (2) except as provided in paragraph (4)—

17 (A) shall prohibit payment of any coinsur18 ance; and

19 (B) subject to section 1152, shall require

20 payment of the copayment for items or services

21 as follows—

22 (i) for items and services described in

23 sections 1102(a)(1), 1104, 1105,

24 1106(g)(1)(H), 1107, 1108, 1109, 1110,

25 1111, 1112, 1115, 1117, and for clinician
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•S 2296 PCS

1 visits and associated services related to

2 prenatal care and one postpartum visit, no

3 copayment is permitted;

4 (ii) for items and services described in

5 sections 1102(a)(2), 1103, 1106 (subject

6 to clause (i)), 1113, 1114, 1115, and

7 1116, the copayment is $10 per visit (or

8 per prescription in the case of items de9 scribed in section 1113);

10 (iii) for services described in section

11 1118(a)(4) and 1118(a)(5), the copayment

12 is $20 per visit;

13 (iv) for items and services described in

14 section 1102(a)(3) and 1104, the

15 copayment is $25 per visit unless the pa16 tient has an emergency medical condition

17 as defined in section 1867(e)(1) of the So18 cial Security Act; and

19 (v) for items and services described in

20 sections 1119, all cost sharing rules shall

21 be determined by the health plans; and

22 (3) shall require payment of coinsurance for an

23 out-of-network item or service (as defined in section

24 1502(f)) in an amount that is a percentage (deter25 mined under subsection (b)) of the applicable pay-
73

•S 2296 PCS

1 ment rate for the item or service established under

2 section 1211(b), but only if the item or service is

3 subject to coinsurance under the higher cost sharing

4 schedule described in section 1133 or is a clinical

5 preventive service as defined in section 1104.

6 (b) OUT-OF-NETWORK COINSURANCE PERCENT7 AGE.—

8 (1) IN GENERAL.—The National Health Board

9 shall determine a percentage referred to in sub10 section (a)(3). The percentage—

11 (A) may not be less than 20 percent; and

12 (B) shall be the same with respect to all

13 out-of-network items and services that are sub14 ject to coinsurance, except as provided in para15 graph (2).

16 (2) EXCEPTION.—The National Health Board

17 may provide for a percentage that is greater than a

18 percentage determined under paragraph (1) in the

19 case of an out-of-network item or service for which,

20 under the higher cost sharing schedule described in

21 section 1133, the coinsurance is greater than 20 per22 cent of the applicable payment rate.

23 SEC. 1133. HIGHER COST SHARING.

24 The higher cost sharing schedule referred to in sec25 tion 1131 that is offered by a health plan—
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•S 2296 PCS

1 (1) shall have an annual individual general de2 ductible of $200 and an annual family general de3 ductible of $400 that apply with respect to expenses

4 incurred for all items and services in the comprehen5 sive benefit package except—

6 (A) an item or service with respect to

7 which a separate individual deductible applies

8 under paragraph (2); or

9 (B) an item or service described in para10 graph (3), (4), or (5) with respect to which a

11 deductible does not apply;

12 (2) shall require an individual to incur expenses

13 in a year for outpatient prescription drugs and

14 biologicals (described in section 1113) equal to $250

15 before the plan provides benefits for such items to

16 the individual;

17 (3) shall require an individual to incur expenses

18 in a year for dental care described in section 1118,

19 except the items and services for prevention and di20 agnosis of dental disease described in section

21 1118(a)(2), equal to $50 before the plan provides

22 benefits for such care to the individual;

23 (4) may not require any deductible for clinical

24 preventive services (described in section 1105);
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•S 2296 PCS

1 (5) may not require any deductible for family

2 planning services as defined in section 1107(1), cli3 nician visits and associated services related to pre4 natal care or 1 post-partum visit under section

5 1107;

6 (6) may not require any deductible for the

7 items and services for prevention and diagnosis of

8 dental disease described in section 1126(a)(2);

9 (7) shall prohibit payment of any copayment;

10 and

11 (8) subject to section 1152, shall require pay12 ment of coinsurance for an item or service as fol13 lows—

14 (A) for items and services described in sec15 tion 1105, family planning services and clinical

16 visits and associated services related to prenatal

17 care and one post partum visit, and case man18 agement services under section 1106, no coin19 surance is permitted;

20 (B) for items and services described in sec21 tion 1118(a)(4) and 1118(a)(5), the coinsur22 ance is 40 percent of the applicable payment

23 rate;

24 (C) for outpatient services under section

25 1106(g)(1)(G)—
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1 (i) the coinsurance with respect to the

2 first five outpatient psychotherapy visits is

3 20 percent of the applicable payment rate;

4 (ii) the coinsurance with respect to

5 any subsequent outpatient psychotherapy

6 visits is 50 percent of the applicable pay7 ment rate; and

8 (iii) the coinsurance with respect to

9 children for outpatient psychotherapy visits

10 is 20 percent of the applicable payment

11 rate; and

12 (D) for all other items and services, the co13 insurance is 20 percent of the applicable pay14 ment rate.

15 For purposes of this section, the term ‘‘applicable payment

16 rate’’, when used with respect to an item or service, means

17 the applicable payment rate for the item or service estab18 lished under section 1523(e).

19 SEC. 1134. COMBINATION COST SHARING.

20 (a) IN GENERAL.—The combination cost sharing

21 schedule referred to in section 1131 that is offered by a

22 health plan shall require different cost sharing for in-net23 work items and services than for out-of-network items and

24 services.
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1 (b) IN-NETWORK ITEMS AND SERVICES.—With re2 spect to an in-network item or service (as defined in sec3 tion 1514(c)(1)), the combination cost sharing schedule

4 that is offered by a health plan—

5 (1) shall have a deductible of $250 per inpa6 tient hospital admission, and shall not have any

7 other required deductibles;

8 (2) shall prohibit payment of any coinsurance;

9 and

10 (3) shall require payment of a copayment in ac11 cordance with the lower cost sharing schedule de12 scribed in section 1132.

13 (c) OUT-OF-NETWORK ITEMS AND SERVICES.—With

14 respect to an out-of-network item or service (as defined

15 in section 1514(c)(2)), the combination cost sharing

16 schedule that is offered by a health plan—

17 (1) shall require an individual and a family to

18 incur expenses before the plan provides benefits for

19 the item or service in accordance with the

20 deductibles under the higher cost sharing schedule

21 described in section 1133;

22 (2) shall prohibit payment of any copayment;

23 and

24 (3) shall require payment of coinsurance in ac25 cordance with such schedule, except with respect to
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1 clinical preventive services obtained out-of-network

2 that shall be subject to a coinsurance percentage as

3 determined by the National Health Board under sec4 tion 1132.

5 SEC. 1135. INDEXING DOLLAR AMOUNTS RELATING TO

6 COST SHARING.

7 (a) IN GENERAL.—Any deductible, copayment, out8 of-pocket limit on cost sharing, or other amount expressed

9 in dollars in this subtitle for items or services provided

10 in a year after 1994 shall be such amount increased by

11 the product of the factors described in subsection (b) for

12 the year and for each previous year after 1994, minus 1.

13 Any increase (or decrease) under this subsection shall be

14 rounded.

15 (b) FACTOR.—

16 (1) IN GENERAL.—The factor described in this

17 subsection for a year is 1 plus the general health

18 care inflation factor (as specified in section

19 6001(a)(3) and determined under paragraph (2)) for

20 the year.

21 (2) DETERMINATION.—In computing such fac22 tor for a year, the percentage increase in the CPI

23 for a year (referred to in section 6001(b)) shall be

24 determined based upon the percentage increase in

25 the average of the CPI for the 12-month period end-
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1 ing with August 31 of the previous year over such

2 average for the preceding 12-month period.

3 PART 3—EXCLUSIONS

4 SEC. 1141. EXCLUSIONS.

5 (a) MEDICAL NECESSITY.—The comprehensive bene6 fit package does not include—

7 (1) an item or service that is not medically nec8 essary or appropriate; or

9 (2) an item or service that the National Health

10 Board may determine is not medically necessary or

11 appropriate in a regulation promulgated under sec12 tion 1154.

13 (b) ADDITIONAL EXCLUSIONS.—The comprehensive

14 benefit package does not include the following items and

15 services:

16 (1) Custodial care, except in the case of hospice

17 care under section 1107.

18 (2) Surgery and other procedures performed

19 solely for cosmetic purposes and hospital or other

20 services incident thereto, unless—

21 (A) required to correct a congenital anom22 aly; or

23 (B) required to restore or correct a part of

24 the body that has been altered as a result of—

25 (i) accidental injury;
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1 (ii) disease; or

2 (iii) surgery that is otherwise covered

3 under this subtitle.

4 (3) Hearing aids, except as provided in section

5 1117.

6 (4) Eyeglasses and contact lenses for individ7 uals at least 18 years of age.

8 (5) In vitro fertilization services.

9 (6) Sex change surgery and related services.

10 (7) Private duty nursing.

11 (8) Personal comfort items, except in the case

12 of hospice care under section 1107.

13 (9) Any dental procedures involving orthodontic

14 care, inlays, gold or platinum fillings, bridges,

15 crowns, pin/post retention, dental implants, surgical

16 periodontal procedures, or the preparation of the

17 mouth for the fitting or continued use of dentures,

18 except as specifically described in section 1118.

19 PART 4—ROLE OF THE NATIONAL HEALTH

20 BOARD

21 SEC. 1151. DEFINITION OF BENEFITS.

22 (a) IN GENERAL.—The National Health Board may

23 promulgate such regulations or establish such guidelines

24 as may be necessary to assure uniformity in the applica25 tion of the comprehensive benefit package across all health
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1 plans. All plans shall comply with any regulation or guide2 lines established by the Board under this section.

3 (b) FLEXIBILITY IN DELIVERY.—The regulations or

4 guidelines under subsection (a) shall permit a health plan

5 to deliver covered items and services to individuals enrolled

6 under the plan using the providers and methods that the

7 plan determines to be appropriate and consistent with

8 standards of quality care and so long as the plan complies

9 with the provisions of this Act.

10 SEC. 1152. ACCELERATION OF EXPANDED BENEFITS.

11 (a) IN GENERAL.—Subject to subsection (b), at any

12 time prior to January 1, 2001, the National Health

13 Board, in its discretion, may by regulation expand the

14 comprehensive benefit package by—

15 (1) adding any item or service that is added to

16 the package as of January 1, 2001; and

17 (2) requiring that a cost sharing schedule de18 scribed in part 2 of this subtitle reflect (wholly or

19 in part) any of the cost sharing requirements that

20 apply to the schedule as of January 1, 2001.

21 No such expansion shall be effective except as of January

22 1 of a year.

23 (b) CONDITION.—The Board may not expand the

24 benefit package under subsection (a) which is to become

25 effective with respect to a year, by adding any item or
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1 service or altering any cost sharing schedule, unless the

2 Board estimates that the additional increase in per capita

3 health care expenditures resulting from the addition or al4 teration, for each health care coverage area for the year,

5 will not cause any health care coverage area to exceed its

6 per capita target (as determined under section 6003).

7 SEC. 1153. AUTHORITY WITH RESPECT TO CLINICAL PRE8 VENTIVE SERVICES.

9 (a) IN GENERAL.—With respect to clinical preventive

10 services described in section 1104, the National Health

11 Board—

12 (1) shall specify and define specific items and

13 services as clinical preventive services for high risk

14 populations within 1 year of the date of enactment

15 of this Act and shall establish and update a periodic16 ity schedule for such items and services;

17 (2) shall establish and update periodicity sched18 ules for the age-appropriate immunizations;

19 (3) shall establish a periodicity schedule for age

20 appropriate tests and clinician visits for individuals

21 under the age of 20;

22 (4) shall establish rules with respect to coverage

23 for an immunization, test, or clinician visit that is

24 not provided to an individual during the age range
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1 for such immunization, test, or clinician visit that is

2 specified in such section; and

3 (5) may otherwise modify the items and services

4 described in such section, taking into account age

5 and other risk factors, but may not modify the cost

6 sharing for any such item or service.

7 (b) CONSULTATION.—In performing the functions de8 scribed in subsection (a), the National Health Board shall

9 consult with experts in clinical preventive services, includ10 ing those specified in section 1105.

11 SEC. 1154. ESTABLISHMENT OF STANDARDS REGARDING

12 MEDICAL NECESSITY.

13 The National Health Board may promulgate such

14 regulations as may be necessary to carry out section

15 1141(a)(2) (relating to the exclusion of certain services

16 that are not medically necessary or appropriate).

17 SEC. 1155. BALANCE BILLING.

18 The Board shall provide for methods to ensure the

19 prohibition of balance billing.

20 PART 5—ADDITIONAL PROVISIONS RELATING TO

21 HEALTH CARE PROVIDERS

22 SEC. 1161. OVERRIDE OF RESTRICTIVE STATE PRACTICE

23 LAWS.

24 No State may, through licensure or otherwise, re25 strict the practice of any class of health professionals be-
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1 yond what is justified by the skills and training of such

2 professionals.

3 SEC. 1162. PROVISION OF ITEMS OR SERVICES CONTRARY

4 TO RELIGIOUS BELIEF OR MORAL CONVIC5 TION.

6 A health professional or a health facility may not be

7 required to provide an item or service in the comprehen8 sive benefit package if the professional or facility objects

9 to doing so on the basis of a religious belief or moral con10 viction.

11 SEC. 1163. DUTY TO DISCLOSE INCORRECT TEST RESULTS.

12 (a) IN GENERAL.—Any facility, including hospitals,

13 clinics, and clinical laboratories, which provides diagnostic

14 testing or other health care items or services covered

15 under this Act shall promptly notify the individual pro16 vider who ordered the test of any errors in the test results.

17 The individual provider who ordered the test must prompt18 ly notify the patient of the error if the new results affect

19 the patient’s diagnosis or treatment.

20 (b) REGULATIONS.—To carry out subsection (a), the

21 Secretary shall promptly issue proposed regulations, and

22 within 9 months of the date of enactment of this Act shall

23 issue final regulations.
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1 Subtitle C—State Responsibilities

2 SEC. 1200. PARTICIPATING STATE.

3 (a) IN GENERAL.—For purposes of the approval of

4 a State health care system by the Board under section

5 1611, a State is a ‘‘participating State’’ if the State meets

6 the applicable requirements of this subtitle.

7 (b) SUBMISSION OF SYSTEM DOCUMENT.—

8 (1) IN GENERAL.—In order to be approved as

9 a participating State under section 1611, a State

10 shall submit to the National Health Board a docu11 ment (in a form and manner specified by the Board)

12 that describes the State health care system that the

13 State is establishing (or has established).

14 (2) DEADLINE.—If a State is not a participat15 ing State with a State health care system in oper16 ation by January 1, 1998, the provisions of subpart

17 C of part 1 of subtitle F (relating to responsibilities

18 in absence of State systems) shall take effect.

19 (3) SUBMISSION OF INFORMATION SUBSEQUENT

20 TO APPROVAL.—A State approved as a participating

21 State under section 1611 shall submit to the Board

22 an annual update to the State health care system

23 not later than February 15 of each year following

24 the first year for which the State is a participating

25 State. The update shall contain—
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1 (A) such information as the Board may re2 quire to determine that the system shall meet

3 the applicable requirements of this Act for the

4 succeeding year; and

5 (B) such information as the Board may re6 quire to determine that the State operated the

7 system during the previous year in accordance

8 with the Board’s approval of the system for

9 such previous year.

10 PART 1—GENERAL STATE RESPONSIBILITIES

11 SEC. 1201. GENERAL STATE RESPONSIBILITIES.

12 A participating State is responsible for:

13 (1) HEALTH CARE COVERAGE AREA.—Estab14 lishing one or more health care coverage areas (in

15 accordance with section 1202).

16 (2) HEALTH PLANS.—Certifying and overseeing

17 health plans in accordance with subtitle F.

18 (3) PROVIDERS.—Assessing such licensing fees

19 as may be necessary to adequately fund State health

20 profession boards. (Nothing in this paragraph shall

21 preempt State authority to license or register health

22 care providers.) State health professional boards

23 shall—
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1 (A) investigate complaints with a reason2 able probability of validity, and issue appro3 priate sanctions;

4 (B) have adequate public, consumer, and

5 non-physician representatives; and

6 (C) report all final disciplinary actions to

7 the National Practitioner Data Bank.

8 (4) PREMIUM ADJUSTMENT.—Administering

9 risk adjustment, reinsurance and other premium ad10 justment programs consistent with this Act.

11 (5) REDUCTIONS IN COST SHARING.—Admin12 istering reductions in cost sharing in accordance

13 wuth section 1281 and 1282 and a premium dis14 count program in accordance with subtitle B of title

15 VI.

16 (6) COOPERATIVES.—Certification of at least

17 one consumer purchasing cooperative in each area,

18 consistent with the provisions of subtitle D.

19 (7) OTHER RESPONSIBILITIES.—Carrying out

20 all other responsibilities of participating States spec21 ified under this Act.
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1 SEC. 1202. ASSURING COMMUNITY-RATED PREMIUMS

2 THROUGH ESTABLISHMENT OF HEALTH

3 CARE COVERAGE AREAS.

4 (a) IN GENERAL.—In accordance with this section,

5 a participating State shall provide for the division of the

6 State into 1 or more health care coverage areas.

7 (b) MULTIPLE AREAS.—With respect to a health care

8 coverage area—

9 (1) no metropolitan statistical area in a State

10 may be incorporated into more than 1 such area in

11 the State;

12 (2) the number of individuals residing within

13 such an area may not be less than 150,000; and

14 (3) no area incorporated in a health care cov15 erage area may be incorporated into another such

16 area.

17 (c) BOUNDARIES.—

18 (1) IN GENERAL.—In establishing boundaries

19 for health care coverage areas, a State shall comply

20 with the antidiscrimination requirements of section

21 1914.

22 (2) COORDINATING MULTIPLE HEALTH CARE

23 COVERAGE AREAS.—Nothing in this section shall be

24 construed as preventing a State from coordinating

25 the activities of one or more health care coverage

26 areas in the State.
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1 (3) INTERSTATE HEALTH CARE COVERAGE

2 AREAS.—Health care coverage areas with respect to

3 interstate areas shall be established in accordance

4 with rules established by the Board.

5 (4) COORDINATION IN MULTI-STATE AREAS.—

6 One or more States may coordinate their operations

7 in contiguous health care coverage areas. Such co8 ordination may include, the following activities,

9 adoption of joint operating rules, contracting with

10 health plans, enforcement activities, and establish11 ment of fee schedules for health providers.

12 SEC. 1203. USE OF INCENTIVES.

13 (a) USE OF INCENTIVES TO ENROLL AND SERVE

14 DISADVANTAGED GROUPS.—A State may provide—

15 (1) for an additional adjustment to the risk-ad16 justment methodology under section 1641(b), or in

17 accordance with the standards under section 1642,

18 and other financial incentives to community-rated

19 health plans to ensure that such plans enroll individ20 uals who are members of disadvantaged groups or

21 populations vulnerable to discrimination due to their

22 health status, and

23 (2) for appropriate extra services, such as out24 reach to encourage enrollment and transportation

25 and interpreting services to ensure access to care,
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1 for certain population groups that face barriers to

2 access because of geographic location, income levels,

3 disability or racial or cultural differences.

4 (b) USE OF INCENTIVES TO ADDRESS NEEDS IN

5 AREAS WITH INADEQUATE HEALTH SERVICES.—

6 (1) PAYMENT ADJUSTMENT.—To ensure that

7 plans are available to all eligible individuals residing

8 in all portions of a health care coverage area, a

9 State may adjust payments to plans or use other fi10 nancial incentives to encourage health plans to ex11 pand into areas that have inadequate health services.

12 (2) ENCOURAGING NEW PLANS.—Subject to

13 section 1202(c), to encourage the establishment of a

14 new health plan in an area that has inadequate

15 health services, a State may—

16 (A) organize health providers to create

17 such a plan in such an area that is targeted at

18 such area;

19 (B) provide assistance with the establish20 ment and administration of such a plan; and

21 (C) arrange favorable financing for such a

22 plan.
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1 SEC. 1204. RESTRICTIONS ON FUNDING OF ADDITIONAL

2 BENEFITS.

3 If a participating State provides benefits (either di4 rectly or through community-rated health plans or other5 wise) in addition to those covered under the comprehensive

6 benefit package, the State may not provide for payment

7 for such benefits through funds provided under this Act.

8 SEC. 1205. CONSUMER INFORMATION AND MARKETING.

9 (a) CONSUMER INFORMATION.—Before each open en10 rollment period, each State shall ensure the availability to

11 eligible enrollees of information, in an easily understood

12 and useful form, that allows such enrollees (and other

13 community-rate eligible individuals) to make valid com14 parisons among community-rated health plans and veter15 ans and Uniformed Services health plans offered in the

16 State, including information about plan price, the charac17 teristics and availability of participating health profes18 sionals and institutions, any restrictions on access to pro19 viders or services and a summary of the annual quality

20 performance report described in section 5005. Such infor21 mation shall be made available in a brochure, published

22 not less often than annually, in accordance with section

23 1603(e). In the case of a health care coverage area that

24 includes a significant number or proportion of residents

25 with limited English speaking proficiency, the State shall

26 ensure the availability of all written materials in languages
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1 other than English as appropriate to the health care cov2 erage area.

3 (b) MARKETING.—Each participating State shall en4 sure that health plans meet the marketing requirements

5 under section 1515.

6 SEC. 1206. STATE RESPONSIBILITIES WITH RESPECT TO

7 WORKSITE HEALTH PROMOTION DISCOUNTS.

8 Each State shall provide for the administration of

9 wellness discounts in accordance with rules established by

10 the Secretary in accordance with section 1687. Such du11 ties shall include the receipt of employer self-certification

12 forms, enforcement of compliance, dispute resolution and

13 implementation of wellness discounts in a manner consist14 ent with section 1687.

15 SEC. 1207. CONSUMER ADVOCATE.

16 (a) IN GENERAL.—The Secretary shall establish (by

17 grant or contract) and oversee a National Center of

18 Consumer Advocacy to provide technical assistance, ade19 quate training and support to States and Offices of

20 Consumer Advocacy in each State (hereafter referred to

21 in this section as the ‘‘Office’’) to carry out the duties

22 of this section, including providing public education to

23 consumers concerning this Act. The National Center of

24 Consumer Advocacy shall be a national non-profit organi25 zation with public education and health policy expertise
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1 and shall have sufficient staff to carry out its duties and

2 a demonstrated ability to represent and work with a broad

3 spectrum of consumers, including vulnerable and under

4 served populations. The Office in each State shall perform

5 public outreach and provide education and assistance re6 garding consumer rights and responsibilities under this

7 Act, and assist consumers in dealing with problems that

8 arise with consumer purchasing cooperatives, large group

9 purchasers, health plans, and health care providers operat10 ing in such State.

11 (b) CONTRACTS.—

12 (1) SOLICITATION.—The Secretary shall solicit

13 contracts from private non-profit organizations to

14 fulfill the duties of the Office in the State. The Sec15 retary may develop such regulations and guidelines

16 as necessary to oversee the process of considering

17 and awarding competitive contracts under this sec18 tion. In awarding such contracts, the Secretary shall

19 consult with the State and National Center of

20 Consumer Advocacy, and shall, at a minimum, con21 sider the demonstrated ability of the organization to

22 represent and work with a broad spectrum of con23 sumers, including vulnerable and underserved popu24 lations.
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1 (2) CONTRACT PERIOD.—The contract period

2 for the State Offices of Consumer Advocacy and the

3 National Center of Consumer Advocacy under this

4 section shall be not less than 4 years and not more

5 than 7 years.

6 (c) FUNCTIONS AND RESPONSIBILITIES.—Each Of7 fice shall have sufficient staff, local offices throughout the

8 State, and a State-wide toll-free hotline to carry out the

9 duties of this section. Through direct contact and the hot10 line, the Office shall provide the following services in the

11 State, including appropriate assistance to individuals with

12 limited English language ability—

13 (1) outreach and education relating to

14 consumer rights and responsibilities under this Act,

15 including such rights and services available through

16 the Office;

17 (2) assistance with enrollment in health plans,

18 or obtaining services or reimbursement from health

19 plans;

20 (3) assistance with filing an application for pre21 mium or cost sharing subsidies;

22 (4) information to enrollees about existing

23 grievance procedures and coordination with other en24 tities to assist in identifying, investigating, and re-
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1 solving enrollee grievances under this Act (including

2 grievances before State medical boards);

3 (5) regular and timely access in the area to the

4 services provided through the Office and its local of5 fices and timely responses from representatives of

6 the Office to complaints;

7 (6) referrals to appropriate local providers of

8 legal assistance and to appropriate State and Fed9 eral agencies which may be of assistance to ag10 grieved individuals in the area; and

11 (7) conduct public hearings no less frequently

12 than once a year to identify and address community

13 health care needs.

14 (d) ACCESS TO INFORMATION.—The Secretary and

15 the States shall ensure that, for purposes of carrying out

16 the Office’s duties under this section, the Office (and offi17 cers and employees of the Office in local offices) have ap18 propriate access to relevant information subject to protec19 tions for confidentiality of enrollee information.

20 (e) EVALUATION AND REPORT.—The Secretary shall

21 have the right to evaluate the quality and effectiveness of

22 the organization in carrying out the functions specified in

23 the contract. The Office shall report to the Secretary and

24 the State annually on the nature and patterns of consumer

25 complaints received in the Office and its local offices dur-
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1 ing each year and any policy, regulatory, and legislative

2 recommendations for needed improvements together with

3 a record of the activities of the Office.

4 (f) FUNDING.—The funding for the establishment of

5 an Office in each State is specified in section 1213, of

6 which $5,000,000 shall be for the National Center for

7 Consumer Advocacy.

8 (g) CONFLICTS OF INTEREST.—The Secretary shall

9 ensure that no individual involved in the designation of

10 the Office, the Office itself, or of any delegate thereof is

11 subject to a conflict of interest, including affiliation with

12 (through ownership or common control) a health care fa13 cility, managed care organization, health insurance com14 pany or association of health care facilities or providers.

15 No grantee under this part may have a direct involvement

16 with the licensing, certification, or accreditation of a

17 health care facility, a health care plan, or a provider of

18 health care services.

19 (h) LEGAL COUNSEL.—The Secretary shall ensure

20 that adequate legal counsel is available, and is able, with21 out conflict of interest, to assist the Office, and the local

22 offices thereof in the performance of their official duties.

23 (i) COORDINATION.—The Office shall coordinate its

24 activities with all appropriate entities including Quality

25 Improvement Foundations (established under section
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1 5008) and the State’s long term care ombudsman or other

2 agency esignated to carry out client advocacy activities

3 pursuant to section 2106.

4 (j) CONSTRUCTION.—Nothing in this section shall re5 place grievance procedures established or otherwise re6 quired under this Act.

7 SEC. 1208. ELECTION PROCEDURE FOR COMMUNITY-RATED

8 EMPLOYERS.

9 (a) IN GENERAL.—Each participating State shall es10 tablish a procedure (consistent with rules established by

11 the Board) through which exempt employers, as defined

12 in section 6117, may make an election to be treated as

13 a community-rated employer. Such procedure shall set

14 forth the form and manner that such election shall be

15 made.

16 (b) NOTIFICATION.—The procedure shall require that

17 employees of a exempt employer are notified of an election

18 or a termination of an election under this section prior

19 to the first annual open enrollment period (as defined in

20 section 1660) following such election or termination.

21 (c) TERMINATION.—The procedures shall permit ex22 empt employers to terminate an election made under this

23 section. If an employer terminates an election, the termi24 nation shall be effective on the first date of the year fol25 lowing such termination.
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1 SEC. 1209. COORDINATED HEALTH CARE SERVICES FOR

2 CHILDREN.

3 (a) DESIGNATION OF STATE AGENCY.—The State

4 shall designate an agency (hereafter referred to in this as

5 the ‘‘lead agency’’) to coordinate the delivery of medical

6 and social services to children with special health care

7 needs. The lead agency shall:

8 (1) Serve as an information resource for chil9 dren with special health care needs and their fami10 lies and health providers, providing technical assist11 ance regarding available specialty and support serv12 ices and referral networks for these children and

13 their families.

14 (2) Coordinate activities with all other State

15 agencies which provide services to children with spe16 cial health care needs and their families, and estab17 lish mechanisms to identify and maximize resources

18 available for these children and families.

19 (3) Provide assistance to the State in fulfilling

20 functions under section 1201 in certifying and mon21 itoring the performance of health plans in delivering

22 appropriate services to children in a timely and effi23 cient manner.

24 (4) Make recommendations to States, plans,

25 and providers to identify what services are lacking

26 for children with special health care needs.
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1 (b) PROVISION OF ACTIVITIES.—The lead agency

2 shall provide the activities under subsection (a) for all chil3 dren with special health care needs or children under fos4 ter care who are referred by a qualified health plan, other

5 health or social service provider, or publicly funded pro6 grams where children receive services.

7 SEC. 1210. STATE RESPONSIBILITIES FOR UTILIZATION

8 MANAGEMENT.

9 (a) IN GENERAL.—A State shall certify or recertify

10 a health plan only if the State reviews the utilization man11 agement activities of the plan and determines that such

12 activities meet the standards described in subsection (b),

13 or such other standards as the National Health Board or

14 other appropriate Federal agency may determine.

15 (b) STANDARDS DESCRIBED.—The standards de16 scribed in this subsection are as follows:

17 (1) A health plan may not employ or contract

18 with a utilization management organization or utili19 zation management reviewer whose conditions of em20 ployment or contract terms include reducing or lim21 iting medically necessary or appropriate services pro22 vided to individuals enrolled in a health plan.

23 (2) Each health plan shall disclose to a partici24 pating provider or an enrollee, upon request, the uti25 lization review protocols for controlling utilization
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1 and costs used to review a plan of treatment rec2 ommended by the provider, and shall provide a de3 scription of plan protocols for controlling utilization

4 and costs upon request to providers, enrollees, and

5 prospective enrollees.

6 (3) Each health plan shall describe to an en7 rollee, prospective enrollee, or participating provider,

8 upon request, the type of financial arrangements, if

9 any, used by the plan for controlling utilization and

10 costs.

11 (4) The protocols described in paragraph (2)

12 shall be applied consistently among utilization man13 agement reviewers within any and each utilization

14 management organization with which a plan con15 tracts.

16 (5) Utilization management reviewers with

17 whom a plan contracts shall be available to consum18 ers during normal business hours for

19 preauthorizations and other purposes, and during

20 non-business hours the health plan shall make avail21 able a procedure for accessing medical care,

22 preauthorization, or other related services.
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1 SEC. 1211. ASSURING FAMILY CHOICE OF HEALTH PLANS.

2 (a) IN GENERAL.—A participating State shall ensure

3 that all community-rated individuals have a choice of

4 health plans in which to enroll.

5 (b) GUARANTEE OF A FEE-FOR-SERVICE OPTION.—

6 (1) IN GENERAL.—Each State shall ensure that

7 at least one fee-for-service plan (as defined in para8 graph (2)) is offered in each health care coverage

9 area.

10 (2) FEE-FOR-SERVICE PLAN DEFINED.—

11 (A) IN GENERAL.—For purposes of this

12 Act, the term ‘‘fee-for-service plan’’ means a

13 health plan that—

14 (i) provides coverage for all items and

15 services included in the comprehensive ben16 efit package that are furnished by any law17 ful health care provider of the enrollee’s

18 choice, subject to reasonable restrictions

19 (described in subparagraph (B)), and

20 (ii) makes payment to such a provider

21 without regard to whether or not there is

22 a contractual arrangement between the

23 plan and the provider.

24 (B) REASONABLE RESTRICTIONS DE25 SCRIBED.—The reasonable restrictions on cov26 erage permitted under a fee-for-service plan (as
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1 specified by the National Health Board) are as

2 follows:

3 (i) Utilization review.

4 (ii) Prior approval for specified serv5 ices.

6 (iii) Exclusion of providers on the

7 basis of poor quality of care, based on evi8 dence obtainable by the plan.

9 Clause (ii) shall not be construed as permitting

10 a plan to require prior approval for health care

11 services through a gatekeeper or other process

12 for services that are not specified for services

13 that are not specified.

14 (3) RULE OF CONSTRUCTION.—Nothing in this

15 Act shall be construed to prevent a health plan from

16 providing for a different basis or level of payment

17 than the fee schedule established under this section

18 as part of a contractual agreement with participat19 ing providers under the plan.

20 SEC. 1212. OVERSIGHT OF HEALTH PLAN ENROLLMENT AC21 TIVITIES.

22 (a) IN GENERAL.—Each participating State shall

23 provide for the general oversight of health plan enrollment

24 activities, implement regulations promulgated by the

25 Board under section 1660, and assure that each commu-
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1 nity-rated individual who resides in the State is enrolled

2 in a community-rated plan or other applicable health plan

3 of the individual’s choosing. In carrying out this sub4 section, States shall ensure that individuals are permitted

5 to enroll directly in health plans of their choice.

6 (b) ENROLLMENT THROUGH PROVIDERS.—Each

7 State shall establish a mechanism for enrolling eligible in8 dividuals who are not enrolled in a plan when the individ9 ual seeks health services in accordance with rules promul10 gated by the Board.

11 (c) ENFORCEMENT OF ENROLLMENT REQUIRE12 MENT.—In the case of a community-rated individual who

13 resides in a State and fails to enroll in an applicable health

14 plan as required under section 1002(a) such State shall

15 require the payment of an amount equal to twice the fam16 ily share of premiums that would have been payable under

17 subtitle B of title VI if the individual had enrolled on a

18 timely basis in the plan, unless the individual establishes

19 to the satisfaction of the State good cause or financial

20 hardship for the failure to enroll on a timely basis. The

21 State shall provide, from the amounts collected under

22 paragraph (2), for payments to plans under subsection

23 (b).
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1 SEC. 1213. ADMINISTRATIVE ALLOWANCE PERCENTAGE.

2 (a) SPECIFICATION BY STATE.—Before obtaining

3 bids under section 6004 from health plans for a year, each

4 State shall establish the administrative allowance for State

5 administrative functions with respect to the oversight of

6 health plan activities, the determination of enrollment, the

7 determination of subsidy eligibility, and other responsibil8 ities under this Act.

9 (b) ADMINISTRATIVE ALLOWANCE PERCENTAGE.—

10 Subject to subsection (c), the State shall compute an ad11 ministrative allowance percentage for each year equal to—

12 (1) the administrative allowance determined

13 under subsection (a) for the year, divided by

14 (2) the total of the amounts payable to commu15 nity-rated health plans under subpart A (as esti16 mated by the State).

17 (c) LIMITATION TO 1.5 PERCENT.—In no case shall

18 an administrative allowance percentage exceed 1.5 per19 cent.

20 (d) DISTRIBUTION OF PERCENTAGE.—The adminis21 trative allowance percentage shall be divided as follows:

22 (1) 1.48 percent for State administrative func23 tions, and

24 (2) .02 percent for the Office of the Consumer

25 Advocate described in section 1207.
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1 (e) RECEIPT OF FUNDS.—A State shall perform the

2 duties required of States under this Act as a condition

3 of receiving funds described in subsection (d)(1).

4 PART 2—REQUIREMENTS FOR STATE SINGLE5 PAYER SYSTEMS

6 SEC. 1221. SINGLE-PAYER SYSTEM DESCRIBED.

7 The Board shall approve the application of a State

8 to operate a single-payer system if the Board finds that

9 the system—

10 (1) meets the requirements of section 1222;

11 (2)(A) meets the requirements for a Statewide

12 single-payer system under section 1223, in the case

13 of a system offered throughout a State; or

14 (B) meets the requirements for an area specific

15 single-payer system under section 1224, in the case

16 of a system offered in a single health care coverage

17 area of a State.

18 SEC. 1222. GENERAL REQUIREMENTS FOR SINGLE-PAYER

19 SYSTEMS.

20 Each single-payer system shall meet the following

21 requirements:

22 (1) ESTABLISHMENT BY STATE.—The system is

23 established under State law, and State law provides

24 for mechanisms to enforce the requirements of the

25 system.
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1 (2) OPERATION BY STATE.—The system is op2 erated by the State or a designated agency of the

3 State.

4 (3) ENROLLMENT OF ELIGIBLE INDIVIDUALS.—

5 (A) MANDATORY ENROLLMENT OF ALL

6 COMMUNITY-RATED INDIVIDUALS.—The system

7 provides for the enrollment of all eligible indi8 viduals residing in the State (or, in the case of

9 an area-specific single-payer system, in the

10 health care coverage area) for whom the appli11 cable health plan would otherwise be a health

12 care coverage area health plan.

13 (B) OPTIONAL ENROLLMENT OF MEDI14 CARE-ELIGIBLE INDIVIDUALS.—At the option of

15 the State, the system may provide for the en16 rollment of Medicare-eligible individuals resid17 ing in the State (or, in the case of an area-spe18 cific single-payer system, in the health care cov19 erage area) if the Secretary of Health and

20 Human Services has approved an application

21 submitted by the State under section 1893 of

22 the Social Security Act (as added by section

23 4001(a)) for the integration of Medicare bene24 ficiaries into plans of the State. Nothing in this

25 subparagraph shall be construed as requiring
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1 that a State have a single-payer system in order

2 to provide for such integration.

3 (C) OPTIONAL ENROLLMENT OF EXPERI4 ENCE-RATED INDIVIDUALS IN STATEWIDE

5 PLANS.—At the option of the State, a Statewide

6 single-payer system may provide for the enroll7 ment of individuals residing in the State who

8 are otherwise eligible to enroll in an experience9 rated health plan under subtitle E.

10 (D) OPTIONS INCLUDED IN STATE SYSTEM

11 DOCUMENT.—A State may not exercise any of

12 the options described in subparagraphs (A) or

13 (B) for a year unless the State included a de14 scription of the option in the submission of its

15 system document to the Board for the year

16 under section 1200(b).

17 (E) EXCLUSION OF CERTAIN INDIVID18 UALS.—A single-payer system may not require

19 the enrollment of electing veterans, active duty

20 military personnel, and electing American Indi21 ans (as defined in 1012(d)).

22 (4) DIRECT PAYMENT TO PROVIDERS.—

23 (A) IN GENERAL.—With respect to provid24 ers who furnish items and services included in

25 the comprehensive benefit package to individ-
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1 uals enrolled in the system, the State shall

2 make payments directly to such providers and

3 assume (subject to subparagraph (B)) all finan4 cial risk associated with making such payments.

5 (B) CAPITATED PAYMENTS PERMITTED.—

6 Nothing in subparagraph (A) shall be construed

7 to prohibit providers furnishing items and serv8 ices under the system from receiving payments

9 on a capitated, at-risk basis based on prospec10 tively determined rates.

11 (5) PROVISION OF COMPREHENSIVE BENEFIT

12 PACKAGE.—

13 (A) IN GENERAL.—The system shall pro14 vide for coverage of the comprehensive benefit

15 package, including the cost sharing provided

16 under the package (subject to subparagraph

17 (B)), to all individuals enrolled in the system.

18 (B) IMPOSITION OF REDUCED COST SHAR19 ING.—The system may decrease the cost shar20 ing otherwise provided in the comprehensive

21 benefit package with respect to any individuals

22 enrolled in the system or any class of services

23 included in the package, so long as the system

24 does not increase the cost sharing otherwise im-
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1 posed with respect to any other individuals or

2 services.

3 (6) COST CONTAINMENT.—The system shall

4 provide for mechanisms to ensure, in a manner sat5 isfactory to the Board, that—

6 (A) the rate of growth in health care

7 spending will not be higher than the target es8 tablished under this Act;

9 (B) the expenditures described in subpara10 graph (A) are computed and effectively mon11 itored;

12 (C) automatic, mandatory, nondiscretion13 ary reductions in payments to health care pro14 viders will be imposed to the extent required to

15 assure that such per capita expenditures do not

16 exceed the applicable target referred to in sub17 paragraph (A); and

18 (D) Federal payments to a single payer

19 State or health care coverage area shall be lim20 ited to the payments that would have been

21 made in the absence of the implementation of

22 the single payer system.

23 (7) REQUIREMENTS GENERALLY APPLICABLE

24 TO HEALTH PLANS.—The system shall meet the re-
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1 quirements applicable to a health plan under section

2 1502(1), except that—

3 (A) the system does not have the authority

4 provided to health plans under section 1516(d)

5 (relating to permissible limitations on the en6 rollment of eligible individuals on the basis of

7 limits on the plan’s capacity);

8 (B) the system is not required to meet the

9 requirements of section 1515 (relating to re10 strictions on the marketing of plan materials);

11 and

12 (C) the system is not required to meet the

13 requirements of section 1512(a) (relating to

14 plan solvency).

15 SEC. 1223. SPECIAL RULES FOR STATES OPERATING STATE16 WIDE SINGLE-PAYER SYSTEM.

17 (a) IN GENERAL.—In the case of a State operating

18 a Statewide single-payer system—

19 (1) the State shall operate the system through20 out the State;

21 (2) except as provided in subsection (b), the

22 State shall meet the requirements for participating

23 States under part 1; and

24 (3) the State shall assume the functions de25 scribed in subsection (c) that are otherwise required
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1 to be performed by health care coverage areas in

2 participating States that do not operate a Statewide

3 single-payer system.

4 (b) EXCEPTIONS TO CERTAIN REQUIREMENTS FOR

5 PARTICIPATING STATES.—In the case of a State operating

6 a Statewide single-payer system, the State is not required

7 to meet the following requirements otherwise applicable to

8 participating States under part 1:

9 (1) ESTABLISHMENT OF HEALTH CARE COV10 ERAGE AREAS.—The requirements of section 1202

11 (relating to the establishment of health care cov12 erage areas).

13 (2) HEALTH PLANS.—The requirements of sub14 title F (relating to health plans), other than require15 ments relating to coordination of workers’ compensa16 tion services and automobile liability insurance.

17 (3) FINANCIAL SOLVENCY.—Requirements re18 lating to the financial solvency of health plans in the

19 State.

20 (4) OTHER REFERENCES INAPPLICABLE.—All

21 other references in this Act to health plans, or other

22 entities, and the requirements applicable thereto,

23 that would not exist under a State single payer sys24 tem, shall not be applicable to a single payer system,

25 except as provided in subsection (c).
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1 (c) ASSUMPTION BY STATE OF CERTAIN REQUIRE2 MENTS APPLICABLE TO HEALTH CARE COVERAGE

3 AREAS.—A State operating a Statewide single-payer sys4 tem shall be subject to the following requirements other5 wise applicable to health care coverage areas in other par6 ticipating States subject to the requirement that all ref7 erences to health care coverage areas shall, with respect

8 to this section, be deemed to refer to the single payer

9 State, and references to health plans shall not apply under

10 this section or shall be considered as references, where ap11 propriate, to health caregivers:

12 (1) ENROLLMENT; ISSUANCE OF HEALTH SECU13 RITY CARDS.—The requirements of subsection (a) of

14 section 1211 and section 1406 shall apply to the

15 State, eligible individuals residing in the State, and

16 the single-payer system operated by the State in the

17 same manner as such requirements apply to a health

18 care coverage area, health care coverage area eligible

19 individuals, and health care coverage area health

20 plans.

21 (2) REDUCTIONS IN COST SHARING FOR LOW22 INCOME INDIVIDUALS.—The requirement of section

23 1281 shall apply to the State in the same manner

24 as such requirement applies to a health care cov25 erage area.
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1 (3) DATA COLLECTION; QUALITY.—The data

2 collection and quality requirements of this Act shall

3 apply to the State and the single-payer system oper4 ated by the State in the same manner as such re5 quirement applies to a health care coverage area and

6 health plans offered in a health care coverage area.

7 (4) ANTI-DISCRIMINATION.—In carrying out

8 such activities as it may have in common with enti9 ties in other States as required under part 2 of sub10 title D, a State may not discriminate against health

11 caregivers on the basis of mix of health profes12 sionals, or location of the headquarters of the plan,

13 except as the State may specifically provide other14 wise to assure an equitable distribution of services or

15 organizational arrangement.

16 (5) COORDINATION OF ENROLLMENT ACTIVI17 TIES.—A State shall coordinate its activities, includ18 ing enrollment and disenrollment activities—

19 (A) in a manner specified by the Board;

20 and

21 (B) in a manner that ensures continuous,

22 nonduplicative coverage of eligible individuals

23 and that minimizes administrative procedures

24 and paperwork.

25 (d) FINANCING.—
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1 (1) IN GENERAL.—A State operating a State2 wide single-payer system shall provide for the financ3 ing of the system using, at least in part, a payroll4 based financing system that requires employers to

5 pay at least the amount that the employers would be

6 required to pay if the employers were subject to the

7 requirements of subtitle B of title VI defined as the

8 applicable percentage of the per capita cost of health

9 care.

10 (2) USE OF FINANCING METHODS.—Such a

11 State may use, consistent with paragraph (1), any

12 other method of financing.

13 (e) SINGLE-PAYER STATE DEFINED.—In this Act,

14 the term ‘‘single-payer State’’ means a State with a State15 wide single-payer system in effect that has been approved

16 by the Board in accordance with this part.

17 SEC. 1224. SPECIAL RULES FOR HEALTH CARE COVERAGE

18 AREA-SPECIFIC SINGLE-PAYER SYSTEMS.

19 (a) IN GENERAL.—In the case of a State operating

20 a health care coverage area specific single-payer system—

21 (1) the State shall meet the requirements for

22 participating States under part 1; and

23 (2) the health care coverage area in which the

24 system is operated shall meet the requirements of

25 subsection (b).
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1 (b) REQUIREMENTS FOR HEALTH CARE COVERAGE

2 AREA IN WHICH SYSTEM OPERATES.—A health care cov3 erage area in which an area-specific single payer system

4 is operated shall meet the requirements applicable to

5 health care coverage areas under subtitle C, except that

6 the health care coverage area is not required to meet the

7 following requirements of such subtitle:

8 (1) CONTRACTS WITH HEALTH PLANS.—The re9 quirements of section 1302 (relating to contracts

10 with health plans).

11 (2) CHOICE OF HEALTH PLANS OFFERED.—The

12 requirements of section 1211 (relating to offering a

13 choice of health plans to eligible enrollees).

14 (3) ADDRESSING NEEDS OF AREAS WITH INAD15 EQUATE HEALTH SERVICES.—The health care cov16 erage area does not have any of the authorities de17 scribed in section 1203 (relating to adjusting pay18 ments to plans and encouraging the establishment of

19 new plans).

20 PART 3—REDUCTIONS IN COST SHARING AND

21 PREMIUMS

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

23 FAMILIES.

24 (a) REDUCTION.—
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1 (1) IN GENERAL.—Subject to subsection (b), in

2 the case of a family that is enrolled in a community3 rated health plan and that is either (A) an AFDC

4 or SSI family or (B) is determined under this sub5 part to have family adjusted income below 200 per6 cent of the applicable poverty level, the family is en7 titled to a reduction in cost sharing in accordance

8 with this section.

9 (2) TIMING OF REDUCTION.—The reduction in

10 cost sharing shall only apply to items and services

11 furnished after the date the application for such re12 duction is approved under section 1282(c) and be13 fore the date of termination of the reduction under

14 this subpart, or, in the case of an AFDC or SSI

15 family, during the period in which the family is such

16 a family.

17 (3) INFORMATION TO PROVIDERS AND

18 PLANS.—Each State shall provide, through elec19 tronic means and otherwise, health care providers

20 and community-rated health plans with access to

21 such information as may be necessary in order to

22 provide for the cost sharing reductions under this

23 section.

24 (b) LIMITATION.—No reduction in cost sharing under

25 subsection (c)(1) shall be available for—
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1 (1) families residing in a health care coverage

2 area if the cooperative for the area determines that

3 there are sufficient low-cost plans (as defined in sec4 tion 6104(b)(3)) that are lower or combination cost

5 sharing plans available in the area to enroll AFDC

6 and SSI families and families with family adjusted

7 income below 150 percent of the applicable poverty

8 level; or

9 (2) for families with family adjusted income be10 tween 150 and 200 percent of the applicable poverty

11 level.

12 (c) AMOUNT OF COST SHARING REDUCTION.—

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

14 the reduction in cost sharing under this section shall

15 be such reduction as will reduce cost sharing to the

16 level of a lower or combination cost sharing plan.

17 (2) SPECIAL TREATMENT OF CERTAIN FAMI18 LIES.—

19 (A) AFDC, SSI AND FAMILIES BELOW POV20 ERTY.—In the case of a family that—

21 (i) is enrolled in a community-rated

22 health plan;

23 (ii) is an AFDC, SSI family or a fam24 ily that is determined under this subpart

25 to have a family adjusted income below
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1 100 percent of the applicable poverty level;

2 and

3 (iii) is enrolled in a lower or combina4 tion cost sharing plan or receiving a reduc5 tion in cost sharing under paragraph (1);

6 the amount of cost sharing applied with respect

7 to an item or service (other than with respect

8 to hospital emergency room services for which

9 there is no emergency medical condition, as de10 fined in section 1867(e)(1) of the Social Secu11 rity Act) shall be an amount equal to 20 per12 cent of the cost sharing amount otherwise ap13 plicable under subtitle B, rounded to the near14 est dollar.

15 (B) FAMILIES WITH INCOMES BETWEEN

16 100 AND 150 PERCENT OF POVERTY.—In the

17 case of a family that—

18 (i) is enrolled in a community-rated

19 health plan;

20 (ii) is determined under this subpart

21 to have family adjusted income between

22 100 and 150 percent of the applicable pov23 erty level;

24 (iii) is not an AFDC or SSI family;

25 and
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1 (iv) is enrolled in a lower or combina2 tion cost sharing plan or receiving a reduc3 tion in cost sharing under paragraph (1);

4 the amount of cost sharing applied with respect

5 to an item or service (other than with respect

6 to hospital emergency room services for which

7 there is no emergency medical condition, as de8 fined in section 1867(e)(1) of the Social Secu9 rity Act) shall be an amount equal to 40 per10 cent of the cost sharing amount otherwise ap11 plicable under subtitle B, rounded to the near12 est dollar.

13 (C) FAMILIES WITH INCOMES BETWEEN

14 150 AND 200 PERCENT OF POVERTY.—In the

15 case of a family that—

16 (i) is enrolled in a community-rated

17 health plan;

18 (ii) is determined under this subpart

19 to have family adjusted income between

20 150 and 200 percent of the applicable pov21 erty level; and

22 (iii) is not an AFDC or SSI family;

23 the amount of cost sharing applied with respect

24 to an item or service (other than with respect

25 to hospital emergency room services for which
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1 there is no emergency medical condition, as de2 fined in section 1867(e)(1) of the Social Secu3 rity Act) shall be an amount equal to 40 per4 cent of the cost sharing amount otherwise ap5 plicable under subtitle B, rounded to the near6 est dollar.

7 (d) ADMINISTRATION.—

8 (1) IN GENERAL.—In the case of an approved

9 family (as defined in section 1282(b)(2)) enrolled in

10 a community-rated health plan, the State shall pay

11 the plan for cost sharing reductions (other than cost

12 sharing reductions under subsection (c)(2)(A), (B)

13 and (C)) provided under this section out of Federal

14 subsidy payments provided in section 9100(b)(2)(A).

15 Payments made by health plans to providers shall

16 include appropriate payments for cost sharing reduc17 tions.

18 (2) ESTIMATED PAYMENTS, SUBJECT TO REC19 ONCILIATION.—Such payment shall be made initially

20 on the basis of reasonable estimates of cost sharing

21 reductions incurred by such a plan with respect to

22 approved families and shall be reconciled not less

23 often than quarterly based on actual claims for

24 items and services provided.
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1 (e) NO COST SHARING FOR AMERICAN INDIANS AND

2 CERTAIN VETERANS AND MILITARY PERSONNEL.—The

3 provisions of section 6104(a)(3) shall apply to cost sharing

4 reductions under this section in the same manner as such

5 provisions apply to premium discounts under section 6104.

6 SEC. 1282. APPLICATION PROCESS FOR COST-SHARING RE7 DUCTIONS AND PREMIUM DISCOUNTS.

8 (a) IN GENERAL.—A community-rated family may

9 apply for a determination of the family adjusted income

10 or wage adjusted income of the family, for the purpose

11 of establishing eligibility for cost sharing reductions under

12 section 1281, and for premium discounts and reductions

13 in liability under sections 6104 and 6112.

14 (b) ACTION ON APPLICATION.—

15 (1) IN GENERAL.—States shall act on such ap16 plications and ensure due process in a timely man17 ner prescribed by the Board.

18 (2) APPROVED FAMILY DEFINED.—As used in

19 this part, the term ‘‘approved family’’ means a fam20 ily for which an application under this section has

21 been approved and not yet terminated.

22 (c) HELP IN COMPLETING APPLICATIONS.—Each

23 State shall ensure adequate distribution and assist individ24 uals in the filing of applications and income reconciliation

25 statements under this subpart.
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1 (d) FAMILY ADJUSTED INCOME.—

2 (1) IN GENERAL.—Except as otherwise pro3 vided, in this Act the term ‘‘family adjusted income’’

4 means, with respect to a family, the sum of the ad5 justed incomes (as defined in paragraph (2)) for all

6 members of the family (determined without regard

7 to section 1012).

8 (2) ADJUSTED INCOME.—In paragraph (1), the

9 term ‘‘adjusted income’’ means, with respect to an

10 individual, adjusted gross income (as defined in sec11 tion 62(a) of the Internal Revenue Code of 1986)—

12 (A) determined without regard to sections

13 135, 162(l), 911, 931, and 933 of such Code,

14 and

15 (B) increased by the amount of interest re16 ceived or accrued by the individual which is ex17 empt from tax.

18 (3) PRESENCE OF ADDITIONAL DEPEND19 ENTS.—At the option of an individual, a family may

20 include (and not be required to separate out) the in21 come of other individuals who are claimed as de22 pendents of the family for income tax purposes, but

23 such individuals shall not be counted as part of the

24 family for purposes of determining the size of the

25 family.
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1 (e) REQUIREMENT FOR PERIODIC CONFIRMATION

2 AND VERIFICATION AND NOTICES.—

3 (1) CONFIRMATION AND VERIFICATION RE4 QUIREMENT.—The continued eligibility of a family

5 for cost sharing reductions, premium discounts and

6 reductions in liability under this section shall be con7 ditioned upon the family’s eligibility being—

8 (A) confirmed periodically by the State;

9 and

10 (B) verified (through the filing of a new

11 application under this section) by the State at

12 the time income reconciliation statements are

13 required to be filed under section 1283.

14 (2) NOTICES OF CHANGES IN INCOME AND EM15 PLOYMENT STATUS.—Each approved family shall

16 promptly notify the State of any material increase

17 (as defined by the Secretary) in the family adjusted

18 income or wage adjusted income of the family.

19 (f) PENALTIES FOR INACCURATE INFORMATION.—

20 (1) INTEREST FOR UNDERSTATEMENTS.—Each

21 individual who knowingly understates income re22 ported in an application to a State under this sub23 part or otherwise makes a material misrepresenta24 tion of information in such an application shall be

25 liable to the State for excess payments made based
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1 on such understatement or misrepresentation, and

2 for interest on such excess payments at a rate speci3 fied by the Secretary.

4 (2) PENALTIES FOR MISREPRESENTATION.—In

5 addition to the liability established under paragraph

6 (1), each individual who knowingly misrepresents

7 material information in an application under this

8 subpart to a State shall be liable to the State for

9 $2,000 or, if greater, three times the excess pay10 ments made based on such misrepresentation.

11 (g) TERMINATION OF COST SHARING REDUCTION

12 AND PREMIUM DISCOUNTS.—The State shall, after notice

13 to the family, terminate the reduction of cost sharing, pre14 mium discounts or reduction in liability for an approved

15 family if the family fails to provide for confirmation or

16 verification on a timely basis or the State otherwise deter17 mines that the family is no longer eligible for such reduc18 tion.

19 (h) TREATMENT OF AFDC AND SSI RECIPIENTS.—

20 (1) NO APPLICATION REQUIRED.—AFDC and

21 SSI families may not be required to submit an appli22 cation under this section.

23 (2) NOTICE REQUIREMENT FOR SSI RECIPI24 ENTS.—The Secretary shall notify each State, in a

25 manner specified by the Secretary of the identity
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1 (and period of eligibility under the SSI program) of

2 each SSI recipient, unless such a recipient elects (in

3 a manner specified by the Secretary) not to accept

4 the reduction in cost sharing or premium discounts

5 under this part.

6 (i) RULES.—The Secretary shall issue rules related

7 to the application procedure, confirmation and verification

8 of eligibility, ensuring due process in enforcement of pen9 alties for inaccurate information, and other issues related

10 to the implmentation of cost sharing reductions, premium

11 discounts and reductions in liability under this subpart.

12 SEC. 1283. END-OF-YEAR RECONCILIATION.

13 (a) IN GENERAL.—In the case of a family whose ap14 plication for a premium discount or reduction of liability

15 for a year has been approved before the end of the year

16 under this subpart, the family shall, subject to subsection

17 (c), file with the State an income reconciliation statement

18 to verify the family’s adjusted income or wage-adjusted

19 income, as appropriate, for the previous year. Such a

20 statement shall contain such information as the Secretary

21 shall require. Each State shall coordinate the submission

22 of such statements with the notice and payment of family

23 payments due under section 1237.

24 (b) RECONCILIATION OF PREMIUM DISCOUNT AND

25 LIABILITY ASSISTANCE BASED ON ACTUAL INCOME.—
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1 Based on and using the income reported in the reconcili2 ation statement filed under subsection (a) with respect to

3 a family, the State shall compute the amount of premium

4 discount or reduction in liability that should have been

5 provided under section 6104 or section 6113 with respect

6 for the family for the year involved. If the amount of such

7 discount or liability reduction computed is—

8 (1) greater than the amount that has been pro9 vided, the family is liable to pay (directly or through

10 an increase in future family share of premiums or

11 other payments) a total amount equal to the amount

12 of the excess payment, or

13 (2) less than the amount that has been pro14 vided, the State shall pay to the family (directly or

15 through a reduction in future family share of pre16 miums or other payments) a total amount equal to

17 the amount of the deficit.

18 (c) NO RECONCILIATION FOR AFDC AND SSI FAMI19 LIES; NO RECONCILIATION FOR COST SHARING REDUC20 TIONS.—No reconciliation statement is required under

21 this section—

22 (1) with respect to cost sharing reductions pro23 vided under section 1281, or
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1 (2) for a family that only claims a premium dis2 count or liability reduction under this subpart on the

3 basis of being an AFDC or SSI family.

4 (d) DISQUALIFICATION FOR FAILURE TO FILE.—In

5 the case of any family that is required to file a statement

6 under this section in a year and that fails to file such a

7 statement by the deadline specified, members of the family

8 shall not be eligible for premium reductions under section

9 6104 or reductions in liability under section 6113 until

10 such statement is filed. A State, using rules established

11 by the Secretary, shall waive the application of this sub12 section if the family establishes, to the satisfaction of the

13 State under such rules, good cause for the failure to file

14 the statement on a timely basis.

15 (e) PENALTIES FOR FALSE INFORMATION.—Any in16 dividual that provides false information in a statement

17 under subsection (a) is subject to the same liabilities as

18 are provided under section 1282 for a misrepresentation

19 of material fact described in such section.

20 (f) NOTICE OF REQUIREMENT.—Each State shall

21 provide for written notice, at the end of each year, of the

22 requirement of this section to each family which had re23 ceived premium discount or reduction in liability under

24 this subpart in any month during the preceding year and

25 to which such requirement applies.
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1 (g) TRANSMITTAL OF INFORMATION; VERIFICA2 TION.—

3 (1) IN GENERAL.—Each participating State

4 shall transmit annually to the Secretary such infor5 mation relating to the income of families for the pre6 vious year as the Secretary may require to verify

7 such income under this subpart.

8 (2) VERIFICATION.—Each participating State

9 may use such information as it has available to it,

10 including information made available to the State

11 under section 6103(l)(7)(D)(x) of the Internal Reve12 nue Code of 1986, in verifying income of families

13 with applications filed under this subpart. The Sec14 retary of the Treasury may, consistent with section

15 6103 of the Internal Revenue Code of 1986, permit

16 return information to be disclosed and used by a

17 participating State in verifying such income but only

18 in accordance with such section.

19 (h) CONSTRUCTION.—Nothing in this section shall be

20 construed as authorizing reconciliation of any cost sharing

21 reduction provided under this subpart.

22 SEC. 1284. ELIGIBILITY ERROR RATES.

23 Each State shall make eligibility determinations for

24 premium discounts, liability reductions, and cost sharing

25 reductions under sections 6104 and 6123, section 6113,
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1 and section 1281, respectively, in a manner that maintains

2 the error rates below an applicable maximum permissible

3 error rate specified by the Secretary (or the Secretary of

4 Labor with respect to section 6123). In specifying such

5 a rate, the Secretary shall take into account maximum

6 permissible error rates recognized by the Federal Govern7 ment under comparable State-administered programs.

8 Subtitle D—Consumer Purchasing

9 Cooperatives

10 PART 1—GENERAL REQUIREMENTS

11 SEC. 1301. DESIGNATION AND ORGANIZATION OF CO12 OPERATIVES.

13 (a) DESIGNATION OF COOPERATIVES.—A State shall

14 certify consumer purchasing cooperatives (in this Act re15 ferred to as ‘‘cooperatives’’) in accordance with this part.

16 Each cooperative shall be chartered under State law and

17 operated as a not-for-profit corporation.

18 (b) BOARD OF DIRECTORS.—Each cooperative shall

19 be governed by a Board of Directors to be composed in

20 equal numbers of representatives of community-rated em21 ployers, eligible employees, and eligible individuals.

22 (c) MEMBERSHIP.—A cooperative shall accept all eli23 gible employers and eligible individuals residing within the

24 area served by the cooperative as members if such employ25 ers, employees or individuals request such membership.
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1 Members of a cooperative shall have voting rights to select

2 Board members consistent with rules established by the

3 State.

4 (d) DUTIES OF COOPERATIVES.—Each cooperative

5 shall—

6 (1) enter into agreements with health plans

7 under section 1302;

8 (2) enter into agreements with community-rated

9 employers;

10 (3) enroll eligible individuals in health plans;

11 (4) make payments to health plans on behalf of

12 community-rated employers and eligible individuals;

13 (5) provide for coordination with other coopera14 tives;

15 (6) provide information on health plans, in ac16 cordance with section 1205; and

17 (7) carry out other functions provided for under

18 this title.

19 (e) LIMITATION ON ACTIVITIES.—A cooperative shall

20 not—

21 (1) perform any activity (including review, ap22 proval, or enforcement) relating to payment rates for

23 providers;
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1 (2) perform any activity (including certification

2 or enforcement) relating to compliance of health

3 plans with the requirements of this Act;

4 (3) assume insurance risk; or

5 (4) perform other activities identified by the

6 State as being inconsistent with the performance of

7 its duties under this Act.

8 (f) RULES OF CONSTRUCTION.—

9 (1) SINGLE ORGANIZATION SERVING MULTIPLE

10 HEALTH CARE COVERAGE AREA.—Nothing in this

11 section shall be construed as preventing a single not12 for-profit corporation from being the cooperative for

13 more than one health care coverage area.

14 (2) MULTIPLE COOPERATIVES.—Noting in this

15 section shall be construed to prevent a State from

16 designating or establishing more than one coopera17 tive in a health care coverage area.

18 (3) VOLUNTARY PARTICIPATION.—Nothing in

19 this section shall be construed as requiring any indi20 vidual or community-rated employer to purchase a

21 health plan exclusively through a cooperative.

22 SEC. 1302. AGREEMENTS WITH HEALTH PLANS.

23 (a) AGREEMENTS.—

24 (1) IN GENERAL.—Except as provided in para25 graph (2)(A) of subsection (c)—
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1 (A) each cooperative for a health care cov2 erage area shall enter into an agreement under

3 this section with each certified community-rated

4 health plan and each health plan of the Depart5 ment of Veterans Affairs and Uniformed

6 Health Services Plan that serves residents of

7 the health care coverage area; and

8 (B) a cooperative may not refuse to enter

9 into such an agreement with a health plan

10 which is certified by a State as offering cov11 erage in the health care coverage area, nor may

12 a community-rated health plan refuse to enter

13 into an agreement with a cooperative in accord14 ance with section 1522.

15 (2) COMMUNITY-RATED PREMIUM.—Except as

16 provided in paragraph (2)(B) of subsection (c), a co17 operative shall offer plans at the community-rate (as

18 defined in section 6000(a)(3)) filed by the plan.

19 (3) TERMINATION OF AGREEMENT.—The State

20 shall establish a process for the termination of

21 agreements entered into under this section and a

22 process for appealing such termination under this

23 paragraph. In accordance with rules established by

24 the State—
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1 (A) a cooperative may terminate an agree2 ment with a health plan if the health plan’s cer3 tification for the health care coverage area in4 volved is terminated or if the health plan fails

5 to fulfill the requirements of the agreement;

6 and

7 (B) a health plan may appeal the termi8 nation of an agreement with a cooperative

9 under this paragraph to the State in accordance

10 with rules and procedures established by the

11 State.

12 (b) RECEIPT OF GROSS PREMIUMS.—

13 (1) IN GENERAL.—Under an agreement be14 tween a cooperative and a health plan, payment of

15 premiums shall be made directly to the cooperative

16 in accordance with rules promulgated by the Board.

17 (2) FORWARDING OF PREMIUMS.—Under an

18 agreement between a health plan and a cooperative,

19 the cooperative shall forward to each health plan in

20 which an eligible individual has been enrolled the

21 amounts collected on the behalf of enrollees in such

22 plans.

23 (c) NEGOTIATING COOPERATIVES.—

24 (1) IN GENERAL.—A State may designate a co25 operative as a ‘‘negotiating cooperative’’ if such co-
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1 operative is the sole State-certified cooperative in a

2 health care coverage area.

3 (2) AUTHORITIES AND RESPONSIBILITIES OF

4 NEGOTIATING COOPERATIVES.—

5 (A) IN GENERAL.—Negotiating coopera6 tives may exclude plans from the plans offered

7 to cooperative members if such cooperatives

8 offer at least three plans, including at least one

9 fee-for-service plan.

10 (B) PREMIUMS.—A health plan may,

11 through negotiations with a negotiating cooper12 ative, offer to individuals enrolled through such

13 cooperative a premium that is less than the

14 community-rated premium, but in no case shall

15 a plan bid a premium to a negotiating coopera16 tive that is higher than the filed per-capita

17 community-rated bid (described in section

18 6000(a)(1)).

19 SEC. 1303. AGREEMENTS WITH COMMUNITY-RATED EM20 PLOYERS.

21 (a) IN GENERAL.—Cooperatives for each health care

22 coverage area shall offer to enter into an agreement under

23 this section with each community-rated employer that em24 ploys individuals in the area and that desires to join the

25 cooperative. Each arrangement between a community-
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1 rated employer and a cooperative shall include provisions

2 consistent with the requirements of this subtitle.

3 (b) ELECTION OF ENROLLMENT.—Qualified employ4 ees of a community-rated employer may elect to enroll in

5 a plan offered through the cooperative with which the em6 ployer has entered into an agreement, through a coopera7 tive sponsored by the FEHBP or directly with a health

8 plan selected by the employer (if such plan is not offered

9 by the cooperative selected by the employer). Qualified em10 ployees not residing in the health care coverage area

11 served by the cooperative selected by the employer shall

12 enroll in a health plan consistent with rules promulgated

13 by the Board. The cooperative selected by the employer

14 shall be responsible for forwarding premium payments to

15 the appropriate plan or cooperative for each qualified em16 ployee.

17 (c) FORWARDING INFORMATION ON ELIGIBLE EM18 PLOYEES.—Under an agreement between an employer and

19 a cooperative, the employer must forward to the appro20 priate cooperative such information as may be required by

21 the Secretary or the Board.

22 SEC. 1304. ENROLLING INDIVIDUALS IN HEALTH PLANS

23 THROUGH A COOPERATIVE.

24 (a) IN GENERAL.—Each cooperative shall offer com25 munity-rate eligible individuals the opportunity to enroll
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1 in any health plan which has an agreement with the coop2 erative for the health care coverage area in which the indi3 vidual resides.

4 (b) ENROLLMENT PROCESS.—Each cooperative shall

5 establish an enrollment process in accordance with rules

6 established by the Board, including a process for enrolling

7 those qualified employees of a community-rated employer

8 who elect not to participate in the cooperative with which

9 the employer has entered into an agreement.

10 (c) ENROLLMENT FEES.—The Board shall promul11 gate rules regarding payment of cooperative fees by em12 ployees exercising an election under section 1303(b).

13 SEC. 1305. COOPERATIVE FEE.

14 (a) IN GENERAL.—Each cooperative shall charge

15 members a uniform membership fee to cover the cost of

16 activities undertaken by the cooperative (including all ad17 ministrative costs incurred by the cooperative).

18 (b) DISCLOSURE.—Each cooperative shall, prior to

19 the time of enrollment, publish the membership fee of such

20 cooperative. Such fees shall be calculated and identified

21 as a separate charge from the premium charged by the

22 health plans offered by the cooperative. A comparison of

23 fees charged by each cooperative in a health care coverage

24 area shall be incorporated into the plan brochure described

25 in section 1205.
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1 (c) MULTIPLE COOPERATIVES.—In health care cov2 erage areas in which States have certified multiple co3 operatives, such cooperatives may compete for members

4 on the basis of the fees described in this section.

5 SEC. 1306. COORDINATION AMONG COOPERATIVES.

6 The State shall establish rules consistent with this

7 section for coordination among cooperatives with respect

8 to enrollment, payment of premiums, and provision of out9 of-area benefits and services.

10 SEC. 1307. THIRD-PARTY CONTRACTING TO PERFORM

11 DUTIES.

12 (a) IN GENERAL.—Each cooperative may contract

13 with qualified, independent third parties for any service

14 necessary to carry out the powers and duties of the cooper15 ative pursuant to the requirements established under this

16 section.

17 (b) RESTRICTION ON PERSONS ELIGIBLE FOR

18 THIRD-PARTY CONTRACT.—No person may act, directly

19 or through an affiliated company, both as a health plan

20 serving the cooperative and as an independent third party

21 contractor as described in subsection (a) within a given

22 health care coverage area.
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1 PART 2—ACCESS TO HEALTH PLANS SPONSORED

2 BY FEHBP

3 SEC. 1321. DESIGNATION OF FEHBP AS A CONSUMER PUR4 CHASING COOPERATIVE.

5 (a) IN GENERAL.—The Federal Employees Health

6 Benefits Program (FEHBP) shall serve as a consumer

7 purchasing cooperative in each health care coverage area

8 designated by each State. The responsibilities and authori9 ties provided to the FEHBP under this part shall be car10 ried out by the Federal Office of Personnel Management.

11 (b) RESPONSIBILITIES AND AUTHORITIES OF

12 FEHBP-SPONSORED COOPERATIVES.—

13 (1) EXEMPTION FROM COOPERATIVE ORGANIZA14 TIONAL REQUIREMENTS.—The organizational re15 quirements specified in part 1 with respect to State

16 certification (under section 1301(a)), governance

17 (under section 1301(b)), and restrictions on the au18 thority of cooperatives to negotiate with health plans

19 (under section 1302(a)), shall not apply to a cooper20 ative sponsored by the FEHBP.

21 (2) GENERAL RESPONSIBILITIES AND AUTHORI22 TIES.—A cooperative sponsored by the FEHBP

23 shall undertake all the duties and retain all the

24 privileges specified in part 1, including section 1302

25 (regarding requirements of plans to contract with,

26 and not undersell, cooperatives).
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1 (c) SATISFACTION OF STATE REQUIREMENT TO

2 CERTIFY A COOPERATIVE.—Compliance with the require3 ments of this part with respect to the establishment of

4 a cooperative sponsored by the FEHBP shall satisfy a

5 State’s requirement to certify at least one consumer pur6 chasing cooperative under section 1201(6).

7 (d) REQUIREMENT OF OPM.—The Federal Office of

8 Personnel Management is hereby authorized to take such

9 actions as are appropriate to fulfill its responsibilities

10 under this part.

11 SEC. 1322. SPECIAL RULES FOR FEHBP SUPPLEMENTAL

12 PLANS.

13 (a) FEHBP SUPPLEMENTAL PLANS.—

14 (1) DEVELOPMENT.—The Office of Personnel

15 Management shall develop FEHBP supplemental

16 health benefit policies. The Office of Personnel Man17 agement shall meet and confer with representatives

18 of Federal employees regarding the supplemental

19 health benefit policies and the cost sharing policies

20 to be offered (including premium contributions, if

21 any, to be made by the Federal Government with re22 spect to such policies for Federal employees and an23 nuitants) through a process to be established by the

24 National Partnership Council.
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1 (2) OFFERING.—The Federal Government shall

2 offer FEHBP supplemental health benefit policies

3 developed in accordance with paragraph (1) and cost

4 sharing policies as provided in section 1523 to Fed5 eral employees, annuitants, and any other commu6 nity rate eligible individual (as defined in section

7 1902(9)).

8 (b) DEFINITIONS.—For purposes of this section:

9 (1) ANNUITANT.—The term ‘‘annuitant’’ means

10 an ‘‘annuitant’’ as defined by section 8901 of title

11 5, United States Code.

12 (2) FEHBP.—The term ‘‘FEHBP’’ means the

13 health insurance program under chapter 89 of title

14 5, United States Code.

15 (3) FEDERAL EMPLOYEE.—The term ‘‘Federal

16 employee’’ means an ‘‘employee’’ as defined by sec17 tion 8901 of title 5, United States Code.

18 Subtitle E—Employer Purchasers

19 PART 1—DEFINITIONS AND RESPONSIBILITIES

20 OF EMPLOYER PURCHASERS

21 SEC. 1401. DEFINITIONS.

22 (a) LARGE GROUP PURCHASER DEFINED.—In this

23 Act, the term ‘‘large group purchaser’’ means—

24 (1) an employer that—
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1 (A) is a current large employer (as defined

2 in subsection (e)(2)),

3 (B) is a dual choice employer (as defined

4 in subsection (e)(4)) that has elected to become

5 a large employer, and

6 (C) is not an excluded employer described

7 in subsection (b)(2); or

8 (2) an eligible purchaser (described in sub9 section (b) if—

10 (A) the sponsor elects, in a form and man11 ner specified by the Secretary of Labor consist12 ent with this subpart, to be treated as a large

13 group purchaser under this title and such elec14 tion has not been terminated under section

15 1403; and

16 (B) the purchaser has filed with the Sec17 retary of Labor a document describing how the

18 sponsor shall carry out activities as such a large

19 group purchaser consistent with part 2.

20 (b) ELIGIBLE LARGE GROUP PURCHASER.—

21 (1) IN GENERAL.—In this subpart, each of the

22 following is an eligible large group purchaser:

23 (A) NEW LARGE EMPLOYER.—An employer

24 that—
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1 (i) is a new large employer (as defined

2 in subsection (e)(2)) as of the date of an

3 election under subsection (a)(1), and

4 (ii) is not an excluded employer de5 scribed in paragraph (2).

6 (B) PLAN SPONSOR OF A MULTIEMPLOYER

7 PLAN.—A plan sponsor described in section

8 3(16)(B)(iii) of Employee Retirement Income

9 Security Act of 1974, but only with respect to

10 a group health plan that is a multiemployer

11 plan (as defined in subsection (e)(3)) main12 tained by the sponsor and only if—

13 (i) such plan offered health benefits

14 as of September 1, 1993, and

15 (ii) as of both September 1, 1993, and

16 January 1, 1996, such plan covers more

17 than 1,000 full-time employees in the Unit18 ed States, or the plan is maintained by one

19 or more affiliates of the same labor organi20 zation, or one or more affiliates of labor

21 organizations representing employees in

22 the same industry, covering more than

23 1,000 employees.
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1 (2) EXCLUDED EMPLOYERS.—For purposes of

2 this section, any of the following are excluded em3 ployers described in this paragraph:

4 (A) An employer whose primary business is

5 employee leasing.

6 (B) The Federal government (other than

7 the United States Postal Service).

8 (c) INDIVIDUALS ELIGIBLE TO ENROLL IN EXPERI9 ENCE-RATED PLANS.—For purposes of part 1 of subtitle

10 A, subject to subsection (d)—

11 (1) FULL-TIME EMPLOYEES OF LARGE EMPLOY12 ERS.—Each eligible individual who is a full-time em13 ployee (as defined in section 1901(b)(2)(C)) of—

14 (A) a current large employer, or

15 (B) a new large employer that has an elec16 tion in effect as a large group purchaser,

17 is eligible to enroll in an experience-rated plan of18 fered by such purchaser.

19 (2) MULTIEMPLOYER PURCHASERS.—

20 (A) PARTICIPANTS.—Each participant and

21 beneficiary (as defined in subparagraph (B))

22 under a multiemployer plan, with respect to

23 which an eligible purchaser of the plan de24 scribed in subsection (b)(1)(B) has an election

25 in effect as a large group purchaser, is eligible
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1 to enroll in an experience-rated plan offered by

2 such purchaser.

3 (B) PARTICIPANT AND BENEFICIARY DE4 FINED.—In subparagraph (A), the terms ‘‘par5 ticipant’’ and ‘‘beneficiary’’ have the meaning

6 given such terms in section 3 of the Employee

7 Retirement Income Security Act of 1974.

8 (3) INELIGIBLE TO ENROLL IN COMMUNITY9 RATED PLAN.—Except as provided in section 1013,

10 an experience-rated individual is not eligible to enroll

11 under a community-rated plan.

12 (d) EXCLUSION OF CERTAIN INDIVIDUALS.—In ac13 cordance with rules of the Board, the following individuals

14 shall not be treated as experience-rated individuals:

15 (1) AFDC recipients.

16 (2) SSI recipients.

17 (3) Individuals who are described in section

18 1004(b) (relating to veterans, military personnel,

19 and Indians) and who elect an applicable health plan

20 described in such section.

21 (4) Employees who are part-time, seasonal or

22 temporary workers (as defined by the Board), other

23 than such workers who are treated as experience24 rated individuals pursuant to a collective bargaining

25 agreement (as defined by the Secretary of Labor).
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1 (5) Electing migrant and seasonal agricultural

2 workers (described in section 1005(b)(4)).

3 (e) ADDITIONAL DEFINITIONS.—As used in this sub4 title:

5 (1) GROUP HEALTH PLAN.—The term ‘‘group

6 health plan’’ means an employee welfare benefit plan

7 (as defined in section 3(1) of the Employee Retire8 ment Income Security Act of 1974) providing medi9 cal care (as defined in section 213(d) of the Internal

10 Revenue Code of 1986) to participants or bene11 ficiaries (as defined in section 3 of the Employee Re12 tirement Income Security Act of 1974) directly or

13 through insurance, reimbursement, or otherwise.

14 (2) LARGE EMPLOYER.—The term ‘‘large em15 ployer’’ means an employer with more than 1000

16 full-time employees in the United States. Such term

17 includes the United States Postal Service. A large

18 group purchaser shall offer a choice of health plans

19 to qualified employees in accordance with section

20 1403 and meet the enrollment requirements de21 scribed in such section.

22 (3) SMALL EMPLOYER.—The term ‘‘small em23 ployer’’ means an employer with 500 or less full24 time employees. A small employer shall offer a

25 choice of health plan to qualified employees in ac-
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1 cordance with section 1403 and meet the enrollment

2 requirements described in such section. A small em3 ployer under this subtitle is a community-rated em4 ployer described in title I and title VI of this Act.

5 (4) DUAL CHOICE EMPLOYER.—

6 (A) IN GENERAL.—The term ‘‘dual choice

7 employer’’ means an employer with more than

8 500 but less than 1000 full-time employees.

9 (B) ELECTION.—A dual choice employer

10 may elect to be considered as either a small em11 ployer or a large employer for purposes of this

12 Act. The status of the employer as a small em13 ployer or a large employer after such an elec14 tion shall remain in effect for a period of not

15 less than 3 years. A dual choice employer elect16 ing to be a large employer shall not be eligible

17 for discounts under title VI.

18 (5) EMPLOYER SPONSORED HEALTH PLAN.—

19 The term ‘‘employer sponsored health plan’’ means

20 a group health plan with an enrollment of at least

21 500 individuals that is established and maintained

22 by a large employer. The health plan may be oper23 ated as a fee-for-service plan (as described in section

24 1211(b)(2)(A)) or as a network plan (as described in

25 section 1514(c)(4)). The employer shall retain the
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1 insurance risk and meet requirements specified by

2 the Secretary of Labor for such plans in accordance

3 with section 1406. The Secretary shall ensure that

4 employer sponsored health plans meet the require5 ments of this paragraph.

6 (6) MULTIEMPLOYER PLAN.—The term ‘‘multi7 employer plan’’ has the meaning given such term in

8 section 3(37) of the Employee Retirement Income

9 Security Act of 1974, and includes any plan that is

10 treated as such a plan under title I of such Act.

11 SEC. 1402. ELECTION OF LARGE GROUP PURCHASERS.

12 (a) IN GENERAL.—Not later than 6 months after the

13 date of enactment of this Act, the Secretary of Labor shall

14 promulgate regulations for the election of new large em15 ployers and multiemployer plans as large group pur16 chasers and for the termination of such elections of multi17 employer plans.

18 (b) DUAL CHOICE EMPLOYERS.—If the number of

19 full-time employees of a dual choice employer changes dur20 ing the coverage year such that the employer has fewer

21 than 500 or more than 1000 employees, the status of such

22 employer shall be retained only throughout that year. The

23 employer shall notify the Secretary of Labor of change in

24 employer status in such a manner as the Secretary shall

25 prescribe.
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1 SEC. 1403. EMPLOYEE ENROLLMENT REQUIREMENTS.

2 (a) ESTABLISHMENT OF EMPLOYER ENROLLMENT

3 FUNCTION.—

4 (1) IN GENERAL.—Each employer shall make

5 available enrollment in at least three health plans,

6 one of which shall be a fee-for-service plan, to each

7 eligible employee of such employer.

8 (2) ASSURANCE OF ENROLLMENT.—Each em9 ployer shall ensure that each eligible individual is en10 rolled in a health plan and receives continuous cov11 erage pursuant to regulations promulgated by the

12 Secretary of Labor and consistent with the appro13 priate provisions of subtitle F. The methods and

14 procedures prescribed in such regulations shall en15 sure the enrollment of such individuals at the time

16 such individuals first become eligible individuals with

17 respect to the employer.

18 (3) INFORMATION.—The Secretary shall pro19 mulgate regulations regarding the provision of infor20 mation to employees by employers to effectuate en21 rollment under this section.

22 (4) CONSTRUCTION.—Nothing in this section

23 shall be construed to prevent an employer from com24 plying with this subsection through the offering of

25 plans provided by a single carrier.
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1 (5) SMALL EMPLOYERS.—Each small employer

2 shall offer, at the age-adjusted community rate in

3 the area, at least three State-certified health plans,

4 one of which shall be a fee-for-service plan, and shall

5 join a consumer purchasing cooperative. A small em6 ployer may satisfy the requirement that it offer at

7 least three health plans by joining a consumer pur8 chasing cooperative.

9 (b) FORWARDING OF ENROLLMENT INFORMATION.—

10 (1) INFORMATION REGARDING PLANS.—An em11 ployer must provide each employee of such employer

12 (including any part-time or seasonal employee) with

13 information regarding all qualified health plans of14 fered in the health care coverage area in which the

15 employer is located and, if the employee resides in

16 another health care coverage area, information re17 garding how to obtain information on qualified

18 health plans offered to residents of such other health

19 care coverage area.

20 (2) INFORMATION REGARDING EMPLOYEES.—

21 An employer must forward the name and address

22 (and any other necessary identifying information

23 specified by the Secretary) of each eligible em24 ployee—
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1 (A) to the qualified health plan in which

2 such employee is enrolled, or

3 (B) to the cooperative (if any) through

4 which such enrollment is made.

5 (c) PAYROLL DEDUCTION.—The employer, upon au6 thorization by the employee, shall provide for the deduc7 tion, from the employee’s wages or other compensation,

8 of the premium amount due (less any employer contribu9 tion) to the plan or purchasing cooperative in accordance

10 with section 6209. This subsection shall only apply to

11 plans and purchasing cooperatives made available by the

12 employer.

13 (d) NO REQUIREMENT TO ENROLL IN EMPLOYER14 PROVIDED PLAN.—An eligible employee of a community15 rated employer may elect not to enroll in a health plan

16 offered by an employer under this section. In addition to

17 such plans, such an employee may enroll in a health plan

18 offered through a purchasing cooperative of the employers

19 choosing, in an association health plan (as described in

20 section 1508) or through a plan offered by the Federal

21 Employees Health Benefits Program.

22 SEC. 1404. RESPONSIBILITIES AND AUTHORITY OF EM23 PLOYER PURCHASERS.

24 (a) SELECTION OF PLANS BY MAJORITY OF EMPLOY25 EES.—Each employer shall make the selections of health
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1 plans under this subsection on an annual basis. In making

2 each such selection, a employer shall comply with any se3 lection made by at least 50 percent of the eligible employ4 ees of the employer. The Secretary of Labor shall pre5 scribe rules which shall govern the manner in which em6 ployees may make such a selection.

7 (b) SPECIFIC REQUIREMENTS OF LARGER GROUP

8 PURCHASERS.—

9 (1) CONTRACTS WITH PLANS.—Each large

10 group purchaser may—

11 (A) negotiate with a State-certified health

12 plan to enter into a contract with the plan for

13 the enrollment of such individuals under the

14 plan; or

15 (B) offer to individuals an appropriate em16 ployer sponsored health plan (as defined in sec17 tion 1401(e)(5));

18 or offer a combination of the plans described in this

19 paragraph.

20 (2) TERMS OF CONTRACTS WITH STATE-CER21 TIFIED HEALTH PLANS.—Contracts under this sec22 tion between a large group purchaser and a State23 certified health plan may contain such provisions

24 (not inconsistent with the requirements of this title)

25 as the large group purchaser and plan may provide,
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1 except that in no case does such contract remove the

2 obligation of the large group purchaser to provide

3 for health benefits to large group purchaser eligible

4 individuals consistent with this part.

5 (3) PLAN AND INFORMATION REQUIRE6 MENTS.—

7 (A) IN GENERAL.—A large group pur8 chaser shall provide a written submission to the

9 Secretary of Labor (in such form as the Sec10 retary may require) detaining how the large

11 group purchaser will carry out its activities

12 under this part.

13 (B) ANNUAL INFORMATION.—An employer

14 group purchaser shall provide to the Secretary

15 of Labor each year, in such form and manner

16 as the Secretary may require, such information

17 as the Secretary may require in order to mon18 itor the compliance of the purchaser with the

19 requirements of this part.

20 (4) MANAGEMENT OF FUNDS.—

21 (A) MANAGEMENT OF FUNDS.—The man22 agement of funds by an large group purchaser

23 shall be subject to the applicable fiduciary re24 quirements of part 4 of subtitle B of title I of

25 the Employee Retirement Income Security Act
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1 of 1974, together with the applicable enforce2 ment provisions of part 5 of subtitle B of title

3 I of such Act.

4 (B) MANAGEMENT OF FINANCES AND

5 RECORDS; ACCOUNTING SYSTEM.—Each large

6 group purchaser shall comply with standards

7 relating to the management of finances and

8 records and accounting systems as the Sec9 retary of Labor shall specify.

10 (c) LARGE GROUP PURCHASER TRANSITION.—Each

11 large group purchaser must provide coverage—

12 (1) as of the first day of any month in which

13 an individual first becomes a large group sponsor eli14 gible individual, and

15 (2) through the end of the month in the case

16 of a large group sponsor eligible individual who loses

17 such eligibility during the month unless covered

18 under paragraph (1).

19 (d) EMPLOYEE SHARE.—The premiums charged by

20 a large group purchaser to an employee for enrollment in

21 a plan offered by such a purchaser (not taking into ac22 count any employer premium payment under section

23 6131) shall vary only by class of family enrollment (as

24 specified under section 6131) and by geographic area. The

25 Secretary of Labor shall promulgate regulations regarding
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1 the designation of geographic area by large group pur2 chasers. Such regulations shall provide for such exceptions

3 to the requirements under this section with respect to a

4 sponsor described in section 1401(b)(1)(B), as may be ap5 propriate.

6 SEC. 1405. DEVELOPMENT OF LARGE EMPLOYER GROUP

7 PURCHASERS.

8 (a) IN GENERAL.—Nothing in this title shall be con9 strued as prohibiting 2 or more large employers from

10 forming a purchasing group with respect to the employees

11 of such employer or employers. Such entities shall comply

12 with the requirements applicable to health plans offered

13 by large group purchasers under this subtitle.

14 (b) NO USE OF INDIVIDUAL AND COMMUNITY-RATED

15 EMPLOYER PURCHASING COOPERATIVES.—A large em16 ployer shall be ineligible to purchase health insurance

17 through an individual and community-rated employer pur18 chasing cooperative.

19 SEC. 1406. TIMING AND TERMINATION OF EMPLOYER ELEC20 TIONS.

21 (a) REGULATIONS.—Not later than 6 months after

22 the date of enactment of this Act, the Secretary of Labor

23 shall promulgate regulations for employer elections.

24 (b) ELECTIVE TERMINATION.—A large group spon25 sor (other than a large employer) may terminate an elec-
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1 tion under this part by filing with the National Health

2 Board and the Secretary of Labor a notice of intent to

3 terminate.

4 (c) EFFECTIVE DATE OF TERMINATION.—In the

5 case of a termination of an election under this section,

6 in accordance with rules established by the Secretary of

7 Labor—

8 (1) subject to section 6022(a)(1), the termi9 nation shall take effect as of the effective date of en10 rollments in experience-rated plans made during the

11 next open enrollment period (as provided in section

12 1403), and

13 (2) the enrollment of eligible individuals in ex14 perience-rated plans of the sponsor shall be termi15 nated as of such date and such individuals shall be

16 enrolled in other applicable health plans effective on

17 such date.

18 (d) NOTICE TO BOARD.—If an election with respect

19 to a large group sponsor is terminated pursuant to sub20 section (b), the Secretary of Labor shall notify the Na21 tional Health Board of the termination of the election.
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1 PART 2—REQUIREMENTS FOR HEALTH PLANS

2 OFFERED BY LARGE GROUP PURCHASERS

3 SEC. 1411. ESTABLISHMENT OF STANDARDS APPLICABLE

4 TO EMPLOYER SPONSORED PLANS.

5 (a) IN GENERAL.—The Secretary of Labor shall de6 velop and publish standards applicable to employer spon7 sored plans (as defined in section 1401(e)(5)) offered by

8 large group purchasers relating to the requirements de9 scribed in subsection (b). The Secretary shall develop and

10 publish such standards by not later than the date that

11 is 6 months after the date of enactment of this Act. Such

12 standards shall be the certified health plan standards ap13 plicable to employer sponsored plans under this part.

14 (b) REQUIREMENTS SPECIFIED.—

15 (1) IN GENERAL.—The requirements referred

16 to in subsection (a) are applicable plan requirements

17 specified in subtitle F.

18 (2) OTHER REQUIREMENTS.—The standards

19 referred to in subsection (a) shall include stand20 ards—

21 (A) relating to financial solvency, reserve

22 and guaranty fund requirements, as the Sec23 retary of Labor shall specify, except that such

24 standards shall be consistent with the applicable

25 rules under part 4 of title I of the Employee

26 Retirement Income Security Act of 1974;
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1 (B) relating to the payments of premiums;

2 and

3 (C) relating to claims grievance proce4 dures, in accordance with subtitle C of title V.

5 SEC. 1412. CORRECTIVE ACTIONS FOR HEALTH PLANS OF6 FERED BY LARGE EMPLOYERS.

7 (a) IN GENERAL.—The plan sponsor of each large

8 employer plan shall determine semiannually whether the

9 requirements of this part are met. In any case in which

10 the plan sponsor determines that there is reason to believe

11 that there is or will be a failure to meet such requirements,

12 or the Secretary of Labor makes such a determination and

13 so notifies the plan sponsor, the plan sponsor shall, within

14 90 days after making such determination or receiving such

15 notification, notify such Secretary (in such form and man16 ner as such Secretary may prescribe by regulation) of a

17 description of the corrective actions (if any) that the plan

18 sponsor has taken or plans to take in response to such

19 recommendations. The plan sponsor shall thereafter report

20 to such Secretary, in such form and frequency as such

21 Secretary may specify to the plan sponsor, regarding cor22 rective action taken by the plan sponsor until such require23 ments are met. Such Secretary may make a determination

24 that a large employer plan has ceased to be a large em25 ployer plan only if such Secretary is satisfied that the nec-
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1 essary corrective action cannot reasonably be expected to

2 occur on a timely basis necessary to avoid failure to pro3 vide benefits for which the plan is obligated.

4 (b) DISQUALIFIED OR TERMINATION OF PLAN.—

5 (1) IN GENERAL.—In any case in which the

6 plan sponsor of a large employer plan determines

7 that there is reason to believe that the plan will

8 cease to be a large employer sponsored health plan

9 or will terminate, the plan sponsor shall so inform

10 the Secretary of Labor, shall develop a plan for

11 winding up the affairs of the plan in connection with

12 such disqualification or termination in a manner

13 which will result in timely payment of all benefits for

14 which the plan is obligated, and shall submit such

15 plan in writing to such Secretary. Actions required

16 under this subparagraph shall be taken in such form

17 and manner as may be prescribed in regulations

18 jointly prescribed by such Secretary.

19 (2) ACTIONS REQUIRED IN CONNECTION WITH

20 DISQUALIFICATION OR TERMINATION.—

21 (A) IN GENERAL.—In any case in which—

22 (i) the Secretary of Labor has been

23 notified under paragraph (1) of a failure of

24 a large employer sponsored health plan to

25 meet the requirements of this part and has
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1 not been notified by the plan sponsor that

2 corrective action has restored compliance

3 with such requirements, and

4 (ii) such Secretary determines that

5 the continuing failure to meet such re6 quirements can be reasonably expected to

7 result in a continuing failure to pay bene8 fits for which the plan is obligated,

9 the plan sponsor and the large employer shall

10 comply with the requirements of subparagraph

11 (B) or (C), as applicable.

12 (B) ACTIONS BY PLAN SPONSOR.—Upon a

13 determination by the Secretary of Labor under

14 subparagraph (A)(ii), the plan sponsor shall, at

15 the direction of such Secretary, terminate the

16 plan and, in the course of the termination, take

17 such actions as such Secretary may require as

18 necessary to ensure that the affairs of the plan

19 will be, to the maximum extent possible, wound

20 up in a manner which will result in timely pay21 ment of all benefits for which the plan is obli22 gated.

23 (C) ACTIONS BY LARGE EMPLOYER.—

24 Upon a determination by the Secretary of

25 Labor under subparagraph (A)(ii), the large
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1 employer shall provide for such contingency cov2 erage for all eligible employees of the employer

3 in accordance with regulations which shall be

4 prescribed by such Secretary. Such regulations

5 may provide for temporary coverage of such

6 employees under a plan provided by a purchas7 ing group in the appropriate area, a plan pro8 vided under chapter 89 of title 5, United States

9 Code, or other appropriate means established in

10 such regulations.

11 SEC. 1413. DISCLOSURE AND RESERVE REQUIREMENTS

12 FOR LARGE EMPLOYER PURCHASER HEALTH

13 PLANS.

14 (a) IN GENERAL.—The Secretary of Labor shall en15 sure that each large group purchaser health plan which

16 is an employer sponsored health plan maintains plan as17 sets in trust as provided in section 403 of the Employee

18 Retirement Income Security Act of 1974—

19 (1) without any exemption under section

20 403(b)(4) of such Act, and

21 (2) in amounts which the Secretary determines

22 are sufficient to provide at any time for payment to

23 health care providers of all outstanding balances

24 owed by the plan at such time and consistent with

25 standards for State certified health plans.
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1 The requirements of the preceding sentence may be met

2 through letters of credit, bonds, or other appropriate secu3 rity to the extent provided in regulations of the Secretary.

4 (b) DISCLOSURE.—Each employer sponsored health

5 plan shall notify the Secretary at such time as the finan6 cial reserve requirements of this section are not being met.

7 The Secretary may assess a civil money penalty of not

8 more than $100,000 against any large group purchaser

9 for any failure to provide such notification in such form

10 and manner and within such time periods as the Secretary

11 may prescribe by regulation.

12 SEC. 1414. TRUSTEESHIP BY THE SECRETARY OF INSOL13 VENT LARGE EMPLOYER PURCHASED

14 HEALTH PLANS.

15 (a) APPOINTMENT OF SECRETARY AS TRUSTEE FOR

16 INSOLVENT PLANS.—Whenever the Secretary of Labor

17 determines that a large employer sponsored health plan

18 will be unable to provide benefits when due or is otherwise

19 in a financially hazardous condition as defined in regula20 tions of the Secretary, the Secretary shall, upon notice to

21 the plan, apply to the appropriate United States district

22 court for appointment of the Secretary as trustee to ad23 minister the plan for the duration of the insolvency. The

24 plan may appear as a party and other interested persons

25 may intervene in the proceedings at the discretion of the
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1 court. The court shall appoint the Secretary trustee if the

2 court determines that the trusteeship is necessary to pro3 tect the interests of the enrolled individuals or health care

4 providers or to avoid any unreasonable deterioration of the

5 financial condition of the plan or any unreasonable in6 crease in the liability of the large group purchaser Health

7 Plan Insolvency Fund. The trusteeship of the Secretary

8 shall continue until the conditions described in the first

9 sentence of this subsection are remedied or the plan is ter10 minated.

11 (b) POWERS AS TRUSTEE.—The Secretary of Labor,

12 upon appointment as trustee under subsection (a), shall

13 have the power—

14 (1) to do any act authorized by the plan, this

15 Act, or other applicable provisions of law to be done

16 by the plan administrator or any trustee of the plan,

17 (2) to require the transfer of all (or any part)

18 of the assets and records of the plan to the Sec19 retary as trustee,

20 (3) to invest any assets of the plan which the

21 Secretary holds in accordance with the provisions of

22 the plan, regulations of the Secretary, and applicable

23 provisions of law,

24 (4) to do such other acts as the Secretary de25 termines to be necessary to continue operation of the
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1 plan without increasing the potential liability of the

2 large group purchaser Health Plan Insolvency Fund,

3 if such acts may be done under the provisions of the

4 plan,

5 (5) to require the large group purchaser, the

6 plan administrator, any contributing employer, and

7 any employee organization representing covered indi8 viduals to furnish any information with respect to

9 the plan which the Secretary as trustee may reason10 ably need in order to administer the plan,

11 (6) to collect for the plan any amounts due the

12 plan and to recover reasonable expenses of the trust13 eeship,

14 (7) to commence, prosecute, or defend on behalf

15 of the plan any suit or proceeding involving the plan,

16 (8) to issue, publish, or file such notices, state17 ments, and reports as may be required under regula18 tions of the Secretary or by any order of the court,

19 (9) to terminate the plan and liquidate the plan

20 assets in accordance with applicable provisions of

21 this Act and other provisions of law, to restore the

22 plan to the responsibility of the large group pur23 chaser, or to continue the trusteeship,
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1 (10) to provide for the enrollment of individuals

2 covered under the plan in an appropriate health

3 plan, and

4 (11) to do such other acts as may be necessary

5 to comply with this Act or any order of the court

6 and to protect the interests of enrolled individuals

7 and health care providers.

8 (c) NOTICE OF APPOINTMENT.—As soon as prac9 ticable after the Secretary’s appointment as trustee, the

10 Secretary shall give notice of such appointment to—

11 (1) the plan administrator,

12 (2) each enrolled individual,

13 (3) each employer who may be liable for con14 tributions to the plan, and

15 (4) each employee organization which, for pur16 poses of collective bargaining, represents enrolled in17 dividuals.

18 (d) ADDITIONAL DUTIES.—Except to the extent in19 consistent with the provisions of this Act or part 4 of sub20 title B of title I of the Employee Retirement Income Secu21 rity Act of 1974, or as may be otherwise ordered by the

22 court, the Secretary of Labor, upon appointment as trust23 ee under this section, shall be subject to the same duties

24 as those of a trustee under section 704 of title 11, United
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1 States Code, and shall have the duties of a fiduciary for

2 purposes of such part 4.

3 (e) OTHER PROCEEDINGS.—An application by the

4 Secretary of Labor under this subsection may be filed not5 withstanding the pendency in the same or any other court

6 of any bankruptcy, mortgage foreclosure, or equity receiv7 ership proceeding, or any proceeding to reorganize, con8 serve, or liquidate such plan or its property, or any pro9 ceeding to enforce a lien against property of the plan.

10 (f) JURISDICTION OF COURT.—

11 (1) IN GENERAL.—Upon the filing of an appli12 cation for the appointment as trustee or the issuance

13 of a decree under this subsection, the court to which

14 the application is made shall have exclusive jurisdic15 tion of the plan involved and its property wherever

16 located with the powers, to the extent consistent

17 with the purposes of this subsection, of a court of

18 the United States having jurisdiction over cases

19 under chapter 11 of title 11, United States Code.

20 Pending an adjudication under this section such

21 court shall stay, and upon appointment by it of the

22 Secretary of Labor as trustee, such court shall con23 tinue the stay of, any pending mortgage foreclosure,

24 equity receivership, or other proceeding to reorga25 nize, conserve, or liquidate the plan, the large group
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1 purchaser, or property of such plan or purchaser,

2 and any other suit against any receiver, conservator,

3 or trustee of the plan, the purchaser, or property of

4 the plan or purchaser. Pending such adjudication

5 and upon the appointment by it of the Secretary as

6 trustee, the court may stay any proceeding to en7 force a lien against property of the plan or the large

8 group purchaser or any other suit against the plan

9 or the purchaser.

10 (2) VENUE.—An action under this subsection

11 may be brought in the judicial district where the

12 plan administrator resides or does business or where

13 any asset of the plan is situated. A district court in

14 which such action is brought may issue process with

15 respect to such action in any other judicial district.

16 (g) PERSONNEL.—In accordance with regulations of

17 the Secretary of Labor, the Secretary shall appoint, retain,

18 and reasonably compensate accountants, actuaries, and

19 other professional service personnel as may be necessary

20 in connection with the Secretary’s service as trustee under

21 this section.

22 Subtitle F—Health Plans

23 SEC. 1500. HEALTH PLAN DEFINED.

24 (a) IN GENERAL.—In this Act, the term ‘‘health

25 plan’’ means a plan that provides the comprehensive bene-
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1 fit package and meets the requirements of this Act appli2 cable to health plans.

3 (b) STATE-CERTIFIED HEALTH PLAN.—In this Act,

4 the term ‘‘State-certified health plan’’ means a health plan

5 that has been certified by a State under section 1504 (or,

6 in the case in which the Board is exercising certification

7 authority under this title, that has been certified by the

8 Board).

9 (c) DOMICILIARY STATE.—For purposes this section,

10 the State which has certified a cooperative is the State

11 in which the cooperative is domiciled.

12 PART 1—REQUIREMENTS FOR HEALTH PLANS

13 SEC. 1501. CERTIFIED HEALTH PLAN.

14 (a) IN GENERAL.—To be certified under this title a

15 health plan must meet the applicable standards under sec16 tion 1503 for a certified health plan.

17 (b) SPECIAL RULES FOR LARGE GROUP PUR18 CHASERS.—Employer sponsored health plans offered by

19 large group purchasers shall meet applicable standards in

20 accordance with subtitle E.

21 (c) CONSTRUCTION.—Whenever in this title a re22 quirement or standard is imposed on a health plan, the

23 requirement or standard is deemed to have been imposed

24 on the insurer or health plan sponsor of the plan in rela25 tion to that plan.
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1 SEC. 1502. APPLICATION OF REQUIREMENTS.

2 No plan shall be treated under this Act as a health

3 plan—

4 (1) unless the plan is an employer sponsored

5 health plan or a State-certified plan; or

6 (2) on and after the effective date of a finding

7 by the applicable regulatory authority that the plan

8 has failed to comply with such applicable require9 ments.

10 SEC. 1503. ESTABLISHMENT OF STANDARDS.

11 In order for a health plan to be eligible to be certified

12 as a health plan by a State, the health plan shall meet

13 the requirements of this Act, as described in regulations

14 promulgated by the Board or the Secretary, including

15 standards requiring that the plan shall—

16 (1) provide for the effective delivery of covered

17 services throughout each designated service area for

18 which it is certified;

19 (2) provide for coverage of the comprehensive

20 benefits package described in subtitle B;

21 (3) provide for the collection and reporting of

22 data;

23 (4) not discriminate in enrollment or benefits;

24 (5) establish community-rated premiums for the

25 comprehensive benefits;
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1 (6) meet financial solvency and financial man2 agement standards promulgated by the Board;

3 (7) provide for effective grievance procedures;

4 (8) demonstrate an ability to ensure that enroll5 ees have adequate access to providers of health care;

6 (9) meet information, disclosure and marketing

7 requirements;

8 (10) meet requirements for open enrollment,

9 availability, and renewability;

10 (11) meet requirements with respect to rural

11 and underserved areas;

12 (12) meet requirements with respect to partici13 pation in a payment adjustment program;

14 (13) meet quality standards;

15 (14) enter into agreements with cooperatives;

16 and

17 (15) meet other applicable requirements of this

18 Act pursuant to the Board or to regulations promul19 gated by the Secretary.

20 SEC. 1504. CERTIFICATION AND REVOCATION OF HEALTH

21 PLAN CERTIFICATION.

22 (a) CERTIFICATION.—A participating State shall—

23 (1) certify each health plan, review the contin24 ued compliance of each plan with the certification

25 requirements and recertify each plan not less fre-
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•S 2296 PCS

1 quently than once during every 3-year period if the

2 State determines that the plan continues to meet the

3 criteria for certification, including demonstrating

4 that the policies of the plan have not discriminated

5 on the basis of any of the categories described in

6 section 1914; and

7 (2) review enrollee disenrollment from health

8 plans in order to determine whether there is a pat9 tern of disenrollment that does not reflect the dis10 tribution of such plans’ reenrolling members with re11 spect to age, income, health condition, prior utiliza12 tion of health services, place of residence and other

13 potential risk characteristics.

14 Evidence of any of the disenrollment patterns described

15 in paragraph (2) may be cause for the denial of a certifi16 cation or for the application of one or more interim sanc17 tions described in section 1505.

18 (b) REVOCATION.—The State may revoke a plan’s

19 certification as a certified health plan for any health care

20 coverage area or refuse to recertify a plan only upon a

21 determination by the State that the health plan no longer

22 meets the requirements of this section, pursuant to proce23 dures established by the Board.
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1 SEC. 1505. MONITORING.

2 A participating State shall monitor the performance

3 of each State-certified health plan to ensure that it contin4 ues to meet the criteria for certification. If during such

5 monitoring the State determined that a health plan fails

6 to deliver care of adequate quality, either with respect to

7 the overall enrollment population or the vulnerable popu8 lation, fails to meet applicable standards relating to finan9 cial solvency and stability, or fails to meet any other cri10 teria for certification or recertification, the State shall im11 pose sanctions on the plan. Such sanctions may include

12 fines and the limitation or prohibition of further enroll13 ment until such time as the plan develops and complies

14 with a corrective action plan.

15 SEC. 1506. ASSOCIATION HEALTH PLANS.

16 (a) APPLICATION.—This section shall apply to any

17 association health plan that is in operation on June 1,

18 1994 and that meets the requirements for being consid19 ered an multiple employer welfare arrangement under sec20 tion 3(40) of the Employee Retirement Income Security

21 Act of 1974 (29 U.S.C. 1002(40)).

22 (b) APPLICATION OF STANDARDS.—An association

23 health plan shall meet the requirements of a State-cer24 tified community-rated health plan.

25 (c) REQUIREMENTS.—The sponsoring entity of the

26 association health plan—
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1 (1) shall be organized and maintained in good

2 faith, with appropriate bylaws that specifically state

3 the purpose, as a trade association, industry associa4 tion, professional association, chamber of commerce,

5 a religious organization, or a public entity associa6 tion and that the entity has been established and

7 maintained for substantial purposes other than to

8 provide the health care required under this section;

9 and

10 (2) is and has been in operation (together with

11 its immediate predecessor, if any) for a continuous

12 period of not less than 3 years and receives the ac13 tive support of its membership.

14 (d) TREATMENT OF EXISTING ENTITIES.—Any ar15 rangement that, as of June 1, 1994, has been in effect

16 for not less than 18 months and with respect to which

17 there is a pending application with the State insurance

18 commissioner for a certificate of operation as a health

19 plan, shall be treated for purposes of this subtitle as a

20 qualified health plan (if such plan otherwise meets the re21 quirements of this Act) unless the State can demonstrate

22 that—

23 (1) fraudulent or material misrepresentations

24 have been made by the sponsor in the application;
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1 (2) the plan that is the subject of the applica2 tion, on its face, fails to meet the requirements for

3 a complete application; or

4 (3) a financial impairment exists with respect

5 to the applicant that is sufficient to demonstrate the

6 applicant’s inability to continue its operations.

7 (e) TREATMENT OF MULTIPLE EMPLOYER WELFARE

8 ARRANGEMENTS.—

9 (1) MEWAS.—The Secretary of Labor shall

10 promulgate regulations that prohibit the insuring of

11 employees under a multiple employer welfare ar12 rangement as defined under section 3(40) of the

13 Employee Retirement Income Security Act of 1974

14 (29 U.S.C. 1002(40)) unless the arrangement meets

15 the standards for an association health plan under

16 subtitle F or is certified by a State or a consumer

17 purchasing cooperative in accordance with subtitle

18 D.

19 (2) REPEAL OF ERISA PROVISIONS.—

20 (A) Paragraph (40) of section 3 of such

21 Act (29 U.S.C. 1002(40)) is repealed.

22 (B) Paragraph 6 of section 514(b) of such

23 Act (29 U.S.C. 1144(b)(6)) is repealed.
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1 SEC. 1507. SPECIFIED STANDARD BENEFITS; SUPPLE2 MENTAL BENEFITS AND COST-SHARING POLI3 CIES.

4 (a) STANDARD BENEFITS AND OTHER REQUIRE5 MENTS.—A State shall not accept the certification of a

6 health plan as a certified health plan unless the plan pro7 vides the comprehensive benefits package required under

8 this Act.

9 (b) TREATMENT OF SUPPLEMENTARY HEALTH BEN10 EFITS.—

11 (1) IN GENERAL.—Subsection (a) shall not be

12 construed as preventing a health plan, carrier, or in13 surer from offering (in a manner that is separate

14 from the offering of health plans) supplemental in15 surance policies, pursuant to the State certification

16 plan and regulations promulgated by the Board.

17 (2) NO DUPLICATIVE HEALTH BENEFITS.—A

18 health plan or any other carrier or insurer may not

19 offer any policy for supplementary health benefits

20 under paragraph (1) that duplicates the comprehen21 sive benefits or is linked in any manner to the plan’s

22 comprehensive benefits package.

23 (3) REGULATION OF SUPPLEMENTAL PLANS.—

24 The Secretary shall provide appropriate rules for the

25 regulation of supplemental benefit policies and plans,
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1 including rules providing for the guaranteed issue

2 and the community rating of supplemental policies.

3 (c) TREATMENT OF COST-SHARING POLICIES.—

4 (1) RULES FOR OFFERING OF POLICIES.—A

5 cost sharing policy may be offered to an individual

6 only if—

7 (A) the policy is offered by the certified

8 health plan in which the individual is enrolled;

9 (B) the certified health plan offers the pol10 icy to all individuals enrolled in the plan;

11 (C) the plan offers each such individual a

12 choice of a policy that provides standard cov13 erage and a policy that provides maximum cov14 erage (in accordance with standards established

15 by the Board); and

16 (D) the policy is offered only during the

17 annual open enrollment period for community18 rated health plans (described in section 1516).

19 (2) PROHIBITION OF COVERAGE OF

20 COPAYMENTS.—Each cost sharing policy may not

21 provide any benefits relating to any copayments es22 tablished under subtitle B.

23 (3) EQUIVALENT COVERAGE FOR ALL SERV24 ICES.—Each cost sharing policy must provide cov25 erage for items and services in the comprehensive
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1 benefit package to the same extent as the policy pro2 vides coverage for all items and services in the pack3 age.

4 (4) REQUIREMENTS FOR PRICING.—

5 (A) IN GENERAL.—The price of any cost

6 sharing policy shall—

7 (i) be the same for each individual to

8 whom the policy is offered;

9 (ii) take into account any expected in10 crease in utilization resulting from the pur11 chase of the policy by individuals enrolled

12 in the community-rated health plan; and

13 (iii) not result in a loss-ratio of less

14 than 90 percent.

15 (B) LOSS-RATIO DEFINED.—In subpara16 graph (A)(iii), a ‘‘loss-ratio’’ is the ratio of the

17 premium returned to the consumer in payout

18 relative to the total premium collected.

19 SEC. 1508. COLLECTION, PROVISION OF STANDARDIZED IN20 FORMATION, AND CONFIDENTIALITY.

21 Each health plan must provide information required

22 in accordance with subtitles A and B of title V.

23 SEC. 1509. PROHIBITION OF DISCRIMINATION.

24 (a) IN GENERAL.—Each health plan shall comply

25 with the antidiscrimination requirements of section 1914.
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1 (b) ANTIDISCRIMINATION.—

2 (1) IN GENERAL.—No health plan may dis3 criminate on the basis of—

4 (A) the method through which a family

5 seeks enrollment under the plan; or

6 (B) the provider’s status as a member of

7 a health care profession for the purposes of se8 lecting among providers of health services for

9 participation in a provider network, provided

10 that the State authorizes members of that pro11 fession to render the services in question and

12 that such services are covered in the com13 prehensive benefits package described in sub14 title B.

15 (2) RULE OF CONSTRUCTION.—Nothing in

16 paragraph (1)(B) shall be construed as requiring

17 any health plan to—

18 (A) include in a network any individual

19 provider;

20 (B) establish any defined ratio of different

21 categories of health professionals;

22 (C) maintain any specific reimbursement

23 methodology other than that which is estab24 lished in other provisions of this Act; and
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1 (D) establish any specific utilization review

2 or internal quality standards other than that re3 quired in other provisions of this Act.

4 SEC. 1510. QUALITY ASSURANCE STANDARDS.

5 (a) IN GENERAL.—Each health plan shall comply

6 with the plan performance standards in accordance with

7 subtitle A of title V. Each health plan shall establish pro8 cedures, including ongoing quality improvement proce9 dures, to ensure that the health care services provided to

10 enrollees under the plan will be provided under reasonable

11 standards of quality of care consistent with prevailing pro12 fessionally recognized standards of medical practice and

13 the quality standards established under subtitle A of title

14 V.

15 (b) INTERNAL QUALITY ASSURANCE PROGRAM.—

16 Each health plan shall establish, and communicate to its

17 enrollees and its providers, an ongoing internal program,

18 including periodic reporting, to monitor and evaluate the

19 quality and cost effectiveness of its health care services,

20 pursuant to standards established by the National Quality

21 Council.

22 SEC. 1511. COMMUNITY-RATING.

23 (a) IN GENERAL.—The Secretary shall promulgate

24 regulations for community rating as modified by age. Such

25 regulations pertaining to adjustments in the community
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1 rate for age shall terminate on December 31, 1998, except

2 that the Board at any time may make a recommendation

3 to Congress to maintain a form of modified community

4 rating during the transition.

5 (b) MARKETING FEES.—Notwithstanding this sec6 tion, a health plan may impose a marketing fee for individ7 uals enrolling in a plan through an agent. Such fees shall

8 be a uniform percentage of the premium established under

9 section 6102(a)(1). In no case shall a plan impose a mar10 keting fee for individuals enrolled through a cooperative

11 or through a direct enrollment process established pursu12 ant to section 1660.

13 SEC. 1512. FINANCIAL SOLVENCY REQUIREMENTS AND

14 CONSUMER PROTECTION AGAINST PRO15 VIDER CLAIMS.

16 (a) SOLVENCY PROTECTION.—Each health plan shall

17 meet financial solvency requirements to assure protection

18 of enrollees with respect to potential insolvency. Health

19 plans must provide a financial plan and meet capital re20 quirements established by the Board under section 1651.

21 Health plans may utilize reinsurance, provide risk sharing,

22 and other appropriate measures established by the Board.

23 (b) PROTECTION AGAINST PROVIDER CLAIMS.—In

24 the case of a failure of a health plan to make payments

25 with respect to the comprehensive benefits for any reason,
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1 an individual who is enrolled under the plan is not liable

2 to any health care provider with respect to the provision

3 of health services within such set of benefits for payments

4 in excess of the amount for which the enrollee would have

5 been liable if the plan were to have made payments in a

6 timely manner.

7 SEC. 1513. GRIEVANCE MECHANISMS.

8 A health plan shall establish grievance procedures

9 that enrollees may utilize in pursuing complaints in ac10 cordance with subtitle C of title V.

11 SEC. 1514. ACCESS TO CARE.

12 (a) POINT-OF-SERVICE OPTION.—Each health plan

13 that is a low-cost sharing plan (as described in section

14 1131) shall offer enrollees the opportunity to obtain cov15 erage for out-of-network items and services, except that

16 such point-of-service option must be offered, and priced

17 separately from the benefits offered through the plan’s

18 network. A health plan providing coverage to an enrollee

19 for out-of-network items and services may charge an alter20 native premium and require alternative cost-sharing to

21 take into account such coverage, consistent with regula22 tions promulgated by the Secretary.

23 (b) TREATMENT OF COST-SHARING.—Each health

24 plan, in providing benefits in the comprehensive benefit

25 package shall include in its payments to providers such
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1 additional reimbursement as may be necessary to reflect

2 cost sharing reductions to which individuals are entitled

3 under section 1281.

4 (c) DEFINITIONS.—

5 (1) IN-NETWORK ITEMS AND SERVICES.—For

6 purposes of this Act, the term ‘‘in-network’’, when

7 used with respect to items or services described in

8 this subtitle, means items or services provided to an

9 individual enrolled under a health plan by a health

10 care provider who is a member of a provider network

11 of the plan (as defined in paragraph (3)).

12 (2) OUT-OF-NETWORK ITEMS AND SERVICES.—

13 For purposes of this Act, the term ‘‘out-of network’’,

14 when used with respect to items or services de15 scribed in this subtitle, means items or services pro16 vided to an individual enrolled under a health plan

17 by a health care provider who is not a member of

18 a provider network of the plan (as defined in para19 graph (3)).

20 (3) PROVIDER NETWORK DEFINED.—A ‘‘pro21 vider network’’ means, with respect to a health plan,

22 providers who have entered into an agreement with

23 the plan under which such providers are obligated to

24 provide items and services in the comprehensive ben25 efit package to individuals enrolled in the plan, or
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1 have an agreement to provide services on a fee-for2 service basis.

3 (4) NETWORK PLAN DEFINED.—For purposes

4 of this Act, a ‘‘network plan’’ means a health plan

5 that utilizes a provider network described in para6 graph (3) and that meets the requirements of sec7 tion 1523(c).

8 (d) RELATION TO DETENTION.—A health plan is not

9 required to provide any reimbursement to any detention

10 facility for services performed in that facility for detainees

11 in the facility.

12 SEC. 1515. INFORMATION AND MARKETING STANDARDS.

13 (a) IN GENERAL.—Each health plan shall provide in14 formation in accordance with sections 1205 and 1603(e),

15 other applicable information requirements of this Act and

16 rules promulgated by the Board.

17 (b) MARKETING METHODS; ADVERTISING MATE18 RIALS.—A health plan may utilize direct marketing, agen19 cy, or other arrangements to distribute health plan infor20 mation, subject to applicable State fair marketing prac21 tices laws and standards established by the State, includ22 ing standards to prevent selective marketing. All advertis23 ing, promotional materials, and other communications

24 with health plan members and the general public must be

25 factually accurate and responsive to the needs of served
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1 populations. A health plan may not distribute marketing

2 materials to an area smaller than the entire designated

3 service area of the plan.

4 (c) PAYMENT OF AGENT COMMISSIONS.—A health

5 plan—

6 (1) may pay a commission or other remunera7 tion to an agent or broker in marketing the plan to

8 individuals or groups, but

9 (2) may not vary such remuneration based, di10 rectly or indirectly, on the anticipated or actual

11 claims experience associated with the group or indi12 viduals to which the plan was sold.

13 (d) MATERIALS IN APPROPRIATE LANGUAGES.—In

14 the case of a health care coverage area that includes a

15 significant number or proportion of residents with limited

16 English proficiency, the State shall provide all materials

17 under this Act at an appropriate reading level and in the

18 native languages of such residents, as appropriate.

19 SEC. 1516. ENROLLMENT; AVAILABILITY, AND RENEWABIL20 ITY.

21 (a) ENROLLMENT REQUIREMENTS.—Each health

22 plan shall establish an enrollment process consistent with

23 this paragraph. To be certified as a health plan, the plan

24 shall accept the enrollment of every eligible individual who

25 seeks such enrollment (including individuals enrolling di-
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1 rectly with the plan or through a cooperative) and comply

2 with all rules and procedures regarding enrollment estab3 lished by the State and by the Board. No plan may engage

4 in any practice that has the effect of attracting or limiting

5 enrollees on the basis of personal characteristics, such as

6 occupation or affiliation with any person or entity, or

7 those characteristics described in section 1914.

8 (b) NO LIMITS ON COVERAGE; NO PRE-EXISTING

9 CONDITION LIMITS.—A health plan may not—

10 (1) terminate, restrict, or limit coverage for the

11 comprehensive benefit package in any portion of the

12 plan’s service area, except as provided in this sec13 tion;

14 (2) cancel coverage for any community rate eli15 gible individual until that individual is enrolled in

16 another applicable health plan;

17 (3) exclude any eligible individual from coverage

18 because of existing medical conditions or genetic pre19 disposition to medical conditions;

20 (4) impose waiting periods before coverage be21 gins; or

22 (5) impose a rider that serves to exclude cov23 erage of particular eligible individuals.

24 (c) RENEWABILITY; LIMITATION ON TERMI25 NATION.—Coverage of eligible individuals, except as pro-
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1 vided in this section, under a health plan in a health care

2 coverage area shall be renewed at the option of such eligi3 ble individuals, and coverage may not be terminated ex4 cept after notice and in accordance with subsection (g).

5 (d) CAPACITY LIMITATIONS.—

6 (1) IN GENERAL.—With the approval of the ap7 plicable regulatory authority, a health plan may limit

8 enrollment because of the plan’s capacity to deliver

9 services or to maintain financial stability. If such a

10 limitation is imposed, the limitation may not be im11 posed on a basis referred to in subsection (a).

12 (2) RESTRICTIONS.—If such a limitation is im13 posed—

14 (A) the plan may only enroll individuals

15 under the plan consistent with priorities estab16 lished by the State consistent with paragraph

17 (3); and

18 (B) the plan may not discriminate based

19 on the method through which a family seeks en20 rollment under the plan.

21 (3) STATE OVERSIGHT.—Each State shall, in

22 accordance with rules promulgated by the Board, es23 tablish procedures and methods to assure equal op24 portunity of enrollment for all families, regardless of
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1 when during the open enrollment period or the

2 method by which the enrollment has been sought.

3 (e) TREATMENT OF NETWORK PLANS.—

4 (1) GEOGRAPHIC LIMITATIONS.—A health plan

5 which is a network plan as defined in section

6 1514(c)(4) may deny enrollment under the plan to

7 an eligible individual who is located outside a service

8 area of the plan, but only if such denial is applied

9 uniformly.

10 (2) SERVICE AREAS.—The State shall establish

11 standards, consistent with guidelines promulgated by

12 the Secretary, for the designation by network plans

13 of service areas in order to prevent discrimination in

14 violation of section 1914.

15 (f) TERMINATION OF PLANS.—A health plan may

16 elect not to renew or make available a health plan in a

17 health care coverage area, or not to utilize a particular

18 type of delivery system in a health care coverage area, but

19 only if the health plan—

20 (1) elects not to renew all of its health plans in

21 such health care coverage area or not to use the de22 livery system in such health care coverage area; and

23 (2) provides notice to the State and each indi24 vidual covered under the plan of such termination at
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1 least 180 days before the date of expiration of either

2 the plan or use of the delivery system.

3 In such case, a health plan may not provide for the issu4 ance of any health plan in such health care coverage area,

5 or to utilize such delivery system in that health care cov6 erage area during a 5-year period beginning on the date

7 of the termination of the last plan not so renewed. For

8 purposes of this paragraph the term ‘‘delivery system’’

9 means an open-network, closed network, or nonnetwork

10 health care delivery system.

11 SEC. 1517. ADMINISTRATIVE PROVISIONS.

12 (a) CAPABILITY.—Each health plan shall dem13 onstrate to the certifying authority the capability to ad14 minister the plan.

15 (b) UTILIZATION MANAGEMENT.—Each health plan

16 shall demonstrate to the certifying authority, through

17 written management procedures, an appropriate utiliza18 tion management process. The Secretary shall establish

19 guidelines under this subsection for utilization manage20 ment.

21 SEC. 1518. INFORMATION REGARDING A PATIENT’S RIGHT

22 TO SELF-DETERMINATION IN HEALTH CARE

23 SERVICES.

24 Each health plan shall provide written information to

25 each individual enrolling in such plan of such individual’s
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1 right under State law (whether statutory or as recognized

2 by the courts of the State) to make decisions concerning

3 medical care, including the right to accept or refuse medi4 cal treatment and the right to formulate advance direc5 tives (as defined in section 1866(f)(3) of the Social Secu6 rity Act (42 U.S.C. 1395cc(f)(3))), and the written poli7 cies of the qualified health plan with respect to such right.

8 SEC. 1519. RURAL AND MEDICALLY UNDERSERVED AREAS.

9 (a) IN GENERAL.—If, in accordance with appropriate

10 rules established by the Secretary, a State determines that

11 there is inadequate access in the provision of health serv12 ices by health plans in any area of a State, the State may

13 authorize—

14 (1) a health plan to be the only health plan in

15 the area; or

16 (2) two or more health plans to take joint ac17 tion to develop and implement a program.

18 (b) MEDICALLY UNDERSERVED AREA DEFINED.—

19 For purposes of this subtitle the term ‘‘medically under20 served area’’ means an urban or rural area designated by

21 the Board as an area with a shortage of health profes22 sionals or of health services or facilities.

23 SEC. 1520. PAYMENT ADJUSTMENTS.

24 Each health plan shall participate in any risk adjust25 ment, reinsurance, or other premium adjustment program
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1 implemented by the State in accordance with section 1641.

2 Provisions of this section concerning risk adjustment and

3 reinsurance shall not apply to health plans offered by large

4 group purchasers.

5 SEC. 1521. PREEMPTION OF CERTAIN STATE LAWS RELAT6 ING TO HEALTH PLANS.

7 (a) LAWS RESTRICTING PLANS OTHER THAN FEE8 FOR-SERVICE PLANS.—Except as may otherwise be pro9 vided in this section, no State law shall apply to any serv10 ices provided under a health plan that is not a fee-for11 service plan (or a fee-for-service component of a plan) if

12 such law has the effect of prohibiting or otherwise restrict13 ing plans from—

14 (1) limiting the number and type of health care

15 providers who participate in the plan;

16 (2) requiring enrollees to obtain health services

17 (other than emergency services) from participating

18 providers or from providers authorized by the plan;

19 (3) requiring enrollees to obtain a referral for

20 treatment by a specialized physician or health insti21 tution;

22 (4) establishing different payment rates for par23 ticipating providers and providers outside the plan;

24 (5) creating incentives to encourage the use of

25 participating providers; or
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1 (6) requiring the use of single-source suppliers

2 for pharmacy, non-serviced medical equipment, and

3 other health products and services.

4 (b) PREEMPTION OF STATE CORPORATE PRACTICE

5 ACTS.—Any State law related to the corporate practice

6 of medicine and to provider ownership of health plans or

7 other providers shall not apply to arrangements between

8 health plans that are not fee-for-service plans and their

9 participating providers.

10 SEC. 1522. CONTRACTS WITH CONSUMER PURCHASING CO11 OPERATIVES.

12 (a) CONTRACTS WITH COOPERATIVES.—A certified

13 health plan provided by a carrier shall enter into contracts

14 with each cooperative in the designated service area served

15 by the plan seeking such a contract.

16 (b) PRICING.—No health plan shall offer a rate to

17 a cooperative that is more than the filed per-capita com18 munity rate (as described in section 6000(a)(1)).

19 SEC. 1523. HEALTH PLAN ARRANGEMENTS WITH PROVID20 ERS.

21 (a) PROVIDER VERIFICATION.—Plans shall ensure

22 that all health care providers reimbursed by the plan are

23 authorized under State law to provide applicable services.

24 Each health plan shall—
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1 (1) verify the credentials of practitioners and

2 facilities;

3 (2) ensure that all providers participating in the

4 plan meet applicable State licensing and certification

5 standards;

6 (3) ensure that each health care provider par7 ticipating in the plan annually discloses information

8 regarding operations, ownership, finances, and

9 workforce necessary to evaluate the providers com10 pliance with this Act;

11 (4) oversee the quality and performance of par12 ticipating providers, consistent with section 1510;

13 and

14 (5) investigate and resolve consumer complaints

15 against participating providers.

16 (b) REQUIREMENTS FOR NONNETWORK PLANS.—

17 Each health plan must enter into such agreements or have

18 such other arrangements as may be necessary with an ap19 propriate mix, number, and distribution of qualified health

20 professionals to ensure the provision of all services covered

21 by the comprehensive benefit package to eligible individ22 uals enrolled in the plan.

23 (c) REQUIREMENTS FOR NETWORK PLANS.—A

24 health plan that requires coinsurance for an out-of-net-
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1 work item or service shall comply with the following re2 quirements:

3 (1) AGREEMENTS.—Each health plan must

4 enter into such agreements or have such other ar5 rangements as may be necessary with an appropriate

6 mix, number, and distribution of qualified health

7 professionals to ensure the provision of all services

8 covered by the comprehensive benefit package to eli9 gible individuals enrolled in the plan.

10 (2) GATEKEEPER.—With respect to each health

11 plan that utilizes a gatekeeper or similar process to

12 approve health care services prior to or following the

13 provision of such services, such gatekeepers shall in14 clude specialists or a care coordinator from an inter15 disciplinary team if medically necessary or appro16 priate given the nature, severity, or complexity of

17 each patient’s chronic disease, disorder, or other

18 health condition.

19 (3) CONTINUED CARE.—Each health plan shall

20 develop a process to ensure the access of enrollees

21 to—

22 (A) obstetrician-gynecologists for medically

23 necessary or appropriate primary care without

24 gatekeeper approval prior to each visit, and
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1 (B) relevant specialists for the continued

2 care of patient-enrollees with chronic diseases,

3 disorders, or health conditions without gate4 keeper approval prior to each visit, when the

5 continued care is medically indicated.

6 (4) ELIGIBLE CENTERS OF SPECIALIZED

7 TREATMENT EXPERTISE.—

8 (A) IN GENERAL.—Each health plan shall

9 provide access through agreements (as defined

10 in subparagraph (B)) to eligible centers of spe11 cialized treatment expertise (as defined in sub12 paragraphs (C) and (D)), including centers out13 side the health care coverage area or State, to

14 ensure that enrollees receive the specialized

15 treatment expertise of such centers when medi16 cally indicated. For children such specialized

17 treatment expertise shall specifically be in pedi18 atrics. A health plan shall be deemed to be in

19 accordance with this paragraph if the agree20 ment of such plan provides that, with respect to

21 health conditions within the specialized treat22 ment expertise of the center involved, the plan

23 will, at the enrollees request—

24 (i) refer medical cases involving such

25 conditions to such center;
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1 (ii) inform plan members of the avail2 ability of referral care; and

3 (iii) establish an appeal mechanism in

4 which plan participants may challenge de5 nials of referrals to such center or may re6 quest that their specialized care be pro7 vided at an alternative center as described

8 in subparagraph (E).

9 (B) AGREEMENTS.—An agreement be10 tween a health plan and a center of specialized

11 treatment expertise shall—

12 (i) be a written provider participation

13 agreement with the center; or

14 (ii) be a written agreement under

15 which the plan shall make payment to the

16 center such that services provided will be

17 reimbursable at the plan’s normal rate for

18 equivalent services or, with respect to a

19 plan that does not pay providers on a fee20 for-service basis, based on payment meth21 odologies and rates used under the applica22 ble methodology and rates or the most

23 closely applicable Medicare payment meth24 odologies under such program as the Sec25 retary may specify in regulations.
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1 (C) SPECIALIZED TREATMENT EXPER2 TISE.—For purposes of this subtitle, the term

3 ‘‘specialized treatment expertise’’, with respect

4 to the treatment of a health condition by an eli5 gible center, means expertise in diagnosing and

6 treating unusual diseases or conditions, diag7 nosing and treating diseases or conditions

8 which are unusually difficult to diagnose or

9 treat, and providing other specialized health

10 care.

11 (D) ELIGIBLE CENTERS.—Eligible centers

12 under this paragraph shall be designated to di13 agnose and provide care for patients with speci14 fied categories of conditions and diseases. Such

15 centers may include academic health centers

16 and teaching hospitals, and other designated

17 centers and systems of advanced care that meet

18 strict objective criteria established by the Sec19 retary including—

20 (i) specialized credentials for caring

21 for patients with the specified categories of

22 conditions and diseases;

23 (ii) staff with experience in caring for

24 a significant number of patients with the
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1 specified categories of conditions and dis2 eases; and

3 (iii) excellent measured outcomes in

4 the diagnosis and treatment of patients

5 with the specified categories of conditions

6 and diseases.

7 (E) ACCESS TO ALTERNATIVE CENTERS.—

8 (i) IN GENERAL.—Patients in need of

9 specialized treatment expertise may re10 quest that specialized care be provided at

11 an alternative center. As used in this sub12 paragraph, the term ‘‘alternative center’’

13 means a center of specialized treatment ex14 pertise with which the health plan of the

15 patient does not have a written agreement

16 as described in subparagraph (B). Plans

17 shall have a procedure for making deci18 sions regarding such requests and have an

19 appeals process for patients who are re20 fused coverage at an alternative center for

21 specialized treatment.

22 (ii) REIMBURSEMENT.—Care provided

23 at an alternative center shall be reim24 bursed by the health plan at the plan’s

25 normal rate for equivalent services or, with
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1 respect to a plan that does not pay provid2 ers on a fee-for-service basis, based on pay3 ment methodologies and rates used under

4 the applicable methodology and rates or

5 the most closely applicable Medicare pay6 ment methodologies under such program

7 as the Secretary may specify in regula8 tions.

9 (F) LIMITATION.—A State may not estab10 lish rules or policies that require or encourage

11 health plans to give preference to centers of

12 specialized treatment expertise within the State

13 or within the health care coverage area. A

14 health plan shall not prohibit an academic

15 health center, teaching hospital, or other center

16 for specialized care with which it contracts from

17 contracting with one or more other plans.

18 (d) EMERGENCY AND URGENT CARE SERVICES.—

19 (1) IN GENERAL.—Each health plan must cover

20 emergency and urgent care services provided to en21 rollees, without regard to whether or not the pro22 vider furnishing such services has a contractual (or

23 other) arrangement with the plan to provide items or

24 services to enrollees of the plan and in the case of
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1 emergency services without regard to prior author2 ization.

3 (2) PAYMENT AMOUNTS.—In the case of emer4 gency and urgent care provided to an enrollee out5 side of a health plan’s service area, the payment

6 amounts of the plan shall be based on the applicable

7 fee schedule described in subsection (e).

8 (e) APPLICATION OF FEE SCHEDULE.—

9 (1) IN GENERAL.—Subject to paragraphs (2)

10 and (3), each qualified health plan that provides for

11 payment for services on a fee-for-service basis and

12 has not established an agreement or contractual ar13 rangement with providers specifying a basis for pay14 ment shall make such payment to such providers

15 under a fee schedule established by the plan.

16 (2) RULE OF CONSTRUCTION.—Nothing in the

17 paragraph (1) shall be construed to prevent a health

18 plan from providing for a different basis or level of

19 payment than the fee schedule established under

20 such paragraph as part of a contractual agreement

21 with participating providers under the plan.

22 (3) REDUCTION FOR PROVIDERS VOLUNTARILY

23 REDUCING CHARGES.—If a provider under a health

24 plan voluntarily agrees to reduce the amount

25 charged to an individual enrolled under the plan, the
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1 plan shall reduce the amount otherwise determined

2 under the fee schedule applicable under paragraph

3 (1) by the proportion of the reduction in such

4 amount charged.

5 (4) REDUCTION FOR NONCOMPLYING PLAN.—

6 Each community-rated health plan that is a non7 complying plan shall provide for reductions in pay8 ments under the fee schedule to providers that are

9 not participating providers in accordance with sec10 tion 6012(b).

11 (f) PROHIBITION AGAINST BALANCE BILLING; RE12 QUIREMENT OF DIRECT BILLING.—

13 (1) PROHIBITION OF BALANCE BILLING.—A

14 provider may not charge or collect from an enrollee

15 a fee in excess of the applicable payment amount

16 under the applicable fee schedule under subsection

17 (e), and the health plan and its enrollees are not le18 gally responsible for payment of any amount in ex19 cess of such applicable payment amount for items

20 and services covered under the comprehensive bene21 fits package.

22 (2) DIRECT BILLING.—

23 (A) IN GENERAL.—A provider may not

24 charge or collect from an enrollee amounts that

25 are payable by the health plan (including any
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1 cost sharing reduction assistance payable by the

2 plan) and shall submit charges to such plan in

3 accordance with any applicable requirements of

4 subtitle B of title V (relating to health informa5 tion systems).

6 (B) PROHIBITION.—An individual or entity

7 that performs ancillary health services, such as

8 clinical laboratory services or other services as

9 defined by the Secretary, may not present or

10 cause to be presented, a claim, bill, or demand

11 for payment to any person other than the indi12 vidual receiving such services, or to the health

13 plan of the individual, except that the Secretary

14 may by regulation establish appropriate excep15 tions to the requirement of this subparagraph.

16 (3) COVERAGE UNDER AGREEMENTS WITH

17 PLANS.—The agreements or other arrangements en18 tered into under section 1514(c)(2) between a health

19 plan and the health care providers providing the

20 comprehensive benefit package to individuals en21 rolled with the plan shall prohibit a provider from

22 engaging in balance billing described in paragraph

23 (1).

24 (4) RULE OF CONSTRUCTION.—Nothing in this

25 Act shall be construed to—
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1 (A) require or force an individual to re2 ceive health care solely through the individual’s

3 health plan; or

4 (B) prohibit any individual from privately

5 contracting with any health care provider and

6 paying for the treatment or service provided by

7 such provider on a cash basis or any other basis

8 as agreed to between the individual and the

9 provider.

10 (g) IMPOSITION OF PARTICIPATING PROVIDER AS11 SESSMENT IN CASE OF A NONCOMPLYING PLAN.—Each

12 community-rated health plan shall provide that if the plan

13 is a noncomplying plan for a year under section 6012, pay14 ments to participating providers shall be reduced by the

15 applicable network reduction percentage under such sec16 tion.

17 (h) PROVIDERS OUTSIDE AREA.—A State may not

18 limit the ability of any plan to contract with a provider

19 of health services located outside of the geographic bound20 aries of a health care coverage area or the State, so long

21 as the provider is authorized under State law to provide

22 such services.

23 SEC. 1524. HEALTH SECURITY CARDS.

24 Each health plan shall issue a health security card

25 to each individual enrolled in such plan in accordance with
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1 subtitle B of title V and regulations promulgated by the

2 Board.

3 SEC. 1525. UTILIZATION MANAGEMENT PROTOCOLS AND

4 PHYSICIAN INCENTIVE PLANS.

5 (a) REQUIRING CONSUMER DISCLOSURE.—Each

6 health plan shall disclose to enrollees (and prospective en7 rollees) and providers the protocols and financial incen8 tives used by the plan, including utilization management

9 protocols and physician incentive plans (as defined in sub10 section (b)), for controlling utilization and costs.

11 (b) UTILIZATION MANAGEMENT.—Each health plan

12 shall provide that all treatment assessment and placement

13 decisions, or review of such decisions, shall be made by

14 personnel—

15 (1) licensed, certified or otherwise credentialed

16 by the State in the field for which the assessment

17 or treatment is sought; and

18 (2) qualified to review utilization of the specific

19 treatment delivered.

20 (c) PHYSICIAN INCENTIVE PLAN DEFINED.—As used

21 in this section, the term ‘‘physician incentive plan’’ means

22 any compensation arrangement between a health plan, a

23 utilization management organization or other organization

24 and a physician or physician group that may directly or

25 indirectly have the effect of reducing or limiting services
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1 provided with respect to individuals enrolled with the orga2 nization.

3 (d) LIMITATIONS ON PHYSICIAN INCENTIVE

4 PLANS.—A health plan, or any provider or group of pro5 viders with whom the health plan contracts, may not oper6 ate a physician incentive plan (as defined in subsection

7 (c)) unless the following requirements are complied with:

8 (1) The physician incentive plan provides that

9 no specific payment may be made directly or indi10 rectly under the plan to a physician or physician

11 group or utilization management organization as an

12 inducement to reduce or limit medically necessary or

13 appropriate services provided to individuals enrolled

14 with the organization.

15 (2) If the health plan places a physician or phy16 sician group at financial risk for services not pro17 vided by the physician or physician group, the physi18 cian incentive plan shall provide stop-loss protection

19 for the physician or physician group that is adequate

20 and appropriate, based on standards developed by

21 the Board that take into account the number of phy22 sicians placed at such financial risk in the group or

23 under the plan and the number of individuals en24 rolled with the organization who receive services

25 from the physician or the physician group.
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1 (3) The health plan and any physician or physi2 cian group with whom the health plan contracts

3 shall provide the Board with descriptive information

4 regarding the physician incentive plan, sufficient to

5 permit the Board to determine whether the plan is

6 in compliance with the requirements of this sub7 section.

8 PART 2—REQUIREMENTS RELATING TO

9 ESSENTIAL COMMUNITY PROVIDERS

10 SEC. 1531. HEALTH PLAN REQUIREMENT.

11 (a) IN GENERAL.—Each health plan shall, with re12 spect to each electing essential community provider (as de13 fined in subsection (d), other than a provider of school

14 health services) located within the plan’s service area, ei15 ther—

16 (1) enter into a written provider participation

17 agreement (described in subsection (b)) with the

18 provider, or

19 (2) enter into a written agreement under which

20 the plan shall make payment to the provider in ac21 cordance with subsection (c).

22 (b) PARTICIPATION AGREEMENT.—A participation

23 agreement between a health plan and an electing essential

24 community provider under this subsection shall provide

25 that the health plan agrees to treat the provider in accord-
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1 ance with terms and conditions at least as favorable as

2 those that are applicable to other providers participating

3 in the health plan with respect to each of the following:

4 (1) The scope of services for which payment is

5 made by the plan to the provider.

6 (2) The rate of payment for covered care and

7 services.

8 (3) The availability of financial incentives to

9 participating providers.

10 (4) Limitations on financial risk provided to

11 other participating providers.

12 (5) Assignment of enrollees to participating

13 providers.

14 (6) Access by the provider’s patients to provid15 ers in medical specialties or subspecialties participat16 ing in the plan.

17 (c) PAYMENTS FOR PROVIDERS WITHOUT PARTICI18 PATION AGREEMENTS.—

19 (1) IN GENERAL.—Payment in accordance with

20 this subsection is payment based, as elected by the

21 electing essential community provider, either—

22 (A) on the fee schedule developed by the

23 State; or

24 (B) on payment methodologies and rates

25 used under the applicable Medicare payment
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1 methodology and rates (or the most closely ap2 plicable methodology under such program as

3 the Secretary of Health and Human Services

4 specifies in regulations).

5 (2) SPECIAL RULE FOR FEDERALLY QUALIFIED

6 HEALTH CENTERS.—With respect to each federally

7 qualified health center (as such term is defined in

8 section 1861(aa) of the Social Security Act) that is

9 an essential community provider, a health plan shall

10 make payments based on the reasonable cost rates

11 applicable under section 1833(a)(3) of the Social Se12 curity Act, except that the federally qualified health

13 center may accept other payment amounts.

14 (3) NO APPLICATION OF GATE-KEEPER LIMITA15 TIONS.—Payment in accordance with this subsection

16 may be subject to utilization review, but may not be

17 subject to otherwise applicable gate-keeper require18 ments under the plan.

19 (d) ELECTION.—

20 (1) IN GENERAL.—In this part, the term ‘‘elect21 ing essential community provider’’ means, with re22 spect to a health plan, an essential community pro23 vider that elects this subpart to apply to the health

24 plan.
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1 (2) FORM OF ELECTION.—An election under

2 this subsection shall be made in a form and manner

3 specified by the Secretary, and shall include notice

4 to the health plan involved. Such an election may be

5 made annually with respect to a health plan, except

6 that the plan and provider may agree to make such

7 an election on a more frequent basis.

8 (e) SPECIAL RULE FOR PROVIDERS OF SCHOOL

9 HEALTH SERVICES.—A health plan shall pay, to each pro10 vider of school health services located in the plan’s service

11 area an amount determined by the Secretary for such

12 services furnished to enrollees of the plan.

13 SEC. 1532. RECOMMENDATION ON CONTINUATION OF RE14 QUIREMENT.

15 (a) STUDIES.—In order to prepare recommendations

16 under subsection (b), the Secretary shall conduct studies

17 regarding essential community providers, including studies

18 that assess—

19 (1) the definition of essential community pro20 vider,

21 (2) the sufficiency of the funding levels for pro22 viders, including the special rule for federally quali23 fied health centers under section 1531(c)(2), for

24 both covered and uncovered benefits under this Act,
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1 (3) the effects of contracting requirements re2 lating to such providers on such providers, health

3 plans, and enrollees,

4 (4) the impact of the payment rules for such

5 providers, and

6 (5) the impact of national health reform on

7 such providers.

8 (b) RECOMMENDATIONS TO CONGRESS.—The Sec9 retary shall submit to Congress, by not later than March

10 1, 2001, specific recommendations respecting whether,

11 and to what extent, section 1531 should continue to apply

12 to some or all essential community providers. Such rec13 ommendations may include a description of the particular

14 types of such providers and circumstances under which

15 such section should continue to apply.

16 Subtitle G—Federal

17 Responsibilities

18 PART 1—NATIONAL HEALTH BOARD

19 Subpart A—Establishment of National Health Board

20 SEC. 1601. CREATION OF NATIONAL HEALTH BOARD; MEM21 BERSHIP.

22 (a) IN GENERAL.—There is hereby created in the Ex23 ecutive Branch a National Health Board.
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1 (b) COMPOSITION.—The Board is composed of 9

2 members appointed by the President, by and with the ad3 vice and consent of the Senate.

4 (c) CHAIR.—The President shall designate one of the

5 members as chair. The chair serves a term concurrent

6 with that of the President. The chair may serve a maxi7 mum of 3 terms. The chair shall serve as the chief execu8 tive officer of the Board.

9 (d) TERMS.—

10 (1) IN GENERAL.—Except as provided in para11 graphs (2) and (4), the term of each member of the

12 Board, except the chair, is 4 years and begins when

13 the term of the predecessor of that member ends.

14 (2) INITIAL TERMS.—The initial terms of the

15 members of the Board (other than the chair) first

16 taking office after the date of the enactment of this

17 Act, shall expire as designated by the President,

18 three at the end of one year, three at the end of two

19 years, and three at the end of three years.

20 (3) REAPPOINTMENT.—A member (other than

21 the chair) may be reappointed for one additional

22 term.

23 (4) CONTINUATION IN OFFICE.—Upon the expi24 ration of a term of office, a member shall continue

25 to serve until a successor is appointed and qualified.
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1 (e) VACANCIES.—

2 (1) IN GENERAL.—Whenever a vacancy shall

3 occur, other than by expiration of term, a successor

4 shall be appointed by the President, by and with the

5 consent of the Senate, to fill such vacancy, and is

6 appointed for the remainder of the term of the pred7 ecessor.

8 (2) NO IMPAIRMENT OF FUNCTION.—A vacancy

9 in the membership of the Board does not impair the

10 authority of the remaining members to exercise all

11 of the powers of the Board.

12 (3) ACTING CHAIR.—The Board may designate

13 a Member to act as chair during any period in which

14 there is no chair designated by the President.

15 (f) MEETINGS; QUORUM.—

16 (1) MEETINGS.—At meetings of the Board the

17 chair shall preside, and in the absence of the chair,

18 the Board shall elect a member to act as chair pro

19 tempore.

20 (2) QUORUM.—Four members of the Board

21 shall constitute a quorum thereof.

22 SEC. 1602. QUALIFICATIONS OF BOARD MEMBERS.

23 (a) CITIZENSHIP.—Each member of the Board shall

24 be a citizen of the United States.
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1 (b) BASIS OF SELECTION.—Board members will be

2 selected on the basis of their experience and expertise in

3 relevant subjects, including the practice of medicine, nurs4 ing, or other clinical practices, health care financing and

5 delivery, state health systems, consumer protection, busi6 ness, law, and delivery of care to vulnerable populations,

7 including children, individuals with disabilities, and indi8 viduals in rural and urban underserved areas.

9 (c) EXCLUSIVE EMPLOYMENT.—During the term of

10 appointment, Board members shall serve as employees of

11 the Federal Government and shall hold no other employ12 ment.

13 (d) PROHIBITION OF CONFLICT OF INTEREST.—A

14 member of the Board may not have a pecuniary interest

15 in or hold an official relation to any health care plan,

16 health care provider, insurance company, pharmaceutical

17 company, medical equipment company, or other affected

18 industry. Before entering upon the duties as a member

19 of the Board, the member shall certify under oath compli20 ance with this requirement.

21 (e) POST-EMPLOYMENT RESTRICTIONS.—After leav22 ing the Board, former members are subject to post-em23 ployment restrictions applicable to comparable Federal

24 employees.
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1 (f) COMPENSATION OF BOARD MEMBERS.—Each

2 member of the Board (other than the chair) shall receive

3 an annual salary at the annual rate payable from time

4 to time for level IV of the Executive Schedule. The chair

5 of the Board, during the period of service as chair, shall

6 receive an annual salary at the annual rate payable from

7 time to time for level III of the Executive Schedule.

8 SEC. 1603. GENERAL DUTIES AND RESPONSIBILITIES.

9 (a) COMPREHENSIVE BENEFIT PACKAGE.—

10 (1) INTERPRETATION.—The Board shall inter11 pret the comprehensive benefit package, adjust the

12 delivery of preventive services under section 1153,

13 and take such steps as may be necessary to assure

14 that the comprehensive benefit package is available

15 on a uniform national basis to all eligible individuals.

16 (2) FISCAL ANALYSIS BY NATIONAL HEALTH

17 BOARD.—

18 (A) IN GENERAL.—Not later than 6

19 months prior to the effective date of this Act,

20 the National Health Board, in cooperation with

21 the Congressional Budget Office, shall under22 take and conclude a fiscal analysis of—

23 (i) the cost of the comprehensive ben24 efits package under section 1101;
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1 (ii) the ability of the health care sys2 tem’s cost containment mechanisms, as de3 fined in this Act, to control health care

4 spending and Federal health expenditures

5 based on current economic projections; and

6 (iii) the impact of new health care fi7 nancial obligations under this Act on the

8 Federal budget deficit, in current economic

9 terms, and the source of any projected

10 spending increases, including those de11 scribed in clauses (i) and (ii), provider re12 imbursement rates, and administrative ex13 penses.

14 (B) SUBMISSION OR REPORT.—The Board

15 shall prepare and submit a preliminary analysis

16 under this paragraph not later than January 1,

17 1997, and submit a final report not later than

18 July 1, 1997, and July 1 of each year there19 after.

20 (C) REQUIREMENT OF REPORT.—In a re21 port submitted under this paragraph, the Board

22 shall specify the source and amount of any Fed23 eral budget deficit increases in order that Con24 gress may more adequately assess other sources

25 of funding or spending reductions that may be
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1 appropriate to maintain the benefit package

2 without adjustments.

3 (D) REPORT.—Based on the fiscal analysis

4 contained in a report under this paragraph, if

5 the Board concludes that the Federal govern6 ment’s obligation to contribute to the health

7 care system (through the provision of subsidies

8 to employers and families) will result in pre9 viously unprojected increases in the Federal

10 budget deficit, the Board shall report and make

11 corrective recommendations to the President

12 and the Congress.

13 (3) REPORT AND RECOMMENDATIONS.—

14 (A) IN GENERAL.—If determined to be

15 necessary by the Board, in consultation with

16 the Congressional Budget Office, to prevent sig17 nificant Federal deficit increases attributable to

18 the provisions of this Act (or subsequent

19 amendments to this Act), the Board shall in20 clude in the reports under paragraph (2)(B),

21 adjustments in specific aspects of the com22 prehensive benefits package (such as scope of

23 benefits, co-payments, deductibles, and phase24 in’s for additional benefits) to achieve savings
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1 consistent with the findings in a report under

2 paragraph (2).

3 (B) NO BOARD ADJUSTMENTS.—If the re4 port of the Board under paragraph (2) contains

5 no adjustments in the benefit package, the ben6 efit package described in section 1101 shall be7 come effective, except that the President may

8 take action under section 9100(e)(4) as the

9 President determines appropriate.

10 (C) BOARD ADJUSTMENTS.—If the report

11 of the Board under paragraph (2) contains ad12 justments in the benefit package, the adjust13 ments shall apply unless a joint resolution dis14 approving the adjustments is passed by Con15 gress within 45 legislative days of the date of

16 the submission of the report. The provisions of

17 section 6006(d) shall apply to Congressional

18 consideration of a joint resolution considered

19 under this paragraph.

20 (D) AUTHORITY OF PRESIDENT.—The re21 quirements of this section shall not be limited

22 in any way by section 9100(e)(4) or any other

23 provision of this Act.

24 (4) SCOPE OF RECOMMENDATIONS.—The

25 Board may make adjustments in the services covered
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1 under the benefit package, including any periodicity

2 tables; copayment, deductible, and out-of-pocket re3 quirements; and phase-in schedules for additional

4 health benefits. The Board may not require co-pay5 ments for preventive health services, but may re6 classify services described in section 1101 as preven7 tive services.

8 (5) RECOMMENDATIONS.—The Board may rec9 ommend to the President and the Congress appro10 priate revisions to such package. Such recommenda11 tions may reflect changes in technology, health care

12 needs, health care costs, and methods of service de13 livery.

14 (b) ADMINISTRATION OF COST CONTAINMENT PRO15 VISIONS.—The Board shall oversee the cost containment

16 requirements of subtitle A of title VI and certify compli17 ance with such requirements.

18 (c) COVERAGE AND FAMILIES.—The Board shall de19 velop and implement standards relating to the eligibility

20 of individuals for coverage in applicable health plans under

21 subtitle A of title I and may provide such additional excep22 tions and special rules relating to the treatment of family

23 members under section 1012 as the Board finds appro24 priate.
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1 (d) QUALITY MANAGEMENT AND IMPROVEMENT.—

2 The Board shall establish and have ultimate responsibility

3 for a performance-based system of quality management

4 and improvement as required by section 5001.

5 (e) INFORMATION SYSTEM AND INFORMATION RE6 LATED FUNCTIONS.—

7 (1) IN GENERAL.—The Board shall—

8 (A) develop and implement standards to

9 establish a national health information system

10 to measure quality as required by section 5101;

11 (B) provide model format and content re12 quirements for summary plan descriptions; and

13 (C) provide model format and content re14 quirements for comparative plan brochures

15 under section 1205.

16 (2) INFORMATION RELATED FUNCTIONS.—

17 (A) DESIGNATION.—The Board shall pro18 vide for the use of entities in the national

19 health data network to perform information re20 lated functions under this section with respect

21 to employers, States, contracting entities, and

22 consumer purchasing cooperatives.

23 (B) FUNCTIONS.—The functions referred

24 to in subparagraph (A) shall include—
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1 (i) receipt of information submitted by

2 employers under section 1702,

3 (ii) from the information received,

4 transmittal to States, and

5 (iii) such other functions as the Board

6 specifies.

7 (f) PARTICIPATING STATE REQUIREMENTS.—Con8 sistent with the provisions of subtitle C, the Board shall—

9 (1) establish requirements for participating

10 States,

11 (2) monitor State compliance with those re12 quirements,

13 (3) provide technical assistance, and

14 in a manner that ensures access to the comprehensive ben15 efit package for all eligible individuals.

16 (g) DEVELOPMENT OF PREMIUM CLASS FACTORS.—

17 The Board shall establish premium class factors under

18 subpart D of this part.

19 (h) DEVELOPMENT OF REINSURANCE AND RISK-AD20 JUSTMENT METHODOLOGY.—The Board shall develop a

21 methodology for the reinsurance and risk-adjustment of

22 premium payments to community-rated health plans in ac23 cordance with subpart E of this part.

24 (i) FINANCIAL REQUIREMENTS.—The Board shall es25 tablish minimum capital requirements and requirements
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1 for guaranty funds and financial reporting and auditing

2 standards under subpart F of this part.

3 (j) STANDARDS FOR HEALTH PLAN GRIEVANCE

4 PROCEDURES.—The Board shall establish standards for

5 health plan grievance procedures that are used by enroll6 ees in pursuing complaints.

7 (k) NATIONAL OPEN ENROLLMENT PERIODS.—The

8 Board shall specify those periods which shall include a na9 tional, uniform open enrollment period, in which eligible

10 individuals may change the applicable health plan in which

11 they enrolled.

12 (l) FIDUCIARY REQUIREMENTS.—The Board shall, in

13 consultation with the Secretary of Labor, develop and pro14 mulgate fiduciary requirements for the management of

15 funds by States, plans, cooperatives, and employers.

16 SEC. 1604. ANNUAL REPORT.

17 (a) IN GENERAL.—The Board shall prepare and send

18 to the President and Congress an annual report address19 ing the overall implementation of the new health care sys20 tem.

21 (b) MATTERS TO BE INCLUDED.—The Board shall

22 include in each annual report under this section the follow23 ing:

24 (1) Information on Federal and State imple25 mentation.
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1 (2) Data related to quality improvement.

2 (3) Recommendations or changes in the admin3 istration, regulation and laws related to health care

4 and coverage.

5 (4) A full account of all actions taken during

6 the previous year.

7 SEC. 1605. POWERS.

8 (a) STAFF; CONTRACT AUTHORITY.—The Board

9 shall have authority, subject to the provisions of the civil10 service laws and chapter 51 and subchapter III of chapter

11 53 of title 5, United States Code, to appoint such officers

12 and employees as are necessary to carry out its functions.

13 To the extent provided in advance in appropriations Acts,

14 the Board may contract with any person (including an

15 agency of the Federal Government) for studies and analy16 sis as required to execute its functions. Any employee of

17 the Executive Branch may be detailed to the Board to as18 sist the Board in carrying out its duties.

19 (b) ESTABLISHMENT OF ADVISORY COMMITTEES.—

20 The Board may establish advisory committees, including

21 committees to advise the Board on the health care needs

22 of disadvantaged and vulnerable populations, including

23 children and individuals with physical, cognitive and other

24 mental disabilities.
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1 (c) ACCESS TO INFORMATION.—The Board may se2 cure directly from any department or agency of the United

3 States information necessary to enable it to carry out its

4 functions, to the extent such information is otherwise

5 available to a department or agency of the United States.

6 Upon request of the chair, the head of that department

7 or agency shall furnish that information to the Board.

8 (d) DELEGATION OF AUTHORITY.—Except as other9 wise provided in this Act, the Board may delegate any

10 function to such officers and employees as the Board may

11 designate and may authorize such successive redelegations

12 of such functions with the Board as the Board deems to

13 be necessary or appropriate. No delegation of functions

14 by the Board shall relieve the Board of responsibility for

15 the administration of such functions.

16 (e) RULEMAKING.—The National Health Board is

17 authorized to establish such rules as may be necessary to

18 carry out this Act.

19 SEC. 1606. FUNDING.

20 (a) AUTHORIZATION OF APPROPRIATIONS.—There

21 are authorized to be appropriated to the Board such sums

22 as may be necessary for fiscal years 1994, 1995, 1996,

23 1997, and 1998.

24 (b) SUBMISSION OF BUDGET.—Under the procedures

25 of chapter 11 of title 31, United States Code, the budget
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1 for the Board for a fiscal year shall be reviewed by the

2 Director of the Office of Management and Budget and

3 submitted to the Congress as part of the President’s sub4 mission of the Budget of the United States for the fiscal

5 year.

6 Subpart B—Responsibilities Relating to Review and

7 Approval of State Systems

8 SEC. 1611. FEDERAL REVIEW AND ACTION ON STATE SYS9 TEMS.

10 (a) APPROVAL OF STATE SYSTEMS BY NATIONAL

11 BOARD.—

12 (1) IN GENERAL.—The National Health Board

13 shall approve a State health care system for which

14 a document is submitted under section 1200(b) un15 less the Board finds that the system (as set forth in

16 the document) does not (or will not) provide for the

17 State meeting the responsibilities for participating

18 States under this Act.

19 (2) REGULATIONS.—The Board shall issue reg20 ulations, not later than July 1, 1995, prescribing the

21 requirements for State health care systems under

22 subtitle C, except that in the case of a document

23 submitted under section 1200(b) before the date of

24 issuance of such regulations, the Board shall take
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1 action on such document notwithstanding the fact

2 that such regulations have not been issued.

3 (3) NO APPROVAL PERMITTED FOR YEARS

4 PRIOR TO 1996.—The Board may not approve a

5 State health care system under this subpart for any

6 year prior to 1996.

7 (b) REVIEW OF COMPLETENESS OF DOCUMENTS.—

8 (1) IN GENERAL.—If a State submits a docu9 ment under subsection (a)(1), the Board shall notify

10 the State, not later than 7 working days after the

11 date of submission, whether or not the document is

12 complete and provides the Board with sufficient in13 formation to approve or disapprove the document.

14 (2) ADDITIONAL INFORMATION ON INCOMPLETE

15 DOCUMENT.—If the Board notifies a State that the

16 State’s document is not complete, the State shall be

17 provided such additional period (not to exceed 45

18 days) as the Board may by regulation establish in

19 which to submit such additional information as the

20 Board may require. Not later than 7 working days

21 after the State submits the additional information,

22 the Board shall notify the State respecting the com23 pleteness of the document.

24 (c) ACTION ON COMPLETED DOCUMENTS.—
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1 (1) IN GENERAL.—The Board shall make a de2 termination (and notify the State) on whether the

3 State’s document provides for implementation of a

4 State system that meets the applicable requirements

5 of subtitle C—

6 (A) in the case of a State that did not re7 quire the additional period described in sub8 section (b)(2) to file a complete document, not

9 later than 90 days after notifying a State under

10 subsection (b) that the State’s document is

11 complete, or

12 (B) in the case of a State that required the

13 additional period described in subsection (b)(2)

14 to file a complete document, not later than 90

15 days after notifying a State under subsection

16 (b) that the State’s document is complete.

17 (2) REVIEW OF COVERAGE AREA.—The Board

18 shall review State designation of health care cov19 erage area boundaries to determine whether such

20 boundaries comply with sections 1202 and 1914,

21 and in particular, the requirements of such sections

22 concerning non-discrimination in the establishment

23 of coverage area boundaries.

24 (3) PLANS DEEMED APPROVED.—If the Board

25 does not meet the applicable deadline for making a
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1 determination and providing notice under paragraph

2 (1) with respect to a State’s document, the Board

3 shall be deemed to have approved the State’s docu4 ment for purposes of this Act.

5 (d) OPPORTUNITY TO RESPOND TO REJECTED DOC6 UMENT.—

7 (1) IN GENERAL.—If (within the applicable

8 deadline under subsection (c)(1)) the Board notifies

9 a State that its document does not provide for im10 plementation of a State system that meets the appli11 cable requirements of subtitle C, the Board shall

12 provide the State with a period of 30 days in which

13 to submit such additional information and assur14 ances as the Board may require.

15 (2) DEADLINE FOR RESPONSE.—Not later than

16 30 days after receiving such additional information

17 and assurances, the Board shall make a determina18 tion (and notify the State) on whether the State’s

19 document provides for implementation of a State

20 system that meets the applicable requirements of

21 subtitle C.

22 (3) PLAN DEEMED APPROVED.—If the Board

23 does not meet the deadline established under para24 graph (2) with respect to a State, the Board shall
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1 be deemed to have approved the State’s document

2 for purposes of this Act.

3 (e) APPROVAL OF PREVIOUSLY TERMINATED

4 STATES.—If the Board has approved a State system

5 under this part for a year but subsequently terminated

6 the approval of the system under section 1612(b)(2), the

7 Board shall approve the system for a succeeding year if

8 the State—

9 (1) demonstrates to the satisfaction of the

10 Board that the failure that formed the basis for the

11 termination no longer exists, and

12 (2) provides reasonable assurances that the

13 types of actions (or inactions) which formed the

14 basis for such termination will not recur.

15 (f) REVISIONS TO STATE SYSTEM.—

16 (1) SUBMISSION.—A State may revise a system

17 approved for a year under this section, except that

18 such revision shall not take effect unless the State

19 has submitted to the Board a document describing

20 such revision and the Board has approved such revi21 sion.

22 (2) ACTIONS ON AMENDMENTS.—Not later than

23 60 days after a document is submitted under para24 graph (1), the Board shall make a determination

25 (and notify the State) on whether the implementa-
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1 tion of the State system, as proposed to be revised,

2 meets the applicable requirements of subtitle C. If

3 the Board fails to meet the requirement of the pre4 ceding sentence, the Board shall be deemed to have

5 approved the implementation of the State system as

6 proposed to be revised.

7 (3) REJECTION OF AMENDMENTS.—Subsection

8 (d) shall apply to an amendment submitted under

9 this subsection in the same manner as it applies to

10 a completed document submitted under subsection

11 (b).

12 (g) NOTIFICATION OF NON-PARTICIPATING

13 STATES.—If a State fails to submit a document for a

14 State system by the deadline referred to in section 1200,

15 or such a document is not approved under subsection (c),

16 the Board shall immediately notify the Secretary of Health

17 and Human Services of the State’s failure for purposes

18 of applying subpart C in that State.

19 SEC. 1612. FAILURE OF PARTICIPATING STATES TO MEET

20 CONDITIONS FOR COMPLIANCE.

21 (a) IN GENERAL.—In the case of a participating

22 State, if the Board determines that the operation of the

23 State system under subtitle C fails to meet the applicable

24 requirements of this Act, sanctions shall apply against the

25 State in accordance with subsection (b).
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1 (b) TYPE OF SANCTION APPLICABLE.—The sanctions

2 applicable under this part are as follows:

3 (1) If the Board determines that the State’s

4 failure does not substantially jeopardize the ability

5 of eligible individuals in the State to obtain coverage

6 for the comprehensive benefit package the Board

7 shall notify the Secretary who shall reduce payment

8 with respect to the State in accordance with section

9 1613.

10 (2) If the Board determines that the failure

11 substantially jeopardizes the ability of eligible indi12 viduals in the State to obtain coverage for the com13 prehensive benefit package—

14 (A) the Board shall terminate its approval

15 of the State system; and

16 (B) the Board shall notify the Secretary of

17 Health and Human Services, who shall assume

18 the responsibilities described in section 1622.

19 (c) TERMINATION OF SANCTION.—

20 (1) COMPLIANCE BY STATE.—A State against

21 which a sanction is imposed may submit information

22 at any time to the Board to demonstrate that the

23 failure that led to the imposition of the sanction has

24 been corrected.
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1 (2) TERMINATION OF SANCTION.—If the Board

2 determines that the failure that led to the imposition

3 of a sanction has been corrected in the case of the

4 sanction described in subsection (b)(1)(A), the

5 Board shall notify the Secretary of Health and

6 Human Services.

7 (d) PROTECTION OF ACCESS TO BENEFITS.—The

8 Board and the Secretary of Health and Human Services

9 shall exercise authority to take actions under this section

10 with respect to a State only in a manner that assures the

11 continuous coverage of eligible individuals enrolled in com12 munity-rated health plans.

13 SEC. 1613. REDUCTION IN PAYMENTS FOR HEALTH PRO14 GRAMS BY SECRETARY OF HEALTH AND

15 HUMAN SERVICES.

16 (a) IN GENERAL.—Upon receiving notice from the

17 Board under section 1612(b)(1)(B), the Secretary of

18 Health and Human Services shall reduce the amount of

19 any of the payments described in subsection (b) that would

20 otherwise be made to individuals and entities in the State

21 by such amount as the Secretary determines to be appro22 priate.

23 (b) PAYMENTS DESCRIBED.—The payments de24 scribed in this subsection are as follows:
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1 (1) Payments to academic health centers in the

2 State under subtitle B of title III.

3 (2) Payments to individuals and entities in the

4 State for health research activities under section 301

5 and title IV of the Public Health Service Act.

6 (3) Payments to hospitals in the State under

7 part 4 of subtitle E of title III (relating to payments

8 to hospitals serving vulnerable populations)

9 SEC. 1614. REVIEW OF FEDERAL DETERMINATIONS.

10 Any State affected by a determination by the Board

11 under this subpart may appeal such determination in ac12 cordance with section 5231.

13 SEC. 1615. FEDERAL SUPPORT FOR STATE IMPLEMENTA14 TION.

15 (a) PLANNING GRANTS.—

16 (1) IN GENERAL.—Not later than 90 days after

17 the date of the enactment of this Act, the Secretary

18 shall make available to each State a planning grant

19 to assist a State in the development of a health care

20 system to become a participating State under sub21 title C.

22 (2) FORMULA.—The Secretary shall establish a

23 formula for the distribution of funds made available

24 under this subsection.
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1 (3) AUTHORIZATION OF APPROPRIATIONS.—

2 There are authorized to be appropriated

3 $50,000,000 in each of fiscal years 1995 and 1996

4 for grants under this subsection.

5 (b) GRANTS FOR START-UP SUPPORT.—

6 (1) IN GENERAL.—The Secretary shall make

7 available to States, upon their enacting enabling leg8 islation to become participating States, grants to as9 sist in the establishment of consumer purchasing co10 operatives.

11 (2) FORMULA.—The Secretary shall establish a

12 formula for the distribution of funds made available

13 under this subsection.

14 (3) STATE MATCHING FUNDS REQUIRED.—

15 Funds are payable to a State under this subsection

16 only if the State provides assurances, satisfactory to

17 the Secretary, that amounts of State funds (at least

18 equal to the amount made available under this sub19 section) are expended for the purposes described in

20 paragraph (1).

21 (4) AUTHORIZATION OF APPROPRIATIONS.—

22 There are authorized to be appropriated

23 $313,000,000 for fiscal year 1996, $625,000,000 for

24 fiscal year 1997, and $313,000,000 for fiscal year

25 1998 for grants under this subsection.
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1 Subpart C—Responsibilities in Absence of State

2 Systems

3 SEC. 1621. APPLICATION OF SUBPART.

4 (a) INITIAL APPLICATION.—This subpart shall apply

5 with respect to a State as of January 1, 1998, unless—

6 (1) the State submits a document for a State

7 system under section 1611(a)(1) by July 1, 1997,

8 and

9 (2) the Board determines under section 1611

10 that such system meets the requirements of part 1

11 of subtitle C.

12 (b) TERMINATION OF APPROVAL OF SYSTEM OF PAR13 TICIPATING STATE.—In the case of a participating State

14 for which the Board terminates approval of the State sys15 tem under section 1612(b)(2), this subpart shall apply

16 with respect to the State as of such date as is appropriate

17 to assure the continuity of coverage for the comprehensive

18 benefit package for eligible individuals in the State.

19 SEC. 1622. FEDERAL ASSUMPTION OF RESPONSIBILITIES IN

20 NON-PARTICIPATING STATES.

21 (a) NOTICE.—When the Board determines that this

22 subpart will apply to a State for a calendar year, the

23 Board shall notify the Secretary of Health and Human

24 Services.

25 (b) ESTABLISHMENT OF COMMUNITY-RATING SYS26 TEM.—Upon receiving notice under subsection (a), the
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1 Secretary shall take such steps as are necessary to ensure

2 that the comprehensive benefit package is provided to eli3 gible individuals in the State during the year.

4 (c) ESTABLISHMENT OF GUARANTY FUND.—

5 (1) ESTABLISHMENT.—The Secretary must en6 sure that there is a guaranty fund that meets the re7 quirements established by the Board under section

8 1652, in order to provide financial protection to

9 health care providers and others in the case of a fail10 ure of a community-rated health plan under a health

11 care system established and operated by the Sec12 retary under this section.

13 (2) ASSESSMENTS TO PROVIDE GUARANTY

14 FUNDS.—In the case of a failure of one or more

15 community-rated health plans, the Secretary may re16 quire each community-rated health plan to pay an

17 assessment to the Secretary in an amount not to ex18 ceed 2 percent of the premiums of such plans paid

19 by or on behalf of community rate eligible individ20 uals during a year for so long as necessary to gen21 erate sufficient revenue to cover any outstanding

22 claims against the failed plan.
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1 SEC. 1623. IMPOSITION OF SURCHARGE ON PREMIUMS

2 UNDER FEDERALLY-OPERATED SYSTEM.

3 (a) IN GENERAL.—If this subpart applies to a State

4 for a calendar year, the premiums charged by community5 rated health plans in the State shall be equal to premiums

6 that would otherwise be charged, increased by 15 percent.

7 Such 15 percent increase shall be used to reimburse the

8 Secretary for any administrative or other expenses in9 curred as a result of establishing and operating the sys10 tem.

11 (b) TREATMENT OF SURCHARGE AS PART OF PRE12 MIUM.—For purposes of determining the compliance of a

13 State for which this subpart applies in a year with the

14 requirements for budgeting under subtitle A of title VI

15 for the year, the 15 percent increase described in sub16 section (a) shall be treated as part of the premium for

17 payment to a State.

18 SEC. 1624. RETURN TO STATE OPERATION.

19 (a) APPLICATION PROCESS.—After the establishment

20 and operation of a system by the Secretary in a State

21 under section 1622, the State may at any time apply to

22 the Board for the approval of a State system in accord23 ance with the procedures described in section 1611.

24 (b) TIMING.—If the Board approves the system of a

25 State for which the Secretary has operated during a year,

26 the Secretary shall terminate the operation of the system,
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1 and the State shall establish and operate its approved sys2 tem, as of January 1 of the first year beginning after the

3 Board approves the State system. The termination of the

4 Secretary’s system and the operation of the State’s system

5 shall be conducted in a manner that assures the continu6 ous coverage of eligible individuals in the State under com7 munity-rated health plans.

8 Subpart D—Establishment of Class Factors for

9 Charging Premiums

10 SEC. 1631. PREMIUM CLASS FACTORS.

11 (a) IN GENERAL.—For each class of family enroll12 ment (as specified in section 1011(c)), for purposes of title

13 VI, the Board shall establish a premium class factor that

14 reflects, subject to subsection (b), the relative actuarial

15 value of the comprehensive benefit package of the class

16 of family enrollment compared to such value of such pack17 age for individual enrollment.

18 (b) CONDITIONS.—In establishing such factors, the

19 factor for the class of individual enrollment shall be 1 and

20 the factor for the couple-only class of family enrollment

21 shall be 2.
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1 Subpart E—Risk Adjustment and Reinsurance

2 Methodology for Payment of Plans

3 SEC. 1641. DEVELOPMENT OF A RISK ADJUSTMENT AND RE4 INSURANCE METHODOLOGY.

5 (a) DEVELOPMENT.—

6 (1) INITIAL DEVELOPMENT.—Not later than

7 April 1, 1995, the Board shall develop a risk adjust8 ment and reinsurance methodology in accordance

9 with this subpart.

10 (2) IMPROVEMENTS.—The Board shall make

11 such improvements in such methodology as may be

12 appropriate to achieve the purposes described in sub13 section (b)(1).

14 (b) RISK ADJUSTMENT METHODOLOGY.—

15 (1) PURPOSES.—Such risk adjustment meth16 odology shall provide for the adjustment of payments

17 to community-rated health plans for the purposes

18 of—

19 (A) assuring that payments to such plans

20 reflect the expected relative utilization and ex21 penditures for such services by each plan’s en22 rollees compared to the average utilization and

23 expenditures for community rate eligible indi24 viduals, and

25 (B) protecting health plans that enroll a

26 disproportionate share of community rate eligi-
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1 ble individuals with respect to whom expected

2 utilization of health care services (included in

3 the comprehensive benefit package) and ex4 pected health care expenditures for such serv5 ices are greater than the average level of such

6 utilization and expenditures for community rate

7 eligible individuals.

8 (2) FACTORS TO BE CONSIDERED.—In develop9 ing such risk adjustment methodology, the Board

10 shall take into account the following factors:

11 (A) Demographic characteristics.

12 (B) Health status, including prior use of

13 health services.

14 (C) Geographic area of residence.

15 (D) Socio-economic status.

16 (E) Subject to paragraph (5), (i) the pro17 portion of enrollees who are SSI recipients and

18 (ii) the proportion of enrollees who are AFDC

19 recipients.

20 (F) Any other factors determined by the

21 Board to be material to the purposes described

22 in paragraph (1).

23 (3) ZERO SUM.—The risk adjustment methodol24 ogy shall assure that the total payments to health

25 plans after application of the methodology are the
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1 same as the amount of payments that would have

2 been made without application of the methodology.

3 (4) TREATMENT OF SSI/AFDC ADJUSTMENT.—

4 The Board is not required to apply the factor de5 scribed in clause (i) or (ii) of paragraph (2)(E) if

6 the Board determines that the application of the

7 other risk adjustment factors described in paragraph

8 (2) is sufficient to adjust premiums to take into ac9 count the enrollment in plans of AFDC recipients

10 and SSI recipients.

11 (5) SPECIAL CONSIDERATION FOR MENTAL ILL12 NESS AND MENTAL RETARDATION.—In developing

13 the methodology under this section, the Board shall

14 give consideration to the unique problems of adjust15 ing payments to health plans with respect to individ16 uals with mental illness and mental retardation.

17 (6) SPECIAL CONSIDERATION FOR VETERANS,

18 MILITARY, AND INDIAN HEALTH PLANS.—In devel19 oping the methodology under this section, the Board

20 shall give consideration to the special enrollment and

21 funding provisions relating to plans described in sec22 tion 1004(b).

23 (7) ADJUSTMENT TO ACCOUNT FOR USE OF ES24 TIMATES.—If the total payments made to all com25 munity-rated health plans in a year under section
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1 1239 exceeds, or is less than, the total of such pay2 ments estimated by the State in the application of

3 the methodology under this subsection, because of a

4 difference between—

5 (A) the State’s estimate of the distribution

6 of enrolled families in different risk categories

7 (assumed in the application of risk factors

8 under this subsection in making payments to

9 community-rated health plans), and

10 (B) the actual distribution of such enrolled

11 families in such categories,

12 the methodology under this subsection shall provide

13 for an adjustment in the application of such meth14 odology in the second succeeding year in a manner

15 that would reduce, or increase, respectively, by the

16 amount of such excess (or deficit) the total of such

17 payments made to all such plans.

18 (c) MANDATORY REINSURANCE.—

19 (1) IN GENERAL.—The methodology developed

20 under this section shall include a system of manda21 tory reinsurance as a component of the risk adjust22 ment methodology.

23 (2) REQUIREMENT IN CERTAIN CASES.—The

24 Board shall reduce or eliminate such a system of re25 insurance at such time as the Board determines that
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1 an adequate prospective payment adjustment for

2 health status has been developed and is ready for

3 implementation.

4 (3) REINSURANCE SYSTEM.—The Board, in de5 veloping the methodology for a mandatory reinsur6 ance system under this subsection, shall—

7 (A) provide for health plans to make pay8 ments to state-established reinsurance programs

9 for the purpose of eliminating incentives for

10 plans to discriminate against individuals on the

11 basis of their expected utilization of health serv12 ices; and

13 (B) specify the manner of creation, struc14 ture, and operation of the system in each State,

15 including—

16 (i) the manner (which may be pro17 spective or retrospective) in which health

18 plans make payments to the system, and

19 (ii) the type and level of reinsurance

20 coverage provided by the system.

21 (d) CONFIDENTIALITY OF INFORMATION.—The

22 methodology shall be developed in a manner consistent

23 with privacy standards promulgated under section

24 5120(a). In developing such standards, the Board shall

25 take into account any potential need of States for certain
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1 individually identifiable health information in order to

2 carry out risk-adjustment and reinsurance activities under

3 this Act, but only to the minimum extent necessary to

4 carry out such activities and with protections provided to

5 minimize the identification of the individuals to whom the

6 information relates.

7 (e) STATE EXPERIMENTATION.—The Board is au8 thorized to undertake experimentation with alternative re9 insurance and risk adjustments methods in one or more

10 different States, with the approval of the States adopting

11 such experiments, to determine the most appropriate

12 method to be used on a national basis.

13 (f) STATE-SPECIFIC ADJUSTERS.—States may, with

14 the approval of the Board, add such risk adjusters to the

15 national risk adjustment and reinsurance methodology

16 that reflect State specific patters of disease or population

17 characteristics.

18 SEC. 1642. INCENTIVES TO ENROLL DISADVANTAGED

19 GROUPS.

20 The Board shall establish standards under which

21 States may provide (under section 1203) for an additional

22 adjustment in the risk-adjustment methodology developed

23 under section 1641 in order to provide a financial incen24 tive for community-rated health plans to enroll individuals
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1 who are members of disadvantaged groups or populations

2 vulnerable to discrimination due to their health status.

3 SEC. 1643. RESEARCH AND DEMONSTRATIONS.

4 The Secretary shall conduct and support research

5 and demonstration projects to develop and improve, on a

6 continuing basis, the risk adjustment and reinsurance

7 methodology under this subpart.

8 SEC. 1644. TECHNICAL ASSISTANCE TO STATES.

9 The Board shall provide technical assistance to

10 States in implementing the methodology developed under

11 this subpart.

12 Subpart F—Responsibilities for Financial

13 Requirements

14 SEC. 1651. CAPITAL STANDARDS FOR COMMUNITY-RATED

15 PLANS.

16 (a) IN GENERAL.—The Board shall establish, in con17 sultation with the States, minimum capital requirements

18 for carriers, for purposes of section 1512.

19 (b) $500,000 MINIMUM.—Subject to subsection (c),

20 under such requirements there shall be not less than

21 $500,000 of capital maintained for each carrier.

22 (c) ADDITIONAL CAPITAL REQUIREMENTS.—The

23 Board shall establish standards that provide for additional

24 capital. The amount of such additional capital required
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1 shall reflect factors likely to affect the financial stability

2 of a carrier, including the following:

3 (1) Projected plan enrollment and number of

4 providers participating in plans of the carrier.

5 (2) Market share and strength of competition.

6 (3) Extent and nature of risk-sharing with par7 ticipating providers and the financial stability of

8 risk-sharing providers.

9 (4) Prior performance of the carrier, risk his10 tory, and liquidity of assets.

11 (d) COMMUNITY- AND PROVIDER-BASED PLANS.—

12 (1) IN GENERAL.—States shall consider alter13 native financial instruments and methods for

14 community- and provider-based plans (as defined in

15 paragraph (2)) to meet the capital and solvency

16 standards developed in accordance with this section.

17 Provisions made for such plans shall ensure the fis18 cal integrity and financial solvency of such plans.

19 (2) ELIGIBLE PLANS.—Plans eligible for special

20 consideration by States must be public or not-for21 profit entities that are owned, or in which a majority

22 share of the plan’s investment is held by—

23 (A) health care providers who practice in

24 the plan;
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1 (B) individuals who live in the area, or

2 not-for-profit organizations located in the area

3 serviced by the plan;

4 (C) a combination of individuals and orga5 nizations described in subparagraphs (A) and

6 (B); or

7 (D) organizations located outside the serv8 ice area which provide for control over local op9 erations by individuals described in subpara10 graphs (A) or (B).

11 (e) DEVELOPMENT OF STANDARDS BY NAIC.—The

12 Board may request the National Association of Insurance

13 Commissioners to develop model standards for the addi14 tional capital requirements described in subsection (c) and

15 to present such standards to the Board not later than July

16 1, 1995. The Board may accept such standards as the

17 standards to be applied under subsection (c) or modify the

18 standards in any manner it finds appropriate.

19 SEC. 1652. STANDARD FOR GUARANTY FUNDS.

20 (a) IN GENERAL.—In consultation with the States,

21 the Board shall establish standards for guaranty funds es22 tablished by States.

23 (b) GUARANTY FUND STANDARDS.—The standards

24 established under subsection (a) for a guaranty fund shall

25 include the following:
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1 (1) Each fund must have a method to generate

2 sufficient resources to pay health providers and oth3 ers in the case of a failure of a health plan in order

4 to meet obligations with respect to—

5 (A) services rendered by the health plan

6 for the comprehensive benefit package, includ7 ing any supplemental coverage for cost sharing

8 provided by the health plan, and

9 (B) services rendered prior to health plan

10 insolvency and services to patients after the in11 solvency but prior to their enrollment in other

12 health plans.

13 (2) The fund is liable for all claims against the

14 plan by health care providers with respect to their

15 provision of items and services covered under the

16 comprehensive benefit package to enrollees of the

17 failed plan. Such claims, in full, shall take priority

18 over all other claims. The fund also is liable, to the

19 extent and in the manner provided in accordance

20 with rules established by the Board, for other

21 claims, including other claims of such providers and

22 the claims of contractors, employees, governments,

23 or any other claimants.
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1 (3) The fund stands as a creditor for any pay2 ments owed the plan to the extent of the payments

3 made by the fund for obligations of the plan.

4 (4) The fund has authority to borrow against

5 future assessments in order to meet the obligations

6 of failed plans participating in the fund.

7 Subpart G—Open Enrollment

8 SEC. 1660. PERIODS OF AUTHORIZED CHANGES IN ENROLL9 MENT.

10 (a) ANNUAL OPEN ENROLLMENT PERIOD.—

11 (1) IN GENERAL.—For purposes of section

12 1211 and section 1502(a)(1), in order to encourage

13 periodic family choice in the selection of health

14 plans, the National Health Board shall specify a

15 uniform, national annual open enrollment period

16 during which all eligible individuals are permitted

17 the opportunity to change enrollment among the

18 health plans offered to them under this Act.

19 (2) EFFECTIVENESS OF CHANGE OF ENROLL20 MENT.—Except as the National Health Board may

21 provide, changes in enrollment during an annual

22 open enrollment period under paragraph (1) shall

23 take effect as of the first date of the following year.
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1 (b) ADDITIONAL PERIODS OF AUTHORIZED

2 CHANGES IN ENROLLMENT.—The National Health Board

3 also shall specify—

4 (1) such other periods and occurrences (includ5 ing the insolvency of carriers or large group pur6 chasers, changes in residence, and appropriate

7 changes in employment) for which an individual is

8 authorized to change enrollment in health plans, and

9 (2) when such change of enrollment becomes ef10 fective.

11 (c) DIRECT ENROLLMENT.—

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

13 methods and procedures for the direct enrollment of

14 individuals in the health plans of their choice.

15 (2) ENROLLMENT PROCESSES.—The Board

16 shall provide standards for State to ensure the broad

17 availability of enrollment forms, including direct en18 rollment through the mail, and other such processes

19 as the Board may designate.

20 (3) NO MARKETING FEE.—Individuals enrolling

21 in plans through the processes described in para22 graph (2) shall be eligible for the community-rated

23 premium (described in section 6000) filed by the

24 health plan selected by the individual, without incur25 ring a marketing fee, a surcharge or any other pay-
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1 ment that represents an addition to the community2 rated premium, whether such charge is imposed by

3 the health plan, an agent of the plan, or any other

4 entity.

5 (d) DISENROLLMENT FOR CAUSE.—

6 (1) IN GENERAL.—In addition to the annual

7 open enrollment period held under subsection (a),

8 the Board shall establish procedures by which eligi9 ble individuals enrolled in a plan may disenroll from

10 the plan for good cause (as defined by Board) at any

11 time during a year and enroll in another plan. Such

12 procedures shall be implemented by participating

13 States in a manner that ensures continuity of cov14 erage for the comprehensive benefit package for such

15 individuals during the year.

16 (2) DISENROLLMENT FOR CAUSE.—

17 (A) IN GENERAL.—In addition to the peri18 ods of authorized change in enrollment under

19 paragraph (1), the National Health Board shall

20 define good cause and establish procedures

21 under which eligible individuals enrolled in a

22 health plan provided by a carrier may disenroll

23 from the plan for good cause at any time dur24 ing a year and enroll in another applicable

25 health plan.
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1 (B) ASSURING CONTINUITY OF COV2 ERAGE.—The procedures under this paragraph

3 shall be implemented in a manner that ensures

4 continuity of coverage for the comprehensive

5 benefit package for individuals changing enroll6 ment during the year.

7 (C) ADDITIONAL REMEDIES.—The Board

8 may provide rules under which an individual

9 who changes enrollment from a plan for good

10 cause due to a pattern of underservice under a

11 plan, the carrier providing the health plan is

12 liable, to the subsequent health plan in which

13 the individual is enrolled, for excess costs (as

14 identified in accordance with such rules) during

15 a reasonable period of the anticipated duration

16 of enrollment with the original health plan.

17 (e) CHANGE OF ENROLLMENT.—In this section and

18 subtitle E, the term ‘‘change of enrollment’’ includes, with

19 respect to an individual—

20 (1) a change in the health plan in which the in21 dividual is enrolled,

22 (2) a change in the type of family enrollment,

23 and

24 (3) the enrollment of the individual at the time

25 the individual first becomes an eligible individual.
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1 (f) PROVIDER-BASED ENROLLMENT MECHANISMS.—

2 The Board shall promulgate rules regarding the establish3 ment by States of provider-based enrollment mechanisms

4 for individuals seeking care who are not enrolled in a

5 health plan. Such rules shall include provisions requiring

6 health plans to pay providers for care delivered to individ7 uals prior to the individual’s enrollment in the plan.

8 (g) COORDINATION OF ENROLLMENT ACTIVITIES.—

9 Each State shall coordinate its activities, including plan

10 enrollment and disenrollment activities, with other States

11 in a manner specified by the National Health Board that

12 ensures continuous, nonduplicative coverage of commu13 nity-rated and experience-rated individuals in health plans

14 and that minimizes administrative procedures and paper15 work.

16 SEC. 1661. DISTRIBUTION OF COMPARATIVE INFORMATION.

17 The Board shall specify a period of time prior to open

18 enrollment during which States must provide for the dis19 tribution to community-rate eligible individuals enrollment

20 materials and comparative information on health plans.
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1 PART 2—RESPONSIBILITIES OF DEPARTMENT OF

2 HEALTH AND HUMAN SERVICES

3 Subpart A—General Responsibilities

4 SEC. 1671. GENERAL RESPONSIBILITIES OF SECRETARY OF

5 HEALTH AND HUMAN SERVICES.

6 (a) IN GENERAL.—Except as otherwise specifically

7 provided under this Act (or with respect to administration

8 of provisions in the Internal Revenue Code of 1986 or in

9 the Employee Retirement Income Security Act of 1974),

10 the Secretary of Health and Human Services shall admin11 ister and implement all of the provisions of this Act, except

12 those duties delegated to the National Health Board, any

13 other executive agency, or to any State.

14 (b) FINANCIAL MANAGEMENT STANDARDS.—The

15 Secretary, in consultation with the Secretaries of Labor

16 and the Treasury, shall establish, for purposes of section

17 1512, standards relating to the management of finances,

18 maintenance of records, accounting practices, auditing

19 procedures, and financial reporting for States, consumer

20 purchasing cooperatives and health plans. Such standards

21 shall take into account current Federal laws and regula22 tions relating to fiduciary responsibilities and financial

23 management of funds.

24 (c) AUDITING STATE PERFORMANCE.—The Sec25 retary shall perform periodic financial and other audits of

26 States to assure that such States are carrying out their
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1 responsibilities under this Act consistent with this Act.

2 Such audits shall include audits of State performance in

3 the areas of—

4 (1) assuring enrollment of all community rate

5 eligible individuals in health plans,

6 (2) management of premium and cost sharing

7 discounts and reductions provided;

8 (3) financial management (including the finan9 cial activities of cooperatives and State-designated

10 contracting entities); and

11 (4) assuring enforcement of the antidiscrimina12 tion provisions of this Act.

13 (d) STANDARDS FOR UTILIZATION MANAGEMENT

14 PROGRAMS.—

15 (1) IN GENERAL.—Not later than 12 months

16 after the date of enactment of this Act, the Sec17 retary, in consultation with interested parties which

18 may include one or more accrediting organizations,

19 shall promulgate uniform Federal standards for uti20 lization management programs, to include the activi21 ties described in section 1210(b).

22 (2) COMPLIANCE.—States shall ensure compli23 ance with the Federal standards established under

24 paragraph (1), consistent with their role in certify25 ing health plans.
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1 (3) REVIEW AND UPDATE.—The Secretary shall

2 periodically review and update utilization manage3 ment standards to reflect appropriate policies and

4 practices in health care delivery.

5 SEC. 1672. MEDICAL TECHNOLOGY IMPACT STUDY.

6 (a) ASSESSMENT OF THE COMPREHENSIVE IMPACT

7 OF MEDICAL TECHNOLOGIES.—

8 (1) IN GENERAL.—The Secretary, acting

9 through the Administrator of the Agency for Health

10 Care Policy and Research (hereafter referred to in

11 this section as the ‘‘Administrator’’), shall undertake

12 an interdisciplinary study (to be known as the ‘‘Med13 ical Technology Impact Study’’) to assess the overall

14 economic costs, economic benefits, and effect on pa15 tient outcomes of medical technologies used in treat16 ing each of a list of target diseases and conditions.

17 The Secretary shall submit the report of the Admin18 istrator to Congress (in accordance with subsection

19 (c)) concerning the results of the study and may

20 provide any recommendations determined to be nec21 essary to ensure the availability, access, and appro22 priate use of medical technologies to improve the

23 quality of health care in the United States.

24 (2) PURPOSE.—The purpose of the study under

25 paragraph (1) is to assess the impact of old, new
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1 and emerging medical technologies on health care

2 costs, social costs, and patient outcomes, and to

3 identify the factors, including government and pri4 vate payor reimbursement policies, that impede or

5 encourage innovation that improves patient out6 comes. Congress intends that the study complement

7 the technology assessment, outcomes research, and

8 guideline development activities authorized under

9 title IX of the Public Health Service Act by provid10 ing a comprehensive context for understanding the

11 economic and social factors related to the develop12 ment and use of medical technologies.

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

14 (A) ECONOMIC BENEFITS.—The term eco15 nomic benefits may include, based on available

16 data—

17 (i) reductions in the economic costs of

18 disease;

19 (ii) increases in employment attrib20 utable to the medical technology industry;

21 (iii) increases in Federal and State

22 tax revenues attributable to the medical

23 technology industry and its employees;
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1 (iv) improvements in the balance of

2 trade deficit attributable to the medical

3 technology industry; and

4 (v) other benefits that are determined

5 by the Advisory Committee to be relevant

6 to assessing the impact of medical tech7 nology.

8 (B) ECONOMIC COSTS.—The term ‘‘eco9 nomic costs’’ may include, based on available

10 data—

11 (i) the financial costs to the health

12 care system of diagnosing and treating dis13 ease, including the costs of nontreatment

14 and palliative care;

15 (ii) the financial costs to employers

16 resulting from worker illness, including the

17 costs of productivity losses and worker ab18 senteeism;

19 (iii) the financial costs to families re20 sulting from illness of a family member, in21 cluding costs associated with loss of in22 come, hiring of caretakers, and long term

23 and hospice care;

24 (iv) the financial costs to government

25 of illness, including reductions in income
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1 tax revenues attributable to worker illness

2 and worker related injuries and increases

3 in transfer payments, including unemploy4 ment, disability, welfare, and survivor ben5 efit payments, made to individuals and

6 families on account of illness; and

7 (v) other costs that are determined by

8 the Advisory Committee to be relevant to

9 assessing the impact of medical technology.

10 (C) PATIENT OUTCOMES.—The term ‘‘pa11 tient outcomes’’ may include—

12 (i) changes in clinical outcomes, in13 cluding stabilization of patients with pro14 gressive disease or health conditions, re15 sulting from the use of safe and effective

16 medical technology in prevention, diag17 nosis, or treatment;

18 (ii) changes in mortality, morbidity,

19 and health service use, including stabiliza20 tion of patients with progressive diseases;

21 (iii) changes in quality of life, includ22 ing ability to perform activities of daily liv23 ing, ability to return to work, relief from

24 discomfort or pain, alleviation of fatigue,
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1 and improved mental functioning and well2 being; and

3 (iv) other outcomes that are deter4 mined by the advisory committee to be rel5 evant to assessing the impact of medical

6 technology.

7 (D) MEDICAL TECHNOLOGIES.—The term

8 ‘‘medical technologies’’ includes drugs, biologics

9 (including vaccines), medical devices, drug de10 livery systems, and surgical services and other

11 procedures for preventing, diagnosing, and

12 treating diseases or health conditions.

13 (E) MEDICAL TECHNOLOGY INDUSTRY.—

14 The term ‘‘medical technology industry’’ in15 cludes the biotechnology, pharmaceutical, and

16 medical device industries, and such other indus17 tries that invent, develop, or market medical

18 technologies.

19 (b) ADVISORY COMMITTEE.—

20 (1) IN GENERAL.—The Administrator shall es21 tablish an Advisory Committee to assist the Agency

22 in preparing the reports required under subsection

23 (c). Except as provided in paragraph (3), no member

24 of the advisory committee shall be an employee of

25 the Federal Government.
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1 (2) MEMBERSHIP.—The Advisory Committee

2 shall be balanced in its representation of interested

3 parties and shall be composed of at least two indi4 viduals appointed by the President of the Institute

5 of Medicine and two individuals from each of the fol6 lowing categories:

7 (A) Experts in medical technology assess8 ment.

9 (B) Experts in objective measures of im10 proved patient outcomes, such as clinical out11 comes, mortality, morbidity, and health service

12 use.

13 (C) Experts in subjective measures of im14 proved patient outcomes, such as quality of life.

15 (D) Experts in quantifying the economic

16 costs of disease to the health care system, in17 cluding public and private payers.

18 (E) Experts in quantifying the economic

19 impact of the medical technology industry.

20 (F) Experts in health statistics and epide21 miology.

22 (G) Physicians and other health care pro23 viders.

24 (H) Officers or employees of health plans

25 and other health care payers.
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1 (I) Experts in the ethical implications of

2 health care.

3 (J) Experts in private sector financial mar4 ket investment in the medical technology indus5 try.

6 (K) Consumers and members of patient

7 advocacy groups.

8 (L) Health professional organizations.

9 (M) Officers or employees of biotechnology

10 companies.

11 (N) Officers or employees of medical device

12 companies.

13 (O) Officers or employees of pharma14 ceutical companies.

15 (3) EX OFFICIO.—The following individuals or

16 their designees shall serve as ex officio members of

17 the Advisory Committee:

18 (A) The Director of the National Institutes

19 of Health.

20 (B) The Commissioner of Food and Drugs.

21 (C) The Director of the Centers for Dis22 ease Control and Prevention.

23 (D) The Administrator of the Health Care

24 Financing Administration.
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1 (E) The Under Secretary of Commerce for

2 Technology.

3 (F) The Director of the Congressional Of4 fice of Technology Assessment.

5 (c) INTERDISCIPLINARY STUDY AND REPORT.—

6 (1) IN GENERAL.—The Administrator, in con7 sultation with the Advisory Committee established

8 under subsection (b), shall determine which diseases

9 or conditions should be studied in the Medical Tech10 nology Impact Study. In carrying out the medical

11 technology assessment required under this sub12 section, the Administrator shall consider various fac13 tors, including those outlined in section 904(b)(2) of

14 the Public Health Service Act and government and

15 private payor reimbursement policies that impede or

16 encourage innovation that improves patient out17 comes. The diseases or conditions studied in such

18 Study shall be those considered to be high priority

19 according to the following criteria:

20 (A) Aggregate economic costs to the

21 United States.

22 (B) Overall importance to public heath.

23 (C) Potential for improvements in patient

24 outcomes.
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1 (D) Significant changes expected in man2 agement of the condition.

3 (E) Other criteria identified by the Advi4 sory Committee.

5 (2) DESIGN.—The Administrator, in consulta6 tion with the Advisory Committee established under

7 subsection (b), and the Institute of Medicine pursu8 ant to paragraph (3), shall develop a design, based

9 on the list of target diseases and conditions, for un10 dertaking the Medical Technology Impact Study.

11 (3) CONTRACT.—The Secretary shall request

12 the Institute of Medicine of the National Academy

13 of Sciences to enter into a contract to review the

14 Study design and report to the Administrator con15 cerning any recommendations for revising such de16 sign, in the interest of assuring that it reflects the

17 best available scientific methodologies.

18 (4) PUBLICATION.—The Administrator shall

19 publish the study design and list of target diseases

20 and conditions, the recommendations of the Institute

21 of Medicine, and the response of the Administrator

22 to such recommendations in the Federal Register for

23 a 60-day period for public comment. Any such com24 ments shall be considered by the Administrator in
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1 completing the proposed study design for submission

2 to the Secretary.

3 (5) DESIGN REPORT.—The Secretary shall re4 port to Congress concerning the proposed design of

5 the Medical Technology Impact Study, together with

6 recommendations for appropriations necessary to

7 carry out the Study.

8 (6) GRANTS AND CONTRACTS.—Beginning in

9 the first fiscal year for which Congress appropriates

10 funds consistent with paragraph (5), and ending on

11 September 30 of that year, the Administrator shall

12 enter into grants and contracts with appropriate en13 tities to conduct any investigations and analyses that

14 may be required to carry out the design of the Medi15 cal Technology Impact Study.

16 (7) REPORT ON FINDINGS.—The Administrator,

17 in consultation with the Advisory Committee, shall

18 develop a draft comprehensive report concerning the

19 findings of the Study, shall make copies of the draft

20 report available to the public and publish a notice in

21 the Federal Register providing for a 60-day period

22 of public comment. Any such comments shall be con23 sidered by the Administrator in completing and sub24 mitting the final report to the Secretary.
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1 (8) FINAL REPORT.—Not later than 3 years

2 after the date of enactment of this section, the Sec3 retary shall submit the report of the Administrator

4 to Congress, and may include any recommendations

5 determined necessary to assure the availability, ac6 cess and appropriate use of medical technologies to

7 improve the quality of health care in the United

8 States.

9 (d) AUTHORIZATION OF APPROPRIATIONS.—There

10 are authorized to be appropriated such sums as may be

11 necessary to carry out this section.

12 SEC. 1673. ASSISTANCE WITH FAMILY COLLECTIONS.

13 The Secretary shall provide States with such tech14 nical and other assistance as may promote the efficient

15 collection of other amounts owed by families under this

16 Act. Such assistance may include the assessment of civil

17 monetary penalties, not to exceed $5,000 or three times

18 the amount of the liability owed, whichever is greater, in

19 the case of repeated failure to pay (as specified in rules

20 of the Secretary).

21 SEC. 1674. ADVISORY OPINIONS.

22 (a) IN GENERAL.—Community- and provider-based

23 plans and individuals and organizations seeking to estab24 lish such plans shall be eligible to receive advisory opinions

25 from appropriate Federal entities, including opinions con-
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1 cerning whether their arrangement complies with Federal

2 self-referral, fraud and abuse, and anti-trust laws.

3 (b) REGULATIONS.—The Secretary shall issue regula4 tions setting forth the procedures for obtaining advisory

5 opinions described in subsection (a).

6 (c) TIMING OF OPINIONS.—Advisory opinions shall

7 be issued not later than 90 days after receipt of a request

8 for such opinions from a plan.

9 (d) FEES.—Applicants shall pay a fee, the amount

10 of which to be determined by the Secretary, to cover the

11 costs of providing the opinion.

12 SEC. 1675. REPORTS.

13 (a) DENTAL CARE.—The Secretary shall undertake

14 studies to determine—

15 (1) the costs of providing—

16 (A) preventive dental care to all adults;

17 (B) restorative dental care to all adults;

18 and

19 (C) preventive dental care to adults with

20 developmental, cognitive, and other mental dis21 abilities; and

22 (2) the best oral health care practice and the

23 cost or savings of providing such care prior to 2001.

24 The Secretary shall report to the National Health
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1 Board and the Congress not later than September 1,

2 1995 concerning such study.

3 (b) IN VITRO FERTILIZATION.—The Secretary shall

4 undertake a study to determine the costs of providing cov5 erage for in vitro fertilization in the comprehensive bene6 fits package. The Secretary shall report to the National

7 Health Board and the Congress not later than September

8 1, 1995 concerning such study.

9 Subpart B—Certification of Essential Community

10 Providers

11 SEC. 1681. CERTIFICATION.

12 For purposes of this Act, the Secretary shall certify

13 as an ‘‘essential community provider’’ any health care pro14 vider or organization that—

15 (1) is within any of the categories of providers

16 and organizations specified in section 1682(a), or

17 (2) meets the standards for certification under

18 section 1683(a).

19 SEC. 1682. CATEGORIES OF PROVIDERS AUTOMATICALLY

20 CERTIFIED.

21 (a) IN GENERAL.—The categories of providers and

22 organizations, including subrecipients, specified in this

23 subsection are as follows:

24 (1) Covered entities as defined in section

25 340B(a)(4) of the Public Health Service Act (42
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1 U.S.C. 256b(a)(4)), except that subsections

2 (a)(4)(L)(iii) and (a)(7) of such section shall not

3 apply.

4 (2) School health services centers under title III

5 of this Act.

6 (3)(A) Nonprofit hospitals meeting the criteria

7 for public hospitals which are eligible entities under

8 section 340B of the Public Health Service Act, ex9 cept that subsection (a)(4)(L)(iii) of such section

10 shall not apply.

11 (B) Nonprofit hospitals with a minimum of 200

12 beds, located in urban areas where—

13 (i) the cumulative total of its services pro14 vided to individuals who are entitled to benefits

15 under title XVIII of the Social Security Act or

16 under a State plan under title XIX of such Act

17 equals a minimum of 65 percent; and

18 (ii) a minimum of 20 percent of its services

19 are provided to individuals eligible for assist20 ance under such title XIX;

21 (C) A Medicare dependent small rural hospital

22 under section 1886(d)(8)(iii) of the Social Security

23 Act.

24 (D) Children’s hospitals meeting comparable

25 criteria determined appropriate by the Secretary.
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1 (4) Public and private, nonprofit mental health

2 and substance abuse providers receiving funds under

3 title V or XIX of the Public Health Service Act.

4 (5) Runaway homeless youth centers or transi5 tional living programs for homeless youth providing

6 health services under the Runaway Homeless Youth

7 Act of 1974 (42 U.S.C. 5701 et seq.).

8 (6) Public or nonprofit maternal and child

9 health providers that receive funding under title V of

10 the Social Security Act.

11 (7) Rural health clinics as defined under section

12 1861(aa)(2) of the Social Security Act.

13 (b) STUDY OF FEDERALLY CERTIFIED RURAL

14 HEALTH CLINICS.—The Secretary shall conduct an eval15 uation of the Rural Health Clinics program as defined in

16 section 1861(aa)(2) of the Social Security Act to examine

17 the causes of the growth in the program and the charac18 teristics of providers certified as rural health clinics and

19 the characteristics of the population served by rural health

20 clinics to ensure that the program meets the needs of rural

21 underserved communities. The Secretary shall report the

22 findings of such evaluation, together with any rec23 ommended changes in the rural health clinics program, to

24 the Congress not later than January 1, 1996.
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1 SEC. 1683. STANDARDS FOR ADDITIONAL PROVIDERS.

2 (a) STANDARDS.—The Secretary shall publish stand3 ards for the certification of additional categories of health

4 care providers and organizations as essential community

5 providers, including the categories described in subsection

6 (b). Such a health care provider or organization shall not

7 be certified unless the Secretary determines, under such

8 standards, that health plans operating in the area served

9 by the applicant would not otherwise be able to assure ade10 quate access to items and services included in the com11 prehensive benefit package if such a provider was not so

12 certified.

13 (b) CATEGORIES TO BE INCLUDED.—The categories

14 described in this subsection are as follows:

15 (1) CERTAIN HEALTH PROFESSIONALS.—A

16 health professional who—

17 (A) for at least 20 hours per week—

18 (i) is located in an area (or areas)

19 designated as a health professional short20 age area (under section 332 of the Public

21 Health Service Act) or serves a population

22 (or populations) designated as a medically

23 underserved population (under section 330

24 of the Public Health Service Act); or
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1 (ii)(I) is located or provides services in

2 a neighborhood or community whose resi3 dents are at risk of underservice; and

4 (II) is available to patients at such lo5 cation on evenings and weekends; and

6 (B) if the health professional is a physi7 cian—

8 (i) is licensed to practice in the juris9 diction; and

10 (ii) is either—

11 (I) granted privileges to practice

12 at one or more hospitals; or

13 (II) has a consultation and refer14 ral arrangement with one or more

15 physicians who are granted privileges

16 to practice at one or more hospitals.

17 (2) INSTITUTIONAL PROVIDERS.—Public and

18 private nonprofit hospitals and other public and non19 profit institutional health care providers, including

20 family planning clinics, located in health professional

21 shortage areas (as defined under section 332 of the

22 Public Health Service Act) or providing health serv23 ices to medically underserved populations (as defined

24 under title III of this Act).
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1 (3) OTHER PROVIDERS.—Other public and pri2 vate nonprofit agencies and organizations that—

3 (A) are located in such an area or provid4 ing health services to such a population, and

5 (B) provide health care and services essen6 tial to residents of such an area or such popu7 lations.

8 SEC. 1684. CERTIFICATION PROCESS; REVIEW; TERMI9 NATION OF CERTIFICATIONS.

10 (a) CERTIFICATION PROCESS.—

11 (1) PUBLICATION OF PROCEDURES.—The Sec12 retary shall publish, not later than 6 months after

13 the date of the enactment of this Act, the procedures

14 to be used by health care professionals, providers,

15 agencies, and organizations seeking certification

16 under this subpart, including the form and manner

17 in which an application for such certification is to be

18 made.

19 (2) TIMELY DETERMINATION.—The Secretary

20 shall make a determination upon such an application

21 not later than 60 days (or 15 days in the case of

22 a certification for an entity described in section

23 1682) after the date the complete application has

24 been submitted. The determination on an application

25 for certification of an entity described in section
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1 1682 shall only involve the verification that the en2 tity is an entity described in such section.

3 (b) REVIEW OF CERTIFICATIONS.—The Secretary

4 shall periodically review whether professionals, providers,

5 agencies, and organizations certified under this subpart

6 continue to meet the requirements for such certification.

7 (c) TERMINATION OR DENIAL OF CERTIFICATION.—

8 (1) PRELIMINARY FINDING.—If the Secretary

9 preliminarily finds that an entity seeking certifi10 cation under this section does not meet the require11 ments for such certification or such an entity cer12 tified under this subpart fails to continue to meet

13 the requirements for such certification, the Secretary

14 shall notify the entity of such preliminary finding

15 and permit the entity an opportunity, under subtitle

16 C of title V, to rebut such findings.

17 (2) FINAL DETERMINATION.—If, after such op18 portunity, the Secretary continues to find that such

19 an entity continues to fail to meet such require20 ments, the Secretary shall terminate the certification

21 and shall notify the entity, the State, large group

22 purchasers, of such termination and the effective

23 date of the termination.
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1 SEC. 1685. NOTIFICATION OF PARTICIPATING STATES.

2 (a) IN GENERAL.—Not less often than annually the

3 Secretary shall notify each participating State of essential

4 community providers that have been certified under this

5 subpart.

6 (b) CONTENTS.—Such notice shall include sufficient

7 information to permit each State to notify health plans

8 of the identity of each entity certified as an essential com9 munity provider, including—

10 (1) the location of the provider within each

11 plan’s service area,

12 (2) the health services furnished by the pro13 vider, and

14 (3) other information necessary for health plans

15 to carry out part 3 of subtitle E.

16 SEC. 1686. DEFINITIONS.

17 As used in subpart:

18 (1) SUBRECIPIENT.—The term ‘‘subrecipient’’

19 means, with respect to a recipient of a grant under

20 a particular authority, an entity that—

21 (A) is receiving funding from such a grant

22 under a contract with the principal recipient of

23 such a grant, and

24 (B) meets the requirements established to

25 be a recipient of such a grant.
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1 (2) HEALTH PROFESSIONAL.—The term

2 ‘‘health professional’’ means a physician, nurse,

3 nurse practitioner, certified nurse midwife, physician

4 assistant, psychologist, dentist, pharmacist, chiro5 practor, clinical social worker, and other health care

6 professional recognized by the Secretary.

7 (3) CHILDREN’S HOSPITAL.—The term ‘‘chil8 dren’s hospital’’ means those hospitals whose inpa9 tients are certified by the Secretary or the State to

10 be predominantly under the age of 18.

11 Subpart C—Workplace Wellness Programs

12 SEC. 1687. WORKPLACE WELLNESS PROGRAM.

13 (a) IN GENERAL.—The Secretary shall perform re14 sponsibilities required under this Act with respect to the

15 development of certification criteria and other duties re16 quired under this Act relating to workplace wellness pro17 grams.

18 (b) APPLICATION OF SECTION.—Employers main19 taining qualified worksite health promotion programs

20 meeting the requirements of subsection (d) shall be enti21 tled to the worksite health promotion rebate specified in

22 subsection (c).

23 (c) WORKSITE HEALTH PROMOTION REBATE.—Em24 ployers maintaining a qualified worksite health promotion

25 programs shall be paid a rebate by the State in an amount
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1 determined using the methodology developed by the Sec2 retary.

3 (d) REQUIREMENTS FOR QUALIFIED WORKSITE

4 HEALTH PROMOTION PROGRAMS.—

5 (1) ESTABLISHMENT OF LEVELS.—The Sec6 retary shall establish not less than two levels of

7 qualified worksite health promotion programs and

8 determine the program elements (or combination of

9 program elements) necessary for an employer to

10 qualify at each level. In establishing such levels, the

11 Secretary shall take into consideration the special

12 characteristics of small businesses (as defined in sec13 tion 6123(c)) and incorporate provisions providing

14 small businesses the opportunity to qualify at all lev15 els.

16 (2) PROGRAM ELEMENTS.—Program elements

17 that the Secretary should consider for inclusion in

18 qualified worksite health promotion programs are

19 the following:

20 (A) Education, screening, counseling, fol21 low-up, treatment or referral programs to re22 duce lifestyle and other modifiable risk factors

23 such as cholesterol, inactivity, nutrition and

24 weight management, HIV, sexually transmitted

25 diseases, cancer prevention, or smoking.
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1 (B) Education, screening, counseling, fol2 low-up, monitoring or referral for chronic health

3 risks or problems such as high blood pressure

4 or diabetes.

5 (C) Promotion of exercise and fitness

6 through education or the provision of exercise

7 facilities at the worksite, adjoining the worksite,

8 or at a proximate location with transportation

9 provided from the worksite.

10 (D) Employee assistance programs that

11 provide counseling and assistance with respect

12 to other areas of personal concern that may ad13 versely affect job performance such as sub14 stance abuse, stress or parenting.

15 (E) Workplace health and safety education

16 and prevention programs that go beyond those

17 required by law.

18 (F) Prenatal counseling and education.

19 (G) Consumer education regarding health

20 care services including programs on the devel21 opment of living wills.

22 (3) MINIMUM PARTICIPATION RATES.—The

23 Secretary shall have the authority to establish mini24 mum employee participation rates as a condition of
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1 employer qualification under a qualified worksite

2 health promotion program.

3 (4) GUIDELINES.—The Secretary shall develop

4 guidelines to ensure that employers who sponsor

5 qualified worksite health promotion program do not

6 discriminate among employees as to either eligibility

7 for participation or program benefits.

8 (5) APPLICATION.—The Secretary shall develop

9 an application form and supporting material to be

10 used by employers to certify that they qualify for

11 one of the worksite health promotion program levels

12 established by the Secretary.

13 SEC. 1688. WELLNESS DISCOUNT METHODOLOGY.

14 (a) REQUIREMENT.—The Secretary shall develop a

15 methodology consistent with subsection (b) in order to en16 sure that—

17 (1) families entitled to a wellness discount by

18 virtue of employment of a family member by an em19 ployer maintaining a qualified worksite health pro20 motion program under section 1687(d) receive a

21 credit toward their family share of premium (as de22 fined in section 6101(b)(1)) equal to the wellness

23 discount specified by the plan in which the family

24 elects to enroll; and
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1 (2) employers maintaining qualified programs

2 receive a rebate annually, based on the average

3 worksite health promotion discount in the health

4 care coverage area, weighted by the enrollment of

5 employees of all employers offering certified wellness

6 programs in the area.

7 (b) METHODOLOGY.—The methodology developed by

8 the Secretary under subsection (a) shall—

9 (1) ensure that each family enrolled in a com10 munity-rated plan that offers a wellness discount re11 ceives the discount provided by the plan chosen by

12 the family regardless of whether the family has en13 rolled in the plan through a consumer purchasing

14 cooperative directly or through the plan, or through

15 some other means;

16 (2) ensure that a separate rebate is computed

17 for each worksite health promotion program level es18 tablished by the Secretary under section 1687; and

19 (3) ensure that any wellness discount offered by

20 health plans are not taken into account in the

21 Board’s determination of plan and area compliance

22 with the per-capita premium targets described in

23 subtitle A of title VI of this Act.
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1 PART 3—SPECIFIC RESPONSIBILITIES OF

2 SECRETARY OF LABOR

3 SEC. 1691. RESPONSIBILITIES OF SECRETARY OF LABOR.

4 (a) IN GENERAL.—The Secretary of Labor is respon5 sible—

6 (1) under subtitle E, for the enforcement of re7 quirements applicable to community-rated employers

8 (including requirements relating to payment of pre9 miums) and the administration of large group pur10 chasers;

11 (2) under subtitle E, with respect to elections

12 by eligible purchasers to become large group pur13 chasers and the termination of such elections;

14 (3) for the temporary assumption of the oper15 ation of self-insured employer sponsored health plans

16 that are insolvent;

17 (4) for carrying out any other responsibilities

18 assigned to the Secretary under this Act; and

19 (5) for administering title I of the Employee

20 Retirement Income Security Act of 1974 as it re21 lates to group health plans maintained by large

22 group purchasers.

23 (b) AGREEMENTS WITH STATES.—The Secretary of

24 Labor may enter into agreements with States in order to

25 enforce responsibilities of employers and large group pur26 chasers, and requirements of employer sponsored health
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1 plans, under subtitle B of title I of the Employee Retire2 ment Income Security Act of 1974.

3 (c) CONSULTATION WITH BOARD.—In carrying out

4 activities under this Act with respect to large group pur5 chasers, employer sponsored health plans, and employers,

6 the Secretary of Labor shall consult with the National

7 Health Board.

8 (d) STUDY ON SEASONAL WORKERS.—Not later than

9 6 months after the date of enactment of this Act, the Sec10 retary of Labor, in consultation with the Secretary and

11 such other Federal departments and experts as deter12 mined appropriate, shall prepare and submit to the appro13 priate committees of Congress, a report concerning the im14 pact of requiring employers of seasonal workers to make

15 premium contributions for such workers. The report shall

16 analyze and make recommendations concerning the fiscal

17 and administrative (including paperwork) burdens on em18 ployers, employees, and health plans.

19 (e) EMPLOYER-RELATED REQUIREMENTS.—

20 (1) IN GENERAL.—The Secretary of Labor, in

21 consultation with the Secretary, shall be responsible

22 for assuring that employers—

23 (A) make payments of any employer pre24 miums (and withhold and make payment of the

25 family share of premiums with respect to quali-
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1 fying employees) and provide discounts to em2 ployees as required under this Act, including

3 auditing of collection activities with respect to

4 such payments,

5 (B) submit timely reports as required

6 under this Act, and

7 (C) otherwise comply with requirements

8 imposed on employers under this Act.

9 (2) AUDIT AND SIMILAR AUTHORITIES.—The

10 Secretary of Labor—

11 (A) may carry out such audits (directly or

12 through contract) and such investigations of

13 employers and States, consumer purchasing co14 operatives and large group purchasers,

15 (B) may exercise such authorities under

16 section 504 of Employee Retirement Income Se17 curity Act of 1974 (in relation to activities

18 under this Act),

19 (C) may, with the permission of the Board,

20 provide (through contract or otherwise) for such

21 collection activities (in relation to amounts owed

22 to States, consumer purchasing cooperatives

23 and large group purchasers, and for the benefit

24 of such States, consumer purchasing coopera25 tives and large group purchasers), and
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1 (D) may impose such civil penalties under

2 section 6210,

3 as may be necessary to carry out such Secretary’s

4 responsibilities under this section.

5 (3) AUDITING OF EMPLOYER PAYMENTS.—

6 (A) IN GENERAL.—Each State is respon7 sible for auditing the records of community8 rated employers to assure that employer pay9 ments (including the payment of amounts with10 held) were made in the appropriate amount as

11 provided under subpart A of part 2 of subtitle

12 B of title VI.

13 (B) EMPLOYERS WITH EMPLOYEES RESID14 ING IN DIFFERENT COMMUNITY-RATING

15 AREAS.—In the case of a community-rated em16 ployer which has employees who reside in more

17 than one community-rating area, the Secretary

18 of Labor, in consultation with the Secretary,

19 shall establish a process for the coordination of

20 State auditing activities among the States in21 volved.

22 (C) APPEAL.—In the case of an audit con23 ducted by a State on an employer under this

24 paragraph, an employer or other State that is

25 aggrieved by the determination in the audit is
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1 entitled to review of such audit by the Secretary

2 of Labor in a manner to be provided by such

3 Secretary.

4 (f) AUTHORITY.—The Secretary of Labor is author5 ized to issue such regulations as may be necessary to carry

6 out section 1704 and responsibilities of the Secretary

7 under this Act (including under title XI).

8 SEC. 1692. ASSISTANCE WITH EMPLOYER COLLECTIONS.

9 The Secretary of Labor shall provide States with such

10 technical and other assistance as may promote the effi11 cient collection of all amounts owed under this Act by em12 ployers. Such assistance may include the assessment of

13 civil monetary penalties, not to exceed $5,000 or three

14 times the amount of the liability owed, whichever is great15 er, in the case of repeated failure to pay (as specified in

16 rules of the Secretary of Labor).

17 SEC. 1693. PENALTIES FOR FAILURE OF LARGE EMPLOY18 ERS TO MEET REQUIREMENTS.

19 (a) IN GENERAL.—If the Secretary of Labor finds

20 that a large group purchaser has failed substantially to

21 meet the applicable requirements of subtitle E, the Sec22 retary shall impose a civil money penalty of not to exceed

23 $10,000 for each such violation.

24 (b) EXCESS INCREASE IN PREMIUM EQUIVALENT.—

25 If the Secretary of Labor finds that a large group pur-
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1 chaser that is a large employer is in violation of the re2 quirements of section 6022 (relating to prohibition against

3 excess increase in premium expenditures), the Secretary

4 shall require that the purchaser enter into contracts with

5 all carriers providing community-rated plans in commu6 nity-rating areas in which their experience-rated individ7 uals reside, under which the purchaser—

8 (1) makes payment to the carriers based on an

9 appropriate community rate (determined by the Sec10 retary of Labor based on the final filed per capita

11 premium rate, subject to appropriate risk adjust12 ment and not subject to any employer discount), and

13 (2) makes payments to the State of an amount

14 provided under section 6124.

15 SEC. 1694. APPLICABILITY OF ERISA ENFORCEMENT MECH16 ANISMS FOR ENFORCEMENT OF CERTAIN RE17 QUIREMENTS.

18 The provisions of sections 502 (relating to civil en19 forcement), 504 (relating to investigative authority) and

20 506 (relating to criminal enforcement) of the Employee

21 Retirement Income Security Act of 1974 shall apply to

22 enforcement by the Secretary of Labor of the applicable

23 requirements for large group purchasers in the same man24 ner and to same extent as such provisions apply to en25 forcement of title I of such Act.
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1 PART 4—COLLECTIVE BARGAINING DISPUTE

2 RESOLUTION

3 SEC. 1695. FINDINGS AND PURPOSE.

4 (a) FINDING.—Congress finds that—

5 (1) consistent with the intention of this Act to

6 eliminate waste and inefficiency in the health care

7 industry, it is important to avoid costly and disrup8 tive labor disputes; and

9 (2) such disputes are particularly likely to take

10 place during the period of transition to a restruc11 tured health care delivery system because of disrup12 tions to established employment relationships result13 ing from that restructuring.

14 (b) PURPOSE.—It is the purpose of this part to ex15 pand the role of the Federal Mediation and Conciliation

16 Service, acting through the Boards of Inquiry provided for

17 in limited terms under section 8(g) of the National Labor

18 Relations Act (29 U.S.C. 158(g)) and section 213 of the

19 Labor Management Relations Act of 1947 (29 U.S.C.

20 183), to avoid labor disputes by providing for public fact

21 finding in contract negotiations.

22 SEC. 1696. APPLICATION LIMITED TO TRANSITION PERIOD.

23 The provisions of this part are intended to avoid cost24 ly and disruptive labor disputes during the period of tran25 sition to a restructured health care delivery system, and
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1 shall be repealed effective upon the end of calendar year

2 2000.

3 SEC. 1697. REQUEST FOR APPOINTMENT OF BOARD OF IN4 QUIRY.

5 (a) IN GENERAL.—A health care entity (as defined

6 in section 3082(a)) or a labor organization that has been

7 lawfully certified or recognized as the representative of the

8 employees of a health care entity for the purpose of engag9 ing in collective bargaining concerning wages, hours and

10 other terms and conditions of employment, may request

11 that the Director of the Federal Mediation and Concilia12 tion Service (hereafter referred to in this part as the ‘‘Di13 rector’’) appoint an impartial Health Care Board of In14 quiry to investigate the issues involved in a collective bar15 gaining dispute between the entity and the labor organiza16 tion.

17 (b) TIME FOR REQUEST.—Such request may be made

18 no earlier than 60 days after notice of the existence of

19 a contract dispute has been provided to—

20 (1) the Federal Mediation and Conciliation

21 Service in accordance with clause (A) or (B) of the

22 last sentence of section 8(d) of the Labor Manage23 ment Relations Act (29 U.S.C. 158(d)); or

24 (2) where the health care entity is otherwise ex25 empt from coverage under such Act, any comparable
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1 State or territorial agency established to mediate

2 and conciliate disputes to which notice is required to

3 be given under applicable State law.

4 SEC. 1698. APPOINTMENT OF BOARD OF INQUIRY.

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

6 (b), the Director shall appoint a Health Care Board of

7 Inquiry not later than 10 days after receipt of a request

8 under section 1696. Each such Board shall be composed

9 of such number of individuals as the Director may deem

10 desirable. No member appointed under this section shall

11 have any interest or involvement in the health care institu12 tions or the employee organizations involved in the dis13 pute.

14 (b) LIMITATION.—With respect to the appointment

15 of a Health Care Board of Inquiry under paragraph (1),

16 if the Director determines that—

17 (1) the health care entity is—

18 (A) otherwise exempt from coverage under

19 the Labor Management Relations Act, as

20 amended (29 U.S.C. 141 et seq.); and

21 (B) subject to State laws containing proce22 dures for the resolution of impasses in collective

23 bargaining that are comparable to those that

24 would be followed by a Board of Inquiry under

25 this section; or
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1 (2) the parties involved have agreed to proce2 dures for the resolution of the impasse in collective

3 bargaining that are comparable to those that would

4 be followed by a Board of Inquiry;

5 the Director may refuse the request for the appointment

6 of such a Board.

7 SEC. 1699. PUBLIC FACTFINDING.

8 A Health Care Board of Inquiry appointed under this

9 part shall investigate the issues involved in the dispute and

10 make a written report thereon to the parties and to the

11 Director within 30 days after the establishment of such

12 a Board. The written report shall contain the findings of

13 fact together with the Board’s recommendations for set14 tling the dispute, with the objective of achieving a prompt,

15 peaceful and just settlement of the dispute. The Board

16 shall arrange for publication of such report within the

17 community served by the health care entity involved.

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

19 INQUIRY.

20 (a) EMPLOYEES IF FEDERAL GOVERNMENT.—Mem21 bers of any board established under this part who are oth22 erwise employed by the Federal Government shall serve

23 without compensation but shall be reimbursed for travel,

24 subsistence, and other necessary expenses incurred by

25 such members in carrying out its duties under this section.
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1 (b) OTHER MEMBERS.—Members of any board estab2 lished under this section who are not subject to subsection

3 (a) shall receive compensation at a rate prescribed by the

4 Director but not to exceed the daily rate prescribed for

5 GS–128 of the General Schedule under section 5332 of

6 title 5, United States Code, including travel for each day

7 they are engaged in the performance of their duties under

8 this section and shall be entitled to reimbursement for

9 travel, subsistence, and other necessary expenses incurred

10 by them in carrying out their duties under this part.

11 SEC. 1699B. MAINTENANCE OF STATUS QUO.

12 After the establishment of a board under section

13 1697, and for 15 days after any such board has issued

14 its report, no change in the status quo in effect prior to

15 the expiration of the contract in the case of negotiations

16 for a contract renewal, or in effect prior to the time the

17 parties began their bargaining in the case of an initial be18 ginning negotiation, except by agreement, shall be made

19 by the parties to the controversy.

20 Subtitle H—Miscellaneous

21 Employer Requirements

22 SEC. 1701. AUDITING OF RECORDS.

23 Each community-rated employer shall maintain such

24 records, and provide the State for the area in which the

25 employer maintains the principal place of employment (as
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1 specified by the Secretary of Labor) with access to such

2 records, as may be necessary to verify and audit the infor3 mation reported under this subtitle.

4 SEC. 1702. PROHIBITION OF CERTAIN EMPLOYER DISCRIMI5 NATION.

6 No employer may discriminate with respect to an em7 ployee on the basis of the family status of the employee

8 or on the basis of the class of family enrollment selected

9 with respect to the employee.

10 SEC. 1703. EVASION OF OBLIGATIONS.

11 It shall be unlawful for any employer or other person

12 to discharge, fine, suspend, expel, discipline, discriminate

13 or otherwise take adverse action against any employee if

14 a purpose of such action is to interfere with the employee’s

15 attainment of status as a qualifying employee, as a full

16 time employee, or as a part-time employee, or if a purpose

17 of such action is to evade or avoid any obligation under

18 this Act.

19 SEC. 1704. PROHIBITION ON SELF-FUNDING OF COST SHAR20 ING BENEFITS.

21 (a) PROHIBITION.—A community-rated employer

22 (and an experience-rated employer with respect to employ23 ees who are community rate eligible individuals) may pro24 vide benefits to employees that consist of the benefits in25 cluded in a cost sharing policy (as defined in section
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1 1507(c)) only through a contribution toward the purchase

2 of a cost sharing policy which is funded primarily through

3 insurance.

4 (b) INDIVIDUAL AND EMPLOYER RESPONSIBIL5 ITIES.—In the case of an individual who resides in a sin6 gle-payer State and an employer with respect to employees

7 who reside in such a State, the responsibilities of such in8 dividual and employer under such system shall supersede

9 the obligations of the individual and employer under this

10 subtitle.

11 SEC. 1705. EMPLOYER RETIREE OBLIGATION.

12 (a) IN GENERAL.—If an employer was providing, as

13 of October 1, 1993, a threshold payment (specified in sub14 section (c)) for a person who was a qualifying retired bene15 ficiary (as defined in subsection (b)) as of such date, the

16 employer shall pay, to or on behalf of that beneficiary for

17 each month beginning with January 1998, an amount that

18 is not less than the amount specified in subsection (d),

19 but only if and for so long as the person remains a qualify20 ing retired beneficiary.

21 (b) QUALIFYING RETIRED BENEFICIARY.—In this

22 section, the term ‘‘qualifying retired beneficiary’’ means

23 a person who is an eligible retiree or qualified spouse or

24 child (as such terms are defined in subsections (b) and

25 (c) of section 6114).
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1 (c) THRESHOLD PAYMENT.—The term ‘‘threshold

2 payment’’ means, for an employer with respect to a health

3 benefit plan providing coverage to a qualifying retired ben4 eficiary, a payment—

5 (1) for coverage of any item or service described

6 in section 1101, and

7 (2) the amount of which is at least 20 percent

8 of the amount of the premium (or premium equiva9 lent) for such coverage with respect to the bene10 ficiary (and dependents).

11 (d) AMOUNT.—The amount specified in this sub12 section is 20 percent of the weighted average premium for

13 the health care coverage area in which the beneficiary re14 sides and for the applicable class of family enrollment.

15 (e) NATURE OF OBLIGATION.—The requirement of

16 this section shall be in addition to any other requirement

17 imposed on an employer under this Act or otherwise.

18 (f) PROTECTION OF COLLECTIVE BARGAINING

19 RIGHTS.—Nothing in this Act (including this section)

20 shall be construed as affecting collective bargaining rights

21 or rights under collective bargaining agreements.

22 SEC. 1706. RULES GOVERNING LITIGATION INVOLVING RE23 TIREE HEALTH BENEFITS.

24 (a) MAINTENANCE OF BENEFITS.—

25 (1) IN GENERAL.—If—
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1 (A) retiree health benefits or plan or plan

2 sponsor payments in connection with such bene3 fits are to be or have been terminated or re4 duced under an employee welfare benefit plan;

5 and

6 (B) an action is brought by any participant

7 or beneficiary to enjoin or otherwise modify

8 such termination or reduction,

9 the court without requirement of any additional

10 showing shall promptly order the plan and plan

11 sponsor to maintain the retiree health benefits and

12 payments at the level in effect immediately before

13 the termination or reduction while the action is

14 pending in any court. No security or other undertak15 ing shall be required of any participant or bene16 ficiary as a condition for issuance of such relief. An

17 order requiring such maintenance of benefits may be

18 refused or dissolved only upon determination by the

19 court, on the basis of clear and convincing evidence,

20 that the action is clearly without merit.

21 (2) MODIFICATIONS.—Nothing in this section

22 shall preclude a court from modifying the obligation

23 of a plan or plan sponsor to the extent retiree bene24 fits are otherwise being paid under section 6208.
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1 (b) BURDEN OF PROOF.—In addition to the relief au2 thorized in subsection (a) or otherwise available, if, in any

3 action described in subsection (a), the terms of the em4 ployee welfare benefit plan summary plan description or

5 other materials distributed to employees at the time of a

6 participant’s retirement or disability are silent or are am7 biguous, either on their face or after consideration of ex8 trinsic evidence, as to whether retiree health benefits and

9 payments may be terminated or reduced for a participant

10 and his or her beneficiaries after the participant’s retire11 ment or disability, then the benefits and payments shall

12 not be terminated or reduced for the participant and his

13 or her beneficiaries unless the plan or plan sponsor estab14 lishes by a preponderance of the evidence that the sum15 mary plan description and other materials about retiree

16 benefits—

17 (1) were distributed to the participant at least

18 90 days in advance of retirement or disability;

19 (2) did not promise retiree health benefits for

20 the lifetime of the participant and his or her spouse;

21 and

22 (3) clearly and specifically disclosed that the

23 plan allowed such termination or reduction as to the

24 participant after the time of his or her retirement or

25 disability.
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1 The disclosure described in paragraph (3) must have been

2 made prominently and in language which can be under3 stood by the average plan participant.

4 (c) REPRESENTATION.—Notwithstanding any other

5 provision of law, an employee representative of any retired

6 employee or the employee’s spouse or dependents may—

7 (1) bring an action described in this section on

8 behalf of such employee, spouse, or dependents; or

9 (2) appear in such an action on behalf of such

10 employee, spouse or dependents.

11 (d) RETIREE HEALTH BENEFITS.—For the purposes

12 of this section, the term ‘‘retiree health benefits’’ means

13 health benefits (including coverage) which are provided

14 to—

15 (1) retired or disabled employees who, imme16 diately before the termination or reduction, are enti17 tled to receive such benefits upon retirement or be18 coming disabled; and

19 (2) their spouses and dependents.

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

21 this section shall apply to actions relating to terminations

22 or reductions of retiree health benefits which are pending

23 or brought, on or after July 20, 1993.
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1 SEC. 1707. PARTICIPATION IN FEHBP.

2 (a) IN GENERAL.—A qualifying employee of an

3 American employer (as defined in section 3121(h) of the

4 Internal Revenue Code of 1986) who is employed by such

5 an employer outside the United States may elect to pur6 chase coverage through designated health plans participat7 ing in FEHBP.

8 (b) VOLUNTARY PARTICIPATION.—Participation by

9 an employee described in subsection (a) shall be at the

10 discretion of such employee, and employer payments on

11 behalf of such employee shall be voluntary.

12 (c) REGULATIONS.—The National Health Board, in

13 consultation with the Office of Personnel Management,

14 shall issue regulations governing the provision and reim15 bursement of items and services included in the com16 prehensive benefit package, premium payments by employ17 ers and employees, and the establishment of separate risk

18 pools for Federal and non-Federal employees abroad.

19 SEC. 1708. ENFORCEMENT.

20 In the case of a person that violates a requirement

21 of this subtitle, the Secretary of Labor may impose a civil

22 money penalty, in an amount not to exceed $10,000, for

23 each violation with respect to each individual.
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1 Subtitle I—General Definitions;

2 Miscellaneous Provisions

3 PART 1—GENERAL DEFINITIONS

4 SEC. 1901. DEFINITIONS RELATING TO EMPLOYMENT AND

5 INCOME.

6 (a) IN GENERAL.—Except as otherwise specifically

7 provided, in this Act the following definitions and rules

8 apply:

9 (1) EMPLOYER, EMPLOYEE, EMPLOYMENT, AND

10 WAGES DEFINED.—Except as provided in this sec11 tion—

12 (A) the terms ‘‘wages’’ and ‘‘employment’’

13 have the meanings given such terms under sec14 tion 3121 of the Internal Revenue Code of

15 1986,

16 (B) the term ‘‘employee’’ has the meaning

17 given such term under section 3121 of such

18 Code, subject to the provisions of chapter 25 of

19 such Code, and

20 (C) the term ‘‘employer’’ has the same

21 meaning as the term ‘‘employer’’ as used in

22 such section 3121.

23 (2) EXCEPTIONS.—For purposes of paragraph

24 (1)—

25 (A) EMPLOYMENT.—
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1 (i) EMPLOYMENT INCLUDED.—Para2 graphs (1), (2), (5), (7) (other than

3 clauses (i) through (iv) of subparagraph

4 (C) and clauses (i) through (v) of subpara5 graph (F)), (8), (9), (10), (11), (13), (15),

6 (18), and (19) of section 3121(b) of the

7 Internal Revenue Code of 1986 shall not

8 apply.

9 (ii) EXCLUSION OF INMATES AS EM10 PLOYEES.—Employment shall not include

11 services performed in a penal institution by

12 an inmate thereof or in a hospital or other

13 health care institution by a patient thereof.

14 (B) WAGES.—

15 (i) IN GENERAL.—Paragraph (1) of

16 section 3121(a) of the Internal Revenue

17 Code of 1986 shall not apply.

18 (ii) TIPS NOT INCLUDED.—The term

19 ‘‘wages’’ does not include cash tips.

20 (C) EXCLUSION OF CERTAIN FOREIGN EM21 PLOYMENT.—The term ‘‘employee’’ does not in22 clude an individual with respect to service, if

23 the individual is not a citizen or resident of the

24 United States and the service is performed out25 side the United States.
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1 (3) AGGREGATION RULES FOR EMPLOYERS.—

2 For purposes of this Act—

3 (A) all employers treated as a single em4 ployer under subsection (a) or (b) of section 52

5 of the Internal Revenue Code of 1986 shall be

6 treated as a single employer, and

7 (B) under regulations of the Secretary of

8 Labor, all employees of organizations which are

9 under common control with one or more organi10 zations which are exempt from income tax

11 under subtitle A of the Internal Revenue Code

12 of 1986 shall be treated as employed by a single

13 employer.

14 The regulations prescribed under subparagraph (B)

15 shall be based on principles similar to the principles

16 which apply to taxable organizations under subpara17 graph (A).

18 (4) EMPLOYER PREMIUM.—The term ‘‘employer

19 premium’’ refers to the premium established and im20 posed under part 2 of subtitle B of title VI.

21 (b) QUALIFYING EMPLOYEE; FULL-TIME EMPLOY22 MENT.—

23 (1) QUALIFYING EMPLOYEE.—

24 (A) IN GENERAL.—In this Act, the term

25 ‘‘qualifying employee’’ means, with respect to
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1 an employer for a month, an employee (other

2 than a covered child, as defined in subpara3 graph (C)) who is employed by the employer for

4 at least 40 hours (as determined under para5 graph (3)) in the month, subject to the limita6 tion set forth in subparagraph (D).

7 (B) NO SPECIAL TREATMENT OF MEDI8 CARE BENEFICIARIES, SSI RECIPIENTS, AFDC

9 RECIPIENTS, AND OTHERS.—Subparagraph (A)

10 shall apply regardless of whether or not the em11 ployee is a medicare-eligible individual, an SSI

12 recipient, an AFDC recipient, an individual de13 scribed in section 1004(b), an eligible individual

14 or is authorized to be so employed.

15 (C) COVERED CHILD DEFINED.—In sub16 paragraph (A), the term ‘‘covered child’’ means

17 an eligible individual who is a child and is en18 rolled under a health plan as a family member

19 described in section 1011(b)(2)(B).

20 (D) QUALIFYING EMPLOYEES.—As used in

21 this Act—

22 (i) the term qualifying employee shall

23 not include, with respect to an employer

24 for a month, an employee of a nonelecting
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1 small employer (as defined in section

2 6220);

3 (ii) the term ‘‘nonqualifying em4 ployee’’ means, with respect to an employer

5 for a month, an employee (who otherwise

6 would be a qualifying employee) of a

7 nonelecting small employer;

8 (iii) the term ‘‘qualifying employee’’

9 shall not include, with respect to an em10 ployer for a month, a part-time employee

11 during the first month (four-week period)

12 of such employee’s employment; and

13 (iv) the term ‘‘qualifying employee’’

14 shall include, with respect to an employer

15 for a month, a part-time employee begin16 ning with the second month of such em17 ployee’s employment.

18 (2) FULL-TIME EQUIVALENT EMPLOYEES;

19 PART-TIME EMPLOYEES.—

20 (A) IN GENERAL.—For purposes of this

21 Act, a qualifying employee who is employed by

22 an employer—

23 (i) for at least 120 hours in a month,

24 is counted as 1 full-time equivalent em-
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1 ployee for the month and shall be deemed

2 to be employed on a full-time basis, or

3 (ii) for at least 40 hours, but less

4 than 120 hours, in a month, is counted as

5 a fraction of a full-time equivalent em6 ployee in the month equal to the full-time

7 employment ratio (as defined in subpara8 graph (B)) for the employee and shall be

9 deemed to be employed on a part-time

10 basis.

11 (B) FULL-TIME EMPLOYMENT RATIO DE12 FINED.—For purposes of this Act, the term

13 ‘‘full-time employment ratio’’ means, with re14 spect to a qualifying employee of an employer

15 in a month, the lesser of 1 or the ratio of—

16 (i) the number of hours of employ17 ment such employee is employed by such

18 employer for the month (as determined

19 under paragraph (3)), to

20 (ii) 120 hours.

21 (C) FULL-TIME EMPLOYEE.—For purposes

22 of this Act, the term ‘‘full-time employee’’

23 means, with respect to an employer, an em24 ployee who is employed on a full-time basis (as

25 specified in subparagraph (A)) by the employer.
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1 (D) PART-TIME EMPLOYEE.—For purposes

2 of this Act, the term ‘‘part-time employee’’

3 means, with respect to an employer, an em4 ployee who is employed on a part-time basis (as

5 specified in subparagraph (A)) by the employer.

6 (E) CONSIDERATION OF INDUSTRY PRAC7 TICE.—As provided under rules established by

8 the Board, an employee who is not described in

9 subparagraph (C) or (D) shall be considered to

10 be employed on a full-time or part-time basis by

11 an employer (and to be a full-time or part-time

12 employee of an employer) for a month (or for

13 all months in a 12-month period) if the em14 ployee is employed by that employer on a con15 tinuing basis that, taking into account the

16 structure or nature of employment in the indus17 try, represents full or part-time employment in

18 that industry.

19 (F) INSTITUTIONS OF HIGHER EDU20 CATION.—Notwithstanding any other provision

21 in this section—

22 (i)(I) employees of an Institution of

23 higher education (as defined in section

24 1201(a) of the Higher Education Act of

25 1965), or of an elementary or secondary
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1 school (as defined in section 1471 of the

2 Elementary and Secondary Education Act

3 of 1965), who are exempt under section 13

4 of the Fair Labor Standards Act, shall be

5 deemed to be full-time employees if they

6 work the hours that constitute full-time

7 employment as defined at such institution;

8 (II) part-time employment shall be

9 considered proportional to such hours for

10 full-time employees; and

11 (III) part-time employees who work at

12 least one-third of the hours that constitute

13 full-time employment as defined at such in14 stitution shall be eligible for proportional

15 employer premium contributions; and

16 (ii) regular employees of institutions

17 of higher education or elementary and sec18 ondary schools who are not paid during the

19 summer months or other periods of the

20 year, but are assured employment at the

21 end of such periods, shall be eligible for

22 year-round employer premium contribu23 tions if such individuals are not eligible to

24 collect unemployment compensation for the

25 periods for which they would receive health
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1 care premium contributions from the em2 ployer covered by this subsection.

3 (3) HOURS OF EMPLOYMENT.—

4 (A) IN GENERAL.—For purposes of this

5 Act, the Board shall specify the method for

6 computing hours of employment for employees

7 of an employer consistent with this paragraph.

8 The Board shall take into account rules used

9 for purposes of applying the Fair Labor Stand10 ards Act.

11 (B) HOURLY WAGE EARNERS.—In the case

12 of an individual who receives compensation (in

13 the form of hourly wages or compensation) for

14 the performance of services, the individual is

15 considered to be ‘‘employed’’ by an employer for

16 an hour if compensation is payable with respect

17 to that hour of employment, without regard to

18 whether or not the employee is actually per19 forming services during such hours.

20 (4) TREATMENT OF SALARIED EMPLOYEES AND

21 EMPLOYEES PAID ON CONTINGENT OR BONUS AR22 RANGEMENTS.—In the case of an employee who re23 ceives compensation on a salaried basis or on the

24 basis of a commission (or other contingent or bonus

25 basis), rather than an hourly wage, the Board shall
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1 establish rules for the conversion of the compensa2 tion to hours of employment, taking into account the

3 minimum monthly compensation levels for workers

4 employed on a full-time basis under the Fair Labor

5 Standards Act and other factors the Board considers

6 relevant.

7 (c) DEFINITIONS RELATING TO SELF-EMPLOY8 MENT.—In this Act:

9 (1) NET EARNINGS FROM SELF-EMPLOY10 MENT.—The term ‘‘net earnings from self-employ11 ment’’ has the meaning given such term under sec12 tion 1402(a) of the Internal Revenue Code of 1986.

13 (2) SELF-EMPLOYED INDIVIDUAL.—The term

14 ‘‘self-employed individual’’ means, for a year, an in15 dividual who has net earnings from self-employment

16 for the year.

17 SEC. 1902. OTHER GENERAL DEFINITIONS.

18 Except as otherwise specifically provided, in this Act

19 the following definitions apply:

20 (1) AFDC FAMILY.—The term ‘‘AFDC family’’

21 means a family composed entirely of one or more

22 AFDC recipients.

23 (2) AFDC RECIPIENT.—The term ‘‘AFDC re24 cipient’’ means, for a month, an individual who is

25 receiving aid or assistance under any plan of the
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1 State approved under title I, X, XIV, or XVI, or

2 part A or part E of title IV, of the Social Security

3 Act for the month.

4 (3) APPLICABLE HEALTH PLAN.—The term

5 ‘‘applicable health plan’’ means, with respect to an

6 eligible individual, the health plan specified pursuant

7 to section 1004 and part 2 of subtitle A.

8 (4) CARRIER.—The term ‘‘carrier’’ means a li9 censed insurance company, a hospital or medical

10 service corporation (including an existing Blue Cross

11 or Blue Shield organization, within the meaning of

12 section 833(c)(2) of Internal Revenue Code of

13 1986), a health maintenance organization, or other

14 entity licensed or certified by the State to provide

15 health insurance or health benefits. The Board may

16 issue regulations that provide for affiliated carriers

17 to be treated as a single carrier where appropriate

18 under this Act.

19 (5) CASE MANAGEMENT.—The term ‘‘case man20 agement’’ means services that assist individuals in

21 gaining access to needed medical, social, educational,

22 and other services.

23 (6) CITIZEN OF ANOTHER COUNTRY LEGALLY

24 RESIDING IN THE UNITED STATES.—The term ‘‘citi-
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1 zen of another country legally residing in the United

2 States’’ means any of the following:

3 (A) An alien lawfully admitted for perma4 nent residence (within the meaning of section

5 101(a)(20) of the Immigration and Nationality

6 Act).

7 (B) An alien granted work authorization

8 by the Immigration and Naturalization Service.

9 (C) An alien permanently residing in the

10 United States under color of law, including (but

11 not limited to) any of the following:

12 (i) An alien who is admitted as a refu13 gee under section 207 of the Immigration

14 and Nationality Act.

15 (ii) An alien who is granted asylum

16 under section 208 of such Act.

17 (iii) An alien whose deportation is

18 withheld under section 243(h) of such Act.

19 (iv) An alien who is admitted for tem20 porary residence under section 210, 210A,

21 or 245A of such Act.

22 (v) An alien who has been paroled

23 into the United States under section

24 212(d)(5) of such Act for an indefinite pe25 riod or who has been granted extended vol-
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1 untary departure, temporary protected sta2 tus, or deferred enforced departure.

3 (vi) An alien who is the spouse or un4 married child under 21 years of age of a

5 citizen of the United States, or the parent

6 of such a citizen if the citizen is over 21

7 years of age, and with respect to whom an

8 application for adjustment to lawful per9 manent residence is pending.

10 (vii) An alien within such other classi11 fication of aliens permanently residing

12 under color of law for purposes of this Act

13 only as the National Health Board may es14 tablish by regulation. Such regulation shall

15 include categories of such aliens who are

16 included in regulations as in effect on the

17 date of the enactment of this Act under

18 title XIX of the Social Security Act and

19 other categories within a public health pri20 ority.

21 (7) COMBINATION COST SHARING PLAN.—The

22 term ‘‘combination cost sharing plan’’ means a

23 health plan that provides combination cost sharing

24 schedule (consistent with section 1134).
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1 (8) COMMUNITY-RATED EMPLOYER.—The term

2 ‘‘community-rated employer’’ means, with respect to

3 an employee, an employer that is not an experience4 rated employer with respect to such employee.

5 (9) COMMUNITY-RATED PLAN.—The term

6 ‘‘community-rated plan’’ means a health plan cer7 tified by a State under section 1503 that is provided

8 to community-rated individuals.

9 (10) COMMUNITY RATE ELIGIBLE INDIVID10 UAL.—The term ‘‘community rate eligible individ11 ual’’ means an eligible individual with respect to

12 whom a community-rated plan is an applicable

13 health plan.

14 (11) COMPREHENSIVE BENEFIT PACKAGE.—

15 The term ‘‘comprehensive benefit package’’ means

16 the package of health benefits provided under sub17 title B.

18 (12) CONSUMER PRICE INDEX; CPI.—The terms

19 ‘‘consumer price index’’ and ‘‘CPI’’ mean the

20 Consumer Price Index for all urban consumers (U.S.

21 city average), as published by the Bureau of Labor

22 Statistics.

23 (13) COST SHARING POLICY.—The term ‘‘cost

24 sharing policy’’ means a health insurance policy or

25 health benefit plan offered to an community rate eli-
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1 gible individual which provides coverage for

2 deductibles, coinsurance, and copayments imposed as

3 part of the comprehensive benefit package under

4 subtitle B, whether imposed under a higher cost

5 sharing plan or with respect to out-of-network pro6 viders.

7 (14) COVERED WAGES DEFINED.—In this sec8 tion, the term ‘‘covered wages’’ means wages paid an

9 employee of an employer during a month in which

10 the employee was a qualifying employee of the em11 ployer.

12 (15) DIAGNOSABLE MENTAL DISORDER AND

13 DIAGNOSABLE SUBSTANCE ABUSE DISORDER.—The

14 terms ‘‘diagnosable mental disorder’’ and

15 ‘‘diagnosable substance abuse disorder’’ mean a dis16 order that—

17 (A) is listed in the Diagnostic and Statis18 tical Manual of Mental Disorders, Fourth Edi19 tion, Revised or a revised version of such man20 ual (except V Codes for Conditions Not Attrib21 utable to a Mental Disorder That Are a Focus

22 of Attention or Treatment);

23 (B) is the equivalent of a disorder de24 scribed in subparagraph (A), but is listed in the

25 International Classification of Diseases, 9th Re-
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1 vision, Clinical Modification, Third Edition or a

2 revised version of such text; or

3 (C) is listed in any authoritative text speci4 fying diagnostic criteria for mental disorders or

5 substance abuse disorders that is identified by

6 the National Health Board.

7 (16) DISABLED SSI RECIPIENT.—The term

8 ‘‘disabled SSI recipient’’ means an individual who—

9 (A) is an SSI recipient, and

10 (B) has been determined to be disabled for

11 purposes of the supplemental security income

12 program (under title XVI of the Social Security

13 Act).

14 (17) ESSENTIAL COMMUNITY PROVIDER.—The

15 term ‘‘essential community provider’’ means an en16 tity certified as such a provider under subpart B of

17 part 2 of subtitle F.

18 (18) EXPERIENCE-RATED EMPLOYER.—The

19 term ‘‘experience-rated employer’’ means—

20 (A) a large employer that is a large group

21 purchaser, and

22 (B) another employer that participates in a

23 experience-rated plan sponsored by a large

24 group purchaser described in paragraph (6) or

25 (7) of section 1401.
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1 (19) EXEMPT INDIVIDUAL.—The term ‘‘exempt

2 individual’’ means an individual that has been grant3 ed an exemption from paying Social Security Taxes

4 under section 1402(g) of the Internal Revenue Code

5 of 1986, or an individual who would be eligible for

6 an exemption under such section if the individual

7 were self-employed.

8 (20) EXPERIENCE-RATED INDIVIDUAL.—The

9 term ‘‘experience-rated individual’’ means, with re10 spect to a large group purchaser, an eligible individ11 ual with respect to whom an experience-rated plan

12 sponsored by the purchaser is the applicable health

13 plan.

14 (21) EXPERIENCE-RATED PLAN.—The term

15 ‘‘experience-rated plan’’ means either—

16 (A) an employer sponsored health plan (as

17 defined in section 1401(e)(5)) offered by a large

18 group purchaser, or

19 (B) an insured health plan offered by a

20 carrier to a large group purchaser.

21 (22) FEE-FOR-SERVICE PLAN.—The term ‘‘fee22 for-service plan’’ means a health plan described in

23 section 1211(b)(2)(A).

24 (23) FIRST YEAR.—The term ‘‘first year’’

25 means, with respect to—
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1 (A) a State that is a participating State in

2 a year before 1998, the year in which the State

3 first is a participating State, or

4 (B) any other State, 1998.

5 (24) HEALTH CARE COVERAGE AREA.—The

6 term ‘‘health care coverage area’’ means an area

7 specified by a State under section 1202.

8 (25) HEALTH PLAN SPONSOR.—The term

9 ‘‘health plan sponsor’’ means—

10 (A) with respect to a community-rated

11 plan, the carrier providing the plan,

12 (B) with respect to an insured experience13 rated plan, the carrier providing the plan, and

14 (C) with respect to a self-funded experi15 ence-rated plan, the large group purchaser pro16 viding the plan.

17 (26) HIGHER COST SHARING PLAN.—The term

18 ‘‘higher cost sharing plan’’ means a health plan that

19 provides a higher cost sharing schedule (consistent

20 with section 1133).

21 (27) HOSPITAL.—The term ‘‘hospital’’ has the

22 meaning given such term in section 1861(e) of the

23 Social Security Act, except that such term shall in24 clude—
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1 (A) in the case of an item or service pro2 vided to an individual whose applicable health

3 plan is specified pursuant to section 1005(b)(1),

4 a facility of the uniformed services under title

5 10, United States Code, that is primarily en6 gaged in providing services to inpatients that

7 are equivalent to the services provided by a hos8 pital defined in such section 1861(e);

9 (B) in the case of an item or service pro10 vided to an individual whose applicable health

11 plan is specified pursuant to section 1005(b)(2),

12 a facility operated by the Department of Veter13 ans Affairs that is primarily engaged in provid14 ing services to inpatients that are equivalent to

15 the services provided by a hospital defined in

16 such section 1861(e); and

17 (C) in the case of an item or service pro18 vided to an individual whose applicable health

19 plan is specified pursuant to section 1005(b)(3),

20 a facility operated by the Indian Health Service

21 that is primarily engaged in providing services

22 to inpatients that are equivalent to the services

23 provided by a hospital defined in such section

24 1861(e).
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1 (28) INPATIENT HOSPITAL SERVICES.—The

2 term ‘‘inpatient hospital services’’ means items and

3 services described in paragraphs (1) through (3) of

4 section 1861(b) of the Social Security Act when pro5 vided to an inpatient of a hospital. The National

6 Health Board shall specify those health professional

7 services described in section 1103 that shall be

8 treated as inpatient hospital services when provided

9 to an inpatient of a hospital.

10 (29) LONG-TERM NONIMMIGRANT.—The term

11 ‘‘long-term nonimmigrant’’ means a nonimmigrant

12 described in subparagraph (E), (H), (I), (J), (K),

13 (L), (M), (N), (O), (Q), or (R) of section 101(a)(15)

14 of the Immigration and Nationality Act or an alien

15 within such other classification of nonimmigrant as

16 the National Health Board may establish by regula17 tion.

18 (30) LOWER COST SHARING PLAN.—The term

19 ‘‘lower cost sharing plan’’ means a health plan that

20 provides a lower cost sharing schedule (consistent

21 with section 1132).

22 (31) MEDICARE PROGRAM.—The term ‘‘medi23 care program’’ means the health insurance program

24 under title XVIII of the Social Security Act.
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1 (32) MEDICARE-ELIGIBLE INDIVIDUAL.—The

2 term ‘‘medicare-eligible individual’’ means, subject to

3 section 1012(a), an individual who is entitled to ben4 efits under part A of the medicare program.

5 (33) MEDICATIONS MANAGEMENT.—

6 (A) IN GENERAL.—The term ‘‘medications

7 management’’ refers to the prescription, use,

8 monitoring, and review of medication for treat9 ment of a mental disorder or pharmacotherapy

10 for the treatment of a substance abuse disorder,

11 including no more than minimal medical psy12 chotherapy or counseling.

13 (B) VISIT.—For purposes of medications

14 management, the term ‘‘visit’’ means one week

15 of treatment.

16 (34) MOVE.—The term ‘‘move’’ means, respect

17 to an individual, a change of residence of the indi18 vidual from one health care coverage area to another

19 health care coverage area.

20 (35) NATIONAL HEALTH BOARD; BOARD.—The

21 terms ‘‘National Health Board’’ and ‘‘Board’’ mean

22 the National Health Board created under section

23 1601.

24 (36) NON-QUALIFYING EMPLOYEE.—The term

25 ‘‘non-qualifying employee’’ means, with respect to an
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1 employer for a month, an employee (who otherwise

2 would be a qualifying employee) of a nonelecting

3 small employer.

4 (37) PARTICIPATING PROVIDER.—The term

5 ‘‘participating provider’’ means, with respect to a

6 health plan, a provider of health care services who

7 is a member of a provider network of the plan.

8 (38) PLACED FOR ADOPTION.—The term

9 ‘‘placed for adoption’’ in connection with any place10 ment for adoption of a child with any person, means

11 the assumption and retention by such person of a

12 legal obligation for total or partial support of such

13 child in anticipation of the adoption of such child.

14 (39) POVERTY LEVEL.—

15 (A) IN GENERAL.—The term ‘‘applicable

16 poverty level’’ means, for a family for a year,

17 the official poverty line (as defined by the Of18 fice of Management and Budget, and revised

19 annually in accordance with section 673(2) of

20 the Omnibus Budget Reconciliation Act of

21 1981) applicable to a family of the size involved

22 (as determined under subparagraph (B)) for

23 1994 adjusted by the percentage increase or de24 crease described in subparagraph (C) for the

25 year involved.
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1 (B) FAMILY SIZE.—In applying the appli2 cable poverty level to—

3 (i) an individual enrollment, the fam4 ily size is deemed to be one person;

5 (ii) a couple-only enrollment, the fam6 ily size is deemed to be two persons;

7 (iii) a single parent enrollment, the

8 family size is deemed to be three persons;

9 or

10 (iv) a dual parent enrollment, the

11 family size is deemed to be four persons.

12 (C) PERCENTAGE ADJUSTMENT.—The per13 centage increase or decrease described in this

14 subparagraph for a year is the percentage in15 crease or decrease by which the average CPI for

16 the 12-month-period ending with August 31 of

17 the preceding year exceeds such average for the

18 12-month period ending with August 31, 1993.

19 (D) ROUNDING.—Any adjustment made

20 under subparagraph (A) for a year shall be

21 rounded to the nearest multiple of $100.

22 (40) PRISONER.—The term ‘‘prisoner’’ means,

23 as specified by the Board, an eligible individual dur24 ing a period of imprisonment under Federal, State,

25 or local authority after conviction as an adult.
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1 (41) PSYCHIATRIC HOSPITAL.—The term ‘‘psy2 chiatric hospital’’ has the meaning given such term

3 in section 1861(f) of the Social Security Act, except

4 that such term shall include—

5 (A) in the case of an item or service pro6 vided to an individual whose applicable health

7 plan is specified pursuant to section 1005(b)(1),

8 a facility of the uniformed services under title

9 10, United States Code, that is engaged in pro10 viding services to inpatients that are equivalent

11 to the services provided by a psychiatric hos12 pital;

13 (B) in the case of an item or service pro14 vided to an individual whose applicable health

15 plan is specified pursuant to section 1005(b)(2),

16 a facility operated by the Department of Veter17 ans Affairs that is engaged in providing services

18 to inpatients that are equivalent to the services

19 provided by a psychiatric hospital; and

20 (C) in the case of an item or service pro21 vided to an individual whose applicable health

22 plan is specified pursuant to section 1005(b)(3),

23 a facility operated by the Indian Health Service

24 that is engaged in providing services to inpa-
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1 tients that are equivalent to the services pro2 vided by a psychiatric hospital.

3 (42) REHABILITATION FACILITY.—The term

4 ‘‘rehabilitation facility’’ means an institution (or a

5 distinct part of an institution) which is established

6 and operated for the purpose of providing diagnostic,

7 therapeutic, and rehabilitation services to individuals

8 for rehabilitation from illness, injury, disorder or

9 other health condition. An entity qualifying as a hos10 pital for purposes of section 1102 may also qualify

11 as a rehabilitation facility for purposes of section

12 1110.

13 (43) RESIDE.—

14 (A) An individual is considered to reside in

15 the location in which the individual maintains a

16 primary residence (as established under rules of

17 the National Health Board).

18 (B) Under such rules and subject to sec19 tion 1516, in the case of an individual who

20 maintains more than one residence, the primary

21 residence of the individual shall be determined

22 taking into account the proportion of time spent

23 at each residence.

24 (C) In the case of a couple only one spouse

25 of which is a qualifying employee, except as the
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1 Board may provide, the residence of the em2 ployee shall be the residence of the couple.

3 (44) SECRETARY.—The term ‘‘Secretary’’

4 means the Secretary of Health and Human Services.

5 (45) SELF-FUNDED PLAN.—The term ‘‘self6 funded plan’’ means (as defined in regulations of the

7 Secretary of Labor) a health plan provided by a

8 large group purchaser and which is not provided by

9 or through a carrier.

10 (46) SEXUAL ORIENTATION.—The term ‘‘sexual

11 orientation’’ means homosexual, bisexual, or hetero12 sexual orientation, real or perceived, as manifested

13 by identity, acts, statements, or associations.

14 (47) SKILLED NURSING FACILITY.—The term

15 ‘‘skilled nursing facility’’ means an institution (or a

16 distinct part of an institution) which is primarily en17 gaged in providing to residents—

18 (A) skilled nursing care and related serv19 ices for residents who require medical or nurs20 ing care; or

21 (B) rehabilitation services to residents for

22 rehabilitation from illness, injury, disorder or

23 other health condition.
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1 (48) SSI FAMILY.—The term ‘‘SSI family’’

2 means a family composed entirely of one or more

3 SSI recipients.

4 (49) SSI RECIPIENT.—The term ‘‘SSI recipi5 ent’’ means, for a month, an individual—

6 (A) with respect to whom supplemental se7 curity income benefits are being paid under title

8 XVI of the Social Security Act for the month,

9 (B) who is receiving a supplementary pay10 ment under section 1616 of such Act or under

11 section 212 of Public Law 93–66 for the

12 month, or

13 (C) who is receiving monthly benefits

14 under section 1619(a) of the Social Security

15 Act (whether or not pursuant to section

16 1616(c)(3) of such Act) for the month.

17 (50) STATE.—The term ‘‘State’’ includes the

18 District of Columbia, Puerto Rico, the Virgin Is19 lands, Guam, American Samoa, and the Northern

20 Mariana Islands.

21 (51) STATE MEDICAID PLAN.—The term ‘‘State

22 medicaid plan’’ means a plan of medical assistance

23 of a State approved under title XIX of the Social

24 Security Act.
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1 (52) SUPPLEMENTAL HEALTH BENEFIT POL2 ICY.—

3 (A) IN GENERAL.—The term ‘‘supple4 mental health benefit policy’’ means a health in5 surance policy or health benefit plan offered to

6 a community rate eligible individual which pro7 vides—

8 (i) coverage for services and items not

9 included in the comprehensive benefit

10 package, or

11 (ii) coverage for items and services in12 cluded in such package but not covered be13 cause of a limitation in amount, duration,

14 or scope provided under this title,

15 or both.

16 (B) EXCLUSIONS.—Such term does not in17 clude the following:

18 (i) A cost sharing policy.

19 (ii) A long-term care insurance policy.

20 (iii) Insurance that limits benefits

21 with respect to specific diseases (or condi22 tions).

23 (iv) Hospital or nursing home indem24 nity insurance.
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1 (v) A medicare supplemental policy

2 (as defined in section 1882(g) of the Social

3 Security Act).

4 (vi) Insurance with respect to acci5 dents.

6 (53) UNITED STATES.—The term ‘‘United

7 States’’ means the 50 States, the District of Colum8 bia, Puerto Rico, the Virgin Islands, Guam, Amer9 ican Samoa, and Northern Mariana Islands.

10 SEC. 1903. REFERENCE TO CERTAIN TERMS.

11 In any provision in this Act (other than this I, sub12 title J of title III, title VI, and subtitle E of title VIII),

13 including any amendment made by such a provision of this

14 Act—

15 (1) any reference to a ‘‘corporate alliance em16 ployer’’ is deemed a reference to an ‘‘experience17 rated employer’’;

18 (2) any reference to a ‘‘corporate alliance’’ is

19 deemed a reference either to an ‘‘experience-rated

20 employer’’ or a ‘‘large group purchaser’’, as specified

21 by the Board;

22 (3) any reference to a ‘‘corporate alliance eligi23 ble individual’’ is deemed a reference to an ‘‘experi24 ence-rated individual’’;
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1 (4) any reference to a ‘‘regional alliance’’ is

2 deemed a reference either to a contracting entity, a

3 State, or a consumer purchasing cooperative, as

4 specified by the Board;

5 (5) any reference to an ‘‘alliance area’’ is

6 deemed a reference to a ‘‘community-rating area’’;

7 (6) any reference to a ‘‘regional alliance eligible

8 individual’’ is deemed a reference to a ‘‘community9 rated individual’’;

10 (7) any reference to an ‘‘alliance eligible indi11 vidual’’ is deemed a reference to a ‘‘community-rated

12 individual’’ and to an ‘‘experience rated individual’’;

13 (8) any reference to a ‘‘regional alliance health

14 plan’’ is deemed a reference to a ‘‘community-rated

15 plan’’;

16 (9) any reference to a ‘‘corporate alliance health

17 plan’’ is deemed a reference to an ‘‘experience-rated

18 plan’’; and

19 (10) any reference to a ‘‘health plan’’ is deemed

20 a reference either to a health plan or a carrier, as

21 specified by the Board.

22 PART 2—MISCELLANEOUS PROVISIONS

23 SEC. 1911. USE OF INTERIM, FINAL REGULATIONS.

24 In order to permit the timely implementation of the

25 provisions of this Act, the National Health Board, the Sec-
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1 retary of Health and Human Services, the Secretary of

2 Labor are each authorized to issue regulations under this

3 Act on an interim basis that become final on the date of

4 publication, subject to change based on subsequent public

5 comment.

6 SEC. 1912. NEUTRALITY CONCERNING UNION ORGANIZING.

7 Amounts appropriated to carry out this Act may not

8 be utilized to assist, promote or deter union organizing.

9 SEC. 1913. SOCIAL SECURITY ACT REFERENCES.

10 Except as may otherwise be provided, any reference

11 in this title, or in title V or VI, to a provision of the Social

12 Security Act shall be to that provision of the Social Secu13 rity Act as in effect on the date of the enactment of this

14 Act.

15 SEC. 1914. ANTIDISCRIMINATION.

16 (a) IN GENERAL.—Neither the National Health

17 Board nor any State, health plan, consumer purchasing

18 cooperative, large group purchaser, employer, or other en19 tity subject to this Act shall directly or through contrac20 tual arrangements—

21 (1) deny or limit access to or the availability of

22 health care services, or otherwise discriminate in

23 connection with the provision of health care services;

24 or
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1 (2) limit, segregate or classify an individual in

2 any way which would deprive or tend to deprive such

3 individual of health care services, or otherwise ad4 versely affect his or her access to health care serv5 ices;

6 on the basis of race, national origin, sex, religion, lan7 guage, income, age, sexual orientation, disability, health

8 status, or anticipated need for health services.

9 (b) DEFINITION.—As used in this section, the term

10 ‘‘in connection with the provision of health care services’’

11 includes, but is not limited to—

12 (1) establishing the boundaries for health care

13 coverage areas under section 1202 and for premium

14 areas, enrolling persons in a health care plan or

15 marketing a health care plan, and selecting provid16 ers or setting the terms or conditions under which

17 providers participate in a health care plan or pro18 vider network; and

19 (2) determining the scope of services provided

20 by a health care plan, and providing such services

21 and determining the site or location of health care

22 facilities.

23 (c) REGULATIONS.—Not later than 1 year after the

24 date of enactment of this Act, the Secretary of Health and
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1 Human Services shall issue regulations to carry out this

2 section.

3 (d) EFFECT ON OTHER LAWS. Nothing in this Act

4 shall be construed to limit the scope of, or the availability

5 of relief under, any other Federal or State law prohibiting

6 discrimination or providing relief therefore.

7 (e) BENEFITS.—Nothing in this Act shall be con8 strued to require or prohibit the provision of benefits to

9 an employee for the benefit of his or her same-sex partner.

10 (f) OUTREACH UNAFFECTED.— Nothing in this sec11 tion shall be construed to prevent a person from engaging

12 in activities to encourage the enrollment of community

13 rated individuals residing in underserved areas.

14 SEC. 1915. COVERAGE OF BENEFITS UNDER HEALTH SECU15 RITY ACT.

16 (a) DAVIS-BACON ACT.—Subsection (b)(2) of the

17 first section of the Davis Bacon Act (40 U.S.C.

18 276a(b)(2)) is amended in the matter following subpara19 graph (B) by inserting after ‘‘local law’’ the following:

20 ‘‘(other than benefits provided pursuant to the Health Se21 curity Act)’’.

22 (b) SERVICE CONTRACT ACT OF 1965.—The second

23 sentence of section 2(a)(2) of the Service Contract Act of

24 1965 (41 U.S.C. 351(a)(2)) is amended by inserting after
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1 ‘‘local law’’ the following: ‘‘(other than benefits provided

2 pursuant to the Health Security Act)’’.

3 SEC. 1916. GOVERNMENT REQUIRED DATA.

4 The set of data referred to in section 5114(a)(5) shall

5 include data on—

6 (1) enrollment and disenrollment in health

7 plans;

8 (2) clinical encounters and other items and

9 services provided by health care providers;

10 (3) administrative, operational and financial as11 pects regarding composition, transactions and activi12 ties of participating States, health plans, health care

13 providers, employers and individuals that are nec14 essary to determine compliance with this Act or an

15 Act amended by this Act;

16 (4) terms of agreement between health plans

17 and the health care providers who are members of

18 provider networks of the plans;

19 (5) payment of benefits in cases in which bene20 fits may be payable under a health plan and any

21 other insurance policy or health program;

22 (6) utilization management by health plans and

23 health care providers;

24 (7) the information collected and reported by

25 the Board or disseminated by other individuals or
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1 entities as part of the National Quality Management

2 Program under subtitle A;

3 (8) health care and payment grievances and the

4 resolutions of such grievances; and

5 (9) any other fact that may be necessary to de6 termine whether a health plan or a health care pro7 vider has complied with a Federal statute pertaining

8 to fraud or misrepresentation in the provision or

9 purchasing of health care or in the submission of a

10 claim for benefits or payment under a health plan.

11 SEC. 1917. SENSE OF THE COMMITTEE CONCERNING FUND12 ING SOURCES.

13 (a) FINANCING.—It is the sense of the Committee on

14 Labor and Human Resources of the Senate that when the

15 Health Security Act is enacted it should include the follow16 ing sources of financing not within the jurisdiction of the

17 Committee:

18 (1) The net savings and revenues included in

19 S.1757, the Health Security Act which are outside

20 the jurisdiction of the Committee.

21 (2) The extension to all employers that are not

22 community-rated employers the 1 percent payroll as23 sessment applied to corporate alliances under

24 S.1757, the Health Security Act.
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1 (3) An increase in the cigarette tax of 75 cents

2 per pack in excess of the amount specified in

3 S.1757, the Health Security Act.

4 (4) A phased-in 1 percent premium assessment

5 equal to the additional amount provided for bio6 medical research under title III of this Act.

7 (b) RESEARCH AND DEVELOPMENT TAX CREDIT.—

8 It is the sense of the Committee on Labor and Human

9 Resources of the Senate that when health reform legisla10 tion is enacted it should include the following provision

11 not within the jurisdiction of the Committee:

12 (1) The permanent extension of the research

13 and development tax credit.

14 SEC. 1918. SENSE OF THE COMMITTEE CONCERNING MEDI15 CAL SAVINGS ACCOUNTS.

16 It is the sense of the Committee on Labor and

17 Human Resources of the Senate that provisions encourag18 ing the establishment of medical savings accounts be in19 cluded in any health reform bill passed by the Senate, in

20 conjunction with a comprehensive benefit package de21 scribed in subtitle B of this title.

22 TITLE II—LONG-TERM CARE

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.
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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.

Sec. 2110. Federal evaluations.

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.

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).

1 PART 1—STATE PROGRAMS FOR HOME AND COM2 MUNITY-BASED SERVICES FOR INDIVIDUALS

3 WITH DISABILITIES

4 Subpart A—Home and Community-Based Services

5 SEC. 2101. STATE PROGRAMS FOR HOME AND COMMUNITY6 BASED SERVICES FOR INDIVIDUALS WITH

7 DISABILITIES.

8 (a) IN GENERAL.—Each State that has a plan for

9 the home and community-based services to individuals

10 with disabilities submitted to and approved by the Sec-
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1 retary under section 2102(b) is entitled to payment in ac2 cordance with section 2108.

3 (b) ENTITLEMENT TO SERVICES.—Nothing in this

4 part shall be construed to create a right to services for

5 individuals or a requirement that a State with an approved

6 plan expend the entire amount of funds to which it is enti7 tled under this subtitle, except that nothing in this subtitle

8 shall be construed to restrict or modify an individual’s

9 right under existing Federal or State law to enforce the

10 obligations of States entered into pursuant to this Act.

11 (c) DESIGNATION OF AGENCY.—Not later than 6

12 months after the date of enactment of this Act, the Sec13 retary shall designate an agency responsible for program

14 administration under this subtitle.

15 SEC. 2102. STATE PLANS.

16 (a) PLAN REQUIREMENTS.—In order to be approved

17 under subsection (b), a State plan for home and commu18 nity-based services for individuals with disabilities must

19 meet the following requirements:

20 (1) ELIGIBILITY.—

21 (A) IN GENERAL.—Within the amounts

22 provided by the State (and under section 2108)

23 for such plan, the plan shall provide that serv24 ices under the plan will be available to individ-
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1 uals with disabilities (as defined in section

2 2103(a)) in the State.

3 (B) INITIAL SCREENING.—The plan shall

4 provide a process for the initial screening of in5 dividuals who appear to have some reasonable

6 likelihood of being an individual with disabil7 ities. Any such process shall require the provi8 sion of assistance to individuals who wish to

9 apply but whose disability limits their ability to

10 do so. Except as provided in subparagraph (C),

11 the initial screening, as well as the determina12 tion of disability (as defined under section

13 2103(b)(1)) and the comprehensive assessment

14 and individualized plan of care (as defined

15 under section 2104(b)(1)(A) and (B)) and

16 2104(b)(2) (A) and (B) shall be provided by

17 public or private nonprofit agencies that—

18 (i) do not provide home and commu19 nity-based services covered under the State

20 plan, with the exception of care manage21 ment services;

22 (ii) do not provide nursing facility

23 services; and

24 (iii) do not have a direct or indirect

25 ownership or control interest in an entity
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•S 2296 PCS

1 that provides home and community-based

2 services or nursing facility services.

3 (C) SCREENING AGENCY EXCEPTIONS.—

4 The provisions of subparagraph (B)(i), (ii) and

5 (iii) shall not apply to providers of residential

6 care. The State agency may elect to waive the

7 provisions of subparagraph (B)(i), (ii), and (iii)

8 in areas of the State in which there is an insuf9 ficiency of available service providers.

10 (D) RESTRICTIONS.—The plan may not

11 limit the eligibility of individuals with disabil12 ities based on—

13 (i) income,

14 (ii) age,

15 (iii) geography,

16 (iv) nature, severity, or category of

17 disability,

18 (v) residential setting (other than an

19 institutional setting), or

20 (vi) other grounds specified by the

21 Secretary;

22 except that during the initial phase-in period

23 the Secretary may permit a State to limit eligi24 bility based on level of disability or geography
336

•S 2296 PCS

1 (if the State assures a balance between urban

2 and rural areas).

3 (E) CONTINUATION OF SERVICES.—The

4 plan must provide assurances that, in the case

5 of an individual receiving medical assistance for

6 home and community-based services under the

7 State medicaid plan as of the date of the enact8 ment of this Act, the State will continue to

9 make available (either under this plan, under

10 the State medicaid plan, or otherwise) to such

11 individual an appropriate level of assistance for

12 home and community-based services, taking

13 into account the level of assistance provided as

14 of such date and the individual’s need for home

15 and community-based services.

16 (2) SERVICES.—

17 (A) NEEDS ASSESSMENT.—Not later than

18 the end of the second year of implementation,

19 the plan or its amendments shall include the re20 sults of a statewide assessment of the needs of

21 individuals with disabilities, in a format re22 quired by the Secretary. The needs assessment

23 shall include demographic data concerning the

24 number of individuals within each category of
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•S 2296 PCS

1 disability described in this Act, and the services

2 available to meet the needs of such individuals.

3 (B) SPECIFICATION.—Consistent with sec4 tion 2104, the plan shall specify—

5 (i) the services made available under

6 the plan,

7 (ii) the extent and manner in which

8 such services are allocated and made avail9 able to individuals with disabilities, and

10 (iii) the manner in which services

11 under the plan are coordinated with each

12 other and with health and long-term care

13 services available outside the plan for indi14 viduals with disabilities.

15 (C) TAKING INTO ACCOUNT INFORMAL

16 CARE.—A State plan may take into account, in

17 determining the amount and array of services

18 made available to covered individuals with dis19 ability, the availability of informal care. Any in20 dividual care plan that includes informal care

21 shall be required to verify the availability of the

22 informal care.

23 (D) ALLOCATION.—The State plan—

24 (i) shall specify how it will allocate

25 services under the plan, during and after
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•S 2296 PCS

1 the 7-fiscal-year phase-in period beginning

2 with fiscal year 1996, among covered indi3 viduals with disabilities,

4 (ii) shall attempt to meet the needs of

5 individuals with a variety of disabilities

6 and, within the limits of available funding,

7 be sufficient in amount, duration, and

8 scope to provide a substantial assistance in

9 living independently,

10 (iii) shall include services that are de11 termined to be necessary to help all cat12 egories of individuals with disabilities, re13 gardless of their age or the nature of their

14 disabling conditions,

15 (iv) shall demonstrate that services

16 are allocated equitably, in accordance with

17 the needs assessment required under sub18 paragraph (A), and

19 (v) shall ensure that—

20 (I) the proportion of the popu21 lation of low-income individuals with

22 disabilities in the State that rep23 resents individuals with disabilities

24 who are provided home and commu25 nity-based services either under the
339

•S 2296 PCS

1 plan, under the State medicaid plan,

2 or under both, is not less than,

3 (II) the proportion of the popu4 lation of the State that represents in5 dividuals who are low-income individ6 uals.

7 (E) LIMITATION ON LICENSURE OR CER8 TIFICATION.—The State may not subject

9 consumer-directed providers of personal assist10 ance services to licensure, certification, or other

11 requirements which the Secretary finds not to

12 be necessary for the health and safety of indi13 viduals with disabilities.

14 (F) CONSUMER CHOICE.—To the extent

15 feasible, the State shall follow the choice of an

16 individual with disabilities (or that individual’s

17 designated representative who may be a family

18 member) regarding which covered services to re19 ceive and the providers who will provide such

20 services.

21 (3) COST SHARING.—The plan shall impose cost

22 sharing with respect to covered services only in ac23 cordance with section 2105.

24 (4) TYPES OF PROVIDERS AND REQUIREMENTS

25 FOR PARTICIPATION.—The plan shall specify—
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•S 2296 PCS

1 (A) the types of service providers eligible

2 to participate in the program under the plan,

3 which shall include consumer-directed providers,

4 except that the plan—

5 (i) may not limit such benefits to

6 services provided by registered nurses or li7 censed practical nurses; and

8 (ii) may not limit such benefits to

9 services provided by agencies or providers

10 certified under title XVIII of the Social Se11 curity Act; and

12 (B) any requirements for participation ap13 plicable to each type of service provider.

14 (5) BUDGET.—The plan shall specify how the

15 State will manage Federal and State funds available

16 under the plan for each fiscal year during the period

17 beginning with fiscal year 1996 and ending with fis18 cal year 2003 and for each 5-fiscal-year periods

19 thereafter to serve all categories of individuals with

20 disabilities and meet the requirements of this sub21 section. If the Secretary makes an adjustment under

22 section 2109(a)(5)(C) for a year, each State shall

23 update the specifications under this paragraph to re24 flect the impact of such an adjustment.

25 (6) PROVIDER REIMBURSEMENT.—
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•S 2296 PCS

1 (A) PAYMENT METHODS.—The plan shall

2 specify the payment methods to be used to re3 imburse providers for services furnished under

4 the plan. Such methods may include retrospec5 tive reimbursement on a fee-for-service basis,

6 prepayment on a capitation basis, payment by

7 cash or vouchers to individuals with disabilities,

8 or any combination of these methods. In the

9 case of payment for consumer-directed services,

10 including the use of cash or vouchers, the plan

11 shall specify how the plan will assure compli12 ance with applicable employment tax and health

13 care coverage provisions.

14 (B) PAYMENT RATES.—The plan shall

15 specify the methods and criteria to be used to

16 set payment rates for—

17 (i) agency administered services fur18 nished under the plan; and

19 (ii) consumer-directed services fur20 nished under the plan, including cash pay21 ments or vouchers to individuals with dis22 abilities, except that such payments shall

23 be adequate to cover amounts required

24 under the applicable employment tax provi25 sions of the Internal Revenue Code of
342

•S 2296 PCS

1 1986 (as added or amended by title VII of

2 the Health Security Act) and the health

3 care coverage provisions under this Act.

4 (C) PLAN PAYMENT AS PAYMENT IN

5 FULL.—The plan shall restrict payment under

6 the plan for covered services to those providers

7 that agree to accept the payment under the

8 plan (at the rates established pursuant to sub9 paragraph (B)) and any cost sharing permitted

10 or provided for under section 2105 as payment

11 in full for services furnished under the plan.

12 (7) QUALITY ASSURANCE AND SAFEGUARDS.—

13 The State plan shall provide for quality assurance

14 and safeguards for applicants and beneficiaries in

15 accordance with section 2106.

16 (8) ADVISORY GROUP.—The State plan shall—

17 (A) assure the establishment and mainte18 nance of an advisory group under section

19 2107(b), and

20 (B) include the documentation prepared by

21 the group under section 2107(b)(4).

22 (9) ADMINISTRATION AND ACCESS.—

23 (A) STATE AGENCY.—The plan shall des24 ignate a State agency or agencies to administer

25 (or to supervise the administration of) the plan.
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•S 2296 PCS

1 (B) INFORMATION AND ASSISTANCE CEN2 TER.—The plan shall provide for a single point

3 of access to information about the system for

4 individuals with disabilities. The plan may des5 ignate separate entry points for individuals

6 under the age of 22, for individuals age 65

7 years and older, or for other appropriate classi8 fication of individuals.

9 (C) COORDINATION.—The plan shall speci10 fy how it will—

11 (i) integrate services provided under

12 the plan, including eligibility prescreening,

13 service coordination, and referrals for indi14 viduals with disabilities who are ineligible

15 for services under this part, with the State

16 medicaid plan, titles V and XX of the So17 cial Security Act, programs under the

18 Older Americans Act of 1965, programs

19 under the Developmental Disabilities As20 sistance and Bill of Rights Act, the Indi21 viduals with Disabilities Education Act,

22 and any other Federal or State programs

23 that provide services or assistance targeted

24 to individuals with disabilities, and

25 (ii) coordinate with health plans.
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•S 2296 PCS

1 (D) ADMINISTRATIVE EXPENDITURES.—

2 The plan shall contain assurances that not

3 more than 10 percent of expenditures under the

4 plan for all quarters in any fiscal year shall be

5 for administrative costs, except that, in fiscal

6 years 1996 through 2002, administrative ex7 penditures for the design, development, and in8 stallation of mechanical claims processing sys9 tems, information retrieval, and infrastructure

10 development may exceed the limit described in

11 this subparagraph by not more than an addi12 tional 10 percent of total expenditures. Quality

13 assurance activities shall not be included as ad14 ministrative costs. The Secretary shall have the

15 authority to waive the administrative limit.

16 (10) REPORTS AND INFORMATION TO SEC17 RETARY; AUDITS.—The plan shall provide that the

18 State will furnish to the Secretary—

19 (A) such reports, and will cooperate with

20 such audits, as the Secretary determines are

21 needed concerning the State’s administration of

22 its plan under this part, including the process23 ing of claims under the plan, and
345

•S 2296 PCS

1 (B) such data and information as the Sec2 retary may require in a uniform format as spec3 ified by the Secretary.

4 (11) USE OF STATE FUNDS FOR MATCHING.—

5 The plan shall provide assurances that Federal

6 funds will not be used to provide for the State share

7 of expenditures under this part.

8 (12) HEALTH CARE WORKER REDEPLOYMENT

9 REQUIREMENT.—The plan provides for compliance

10 with the requirement of section 3083(a).

11 (13) TERMINOLOGY.—The plan shall adhere to

12 uniform definitions of terms, as specified by the Sec13 retary.

14 (b) APPROVAL OF PLANS.—The Secretary shall ap15 prove a plan submitted by a State if the Secretary deter16 mines that the plan—

17 (1) was developed by the State after a public

18 comment period of not less than 30 days, and

19 (2) meets the requirements of subsection (a).

20 The approval of such a plan shall take effect as of the

21 first day of the first fiscal year beginning after the date

22 of such approval (except that any approval made before

23 January 1, 1996, shall be effective as of January 1, 1996).

24 In order to budget funds allotted under this part, the Sec25 retary may establish a deadline for the submission of such
346

•S 2296 PCS

1 a plan before the beginning of a fiscal year as a condition

2 of its approval effective with that fiscal year. Any signifi3 cant changes to the State plan shall be submitted to the

4 Secretary in the form of plan amendments and shall be

5 subject to approval by the Secretary.

6 (c) MONITORING.—The Secretary shall annually

7 monitor the compliance of State plans with the require8 ments of this subtitle according to specified performance

9 standards. States that fail to comply with such require10 ments may be subject to the withholding of Federal funds

11 for services or administration until such time as compli12 ance is achieved.

13 (d) TECHNICAL ASSISTANCE.—The Secretary shall

14 ensure the availability of ongoing technical assistance to

15 States under this section. Such assistance shall include

16 serving as a clearinghouse for information regarding suc17 cessful practices in providing long-term care services.

18 (e) REGULATIONS.—The Secretary shall issue such

19 regulations as may be appropriate to carry out this part

20 on a timely basis.

21 SEC. 2103. INDIVIDUALS WITH DISABILITIES DEFINED.

22 (a) IN GENERAL.—In this part, the term ‘‘individual

23 with disabilities’’ means any individual within one or more

24 of the following 4 categories of individuals:
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•S 2296 PCS

1 (1) INDIVIDUALS REQUIRING HELP WITH AC2 TIVITIES OF DAILY LIVING.—Except as provided in

3 section 2103(a)(4) an individual of any age who—

4 (A) requires hands-on or standby assist5 ance, supervision, or cueing (as defined in regu6 lations) to perform three or more activities of

7 daily living (as defined in subsection (c)), and

8 (B) is expected to require such assistance,

9 supervision, or cueing over a period of at least

10 90 days.

11 (2) INDIVIDUALS WITH SEVERE COGNITIVE OR

12 MENTAL IMPAIRMENT.—An individual of any age—

13 (A) whose score, on a standard mental sta14 tus protocol (or protocols) appropriate for

15 measuring the individual’s particular condition

16 specified by the Secretary, indicates either se17 vere cognitive impairment or severe mental im18 pairment, or both;

19 (B) who—

20 (i) requires hands-on or standby as21 sistance, supervision, or cueing with one or

22 more activities of daily living,

23 (ii) requires hands-on or standby as24 sistance, supervision, or cueing with at

25 least such instrumental activity (or activi-
348

•S 2296 PCS

1 ties) of daily living related to cognitive or

2 mental impairment as the Secretary speci3 fies, or

4 (iii) displays symptoms of one or more

5 serious behavioral problems (that is on a

6 list of such problems specified by the Sec7 retary) which create a need for supervision

8 to prevent harm to self or others; and

9 (C) who is expected to meet the require10 ments of subparagraphs (A) and (B) over a pe11 riod of at least 90 days.

12 Not later than 2 years after the date of enactment

13 of this Act, the Secretary shall make recommenda14 tions regarding the most appropriate duration of dis15 ability under this paragraph.

16 (3) INDIVIDUALS WITH SEVERE OR PROFOUND

17 MENTAL RETARDATION.—An individual of any age

18 who has severe or profound mental retardation (as

19 determined according to a protocol specified by the

20 Secretary).

21 (4) YOUNG CHILDREN WITH SEVERE DISABIL22 ITIES.—An individual under 6 years of age who—

23 (A) has a severe disability or chronic medi24 cal condition that limits functioning in a man25 ner that is comparable in severity to the stand-
349

•S 2296 PCS

1 ards established under paragraphs (1), (2), or

2 (3), and

3 (B) is expected to have such a disability or

4 condition and require such services over a pe5 riod of at least 90 days.

6 (b) DETERMINATION.—

7 (1) IN GENERAL.—In formulating eligibility cri8 teria under subsection (a), the Secretary shall estab9 lish criteria for assessing the functional level of dis10 ability among all categories of individuals with dis11 abilities that are comparable in severity, regardless

12 of the age or the nature of the disabling condition

13 of the individual. The determination of whether an

14 individual is an individual with disabilities shall be

15 made, by persons or entities specified under the

16 State plan, using a uniform protocol consisting of an

17 initial screening and preliminary assessment speci18 fied by the Secretary. A State may not impose cost

19 sharing with respect to the preliminary assessment.

20 A State may collect additional information, at the

21 time of obtaining information to make such deter22 mination, in order to provide for the assessment and

23 plan described in section 2104(b) or for other pur24 poses. The State shall establish a fair hearing proc25 ess for appeals of such determinations.
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•S 2296 PCS

1 (2) INDIVIDUALS WITH COMPARABLE DISABIL2 ITIES.—Not more than 2 percent of a State’s allot3 ment for services under this part may be expended

4 for the provision of services to individuals with se5 vere disabilities that are comparable in severity to

6 the criteria described in subsection (a), but who fail

7 to meet the criteria described in any single category.

8 (3) PERIODIC REASSESSMENT.—The determina9 tion that an individual is an individual with disabil10 ities shall be considered to be effective under the

11 State plan for a period of not more than 6 months

12 (or for such longer period in such cases as a signifi13 cant change in an individual’s condition that may af14 fect such determination is unlikely). A reassessment

15 shall be made if there is a significant change in an

16 individual’s condition that may affect such deter17 mination.

18 (c) REASSESSMENTS.—The Secretary shall reassess

19 the validity of the eligibility criteria described in sub20 section (a) as new knowledge regarding the assessments

21 of functional disabilities becomes available. The Secretary

22 shall report to the Committee on Labor and Human Re23 sources of the Senate and the Committee on Energy and

24 Commerce of the House of Representatives on its findings
351

•S 2296 PCS

1 not later than 5 years after the date of enactment of this

2 Act.

3 (d) ACTIVITY OF DAILY LIVING DEFINED.—In this

4 part, the term ‘‘activity of daily living’’ means any of the

5 following: eating, toileting, dressing, bathing, and trans6 ferring.

7 SEC. 2104. HOME AND COMMUNITY-BASED SERVICES COV8 ERED UNDER STATE PLAN.

9 (a) SPECIFICATION.—

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

11 provisions of this section, the State plan under this

12 part shall specify—

13 (A) the home and community-based serv14 ices available under the plan to individuals with

15 disabilities (or to such categories of such indi16 viduals), and

17 (B) any limits with respect to such serv18 ices, except that within the limits of available

19 funding, such services shall be sufficient in

20 amount, duration, and scope to provide sub21 stantial assistance in living independently.

22 (2) FLEXIBILITY IN MEETING INDIVIDUAL

23 NEEDS.—Subject to subsection (e)(1)(B), such serv24 ices may be delivered in an individual’s home, a
352

•S 2296 PCS

1 range of community residential arrangements, or

2 outside the home.

3 (b) REQUIREMENT FOR CARE MANAGEMENT.—

4 (1) IN GENERAL.—The State shall make avail5 able to each category of individual with disabilities

6 care management services that at a minimum in7 clude—

8 (A) a comprehensive assessment of the in9 dividual’s need for home and community-based

10 services (regardless of whether all needed serv11 ices are available under the plan),

12 (B) an individualized plan of care based on

13 such assessment,

14 (C) services consistent with such plan of

15 care,

16 (D) arrangements for the provision of such

17 services, and

18 (E) monitoring of the delivery of services.

19 (2) HOME AND COMMUNITY-BASED SERV20 ICES.—The State shall provide for home and com21 munity-based services to an individual with disabil22 ities only if—

23 (A) a comprehensive assessment of the in24 dividual’s need for home and community-based

25 services (regardless of whether all needed serv-
353

•S 2296 PCS

1 ices are available under the plan) has been

2 made,

3 (B) an individualized plan of care based on

4 such assessment is developed, and

5 (C) such services are provided consistent

6 with such plan of care.

7 The Secretary shall develop a uniform comprehen8 sive assessment tool that shall be used by the States

9 under subparagraph (A). Alternative comprehensive

10 assessment tools may be used by the States only

11 with the approval of the Secretary. The Secretary

12 shall provide guidance to the States with regard to

13 the appropriate qualifications for individuals who

14 conduct comprehensive assessments.

15 (3) INVOLVEMENT OF INDIVIDUALS.—The indi16 vidualized plan of care under paragraphs (1)(B) and

17 (2)(B) for an individual with disabilities shall—

18 (A) be developed by qualified individuals

19 (specified under the State plan),

20 (B) be developed and implemented in close

21 consultation with the individual or the individ22 ual’s designated representative,

23 (C) be approved by the individual (or the

24 individual’s designated representative), and
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•S 2296 PCS

1 (D) be reviewed and updated not less often

2 than every 6 months.

3 (4) PLAN OF CARE.—The plan of care under

4 paragraphs (1)(B) and (2)(B) shall—

5 (A) specify which services specified under

6 the individual plan will be provided under the

7 State plan under this part,

8 (B) identify (to the extent possible) how

9 the individual will be provided any services

10 specified under the plan of care and not pro11 vided under the State plan, and

12 (C) specify how the provision of services to

13 the individual under the plan will be coordi14 nated with the provision of other health care

15 services to the individual.

16 The State shall make reasonable efforts to identify

17 and arrange for services described in subparagraph

18 (B). Nothing in this subsection shall be construed as

19 requiring a State (under the State plan or other20 wise) to provide all the services specified in such a

21 plan.

22 (c) MANDATORY COVERAGE OF PERSONAL ASSIST23 ANCE SERVICES.—The State plan shall include, in the

24 array of services made available to each category of indi25 viduals with disabilities, both agency-administered and
355

•S 2296 PCS

1 consumer-directed personal assistance services (as defined

2 in subsection (g)).

3 (d) ADDITIONAL SERVICES.—

4 (1) TYPES OF SERVICES.—Subject to subsection

5 (e), services available under a State plan under this

6 part shall include any (or all) of the following:

7 (A) Homemaker and chore assistance.

8 (B) Home modifications.

9 (C) Respite services.

10 (D) Assistive devices, as defined in the

11 Technology Related Assistance for Individuals

12 with Disabilities Act.

13 (E) Adult day services.

14 (F) Habilitation and rehabilitation.

15 (G) Supported employment.

16 (H) Home health services.

17 (I) Transportation.

18 (J) Any other care or assistive services

19 (approved by the Secretary) that the State de20 termines will help individuals with disabilities to

21 remain in their homes and communities.

22 (2) CRITERIA FOR SELECTION OF SERVICES.—

23 The State plan shall specify—

24 (A) the methods and standards used to se25 lect the types, and the amount, duration, and
356

•S 2296 PCS

1 scope, of services to be covered under the plan

2 and to be available to each category of individ3 uals with disabilities, and

4 (B) how the types, and the amount, dura5 tion, and scope, of services specified, within the

6 limits of available funding, provide substantial

7 assistance in living independently to individuals

8 within each of the 4 categories of individuals

9 with disabilities.

10 Not later than the date on which the plan is fully

11 phased-in, the State shall ensure that a full array of

12 services is available to meet the needs of individuals

13 with disabilities.

14 (e) EXCLUSIONS AND LIMITATIONS.—A State plan

15 may not provide for coverage of—

16 (1) room and board,

17 (2) services furnished in a hospital, nursing fa18 cility, intermediate care facility for the mentally re19 tarded, or other institutional setting specified by the

20 Secretary, or

21 (3) items and services to the extent coverage is

22 provided for the individual under a health plan or

23 the medicare program.

24 (f) PAYMENT FOR SERVICES.—A State plan may pro25 vide for the use of—
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•S 2296 PCS

1 (1) vouchers,

2 (2) cash payments directly to individuals with

3 disabilities,

4 (3) capitation payments to health plans, and

5 (4) payment to providers,

6 to pay for covered services.

7 (g) PERSONAL ASSISTANCE SERVICES.—

8 (1) IN GENERAL.—In this section, the term

9 ‘‘personal assistance services’’ means those services

10 specified under the State plan as personal assistance

11 services and shall include at least hands-on and

12 standby assistance, supervision, and cueing with ac13 tivities of daily living and for people with primarily

14 mental, cognitive or sensory impairments such in15 strumental activities of daily living as deemed nec16 essary or appropriate, whether agency-administered

17 or consumer-directed (as defined in paragraph (2)).

18 Such services shall include services that are deter19 mined to be necessary to help all categories of indi20 viduals with disabilities, regardless of their age or

21 the nature of their disabling conditions,

22 (2) CONSUMER-DIRECTED.—In this part:

23 (A) IN GENERAL.—The term ‘‘consumer24 directed’’ means, with reference to personal as25 sistance services or the provider of such serv-
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•S 2296 PCS

1 ices, services that are provided by an individual

2 who is selected and managed (and, at the op3 tion of the service recipient, trained) by the in4 dividual receiving the services.

5 (B) STATE RESPONSIBILITIES.—A State

6 plan shall ensure that where services are pro7 vided in a consumer-directed manner, the State

8 shall create or contract with an entity, other

9 than the consumer or the individual provider,

10 to—

11 (i) inform both recipients and provid12 ers of rights and responsibilities under all

13 applicable Federal labor and tax law; and

14 (ii) assume responsibility for providing

15 effective billing, payments for services, tax

16 withholding, unemployment insurance, and

17 workers’ compensation coverage, and act

18 as the employer of the home care provider.

19 (C) RIGHT OF CONSUMERS.—Notwith20 standing the State responsibilities described in

21 subparagraph (B), service recipients, and,

22 where appropriate, their designated representa23 tive, shall retain the right to independently se24 lect, hire, terminate, and direct (including man-
359

•S 2296 PCS

1 age, train, schedule, and verify services pro2 vided) the work of a home care provider.

3 (3) AGENCY ADMINISTERED.—The term ‘‘agen4 cy-administered’’ means, with respect to such serv5 ices, services that are not consumer-directed.

6 SEC. 2105. COST SHARING.

7 (a) NO COST SHARING FOR POOREST.—The State

8 plan may not impose any cost sharing for individuals with

9 income (as determined under subsection (c)) less than 150

10 percent of the official poverty level (referred to in section

11 1902(30)) applicable to a family of the size involved (de12 termined without regard to section 1902(30)(B)).

13 (b) SLIDING SCALE FOR REMAINDER.—The State

14 plan shall impose cost sharing in the form of coinsurance

15 (based on the amount paid under the State plan for a serv16 ice)—

17 (1) at a rate of 10 percent for individuals with

18 disabilities with income not less than 150 percent,

19 and less than 200 percent, of such official poverty

20 line (as so applied);

21 (2) at a rate of 20 percent for such individuals

22 with income not less than 200 percent, and less than

23 250 percent, of such official poverty line (as so ap24 plied); and
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•S 2296 PCS

1 (3) at a rate of 25 percent for such individuals

2 with income equal to at least 250 percent of such of3 ficial poverty line (as so applied).

4 (c) RECOMMENDATION OF THE SECRETARY.—The

5 Secretary shall make recommendations to the States as

6 to how to reduce cost-sharing for individuals with extraor7 dinary out-of-pocket costs for whom the cost-sharing pro8 visions of section 2105 could jeopardize their ability to

9 take advantage of the services offered under this Act. The

10 Secretary shall establish a methodology for reducing the

11 cost-sharing burden for individuals with exceptionally high

12 out-of-pocket costs under this Act.

13 (d) DETERMINATION OF INCOME FOR PURPOSES OF

14 COST SHARING.—The State plan shall specify the process

15 to be used to determine the income of an individual with

16 disabilities for purposes of this section. Such standards

17 shall include a uniform Federal definition of income and

18 any allowable deductions from income.

19 SEC. 2106. QUALITY ASSURANCE AND SAFEGUARDS.

20 (a) MINIMUM REQUIREMENTS FOR PROVIDERS.—

21 (1) IN GENERAL.—Providers of home and com22 munity-based services under this subtitle must, as a

23 condition of participation under this subtitle, meet

24 such requirements for quality assurance and safe25 guards as shall be established by the Secretary
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•S 2296 PCS

1 under this section. Such requirements will include at

2 a minimum:

3 (A) QUALITY ASSURANCE.—Not later than

4 January 1, 1995, the Secretary shall promul5 gate regulations specifying how the States will

6 ensure and monitor the quality of services, in7 cluding—

8 (i) safeguarding the health and safety

9 of individuals with disabilities, including

10 the use of periodic surveys of providers;

11 (ii) the minimum standards for agen12 cy providers, including certification, and

13 how such standards will be enforced;

14 (iii) the minimum competency require15 ments, including education and training re16 quirements, for agency provider employees

17 who provide direct services under this part

18 and how the competency of such employees

19 will be enforced;

20 (iv) obtaining meaningful consumer

21 input, including consumer surveys that

22 measure the extent to which participants

23 receive the services described in the plan of

24 care and participant satisfaction with such

25 services;
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1 (v) participation in quality assurance

2 activities; and

3 (vi) the role of existing State

4 consumer protection and advocacy re5 sources, particularly the long-term care

6 ombudsman (under the Older Americans

7 Act of 1965) and the Protection and Advo8 cacy Agency (under the Developmental

9 Disabilities Assistance and Bill of Rights

10 Act) in assuring quality of services and

11 protecting the rights of individuals with

12 disabilities.

13 (B) SAFEGUARDS.—Not later than Janu14 ary 1, 1995, the Secretary shall promulgate

15 regulations providing the following:

16 (i) CONFIDENTIALITY.—The regula17 tions shall provide safeguards which re18 strict the use of disclosure of information

19 concerning applicants and beneficiaries to

20 purposes directly connected with the ad21 ministration of the plan (including per22 formance reviews under this section).

23 (ii) SAFEGUARDS AGAINST ABUSE.—

24 The regulations shall provide safeguards

25 against physical, emotional, or financial
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1 abuse or exploitation (specifically including

2 appropriate safeguards in cases where pay3 ment for program benefits is made by cash

4 payment or vouchers given directly to indi5 viduals with disabilities.

6 (2) NO DELEGATION TO STATES.—The Sec7 retary’s authority under this subsection shall not be

8 delegated to States.

9 (3) NO PREVENTION OF MORE STRINGENT RE10 QUIREMENTS BY STATES .—Nothing in this section

11 shall be construed as preventing States from impos12 ing requirements that are more stringent than the

13 requirements established by the Secretary under this

14 subsection.

15 (b) FEDERAL STANDARDS.—The State plan shall ad16 here to Federal quality standards in the following areas:

17 (1) Case review of a specified sample of client

18 records.

19 (2) Random home visits for a specified percent20 age of cases.

21 (3) The mandatory reporting of abuse, neglect,

22 or exploitation.

23 (4) The establishment of a formal client griev24 ance mechanism, including a fair hearing process.
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1 (5) State licensure or certification for agency

2 providers that offer home health services.

3 (6) Minimum training requirements for agency4 directed home care workers.

5 (7) The development of a registry of provider

6 agencies or home care workers against whom any

7 complaints have been sustained, which shall be avail8 able to the public.

9 (8) Sanctions to be imposed on States or pro10 viders, including disqualification from the program,

11 if minimum standards are not met.

12 (9) Surveys of client satisfaction.

13 (10) State optional training programs for infor14 mal caregivers.

15 (c) FUNDING.—A State that is entitled to a payment

16 in accordance with section 2108 shall receive a separate

17 allocation that may be expended only for client advocacy

18 activities. The State may use such funds to augment the

19 budgets of the long-term care ombudsman (under the

20 Older Americans Act of 1965) and the Protection and Ad21 vocacy Agency (under the Developmental Disabilities As22 sistance and Bill of Rights Act) or may establish a sepa23 rate and independent agency to administer a new program

24 designed to advocate for client rights.

25 (d) FUNCTIONS.—
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1 (1) IN GENERAL.—A client advocacy office es2 tablished under this section shall—

3 (A) identify, investigate, and resolve com4 plaints that—

5 (i) are made by, or on behalf of, cli6 ents; and

7 (ii) relate to action, inaction, or deci8 sions, that may adversely affect the health,

9 safety, welfare, or rights of the clients (in10 cluding the welfare and rights of the cli11 ents with respect to the appointment and

12 activities of guardians and representative

13 payees), of—

14 (I) providers, or representatives

15 of providers, of long-term care serv16 ices;

17 (II) public agencies; or

18 (III) health and social service

19 agencies;

20 (B) provide services to assist the clients in

21 protecting the health, safety, welfare, and rights

22 of the clients;

23 (C) inform the clients about means of ob24 taining services provided by providers or agen-
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•S 2296 PCS

1 cies described in subparagraph (A)(ii) or serv2 ices described in subparagraph (B);

3 (D) ensure that the clients have regular

4 and timely access to the services provided

5 through the office and that the clients and com6 plainants receive timely responses from rep7 resentatives of the office to complaints; and

8 (E) represent the interests of the clients

9 before governmental agencies and seek adminis10 trative, legal, and other remedies to protect the

11 health, safety, welfare, and rights of the clients

12 with regard to the provisions of this title and

13 related concerns under this Act.

14 (2) CONTRACTS AND ARRANGEMENTS.—

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

16 subparagraph (B), the State agency may estab17 lish and operate the office, and carry out the

18 program, directly, or by contract or other ar19 rangement with any public agency or nonprofit

20 private organization.

21 (B) LICENSING AND CERTIFICATION ORGA22 NIZATIONS; ASSOCIATIONS.—The State agency

23 may not enter into the contract or other ar24 rangement described in subparagraph (A) with

25 an agency or organization that is responsible
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1 for licensing, certifying, or providing long-term

2 care services in the State.

3 (e) SAFEGUARDS.—

4 (1) CONFIDENTIALITY.—The State plan shall

5 provide safeguards which restrict the use or disclo6 sure of information concerning applicants and bene7 ficiaries to purposes directly connected with the ad8 ministration of the plan (including performance re9 views under section 2602).

10 (2) SAFEGUARDS AGAINST ABUSE.—The State

11 plans shall provide safeguards against physical, emo12 tional, or financial abuse or exploitation (specifically

13 including appropriate safeguards in cases where pay14 ment for program benefits is made by cash pay15 ments or vouchers given directly to individuals with

16 disabilities). All providers of services shall be re17 quired to register with the State agency.

18 (f) ISSUANCE OF REGULATIONS.—Not later than 1

19 year after the date of enactment of this Act, the Secretary

20 shall issue regulations implementing the quality provisions

21 of this section.

22 SEC. 2107. ADVISORY GROUPS.

23 (a) FEDERAL ADVISORY GROUP.—

24 (1) ESTABLISHMENT.—The Secretary shall es25 tablish an advisory group, to advise the Secretary
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1 and States on all aspects of the program under this

2 part.

3 (2) COMPOSITION.—The group shall be com4 posed of individuals with disabilities and their rep5 resentatives, providers, Federal and State officials,

6 and local community implementing agencies. A ma7 jority of its members shall be individuals with dis8 abilities and their representatives.

9 (b) STATE ADVISORY GROUPS.—

10 (1) IN GENERAL.—Each State plan shall pro11 vide for the establishment and maintenance of an

12 advisory group to advise the State on all aspects of

13 the State plan under this part.

14 (2) COMPOSITION.—Members of each advisory

15 group shall be appointed by the Governor (or other

16 chief executive officer of the State) and shall include

17 individuals with disabilities and their representa18 tives, providers, State officials, and local community

19 implementing agencies. A majority of its members

20 shall be individuals with disabilities and their rep21 resentatives. The members of the advisory group

22 shall be selected from the those nominated as de23 scribed in section 2107(b)(3).

24 (3) SELECTION OF MEMBERS.—Each State

25 shall establish a process whereby all residents of the
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1 State, including individuals with disabilities and

2 their representatives, shall be given the opportunity

3 to nominate members to the advisory group.

4 (4) PARTICULAR CONCERNS.—Each advisory

5 group shall—

6 (A) before the State plan is developed, ad7 vise the State on guiding principles and values,

8 policy directions, and specific components of the

9 plan,

10 (B) meet regularly with State officials in11 volved in developing the plan, during the devel12 opment phase, to review and comment on all as13 pects of the plan,

14 (C) participate in the public hearings to

15 help assure that public comments are addressed

16 to the extent practicable,

17 (D) report to the Governor and make

18 available to the public any differences between

19 the group’s recommendations and the plan,

20 (E) report to the Governor and make avail21 able to the public specifically the degree to

22 which the plan is consumer-directed, and

23 (F) meet regularly with officials of the des24 ignated State agency (or agencies) to provide
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1 advice on all aspects of implementation and

2 evaluation of the plan.

3 SEC. 2108. PAYMENTS TO STATES.

4 (a) IN GENERAL.—Subject to section 2102(a)(9)(D)

5 (relating to limitation on payment for administrative

6 costs), the Secretary, in accordance with the Cash Man7 agement Improvement Act, shall authorize payment to

8 each State with a plan approved under this part, for each

9 quarter (beginning on or after January 1, 1996), from its

10 allotment under section 2109(b), an amount equal to—

11 (1) the Federal matching percentage (as de12 fined in subsection (b)) of amount demonstrated by

13 State claims to have been expended during the quar14 ter for home and community-based services under

15 the plan for individuals with disabilities; plus

16 (2) an amount equal to 90 percent of the

17 amount demonstrated by the State to have been ex18 pended during the quarter for quality assurance ac19 tivities under the plan; plus

20 (3) an amount equal to 90 percent of amount

21 expended during the quarter under the plan for ac22 tivities (including preliminary screening) relating to

23 determination of eligibility and performance of needs

24 assessment; plus
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1 (4) an amount equal to 90 percent (or, begin2 ning with quarters in fiscal year 2003, 75 percent)

3 of the amount expended during the quarter for the

4 design, development, and installation of mechanical

5 claims processing systems and for information re6 trieval; plus

7 (5) an amount equal to 90 percent (or, begin8 ning with quarters in fiscal year 2003, the Federal

9 matching percentage) of the amount expended dur10 ing the quarter for infrastructure development, as

11 defined by the Secretary; plus

12 (6) an amount equal to 50 percent of the re13 mainder of the amounts expended during the quar14 ter as found necessary by the Secretary for the prop15 er and efficient administration of the State plan;

16 plus

17 (7) an amount equal to .5 percent of the State’s

18 total allotment for client advocacy activities de19 scribed in section 2106(c).

20 (b) FEDERAL MATCHING PERCENTAGE.—

21 (1) IN GENERAL.—In subsection (a), the term

22 ‘‘Federal matching percentage’’ means, with respect

23 to a State, the reference percentage specified in

24 paragraph (2) increased by 17.5 percentage points,

25 except that the Federal matching percentage shall in
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1 no case be less than 67.5 percent or more than 95

2 percent.

3 (2) REFERENCE PERCENTAGE.—

4 (A) IN GENERAL.—The reference percent5 age specified in this paragraph is 100 percent

6 less the State percentage specified in subpara7 graph (B), except that—

8 (i) the percentage under this para9 graph shall in no case be less than 50 per10 cent or more than 83 percent, and

11 (ii) the percentage for Puerto Rico,

12 the Virgin Islands, Guam, the Northern

13 Mariana Islands, and American Samoa

14 shall be 50 percent.

15 (B) STATE PERCENTAGE.—The State per16 centage specified in this subparagraph is that

17 percentage which bears the same ratio to 45

18 percent as the square of the per capita income

19 of such State bears to the square of the per

20 capita income of the continental United States

21 (including Alaska) and Hawaii.

22 (c) PAYMENTS ON ESTIMATES WITH RETROSPECTIVE

23 ADJUSTMENTS.—The method of computing and making

24 payments under this section shall be as follows:
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1 (1) The Secretary shall, prior to the beginning

2 of each quarter, estimate the amount to be paid to

3 the State under subsection (a) for such quarter,

4 based on a report filed by the State containing its

5 estimate of the total sum to be expended in such

6 quarter, and such other information as the Secretary

7 may find necessary.

8 (2) From the allotment available therefore, the

9 Secretary shall provide for payment of the amount

10 so estimated, reduced or increased, as the case may

11 be, by any sum (not previously adjusted under this

12 section) by which the Secretary finds that the esti13 mate of the amount to be paid the State for any

14 prior period under this section was greater or less

15 than the amount which should have been paid.

16 (d) APPLICATION OF RULES REGARDING LIMITA17 TIONS ON PROVIDER-RELATED DONATIONS AND HEALTH

18 CARE RELATED TAXES.—The provisions of section

19 1903(w) of the Social Security Act shall apply to pay20 ments to States under this section in the same manner

21 as they apply to payments to States under section 1903(a)

22 of such Act .

23 SEC. 2109. APPROPRIATION; ALLOTMENTS TO STATES.

24 (a) APPROPRIATION.—
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1 (1) FISCAL YEARS 1996 THROUGH 2003.—Sub2 ject to paragraph (5)(C), for purposes of this part,

3 the appropriation authorized under this part for

4 each of fiscal years 1996 through 2003 is the follow5 ing:

6 (A) For fiscal year 1996, $3,900,000,000.

7 (B) For fiscal year 1997, $6,800,000,000.

8 (C) For fiscal year 1998, $9,600,000,000.

9 (D) For fiscal year 1999,

10 $12,900,000,000.

11 (E) For fiscal year 2000,

12 $16,400,000,000.

13 (F) For fiscal year 2001,

14 $23,400,000,000.

15 (G) For fiscal year 2002,

16 $31,100,000,000.

17 (H) For fiscal year 2003,

18 $33,600,000,000.

19 (2) SUBSEQUENT FISCAL YEARS.—For pur20 poses of this part, the total Federal budget for State

21 plans under this part for each fiscal year after fiscal

22 year 2003 is the total Federal budget under this

23 subsection for the preceding fiscal year multiplied

24 by—
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1 (A) a factor (described in paragraph (3))

2 reflecting the change in the CPI for the fiscal

3 year, and

4 (B) a factor (described in paragraph (4))

5 reflecting the change in the number of individ6 uals with disabilities for the fiscal year.

7 (3) CPI INCREASE FACTOR.—For purposes of

8 paragraph (2)(A), the factor described in this para9 graph for a fiscal year is the ratio of—

10 (A) the annual average index of the

11 consumer price index for the preceding fiscal

12 year, to—

13 (B) such index, as so measured, for the

14 second preceding fiscal year.

15 (4) DISABLED POPULATION FACTOR.—For pur16 poses of paragraph (2)(B), the factor described in

17 this paragraph for a fiscal year is 100 percent plus

18 (or minus) the percentage increase (or decrease)

19 change in the disabled population of the United

20 States (as determined for purposes of the most re21 cent update under subsection (b)(3)(D)).

22 (5) ADDITIONAL FUNDS DUE TO MEDICAID

23 OFFSETS.—

24 (A) IN GENERAL.—Each participating

25 State must provide the Secretary with informa-
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1 tion concerning offsets and reductions in the

2 medicaid program resulting from home and

3 community-based services provided disabled in4 dividuals under this part, that would have been

5 paid for such individuals under the State medic6 aid plan but for the provision of similar services

7 under the program under this part. At the time

8 a State first submits its plan under this title

9 and before each subsequent fiscal year (through

10 fiscal year 2003), the State also must provide

11 the Secretary with such budgetary information

12 (for each fiscal year through fiscal year 2003),

13 as the Secretary determines to be necessary to

14 carry out this paragraph.

15 (B) REPORTS.—Each State with a pro16 gram under this part shall submit such reports

17 to the Secretary as the Secretary may require

18 in order to monitor compliance with subpara19 graph (A). The Secretary shall specify the for20 mat of such reports and establish uniform data

21 reporting elements.

22 (C) ADJUSTMENTS TO FEDERAL

23 BUDGET.—

24 (i) IN GENERAL.—For each fiscal year

25 (beginning with fiscal year 1996 and end-
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1 ing with fiscal year 2003) and based on a

2 review of information submitted under sub3 paragraph (A), the Secretary shall deter4 mine the amount by which the total Fed5 eral budget under subsection (a) will in6 crease. The amount of such increase for a

7 fiscal year shall be limited to the reduction

8 in Federal expenditures of medical assist9 ance (as determined by Secretary) that

10 would have been made under title XIX of

11 the Social Security Act for home and com12 munity based services for disabled individ13 uals but for the provision of similar serv14 ices under the program under this part.

15 (ii) ANNUAL PUBLICATION.—The Sec16 retary shall publish before the beginning of

17 such fiscal year, the revised total Federal

18 budget under this subsection for such fis19 cal year (and succeeding fiscal years before

20 fiscal year 2003).

21 (D) NO DUPLICATE PAYMENT.—No pay22 ment may be made to a State under this section

23 for any services to the extent that the State re24 ceived payment for such services under section
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1 1903(a) of the Social Security Act or title I of

2 this Act.

3 (E) CONSTRUCTION.—Nothing in this sub4 section shall be construed as requiring States to

5 determine eligibility for medical assistance

6 under the State medicaid plan on behalf of indi7 viduals receiving assistance under this part.

8 (b) ALLOTMENTS TO STATES.—

9 (1) IN GENERAL.—The Secretary shall allot to

10 each State for each fiscal year an amount that bears

11 the same ratio to the total Federal budget for the

12 fiscal year (specified under paragraph (1) or (2) of

13 subsection (a)) as the State allotment factor (under

14 paragraph (2) for the State for the fiscal year) bears

15 to the sum of such factors for all States for that fis16 cal year. One-half of one percent of the allotment

17 provided under this paragraph shall be used exclu18 sively for client advocacy activities.

19 (2) STATE ALLOTMENT FACTOR.—

20 (A) IN GENERAL.—For each State for each

21 fiscal year, the Secretary shall compute a State

22 allotment factor equal to the sum of—

23 (i) the base allotment factor (specified

24 in subparagraph (B)), and
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1 (ii) the low income allotment factor

2 (specified in subparagraph (C)),

3 for the State for the fiscal year.

4 (B) BASE ALLOTMENT FACTOR.—The base

5 allotment factor, specified in this subparagraph,

6 for a State for a fiscal year is equal to the

7 product of the following:

8 (i) NUMBER OF INDIVIDUALS WITH

9 DISABILITIES.—The number of individuals

10 with disabilities in the State (determined

11 under paragraph (3)) for the fiscal year.

12 (ii) 80 PERCENT OF THE NATIONAL

13 PER CAPITA BUDGET.—80 percent of the

14 national average per capita budget amount

15 (determined under paragraph (4)) for the

16 fiscal year.

17 (iii) WAGE ADJUSTMENT FACTOR.—

18 The wage adjustment factor (determined

19 under paragraph (5)) for the State for the

20 fiscal year.

21 (iv) FEDERAL MATCHING RATE.—The

22 Federal matching rate (determined under

23 section 2108(b)) for the fiscal year.

24 (C) LOW INCOME ALLOTMENT FACTOR.—

25 The low income allotment factor, specified in
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1 this subparagraph, for a State for a fiscal year

2 is equal to the product of the following:

3 (i) NUMBER OF INDIVIDUALS WITH

4 DISABILITIES.—The number of individuals

5 with disabilities in the State (determined

6 under paragraph (3)) for the fiscal year.

7 (ii) 10 PERCENT OF THE NATIONAL

8 PER CAPITA BUDGET.—10 percent of the

9 national average per capita budget amount

10 (determined under paragraph (4)) for the

11 fiscal year.

12 (iii) WAGE ADJUSTMENT FACTOR.—

13 The wage adjustment factor (determined

14 under paragraph (5)) for the State for the

15 fiscal year.

16 (iv) FEDERAL MATCHING RATE.—The

17 Federal matching rate (determined under

18 section 2108(b)) for the fiscal year.

19 (v) LOW INCOME INDEX.—The low in20 come index (determined under paragraph

21 (6)) for the State for the preceding fiscal

22 year.

23 (3) NUMBER OF INDIVIDUALS WITH DISABIL24 ITIES.—The number of individuals with disabilities
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1 in a State for a fiscal year shall be determined as

2 follows:

3 (A) BASE.—The Secretary shall determine

4 the number of individuals in the State by age,

5 sex, and income category, based on the 1990

6 decennial census, adjusted (as appropriate) by

7 the March 1994 current population survey.

8 (B) DISABILITY PREVALENCE LEVEL BY

9 POPULATION CATEGORY.—The Secretary shall

10 determine, for each such age, sex, and income

11 category, the national average proportion of the

12 population of such category that represents in13 dividuals with disabilities. The Secretary may

14 conduct periodic surveys in order to determine

15 such proportions.

16 (C) BASE DISABLED POPULATION IN A

17 STATE.—The number of individuals with dis18 abilities in a State in 1994 is equal to the sum

19 of the products, for such each age, sex, and in20 come category, of—

21 (i) the population of individuals in the

22 State in the category (determined under

23 subparagraph (A)), and
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1 (ii) the national average proportion

2 for such category (determined under sub3 paragraph (B)).

4 (D) UPDATE.—The Secretary shall deter5 mine the number of individuals with disabilities

6 in a State in a fiscal year equal to the number

7 determined under subparagraph (C) for the

8 State increased (or decreased) by the percent9 age increase (or decrease) in the disabled popu10 lation of the State as determined under the cur11 rent population survey from 1994 to the year

12 before the fiscal year involved.

13 (4) NATIONAL PER CAPITA BUDGET AMOUNT.—

14 The national average per capita budget amount, for

15 a fiscal year, is—

16 (A) the total Federal budget specified

17 under subsection (a) for the fiscal year; divided

18 by

19 (B) the sum, for the fiscal year, of the

20 numbers of individuals with disabilities (deter21 mined under paragraph (3)) for all the States

22 for the fiscal year.

23 (5) WAGE ADJUSTMENT FACTOR.—The wage

24 adjustment factor, for a State for a fiscal year, is

25 equal to the ratio of—
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1 (A) the average hourly wages for service

2 workers (other than household or protective

3 services) in the State, to

4 (B) the national average hourly wages for

5 service workers (other than household or protec6 tive services).

7 The hourly wages shall be determined under this

8 paragraph based on data from the most recent de9 cennial census for which such data are available.

10 (6) LOW INCOME INDEX.—The low income

11 index for each State for a fiscal year is the ratio, de12 termined for the preceding fiscal year, of—

13 (A) the percentage of the State’s popu14 lation that has income below 150 percent of the

15 poverty level, to

16 (B) the percentage of the population of the

17 United States that has income below 150 per18 cent of the poverty level.

19 Such percentages shall be based on data from the

20 most recent decennial census for which such data

21 are available, adjusted by data from the most recent

22 current population survey as determined appropriate

23 by the Secretary.

24 (c) CARRY-OVER.—With respect to fiscal years 1996

25 through 2003, a State shall be permitted to carry-over not
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1 more than 25 percent of the allotment of such State for

2 expenditures in the subsequent year.

3 (d) STATE ENTITLEMENT.—This part constitutes

4 budget authority in advance of appropriations Acts, and

5 represents the obligation of the Federal Government to

6 provide for the payment to States of amounts described

7 in subsection (a).

8 SEC. 2110. FEDERAL EVALUATIONS.

9 Not later than December 31, 2000, December 31,

10 2003, and each December 31 thereafter, the Secretary

11 shall provide to Congress analytical reports that evalu12 ate—

13 (1) the extent to which individuals with low in14 comes and disabilities are equitably served;

15 (2) the adequacy and equity of service plans to

16 individuals with similar levels of disability across

17 States;

18 (3) the comparability of program participation

19 across States, described by level and type of disabil20 ity; and

21 (4) the ability of service providers to sufficiently

22 meet the demand for services.

23 Not later than 18 months after the date of enactment

24 of this Act, the Secretary shall report to Congress concern25 ing the feasibility of providing reimbursement under
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1 health plans and other payers of health services for full

2 geriatric assessment, when recommended by a physician.

3 Subpart B—State Programs for Extended Services

4 for Children With Special Health Care Needs

5 SEC. 2111. STATE PROGRAMS FOR EXTENDED SERVICES

6 FOR CHILDREN WITH SPECIAL HEALTH CARE

7 NEEDS.

8 (a) PURPOSE.—The purpose of this subpart is to pro9 vide financial assistance to the States to assist each State

10 in developing and implementing, or expanding and en11 hancing, a family-centered, culturally competent, commu12 nity-centered, comprehensive statewide system of extended

13 services and benefits for children with special health care

14 needs.

15 (b) PAYMENT.—Each State that has a plan for the

16 provision of extended services for children with special

17 health care needs submitted to and approved by the Sec18 retary under section 2114 is entitled to payment subject

19 to section 2117. Approval of a plan shall be contingent

20 upon adequacy of funding and fulfillment of criteria estab21 lished and published by the Secretary.

22 SEC. 2112. EXTENDED SERVICES COVERED UNDER THE

23 STATE PLAN.

24 (a) SPECIFICATION.—
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1 (1) IN GENERAL.—Subject to the succeeding

2 provisions of this section, the State plan under this

3 subpart shall specify—

4 (A) the extended services available under

5 the plan to eligible children, and

6 (B) any limits with respect to such serv7 ices.

8 (2) FLEXIBILITY IN MEETING INDIVIDUAL

9 NEEDS.—Subject to subsection (e)(1)(B), such serv10 ices may be delivered in an individual’s home, a

11 range of community residential arrangements, or

12 outside the home.

13 (b) REQUIREMENT FOR NEEDS ASSESSMENT AND

14 PLAN OF CARE.—

15 (1) IN GENERAL.—The State plan shall provide

16 for extended services to an eligible child only if—

17 (A) a comprehensive assessment of the

18 child’s need for home and community-based

19 services (regardless of whether all needed serv20 ices are available under the plan) has been

21 made,

22 (B) an individualized plan of care based on

23 such assessment is developed, and

24 (C) such services are provided consistent

25 with such plan of care.
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•S 2296 PCS

1 (2) INVOLVEMENT OF INDIVIDUALS.—The indi2 vidualized plan of care under paragraph (1)(B) for

3 an eligible child shall—

4 (A) be developed by qualified individuals

5 (specified under the State plan),

6 (B) be developed and implemented in close

7 consultation with the child’s designated rep8 resentative and the child where appropriate,

9 (C) be approved by the child’s designated

10 representative and the child where appropriate,

11 and

12 (D) be reviewed and updated not less often

13 than every 6 months.

14 (3) PLAN OF CARE.—The plan of care under

15 paragraph (1)(B) shall—

16 (A) specify which services specified under

17 the individual plan will be provided under the

18 State plan under this part,

19 (B) identify (to the extent possible) how

20 the child will be provided any services specified

21 under the plan of care and not provided under

22 the State plan, and

23 (C) specify how the provision of services to

24 the child under the plan will be coordinated
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1 with the provision of other health care services

2 to the child.

3 The State shall make reasonable efforts to identify

4 and arrange for services described in subparagraph

5 (B). Nothing in this subsection shall be construed as

6 requiring a State (under the State plan or other7 wise) to provide all the services specified in such a

8 plan.

9 (c) EXTENDED SERVICES COVERED UNDER THE

10 STATE PLAN.—

11 (1) IN GENERAL.—The State plan shall include

12 the following extended services:

13 (A) Developmentally appropriate personal

14 assistance services that are family centered and

15 provided in a culturally competent manner, and

16 which meet the standards of 2104(g).

17 (B) Care management.

18 (C) Homemaker and chore assistance.

19 (D) Home modifications.

20 (E) Respite services.

21 (F) Assistive technology devices and

22 assistive technology services as defined in the

23 Technology Related Assistance for Individuals

24 with Disabilities Act.

25 (G) Habilitation and rehabilitation.
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1 (H) Home health services.

2 (I) Transportation.

3 (J) Any other care or assistive services

4 (approved by the Secretary) that the State de5 termines will help maximize a child’s ability to

6 function independently, appropriately, and ef7 fectively in an age-appropriate manner, or will

8 facilitate the caregiver’s ability to care for the

9 child outside of an institution.

10 (2) CRITERIA FOR SELECTION OF SERVICES.—

11 The State plan shall specify—

12 (A) the methods and standards used to se13 lect the types, and the amount, duration, and

14 scope, of services to be covered under the plan

15 and to be available to eligible children, and

16 (B) how the types, and the amount, dura17 tion, and scope, of services specified meet the

18 needs of eligible children.

19 (d) NO INDIVIDUAL ENTITLEMENT.—Nothing in this

20 section shall be construed to create an entitlement for eli21 gible children.

22 (e) EXCLUSIONS AND LIMITATIONS.—

23 (1) IN GENERAL.—A State plan may not pro24 vide for coverage of—

25 (A) room and board,
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1 (B) services furnished in a hospital, nurs2 ing facility, intermediate care facility for the

3 mentally retarded, or other institutional setting

4 specified by the Secretary, or

5 (C) items and services for which the child

6 may receive payment under title I or title IV of

7 this Act.

8 (f) PAYMENT FOR SERVICES.—A State plan may pro9 vide for the use of—

10 (1) vouchers,

11 (2) cash payments directly to a child’s des12 ignated representative,

13 (3) capitation payments to health plans, and

14 (4) payment to providers,

15 to pay for covered services.

16 SEC. 2113. CHILDREN ELIGIBLE FOR SERVICES.

17 (a) ELIGIBILITY CRITERIA.—

18 (1) IN GENERAL.—Children with special health

19 care needs shall be eligible for extended services and

20 benefits under this subpart.

21 (2) CHILD WITH SPECIAL HEALTH CARE

22 NEEDS.—As used in this subpart, the term ‘‘child

23 with special health care needs’’ means an individual

24 between the ages of birth to 21 years who—
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1 (A) is not eligible for medical assistance

2 under title IV of this Act;

3 (B) has a significant functional limitation

4 under paragraph (3); and

5 (C) is in need of extended services under

6 paragraph (4).

7 (3) SIGNIFICANT FUNCTIONAL LIMITATION.—

8 (A) IN GENERAL.—As used in this sub9 part, the term ‘‘significant functional limita10 tion’’ means—

11 (i) in the case of an individual 6 years

12 of age or older, a significant physical or

13 mental impairment as defined pursuant to

14 State policy to the extent that such policy

15 is established without regard to type of

16 disability; and

17 (ii) in the case of infants and young

18 children, birth to age 5, inclusive, a sub19 stantial developmental delay or specific

20 congenital or acquired conditions with a

21 high probability of resulting in a disability

22 if services are not provided.

23 (B) PRESUMPTIVE SIGNIFICANT FUNC24 TIONAL LIMITATION.—An individual who has a

25 disability or who is blind pursuant to the eligi-
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1 bility requirements of title XVI of the Social

2 Security Act (42 U.S.C. 1381 et seq.) shall be

3 considered to have—

4 (i) in the case of an individual 6 years

5 of age or older, a significant physical or

6 mental impairment as defined pursuant to

7 State policy to the extent that such policy

8 is established without regard to type of

9 disability; and

10 (ii) in the case of infants and young

11 children, birth to age 5, inclusive, a sub12 stantial developmental delay or specific

13 congenital or acquired conditions with a

14 high probability of resulting in a disability

15 if services are not provided.

16 (4) CHILD IN NEED OF EXTENDED SERVICES.—

17 As used in this subpart, the term ‘‘child in need of

18 extended services’’ means an individual between the

19 ages of birth to 21 years of age who requires serv20 ices identified in section 2112(c) in order to maxi21 mize or restore function, or prevent or limit disabil22 ity.

23 SEC. 2114. APPLICATION AND ADMINISTRATION.

24 (a) APPLICATION FOR STATE PARTICIPATION.—
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1 (1) IN GENERAL.—A State desiring a grant

2 under this subpart shall submit an application, as an

3 addendum to the State application under section

4 2102, identifying in the State plan—

5 (A) the population to be served under this

6 subpart;

7 (B) the manner in which funds made avail8 able would be utilized, and the services to be

9 provided;

10 (C) how the State will define individuals

11 qualified to develop individualized pediatric

12 plans of care as defined in section 2112(b)(3);

13 and

14 (D) how the State will assure that the

15 range of services available under section 2112

16 will also be available to individuals with disabil17 ities under the age of 21 who are eligible for

18 services under subpart A to the maximum ex19 tent possible consistent with funds available to

20 carry out subpart A; and

21 (E) any other information the Secretary

22 may require.

23 (2) EVALUATION OF PROGRAM.—An applicant

24 under this section shall agree to provide an evalua25 tion of the effectiveness, including cost effectiveness
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1 when measurable, of offering the benefits and serv2 ices under the State plan to children with special

3 health care needs.

4 (b) NUMBER OF PROGRAMS.—

5 (1) REQUEST FOR APPLICATIONS.—The Sec6 retary shall publish a request for applications under

7 this section not later than 1 year after the date of

8 the enactment of this Act.

9 (2) MAXIMUM NUMBER OF GRANTS.—The Sec10 retary shall make grants available under this sub11 part for the maximum number of State programs, in

12 accordance with the current funding level in section

13 2117, that is compatible with services and benefits

14 to be offered under section 2112 for eligible children

15 with special health care needs residing in such State.

16 (3) FORMULA.—The provisions of subsection

17 (b)(2) shall remain in effect through fiscal year

18 2003, at which time the Secretary shall establish a

19 formula by which to distribute funds under this sub20 part, in accordance with section 2117, to all States

21 that have a plan approved in accordance with section

22 2111 to provide the benefits described in section

23 2112.

24 (c) ADMINISTRATION.—
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1 (1) STATE AGENCY.—The State shall designate

2 a State agency or designee to administer (or to su3 pervise the administration of) the program under

4 this subpart.

5 (2) COORDINATION.—The State agency or des6 ignee shall specify how the agency or designee will

7 coordinate its activities with health plans and other

8 service providers, and with the agency administering

9 subpart A.

10 (3) REQUIREMENT FOR COORDINATION OF

11 CARE.—The State program under this subpart shall

12 provide for coordinated services and benefits as de13 scribed in section 2112 to a family with children

14 with special health care needs integrating services

15 whenever possible in accordance with section

16 2102(a)(9)(C).

17 SEC. 2115. COST-SHARING.

18 (a) NO COST SHARING FOR POOREST.—The State

19 plan may not impose any cost sharing for individuals with

20 income (as determined under subsection (c)) less than 150

21 percent of the official poverty level (referred to in section

22 1902(38)(A)) applicable to a family of the size involved

23 (determined without regard to section 1902(38)(B)).

24 (b) SLIDING SCALE FOR REMAINDER.—The State

25 plan shall impose cost sharing in the form of coinsurance
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1 (based on the amount paid under the State plan for a serv2 ice)—

3 (1) at a rate of 10 percent for individuals with

4 disabilities with income not less than 150 percent,

5 and less than 200 percent, of such official poverty

6 line (as so applied);

7 (2) at a rate of 20 percent for such individuals

8 with income not less than 200 percent, and less than

9 250 percent, of such official poverty line (as so ap10 plied); and

11 (3) at a rate of 25 percent for such individuals

12 with income equal to at least 250 percent of such of13 ficial poverty line (as so applied).

14 (c) DETERMINATION OF INCOME FOR PURPOSES OF

15 COST SHARING.—The State plan shall specify the process

16 to be used to determine the income of an individual with

17 disabilities for purposes of this section. In making these

18 income determinations, the State shall at a minimum com19 ply with standards established by the Secretary. Such

20 standards shall include a uniform Federal definition of in21 come and shall allow deductions from income for disabil22 ity-related expenses not covered under other titles of this

23 Act as promulgated by the Secretary.

24 (d) RECOMMENDATION FOR REDUCTIONS.—The Sec25 retary shall make recommendations to the States as how
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1 to reduce cost-sharing based on income standards estab2 lished under subsection (c) for individuals with extraor3 dinary out of pocket costs for whom the cost-sharing pro4 visions of section 2115 could jeopardize their ability to

5 take advantage of the services offered under this Act.

6 (e) REQUEST FOR PAYMENT PLAN.—If copayments

7 under subsection (b) for services utilized by the child pur8 suant to section 2112(b)(1) exceed 10 percent of the

9 child’s income or the income of their designated represent10 ative—

11 (1) the child or child’s designated representative

12 may request that the State provide a payment sched13 ule for these amounts that shall not exceed 10 per14 cent of monthly income, and

15 (2) States may accept such requests from indi16 viduals and provide payment plans without interest

17 or finance charges.

18 SEC. 2116. PROGRAM EVALUATION.

19 The Secretary shall evaluate the programs under this

20 subpart, and shall submit to Congress interim reports de21 tailing the utilization, cost, and cost efficiency of the pro22 grams.
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1 SEC. 2117. TOTAL FEDERAL BUDGET AND FEDERAL ALLOT2 MENT TO STATES.

3 (a) TOTAL FEDERAL BUDGET.—The amount avail4 able to carry out State plans under this subpart shall be

5 an amount equal to the total of a 2 percent set-aside from

6 the amounts for each fiscal year beginning in fiscal year

7 1996 pursuant to section 2109.

8 (b) FEDERAL MATCHING PERCENTAGE.—States

9 shall contribute to the program an amount consistent with

10 the requirements in section 2108(b)(1).

11 (c) REMAINING FUNDS.—Funds remaining under

12 subsection (a) at the end of each fiscal year shall be made

13 available to States under section 2108 for the following

14 fiscal year.

15 PART 2—LONG-TERM CARE INSURANCE

16 IMPROVEMENT AND ACCOUNTABILITY

17 SEC. 2201. SHORT TITLE.

18 This part may be cited as the ‘‘Long-Term Care In19 surance Improvement and Accountability Act’’.

20 SEC. 2202. ESTABLISHMENT OF FEDERAL STANDARDS FOR

21 LONG-TERM CARE INSURANCE.

22 The Public Health Service Act is amended by adding

23 at the end thereof the following new title:
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1 ‘‘TITLE XXVII—LONG-TERM CARE

2 ‘‘PART 1—LONG-TERM CARE INSURANCE

3 STANDARDS

4 ‘‘Subpart A—Promulgation of Standards and Model

5 Benefits

6 ‘‘SEC. 2701. STANDARDS.

7 ‘‘(a) APPLICATION OF STANDARDS.—

8 ‘‘(1) NAIC.—

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

10 request that the National Association of Insur11 ance Commissioners (hereafter in this part re12 ferred to as the ‘NAIC’)—

13 ‘‘(i) develop specific standards that in14 corporate the requirements of this part;

15 and

16 ‘‘(ii) report to the Secretary concern17 ing such standards.

18 ‘‘(B) APPLICATION.—If, within 12 months

19 after the date of the enactment of this part, the

20 NAIC develops the model standards under sub21 paragraph (A)(i), the Secretary shall have 60

22 days in which to determine whether such stand23 ards implement the requirements of this part. If

24 such standards are approved by the Secretary,
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1 they shall be the standards that apply as pro2 vided in this part.

3 ‘‘(2) DEFAULT.—If the NAIC does not promul4 gate the model standards under paragraph (1) by

5 the deadline established in that paragraph, the Sec6 retary shall promulgate, within 12 months after such

7 deadline, a regulation that provides standards that

8 incorporate the requirements of this part and such

9 standards shall apply as provided for in this part.

10 ‘‘(3) RELATION TO STATE LAW.—Nothing in

11 this part shall be construed as preventing a State

12 from applying standards that provide greater protec13 tion to policyholders of long-term care insurance

14 policies than the standards promulgated under this

15 part, except that such State standards may not be

16 inconsistent or in conflict with any of the require17 ments of this part.

18 ‘‘(b) DEADLINE FOR APPLICATION OF STAND19 ARDS.—

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

21 the date specified in this subsection for a State is—

22 ‘‘(A) the date the State adopts the stand23 ards established under subsection (a)(1); or

24 ‘‘(B) the date that is 1 year after the first

25 day of the first regular legislative session that
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1 begins after the date such standards are first

2 established under subsection (a)(2);

3 whichever is earlier.

4 ‘‘(2) STATE REQUIRING LEGISLATION.—In the

5 case of a State which the Secretary identifies, in

6 consultation with the NAIC, as—

7 ‘‘(A) requiring State legislation (other than

8 legislation appropriating funds) in order for the

9 standards established under subsection (a) to be

10 applied; but

11 ‘‘(B) having a legislature which is not

12 scheduled to meet within 1 year following the

13 beginning of the next regular legislative session

14 in which such legislation may be considered;

15 the date specified in this subsection is the first day

16 of the first calendar quarter beginning after the

17 close of the first legislative session of the State legis18 lature that begins on or after January 1, 1995. For

19 purposes of the previous sentence, in the case of a

20 State that has a 2-year legislative session, each year

21 of such session shall be deemed to be a separate reg22 ular session of the State legislature.

23 ‘‘(c) ITEMS INCLUDED IN STANDARDS.—The stand24 ards promulgated under subsection (a) shall include—
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1 ‘‘(1) minimum Federal standards for long-term

2 care insurance consistent with the provisions of this

3 part;

4 ‘‘(2) standards for the enhanced protection of

5 consumers with long-term care insurance; and

6 ‘‘(3) procedures for the modification of the

7 standards established under paragraph (1) in a

8 manner consistent with future laws to expand exist9 ing Federal or State long-term care benefits or es10 tablish a comprehensive Federal or State long-term

11 care benefit program.

12 ‘‘(d) CONSULTATION.—In establishing standards and

13 models of benefits under this section, the Secretary shall,

14 after consultation with representatives of carriers,

15 consumer groups, and providers of long-term care serv16 ices—

17 ‘‘(1) recommend the appropriate inflationary

18 index to be used with respect to the inflation protec19 tion benefit portion of the standards;

20 ‘‘(2) recommend the uniform needs assessment

21 mechanism to be used in determining the eligibility

22 of individuals for benefits under a policy;

23 ‘‘(3) recommend appropriate standards for the

24 regulation of the insurance aspects of supported

25 housing arrangements; and
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1 ‘‘(4) perform such other activities as deter2 mined appropriate by the Secretary.

3 ‘‘Subpart B—Establishment and Implementation of

4 Long-Term Care Insurance Policy Standards

5 ‘‘SEC. 2711. IMPLEMENTATION OF POLICY STANDARDS.

6 ‘‘(a) IN GENERAL.—

7 ‘‘(1) REGULATORY PROGRAM.—No long-term

8 care policy (as defined in section (2721)) may be is9 sued, sold, or offered for sale as a long-term care in10 surance policy in a State on or after the date speci11 fied in section 2701(b) unless—

12 ‘‘(A) the Secretary determines that the

13 State has established a regulatory program

14 that—

15 ‘‘(i) provides for the application and

16 enforcement of the standards established

17 under section 2701(a); and

18 ‘‘(ii) complies with the requirements

19 of subsection (b);

20 by the date specified in section 2701(b), and

21 the policy has been approved by the State com22 missioner or superintendent of insurance under

23 such program; or

24 ‘‘(B) if the State has not established such

25 a program, or if the State’s regulatory program
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1 has been decertified, the policy has been cer2 tified by the Secretary (in accordance with such

3 procedures as the Secretary may establish) as

4 meeting the standards established under section

5 2701(a) by the date specified in section

6 2701(b).

7 For purposes of this subsection, the advertising or

8 soliciting with respect to a policy, directly or indi9 rectly, shall be deemed the offering for sale of the

10 policy.

11 ‘‘(2) REVIEW OF STATE REGULATORY PRO12 GRAMS.—The Secretary shall review regulatory pro13 grams described in paragraph (1)(A) at least bian14 nually to determine if they continue to provide for

15 the application and enforcement of the standards

16 and procedures established under section 2701(a)

17 and (b). If the Secretary determines that a State

18 regulatory program no longer meets such standards

19 and requirements, before making a final determina20 tion, the Secretary shall provide the State an oppor21 tunity to adopt such a plan of correction as would

22 permit the program to continue to meet such stand23 ards and requirements. If the Secretary makes a

24 final determination that the State regulatory pro25 gram, after such an opportunity, fails to meet such
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•S 2296 PCS

1 standards and requirements, the Secretary shall as2 sume responsibility under paragraph (1)(B) with re3 spect to certifying policies in the State and shall ex4 ercise full authority under section 2701 for carriers,

5 agents, or associations or its subsidiary in the State

6 plans in the State.

7 ‘‘(b) ADDITIONAL REQUIREMENTS FOR APPROVAL

8 OF STATE REGULATORY PROGRAMS.—For purposes of

9 subsection (a)(1)(A)(ii), the requirements of this sub10 section for a State regulatory program are as follows:

11 ‘‘(1) ENFORCEMENT.—The enforcement under

12 the program—

13 ‘‘(A) shall be designed in a manner so as

14 to secure compliance with the standards within

15 30 days after the date of a finding of non16 compliance with such standards; and

17 ‘‘(B) shall provide for notice in the annual

18 report required under paragraph (5) to the Sec19 retary of cases where such compliance is not se20 cured within such 30-day period.

21 ‘‘(2) PROCESS.—The enforcement process

22 under each State regulatory program shall provide

23 for—
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1 ‘‘(A) procedures for individuals and enti2 ties to file written, signed complaints respecting

3 alleged violations of the standards;

4 ‘‘(B) responding to such complaints within

5 90 days;

6 ‘‘(C) the investigation of—

7 ‘‘(i) those complaints which have a

8 reasonable probability of validity, and

9 ‘‘(ii) such other alleged violations of

10 the standards as the program finds appro11 priate; and

12 ‘‘(D) the imposition of appropriate sanc13 tions (which include, in appropriate cases, the

14 imposition of a civil money penalty as provided

15 for in section 2718) in the case of a carrier,

16 agent, or association or its subsidiary deter17 mined to have violated the standards.

18 ‘‘(3) PRIVATE ACTIONS.—An individual may

19 commence a civil action in an appropriate State or

20 United States district court to enforce the provisions

21 of this title and may be awarded appropriate relief

22 and reasonable attorney’s fees.

23 ‘‘(4) CONSUMER ACCESS TO COMPLIANCE IN24 FORMATION.—
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1 ‘‘(A) IN GENERAL.—A State regulatory

2 program must provide for consumer access to

3 complaints filed with the State commissioner or

4 superintendent of insurance with respect to

5 long-term care insurance policies.

6 ‘‘(B) CONFIDENTIALITY.—The access pro7 vided under subparagraph (A) shall be limited

8 to the extent required to protect the confiden9 tiality of the identity of individual policyholders.

10 ‘‘(5) PROCESS FOR APPROVAL OF PREMIUMS.—

11 ‘‘(A) IN GENERAL.—Each State regulatory

12 program shall—

13 ‘‘(i) provide for a process for approv14 ing or disapproving proposed premium in15 creases or decreases with respect to long16 term care insurance policies; and

17 ‘‘(ii) establish a policy for receipt and

18 consideration of public comments before

19 approving such a premium increase or de20 crease.

21 ‘‘(B) CONDITIONS FOR APPROVAL.—No

22 premium increase shall be approved (or deemed

23 approved) under subparagraph (A) unless the

24 proposed increase is accompanied by an actuar25 ial memorandum which—
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•S 2296 PCS

1 ‘‘(i) includes a description of the as2 sumptions that justify the increase, includ3 ing a financial report on expenditures;

4 ‘‘(ii) contains such information as

5 may be required under the Standards; and

6 ‘‘(iii) is made available to the public.

7 ‘‘(C) APPLICATION.—Except as provided in

8 subparagraph (D), this paragraph shall not

9 apply to a group long-term care insurance pol10 icy issued to a group described in section

11 4(E)(1) of the NAIC Long Term Care Insur12 ance Model Act (effective January 1991), ex13 cept that such group policy shall, pursuant to

14 guidelines developed by the NAIC, provide no15 tice to policyholders and certificate holders of

16 any premium change under such group policy.

17 ‘‘(D) EXCEPTION.—Subparagraph (C)

18 shall not apply to—

19 ‘‘(i) group conversion policies;

20 ‘‘(ii) the group continuation feature of

21 a group policy if the insurer separately

22 rates employee and continuation coverages;

23 and

24 ‘‘(iii) group policies where the func25 tion of the employer is limited solely to col-
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•S 2296 PCS

1 lecting premiums (through payroll deduc2 tions or dues checkoff) and remitting them

3 to the insurer.

4 ‘‘(E) CONSTRUCTION.—Nothing in this

5 paragraph shall be construed as preventing the

6 NAIC from promulgating standards, or a State

7 from enacting and enforcing laws, with respect

8 to premium rates or loss ratios for all, including

9 group, long-term care insurance policies.

10 ‘‘(6) ANNUAL REPORTS.—Each State regu11 latory program shall provide for annual reports to be

12 submitted to the Secretary on the implementation

13 and enforcement of the standards in the State, in14 cluding information concerning violations in excess

15 of 30 days.

16 ‘‘(7) ACCESS TO OTHER INFORMATION.—The

17 State regulatory program must provide for consumer

18 access to actuarial memoranda, including financial

19 information, provided under paragraph (4).

20 ‘‘(8) DEFAULT.—In the case of a State without

21 a regulatory program approved under subsection (a),

22 the Secretary shall provide for the enforcement ac23 tivities described in subsection (c).

24 ‘‘(c) SECRETARIAL ENFORCEMENT AUTHORITY.—
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•S 2296 PCS

1 ‘‘(1) IN GENERAL.—The Secretary shall exer2 cise authority under this section in the case of a

3 State that does not have a regulatory program ap4 proved under this section.

5 ‘‘(2) COMPLAINTS AND INVESTIGATIONS.—The

6 Secretary shall establish procedures—

7 ‘‘(A) for individuals and entities to file

8 written, signed complaints respecting alleged

9 violations of the requirements of this part;

10 ‘‘(B) for responding on a timely basis to

11 such complaints; and

12 ‘‘(C) for the investigation of—

13 ‘‘(i) those complaints that have a rea14 sonable probability of validity; and

15 ‘‘(ii) such other alleged violations of

16 the requirements of this part as the Sec17 retary determines to be appropriate.

18 In conducting investigations under this subsection,

19 agents of the Secretary shall have reasonable access

20 necessary to enable such agents to examine evidence

21 of any carrier, agent, or association or its subsidiary

22 being investigated.

23 ‘‘(3) HEARINGS.—

24 ‘‘(A) IN GENERAL.—Prior to imposing an

25 order described in paragraph (4) against a car-
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•S 2296 PCS

1 rier, agent, or association or its subsidiary

2 under this section for a violation of the require3 ments of this part, the Secretary shall provide

4 the carrier, agent, association or subsidiary

5 with notice and, upon request made within a

6 reasonable time (of not less than 30 days, as

7 established by the Secretary by regulation) of

8 the date of the notice, a hearing respecting the

9 violation.

10 ‘‘(B) CONDUCT OF HEARING.—Any hear11 ing requested under subparagraph (A) shall be

12 conducted before an administrative law judge.

13 If no hearing is so requested, the Secretary’s

14 imposition of the order shall constitute a final

15 and unappealable order.

16 ‘‘(C) AUTHORITY IN HEARINGS.—In con17 ducting hearings under this paragraph—

18 ‘‘(i) agents of the Secretary and ad19 ministrative law judges shall have reason20 able access necessary to enable such agents

21 and judges to examine evidence of any car22 rier, agent, or association or its subsidiary

23 being investigated; and

24 ‘‘(ii) administrative law judges, may,

25 if necessary, compel by subpoena the at-
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•S 2296 PCS

1 tendance of witnesses and the production

2 of evidence at any designated place or

3 hearing.

4 In case of contumacy or refusal to obey a sub5 poena lawfully issued under this subparagraph

6 and upon application of the Secretary, an ap7 propriate district court of the United States

8 may issue an order requiring compliance with

9 such subpoena and any failure to obey such

10 order may be punished by such court as a con11 tempt thereof.

12 ‘‘(D) ISSUANCE OF ORDERS.—If an admin13 istrative law judge determines in a hearing

14 under this paragraph, upon the preponderance

15 of the evidence received, that a carrier, agent,

16 or association or its subsidiary named in the

17 complaint has violated the requirements of this

18 part, the administrative law judge shall state

19 the findings of fact and issue and cause to be

20 served on such carrier, agent, association, or

21 subsidiary an order described in paragraph (4).

22 ‘‘(4) CEASE AND DESIST ORDER WITH CIVIL

23 MONEY PENALTY.—
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1 ‘‘(A) IN GENERAL.—Subject to the provi2 sions of subparagraphs (B) through (F), an

3 order under this paragraph—

4 ‘‘(i) shall require the agent, associa5 tion or its subsidiary, or a carrier—

6 ‘‘(I) to cease and desist from

7 such violations; and

8 ‘‘(II) to pay a civil penalty in an

9 amount not to exceed $15,000 in the

10 case of each agent, and not to exceed

11 $25,000 for each association or its

12 subsidiary or a carrier for each such

13 violation; and

14 ‘‘(ii) may require the agent, associa15 tion or its subsidiary, or a carrier to take

16 such other remedial action as is appro17 priate.

18 ‘‘(B) CORRECTIONS WITHIN 30 DAYS.—No

19 order shall be imposed under this paragraph by

20 reason of any violation if the carrier, agent, or

21 association or its subsidiary establishes to the

22 satisfaction of the Secretary that—

23 ‘‘(i) such violation was due to reason24 able cause and was not intentional and was

25 not due to willful neglect; and
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•S 2296 PCS

1 ‘‘(ii) such violation is corrected within

2 the 30-day period beginning on the earliest

3 date the carrier, agent, association, or sub4 sidiary knew, or exercising reasonable dili5 gence could have known, that such a viola6 tion was occurring.

7 ‘‘(C) WAIVER BY SECRETARY.—In the case

8 of a violation under this part that is due to rea9 sonable cause and not to willful neglect, the

10 Secretary may waive part or all of the civil

11 money penalty imposed under subparagraph

12 (A)(i)(II) to the extent that payment of such

13 penalty would be grossly excessive relative to

14 the violation involved and to the need for deter15 rence of violations.

16 ‘‘(D) ADMINISTRATIVE APPELLATE RE17 VIEW.—The decision and order of an adminis18 trative law judge under this paragraph shall be19 come the final agency decision and order of the

20 Secretary unless, within 30 days, the Secretary

21 modifies or vacates the decision and order, in

22 which case the decision and order of the Sec23 retary shall become a final order under this

24 paragraph.
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•S 2296 PCS

1 ‘‘(E) JUDICIAL REVIEW.—A carrier, agent,

2 or association or its subsidiary or any other in3 dividual adversely affected by a final order is4 sued under this paragraph may, within 45 days

5 after the date the final order is issued, file a pe6 tition in the Court of Appeals for the appro7 priate circuit for review of the order.

8 ‘‘(F) ENFORCEMENT OF ORDERS.—If a

9 carrier, agent, or association or its subsidiary

10 fails to comply with a final order issued under

11 this paragraph against the carrier, agent, asso12 ciation or subsidiary after opportunity for judi13 cial review under subparagraph (E), the Sec14 retary shall file a suit to seek compliance with

15 the order in any appropriate district court of

16 the United States. In any such suit, the validity

17 and appropriateness of the final order shall not

18 be subject to review.

19 ‘‘SEC. 2712. REGULATION OF SALES PRACTICES.

20 ‘‘(a) DUTY OF GOOD FAITH AND FAIR DEALING.—

21 ‘‘(1) IN GENERAL.—Each agent (as defined in

22 section 2733) or association that is selling or offer23 ing for sale a long-term care insurance policy has

24 the duty of good faith and fair dealing to the pur25 chaser or potential purchaser of such a policy.
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•S 2296 PCS

1 ‘‘(2) POLICY REPLACEMENT FORM.—With re2 spect to any person who elects to replace or effect

3 a change in a long-term care insurance policy, the

4 individual that is selling such policy shall ensure

5 that such person completes a policy replacement

6 form developed by the NAIC. A copy of such form

7 shall be provided to such person and additional cop8 ies shall be delivered by the selling individual to the

9 old policy issuer and the new issuer and kept on file

10 for inspection by the State regulatory agency.

11 ‘‘(3) PROHIBITED PRACTICES.—An agent or as12 sociation is considered to have violated paragraph

13 (1) if the agent or association engages in any of the

14 following practices:

15 ‘‘(A) TWISTING.—Knowingly making any

16 misleading representation (including the inac17 curate completion of medical histories) or in18 complete or fraudulent comparison of any long19 term care insurance policy or insurers for the

20 purpose of inducing, or tending to induce, any

21 person to retain or effect a change with respect

22 to a long-term care insurance policy.

23 ‘‘(B) HIGH PRESSURE TACTICS.—Employ24 ing any method of marketing having the effect

25 of, or intending to, induce the purchase of long-
417

•S 2296 PCS

1 term care insurance policy through force, fright,

2 threat or undue pressure, whether explicit or

3 implicit.

4 ‘‘(C) COLD LEAD ADVERTISING.—Making

5 use directly or indirectly of any method of mar6 keting which fails to disclose in a conspicuous

7 manner that a purpose of the method of mar8 keting is solicitation of insurance and that con9 tact will be made by an insurance agent or in10 surance company.

11 ‘‘(D) OTHERS.—Engaging in such other

12 practices determined inappropriate under guide13 lines issued by the NAIC.

14 ‘‘(b) FINANCIAL STANDARDS.—The NAIC shall de15 velop recommended financial minimum standards (includ16 ing both income and asset criteria) for the purpose of ad17 vising individuals as to the costs and amounts of insurance

18 needed when considering the purchase of a long-term care

19 insurance policy.

20 ‘‘(c) PROHIBITION OF SALE OR ISSUANCE TO MEDIC21 AID BENEFICIARIES.—An agent, an association, or a car22 rier may not knowingly sell or issue a long-term care in23 surance policy to an individual who is eligible for medical

24 assistance under title XIX of the Social Security Act.
418

•S 2296 PCS

1 ‘‘(d) PROHIBITION OF SALE OR ISSUANCE OF DUPLI2 CATE SERVICE BENEFIT POLICIES.—An agent, associa3 tion or its subsidiary, or a carrier may not sell or issue

4 a service-benefit long-term care insurance policy to an in5 dividual—

6 ‘‘(1) knowing that the policy provides for cov7 erage that duplicates coverage already provided in

8 another service-benefit long-term care insurance pol9 icy held by such individual (unless the policy is in10 tended to replace such other policy); or

11 ‘‘(2) for the benefit of an individual unless the

12 individual (or a representative of the individual) pro13 vides a written statement to the effect that the cov14 erage—

15 ‘‘(A) does not duplicate other coverage in

16 effect under a service-benefit long-term care in17 surance policy; or

18 ‘‘(B) will replace another service-benefit

19 long-term care insurance policy.

20 In this subsection, the term ‘service-benefit long-term care

21 insurance policy’ means a long-term care insurance policy

22 which provides for benefits based on the type and amount

23 of services furnished.

24 ‘‘(e) PROHIBITION BASED ON ELIGIBILITY FOR

25 OTHER BENEFITS.—A carrier may not sell or issue a
419

•S 2296 PCS

1 long-term care insurance policy that reduces, limits or co2 ordinates the benefits provided under the policy on the

3 basis that the policyholder has or is eligible for other long4 term care insurance coverage or benefits.

5 ‘‘(f) PROVISION OF OUTLINE OF COVERAGE.—No

6 agent, association or its subsidiary, or carrier may sell or

7 offer for a sale a long-term care insurance policy without

8 providing to every individual purchaser or potential pur9 chaser (or representative) an outline of coverage that com10 plies with the standards established under section

11 2701(a).

12 ‘‘(g) PENALTIES.—Any agent who sells, offers for

13 sale, or issues a long-term care insurance policy in viola14 tion of this section may be imprisoned not more than 5

15 years, or fined in accordance with title 18, United States

16 Code, and, in addition, is subject to a civil money penalty

17 of not to exceed $15,000 for each such violation. Any asso18 ciation or its subsidiary or carrier that sells, offers for

19 sale, or issues a long-term care insurance policy in viola20 tion of this section may be fined in accordance with title

21 18, United States Code, and in addition, is subject to a

22 civil money penalty of not to exceed $25,000 for each vio23 lation. Nothing in this subsection shall be construed as

24 preempting or otherwise limiting the penalties that may
420

•S 2296 PCS

1 be imposed by a State for conduct that violates this sec2 tion.

3 ‘‘(h) AGENT TRAINING AND CERTIFICATION RE4 QUIREMENTS.—The NAIC, shall establish requirements

5 for long-term care insurance agent training and certifi6 cation that—

7 ‘‘(1) specify requirements for training insurance

8 agents who desire to sell or offer for sale long-term

9 care insurance policies; and

10 ‘‘(2) specify procedures for certifying and

11 recertifying agents who have completed such train12 ing and who are as qualified to sell or offer for sale

13 long-term care insurance policies.

14 ‘‘SEC. 2713. ADDITIONAL RESPONSIBILITIES FOR CAR15 RIERS.

16 ‘‘(a) REFUND OF PREMIUMS.—If an application for

17 a long-term care insurance policy (or for a certificate

18 under a group long-term care insurance policy) is denied

19 or an applicant returns a policy or certificate within 30

20 days of the date of its issuance pursuant to subsection

21 2717, the carrier shall refund directly to the applicant,

22 or in the case of an employer to whomever remits the pre23 mium, and not by delivery by the agent, not later than

24 30 days after the date of the denial or return, any pre25 miums paid with respect to such a policy (or certificate).
421

•S 2296 PCS

1 ‘‘(b) MAILING OF POLICY.—If an application for a

2 long-term care insurance policy (or for a certificate under

3 a group long-term care insurance policy) is approved, the

4 carrier shall provide every individual applicant the policy

5 (or certificate) of insurance and outline of coverage not

6 later than 30 days after the date of the approval.

7 ‘‘(c) INFORMATION ON DENIALS OF CLAIMS.—If a

8 claim under a long-term care insurance policy is denied,

9 the carrier shall, within 15 days of the date of a written

10 request by the policyholder or certificate holder (or rep11 resentative)—

12 ‘‘(1) provide a written explanation of the rea13 sons for the denial;

14 ‘‘(2) make available all medical and patient

15 records directly relating to such denial; and

16 ‘‘(3) provide a written explanation of the man17 ner in which to appeal the denial.

18 Except as provided in subsection (e) of section 2715, no

19 claim under such a policy may be denied on the basis of

20 a failure to disclose a condition at the time of issuance

21 of the policy if the application for the policy failed to re22 quest information respecting the condition.

23 ‘‘(d) REPORTING OF INFORMATION.—A carrier that

24 issues one or more long-term care insurance policies shall

25 periodically (not less often than annually) report, in a
422

•S 2296 PCS

1 form and in a manner determined by the NAIC, to the

2 Commissioner, superintendent or director of insurance of

3 each State in which the policy is delivered, and shall make

4 available to the Secretary, upon request, information in

5 a form and manner determined by the NAIC concerning—

6 ‘‘(1) the long-term care insurance policies of the

7 carrier that are in force;

8 ‘‘(2) the most recent premiums for such policies

9 and the premiums imposed for such policies since

10 their initial issuance;

11 ‘‘(3) the lapse rate, replacement rate, and re12 scission rates by policy;

13 ‘‘(4) the names of that 10 percent of its agents

14 that—

15 ‘‘(A) have the greatest lapse and replace16 ment rate; and

17 ‘‘(B) have produced at least $50,000 of

18 long-term care insurance sales in the previous

19 year; and

20 ‘‘(5) the claims denied (expressed as a number

21 and as a percentage of claims submitted) by policy.

22 Information required under this subsection shall be re23 ported in a format specified in the standards established

24 under section 2701(a). For purposes of paragraph (3),

25 there shall be included (but reported separately) data con-
423

•S 2296 PCS

1 cerning lapses due to the death of the policyholder. For

2 purposes of paragraph (4), there shall not be included as

3 a claim any claim that is denied solely because of the fail4 ure to meet a deductible, waiting period, or exclusionary

5 period.

6 ‘‘(e) STANDARDS ON COMPENSATION FOR SALE OF

7 POLICIES.—

8 ‘‘(1) IN GENERAL.—A carrier that issues one or

9 more long-term care insurance policies may provide

10 a commission or other compensation to an agent or

11 other representative for the sale of such a policy only

12 if the first year commission or other first year com13 pensation to be paid does not exceed 200 percent of

14 the commission or other compensation paid for sell15 ing or servicing the policy in the second year, or if

16 the first year commission or other compensation to

17 be paid does not exceed 50 percent of the premium

18 paid on the first year policy, until the NAIC promul19 gates mandatory standards concerning compensation

20 for the sale of such policies.

21 ‘‘(2) SUBSEQUENT YEARS.—The commission or

22 other compensation provided for the sale of long23 term care insurance policies in years subsequent to

24 the first year of the policy shall be the same as that
424

•S 2296 PCS

1 provided in the second subsequent year and shall be

2 provided for no fewer than 5 subsequent years.

3 ‘‘(3) LIMITATION.—No carrier shall provide

4 compensation to its agents for the sale of a long5 term care insurance policy and no agent shall receive

6 compensation greater than the renewal compensation

7 payable by the replacing carrier on renewal policies

8 if an existing policy is replaced.

9 ‘‘(4) COMPENSATION DEFINED.—As used in

10 this subsection, the term ‘compensation’ includes pe11 cuniary or nonpecuniary remuneration of any kind

12 relating to the sale or renewal of the policy, includ13 ing but not limited to deferred compensation, bo14 nuses, gifts, prizes, awards, and finders fees.

15 ‘‘SEC. 2714. RENEWABILITY STANDARDS FOR ISSUANCE,

16 AND BASIC FOR CANCELLATION OF POLI17 CIES.

18 ‘‘(a) IN GENERAL.—No long-term care insurance pol19 icy may be canceled or nonrenewed for any reason other

20 than nonpayment of premium, material misrepresentation

21 or fraud.

22 ‘‘(b) CONTINUATION AND CONVERSION RIGHTS FOR

23 GROUP POLICIES.—

24 ‘‘(1) IN GENERAL.—Each group long-term care

25 insurance policy shall provide covered individuals
425

•S 2296 PCS

1 with a basis for continuation or conversion in ac2 cordance with this subsection.

3 ‘‘(2) BASIS FOR CONTINUATION.—For purposes

4 of paragraph (1), a policy provides a basis for con5 tinuation of coverage if the policy maintains cov6 erage under the existing group policy when such cov7 erage would otherwise terminate and which is sub8 ject only to the continued timely payment of pre9 mium when due. A group policy which restricts pro10 vision of benefits and services to or contains incen11 tives to use certain providers or facility, may provide

12 continuation benefits which are substantially equiva13 lent to the benefits of the existing group policy.

14 ‘‘(3) BASIS FOR CONVERSION.—For purposes of

15 paragraph (1), a policy provides a basis for conver16 sion of coverage if the policy entitles each individ17 ual—

18 ‘‘(A) whose coverage under the group pol19 icy would otherwise be terminated for any rea20 son; and

21 ‘‘(B) who has been continuously insured

22 under the policy (or group policy which was re23 placed) for at least 6 months before the date of

24 the termination;
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•S 2296 PCS

1 to issuance of a policy providing benefits identical to,

2 substantially equivalent to, or in excess of, those of

3 the policy being terminated, without evidence of in4 surability.

5 ‘‘(4) TREATMENT OF SUBSTANTIAL EQUIVA6 LENCE.—In determining under this subsection

7 whether benefits are substantially equivalent, consid8 eration should be given to the difference between

9 managed care and non-managed care plans.

10 ‘‘(5) GROUP REPLACEMENT OF POLICIES.—If a

11 group long-term care insurance policy is replaced by

12 another long-term care insurance policy purchased

13 by the same policyholder, the succeeding issuer shall

14 offer coverage to all persons covered under the old

15 group policy on its date of termination. Coverage

16 under the new group policy shall not result in any

17 exclusion for preexisting conditions that would have

18 been covered under the group policy being replaced.

19 ‘‘(c) STANDARDS FOR ISSUANCE.—

20 ‘‘(1) IN GENERAL.—

21 ‘‘(A) GUARANTEE.—An agent, association

22 or carrier that sells or issues long-term care in23 surance policies shall guarantee that such poli24 cies shall be sold or issued to an individual, or

25 eligible individual in the case of a group plan,
427

•S 2296 PCS

1 if such individual meets the minimum medical

2 underwriting requirements of such policy.

3 ‘‘(B) PREMIUM FOR CONVERTED POL4 ICY.—If a group policy from which conversion

5 is made is a replacement for a previous group

6 policy, the premium for the converted policy

7 shall be calculated on the basis of the insured’s

8 age at the inception of coverage under the

9 group policy from which conversion is made.

10 Where the group policy from which conversion

11 is made replaced previous group coverage, the

12 premium for the converted policy shall be cal13 culated on the basis of the insured’s age at in14 ception of coverage under the group policy re15 placed.

16 ‘‘(2) UPGRADE FOR CURRENT POLICIES.—The

17 NAIC shall establish standards, including those pro18 viding guidance on medical underwriting and age

19 rating, with respect to the access of individuals to

20 policies offering upgraded benefits.

21 ‘‘(3) RATE STABILIZATION.—The NAIC shall

22 establish standards for premium rate stabilization.

23 ‘‘(d) EFFECT OF INCAPACITATION.—

24 ‘‘(1) IN GENERAL.—
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•S 2296 PCS

1 ‘‘(A) PROHIBITION.—Except as provided

2 in paragraph (2), a long-term care insurance

3 policy in effect as of the effective date of the

4 standards established under section 2701(a)

5 may not be canceled for nonpayment if the pol6 icy holder is determined by a long-term care

7 provider, physician or other health care pro8 vider, independent of the issuer of the policy, to

9 be cognitively or mentally incapacitated so as to

10 not make payments in a timely manner.

11 ‘‘(B) REINSTATEMENT.—A long-term care

12 policy shall include a provision that provides for

13 the reinstatement of such coverage, in the event

14 of lapse, if the insurer is provided with proof of

15 cognitive or mental incapacitation. Such rein16 statement option shall remain available for a

17 period of not less than 5 months after termi18 nation and shall allow for the collection of past

19 due premium.

20 ‘‘(2) PERMITTED CANCELLATION.—A long-term

21 care insurance policy may be canceled under para22 graph (1) for nonpayment if—

23 ‘‘(A) the period of such nonpayment is in

24 excess of 30 days; and
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•S 2296 PCS

1 ‘‘(B) notice of intent to cancel is provided

2 to the policyholder or designated representative

3 of the policy holder not less than 30 days prior

4 to such cancellation, except that notice may not

5 be provided until the expiration of 30 days after

6 a premium is due and unpaid.

7 Notice under this paragraph shall be deemed to have

8 been given as of 5 days after the mailing date.

9 ‘‘SEC. 2715. BENEFIT STANDARDS.

10 ‘‘(a) USE OF STANDARD DEFINITIONS AND TERMI11 NOLOGY, UNIFORM FORMAT, AND STANDARD BENE12 FITS.—Each long-term care insurance policy shall, with

13 respect to services, providers or facilities, pursuant to

14 standards established under section 2701(a)—

15 ‘‘(1) use uniform language and definitions, ex16 cept that such language and definitions may take

17 into account the differences between States with re18 spect to definitions and terminology used for long19 term care services and providers; and

20 ‘‘(2) use a uniform format for presenting the

21 outline of coverage under such a policy;

22 as prescribed under guidelines issued by the NAIC and

23 periodically updated.

24 ‘‘(b) DISCLOSURE.—

25 ‘‘(1) OUTLINE OF COVERAGE.—
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•S 2296 PCS

1 ‘‘(A) REQUIREMENT.—Each carrier that

2 sells or offers for sale a long-term care insur3 ance policy shall provide an outline of coverage

4 to each individual policyholder under such pol5 icy that meets the applicable standards estab6 lished pursuant to section 2701(a), complies

7 with the requirements of subparagraph (B), and

8 is in a uniform format as prescribed in guide9 lines issued by the NAIC and periodically up10 dated.

11 ‘‘(B) CONTENTS.—The outline of coverage

12 for each long-term care insurance policy shall

13 include at least the following:

14 ‘‘(i) A description of the benefits and

15 coverage under the policy.

16 ‘‘(ii) A statement of the exclusions, re17 ductions, and limitations contained in the

18 policy.

19 ‘‘(iii) A statement of the terms under

20 which the policy (or certificate) may be

21 continued in force or discontinued, the

22 terms for continuation or conversion, and

23 any reservation in the policy of a right to

24 change premiums.
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•S 2296 PCS

1 ‘‘(iv) Consumer protection informa2 tion, including the manner in which to file

3 a claim and to register complaints.

4 ‘‘(v) A statement, in bold face type on

5 the face of the document in language that

6 is understandable to an average individual,

7 that the outline of coverage is a summary

8 only, not a contract of insurance, and that

9 the policy (or master policy) contains the

10 contractual provisions that govern, except

11 that such summary shall substantially and

12 accurately reflect the contents of the policy

13 or the master policy.

14 ‘‘(vi) A description of the terms, speci15 fied in section 2717, under which a policy

16 or certificate may be returned and pre17 mium refunded.

18 ‘‘(vii) Information on—

19 ‘‘(I) national average costs for

20 nursing facility and home health care

21 and information (in graphic form) on

22 the relationship of the value of the

23 benefits provided under the policy to

24 such national average costs and State

25 average costs; and
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•S 2296 PCS

1 ‘‘(II) other public and private

2 long-term care insurance products and

3 long-term care programs where made

4 available by the Federal Government

5 or by a State government.

6 ‘‘(viii) A statement of the percentage

7 limit on annual premium increases that is

8 provided under the policy pursuant to this

9 section.

10 ‘‘(2) CERTIFICATES.—A certificate issued pur11 suant to a group long-term care insurance policy

12 shall include—

13 ‘‘(A) a description of the principal benefits

14 and coverage provided in the policy;

15 ‘‘(B) a statement of the principal exclu16 sions, reductions, and limitations contained in

17 the policy; and

18 ‘‘(C) a statement that the group master

19 policy determines governing contractual provi20 sions.

21 ‘‘(3) LONG-TERM CARE AS PART OF LIFE IN22 SURANCE.—In the case of a long-term care insur23 ance policy issued as a part of, or a rider on, a life

24 insurance policy, at the time of policy delivery there

25 shall be provided a policy summary that includes—
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•S 2296 PCS

1 ‘‘(A) an explanation of how the long-term

2 care benefits interact with other components of

3 the policy (including deductions from death

4 benefits);

5 ‘‘(B) an illustration of the amount of bene6 fits, the length of benefit, and the guaranteed

7 lifetime benefits (if any) for each covered per8 son; and

9 ‘‘(C) any exclusions, reductions, and limi10 tations on benefits of long-term care.

11 ‘‘(4) ADDITIONAL INFORMATION.—The NAIC

12 shall develop recommendations with respect to in13 forming consumers of the long-term economic viabil14 ity of carriers issuing long-term care insurance poli15 cies.

16 ‘‘(c) LIMITING CONDITIONS ON BENEFITS; MINIMUM

17 BENEFITS.—

18 ‘‘(1) IN GENERAL.—A long-term care insurance

19 policy may not condition or limit eligibility—

20 ‘‘(A) for benefits for a type of services to

21 the need for or receipt of any other services;

22 ‘‘(B) for any benefit on the medical neces23 sity for such benefit;

24 ‘‘(C) for benefits furnished by licensed or

25 certified providers in compliance with conditions
434

•S 2296 PCS

1 which are in addition to those required for li2 censure or certification under State law, except

3 that if no State licensure or certification laws

4 exists, in compliance with qualifications devel5 oped by the NAIC; or

6 ‘‘(D) for residential care (if covered under

7 the policy) only—

8 ‘‘(i) to care provided in facilities

9 which provide a higher level of care; or

10 ‘‘(ii) to care provided in facilities

11 which provide for 24-hour or other nursing

12 care not required in order to be licensed by

13 the State.

14 ‘‘(2) HOME HEALTH CARE OR COMMUNITY15 BASED SERVICES.—If a long-term care insurance

16 policy provides benefits for the payment of specified

17 home health care or community-based services, the

18 policy—

19 ‘‘(A) may not limit such benefits to serv20 ices provided by registered nurses or licensed

21 practical nurses;

22 ‘‘(B) may not require benefits for such

23 services to be provided by a nurse or therapist

24 that can be provided by a home health aide or

25 licensed or certified home care worker, except
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•S 2296 PCS

1 that if no State licensure or certification laws

2 exists, in compliance with qualifications devel3 oped by the NAIC;

4 ‘‘(C) may not limit such benefits to serv5 ices provided by agencies or providers certified

6 under title XVIII of the Social Security Act;

7 and

8 ‘‘(D) must provide, at a minimum, benefits

9 for personal care services (including home

10 health aide and home care worker services as

11 defined by the NAIC) home health services,

12 adult day care, and respite care in an individ13 ual’s home or in another setting in the commu14 nity, or any of these benefits on a respite care

15 basis.

16 ‘‘(3) NURSING FACILITY SERVICES.—If a long17 term care insurance policy provides benefits for the

18 payment of specified nursing facility services, the

19 policy must provide such benefits with respect to all

20 nursing facilities (as defined in section 1919(a) of

21 the Social Security Act or until such time as subse22 quently provided for by the NAIC in establishing

23 uniform language and definitions under section

24 2715(a)(1)) in the State.

25 ‘‘(4) PER DIEM POLICIES.—
436

•S 2296 PCS

1 ‘‘(A) DEFINITION.—For purposes of this

2 part, the term ‘per diem long-term care insur3 ance policy’ means a long-term care insurance

4 policy (or certificate under a group long-term

5 care insurance policy) that provides for benefit

6 payments on a periodic basis due to cognitive

7 impairment or loss of functional capacity with8 out regard to the expenses incurred or services

9 rendered during the period to which the pay10 ments relate.

11 ‘‘(B) LIMITATION.—No per diem long-term

12 care insurance policy (or certificate) may condi13 tion, limit or otherwise exclude benefit pay14 ments based on the receipt of any type services

15 from any type providers of long-term care serv16 ice providers.

17 ‘‘(d) PROHIBITION OF DISCRIMINATION.—A long18 term care insurance policy may not treat benefits under

19 the policy in the case of an individual with Alzheimer’s

20 disease, with any related progressive degenerative demen21 tia of an organic origin, with any organic or inorganic

22 mental illness, or with mental retardation or any other

23 cognitive or mental impairment differently from an indi24 vidual having a functional impairment for which benefits

25 may be made available.
437

•S 2296 PCS

1 ‘‘(e) LIMITATION ON USE OF PREEXISTING CONDI2 TION LIMITS.—

3 ‘‘(1) INITIAL ISSUANCE.—

4 ‘‘(A) IN GENERAL.—Subject to subpara5 graph (B), a long-term care insurance policy

6 may not exclude or condition benefits based on

7 a medical condition for which the policyholder

8 received treatment or was otherwise diagnosed

9 before the issuance of the policy.

10 ‘‘(B) 6-MONTH LIMIT.—

11 ‘‘(i) IN GENERAL.—No long-term care

12 insurance policy or certificate issued under

13 this part shall utilize a definition of ‘pre14 existing condition’ that is more restrictive

15 than the following: The term ‘preexisting

16 condition’ means a condition for which

17 medical advice or treatment was rec18 ommended by, or received from a provider

19 of health care services, within 6 months

20 preceding the effective date of coverage of

21 an insured individual.

22 ‘‘(ii) PROHIBITION ON EXCLUSION OF

23 COVERAGE.—No long-term care insurance

24 policy or certificate may exclude coverage

25 for a loss or confinement that is the result
438

•S 2296 PCS

1 of a preexisting condition unless such loss

2 or confinement begins within 6 months fol3 lowing the effective date of the coverage of

4 the insured individual.

5 ‘‘(2) REPLACEMENT POLICIES.—If a long-term

6 care insurance policy replaces another long-term

7 care insurance policy, the issuer of the replacing pol8 icy shall waive any time periods applicable to pre9 existing conditions, waiting period, elimination peri10 ods and probationary periods in the new policy for

11 similar benefits to the extent such time was spent

12 under the original policy.

13 ‘‘(f) ELIGIBILITY FOR BENEFITS.—

14 ‘‘(1) LONG-TERM CARE POLICIES.—Each long15 term care insurance policy shall—

16 ‘‘(A) describe the level of benefits available

17 under the policy; and

18 ‘‘(B) specify in clear, understandable

19 terms, the level (or levels) of physical, cognitive,

20 or mental impairment required in order to re21 ceive benefits under the policy.

22 ‘‘(2) FUNCTIONAL ASSESSMENT.—In order to

23 submit a claim under any long-term care insurance

24 policy, each claimant shall have a professional func25 tional assessment of his or her functional or cog-
439

•S 2296 PCS

1 nitive abilities. Such initial assessment shall be con2 ducted by an individual or entity, meeting the quali3 fications established by the NAIC to assure the pro4 fessional competence and credibility of such individ5 ual or entity and that such individual meets any ap6 plicable State licensure and certification require7 ments. The individual or entity conducting such as8 sessment may not control, or be controlled by, the

9 issuer of the policy. For purposes of this paragraph

10 and paragraph (4), the term ‘control’ means the di11 rect or indirect possession of the power to direct the

12 management and policies of a person. Control is pre13 sumed to exist, if any person directly or indirectly,

14 owns, controls, holds with the power to vote, or

15 holds proxies representing at least 10 percent of the

16 voting securities of another person.

17 ‘‘(3) CLAIMS REVIEW.—Except as provided in

18 paragraph (1), each long-term care insurance policy

19 shall be subject to final claims review by the carrier

20 pursuant to the terms of the long-term care insur21 ance policy.

22 ‘‘(4) APPEALS PROCESS.—

23 ‘‘(A) IN GENERAL.—Each long-term care

24 insurance policy shall provide for a timely and

25 independent appeals process, meeting standards
440

•S 2296 PCS

1 established by the NAIC, for individuals who

2 dispute the results of the claims review, con3 ducted under paragraph (3), of the policy4 holder’s functional assessment, conducted under

5 paragraph (2).

6 ‘‘(B) INDEPENDENT ASSESSMENT.—An

7 appeals process under this paragraph shall in8 clude, at the request of the claimant, an inde9 pendent assessment of the claimant’s functional

10 or cognitive abilities.

11 ‘‘(C) CONDUCT.—An independent assess12 ment under subparagraph (B) shall be con13 ducted by an individual or entity meeting the

14 qualifications established by the NAIC to as15 sure the professional competence and credibility

16 of such individual or entity and any applicable

17 State licensure and certification requirements

18 and may not be conducted—

19 ‘‘(i) by an individual who has a direct

20 or indirect significant or controlling inter21 est in, or direct affiliation or relationship

22 with, the issuer of the policy;

23 ‘‘(ii) by an entity that provides serv24 ices to the policyholder or certificate holder
441

•S 2296 PCS

1 for which benefits are available under the

2 long-term care insurance policy; or

3 ‘‘(iii) by an individual or entity in con4 trol of, or controlled by, the issuer of the

5 policy.

6 ‘‘(5) STANDARD ASSESSMENTS.—Not later than

7 2 years after the date of enactment of this part, the

8 advisory committee established under section

9 2701(d) shall recommend uniform needs assessment

10 mechanisms for the determination of eligibility for

11 benefits under such assessments.

12 ‘‘(g) INFLATION PROTECTION.—

13 ‘‘(1) OPTION TO PURCHASE.—A carrier may

14 not offer a long-term care insurance policy unless

15 the carrier also offers to the proposed policyholder,

16 including each group policyholder, the option to pur17 chase a policy that provides for increases in benefit

18 levels, with benefit maximums or reasonable dura19 tions that are meaningful, to account for reasonably

20 anticipated increases in the costs of long-term care

21 services covered by the policy. A carrier may not

22 offer to a policyholder an inflation protection feature

23 that is less favorable to the policyholder than one

24 following:
442

•S 2296 PCS

1 ‘‘(A) With respect to policies that provide

2 for automatic periodic increases in benefits, the

3 policy provides for an annual increase in bene4 fits in a manner so that such increases are

5 computed annually at a rate of not less than 5

6 percent.

7 ‘‘(B) With respect to policies that provide

8 for periodic opportunities to elect an increase in

9 benefits, the policy guarantees that the insured

10 individual will have the right to periodically in11 crease the benefit levels under the policy with12 out providing evidence of insurability or health

13 status so long as the option for the previous pe14 riod was not declined. The amount of any such

15 additional benefit may not be less than the dif16 ference between—

17 ‘‘(i) the existing policy benefit; and

18 ‘‘(ii) such existing benefit compounded

19 annually at a rate of at least 5 percent for

20 the period beginning on the date on which

21 the existing benefit is purchased and ex22 tending until the year in which the offer of

23 increase is made.

24 ‘‘(C) With respect to service benefit poli25 cies, the policy covers a specified percentage of
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1 the actual or reasonable charges and does not

2 include a maximum specified indemnity amount

3 or limit.

4 ‘‘(2) EXCEPTION.—The requirements of para5 graph (1) shall not apply to life insurance policies or

6 riders containing accelerated long-term care benefits.

7 ‘‘(3) REQUIRED INFORMATION.—Carriers shall

8 include the following information in or together with

9 the outline of coverage provided under this part:

10 ‘‘(A) A graphic comparison of the benefit

11 levels of a policy that increases benefits over the

12 policy period with a policy that does not in13 crease benefits. Such comparison shall show

14 benefit levels over not less than a 20-year pe15 riod.

16 ‘‘(B) Any expected premium increases or

17 additional premiums required to pay for any

18 automatic or optional benefit increases, whether

19 the individual who purchases the policy obtains

20 the inflation protection initially or whether such

21 individual delays purchasing such protection

22 until a future time.

23 ‘‘(4) CONTINUATION OF PROTECTION.—Infla24 tion protection benefit increases under this sub25 section under a policy that contains such protection
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1 shall continue without regard to an insured’s age,

2 claim status or claim history, or the length of time

3 the individual has been insured under the policy.

4 ‘‘(5) CONSTANT PREMIUM.—An offer of infla5 tion protection under this subsection that provides

6 for automatic benefit increases shall include an offer

7 of a premium that the carrier expects to remain con8 stant. Such offer shall disclose in a conspicuous

9 manner that the premium may change in the future

10 unless the premium is guaranteed to remain con11 stant.

12 ‘‘(6) REJECTION.—Inflation protection under

13 this subsection shall be included in a long-term care

14 insurance policy unless a carrier obtains a written

15 rejection of such protection signed by the policy16 holder.

17 ‘‘SEC. 2716. NONFORFEITURE.

18 ‘‘(a) IN GENERAL.—Each long-term care insurance

19 policy (or certificate) shall provide that if the policy lapses

20 after the policy has been in effect for a minimum period

21 (specified under the standards under section 2701(a)), the

22 policy will provide, without payment of any additional pre23 miums, nonforfeiture benefits as determined appropriate

24 by the NAIC.
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1 ‘‘(b) ESTABLISHMENT OF STANDARDS.—The stand2 ards under section 2701(a) shall provide that the percent3 age or amount of benefits under subsection (a) must in4 crease based upon the policyholder’s equity in the policy.

5 ‘‘SEC. 2717. LIMIT OF PERIOD OF CONTESTABILITY AND

6 RIGHT TO RETURN.

7 ‘‘(a) CONTESTABILITY.—A carrier may not cancel or

8 renew a long-term care insurance policy or deny a claim

9 under the policy based on fraud or intentional misrepre10 sentation relating to the issuance of the policy unless no11 tice of such fraud or misrepresentation is provided within

12 a time period to be determined by the NAIC.

13 ‘‘(b) RIGHT TO RETURN.—Each applicant for a long14 term care insurance policy shall have the right to return

15 the policy (or certificates) within 30 days of the date of

16 its delivery (and to have the premium refunded) if, after

17 examination of the policy or certificate, the applicant is

18 not satisfied for any reason.

19 ‘‘SEC. 2718. CIVIL MONEY PENALTY.

20 ‘‘(a) CARRIER.—Any carrier, association or its sub21 sidiary that sells or offers for sale a long-term care insur22 ance policy and that—

23 ‘‘(1) fails to make a refund in accordance with

24 section 2713(a);
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1 ‘‘(2) fails to transmit a policy in accordance

2 with section 2713(b);

3 ‘‘(3) fails to provide, make available, or report

4 information in accordance with subsections (c) or (d)

5 of section 2713;

6 ‘‘(4) provides a commission or compensation in

7 violation of section 2713(e);

8 ‘‘(5) fails to provide an outline of coverage in

9 violation of section 2715(b)(1); or

10 ‘‘(6) issues a policy without obtaining certain

11 information in violation of section 2715(f);

12 is subject to a civil money penalty of not to exceed $25,000

13 for each such violation.

14 ‘‘(b) AGENTS.—Any agent that sells or offers for sale

15 a long-term care insurance policy and that—

16 ‘‘(1) fails to make a refund in accordance with

17 section 2713(a);

18 ‘‘(2) fails to transmit a policy in accordance

19 with section 2713(b);

20 ‘‘(3) fails to provide, make available, or report

21 information in accordance with subsections (c) or (d)

22 of section 2713;

23 ‘‘(4) fails to provide an outline of coverage in

24 violation of section 2715(b)(1); or
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1 ‘‘(5) issues a policy without obtaining certain

2 information in violation of section 2715(f);

3 is subject to a civil money penalty of not to exceed $15,000

4 for each such violation.

5 ‘‘(c) EFFECT ON STATE LAW.—Nothing in this sec6 tion shall be construed as preempting or otherwise limiting

7 the penalties that may be imposed by a State for the types

8 of conduct described in this section.

9 ‘‘Subpart C—Long-Term Care Insurance Policies,

10 Definition and Endorsements

11 ‘‘SEC. 2721. LONG-TERM CARE INSURANCE POLICY DE12 FINED.

13 ‘‘(a) IN GENERAL.—As used in this section, the term

14 ‘long-term care insurance policy’ means any insurance pol15 icy, rider or certificate advertised, marketed, offered or de16 signed to provide coverage for not less than 12 consecutive

17 months for each covered person on an expense incurred,

18 indemnity prepaid or other basis, for one or more nec19 essary diagnostic, preventive, therapeutic, rehabilitative,

20 maintenance or personal care services, provided in a set21 ting other than an acute care unit of a hospital. Such term

22 includes—

23 ‘‘(1) group and individual annuities and life in24 surance policies, riders or certificates that provide
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1 directly, or that supplement long-term care insur2 ance; and

3 ‘‘(2) a policy, rider or certificates that provides

4 for payment of benefits based on cognitive impair5 ment or the loss of functional capacity.

6 ‘‘(b) ISSUANCE.—Long-term care insurance policies

7 may be issued by—

8 ‘‘(1) carriers;

9 ‘‘(2) fraternal benefit societies;

10 ‘‘(3) nonprofit health, hospital, and medical

11 service corporations;

12 ‘‘(4) prepaid health plans;

13 ‘‘(5) health maintenance organizations; or

14 ‘‘(6) any similar organization to the extent they

15 are otherwise authorized to issue life or health insur16 ance.

17 ‘‘(c) POLICIES EXCLUDED.—The term ‘long-term

18 care insurance policy’ shall not include any insurance pol19 icy, rider or certificate that is offered primarily to provide

20 basic Medicare supplement coverage, basic hospital ex21 pense coverage, basic medical-surgical expense coverage,

22 hospital confinement indemnity coverage, major medical

23 expense coverage, disability income or related asset-protec24 tion coverage, accident only coverage, specified disease or

25 specified accident coverage, or limited benefit health cov-
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1 erage. With respect to life insurance, such term shall not

2 include life insurance policies, riders or certificates that

3 accelerate the death benefit specifically for one or more

4 of the qualifying events of terminal illness, medical condi5 tions requiring extraordinary medical intervention, or per6 manent institutional confinement, and that provide the op7 tion of a lump-sum payment for those benefits and in

8 which neither the benefits nor the eligibility for the bene9 fits is conditioned upon the receipt of long-term care.

10 ‘‘(d) APPLICATIONS.—Notwithstanding any other

11 provision of this part, this part shall apply to any product

12 advertised, marketed or offered as a long-term insurance

13 policy, rider or certificate.

14 ‘‘SEC. 2722. CODE OF CONDUCT WITH RESPECT TO EN15 DORSEMENTS.

16 ‘‘Not later than 1 year after the date of enactment

17 of this part the NAIC shall issue guidelines that shall

18 apply to organizations and associations, other than em19 ployers and labor organizations that do not accept com20 pensation, and their subsidiaries that provide endorse21 ments of long-term care insurance policies, or that permit

22 such policies to be offered for sale through the organiza23 tion or association. Such guidelines shall include at mini24 mum the following:
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1 ‘‘(1) In endorsing or selling long-term care in2 surance policies, the primary responsibility of an or3 ganization or association shall be to educate their

4 members concerning such policies and assist such

5 members in making informed decisions. Such organi6 zations and associations may not function primarily

7 as sales agents for insurance companies.

8 ‘‘(2) Organizations and associations shall pro9 vide objective information regarding long-term care

10 insurance policies sold or endorsed by such organiza11 tions and associations to ensure that members of

12 such organizations and associations have a balanced

13 and complete understanding of both the strengths

14 and weaknesses of the policies that are being en15 dorsed or sold.

16 ‘‘(3) Organizations and associations selling or

17 endorsing long-term care insurance policies shall dis18 close in marketing literature provided to their mem19 bers concerning such policies the manner in which

20 such policies and the insurance company issuing

21 such policies were selected. If the organization or as22 sociation and the insurance company have interlock23 ing directorates, the organization or association shall

24 disclose such fact to their members.
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1 ‘‘(4) Organizations and associations selling or

2 endorsing long-term care insurance policies shall dis3 close in marketing literature provided to their mem4 bers concerning such policies the nature and amount

5 of the compensation arrangements (including all

6 fees, commissions, administrative fees and other

7 forms of financial support that the organization or

8 association receives) from the endorsement or sale of

9 the policy to its members.

10 ‘‘(5) The Boards of Directors of organizations

11 and associations selling or endorsing long-term care

12 insurance policies, if such organizations and associa13 tions have a Board of Directors, shall review and ap14 prove such insurance policies, the compensation ar15 rangements and the marketing materials used to

16 promote sales of such policies.’’.

17 PART 3—LIFE CARE

18 SEC. 2301. SHORT TITLE.

19 This part may be cited as the ‘‘Life Care Act’’.

20 SEC. 2302. LIFE CARE: PUBLIC INSURANCE PROGRAM FOR

21 NURSING HOME CARE.

22 Title XXVII of the Public Health Service Act (as

23 added by section 2301) is amended by adding at the end

24 thereof the following new part:
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1 ‘‘PART 2—LIFE CARE: PUBLIC INSURANCE

2 PROGRAM FOR NURSING HOME CARE

3 ‘‘SEC. 2741. ESTABLISHMENT OF VOLUNTARY LONG-TERM

4 CARE INSURANCE PROGRAM.

5 ‘‘The Secretary shall establish a voluntary insurance

6 program for individuals 35 years of age and over to cover

7 the nursing home stays of such individuals. The Secretary

8 shall establish a process for enrollment in the Life Care

9 program.

10 ‘‘SEC. 2742. BENEFITS.

11 ‘‘(a) IN GENERAL.—

12 ‘‘(1) ELIGIBILITY FOR COVERAGE.—Subject to

13 subsection (c), an individual who meets the eligibility

14 criteria prescribed in section 2743 shall be eligible

15 under the program established under this part for

16 coverage for necessary services described in sub17 section (b) (in the amounts described in subsection

18 (c)) that are provided to the individual by a nursing

19 facility while the individual is an inpatient of the fa20 cility.

21 ‘‘(2) NONFORFEITURE.—The Secretary shall

22 establish standards to ensure the nonforfeiture of

23 benefits for which premiums have been paid.

24 ‘‘(b) TYPES.—Coverage may be provided under this

25 part for—
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1 ‘‘(1) nursing care provided by or under the su2 pervision of a registered professional nurse;

3 ‘‘(2) physical, occupational, or speech therapy

4 furnished by a facility or by others under arrange5 ments with a facility;

6 ‘‘(3) medical social work services;

7 ‘‘(4) drug, biological, supply, appliance, and

8 equipment for use in the facility, that is ordinarily

9 furnished by the facility for the care and treatment

10 of an inpatient;

11 ‘‘(5) such other services necessary to the func12 tioning of a patient, including personal care and as13 sistance with activities of daily living, as are gen14 erally provided by a nursing home facility; and

15 ‘‘(6) with respect to the initial 6 months of cov16 ered residence in a nursing facility, such room and

17 board costs as are not covered by beneficiary

18 copayment.

19 ‘‘(c) COVERAGE AMOUNT.—

20 ‘‘(1) IN GENERAL.—The amount of coverage

21 provided with respect to an eligible individual for the

22 services described in subsection (b) shall, based on

23 an election made by the individual, not exceed

24 $30,000, $60,000, or $90,000 over the lifetime of

25 the eligible individual. Such amounts shall be ad-
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1 justed by the Secretary to reflect increases in the

2 Consumer Price Index.

3 ‘‘(2) ASSET PROTECTION.—An eligible individ4 ual shall be entitled to the asset protection provided

5 under section 2748.

6 ‘‘(d) PAYMENT.—Amounts provided under this part

7 with respect to an eligible individual for the services de8 scribed in subsection (b) shall be paid from the general

9 fund of the Treasury of the United States.

10 ‘‘(e) RESIDENTIAL CARE FACILITIES.—The Sec11 retary shall consider the feasibility of making payments

12 under this part for services delivered in residential care

13 facilities. Not later than 2 years after the date of enact14 ment of this Act, the Secretary shall report its findings

15 to the Congress with respect to the feasibility of making

16 such payments.

17 ‘‘SEC. 2743. ELIGIBILITY.

18 ‘‘(a) IN GENERAL.—An individual shall be eligible for

19 benefits under this part if—

20 ‘‘(1) the individual—

21 ‘‘(A) is a legal resident of the United

22 States and has elected coverage under sub23 section (c); and
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1 ‘‘(B) has been determined by a Screening

2 Agency through a screening process (conducted

3 in accordance with section 2747)—

4 ‘‘(i)(I) to require hands-on or standby

5 assistance, supervision, or cueing (as de6 fined in regulations) to perform three or

7 more activities of daily living; or

8 ‘‘(II) to require hands-on or standby

9 assistance, supervision, or cueing with at

10 least such instrumental activity (or activi11 ties) of daily living related to cognitive or

12 mental impairment as the Secretary speci13 fies; or

14 ‘‘(III) to display symptoms of one or

15 more serious behavioral problems (that is

16 on a list of such problems specified by the

17 Secretary) which create a need for super18 vision to prevent harm to self or others; or

19 ‘‘(IV) has achieved a score, on a

20 standard mental status protocol (or proto21 cols) appropriate for measuring the indi22 vidual’s particular condition specified by

23 the Secretary, that indicates either severe

24 cognitive impairment or severe mental im25 pairment, or both; and
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1 ‘‘(ii) to require such assistance, super2 vision, or cueing over a period of at least

3 90 days; and

4 ‘‘(2)(A) the individual has filed an application

5 for such benefits, and is in need of, benefits covered

6 under this part; or

7 ‘‘(B) the legal guardian of the individual has

8 filed an application on behalf of an individual who

9 is in need of benefits covered under this part; or

10 ‘‘(C) the representative of an individual who is

11 cognitively impaired and who is in need of benefits

12 covered under this part has filed an application on

13 behalf of the individual.

14 ‘‘(b) CURRENT INDIVIDUALS.—An individual who is

15 in a hospital or nursing home on the date of the enroll16 ment of the individual in the program established under

17 this part shall be ineligible for coverage under this section

18 until the individual’s first spell of illness beginning after

19 such date.

20 ‘‘(c) ELECTION OF COVERAGE.—

21 ‘‘(1) IN GENERAL.—Subject to this subsection,

22 an individual shall have the option to purchase cov23 erage under this part when the individual is 35

24 years of age, 45 years of age, 55 years of age, or

25 65 years of age.
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1 ‘‘(2) INITIAL YEAR.—During the 1-year period

2 beginning on the date on which final regulations

3 that implement this part are issued, an individual

4 who is 35 years of age or older shall be eligible to

5 purchase insurance under this part, except that such

6 an individual shall not be eligible to purchase such

7 insurance—

8 ‘‘(A) while confined to a hospital or nurs9 ing home;

10 ‘‘(B) within the 6-month period after the

11 individual’s confinement in a nursing home; or

12 ‘‘(C) within the 90-day period after the in13 dividual’s confinement in a hospital.

14 Individuals described in the matter preceding sub15 paragraph (A) shall become eligible to receive bene16 fits under this part on the expiration of the 3-year

17 period beginning on the date such individuals pur18 chase insurance under this part.

19 ‘‘(3) EXTENSION BEYOND INITIAL YEAR.—If an

20 individual is confined to a nursing home or hospital

21 during a period that extends beyond the first year

22 after the effective date of this part, an individual

23 shall be eligible to enroll in the program established

24 by this part during the 60-day period beginning

25 after the individual’s spell of illness.
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1 ‘‘(4) SUBSEQUENT YEARS.—During years sub2 sequent to the 1-year period referred to in para3 graph (2), an individual shall be eligible to purchase

4 insurance under this part within 6 months of the

5 35th, 45th, 55th or 65th birthday of the individual.

6 ‘‘(5) ACTIVATION OF BENEFITS.—To receive

7 coverage under the insurance program established by

8 this part, an individual shall have purchased such

9 coverage not later than 1 month prior to admission

10 to a nursing facility, unless the reason for the need

11 of services is a result of an accident or stroke subse12 quent to the date that such individual enrolled for

13 coverage under this part.

14 ‘‘(d) PUBLIC EDUCATION.—In the 12 months preced15 ing the initial enrollment period, the Secretary shall, either

16 directly or through grants and contracts, conduct a public

17 service and education campaign designed to inform poten18 tially eligible individuals as to the nature of the benefits

19 and the limited enrollment period. In conducting such

20 campaigns the Secretary shall make information available

21 to individuals through the open enrollment process for ob22 taining health care benefits under this Act.

23 ‘‘SEC. 2744. PREMIUM RATES.

24 ‘‘(a) IN GENERAL.—The Secretary shall determine

25 one premium rate for individuals electing to purchase cov-
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1 erage under this part at age 35 (or between the ages of

2 35 and 44 during the initial enrollment period), a separate

3 rate for those individuals who elect coverage at age 45

4 (or between the ages of 45 and 54 during the initial enroll5 ment period), a separate rate for those individuals who

6 elect such coverage at age 55 (or between that ages of

7 55 and 64 during the initial enrollment period), and a sep8 arate rate for those individuals who elect such coverage

9 at age 65 (or at age 65 and over during the initial enroll10 ment period). During the initial enrollment period, the

11 Secretary shall establish actuarily fair, age-rated pre12 miums for persons age 65 and over.

13 ‘‘(b) REVISION.—The Secretary shall revise premium

14 rates annually to increase such rates to reflect the amount

15 of the increase in the cost of living adjustment with re16 spect to benefits under title II of the Social Security Act.

17 ‘‘(c) RATES.—In developing premium rates under the

18 program established under this part, the Secretary shall

19 establish rates that are expected to cover 100 percent of

20 the reimbursement amount provided under this part for

21 nursing home stays for those individuals enrolled in the

22 program.

23 ‘‘(d) WAIVER.—An individual electing to purchase

24 coverage under this part shall not be required to pay pre-
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1 miums during any period in which such individual is re2 ceiving benefits under this part.

3 ‘‘(e) PAYMENT.—Premiums shall be paid under this

4 section into the general fund of the Treasury of the United

5 States.

6 ‘‘SEC. 2745. QUALIFIED SERVICE PROVIDERS.

7 ‘‘(a) IN GENERAL.—To be considered as a covered

8 nursing home service under this part, such service must

9 have been provided by a qualified service provider.

10 ‘‘(b) TYPES.—A provider shall be considered a quali11 fied service provider under this part if the provider is a

12 nursing facility that is certified by the State and meets

13 the requirements of this part and any other standards es14 tablished by the Secretary by regulation for the safe and

15 efficient provision of services covered under this part.

16 ‘‘SEC. 2746. REIMBURSEMENT.

17 ‘‘(a) AMOUNT.—Monthly reimbursement for nursing

18 facility services under this part shall equal 65 percent (or

19 during the initial 6 months of coverage, 80 percent) of

20 the amount the Secretary determines to be reasonable and

21 appropriate to cover the cost of care provided under this

22 part.

23 ‘‘(b) PROSPECTIVE PAYMENT.—To the extent fea24 sible, the Secretary shall establish a prospective payment

25 mechanism for payment for nursing home services under
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1 this part that takes into account the expected resource uti2 lization of individual patients based on their degree of dis3 ability, the methodology recommended for reimbursement

4 of skilled nursing facilities under title XVIII of the Social

5 Security Act, and other factors determining service re6 quirements.

7 ‘‘(c) ROOM AND BOARD PAYMENT.—An individual

8 receiving benefits under this program shall be responsible

9 for the payment of an amount for room and board that

10 is equal to—

11 ‘‘(1) with respect to the initial 6 months of resi12 dence in a nursing facility, 20 percent of the average

13 per diem rate paid by the Secretary to nursing facili14 ties receiving reimbursement under this part; and

15 ‘‘(2) with respect to subsequent periods of resi16 dence, 35 percent of the average per diem rate paid

17 by the Secretary to nursing facilities receiving reim18 bursement under this part. Payments under sub19 section (a) and (c) shall be considered payment in

20 full for services received under this section.

21 ‘‘(d) PRIORITY PAYERS.—Notwithstanding any other

22 provision of this part, reimbursement for nursing facility

23 services provided under this part to an individual shall,

24 to the extent available, be made under the Medicare pro25 gram, under Department of Veterans Affairs’ programs,
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1 or under private insurance policies prior to reimbursement

2 under this part.

3 ‘‘SEC. 2747. LONG-TERM CARE SCREENING AGENCY.

4 ‘‘(a) ESTABLISHMENT.—The Secretary shall contract

5 with entities to act as Long-Term Care Screening Agen6 cies (hereafter referred to in this part as the ‘Screening

7 Agency’) for each designated area of a State. It shall be

8 the responsibility of such agency to assess the eligibility

9 of individuals residing in the geographic jurisdiction of the

10 Agency, for services provided under this part according to

11 the requirements of this part and regulations prescribed

12 by the Secretary. In entering into such contracts, the Sec13 retary shall give preference to State governmental entities

14 and private nonprofit agencies.

15 ‘‘(b) ELIGIBILITY.—The Screening Agency shall de16 termine the eligibility of an individual under this part

17 based on the results of a preliminary telephone interview

18 or written questionnaire (completed by the applicant, by

19 the caregiver of the applicant, or by the legal guardian

20 or representative of the applicant) that shall be validated

21 through the use of a screening tool administered in person

22 to each applicant determined eligible through initial tele23 phone or written questionnaire interviews not later than

24 15 days from the date on which such individual initially

25 applied for services under this part.
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1 ‘‘(c) QUESTIONNAIRES AND SCREENING TOOLS.—

2 ‘‘(1) IN GENERAL.—The Secretary shall estab3 lish a telephone or written questionnaire and a

4 screening tool to be used by the Screening Agency

5 to determine the eligibility of an individual for serv6 ices under this part consistent with requirements of

7 this part and the standards established by the Sec8 retary by regulation.

9 ‘‘(2) QUESTIONNAIRES.—The questionnaire

10 shall include questions about the functional impair11 ment and mental status of an individual and other

12 criteria that the Secretary shall prescribe by regula13 tion.

14 ‘‘(3) SCREENING TOOLS.—The screening tool

15 should measure functional impairment caused by

16 physical or cognitive conditions as well as informa17 tion concerning cognition disability, behavioral prob18 lems (such as wandering or abusive and aggressive

19 behavior), and any other criteria that the Secretary

20 shall prescribe by regulation. The screening tool

21 shall be administered in person.

22 ‘‘(d) NOTIFICATION.—Not later than 15 days after

23 the date on which an individual initially applied for serv24 ices under this part (by telephone or written question25 naire), the Screening Agency shall notify such individual
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1 that such individual is not eligible for benefits, or that

2 such individuals must schedule an in-person screening to

3 determine final eligibility for benefits under this part. The

4 Screening Agency shall notify such individual of its final

5 decision not later than 2 working days after the in-person

6 screening.

7 ‘‘(e) IN-PERSON SCREENING.—An individual (or the

8 legal guardian or representative of such individual) whose

9 application for benefits under this part is denied on the

10 basis of information provided through a telephone or writ11 ten questionnaire, shall be notified of such individual’s

12 right to an in-person screening by a nurse or appropriate

13 health care professionals.

14 ‘‘(f) APPEALS.—The Secretary shall establish a

15 mechanism for hearings and appeals in cases in which in16 dividuals contest the eligibility findings of the Screening

17 Agency.

18 ‘‘(g) PAYMENT.—

19 ‘‘(1) PAYMENT FOR SCREENING.—The Screen20 ing Agency may require payment from individuals

21 only in accordance with standards established by the

22 Secretary.

23 ‘‘(2) NO PAYMENT FOR POOREST.—The Screen24 ing Agency may not require payment for individuals
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1 with incomes of less than 150 percent of the official

2 poverty line.

3 ‘‘SEC. 2748. ASSET PROTECTION.

4 ‘‘Notwithstanding any other provision of law, the as5 sets an eligible individual may retain and be determined

6 eligible for nursing facility benefits, including payments of

7 room and board under this part, under State Medicaid

8 programs (in accordance with section 1902(a)(10)) shall

9 be increased by the amount of coverage ($30,000,

10 $60,000, or $90,000) elected under section 2742.

11 ‘‘SEC. 2749. RELATION TO PRIVATE INSURANCE.

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

13 (b), an insurer may not offer a long-term care insurance

14 policy to an individual who has purchased coverage under

15 this part if the coverage under such policy duplicates the

16 coverage provided under this part.

17 ‘‘(b) DEVELOPMENT OF STANDARD PACKAGES.—The

18 Secretary shall develop standard long-term care insurance

19 benefits packages that insurers may offer to insured indi20 viduals under this part. Such packages shall provide cov21 erage for benefits that compliment, but do not duplicate,

22 those covered under this part.

23 ‘‘SEC. 2750. DEFINITIONS.

24 ‘‘As used in this part:
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1 ‘‘(1) NURSING FACILITY.—The term ‘nursing

2 facility’ means—

3 ‘‘(A) a skilled nursing facility (as defined

4 in section 1819(a) of the Social Security Act);

5 or

6 ‘‘(B) a facility that is a nursing facility (as

7 defined in section 1919(a) of such Act) which

8 meets the requirements of section

9 1819(b)(4)(C) of such Act (relating to nursing

10 care).

11 ‘‘(2) SPELL OF ILLNESS.—The term ‘spell of

12 illness’ means a period of consecutive days beginning

13 with the first day on which an individual is fur14 nished services as an inpatient in a hospital or nurs15 ing facility and ending with the close of the first 6

16 consecutive months thereafter during which the indi17 vidual is no longer an inpatient of a nursing facility,

18 or 90 days after the individual is no longer an inpa19 tient in a hospital.

20 ‘‘SEC. 2751. REPORTS.

21 ‘‘(a) IN GENERAL.—Prior to the promulgation of reg22 ulations implementing this title, the Secretary shall report

23 to Congress on—

24 ‘‘(1) the actuarially-sound premium rates to be

25 used in the implementation of this Act, including
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1 whether the premiums will cover 100 percent of the

2 benefits paid out, and whether Federal funds will be

3 required to support the payment of benefits;

4 ‘‘(2) an assessment of the impact of such pre5 mium rates on the affordability of coverage under

6 this Act;

7 ‘‘(3) a projected enrollment of individuals by

8 age category; and

9 ‘‘(4) an estimate of current and projected en10 rollment of individuals, by age category in coverage

11 under private long-term care insurance.

12 ‘‘(b) LIFE CARE REPORT.—Not later than 2 years

13 after the promulgation of regulations implementing this

14 title, the Secretary shall report to Congress on the follow15 ing aspects of the Life Care Act:

16 ‘‘(1) The current and projected premium rates.

17 ‘‘(2) The current and projected enrollment of

18 individuals, by age category and an estimate of cur19 rent and projected enrollment of individuals by age

20 category in private long-term care insurance.

21 ‘‘(3) The projected use of benefits and the im22 pact of use on premium rates.

23 ‘‘(4) An assessment of the impact of projected

24 premium rates on the affordability of coverage under

25 this Act.
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1 ‘‘(c) RECOMMENDATIONS.—The Secretary shall make

2 recommendations to Congress regarding necessary revi3 sions to the Life Care Act as a result of the findings pro4 vided in the reports submitted under this section.’’.

5 SEC. 2303. SENSE OF THE COMMITTEE CONCERNING PACE

6 (PROGRAM OF ALL-INCLUSIVE CARE FOR THE

7 ELDERLY).

8 (a) FINDINGS.—The Committee on Labor and

9 Human Resources of the Senate finds that—

10 (1) a serious shortcoming in the Nation’s cur11 rent health care delivery system is its ability to inte12 grate acute and long-term care services;

13 (2) the pioneering efforts of the On Lok pro14 gram in San Francisco, which has been replicated as

15 PACE (Program of All-inclusive Care for the Elder16 ly), provides a comprehensive range of acute and

17 long-term care services to frail, nursing home eligible

18 individuals, allowing them to avoid unwanted institu19 tionalization;

20 (3) two of the current PACE sites are located

21 in East Boston, Massachusetts and Columbia, South

22 Carolina;

23 (4) these programs have done a remarkable job

24 in keeping elderly, low-income, severely disabled indi-
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1 viduals in their homes and have proven to be both

2 popular and cost-effective;

3 (5) payments to PACE providers are capitated

4 and, therefore, require waivers of Medicare and

5 Medicaid rules; and

6 (6) at the present time, only 15 PACE sites are

7 authorized.

8 (b) SENSE OF THE COMMITTEE.—It is the sense of

9 the Committee on Labor and Human Resources of the

10 Senate that—

11 (1) the number of PACE sites should be ex12 panded substantially; and

13 (2) the Committee on Finance of the Senate,

14 which has jurisdiction over Medicare and Medicaid,

15 should take action on this critical issue to allow a

16 greater number of individuals with disabilities to

17 take advantage of a successful model for integrated

18 service delivery.

19 TITLE III—PUBLIC HEALTH

20 INITIATIVES

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.

SUBPART B—AUTHORIZED POSITIONS IN SPECIALTY TRAINING

Sec. 3011. Cooperation regarding approved physician training programs.
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Sec. 3012. Annual authorization of number of specialty positions; requirements

regarding primary health care.

Sec. 3013. Allocations among specialities and programs.

SUBPART 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 payments.

SUBPART D—GENERAL PROVISIONS

Sec. 3055. Definitions.

SUBPART 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.

PART 3—RELATED PROGRAMS

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 health

care workers.

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.
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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 PREVENTION

SUBPART A—GENERAL GRANTS

Sec. 3331. Grants for national prevention initiatives.

Sec. 3332. Priorities.

Sec. 3333. Submission of information.

Sec. 3334. Application for grant.

SUBPART 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

PART 1—INITIATIVES FOR ACCESS TO HEALTH CARE

SUBPART A—AUTHORIZATION OF APPROPRIATIONS

Sec. 3411. Authorizations of appropriations.
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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.

Sec. 3424. Purposes and conditions.

SUBPART 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. Administration of programs.

SUBPART 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—AUTHORITIES REGARDING PARTICIPATING STATES

SUBPART A—REPORT

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.
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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.

PART 5—SCHOOL-RELATED HEALTH SERVICES

SUBPART A—DEVELOPMENT AND OPERATION

Sec. 3681. Authorizations of appropriations.

Sec. 3682. Eligibility for grants.

Sec. 3683. Preferences.

Sec. 3684. Planning and development grants.

Sec. 3685. Grants for operation of school health services.

SUBPART 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.
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1 Subtitle A—Workforce Priorities

2 Under Federal Payments

3 PART 1—INSTITUTIONAL COSTS OF GRADUATE

4 MEDICAL EDUCATION; WORKFORCE PRIORITIES

5 Subpart A—National Council Regarding Workforce

6 Priorities

7 SEC. 3001. NATIONAL COUNCIL ON GRADUATE MEDICAL

8 EDUCATION.

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

10 Department of Health and Human Services a council to

11 be known as the National Council on Graduate Medical

12 Education.

13 (b) DUTIES.—The Secretary shall carry out subpart

14 B acting through the National Council.

15 (c) COMPOSITION.—

16 (1) IN GENERAL.—The membership of the Na17 tional Council shall include between 12 and 18 indi18 viduals who are appointed to the Council from

19 among individuals who are not officers or employees

20 of the United States. Such individuals shall be ap21 pointed by the Secretary, and shall include individ22 uals from each of the following categories:

23 (A) Consumers of health care services, at

24 least one of whom resides in a rural area.
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1 (B) Physicians who are faculty members of

2 medical schools.

3 (C) Physicians in private practice who are

4 not physicians described in subparagraph (B).

5 (D) Officers or employees of regional and

6 corporate health alliances.

7 (E) Officers or employees of health care

8 plans that participate in such alliances.

9 (F) Executives of teaching hospitals.

10 (G) Nurses.

11 (H) Primary care physicians, at least one

12 of whom practices in a rural area.

13 (I) Such other individuals as the Secretary

14 determines to be appropriate.

15 (2) EX OFFICIO MEMBERS; OTHER FEDERAL

16 OFFICERS OR EMPLOYEES.—The membership of the

17 National Council shall include individuals designated

18 by the Secretary to serve as members of the Council

19 from among Federal officers or employees who are

20 appointed by the President, or by the Secretary or

21 other Federal officers who are appointed by the

22 President with the advice and consent of the Senate.

23 (d) CHAIR.—The Secretary shall, from among mem24 bers of the National Council appointed under subsection
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1 (c)(1), designate an individual to serve as the Chair of

2 the Council.

3 (e) DEFINITIONS.—For purposes of this subtitle:

4 (1) The term ‘‘academic health center’’ means

5 an entity defined in section 3051(c)(1).

6 (2) The term ‘‘medical school’’ means a school

7 of medicine (as defined in section 799 of the Public

8 Health Service Act) or a school of osteopathic medi9 cine (as defined in such section).

10 (3) The term ‘‘National Council’’ means the

11 council established in subsection (a).

12 Subpart B—Authorized Positions in Specialty

13 Training

14 SEC. 3011. COOPERATION REGARDING APPROVED PHYSI15 CIAN TRAINING PROGRAMS.

16 (a) IN GENERAL.—With respect to an approved phy17 sician training program in a medical specialty, a funding

18 agreement with a qualified applicant for payments under

19 section 3031 for a calendar year is that the qualified appli20 cant will ensure that the number of individuals enrolled

21 in the program in the subsequent academic year is in ac22 cordance with this subpart.

23 (b) DEFINITIONS.—

24 (1) APPROVED PROGRAM.—For purposes of this

25 subtitle:
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1 (A) The term ‘‘approved physician training

2 program’’, with respect to the medical speciality

3 involved, means a residency or other post4 graduate program that trains physicians and

5 meets the following conditions:

6 (i) Participation in the program may

7 be counted toward certification in the med8 ical specialty.

9 (ii) The program is accredited by the

10 Accreditation Council on Graduate Medical

11 Education, or approved by the Council on

12 Postgraduate Training of the American

13 Osteopathic Association.

14 (B) The term ‘‘approved physician training

15 program’’ includes any postgraduate program

16 described in subparagraph (A) that provides

17 health services in an ambulatory setting, with18 out regard to whether the program provides in19 patient hospital services.

20 (C) The term ‘‘approved physician training

21 program’’ includes any postgraduate program

22 described in subparagraph (A), whether oper23 ated by academic health centers, teaching hos24 pitals, multispecialty group practices, ambula-
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1 tory care providers, prepaid health plans, or

2 other entities.

3 (D) The term ‘‘approved physician training

4 program’’ includes any postgraduate program

5 described in subparagraph (A) that provides fel6 lowship training in family medicine, general in7 ternal medicine or general pediatrics, and pro8 vides training for a faculty position in family

9 medicine, general medicine or general pediat10 rics.

11 (2) QUALIFIED APPLICANT; SUBPART DEFINI12 TION.—For purposes of this subpart, the term

13 ‘‘qualified applicant’’, with respect to an academic

14 year, means an entity that trains individuals in an

15 approved physician program that receives payments

16 under subpart C for the calendar year in which the

17 academic year begins.

18 (3) OTHER DEFINITIONS.—For purposes of this

19 subtitle:

20 (A)(i) The term ‘‘academic year’’ means

21 the 1-year period beginning on July 1. The aca22 demic year beginning July 1, 1993, is academic

23 year 1993–94.

24 (ii) With respect to the funding agreement

25 described in subsection (a), the term ‘‘subse-
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1 quent academic year’’ means the academic year

2 beginning July 1 of the calendar year for which

3 payments are to be made under the agreement.

4 (B) The term ‘‘funding agreement’’, with

5 respect to payments under section 3031 to a

6 qualified applicant, means that the Secretary

7 may make the payments only if the qualified

8 applicant makes the agreement involved.

9 (C) The term ‘‘medical specialty’’ includes

10 all medical, surgical, and other physician spe11 cialties and subspecialties.

12 SEC. 3012. ANNUAL AUTHORIZATION OF NUMBER OF SPE13 CIALTY POSITIONS; REQUIREMENTS REGARD14 ING PRIMARY HEALTH CARE.

15 (a) ANNUAL AUTHORIZATION OF NUMBER OF POSI16 TIONS.—In the case of each medical specialty, the Na17 tional Council shall, pursuant to section 3011, designate

18 for each academic year the number of individuals nation19 wide who are authorized to be enrolled in eligible pro20 grams. The preceding sentence is subject to subsection

21 (c)(2).

22 (b) PRIMARY HEALTH CARE.—

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

24 carrying out subsection (a) for an academic year, the

25 National Council shall ensure that, of the class of
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1 training participants entering eligible programs for

2 academic year 2000–2001 or any subsequent aca3 demic year, the percentage of such class that com4 pletes eligible programs in primary health care is not

5 less than 55 percent (without regard to the academic

6 year in which the members of the class complete the

7 programs).

8 (2) RULE OF CONSTRUCTION.—The require9 ment of paragraph (1) regarding a percentage ap10 plies in the aggregate to training participants enter11 ing eligible programs for the academic year involved,

12 and not individually to any eligible program.

13 (c) DESIGNATIONS REGARDING 3-YEAR PERIODS.—

14 (1) DESIGNATION PERIODS.—For each medical

15 specialty, the National Council shall make the an16 nual designations under subsection (a) for periods of

17 3 academic years.

18 (2) INITIAL PERIOD.—The first designation pe19 riod established by the National Council after the

20 date of the enactment of this Act shall be the aca21 demic years 2000–2001 through 2002–03.

22 (d) CERTAIN CONSIDERATIONS IN DESIGNATING AN23 NUAL NUMBERS.—

24 (1) IN GENERAL.—Factors considered by the

25 National Council in designating the annual number
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1 of specialty positions for an academic year for a

2 medical specialty shall include the extent to which

3 there is a need for additional practitioners in the

4 speciality, as indicated by the following:

5 (A) The characteristics of diseases, dis6 orders, or health conditions treated, including—

7 (i) the incidence and prevalence (in

8 the general population and in various other

9 populations) of the diseases, disorders, or

10 other health conditions with which the spe11 cialty is concerned;

12 (ii) the intensity of care required for

13 each of these diseases, disorders, or health

14 conditions;

15 (iii) the relevant training received and

16 experience attained by primary care and

17 specialist physicians in caring for each of

18 these diseases, disorders, or health condi19 tions; and

20 (iv) when sufficient data becomes

21 available, the extent to which individuals

22 with certain diseases, disorders, or health

23 conditions have better health outcomes

24 when treated by health specialists than by

25 primary care physicians.
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1 (B) The number of physicians who will be

2 practicing in the specialty in the academic year.

3 (C) The number of physicians who will be

4 practicing in the specialty at the end of the 5-

5 year period beginning on the first day of the

6 academic year.

7 (2) RECOMMENDATIONS OF PRIVATE ORGANIZA8 TIONS.—In designating the annual number of spe9 cialty positions for an academic year for a medical

10 specialty, the National Council shall consider the

11 recommendations of organizations representing phy12 sicians in the specialty, organizations representing

13 academic medicine, and the recommendations of or14 ganizations representing consumers of the services of

15 such physicians.

16 (3) TOTAL OF RESPECTIVE ANNUAL NUM17 BERS.—

18 (A) For academic year 2000–2001 and

19 subsequent academic years, the National Coun20 cil shall ensure that the total of the respective

21 annual numbers designated under subsection

22 (a) for an academic year is a total that—

23 (i) bears a relationship to the number

24 of individuals who graduated from medical
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1 schools in the United States in the preced2 ing academic year; and

3 (ii) is consistent with the purposes of

4 this subpart.

5 (B) For each of the academic years 2000–

6 2001 through 2004–05, the total determined

7 under subparagraph (A) shall be reduced by a

8 percentage determined by the National Council.

9 (e) INTERIM VOLUNTARY TARGETS.—

10 (1) ESTABLISHMENT.—Not later than July 1,

11 1996, the National Council shall establish targets

12 with respect to the aggregate number of individuals

13 enrolled in approved physician training programs for

14 each specialty to be achieved by the year 2000.

15 (2) VOLUNTARY COMPLIANCE.—Specialties that

16 meet and continue to be in compliance with the ag17 gregate targets established under paragraph (1), as

18 determined by the National Council, shall not be

19 subject to the mandatory allocation system described

20 in section 3013.

21 (3) MEASURE OF COMPLIANCE.—To be consid22 ered in compliance with the targets under paragraph

23 (2), a specialty shall demonstrate, not later than

24 July 1, 1998, that the number of individuals en25 rolled in approved physician training programs of
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1 the specialty is not less than the number of individ2 uals enrolled in such programs as of July 1, 1994,

3 increased or decreased, as the case may be, by 45

4 percent of the difference between such enrollment

5 and the target enrollment established under para6 graph (1) and, not later than January 1, 2000, have

7 increased or decreased by 90 percent of such dif8 ference, and, by January 1, 2001, are deemed by the

9 National Council to be in compliance with the tar10 get.

11 (4) LOSS OF COMPLIANCE.—The National

12 Council may, at any time, determine that a specialty

13 is not in compliance with the targets established

14 under paragraph (1) and initiate, with respect to

15 that specialty, the system of mandatory allocations

16 described under section 3013.

17 (f) STUDY.—Not later than January 1, 2005, the

18 Secretary shall arrange for the completion, by the Insti19 tute of Medicine or other similar entity, of an independent

20 study concerning the effect of medical workforce regula21 tion and planning. The results of such study together with

22 recommendations concerning the appropriateness of modi23 fying or eliminating workforce regulations shall be com24 piled in a report and transmitted by the Secretary to the

25 President and the Congress.
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1 (g) DEFINITIONS.—For purposes of this subtitle:

2 (1) The term ‘‘annual number of specialty posi3 tions’’, with respect to a medical specialty, means

4 the number designated by the National Council

5 under subsection (a) for eligible programs for the

6 academic year involved.

7 (2) The term ‘‘designation period’’ means a 3-

8 year period under subsection (c)(1) for which des9 ignations under subsection (a) are made by the Na10 tional Council.

11 (3) The term ‘‘primary health care’’ means the

12 following medical specialties: Family medicine, gen13 eral internal medicine, general pediatrics, geriatric

14 medicine, obstetrics and gynecology, and medical

15 specialties (including psychiatry), if any, that have

16 been designated to be medical shortage specialties or

17 protected medical specialties by the Council on

18 Graduate Medical Education, or other similar physi19 cian advisory body authorized by Congress to pro20 vide an ongoing assessment of physician workforce

21 trends, and identify needs and be advisory to the

22 Secretary, the Committee on Labor and Human Re23 sources and the Committee on Finance of the Senate

24 and the Committee on Energy and Commerce and

25 the Committee on Ways and Means of the House of
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1 Representatives. Only those participants in programs

2 with a significant primary care training emphasis

3 will be considered to have completed an eligible pro4 gram in primary care for the purposes of subsection

5 (b)(1). Determination of meeting the definition of a

6 ‘‘significant primary care training emphasis’’ will be

7 made by the National Board.

8 (4) The term ‘‘specialty position’’ means a posi9 tion as a training participant.

10 (5) The term ‘‘training participant’’ means an

11 individual who is enrolled in an approved physician

12 training program.

13 SEC. 3013. ALLOCATIONS AMONG SPECIALITIES AND PRO14 GRAMS.

15 (a) IN GENERAL.—For each academic year, the Na16 tional Council shall for each medical specialty make alloca17 tions among eligible programs of the annual number of

18 specialty positions that the Council has designated for

19 such year. The preceding sentence is subject to subsection

20 (b)(3).

21 (b) ALLOCATIONS REGARDING 3-YEAR PERIOD.—

22 (1) IN GENERAL.—For each medical specialty,

23 the National Council shall make the annual alloca24 tions under subsection (a) for periods of 3 academic

25 years.
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1 (2) ADVANCE NOTICE TO PROGRAMS.—With re2 spect to the first academic year of an allocation pe3 riod established by the National Council, the Na4 tional Council shall, not later than July 1 of the pre5 ceding academic year, notify each eligible program of

6 the allocations made for the program for each of the

7 academic years of the period.

8 (3) INITIAL PERIOD.—The first allocation pe9 riod established by the National Council after the

10 date of the enactment of this Act shall be the aca11 demic years 2000–2001 through 2002–03.

12 (c) CERTAIN CONSIDERATIONS.—

13 (1) GEOGRAPHIC AREAS; QUALITY OF PRO14 GRAMS.—In making allocations under subsection (a)

15 for eligible programs of the various geographic

16 areas, the National Council shall include among the

17 factors considered the historical distribution among

18 the areas of approved physician training programs,

19 and the quality of such programs.

20 (2) UNDERREPRESENTATION OF MINORITY

21 GROUPS AND WOMEN.—In making an allocation

22 under subsection (a) for an eligible program, the

23 National Council shall include among the factors

24 considered the following:
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1 (A) The extent to which the population of

2 training participants in the program includes

3 training participants who are members of racial

4 or ethnic minority groups and women.

5 (B) With respect to a racial or ethnic

6 group or women represented among the train7 ing participants, the extent to which the group

8 is underrepresented in the field of medicine

9 generally and in the various medical specialities.

10 (3) UNDERSERVED RURAL AND INNER-CITY

11 COMMUNITIES.—In making allocations under sub12 section (a) for eligible programs, the National Coun13 cil shall consider the extent to which the population

14 of training participants in the program includes

15 training participants who have resided in rural or

16 inner-city communities and the proportion of past

17 participants in the program who are practicing in

18 rural or inner-city communities.

19 (4) RECOMMENDATIONS OF PRIVATE ORGANIZA20 TIONS.—In making allocations under subsection (a)

21 for eligible programs, the National Council shall con22 sider the recommendations of organizations rep23 resenting physicians in the medical specialties, the

24 recommendations of organizations representing aca25 demic medicine and the recommendations of organi-
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1 zations representing consumers of the services of

2 such physicians.

3 (d) DEFINITIONS.—For purposes of this subtitle, the

4 term ‘‘allocation period’’ means a 3-year period under sub5 section (b)(1) for which allocations under subsection (a)

6 are made by the National Council.

7 CHAPTER 1—OPERATION OF APPROVED

8 PHYSICIAN TRAINING PROGRAMS

9 SEC. 3031. FEDERAL FORMULA PAYMENTS TO QUALIFIED

10 ENTITIES FOR THE COSTS OF THE OPER11 ATION OF APPROVED PHYSICIAN TRAINING

12 PROGRAMS.

13 (a) IN GENERAL.—In the case of a qualified entity

14 that in accordance with section 3032 submits to the Sec15 retary an application for calendar year 1996 or any subse16 quent calendar year, the Secretary shall make payments

17 for such year to the qualified entity for the purpose speci18 fied in subsection (b). The Secretary shall make the pay19 ments in an amount determined in accordance with section

20 3033, and may administer the payments as a contract,

21 grant, or cooperative agreement.

22 (b) PAYMENTS FOR OPERATION OF APPROVED PHY23 SICIAN TRAINING PROGRAMS.—The purpose of payments

24 under subsection (a) is to assist a qualified applicant with

25 the costs of operation of an approved physician training
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1 program. A funding agreement for such payments is that

2 the qualified applicant involved will expend the payments

3 only for such purpose.

4 (c) QUALIFIED APPLICANT; SUBPART DEFINITION.—

5 (1) IN GENERAL.—For purposes of this sub6 part, the term ‘‘qualified applicant’’, with respect to

7 the calendar year involved, means an entity—

8 (A) that trains individuals in approved

9 physician training programs;

10 (B) that submits to the Secretary an appli11 cation for such year in accordance with section

12 3032; and

13 (C) if the entity has an approved physician

14 training program in primary health care, that

15 rotates individuals enrolled in the program to

16 health centers or other community programs in

17 underserved urban or rural areas.

18 (2) ENTITIES INCLUDED.—The term ‘‘qualified

19 applicant’’ may include a teaching hospital, medical

20 school, group practice, an entity representing two or

21 more parties engaged in a formal association, a com22 munity health center or another entity operating an

23 approved physician training program.

24 (d) TREATMENT OF PODIATRIC AND DENTAL RESI25 DENCY PROGRAMS.—For the purposes of chapters 1 and
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1 3 of subpart C, an approved physician training program

2 includes training programs approved by the Commission

3 on Dental Accreditation or the Council of Podiatric Medi4 cal Education of the American Podiatric Medical Associa5 tion. This subsection shall not apply for purposes of sub6 part B.

7 SEC. 3032. APPLICATION FOR PAYMENTS.

8 (a) IN GENERAL.—

9 (1) IN GENERAL.—For purposes of section

10 3031(a), an application for payments under such

11 section for a calendar year is in accordance with this

12 section if—

13 (A) the eligible entity involved submits the

14 application not later than the date specified by

15 the Secretary;

16 (B) the application demonstrates that the

17 condition described in subsection (b) is met

18 with respect to the program;

19 (C) the application contains each funding

20 agreement described in this part and the appli21 cation provides such assurances of compliance

22 with the agreements as the Secretary may re23 quire; and

24 (D) the application is in such form, is

25 made in such manner, and contains such agree-
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1 ments, assurances, and information as the Sec2 retary determines to be necessary to carry out

3 this part.

4 (2) CERTAIN ENTITIES.—If an applicant under

5 paragraph (1) is an entity representing two or more

6 parties—

7 (A) the application shall contain a written

8 agreement, signed by all participants, in which

9 all of the participants agree as to the manner

10 in which the payments will be allocated; and

11 (B) the applicant shall agree to submit ad12 ditional documentation, if requested by the Na13 tional Council, that demonstrates that the

14 funds are distributed in the manner agreed

15 upon by all participants.

16 (b) CERTAIN CONDITIONS.—An eligible entity meets

17 the condition described in this subsection for receiving

18 payments under section 3031 for a calendar year if—

19 (1) the entity agrees to use such funds only to

20 support an approved physician training program;

21 (2) with respect to—

22 (A) a specialty for which programs have

23 received allocations under section 3013, the en24 tity agrees that funds will only be used to sup25 port approved training programs for which the
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1 number of specialists in training is consistent

2 with the allotment under section 3013; and

3 (B) a specialty for which a voluntary pro4 gram has received allocations under section

5 3012(e), the entity agrees that funds will only

6 be used to support approved training programs

7 for which the number of specialists in training

8 is consistent with the targets under section

9 3012(e); and

10 (3) the application of the entity contains a writ11 ten agreement, signed by all participants, in which

12 all participants agree to the manner in which the

13 payments will be allocated; and

14 (4) the entity agrees to submit additional docu15 mentation, if requested by the National Council, that

16 demonstrates that the funds will be distributed in a

17 manner agreed upon by all participants.

18 SEC. 3033. AVAILABILITY OF FUNDS FOR PAYMENTS; AN19 NUAL AMOUNT OF PAYMENTS.

20 (a) ANNUAL HEALTH PROFESSIONS WORKFORCE

21 ACCOUNT.—Subject to paragraph (2), the amount avail22 able for a calendar year for making payments under sec23 tions 3031 and 3061 (constituting an account to be known

24 as the annual health professions workforce account) is the

25 following, as applicable to the calendar year:
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1 (1) In the case of calendar year 1996,

2 $3,200,000,000.

3 (2) In the case of calendar year 1997,

4 $3,550,000,000.

5 (3) In the case of calendar year 1998,

6 $4,800,000,000.

7 (4) In the case of each of the calendar years

8 1999 and 2000, $5,800,000,000.

9 (5) In the case of each subsequent calendar

10 year, the amount specified in paragraph (4) in11 creased by the product of such amount and the gen12 eral health care inflation factor for such year (as de13 fined in subsection (d)).

14 (b) AMOUNT OF PAYMENTS FOR INDIVIDUAL ELIGI15 BLE ENTITIES.—

16 (1) IN GENERAL.—Payment amounts with re17 spect to any physician training program under this

18 section shall be equal to the product of the number

19 of full time equivalent training participants in the

20 program, and the per resident amount for the train21 ing program.

22 (2) PER RESIDENT AMOUNT.—The per resident

23 amount for a training program shall be equal to—

24 (A) with respect to—
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1 (i) the first calendar years during

2 which the program is in operation, 90 per3 cent;

4 (ii) the second calendar years during

5 which the program is in operation, 80 per6 cent;

7 (iii) the third calendar years during

8 which the program is in operation, 70 per9 cent;

10 (iv) the fourth calendar years during

11 which the program is in operation, 60 per12 cent; and

13 (v) the fifth and subsequent calendar

14 years during which the program is in oper15 ation, 50 percent;

16 of the all payer hospital per resident cost; and

17 (B) with respect to—

18 (i) the first calendar years during

19 which the program is in operation, 10 per20 cent;

21 (ii) the second calendar years during

22 which the program is in operation, 20 per23 cent;
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1 (iii) the third calendar years during

2 which the program is in operation, 30 per3 cent;

4 (iv) the fourth calendar years during

5 which the program is in operation, 40 per6 cent; and

7 (v) the fifth and subsequent calendar

8 years during which the program is in oper9 ation, 50 percent;

10 of the geographically adjusted national average

11 per resident amount.

12 (3) ADJUSTMENT FACTOR.—Payments under

13 this section shall be subject to an adjustment factor,

14 as determined by the Secretary, so that total pay15 ments in any year will not exceed the amounts speci16 fied in section 3033(a) and as provided in section

17 3033(c).

18 (4) ADDITIONAL PROVISIONS REGARDING NA19 TIONAL AVERAGE COST.—

20 (A) The Secretary shall in accordance with

21 paragraph (1)(B) determine, for academic year

22 1992–93, an amount equal to the national aver23 age described in such paragraph with respect to

24 training a participant in an approved physician

25 training program in the medical specialty in-
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1 volved. The national average applicable under

2 such paragraph for a calendar year for such

3 programs is, subject to subparagraph (B), the

4 amount determined under the preceding sen5 tence increased by the amount necessary to off6 set the effects of inflation occurring since aca7 demic year 1992–93, as determined through use

8 of the consumer price index.

9 (B) The national average determined

10 under subparagraph (A) and applicable to a cal11 endar year shall, in the case of the eligible en12 tity involved, be adjusted by a factor to reflect

13 regional differences in the applicable wage and

14 wage-related costs.

15 (5) FUNDING LEVEL AND ALLOCATION METH16 OD.—Not later than January 1, 1998, the Secretary

17 shall complete a study to determine the effect of the

18 funding level and allocation method described in sub19 section (a) and paragraphs (1) and (2) of this sub20 section on the operation of training programs and

21 shall compile the findings and recommendations de22 rived from such study in a report to be submitted

23 to the President and the Congress.

24 (c) LIMITATION.—If, subject to subsection (a)(2), the

25 annual health professions workforce account available for
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1 a calendar year is insufficient for providing each eligible

2 entity with the amount of payments determined under

3 subsection (b) for the entity for such year, the Secretary

4 shall make such pro rata reductions in the amounts so

5 determined as may be necessary to ensure that the total

6 of payments made under section 3031 for such year equals

7 the total of such account.

8 (d) DEFINITIONS.—For purposes of this subtitle:

9 (1) The term ‘‘annual health professions

10 workforce account’’ means the account established

11 pursuant to subsection (a)(1).

12 (2) The term ‘‘consumer price index’’ has the

13 meaning given such term in section 1902(11).

14 (3) The term ‘‘general health care inflation fac15 tor’’, with respect to a year, has the meaning given

16 such term in section 6001(a)(3) for such year.

17 CHAPTER 2—MEDICAL SCHOOL FUND

18 ACCOUNT

19 SEC. 3041. FEDERAL PAYMENTS TO THE MEDICAL SCHOOL

20 FUND.

21 (a) IN GENERAL.—In the case of an eligible medical

22 school that in accordance with section 3042 submits to

23 the Secretary an application for academic year 1996, or

24 any subsequent academic year, the Secretary shall make

25 payments for such year to the school for the purpose speci-
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1 fied in subsection (b). The Secretary shall make the pay2 ments in an amount determined in accordance with section

3 3043, and shall administer the payments as a grant.

4 (b) PAYMENTS FOR THE MEDICAL SCHOOL FUND.—

5 The purpose specified in this subsection is to assist an

6 eligible medical school with the direct costs of academic

7 programs, including the education of medical students (es8 pecially in ambulatory and preventive medicine), graduate

9 students in biomedical sciences, and otherwise unfunded

10 faculty research. A funding agreement for such payments

11 is that the medical school involved will expend the pay12 ments only for direct expenses determined as allowable by

13 the Secretary.

14 (c) ELIGIBLE MEDICAL SCHOOL; SUBPART DEFINI15 TION.—For purposes of this subpart, the term ‘‘eligible

16 medical school’’ with respect to the academic year in17 volved, means an approved medical school that submits to

18 the Secretary an application for such year in accordance

19 with section 3043.

20 SEC. 3042. APPLICATION FOR PAYMENTS.

21 For purposes of section 3041(a), an application for

22 payments under such section for an academic year is in

23 accordance with this section if—
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1 (1) the dean (or appropriate presiding official)

2 of the eligible medical school submits the application

3 not later than the date specified by the Secretary;

4 (2) the application contains each funding agree5 ment described in this subpart and provides such as6 surances of compliance with the agreements as the

7 Secretary may require; and

8 (3) the application is in such form, is made in

9 such manner, and contains such agreements, assur10 ances, and information as the Secretary determines

11 to be necessary to carry out this part.

12 SEC. 3043. AVAILABILITY OF FUNDS FOR PAYMENTS; AN13 NUAL AMOUNT OF PAYMENTS.

14 (a) ANNUAL MEDICAL SCHOOL FUND ACCOUNT.—

15 Subject to section 3043, the amount available for an aca16 demic year for making payments under section 3041 (con17 stituting an account to be known as the annual medical

18 school fund account) shall be the following, as applicable

19 to the academic year:

20 (1) In the case of academic year 1996,

21 $200,000,000.

22 (2) In the case of academic year 1997,

23 $300,000,000.

24 (3) In the case of academic year 1998,

25 $400,000,000.
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1 (4) In the case of academic year 1999,

2 $500,000,000.

3 (5) In the case of academic year 2000,

4 $600,000,000.

5 (6) In the case of each subsequent calendar

6 year, the amount specified in paragraph (5) in7 creased by the product of such amount and the gen8 eral health care inflation factor (as defined in sub9 section (d)).

10 (b) AMOUNT OF PAYMENTS FOR INDIVIDUAL ELIGI11 BLE PROGRAMS.—Subject to the annual medical school

12 fund account available for an academic year, the amount

13 of payment required under section 3041 to be made to

14 an eligible medical school for the academic year is an

15 amount equal to the sum of—

(1) the product of 3 16 ⁄4 of the fund account avail17 able and the proportion of full-time equivalent stu18 dents at the eligible medical school in academic year

19 1993–1994 compared to all full-time equivalent stu20 dents enrolled in eligible medical schools nationwide

21 in academic year 1993–1994; and

(2) the product of 1 22 ⁄4 of the fund account avail23 able and the proportion of research conducted by the

24 faculty at the eligible medical school compared to all
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1 research conducted by the faculty at all eligible med2 ical schools nationwide.

3 The Secretary shall establish a method for measuring fac4 ulty research contributions.

5 (c) STUDIES.—

6 (1) FUNDING LEVEL AND ALLOCATION METH7 OD.—Not later than January 1, 1998, the Secretary

8 shall arrange for an independent study and report to

9 be completed, by the Institute of Medicine or other

10 similar entity, concerning the amount of and alloca11 tion method for medical school funding. Such report

12 shall be submitted to the President and the Con13 gress and shall include findings and recommendation

14 as to the appropriateness of modifying funding levels

15 or allocation.

16 (2) Not later than January 1, 2000, the Sec17 retary shall arrange for an independent study and

18 report to be completed, by the Institute of Medicine

19 or other similar entity, concerning the impact of

20 health reform on undergraduate and graduate medi21 cal education. Such report shall be submitted to the

22 President and the Congress and shall include appro23 priate findings and recommendations.

24 (d) DEFINITIONS.—As used in this subtitle:
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1 (1) The term ‘‘annual medical school fund ac2 count’’ means the account established under sub3 section (a).

4 (2) The term ‘‘general health care inflation fac5 tor’’ with respect to a year, has the meaning given

6 such term in section 6001(a)(3) for such year.

7 CHAPTER 3—ACADEMIC HEALTH

8 CENTERS

9 SEC. 3051. FEDERAL FORMULA PAYMENTS TO ACADEMIC

10 HEALTH CENTERS.

11 (a) IN GENERAL.—In the case of a qualified aca12 demic health center or qualified teaching hospital that in

13 accordance with section 3052 submits to the Secretary a

14 written request for calendar year 1996 or any subsequent

15 calendar year, the Secretary shall make payments for such

16 year to the center or hospital for the purpose specified

17 in subsection (b). The Secretary shall make the payments

18 in an amount determined in accordance with section 3053,

19 and may administer the payments as a contract, grant,

20 or cooperative agreement.

21 (b) PAYMENTS FOR COSTS ATTRIBUTABLE TO ACA22 DEMIC NATURE OF INSTITUTIONS.—The purpose of pay23 ments under subsection (a) is to assist eligible institutions

24 with costs that are not routinely incurred by other entities

25 in providing health services, but are incurred by such insti-
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1 tutions in providing health services by virtue of the aca2 demic nature of such institutions. Such costs include—

3 (1) with respect to productivity in the provision

4 of health services, costs resulting from the reduced

5 rate of productivity of faculty due to teaching re6 sponsibilities;

7 (2) the uncompensated costs of clinical re8 search; and

9 (3) exceptional costs associated with the treat10 ment of health conditions with respect to which an

11 eligible institution has specialized expertise (includ12 ing treatment of rare diseases, treatment of unusu13 ally severe conditions, and providing other special14 ized health care).

15 (c) DEFINITIONS.—

16 (1) ACADEMIC HEALTH CENTER.—For purposes

17 of this subtitle, the term ‘‘academic health center’’

18 means an entity that operates a teaching hospital

19 that carries out an approved physician training pro20 gram.

21 (2) TEACHING HOSPITAL.—For purposes of this

22 subtitle, the term ‘‘teaching hospital’’ means a hos23 pital that operates an approved physician training

24 program (as defined in section 3011(b) or section

25 3031(d)).
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1 (3) QUALIFIED CENTER OR HOSPITAL.—For

2 purposes of this subtitle:

3 (A) The term ‘‘qualified academic health

4 center’’ means an academic health center that

5 operates a teaching hospital.

6 (B) The term ‘‘qualified teaching hospital’’

7 means any teaching hospital other than a teach8 ing hospital that is operated by an academic

9 health center.

10 (4) ELIGIBLE INSTITUTION.—For purposes of

11 this subtitle, the term ‘‘eligible institution’’, with re12 spect to a calendar year, means a qualified academic

13 health center, or a qualified teaching hospital, that

14 submits to the Secretary a written request in accord15 ance with section 3052.

16 SEC. 3052. REQUEST FOR PAYMENTS.

17 (a) IN GENERAL.—For purposes of section 3051, a

18 written request for payments under such section is in ac19 cordance with this section if the qualified academic health

20 center or qualified teaching hospital involved submits the

21 request not later than the date specified by the Secretary;

22 the request is accompanied by each funding agreement de23 scribed in this part; and the request is in such form, is

24 made in such manner, and contains such agreements, as-
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1 surances, and information as the Secretary determines to

2 be necessary to carry out this part.

3 (b) CONTINUED STATUS AS ACADEMIC HEALTH

4 CENTER.—A funding agreement for payments under sec5 tion 3051 is that the qualified academic health center or

6 qualified teaching hospital involved will maintain status as

7 such a center or hospital, respectively. For purposes of

8 this subtitle, the term ‘‘funding agreement’’, with respect

9 to payments under section 3051 to such a center or hos10 pital, means that the Secretary may make the payments

11 only if the center or hospital makes the agreement in12 volved.

13 SEC. 3053. AVAILABILITY OF FUNDS FOR PAYMENTS; AN14 NUAL AMOUNT OF PAYMENTS.

15 (a) ANNUAL ACADEMIC HEALTH CENTER AC16 COUNT.—The amount available for a calendar year for

17 making payments under section 3051 (constituting an ac18 count to be known as the annual academic health center

19 account) is the following, as applicable to the calendar

20 year:

21 (1) In the case of calendar year 1996,

22 $6,280,000,000.

23 (2) In the case of calendar year 1997,

24 $7,250,000,000.
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1 (3) In the case of calendar year 1998,

2 $8,220,000,000.

3 (4) In the case of calendar year 1999,

4 $9,400,000,000.

5 (5) In the case of calendar year 2000,

6 $10,640,000,000.

7 (6) In the case of each subsequent calendar

8 year, the amount specified in paragraph (5) in9 creased by the product of such amount and the gen10 eral health care inflation factor (as defined in sub11 section (d)).

12 (b) AMOUNT OF PAYMENTS FOR INDIVIDUAL ELIGI13 BLE INSTITUTIONS.—

14 (1) FORMULA.—The amount of payments re15 quired in section 3051 to be made to an eligible in16 stitution for a calendar year is an amount equal to

17 the product of—

18 (A) the annual academic health center ac19 count available for the calendar year; and

20 (B) the percentage constituted by the ratio

21 of—

22 (i) the product of—

23 (I) the sum, for all discharges of

24 individuals, of the amounts otherwise
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1 paid on behalf of such individuals;

2 and

3 (II) an adjustment factor equal

4 to 1.200 multiplied by (((1+r) to the

5 nth power) - 1), where ‘‘r’’ equals the

6 ratio of the hospital’s full-time equiva7 lent interns and residents to beds and

8 ‘‘n’’ equals .405; and

9 (ii) the sum of the respective amounts

10 determined under clause (i) for eligible in11 stitutions.

12 (2) ADJUSTMENT FACTOR.—Payments under

13 this section shall be subject to an adjustment factor,

14 as determined by the Secretary, so that total pay15 ments in any year will not exceed the amounts speci16 fied in section 3033(a) and as provided in section

17 3033(c).

18 (c) REPORT REGARDING MODIFICATIONS IN FOR19 MULA.—Not later than July 1, 2000, the Secretary shall

20 submit to the Congress a report containing any rec21 ommendations of the Secretary for the modification of the

22 program of formula payments described in this chapter.

23 In preparing such report the Secretary shall consider—

24 (1) the costs described in subsection (b) in25 curred by academic health centers;
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1 (2) the adequacy of the formula payments es2 tablished in this chapter to cover such costs, taking

3 into account any additional revenues to cover such

4 costs paid by other payers, including private health

5 plans;

6 (3) the importance to the maintenance of a

7 quality national health care system of academic

8 health centers in providing for the training of health

9 professionals, in conducting clinical research, and in

10 providing innovative, technically advanced care; and

11 (4) the overall impact of the reformed health

12 care system on the ability of academic health centers

13 to perform such functions.

14 (d) DEFINITION.—For purposes of this subtitle:

15 (1) The term ‘‘annual academic health center

16 account’’ means the account established pursuant to

17 subsection (a).

18 (2) The term ‘‘general health care inflation fac19 tor’’, with respect to a year, has the meaning given

20 such term in section 6001(a)(3) for such year.

21 Subpart D—General Provisions

22 SEC. 3055. DEFINITIONS.

23 For purposes of this subtitle:

24 (1) The term ‘‘academic year’’ has the meaning

25 given such term in section 3011(b).
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1 (2) The term ‘‘allocation period’’ has the mean2 ing given such term in section 3013(d).

3 (3) The term ‘‘annual health professions

4 workforce account’’ has the meaning given such

5 term in section 3033(d).

6 (4) The term ‘‘annual number of specialty posi7 tions’’ has the meaning given such term in section

8 3012(e).

9 (5) The term ‘‘approved physician training pro10 gram’’ has the meaning given such term in section

11 3011(b).

12 (6) The term ‘‘consumer price index’’ has the

13 meaning given such term in section 3033(d).

14 (7) The term ‘‘designation period’’ has the

15 meaning given such term in section 3012(e).

16 (8) The term ‘‘eligible entity’’ has the meaning

17 given such term in section 3011(b), in the case of

18 subpart B; and has the meaning given such term in

19 section 3031(c), in the case of subpart C.

20 (9) The term ‘‘funding agreement’’ has the

21 meaning given such term in section 3011(b).

22 (10) The term ‘‘general health care inflation

23 factor’’ has the meaning given such term in section

24 3033(d).
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1 (11) The term ‘‘medical school’’ has the mean2 ing given such term in section 3001(e).

3 (12) The term ‘‘medical specialty’’ has the

4 meaning given such term in section 3011(b).

5 (13) The term ‘‘National Council’’ has the

6 meaning given such term in section 3001(e).

7 (14) The term ‘‘primary health care’’ has the

8 meaning given such term in section 3012(e).

9 (15) The term ‘‘specialty position’’ has the

10 meaning given such term in section 3012(e).

11 (16) The term ‘‘training participant’’ has the

12 meaning given such term in section 3012(e).

13 Subpart E—Transitional Provisions

14 SEC. 3061. TRANSITIONAL PAYMENTS TO INSTITUTIONS.

15 (a) PAYMENTS REGARDING EFFECTS OF SUBPART B

16 ALLOCATIONS.—For each of the four calendar years speci17 fied in subsection (b)(2), in the case of an eligible entity

18 that submits to the Secretary an application for such year

19 in accordance with subsection (d), the Secretary shall

20 make payments for the year to the entity for the purpose

21 specified in subsection (c). The Secretary shall make the

22 payments in an amount determined in accordance with

23 subsection (e), and may administer the payments as a con24 tract, grant, or cooperative agreement.
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1 (b) ELIGIBLE ENTITIES LOSING SPECIALTY POSI2 TIONS; RELEVANT YEARS REGARDING PAYMENTS.—

3 (1) ELIGIBLE ENTITIES LOSING SPECIALTY PO4 SITIONS.—The Secretary may make payments under

5 subsection (a) to an eligible entity only if, with re6 spect to the calendar year involved, the entity meets

7 the following conditions:

8 (A) The entity operates or operated in the

9 year preceding the initiation of transitional pay10 ments one or more programs that—

11 (i) are or were at the time they termi12 nated approved physician training pro13 grams; and

14 (ii) are or were at the time they ter15 minated receiving payments under section

16 3031 for such year.

17 (B) The aggregate number of speciality po18 sitions in such programs (in the medical speci19 alities with respect to which such payments are

20 made) is below the aggregate number of such

21 positions at the entity for academic year 1993–

22 94 as a result of allocations under subpart B,

23 or as a result of voluntary changes under sec24 tion 3012(e) prior to January 1, 2000.
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1 (2) RELEVANT YEARS.—The Secretary may

2 make payments under subsection (a) to an eligible

3 entity only for the first four calendar years after the

4 initial calendar year for which the entity meets the

5 conditions described in paragraph (1).

6 (3) ELIGIBLE ENTITY.—For purposes of this

7 section, the term ‘‘eligible entity’’ means an entity

8 that submits to the Secretary an application in ac9 cordance with subsection (d).

10 (c) PURPOSE OF PAYMENTS.—The purpose of pay11 ments under subsection (a) is to assist an eligible entity

12 with the costs of operation. A funding agreement for such

13 payments is that the entity involved will expend the pay14 ments only for such purpose.

15 (d) APPLICATION FOR PAYMENTS.—For purposes of

16 subsection (a), an application for payments under such

17 subsection is in accordance with this subsection if—

18 (1) the eligible entity involved submits the ap19 plication not later than the date specified by the

20 Secretary;

21 (2) the application demonstrates that the entity

22 meets the conditions described in subsection (b)(1)

23 and that the entity has cooperated with the approved

24 physician training programs of the entity in meeting

25 the condition described in section 3032(b);
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1 (3) the application contains each funding agree2 ment described in this subpart and the application

3 provides such assurances of compliance with the

4 agreements as the Secretary may require; and

5 (4) the application is in such form, is made in

6 such manner, and contains such agreements, assur7 ances, and information as the Secretary determines

8 to be necessary to carry out this subpart.

9 (e) AMOUNT OF PAYMENTS.—

10 (1) IN GENERAL.—Subject to the annual health

11 professions workforce account available for the cal12 endar year involved, the amount of payments re13 quired in subsection (a) to be made to an eligible en14 tity for such year is the product of the amount de15 termined under paragraph (2) and the applicable

16 percentage specified in paragraph (3).

17 (2) NUMBER OF SPECIALTY POSITIONS LOST.—

18 For purposes of paragraph (1), the amount deter19 mined under this paragraph for an eligible entity for

20 the calendar year involved is the product of—

21 (A) an amount equal to the aggregate

22 number of full-time equivalent specialty posi23 tions lost; and
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1 (B) the amount that would be received

2 under section 3033 for each speciality position

3 lost.

4 (3) APPLICABLE PERCENTAGE.—For purposes

5 of paragraph (1), the applicable percentage for a cal6 endar year is the following, as applicable to such

7 year:

8 (A) For the first calendar year after cal9 endar year 1995 for which the eligible entity in10 volved meets the conditions described in sub11 section (b)(1), 100 percent.

12 (B) For the second such year, 75 percent.

13 (C) For the third such year, 50 percent.

14 (D) For the fourth such year, 25 percent.

15 (4) DETERMINATION OF SPECIALTY POSITIONS

16 LOST.—

17 (A) For purposes of this subsection, the

18 aggregate number of specialty positions lost,

19 with respect to a calendar year, is the difference

20 between—

21 (i) the aggregate number of specialty

22 positions described in subparagraph (B)

23 that are estimated for the eligible entity in24 volved for the academic year beginning in

25 such calendar year; and
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1 (ii) the aggregate number of such spe2 cialty positions at the entity for academic

3 year 1993–94.

4 (B) For purposes of subparagraph (A), the

5 specialty positions described in this subpara6 graph are specialty positions in the medical spe7 cialities with respect to which payments under

8 section 3031 are made to the approved physi9 cian training programs of the eligible entities

10 involved.

11 (5) ADDITIONAL PROVISION REGARDING NA12 TIONAL AVERAGE SALARY.—

13 (A) The Secretary shall determine, for aca14 demic year 1992–93, an amount equal to the

15 national average described in paragraph (2)(B).

16 The national average applicable under such

17 paragraph for a calendar year is, subject to

18 subparagraph (B), the amount determined

19 under the preceding sentence increased by an

20 amount necessary to offset the effects of infla21 tion occurring since academic year 1992–93, as

22 determined through use of the consumer price

23 index.

24 (B) The national average determined

25 under subparagraph (A) and applicable to a cal-
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1 endar year shall, in the case of the eligible en2 tity involved, be adjusted by a factor to reflect

3 regional differences in the applicable wage and

4 wage-related costs.

5 PART 2—INSTITUTIONAL COSTS OF GRADUATE

6 NURSING EDUCATION; WORKFORCE PRIORITIES

7 SEC. 3071. AUTHORIZED GRADUATE NURSE TRAINING POSI8 TIONS; INSTITUTIONAL COSTS.

9 (a) PROGRAM REGARDING GRADUATE NURSE TRAIN10 ING PROGRAMS.—The Secretary shall, in accordance with

11 this part, carry out a program with respect to graduate

12 nurse training programs that is equivalent to the program

13 carried out under part 1 with respect to approved physi14 cian training programs.

15 (b) DEFINITIONS.—For purposes of this part:

16 (1) The term ‘‘graduate nurse training pro17 grams’’ means programs for advanced nurse edu18 cation, programs for education as nurse practition19 ers, programs for education as nurse midwives, pro20 grams for education as nurse anesthetists, and such

21 other programs for training in clinical nurse special22 ties as are determined by the Secretary to require

23 advanced education.
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1 (2) The term ‘‘graduate nurse training posi2 tion’’ means a position as an individual who is en3 rolled in a graduate nurse training program.

4 (3) The term ‘‘programs for advanced nurse

5 education’’ means programs meeting the conditions

6 to be programs for which awards of grants and con7 tracts may be made under section 821 of the Public

8 Health Service Act.

9 (4) The term ‘‘programs for education as nurse

10 practitioners’’ means programs meeting the condi11 tions to be programs for which awards of grants and

12 contracts may be made under section 822 of the

13 Public Health Service Act for education as a nurse

14 practitioners.

15 (5) The term ‘‘programs for education as nurse

16 midwives’’ means programs meeting the conditions

17 to be programs for which awards of grants and con18 tracts may be made under section 822 of the Public

19 Health Service Act for education as nurse midwives.

20 (6) The term ‘‘programs for education as nurse

21 anesthetists’’ means programs meeting the condi22 tions to be programs for which awards of grants

23 may be made under section 831 of the Public Health

24 Service Act for education as nurse anesthetists.
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1 SEC. 3072. APPLICABILITY OF PART 1 PROVISIONS.

2 (a) IN GENERAL.—The provisions of part 1 apply to

3 the program carried out under section 3071 to the same

4 extent and in the same manner as such provisions apply

5 to the program carried out under part 1, subject to the

6 subsequent provisions of this section. Section 3061 does

7 not apply for purposes of the preceding sentence.

8 (b) NATIONAL COUNCIL.—With respect to section

9 3001 as applied to this part, the council shall be known

10 as the National Council on Graduate Nurse Education (in

11 this part referred to as the ‘‘National Council’’). The pro12 visions of section 851 of the Public Health Service Act

13 regarding the composition of the council under such sec14 tion apply to the composition of the National Council to

15 the same extent and in the same manner as such provi16 sions apply to the council under such section 851.

17 (c) ALLOCATION OF GRADUATE NURSE TRAINING

18 POSITIONS; FORMULA PAYMENTS FOR OPERATING

19 COSTS.—With respect to subparts B and C of part 1 as

20 applied to this part—

21 (1) the funding agreement described in section

22 3011 is to be made by graduate nurse training pro23 grams;

24 (2) the applicable accrediting bodies described

25 in section 3011 for graduate nurse training pro-
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1 grams are the National League of Nursing and oth2 ers determined to be appropriate by the Secretary;

3 (3) designations under section 3012 and alloca4 tions under section 3013 apply to graduate nurse

5 training positions; and

6 (4) payments under section 3031 are to be

7 made to graduate nurse training programs, subject

8 to the requirements for such payments.

9 SEC. 3073. FUNDING.

10 (a) IN GENERAL.—With respect to section 3033 as

11 applied to this part, the provisions of this section apply.

12 (b) ANNUAL GRADUATE NURSE TRAINING AC13 COUNT.—The amount available for each of the calendar

14 years 1996 through 2000 for making payments pursuant

15 to section 3072(c)(4) to graduate nurse training programs

16 (constituting an account to be known as the annual grad17 uate nurse training account) is $200,000,000.

18 PART 3—RELATED PROGRAMS

19 Subpart A—Workforce Development

20 SEC. 3081. PROGRAMS OF THE SECRETARY OF HEALTH AND

21 HUMAN SERVICES.

22 (a) IN GENERAL.—

23 (1) FUNDING.—For purposes of carrying out

24 the programs described in this section, there is au25 thorized to be appropriated $100,000,000 for each
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1 of the fiscal years 1995 and 1996, and

2 $150,000,000 for each of the fiscal years 1997

3 through 2000 (in addition to amounts that may oth4 erwise be authorized to be appropriated for carrying

5 out the programs).

6 (2) ADMINISTRATION.—The programs described

7 in this section and carried out with amounts made

8 available under subsection (a) shall be carried out by

9 the Secretary of Health and Human Services.

10 (b) PRIMARY CARE PHYSICIAN AND PHYSICIAN AS11 SISTANT TRAINING.—For purposes of subsection (a), the

12 programs described in this section include programs to

13 support projects to train additional numbers of primary

14 care physicians and physician assistants, including

15 projects to enhance community-based generalist training

16 for medical students, residents, and practicing physicians;

17 to retrain mid-career physicians previously certified in a

18 nonprimary care medical specialty; to expand the supply

19 of physicians with special training to serve in rural and

20 inner-city medically underserved areas; to support expan21 sion of service-linked educational networks that train a

22 range of primary care providers in community settings;

23 to provide for training in managed care, cost-effective

24 practice management, and continuous quality improve25 ment; to provide interdisciplinary training for medical stu-
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1 dents, residents or practicing physicians, and dental stu2 dents, residents, and dental hygienists, to deliver primary

3 care to individuals with mental, physical, and developmen4 tal disabilities, including mental retardation, particularly

5 those who are more than 18 years of age; and to develop

6 additional information on primary care workforce issues

7 as required to meet future needs in health care.

8 (c) TRAINING OF UNDERREPRESENTED RACIAL AND

9 ETHNIC MINORITIES AND DISADVANTAGED PERSONS.—

10 For purposes of subsection (a), the programs described

11 in this section include a program to support projects to

12 increase the number of racial and ethnic underrepresented

13 minority and disadvantaged persons in medicine, osteop14 athy, dentistry, advanced practice nursing, public health,

15 psychology, and other health professions, including

16 projects to provide continuing financial assistance for such

17 persons entering health professions training programs; for

18 financial assistance for facility renovation or construction;

19 to increase support for recruitment and retention of such

20 persons in the health professions; to maintain efforts to

21 foster interest in health careers among such persons at

22 the preprofessional level; and to increase the number of

23 racial and ethnic minority health professions faculty at

24 programs that have a significant number of

25 underrepresented racial and ethnic minorities.
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1 (d) EXPANDING RURAL HEALTH CAREER OPPORTU2 NITIES AND RETENTION EFFORTS.—

3 (1) IN GENERAL.—For purposes of subsection

4 (a), the programs described in this section include

5 programs to support projects to increase the number

6 of individuals living in rural, underserved commu7 nities who enter the fields of medicine, osteopathy,

8 dentistry, advanced practice nursing, public health,

9 psychology, and other health professions, and to en10 courage the retention of such health care profes11 sionals in rural, underserved communities.

12 (2) RURAL HEALTH CAREER TRAINING.—

13 Projects to increase the number of individuals re14 cruited from rural, underserved areas include

15 projects—

16 (A) to provide continuing financial assist17 ance for such persons entering health profes18 sions education and training programs;

19 (B) to increase efforts to foster interest in

20 health careers among such persons at the

21 preprofessional level;

22 (C) to foster the development of training

23 curricula appropriate to rural health care set24 tings; and
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1 (D) to increase support for recruitment of

2 such persons in the health professions.

3 (3) RETENTION OF RURAL HEALTH CARE PRO4 VIDERS.—Projects to encourage the retention of in5 dividuals providing health care in rural, underserved

6 areas include projects—

7 (A) to establish State and regional locum

8 tenans programs in rural health care settings so

9 that substitute health care providers are avail10 able when permanent staff is absent from the

11 health care setting;

12 (B) to implement programs to foster inter13 disciplinary team approaches to rural health

14 training and practice; and

15 (C) to develop state-of-the-art network

16 telecommunications and telemedicine systems to

17 link rural health professionals to other health

18 care providers and academic health care cen19 ters.

20 (e) NURSE TRAINING.—For purposes of subsection

21 (a), the programs described in this section include a pro22 gram to support projects to support midlevel provider

23 training and address priority nursing workforce needs, in24 cluding projects to train additional nurse practitioners and

25 nurse midwives; to support baccalaureate-level nurse
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1 training programs providing preparation for careers in

2 teaching, community health service, and specialized clini3 cal care; to train additional nurse clinicians and nurse an4 esthetists; to support interdisciplinary school-based com5 munity nursing programs; and to promote research on

6 nursing workforce issues.

7 (f) INAPPROPRIATE PRACTICE BARRIERS; FULL UTI8 LIZATION OF SKILLS.—For purposes of subsection (a), the

9 programs described in this section include a program—

10 (1) to develop and encourage the adoption of

11 model professional practice statutes for advanced

12 practice nurses and physician assistants, and to oth13 erwise support efforts to remove inappropriate bar14 riers to practice by such nurses and such physician

15 assistants; and

16 (2) to promote the full utilization of the profes17 sional education and clinical skills of advanced prac18 tice nurses and physician assistants.

19 (g) ADVISORY BOARD ON HEALTH CARE

20 WORKFORCE DEVELOPMENT.—

21 (1) IN GENERAL.—The Secretary shall establish

22 an Advisory Board known as the National Advisory

23 Board on Health Care Workforce Development to

24 advise, consult with, and make recommendations to
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1 the Secretary and to the Secretary of Labor on mat2 ters relating to—

3 (A) health care worker supply and its ade4 quacy to assure proper health care delivery sys5 tem staffing in both rural and urban areas; and

6 (B) the impact of this Act, and of related

7 changes in law regarding health care, on health

8 care workers and the needs of such workers, in9 cluding needs regarding education, training,

10 and other career development matters.

11 (2) COMPOSITION.—The Board established

12 under paragraph (1) shall be composed of the follow13 ing members with expertise in health care workforce

14 issues appointed by the Secretary in consultation

15 with the Secretary of Labor:

16 (A) Five representatives of labor organiza17 tions representing health care workers.

18 (B) Five representatives of health institu19 tions.

20 (C) Two representatives from health care

21 education organizations.

22 (D) Two representatives from consumer

23 organizations.

24 (3) ASSISTANCE.—The Secretary shall provide

25 the Board with such administrative assistance as
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1 may be necessary for the Board to carry out this

2 subsection.

3 (h) OTHER PROGRAMS.—For purposes of subsection

4 (a), the programs described in this section include a pro5 gram to train health professionals and administrators in

6 managed care, cost-effective practice management, contin7 uous quality improvement practices, and provision of cul8 turally sensitive care.

9 (i) RELATIONSHIP TO EXISTING PROGRAMS.—This

10 section may be carried out through programs established

11 in title VII or VIII of the Public Health Service Act, as

12 appropriate and as consistent with the purposes of such

13 programs.

14 (j) MENTAL RETARDATION AND OTHER DEVEL15 OPMENTAL DISABILITIES.—Title VII of the Public Health

16 Service Act is amended by inserting after section 778, the

17 following new section:

18 ‘‘SEC. 779. MENTAL RETARDATION AND OTHER DEVEL19 OPMENTAL DISABILITIES.

20 ‘‘(a) IN GENERAL.—The Secretary may make grants

21 and enter into contracts with university affiliated pro22 grams, schools of medicine, and schools of dentistry to as23 sist in meeting the costs of such programs or schools to—

24 ‘‘(1) improve the interdisciplinary training of

25 primary care physicians and dentists in the health
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1 care services needs of individuals with mental, phys2 ical, and developmental disabilities, including mental

3 retardation, particularly those who are more than 18

4 years of age;

5 ‘‘(2) develop, evaluate, and disseminate curric6 ula relating to the health care service needs of indi7 viduals with mental, physical, and developmental dis8 abilities, including mental retardation, particularly

9 those individuals who are more than 18 years of age;

10 ‘‘(3) support the training and retraining of fac11 ulty to provide such instruction; and

12 ‘‘(4) support continuing education of health

13 professionals who provide health care services and

14 support to individuals with mental, physical, and de15 velopmental disabilities, including mental retarda16 tion, particularly those who are more than 18 years

17 of age.

18 ‘‘(b) AUTHORIZATION OF APPROPRIATIONS.—For

19 purposes of carrying out this section, there are authorized

20 to be appropriated, $10,000,000 for each of the fiscal

21 years 1995 through 2000.’’.

22 SEC. 3082. PROGRAMS OF THE SECRETARY OF LABOR.

23 (a) IN GENERAL.—

24 (1) FUNDING.—For purposes of carrying out

25 the programs described in this section, and for car-
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1 rying out section 3083, there is authorized to be ap2 propriated $200,000,000 for fiscal year 1994 and

3 each subsequent fiscal year (in addition to amounts

4 that may otherwise be authorized to be appropriated

5 for carrying out the programs).

6 (2) ADMINISTRATION.—The programs described

7 in this section and carried out with amounts made

8 available under subsection (a) shall be carried out by

9 the Secretary of Labor (in this section referred to as

10 the ‘‘Secretary’’).

11 (b) RETRAINING PROGRAMS; ADVANCED CAREER

12 POSITIONS; WORKFORCE ADJUSTMENT PROGRAMS.—

13 (1) IN GENERAL.—For purposes of subsection

14 (a), the programs described in this section are the

15 following:

16 (A) A program for skills upgrading and oc17 cupational retraining (including retraining

18 health care workers for more advanced positions

19 as technicians, nurses, and physician assist20 ants), and for quality and workforce improve21 ment.

22 (B) A demonstration program to assist

23 workers in health care institutions in obtaining

24 advanced career positions.
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1 (C) A program to develop and operate

2 health care and health insurance industry work3 er job banks in local employment services agen4 cies or one-stop career centers, subject to the

5 following:

6 (i) Such job banks shall be available

7 to all health care providers in the commu8 nity involved.

9 (ii) Such job banks shall begin oper10 ation not later than 90 days after the date

11 of the enactment of this Act.

12 (iii)(I) With respect to each affected

13 community, the local employment service

14 agency or one-stop career center serving

15 such community shall be allocated not less

16 than one counselor whose responsibility it

17 shall be to develop and operate health and

18 insurance industry worker job banks.

19 Where the impact of health care industry

20 restructuring in the affected community is

21 such that the functions required under this

22 clause cannot be adequately provided by

23 one counselor, additional counselors shall

24 be allocated to carry out such functions.
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1 (II) Such counselor shall solicit job

2 openings from local health care industry

3 employers, maintain frequent contacts with

4 these and other employers, and monitor

5 and update all job listings appropriate for

6 displaced health care and health insurance

7 industry workers seeking employment.

8 (III) The local employment service

9 agency or one-stop career center shall pro10 vide directly, or facilitate the provision of,

11 labor exchange services to displaced health

12 care and insurance industry workers, in13 cluding assessment, counseling, testing,

14 job-search assistance, job referral and

15 placement, and referral to training and

16 educational programs, where appropriate.

17 (IV) The Secretary of Labor shall de18 velop performance goals for the effective

19 performance of such job banks with respect

20 to the number and quality of jobs listed,

21 the degree of participation by employers in

22 the affected community, and success in

23 placement of job bank users in jobs listed,

24 taking into account specific geographic,
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1 economic and labor market characteristics

2 of the community served.

3 (D) A program to provide for joint labor4 management decision-making in the health care

5 sector on workplace matters related to the re6 structuring of the health care delivery system

7 provided for in this Act.

8 (E) A program to collect data regarding

9 the adequacy of the supply of health care work10 ers by occupation and sector of the health in11 dustry in light of existing and projected demand

12 for such workers.

13 (F)(i) A program to encourage the adop14 tion and utilization of high performance, high

15 quality health care delivery systems, including

16 employee participation committees and em17 ployee team systems that will contribute to

18 more effective health care by increasing the role

19 and the area of independent decisionmaking of

20 health care workers.

21 (ii) For purposes of this subparagraph, the

22 term ‘‘employee participation committees’’

23 means committees of workers independently se24 lected by and from a facility’s nonmanagerial

25 workforce, or selected by unions where collective
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1 bargaining agreements are in effect, and which

2 operate independently without employer inter3 ference and consult with management on issues

4 of efficiency, productivity, and quality of care,

5 except that an employee participation commit6 tee established under and operating in conform7 ity with this subparagraph shall not be consid8 ered a labor organization within the meaning of

9 section 2(5) of the National Labor Relations

10 Act or a representative within the meaning of

11 section 1, sixth, of the Railway Labor Act.

12 (2) USE OF FUNDS.—Amounts made available

13 under subsection (a) for carrying out this section

14 may be expended for program support, faculty devel15 opment, trainee support, workforce analysis, and dis16 semination of information, as necessary to produce

17 required performance outcomes.

18 (c) CERTAIN REQUIREMENTS FOR PROGRAMS.—In

19 carrying out the programs described in subsection (b), the

20 Secretary shall, with respect to the organizations and em21 ployment positions involved, provide for the following:

22 (1) Explicit, clearly defined skill requirements

23 developed for all the positions and projections of the

24 number of openings for each position.

25 (2) Opportunities for internal career movement.
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1 (3) Opportunities to work while training or

2 completing an educational program.

3 (4) Evaluation and dissemination.

4 (5) Training opportunities in several forms, as

5 appropriate.

6 (d) ADMINISTRATIVE REQUIREMENTS.—In carrying

7 out the programs described in subsection (b), the Sec8 retary shall, with respect to the organizations and employ9 ment positions involved, provide for the following:

10 (1) Joint labor-management implementation

11 and administration.

12 (2) Discussion with employees as to training

13 needs for career advancement.

14 (3) Commitment to a policy of internal hirings

15 and promotion.

16 (4) Provision of support services.

17 (5) Consultations with employers and with or18 ganized labor.

19 SEC. 3083. REQUIREMENT FOR CERTAIN PROGRAMS RE20 GARDING REDEPLOYMENT OF HEALTH CARE

21 WORKERS.

22 (a) STATE PROGRAMS FOR HOME AND COMMUNITY23 BASED SERVICES FOR INDIVIDUALS WITH DISABIL24 ITIES.—With respect to the plan required in section

25 2102(a) (for State programs for home and community-
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1 based services for individuals with disabilities under part

2 1 of subtitle B of title II), the plan shall, in addition to

3 requirements under such part, provide for the following:

4 (1) Before initiating the process of implement5 ing the State program under such plan, negotiations

6 will be commenced with labor unions representing

7 the employees of the affected hospitals or other fa8 cilities.

9 (2) Negotiations under paragraph (1) will ad10 dress the following:

11 (A) The impact of the implementation of

12 the program upon the workforce.

13 (B) Methods to redeploy workers to posi14 tions in the proposed system, in the case of

15 workers affected by the program.

16 (3) The plan will provide evidence that there

17 has been compliance with paragraphs (1) and (2),

18 including a description of the results of the negotia19 tions.

20 (b) PLAN FOR INTEGRATION OF MENTAL HEALTH

21 SYSTEMS.—With respect to the plan required in section

22 3511(a) (relating to the integration of the mental health

23 and substance abuse services of a State and its political

24 subdivisions with the mental health and substance abuse

25 services included in the comprehensive benefit package
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1 under title I), the plan shall, in addition to requirements

2 under such section, provide for the following:

3 (1) Before initiating the process of implement4 ing the integration of such services, negotiations will

5 be commenced with labor unions representing the

6 employees of the affected hospitals or other facilities.

7 (2) Negotiations under paragraph (1) will ad8 dress the following:

9 (A) The impact of the proposed changes

10 upon the workforce.

11 (B) Methods to redeploy workers to posi12 tions in the proposed system, in the case of

13 workers affected by the proposed changes.

14 (3) The plan will provide evidence that there

15 has been compliance with paragraphs (1) and (2),

16 including a description of the results of the negotia17 tions.

18 Subpart B—Transitional Provisions for Workforce

19 Stability

20 SEC. 3091. APPLICATION.

21 (a) LIMITATION TO TRANSITION PERIOD.—The pro22 visions of this subpart are intended to minimize, to the

23 extent possible, disruptions in established employment re24 lationships during the period of transition to a restruc-
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1 tured health care delivery system, and shall terminate De2 cember 31, 2000.

3 (b) HEALTH CARE ENTITIES COVERED BY SUB4 PART.—The provisions of this subpart, including ref5 erences to displacing employers, hiring employers, succes6 sors and contractors, apply only to health care entities

7 that employ more than 25 individuals.

8 SEC. 3092. DEFINITIONS.

9 (a) HEALTH CARE ENTITY.—As used in this sub10 part, the term ‘‘health care entity’’ includes individuals,

11 sole proprietorships, partnerships, associations, business

12 trusts, corporations, governmental institutions, and public

13 agencies (including state governments and political sub14 divisions thereof) that—

15 (1) provide health care services under title I

16 (including nonmandatory health care services under

17 title I) or under the amendments made or programs

18 referred to in titles IV and VIII; or

19 (2) provide necessary related services, including

20 administrative, food service, janitorial or mainte21 nance services, to an entity that provides health care

22 services (as described in subparagraph (1));

23 except that an entity that solely manufactures or provides

24 goods or equipment to a health care entity shall not be

25 considered a health care entity.
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1 (b) AFFILIATED ENTERPRISE.—As used in this sub2 part, the term ‘‘affiliated enterprise’’ means a health care

3 entity that, together with the displacing employer, is con4 sidered a single employer as defined under 414 of the In5 ternal Revenue Code of 1986.

6 (c) PREFERENCE ELIGIBLE EMPLOYEE.—As used in

7 this subpart, the term ‘‘preference eligible employee’’

8 means an employee who—

9 (1) has been employed for in excess of 1 year

10 by a health care entity; and

11 (2) has been displaced by or has received notice

12 of an impending displacement by such entity.

13 (d) DISPLACEMENT.—As used in this subpart, the

14 term ‘‘displacement’’ includes a layoff, termination, sig15 nificant cutback in paid work hours, or other loss of em16 ployment, except that a discharge for just cause shall not

17 constitute a displacement within the meaning of this para18 graph.

19 SEC. 3093. OBLIGATIONS OF DISPLACING EMPLOYER AND

20 AFFILIATED ENTERPRISES IN EVENT OF DIS21 PLACEMENT.

22 (a) NOTICE.—A health care entity which displaces a

23 preference eligible employee shall provide such employee

24 with—
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1 (1) written notice, no later than the date of dis2 placement, of employment rights under this subpart,

3 including employment rights with respect to affili4 ated enterprises of the displacing employer; and

5 (2) notice of any existing or subsequent vacan6 cies with the displacing employer or an affiliated en7 terprise, which notice may be given by posting of

8 such vacancies wherever notices to applicants for

9 employment are customarily posted, by listing such

10 vacancies with the local employment services agency,

11 or in such other manner as the Secretary of Labor,

12 by regulation, may hereafter specify.

13 Any such vacancy shall remain open for applications by

14 preference eligible employees for not less than 14 calendar

15 days from the date on which the initial notice is provided.

16 (b) HIRING PREFERENCE.—

17 (1) IN GENERAL.—A qualified preference eligi18 ble employee who applies during the notice period

19 described in subsection (a)(2) for a vacant position

20 with the displacing employer or an affiliated enter21 prise, which position is in the employee’s occupa22 tional specialty and is located in the same State or

23 Standard Metropolitan Statistical Area in which the

24 employee was employed prior to the displacement,

25 shall be given the right to accept or decline the posi-
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1 tion before the employer may offer the position to a

2 nonpreference eligible employee.

3 (2) MULTIPLE APPLICATIONS.—When consider4 ing applications from more than one qualified pref5 erence eligible employee, the hiring health care en6 tity shall have discretion as to which of such employ7 ees will be offered the position.

8 (3) EMPLOYMENT QUALIFICATIONS.—Nothing

9 in this subsection shall be construed to prohibit the

10 hiring health care entity from establishing reason11 able employment qualifications for a vacancy to

12 which this subpart applies, except that employees

13 who performed essentially the same work prior to

14 their displacement shall be deemed presumptively

15 qualified for comparable positions.

16 (c) TERMINATION OF PREFERENCE ELIGIBILITY.—

17 A displaced employee’s preference eligibility shall termi18 nate—

19 (1) at such time as the displaced employee ob20 tains substantially equivalent employment with the

21 displacing employer; or

22 (2) if the employee does not obtain such em23 ployment—
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1 (A) with respect to health care entities

2 other than the displacing employer, 2 years

3 after the date of the displacement; or

4 (B) with respect to the displacing em5 ployer, upon the termination of this subpart

6 pursuant to section 3081(a).

7 SEC. 3094. EMPLOYMENT WITH SUCCESSORS.

8 A health care entity that succeeds another health care

9 entity through merger, consolidation, acquisition, contract,

10 or other similar manner shall provide employees of the

11 previous health care entity who would otherwise be dis12 placed the right to continued employment in the job posi13 tions held by such employees prior thereto, unless the em14 ployer can establish that such positions no longer exist.

15 SEC. 3095. COLLECTIVE BARGAINING OBLIGATIONS DUR16 ING TRANSITION PERIOD.

17 (a) CONTINUATION OF PREVIOUSLY RECOGNIZED

18 BARGAINING REPRESENTATIVES AND AGREEMENTS.—If

19 a majority of the employees in an appropriate bargaining

20 unit consists of employees who were previously covered by

21 a bargaining agreement or represented by an exclusive

22 representative with respect to terms and conditions of em23 ployment, and there has not been a substantial change in

24 the operations performed by the employees in that unit,

25 the employer shall recognize such representative as the ex-
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1 clusive representative for the unit and shall assume the

2 bargaining agreement, except that where application of

3 this subsection would result in the recognition of more

4 than one bargaining representative for a single unit, the

5 question concerning which representative shall be recog6 nized as the exclusive representative for the unit shall be

7 resolved in accordance with applicable Federal or State

8 law.

9 (b) JOINT EMPLOYER STATUS.—If employees of a

10 contractor are assigned on a regular basis to perform work

11 on the premises of a contracting entity and the tasks per12 formed by these employees are functionally integrated with

13 the operations of the contracting entity on whose premises

14 such employees work, both the contractor and the con15 tracting entity shall be considered joint employers of the

16 employees with respect to work performed on those prem17 ises for purposes of determining compliance with labor re18 lations laws. Employees of such joint employers may not

19 be excluded from a bargaining unit within either entity

20 on the basis of such joint employer status.

21 SEC. 3096. GENERAL PROVISIONS.

22 (a) REGULATIONS.—Not later than 120 days after

23 the date of enactment of this Act, the Secretary shall pro24 mulgate regulations to implement the requirements of sec25 tion 3093.
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1 (b) OTHER LAWS.—The standards and requirements

2 of this subpart shall not preempt or excuse noncompliance

3 with any other applicable Federal or State law, regulation

4 or municipal ordinance that establishes additional notice

5 and preference standards or requirements concerning em6 ployee dislocation, employee representation, or collective

7 bargaining.

8 (c) RULES OF CONSTRUCTION.—Nothing in this sub9 part shall be construed—

10 (1) to excuse or otherwise limit the obligation

11 of an employer to comply with any collective bar12 gaining agreement or any employment benefit plan

13 that provides rights to employees in addition to

14 those provided under this subpart; or

15 (2) to require an employer to recognize or bar16 gain with a labor organization in violation of State

17 law.

18 (d) ENFORCEMENT.—Unless otherwise specifically

19 provided in this subpart, the enforcement provisions of

20 section 107 of the Family and Medical Leave Act of 1993

21 (29 U.S.C. 2617) shall apply with respect to the enforce22 ment of the individual rights, including notice require23 ments, provided under section 3093. The collective bar24 gaining and contractual rights provided under sections

25 3094 and 3095 shall be enforced through administrative
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1 and judicial procedures otherwise provided under Federal

2 or State law with respect to such rights.

3 Subtitle B—Academic Health

4 Centers

5 SEC. 3131. DISCRETIONARY GRANTS REGARDING ACCESS

6 TO CENTERS.

7 (a) RURAL INFORMATION AND REFERRAL SYS8 TEMS.—The Secretary may make grants to eligible centers

9 for the establishment and operation of information and re10 ferral systems to provide the services of such centers to

11 rural health plans.

12 (b) OTHER PURPOSES REGARDING URBAN AND

13 RURAL AREAS.—The Secretary may make grants to

14 community- and provider-based health plans under section

15 1651(d) to carry out activities (other than activities car16 ried out under subsection (a)) for the purpose of providing

17 the services of eligible centers to residents of rural or

18 urban communities who otherwise would not have ade19 quate access to such services.

20 (c) AUTHORIZATION OF APPROPRIATIONS.—For the

21 purpose of carrying out this section, there are authorized

22 to be appropriate, $3,000,000 for fiscal year 1995,

23 $4,000,000 for fiscal year 1996, and $5,000,000 for each

24 of the fiscal years 1997 through 2000.
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1 Subtitle C—Health Research

2 Initiatives

3 PART 1—PROGRAMS FOR CERTAIN AGENCIES

4 SEC. 3201. BIOMEDICAL AND BEHAVIORAL RESEARCH.

5 (a) FINDINGS.—Congress finds the following:

6 (1) Nearly 4 of 5 peer reviewed research

7 projects deemed worthy of funding by the National

8 Institutes of Health are not funded.

9 (2) Less than 2 percent of the nearly one tril10 lion dollars our Nation spends on health care is de11 voted to health research, while the defense industry

12 spends 15 percent of its budget on research.

13 (3) Public opinion surveys have shown that

14 Americans want more Federal resources put into

15 health research and support by having a portion of

16 their health insurance premiums set aside for this

17 purpose.

18 (4) Ample evidence exists to demonstrate that

19 health research has improved the quality of health

20 care in the United States. Advances such as the de21 velopment of vaccines, the cure of many childhood

22 cancers, drugs that effectively treat a host of dis23 eases and disorders, a process to protect our Na24 tion’s blood supply from the HIV virus, progress

25 against cardiovasculor disease including heart attack
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1 and stroke, and new strategies for the early detec2 tion and treatment of diseases such as colon, breast,

3 and prostate cancer clearly demonstrates the bene4 fits of health research.

5 (5) Among the most effective methods to con6 trol health care costs are the prevention of inten7 tional and unintentional injury and the prevention

8 and cure of disease and disability, thus, health re9 search which holds the promise of prevention of in10 tentional and unintentional injury and cure and pre11 vention of disease and disability is a critical compo12 nent of any comprehensive health care reform plan.

13 (6) The state of our Nation’s research facilities

14 at the National Institutes of Health and at univer15 sities is deteriorating significantly. Renovation and

16 repair of these facilities are badly needed to main17 tain and improve the quality of research.

18 (7) Because the Omnibus Budget Reconciliation

19 Act of 1993 freezes discretionary spending for the

20 next 5 years, the Nation’s investment in health re21 search through the National Institutes of Health is

22 likely to decline in real terms unless corrective legis23 lative action is taken.

24 (8) A health research fund is needed to main25 tain our Nation’s commitment to health research
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1 and to increase the percentage of approved projects

2 which receive funding at the National Institutes of

3 Health to at least 33 percent.

4 (9) Private sector investment in research and

5 development has been responsible for the vast major6 ity of new developments in pharmaceuticals, medical

7 devices, biotechnology and other health care innova8 tions. Over 90 percent of the most prescribed drugs

9 in the United States were discovered by the re10 search-based pharmaceutical industry.

11 (10) United States industry is the preeminent

12 world leader in the research, development and deliv13 ery of innovative therapies that improve the quality

14 of care for people throughout the world.

15 (11) Global health care budgets may constrict

16 private sector investment in research and develop17 ment. Further, they may be inconsistent with the

18 goal of developing promising new cost effective treat19 ment therapies.

20 (b) AVAILABILITY OF FUNDS.—

21 (1) IN GENERAL.—With respect to each cal22 endar year, the Secretary shall pay, from funds in

23 the Treasury not otherwise appropriated, for activi24 ties under this section in an amount equal to 0.25

25 percent in 1996, 0.50 percent in 1997, 0.75 percent
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1 in 1998, and 1.0 percent in 1999 and subsequent

2 years, of all private premiums required to be paid

3 under this Act.

4 (2) For purposes of this subsection, the term

5 ‘‘private health premiums’’ means all premium relat6 ed payments made by employers, individuals, and

7 families for coverage under this Act.

8 (c) PURPOSES FOR EXPENDITURES.—Part A of title

9 IV of the Public Health Service Act (42 U.S.C. 281 et

10 seq.) is amended by adding at the end thereof the follow11 ing new section:

12 ‘‘SEC. 404F. EXPENDITURES FOR HEALTH RESEARCH.

13 ‘‘(a) IN GENERAL.—From amounts made available

14 under section 3201 of the Health Security Act, the Sec15 retary shall distribute—

16 ‘‘(1) 2 percent of such amounts during any fis17 cal year to the Office of the Director of the National

18 Institutes of Health to be allocated at the Director’s

19 discretion for the following activities:

20 ‘‘(A) for carrying out the responsibilities of

21 the Office of the Director, in including the Of22 fice of Research on Women’s Health and the

23 Office of Research on Minority Health, the Of24 fice of Alternative Medicine and the Office of

25 Rare Diseases Research; and
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1 ‘‘(B) for construction and acquisition of

2 equipment for or facilities of or used by the Na3 tional Institutes of Health;

4 ‘‘(2) 2 percent of such amounts for transfer to

5 the National Center for Research Resources to carry

6 out section 1502 of the National Institutes of

7 Health Revitalization Act of 1993 concerning Bio8 medical and Behavioral Research Facilities;

9 ‘‘(3) 1 percent of such amounts during any fis10 cal year for carrying out section 301 and part D of

11 title IV with respect to health information commu12 nications; and

13 ‘‘(4) the remainder of such amounts during any

14 fiscal year to member institutes of the National In15 stitutes of Health and Centers in the same propor16 tion to the total amount received under this section,

17 as the amount of annual appropriations under ap18 propriations Acts for each member institute and

19 Centers for the fiscal year bears to the total amount

20 of appropriations under appropriations Acts for all

21 member institutes and Centers of the National Insti22 tutes of Health for the fiscal year.

23 ‘‘(b) PLANS OF ALLOCATION.—The amounts trans24 ferred under subsection (a) shall be allocated by the Direc25 tor of NIH or the various directors of the institutes and
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1 centers, as the case may be, pursuant to allocation plans

2 developed by the various advisory councils to such direc3 tors, after consultation with such directors.’’.

4 SEC. 3202. HEALTH SERVICES RESEARCH.

5 Section 902 of the Public Health Service Act (42

6 U.S.C. 299a), as amended by section 2(b) of Public Law

7 102–410 (106 Stat. 2094), is amended by adding at the

8 end the following subsection:

9 ‘‘(f) RESEARCH ON HEALTH CARE REFORM.—

10 ‘‘(1) IN GENERAL.—In carrying out section

11 901(b), the Administrator shall conduct and support

12 research on the reform of the health care system of

13 the United States, as directed by the National

14 Board.

15 ‘‘(2) PRIORITIES.—In carrying out paragraph

16 (1), the Administrator shall give priority to the fol17 lowing:

18 ‘‘(A) Conducting and supporting research

19 on the appropriateness and effectiveness of al20 ternative clinical strategies (including commu21 nity-based programs and preventive services),

22 the quality and outcomes of care, and adminis23 trative simplification.

24 ‘‘(B) Conducting and supporting research

25 on the appropriateness and effectiveness of al-
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1 ternative community-based and clinical strate2 gies including integrating preventive services

3 into primary care, the effectiveness of preven4 tive counseling and health education, and the

5 efficacy and cost-effectiveness of clinical preven6 tive services.

7 ‘‘(C) Conducting and supporting research

8 on consumer choice and information resources;

9 the effects of health care reform on health de10 livery systems; workplace injury and illness pre11 vention; intentional and unintentional injury

12 prevention; methods for risk adjustment; fac13 tors influencing access to health care for vulner14 able populations, including children, persons

15 with low-income, persons with disabilities, or in16 dividuals with chronic or complex health condi17 tions, and primary care.

18 ‘‘(D) The development of clinical practice

19 guidelines consistent with section 913, the dis20 semination of such guidelines consistent with

21 section 903, and the assessment of the effec22 tiveness of such guidelines.’’.
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1 PART 2—FUNDING FOR PROGRAM

2 SEC. 3211. AUTHORIZATIONS OF APPROPRIATIONS.

3 (a) HEALTH SERVICES RESEARCH.—For the purpose

4 of carrying out activities pursuant to the amendments

5 made by section 3202, there are authorized to be appro6 priated $150,000,000 for fiscal year 1995, $400,000,000

7 for fiscal year 1996, $500,000,000 for fiscal year 1997,

8 and $600,000,000 for each of the fiscal years 1998

9 through 2000.

10 (b) RELATION TO OTHER FUNDS.—The authoriza11 tion of appropriations established in subsection (a) are in

12 addition to any other authorizations of appropriations that

13 are available for the purposes described in such sub14 section.

15 (c) TRIGGER AND RELEASE OF MONIES.—No ex16 penditure shall be made pursuant to section 3201(c) dur17 ing any fiscal year in which the annual amount appro18 priated for the National Institutes of Health is less than

19 the amount so appropriated for the prior fiscal year. With

20 respect to amounts available for expenditure pursuant to

21 section 3201(c) which, as a result of the application of

22 this subsection remain unexpended, such amounts shall be

23 obligated by the Secretary of Health and Human Services

24 under the public health initiative under subtitle H.
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1 Subtitle D—Core Functions of Pub2 lic Health Programs; National

3 Initiatives Regarding Preven4 tive Health

5 PART 1—FUNDING

6 SEC. 3301. AUTHORIZATIONS OF APPROPRIATIONS.

7 (a) CORE FUNCTIONS OF PUBLIC HEALTH PRO8 GRAMS.—For the purpose of carrying out part 2, there

9 are authorized to be appropriated $150,000,000 for fiscal

10 year 1995, $225,000,000 for fiscal year 1996,

11 $325,000,000 for fiscal year 1997, $425,000,000 for fis12 cal year 1998, $500,000,000 for fiscal year 1999, and

13 $625,000,000 for fiscal year 2000.

14 (b) NATIONAL INITIATIVES REGARDING HEALTH

15 PROMOTION AND DISEASE PREVENTION.—For the pur16 pose of carrying out part 3, there are authorized to be

17 appropriated $125,000,000 for each of the fiscal years

18 1996 through 1998, and $150,000,000 for each of the fis19 cal years 1999 and 2000.

20 (c) RELATION TO OTHER FUNDS.—The authoriza21 tions of appropriations established in subsections (a) and

22 (b) are in addition to any other authorizations of appro23 priations that are available for the purposes described in

24 such subsections.
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1 PART 2—CORE FUNCTIONS OF PUBLIC HEALTH

2 PROGRAMS

3 SEC. 3311. PURPOSES.

4 Subject to the subsequent provisions of this subtitle,

5 the purposes of this part are to strengthen the capacity

6 of State and local public health agencies to carry out the

7 following functions:

8 (1) To monitor and protect the health of com9 munities against communicable diseases and expo10 sure to toxic environmental pollutants, occupational

11 hazards, harmful products, and poor quality health

12 care.

13 (2) To identify and control outbreaks of infec14 tious disease and patterns of chronic disease and in15 jury.

16 (3) To inform and educate health care consum17 ers and providers about their roles in preventing in18 jury, preventing and controlling disease and the ap19 propriate use of medical services.

20 (4) To develop and test new prevention and

21 public health control interventions.

22 (5) To integrate and coordinate the prevention

23 programs and services of health plans, community24 based providers, local health departments, State

25 health departments, health alliances, and other sec26 tors of State and local government that affect
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1 health, including education, labor, transportation,

2 welfare, criminal justice, environment, agriculture,

3 and housing.

4 (6) To conduct research on the effectiveness

5 and cost-effectiveness of public health programs.

6 SEC. 3312. GRANTS TO STATES FOR CORE FUNCTIONS OF

7 PUBLIC HEALTH.

8 (a) IN GENERAL.—The Secretary shall make grants

9 to States that submit applications as prescribed in section

10 3313 in an amount which bears the same ratio to the

11 available amounts for that fiscal year as the amounts pro12 vided by the Secretary under the provisions of law listed

13 in section 1902(2) of the Public Health Service Act to the

14 State for fiscal year 1981 bear to the total amount appro15 priated for such provisions of law for fiscal year 1981.

16 (b) CORE FUNCTIONS OF PUBLIC HEALTH PRO17 GRAMS.—For purposes of subsection (a), the functions de18 scribed in this subsection are, subject to subsection (c),

19 as follows:

20 (1)(A) Data collection, activities related to pop21 ulation health (including the population of individ22 uals ineligible for the comprehensive benefit pack23 age) measurement and outcomes monitoring, includ24 ing the acquisition and installation of hardware and

25 software, personnel training and technical assistance
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1 to operate and support automated and integrated in2 formation systems, the regular collection and analy3 sis of public health data, vital statistics, and per4 sonal health services data and analysis for planning

5 and needs assessment purposes of data collected

6 from health plans through the information system

7 under title V of this Act.

8 (B) Data measures under this paragraph must

9 include an ethnic identifier on all forms. To the ex10 tent feasible, ethnic identifiers should be classified

11 by ethnic sub-group populations. Access to data

12 must be ensured for research organizations and data

13 clearinghouses. Population health measurement and

14 outcome monitoring should focus on health status

15 differentials between racial, and ethnic groups, by

16 subpopulation, and gender differences.

17 (2) Activities to protect the environment and to

18 assure the safety of housing, workplaces, food and

19 water, including the following activities:

20 (A) Monitoring and improving the overall

21 public health quality and safety of communities.

22 (B) Assessing exposure to high lead levels

23 and water contamination.

24 (C) Providing support for poison control

25 centers.
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1 (D) Monitoring sewage and solid waste dis2 posal, radiation exposure, radon exposure, and

3 noise levels.

4 (E) Abatement of lead-related hazards.

5 (F) Assuring recreation, home and worker

6 safety.

7 (G) Public information and education pro8 grams that help to reduce intentional and unin9 tentional injuries, including training parents

10 and children on use of safety devices.

11 (H) Enforcing public health safety and

12 sanitary codes.

13 (I) Other activities relating to promoting

14 the public health of communities.

15 (3) Investigation and control of adverse health

16 conditions, including improvements in emergency

17 treatment preparedness, injury prevention, coopera18 tive activities to reduce violence levels in homes and

19 communities, activities to control the outbreak of

20 disease, exposure related conditions and other

21 threats to the health status of individuals.

22 (4) Public information and education programs

23 to reduce risks to health such as use of tobacco, al24 cohol and other drugs, sexual activities that increase

25 the risk to HIV transmission and sexually transmit-
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1 ted diseases, domestic violence, poor diet, physical

2 inactivity, and low childhood immunization levels.

3 (5) Accountability and quality assurance activi4 ties, including monitoring the quality of personal

5 health services furnished by health plans and provid6 ers of medical and health services in a manner con7 sistent with the overall quality of care monitoring

8 activities undertaken under title V, and monitoring

9 communities’ overall access to health services.

10 (6) Provision of public health laboratory serv11 ices to complement private clinical laboratory serv12 ices and that screen for diseases and conditions such

13 as metabolic diseases in newborns, provide toxicology

14 assessments of blood lead levels and other environ15 mental toxins, diagnose sexually transmitted dis16 eases, tuberculosis and other diseases requiring part17 ner notification, test for infectious and food-borne

18 diseases, and monitor the safety of water and food

19 supplies.

20 (7) Training and education to assure provision

21 of care by all health professionals, with special em22 phasis placed on the training of public health profes23 sions including epidemiologists, biostatisticians,

24 health educators, public health administrators,

25 sanitarians and laboratory technicians.
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1 (8) Leadership, policy development and admin2 istration activities, including needs assessment, the

3 setting of public health standards, the development

4 of community public health policies, and the develop5 ment of community public health coalitions.

6 (c) RESTRICTIONS ON USE OF GRANT.—

7 (1) IN GENERAL.—A funding agreement for a

8 grant under subsection (a) for a State is that the

9 grant will not be expended—

10 (A) to provide inpatient services;

11 (B) to make cash payments to intended re12 cipients of health services;

13 (C) to purchase or improve land, purchase,

14 construct, or permanently improve (other than

15 minor remodeling) any building or other facil16 ity, or purchase major medical equipment;

17 (D) to satisfy any requirement for the ex18 penditure of non-Federal funds as a condition

19 for the receipt of Federal funds; or

20 (E) to provide financial assistance to any

21 entity other than a public or nonprofit private

22 entity.

23 (2) LIMITATION ON ADMINISTRATIVE EX24 PENSES.—A funding agreement for a grant under

25 subsection (a) is that the State involved will not ex-
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1 pend more than 10 percent of the grant for adminis2 trative expenses with respect to the grant.

3 (d) MAINTENANCE OF EFFORT.—A funding agree4 ment for a grant under subsection (a) is that the State

5 involved will maintain expenditures of non-Federal

6 amounts for core health functions at a level that is not

7 less than the level of such expenditures maintained by the

8 State for the fiscal year preceding the first fiscal year for

9 which the State receives such a grant.

10 SEC. 3313. SUBMISSION OF INFORMATION.

11 The Secretary may make a grant under section 3312

12 only if the State involved submits to the Secretary the fol13 lowing information:

14 (1) A description of existing deficiencies in the

15 State’s public health system (at the State level and

16 the local level), using standards of sufficiency devel17 oped by the Secretary.

18 (2) A description of health status measures to

19 be improved within the State (at the State level and

20 the local level) through expanded public health func21 tions.

22 (3) Measurable outcomes and process objectives

23 for improving health status and core health func24 tions for which the grant is to be expended.
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1 (4) Information regarding each such function,

2 which—

3 (A) identifies the amount of State and

4 local funding expended on each such function

5 for the fiscal year preceding the fiscal year for

6 which the grant is sought; and

7 (B) provides a detailed description of how

8 additional Federal funding will improve each

9 such function by both the State and local public

10 health agencies.

11 (5) A description of the core health functions to

12 be carried out at the local level, and a specification

13 for each such function of—

14 (A) the communities in which the function

15 will be carried out; and

16 (B) the amount of the grant to be ex17 pended for the function in each community so

18 specified.

19 SEC. 3314. REPORTS.

20 A funding agreement for a grant under section 3312

21 is that the States involved will, not later than the date

22 specified by the Secretary, submit to the Secretary a re23 port describing—

24 (1) the purposes for which the grant was ex25 pended; and
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1 (2) describing the extent of progress made by

2 the State in achieving measurable outcomes and

3 process objectives described in section 3313(3).

4 SEC. 3315. APPLICATION FOR GRANT.

5 The Secretary may make a grant under section 3312

6 only if an application for the grant is submitted to the

7 Secretary, the application contains each agreement de8 scribed in this part, the application contains the informa9 tion required in section 3314, and the application is in

10 such form, is made in such manner, and contains such

11 agreements, assurances, and information as the Secretary

12 determines to be necessary to carry out this part.

13 SEC. 3316. ALLOCATIONS FOR CERTAIN ACTIVITIES.

14 Of the amounts made available under section 3301

15 for a fiscal year for carrying out this part, the Secretary

16 may reserve not more than 5 percent for carrying out the

17 following activities:

18 (1) Technical assistance with respect to plan19 ning, development, and operation of core health

20 functions carried out under section 3312, including

21 provision of biostatistical and epidemiological exper22 tise and provision of laboratory expertise.

23 (2) Development and operation of a national in24 formation network among State and local health

25 agencies.
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1 (3) Program monitoring and evaluation of core

2 health functions carried out under section 3312.

3 (4) Development of a unified electronic report4 ing mechanism to improve the efficiency of adminis5 trative management requirements regarding the pro6 vision of Federal grants to State public health agen7 cies.

8 SEC. 3317. DEFINITIONS.

9 For purposes of this part:

10 (1) The term ‘‘funding agreement’’, with re11 spect to a grant under section 3312 to a State,

12 means that the Secretary may make the grant only

13 if the State makes the agreement involved.

14 (2) The term ‘‘core health functions’’, with re15 spect to a State, means the functions described in

16 section 3312(b).

17 SEC. 3318. SINGLE APPLICATION AND UNIFORM REPORT18 ING SYSTEMS FOR CORE FUNCTIONS OF PUB19 LIC HEALTH AND PUBLIC HEALTH CATEGOR20 ICAL GRANT PROGRAMS ADMINISTERED BY

21 THE CENTERS FOR DISEASE CONTROL AND

22 PREVENTION.

23 (a) SINGLE APPLICATION.—

24 (1) IN GENERAL.—The Secretary, acting

25 through the Director of the Centers for Disease
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1 Control and Prevention, shall establish a single con2 solidated application to enable States to apply for

3 the Core Functions of Public Health Grants Pro4 gram and any or all of the Public Health Service

5 Act categorical programs described in subsection (b).

6 (2) REQUIREMENTS.—The application devel7 oped under paragraph (1) shall—

8 (A) be designed so that information col9 lected will be consistent with the requirements

10 of this part including subsection (b);

11 (B) be designed and implemented not later

12 than 1 year after the date of enactment of this

13 Act; and

14 (C) be developed with resources made

15 available under section 3316 (not resources

16 made available for the programs described in

17 subsection (b)).

18 (3) STATE PUBLIC HEALTH OFFICERS.—In de19 veloping the single consolidated application form to

20 be used under this subsection the Secretary shall

21 consult with Federal, State and local public health

22 agencies.’’.

23 (4) ELIGIBILITY.—States and local govern24 ments that have grants, contracts or cooperative

25 agreements in effect with the Centers for Disease
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1 Control and Prevention on the date of enactment of

2 this Act shall be eligible to use a single application

3 under this section to apply for any or all of the Pub4 lic Health Service Act categorical programs de5 scribed in subsection (b).

6 (b) ELIGIBLE PUBLIC HEALTH SERVICE ACT PRO7 GRAMS.—Eligible Public Health Service Act categorical

8 programs described in this subsection are the following:

9 (1) The Preventive Health and Health Services

10 Block Grant under section 1903 of the Public

11 Health Service Act.

12 (2) The Childhood Lead Poisoning Prevention

13 Program under section 317A of the Public Health

14 Service Act.

15 (3) The Sexually Transmitted Diseases Pro16 gram under section 318 of the Public Health Service

17 Act.

18 (4) The Prevention of Sexually Transmitted

19 Diseases-Related Infertility Program under section

20 318A of the Public Health Service Act.

21 (5) The Breast and Cervical Cancer Early De22 tection Program under sections 1501 through 1509

23 of the Public Health Service Act.
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1 (6) The National Program of Cancer Registries

2 under section 399H of the Public Health Service

3 Act.

4 (7) The Injury Control and Prevention Pro5 gram under sections 391 through 394 of the Public

6 Health Service Act.

7 (8) The preventive health for prostate cancer

8 program under section 317D of the Public Health

9 Service Act.

10 (9) The birth defects data program under sec11 tion 317C of the Public Health Service Act.

12 (10) Programs under subtitle D of this title.

13 (11) Other relevant programs as determined ap14 propriate by the Secretary.

15 (c) ALLOCATION OF FUNDS.—In awarding grants to

16 States and local governments under a single application

17 under this section, the Secretary shall delineate to each

18 grantee the amounts to be dedicated to each of the pro19 grams described in subsection (b) and ensure that funding

20 allotments for each of such programs are consistent with

21 the requirements of Federal law.

22 (d) UNIFORM CORE FUNCTIONS OF PUBLIC HEALTH

23 REPORTING SYSTEM.—

24 (1) DEVELOPMENT.—The Secretary, acting

25 through the Director of the Office of Disease Pre-
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1 vention and Health Promotion and the Director of

2 the Centers for Disease Control and Prevention, in

3 consultation with other relevant Federal and State

4 health agencies with data collection responsibilities,

5 shall develop and implement a Uniform Core Public

6 Health Functions Reporting System to collect pro7 gram and fiscal data concerning the programs de8 scribed in subsection (b).

9 (2) REQUIREMENTS.—The system developed

10 under paragraph (1) shall—

11 (A) use outcomes consistent with the goals

12 of Healthy People 2000;

13 (B) be designed so that information col14 lected will be consistent with the requirements

15 of this part including subsection (b);

16 (C) be designed and implemented not later

17 than 2 years after the date of enactment of this

18 Act; and

19 (D) be developed with resources made

20 available under section 3316 of this Act (not re21 sources made available for the programs de22 scribed in subsection (b)).

23 (3) STATE PUBLIC HEALTH OFFICERS.—In de24 veloping the data set to be used under Uniform Core

25 Public Health Functions Reporting System the Sec-
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1 retary shall consult with Federal, State and local

2 public health agencies.

3 (e) STUDY.—

4 (1) IN GENERAL.—Within a reasonable period

5 of time after the date of enactment of this Act, the

6 Secretary shall request that the Institute of Medi7 cine conduct a study concerning—

8 (A) the effects of consolidating any or all

9 of the grant programs administered by the Cen10 ters for Disease Control and Prevention and de11 scribed in subsection (b) into a Core Functions

12 of Public Health Block Grant Program;

13 (B) the development of alternative methods

14 for implementing a block grant program or cat15 egorical grant program; and

16 (C) alternative formulas for allocating

17 State grants that incorporate measures of

18 health status, population and degree of poverty.

19 In particular, the impact of program consolidation

20 on the targeted recipients, including women and vul21 nerable populations, shall be addressed in the study.

22 If the Institute of Medicine declines to do the study,

23 the Secretary shall make grants to or enter into con24 tracts with a public or nonprofit private entity with

25 relevant expertise for the conduct of such a study.
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1 (2) REPORT.—Not later than 1 year after the

2 date of the receipt of the contract under paragraph

3 (1), the contract recipient shall prepare and submit

4 to the Secretary, the Energy and Commerce Com5 mittee of the House of Representatives, and the

6 Committee on Labor and Human Resources of the

7 Senate a report that contains the results of the

8 study conducted under paragraph (1).

9 (3) ISSUANCE OF PLAN.—Not later than 1 year

10 after the date on which the report under paragraph

11 (2) is received by the Secretary and the committees

12 referred to in such paragraph, the Secretary shall

13 issue a plan in response to the report. Such a plan

14 shall include the identification of relevant changes in

15 authorizing language.

16 PART 3—NATIONAL INITIATIVES REGARDING

17 HEALTH PROMOTION AND DISEASE PREVENTION

18 Subpart A—General Grants

19 SEC. 3331. GRANTS FOR NATIONAL PREVENTION INITIA20 TIVES.

21 (a) IN GENERAL.—The Secretary may make grants

22 to entities described in subsection (b) for the purpose of

23 carrying out projects to develop and implement innovative

24 community-based strategies to provide for health pro25 motion and disease prevention activities for which there
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1 is a significant need, as identified under section 1701 of

2 the Public Health Service Act.

3 (b) ELIGIBLE ENTITIES.—The entities referred to in

4 subsection (a) are agencies of State or local government,

5 private nonprofit organizations (including research institu6 tions), and coalitions that link two or more of these

7 groups.

8 (c) CERTAIN ACTIVITIES.—The Secretary shall en9 sure that projects carried out under subsection (a)—

10 (1) reflect approaches that take into account

11 the special needs and concerns of the affected popu12 lations;

13 (2) are targeted to the most needy and vulner14 able population groups and geographic areas of the

15 Nation;

16 (3) examine links between various high priority

17 preventable health problems and the potential com18 munity-based remedial actions; and

19 (4) establish or strengthen the links between

20 the activities of agencies engaged in public health

21 activities with those of health alliances, health care

22 providers, and other entities involved in the personal

23 health care delivery system described in title I.

24 SEC. 3332. PRIORITIES.

25 (a) ESTABLISHMENT.—
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1 (1) ANNUAL STATEMENT.—The Secretary shall

2 for each fiscal year develop a statement of proposed

3 priorities for grants under section 3331 for the fiscal

4 year.

5 (2) ALLOCATIONS AMONG PRIORITIES.—With

6 respect to the amounts available under section

7 3301(b) for the fiscal year for carrying out this part,

8 each statement under paragraph (1) for a fiscal year

9 shall include a specification of the percentage of the

10 amount to be devoted to projects addressing each of

11 the proposed priorities established in the statement.

12 (3) PROCESS FOR ESTABLISHING PRIORITIES.—

13 (A) PREFERENCE.—In establishing prior14 ities for grants under this part, preference shall

15 be given to projects that—

16 (i) reduce the prevalence of chronic

17 diseases including cardiovascular disease,

18 stroke, diabetes, and cancer;

19 (ii) prevent violence against women by

20 training providers and other health care

21 professionals to identify victims of domes22 tic violence, to provide appropriate exam23 ination and treatment, and to refer the vic24 tims for appropriate social and legal serv25 ices; and
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1 (iii) establish community health advi2 sor programs described in subparagraph

3 (B).

4 (B) COMMUNITY HEALTH ADVISOR PRO5 GRAMS.—For purposes of subparagraph

6 (A)(iii), the term ‘‘community health advisor

7 program’’ means a program that performs the

8 following functions:

9 (i) Provides outreach services to in10 form the community of the availability of

11 program services.

12 (ii) Collaborate efforts with health

13 care providers and related entities to facili14 tate the provision of health services and

15 health related social services.

16 (iii) Provide public education on

17 health promotion and disease prevention

18 and efforts to facilitate the use of available

19 health services and health-related social

20 services.

21 (iv) Provide health-related counseling.

22 (v) Make referrals for available health

23 services and health-related social services.

24 (vi) Improve the ability of individuals

25 to use health services and health-related
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1 social services under Federal, State, and

2 local programs, through assisting individ3 uals in establishing eligibility under the

4 programs.

5 (vii) Establish a community health ad6 visor training program.

7 (viii) Provide services in the language

8 and cultural context most appropriate for

9 the individuals served by the program.

10 (ix) Provide compensation for the

11 services of, and opportunities for training

12 and employment of, community health ad13 visors.

14 (x) Such other services as the Sec15 retary determines to be appropriate, which

16 may include transportation and translation

17 services.

18 (C) PUBLICATION OF STATEMENT.—Not

19 later than January 1 of each fiscal year, the

20 Secretary shall publish a statement under para21 graph (1) in the Federal Register. A period of

22 60 days shall be allowed for the submission of

23 public comments and suggestions concerning

24 the proposed priorities. After analyzing and

25 considering comments on the proposed prior-
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1 ities, the Secretary shall publish in the Federal

2 Register final priorities (and associated reserva3 tions of funds) for approval of projects for the

4 following fiscal year.

5 (D) DEFINITION OF COMMUNITY HEALTH

6 ADVISOR.—For purposes of subparagraph (B),

7 the term ‘‘community health advisor’’ means an

8 individual—

9 (i) who has demonstrated the capacity

10 to carry out one or more of the authorized

11 program services;

12 (ii) who, for not less than 1 year, has

13 been a resident of the community in which

14 the community health advisor program in15 volved is to be operated; and

16 (iii) is a member of a socioeconomic

17 group to be served by the program.

18 (b) APPLICABILITY TO MAKING OF GRANTS.—

19 (1) IN GENERAL.—The Secretary may make

20 grants under section 3331 for projects that the Sec21 retary determines—

22 (A) are consistent with the applicable final

23 statement of priorities and otherwise meets the

24 objectives described in subsection (a); and
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1 (B) will assist in meeting a health need or

2 concern of a population within a defined health

3 care coverage area or other service area.

4 (2) SPECIAL CONSIDERATION FOR CERTAIN

5 PROJECTS.—In making grants under section 3331,

6 the Secretary shall give special consideration to ap7 plicants that will carry out projects that, in addition

8 to being consistent with the applicable published pri9 orities under subsection (a) and otherwise meeting

10 the requirements of this part, have the potential for

11 replication in other communities.

12 SEC. 3333. SUBMISSION OF INFORMATION.

13 The Secretary may make a grant under section 3331

14 only if the applicant involved submits to the Secretary the

15 following information:

16 (1) A description of the activities to be con17 ducted, and the manner in which the activities are

18 expected to contribute to meeting one or more of the

19 priority health needs specified under section 3332

20 for the fiscal year for which the grant is initially

21 sought.

22 (2) A description of the total amount of Federal

23 funding requested, the geographic area and popu24 lations to be served, and the evaluation procedures

25 to be followed.
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1 (3) Such other information as the Secretary de2 termines to be appropriate.

3 SEC. 3334. APPLICATION FOR GRANT.

4 The Secretary may make a grant under section 3331

5 only if an application for the grant is submitted to the

6 Secretary, the application contains each agreement de7 scribed in this part, the application contains the informa8 tion required in section 3333, and the application is in

9 such form, is made in such manner, and contains such

10 agreements, assurances, and information as the Secretary

11 determines to be necessary to carry out this part.

12 Subpart B—Development of Telemedicine in Rural

13 Underserved Areas

14 SEC. 3341. GRANTS FOR DEVELOPMENT OF RURAL

15 TELEMEDICINE.

16 (a) IN GENERAL.—

17 (1) GRANTS AWARDED.—The Secretary, acting

18 through the Office of Rural Health Policy, shall

19 award grants to eligible entities that have applica20 tions approved under subsection (b) for the purpose

21 of expanding access to health care services for indi22 viduals in rural areas through the use of

23 telemedicine. Grants shall be awarded under this

24 section to encourage the initial development of rural

25 telemedicine networks, expand existing networks,
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1 link existing networks together, or link such net2 works to existing fiber optic telecommunications sys3 tems.

4 (2) ELIGIBLE ENTITY DEFINED.—For purposes

5 of this section, the term ‘‘eligible entity’’ means pub6 lic or nonprofit entities in nonmetropolitan areas (as

7 defined by the Department of Commerce) in a con8 sortium of community-based providers that includes

9 at least three of the following:

10 (A) community or migrant health centers;

11 (B) local health departments;

12 (C) community mental health centers;

13 (D) nonprofit hospitals

14 (E) private practice health professionals,

15 including rural health clinics; or

16 (F) other publicly funded health or social

17 services agencies.

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

19 under this section an eligible entity shall prepare and sub20 mit to the Secretary for approval an application at such

21 time, in such manner, and containing such information as

22 the Secretary may require, including a description of the

23 use to which the entity will apply any amounts received

24 under the grant.
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1 (c) PREFERENCE IN AWARDING GRANTS.—The Sec2 retary shall, in awarding grants under this section give

3 preference to applicants that—

4 (1) are health care providers in a rural health

5 care network or that propose to form such a net6 work, if a majority of the providers in such network

7 are located in a medically underserved area or health

8 professional shortage area;

9 (2) can demonstrate broad geographic coverage

10 in the rural areas of the State, or States, in which

11 the applicant is located;

12 (3) propose to use the amounts provided under

13 the grant to develop plans for, or to establish,

14 telemedicine systems that will link rural hospitals

15 and other rural health care providers to other hos16 pitals and health care providers;

17 (4) will use the amounts provided under the

18 grant for a broad range of health care applications

19 such as teleradiology, telepathology, interactive video

20 consultation and remote educational services, and to

21 promote greater efficiency in the use of health care

22 resources and administrative activities; and

23 (5) propose to use local matching funds to fi24 nance projects.
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1 (d) USE OF AMOUNTS.—Amounts received under a

2 grant awarded under this section shall be utilized for the

3 development of telemedicine networks involving three or

4 more providers. Such amounts may be used to cover the

5 costs associated with the development of telemedicine net6 works and the acquisition or construction of telecommuni7 cations facilities and equipment including—

8 (1) the development and acquisition through

9 lease or purchase of computer hardware and soft10 ware, audio and visual equipment, computer network

11 equipment, telecommunications transmission facili12 ties, telecommunications terminal equipment, inter13 active video equipment, data terminal equipment,

14 and other facilities and equipment that would fur15 ther the purposes of this section;

16 (2) the provision of technical assistance and in17 struction for the development and use of such pro18 gramming equipment or facilities;

19 (3) the development and acquisition of instruc20 tional programming;

21 (4) demonstration projects for teaching or

22 training medical students, residents, and other

23 health professions students in rural training sites

24 about the applications of telemedicine;
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1 (5) transmission costs, maintenance of equip2 ment, and compensation of specialists and referring

3 practitioners;

4 (6) demonstration projects to use telemedicine

5 to facilitate collaboration between physicians and

6 nonphysician primary care practitioners such as phy7 sician assistants, nurse practitioners, and certified

8 nurse-midwives; or

9 (7) such other uses that are consistent with

10 achieving the purposes of this section as approved by

11 the Secretary.

12 SEC. 3342. REPORT AND EVALUATION OF TELEMEDICINE.

13 Three years after the first grant is awarded under

14 section 3341 the Secretary shall submit a report to Con15 gress that evaluates all telemedicine projects funded

16 through the Department of Health and Human Services.

17 Such report shall evaluate—

18 (1) whether telemedicine expands access to

19 health care services;

20 (2) the cost effectiveness of telemedicine serv21 ices; and

22 (3) the quality of telemedicine services deliv23 ered.
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1 SEC. 3343. RECOMMENDATIONS ON REIMBURSEMENT OF

2 TELEMEDICINE.

3 The Secretary, in consultation with the Office of

4 Rural Health and the Health Care Financing Administra5 tion, shall issue regulations regarding reimbursement for

6 telemedicine services provided under title XVIII of the So7 cial Security Act no later than July 1, 1996.

8 Subtitle E—Health Services for

9 Medically Underserved Popu10 lations

11 PART 1—INITIATIVES FOR ACCESS TO HEALTH

12 CARE

13 Subpart A—Authorization of Appropriations

14 SEC. 3411. AUTHORIZATIONS OF APPROPRIATIONS.

15 (a) IMPROVING ACCESS TO HEALTH SERVICES.—

16 (1) SUBPART B.—

17 (A) Except as provided in subparagraph

18 (B), for the purpose of carrying out subpart B,

19 there are authorized to be appropriated

20 $52,500,000 for fiscal year 1995, $122,500,000

21 for fiscal year 1996, $192,500,000 for fiscal

22 year 1997, $157,500,000 for fiscal year 1998,

23 $122,500,000 for fiscal year 1999, and

24 $52,500,000 for fiscal year 2000.

25 (B) With respect to awards to federally

26 qualified health centers (as defined in section
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1 1861(aa)(4) of the Social Security Act) under

2 subpart B, there are authorized to be appro3 priated $97,500,000 for fiscal year 1995,

4 $227,500,000 for fiscal year 1996,

5 $357,500,000 for fiscal year 1997,

6 $292,500,000 for fiscal year 1998,

7 $227,500,000 for fiscal year 1999, and

8 $97,500,000 for fiscal year 2000.

9 (2) SUBPART C.—

10 (A) For the purpose of providing loans

11 under subpart C, there are authorized to be ap12 propriated such sums as may be necessary to

13 support a loan level of $200,000,000 for each

14 of the fiscal years 1995 through 2000.

15 (B) For the purpose of making grants

16 under subpart C, there are authorized to be ap17 propriated $35,000,000 for each of the fiscal

18 year 1995 through 2000.

19 (b) RELATION TO OTHER FUNDS.—The authoriza20 tions of appropriations established in subsection (a) are

21 in addition to any other authorizations of appropriations

22 that are available for the purpose described in such sub23 section.

24 (c) ELIGIBLE ENTITIES.—For purposes of this part,

25 the term ‘‘eligible entities’’ means—
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1 (1) covered entities as defined in section

2 340B(a)(4) of the Public Health Service Act (42

3 U.S.C. 256b(a)(4)), except that subsection

4 (a)(4)(L)(iii) and (a)(7) of such section shall not

5 apply;

6 (2) school health service sites under title III of

7 this Act;

8 (3) nonprofit hospitals meeting the criteria for

9 public hospitals which are eligible entities under sec10 tion 340B of the Public Health Service Act, except

11 that subsection (a)(4)(L)(iii) of such section shall

12 not apply, and children’s hospitals meeting com13 parable criteria as determined appropriate by the

14 Secretary;

15 (4) public and private, nonprofit community

16 mental health centers and substance abuse treat17 ment providers receiving funds from the Substance

18 Abuse and Mental Health Services Administration;

19 (5) runaway homeless youth centers or transi20 tional living programs for homeless youth for the

21 provision of health services under the Runaway

22 Homeless Youth Act of 1974 (42 U.S.C. 5701 et

23 seq.);

24 (6) rural referral centers under section

25 1886(d)(5)(C) of the Social Security Act, except
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1 that such eligibility is restricted to the receipt of

2 grants under section 3441; and

3 (7) public or nonprofit entities in

4 nonmetropolitan areas (as defined by the Depart5 ment of Commerce) in a consortium of community6 based providers that includes at least three of the

7 following:

8 (A) community or migrant health centers;

9 (B) local health departments;

10 (C) community mental health centers;

11 (D) nonprofit hospitals;

12 (E) private practice health professionals,

13 including rural health clinics; or

14 (F) other publicly funded health or social

15 services agencies;

16 except that such eligibility is restricted to the receipt

17 of grants or contracts under section 3421(a).

18 (d) PRIORITY.—In making awards from amounts ap19 propriated under subsection (a)(1)(B) and section 3462,

20 the Secretary shall give the highest priority to providing

21 adequate assistance to federally qualified health centers

22 in order to ensure the provision of comprehensive primary

23 health care services, other covered services and benefits,

24 and enabling services to medically underserved populations

25 that were served by such centers prior to the date of enact-
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1 ment of this Act, except that such federally qualified

2 health centers must continue to meet the requirements for

3 designation under section 1861(aa)(4) of the Social Secu4 rity Act.

5 (e) EQUITABLE DISTRIBUTION.—The Secretary

6 shall, in awarding grants, entering into contracts, and

7 making loans under this part, assure an equitable distribu8 tion of funds between rural and urban areas.

9 Subpart B—Development of Community Health

10 Groups and Health Care Sites and Services

11 SEC. 3421. GRANTS AND CONTRACTS FOR DEVELOPMENT

12 OF PLANS AND NETWORKS AND THE EXPAN13 SION AND DEVELOPMENT OF HEALTH CARE

14 SITES AND SERVICES.

15 (a) IN GENERAL.—The Secretary may make grants

16 to and enter into contracts with eligible entities described

17 in section 3411(c) for—

18 (1) the development of community health

19 groups whose principal purpose is to provide the

20 comprehensive benefit package under title I in one

21 or more health professional shortage areas or to pro22 vide such items and services to a significant number

23 of individuals who are members of a medically un24 derserved population; and
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1 (2) the expansion of existing health delivery

2 sites and services and the development of new health

3 delivery sites and services.

4 (b) SERVICE AREA.—In making an award under sub5 section (a), the Secretary shall designate the geographic

6 area with respect to which the community health group

7 involved is to provide health services.

8 (c) PRIORITY.—In making awards under subsection

9 (a)(1), the Secretary shall give priority to proposals in

10 which a greater number of eligible entities and other

11 health care providers, especially providers in community12 and provider-based health plans under section 1651(d),

13 are participants in the community health group, except in

14 areas such as rural areas, where providers are severely

15 limited in number.

16 (d) LIMITATION ON AWARDS.—The Secretary may

17 not make awards under subsection (a)(1) for more than

18 5 years to the same community health group.

19 (e) DEFINITIONS.—For purposes of this subpart:

20 (1) The term ‘‘community health group’’

21 means—

22 (A) a community health network that—

23 (i) is a public or nonprofit private

24 consortium of health care providers that

25 principally provides some of the items and
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1 services of the basic benefit package to

2 medically underserved populations, and

3 residents of health professional shortage

4 areas;

5 (ii) has an agreement with one or

6 more health plans; and

7 (iii) has a written agreement govern8 ing the participation of health care provid9 ers in the consortium to which each par10 ticipating provider is a party; or

11 (B) a community health plan that—

12 (i) is a public or nonprofit private en13 tity that principally provides all of the

14 items and services of the basic benefit

15 package to medically underserved popu16 lations, and residents of health professional

17 shortage areas;

18 (ii) is a participant in one or more

19 health alliances; and

20 (iii) has a written agreement govern21 ing the participation of health care provid22 ers in the consortium to which each par23 ticipating provider is a party.

24 (2) The term ‘‘health professional shortage

25 areas’’ means health professional shortage areas des-
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1 ignated under section 332 of the Public Health Serv2 ice Act.

3 (3) The term ‘‘medically underserved popu4 lation’’ means a medically underserved population

5 designated under section 330(b)(3) of the Public

6 Health Service Act, populations residing in health

7 professional shortage areas under section 332 of the

8 Public Health Service Act, and populations eligible

9 for premium subsidies and cost sharing reductions

10 based on income under title I.

11 SEC. 3422. CERTAIN USES OF AWARDS.

12 (a) IN GENERAL.—Amounts awarded under section

13 3421 may be expended for—

14 (1) the development of a community health

15 group, including entering into contracts between the

16 recipient of the award and health care providers who

17 are to participate in the group;

18 (2) the expansion, development and on-going

19 operation of health delivery sites and services; and

20 (3) activities under paragraphs (1) and (2)

21 which include—

22 (A) the recruitment, compensation, and

23 training of health professionals and administra24 tive staff;
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1 (B) the purchase and upgrading of equip2 ment, supplies, and information systems includ3 ing telemedicine systems; and

4 (C) the establishment of reserves required

5 for furnishing services on a prepaid or capitated

6 basis, except that eligible entities may use non7 cash mechanisms (including bonds, letters of

8 credit and federally guaranteed reinsurance

9 pools) for establishing and maintaining finan10 cial reserves.

11 (b) LOANS AND GRANTS.—The Secretary may ex12 pend, in any fiscal year, not to exceed 10 percent of the

13 amounts appropriated to carry out this subpart to make

14 loans and grants to eligible entities to support the types

15 of activities described in section 3441, subject to the re16 quirements of subpart C, except that, with respect to

17 amounts available for non-federally qualified health center

18 activities, such funds may be used to convert facilities

19 from providers of acute care service to providers of pri20 mary, emergency or long-term care.

21 SEC. 3423. APPLICATION.

22 The Secretary may not make an award to an entity

23 under section 3421 until such entity submits and applica24 tion to the Secretary, in such form and containing such
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1 assurances and information as the Secretary determines

2 appropriate, including—

3 (1) an assessment of the need that the medi4 cally underserved population or populations proposed

5 to be served by the applicant have for health services

6 and for enabling services (as defined in section

7 3461);

8 (2) a description of how the applicant will de9 sign the proposed community health plan or practice

10 network (including the service sites involved) for

11 such populations based on the assessment of need;

12 (3) a description of efforts to secure financial

13 and professional assistance and support for the

14 project; and

15 (4) evidence of significant community involve16 ment in the initiation, development and ongoing op17 eration of the project.

18 SEC. 3424. PURPOSES AND CONDITIONS.

19 Grants shall be made under this subpart for the pur20 poses and subject to all of the conditions under which eli21 gible entities otherwise receive funding to provide health

22 services to medically underserved populations under the

23 Public Health Service Act. The Secretary shall prescribe

24 comparable purposes and conditions for eligible entities

25 not receiving funding under the Public Health Service Act.
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1 Subpart C—Capital Cost of Development of

2 Community Health Groups and Other Purposes

3 SEC. 3441. DIRECT LOANS AND GRANTS.

4 (a) IN GENERAL.—The Secretary shall make grants

5 and loans to—

6 (1) eligible entities (as defined in section

7 3412(c));

8 (2) hospitals designated by the Secretary as es9 sential access community hospitals under section

10 1820(i)(1) of the Social Security Act; or

11 (3) rural primary care hospitals under section

12 1820(i)(2) of such Act;

13 for the capital costs of developing community health

14 groups (as defined in section 3421(e)) and expanding ex15 isting health delivery sites or developing new health deliv16 ery sites.

17 (b) USE OF ASSISTANCE.—

18 (1) IN GENERAL.—The capital costs for which

19 grants and loans made pursuant to subsection (a)

20 may be expended are, subject to paragraphs (2) and

21 (3), the following:

22 (A) The acquisition, modernization, expan23 sion or construction of facilities, or the conver24 sion of unneeded hospital facilities to facilities

25 that will assure or enhance the provision and
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1 accessibility of health care and enabling services

2 to medically underserved populations.

3 (B) The purchase of major equipment, in4 cluding equipment necessary for the support of

5 external and internal information systems.

6 (C) The establishment of reserves required

7 for furnishing services on a prepaid or capitated

8 basis.

9 (D) Such other capital costs as the Sec10 retary may determine are necessary to achieve

11 the objectives of this section.

12 (2) PRIORITIES REGARDING USE OF FUNDS.—

13 In providing grants and loans under subsection (a)

14 for an entity, the Secretary shall give priority to au15 thorizing the use of amounts for projects for the

16 renovation and modernization of medical facilities

17 necessary to prevent or eliminate safety hazards in18 cluding asbestos removal, avoid noncompliance with

19 licensure or accreditation standards, or projects to

20 replace obsolete facilities.

21 (3) LIMITATION.—The Secretary may authorize

22 the use of grants and loans under subsection (a) for

23 the construction of new buildings only if the Sec24 retary determines that appropriate facilities are not

25 available through acquiring, modernizing, expanding
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1 or converting existing buildings, or that construction

2 new buildings will cost less.

3 (c) AMOUNT OF ASSISTANCE.—

4 (1) IN GENERAL.—The principal amount of

5 loans under subsection (a) may cover up to 90 per6 cent of the costs involved.

7 (2) GRANTS.—Grants under this subsection

8 may not exceed 75 percent of the costs involved.

9 (d) INTEREST SUBSIDIES.—Amounts provided under

10 this section may be used to provide interest subsidies for

11 loans provided under this section where such subsidies are

12 necessary to make a project financial feasible.

13 SEC. 3442. CERTAIN REQUIREMENTS.

14 (a) IN GENERAL.—The Secretary may approve a loan

15 under section 3441 only if—

16 (1) the Secretary is reasonably satisfied that

17 the applicant for the project for which the loan

18 would be made will be able to make payments of

19 principal and interest thereon when due; and

20 (2) the applicant provides the Secretary with

21 reasonable assurances that there will be available to

22 it such additional funds as may be necessary to com23 plete the project or undertaking with respect to

24 which such loan is requested.
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1 (b) TERMS AND CONDITIONS.—Any loan made under

2 section 3441 shall, subject to the Federal Credit Reform

3 Act of 1990, meet such terms and conditions (including

4 provisions for recovery in case of default) as the Secretary,

5 in consultation with the Secretary of the Treasury, deter6 mines to be necessary to carry out the purposes of such

7 section while adequately protecting the financial interests

8 of the United States. Terms and conditions for such loans

9 shall include provisions regarding the following:

10 (1) Security.

11 (2) Maturity date.

12 (3) Amount and frequency of installments.

13 (4) Rate of interest, which shall be at a rate

14 comparable to the rate of interest prevailing on the

15 date the loan is made.

16 SEC. 3443. DEFAULTS; RIGHT OF RECOVERY.

17 (a) DEFAULTS.—

18 (1) IN GENERAL.—The Secretary may take

19 such action as may be necessary to prevent a default

20 on loans under section 3441, including the waiver of

21 regulatory conditions, deferral of loan payments, re22 negotiation of loans, and the expenditure of funds

23 for technical and consultative assistance, for the

24 temporary payment of the interest and principal on

25 such a loan, and for other purposes.
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1 (2) FORECLOSURE.—The Secretary may take

2 such action, consistent with State law respecting

3 foreclosure procedures, as the Secretary deems ap4 propriate to protect the interest of the United States

5 in the event of a default on a loan made pursuant

6 to section 3441, including selling real property

7 pledged as security for such a loan and for a reason8 able period of time taking possession of, holding,

9 and using real property pledged as security for such

10 a loan.

11 (3) WAIVERS.—The Secretary may, for good

12 cause, but with due regard to the financial interests

13 of the United States, waive any right of recovery

14 which the Secretary has by reasons of the failure of

15 a borrower to make payments of principal of and in16 terest on a loan made pursuant to section 3441, ex17 cept that if such loan is sold and guaranteed, any

18 such waiver shall have no effect upon the Secretary’s

19 guarantee of timely payment of principal and inter20 est.

21 (b) TWENTY-YEAR OBLIGATION; RIGHT OF RECOV22 ERY; SUBORDINATION; WAIVERS.—

23 (1) IN GENERAL.—With respect to an eligible

24 entity for which a grant or loan was made under

25 section 3441, the Secretary may award the grant or
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1 loan only if the applicant involved agrees that the

2 applicant will be liable to the United States for the

3 amount of the grant or loan, together with an

4 amount representing interest, if at any time during

5 the 20-year period beginning on the date of comple6 tion of the activities involved, the entity—

7 (A) ceases to be an eligible entity utilized

8 by a community health group, or by another

9 public or nonprofit private entity that provides

10 health services in one or more health profes11 sional shortage areas or that provides such

12 services to a significant number of individuals

13 who are members of a medically underserved

14 population; or

15 (B) is sold or transferred to any entity

16 other than an entity that is—

17 (i) a community health group or other

18 entity described in subparagraph (A); and

19 (ii) approved by the Secretary as a

20 purchaser or transferee regarding the facil21 ity.

22 (2) SUBORDINATION; WAIVERS.—With respect

23 to essential community providers, the Secretary may

24 subordinate or waive the right of recovery under

25 paragraph (1), and any other Federal interest that
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1 may be derived by virtue of a grant or loan under

2 section 3441, if the Secretary determines that subor3 dination or waiver will further the objectives of this

4 part.

5 SEC. 3444. PROVISIONS REGARDING CONSTRUCTION OR EX6 PANSION OF FACILITIES.

7 (a) SUBMISSION OF INFORMATION.—In the case of

8 a project for construction, conversion, expansion or mod9 ernization of a facility, the Secretary may provide loans

10 under section 3441 only if the applicant submits to the

11 Secretary the following:

12 (1) A description of the site.

13 (2) Plans and specifications which meet require14 ments prescribed by the Secretary.

15 (3) Information reasonably demonstrating that

16 title to such site is vested in one or more of the enti17 ties filing the application (unless the agreement de18 scribed in subsection (b)(1) is made).

19 (4) A specification of the type of assistance

20 being requested under section 3441.

21 (b) AGREEMENTS.—In the case of a project for con22 struction, conversion, expansion or modernization of a fa23 cility, the Secretary may provide loans under section 3441

24 only if the applicant makes the following agreements:
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1 (1) Title to such site will be vested in one or

2 more of the entities filing the application (unless the

3 assurance described in subsection (a)(3) has been

4 submitted under such subsection).

5 (2) Adequate financial support will be available

6 for completion of the project and for its maintenance

7 and operation when completed.

8 (3) All laborers and mechanics employed by

9 contractors or subcontractors in the performance of

10 work on a project will be paid wages at rates not

11 less than those prevailing on similar construction in

12 the locality as determined by the Secretary of Labor

13 in accordance with the Act of March 3, 1931 (40

14 U.S.C. 276a et seq; commonly known as the Davis15 Bacon Act), and the Secretary of Labor shall have

16 with respect to such labor standards the authority

17 and functions set forth in Reorganization Plan

18 Numbered 14 of 1950 (15 FR 3176; 5 U.S.C. Ap19 pendix) and section 276c of title 40.

20 (4) The facility will be made available to all

21 persons seeking service regardless of their ability to

22 pay.

23 SEC. 3445. APPLICATION FOR ASSISTANCE.

24 The Secretary may provide loans under section 3441

25 only if an application for such assistance is submitted to
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1 the Secretary, the application contains each agreement de2 scribed in this subpart, the application contains the infor3 mation required in section 3444(a), and the application

4 is in such form, is made in such manner, and contains

5 such agreements, assurances, and information as the Sec6 retary determines to be necessary to carry out this sub7 part.

8 SEC. 3446. ADMINISTRATION OF PROGRAMS.

9 This subpart, and any other program of the Secretary

10 that provides loans, shall be carried out by a centralized

11 loan unit established within the Department of Health and

12 Human Services.

13 Subpart D—Enabling and Supplemental Services

14 SEC. 3461. GRANTS AND CONTRACTS FOR ENABLING AND

15 SUPPLEMENTAL SERVICES.

16 (a) IN GENERAL.—The Secretary may make grants

17 to and enter into contracts with eligible entities to assist

18 such entities in providing the services described in sub19 sections (b) and (c) for the purpose of increasing the ca20 pacity of individuals to utilize the items and services in21 cluded in the comprehensive benefits package under title

22 I, and to provide access to essential supplemental services

23 that are not fully reimbursable under title I prior to Janu24 ary 2001,.
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1 (b) ENABLING SERVICES.—Enabling services shall

2 include transportation, community and patient outreach,

3 patient and family education, translation services, case

4 management, home visiting, and such other services as the

5 Secretary determines to be appropriate in carrying out the

6 purpose described in such subsection.

7 (c) SUPPLEMENTAL SERVICES.—Supplemental serv8 ices shall include items or services described in section

9 1106 or section 1118 of this Act that would otherwise be

10 excluded from coverage prior to January 1, 2001.

11 (d) CERTAIN REQUIREMENTS REGARDING PROJECT

12 AREA.—The Secretary may make an award of a grant or

13 contract under subsection (a) only if the applicant in14 volved—

15 (1) submits to the Secretary—

16 (A) information demonstrating that the

17 medically underserved populations in the com18 munity to be served under the award have a

19 need for enabling services; and

20 (B) a proposed budget for providing such

21 services;

22 (2) the applicant for the award agrees that the

23 medically underserved residents of the community

24 will be consulted with respect to the design and im-
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1 plementation of the project carried out with the

2 award;

3 (3) agrees that the services will not be denied

4 because the individual is unable to pay for such serv5 ices; and

6 (4) agrees that the applicant will utilize existing

7 resources to the maximum extent practicable.

8 (e) APPLICATION FOR AWARDS OF ASSISTANCE.—

9 The Secretary may make an award of a grant or contract

10 under subsection (a) only if an application for the award

11 is submitted to the Secretary, the application contains

12 each agreement described in this subpart, and the applica13 tion is in such form, is made in such manner, and contains

14 such agreements, assurances, and information as the Sec15 retary determines to be necessary to carry out this sub16 part.

17 SEC. 3462. AUTHORIZATIONS OF APPROPRIATIONS.

18 (a) ENABLING SERVICES.—For the purpose of carry19 ing out section 3461(b), there are authorized to be appro20 priated $35,000,000 for fiscal year 1996, $140,000,000

21 for each of the fiscal years 1997 through 1999, and

22 $175,000,000 for fiscal year 2000.

23 (b) SUPPLEMENTAL SERVICES.—For the purpose of

24 carrying out section 3461(c), there are authorized to be

25 appropriated $100,000,000 for fiscal year 1995,
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1 $150,000,000 for fiscal year 1996, and $250,000,000 for

2 each of the fiscal years 1997 through 2000.

3 (c) FEDERALLY QUALIFIED HEALTH CENTERS.—

4 With respect to federally qualified health centers (as de5 fined in section 1861(aa)(4) of the Social Security Act),

6 for the purpose of carrying out section 3461(b), there are

7 authorized to be appropriated $65,000,000 for fiscal year

8 1996, $260,000,000 for each of the fiscal years 1997

9 through 1999, and $325,000,000 for fiscal year 2000.

10 (d) RELATION TO OTHER FUNDS.—The authoriza11 tions of appropriations established in subsection (a) are

12 in addition to any other authorizations of appropriations

13 that are available for the purpose described in such sub14 section.

15 PART 2—NATIONAL HEALTH SERVICE CORPS

16 SEC. 3471. AUTHORIZATIONS OF APPROPRIATIONS.

17 (a) ADDITIONAL FUNDING; GENERAL CORPS PRO18 GRAM; ALLOCATIONS REGARDING NURSES.—For the pur19 pose of carrying out subpart II of part D of title III of

20 the Public Health Service Act, and for the purpose of car21 rying out section 3472, there are authorized to be appro22 priated $150,000,000 for fiscal year 1996, $150,000,000

23 for fiscal year 1997, and $250,000,000 for each of the

24 fiscal years 1998 through 2000.
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1 (b) RELATION TO OTHER FUNDS.—The authoriza2 tions of appropriations established in subsection (a) are

3 in addition to any other authorizations of appropriations

4 that are available for the purpose described in such sub5 section.

6 SEC. 3472. ALLOCATION FOR PARTICIPATION OF NURSES

7 IN SCHOLARSHIP AND LOAN REPAYMENT

8 PROGRAMS.

9 Of the amounts appropriated under section 3471, the

10 Secretary shall reserve such amounts as may be necessary

11 to ensure that, of the aggregate number of individuals who

12 are participants in the Scholarship Program under section

13 338A of the Public Health Service Act, or in the Loan

14 Repayment Program under section 338B of such Act, the

15 total number who are being educated as nurse practition16 ers, nurse midwives, or nurse anesthetists or are serving

17 as nurse practitioners, nurse midwives, or nurse anes18 thetists, respectively, is increased to 20 percent.

19 SEC. 3473. ALLOCATION FOR PARTICIPATION OF PSYCHIA20 TRISTS, PSYCHOLOGISTS, AND CLINICAL SO21 CIAL WORKERS IN SCHOLARSHIP AND LOAN

22 REPAYMENT PROGRAMS.

23 Of the amounts appropriate under section 3471, the

24 Secretary shall reserve such amounts as may be necessary

25 to ensure that of the aggregate number of individuals who
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1 are participants in the scholarship program under section

2 338A of the Public Health Service Act, the number who

3 are being educated as psychiatrists, psychologists, and

4 clinical social workers or are serving as psychiatrists, psy5 chologists, and clinical social workers, respectively, is in6 creased to 15 percent.

7 PART 3—PAYMENTS TO HOSPITALS SERVING

8 VULNERABLE POPULATIONS

9 SEC. 3481. PAYMENTS TO HOSPITALS.

10 (a) ENTITLEMENT STATUS.—The Secretary shall

11 make payments in accordance with this part to eligible

12 hospitals described in section 3482. The preceding sen13 tence—

14 (1) is an entitlement in the Secretary on behalf

15 of such eligible hospitals (but is not an entitlement

16 in the State in which any such hospital is located or

17 in any individual receiving services from any such

18 hospital); and

19 (2) constitutes budget authority in advance of

20 appropriations Acts and represents the obligation of

21 the Federal Government to provide funding for such

22 payments in the amounts, and for the fiscal years,

23 specified in subsection (b).

24 (b) APPROPRIATIONS.—
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1 (1) IN GENERAL.—For purposes of subsection

2 (a)(2), the amounts and fiscal years specified in this

3 subsection are (in the aggregate for all eligible hos4 pitals) $1,300,000,000 for the fiscal year in which

5 the general effective date occurs and for each subse6 quent fiscal year.

7 (2) SPECIAL RULE FOR YEARS BEFORE GEN8 ERAL EFFECTIVE DATE.—

9 (A) IN GENERAL.—For each of the fiscal

10 years 1996 and 1997, the amount specified in

11 this subsection for purposes of subsection (a)(2)

12 shall be equal to the aggregate DSH percentage

13 of the amount otherwise determined under

14 paragraph (1).

15 (B) AGGREGATE DSH PERCENTAGE DE16 FINED.—In subparagraph (A), the ‘‘aggregate

17 DSH percentage’’ for a year is the amount (ex18 pressed as a percentage) equal to—

19 (i) the total amount of payment made

20 by the Secretary under section 1903(a) of

21 the Social Security Act during the base

22 year with respect to payment adjustments

23 made under section 1923(c) of such Act

24 for hospitals in the States in which eligible
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1 hospitals for the year are located; divided

2 by

3 (ii) the total amount of payment made

4 by the Secretary under section 1903(a) of

5 such Act during the base year with respect

6 to payment adjustments made under sec7 tion 1923(c) of such Act for hospitals in

8 all States.

9 (c) PAYMENTS MADE ON QUARTERLY BASIS.—Pay10 ments to an eligible hospital under this section for a year

11 shall be made on a quarterly basis during the year.

12 SEC. 3482. IDENTIFICATION OF ELIGIBLE HOSPITALS.

13 (a) STATE IDENTIFICATION.—In accordance with the

14 criteria described in subsection (b) and such procedures

15 as the Secretary may require, each State shall identify the

16 hospitals in the State that meet such criteria and provide

17 the Secretary with a list of such hospitals.

18 (b) CRITERIA FOR ELIGIBILITY.—A hospital meets

19 the criteria described in this subsection if the hospital’s

20 low-income utilization rate for the base year under section

21 1923(b)(3) of the Social Security Act (as such section is

22 in effect on the day before the date of the enactment of

23 this Act) is not less than 25 percent.
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1 SEC. 3483. AMOUNT OF PAYMENTS.

2 (a) DISTRIBUTION OF ALLOCATION FOR LOW-IN3 COME ASSISTANCE.—

4 (1) ALLOCATION FROM TOTAL AMOUNT.—Of

5 the total amount available for payments under this

6 section in a year, 66.66 percent shall be allocated to

7 hospitals for low-income assistance in accordance

8 with this subsection.

9 (2) DETERMINATION OF HOSPITAL PAYMENT

10 AMOUNT.—The amount of payment to an eligible

11 hospital from the allocation made under paragraph

12 (1) during a year shall be the equal to the hospital’s

13 low-income percentage of the allocation for the year.

14 (b) DISTRIBUTION OF ALLOCATION FOR ASSISTANCE

15 FOR UNCOVERED SERVICES.—

16 (1) ALLOCATION FROM TOTAL AMOUNT; DETER17 MINATION OF STATE-SPECIFIC PORTION OF ALLOCA18 TION.—Of the total amount available for payments

19 under this section in a year, 33.33 percent shall be

20 allocated to hospitals for assistance in furnishing

21 hospital services that are not covered services under

22 title I (in accordance with regulations of the Sec23 retary) or in furnishing hospital services to individ24 uals, including those residing in Southwestern bor25 der States, who are not eligible individuals under

26 title I, in accordance with this subsection. The
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1 amount available for payments to eligible hospitals

2 in a State shall be equal to an amount determined

3 in accordance with a methodology specified by the

4 Secretary that shall take into consideration the vol5 ume of such services provided by hospital in the

6 State as compared to the volume of such services

7 provided by all eligible hospitals.

8 (2) DETERMINATION OF HOSPITAL PAYMENT

9 AMOUNT.—The amount of payment to an eligible

10 hospital in a State from the amount available for

11 payments to eligible hospitals in the State under

12 paragraph (1) during a year shall be the equal to

13 the hospital’s low-income percentage of such amount

14 for the year.

15 (c) LOW-INCOME PERCENTAGE DEFINED.—

16 (1) IN GENERAL.—In this subsection, an eligi17 ble hospital’s ‘‘low-income percentage’’ for a year is

18 equal to the amount (expressed as a percentage) of

19 the total low-income days for all eligible hospitals for

20 the year that are attributable to the hospital.

21 (2) LOW-INCOME DAYS DESCRIBED.—For pur22 poses of paragraph (1), an eligible hospital’s low-in23 come days for a year shall be equal to the product

24 of—
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1 (A) the total number of inpatient days for

2 the hospital for the year (as reported to the

3 Secretary by the State in which the hospital is

4 located, in accordance with a reporting schedule

5 and procedures established by the Secretary);

6 and

7 (B) the hospital’s low-income utilization

8 rate for the base year under section 1923(b)(3)

9 of the Social Security Act (as such section is in

10 effect on the day before the date of the enact11 ment of this Act).

12 SEC. 3484. BASE YEAR.

13 In this part, the ‘‘base year’’ is, with respect to a

14 State and hospitals in a State, the year immediately prior

15 to the year in which the general effective date occurs.

16 PART 4—SENSE OF THE COMMITTEE

17 SEC. 3491. SENSE OF THE COMMITTEE.

18 It is the sense of the Committee on Labor and

19 Human Resources of the Senate that when the Health Se20 curity Act is enacted, it and subsequent appropriations

21 Acts should appropriately recognize the success of commu22 nity and migrant health centers as a proven, cost-effective

23 model for the delivery of health care services to those pop24 ulations which are medically underserved because of eco25 nomic, geographic, and cultural barriers.
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1 Subtitle F—Mental Health;

2 Substance Abuse

3 PART 1—AUTHORITIES REGARDING

4 PARTICIPATING STATES

5 SEC. 3510. INTEGRATION OF MENTAL HEALTH AND SUB6 STANCE ABUSE SYSTEMS.

7 (a) IN GENERAL.—As a condition of being a partici8 pating State under title I, each State shall, not later than

9 January 1, 2001, achieve the integration of the mental

10 illness and substance abuse services of the State and its

11 political subdivisions with the mental illness and substance

12 abuse services offered by health plans pursuant to title I

13 of this Act. A State may petition the Secretary for a waiv14 er of the requirement of this subsection under the cir15 cumstances described in section 3511(b)(7).

16 (b) CERTIFICATION OF READINESS.—

17 (1) PETITION.—A State may petition the Sec18 retary to integrate the mental illness and substance

19 abuse services of the State and its political subdivi20 sions with the mental illness and substance abuse

21 services offered by health plans pursuant to title I

22 of this Act prior to January 1, 2001.

23 (2) STATE READINESS TO INTEGRATE.—Upon

24 receiving such a petition, the Secretary shall, based

25 on the reports submitted pursuant to subsections (b)
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1 and (c) of section 3511 and the criteria promulgated

2 pursuant to paragraph (3), ascertain the State’s

3 readiness to integrate its mental illness and sub4 stance abuse services with the mental illness and

5 substance abuse services offered by health plans pur6 suant to title I of this Act and certify whether the

7 State is prepared to conduct such an integration.

8 (3) CRITERIA.—The certification by the Sec9 retary of a State’s readiness to integrate under

10 paragraph (2) shall be based on objective criteria

11 promulgated by the Secretary after consultation with

12 the States.

13 (c) APPLICATION OF PROVISIONS.—Upon the issu14 ance of a certification of readiness by the Secretary for

15 a State, the limits set forth in subsections (d)(2)(B) and

16 (e)(2)(A) of section 1106 shall not apply to the provision

17 of mental illness and substance abuse services in the State.

18 SEC. 3511. REPORT ON INTEGRATION OF MENTAL HEALTH

19 SYSTEMS.

20 (a) IN GENERAL.—As a condition of being a partici21 pating State under title I, each State shall, not later than

22 October 1, 1998, submit to the Secretary a report contain23 ing the information described in subsection (b) on (includ24 ing a plan for) the measures to be implemented by the

25 State to achieve the integration of the mental illness and
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1 substance abuse services of the State and its political sub2 divisions with the mental illness and substance abuse serv3 ices that are included in the comprehensive benefit pack4 age under title I. The plan required in the preceding sen5 tence shall meet the conditions described in section

6 3083(b). In addition, each State shall submit to the Sec7 retary a report containing the information described in

8 subsection (c) for each year in which the State participates

9 under title I up to and including the year 2001 or the

10 date on which an unlimited benefit for mental illness and

11 substance abuse services is provided, whichever occurs

12 later.

13 (b) REQUIRED CONTENTS OF INTEGRATION RE14 PORT.—With respect to the provision of items and services

15 relating to mental illness and substance abuse, the report

16 of a State under subsection (a) shall, at a minimum, con17 tain the following information:

18 (1) Information on the number of individuals

19 served by or through mental illness and substance

20 abuse programs administered by State and local

21 agencies and the proportion who are eligible persons

22 under title I.

23 (2) Information on the extent to which each

24 health provider furnishing mental illness and sub25 stance abuse services under a State program partici-
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1 pates or will participate in one or more regional or

2 corporate alliance health plans, and, in the case of

3 providers that do not so participate, the reasons for

4 the lack of participation.

5 (3) With respect to the two years preceding the

6 year in which the State becomes a participating

7 State under title I—

8 (A) the amount of funds expended by the

9 State and its political subdivisions for each of

10 such years for items and services that are in11 cluded in the comprehensive benefit package

12 under such title;

13 (B) the amount of funds expended for

14 medically necessary and appropriate items and

15 services not included in such benefit package,

16 including medical care, other health care, and

17 supportive services related to the provision of

18 health care.

19 (4) An estimate of the amount that the State

20 will expend to furnish items and services not in21 cluded in such package once the expansion of cov22 erage for mental illness and substance abuse services

23 is implemented in the year 2001.

24 (5) A description of how the State will assure

25 that all individuals served by mental illness and sub-
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1 stance abuse programs funded by the State will be

2 enrolled in a health plan and how mental illness and

3 substance abuse services not covered under the bene4 fit package will continue to be furnished to such en5 rollees.

6 (6) A description of the conditions under which

7 the integration of mental illness and substance abuse

8 providers into regional and corporate alliances can

9 be achieved, and an identification of changes in par10 ticipation and certification requirements that are

11 needed to achieve the integration of such programs

12 and providers into health plans.

13 (7) If the integration of mental illness and sub14 stance abuse programs operated by the State into

15 one or more health plans is not medically appro16 priate or feasible for one or more groups of individ17 uals treated under State programs, a description of

18 the reasons that integration is not feasible or appro19 priate and a plan for assuring the coordination for

20 such individuals of the care and services covered

21 under the comprehensive benefit package with the

22 additional items and services furnished by such pro23 grams.

24 (8) A description of the manner in which the

25 resources that the State and its political subdivisions
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1 currently spend on mental health and substance

2 abuse services will be used to facilitate integration.

3 (c) REQUIRED CONTENTS OF TRANSITION RE4 PORT.—With respect to the a report required under this

5 subsection, the report shall, at a minimum, contain the

6 following information:

7 (1) The amount of funds expended for sub8 stance abuse and mental health services by the

9 source of revenue, including, Federal block grant

10 funds, under title XIX of the Public Health Service

11 Act, Federal categorical grant funds, State and local

12 revenues and health plan payments.

13 (2) The amount of funds expended for support14 ive services to individuals enrolled in substance

15 abuse and mental health treatment programs, in16 cluding transportation, child care, educational and

17 vocational training and coordination with other pub18 lic systems such as the social service, child welfare

19 and juvenile and criminal justice systems, by source

20 of revenue.

21 (3) The amount of funds expended on medically

22 necessary and appropriate items and services not

23 covered or reimbursed in the comprehensive benefit

24 package by source of revenue.
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1 (4) The amount of funds expended by the State

2 on substance abuse and mental illness services for

3 individuals who are not eligible to receive the com4 prehensive benefit package pursuant to this Act, and

5 the source of revenue for such services.

6 (d) GENERAL PROVISIONS.—Reports under sub7 sections (b) and (c) shall be provided at the time and in

8 the manner prescribed by the Secretary. The Secretary

9 shall also determine what, if any, reports shall be submit10 ted in years following the implementation of an unlimited

11 benefit for mental illness and substance abuse services.

12 (e) REPORTING REQUIREMENT.—Each State shall

13 report annually to the Secretary on the incidence and

14 prevalence of mental illness and substance abuse disorders

15 in the prison population, changes in such incidence and

16 prevalence in the prison population, and potential causa17 tive factors with respect to such changes, including an es18 timate of the extent to which the denial of treatment, or

19 the provision of inadequate treatment, to individuals with

20 mental illness and substance abuse disorders is contribut21 ing to the criminal activity of such individuals.
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1 PART 2—ASSISTANCE FOR STATE MANAGED MEN2 TAL HEALTH AND SUBSTANCE ABUSE PRO3 GRAMS

4 SEC. 3531. AVAILABILITY OF ASSISTANCE.

5 (a) IN GENERAL.—The Secretary shall make grants

6 to States for the development and operation of comprehen7 sive managed mental health and substance abuse pro8 grams that are integrated with the health delivery system

9 established under this Act. Such programs shall—

10 (1) promote the development of integrated de11 livery systems for the management of the mental

12 health and substance abuse services provided under

13 the comprehensive benefits package;

14 (2) give priority to providing services to low-in15 come adults with serious mental illness or substance

16 abuse disorders and children with serious emotional

17 disturbance or substance abuse disorders and pro18 vide for the phase-in of such services for all eligible

19 persons within 5 years;

20 (3) ensure that individuals participating in the

21 program have access to all medically necessary men22 tal health and substance abuse services;

23 (4) promote the linkage of mental health and

24 substance abuse services with primary and preven25 tive health care services; and
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1 (5) meet such other requirements as the Sec2 retary may impose.

3 (b) EXCEPTION.—Nothing in this part shall be con4 strued as preventing States that have separate administra5 tive entities for mental health and for substance abuse

6 services from establishing separate comprehensive man7 aged care programs for such services and receiving assist8 ance under this part for either or both programs.

9 SEC. 3532. PLAN REQUIREMENTS.

10 In order to receive a grant under this part, a State

11 must have a plan for a comprehensive managed mental

12 health and substance abuse program which is approved

13 by the Secretary. Such plan shall—

14 (1) describe the management, access, and refer15 ral structure that the State will use to promote and

16 achieve integration of mental health and substance

17 abuse services with the health delivery system estab18 lished under this Act for eligible individuals in the

19 State;

20 (2) describe how the State will ensure that pro21 viders of specialized services will meet appropriate

22 standards and provide assurances that the State has

23 complied with section 1504 as it affects mental

24 health and substance abuse services;
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1 (3) describe payment, utilization review, and

2 other mechanisms that the State will use to encour3 age appropriate service delivery and management of

4 costs;

5 (4) describe uniform patient placement criteria

6 that the State will use to ensure placement in appro7 priate substance abuse treatment programs;

8 (5) describe the processes the State will use to

9 ensure that individuals will continue to have access

10 to treatment through referrals from nonhealth public

11 entities, such as the juvenile or criminal justice sys12 tems, or social service systems;

13 (6) specify the methods the State will use to en14 sure that individuals receiving services under the

15 program have access to all medically necessary and

16 appropriate mental health and substance abuse serv17 ices;

18 (7) define terms that will be used by the State

19 in determining the eligibility of individuals for serv20 ices under the program;

21 (8) describe how health plans will use services

22 under the comprehensive managed mental health

23 and substance abuse programs established under

24 this part;
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1 (9) describe the role of local government in fi2 nancing and managing the integrated mental illness

3 and substance abuse treatment system;

4 (10) describe the sources of funding, including

5 Medicaid and the block grants authorized by title

6 XIX of the Public Health Service Act, that will be

7 used by the State, other than the grant received

8 under this part, to operate the program, and provide

9 the status of any request for a Medicaid waiver

10 made by the State to the Secretary;

11 (11) describe how the State provided for broad12 based public input in the development of the plan,

13 and the mechanism that will be used for ongoing

14 public comment on and review of amendments to the

15 plan; and

16 (12) describe grievance procedures that will be

17 available for individuals dissatisfied with their health

18 plan’s participation in the comprehensive managed

19 mental health and substance abuse program, and

20 mechanisms that will be available to review the per21 formance of health plans and fee-for-service arrange22 ments to ensure against under treatment.

23 SEC. 3533. ADDITIONAL FEDERAL RESPONSIBILITIES.

24 The Secretary shall, upon the submission of a State’s

25 plan under section 3532, ensure the timely consideration
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1 of any Medicaid waiver requests submitted by the State,

2 affirm that section 1504 has been implemented, and en3 sure the timely implementation of section 1641(b)(5).

4 SEC. 3534. AUTHORIZATION OF APPROPRIATIONS.

5 There are authorized to be appropriated for grants

6 under this part, $100,000,000 for each of the fiscal years

7 1995 through 2000.

8 Subtitle G—Comprehensive School

9 Health Education; School-Relat10 ed Health Services

11 PART 1—HEALTHY STUDENTS-HEALTHY

12 SCHOOLS GRANTS FOR SCHOOL HEALTH

13 EDUCATION

14 SEC. 3601. PURPOSES.

15 It is the purpose of this part—

16 (1) to support the development and implemen17 tation of comprehensive age appropriate health edu18 cation programs in public schools for children and

19 youth kindergarten through grade 12; and

20 (2) to increase access to preventive and primary

21 health care services for children and youth through

22 school-based or school-linked health service sites in

23 accordance with locally determined needs.
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1 SEC. 3602. HEALTHY STUDENTS-HEALTHY SCHOOLS

2 GRANTS.

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

4 with the Secretary of Education, shall award grants to

5 State educational agencies in eligible States to integrate

6 comprehensive school health education in schools within

7 the State, with priority given within States to those com8 munities in greatest need as defined by section 3683(a).

9 (b) ELIGIBLE USES OF FUNDS.—Funds made avail10 able under this section shall be used—

11 (1) to implement comprehensive school health

12 education programs, as defined in subsection (f)(1)

13 through grants to local educational agencies;

14 (2) to provide staff development and technical

15 assistance to local educational agencies, schools,

16 local health agencies, and other community organiza17 tions involved in providing comprehensive school

18 health education programs;

19 (3) to evaluate and report to the Secretary on

20 the progress made towards attaining the goals and

21 objectives described under subsection (c)(1)(A); and

22 (4) to conduct such other activities to achieve

23 the objectives of this subpart as the Secretary may

24 require.

25 (c) APPLICATION.—An application for a grant under

26 subsection (a), shall be jointly developed by the State edu-
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1 cational agency and the State health agencies of the State

2 involved, and shall contain—

3 (1) a State plan for comprehensive school

4 health education programs, that outlines—

5 (A) the goals and objectives of the State

6 for school health education programs, and the

7 manner in which the State will allocate funds to

8 local educational agencies in order to achieve

9 these goals and objectives;

10 (B) the manner in which the State will co11 ordinate programs under this part with other

12 Federal, State and local health education pro13 grams and resources, and school health serv14 ices;

15 (C) the manner in which comprehensive

16 school health education programs will be coordi17 nated with other Federal, State and local edu18 cation programs (such as programs under titles

19 I, II, and IV of the Elementary and Secondary

20 Education Act of 1965), with the school im21 provement plan of the State, if any, under title

22 III of the Goals 2000: Educate America Act,

23 and with any similar programs;

24 (D) the manner in which the State shall

25 work with State and local educational agencies
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1 and with State and local health agencies to re2 duce barriers to implementing school health

3 education programs;

4 (E) the manner in which the State will

5 monitor the implementation of such programs

6 by local educational agencies and establish out7 come criteria by which to evaluate their effec8 tiveness in achieving progress towards the goals

9 and objectives described in subparagraph (A);

10 (F) the manner in which the State will

11 provide staff development and technical assist12 ance to local educational agencies, and build ca13 pacity for professional development of health

14 educators; and

15 (G) the manner in which such school

16 health education programs will be, to the extent

17 practicable, culturally competent and linguis18 tically appropriate and responsive to the diverse

19 needs of the students served;

20 (2) a description of the respective roles of the

21 State educational agency, local educational agencies,

22 the State health agency and local health agencies in

23 developing and implementing the State’s school

24 health education plan and resulting programs;
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1 (3) a description of the input of the local com2 munity (including students and parents) in the de3 velopment and operation of comprehensive school

4 health education programs;

5 (4) an assurance that communities identified in

6 section 3683(a) receive priority as locations for com7 prehensive school health education programs for all

8 grades to the extent that a State does not implement

9 a statewide program; and

10 (5) an assurance that grants to local edu11 cational agencies under subsection (b)(1) are contin12 gent upon submission by such agencies of a plan

13 consistent with the requirements for the State plan

14 as required under this subsection.

15 (d) WAIVERS OF STATUTORY AND REGULATORY RE16 QUIREMENTS.—

17 (1) WAIVERS.— Except as provided in para18 graph (4), upon the request of an entity and under

19 a relevant program described in paragraph (2), the

20 Secretary of Health and Human Services and the

21 Secretary of Education may grant to the entity a

22 waiver of any requirement of such program regard23 ing the use of funds, or of the regulations issued for

24 the program by the Secretary involved, if the follow25 ing conditions are met with respect to such program:
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1 (A) The Secretary involved determines that

2 the requirements of such program impede the

3 ability of the State educational agency to

4 achieve more effectively the purposes described

5 in section 3601.

6 (B) The Secretary involved determines

7 that, with respect to the use of funds under

8 such program, the requested use of the funds

9 by the entity would be consistent with the pur10 poses described in section 3601.

11 (C) The State educational agency provides

12 all interested local educational agencies in the

13 State with notice and an opportunity to com14 ment on the proposal and makes these com15 ments available to the Secretary.

16 (2) RELEVANT PROGRAMS.—For purposes of

17 paragraph (1), the programs described in this sub18 paragraph are the following:

19 (A) In the case of programs administered

20 by the Secretary of Health and Human Serv21 ices, the following:

22 (i) The program known as the Preven23 tion, Treatment, and Rehabilitation Model

24 Projects for High Risk Youth, carried out
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1 under section 517 of the Public Health

2 Service Act.

3 (ii) The program known as the State

4 and Local Comprehensive School Health

5 Programs to Prevent Important Health

6 Problems and Improve Educational Out7 comes, carried out under such Act.

8 (B) In the case of programs administered

9 by the Secretary of Education, any program

10 carried out under part B of the Drug-Free

11 Schools and Communities Act of 1986, except

12 that a component of such comprehensive school

13 health education must be consistent with the

14 statutory intent and purposes of such Act.

15 (3) WAIVER PERIOD.—A waiver under this

16 paragraph shall be for a period not to exceed 3

17 years, unless the Secretary involved determines

18 that—

19 (A) the waiver has been effective in ena20 bling the State to carry out the activities for

21 which it was requested and has contributed to

22 improved performance of comprehensive health

23 education programs; and

24 (B) such extension is in the public interest;
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1 (4) WAIVERS NOT AUTHORIZED.—The Sec2 retary involved under paragraph (1), may not waive,

3 under this section, any statutory or regulatory re4 quirements relating to—

5 (A) comparability of services;

6 (B) maintenance of effort;

7 (C) parental participation and involvement;

8 (D) the distribution of funds to States or

9 to local educational agencies or other recipients

10 of funds under the programs described in para11 graph (2);

12 (E) maintenance of records;

13 (F) applicable civil rights requirements; or

14 (G) the requirements of sections 438 and

15 439 of the General Education Provisions Act.

16 (5) TERMINATION OF WAIVER.—The Secretary

17 involved under paragraph (1) shall terminate a waiv18 er under this subsection if the Secretary determines

19 that the performance of the State affected by the

20 waiver has been inadequate to justify a continuation

21 of the waiver or if it is no longer necessary to

22 achieve its original purpose.

23 (e) DEFINITIONS.—As used in this section:

24 (1) COMPREHENSIVE SCHOOL HEALTH EDU25 CATION.—The term ‘‘comprehensive school health
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1 education’’ means a planned, sequential program of

2 health education that addresses the physical, emo3 tional and social dimensions of student health in

4 kindergarten through grade 12. Such program

5 shall—

6 (A) be designed to assist students in devel7 oping the knowledge and behavioral skills need8 ed to make positive health choices and maintain

9 and improve their health, prevent disease and

10 injuries, and reduce risk behaviors which ad11 versely impact health;

12 (B) be comprehensive and include a variety

13 of components addressing personal health, com14 munity and environmental health, injury pre15 vention and safety, nutritional health, the ef16 fects of substance use and abuse, consumer

17 health regarding the benefits and appropriate

18 use of medical services including immunizations

19 and other clinical preventive services, and other

20 components deemed appropriate by the local

21 educational agencies;

22 (C) be designed to be linguistically and cul23 turally competent and responsive to the needs

24 of the students served; and
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1 (D) address locally relevant priorities as

2 determined by parents, students, teachers, and

3 school administrators and health officials.

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

5 State’’ means a State with a memorandum of under6 standing or a written cooperative agreement entered

7 into by the agencies responsible for health and edu8 cation concerning the planning and implementation

9 of comprehensive school health education programs.

10 Among these States a priority shall be given to

11 qualified States as defined in section 3682(c).

12 (3) STATE EDUCATIONAL AGENCY.—The term

13 ‘‘State educational agency’’ means the officer or

14 agency primarily responsible for the State super15 vision of public elementary and secondary schools.

16 (4) LOCAL EDUCATIONAL AGENCY.—The term

17 ‘‘local educational agency’’ means a public board of

18 education or other public authority legally con19 stituted within a State for either administrative con20 trol or direction of, or to perform a service function

21 for, public elementary or secondary schools in a city,

22 county, township, school district, or other political

23 subdivision of a State, or such combination of school

24 districts or counties as are recognized in a State as

25 an administrative agency for its public elementary or
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1 secondary schools. Such term includes any other

2 public institution or agency having administrative

3 control and direction of a public elementary or sec4 ondary school.

5 (f) AUTHORIZED FUNDING.—For the purpose of car6 rying out this section, out of the funds available under

7 section 3695(b)(2), there are made available, not to exceed

8 $15,000,000 for fiscal year 1995, $20,000,000 for fiscal

9 year 1996, $25,000,000 for fiscal year 1997, $30,000,000

10 for fiscal year 1998, $40,000,000 for fiscal year 1999, and

11 $50,000,000 for fiscal year 2000.

12 SEC. 3603. HEALTHY STUDENTS-HEALTHY SCHOOLS INTER13 AGENCY TASK FORCE.

14 (a) ESTABLISHMENT.—Not later than 120 days after

15 the date of enactment of this Act, the Secretary shall es16 tablish a Healthy Students-Healthy Schools Interagency

17 Task Force to be composed of representatives of the Office

18 of Disease Prevention and Health Promotion, the National

19 Institutes of Health, the Centers for Disease Control and

20 Prevention, the Health Resources and Services Adminis21 tration, the Office of School Health Education within the

22 Department of Education, and other Federal agencies and

23 departments which have responsibility for components of

24 school health and education.
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1 (b) CO-CHAIRPERSONS.—The Assistant Secretary for

2 Health and the Assistant Secretary for Elementary and

3 Secondary Education shall serve as co-chairpersons of the

4 task force established under subsection (a).

5 (c) FUNCTIONS AND ACTIVITIES.—The task force es6 tablished under subsection (a) shall—

7 (1) review and coordinate all Federal efforts in

8 school health education and health services;

9 (2) provide scientific and technical advice con10 cerning the development and implementation of

11 model comprehensive school health education pro12 grams and curricula;

13 (3) develop model student learning objectives

14 and assessment instruments that shall be made

15 available to all States;

16 (4) develop a uniform grant application form (a

17 form that serves as the principal document contain18 ing the core information concerning a particular en19 tity) and procedures that may be used with respect

20 to all school health education-related programs (in21 cluding supplementary information procedures to be

22 implemented when an entity that has already sub23 mitted an application form is applying for additional

24 assistance) that require the submission of an appli25 cation; and
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1 (5) recommend to the Secretary, for inclusion

2 in the biennial report required by section 3604(2),

3 methods for effectively linking school health edu4 cation and health services research findings at the

5 Federal level with implementation at the State and

6 local levels.

7 (d) CONSOLIDATION OF INITIATIVES.—Not later

8 than 12 months after the date of enactment of this Act,

9 the task force established under subsection (a) shall pre10 pare and submit to the Congress a report containing the

11 recommendations of the task force for the consolidation

12 of Federal school health education initiatives.

13 SEC. 3604. DUTIES OF THE SECRETARY.

14 The Secretary shall—

15 (1) establish and maintain a national clearing16 house, using advanced technologies to the maximum

17 extent practicable, and mechanisms for the diverse

18 dissemination of school health education material,

19 including written, audio-visual, and electronically

20 conveyed information to educators, schools, health

21 care providers, and other individuals, organizations,

22 and governmental entities;

23 (2) submit a biennial report to the Committee

24 on Labor and Human Resources of the Senate and

25 the appropriate committees of the House of Rep-
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1 resentatives on the implementation and contribution

2 of comprehensive school health education programs

3 funded under this part toward achieving relevant

4 National Healthy People 2000 objectives established

5 by the Secretary; and

6 (3) encourage coordination among Federal

7 agencies, State and local governments, educators,

8 school health providers, community-based organiza9 tions, and private sector entities to support develop10 ment of comprehensive school health education pro11 grams and school health services.

12 PART 5—SCHOOL-RELATED HEALTH SERVICES

13 Subpart A—Development and Operation

14 SEC. 3681. AUTHORIZATION OF APPROPRIATIONS.

15 (a) FUNDING FOR SCHOOL-RELATED HEALTH SERV16 ICES.—For the purpose of carrying out this subpart, there

17 are authorized to be appropriated $100,000,000 for fiscal

18 year 1995, $200,000,000 for fiscal year 1996,

19 $325,000,000 for fiscal year 1997, $450,000,000 for fis20 cal year 1998, $575,000,000 for fiscal year 1999, and

21 $700,000,000 for fiscal year 2000.

22 (b) FUNDING FOR PLANNING AND DEVELOPMENT

23 GRANTS.—Of amounts made available under this section,

24 not to exceed $10,000,000 for each of fiscal years 1995

25 and 1996 may be utilized to carry out section 3684.
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1 SEC. 3682. ELIGIBILITY FOR GRANTS.

2 (a) IN GENERAL.—

3 (1) PLANNING AND DEVELOPMENT GRANTS.—

4 Entities eligible to apply for and receive grants

5 under section 3684 are—

6 (A) State health agencies that apply on be7 half of local community partnerships; or

8 (B) local community partnerships in States

9 in which health agencies have not successfully

10 applied.

11 (2) OPERATIONAL GRANTS.—Entities eligible to

12 apply for and receive grants under section 3685

13 are—

14 (A) a qualified State as designated under

15 subsection (c) that apply on behalf of local com16 munity partnerships; or

17 (B) local community partnerships in States

18 that are not designated under subparagraph

19 (A).

20 (b) LOCAL COMMUNITY PARTNERSHIPS.—

21 (1) IN GENERAL.—A local community partner22 ship under subsection (a)(1)(B) and (a)(2)(B) is an

23 entity that, at a minimum includes—

24 (A) a local health care provider, which may

25 be a local public health department, with expe-
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1 rience in delivering services to children and

2 youth or medically underserved populations;

3 (B) local educational agency on behalf of

4 one or more public schools; and

5 (C) one community-based organization lo6 cated in the community to be served that has

7 a history of providing services to at-risk chil8 dren and youth.

9 (2) RURAL COMMUNITIES.—In rural commu10 nities, local partnerships should seek to include, to

11 the fullest extent practicable, providers and commu12 nity-based organizations with experience in serving

13 the target population.

14 (3) PARENT AND COMMUNITY PARTICIPA15 TION.—An applicant described in subsection (a)

16 shall, to the maximum extent feasible, involve broad17 based community participation (including parents of

18 the youth to be served).

19 (c) QUALIFIED STATE.—A qualified State under sub20 section (a)(2)(A) is a State that, at a minimum—

21 (1) demonstrates an organizational commitment

22 (including a strategic plan) to providing a broad

23 range of health, health education and support serv24 ices to at-risk youth; and
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1 (2) has a memorandum of understanding or co2 operative agreement jointly entered into by the State

3 agencies responsible for health and education re4 garding the planned delivery of health and support

5 services in school-based or school-linked centers.

6 SEC. 3683. PREFERENCES.

7 In making grants under sections 3684 and 3685, the

8 Secretary shall give priority to applicants whose-commu9 nities to be served show the most substantial level of need

10 for health services among children and youth.

11 SEC. 3684. PLANNING AND DEVELOPMENT GRANTS.

12 (a) IN GENERAL.—The Secretary may make grants

13 during fiscal years 1995 and 1996 to entities eligible

14 under section 3862 to develop school-based or school15 linked health service sites.

16 (b) USE OF FUNDS.—Amounts provided under a

17 grant under this section may be used for the following:

18 (1) Planning for the provision of school health

19 services, including—

20 (A) an assessment of the need for health

21 services among youth in the communities to be

22 served;

23 (B) the health services to be provided and

24 how new services will be integrated with exist25 ing services;
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1 (C) assessing and planning for the mod2 ernization and expansion of existing facilities

3 and equipment to accommodate such services;

4 and

5 (D) an affiliation with relevant health

6 plans.

7 (2) recruitment and training of staff for the ad8 ministration and delivery of school health services;

9 (3) the establishment of local community part10 nerships as described in section 3682 (b);

11 (4) in the case of States, the development of

12 memorandums of understanding or cooperative

13 agreements for the coordinated delivery of health

14 and support services through school health service

15 sites; and

16 (5) other activities necessary to assume oper17 ational status.

18 (c) APPLICATION FOR GRANTS.—To be eligible to re19 ceive a grant under this section an entity described in sec20 tion 3682 (a) shall submit an application in a form and

21 manner prescribed by the Secretary.

22 (d) NUMBER OF GRANTS.—Not more than one plan23 ning grant may be made to a single applicant. A planning

24 grant may not exceed 2 years in duration.
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1 (e) AMOUNT AVAILABLE FOR DEVELOPMENT

2 GRANT.—The Secretary may award not to exceed—

3 (1) $150,000 to entities under section

4 3682(a)(1)(A) and to localities planning for a city5 wide or countywide school health services delivery

6 system; and

7 (2) $50,000 to entities under section

8 3682(a)(1)(B).

9 SEC. 3685. GRANTS FOR OPERATION OF SCHOOL HEALTH

10 SERVICES.

11 (a) IN GENERAL.—The Secretary may make grants

12 to eligible entities described in section 3682(a)(2) that

13 submit applications consistent with the requirements of

14 this section, to pay the cost of operating school-based or

15 school-linked health service sites.

16 (b) USE OF GRANT.—Amounts provided under a

17 grant under this section may be used for the following—

18 (1) health services, including diagnosis and

19 treatment of simple illnesses and minor injuries;

20 (2) preventive health services, including health

21 screenings follow-up health care, mental health, and

22 preventive health education;

23 (3) enabling services, as defined in section

24 3461(b), and other necessary support services;
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1 (4) training, recruitment, and compensation of

2 health professionals and other staff necessary for the

3 administration and delivery of school health services;

4 and

5 (5) referral services, including the linkage of in6 dividuals to health plans, and community-based

7 health and social service providers.

8 (c) APPLICATION FOR GRANT.—To be eligible to re9 ceive a grant under this section an entity described in sec10 tion 3682(a)(2) shall submit an application in a form and

11 manner prescribed by the Secretary. In order to receive

12 a grant under this section, an applicant must include in

13 the application the following information—

14 (1) a description of the services to be furnished

15 by the applicant;

16 (2) the amounts and sources of funding that

17 the applicant will expend, including estimates of the

18 amount of payments the applicant will receive from

19 health plans and other sources;

20 (3) a description of local community partner21 ships, including parent and community participation;

22 (4) a description of the linkages with other

23 health and social service providers; and

24 (5) such other information as the Secretary de25 termines to be appropriate.
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1 (d) ASSURANCES.—In order to receive a grant under

2 this section, an applicant must meet the following condi3 tions—

4 (1) school health service sites will, directly or

5 indirectly, provide a broad range of health services,

6 in accordance with the determinations of the local

7 community partnership, that may include—

8 (A) diagnosis and treatment of simple ill9 nesses and minor injuries;

10 (B) preventive health services, including

11 health screenings and follow-up health care,

12 mental health and preventive health education;

13 (C) enabling services, as defined in section

14 3461(b);

15 (D) referrals (including referrals regarding

16 mental health and substance abuse) with follow17 up to ensure that needed services are received;

18 (2) the applicant provides services rec19 ommended by the health provider, in consultation

20 with the local community partnership, and with the

21 approval of the local education agency;

22 (3) the applicant provides the services under

23 this subsection to adolescents, and other school age

24 children and their families as deemed appropriate by

25 the local partnership;
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1 (4) the applicant maintains agreements with

2 community-based health care providers with a his3 tory of providing services to such populations for the

4 provision of health care services not otherwise pro5 vided directly or during the hours when school

6 health services are unavailable;

7 (5) the applicant establishes an affiliation with

8 relevant health plans and will establish reimburse9 ment procedures and will make every reasonable ef10 fort to collect appropriate reimbursement for serv11 ices provided; and

12 (6) the applicant agrees to supplement and not

13 supplant the level of State or local funds under the

14 direct control of the applying State or participating

15 local education or health authority expended for

16 school health services as defined by this Act;

17 (7) services funded under this Act will be co18 ordinated with existing school health services pro19 vided at a participating school; and

20 (8) for applicants in rural areas, the assurances

21 required under paragraph (4) shall be fulfilled to the

22 maximum extent possible.

23 (e) STATE LAWS.—Notwithstanding any other provi24 sion in this part, no school based health clinic may provide

25 services, to any minor, when to do so is a violation of State
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1 laws or regulations pertaining to informed consent for

2 medical services to minors.

3 (f) LIMITATION ON ADMINISTRATIVE FUNDS.—In

4 the case of a State applying on behalf of local educational

5 partnerships, the applicant may retain not more than 5

6 percent of grants awarded under this subpart for adminis7 trative costs.

8 (g) DURATION OF GRANT.—A grant under this sec9 tion shall be for a period determined appropriate by the

10 Secretary.

11 (h) AMOUNT OF GRANT.—The annual amount of a

12 grant awarded under this section shall not be more than

13 $200,000 per school-based or school-linked health service

14 site.

15 (i) FEDERAL SHARE.—

16 (1) IN GENERAL.—Subject to paragraph (3), a

17 grant for services awarded under this section may

18 not exceed—

19 (A) 90 percent of the non-reimbursed cost

20 of the activities to be funded under the program

21 for the first 2 fiscal years for which the pro22 gram receives assistance under this section; and

23 (B) 75 percent of the non-reimbursed cost

24 of such activities for subsequent years for which
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1 the program receives assistance under this sec2 tion.

3 The remainder of such costs shall be made available as

4 provided in paragraph (2).

5 (2) FORM OF NON-FEDERAL SHARE.—The non6 Federal share required by paragraph (1) may be in

7 cash or in-kind, fairly evaluated, including facilities,

8 equipment, personnel, or services, but may not in9 clude amounts provided by the Federal Government.

10 In-kind contributions may include space within a

11 school facilities, school personnel, program use of

12 school transportation systems, outposted health per13 sonnel, and extension of health provider medical li14 ability insurance.

15 (3) WAIVER.—The Secretary may waive the re16 quirements of paragraph (1) for any year in accord17 ance with criteria established by regulation. Such

18 criteria shall include a documented need for the

19 services provided under this section and an inability

20 of the grantee to meet the requirements of para21 graph (1) despite a good faith effort.

22 (j) TRAINING AND TECHNICAL ASSISTANCE.—Enti23 ties that receive assistance under this section may use not

24 to exceed 10 percent of the amount of such assistance to

25 provide staff training and to secure necessary technical as-
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1 sistance. To the maximum extent feasible, technical assist2 ance should be sought through local community-based en3 tities. The limitation contained in this subsection shall

4 apply to individuals employed to assist in obtaining funds

5 under this part. Staff training should include the training

6 of teachers and other school personnel necessary to ensure

7 appropriate referral and utilization of services, and appro8 priate linkages between class-room activities and services

9 offered.

10 (k) REPORT AND MONITORING.—The Secretary will

11 submit to the Committee on Labor and Human Resources

12 in the Senate and the Committee on Energy and Com13 merce in the House of Representatives a biennial report

14 on the activities funded under this Act, consistent with

15 the ongoing monitoring activities of the Department. Such

16 reports are intended to advise the relevant Committees of

17 the availability and utilization of services, and other rel18 evant information about program activities.

19 Subpart B—Capital Costs of Developing Projects

20 SEC. 3691. FUNDING.

21 Amounts available to the Secretary under section

22 3412 for the purpose of carrying out subparts B and C

23 of part 2 of subtitle E are, in addition to such purpose,

24 available to the Secretary for the purpose of carrying out

25 this subpart.
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1 Subtitle H—Public Health Service

2 Initiative

3 SEC. 3695. PUBLIC HEALTH SERVICE INITIATIVE.

4 (a) IN GENERAL.—Subject to subsection (c), the Sec5 retary of Health and Human Services shall pay, from

6 funds in the Treasury not otherwise appropriated, individ7 uals and entities that are eligible to receive assistance pur8 suant to the provisions referred to in paragraphs (1)

9 through (13) of subsection (b), to the extent of the

10 amounts specified under subsection (b).

11 (b) AMOUNTS SPECIFIED.—The amounts specified in

12 subsection (a) with respect to a fiscal year shall be—

13 (1) with respect to the health services research

14 activities authorized under the amendments made by

15 section 3202, $150,000,000 for fiscal year 1995,

16 $400,000,000 for fiscal year 1996, $500,000,000 for

17 fiscal year 1997, and $600,000,000 for each of the

18 fiscal years 1998 through 2000;

19 (2) with respect to the core functions of public

20 health programs authorized under part 2 of subtitle

21 D of title III, $150,000,000 for fiscal year 1995,

22 $225,000,000 for fiscal year 1996, $325,000,000 for

23 fiscal year 1997, $425,000,000 for fiscal year 1998,

24 $500,000,000 for fiscal year 1999, and

25 $625,000,000 for fiscal year 2000;
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1 (3) with respect to the national initiatives re2 garding health promotion and disease prevention

3 under part 3 of subtitle D of title III, $125,000,000

4 for each of the fiscal years 1996 through 1998, and

5 $150,000,000 for each of the fiscal years 1999 and

6 2000;

7 (4) with respect to occupational injury and ill8 ness prevention under section 3903, $150,000,000

9 for each of the fiscal years 1995 through 2000;

10 (5) with respect to activities for the develop11 ment of plans and networks under subpart B of part

12 2 of subtitle E of title III—

13 (A) $52,500,000 for fiscal year 1995,

14 $122,500,000 for fiscal year 1996,

15 $192,500,000 for fiscal year 1997,

16 $157,500,000 for fiscal year 1998,

17 $122,500,000 for fiscal year 1999, and

18 $52,500,000 for fiscal year 2000; and

19 (B) with respect to awards to federally

20 qualified health centers (as defined in section

21 1861(aa)(4) of the Social Security Act) under

22 such subpart, $97,500,000 for fiscal year 1995,

23 $227,500,000 for fiscal year 1996,

24 $357,500,000 for fiscal year 1997,

25 $292,500,000 for fiscal year 1998,
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1 $227,500,000 for fiscal year 1999, and

2 $97,500,000 for fiscal year 2000;

3 (6) with respect to capital costs under subpart

4 C of part 2 of subtitle E of title III, $50,000,000

5 for each of the fiscal years 1995 through 2000;

6 (7) with respect to enabling services under sub7 part D of part 2 of subtitle E of title III—

8 (A) $35,000,000 for fiscal year 1996,

9 $140,000,000 for each of the fiscal years 1997

10 through 1999, and $175,000,000 for fiscal year

11 2000; and

12 (B) with respect to awards to federally

13 qualified health centers (as defined in section

14 1861(aa)(4) of the Social Security Act) under

15 such subpart, $65,000,000 for fiscal year 1996,

16 $260,000,000 for each of the fiscal years 1997

17 through 1999, and $325,000,000 for fiscal year

18 2000;

19 (8) with respect to supplemental services under

20 subpart D of part 1 of subtitle E of title III,

21 $100,000,000 for fiscal year 1995, $150,000,000 for

22 fiscal year 1996, and $250,000,000 for each of the

23 fiscal years 1997 through 2000;

24 (9) with respect to the National Health Service

25 Corps program referred to under section 3471,
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1 $150,000,000 for each of the fiscal years 1996 and

2 1997, and $250,000,000 for each of the fiscal years

3 1998 through 2000;

4 (10) with respect to school-related health serv5 ice programs under subpart A of part 5 of subtitle

6 G of title III, $100,000,000 for fiscal year 1995,

7 $200,000,000 for fiscal year 1996, $325,000,000 for

8 fiscal year 1997, and $450,000,000 for fiscal year

9 1998, $575,000,000 for fiscal year 1999, and

10 $700,000,000 for fiscal year 2000;

11 (11) with respect to the development and oper12 ation of comprehensive managed mental health and

13 substance abuse programs under section 3534,

14 $100,000,000 for each of the fiscal years 1995

15 through 2000;

16 (12) with respect to programs of the Secretary

17 of Health and Human Services under section 3081,

18 $100,000,000 for each of the fiscal years 1995 and

19 1996, and $150,000,000 for each of the fiscal years

20 1997 through 2000; and

21 (13) with respect to programs of the Secretary

22 of Labor under section 3082, $200,000,000 for each

23 of the fiscal years 1995 through 2000.

24 (c) AUTHORITY TO TRANSFER FUNDS.—The Com25 mittee on Appropriations of the House of Representatives
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1 and the Committee on Appropriations of the Senate, act2 ing through appropriations Acts, may transfer the

3 amounts specified under subsection (b) in each fiscal year

4 among the programs referred to in such subsection.

5 Subtitle I—Additional Provisions

6 Regarding Public Health

7 SEC. 3901. CURRICULUM DEVELOPMENT AND IMPLEMEN8 TATION REGARDING DOMESTIC VIOLENCE

9 AND WOMEN’S HEALTH.

10 (a) IN GENERAL.—The Secretary shall make grants

11 to eligible entities for the purpose of implementing and

12 developing for trainees a curriculum that includes training

13 in identification, treatment and referral of victims of do14 mestic violence and women’s health needs.

15 (b) ELIGIBLE ENTITIES.—For purposes of sub16 section (a), eligible entities are any school of medicine,

17 school of osteopathic medicine, school of public health,

18 graduate program in mental health practice, school of

19 nursing as defined in section 853 of the Public Health

20 Service Act, a program to train physician assistants, a

21 program for training allied health professionals, and a

22 program for training of family medicine physicians, gen23 eral internists, general pediatricians, geriatricians, and ob24 stetrician/gynecologists.
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1 (c) CURRICULUM.—A curriculum developed under

2 this section shall include—

3 (1) identification of victims of domestic violence

4 and maintaining complete medical records that in5 clude documentation of the examination, treatment

6 provided, and referral made and recording the loca7 tion and nature of the victim’s injuries;

8 (2) examining and treating such victims within

9 the scope of the health professional’s discipline,

10 training, and practice, including at a minimum pro11 viding medical advice regarding the dynamics and

12 nature of domestic violence;

13 (3) referring the victims to public and nonprofit

14 entities that provide support services for such vic15 tims;

16 (4) training in the identification and diagnosis

17 of diseases afflicting women and other medical dis18 orders as they affect women;

19 (5) training in the treatment of such diseases

20 and disorders with emphasis on the unique needs of

21 women; and

22 (6) research into the causes of such diseases

23 and disorders, including determination of appro24 priate means of prevention.
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1 (d) ALLOCATION OF APPROPRIATIONS.—Of the

2 amounts made available under section 3301(b) for a fiscal

3 year, the Secretary shall reserve not to exceed

4 $20,000,000 for a fiscal year for carrying out this section.

5 Subtitle J—Occupational Safety

6 and Health

7 SEC. 3903. OCCUPATIONAL INJURY AND ILLNESS PREVEN8 TION.

9 (a) IN GENERAL.—The Secretary of Health and

10 Human Services and the Secretary of Labor shall work

11 together to develop and implement a comprehensive pro12 gram to expand and coordinate initiatives to prevent occu13 pational injuries and illnesses.

14 (b) SECRETARY OF LABOR.—The Secretary of Labor

15 after consultation with the Secretary of Health and

16 Human Services shall directly or by grants or contracts—

17 (1) provide for training and education programs

18 for employees and employers in the recognition and

19 control of workplace hazards and methods and meas20 ures to prevent occupational injuries and illnesses;

21 (2) develop model educational materials for

22 training and educating employees and employers on

23 the recognition and control of workplace hazards, in24 cluding a core curriculum for general safety and
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1 health training and materials related to specific safe2 ty and health hazards; and

3 (3) provide programs and services for technical

4 assistance to employers and employees on the rec5 ognition and control of workplace safety and health

6 hazards including programs for onsite consultation.

7 Technical assistance and consultative services under para8 graph (3) shall be provided in a manner that is separate

9 from the enforcement programs conducted by the Sec10 retary of Labor.

11 (c) SECRETARY OF HEALTH AND HUMAN SERV12 ICES.—The Secretary of Health and Human Services after

13 consultation with the Secretary of Labor shall directly or

14 by grants or contracts—

15 (1) provide education programs for training oc16 cupational safety and health professionals including

17 professionals in the fields of occupational medicine,

18 occupational health nursing, industrial hygiene, safe19 ty engineering, toxicology and epidemiology;

20 (2) provide education programs for other health

21 professionals and health care providers and the pub22 lic to improve the recognition, treatment and preven23 tion of occupationally related injuries and illnesses;

24 (3) conduct surveillance programs to identify

25 patterns and to determine the prevalence of occupa-
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1 tional illnesses, injuries and deaths related to expo2 sure to particular safety and health hazards;

3 (4) conduct investigations and evaluations to

4 determine if workplace exposures to toxic chemicals,

5 harmful physical agents or potentially hazardous

6 conditions pose a risk to exposed employees; and

7 (5) conduct research, demonstrations and ex8 periments relating to occupational safety and health

9 to identify the causes of and major factors contribut10 ing to occupational illnesses and injuries.

11 (d) NATIONAL ADVISORY BOARD.—

12 (1) ESTABLISHMENT.—There is established a

13 National Advisory Board for Occupational Injury

14 and Illness Prevention to provide oversight, advice

15 and direction on the occupational injury and illness

16 prevention programs and initiatives conducted by the

17 Secretary of Labor and Secretary of Health and

18 Human Services.

19 (2) COMPOSITION.—The Board shall be com20 posed of 10 members appointed by the Secretary of

21 Labor, 5 of whom are to be designated by the Sec22 retary of Health and Human Services. Such mem23 bers shall be composed of representatives of employ24 ers, employees, and occupational safety and health

25 professionals.
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1 (e) DIRECTOR OF NIOSH.—The responsibilities of

2 the Secretary of Health and Human Services established

3 under this section shall be carried out by the Director of

4 the National Institute for Occupational Safety and Health.

5 (f) AUTHORIZATION OF APPROPRIATIONS.—For the

6 purposes of carrying out this section there are authorized

7 to be appropriated $150,000,000 for each of the fiscal

8 years 1995 through 2000

9 Subtitle K—Full Funding for WIC

10 SEC. 3905. FULL FUNDING FOR WIC.

11 Section 17 of the Child Nutrition Act of 1966 (42

12 U.S.C. 1786) is amended—

13 (1) in the second sentence of subsection (a)—

14 (A) by striking ‘‘authorized’’ and inserting

15 ‘‘established’’; and

16 (B) by striking ‘‘, up to the authorization

17 levels set forth in subsection (g) of this sec18 tion,’’ and inserting ‘‘, up to the levels made

19 available under this section,’’;

20 (2) in subsection (c)—

21 (A) in the first sentence of paragraph (1),

22 by striking ‘‘may’’ and inserting ‘‘shall’’;

23 (B) in paragraph (2), by striking ‘‘appro24 priated’’ and inserting ‘‘made available’’;

25 (3) in subsection (g)—
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1 (A) by striking paragraph (1) and insert2 ing the following new paragraph:

3 ‘‘(1)(A) There are authorized to be—

4 ‘‘(i) appropriated to carry out this section such

5 amounts as are necessary for each of fiscal years

6 1995 through 2000; and

7 ‘‘(ii) made available such amounts as are nec8 essary for the Secretary of the Treasury to fulfill the

9 requirements of subparagraph (B).

10 ‘‘(B)(i) Out of any money in the Treasury not other11 wise appropriated, the Secretary of the Treasury shall pro12 vide to the Secretary of Agriculture, on January 1 of each

13 fiscal year, to carry out this subsection—

14 ‘‘(I) $254,000,000 for fiscal year 1996;

15 ‘‘(II) $407,000,000 for fiscal year 1997;

16 ‘‘(III) $384,000,000 for fiscal year 1998;

17 ‘‘(IV) $398,000,000 for fiscal year 1999; and

18 ‘‘(V) $411,000,000 for fiscal year 2000.

19 ‘‘(ii) The Secretary of Agriculture shall be entitled

20 to receive the funds and shall accept the funds.

21 ‘‘(C) In lieu of obligating the funds made available

22 under subparagraph (B) to carry out this subsection, if

23 the amount appropriated (in addition to the amount ap24 propriated under subparagraph (B)(i)) to carry out this

25 subsection for—
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1 ‘‘(i) fiscal year 1996 is less than

2 $3,660,000,000, the amount referred to in subpara3 graph (B)(i)(I) shall be obligated by the Secretary,

4 during the period beginning December 31, 1995,

5 and ending June 30, 1996, to increase the special

6 assistance factor prescribed under section 11(a) of

7 the National School Lunch Act (42 U.S.C.

8 1759a(a)) for free lunches served under the school

9 lunch program (as established under section 4 of

10 such Act (42 U.S.C. 1753));

11 ‘‘(ii) fiscal year 1997 is less than

12 $3,759,000,000, the amount referred to in subpara13 graph (B)(i)(II) shall be obligated by the Secretary,

14 during the period beginning December 31, 1996,

15 and ending June 30, 1997, to increase the special

16 assistance factor prescribed under section 11(a) of

17 such Act for free lunches served under the school

18 lunch program (as established under section 4 of

19 such Act);

20 ‘‘(iii) fiscal year 1998 is less than

21 $3,861,000,000, the amount referred to in subpara22 graph (B)(i)(III) shall be obligated by the Secretary,

23 during the period beginning December 31, 1997,

24 and ending June 30, 1998, to increase the special

25 assistance factor prescribed under section 11(a) of
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1 such Act for free lunches served under the school

2 lunch program (as established under section 4 of

3 such Act);

4 ‘‘(iv) fiscal year 1999 is less than

5 $3,996,000,000, the amount referred to in subpara6 graph (B)(i)(IV) shall be obligated by the Secretary,

7 during the period beginning December 31, 1998,

8 and ending June 30, 1999, to increase the special

9 assistance factor prescribed under section 11(a) of

10 such Act for free lunches served under the school

11 lunch program (as established under section 4 of

12 such Act); and

13 ‘‘(v) fiscal year 2000 is less than

14 $4,136,000,000, the amount referred to in subpara15 graph (B)(i)(V) shall be obligated by the Secretary,

16 during the period beginning December 31, 1999,

17 and ending June 30, 2000, to increase the special

18 assistance factor prescribed under section 11(a) of

19 such Act for free lunches served under the school

20 lunch program (as established under section 4 of

21 such Act).

22 ‘‘(D) Any increase in the special assistance factor

23 prescribed under section 11(a) of such Act as a result of

24 subparagraph (C) shall not affect any annual adjustment

25 in the factor under section 11(a)(3) of such Act.’’;
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•S 2296 PCS

1 (B) in the first sentence of paragraph (4),

2 by striking ‘‘appropriated’’ and inserting ‘‘made

3 available’’; and

4 (C) in paragraph (5), by striking ‘‘appro5 priated’’ and inserting ‘‘made available’’;

6 (4) in subsection (h)—

7 (A) in paragraph (1)—

8 (i) in subparagraph (A), by striking

9 ‘‘appropriated’’ both places it appears and

10 inserting ‘‘made available’’; and

11 (ii) in subparagraph (C), by striking

12 ‘‘appropriated’’ both places it appears and

13 inserting ‘‘made available’’; and

14 (B) in the first sentence of paragraph

15 (2)(A), by striking ‘‘1990, 1991, 1992, 1993

16 and 1994’’ and inserting ‘‘1990 through 2000’’;

17 and

18 (5) in subsection (l), by striking ‘‘funds appro19 priated’’ and inserting ‘‘funds made available’’.

20 Subtitle L—Border Health

21 Improvement

22 SEC. 3908. BORDER HEALTH COMMISSION.

23 (a) ESTABLISHMENT.—The President is authorized

24 and encouraged to conclude an agreement with Mexico to
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1 establish a binational commission to be known as the Unit2 ed States-Mexico Border Health Commission.

3 (b) DUTIES.—It should be the duty of the Commis4 sion—

5 (1) to conduct a comprehensive needs assess6 ment in the United States-Mexico Border Area for

7 the purposes of identifying, evaluating, preventing,

8 and resolving health problems and potential health

9 problems that affect the general population of the

10 area;

11 (2) to develop and implement a comprehensive

12 plan for carrying out the actions recommended by

13 the needs assessment through—

14 (A) assisting in the coordination of public

15 and private efforts to prevent potential health

16 problems and resolve existing health problems;

17 (B) assisting in the coordination of public

18 and private efforts to educate the population, in

19 a culturally competent manner, concerning such

20 potential and existing health problems; and

21 (C) developing and implementing culturally

22 competent programs to prevent and resolve

23 such health problems and to educate the popu24 lation, in a culturally competent manner, con25 cerning such health problems where a new pro-
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1 gram is necessary to meet a need that is not

2 being met through other public or private ef3 forts; and

4 (3) to formulate recommendations to the Gov5 ernments of the United States and Mexico concern6 ing a fair and reasonable method by which the gov7 ernment of one country could reimburse a public or

8 private person in the other country for the cost of

9 a health care service that such person furnishes to

10 a citizen or resident alien of the first country who

11 is unable, through insurance or otherwise, to pay for

12 the service.

13 (c) OTHER AUTHORIZED FUNCTIONS.—In addition

14 to the duties described in subsection (b), the Commission

15 should be authorized to perform the following functions

16 as the Commission determines to be appropriate—

17 (1) to conduct or support investigations, re18 search, or studies designed to identify, study, and

19 monitor, on an on-going basis, health problems that

20 affect the general population in the United States21 Mexico Border Area;

22 (2) to conduct or support a binational, public23 private effort to establish a comprehensive and co24 ordinated system, which uses advanced technologies

25 to the maximum extent possible, for gathering
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1 health-related data and monitoring health problems

2 in the United States-Mexico Border Area; and

3 (3) to provide financial, technical, or adminis4 trative assistance to public or private persons who

5 act to prevent or resolve such problems or who edu6 cate the population concerning such health problems.

7 (d) MEMBERSHIP.—

8 (1) NUMBER AND APPOINTMENT OF UNITED

9 STATES SECTION.—The United States section of the

10 Commission should be composed of 13 members.

11 The section should consist of the following members:

12 (A) The Secretary of Health and Human

13 Services or the Secretary’s delegate.

14 (B) The commissioners of health or chief

15 health officer from the States of Texas, New

16 Mexico, Arizona, and California or such com17 missioners’ delegates.

18 (C) Two individuals residing in United

19 States-Mexico Border Area in each of the

20 States of Texas, New Mexico, Arizona, and

21 California who are nominated by the chief exec22 utive officer of the respective States and ap23 pointed by the President from among individ24 uals—
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1 (i) who have a demonstrated interest

2 or expertise in health issues of the United

3 States-Mexico Border Area; and

4 (ii) whose name appears on a list of

5 6 nominees submitted to the President by

6 the chief executive officer of the State

7 where the nominee resides.

8 (2) COMMISSIONER.—The Commissioner of the

9 United States section of the Commission should be

10 the Secretary of Health and Human Services or

11 such individual’s delegate to the Commission. The

12 Commissioner should be the leader of the section.

13 (3) COMPENSATION.—Members of the United

14 States section of the Commission who are not em15 ployees of the United States—

16 (A) shall each receive compensation at a

17 rate of not to exceed the daily equivalent of the

18 annual rate of basic pay payable for positions

19 at GS–15 of the General Schedule under sec20 tion 5332 of title 5, United States Code, for

21 each day such member is engaged in the actual

22 performance of the duties of the Commission;

23 and

24 (B) shall be allowed travel expenses, in25 cluding per diem in lieu of subsistence at rates
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1 authorized for employees of agencies under sub2 chapter I of chapter 57 of title 5, United States

3 Code, while away from their homes or regular

4 places of business in the performance of serv5 ices of the Commission.

6 (e) REGIONAL OFFICES.—The Commission should

7 designate or establish one border health office in each of

8 the States of Texas, New Mexico, Arizona, and California.

9 Such office should be located within the United States10 Mexico Border Area, and should be coordinated with—

11 (1) State border health offices; and

12 (2) local nonprofit organizations designated by

13 the State’s governor and directly involved in border

14 health issues.

15 If feasible to avoid duplicative efforts, the Commission of16 fices should be located in existing State or local nonprofit

17 offices. The Commission should provide adequate com18 pensation for cooperative efforts and resources.

19 (f) REPORTS.—Not later than February 1 of each

20 year that occurs more than 1 year after the date of the

21 establishment of the Commission, the Commission should

22 submit an annual report to both the United States Gov23 ernment and the Government of Mexico regarding all ac24 tivities of the Commission during the preceding calendar

25 year.
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1 (g) DEFINITIONS.—As used in this section:

2 (1) COMMISSION.—The term ‘‘Commission’’

3 means the United States-Mexico Border Health

4 Commission.

5 (2) HEALTH PROBLEM.—The term ‘‘health

6 problem’’ means a disease or medical ailment or an

7 environmental condition that poses the risk of dis8 ease or medical ailment. Such term includes dis9 eases, ailments, or risks of disease or ailment caused

10 by or related to environmental factors, control of

11 animals and rabies, control of insect and rodent vec12 tors, disposal of solid and hazardous waste, and con13 trol and monitoring of air quality.

14 (3) RESIDENT ALIEN.—The term ‘‘resident

15 alien’’, when used in reference to a country, means

16 an alien lawfully admitted for permanent residence

17 to the United States or otherwise permanently resid18 ing in the United States under color of law (includ19 ing residence as an asylee, refugee, or parolee).

20 (4) SECRETARY.—The term ‘‘Secretary’’ means

21 the Secretary of Health and Human Services.

22 (5) UNITED STATES-MEXICO BORDER AREA.—

23 The term ‘‘United States-Mexico Border Area’’

24 means the area located in the United States and
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1 Mexico within 100 kilometers of the border between

2 the United States and Mexico.

3 TITLE V—QUALITY AND

4 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

PART 1—NATIONAL HEALTH CARE DATA NETWORK

SUBPART A—PURPOSE AND DEFINITIONS

Sec. 5101. Purpose.

Sec. 5102. Definitions.

SUBPART 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. 5106. Preemption of State ‘‘quill pen’’ laws.

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. 5111. Ensuring availability of data.

SUBPART D—STANDARDS FOR TRANSACTIONS, DATA ELEMENTS, AND INDEX

MARKERS.

Sec. 5112. General requirements on board.
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Sec. 5113. Financial and administrative transactions.

Sec. 5114. Elements of health care data.

Sec. 5115. Index markers.

Sec. 5116. Timetables for establishment.

SUBPART 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 establishment and compliance.

SUBPART F—PENALTIES

Sec. 5124. General penalty for failure to comply with requirements and standards.

Sec. 5125. Penalties relating to accessing data.

SUBPART 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. Authorization of appropriations.

SUBPART H—ASSISTANCE TO THE BOARD

Sec. 5132. General requirement on Board.

Sec. 5133. Health care data advisory panel.

SUBPART I—DEMONSTRATION PROJECTS FOR COMMUNITY-BASED CLINICAL

INFORMATION SYSTEMS

Sec. 5135. Grants for demonstration projects.

SUBPART J—HEALTH SECURITY CARDS

Sec. 5136. Health security cards.

PART 2—PRIVACY OF INFORMATION

SUBPART A—SHORT TITLE; FINDINGS AND PURPOSES

Sec. 5160. Short title.

Sec. 5161. Findings and purposes.

SUBPART B—JUDICIAL PROCEEDINGS

Sec. 5162. Privacy of personally identifiable health care information.

SUBPART C—LIMITATION ON DISCLOSURE OF PROTECTED HEALTH

INFORMATION

Sec. 5163. Definitions.

Sec. 5164. General limitations on disclosure.
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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 BENEFIT DETERMINATIONS FOR ENROLLED

INDIVIDUALS

SUBPART A—GENERAL RULES

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 money penalties.

SUBPART 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.
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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.

1 Subtitle E—Expanded Efforts To

2 Combat Health Care Fraud and

3 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
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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.

1 Subtitle F—Repeal of Exemption

Sec. 5501. Repeal of exemption for health insurance.

2 Subtitle A—Quality Management

3 and Improvement

4 SEC. 5001. NATIONAL QUALITY COUNCIL.

5 (a) ESTABLISHMENT.—Not later than 1 year after

6 the date of enactment of this Act, the National Health

7 Board shall establish a council to be known as the Na8 tional Quality Council to oversee a performance based pro9 gram of quality management and improvement designed

10 to enhance the quality, appropriateness, and effectiveness

11 of health care services and access to such services.

12 (b) APPOINTMENT.—The National Quality Council

13 shall consist of 15 members appointed by the President,

14 with the advice and consent of the Senate, who are broadly

15 representative of the population of the United States and

16 shall include—
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1 (1) individuals and health care providers distin2 guished in the fields of medicine, public health,

3 health care quality, and related fields of health serv4 ices research. Such members shall constitute at least

5 one-third of the Council’s membership;

6 (2) individuals representing consumers of health

7 care services. Such members shall constitute at least

8 one-third of the Council’s membership; and

9 (3) other individuals representing purchasers of

10 health care; health plans; States; and nationally rec11 ognized health care accreditation organizations.

12 (c) DUTIES.—The National Quality Council shall:

13 (1) develop national goals and performance

14 measures of quality;

15 (2) develop uniform quality goals and perform16 ance measures for plans;

17 (3) design and oversee national surveys of plans

18 and consumers;

19 (4) design and oversee the production of

20 Consumer Report Cards;

21 (5) establish and oversee State-based Quality

22 Improvement Foundations; and

23 (6) evaluate the impact of the implementation

24 of this Act on the quality of health care services in
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1 the United States and the access of consumers to

2 such services.

3 (d) CONSULTATION.—In carrying out these duties,

4 the National Quality Council shall establish a process of

5 consultation with appropriate interested parties.

6 (e) TERMS.—

7 (1) IN GENERAL.—Except as provided in para8 graph (2), members of the Council shall serve for a

9 term of 4 years.

10 (2) STAGGERED ROTATION.—Of the members

11 first appointed to the Council under subsection (b),

12 the President shall appoint members to serve for a

13 term of between 1 and 4 years so that no more than

14 one third of the Council seats are vacated each year.

15 (3) SERVICE BEYOND TERM.—A member of the

16 Council may continue to serve after the expiration of

17 the term of the member until a successor is ap18 pointed.

19 (f) VACANCIES.—If a member of the Council does not

20 serve the full term applicable under subsection (e), the in21 dividual appointed to fill the resulting vacancy shall be ap22 pointed for the remainder of the term of the predecessor

23 of the individual.

24 (g) CHAIR.—The President shall designate an indi25 vidual to serve as the chair of the Council.
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1 (h) MEETINGS.—The Council shall meet not less than

2 once during each 4-month period and shall otherwise meet

3 at the call of the President or the chair.

4 (i) COMPENSATION AND REIMBURSEMENT OF EX5 PENSES.—Members of the Council shall receive compensa6 tion for each day (including travel time) engaged in carry7 ing out the duties of the Council. Such compensation may

8 not be in an amount in excess of the maximum rate of

9 basic pay payable for level IV of the Executive Schedule

10 under section 5315 of title 5, United States Code.

11 (j) CONFLICTS OF INTEREST.—Members of the

12 Council shall disclose upon appointment to the Council or

13 at any subsequent time that it may occur, conflicts of in14 terest.

15 (k) STAFF.—The National Health Board shall pro16 vide to the Council such staff, information, and other as17 sistance as may be necessary to carry out the duties of

18 the Council.

19 (l) HEALTH CARE PROVIDER.—For purposes of this

20 subtitle, the term ‘‘health care provider’’ means an individ21 ual who, or entity that, provides an item or service to an

22 individual that is covered under the health plan (as de23 fined in section 1500) in which the individual is enrolled.
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1 SEC. 5002. NATIONAL GOALS AND PERFORMANCE MEAS2 URES OF QUALITY.

3 (a) IN GENERAL.—The National Quality Council

4 shall develop a set of national goals and performance

5 measures of quality for both the general population and

6 for population subgroups defined by demographic charac7 teristics and health status. The goals and measures shall

8 incorporate standards identified by the Secretary of

9 Health and Human Services for meeting public health ob10 jectives utilizing, but not limited to, goals delineated in

11 Healthy People 2000.

12 (b) SUBJECT OF MEASURES.—National measures of

13 quality performance shall be selected in a manner that

14 provides statistical and other information on at least the

15 following subjects:

16 (1) Outcomes of health care services and proce17 dures.

18 (2) Health promotion.

19 (3) Prevention of diseases, disorders, and other

20 health conditions.

21 (4) Access to care and appropriateness of care.

22 SEC. 5003. STANDARDS AND PERFORMANCE MEASURES

23 FOR HEALTH PLANS.

24 (a) IN GENERAL.—The National Quality Council

25 shall establish national standards and performance meas26 ures for health plans, which may be used to assess the
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1 provision of health care services and access to such serv2 ices, both for the general population and population

3 subgroups defined by demographic characteristics and

4 health status. In subject matter areas with which the Na5 tional Quality Council determines that sufficient informa6 tion and consensus exist, the Council shall establish goals

7 for performance by health plans consistent with the na8 tional goals and performance measures established under

9 section 5002. These quality measures shall relate to, at

10 a minimum:

11 (1) Access to health care services by consumers,

12 including provider to patient ratios, waiting times

13 for appointments, travel distances, and community

14 involvement and outreach.

15 (2) Appropriateness of health care services, in16 cluding failure to provide appropriate services and

17 continuity of care.

18 (3) Consumer satisfaction with care and compli19 ance with members rights, including dissenrollment,

20 referral, patterns of claims denials and out-of-net21 work utilization patterns.

22 (4) Quality improvement and accountability, in23 cluding showing that the plan can continuously mon24 itor and improve the quality of health care provided.

25 (5) Provider credentialing and competency.
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1 (6) Management of clinical, and administrative

2 and financial information.

3 (7) Utilization management including criteria

4 for monitoring underutilization, techniques and pro5 vider feedback to minimize interference with the pro6 vider-patient relationship, and supervision of utiliza7 tion determinations by qualified medical profes8 sionals.

9 (b) CERTIFICATION OF PLANS.—The National Qual10 ity Council shall provide information and technical assist11 ance to the Board and the States on the use of national

12 standards and performance measures in this section for

13 State certification of health plans.

14 SEC. 5004. PLAN DATA ANALYSIS AND CONSUMER SURVEYS.

15 (a) IN GENERAL.—The National Quality Council

16 shall conduct (either directly or through contract) periodic

17 surveys of health care consumers and plans to gather in18 formation concerning the quality measures established in

19 sections 5002 and 5003. The surveys shall monitor

20 consumer reaction to the implementation of this Act and,

21 in coordination with relevant data from health plans and

22 other sources, be designed to assess the impact of this Act

23 both for the general population of the United States and

24 for populations vulnerable to discrimination or to receiving
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1 inadequate care due to health status, demographic charac2 teristics, or geographic location.

3 (b) SURVEY ADMINISTRATION AND DATA ANALY4 SIS.—The National Quality Council shall approve a stand5 ard design for the consumer surveys and sampling of rel6 evant plan data which shall be administered by the Admin7 istrator for Health Care Policy and Research or such other

8 appropriate entity the Council shall designate on a plan9 by-plan and State-by-State basis. Sufficient consumer sur10 vey and plan data shall be collected and verified to provide

11 for reliable and valid analysis. A State may add survey

12 questions on quality measures of local interest to surveys

13 conducted in the State. The plan-level survey shall include

14 a subset of consumer survey responses related to consumer

15 satisfaction, perceived health status, access, and such

16 other survey items designated by the Council.

17 (c) SAMPLING STRATEGIES.—The National Quality

18 Council shall approve sampling strategies that ensure that

19 appropriate survey samples adequately measure popu20 lations that are considered to be at risk of receiving inad21 equate health care or may be difficult to reach through

22 consumer-sampling methods, including individuals who—

23 (1) fail to enroll in a health plan;

24 (2) resign from a plan; or
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1 (3) are vulnerable to discrimination or to receiv2 ing inadequate care due to health status, demo3 graphic characteristics, or geographic location.

4 (d) SURVEY INTEGRATION.—To the extent feasible,

5 the consumer and plan surveys shall be integrated with

6 existing Federal surveys.

7 SEC. 5005. EVALUATION AND REPORTING OF QUALITY PER8 FORMANCE.

9 (a) PERFORMANCE REPORTS.—

10 (1) HEALTH PLAN REPORTS.—Each State an11 nually shall publish and make available to the public

12 a performance report in a standard format, des13 ignated by the National Quality Council, outlining

14 the performance of each health plan offered in the

15 State, on the set of national measures of quality per16 formance in section 5002 and 5003. The report shall

17 include the results of a smaller number of such

18 measures for health care providers if the available

19 information is statistically meaningful. The report

20 shall also include the results of consumer surveys de21 scribed in section 5004 that were conducted in the

22 State during the year that is the subject of the re23 port and be based on the data collected and analyzed

24 in section 5004.
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1 (2) CONSUMER REPORT CARDS.—The health

2 plan reports shall be summarized in a consumer re3 port card as specified by the National Quality Coun4 cil and made available by the State to all individuals

5 in the State.

6 (3) QUALITY REPORTS.—The National Quality

7 Council annually shall provide recommendations to

8 the Congress, the National Health Board, and the

9 Secretary a summary report that—

10 (A) outlines in a standard format the per11 formance of each State;

12 (B) discusses State-level and national

13 trends relating to health care quality; and

14 (C) presents data for each State from

15 health plan reports and consumer surveys that

16 were conducted during the year that is the sub17 ject of the report.

18 (4) STATE REPORTS.—The National Quality

19 Council annually shall provide to each State a sum20 mary report that—

21 (A) outlines in a standard format the per22 formance of each health plan;

23 (B) discusses State-level and national

24 trends relating to health care quality; and
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1 (C) presents data for each health plan

2 from health plan reports and consumer surveys

3 that were conducted during the year that is the

4 subject of the report.

5 (b) PUBLIC AVAILABILITY OF INFORMATION IN NA6 TIONAL PRACTITIONER DATA BANK ON DEFENDANTS,

7 AWARDS, AND SETTLEMENTS.—

8 (1) IN GENERAL.—Section 427(a) of the Health

9 Care Quality Improvement Act (42 U.S.C. 11137

10 (a)) is amended by adding at the end the following

11 new sentence: ‘‘Not later than January 1, 1996, the

12 Secretary shall promulgate regulations under which

13 individuals seeking to enroll in health plans under

14 the Health Security Act shall be able to obtain infor15 mation reported under this part with respect to phy16 sicians and other licensed health practitioners par17 ticipating in such plans for whom information has

18 been reported under this part on repeated occa19 sions.’’.

20 (2) ACCESS TO DATA BANK FOR POINT-OF21 SERVICE CONTRACTORS UNDER MEDICARE.—Section

22 427(a) of such Act (42 U.S.C. 11137(a)) is amend23 ed—
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1 (A) by inserting ‘‘to sponsors of point-of2 service networks under section 1990 of the So3 cial Security Act,’’, and

4 (B) in the heading, by inserting ‘‘RELAT5 ED’’ after ‘‘CARE’’.

6 SEC. 5006. DEVELOPMENT AND DISSEMINATION OF PRAC7 TICE GUIDELINES.

8 (a) DEVELOPMENT OF GUIDELINES.—The National

9 Quality Council may advise the Secretary and the Admin10 istrator for Health Care Policy and Research on priorities

11 for the development and periodic review and updating of

12 clinically relevant guidelines established under section 912

13 of the Public Health Service Act.

14 (b) HEALTH SERVICE UTILIZATION PROTOCOLS.—

15 The National Quality Council shall establish standards

16 and procedures for evaluating the clinical appropriateness

17 of protocols used to manage health service utilization.

18 SEC. 5007. RESEARCH ON HEALTH CARE QUALITY.

19 The National Quality Council may make rec20 ommendations to the Secretary and the Administrator for

21 Agency for Health Care Policy and Research concerning

22 priorities for research with respect to the quality, appro23 priateness, and effectiveness of health care.
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1 SEC. 5008. QUALITY IMPROVEMENT FOUNDATIONS.

2 (a) ESTABLISHMENT.—The National Quality Council

3 shall oversee the operation of quality improvement founda4 tions to perform the duties specified in subsection (c).

5 (b) STRUCTURE AND MEMBERSHIP.—

6 (1) GRANT PROCESS.—The Secretary, in con7 sultation with the States and the Council, shall se8 lect a number of regional foundations through a

9 competitive grantmaking process. The Secretary

10 shall allow for foundations to serve only one State

11 if the State so requests.

12 (2) ELIGIBLE APPLICANTS.—Eligible applicants

13 shall meet the following conditions:

14 (A) The entity shall be a not-for-profit en15 tity.

16 (B) The entity shall have a board which

17 includes—

18 (i) representatives of health care pro19 viders from throughout the State, includ20 ing both practicing providers and experts

21 in the field of quality measurement and

22 improvement, which together shall com23 prise at least one-fourth of the advisory

24 board’s membership;

25 (ii) at least one representative of Aca26 demic Health Centers or schools defined in
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1 section 799 of the Public Health Service

2 Act, which shall comprise up to one-fourth

3 of the membership;

4 (iii) representatives of consumers, who

5 shall comprise one-fourth of the member6 ship; and

7 (iv) representatives of purchasers of

8 health care, health plans, the State, and

9 other interested parties.

10 (C) STAFFING.—Each entity shall have

11 sufficient, competent staff of experts possessing

12 the skills and knowledge necessary to enable the

13 foundation perform its duties.

14 (c) DUTIES.—

15 (1) IN GENERAL.—Each quality improvement

16 foundation shall carry out the duties described in

17 paragraph (2) for the region in which the foundation

18 is located. The foundation shall establish a program

19 of activities incorporating such duties and shall be

20 able to demonstrate the involvement of a broad

21 cross-section of the providers and health care insti22 tutions throughout the region. A foundation may

23 apply for and conduct research described in section

24 5007.
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1 (2) DUTIES DESCRIBED.—The duties described

2 in this paragraph include the following:

3 (A) Collaboration with and technical assist4 ance to providers and health plans in ongoing

5 efforts to improve the quality of health care

6 provided to individuals in the State.

7 (B) Population-based monitoring of prac8 tice patterns and patient outcomes, and audit9 ing samples of such data to assure its validity.

10 (C) Developing programs in lifetime learn11 ing for health professionals to improve the qual12 ity of health care by ensuring that health pro13 fessionals remain abreast of new knowledge, ac14 quire new skills, and adopt new roles as tech15 nology and societal demands change.

16 (D) Disseminating information about suc17 cessful quality improvement programs, practice

18 guidelines, and research findings, including in19 formation on innovative staffing of health pro20 fessionals.

21 (E) Assist in developing innovative patient

22 education systems that enhance patient involve23 ment in decisions relating to their health care.

24 (F) Issuing a report to the public regard25 ing the foundation’s activities for the previous
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1 year including areas of success during the pre2 vious year and areas for opportunities in im3 proving health outcomes for the community,

4 and the adoption of guidelines.

5 (G) Providing notice to the State or appro6 priate entity if the foundation finds, after rea7 sonable opportunities for improvement, that a

8 provider or plan appears unwilling or unable to

9 successfully engage in quality improvement ac10 tivities related to the services described.

11 SEC. 5009. AUTHORIZATION OF APPROPRIATIONS.

12 For the purposes of carrying out this subtitle, there

13 are authorized to be appropriated such sums as may be

14 necessary for fiscal years 1995 through 2000.

15 SEC. 5010. ROLE OF STATES IN QUALITY ASSURANCE.

16 Each State shall—

17 (1) disseminate to consumers information relat18 ed to quality and access to aid in their selection of

19 plans in accordance with section 1206;

20 (2) disseminate information on the quality of

21 health plans and health care providers contained in

22 reports of the National Quality Council under sec23 tion 5005;
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1 (3) ensure through collaboration with the Qual2 ity Improvement Foundation that performance and

3 quality standards are continually improved; and

4 (4) ensure that educational programs are devel5 oped in cooperation with quality improvement foun6 dations to assist consumers in using quality and

7 other information in choosing health plans.

8 SEC. 5011. ROLE OF HEALTH PLANS IN QUALITY MANAGE9 MENT.

10 Each health plan shall—

11 (1) measure and disclose performance on qual12 ity measures as designated by this Act;

13 (2) furnish information required under subtitle

14 B of this title and provide such other reports and in15 formation on the quality of care delivered by health

16 care providers who are members of a provider net17 work of the plan (as defined in section 1502 (h)(3))

18 as may be required under this Act; and

19 (3) maintain quality management systems

20 that—

21 (A) use the national measures of quality

22 performance developed by the National Quality

23 Council under section 5003; and
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1 (B) measure the quality of health care fur2 nished to enrollees under the plan by all health

3 care providers of the plan.

4 SEC. 5012. INFORMATION ON HEALTH CARE PROVIDERS.

5 Each State shall make available to consumers, upon

6 request, information concerning providers of health care

7 services or supplies. Such information shall include—

8 (1) the identity of any provider that has been

9 convicted, under Federal or State law, of a criminal

10 offense relating to fraud, corruption, breach of fidu11 ciary responsibility, or other financial misconduct in

12 connection with the delivery of a health care service

13 or supply;

14 (2) the identity of any provider that has been

15 convicted, under Federal or State law, of a criminal

16 offense relating to neglect or abuse of patients in

17 connection with the delivery of a health care service

18 or supply;

19 (3) the identity of any provider that has been

20 convicted, under Federal or State law, of a criminal

21 offense relating to the unlawful manufacture, dis22 tribution, prescription, or dispensing of a controlled

23 substance; and

24 (4) the identity of any provider whose license to

25 provide health care services or supplies has been re-
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1 voked, suspended, restricted, or not renewed, by a

2 State licensing authority for reasons relating to the

3 provider’s professional competence, professional per4 formance, or financial integrity, or any provider who

5 surrendered such a license while a formal discipli6 nary proceeding was pending before such an author7 ity, if the proceeding concerned the provider’s pro8 fessional competence, professional performance, or

9 financial integrity.

10 SEC. 5013. CONFORMING AMENDMENTS TO PUBLIC

11 HEALTH SERVICE ACT.

12 Title IX of the Public Health Service Act is amend13 ed—

14 (1) in section 903(a)(4) (42 U.S.C. 299a15 1(a)(4)), by inserting ‘‘and Quality Improvement

16 Foundations’’ after ‘‘health agencies’’;

17 (2) in section 904(c)(1) (42 U.S.C. 299a18 2(c)(1)), by inserting ‘‘the National Quality Council

19 and’’ after ‘‘in consultation with’’;

20 (3) in section 912(b)(4) (42 U.S.C. 299b21 1(b)(4))—

22 (A) by inserting ‘‘outcomes,’’ before

23 ‘‘risks’’; and
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1 (B) by inserting before the semicolon ‘‘to

2 the extent feasible given the availability of unbi3 ased, reliable, and valid data’’;

4 (4) in section 914 (42 U.S.C. 299b-3)—

5 (A) in subsection (a)(2)(B)—

6 (i) by inserting ‘‘the National Quality

7 Council,’’ after ‘‘shall consult with’’; and

8 (ii) by inserting before the period

9 ‘‘and relevant sections of the Health Secu10 rity Act’’;

11 (B) in subsection (c), by inserting ‘‘Quality

12 Improvement Foundations and other’’ after

13 ‘‘carried out through’’; and

14 (C) in subsection (f)—

15 (i) by striking ‘‘TO ADMINISTRATOR’’

16 in the subsection heading;

17 (ii) by striking ‘‘Administrator’’ and

18 inserting ‘‘National Quality Council and

19 the’’; and

20 (5) in section 927 (42 U.S.C. 299c-6), by add21 ing at the end thereof the following new paragraphs:

22 ‘‘(5) The term ‘National Quality Council’ means

23 the Council established under section 5001 of the

24 Health Security Act.
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1 ‘‘(6) The term ‘‘Quality Improvement Founda2 tions’’ means the Foundations established under sec3 tion 5008 of the Health Security Act.’’.

4 Subtitle B—Information Systems,

5 Privacy, and Administrative

6 Simplification

7 PART 1—NATIONAL HEALTH CARE DATA

8 NETWORK

9 Subpart A—Purpose and Definitions

10 SEC. 5101. PURPOSE.

11 It is the purpose of this part to improve the efficiency

12 and effectiveness of the health care system by requiring

13 health plans and health care providers in the health care

14 system to—

15 (1) standardize certain health care transactions

16 and data in a manner established by the Board;

17 (2) transmit standard index markers with re18 spect to such standardized data to entities that are

19 certified by the Board; and

20 (3) make standardized data electronically avail21 able for disclosure as authorized under this subtitle.

22 SEC. 5102. DEFINITIONS.

23 For purposes of this part:

24 (1) CERTIFIED CLEARINGHOUSE.—
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1 (A) IN GENERAL.—The term ‘‘certified

2 clearinghouse’’ means a clearinghouse that is

3 certified under section 5109.

4 (B) CLEARINGHOUSE.—The term ‘‘clear5 inghouse’’ means a public or private entity that

6 has the ability to—

7 (i) process nonstandard health care

8 data into standard health care data; or

9 (ii) store standard health care data

10 and make such data available to another

11 entity.

12 (2) CERTIFIED INDEXING SYSTEM.—

13 (A) IN GENERAL.—The term ‘‘certified in14 dexing system’’ means an indexing system that

15 is certified under section 5109.

16 (B) INDEXING SYSTEM.—The term ‘‘index17 ing system’’ means a public or private entity

18 that stores standard index markers and has the

19 ability to comply with section 5108(b).

20 (3) HEALTH CARE DATA NETWORK.—The term

21 ‘‘health care data network’’ means the health care

22 information system that is formed through the appli23 cation of the requirements under this part.

24 (4) HEALTH CARE PROVIDER.—The term

25 ‘‘health care provider’’ includes a provider of services
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1 (as defined in section 1861(u) of the Social Security

2 Act), a physician, a laboratory (as defined in section

3 353(a) of the Public Health Service Act), a supplier,

4 and any other person furnishing health care.

5 (5) HEALTH INFORMATION PROTECTION ORGA6 NIZATION.—The term ‘‘health information protection

7 organization’’ means a private entity or an entity op8 erated by a State that has the capability to access

9 standard health care data through entities in the na10 tional health care data network and process such

11 data into data that is non-identifiable health infor12 mation.

13 (6) HEALTH PLAN.—The term ‘‘health plan’’

14 has the meaning given such term in section 1500

15 and includes—

16 (A) workers compensation or similar insur17 ance insofar as it relates to workers compensa18 tion medical benefits (as defined by the Board);

19 (B) automobile medical insurance insofar

20 as it relates to automobile insurance medical

21 benefits (as defined by the Board); and

22 (C) a Federal, State, or local program that

23 pays for, or provides directly for, the provision

24 of health care.
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1 (7) INDEX MARKER.—The term ‘‘index marker’’

2 means data that indicate the location of specific

3 standard health care data, the unique identifier of

4 the holder of such data, and information necessary

5 to access such data.

6 (8) NON-IDENTIFIABLE HEALTH INFORMA7 TION.—The term ‘‘non-identifiable health informa8 tion’’ means health care data that is not protected

9 health information as defined in section 5163.

10 (9) PROTECTED HEALTH INFORMATION.—The

11 term ‘‘protected health information’’ has the mean12 ing given such term in section 5163.

13 (10) STANDARD.—The term ‘‘standard’’ when

14 referring to a transaction or to data means the

15 transaction or data meets any standard established

16 by the Board under subpart D that applies to such

17 transaction or data.

18 Subpart B—Requirements on Health Care Providers

19 and Health Plans

20 SEC. 5103. REQUIREMENTS WITH RESPECT TO CERTAIN

21 TRANSACTIONS AND DATA.

22 (a) ENROLLMENT AND DISENROLLMENT DATA.—

23 With respect to each enrollment and disenrollment trans24 action, a health plan shall be responsible for ensuring the

25 transmission of a standard index marker for the standard
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1 enrollment and disenrollment data described in section

2 5114(a)(1) to a certified indexing system.

3 (b) FINANCIAL AND ADMINISTRATIVE TRANS4 ACTIONS AND DATA.—

5 (1) FINANCIAL AND ADMINISTRATIVE TRANS6 ACTIONS.—Any financial and administrative trans7 action described in section 5113 that is conducted by

8 a health care provider or a health plan shall be con9 ducted in accordance with standards established by

10 the Board under such section and the financial and

11 administrative data transmitted in connection with

12 such a financial and administrative transaction shall

13 be standard data.

14 (2) FINANCIAL AND ADMINISTRATIVE DATA.—

15 (A) IN GENERAL.—A health plan shall be

16 responsible for ensuring the transmission to a

17 certified indexing system of a standard index

18 marker for any standard financial and adminis19 trative data held by a health plan as a result

20 of a financial and administrative transaction.

21 (B) SPECIAL RULE FOR CERTAIN HEALTH

22 PLANS.—In the case of a health plan that does

23 not file claims, such plan shall be responsible

24 for ensuring the transmission to a certified in25 dexing system of a standard index marker for
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1 the financial and administrative data deter2 mined appropriate by the Board.

3 (c) QUALITY-RELATED PATIENT MEDICAL RECORD

4 DATA.—

5 (1) IN GENERAL.—A health care provider (in6 cluding a health care provider that consists of a

7 health maintenance organization) shall be respon8 sible for ensuring the transmission to a certified in9 dexing system of a standard index marker for the

10 standard quality-related patient medical record data

11 described in section 5114(a)(3).

12 (2) TRANSMISSION TO HEALTH PLANS.—A

13 health care provider may satisfy the requirement

14 under paragraph (1) by transmitting standard qual15 ity-related patient medical record data to a health

16 plan. If a health care provider transmits data in ac17 cordance with the preceding sentence, the health

18 plan to which such data is transmitted shall be re19 sponsible for ensuring the transmission of a stand20 ard index marker for such data to a certified index21 ing system.

22 (3) REQUIREMENTS NOT APPLICABLE TO COM23 PLETE MEDICAL RECORDS.—Nothing in this section

24 shall be construed as preventing a health service

25 provider or health benefit plan from storing and
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1 maintaining patient medical records in a form and

2 manner selected by such providers or plans (so long

3 as such providers and plans are able to comply with

4 the reporting requirements of this subtitle).

5 (d) GOVERNMENT REQUIRED DATA.—A health plan

6 or health care provider shall be responsible for ensuring

7 the transmission to a certified indexing system of a stand8 ard index marker for the standard Government required

9 data described in section 5114(a)(5).

10 (e) SATISFACTION OF REQUIREMENTS.—

11 (1) FINANCIAL AND ADMINISTRATIVE DATA.—A

12 health care provider or health plan may satisfy the

13 requirement imposed on such provider or plan under

14 subsection (b)(1) by—

15 (A) directly transmitting standard finan16 cial and administrative data; or

17 (B) submitting nonstandard financial and

18 administrative data to a certified clearinghouse

19 for processing into standard data and trans20 mission.

21 (2) INDEX MARKERS.—A health care provider

22 or health plan may satisfy a requirement imposed on

23 such provider or plan under subsection (a), (b)(2),

24 (c), or (d) by—
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1 (A) transmitting a standard index marker

2 for standard data directly to a certified index3 ing system; or

4 (B) entering into a contract with a cer5 tified clearinghouse under which the clearing6 house transmits a standard index marker for

7 such data directly to a certified indexing sys8 tem.

9 (3) TIMELINESS.—A health care provider or

10 health plan shall be determined to have satisfied a

11 requirement imposed under subsection (a), (b), (c),

12 or (d) only if the action required under such sub13 section is completed in a timely manner, as deter14 mined by the Board.

15 (f) FORMS NOT TO INCLUDE PATIENT MEDICAL

16 RECORDS.—Nothing in this section shall be construed as

17 giving the National Health Board the authority to require

18 the disclosure and transmission of complete patient medi19 cal records without Congressional approval.

20 (g) ENFORCEMENT.—The National Health Board

21 shall ensure that the requirements of this part are satis22 fied.
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1 SEC. 5104. AVAILABILITY OF STANDARD HEALTH CARE

2 DATA.

3 (a) IN GENERAL.—A health care provider or health

4 plan shall be capable of disclosing all standard health care

5 data with respect to which a standard index marker has

6 been transmitted to a certified indexing system under sec7 tion 5103 when such disclosure is authorized under part

8 2.

9 (b) SATISFACTION.—A health care provider or health

10 plan may satisfy the requirement imposed under sub11 section (a) by—

12 (1) being capable of disclosing standard health

13 care data directly; or

14 (2) entering into a contract with a certified

15 clearinghouse under which the clearinghouse is capa16 ble of disclosing such data.

17 (c) CONSTRUCTION.—Nothing in this section shall be

18 construed to require a health plan or health care provider

19 to disclose health care data under this section.

20 SEC. 5105. TIMETABLES FOR COMPLIANCE WITH REQUIRE21 MENTS.

22 (a) INITIAL COMPLIANCE.—

23 (1) IN GENERAL.—Not later than 12 months

24 after the date on which standards are established

25 under subpart D with respect to a type of financial

26 and administrative transaction, a type of data, or
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1 index markers for such data a health plan or health

2 care provider shall comply with the requirements of

3 this subpart with respect to such transaction, data,

4 or index marker.

5 (2) ADDITIONAL DATA.—Not later than 12

6 months after the date on which the Board makes an

7 addition to a set of health care data under subpart

8 D, a health plan or health care provider shall comply

9 with the requirements of this subpart with respect to

10 such data.

11 (b) COMPLIANCE WITH MODIFIED STANDARDS.—

12 (1) IN GENERAL.—If the Board modifies a

13 standard established under subpart D, a health plan

14 or health care provider shall be required to transmit

15 or receive data in accordance with the modified

16 standard at such time as the Board determines ap17 propriate taking into account the time needed to

18 comply due to the nature and extent of the modifica19 tion.

20 (2) SPECIAL RULE.—In the case of modifica21 tions to standards that do not occur within the 12-

22 month period beginning on the date such standards

23 are established, the time determined appropriate by

24 the Board under paragraph (1) shall be no sooner

25 than the last day of the 90-day period beginning on
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1 the date such modified standard is established and

2 no later than the last day of the 12-month period

3 beginning on the date such modified standard is es4 tablished.

5 SEC. 5106. PREEMPTION OF STATE ‘‘QUILL PEN’’ LAWS.

6 A requirement under this part or a standard estab7 lished by the Board under this part shall supersede any

8 contrary provision of State law, including a provision of

9 State law that requires medical or health plan records (in10 cluding billing information) to be maintained in written

11 rather than electronic form, except where the Board deter12 mines that the provision is necessary to prevent fraud and

13 abuse, with respect to controlled substances, or for other

14 purposes.

15 Subpart C—Standards and Certification for Indexing

16 Systems and Clearinghouses

17 SEC. 5108. ESTABLISHMENT OF STANDARDS.

18 (a) IN GENERAL.—The Board shall establish stand19 ards with respect to the operation of indexing systems and

20 clearinghouses, including standards ensuring that—

21 (1) such entities develop, operate, and cooperate

22 with one another to form a national health care data

23 network;

24 (2) such entities meet all of the requirements

25 under part 2 that are applicable to such entities;
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•S 2296 PCS

1 (3) such entities make public information con2 cerning their performance, as measured by uniform

3 indicators such as accessibility, transaction respon4 siveness, administrative efficiency, reliability, de5 pendability, and any other indicator determined ap6 propriate by the Board;

7 (4) such entities have the highest security pro8 cedures that are practicable with respect to the proc9 essing of health care data; and

10 (5) indexing systems meet the additional re11 quirements for such systems described in subsection

12 (b).

13 (b) ADDITIONAL REQUIREMENTS FOR INDEXING

14 SYSTEMS.—The additional requirements for indexing sys15 tems that are referred to in subsection (a)(6) are as fol16 lows:

17 (1) INDEXING STANDARD HEALTH CARE

18 DATA.—An indexing system shall have the capability

19 to index the standard health care data that is made

20 available to the system.

21 (2) INTEROPERABILITY.—

22 (A) AVAILABILITY OF DATA.—An indexing

23 system shall make any index marker received by

24 such system pursuant to the requirements of

25 subpart B available to all other certified index-
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1 ing systems operating in the national health

2 care data network.

3 (B) ABILITY TO ACCESS DATA.—An index4 ing system shall have the ability to receive

5 index markers from all other certified indexing

6 systems operating in the national health care

7 data network.

8 (3) RATES CHARGED.—The rate that an index9 ing system applies to a service performed for an10 other indexing system shall not exceed the amount

11 of the weighted average of the rates such system ap12 plies to the same service performed for health plans

13 or health care providers.

14 (c) TIMETABLE FOR ESTABLISHMENT.—The Board

15 shall establish standards under this section not later than

16 9 months after the date of the enactment of this part.

17 SEC. 5109. CERTIFICATION PROCEDURE.

18 (a) IN GENERAL.—Not later than 12 months after

19 the date of the enactment of this part, the Board shall

20 establish a certification procedure for indexing systems

21 and clearinghouses which ensures that certified entities

22 are qualified to meet the requirements of this subtitle.

23 (b) APPLICATION.—The procedure established by the

24 Board under subsection (a) shall provide that each entity

25 described in such subsection desiring to be certified as an
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•S 2296 PCS

1 indexing system or clearinghouse shall apply to the Board

2 for certification in such form and in such manner as the

3 Board determines appropriate.

4 (c) AUDITS AND REPORTS.—The procedure estab5 lished under subsection (a) shall provide for audits by the

6 Board and reports by certified entities at such intervals

7 as the Board determines appropriate in order to monitor

8 compliance with the standards established under section

9 5108.

10 (d) RECERTIFICATION.—An indexing system or clear11 inghouse must be recertified under this section at least

12 every 3 years.

13 (e) LOSS OF CERTIFICATION.—

14 (1) MANDATORY TERMINATION.—If an indexing

15 system or clearinghouse violates a requirement im16 posed on such system or clearinghouse under part 2,

17 the entity’s certification under this section shall be

18 terminated unless the Board determines that appro19 priate corrective action has been taken.

20 (2) DISCRETIONARY TERMINATION.—If an in21 dexing system or clearinghouse violates a require22 ment of this part and a penalty has been imposed

23 under section 5124 with respect to such violation,

24 the Board shall review the certification of such sys-
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•S 2296 PCS

1 tem or clearinghouse and may terminate such certifi2 cation.

3 SEC. 5110. STATE OPERATION OF INDEXING SYSTEMS AND

4 CLEARINGHOUSES.

5 (a) IN GENERAL.—A State may operate an indexing

6 system or a clearinghouse that is certified under section

7 5109.

8 (b) EXCLUSIVE STATE SYSTEMS PERMITTED.—A

9 State operating a certified indexing system or a certified

10 clearinghouse may require each health plan or health care

11 provider in the State to use such system or clearinghouse

12 to satisfy the requirements imposed on such plan or pro13 vider under subpart B.

14 SEC. 5111. ENSURING AVAILABILITY OF DATA.

15 The Board shall establish a procedure under which

16 health plans and health care providers which do not have

17 access to certified indexing systems and clearinghouses are

18 able to make health care data available to the health care

19 data network in accordance with the purposes of this part.

20 Subpart D—Standards for Transactions, Data

21 Elements, and Index Markers.

22 SEC. 5112. GENERAL REQUIREMENTS ON BOARD.

23 In establishing standards under this subpart, the

24 Board shall, to the maximum extent practicable (consist25 ent with the requirements of this Act)—
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1 (1) require the use of data that are verifiable,

2 timely, accurate, reliable, useful, complete, and rel3 evant;

4 (2) establish standards that are consistent with

5 the objective of reducing the costs of providing and

6 paying for health care;

7 (3) incorporate standards in use and generally

8 accepted that are recommended by recognized public

9 or private standard setting or development groups,

10 including the American National Standard Insti11 tute’s ASC X12, the Healthcare Informatics Stand12 ards Planning Panel, and the Department of Health

13 and Human Services; and

14 (4) promote the development of standards nec15 essary to fulfill the requirements of this Act.

16 The Board shall insure that new standards are developed

17 in collaboration with Federal health agencies, participat18 ing States, health plans, representatives of providers, em19 ployers and consumers, experts in public health, and na20 tionally recognized standard setting groups.

21 SEC. 5113. FINANCIAL AND ADMINISTRATIVE TRANS22 ACTIONS.

23 (a) IN GENERAL.—The Board shall establish the

24 standards necessary for health care providers and health
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1 plans to conduct the following transactions relating to the

2 financing or administering of health care:

3 (1) Eligibility.

4 (2) Payment and remittance advice.

5 (3) Claims.

6 (4) Encounters.

7 (5) Claims status.

8 (6) Coordination of benefits.

9 (7) First report of injury.

10 (8) Claim attachments.

11 (9) Referrals, certification, and authorization.

12 (10) Any other transactions determined appro13 priate by the Board.

14 (b) SPECIAL RULE.—Any standards established by

15 the Board under subsection (a) that relate to coordination

16 of benefits shall be consistent with the rules and proce17 dures developed by the Board under section 5127.

18 SEC. 5114. ELEMENTS OF HEALTH CARE DATA.

19 (a) IN GENERAL.—The Board shall establish stand20 ards necessary to make the following health care data uni21 form and compatible for electronic transmission through

22 a national health care data network:

23 (1) enrollment and disenrollment data;

24 (2) financial and administrative data that the

25 Board determines is appropriate for transmission in
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•S 2296 PCS

1 connection with a financial and administrative trans2 action described in section 5113;

3 (3) a set of quality-related patient medical

4 record data that the Board determines is necessary

5 in order to conduct meaningful quality measure6 ment;

7 (4) patient medical record data that is not in8 cluded in a set of quality-related patient medical

9 record data established by the Board under para10 graph (3);

11 (5) a set of health care data that is not de12 scribed in paragraphs (1) through (3) and that is re13 quired by the Board, a State, or the National Center

14 for Consumer Advocacy for such entity to perform

15 its functions under this Act.

16 (b) ADDITIONS.—The Board may make additions to

17 the sets of health care data established under paragraphs

18 (1), (2), (3), and (5) of subsection (a) as the Board deter19 mines appropriate.

20 (c) CERTAIN DATA ELEMENTS.—

21 (1) UNIQUE IDENTIFIERS.—The Board shall es22 tablish a system to provide for a unique identifier

23 for each individual, employer, health plan, and

24 health care provider.
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•S 2296 PCS

1 (2) CODE SETS.—The Board shall select code

2 sets for any appropriate data elements from among

3 the code sets that are maintained by private and

4 public entities such as the American National Stand5 ards Institute, the National Uniform Billing Com6 mittee, or the Department of Health and Human

7 Services.

8 (d) FORMAT OF DATA ELEMENTS.—The Board shall

9 establish standards with respect to the format in which

10 data elements shall be transmitted.

11 (e) DEFINITIONS.—For purposes of this section:

12 (1) DEFINITION.—The term ‘‘code set’’ means

13 any set of codes used for encoding data elements, in14 cluding tables of terms, medical diagnostic codes, or

15 medical procedure codes.

16 (2) PATIENT MEDICAL RECORD DATA DE17 FINED.—The term ‘‘patient medical record data’’

18 means health care data derived from a clinical en19 counter that relates to the physical or mental condi20 tion of an individual and that is not financial and

21 administrative data.

22 (3) QUALITY MEASUREMENT DEFINED.—The

23 term ‘‘quality measurement’’ means monitoring and

24 measuring the quality of health care consistent with
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•S 2296 PCS

1 the measures established by the National Quality

2 Council under section 5002.

3 SEC. 5115. INDEX MARKERS.

4 The Board shall establish the standards necessary for

5 a health care provider or health plan to ensure the trans6 mission of an index marker with respect to standard

7 health care data to a certified indexing system.

8 SEC. 5116. TIMETABLES FOR ESTABLISHMENT.

9 (a) INITIAL STANDARDS.—The Board shall establish

10 standards relating to—

11 (1) financial and administrative transactions

12 not later than 9 months after the date of the enact13 ment of this part (except in the case of standards

14 for claims attachments which shall be established

15 not later than 24 months after the date of the enact16 ment of this part);

17 (2) the first set of enrollment data not later

18 than 9 months after the date of the enactment of

19 this part;

20 (3) financial and administrative data not later

21 than 9 months after the date of the enactment of

22 this part (except in the case of standards with re23 spect to data transmitted in connection with claims

24 attachments which shall be established not later
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•S 2296 PCS

1 than 24 months after the date of the enactment of

2 this part);

3 (4) the first set of quality-related patient medi4 cal record data not later than 24 months after the

5 date of the enactment of this part;

6 (5) patient medical record data that is not in7 cluded in a set of quality-related patient medical

8 record data not later than 7 years after the date of

9 the enactment of this part;

10 (6) the first set of Government required data

11 not later than 9 months after the date of the enact12 ment of this part;

13 (7) index markers for standard data not later

14 than 9 months after the date of the enactment of

15 this part; and

16 (8) any addition to a set of health care data

17 under this part, in conjunction with making such an

18 addition.

19 (b) MODIFICATIONS TO STANDARDS.—

20 (1) IN GENERAL.—Except as provided in para21 graph (2), the Board shall review the standards es22 tablished under this subpart no more frequently

23 than every 6 months but at least every 12 months,

24 and shall modify such standards as determined ap25 propriate.
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•S 2296 PCS

1 (2) SPECIAL RULES.—

2 (A) MODIFICATIONS DURING FIRST 12-

3 MONTH PERIOD.—The Board shall not modify

4 any standards established under this subpart

5 during the 12-month period beginning on the

6 date such standards are established unless the

7 Board determines that a modification is nec8 essary in order to permit health plans and

9 health care providers to comply with the re10 quirements of subpart B.

11 (B) CODE SETS.—

12 (i) RECOMMENDED MODIFICATIONS.—

13 The Board shall establish a procedure

14 under which an entity described in section

15 5114(b)(2)(A) may submit any modifica16 tion to a code set selected by the Board

17 that is determined appropriate by the en18 tity.

19 (ii) ADDITIONAL RULES.—A code set

20 selected by the Board may not be modified

21 more frequently than once annually unless

22 the Board determines that a modification

23 is necessary in order to permit health

24 plans and health care providers to comply

25 with the requirements of subpart B. If
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•S 2296 PCS

1 such a code set is modified under the pre2 ceding sentence, the modified set shall in3 clude instructions on how data elements

4 that were encoded prior to such modifica5 tion are to be converted or translated so as

6 to preserve the value of the elements. Any

7 modification under this subparagraph shall

8 be implemented in a manner that mini9 mizes the disruption and cost to health

10 plans and health care providers of comply11 ing with such modification.

12 (C) EVALUATION OF STANDARDS.—The

13 Board may establish a process to measure or

14 verify the consistency of standards established

15 or modified under this subpart with the require16 ments of this Act. Such process may include

17 demonstration projects and analyses of the

18 costs of implementation of such standards and

19 modifications.

20 Subpart E—Accessing Health Care Data

21 SEC. 5117. ACCESSING FINANCIAL AND ADMINISTRATIVE

22 DATA IN CONNECTION WITH A FINANCIAL

23 AND ADMINISTRATIVE TRANSACTION.

24 The Board shall establish technical standards under

25 which a health care provider or health plan may access
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1 financial and administrative data through entities in the

2 national health care data network in connection with a fi3 nancial and administrative transaction when such access

4 is authorized under part 2.

5 SEC. 5118. ACCESSING DATA FOR AUTHORIZED PURPOSES.

6 The Board shall establish technical standards that

7 shall apply to any request to access standard health care

8 data that is not described in section 5117, including

9 standards relating to access by enrollees, through entities

10 in the national health care data network. Such technical

11 standards shall provide any such request shall be satis12 fied—

13 (1) if the request is for data that is protected

14 health information and is authorized for disclosure

15 under part 2; or

16 (2) if the request is for data that is non-identi17 fiable health information, by obtaining such data

18 through a health information protection organization

19 certified under section 5119.

20 SEC. 5119. HEALTH INFORMATION PROTECTION ORGANIZA21 TIONS.

22 (a) RIGHT TO ACCESS DATA.—The Board shall es23 tablish standards under which a health information pro24 tection organization that is certified under subsection (d)
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•S 2296 PCS

1 may access health care data through entities in the na2 tional health care data network.

3 (b) LIMITATION ON DISCLOSURE.—A health informa4 tion protection organization that is certified under sub5 section (d) may disclose health care data—

6 (1) if the data is non-identifiable health infor7 mation; or

8 (2) if the data is protected health care informa9 tion only when such disclosure is authorized under

10 part 2.

11 (c) STANDARDS FOR OPERATION.—The Board shall

12 establish standards with respect to the operation of health

13 information protection organizations, including standards

14 ensuring that such organizations have the highest security

15 procedures that are practicable with respect to processing

16 health care data.

17 (d) CERTIFICATION BY THE BOARD.—

18 (1) ESTABLISHMENT.—Not later than 12

19 months after the date of the enactment of this part,

20 the Board shall establish a certification procedure

21 for health information protection organizations

22 which ensures that certified organizations are quali23 fied to meet the requirements of this section.

24 (2) APPLICATION.—Each entity desiring to be

25 certified as a health information protection organiza-
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•S 2296 PCS

1 tion shall apply to the Board for certification in a

2 form and manner determined appropriate by the

3 Board.

4 (3) AUDITS AND REPORTS.—The procedure es5 tablished under paragraph (1) shall provide for au6 dits by the Board and reports by an entity certified

7 under paragraph (2) at such intervals as the Board

8 determines appropriate in order to monitor such en9 tity’s compliance with the requirements of this sec10 tion and the standards established by the Board

11 under this section.

12 (4) RECERTIFICATION.—A health information

13 protection organization must be recertified under

14 this subsection at least every 3 years.

15 (e) LOSS OF CERTIFICATION.—

16 (1) MANDATORY TERMINATION.—If a health in17 formation protection organization violates a require18 ment imposed on such organization under part 2,

19 the organization’s certification under this section

20 shall be terminated unless the Board determines

21 that appropriate corrective action has been taken.

22 (2) DISCRETIONARY TERMINATION.—If a health

23 information protection organization violates a re24 quirement of this part, the Board shall review the
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•S 2296 PCS

1 certification of such organization and may terminate

2 such certification.

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

4 AGENCIES.

5 (a) IN GENERAL.—The Board or any other Federal

6 agency may access health care data through entities in the

7 national health care data network only when authorized

8 under part 2.

9 (b) ACCESS THROUGH HEALTH INFORMATION PRO10 TECTION ORGANIZATIONS.—

11 (1) IN GENERAL.—Health information protec12 tion organizations certified under section 5119 shall

13 make available to the Board or another Federal

14 agency pursuant to a cost reimbursement contract

15 (as defined under the Federal Acquisition Regula16 tion), any health care information that is requested

17 by such agency.

18 (2) CERTAIN INFORMATION AVAILABLE TO

19 HEALTH INFORMATION PROTECTION ORGANIZATIONS

20 AT NO CHARGE.—If a health information protection

21 organization needs data from a health plan or health

22 care provider in order to comply with a request of

23 the Board or another a Federal agency under para24 graph (1) that relates to a requirement on such

25 agency under this Act, such plan or provider shall
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•S 2296 PCS

1 make such data available to such organization at no

2 charge.

3 (c) DISCLOSURE.—

4 (1) IN GENERAL.—Health care data accessed

5 by the Board or another Federal agency under this

6 section shall be disclosed only as authorized under

7 the provisions of this Act.

8 (2) DISCLOSURE FOR PUBLIC USE FUNC9 TIONS.—The Board and any other Federal agency

10 shall make the non-identifiable health care informa11 tion accessed by such agency under this section

12 available to private, not-for-profit organizations for

13 public use functions (as determined by the Board

14 through regulations) in an affordable and timely

15 manner.

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

17 (a) IN GENERAL.—The Board shall establish stand18 ards under which a State may access health care data

19 through entities in the national health care data network.

20 (b) ACCESS THROUGH HEALTH INFORMATION PRO21 TECTION ORGANIZATIONS.—Health information protec22 tion organizations certified under section 5119 shall make

23 health care data available to the States in accordance with

24 section 5119 pursuant to a cost reimbursement contract

25 (as defined under the Federal Acquisition Regulation).
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•S 2296 PCS

1 SEC. 5122. LENGTH OF TIME DATA SHOULD BE ACCES2 SIBLE.

3 The Board shall establish standards with respect to

4 the length of time any specific standard health care data

5 should be accessible through the health care data network.

6 SEC. 5123. TIMETABLES FOR ESTABLISHMENT AND COM7 PLIANCE.

8 (a) INITIAL STANDARDS.—The Board shall establish

9 standards under this subpart not later than 9 months

10 after the date of the enactment of this part and such

11 standards shall be effective upon establishment.

12 (b) MODIFICATIONS TO STANDARDS.—

13 (1) IN GENERAL.—Except as provided in para14 graph (2), the Board shall review the standards es15 tablished under this subpart no more frequently

16 than every 6 months but at least every 12 months,

17 and shall modify such standards as determined ap18 propriate by the Board. Any modifications to stand19 ards established under this subpart shall be effective

20 upon establishment.

21 (2) SPECIAL RULE.—The Board shall not mod22 ify any standards established under this subpart

23 during the 12-month period beginning on the date

24 such standards are established unless the Board de25 termines that a modification is necessary in order to
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•S 2296 PCS

1 permit compliance with the requirements of this sub2 part.

3 Subpart F—Penalties

4 SEC. 5124. GENERAL PENALTY FOR FAILURE TO COMPLY

5 WITH REQUIREMENTS AND STANDARDS.

6 (a) IN GENERAL.—Except as provided in section

7 5125, the Board shall impose on a health plan, health care

8 provider, indexing system, or clearinghouse that violates

9 a requirement or standard imposed under this part a pen10 alty of not more than $1,000 for each violation. The provi11 sions of section 1128A of the Social Security Act (other

12 than subsections (a) and (b) and the second sentence of

13 subsection (f)) shall apply to the imposition of a civil

14 money penalty under this subsection in the same manner

15 as such provisions apply to the imposition of a penalty

16 under section 1128A of such Act.

17 (b) LIMITATIONS.—

18 (1) NONCOMPLIANCE NOT DISCOVERED EXER19 CISING REASONABLE DILIGENCE.—A penalty may

20 not be imposed under subsection (a) if it is estab21 lished to the satisfaction of the Board that the per22 son liable for the penalty did not know, and by exer23 cising reasonable diligence would not have known,

24 that such person failed to comply with the require25 ment or standard described in subsection (a).
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•S 2296 PCS

1 (2) FAILURES DUE TO REASONABLE CAUSE.—

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

3 subparagraphs (B) and (C), a penalty may not

4 be imposed under subsection (a) if—

5 (i) the failure to comply was due to

6 reasonable cause and not to willful neglect;

7 and

8 (ii) the failure to comply is corrected

9 during the 30-day period beginning on the

10 1st date the person liable for the penalty

11 knew, or by exercising reasonable diligence

12 would have known, that the failure to com13 ply occurred.

14 (B) PLANS AND PROVIDERS.—

15 (i) NO PENALTY.—If a health plan or

16 health care provider demonstrates to the

17 Board that a failure to comply occurred

18 because the plan or provider was unable to

19 comply, no penalty may be imposed under

20 subsection (a) until such time as the plan

21 or provider is able to comply.

22 (ii) ASSISTANCE.—The Board shall

23 provide technical assistance to a health

24 plan or health care provider described in

25 clause (i) to obtain compliance. Such as-
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•S 2296 PCS

1 sistance shall be provided in any manner

2 determined appropriate by the Board.

3 (C) INDEXING SYSTEMS AND CLEARING4 HOUSES.—In the case of an indexing system or

5 clearinghouse, the period referred to in sub6 paragraph (A)(ii) may be extended as deter7 mined appropriate by the Board based on the

8 nature and extent of the failure to comply.

9 (3) REDUCTION.—In the case of a failure to

10 comply which is due to reasonable cause and not to

11 willful neglect, any penalty under subsection (a) that

12 is not entirely waived under paragraph (2) may be

13 waived to the extent that the payment of such pen14 alty would be excessive relative to the compliance

15 failure involved.

16 SEC. 5125. PENALTIES RELATING TO ACCESSING DATA.

17 A person who violates a standard established under

18 sections 5117, 5118, and 5119 shall—

19 (1) be fined not more than $50,000, imprisoned

20 not more than 1 year, or both;

21 (2) if the offense is committed under false pre22 tenses, be fined not more than $100,000, imprisoned

23 not more than 5 years, or both; and

24 (3) if the offense is committed with intent to

25 sell, transfer, or use health care data for commercial
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•S 2296 PCS

1 advantage, personal gain, or malicious harm, fined

2 not more than $250,000, imprisoned not more than

3 10 years, or both.

4 Subpart G—Miscellaneous

5 SEC. 5126. IMPOSITION OF ADDITIONAL REQUIREMENTS.

6 (a) IN GENERAL.—A health plan or health care pro7 vider may not impose a standard on another plan or pro8 vider that is in addition to the standards established by

9 the Board under this part unless—

10 (1) such plan or provider voluntarily agrees to

11 such standard; or

12 (2) a waiver is granted under subsection (b) to

13 establish such standard.

14 (b) CONDITIONS FOR WAIVERS.—

15 (1) IN GENERAL.—A health plan or health care

16 provider may request a waiver from the Board in

17 order to require another plan or provider to comply

18 with a standard that is in addition to the standards

19 imposed by the Board under this part.

20 (2) CONSIDERATION OF WAIVER REQUESTS.—

21 In determining whether to grant a waiver under this

22 subsection the Board shall consider the value of the

23 data to be exchanged for research or other purposes

24 determined appropriate by the Board, the adminis25 trative cost of the additional standard, the burden of
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•S 2296 PCS

1 the additional standard, and the burden of the tim2 ing of the imposition of the additional standard.

3 (3) ANONYMOUS REPORTING.—If a health plan

4 or health care provider attempts to impose a stand5 ard in addition to the standards imposed under this

6 part, the plan or provider on which such additional

7 standard is being imposed may contact the Board.

8 The Board shall develop a procedure under which

9 the contacting plan or provider shall remain anony10 mous. The Board shall notify the plan or provider

11 imposing the additional standard that the additional

12 standard may not be imposed unless the other plan

13 or provider voluntarily agrees to such standard or a

14 waiver is obtained under this subsection.

15 SEC. 5127. RULES REGARDING COORDINATION OF BENE16 FITS.

17 Not later than 9 months after the date of the enact18 ment of this part, the Board shall develop rules and proce19 dures for determining and coordinating the financial obli20 gations of health plans when health care benefits are pay21 able under 2 or more health plans.

22 SEC. 5128. EFFECT ON STATE LAW.

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

24 (b), the provisions of this part shall supersede any provi-
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•S 2296 PCS

1 sions of the law of any State to the extent that the provi2 sions of this part conflict with such provisions of law.

3 (b) EXCEPTION.—Nothing in this part shall super4 sede any provision of State law that requires health plans

5 or health care providers to use an indexing system or a

6 clearinghouse that is certified under section 5109 and that

7 is operated by the State to satisfy the requirements im8 posed on such plan or provider under subpart B.

9 SEC. 5129. HEALTH CARE DATA CONTINUITY.

10 (a) DATA HELD BY HEALTH PLANS AND PROVID11 ERS.—Any health care data held by a health plan or

12 health care provider that ceases to function shall be ob13 tained by the State in connection with the execution of

14 the State’s responsibilities under section 1204. The State

15 shall ensure that such health care data is transferred to

16 a health plan or health care provider under procedures de17 veloped by the Board.

18 (b) DATA HELD BY INDEXING SYSTEMS AND CLEAR19 INGHOUSES.—If an indexing system or clearinghouse is

20 decertified or ceases to function in a manner that would

21 threaten the continued existence of health care data or

22 index markers held by such system or clearinghouse, such

23 data or index markers shall be transferred to a certified

24 indexing system or clearinghouse designated by the Board.
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•S 2296 PCS

1 SEC. 5130. PROTECTION OF COMMERCIAL INFORMATION.

2 In establishing standards under this part, the Board

3 shall ensure that the trade secrets and confidential com4 mercial information of entities operating in the health care

5 data network is protected from—

6 (1) use other than as described in this title; and

7 (2) release to or access by third parties.

8 SEC. 5131. AUTHORIZATION OF APPROPRIATIONS.

9 There are authorized to be appropriated such sums

10 as may be necessary for each of the fiscal years 1995

11 through 2000, to carry out the purposes of this subtitle.

12 Subpart H—Assistance to the Board

13 SEC. 5132. GENERAL REQUIREMENT ON BOARD.

14 In complying with any requirements imposed under

15 this part, the Board shall rely on recommendations of the

16 Health Care Data Advisory Panel established under sec17 tion 5133 and shall consult with appropriate Federal

18 agencies.

19 SEC. 5133. HEALTH CARE DATA ADVISORY PANEL.

20 (a) ESTABLISHMENT.—There is established a panel

21 to be known as the Health Care Data Advisory Panel.

22 (b) DUTY.—The panel shall provide assistance to the

23 Board in complying with the requirements imposed on the

24 Board under this part and part 2. In performing such

25 duty, the Panel shall receive technical assistance from ap26 propriate Federal agencies.
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•S 2296 PCS

1 (c) MEMBERSHIP.—

2 (1) IN GENERAL.—The Panel shall consist of

3 15 members to be appointed by the President not

4 later than 60 days after the date of the enactment

5 of this part. The Panel shall designate 1 member as

6 the Chair.

7 (2) EXPERTISE.—The membership of the Panel

8 shall consist of individuals who are of recognized

9 standing and distinction and who possess the dem10 onstrated capacity to discharge the duties imposed

11 on the Panel.

12 (3) TERMS.—Each member of the Panel shall

13 be appointed for a term of 5 years, except that the

14 members first appointed shall serve staggered terms

15 such that the terms of no more than 3 members ex16 pire at one time.

17 (4) VACANCIES.—

18 (A) IN GENERAL.—A vacancy on the Panel

19 shall be filled in the manner in which the origi20 nal appointment was made and shall be subject

21 to any conditions which applied with respect to

22 the original appointment.

23 (B) FILLING UNEXPIRED TERM.—An indi24 vidual chosen to fill a vacancy shall be ap-
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•S 2296 PCS

1 pointed for the unexpired term of the member

2 replaced.

3 (C) EXPIRATION OF TERMS.—The term of

4 any member shall not expire before the date on

5 which the member’s successor takes office.

6 (5) CONFLICTS OF INTEREST.—Members of the

7 Panel shall disclose upon appointment to the Panel

8 or at any subsequent time that it may occur, con9 flicts of interest.

10 (d) MEETINGS.—

11 (1) IN GENERAL.—Except as provided in para12 graph (2), the Panel shall meet at the call of the

13 Chair.

14 (2) INITIAL MEETING.—Not later than 30 days

15 after the date on which all members of the Panel

16 have been appointed, the Panel shall hold its first

17 meeting.

18 (3) QUORUM.—A majority of the members of

19 the Panel shall constitute a quorum, but a lesser

20 number of members may hold hearings.

21 (e) POWER TO HOLD HEARINGS.—The Panel may

22 hold such hearings, sit and act at such times and places,

23 take such testimony, and receive such evidence as the

24 Panel considers advisable to carry out the purposes of this

25 section.
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•S 2296 PCS

1 (f) OTHER ADMINISTRATIVE PROVISIONS.—Subpara2 graphs (C), (D), and (H) of section 1886(e)(6) of the So3 cial Security Act shall apply to the Panel in the same man4 ner as they apply to the Prospective Payment Assessment

5 Commission.

6 (g) REPORTS.—

7 (1) IN GENERAL.—The Panel shall annually

8 prepare and submit to Congress and the Board a re9 port on—

10 (A) the status of the national health care

11 data network established pursuant to this part,

12 including—

13 (i) whether the network is fulfilling

14 the purpose described in section 5101; and

15 (ii) information relating to the cost

16 and quality of health care rendered by

17 health care providers;

18 (B) the savings and costs of the network;

19 and

20 (C) any legislative recommendations relat21 ed to the network.

22 (2) AVAILABILITY TO THE PUBLIC.—Any infor23 mation in the report submitted to Congress under

24 paragraph (1) shall be made available to the public

25 unless such information may not be disclosed by law.
729

•S 2296 PCS

1 (h) DURATION.—Notwithstanding section 14(a) of

2 the Federal Advisory Committee Act, the Panel shall con3 tinue in existence until otherwise provided by law.

4 (i) AUTHORIZATION OF APPROPRIATIONS.—

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

6 appropriated such sums as may be necessary to

7 carry out the purposes of this section.

8 (2) AVAILABILITY.—Any sums appropriated

9 under the authorization contained in this subsection

10 shall remain available, without fiscal year limitation,

11 until expended.

12 Subpart I—Demonstration Projects for Community13 Based Clinical Information Systems

14 SEC. 5135. GRANTS FOR DEMONSTRATION PROJECTS.

15 (a) IN GENERAL.—The Board may make grants for

16 demonstration projects to promote the development and

17 use of electronically integrated community-based clinical

18 information systems and computerized patient medical

19 records.

20 (b) APPLICATIONS.—

21 (1) SUBMISSION.—To apply for a grant under

22 this subpart for any fiscal year, an applicant shall

23 submit an application to the Board in accordance

24 with the procedures established by the Board.
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•S 2296 PCS

1 (2) CRITERIA FOR APPROVAL.—The Board may

2 not approve an application submitted under para3 graph (1) unless the application includes assurances

4 satisfactory to the Board regarding the following:

5 (A) USE OF EXISTING TECHNOLOGY.—

6 Funds received under this subpart will be used

7 to apply telecommunications and information

8 systems technology that is in existence on the

9 date the application is submitted in a manner

10 that improves the quality of health care, re11 duces the costs of such care, and protects the

12 privacy and confidentiality of information relat13 ing to the physical or mental condition of an in14 dividual.

15 (B) USE OF EXISTING INFORMATION SYS16 TEMS.—Funds received under this subpart will

17 be used—

18 (i) to enhance telecommunications or

19 information systems that are operating on

20 the date the application is submitted;

21 (ii) to integrate telecommunications or

22 information systems that are operating on

23 the date the application is submitted; or

24 (iii) to connect additional users to

25 telecommunications or information net-
731

•S 2296 PCS

1 works or systems that are operating on the

2 date the application is submitted.

3 (C) MATCHING FUNDS.—The applicant will

4 make available funds for the demonstration

5 project in an amount that equals at least 50

6 percent of the cost of the project.

7 (c) GEOGRAPHIC DIVERSITY.—In making any grants

8 under this subpart, the Board shall, to the extent prac9 ticable, make grants to persons representing different geo10 graphic areas of the United States, including urban and

11 rural areas.

12 (d) REVIEW AND SANCTIONS.—The Board shall re13 view at least annually the compliance of a person receiving

14 a grant under this subpart with the provisions of this sub15 part. The Board shall establish a procedure for determin16 ing whether such a person has failed to comply substan17 tially within the provisions of this subpart and the sanc18 tions to be imposed for any such noncompliance.

19 (e) ANNUAL REPORT.—The Board shall include in

20 the annual report under section 1705 of the Public Health

21 Service Act (42 U.S.C. 300u–4) a description of the activi22 ties carried out under this subpart.
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•S 2296 PCS

1 Subpart J—Health Security Cards

2 SEC. 5136. HEALTH SECURITY CARDS.

3 (a) PERMISSIBLE USES OF CARD.—A health security

4 card that is issued to an eligible individual under section

5 1001(b) may be used by an individual or entity, in accord6 ance with regulations promulgated by the Board, only for

7 the purpose of providing or assisting the eligible individual

8 in obtaining an item or service that is covered under—

9 (1) the applicable health plan in which the indi10 vidual is enrolled (as defined in section 1902);

11 (2) a policy consisting of a supplemental health

12 policy (described in part 2 of subtitle E of title I),

13 a cost sharing policy (described in such part), or

14 both;

15 (3) a FEHBP supplemental plan (described in

16 subtitle C of title VIII);

17 (4) a FEHBP medicare supplemental plan (de18 scribed in such subtitle); or

19 (5) such other programs as the Board may

20 specify.

21 (b) FORM OF CARD AND ENCODED INFORMATION.—

22 The Board shall establish standards respecting the form

23 of health security cards and the information to be encoded

24 in electronic form on the cards. Such information shall

25 include—
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•S 2296 PCS

1 (1) the identity of the individual to whom the

2 card is issued;

3 (2) the applicable health plan in which the indi4 vidual is enrolled;

5 (3) any policy described in paragraph (2), (3),

6 or (4) of subsection (a) in which the individual is en7 rolled; and

8 (4) any other information that the Board deter9 mines to be necessary in order for the card to serve

10 the purpose described in subsection (a).

11 (c) UNIQUE IDENTIFIER NUMBERS.—The unique

12 identifier number system developed by the Board under

13 section 5114(b) shall be used in encoding the information

14 described in subsection (b).

15 (d) TRADEMARK REGISTRATION.—The Board shall

16 take appropriate steps to ensure the registration of health

17 security cards and other indicia relating to such cards as

18 trademarks or service marks (as appropriate) under the

19 Trademark Act of 1946. For purposes of this subsection,

20 the ‘‘Trademark Act of 1946’’ refers to the Act entitled

21 ‘‘An Act to provide for the registration and protection of

22 trademarks used in commerce, to carry out the provisions

23 of international conventions, and for other purposes’’, ap24 proved July 5, 1946 (15 U.S.C. et seq.).
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•S 2296 PCS

1 PART 2—PRIVACY OF INFORMATION

2 Subpart A—Short Title; Findings and Purposes

3 SEC. 5160. SHORT TITLE.

4 This part may be cited as the ‘‘Health Care Privacy

5 Protection Act’’.

6 SEC. 5161. FINDINGS AND PURPOSES.

7 (a) FINDINGS.—The Congress finds as follows:

8 (1) The improper disclosure of personally iden9 tifiable health care information may cause signifi10 cant harm to a person’s interests in privacy, health

11 care, and reputation and may unfairly affect the

12 ability of a person to obtain employment, education,

13 insurance, and credit.

14 (2) The movement of people and health care-re15 lated information across State lines, availability of

16 access to and exchange of health care-related infor17 mation from automated data banks and networks,

18 and emergence of multistate health care providers

19 and payors create a need for uniform Federal law

20 governing the disclosure of health care information.

21 (b) PURPOSE.—The purpose of this Act is to estab22 lish effective mechanisms to protect the privacy of persons

23 with respect to personally identifiable health care informa24 tion that is created or maintained as part of health treat25 ment, enrollment, payment, testing, or research processes.
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•S 2296 PCS

1 Subpart B—Judicial Proceedings

2 SEC. 5162. PRIVACY OF PERSONALLY IDENTIFIABLE

3 HEALTH CARE INFORMATION.

4 (a) OFFENSE.—Part I of title 18, United States

5 Code, is amended by inserting after chapter 84, the follow6 ing new chapter:

7 ‘‘CHAPTER 84A—PRIVACY OF PERSON8 ALLY IDENTIFIABLE HEALTH CARE IN9 FORMATION

‘‘Sec.

‘‘1755. Wrongful disclosure of personally identifiable health care information.

‘‘1756. Misuse of health security card or unique identifier.

10 ‘‘§ 1755. Wrongful disclosure of protected health in11 formation

12 ‘‘(a) DEFINITION.—The term ‘protected health infor13 mation’ shall have the meaning given such term under sec14 tion 5163 of the Health Security Act.

15 ‘‘(b) OFFENSE.—A person who knowingly—

16 ‘‘(1) obtains protected health information relat17 ing to an individual in violation of subpart C of the

18 Health Care Privacy Protection Act; or

19 ‘‘(2) discloses protected health information to

20 another person in violation of subpart C of the

21 Health Care Privacy Protection Act,

22 shall be punished as provided in subsection (c).
736

•S 2296 PCS

1 ‘‘(c) PENALTIES.—A person who violates subsection

2 (b) shall—

3 ‘‘(1) be fined not more than $50,000, impris4 oned not more than 1 year, or both;

5 ‘‘(2) if the offense is committed under false pre6 tenses, be fined not more than $100,000, imprisoned

7 not more than 5 years, or both; and

8 ‘‘(3) if the offense is committed with intent to

9 sell, transfer, or use protected health information for

10 commercial advantage, personal gain, or malicious

11 harm, fined not more than $250,000, imprisoned not

12 more than 10 years, or both.

13 ‘‘§ 1756. Misuse of health security card or unique

14 identifier

15 ‘‘A person who—

16 ‘‘(1) requires the display of, requires the use of,

17 or uses a health security card that is issued under

18 the Health Security Act for any purpose other than

19 obtaining or paying for health care; or

20 ‘‘(2) requires the disclosure of, requires the use

21 of, or uses a unique identifier number for any pur22 pose that is not authorized by the National Health

23 Board,

24 shall be fined not more than $25,000, imprisoned not

25 more than 2 years, or both.’’.
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•S 2296 PCS

1 (b) TECHNICAL AMENDMENT.—The part analysis for

2 part I of title 18, United States Code, is amended by in3 serting after the item related to chapter 84, the following

4 new item:

‘‘84A. Privacy of personally identifiable health care information ............. 1755.’’.

5 Subpart C—Limitations on Disclosure of Protected

6 Health Information

7 SEC. 5163. DEFINITIONS.

8 In this subpart:

9 (1) ENROLLEE.—The term ‘‘enrollee’’ means

10 an individual who is covered under a health plan.

11 The term includes a deceased individual who was

12 covered under a health plan.

13 (2) ENROLLEE REPRESENTATIVE.—The term

14 ‘‘enrollee representative’’ means any individual le15 gally empowered to make decisions concerning the

16 provision of health care to an enrollee (where the en17 rollee lacks the legal capacity under State law to

18 make such decisions) or the administrator or execu19 tor of the estate of a deceased enrollee.

20 (3) HEALTH CARE.—The term ‘‘health care’’—

21 (A) means—

22 (i) a preventative, diagnostic, thera23 peutic, rehabilitative, maintenance, or pal24 liative care, counseling, service, or proce25 dure—
738

•S 2296 PCS

1 (I) with respect to the physical or

2 mental condition of an individual; or

3 (II) affecting the structure or

4 function of the human body or any

5 part of the human body; or

6 (ii) any sale or dispensing of a drug,

7 device, equipment, or other item to an indi8 vidual, or for the use of an individual, pur9 suant to a prescription; but

10 (B) does not include any item or service

11 that is not furnished for the purpose of examin12 ing, maintaining, or improving the health of an

13 individual.

14 (4) HEALTH CARE PROVIDER.—The term

15 ‘‘health care provider’’ means a person who is li16 censed, certified, registered, or otherwise authorized

17 by law to provide an item or service that constitutes

18 health care in the ordinary course of business or

19 practice of a profession.

20 (5) HEALTH INFORMATION TRUSTEE.—The

21 term ‘‘health information trustee’’ means—

22 (A) a health care provider, health plan,

23 health oversight agency, certified indexing sys24 tem, certified clearinghouse, certified health in25 formation protection organization, or employer,
739

•S 2296 PCS

1 insofar as it creates, receives, maintains, uses,

2 or transmits protected health information; and

3 (B) any person who obtains protected

4 health information under section 5169, 5170,

5 5171, 5172, 5173, 5174, or 5177.

6 (6) HEALTH OVERSIGHT AGENCY.—The term

7 ‘‘health oversight agency’’ means a person that—

8 (A) performs or oversees the performance

9 of an assessment, evaluation, determination, or

10 investigation relating to the licensing, accredita11 tion, or certification of health care

12 providers; or

13 (B)(i) performs or oversees the perform14 ance of an assessment, evaluation, determina15 tion, or investigation relating to the effective16 ness of, compliance with, or applicability of

17 legal, fiscal, medical, or scientific standards or

18 aspects of performance related to the delivery

19 of, or payment for, health care or relating to

20 health care fraud or fraudulent claims for pay21 ment regarding health; and

22 (ii) is a public agency, acting on behalf of

23 a public agency, acting pursuant to a require24 ment of a public agency, or carrying out activi25 ties under a Federal or State statute governing
740

•S 2296 PCS

1 the assessment, evaluation, determination, or

2 investigation.

3 (7) HEALTH PLAN.—The term ‘‘health plan’’

4 shall have the meaning given such term under sec5 tion 5102(6).

6 (8) HEALTH RESEARCHER.—The term ‘‘health

7 researcher’’ means a person who conducts a bio8 medical, public health, health services or health sta9 tistics research project or a research project on so10 cial and behavioral factors relating to health, that

11 has been approved by—

12 (A) an institutional review board for the

13 organization sponsoring the project;

14 (B) an institutional review board for each

15 health information trustee that maintains pro16 tected health information intended to be used in

17 the project; or

18 (C) an institutional review board estab19 lished or designated by the Board.

20 (9) INSTITUTIONAL REVIEW BOARD.—The term

21 ‘‘institutional review board’’ means—

22 (A) a board established in accordance with

23 regulations of the Board under section 491(a)

24 of the Public Health Service Act (42 U.S.C.

25 289);
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•S 2296 PCS

1 (B) a similar board established by the

2 Board for the protection of human subjects in

3 research conducted by the Board; or

4 (C) a similar board established under regu5 lations of a Federal Government authority other

6 than the Board.

7 (10) LAW ENFORCEMENT INQUIRY.—The term

8 ‘‘law enforcement inquiry’’ means an investigation or

9 official proceeding inquiring into whether there is a

10 violation of, or failure to comply with, any criminal

11 or civil statute or any regulation, rule, or order is12 sued pursuant to such a statute.

13 (11) PERSON.—The term ‘‘person’’ includes an

14 authority of the United States, a State, or a political

15 subdivision of a State.

16 (12) PROTECTED HEALTH INFORMATION.—The

17 term ‘‘protected health information’’ means any in18 formation, whether oral or recorded in any form or

19 medium, that—

20 (A)(i) is created or received by a health

21 care provider, health plan, health oversight

22 agency, public health authority, certified index23 ing system, certified clearinghouse, or certified

24 health information protection organization; or
742

•S 2296 PCS

1 (ii) is created or received by an employer

2 through the process of testing, screening, or as3 sisting applicants or employees; and

4 (B) relates to the past, present, or future

5 physical or mental health or condition of an en6 rollee, the provision of health care to an en7 rollee, past, present, or future payment for the

8 provision of health care to an enrollee, or demo9 graphic data collected from the enrollee and—

10 (i) identifies an individual; or

11 (ii) with respect to which there is a

12 reasonable basis to believe that the infor13 mation can be used to identify an individ14 ual.

15 (12) PUBLIC HEALTH AUTHORITY.—The term

16 ‘‘public health authority’’ means an authority or in17 strumentality of the United States, a State, or a po18 litical subdivision of a State that is (A) responsible

19 for public health matters; and (B) engaged in such

20 activities as injury reporting, public health surveil21 lance, and public health investigation or interven22 tion.

23 (13) REFERENCES TO CERTAIN CERTIFIED EN24 TITIES.—
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•S 2296 PCS

1 (A) CERTIFIED INDEXING SYSTEM.—The

2 term ‘‘certified indexing system’’ shall have the

3 meaning given such term under section 5102.

4 (B) CERTIFIED CLEARINGHOUSE.—The

5 term ‘‘certified clearinghouse’’ shall have the

6 meaning given such term under section 5102.

7 (C) CERTIFIED HEALTH INFORMATION

8 PROTECTION ORGANIZATION.—The term ‘‘cer9 tified health information protection organiza10 tion’’ means a health information protection or11 ganization (as defined in section 5102(5)) that

12 is certified under section 5119.

13 SEC. 5164. GENERAL LIMITATIONS ON DISCLOSURE.

14 (a) IN GENERAL.—

15 (1) DISCLOSURE WITHIN A TRUSTEE.—A

16 health information trustee may disclose protected

17 health information to an officer, employee, or agent

18 of the trustee only for a purpose that is compatible

19 with and related to the purpose for which the infor20 mation—

21 (A) was collected; or

22 (B) was received by that trustee.

23 (2) DISCLOSURE OUTSIDE A TRUSTEE.—A

24 health information trustee may disclose protected

25 health information to a person other than an officer,
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•S 2296 PCS

1 employee, or agent of the trustee only for a purpose

2 that is authorized under this Act.

3 (3) SCOPE OF DISCLOSURE.—

4 (A) IN GENERAL.—Every disclosure of pro5 tected health information by a health informa6 tion trustee shall be limited to the minimum

7 amount of information necessary to accomplish

8 the purpose for which the information is dis9 closed.

10 (B) GUIDELINES.—Not later than July 1,

11 1996, the Board, after notice and opportunity

12 for public comment, shall issue guidelines to im13 plement subparagraph (A), which shall take

14 into account the technical capabilities of the

15 record systems used to maintain protected

16 health information and the costs of limiting dis17 closure.

18 (4) IDENTIFICATION OF DISCLOSED INFORMA19 TION AS PROTECTED INFORMATION.—Except with

20 respect to protected health information that is dis21 closed under section 5179, and except as provided in

22 paragraph (5), a health information trustee may not

23 disclose protected health information unless such in24 formation is clearly identified as protected health in25 formation that is subject to this section.
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•S 2296 PCS

1 (5) ROUTINE DISCLOSURES SUBJECT TO WRIT2 TEN AGREEMENT.—A health information trustee

3 who routinely discloses protected health information

4 to a person may satisfy the identification require5 ment in paragraph (4) through a written agreement

6 between the trustee and the person with respect to

7 the protected health information.

8 (6) AGREEMENT TO LIMIT DISCLOSURE.—A

9 health information trustee who receives protected

10 health information from any person pursuant to a

11 written agreement to restrict disclosure of the infor12 mation to a greater extent than would otherwise be

13 required under this section shall comply with the

14 terms of the agreement, except in circumstances in

15 which disclosure of the information is required by

16 law notwithstanding the agreement.

17 (7) NO GENERAL REQUIREMENT TO DIS18 CLOSE.—Except as provided in the section 5179 re19 lating to inspection, nothing in this section shall be

20 construed to require a health information trustee to

21 disclose protected health information not otherwise

22 required to be disclosed by law.

23 (b) DISCLOSURE BY OFFICER, EMPLOYEE, OR

24 AGENT.—No officer, employee, or agent of a health infor25 mation trustee may disclose protected health information,
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•S 2296 PCS

1 except insofar as the health information trustee is per2 mitted to disclose such information for a purpose that is

3 authorized under this Act.

4 SEC. 5165. AUTHORIZATIONS FOR DISCLOSURE OF PRO5 TECTED HEALTH INFORMATION.

6 (a) WRITTEN AUTHORIZATIONS.—A health care pro7 vider and health plan may disclose protected health infor8 mation pursuant to an authorization executed by the en9 rollee who is the subject of the information, if each of the

10 following requirements is met:

11 (1) WRITING.—The authorization is in writing,

12 signed by the enrollee who is the subject of the in13 formation, and dated on the date of such signature.

14 (2) SEPARATE FORM.—The authorization is not

15 on a form used to authorize or facilitate the provi16 sion of, or payment for, health care.

17 (3) TRUSTEE DESCRIBED.—The trustee is spe18 cifically named or generically described in the au19 thorization as authorized to disclose such informa20 tion.

21 (4) RECIPIENT DESCRIBED.—The person to

22 whom the information is to be disclosed is specifi23 cally named or generically described in the author24 ization as a person to whom such information may

25 be disclosed.
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1 (5) STATEMENT OF INTENDED DISCLOSURES.—

2 The authorization contains an acknowledgment that

3 the enrollee who is the subject of the information

4 has received a statement of the disclosures that the

5 person to receive the protected health information

6 intends to make, which statement shall be in writ7 ing, on a form that is distinct from the authorization

8 for disclosure, and which statement must be received

9 by the enrollee authorizing the disclosure on or be10 fore such authorization is executed.

11 (6) INFORMATION DESCRIBED.—The informa12 tion to be disclosed is described in the authorization.

13 (7) AUTHORIZATION TIMELY RECEIVED.—The

14 authorization is received by the trustee during a pe15 riod described in subsection (c)(1).

16 (8) DISCLOSURE TIMELY MADE.—The disclo17 sure occurs during a period described in subsection

18 (c)(2).

19 (b) AUTHORIZATIONS REQUESTED IN CONNECTION

20 WITH PROVISION OF HEALTH CARE.—

21 (1) IN GENERAL.—A health information trustee

22 may not request that an individual person provide to

23 any other person an authorization described in sub24 section (a) on a day on which—
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•S 2296 PCS

1 (A) the trustee provides health care to the

2 individual requested to provide the authoriza3 tion; or

4 (B) in the case of a trustee that is a health

5 facility, the individual is admitted into the facil6 ity as a resident or inpatient in order to receive

7 health care.

8 (2) EXCEPTION.—Paragraph (1) does not apply

9 if a health information trustee requests that an indi10 vidual provide an authorization described in sub11 section (a) for the purpose of assisting the individual

12 in obtaining counseling or social services from a per13 son other than the trustee.

14 (c) TIME LIMITATIONS ON AUTHORIZATIONS.—

15 (1) RECEIPT BY TRUSTEE.—For purposes of

16 subsection (a)(7), an authorization is timely received

17 if it is received by the trustee during—

18 (A) the 1-year period beginning on the

19 date on which the authorization is signed under

20 subsection (a)(1), if the authorization permits

21 the disclosure of protected health information to

22 a person who provides health counseling or so23 cial services to individuals; or

24 (B) the 30-day period beginning on the

25 date on which the authorization is signed under
749

•S 2296 PCS

1 subsection (a)(1), if the authorization permits

2 the disclosure of protected health information to

3 a person other than a person described in sub4 paragraph (A).

5 (2) DISCLOSURE BY TRUSTEE.—For purposes

6 of subsection (a)(8), a disclosure is timely made if

7 it occurs before—

8 (A) the date or event (if any) specified in

9 the authorization upon which the authorization

10 expires; and

11 (B) the expiration of the 6-month period

12 beginning on the date on which the trustee re13 ceives the authorization.

14 (d) REVOCATION OR AMENDMENT OF AUTHORIZA15 TION.—

16 (1) IN GENERAL.—An individual may in writing

17 revoke or amend an authorization described in sub18 section (a), in whole or in part, at any time, except

19 when—

20 (A) disclosure of protected health informa21 tion has been authorized to permit validation of

22 expenditures for health care; or

23 (B) action has been taken in reliance on

24 the authorization.
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•S 2296 PCS

1 (2) NOTICE OF REVOCATION.—A health infor2 mation trustee who discloses protected health infor3 mation pursuant to an authorization that has been

4 revoked shall not be subject to any liability or pen5 alty under this subpart if—

6 (A) the reliance was in good faith;

7 (B) the trustee had no notice of the rev8 ocation; and

9 (C) the disclosure was otherwise in accord10 ance with the requirements of this subpart.

11 (e) DECEASED INDIVIDUAL.—The Board shall de12 velop and establish through regulation a procedure for ob13 taining protected health information relating to a deceased

14 individual when there is no administrator or executor of

15 such individual’s estate.

16 (f) MODEL AUTHORIZATIONS.—The Board, after no17 tice and opportunity for public comment, shall develop and

18 disseminate model written authorizations of the type de19 scribed in subsection (a) and model statements of intended

20 disclosures of the type described in paragraph (a)(5).

21 (g) EFFECT OF AUTHORIZATION ON PRIVILEGES.—

22 The execution by an individual of an authorization that

23 meets the requirements of this section for the purpose of

24 receiving health care or providing for the payment for

25 health care shall not be construed to affect any privilege
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1 that the individual may have under common or statutory

2 law in a court of a State or the United States.

3 (h) ADDITIONAL REQUIREMENTS OF TRUSTEE.—A

4 health information trustee may impose requirements for

5 an authorization that are in addition to the requirements

6 in this subsection.

7 (i) COPY.—A health information trustee who dis8 closes protected health information pursuant to an author9 ization under this section shall maintain a copy of the au10 thorization as part of the information.

11 (j) RULE OF CONSTRUCTION.—This section shall not

12 be construed—

13 (1) to require a health information trustee to

14 disclose protected health information; or

15 (2) to limit the right of a health information

16 trustee to charge a fee for the disclosure or repro17 duction of protected health information.

18 (k) SUBPOENAS.—If a health information trustee dis19 closes protected health information pursuant to an author20 ization in order to comply with a subpoena, the authoriza21 tion—

22 (1) shall specifically authorize the disclosure for

23 the purpose of permitting the trustee to comply with

24 the subpoena; and
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•S 2296 PCS

1 (2) shall otherwise meet the requirements in

2 this subsection.

3 SEC. 5166. TREATMENT; FINANCIAL AND ADMINISTRATIVE

4 TRANSACTIONS.

5 (a) DISCLOSURE OF INFORMATION.—

6 (1) IN GENERAL.—A health care provider,

7 health plan, or employer may disclose protected

8 health information to a health care provider for the

9 purpose of providing health care to an enrollee if the

10 enrollee who is the subject of the information has

11 not previously objected to the disclosure in writing.

12 (2) PROVIDING FOR PAYMENT.—A health care

13 provider, health plan, employer, or certified indexing

14 system may disclose protected health information to

15 a health plan for the purpose of providing for the

16 payment for health care furnished to an enrollee.

17 (3) COOPERATIVE.—A health care provider or

18 health plan may disclose protected health informa19 tion to a consumer purchasing cooperative estab20 lished under subtitle D of title I in connection with

21 a financial and administrative transaction described

22 in section 5113.

23 (4) INDEXING SYSTEMS.—A health care pro24 vider or health plan may disclose protected health

25 information to a certified indexing system or cer-
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•S 2296 PCS

1 tified clearinghouse for the purpose of carrying out

2 the functions of such system or clearinghouse under

3 part 1.

4 (b) SCOPE OF DISCLOSURE.—The disclosure of pro5 tected health information under this section shall be lim6 ited to the minimum amount necessary to accomplish the

7 purpose for which the disclosure is authorized.

8 SEC. 5167. OVERSIGHT.

9 (a) IN GENERAL.—A health information trustee may

10 disclose protected health information to a health oversight

11 agency for a purpose authorized by law.

12 (b) SCOPE OF DISCLOSURE.—The disclosure of pro13 tected health information under this section shall be lim14 ited to the minimum amount necessary to accomplish the

15 purpose for which the disclosure is authorized.

16 (c) USE IN ACTION AGAINST ENROLLEES.—Pro17 tected health information about an enrollee that is dis18 closed under this section may not be used in, or disclosed

19 to any person for use in, any administrative, civil, or crimi20 nal action or investigation directed against the enrollee

21 who is the subject of the information, except in an action

22 or investigation arising out of and directly related to re23 ceipt of health care or payment for health care or an ac24 tion involving a fraudulent claim related to health.
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•S 2296 PCS

1 SEC. 5168. NEXT OF KIN AND DIRECTORY INFORMATION.

2 (a) NEXT OF KIN.—A health care provider or person

3 that receives protected health information under section

4 5170 may disclose protected health information to the

5 next of kin or enrollee representative of the enrollee who

6 is the subject of the information or to an individual with

7 whom that enrollee has a personal relationship if—

8 (1) the enrollee who is the subject of the infor9 mation has not previously objected to the disclosure

10 after being notified of the right to object; and

11 (2) the information disclosed relates to health

12 care currently being provided to that enrollee.

13 (b) DIRECTORY INFORMATION.—A health care pro14 vider and a person receiving protected health information

15 under section 5170 may disclose information to any per16 son if—

17 (1) the information does not reveal specific in18 formation about the physical or mental condition of

19 the enrollee who is the subject of the information or

20 health care provided to that person;

21 (2) the enrollee who is the subject of the infor22 mation has not objected in writing to the disclosure

23 after being notified of the right to object; and

24 (3) the information consists only of 1 or more

25 of the following items:
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•S 2296 PCS

1 (A) The name of the enrollee who is the

2 subject of the information.

3 (B) If the enrollee who is the subject of

4 the information is receiving health care from a

5 health care provider on a premises controlled by

6 the provider—

7 (i) the location of the enrollee on the

8 premises; and

9 (ii) the general health status of the

10 enrollee, described as critical, poor, fair,

11 stable, or satisfactory or in terms denoting

12 similar conditions.

13 (c) IDENTIFICATION OF DEAD PERSON.—A health

14 care provider, health plan, employer, certified indexing

15 system, or certified clearinghouse may disclose protected

16 health information if necessary to assist in the identifica17 tion of a dead person.

18 (d) MINIMUM DISCLOSURE.—The disclosure of pro19 tected health information under this section shall be lim20 ited to the minimum amount necessary to accomplish the

21 purpose for which the disclosure is authorized.

22 SEC. 5169. PUBLIC HEALTH.

23 (a) IN GENERAL.—A health care provider, health

24 plan, public health authority, employer, or person that re25 ceives protected health information under section 5170
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•S 2296 PCS

1 may disclose protected health information to a public

2 health authority or other person authorized by law for use

3 in legally authorized—

4 (1) disease or injury reporting;

5 (2) public health surveillance; or

6 (3) public health investigation or intervention.

7 (b) SCOPE OF DISCLOSURE.—The disclosure of pro8 tected health information under this section shall be lim9 ited to the minimum amount necessary to accomplish the

10 purpose for which the disclosure is authorized.

11 SEC. 5170. EMERGENCY CIRCUMSTANCES.

12 (a) IN GENERAL.—A health care provider, health

13 plan, employer, certified indexing system, certified clear14 inghouse, or person that receives protected health informa15 tion under this section may disclose protected health infor16 mation in emergency circumstances when necessary to

17 protect the health or safety of an individual from immi18 nent harm.

19 (b) SCOPE OF DISCLOSURE.—The disclosure of pro20 tected health information under this section shall be lim21 ited to the minimum amount necessary to accomplish the

22 purpose for which the disclosure is permitted and shall

23 be limited to persons who need the information to take

24 action to protect the health or safety of the enrollee.
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•S 2296 PCS

1 (c) USE IN ACTION AGAINST ENROLLEE.—Protected

2 health information about an enrollee that is disclosed

3 under this section may not be used in, or disclosed to any

4 person for use in, any administrative, civil, or criminal ac5 tion or investigation directed against the enrollee.

6 SEC. 5171. JUDICIAL AND ADMINISTRATIVE PURPOSES.

7 (a) IN GENERAL.—A health care provider, health

8 plan, health oversight agency, or employer may disclose

9 protected health information—

10 (1) pursuant to the Federal Rules of Civil Pro11 cedure, the Federal Rules of Criminal Procedure, or

12 comparable rules of other courts or administrative

13 agencies in connection with litigation or proceedings

14 to which the enrollee who is the subject of the infor15 mation is a party and in which the enrollee has

16 placed the enrollee’s physical or mental condition in

17 issue;

18 (2) if ordered by a court in connection with an

19 examination of an enrollee; or

20 (3) pursuant to a law requiring the reporting of

21 specific medical information to law enforcement au22 thorities.

23 (b) SCOPE OF DISCLOSURE.—The disclosure of pro24 tected health information under this section shall be lim-
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•S 2296 PCS

1 ited to the minimum amount necessary to accomplish the

2 purpose for which the disclosure is permitted.

3 (c) LIMIT ON ADDITIONAL DISCLOSURE.—A person

4 that receives protected health information under this sec5 tion may use the information and disclose such informa6 tion only for the purpose for which it was received.

7 SEC. 5172. HEALTH RESEARCH.

8 (a) IN GENERAL.—Subject to subsection (d), a health

9 information trustee may disclose protected health informa10 tion to a health researcher if an institutional review board

11 has determined that the research project engaged in by

12 the health researcher—

13 (1) requires use of the protected health infor14 mation for the effectiveness of the project; and

15 (2) is of sufficient importance to outweigh the

16 intrusion into the privacy of the enrollee who is the

17 subject of the information that would result from the

18 disclosure.

19 (b) OBLIGATIONS OF RECIPIENT.—A person who re20 ceives protected health information pursuant to subsection

21 (a)—

22 (1) shall remove or destroy, at the earliest op23 portunity consistent with the purposes of the project,

24 information that would enable an enrollee to be iden25 tified, unless—
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•S 2296 PCS

1 (A) an institutional review board has de2 termined that there is a health or research jus3 tification for retention of such identifiers; and

4 (B) there is an adequate plan to protect

5 the identifiers from disclosure that is inconsist6 ent with this section; and

7 (2) shall use protected health information solely

8 for purposes of the health research project for which

9 disclosure was authorized under this section.

10 (c) SCOPE OF DISCLOSURE.—The disclosure of pro11 tected health information under this section shall be lim12 ited to the minimum amount necessary to accomplish the

13 research purpose for which the disclosure is authorized.

14 (d) RESEARCH REQUIRING DIRECT CONTACT.—Pro15 tected information may not be disclosed to a health re16 searcher for a research project that includes direct contact

17 with an enrollee who is the subject of protected health in18 formation unless the enrollee has been given notice by the

19 health information trustee that such contact is possible,

20 has been given the opportunity to object to the disclosure,

21 and has not objected.

22 SEC. 5173. LAW ENFORCEMENT.

23 (a) IN GENERAL.—A health care provider, health

24 plan, health oversight agency, employer, or other person

25 that receives protected health information under section
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•S 2296 PCS

1 5170 may disclose protected health information to a law

2 enforcement agency (other than a health oversight agency

3 governed by section 5167) if the information is requested

4 for use—

5 (1) in an investigation or prosecution of a

6 health information trustee;

7 (2) in the identification of a victim or witness

8 in a law enforcement inquiry; or

9 (3) in connection with the investigation of

10 criminal activity committed against the trustee or on

11 premises controlled by the trustee.

12 (b) CERTIFICATION.—When a law enforcement agen13 cy (other than a health oversight agency) requests that

14 a health information trustee disclose protected health in15 formation under this subsection, the law enforcement

16 agency shall provide the trustee with a written certifi17 cation that—

18 (1) specifies the information requested;

19 (2) states that the information is needed for a

20 lawful purpose under this section; and

21 (3) is signed by a supervisory official of a rank

22 designated by the head of the agency.

23 (c) SCOPE OF DISCLOSURE.—The disclosure of pro24 tected health information under this section shall be lim-
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•S 2296 PCS

1 ited to the minimum amount necessary to accomplish the

2 purposes for which the disclosure is permitted.

3 (d) RESTRICTIONS ON ADDITIONAL DISCLOSURE.—

4 Protected health information about an enrollee that is dis5 closed to a law enforcement agency under this section—

6 (1) may not be disclosed for, or used in, any

7 administrative, civil, or criminal action or investiga8 tion against the enrollee, except in an action or in9 vestigation arising out of and directly related to the

10 action or investigation for which the information was

11 obtained; and

12 (2) may not be otherwise used or disclosed by

13 the law enforcement agency, unless the use or disclo14 sure is necessary to fulfill the purpose for which the

15 information was obtained and is not otherwise pro16 hibited by law.

17 SEC. 5174. SUBPOENAS AND WARRANTS.

18 (a) IN GENERAL.—A health care provider, health

19 plan, health oversight agency, employer, or person that re20 ceives protected health information under section 5170

21 may disclose protected health information under this sec22 tion if the disclosure is pursuant to—

23 (1) a subpoena issued under the authority of a

24 grand jury, and the trustee is provided a written cer25 tification by the grand jury seeking the information
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•S 2296 PCS

1 that the grand jury has complied with the applicable

2 access provisions of section 5175;

3 (2) an administrative subpoena or a judicial

4 subpoena or warrant, and the trustee is provided a

5 written certification by the person seeking the infor6 mation that the person has complied with the appli7 cable access provisions of section 5175 or 5176; or

8 (3) an administrative subpoena or a judicial

9 subpoena or warrant, and the disclosure otherwise

10 meets the conditions of section 5167, 5169, 5170,

11 5171, or 5173.

12 (b) RESTRICTIONS ON ADDITIONAL DISCLOSURE.—

13 Protected health information about an enrollee that is re14 ceived under—

15 (1) subsection (a) may not be disclosed for, or

16 used in, any administrative, civil, or criminal action

17 or investigation against the enrollee, except in an ac18 tion or investigation arising out of and directly relat19 ed to the inquiry for which the information was ob20 tained;

21 (2) subsection (a)(2) may not be otherwise dis22 closed by the recipient unless the disclosure is nec23 essary to fulfill the purpose for which the informa24 tion was obtained; and
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•S 2296 PCS

1 (3) subsection (a)(3) may not be disclosed by

2 the recipient unless the recipient complies with the

3 conditions and restrictions on disclosure with which

4 the recipient would have been required to comply if

5 the disclosure had been made under section 5168,

6 5169, 5170, 5171, or 5173.

7 SEC. 5175. ACCESS PROCEDURES FOR LAW ENFORCEMENT

8 SUBPOENAS AND WARRANTS.

9 (a) PROBABLE CAUSE REQUIREMENT.—A govern10 ment authority may not obtain protected health informa11 tion about an enrollee under section 5174(a) (1) or (2)

12 for use in a law enforcement inquiry unless there is prob13 able cause to believe that the information is relevant to

14 a legitimate law enforcement inquiry being conducted by

15 the government authority.

16 (b) WARRANTS.—A government authority that ob17 tains protected health information about an enrollee under

18 circumstances described in subsection (a) and pursuant to

19 a warrant shall, not later than 30 days after the date the

20 warrant was executed, serve the enrollee with, or mail to

21 the last known address of the enrollee, a notice that pro22 tected health information about the enrollee was so ob23 tained.

24 (c) SUBPOENAS.—Except as provided in subsection

25 (d), a government authority may not obtain protected
764

•S 2296 PCS

1 health information about an enrollee under circumstances

2 described in subsection (a) and pursuant to a subpoena

3 unless a copy of the subpoena has been served on the en4 rollee on or before the date of return of the subpoena, to5 gether with a notice of the enrollee’s right to challenge

6 the subpoena in accordance with section 5176, and—

7 (1) 30 days have passed from the date of serv8 ice on the enrollee and within that time period the

9 enrollee has not initiated a challenge in accordance

10 with section 5176; or

11 (2) disclosure is ordered by a court after chal12 lenge under section 5176.

13 (d) APPLICATION FOR DELAY.—

14 (1) IN GENERAL.—A government authority may

15 apply ex parte and under seal to an appropriate

16 court to delay (for an initial period of not longer

17 than 90 days) serving a copy of a subpoena or notice

18 required under subsection (b) or (c) with respect to

19 a law enforcement inquiry. The government author20 ity may apply to the court for extensions of the

21 delay.

22 (2) REASONS FOR DELAY.—An application for

23 a delay, or extension of a delay, under this sub24 section shall state, with reasonable specificity, the

25 reasons why the delay or extension is being sought.
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•S 2296 PCS

1 (3) EX PARTE ORDER.—The court shall enter

2 an ex parte order delaying, or extending the delay

3 of, notice and an order prohibiting the disclosure of

4 the request for or disclosure of the protected health

5 information and an order requiring the disclosure of

6 the protected health information if the court finds

7 that—

8 (A) the inquiry being conducted is within

9 the lawful jurisdiction of the government au10 thority seeking the protected health informa11 tion;

12 (B) there is probable cause to believe that

13 the protected health information being sought is

14 relevant to a legitimate law enforcement in15 quiry;

16 (C) the government authority’s need for

17 the information outweighs the privacy interest

18 of the enrollee who is the subject of the infor19 mation; and

20 (D) there is reasonable ground to believe

21 that receipt of notice by the enrollee will result

22 in—

23 (i) endangering the life or physical

24 safety of any individual;

25 (ii) flight from prosecution;
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•S 2296 PCS

1 (iii) destruction of or tampering with

2 evidence or the information being sought;

3 or

4 (iv) intimidation of potential wit5 nesses.

6 SEC. 5176. CHALLENGE PROCEDURES FOR LAW ENFORCE7 MENT SUBPOENAS.

8 (a) MOTION TO QUASH SUBPOENA.—Within 30 days

9 after the date of service of a subpoena of a government

10 authority seeking protected health information about an

11 enrollee under section 5174 (a) (1) or (2), or notice that

12 protected health information has been obtained by a gov13 ernment authority, the enrollee may file a motion to quash

14 the subpoena—

15 (1) in the case of a State judicial subpoena, in

16 the court which issued the subpoena;

17 (2) in the case of a subpoena issued under the

18 authority of a State that is not a State judicial sub19 poena, in a court of competent jurisdiction;

20 (3) in the case of a subpoena issued under the

21 authority of a Federal court, in the United States

22 district court for the district in which the enrollee

23 resides or in which the subpoena was issued; or

24 (4) in the case of any other subpoena issued

25 under the authority of the United States, in the
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•S 2296 PCS

1 United States district court for the district in which

2 the enrollee resides or in which the subpoena was is3 sued.

4 (b) COPY.—A copy of the motion shall be served by

5 the enrollee upon the government authority by registered

6 or certified mail.

7 (c) PROCEEDINGS.—The government authority may

8 file with the court such papers, including affidavits and

9 other sworn documents, as sustain the validity of the sub10 poena. The enrollee may file with the court reply papers

11 in response to the government authority’s filing. The

12 court, upon the request of the enrollee or the government

13 authority or both, may proceed in camera. The court may

14 conduct such proceedings as it deems appropriate to rule

15 on the motion, but shall endeavor to expedite its deter16 mination.

17 (d) STANDARD FOR DECISION.—A court may deny

18 a motion under subsection (a) if it finds there is probable

19 cause to believe the protected health information being

20 sought is relevant to a legitimate law enforcement inquiry

21 being conducted by the government authority, unless the

22 court finds the enrollee’s privacy interest outweighs the

23 government authority’s need for the information. The en24 rollee shall have the burden of demonstrating that the en-
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•S 2296 PCS

1 rollee’s privacy interest outweighs the need established by

2 the government authority for the information.

3 (e) SPECIFIC CONSIDERATIONS WITH RESPECT TO

4 PRIVACY INTEREST.—In reaching its determination, the

5 court shall consider—

6 (1) the particular purpose for which the infor7 mation was collected;

8 (2) the degree to which disclosure of the infor9 mation will embarrass, injure, or invade the privacy

10 of the enrollee;

11 (3) the effect of the disclosure on the enrollee’s

12 future health care;

13 (4) the importance of the inquiry being con14 ducted by the government authority, and the impor15 tance of the information to that inquiry; and

16 (5) any other factor deemed relevant by the

17 court.

18 (f) ATTORNEY’S FEES.—In the case of a motion

19 brought under subsection (a) in which the enrollee has

20 substantially prevailed, the court may assess against the

21 government authority a reasonable attorney’s fee and

22 other litigation costs (including expert’s fees) reasonably

23 incurred.

24 (g) NO INTERLOCUTORY APPEAL.—A ruling denying

25 a motion to quash under this section shall not be deemed
769

•S 2296 PCS

1 to be a final order, and no interlocutory appeal may be

2 taken therefrom by the enrollee. An appeal of such a rul3 ing may be taken by the enrollee within such period of

4 time as is provided by law as part of any appeal from a

5 final order in any legal proceeding initiated against the

6 enrollee arising out of or based upon the protected health

7 information disclosed.

8 SEC. 5177. ACCESS AND CHALLENGE PROCEDURES FOR

9 SUBPOENAS OTHER THAN LAW ENFORCE10 MENT SUBPOENAS.

11 (a) IN GENERAL.—A private party may not obtain

12 protected health information from a health care provider,

13 health plan, employer, or person that receives protected

14 health information under section 5170 pursuant to a sub15 poena unless—

16 (1) a copy of the subpoena together with a no17 tice of the enrollee’s right to challenge the subpoena

18 by filing a motion to quash under subsection (b), has

19 been served upon the enrollee who is the subject of

20 the protected health information on or before the

21 date on which the subpoena was served; and

22 (2)(A) 30 days have passed since the date of

23 service, and within that time period the enrollee has

24 not filed a motion under subsection (b); or
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•S 2296 PCS

1 (B) disclosure is ordered by a court under that

2 subsection.

3 (b) MOTION TO QUASH.—Within 30 days after serv4 ice of a subpoena seeking protected health information

5 under subsection (a), the enrollee who is the subject of

6 the protected health information may file in any court of

7 competent jurisdiction a motion to quash the subpoena,

8 with a copy served on the person seeking the information.

9 The enrollee may oppose or seek to limit the subpoena on

10 any ground that would be available if the enrollee were

11 in sole possession of the information, including privacy

12 and relevance.

13 (c) STANDARD FOR DECISION.—The court shall

14 grant a motion under subsection (b) unless the respondent

15 demonstrates that—

16 (1) there is reasonable ground to believe the in17 formation is relevant to a lawsuit or other judicial

18 or administrative proceeding; and

19 (2) the need of the respondent for the informa20 tion outweighs the privacy interest of the enrollee.

21 (d) SPECIFIC CONSIDERATIONS WITH RESPECT TO

22 PRIVACY INTEREST.—In determining under subsection (c)

23 whether the need of the respondent for the information

24 outweighs the privacy interest of the enrollee, the court

25 shall consider—
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•S 2296 PCS

1 (1) the particular purpose for which the infor2 mation was collected;

3 (2) the degree to which disclosure of the infor4 mation would embarrass, injure, or invade the pri5 vacy of the enrollee;

6 (3) the effect of the disclosure on the enrollee’s

7 future health care;

8 (4) the importance of the information to the

9 lawsuit or proceeding; and

10 (5) any other relevant factor.

11 (e) ATTORNEY’S FEES.—In the case of a motion

12 brought under subsection (b) in which the enrollee has

13 substantially prevailed, the court may assess against the

14 respondent a reasonable attorney’s fee and other litigation

15 costs and expenses (including expert’s fees) reasonably in16 curred.

17 SEC. 5178. SECURITY.

18 (a) IN GENERAL.—A health information trustee shall

19 establish and maintain appropriate administrative, tech20 nical, and physical safeguards—

21 (1) to ensure the integrity and confidentiality of

22 protected health information created or received by

23 the trustee; and
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•S 2296 PCS

1 (2) to protect against any anticipated threats or

2 hazards to the security or integrity of such informa3 tion.

4 (b) SPECIFIC SECURITY MEASURES.—The security

5 measures adopted by a health information trustee shall in6 clude the following:

7 (1) officers, employees, and agents of the trust8 ee who have access to protected health information

9 created or received by the trustee shall be regularly

10 trained in the requirements governing such informa11 tion;

12 (2) complete, accurate, and readily available

13 documentation of security features shall be main14 tained, if the maintenance of such documentation is

15 practicable, taking into account the technical capa16 bilities of the system used to maintain protected

17 health information and the costs of such mainte18 nance; and

19 (3) appropriate signs and warnings shall be

20 posted to advise of the need to secure protected

21 health information.

22 (c) REGULATIONS.—The Board shall promulgate reg23 ulations regarding security measures for protected health

24 information.
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•S 2296 PCS

1 SEC. 5179. INSPECTION OF PROTECTED HEALTH INFORMA2 TION.

3 (a) INSPECTION OF PROTECTED HEALTH INFORMA4 TION.—

5 (1) IN GENERAL.—Except as provided in para6 graph (3), a health care provider or health plan—

7 (A) shall permit an enrollee who is the

8 subject of protected health information to in9 spect any such information that the provider or

10 plan maintains;

11 (B) shall permit the enrollee to have a

12 copy of the information;

13 (C) shall permit a person who has been

14 designated in writing by the enrollee who is the

15 subject of the information to inspect, or to have

16 a copy of, the information on behalf of the en17 rollee or to accompany the enrollee during the

18 inspection; and

19 (D) may offer to explain or interpret infor20 mation that is inspected or copied under this

21 subsection.

22 (2) USE OF INDEXING SYSTEMS.—Except as

23 provided in paragraph (3), a health plan or health

24 care provider shall, upon written request of an en25 rollee—
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•S 2296 PCS

1 (A) determine the identity of previous pro2 viders to the enrollee; and

3 (B) obtain protected health information re4 garding the enrollee.

5 The plan or provider may obtain such information

6 through use of a certified indexing system.

7 (3) EXCEPTIONS.—A health care provider or

8 health plan is not required by this section to permit

9 inspection or copying of protected health information

10 if any of the following conditions apply:

11 (A) MENTAL HEALTH TREATMENT

12 NOTES.—The information consists of psy13 chiatric, psychological, or mental health treat14 ment notes, and the provider or plan deter15 mines, based on reasonable medical judgment,

16 that inspection or copying of the notes would

17 cause sufficient harm to the enrollee who is the

18 subject of the notes so as to outweigh the desir19 ability of permitting access, and the provider or

20 plan has not disclosed the notes to any person

21 not directly engaged in treating the enrollee, ex22 cept with the authorization of the enrollee or

23 under compulsion of law.

24 (B) INFORMATION ABOUT OTHERS.—The

25 information relates to an individual other than
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•S 2296 PCS

1 the enrollee seeking to inspect or have a copy

2 of the information and the provider or plan de3 termines, based on reasonable medical judg4 ment, that inspection or copying of the informa5 tion would cause sufficient harm to 1 or both

6 of the individuals so as to outweigh the desir7 ability of permitting access.

8 (C) ENDANGERMENT TO LIFE OR SAFE9 TY.—The provider or plan determines that dis10 closure of the information could reasonably be

11 expected to endanger the life or physical safety

12 of any individual.

13 (D) CONFIDENTIAL SOURCE.—The infor14 mation identifies or could reasonably lead to the

15 identification of a person (other than a health

16 care provider) who provided information under

17 a promise of confidentiality to a health care

18 provider concerning the enrollee who is the sub19 ject of the information.

20 (E) ADMINISTRATIVE PURPOSES.—The in21 formation—

22 (i) is used by the provider or plan

23 solely for administrative purposes and not

24 in the provision of health care to the en-
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•S 2296 PCS

1 rollee who is the subject of the informa2 tion; and

3 (ii) has not been disclosed by the pro4 vider or plan to any other person.

5 (3) INSPECTION AND COPYING OF SEGREGABLE

6 PORTION.—A health care provider or health plan

7 shall permit inspection and copying under paragraph

8 (1) of any reasonably segregable portion of a record

9 after deletion of any portion that is exempt under

10 paragraph (2).

11 (4) CONDITIONS.—A health care provider or

12 health plan may—

13 (A) require a written request for the in14 spection and copying of protected health infor15 mation under this subsection; and

16 (B) charge a reasonable fee (not greater

17 than the actual cost) for—

18 (i) permitting inspection of informa19 tion under this subsection; and

20 (ii) providing a copy of protected

21 health information under this subsection.

22 (5) STATEMENT OF REASONS FOR DENIAL.—If

23 a health care provider or health plan denies a re24 quest for inspection or copying under this sub25 section, the provider or plan shall provide the en-
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•S 2296 PCS

1 rollee who made the request (or the enrollee’s des2 ignated representative) with a written statement of

3 the reasons for the denial.

4 (6) DEADLINE.—A health care provider or

5 health plan shall comply with or deny a request for

6 inspection or copying of protected health information

7 under this subsection within the 30-day period be8 ginning on the date on which the provider or plan

9 receives the request.

10 SEC. 5180. AMENDMENT OF PROTECTED HEALTH INFORMA11 TION.

12 (a) IN GENERAL.—A health care provider or health

13 plan that is required to comply with section 5179 shall,

14 within the 45-day period beginning on the date on which

15 the provider or plan receives from an enrollee a written

16 request that the provider or plan correct or amend the

17 information—

18 (1) make the correction or amendment re19 quested;

20 (2) inform the enrollee of the correction or

21 amendment that has been made;

22 (3) inform any certified indexing system or cer23 tified clearinghouse to which the uncorrected or

24 unamended portion of the information was pre-
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•S 2296 PCS

1 viously disclosed, of the correction or amendment;

2 and

3 (4) inform any person who is identified by the

4 enrollee, who is not an officer, employee or agent of

5 the provider or plan, and to whom the uncorrected

6 or unamended portion of the information was pre7 viously disclosed, of the correction or amendment

8 that has been made.

9 (b) REFUSAL TO CORRECT.—If the provider or plan

10 refuses to make the corrections, the provider or plan shall

11 inform the enrollee of—

12 (1) the reasons for the refusal of the provider

13 or plan to make the correction or amendment;

14 (2) any procedures for further review of the re15 fusal; and

16 (3) the enrollee’s right to file with the provider

17 or plan a concise statement setting forth the re18 quested correction or amendment and the enrollee’s

19 reasons for disagreeing with the refusal of the pro20 vider or plan.

21 (c) BASES FOR REQUEST TO CORRECT OR

22 AMEND.—An enrollee may request correction or amend23 ment of protected health information about the enrollee

24 under paragraph (a) if the information is not timely, accu25 rate, relevant to the system of records, or complete.
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•S 2296 PCS

1 (d) STATEMENT OF DISAGREEMENT.—After an en2 rollee has filed a statement of disagreement under para3 graph (b)(3), the provider or plan, in any subsequent dis4 closure of the disputed portion of the information—

5 (1) shall include a copy of the enrollee’s state6 ment; and

7 (2) may include a concise statement of the rea8 sons of the provider or plan for not making the re9 quested correction or amendment.

10 (e) RULE OF CONSTRUCTION.—This section shall not

11 be construed to require a health care provider or health

12 plan to conduct a formal, informal, or other hearing or

13 proceeding concerning a request for a correction or

14 amendment to protected health information the provider

15 or plan maintains.

16 (f) CORRECTION.—For purposes of paragraph (a), a

17 correction is deemed to have been made to protected

18 health information when information that is not timely,

19 accurate, relevant to the system of records, or complete

20 is clearly marked as incorrect or when supplementary cor21 rect information is made part of the information.

22 (g) NOTICE OF INFORMATION PRACTICES.—

23 (1) PREPARATION OF WRITTEN NOTICE.—A

24 health care provider or health plan shall prepare a
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•S 2296 PCS

1 written notice of information practices describing the

2 following:

3 (A) PERSONAL RIGHTS OF AN EN4 ROLLEE.—The rights under this section of an

5 enrollee who is the subject of protected health

6 information, including the right to inspect and

7 copy such information and the right to seek

8 amendments to such information, and the pro9 cedures for authorizing disclosures of protected

10 health information and for revoking such au11 thorizations.

12 (B) PROCEDURES OF PROVIDER OR

13 PLAN.—The procedures established by the pro14 vider or plan for the exercise of the rights of

15 enrollees about whom protected health informa16 tion is maintained.

17 (C) AUTHORIZED DISCLOSURES.—The dis18 closures of protected health information that

19 are authorized.

20 (2) DISSEMINATION OF NOTICE.—A health care

21 provider or health plan—

22 (A) shall, upon request, provide any en23 rollee with a copy of the notice of information

24 practices described in paragraph (1); and
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•S 2296 PCS

1 (B) shall make reasonable efforts to inform

2 enrollees in a clear and conspicuous manner of

3 the existence and availability of the notice.

4 (3) MODEL NOTICE.—The Board, after notice

5 and opportunity for public comment, shall develop

6 and disseminate a model notice of information prac7 tices for use by health care providers and health

8 plans under this section.

9 SEC. 5181. ACCOUNTING FOR DISCLOSURES.

10 (a) IN GENERAL.—A health care provider or health

11 plan that is required to comply with sections 5179 and

12 5180 shall create and maintain, with respect to any pro13 tected health information disclosed, a record of—

14 (1) the date and purpose of the disclosure;

15 (2) the name of the person to whom or to which

16 the disclosure was made;

17 (3) the address of the person to whom or to

18 which the disclosure was made or the location to

19 which the disclosure was made; and

20 (4) the information disclosed, if the recording of

21 the information disclosed is practicable, taking into

22 account the technical capabilities of the system used

23 to maintain the record and the costs of such mainte24 nance.
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•S 2296 PCS

1 (b) DISCLOSURE RECORD PART OF INFORMATION.—

2 A record created and maintained under paragraph (a)

3 shall be maintained as part of the protected health infor4 mation to which the record pertains, except for requests

5 from and disclosures to health oversight agencies.

6 (c) CERTIFIED INDEXING SYSTEMS AND CERTIFIED

7 CLEARINGHOUSES.—

8 (1) IN GENERAL.—Certified indexing systems

9 and certified clearinghouses shall account for disclo10 sures of protected health information in the manner

11 prescribed under subsection (a).

12 (2) SPECIAL RULE.—Paragraph (1) shall not

13 apply to disclosures made in connection with finan14 cial and administrative transactions and to health

15 information protection organizations (as such terms

16 are defined under part 1) for the creation of health

17 information that is non-identifiable health informa18 tion.

19 SEC. 5182. STANDARDS FOR ELECTRONIC DOCUMENTS AND

20 COMMUNICATIONS.

21 The Board, after notice and opportunity for public

22 comment, shall promulgate standards with respect to the

23 creation, transmission, receipt, and maintenance, in elec24 tronic form, of each written document required or author25 ized under this subpart. When a signature is required with
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•S 2296 PCS

1 respect to a written document under any other provision

2 of this subpart, such standards shall provide for an elec3 tronic substitute that serves the functional equivalent of

4 a signature.

5 SEC. 5183. RIGHTS OF INCOMPETENTS.

6 (a) EFFECT OF DECLARATION OF INCOMPETENCE.—

7 Except as provided in section 5184, if an enrollee has been

8 declared to be incompetent by a court of competent juris9 diction, the rights of the enrollee under this subpart shall

10 be exercised and discharged in the best interests of the

11 enrollee through the enrollee’s representative.

12 (b) NO COURT DECLARATION.—Except as provided

13 in section 5184, if a health care provider determines that

14 an enrollee, who has not been declared to be incompetent

15 by a court of competent jurisdiction, suffers from a medi16 cal condition that prevents the enrollee from acting know17 ingly or effectively on the enrollee’s own behalf, the right

18 of the enrollee to authorize disclosure may be exercised

19 and discharged in the best interest of the enrollee by the

20 enrollee’s next of kin.

21 SEC. 5184. RIGHTS OF MINORS.

22 (a) INDIVIDUALS WHO ARE 18 OR LEGALLY CAPA23 BLE.—In the case of an enrollee—

24 (1) who is 18 years of age or older, all rights

25 of the enrollee shall be exercised by the enrollee; or
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•S 2296 PCS

1 (2) who, acting alone, has the legal right, as de2 termined by State law, to apply for and obtain a

3 type of medical examination, care, or treatment and

4 who has sought such examination, care, or treat5 ment, the enrollee shall exercise all rights of an en6 rollee under this subpart with respect to protected

7 health information relating to such examination,

8 care, or treatment.

9 (b) INDIVIDUALS UNDER 18.—Except as provided in

10 subsection (a)(2), in the case of an enrollee who is—

11 (1) under 14 years of age, all the enrollee’s

12 rights under this subpart shall be exercised through

13 the parent or legal guardian of the enrollee; or

14 (2) 14, 15, 16, or 17 years of age, the rights

15 of inspection and amendment, and the right to au16 thorize disclosure of protected health information of

17 the enrollee may be exercised either by the enrollee

18 or by the parent or legal guardian of the enrollee.

19 SEC. 5185. NO LIABILITY FOR PERMISSIBLE DISCLOSURES.

20 A health information trustee who makes a disclosure

21 of protected health information about an enrollee that is

22 permitted by this subpart shall not be liable to the enrollee

23 for the disclosure under common law.
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•S 2296 PCS

1 SEC. 5186. NO LIABILITY FOR INSTITUTIONAL REVIEW

2 BOARD DETERMINATIONS.

3 If the members of an institutional review board make

4 a determination in good faith that—

5 (1) a health research project is of sufficient im6 portance to outweigh the intrusion into the privacy

7 of an enrollee; and

8 (2) the effectiveness of the project requires use

9 of protected health information,

10 the members, the board, and the parent institution of the

11 board shall not be liable to the enrollee as a result of the

12 determination.

13 SEC. 5187. GOOD FAITH RELIANCE ON CERTIFICATION.

14 A health information trustee who relies in good faith

15 on a certification by a government authority or other per16 son and discloses protected health information about an

17 enrollee in accordance with this subpart shall not be liable

18 to the enrollee for such disclosure.

19 SEC. 5188. CIVIL PENALTY.

20 (a) VIOLATION.—Any health information trustee who

21 the Board determines has substantially failed to comply

22 with this subpart shall be subject, in addition to any other

23 penalties that may be prescribed by law, to a civil penalty

24 of not more than $10,000 for each such violation.

25 (b) PROCEDURES FOR IMPOSITION OF PENALTIES.—

26 Section 1128A of the Social Security Act (42 U.S.C.
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•S 2296 PCS

1 1320a–7a), other than subsections (a) and (b) and the

2 second sentence of subsection (f) of that section, shall

3 apply to the imposition of a civil monetary penalty under

4 this section in the same manner as such provisions apply

5 with respect to the imposition of a penalty under section

6 1128A of that Act.

7 SEC. 5189. CIVIL ACTION.

8 (a) IN GENERAL.—An individual who is aggrieved by

9 conduct in violation of this subpart may bring a civil ac10 tion to recover—

11 (1) the greater of actual damages or liquidated

12 damages of $5,000;

13 (2) punitive damages;

14 (3) a reasonable attorney’s fee and expenses of

15 litigation;

16 (4) costs of litigation; and

17 (5) such preliminary and equitable relief as the

18 court determines to be appropriate.

19 (b) LIMITATION.—No action may be commenced

20 under this section more than 3 years after the date on

21 which the violation was or should reasonably have been

22 discovered.
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•S 2296 PCS

1 SEC. 5190. RELATIONSHIP TO OTHER LAWS.

2 (a) STATE LAW.—Except as provided in subsections

3 (b), (c), and (d), this subpart preempts any State law to

4 the extent that such law is inconsistent with this subpart.

5 (b) LAWS RELATING TO PUBLIC HEALTH.—Nothing

6 in this subpart is intended to preempt or operate to the

7 exclusion of any State public health law that prevents or

8 regulates disclosure of protected health information other9 wise allowed under this Act.

10 (c) PRIVILEGES.—Nothing in this subpart is intended

11 to preempt or modify State common or statutory law to

12 the extent such law concerns a privilege of a witness or

13 person in a court of the State. This subpart does not su14 persede or modify Federal common or statutory law to the

15 extent such law concerns a privilege of a witness or person

16 in a court of the United States.

17 (d) CERTAIN DUTIES UNDER STATE OR FEDERAL

18 LAW.—This subpart shall not be construed to preempt,

19 supersede, or modify the operation of—

20 (1) any law that provides for the reporting of

21 vital statistics such as birth or death information;

22 (2) any law requiring the reporting of abuse or

23 neglect information about any individual; or

24 (3) subpart II of part E of title XXVI of the

25 Public Health Service Act (relating to notifications
788

•S 2296 PCS

1 of emergency response employees of possible expo2 sure to infectious diseases); or

3 (4) any federal law that prevents or regulates

4 disclosure of protected health information.

5 SEC. 5191. PRIOR WRITTEN CONSENT.

6 Except as otherwise provided in this title, no individ7 ually identifiable health care information may be disclosed,

8 shared or otherwise transmitted without the prior, valid,

9 written consent of the individuals about whom the infor10 mation is maintained. Such consent may not be provided

11 on a form that is used to authorize or facilitate the provi12 sion of, or payment for, health care. A separate consent

13 shall be obtained for each proposed disclosure under this

14 section. With respect to minors or individuals deemed in15 capable of giving valid written consent, State law shall

16 apply as appropriate.

17 SEC. 5192. PROVIDER IDENTIFIABLE DATA.

18 The Board shall establish standards for the disclo19 sure and transmission of provider identifiable data.

20 PART 3—INTERIM REQUIREMENTS FOR

21 ADMINISTRATIVE SIMPLIFICATION

22 SEC. 5195. STANDARD BENEFIT FORMS.

23 (a) DEVELOPMENT.—Not later than 1 year after the

24 date of the enactment of this Act, the National Health

25 Board shall develop, promulgate, and publish in the Fed-
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•S 2296 PCS

1 eral Register the following standard health care benefit

2 forms:

3 (1) An enrollment and disenrollment form to be

4 used to record enrollment and disenrollment in a

5 health benefit plan.

6 (2) A clinical encounter record to be used by

7 health benefit plans and health service providers.

8 (3) A claim form to be used in the submission

9 of claims for benefits or payment under a health

10 benefit plan.

11 (b) INSTRUCTIONS, DEFINITIONS, AND CODES.—

12 Each standard form developed under subsection (a) shall

13 include instructions for completing the form that—

14 (1) specifically define, to the extent practicable,

15 the data elements contained in the form; and

16 (2) standardize any codes or data sets to be

17 used in completing the form.

18 (c) REQUIREMENTS FOR ADOPTION OF FORMS.—

19 (1) HEALTH SERVICE PROVIDERS.—On or after

20 the date that is 270 days after the publication of the

21 standard forms developed under subsection (a), a

22 health service provider that furnishes items or serv23 ices in the United States for which payment may be

24 made under a health benefit plan may not—
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•S 2296 PCS

1 (A) maintain records of clinical encounters

2 involving such items or services that are re3 quired to be maintained by the National Health

4 Board in a paper form that is not the clinical

5 encounter record promulgated by the Board; or

6 (B) submit any claim for benefits or pay7 ment for such services to such plan in a paper

8 form that is not the claim form promulgated by

9 the National Health Board.

10 (2) HEALTH BENEFIT PLANS.—On or after the

11 date that is 270 days after the publication of the

12 standard forms developed under subsection (a), a

13 health benefit plan may not—

14 (A) record enrollment and disenrollment in

15 a paper form that is not the enrollment and

16 disenrollment form promulgated by the Na17 tional Health Board;

18 (B) maintain records of clinical encounters

19 that are required to be maintained by the Na20 tional Health Board in a paper form that is not

21 the clinical encounter record promulgated by

22 the Board; or

23 (C) reject a claim for benefits or payment

24 under the plan on the basis of the form or me25 dium in which the claim is submitted if—
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•S 2296 PCS

1 (i) the claim is submitted on the claim

2 form promulgated by the National Health

3 Board; and

4 (ii) the plan accepts claims submitted

5 in paper form.

6 (d) DEFINITIONS.—For purposes of this subtitle:

7 (1) HEALTH BENEFIT PLAN.—

8 (A) IN GENERAL.—The term ‘‘health bene9 fit plan’’ means, except as provided in subpara10 graphs (B) through (D), any public or private

11 entity or program that provides for payments

12 for health care services, including—

13 (i) a group health plan (as defined in

14 section 5000(b)(1) of the Internal Revenue

15 Code of 1986); and

16 (ii) any other health insurance ar17 rangement, including any arrangement

18 consisting of a hospital or medical expense

19 incurred policy or certificate, hospital or

20 medical service plan contract, or health

21 maintenance organization subscriber con22 tract.

23 (B) PLANS EXCLUDED.—Such term does

24 not include—
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•S 2296 PCS

1 (i) accident-only, credit, or disability

2 income insurance;

3 (ii) coverage issued as a supplement

4 to liability insurance;

5 (iii) an individual making payment on

6 the individual’s own behalf (or on behalf of

7 a relative or other individual) for

8 deductibles, coinsurance, or services not

9 covered under a health benefit plan; and

10 (iv) such other plans as the National

11 Health Board may determine, because of

12 the limitation of benefits to a single type

13 or kind of health care, such as dental serv14 ices or hospital indemnity plans, or other

15 reasons should not be subject to the re16 quirements of this section.

17 (C) PLANS INCLUDED.—Such term in18 cludes—

19 (i) workers compensation or similar

20 insurance insofar as it relates to workers

21 compensation medical benefits (as defined

22 in section 10000(3)) provided by or

23 through health plans; and

24 (ii) automobile medical insurance in25 sofar as it relates to automobile insurance
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•S 2296 PCS

1 medical benefits (as defined in section

2 10100(2)) provided by or through health

3 plans.

4 (D) TREATMENT OF DIRECT PROVISION OF

5 SERVICES.—Such term does not include a Fed6 eral or State program that provides directly for

7 the provision of health services to beneficiaries.

8 (2) HEALTH SERVICE PROVIDER.—The term

9 ‘‘health service provider’’ includes a provider of serv10 ices (as defined in section 1861(u) of the Social Se11 curity Act), physician, supplier, and other person

12 furnishing health care services. Such term includes

13 a Federal or State program that provides directly

14 for the provision of health services to beneficiaries.

15 (e) INTERIM NATURE OF REQUIREMENTS.—Any re16 quirement with respect to a standard form imposed under

17 this part shall cease to be effective upon a determination

18 by the Board that the health care data network (as defined

19 in section 5102(3)) is operational.
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1 Subtitle C—Remedies and

2 Enforcement

3 PART 1—REVIEW OF BENEFIT DETERMINATIONS

4 FOR ENROLLED INDIVIDUALS

5 Subpart A—General Rules

6 SEC. 5201. HEALTH PLAN CLAIMS PROCEDURE.

7 (a) DEFINITIONS.—For purposes of this section—

8 (1) CLAIM.—The term ‘‘claim’’ means a claim

9 for payment or provision of benefits under a health

10 plan, a request for preauthorization of items or serv11 ices which is submitted to a health plan prior to re12 ceipt of the items or services, or the denial, reduc13 tion or termination of any service or request for a

14 referral or reimbursement.

15 (2) INDIVIDUAL CLAIMANT.—The term ‘‘indi16 vidual claimant’’ with respect to a claim means any

17 individual who submits the claim to a health plan in

18 connection with the individual’s enrollment under

19 the plan, or on whose behalf the claim is submitted

20 to the plan by a provider.

21 (3) PROVIDER CLAIMANT.—The term ‘‘provider

22 claimant’’ with respect to a claim means any pro23 vider who submits the claim to a health plan with

24 respect to items or services provided to an individual

25 enrolled under the plan.
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•S 2296 PCS

1 (b) GENERAL RULES GOVERNING TREATMENT OF

2 CLAIMS.—

3 (1) ADEQUATE NOTICE OF DISPOSITION OF

4 CLAIM.—In any case in which a claim is submitted

5 in complete form to a health plan, the plan shall

6 provide to the individual claimant and any provider

7 claimant with respect to the claim a written notice

8 of the plan’s approval or denial of the claim within

9 15 days after the date of the submission of the

10 claim. The notice to the individual claimant shall be

11 written in language calculated to be understood by

12 the typical individual enrolled under the plan and in

13 a form which takes into account accessibility to the

14 information by individuals whose primary language

15 is not English. In the case of a denial of the claim,

16 the notice shall be provided within 5 days after the

17 date of the determination to deny the claim, and

18 shall set forth the specific reasons for the denial.

19 Such notice shall include an explanation of the spe20 cific reasons and facts underlying the decision to re21 duce or fail to provide services or pay the claim. The

22 notice of a denial shall clearly explain the right to

23 appeal the denial under paragraph (2) and a de24 scription of the process for appealing such decision

25 sufficient to allow the claimant to initiate an appeal
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•S 2296 PCS

1 and submit evidence to the decision maker in sup2 port of the position of the claimant. Failure by any

3 plan to comply with the requirements of this para4 graph with respect to any claim submitted to the

5 plan shall be treated as approval by the plan of the

6 claim.

7 (2) PLAN’S DUTY TO REVIEW DENIALS UPON

8 TIMELY REQUEST.—The plan shall review its denial

9 of the claim if an individual claimant or provider

10 claimant with respect to the claim submits to the

11 plan a written request for reconsideration of the

12 claim after receipt of written notice from the plan of

13 the denial. The plan shall allow any such claimant

14 not less than 60 days, after receipt of written notice

15 from the plan of the denial, to submit the claimant’s

16 request for reconsideration of the claim.

17 (3) TIME LIMIT FOR REVIEW.—The plan shall

18 complete any review required under paragraph (2),

19 and shall provide the individual claimant and any

20 provider claimant with respect to the claim written

21 notice of the plan’s decision on the claim after re22 consideration pursuant to the review, within 30 days

23 after the date of the receipt of the request for recon24 sideration.
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•S 2296 PCS

1 (4) DE NOVO REVIEWS.—Any review required

2 under paragraph (2)—

3 (A) shall be de novo,

4 (B) shall be conducted by an individual

5 who did not make the initial decision denying

6 the claim and who is authorized to approve the

7 claim, and

8 (C) shall include review by a qualified phy9 sician in the same speciality as the treating

10 physician if the resolution of any issues involved

11 requires medical expertise.

12 (c) TREATMENT OF URGENT REQUESTS TO PLANS

13 FOR PREAUTHORIZATION.—

14 (1) IN GENERAL.—This subsection applies in

15 the case of any claim submitted by an individual

16 claimant or a provider claimant consisting of a re17 quest for preauthorization of items or services (other

18 than emergency services which under section

19 1406(b) may not be subject to preauthorization)

20 which is accompanied by an attestation that—

21 (A) failure to immediately provide the

22 items or services could reasonably be expected

23 to result in—

24 (i) placing the health of the individual

25 claimant (or, with respect to an individual
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•S 2296 PCS

1 claimant who is a pregnant woman, the

2 health of the woman or her unborn child)

3 in serious jeopardy,

4 (ii) serious impairment to bodily func5 tions, or

6 (iii) serious dysfunction of any bodily

7 organ or part,

8 or

9 (B) immediate provision of the items or

10 services is necessary because the individual

11 claimant has made or is at serious risk of mak12 ing an attempt to harm such individual claim13 ant or another individual.

14 (2) SHORTENED TIME LIMIT FOR CONSIDER15 ATION OF REQUESTS FOR PREAUTHORIZATION.—

16 Notwithstanding subsection (b)(1), a health plan

17 shall approve or deny any claim described in para18 graph (1) within 12 hours after submission of the

19 claim to the plan. Failure by the plan to comply with

20 the requirements of this paragraph with respect to

21 the claim shall be treated as approval by the plan of

22 the claim.

23 (3) EXPEDITED EXHAUSTION OF PLAN REM24 EDIES.—Any claim described in paragraph (1) which

25 is denied by the plan shall be treated as a claim with
799

•S 2296 PCS

1 respect to which all remedies under the plan pro2 vided pursuant to this section are exhausted, irre3 spective of any review provided under subsection

4 (b)(2).

5 (4) DENIAL OF PREVIOUSLY AUTHORIZED

6 CLAIMS NOT PERMITTED.—In any case in which a

7 health plan approves a claim described in paragraph

8 (1)—

9 (A) the plan may not subsequently deny

10 payment or provision of benefits pursuant to

11 the claim, unless the plan makes a showing of

12 an intentional misrepresentation of a material

13 fact by the individual claimant, and

14 (B) in the case of a violation of subpara15 graph (A) in connection with the claim, all rem16 edies under the plan provided pursuant to this

17 section with respect to the claim shall be treat18 ed as exhausted.

19 (d) TIME LIMIT FOR DETERMINATION OF INCOM20 PLETENESS OF CLAIM.—For purposes of this section—

21 (1) any claim submitted by an individual claim22 ant and accepted by a provider serving under con23 tract with a health plan and any claim described in

24 subsection (b)(1) shall be treated with respect to the
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•S 2296 PCS

1 individual claimant as submitted in complete form,

2 and

3 (2) any other claim for benefits under the plan

4 shall be treated as filed in complete form as of 10

5 days after the date of the submission of the claim,

6 unless the plan provides to the individual claimant

7 and any provider claimant, within such period, a

8 written notice of any required matter remaining to

9 be filed in order to complete the claim.

10 Any filing by the individual claimant or the provider claim11 ant of additional matter requested by the plan pursuant

12 to paragraph (2) shall be treated for purposes of this sec13 tion as an initial filing of the claim.

14 (e) ADDITIONAL NOTICE AND DISCLOSURE RE15 QUIREMENTS FOR HEALTH PLANS.—In the case of a de16 nial of a claim for benefits under a health plan, the plan

17 shall include, together with the specific reasons provided

18 to the individual claimant and any provider claimant

19 under subsection (b)(1)—

20 (1) if the denial is based in whole or in part on

21 a determination that the claim is for an item or

22 service which is not covered by the comprehensive

23 benefit package or exceeds payment rates under the

24 applicable fee schedule, the factual basis for the de25 termination,
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•S 2296 PCS

1 (2) if the denial is based in whole or in part on

2 exclusion of coverage with respect to services be3 cause the services are determined to comprise an ex4 perimental treatment or investigatory procedure, the

5 medical basis for the determination and a descrip6 tion of the process used in making the determina7 tion, and

8 (3) if the denial is based in whole or in part on

9 a determination that the treatment is not medically

10 necessary or appropriate or is inconsistent with the

11 plan’s practice guidelines, the medical basis for the

12 determination, the guidelines used in making the de13 termination, and a description of the process used in

14 making the determination.

15 (f) WAIVER OF RIGHTS PROHIBITED.—A health plan

16 may not require any party to waive any right under the

17 plan or this Act as a condition for approval of any claim

18 under the plan, except to the extent otherwise specified

19 in a formal settlement agreement.

20 SEC. 5202. REVIEW IN AREA COMPLAINT REVIEW OFFICES

21 OF GRIEVANCES BASED ON ACTS OR PRAC22 TICES BY HEALTH PLANS.

23 (a) COMPLAINT REVIEW OFFICES.—

24 (1) IN GENERAL.—In accordance with rules

25 which shall be prescribed by the Secretary of Labor,
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•S 2296 PCS

1 in consultation with the National Health Board,

2 each State shall establish and maintain a complaint

3 review office for each health care coverage area es4 tablished by such State. According to designations

5 which shall be made by each State under regulations

6 of the Secretary of Labor, in consultation with such

7 Board, the complaint review office for a health care

8 coverage area established by such State shall also

9 serve as the complaint review office for large group

10 sponsors operating in the State with respect to indi11 viduals who are enrolled under health plans main12 tained by such sponsors and who reside within the

13 area of the health care coverage area.

14 (2) HEALTH SYSTEMS NOT ESTABLISHED BY

15 STATES.—In the case of any health care system es16 tablished in any State by the Secretary of Health

17 and Human Services, the Secretary of Health and

18 Human Services shall assume all duties and obliga19 tions of such State under this part in accordance

20 with the applicable regulations of the Secretary of

21 Labor, in consultation with the National Health

22 Board, under this part.

23 (b) FILINGS OF COMPLAINTS BY AGGRIEVED PER24 SONS.—In the case of any person who is aggrieved by—
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•S 2296 PCS

1 (1) any act or practice engaged in by any

2 health plan which consists of or results in denial of

3 payment or provision of benefits under the plan or

4 delay in the payment or provision of benefits, or

5 (2) any act or practice engaged in by any other

6 plan maintained in a health care coverage area or by

7 a large group sponsor which consists of or results in

8 denial of payment or provision of benefits under a

9 supplemental benefit policy described in section

10 1421(b)(1) or a cost sharing policy described in sec11 tion 1421(b)(2) or delay in the payment or provision

12 of the benefits,

13 if the denial or delay consists of a failure to comply with

14 the terms of the plan (including the provision of benefits

15 in full when due in accordance with the terms of the plan),

16 or with the applicable requirements of this Act, such per17 son may file a complaint with the appropriate complaint

18 review office.

19 (c) EXHAUSTION OF PLAN REMEDIES.—Any com20 plaint including a claim to which section 5201 applies may

21 not be filed until the complainant has exhausted all rem22 edies provided under the plan with respect to the claim

23 in accordance with such section.

24 (d) FORM OF COMPLAINT.—The complaint shall be

25 in writing under oath or affirmation, shall set forth the
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•S 2296 PCS

1 complaint in a manner calculated to give notice of the na2 ture of the complaint, and shall contain such information

3 as may be prescribed in regulations of the Secretary of

4 Labor.

5 (e) NOTICE OF FILING.—The complaint review office

6 shall serve by certified mail a notice of the complaint (in7 cluding the date, place, and circumstances of the alleged

8 violation) on the person or persons alleged in the com9 plaint to have committed the violation within 10 days after

10 the filing of the complaint.

11 (f) TIME LIMITATION.—Complaints may not be

12 brought under this section with respect to any violation

13 later than one year after the date on which the complain14 ing party knows or should have reasonably known that a

15 violation has occurred. This subsection shall not prevent

16 the subsequent amending of a complaint.

17 SEC. 5203. INITIAL PROCEEDINGS IN COMPLAINT REVIEW

18 OFFICES.

19 (a) ELECTIONS.—Whenever a complaint is brought

20 to the complaint review office under section 5202(b), the

21 complaint review office shall provide the complainant with

22 an opportunity, in such form and manner as shall be pre23 scribed in regulations of the Secretary of Labor, to elect

24 one of the following:
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•S 2296 PCS

1 (1) to forego further proceedings in the com2 plaint review office and rely on remedies available in

3 a court of competent jurisdiction, with respect to

4 any matter in the complaint,

5 (2) to submit the complaint as a dispute under

6 the Early Resolution Program established under

7 subpart B and thereby suspend further review pro8 ceedings under this section pending termination of

9 proceedings under the Program, or

10 (3) in any case in which an election under para11 graph (2) is not made, or such an election was made

12 but resolution of all matters in the complaint was

13 not obtained upon termination of proceedings pursu14 ant to the election by settlement agreement or other15 wise, to proceed with the complaint to a hearing in

16 the complaint review office under section 5204 re17 garding the unresolved matters.

18 (b) DUTY OF COMPLAINT REVIEW OFFICE.—The

19 complaint review office shall provide (in a linguistically ap20 propriate manner) an explanation to complainants bring21 ing complaints to the office concerning the legal and other

22 ramifications of each option available under this section.

23 (c) EFFECT OF PARTICIPATION IN EARLY RESOLU24 TION PROGRAM.—Any matter in a complaint brought to

25 the complaint review office which is included in a dispute
806

•S 2296 PCS

1 which is timely submitted to the Early Resolution Pro2 gram established under subpart B shall not be assigned

3 to a hearing under section 5204 unless the proceedings

4 under the Program with respect to the dispute are termi5 nated without settlement or resolution of the dispute with

6 respect to such matter. Upon termination of any proceed7 ings regarding a dispute submitted to the Program, the

8 applicability of this section to any matter in a complaint

9 which was included in the dispute shall not be affected

10 by participation in the proceedings, except to the extent

11 otherwise required under the terms of any settlement

12 agreement or other formal resolution obtained in the pro13 ceedings.

14 SEC. 5204. HEARINGS BEFORE HEARING OFFICERS IN COM15 PLAINT REVIEW OFFICES.

16 (a) HEARING PROCESS.—

17 (1) ASSIGNMENT OF COMPLAINTS TO HEARING

18 OFFICERS AND NOTICE TO PARTIES.—

19 (A) IN GENERAL.—In the case of an elec20 tion under section 5203(a)(3)—

21 (i) the complaint review office shall

22 assign the complaint, and each motion in

23 connection with the complaint, to a hearing

24 officer employed by the State in the office;

25 and
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•S 2296 PCS

1 (ii) the hearing officer shall have the

2 power to issue and cause to be served upon

3 the plan named in the complaint a copy of

4 the complaint and a notice of hearing be5 fore the hearing officer at a place fixed in

6 the notice, not less than 5 days after the

7 serving of the complaint.

8 (B) QUALIFICATIONS FOR HEARING OFFI9 CERS.—No individual may serve in a complaint

10 review office as a hearing officer unless the in11 dividual meets standards which shall be pre12 scribed by the Secretary of Labor. Such stand13 ards shall include experience, training, ability to

14 communicate with the enrollee, affiliations, dili15 gence, absence of actual or potential conflicts of

16 interest, and other qualifications deemed rel17 evant by the Secretary of Labor. At no time

18 shall a hearing officer have any official, finan19 cial, or personal conflict of interest with respect

20 to issues in controversy before the hearing offi21 cer.

22 (2) AMENDMENT OF COMPLAINTS.—Any such

23 complaint may be amended by the hearing officer

24 conducting the hearing, upon the motion of the com-
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•S 2296 PCS

1 plainant, in the hearing officer’s discretion at any

2 time prior to the issuance of an order based thereon.

3 (3) ANSWERS.—The party against whom the

4 complaint is filed shall have the right to file an an5 swer to the original or amended complaint and to

6 appear in person or otherwise and give testimony at

7 the place and time fixed in the complaint.

8 (b) ADDITIONAL PARTIES.—In the discretion of the

9 hearing officer conducting the hearing, any other person

10 may be allowed to intervene in the proceeding and to

11 present testimony.

12 (c) HEARINGS.—

13 (1) DE NOVO HEARING.—Each hearing officer

14 shall hear complaints and motions de novo.

15 (2) TESTIMONY.—The testimony taken by the

16 hearing officer shall be reduced to writing. There17 after, the hearing officer, in his or her discretion,

18 upon notice may provide for the taking of further

19 testimony or hear argument.

20 (3) AUTHORITY OF HEARING OFFICERS.—The

21 hearing officer may compel by subpoena the attend22 ance of witnesses and the production of evidence at

23 any designated place or hearing. In case of contu24 macy or refusal to obey a subpoena lawfully issued

25 under this paragraph and upon application of the
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•S 2296 PCS

1 hearing officer, an appropriate district court of the

2 United States may issue an order requiring compli3 ance with the subpoena and any failure to obey the

4 order may be punished by the court as a contempt

5 thereof. The hearing officer may also seek enforce6 ment of the subpoena in a State court of competent

7 jurisdiction.

8 (4) EXPEDITED HEARINGS.—Notwithstanding

9 section 5203 and the preceding provisions of this

10 section, upon receipt of a complaint containing a

11 claim described in section 5201(c)(1), the complaint

12 review office shall promptly provide the complainant

13 with the opportunity to make an election under sec14 tion 5203(a)(3) and assignment to a hearing on the

15 complaint before a hearing officer. The complaint re16 view office shall ensure that such a hearing com17 mences not later than 24 hours after receipt of the

18 complaint by the complaint hearing office and not

19 later than 3 days after the receipt of a complaint,

20 the Complaint Review Office shall provide a decision.

21 (d) DECISION OF HEARING OFFICER.—

22 (1) IN GENERAL.—Not later than 120 days

23 after the date on which a complaint is assigned

24 under this section, the hearing officer shall decide if

25 the preponderance of the evidence justifies the denial
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•S 2296 PCS

1 of services and whether to decide in favor of the

2 complainant with respect to each alleged act or prac3 tice. Each such decision—

4 (A) shall include the hearing officer’s find5 ings of fact, and

6 (B) shall constitute the hearing officer’s

7 final disposition of the proceedings.

8 (2) DECISIONS FINDING IN FAVOR OF COM9 PLAINANT.—If the hearing officer’s decision includes

10 a determination that any party named in the com11 plaint has engaged in or is engaged in an act or

12 practice described in section 5202(b), the hearing of13 ficer shall issue and cause to be served on such

14 party an order which requires such party—

15 (A) to cease and desist from such act or

16 practice,

17 (B) to provide the benefits due under the

18 terms of the plan and to otherwise comply with

19 the terms of the plan and the applicable re20 quirements of this Act,

21 (C) to pay to the complainant prejudgment

22 interest on the actual costs incurred in obtain23 ing the items and services at issue in the com24 plaint,
811

•S 2296 PCS

1 (D) to pay to the prevailing complainant a

2 reasonable attorney’s fee, reasonable expert wit3 ness fees, and other reasonable costs relating to

4 the hearing on the charges on which the com5 plainant prevails, and

6 (E) to provide other appropriate relief.

7 (3) DECISIONS NOT IN FAVOR OF COMPLAIN8 ANT.—If the hearing officer’s decision includes a de9 termination that the party named in the complaint

10 has not engaged in or is not engaged in an act or

11 practice referred to in section 5202(b), the hearing

12 officer—

13 (A) shall include in the decision a dismissal

14 of the charge in the complaint relating to the

15 act or practice, and

16 (B) upon a finding that such charge is

17 frivolous, shall issue and cause to be served on

18 the complainant an order which requires the

19 complainant to pay to such party a reasonable

20 attorney’s fee, reasonable expert witness fees,

21 and other reasonable costs relating to the pro22 ceedings on such charge.

23 (4) SUBMISSION AND SERVICE OF DECISIONS.—

24 The hearing officer shall submit each decision to the

25 complaint review office at the conclusion of the pro-
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•S 2296 PCS

1 ceedings and the office shall cause a copy of the de2 cision to be served on the parties to the proceedings.

3 (e) REVIEW.—

4 (1) IN GENERAL.—The decision of the hearing

5 officer shall be final and binding upon all parties.

6 Except as provided in paragraph (2), any party to

7 the complaint may, within 30 days after service of

8 the decision by the complaint review office, file an

9 appeal of the decision with the Federal Health Plan

10 Review Board under section 5205 in such form and

11 manner as may be prescribed by such Board.

12 (2) EXCEPTION.—The decision in the case of

13 an expedited hearing under subsection (c)(4) shall

14 not be subject to review.

15 (f) COURT ENFORCEMENT OF ORDERS.—

16 (1) IN GENERAL.—If a decision of the hearing

17 officer in favor of the complainant is not appealed

18 under section 5205, the complainant may petition

19 any court of competent jurisdiction for enforcement

20 of the order. In any such proceeding, the order of

21 the hearing officer shall not be subject to review.

22 (2) AWARDING OF COSTS.—In any action for

23 court enforcement under this subsection, a prevailing

24 complainant shall be entitled to a reasonable attor-
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•S 2296 PCS

1 ney’s fee, reasonable expert witness fees, and other

2 reasonable costs relating to such action.

3 SEC. 5205. REVIEW BY FEDERAL HEALTH PLAN REVIEW

4 BOARD.

5 (a) ESTABLISHMENT AND MEMBERSHIP.—The Sec6 retary of Labor, in consultation with the National Health

7 Board, shall establish by regulation a Federal Health Plan

8 Review Board (hereinafter in this subtitle referred to as

9 the ‘‘Review Board’’). The Review Board shall be com10 posed of 5 members appointed by the Secretary of Labor,

11 in consultation with the National Health Board, from

12 among persons who by reason of training, education, or

13 experience are qualified to carry out the functions of the

14 Review Board under this subtitle, and be balanced to fairly

15 represent all interested parties. The Secretary of Labor,

16 in consultation with the National Health Board, shall pre17 scribe such rules as are necessary for the orderly trans18 action of proceedings by the Review Board. Every official

19 act of the Review Board shall be entered of record, and

20 its hearings and records shall be open to the public.

21 (b) REVIEW PROCESS.—The Review Board shall en22 sure, in accordance with rules prescribed by the Secretary

23 of Labor, in consultation with the National Health Board,

24 that reasonable notice is provided for each appeal before

25 the Review Board of a hearing officer’s decision under sec-
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•S 2296 PCS

1 tion 5304, and shall provide for the orderly consideration

2 of arguments by any party to the hearing upon which the

3 hearing officer’s decision is based. In the discretion of the

4 Review Board, any other person may be allowed to inter5 vene in the proceeding and to present written argument.

6 The National Health Board may intervene in the proceed7 ing as a matter of right.

8 (c) SCOPE OF REVIEW.—The Review Board shall re9 view the decision of the hearing officer from which the

10 appeal is made, except that the review shall be only for

11 the purposes of determining—

12 (1) whether the determination is supported by

13 substantial evidence on the record considered as a

14 whole,

15 (2) in the case of any interpretation by the

16 hearing officer of contractual terms (irrespective of

17 the extent to which extrinsic evidence was consid18 ered), whether the determination is supported by a

19 preponderance of the evidence,

20 (3) whether the determination is in excess of

21 statutory jurisdiction, authority, or limitations, or in

22 violation of a statutory right, or

23 (4) whether the determination is without ob24 servance of procedure required by law.
815

•S 2296 PCS

1 (d) DECISION OF REVIEW BOARD.—The decision of

2 the hearing officer as affirmed or modified by the Review

3 Board (or any reversal by the Review Board of the hearing

4 officer’s final disposition of the proceedings) shall become

5 the final order of the Review Board and binding on all

6 parties, subject to review under subsection (e). The Review

7 Board shall cause a copy of its decision to be served on

8 the parties to the proceedings not later than 5 days after

9 the date of the decision.

10 (e) REVIEW OF FINAL ORDERS.—

11 (1) IN GENERAL.—Not later than 60 days after

12 the entry of the final order, any person aggrieved by

13 any such final order under which the amount or

14 value in controversy exceeds $10,000 may seek a re15 view of the order in the United States court of ap16 peals for the circuit in which the violation is alleged

17 to have occurred or in which the complainant re18 sides.

19 (2) FURTHER REVIEW.—Upon the filing of the

20 record with the court, the jurisdiction of the court

21 shall be exclusive and its judgment shall be final, ex22 cept that the judgment shall be subject to review by

23 the Supreme Court of the United States upon writ

24 of certiorari or certification as provided in section

25 1254 of title 28 of the United States Code.
816

•S 2296 PCS

1 (3) ENFORCEMENT DECREE IN ORIGINAL RE2 VIEW.—If, upon appeal of an order under paragraph

3 (1), the United States court of appeals does not re4 verse the order, the court shall have the jurisdiction

5 to make and enter a decree enforcing the order of

6 the Review Board.

7 (f) AWARDING OF ATTORNEYS’ FEES AND OTHER

8 COSTS AND EXPENSES.—In any proceeding before the Re9 view Board under this section or any judicial proceeding

10 under subsection (e), the Review Board or the court (as

11 the case may be) shall award to a prevailing complainant

12 reasonable costs and expenses (including a reasonable at13 torney’s fee) on the causes on which the complainant pre14 vails.

15 SEC. 5206. CIVIL MONEY PENALTIES.

16 (a) DENIAL OR DELAY IN PAYMENT OR PROVISION

17 OF BENEFITS.—

18 (1) IN GENERAL.—The Secretary of Labor, in

19 consultation with the National Health Board, may

20 assess a civil penalty against any health plan, or

21 against any other plan in connection with benefits

22 provided thereunder under a supplemental benefit

23 policy described in section 1421(b)(1) or a cost shar24 ing policy described in section 1421(b)(2), for unrea-
817

•S 2296 PCS

1 sonable denial or delay in the payment or provision

2 of benefits thereunder, in an amount not to exceed—

3 (A) $25,000 per violation, or $75,000 per

4 violation in the case of a finding of bad faith

5 on the part of the plan, and

6 (B) in the case of a finding of a pattern

7 or practice of such violations engaged in by the

8 plan, $1,000,000 in addition to the total

9 amount of penalties assessed under subpara10 graph (A) with respect to such violations.

11 For purposes of subparagraph (A), each violation

12 with respect to any single individual shall be treated

13 as a separate violation.

14 (2) CIVIL ACTION TO ENFORCE CIVIL PEN15 ALTY.—The Secretary of Labor, in consultation with

16 the National Health Board, may commence a civil

17 action in any court of competent jurisdiction to en18 force a civil penalty assessed under paragraph (1).

19 (3) SUPPLEMENTAL PLANS.—Nothing in this

20 section shall be construed to limit the rights and

21 remedies available under State law with respect to

22 supplemental benefit plans.

23 (b) CIVIL PENALTIES FOR CERTAIN OTHER AC24 TIONS.—The Secretary of Labor, in consultation with the

25 National Health Board, may assess a civil penalty de-
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•S 2296 PCS

1 scribed in section 5412(b)(1) against any experience-rated

2 health plan, or against any other plan sponsored by a large

3 group sponsor in connection with benefits provided there4 under under a cost sharing policy described in section

5 1421(b)(2), for any action described in section 5412(a).

6 The Secretary of Labor, in consultation with the National

7 Health Board, may initiate proceedings to impose such

8 penalty in the same manner as the Secretary of Health

9 and Human Services may initiate proceedings under sec10 tion 5412 with respect to actions described in section

11 5412(a).

12 Subpart B—Early Resolution Programs

13 SEC. 5211. ESTABLISHMENT OF EARLY RESOLUTION PRO14 GRAMS IN COMPLAINT REVIEW OFFICES.

15 (a) ESTABLISHMENT OF PROGRAMS.—Each State

16 shall establish and maintain an Early Resolution Program

17 in each complaint review office in such State. The Pro18 gram shall include—

19 (1) the establishment and maintenance of fo20 rums for mediation of disputes in accordance with

21 this subpart, and

22 (2) the establishment and maintenance of such

23 forums for other forms of alternative dispute resolu24 tion (including binding arbitration) as may be pre-
819

•S 2296 PCS

1 scribed in regulations of the Secretary of Labor, in

2 consultation with the National Health Board.

3 Each State shall ensure that the standards applied in

4 Early Resolution Programs administered in such State

5 which apply to any form of alternative dispute resolution

6 described in paragraph (2) and which relate to time re7 quirements, qualifications of facilitators, arbitrators, or

8 other mediators, and confidentiality are at least equivalent

9 to the standards which apply to mediation proceedings

10 under this subpart.

11 (b) DUTIES OF COMPLAINT REVIEW OFFICES.—

12 Each complaint review office in a State—

13 (1) shall administer its Early Resolution Pro14 gram in accordance with regulations of the Secretary

15 of Labor, in consultation with the National Health

16 Board,

17 (2) shall, pursuant to subsection (a)(1)—

18 (A) recruit and train individuals to serve

19 as facilitators for mediation proceedings under

20 the Early Resolution Program from attorneys

21 who have the requisite expertise for such serv22 ice, which shall be specified in regulations of

23 the Secretary of Labor, in consultation with the

24 National Health Board,
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1 (B) provide meeting sites, maintain

2 records, and provide facilitators with adminis3 trative support staff, and

4 (C) establish and maintain attorney refer5 ral panels,

6 (3) shall ensure that, upon the filing of a com7 plaint with the office, the complainant is adequately

8 apprised of the complainant’s options for review

9 under this part, and

10 (4) shall monitor and evaluate the Program on

11 an ongoing basis.

12 SEC. 5212. INITIATION OF PARTICIPATION IN MEDIATION

13 PROCEEDINGS.

14 (a) ELIGIBILITY OF CASES FOR SUBMISSION TO

15 EARLY RESOLUTION PROGRAM.—A dispute may be sub16 mitted to the Early Resolution Program only if the follow17 ing requirements are met with respect to the dispute:

18 (1) NATURE OF DISPUTE.—The dispute con19 sists of an assertion by an individual enrolled under

20 a health plan of one or more claims against the

21 health plan for payment or provision of benefits, or

22 against any other plan community-rated health plan

23 or large group sponsor sponsoring the health plan

24 with respect to benefits provided under a supple25 mental benefit policy described in section 1421(b)(1)
821

•S 2296 PCS

1 or a cost sharing policy described in section

2 1421(b)(2), based on alleged coverage under the

3 plan, and a denial of the claims, or a denial of ap4 propriate reimbursement based on the claims, by the

5 plan.

6 (2) NATURE OF DISPUTED CLAIM.—Each claim

7 consists of—

8 (A) a claim for payment or provision of

9 benefits under the plan; or

10 (B) a request for information or docu11 ments the disclosure of which is required under

12 this Act (including claims of entitlement to dis13 closure based on colorable claims to rights to

14 benefits under the plan).

15 (b) FILING OF ELECTION.—A complainant with a

16 dispute which is eligible for submission to the Early Reso17 lution Program may make the election under section

18 5203(a)(2) to submit the dispute to mediation proceedings

19 under the Program not later than 15 days after the date

20 the complaint is filed with the complaint review office

21 under section 5202(b).

22 (c) AGREEMENT TO PARTICIPATE.—

23 (1) ELECTION BY CLAIMANT.—A complainant

24 may elect participation in the mediation proceedings

25 only by entering into a written participation agree-
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•S 2296 PCS

1 ment (including an agreement to comply with the

2 rules of the Program and consent for the complaint

3 review office to contact the health plan regarding the

4 agreement), and by releasing plan records to the

5 Program for the exclusive use of the facilitator as6 signed to the dispute.

7 (2) PARTICIPATION BY PLANS OR HEALTH BEN8 EFITS CONTRACTORS.—Each party whose participa9 tion in the mediation proceedings has been elected

10 by a claimant pursuant to paragraph (1) shall par11 ticipate in, and cooperate fully with, the proceedings.

12 The claims review office shall provide such party

13 with a copy of the participation agreement described

14 in paragraph (1), together with a written description

15 of the Program. Such party shall submit the copy of

16 the agreement, together with its authorized signa17 ture signifying receipt of notice of the agreement, to

18 the claims review office, and shall include in the sub19 mission to the claims review office a copy of the

20 written record of the plan claims procedure com21 pleted pursuant to section 5201 with respect to the

22 dispute and all relevant plan documents. The rel23 evant documents shall include all documents under

24 which the plan is or was administered or operated,

25 including copies of any insurance contracts under
823

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1 which benefits are or were provided and any fee or

2 reimbursement schedules for health care providers.

3 SEC. 5213. MEDIATION PROCEEDINGS.

4 (a) ROLE OF FACILITATOR.—In the course of medi5 ation proceedings under the Early Resolution Program,

6 the facilitator assigned to the dispute shall prepare the

7 parties for a conference regarding the dispute and serve

8 as a neutral mediator at such conference, with the goal

9 of achieving settlement of the dispute.

10 (b) PREPARATIONS FOR CONFERENCE.—In advance

11 of convening the conference, after identifying the nec12 essary parties and confirming that the case is eligible for

13 the Program, the facilitator shall analyze the record of the

14 claims procedure conducted pursuant to section 5201 and

15 any position papers submitted by the parties to determine

16 if further case development is needed to clarify the legal

17 and factual issues in dispute, and whether there is any

18 need for additional information and documents.

19 (c) CONFERENCE.—Upon convening the conference,

20 the facilitator shall assist the parties in identifying undis21 puted issues and exploring settlement. If settlement is

22 reached, the facilitator shall assist in the preparation of

23 a written settlement agreement. If no settlement is

24 reached, the facilitator shall present the facilitator’s eval25 uation, including an assessment of the parties’ positions,
824

•S 2296 PCS

1 the likely outcome of further administrative action or liti2 gation, and suggestions for narrowing the issues in dis3 pute.

4 (d) TIME LIMIT.—The facilitator shall ensure that

5 mediation proceedings with respect to any dispute under

6 the Early Resolution Program shall be completed within

7 120 days after the election to participate. The parties may

8 agree to one extension of the proceedings by not more than

9 30 days if the proceedings are suspended to obtain an

10 agency ruling or to reconvene the conference in a subse11 quent session.

12 (e) INAPPLICABILITY OF FORMAL RULES.—Formal

13 rules of evidence shall not apply to mediation proceedings

14 under the Early Resolution Program. All statements made

15 and evidence presented in the proceedings shall be admis16 sible in the proceedings. The facilitator shall be the sole

17 judge of the proper weight to be afforded to each submis18 sion. The parties to mediation proceedings under the Pro19 gram shall not be required to make statements or present

20 evidence under oath.

21 (f) REPRESENTATION.—Parties may participate pro

22 se or be represented by attorneys throughout the proceed23 ings of the Early Resolution Program.

24 (g) CONFIDENTIALITY.—
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•S 2296 PCS

1 (1) IN GENERAL.—Under regulations of the

2 Secretary of Labor, rules similar to the rules under

3 section 574 of title 5, United States Code (relating

4 to confidentiality in dispute resolution proceedings)

5 shall apply to the mediation proceedings under the

6 Early Resolution Program.

7 (2) CIVIL REMEDIES.—The Secretary of Labor

8 may assess a civil penalty against any person who

9 discloses information in violation of the regulations

10 prescribed pursuant to paragraph (1) in the amount

11 of three times the amount of the claim involved. The

12 Secretary of Labor may bring a civil action to en13 force such civil penalty in any court of competent ju14 risdiction.

15 SEC. 5214. LEGAL EFFECT OF PARTICIPATION IN MEDI16 ATION PROCEEDINGS.

17 (a) PROCESS NONBINDING.—Findings and conclu18 sions made in the mediation proceedings of the Early Res19 olution Program shall be treated as advisory in nature and

20 nonbinding. Except as provided in subsection (b), the

21 rights of the parties under subpart A shall not be affected

22 by participation in the Program.

23 (b) RESOLUTION THROUGH SETTLEMENT AGREE24 MENT.—If a case is settled through participation in medi25 ation proceedings under the Program, the facilitator shall
826

•S 2296 PCS

1 assist the parties in drawing up an agreement which shall

2 constitute, upon signature of the parties, a binding con3 tract between the parties, which shall be enforceable under

4 section 5215.

5 (c) PRESERVATION OF RIGHTS OF NON-PARTIES.—

6 The settlement agreement shall not have the effect of

7 waiving or otherwise affecting any rights to review under

8 subpart A, or any other right under this Act or the plan,

9 with respect to any person who is not a party to the settle10 ment agreement.

11 SEC. 5215. ENFORCEMENT OF SETTLEMENT AGREEMENTS.

12 (a) ENFORCEMENT.—Any party to a settlement

13 agreement entered pursuant to mediation proceedings

14 under this subpart may petition any court of competent

15 jurisdiction for the enforcement of the agreement, by filing

16 in the court a written petition praying that the agreement

17 be enforced. In such a proceeding, the order of the hearing

18 officer shall not be subject to review.

19 (b) COURT REVIEW.—It shall be the duty of the court

20 to advance on the docket and to expedite to the greatest

21 possible extent the disposition of any petition filed under

22 this section, with due deference to the role of settlement

23 agreements under this part in achieving prompt resolution

24 of disputes involving health plans.
827

•S 2296 PCS

1 (c) AWARDING OF ATTORNEY’S FEES AND OTHER

2 COSTS AND EXPENSES.—In any action by an individual

3 enrolled under a health plan for court enforcement under

4 this section, a prevailing plaintiff shall be entitled to rea5 sonable costs and expenses (including a reasonable attor6 ney’s fee and reasonable expert witness fees) on the

7 charges on which the plaintiff prevails.

8 SEC. 5216. DUE PROCESS FOR HEALTH CARE PROVIDERS.

9 (a) PUBLICLY AVAILABLE STANDARDS AND PROC10 ESS.—Each health plan shall establish and utilize—

11 (1) publicly available standards for contracting

12 with health care providers; and

13 (2) a publicly available process for dismissing

14 such providers or failing to renew contracts with

15 such providers.

16 (b) NOTICE REQUIREMENT.—

17 (1) IN GENERAL.—The process established by a

18 health plan under subsection (a) shall include rea19 sonable notification to a health care provider of a

20 decision to dismiss such provider or not to renew a

21 contract with such provider before such decision

22 takes effect.

23 (2) EXCEPTION.—The notice required under

24 paragraph (1) shall not apply if failure to dismiss a
828

•S 2296 PCS

1 provider or renewing a provider’s contract would ad2 versely affect the health or safety of a patient.

3 (3) CONTENTS OF NOTICE.—Each notice to a

4 health care provider under paragraph (1) shall con5 tain the reasons for the dismissal or failure to

6 renew. Such reasons shall be consistent with the

7 standards established under subsection (a).

8 (c) REVIEW.—The process established by a health

9 plan under subsection (a) shall include an opportunity for

10 review of the health plan’s action by a health care provider

11 who is dismissed by a health plan or with respect to whom

12 a health plan fails to renew a contract. Such review shall

13 be conducted by—

14 (1) the provider’s peers who have contracts

15 with, or are employed by, the health plan; and

16 (2) if there is mutual consent of the provider

17 and the health plan, one or more enrollees in the

18 health plan.

19 A health care provider may have an attorney present in

20 connection with any review under this subsection if the

21 provider notifies the health plan that an attorney will be

22 present in advance of the review proceeding.

23 (d) EFFECT ON OTHER LAWS.—The provisions of

24 this section shall not supersede any other provision of Fed25 eral or State law.
829

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1 PART 2—ADDITIONAL REMEDIES AND

2 ENFORCEMENT PROVISIONS

3 SEC. 5231. JUDICIAL REVIEW OF FEDERAL ACTION ON

4 STATE SYSTEMS.

5 (a) IN GENERAL.—Any State that is aggrieved by a

6 determination by the National Health Board under sub7 part B of part 1 of subtitle F of title I shall be entitled

8 to judicial review of such determination in accordance with

9 this section.

10 (b) JUDICIAL REVIEW.—

11 (1) JURISDICTION.—The courts of appeals of

12 the United States (other than the United States

13 Court of Appeals for the Federal Circuit) shall have

14 jurisdiction to review a determination described in

15 subsection (a), to affirm the determination, or to set

16 it aside, in whole or in part. A judgment of a court

17 of appeals in such an action shall be subject to re18 view by the Supreme Court of the United States

19 upon certiorari or certification as provided in section

20 1254 of title 28, United States Code.

21 (2) PETITION FOR REVIEW.—A State that de22 sires judicial review of a determination described in

23 subsection (a) shall, within 30 days after it has been

24 notified of such determination, file with the United

25 States court of appeals for the circuit in which the

26 State is located a petition for review of such deter-
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•S 2296 PCS

1 mination. A copy of the petition shall be transmitted

2 by the clerk of the court to the National Health

3 Board, and the Board shall file in the court the

4 record of the proceedings on which the determina5 tion or action was based, as provided in section 2112

6 of title 28, United States Code.

7 (3) SCOPE OF REVIEW.—The findings of fact of

8 the National Health Board, if supported by substan9 tial evidence, shall be conclusive; but the court, for

10 good cause shown, may remand the case to the

11 Board to take further evidence, and the Board may

12 make new or modified findings of fact and may mod13 ify its previous action, and shall certify to the court

14 the record of the further proceedings. Such new or

15 modified findings of fact shall likewise be conclusive

16 if supported by substantial evidence.

17 SEC. 5232. ADMINISTRATIVE AND JUDICIAL REVIEW RELAT18 ING TO COST CONTAINMENT.

19 There shall be no administrative or judicial review of

20 any determination by the National Health Board respect21 ing any matter under subtitle A of title VI.

22 SEC. 5233. CIVIL ENFORCEMENT.

23 Unless otherwise provided in this Act, the district

24 courts of the United States shall have jurisdiction of civil

25 actions brought by—
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1 (1) the Secretary of Labor, in consultation with

2 the National Health Board, to enforce any final

3 order of such Secretary or to collect any civil mone4 tary penalty assessed by such Secretary under this

5 Act; and

6 (2) the Secretary of Health and Human Serv7 ices to enforce any final order of such Secretary or

8 to collect any civil monetary penalty assessed by

9 such Secretary under this Act.

10 SEC. 5234. PRIORITY OF CERTAIN BANKRUPTCY CLAIMS.

11 Section 507(a)(8) of title 11, United States Code, is

12 amended to read as follows:

13 ‘‘(8) Eighth, allowed unsecured claims—

14 ‘‘(A) based upon any commitment by the

15 debtor to the Federal Deposit Insurance Cor16 poration, the Resolution Trust Corporation, the

17 Director of the Office of Thrift Supervision, the

18 Comptroller of the Currency, or the Board of

19 Governors of the Federal Reserve System, or

20 their predecessors or successors, to maintain

21 the capital of an insured depository institution;

22 ‘‘(B) for payments under subtitle B of title

23 IV of the Health Security Act owed to a State

24 (as defined in section 1301 of such Act);
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1 ‘‘(C) for payments owed to an experienced2 rated health plan under trusteeship of the Sec3 retary of Labor under section 1395 of the

4 Health Security Act; or

5 ‘‘(D) for assessments and related amounts

6 owed to the Secretary of Labor under section

7 1397 of the Health Security Act.’’.

8 SEC. 5235. PRIVATE RIGHT TO ENFORCE STATE RESPON9 SIBILITIES.

10 The failure of a participating State to carry out a

11 responsibility applicable to participating States under this

12 Act constitutes a deprivation of rights secured by this Act

13 for the purposes of section 1977 of the Revised Statutes

14 of the United States (42 U.S.C. 1983). In an action

15 brought under such section, the court shall exercise juris16 diction without regard to whether the aggrieved person

17 has exhausted any administrative or other remedies that

18 may be provided by law.

19 SEC. 5236. PRIVATE RIGHT TO ENFORCE FEDERAL RESPON20 SIBILITIES IN OPERATING A SYSTEM IN A

21 STATE.

22 (a) IN GENERAL.—The failure of the Secretary of

23 Health and Human Services to carry out a responsibility

24 under section 1522 (relating to State participation) con25 fers an enforceable right of action on any person who is
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1 aggrieved by such failure. Such a person may commence

2 a civil action against the Secretary in an appropriate State

3 court or district court of the United States.

4 (b) EXHAUSTION OF REMEDIES.—In an action under

5 subsection (a), the court shall exercise jurisdiction without

6 regard to whether the aggrieved person has exhausted any

7 administrative or other remedies that may be provided by

8 law.

9 (c) RELIEF.—In an action under subsection (a), if

10 the court finds that a failure described in such subsection

11 has occurred, the aggrieved person may recover compen12 satory damages and the court may award any other appro13 priate relief.

14 (d) ATTORNEY’S FEES.—In an action under sub15 section (a), the court, in its discretion, may allow the pre16 vailing party, other than the United States, a reasonable

17 attorney’s fee (including expert fees) as part of the costs,

18 and the United States shall be liable for costs the same

19 as a private person.

20 SEC. 5237. PRIVATE RIGHT TO ENFORCE RESPONSIBILITIES

21 OF COOPERATIVES.

22 (a) IN GENERAL.—The failure of a consumer pur23 chasing cooperative, large group sponsor, or health plan

24 to carry out a responsibility applicable to the entity under

25 this Act confers an enforceable right of action on any per-
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1 son who is aggrieved by such failure. Such a person may

2 commence a civil action against the cooperative, large

3 group sponsor or health plan in an appropriate State court

4 or district court of the United States.

5 (b) EXHAUSTION OF REMEDIES.—

6 (1) IN GENERAL.—Except as provided in para7 graph (2), in an action under subsection (a) the

8 court may not exercise jurisdiction until the ag9 grieved person has exhausted any administrative

10 remedies that may be provided by law.

11 (2) NO EXHAUSTION REQUIRED.—In an action

12 under subsection (a), the court shall exercise juris13 diction without regard to whether the aggrieved per14 son has exhausted any administrative or other rem15 edies that may be provided by law if the action re16 lates to—

17 (A) whether the person is an eligible indi18 vidual within the meaning of section 1001(c);

19 (B) whether the person is eligible for a

20 premium discount under subpart A of part 1 of

21 subtitle B of title VI;

22 (C) whether the person is eligible for a re23 duction in cost sharing under subpart D of part

24 3 of subtitle D of title I; or
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1 (D) enrollment or disenrollment in a health

2 plan.

3 (c) RELIEF.—In an action under subsection (a), if

4 the court finds that a failure described in such subsection

5 has occurred, the court may award any appropriate relief.

6 (d) ATTORNEY’S FEES.—In any action under sub7 section (a), the court, in its discretion, may allow the pre8 vailing party, other than the United States, a reasonable

9 attorney’s fee (including expert fees) as part of the costs,

10 and the United States shall be liable for costs the same

11 as a private person.

12 SEC. 5237A. ENFORCEMENT OF CONSUMER PROTECTIONS.

13 (a) COVERED VIOLATIONS.—The provisions of this

14 section shall apply with respect to a health plan that fails

15 to fulfill a duty imposed on the plan under section 1204

16 and subtitle A of this title.

17 (b) ADMINISTRATIVE ENFORCEMENT AND CIVIL

18 PENALTIES.—The penalties described in section

19 1867(d)(1) of the Social Security Act and the procedures

20 described in section 1128A of such Act (other than the

21 first two sentences of subsection (a) and subsection (b))

22 shall apply to health plans described in subsection (a). In

23 addition to such penalties, an amount not to exceed

24 $1,000,000 may be assessed in the case of a finding of

25 a pattern or practice of such violations. The Secretary
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1 shall establish procedures whereby, when a consumer has

2 disenrolled from a health plan violating the duties de3 scribed in subsection (a), successor health plans may re4 cover from the original health plan for health care costs

5 attributable to such violations.

6 (c) CORRECTION OF SUBSTANTIAL VIOLATIONS.—

7 Upon an administrative or judicial finding of a substantial

8 violation of the duties described in subsection (a), the

9 State or court may—

10 (1) inform all current enrollees of the plan of

11 the violation and that they may disenroll imme12 diately from that plan and enroll with another com13 munity-rated health plan; and

14 (2) notify the health plan that it shall imme15 diately cease enrollment activities until it has ob16 tained certifications from the appropriate certifying

17 entity or court that the violation has been corrected.

18 Such actions shall not be taken without providing the

19 health plan with a reasonable opportunity to correct such

20 violations, except where providing such an opportunity

21 would risk health or safety.

22 SEC. 5238. DISCRIMINATION CLAIMS.

23 (a) CIVIL ACTION BY AGGRIEVED PERSON.—

24 (1) IN GENERAL.—Any person who is aggrieved

25 by a violation of section 1914 may commence a civil
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1 action against the party or parties committing such

2 violation in an appropriate State court or district

3 court of the United States.

4 (2) STANDARDS.—The standards used to deter5 mine whether a violation has occurred in a complaint

6 alleging discrimination on the basis of age or disabil7 ity under section 1914 shall be the standards ap8 plied under the Age Discrimination Act of 1975 (42

9 U.S.C. 6101 et seq.) and the Americans with Dis10 abilities Act of 1990 (42 U.S.C. 12101 et. seq.).

11 (3) RELIEF.—In any action under paragraph

12 (1), if the court finds a violation of section 1914, the

13 court may award such equitable and injunctive relief

14 as it deems appropriate, and may award to the ag15 grieved person any sums lost as a result of the viola16 tion. If the court finds that the party or parties

17 committing a violation engaged in intentional dis18 crimination in violation of section 1914, the ag19 grieved person may recover compensatory damages.

20 If the court finds that the party or parties commit21 ting such violation did so with malice or reckless in22 difference to the federally protected rights of the ag23 grieved person, the aggrieved person may recover

24 punitive damages under this section against a de-
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•S 2296 PCS

1 fendant other than a government, government agen2 cy or political subdivision.

3 (4) ATTORNEYS’ FEES.—In any action under

4 paragraph (1), the court, in its discretion, may allow

5 the prevailing party, other than the United States,

6 a reasonable attorney’s fee (including expert fees

7 and other litigation expenses) as part of the costs,

8 and the United States shall be liable for costs the

9 same as a private person.

10 (b) ACTION BY SECRETARY.—Whenever the Sec11 retary of Health and Human Services finds that a party

12 has failed to comply with section 1914 or with an applica13 ble regulation issued under such section, the Secretary

14 shall notify the party. If within a reasonable period of time

15 the party fails or refuses to comply, the Secretary may—

16 (1) refer the matter to the Attorney General

17 with a recommendation that an appropriate civil ac18 tion be instituted;

19 (2) terminate or limit the participation of such

20 party in the programs authorized by this Act;

21 (3) withhold Federal financial assistance to the

22 party; or

23 (4) take such other action as may be provided

24 by law.
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1 (c) ACTION BY ATTORNEY GENERAL.—When a mat2 ter is referred to the Attorney General under subsection

3 (b)(1), the Attorney General may bring a civil action in

4 a district court of the United States for such relief as may

5 be appropriate, including injunctive relief. In a civil action

6 under this section, the court—

7 (1) may grant any equitable relief that the

8 court considers to be appropriate;

9 (2) may award such other relief as the court

10 considers to be appropriate, including in cases of in11 tentional discrimination compensatory and punitive

12 damages; and

13 (3) may, to vindicate the public interest when

14 requested by the Attorney General, assess a civil

15 money penalty against the party in an amount—

16 (A) not exceeding $50,000 for a first viola17 tion; and

18 (B) not exceeding $100,000 for any subse19 quent violation.

20 SEC. 5239. NONDISCRIMINATION IN FEDERALLY ASSISTED

21 PROGRAMS.

22 Federal payments under subtitle C of title VI shall

23 be treated as Federal financial assistance for purposes of

24 section 504 of the Rehabilitation Act of 1973 (29 U.S.C.

25 794), section 303 of the Age Discrimination Act of 1975
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•S 2296 PCS

1 (42 U.S.C. 6102), and section 601 of the Civil Rights Act

2 of 1964 (42 U.S.C. 2000d).

3 SEC. 5240. CIVIL AND ADMINISTRATION ACTION BY ESSEN4 TIAL COMMUNITY PROVIDER.

5 (a) IN GENERAL.—An electing essential community

6 provider (as defined in section 1431(d)) who is aggrieved

7 by the failure of a health plan to fulfill a duty imposed

8 on the plan by section 1431 may commence a civil action

9 against the plan in an appropriate State court or district

10 court of the United States.

11 (b) RELIEF.—In an action under subsection (a), if

12 the court finds that the health plan has failed to fulfill

13 a duty imposed on the plan by section 1431, the electing

14 essential community provider may recover compensatory

15 damages and the court may order any other appropriate

16 relief.

17 (c) ATTORNEY’S FEES.—In any action under sub18 section (a), the court, in its discretion, may allow the pre19 vailing party, other than the United States, a reasonable

20 attorney’s fee (including expert fees) as part of the costs,

21 and the United States shall be liable for costs the same

22 as a private person.

23 (d) STATE COMPLAINT SYSTEM REQUIRED.—Prior

24 to commencing an action under subsection (a), the ag25 grieved essential community provider may first elect to
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1 utilize the administrative process provided under this sub2 section as follows:

3 (1) The Secretary shall prescribe regulations

4 governing administrative grievance actions by essen5 tial community providers that shall be consistent

6 with the requirements of section 5204 and that shall

7 provide for the consolidation of complaints (at the

8 election of the essential community providers) in

9 cases involving multiple complaints against a single

10 health plan.

11 (2) A State shall make available to each elect12 ing essential community provider that is aggrieved

13 by an action of a health plan under section 1431,

14 the opportunity to file a complaint in the complaint

15 review office established under section 5202. In the

16 case of essential community providers located in a

17 cooperative established in any State by the Sec18 retary, the Secretary shall assume all of the duties

19 and obligations of such State under this section.

20 SEC. 5241. FACIAL CONSTITUTIONAL CHALLENGES.

21 (a) JURISDICTION.—The United States District

22 Court for the District of Columbia shall have original and

23 exclusive jurisdiction of any civil action brought to invali24 date this Act or a provision of this Act on the ground of

25 its being repugnant to the Constitution of the United
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•S 2296 PCS

1 States on its face and for every purpose. In any action

2 described in this subsection, the district court may not

3 grant any temporary order or preliminary injunction re4 straining the enforcement, operation, or execution of this

5 Act or any provision of this Act.

6 (b) CONVENING OF THREE-JUDGE COURT.—An ac7 tion described in subsection (a) shall be heard and deter8 mined by a district court of three judges in accordance

9 with section 2284 of title 28, United States Code.

10 (c) CONSOLIDATION.—When actions described in

11 subsection (a) involving a common question of law or fact

12 are pending before a district court, the court shall order

13 all the actions consolidated.

14 (d) DIRECT APPEAL TO SUPREME COURT.—In any

15 action described in subsection (a), an appeal may be taken

16 directly to the Supreme Court of the United States from

17 any final judgment, decree, or order in which the district

18 court—

19 (1) holds this Act or any provision of this Act

20 invalid; and

21 (2) makes a determination that its holding will

22 materially undermine the application of the Act as

23 whole.

24 (e) CONSTRUCTION.—This section does not limit—

25 (1) the right of any person—
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1 (A) to a litigation concerning the Act or

2 any portion of the Act; or

3 (B) to petition the Supreme Court for re4 view of any holding of a district court by writ

5 of certiorari at any time before the rendition of

6 judgment in a court of appeals; or

7 (2) the authority of the Supreme Court to grant

8 a writ of certiorari for the review described in para9 graph (1)(B).

10 SEC. 5242. TREATMENT OF PLANS AS PARTIES IN CIVIL AC11 TIONS.

12 (a) IN GENERAL.—A health plan may sue or be sued

13 under this Act as an entity. Service of summons, sub14 poena, or other legal process of a court or hearing officer

15 upon a trustee or an administrator of any such plan in

16 his capacity as such shall constitute service upon the plan.

17 In a case where a plan has not designated in applicable

18 plan documents an individual as agent for the service of

19 legal process, service upon the Secretary of Health and

20 Human Services (in the case of a community-rated health

21 plan) or the Secretary of Labor (in the case of an experi22 enced-rated health plan) shall constitute such service. The

23 Secretary, not later than 15 days after receipt of service

24 under the preceding sentence, shall notify the adminis25 trator or any trustee of the plan of receipt of such service.
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1 (b) OTHER PARTIES.—Any money judgment under

2 this Act against a plan referred to in subsection (a) shall

3 be enforceable only against the plan as an entity and shall

4 not be enforceable against any other person unless liability

5 against such person is established in his individual capac6 ity under this Act.

7 SEC. 5243. WHISTLEBLOWER PROTECTIONS.

8 (a) IN GENERAL.—A health care entity (as defined

9 in section 11101(7)) or a health plan may not discharge,

10 discriminate or otherwise take adverse action against any

11 employee with respect to compensation, terms, conditions

12 or privileges of employment because the employee (or any

13 person acting pursuant to the request of the employee)

14 provided information to any Federal, State or private su15 pervisory agency or entity regarding a possible violation

16 of any provision of this Act or any regulation issued under

17 this Act.

18 (b) CIVIL ACTION.—An employee or former employee

19 who believes that such employee has been discharged, dis20 criminated or otherwise subject to adverse action in viola21 tion of subsection (a) may file a civil action in the appro22 priate United States district court within 2 years of the

23 date of such discharge, discrimination or adverse action.

24 (c) DETERMINATION OF COURT.—If a court in an ac25 tion under subsection (b) determines that a violation of
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1 subsection (a) has occurred, the court may order the

2 health care entity or plan that committed the violation—

3 (1) to reinstate the employee to his or her

4 former position;

5 (2) to pay compensatory damages to the em6 ployee;

7 (3) to pay reasonable costs and attorneys fees

8 incurred by the employee in bringing such action;

9 and

10 (4) to take such other appropriate actions to

11 remedy any past discrimination.

12 SEC. 5244. GENERAL NONPREEMPTION OF RIGHTS AND

13 REMEDIES.

14 Nothing in this title shall be construed to deny, im15 pair, or otherwise adversely affect a right or remedy avail16 able under law to any person, except to the extent the

17 right or remedy is inconsistent with this title.

18 Subtitle D—Medical Malpractice

19 PART 1—LIABILITY REFORM

20 SEC. 5301. FEDERAL TORT REFORM.

21 (a) APPLICABILITY.—

22 (1) IN GENERAL.—Except as provided in sec23 tion 5302, this part shall apply with respect to any

24 medical malpractice liability action brought in any

25 State or Federal court, except that this part shall
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1 not apply to a claim or action for damages arising

2 from a vaccine-related injury or death to the extent

3 that title XXI of the Public Health Service Act ap4 plies to the claim or action.

5 (2) EFFECT ON SOVEREIGN IMMUNITY AND

6 CHOICE OF LAW OR VENUE.—Nothing in this part

7 shall be construed to—

8 (A) waive or affect any defense of sov9 ereign immunity asserted by any State under

10 any provision of law;

11 (B) waive or affect any defense of sov12 ereign immunity asserted by the United States;

13 (C) affect the applicability of any provision

14 of the Foreign Sovereign Immunities Act of

15 1976;

16 (D) preempt State choice-of-law rules with

17 respect to claims brought by a foreign nation or

18 a citizen of a foreign nation; or

19 (E) affect the right of any court to trans20 fer venue or to apply the law of a foreign nation

21 or to dismiss a claim of a foreign nation or of

22 a citizen of a foreign nation on the ground of

23 inconvenient forum.

24 (3) FEDERAL COURT JURISDICTION NOT ES25 TABLISHED ON FEDERAL QUESTION GROUNDS.—
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1 Nothing in this part shall be construed to establish

2 any jurisdiction in the district courts of the United

3 States over medical malpractice liability actions on

4 the basis of section 1331 or 1337 of title 28, United

5 States Code.

6 (b) DEFINITIONS.—In this subtitle, the following

7 definitions apply:

8 (1) ALTERNATIVE DISPUTE RESOLUTION SYS9 TEM; ADR.—The term ‘‘alternative dispute resolu10 tion system’’ or ‘‘ADR’’ means a system that pro11 vides for the resolution of medical malpractice claims

12 in a manner other than through medical malpractice

13 liability actions.

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

15 any person who alleges a medical malpractice claim,

16 and any person on whose behalf such a claim is al17 leged, including the decedent in the case of an action

18 brought through or on behalf of an estate.

19 (3) HEALTH CARE PROFESSIONAL.—The term

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

21 provides health care services in a State and who is

22 required by the laws or regulations of the State to

23 be licensed or certified by the State to provide such

24 services in the State.
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1 (4) HEALTH CARE PROVIDER.—The term

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

3 institution that is engaged in the delivery of health

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

5 laws or regulations of the State to be licensed or cer6 tified by the State to engage in the delivery of such

7 services in the State.

8 (5) INJURY.—The term ‘‘injury’’ means any ill9 ness, disease, or other harm that is the subject of

10 a medical malpractice liability action or a medical

11 malpractice claim.

12 (6) MEDICAL MALPRACTICE LIABILITY AC13 TION.—The term ‘‘medical malpractice liability ac14 tion’’ means a cause of action brought in a State or

15 Federal court against a health care provider or

16 health care professional by which the plaintiff alleges

17 a medical malpractice claim.

18 (7) MEDICAL MALPRACTICE CLAIM.—The term

19 ‘‘medical malpractice claim’’ means a claim brought

20 against a health care provider or health care profes21 sional in which a claimant alleges that injury was

22 caused by the provision of (or the failure to provide)

23 health care services, except that such term does not

24 include—
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1 (A) any claim based on an allegation of an

2 intentional tort;

3 (B) any claim based on an allegation that

4 a product is defective that is brought against

5 any individual or entity that is not a health

6 care professional or health care provider; or

7 (C) any claim brought pursuant to subtitle

8 C of this title.

9 SEC. 5302. STATE-BASED ALTERNATIVE DISPUTE RESOLU10 TION MECHANISMS.

11 (a) APPLICATION TO MALPRACTICE CLAIMS UNDER

12 PLANS.—Prior to or immediately following the commence13 ment of any medical malpractice action, the parties shall

14 participate in the alternative dispute resolution system ad15 ministered by the State under subsection (b). Such partici16 pation shall be in lieu of any other provision of Federal

17 or State law or any contractual agreement made by or on

18 behalf of the parties prior to the commencement of the

19 medical malpractice action.

20 (b) ADOPTION OF MECHANISM BY STATE.—Each

21 State shall—

22 (1) maintain or adopt at least one of the alter23 native dispute resolution methods satisfying the re24 quirements specified under subsection (c) and (d) for

25 the resolution of medical malpractice claims arising
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1 from the provision of (or failure to provide) health

2 care services to individuals enrolled in a health plan;

3 and

4 (2) clearly disclose to enrollees (and potential

5 enrollees) the availability and procedures for

6 consumer grievances, including a description of the

7 alternative dispute resolution method or methods

8 adopted under this subsection.

9 (c) SPECIFICATION OF PERMISSIBLE ALTERNATIVE

10 DISPUTE RESOLUTION METHODS.—

11 (1) IN GENERAL.—The Board shall, by regula12 tion, develop alternative dispute resolution methods

13 for the use by States in resolving medical mal14 practice claims under subsection (a). Such methods

15 shall include at least the following:

16 (A) ARBITRATION.—The use of arbitra17 tion, a nonjury adversarial dispute resolution

18 process which may, subject to subsection (d),

19 result in a final decision as to facts, law, liabil20 ity or damages.

21 (B) CLAIMANT-REQUESTED BINDING ARBI22 TRATION.—For claims involving a sum of

23 money that falls below a threshold amount set

24 by the Board, the use of arbitration not subject
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1 to subsection (d). Such binding arbitration shall

2 be at the sole discretion of the claimant.

3 (C) MEDIATION.—The use of mediation, a

4 settlement process coordinated by a neutral

5 third party without the ultimate rendering of a

6 formal opinion as to factual or legal findings.

7 (D) EARLY NEUTRAL EVALUATION.—The

8 use of early neutral evaluation, in which the

9 parties make a presentation to a neutral attor10 ney or other neutral evaluator for an assess11 ment of the merits, to encourage settlement. If

12 the parties do not settle as a result of assess13 ment and proceed to trial, the neutral eval14 uator’s opinion shall be kept confidential.

15 (E) CERTIFICATE OF MERIT.—The re16 quirement that a medical malpractice plaintiff

17 submit to the court before trial a written report

18 by a qualified specialist that includes the spe19 cialist’s determination that, after a review of

20 the available medical record and other relevant

21 material, there is a reasonable and meritorious

22 cause for the filing of the action against the de23 fendant.

24 (2) STANDARDS FOR ESTABLISHING METH25 ODS.—In developing alternative dispute resolution
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•S 2296 PCS

1 methods under paragraph (1), the Board shall as2 sure that the methods promote the resolution of

3 medical malpractice claims in a manner that—

4 (A) is affordable for the parties involved;

5 (B) provides for timely resolution of

6 claims;

7 (C) provides for the consistent and fair

8 resolution of claims; and

9 (D) provides for reasonably convenient ac10 cess to dispute resolution for individuals en11 rolled in plans.

12 (3) WAIVER AUTHORITY.—Upon application of

13 a State, the Board may grant the State the author14 ity to fulfill the requirement of subsection (b) by

15 adopting a mechanism other than a mechanism es16 tablished by the Board pursuant to this subsection,

17 except that such mechanism must meet the stand18 ards set forth in paragraph (2).

19 (d) FURTHER REDRESS.—Except with respect to the

20 claimant-requested binding arbitration method set forth in

21 subsection (c)(1)(B), and notwithstanding any other provi22 sion of a law or contractual agreement, a plan enrollee

23 dissatisfied with the determination reached as a result of

24 an alternative dispute resolution method applied under

25 this section may, after the final resolution of the enrollee’s
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•S 2296 PCS

1 claim under the method, bring a cause of action to seek

2 damages or other redress with respect to the claim to the

3 extent otherwise permitted under State law. The results

4 of any alternative dispute resolution procedure are inad5 missible at any subsequent trial, as are all statements, of6 fers, and other communications made during such proce7 dures, unless otherwise admissible under State law.

8 SEC. 5303. LIMITATION ON AMOUNT OF ATTORNEY’S CON9 TINGENCY FEES.

10 (a) IN GENERAL.—An attorney who represents, on

11 a contingency fee basis, a plaintiff in a medical mal12 practice liability action may not charge, demand, receive,

13 or collect for services rendered in connection with such ac14 tion (including the resolution of the claim that is the sub15 ject of the action under any alternative dispute resolution

16 system) in excess of—

(1) 331 17 ⁄3 percent of the first $150,000 of the

18 total amount recovered by judgment or settlement in

19 such action; plus

20 (2) 25 percent of any amount recovered above

21 the amount described in paragraph (1);

22 unless otherwise determined under State law. Such

23 amount shall be computed after deductions are made for

24 all the expenses associated with the claim other than those
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•S 2296 PCS

1 attributable to the normal operating expenses of the attor2 ney.

3 (b) CALCULATION OF PERIODIC PAYMENTS.—In the

4 event that a judgment or settlement includes periodic or

5 future payments of damages, the amount recovered for

6 purposes of computing the limitation on the contingency

7 fee under subsection (a) may, in the discretion of the

8 court, be based on the cost of the annuity or trust estab9 lished to make the payments. In any case in which an an10 nuity or trust is not established to make such payments,

11 such amount shall be based on the present value of the

12 payments.

13 (c) CONTINGENCY FEE DEFINED.—As used in this

14 section, the term ‘‘contingency fee’’ means any fee for pro15 fessional legal services which is, in whole or in part, con16 tingent upon the recovery of any amount of damages,

17 whether through judgment or settlement.

18 SEC. 5304. REDUCTION OF AWARDS FOR RECOVERY FROM

19 COLLATERAL SOURCES.

20 (a) REDUCTION OF AWARD.—The total amount of

21 damages recovered by a plaintiff in a medical malpractice

22 liability action shall be reduced by an amount that

23 equals—

24 (1) the amount of any payment which the plain25 tiff has received or to which the plaintiff is presently
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1 entitled on account of the same injury for which the

2 damages are awarded, including payment under—

3 (A) Federal or State disability or sickness

4 programs;

5 (B) Federal, State, or private health insur6 ance programs;

7 (C) private disability insurance programs;

8 (D) employer wage continuation programs;

9 and

10 (E) any other program, if the payment is

11 intended to compensate the plaintiff for the

12 same injury for which damages are awarded;

13 less

14 (2) the amount of any premiums or any other

15 payments that the plaintiff has paid to be eligible to

16 receive the payment described in paragraph (1) and

17 any portion of the award subject to a subrogation

18 lien or claim.

19 (b) SUBROGATION.—The court may reduce a sub20 rogation lien or claim described in subsection (a)(2) by

21 an amount representing reasonable costs incurred in se22 curing the award subject to the lien or claim.

23 (c) INAPPLICABILITY OF SECTION.—This section

24 shall not apply to any case in which the court determines

25 that the reduction of damages pursuant to subsection (a)
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1 would compound the effect of any State law limitation on

2 damages so as to render the plaintiff less than fully com3 pensated for his or her injuries.

4 SEC. 5305. PERIODIC PAYMENT OF AWARDS.

5 (a) IN GENERAL.—A party to a medical malpractice

6 liability action may petition the court to instruct the trier

7 of fact to award any future damages on an appropriate

8 periodic basis. If the court, in its discretion, so instructs

9 the trier of fact, and damages are awarded on a periodic

10 basis, the court may require the defendant to purchase

11 an annuity or other security instrument (typically based

12 on future damages discounted to present value) adequate

13 to assure payments of future damages.

14 (b) FAILURE OR INABILITY TO PAY.—With respect

15 to an award of damages described in subsection (a), if a

16 defendant fails to make payments in a timely fashion, or

17 if the defendant becomes or is at risk of becoming insol18 vent, upon such a showing the claimant may petition the

19 court for an order requiring that remaining balance be dis20 counted to present value and paid to the claimant in a

21 lump-sum.

22 (c) MODIFICATION OF PAYMENT SCHEDULE.—The

23 court shall retain authority to modify the payment sched24 ule based on changed circumstances.
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1 (d) FUTURE DAMAGES DEFINED.—As used in this

2 section, the term ‘‘future damages’’ means any economic

3 or noneconomic loss other than that incurred or accrued

4 as of the time of judgment.

5 SEC. 5306. CONSTRUCTION.

6 Nothing in this subtitle shall be construed to preempt

7 any State law that sets a maximum limit on total dam8 ages.

9 PART 2—OTHER PROVISIONS RELATING TO

10 MEDICAL MALPRACTICE LIABILITY

11 SEC. 5311. STATE MALPRACTICE REFORM DEMONSTRATION

12 PROJECTS.

13 (a) ESTABLISHMENT.—The Secretary shall award

14 grants to States for the establishment of malpractice re15 form demonstration projects in accordance with this sec16 tion. Each such project shall be designed to assess the

17 fairness and effectiveness of one or more of the following

18 models:

19 (1) No-fault liability.

20 (2) Enterprise liability.

21 (3) Practice guidelines.

22 (b) DEFINITIONS.—For purposes of this section:

23 (1) MEDICAL ADVERSE EVENT.—The term

24 ‘‘medical adverse event’’ means an injury that is the

25 result of medical management as opposed to a dis-
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1 ease process that creates disability lasting at least

2 one month after discharge, or that prolongs a hos3 pitalization for more than one month, and for which

4 compensation is available under a no-fault medical

5 liability system established under this section.

6 (2) NO-FAULT MEDICAL LIABILITY SYSTEM.—

7 The terms ‘‘no-fault medical liability system’’ and

8 ‘‘system’’ mean a system established by a State re9 ceiving a grant under this section which replaces the

10 common law tort liability system for medical injuries

11 with respect to certain qualified health care organi12 zations and qualified insurers and which meets the

13 requirements of this section.

14 (3) PROVIDER.—The term ‘‘provider’’ means

15 physician, physician assistant, or other individual

16 furnishing health care services in affiliation with a

17 qualified health care organization.

18 (4) QUALIFIED HEALTH CARE ORGANIZA19 TION.—The term ‘‘qualified health care organiza20 tion’’ means a hospital, a hospital system, a man21 aged care network, or other entity determined appro22 priate by the Secretary which elects in a State re23 ceiving a grant under this section to participate in

24 a no-fault medical liability system and which meets

25 the requirements of this section.
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1 (5) QUALIFIED INSURER.—The term ‘‘qualified

2 insurer’’ means a health care malpractice insurer,

3 including a self-insured qualified health care organi4 zation, which elects in a State receiving a grant

5 under this section to participate in a no-fault medi6 cal liability system and which meets the require7 ments of this section.

8 (6) ENTERPRISE LIABILITY.—The term ‘‘enter9 prise liability’’ means a system in which State law

10 imposes malpractice liability on the health plan in

11 which a physician participates in place of personal li12 ability on the physician in order to achieve improved

13 quality of care, reductions in defensive medical prac14 tices, and better risk management.

15 (7) PRACTICE GUIDELINES.—The term ‘‘prac16 tice guidelines’’ means guidelines established by the

17 Agency for Health Care Policy and Research pursu18 ant to the Public Health Service Act or this Act.

19 (c) APPLICATIONS BY STATES.—

20 (1) IN GENERAL.—Each State desiring to es21 tablish a malpractice reform demonstration project

22 shall submit an application to the Secretary at such

23 time and in such manner as the Secretary shall re24 quire.
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1 (2) CONTENTS OF APPLICATION.—An applica2 tion under paragraph (1) shall include—

3 (A) an identification of the State agency or

4 agencies that will administer the demonstration

5 project and be the grant recipient of funds for

6 the State;

7 (B) a description of the manner in which

8 funds granted to a State will be expended and

9 a description of fiscal control, accounting, and

10 audit procedures to ensure the proper dispersal

11 of and accounting for funds received under this

12 section; and

13 (C) such other information as the Sec14 retary determines appropriate.

15 (3) CONSIDERATION OF APPLICATIONS.—In re16 viewing all applications received from States desiring

17 to establish malpractice demonstration projects

18 under paragraph (1), the Secretary shall consider—

19 (A) data regarding medical malpractice

20 and malpractice litigation patterns in each

21 State;

22 (B) the contributions that any demonstra23 tion project will make toward reducing mal24 practice and costs associated with health care

25 injuries;
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1 (C) diversity among the populations serv2 iced by the systems;

3 (D) geographic distribution; and

4 (E) such other criteria as the Secretary de5 termines appropriate.

6 (d) EVALUATION AND REPORTS.—

7 (1) BY THE STATES.—Each State receiving a

8 grant under this section shall conduct on-going eval9 uations of the effectiveness of any demonstration

10 project established in such State and shall submit an

11 annual report to the Secretary concerning the re12 sults of such evaluations at such times and in such

13 manner as the Secretary shall require.

14 (2) BY THE SECRETARY.—The Secretary shall

15 submit an annual report to Congress concerning the

16 fairness and effectiveness of the demonstration

17 projects conducted under this section. Such report

18 shall analyze the reports received by the Secretary

19 under paragraph (1).

20 (e) FUNDING.—

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

22 appropriated such sums as may be necessary to

23 carry out the purposes of this section.

24 (2) LIMITATIONS ON EXPENDITURES.—
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1 (A) ADMINISTRATIVE EXPENSES.—Not

2 more than 10 percent of the amount of each

3 grant awarded to a State under this section

4 may be used for administrative expenses.

5 (B) WAIVER OF COST LIMITATIONS.—The

6 limitation under subparagraph (A) may be

7 waived as determined appropriate by the Sec8 retary.

9 (f) ELIGIBILITY FOR NO-FAULT DEMONSTRATION.—

10 A State is eligible to receive a no-fault liability demonstra11 tion grant if the application of the State under subsection

12 (c) includes—

13 (1) an identification of each qualified health

14 care organization selected by the State to participate

15 in the system, including—

16 (A) the location of each organization;

17 (B) the number of patients generally

18 served by each organization;

19 (C) the types of patients generally served

20 by each organization;

21 (D) an analysis of any characteristics of

22 each organization which makes such organiza23 tion appropriate for participation in the system;

24 (E) whether the organization is self-in25 sured for malpractice liability; and
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1 (F) such other information as the Sec2 retary determines appropriate;

3 (2) an identification of each qualified insurer

4 selected by the State to participate in the system, in5 cluding—

6 (A) a schedule of the malpractice insur7 ance premiums generally charged by each in8 surer under the common law tort liability sys9 tem; and

10 (B) such other information as the Sec11 retary determines appropriate;

12 (3) a description of the procedure under which

13 qualified health care organizations and insurers elect

14 to participate in the system;

15 (4) a description of the system established by

16 the State to assure compliance with the require17 ments of this section by each qualified health care

18 organization and insurer; and

19 (5) a description of procedures for the prepara20 tion and submission to the State of an annual report

21 by each qualified health care organization and quali22 fied insurer participating in a system that shall in23 clude—

24 (A) a description of activities conducted

25 under the system during the year; and
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1 (B) the extent to which the system ex2 ceeded or failed to meet relevant performance

3 standards including compensation for and de4 terrence of medical adverse events.

5 (g) ELIGIBILITY FOR ENTERPRISE LIABILITY DEM6 ONSTRATION.—A State is eligible to receive an enterprise

7 liability demonstration grant if the State—

8 (1) has entered into an agreement with a health

9 plan (other than a fee-for-service plan) operating in

10 the State under which the plan assumes legal liabil11 ity with respect to any medical malpractice claim

12 arising from the provision of (or failure to provide)

13 services under the plan by any physician participat14 ing in the plan; and

15 (2) has provided that, under the law of the

16 State, a physician participating in a plan that has

17 entered into an agreement with the State under

18 paragraph (1) may not be liable in damages or oth19 erwise for such a claim and the plan may not require

20 such physician to indemnify the plan for any such li21 ability.

22 (h) ELIGIBILITY FOR PRACTICE GUIDELINES DEM23 ONSTRATION.—A State is eligible to receive a practice

24 guidelines demonstration grant if the law of the State pro25 vides that in the resolution of any medical malpractice ac-
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1 tion, compliance or non-compliance with an appropriate

2 practice guideline shall be admissible at trial as a rebutta3 ble presumption regarding medical negligence.

4 Subtitle E—Expanded Efforts To

5 Combat Health Care Fraud and

6 Abuse

7 PART 1—IMPROVED ENFORCEMENT

8 SEC. 5401. ALL-PAYER HEALTH CARE FRAUD AND ABUSE

9 CONTROL PROGRAM.

10 (a) IN GENERAL.—Not later than January 1, 1995,

11 the Secretary and the Attorney General of the United

12 States shall establish a joint program—

13 (1) to coordinate Federal, State, and local law

14 enforcement programs to control fraud and abuse

15 with respect to the delivery of and payment for

16 health care in the United States,

17 (2) to conduct investigations (including

18 consumer complaint investigations), audits, evalua19 tions, and inspections relating to the delivery of and

20 payment for health care in the United States, and

21 (3) to facilitate the enforcement of this subtitle

22 and other statutes applicable to health care fraud

23 and abuse.

24 (b) COORDINATION WITH LAW ENFORCEMENT

25 AGENCIES.—In carrying out the program under sub-
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1 section (a), the Secretary and the Attorney General shall

2 consult with, and arrange for the sharing of data and re3 sources with Federal, State and local law enforcement

4 agencies, State Medicaid Fraud Control Units, and State

5 agencies responsible for the licensing and certification of

6 health care providers.

7 (c) COORDINATION WITH CONSUMER PURCHASING

8 COOPERATIVES AND HEALTH PLANS.—In carrying out

9 the program under subsection (a), the Secretary and the

10 Attorney General shall consult with, and arrange for the

11 sharing of data with representatives of consumer purchas12 ing cooperatives and health plans.

13 (d) AUTHORITIES OF ATTORNEY GENERAL AND SEC14 RETARY.—In carrying out duties under subsection (a), the

15 Attorney General and the Secretary are authorized—

16 (1) to conduct, supervise, and coordinate audits,

17 civil and criminal investigations, inspections, and

18 evaluations relating to the program established

19 under such subsection;

20 (2) to have access (including on-line access as

21 requested and available) to all records available to

22 consumer purchasing cooperatives and health plans

23 relating to the activities described in paragraph (1)

24 (subject to restrictions based on the confidentiality
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1 of certain information under part 2 of subtitle B);

2 and

3 (3) to require the issuance of advisory opinions,

4 fraud alerts, and other appropriate educational ma5 terial to assist in compliance with the provisions of

6 this subtitle.

7 (e) QUALIFIED IMMUNITY FOR PROVIDING INFORMA8 TION.—The provisions of section 1157(a) of the Social Se9 curity Act (relating to limitation on liability) shall apply

10 to a person providing information or communications to

11 the Secretary or the Attorney General in conjunction with

12 their performance of duties under this section, in the same

13 manner as such section applies to information provided

14 to organizations with a contract under part B of title XI

15 of such Act.

16 (f) USE OF POWERS UNDER INSPECTOR GENERAL

17 ACT OF 1978.—In carrying out duties and responsibilities

18 under the program established under subsection (a), the

19 Inspector General is authorized to exercise all powers

20 granted under the Inspector General Act of 1978 to the

21 same manner and extent as provided in that Act.

22 (g) DEFINITIONS.—In this subtitle:

23 (1) HEALTH CARE.—The term ‘‘health care’’

24 includes long-term care benefits under title II of this

25 Act.
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1 (2) INSPECTOR GENERAL.—The term ‘‘Inspec2 tor General’’ means the Inspector General of the De3 partment of Health and Human Services.

4 SEC. 5402. ESTABLISHMENT OF ALL-PAYER HEALTH CARE

5 FRAUD AND ABUSE CONTROL ACCOUNT.

6 (a) ESTABLISHMENT.—

7 (1) IN GENERAL.—There is hereby established

8 an account to be known as the ‘‘All-Payer Health

9 Care Fraud and Abuse Control Account’’ (in this

10 section referred to as the ‘‘Anti-Fraud Account’’).

11 The Anti-Fraud Account shall consist of such gifts

12 and bequests as may be made as provided in para13 graph (2) and such amounts as may be deposited in

14 such Anti-Fraud Account as provided in section

15 5411(d)(2). It shall also include the following:

16 (A) All criminal fines imposed in cases in17 volving a Federal health care offense (as de18 fined in subsection (d)).

19 (B) Penalties and damages imposed under

20 the False Claims Act (31 U.S.C. 3729 et seq.),

21 in cases involving claims related to the provision

22 of health care items and services (other than

23 funds awarded to a relator or for restitution).
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•S 2296 PCS

1 (C) Administrative penalties and assess2 ments imposed under section 5411 (except as

3 otherwise provided by law).

4 (D) Amounts resulting from the forfeiture

5 of property by reason of a Federal health care

6 offense.

7 Any such funds received on or after the date of the

8 enactment of this Act shall be deposited in the Anti9 Fraud Account.

10 (2) AUTHORIZATION TO ACCEPT GIFTS.—The

11 Anti-Fraud Account is authorized to accept on be12 half of the United States money gifts and bequests

13 made unconditionally to the Anti-Fraud Account, for

14 the benefit of the Anti-Fraud Account or any activ15 ity financed through the Anti-Fraud Account.

16 (b) USE OF FUNDS.—

17 (1) IN GENERAL.—Amounts in the Anti-Fraud

18 Account shall be available without appropriation and

19 until expended as determined jointly by the Sec20 retary and the Attorney General of the United

21 States in carrying out the All-Payer Health Care

22 Fraud and Abuse Control Program established

23 under section 5401 (including the administration of

24 the Program), and may be used to cover costs in-
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1 curred in operating the Program, including costs

2 of—

3 (A) prosecuting health care matters

4 (through criminal, civil and administrative pro5 ceedings);

6 (B) investigations (including equipment,

7 salaries, administratively uncontrollable work,

8 travel, and training of law enforcement person9 nel);

10 (C) financial and performance audits of

11 health care programs and operations;

12 (D) inspections and other evaluations;

13 (E) rewards paid under section 5404; and

14 (F) provider and consumer education (in15 cluding the provision of advisory opinions) re16 garding compliance with the provisions of this

17 subtitle.

18 Twenty percent of the amounts available in the Anti19 Fraud Account for any fiscal year shall be used for

20 costs described in subparagraph (F).

21 (2) FUNDS USED TO SUPPLEMENT AGENCY AP22 PROPRIATIONS.—It is intended that disbursements

23 made from the Anti-Fraud Account to any Federal

24 agency be used to increase and not supplant the re25 cipient agency’s appropriated operating budget.
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1 (c) ANNUAL REPORT.—The Secretary and the Attor2 ney General shall submit jointly an annual report to Con3 gress on the amount of revenue which is generated and

4 disbursed by the Anti-Fraud Account in each fiscal year.

5 (d) FEDERAL HEALTH CARE OFFENSE DEFINED.—

6 For purposes of subsection (a)(1)(A) and section 5404(a),

7 the term ‘‘Federal health care offense’’ means a violation

8 of, or a criminal conspiracy to violate—

9 (1) sections 226, 668, 1033, or 1347 of title

10 18, United States Code;

11 (2) section 1128B of the Social Security Act;

12 (3) sections 287, 371, 664, 666, 1001, 1027,

13 1341, 1343, or 1954 of title 18, United States Code,

14 if the violation or conspiracy relates to health care

15 fraud;

16 (4) sections 501 or 511 of the Employee Retire17 ment Income Security Act of 1974, if the violation

18 or conspiracy relates to health care fraud; or

19 (5) sections 301, 303(a)(2), or 303 (b) or (e)

20 of the Federal Food Drug and Cosmetic Act, if the

21 violation or conspiracy relates to health care fraud.

22 SEC. 5403. USE OF FUNDS BY INSPECTOR GENERAL.

23 (a) REIMBURSEMENTS FOR INVESTIGATIONS.—

24 (1) IN GENERAL.—The Inspector General is au25 thorized to receive and retain for current use reim-
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1 bursement for the costs of conducting investigations,

2 when such restitution is ordered by a court, volun3 tarily agreed to by the payer, or otherwise.

4 (2) CREDITING.—Funds received by the Inspec5 tor General as reimbursement for costs of conduct6 ing investigations shall be deposited to the credit of

7 the appropriation from which initially paid, or to ap8 propriations for similar purposes currently available

9 at the time of deposit, and shall remain available for

10 obligation for 1 year from the date of their deposit.

11 (3) EXCEPTION FOR FORFEITURES.—This sub12 section does not apply to investigative costs paid to

13 the Inspector General from the Department of Jus14 tice Asset Forfeiture Fund, which monies shall be

15 deposited and expended in accordance with sub16 section (b).

17 (b) HHS OFFICE OF INSPECTOR GENERAL ASSET

18 FORFEITURE PROCEEDS FUND.—

19 (1) IN GENERAL.—There is hereby established

20 the ‘‘HHS Office of Inspector General Asset Forfeit21 ure Proceeds Fund,’’ to be administered by the In22 spector General, which shall be available to the In23 spector General without fiscal year limitation for ex24 penses relating to the investigation of matters within

25 the jurisdiction of the Inspector General.
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1 (2) DEPOSITS.—There shall be deposited in the

2 Fund all proceeds from forfeitures that have been

3 transferred to the Inspector General from the De4 partment of Justice Asset Forfeiture Fund under

5 section 524 of title 28, United States Code.

6 SEC. 5404. REWARDS FOR INFORMATION LEADING TO

7 PROSECUTION AND CONVICTION.

8 (a) IN GENERAL.—In special circumstances, the Sec9 retary and the Attorney General of the United States may

10 jointly make a payment of up to $10,000 to a person who

11 furnishes information unknown to the Government relat12 ing to a possible prosecution of a Federal health care of13 fense (as defined in section 5402(d)).

14 (b) INELIGIBLE PERSONS.—A person is not eligible

15 for a payment under subsection (a) if—

16 (1) the person is a current or former officer or

17 employee of a Federal or State government agency

18 or instrumentality who furnishes information discov19 ered or gathered in the course of government em20 ployment;

21 (2) the person knowingly participated in the of22 fense;

23 (3) the information furnished by the person

24 consists of allegations or transactions that have been

25 disclosed to the public—
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1 (A) in a criminal, civil, or administrative

2 proceeding;

3 (B) in a congressional, administrative or

4 General Accounting Office report, hearing,

5 audit, or investigation; or

6 (C) by the news media, unless the person

7 is the original source of the information; or

8 (4) when, in the judgment of the Attorney Gen9 eral, it appears that a person whose illegal activities

10 are being prosecuted or investigated could benefit

11 from the award.

12 (c) DEFINITION.—For the purposes of subsection

13 (b)(3)(C), the term ‘‘original source’’ means a person who

14 has direct and independent knowledge of the information

15 that is furnished and has voluntarily provided the informa16 tion to the Government prior to disclosure by the news

17 media.

18 (d) NO JUDICIAL REVIEW.—Neither the failure of

19 the Secretary and the Attorney General to authorize a

20 payment under subsection (a) nor the amount authorized

21 shall be subject to judicial review.
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1 PART 2—CIVIL PENALTIES AND RIGHTS OF

2 ACTION

3 SEC. 5411. CIVIL MONETARY PENALTIES.

4 (a) ACTIONS SUBJECT TO PENALTY.—Any person

5 who is determined by the Secretary to have committed any

6 action with respect to an applicable health plan that would

7 subject the person to a penalty under paragraphs (1)

8 through (3) of section 1128A(a) of the Social Security Act

9 if the action was taken with respect to title V, XVIII, XIX,

10 or XX of such Act, shall be subject to a penalty in accord11 ance with subsection (b).

12 (b) PENALTIES DESCRIBED.—

13 (1) GENERAL RULE.—In the case of a person

14 who the Secretary determines has committed an ac15 tion described in subsection (a), the person shall be

16 subject to the civil monetary penalty (together with

17 any additional assessment) to which the person

18 would be subject under section 1128A of the Social

19 Security Act if the action on which the determina20 tion is based had been committed with respect to

21 title V, XVIII, XIX, or XX of such Act, by sub22 stituting ‘‘$10,000’’ for ‘‘$2,000’’, and ‘‘3 times the

23 amount claimed’’ for ‘‘twice the amount claimed’’.

24 (2) INTEREST ON PENALTIES.—Interest shall

25 accrue on the civil monetary penalties and assess26 ments imposed by a final determination of the Sec-
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1 retary under this subsection, in accordance with an

2 annual rate established by the Secretary under the

3 Federal Claims Collection Act. The rate of interest

4 charged shall be the rate in effect on the date the

5 determination becomes final and shall remain fixed

6 at that rate until the entire amount due is paid. In

7 addition, the Secretary is authorized to recover the

8 costs of collection in any case where such penalties

9 and assessments are not paid within 30 days after

10 the determination becomes final, or in the case of a

11 compromised amount, where payments are more

12 than 90 days past due. In lieu of actual costs, the

13 Secretary is authorized to impose a charge of up to

14 10 percent of the amount of such penalties and as15 sessments owed to cover the costs of collection.

16 (3) DETERMINATIONS TO EXCLUDE PER17 MITTED.—In addition to any civil monetary penalty

18 or assessment imposed under this subsection, the

19 Secretary may make a determination in the same

20 proceeding to exclude a provider from participation

21 in all applicable health plans for the delivery of or

22 payment for health care items or services (in accord23 ance with section 5414(c)).

24 (c) PROCEDURES FOR IMPOSITION OF PENALTIES.—
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1 (1) APPLICABILITY OF PROCEDURES UNDER SO2 CIAL SECURITY ACT.—Except as otherwise provided

3 in paragraph (2), the provisions of section 1128A of

4 the Social Security Act (other than subsections (a)

5 and (b) and the second sentence of subsection (f))

6 shall apply to the imposition of a civil monetary pen7 alty, assessment, or exclusion under this section in

8 the same manner as such provisions apply with re9 spect to the imposition of a penalty, assessment, or

10 exclusion under section 1128A of such Act.

11 (2) AUTHORITY OF SECRETARY OF LABOR AND

12 STATES TO IMPOSE PENALTIES, ASSESSMENTS, AND

13 EXCLUSIONS.—

14 (A) IN GENERAL.—The Secretary of Labor

15 or a State may initiate an action to impose a

16 civil monetary penalty, assessment, or exclusion

17 under this section with respect to actions relat18 ing to a large group sponsor if authorized by

19 the Attorney General of the United States and

20 the Secretary pursuant to regulations promul21 gated by the Secretary in consultation with the

22 Attorney General.

23 (B) REQUIREMENTS DESCRIBED.—Under

24 the regulations promulgated under subpara25 graph (A), the Attorney General and the Sec-
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1 retary shall review an action proposed by the

2 Secretary of Labor or a State, and not later

3 than 60 days after receiving notice of the pro4 posed action from the Secretary of Labor or the

5 State, shall—

6 (i) approve the proposed action to be

7 taken by the Secretary of Labor or the

8 State;

9 (ii) disapprove the proposed action; or

10 (iii) assume responsibility for initiat11 ing a criminal, civil, or administrative ac12 tion based on the information provided in

13 the notice.

14 (C) ACTION DEEMED APPROVED IF DEAD15 LINE MISSED.—If the Attorney General and the

16 Secretary fail to respond to a proposed action

17 by the Secretary of Labor or a State within the

18 period described in subparagraph (B), the At19 torney General and the Secretary shall be

20 deemed to have approved the proposed action to

21 be taken by the Secretary of Labor or the

22 State.

23 (d) TREATMENT OF AMOUNTS RECOVERED.—Any

24 amounts recovered under this section shall be paid to the

25 Secretary and disposed of as follows:
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1 (1) Such portions of the amounts recovered as

2 is determined to have been improperly paid from an

3 applicable health plan for the delivery of or payment

4 for health care items or services shall be repaid to

5 such plan (and enrollees of such plan as appro6 priate).

7 (2) The remainder of the amounts recovered

8 shall be deposited in the All-Payer Health Care

9 Fraud and Abuse Control Account established under

10 section 5402.

11 (e) NOTIFICATION OF LICENSING AUTHORITIES.—

12 Whenever the Secretary’s determination to impose a pen13 alty, assessment, or exclusion under this section becomes

14 final, the Secretary shall notify the appropriate State or

15 local licensing agency or organization (including the agen16 cy specified in section 1864(a) and 1902(a)(33) of the So17 cial Security Act) that such a penalty, assessment, or ex18 clusion has become final and the reasons therefor.

19 SEC. 5412. PERMITTING PARTIES TO BRING ACTIONS ON

20 OWN BEHALF.

21 (a) IN GENERAL.—Subject to subsections (b) and (c),

22 a health plan or large group sponsor that suffers harm

23 or monetary loss exceeding the sum or value of $10,000

24 (excluding interest) as a result of any activity of an indi25 vidual or entity which makes the individual or entity sub-
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1 ject to a civil monetary penalty under section 5411 may,

2 in a civil action against the individual or entity in the

3 United States District Court, obtain treble damages and

4 costs including attorneys’ fees against the individual or en5 tity and such equitable relief as is appropriate.

6 (b) REQUIREMENTS FOR BRINGING ACTION.—A per7 son may bring a civil action under this section only if—

8 (1) the person provides the Secretary with writ9 ten notice of—

10 (A) the person’s intent to bring an action

11 under this section,

12 (B) the identities of the individuals or enti13 ties the person intends to name as defendants

14 to the action, and

15 (C) all information the person possesses

16 regarding the activity that is the subject of the

17 action that may materially affect the Sec18 retary’s decision to initiate a proceeding to im19 pose a civil monetary penalty under section

20 5411 against the defendants, and

21 (2) one of the following conditions is met:

22 (A) During the 60-day period that begins

23 on the date the Secretary receives the written

24 notice described in paragraph (1), the Secretary

25 does not notify the person that the Secretary
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1 intends to initiate an investigation to determine

2 whether to impose a civil monetary penalty

3 under section 5411 against the defendants.

4 (B) The Secretary notifies the person dur5 ing the 60-day period described in subpara6 graph (A) that the Secretary intends to initiate

7 an investigation to determine whether to impose

8 a civil monetary penalty under such section

9 against the defendants, and the Secretary sub10 sequently notifies the person that the Secretary

11 no longer intends to initiate an investigation or

12 proceeding to impose a civil monetary penalty

13 against the defendants.

14 (C) After the expiration of the 1-year pe15 riod that begins on the date written notice is

16 provided to the Secretary, the Secretary has not

17 initiated a proceeding to impose a civil mone18 tary penalty against the defendants.

19 (c) TREATMENT OF EXCESS AWARDS.—If a person

20 is awarded any amounts in an action brought under this

21 section that are in excess of the damages suffered by the

22 person as a result of the defendant’s activities, 20 percent

23 of such amounts shall be withheld from the person for pay24 ment into the All-Payer Health Care Fraud and Abuse

25 Control Account established under section 5402(a).
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1 (d) STATUTE OF LIMITATIONS.—No action may be

2 brought under this section more than 6 years after the

3 date of the activity with respect to which the action is

4 brought.

5 (e) NO LIMITATION ON OTHER ACTIONS.—Nothing

6 in this section shall limit the right of any person to pursue

7 any other right of action or remedy available under the

8 law.

9 (f) PENDENT JURISDICTION.—Nothing in this sec10 tion shall be construed, by reason of a claim arising under

11 this section, to confer on the Courts of the United States

12 jurisdiction over any State law claim.

13 SEC. 5413. EXCLUSION FROM PROGRAM PARTICIPATION.

14 (a) MANDATORY EXCLUSION.—

15 (1) IN GENERAL.—Except as provided in para16 graph (2), the Secretary shall exclude an individual

17 or entity from participation in any applicable health

18 plan if the individual or entity—

19 (A) is excluded from participation in a

20 public program under, or is otherwise described

21 in, section 1128(a) of the Social Security Act

22 (relating to individuals and entities convicted of

23 health care-related crimes or patient abuse);

24 (B) has been convicted after the date of

25 the enactment of this section, under Federal or
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1 State law, in connection with the delivery of a

2 health care item or service of a criminal offense

3 consisting of a felony relating to fraud, theft,

4 embezzlement, breach of fiduciary responsibil5 ity, or other financial misconduct; or

6 (C) has been convicted after such date,

7 under Federal or State law, of a criminal of8 fense consisting of a felony relating to the un9 lawful manufacture, distribution, prescription,

10 or dispensing of a controlled substance.

11 (2) WAIVER PERMITTED.—

12 (A) IN GENERAL.—When, in the opinion of

13 the Secretary, mandatory exclusion of an indi14 vidual or entity would significantly harm the

15 public health or pose a significant risk to the

16 public health, the Secretary may waive such ex17 clusion and shall apply such other appropriate

18 penalties as authorized under this subtitle.

19 (B) APPLICATION FOR WAIVER OF EXCLU20 SION.—

21 (i) IN GENERAL.—An individual or

22 entity subject to mandatory exclusion

23 under this subsection may apply to the

24 Secretary, in a manner specified by the
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1 Secretary in regulations, for waiver of the

2 exclusion.

3 (ii) SECRETARIAL RESPONSE.—The

4 Secretary may waive the exclusion for the

5 reasons described in subparagraph (A).

6 (C) NOTIFICATION OF TERMINATION.—

7 The Secretary shall promptly notify each spon8 sor of an applicable health plan and each entity

9 that administers a State health care program

10 described in section 1128(h) of the Social Secu11 rity Act of each termination of exclusion made

12 under this paragraph.

13 (b) PERMISSIVE EXCLUSION.—The Secretary may

14 exclude an individual or entity from participation in any

15 applicable health plan if the individual or entity—

16 (1) is excluded from participation in a public

17 program under, or is otherwise described in, section

18 1128(b) of the Social Security Act (other than para19 graphs (3), (6)(A), (6)(C), (6)(D), (10), or (13) of

20 such section);

21 (2) has been convicted after the date of the en22 actment of this section, under Federal or State law,

23 in connection with the delivery of a health care item

24 or service of a criminal offense consisting of a mis25 demeanor relating to fraud, theft, embezzlement,
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1 breach of fiduciary responsibility, or other financial

2 misconduct; or

3 (3) has been convicted after the date of the en4 actment of this section, under Federal or State law,

5 of a criminal offense consisting of a misdemeanor re6 lating to the unlawful manufacture, distribution,

7 prescription, or dispensing of a controlled substance.

8 (c) NOTICE, EFFECTIVE DATE, AND PERIOD OF EX9 CLUSION.—

10 (1) NOTICE OF EXCLUSION.—An exclusion

11 under this section or section 5411(b)(3) shall be ef12 fective at such time and upon such reasonable notice

13 to the public and to the individual or entity excluded

14 as may be specified in regulations consistent with

15 paragraph (2).

16 (2) EFFECTIVE DATE OF EXCLUSION.—Such an

17 exclusion shall be effective with respect to services

18 furnished to an individual on or after the effective

19 date of the exclusion.

20 (3) PERIOD OF EXCLUSION.—

21 (A) IN GENERAL.—The Secretary shall

22 specify, in the notice of exclusion under para23 graph (1) and the notice under section 5411(e),

24 the minimum period (or, in the case of an ex25 clusion of an individual excluded from participa-
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1 tion in a public program under, or is otherwise

2 described in, section 1128(b)(12) of the Social

3 Security Act, the period) of the exclusion.

4 (B) MINIMUM PERIOD FOR MANDATORY

5 EXCLUSIONS.—In the case of a mandatory ex6 clusion under subsection (a), the minimum pe7 riod of exclusion shall be not less than 2 years.

8 (C) MINIMUM PERIOD FOR CERTAIN PER9 MISSIVE EXCLUSIONS.—

10 (i) FRAUD, OBSTRUCTION OF INVES11 TIGATION, AND CONTROLLED SUBSTANCE

12 CONVICTION.—In the case of an exclusion

13 of an individual excluded from participa14 tion in a public program under, or is other15 wise described in, paragraph (1) or (2) of

16 section 1128(b) of the Social Security Act

17 or paragraph (2) or (3) of subsection (b)

18 of this section, the period of exclusion shall

19 be a minimum of 1 year, unless the Sec20 retary determines that a longer period is

21 necessary because of aggravating cir22 cumstances.

23 (ii) SUSPENSIONS.—In the case of an

24 exclusion of an individual or entity ex25 cluded from participation in a public pro-
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1 gram under, or is otherwise described in,

2 paragraph (4), (5)(A), or (5)(B) of section

3 1128(b) of the Social Security Act, the pe4 riod of the exclusion shall not be less than

5 the period during which the individual’s or

6 entity’s license to provide health care is re7 voked, suspended or surrendered, or the in8 dividual or the entity is excluded or sus9 pended from a Federal or State health

10 care program.

11 (iii) UNNECESSARY SERVICES.—In the

12 case of an exclusion of an individual or en13 tity described in paragraph (6)(B) of sec14 tion 1128(b) of the Social Security Act,

15 the period of the exclusion shall be not less

16 than 1 year.

17 (iv) DENIAL OF IMMEDIATE AC18 CESS.—In the case of an exclusion of an

19 individual described in paragraph (12) of

20 section 1128(b) of the Social Security Act,

21 the period of the exclusion shall be equal

22 to the sum of—

23 (I) the length of the period in

24 which the individual failed to grant
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1 the immediate access described in that

2 paragraph, and

3 (II) an additional period, not to

4 exceed 90 days, set by the Secretary.

5 (d) NOTICE TO ENTITIES ADMINISTERING PUBLIC

6 PROGRAMS FOR THE DELIVERY OF OR PAYMENT FOR

7 HEALTH CARE ITEMS OR SERVICES.—

8 (1) IN GENERAL.—The Secretary shall exercise

9 the authority under this section in a manner that re10 sults in an individual’s or entity’s exclusion from all

11 applicable health plans for the delivery of or pay12 ment for health care items or services.

13 (2) NOTIFICATION REQUIREMENTS.—The Sec14 retary shall promptly notify each sponsor of an ap15 plicable health plan and each entity that administers

16 a State health care program described in section

17 1128(h) of the Social Security Act of the fact and

18 circumstances of each exclusion (together with the

19 period thereof) effected against an individual or en20 tity under this section or under section 5411(b)(3).

21 (e) NOTICE TO STATE LICENSING AGENCIES.—The

22 provisions of section 1128(e) of the Social Security Act

23 shall apply to this section in the same manner as such

24 provisions apply to sections 1128 and 1128A of such Act.

25 (f) NOTICE, HEARING, AND JUDICIAL REVIEW.—
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1 (1) IN GENERAL.—Subject to paragraph (2),

2 any individual or entity that is excluded (or directed

3 to be excluded) from participation under this section

4 is entitled to reasonable notice and opportunity for

5 a hearing thereon by the Secretary to the same ex6 tent as is provided in section 205(b) of the Social

7 Security Act, and to judicial review of the Sec8 retary’s final decision after such hearing as is pro9 vided in section 205(g) of such Act, except that such

10 action shall be brought in the Court of Appeals of

11 the United States for the judicial circuit in which

12 the individual or entity resides, or has a principal

13 place of business, or, if the individual or entity does

14 not reside or have a principal place of business with15 in any such judicial circuit, in the United States

16 Court of Appeals for the District of Columbia Cir17 cuit.

18 (2) ADMINISTRATIVE HEARING.—Unless the

19 Secretary determines that the health or safety of in20 dividuals receiving services warrants the exclusion

21 taking effect earlier, any individual or entity that is

22 the subject of an adverse determination based on

23 paragraphs (6)(B), (7), (8), (9), (11), (12), (14), or

24 (15) of section 1128(b) of the Social Security Act,

25 shall be entitled to a hearing by an administrative
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1 law judge (as provided under section 205(b) of the

2 Social Security Act) on the determination before any

3 exclusion based upon the determination takes effect.

4 If a hearing is requested, the exclusion shall be ef5 fective upon the issuance of an order by the adminis6 trative law judge upholding the determination of the

7 Secretary to exclude.

8 (3) SPECIAL RULES.—The provisions of section

9 205(h) of the Social Security Act shall apply with

10 respect to this section or section 5411(b)(3) to the

11 same extent as such provisions apply with respect to

12 title II of such Act.

13 (g) APPLICATION FOR TERMINATION OF EXCLU14 SION.—

15 (1) IN GENERAL.—An individual or entity ex16 cluded (or directed to be excluded) from participa17 tion under this section or section 5411(b)(3) may

18 apply to the Secretary, in a manner specified by the

19 Secretary in regulations and at the end of the mini20 mum period of exclusion (or, in the case of an indi21 vidual or entity described in section 1128(b)(12), the

22 period of exclusion) provided under this section or

23 section 5411(b)(3) and at such other times as the

24 Secretary may provide, for termination of the exclu25 sion.
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1 (2) SECRETARIAL RESPONSE.—The Secretary

2 may terminate the exclusion if the Secretary deter3 mines, on the basis of the conduct of the applicant

4 which occurred after the date of the notice of exclu5 sion or which was unknown to the Secretary at the

6 time of the exclusion, that—

7 (A) there is no basis under this section or

8 section 5411(b)(3) for a continuation of the ex9 clusion, and

10 (B) there are reasonable assurances that

11 the types of actions which formed the basis for

12 the original exclusion have not recurred and will

13 not recur.

14 (3) NOTIFICATION OF TERMINATION.—The Sec15 retary shall promptly notify each sponsor of an ap16 plicable health plan and each entity that administers

17 a State health care program described in section

18 1128(h) of the Social Security Act of each termi19 nation of exclusion made under this subsection.

20 (h) CONVICTED DEFINED.—In this section, the term

21 ‘‘convicted’’ has the meaning given such term in section

22 1128(i) of the Social Security Act.

23 (i) REQUEST FOR EXCLUSION.—The sponsor of any

24 applicable health plan (including a State in the case of

25 a consumer purchasing cooperative and the Secretary of
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1 Labor in the case of a large group sponsor) may request

2 that the Secretary of Health and Human Services exclude

3 an individual or entity with respect to actions under such

4 a plan in accordance with this section.

5 (j) EFFECT OF EXCLUSION.—Notwithstanding any

6 other provision of this Act, no payment may be made

7 under a health plan for the delivery of or payment for any

8 item or service (other than an emergency item or service,

9 not including items or services furnished in an emergency

10 room of a hospital) furnished—

11 (1) by an individual or entity during the period

12 when such individual or entity is excluded pursuant

13 to this section or section 5411(b)(3) from participa14 tion in a health plan; or

15 (2) at the medical direction or on the prescrip16 tion of a physician during the period when the physi17 cian is excluded pursuant to this section or section

18 5411(b)(3) from participation in a health plan and

19 the person furnishing the item or service knew or

20 had reason to know of the exclusion (after a reason21 able time period after reasonable notice has been

22 furnished to the person).
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1 PART 3—AMENDMENTS TO CRIMINAL LAW

2 SEC. 5421. HEALTH CARE FRAUD.

3 (a) IN GENERAL.—Chapter 63 of title 18, United

4 States Code, is amended by adding at the end the follow5 ing:

6 ‘‘§ 1347. Health care fraud

7 ‘‘(a) Whoever knowingly executes, or attempts to exe8 cute, a scheme or artifice—

9 ‘‘(1) to defraud any consumer purchasing coop10 erative, health plan, or other person, in connection

11 with the delivery of or payment for health care bene12 fits, items, or services; or

13 ‘‘(2) to obtain, by means of false or fraudulent

14 pretenses, representations, or promises, any of the

15 money or property owned by, or under the custody

16 or control of, any consumer purchasing cooperative,

17 health plan, or person in connection with the deliv18 ery of or payment for health care benefits, items, or

19 services;

20 shall be fined under this title or imprisoned not more than

21 10 years, or both. If the violation results in serious bodily

22 injury (as defined in section 1365 of this title) such person

23 shall be imprisoned for life or any term of years.

24 ‘‘(b) As used in this section—
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1 ‘‘(1) the terms ‘consumer purchasing coopera2 tive’ and ‘health plan’ have the meanings given those

3 terms in title I of the Health Security Act; and

4 ‘‘(2) the term ‘health care’ includes long-term

5 care under title II of the Health Security Act.’’.

6 (b) CLERICAL AMENDMENT.—The table of sections

7 at the beginning of chapter 63 of title 18, United States

8 Code, is amended by adding at the end the following:

‘‘1347. Health care fraud.’’.

9 SEC. 5422. THEFT OR EMBEZZLEMENT.

10 (a) IN GENERAL.—Chapter 31 of title 18, United

11 States Code, is amended by adding at the end the follow12 ing:

13 ‘‘§ 668. Theft or embezzlement in connection with

14 health care

15 ‘‘(a) Whoever embezzles, steals, willfully and unlaw16 fully converts to the use of any person other than the

17 rightful owner, or intentionally misapplies any of the mon18 eys, securities, premiums, credits, property, or other assets

19 of a consumer purchasing cooperative, health plan, or of

20 any fund connected with such a cooperative or plan, shall

21 be fined under this title or imprisoned not more than 10

22 years, or both.

23 ‘‘(b) As used in this section, the terms ‘consumer pur24 chasing cooperative’ and ‘health plan’ have the meanings

25 given those terms in title I of the Health Security Act.’’.
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1 (b) CLERICAL AMENDMENT.—The table of sections

2 at the beginning of chapter 31 of title 18, United States

3 Code, is amended by adding at the end the following:

‘‘668. Theft or embezzlement in connection with health care.’’.

4 SEC. 5423. FALSE STATEMENTS.

5 (a) IN GENERAL.—Chapter 47 of title 18, United

6 States Code, is amended by adding at the end the follow7 ing:

8 ‘‘§ 1033. False statements relating to health care mat9 ters

10 ‘‘(a) Whoever, in any matter involving a consumer

11 purchasing cooperative or health plan, knowingly and will12 fully falsifies, conceals, or covers up by any trick, scheme,

13 or device a material fact, or makes any false, fictitious,

14 or fraudulent statements or representations, or makes or

15 uses any false writing or document knowing the same to

16 contain any false, fictitious, or fraudulent statement or

17 entry, shall be fined under this title or imprisoned not

18 more than 5 years, or both.

19 ‘‘(b) As used in this section, the terms ‘consumer pur20 chasing cooperative’ and ‘health plan’ have the meanings

21 given those terms under title I of the Health Security

22 Act.’’.

23 (b) CLERICAL AMENDMENT.—The table of sections

24 at the beginning of chapter 47 of title 18, United States

25 Code, is amended by adding at the end the following:
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‘‘1033. False statements relating to health care matters.’’.

1 SEC. 5424. BRIBERY AND GRAFT.

2 (a) IN GENERAL.—Chapter 11 of title 18, United

3 States Code, is amended by adding at the end the follow4 ing:

5 ‘‘§ 226. Bribery and graft in connection with health

6 care

7 ‘‘(a) Whoever—

8 ‘‘(1) directly or indirectly, corruptly gives, of9 fers, or promises anything of value to a health care

10 official, or offers or promises a health care official

11 to give anything of value to any other person, with

12 intent—

13 ‘‘(A) to influence any of the health care of14 ficial’s actions, decisions, or duties relating to a

15 consumer purchasing cooperative or health

16 plan;

17 ‘‘(B) to influence such an official to com18 mit or aid in the committing, or collude in or

19 allow, any fraud, or make opportunity for the

20 commission of any fraud, on a consumer pur21 chasing cooperative or health plan; or

22 ‘‘(C) to induce such an official to engage

23 in any conduct in violation of the lawful duty of

24 such official; or
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1 ‘‘(2) being a health care official, directly or in2 directly, corruptly demands, seeks, receives, accepts,

3 or agrees to accept anything of value personally or

4 for any other person or entity, the giving of which

5 violates paragraph (1) of this subsection;

6 shall be fined under this title or imprisoned not more than

7 15 years, or both.

8 ‘‘(b) Whoever, otherwise than as provided by law for

9 the proper discharge of any duty, directly or indirectly

10 gives, offers, or promises anything of value to a health

11 care official, for or because of any of the health care offi12 cial’s actions, decisions, or duties relating to a consumer

13 purchasing cooperative or health plan, shall be fined under

14 this title or imprisoned not more than two years, or both.

15 ‘‘(c) As used in this section—

16 ‘‘(1) the term ‘health care official’ means—

17 ‘‘(A) an administrator, officer, trustee, fi18 duciary, custodian, counsel, agent, or employee

19 of any consumer purchasing cooperative or

20 health plan;

21 ‘‘(B) an officer, counsel, agent, or em22 ployee, of an organization that provides services

23 under contract to any consumer purchasing co24 operative or health plan;
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1 ‘‘(C) an official or employee of a State

2 agency having regulatory authority over any

3 consumer purchasing cooperative or health

4 plan;

5 ‘‘(D) an officer, counsel, agent, or em6 ployee of a health care sponsor;

7 ‘‘(2) the term ‘health care sponsor’ means any

8 individual or entity serving as the sponsor of a

9 consumer purchasing cooperative or health plan for

10 purposes of the Health Security Act, and includes

11 the joint board of trustees or other similar body

12 used by two or more employers to administer a

13 consumer purchasing cooperative or health plan for

14 purposes of such Act; and

15 ‘‘(3) the terms ‘consumer purchasing coopera16 tive’ and ‘health plan’ have the meanings given those

17 terms under title I of the Health Security Act.’’.

18 (b) CLERICAL AMENDMENT.—The table of chapters

19 at the beginning of chapter 11 of title 18, United States

20 Code, is amended by adding at the end the following:

‘‘226. Bribery and graft in connection with health care.’’.

21 SEC. 5425. INJUNCTIVE RELIEF RELATING TO HEALTH

22 CARE OFFENSES.

23 Section 1345(a)(1) of title 18, United States Code,

24 is amended—
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1 (1) by striking ‘‘or’’ at the end of subparagraph

2 (A);

3 (2) by inserting ‘‘or’’ at the end of subpara4 graph (B); and

5 (3) by adding at the end the following:

6 ‘‘(C) committing or about to commit a Federal

7 health care offense (as defined in section 5402(d) of

8 the Health Security Act);’’.

9 SEC. 5426. GRAND JURY DISCLOSURE.

10 Section 3322 of title 18, United States Code, is

11 amended—

12 (1) by redesignating subsections (c) and (d) as

13 subsections (d) and (e), respectively; and

14 (2) by inserting after subsection (b) the follow15 ing:

16 ‘‘(c) A person who is privy to grand jury information

17 concerning a health law violation—

18 ‘‘(1) received in the course of duty as an attor19 ney for the Government; or

20 ‘‘(2) disclosed under rule 6(e)(3)(A)(ii) of the

21 Federal Rules of Criminal Procedure;

22 may disclose that information to an attorney for the Gov23 ernment to use in any civil proceeding related to a Federal

24 health care offense (as defined in section 5402(d) of the

25 Health Security Act).’’.
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1 SEC. 5427. FORFEITURES FOR VIOLATIONS OF FRAUD STAT2 UTES.

3 Section 982(a) of title 18, United States Code, is

4 amended by inserting after paragraph (5) the following:

5 ‘‘(6) The court, in imposing sentence on a person con6 victed of a Federal health care offense (as defined in sec7 tion 5402(d) of the Health Security Act), shall order such

8 person to forfeit to the United States any property, real

9 or personal, constituting or traceable to the gross proceeds

10 obtained, directly or indirectly, as a result of the commis11 sion of the offense.’’.

12 PART 4—AMENDMENTS TO CIVIL FALSE CLAIMS

13 ACT

14 SEC. 5431. AMENDMENTS TO CIVIL FALSE CLAIMS ACT.

15 Section 3729 of title 31, United States Code, is

16 amended—

17 (1) in subsection (a)(7), by inserting ‘‘or to a

18 health plan’’ after ‘‘property to the Government’’;

19 (2) in the matter following subsection (a)(7), by

20 inserting ‘‘or health plan’’ before ‘‘sustains because

21 of the act of that person,’’;

22 (3) at the end of the first sentence of sub23 section (a), by inserting ‘‘or health plan’’ before

24 ‘‘sustains because of the act of the person.’’;

25 (4) in subsection (c)—
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1 (A) by inserting ‘‘the term’’ after ‘‘sec2 tion,’’; and

3 (B) by adding at the end the following:

4 ‘‘The term also includes any request or demand,

5 whether under contract of otherwise, for money

6 or property which is made or presented to a

7 health plan.’’; and

8 (5) by adding at the end the following:

9 ‘‘(f) HEALTH PLAN DEFINED.—For purposes of this

10 section, the term ‘health plan’ has the meaning given such

11 term under section 1400 of the Health Security Act.’’.

12 PART 5—EFFECTIVE DATE

13 SEC. 5441. EFFECTIVE DATE.

14 Except as otherwise provided in this subtitle, the pro15 visions of, and amendments made by, this subtitle shall

16 be effective on and after January 1, 1995.

17 Subtitle F—Repeal of Exemption

18 SEC. 5501. REPEAL OF EXEMPTION FOR HEALTH INSUR19 ANCE.

20 (a) IN GENERAL.—Section 3 of the Act of March 9,

21 1945 (15 U.S.C. 1013), known as the McCarran-Ferguson

22 Act, is amended by adding at the end the following:

23 ‘‘(c) Notwithstanding that the business of insurance

24 is regulated by State law, nothing in this Act shall limit

25 the applicability of the following Acts to the business of
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1 insurance to the extent that such business relates to the

2 provision of health benefits:

3 ‘‘(1) The Sherman Act (15 U.S.C. 1 et seq.).

4 ‘‘(2) The Clayton Act (15 U.S.C. 12 et seq.).

5 ‘‘(3) Federal Trade Commission Act (15 U.S.C.

6 41 et seq.).

7 ‘‘(4) The Act of June 19, 1936 (49 Stat. 1526;

8 15 U.S.C. 21a et seq.), known as the Robinson-Pat9 man Antidiscrimination Act.’’.

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

11 subsection (a) shall take effect on the first day of the sixth

12 month beginning after the date of the enactment of this

13 Act.

14 TITLE VI—PREMIUM CAPS; PRE15 MIUM-BASED FINANCING;

16 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

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.

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.
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Sec. 6007. Reference to limitation on administrative and judicial review of certain determinations.

Sec. 6008. Application of marketing and cooperative fees.

SUBPART 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

PART 1—FAMILY PREMIUM PAYMENTS

SUBPART A—FAMILY SHARE

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. 6109. Application of adjustments.

SUBPART 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.

PART 2—EMPLOYER PREMIUM PAYMENTS

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.
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Sec. 6120. Nonelecting small employer.

SUBPART 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. Application to self-employed individuals.

SUBPART 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.

1 SEC. 6000. GENERAL DEFINITIONS.

2 (a) DEFINITIONS RELATING TO PER CAPITA PRE3 MIUM RATES.—In this title:

4 (1) FILED PER CAPITA COMMUNITY BID.—The

5 term ‘‘filed per capita community bid’’ means the

6 per capita premium bid that is filed with a State for

7 a community-rated plan offered in a health care cov8 erage area under subpart A of part 1 and is avail9 able to all community rate eligible individuals enroll10 ing directly with a health plan.
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1 (2) ACCEPTED PER CAPITA COOPERATIVE

2 BID.—The term ‘‘accepted per capita cooperative

3 bid’’ means the per capita premium rate agreed

4 upon by a cooperative and a plan taking into ac5 count any discount to such bid negotiated under sec6 tion 1302(c)(2).

7 (3) FINAL COMMUNITY RATE.—The term ‘‘final

8 community rate’’ means the filed per capita commu9 nity bid, taking into account any voluntary reduction

10 in such bid made under section 6004(e).

11 (4) FINAL COOPERATIVE RATE.—The term

12 ‘‘final cooperative bid’’ means the accepted per cap13 ita cooperative bid, taking into account any vol14 untary reductions in such bid made under section

15 6004(e).

16 (b) DEFINITIONS RELATED TO WEIGHTED AVERAGE

17 PER CAPITA PREMIUM RATES.—In this title:

18 (1) WEIGHTED AVERAGE ACCEPTED BID.—The

19 term ‘‘weighted average accepted bid’’ means, for a

20 health care coverage area for a year, the average

21 across all plans of—

22 (A) the filed per capita community bid for

23 each community-rated health plan offered in a

24 health care coverage area weighted to reflect

25 the relative enrollment (net of any enrollment
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1 through a cooperative) of community rate eligi2 ble individuals among such plans; and

3 (B) the accepted per capita cooperative bid

4 for each community-rated health plan offered in

5 a health care coverage area weighted to reflect

6 the relative enrollment of community rate eligi7 ble individuals through a cooperative among

8 such plans.

9 (2) WEIGHTED AVERAGE DISCOUNT RATE.—

10 The term ‘‘weighted average discount rate’’ means,

11 for a health care coverage area for a year, the lesser

12 of—

13 (A) the per capita premium target for the

14 health care coverage area (as defined in section

15 6003) for the year; or

16 (B) the average across all plans of the less17 er of—

18 (i) the final community rate; or

19 (ii) the final cooperative rate, (appli20 cable only for plans offered through the co21 operative);

22 for each community-rated health plan, weighted

23 to reflect the total enrollment of community

24 rate eligible individuals among such plans.
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1 (3) WEIGHTED AVERAGE PREMIUM.—The term

2 ‘‘weighted average premium’’ means, for a class of

3 enrollment and with respect to a health care cov4 erage area for the year, the product of—

5 (A) the weighted average discount rate (as

6 defined in paragraph (2));

7 (B) the uniform per capita conversion fac8 tor (established under section 6211 for the

9 area; and

10 (C) the premium class factor established

11 by the Board for that class under section 1631.

12 (d) INCORPORATION OF OTHER DEFINITIONS.—Ex13 cept as otherwise provided in this title, the definitions of

14 terms in subtitle J of title I of this Act shall apply to

15 this title.

16 Subtitle A—Premium Caps

17 PART 1—HEALTH EXPENDITURES OF HEALTH

18 CARE COVERAGE AREAS

19 Subpart A—Computation of Targets and Accepted

20 Bids

21 SEC. 6001. COMPUTATION OF HEALTH CARE COVERAGE

22 AREA INFLATION FACTORS.

23 (a) COMPUTATION.—

24 (1) IN GENERAL.—This section provides for the

25 computation of factors that limit the growth of pre-
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1 miums for the comprehensive benefit package in

2 community-rated health plans. The Board shall com3 pute and publish, not later than March 1 of each

4 year (beginning with 1995) the health care coverage

5 area inflation factor (as defined in paragraph (2))

6 for each health care coverage area for the following

7 year.

8 (2) HEALTH CARE COVERAGE AREAS INFLA9 TION FACTOR.—In this part, the term ‘‘health care

10 coverage area inflation factor’’ means, for a year for

11 a health care coverage area—

12 (A) the general health care inflation factor

13 for the year (as defined in paragraph (3));

14 (B) adjusted under subsection (c) (to take

15 into account material changes in the demo16 graphic and socio-economic characteristics of

17 the population of community rate eligible indi18 viduals);

19 (C) decreased by the percentage adjust20 ment (if any) provided with respect to the

21 health care coverage area under subsection (d)

22 (relating to adjustment for previous excess ex23 penditures); and

24 (D) in the case of the year 2001, increased

25 by a factor that the Board determines to reflect
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1 the ratio of (i) the actuarial value of the in2 crease in benefits provided in that year under

3 the comprehensive benefit package to (ii) the

4 actuarial value of the benefits that would have

5 been in such package in the year without regard

6 to the increase.

7 For purposes of subparagraph (D)(i), the actuarial

8 value of the increase with respect to mental illness

9 and substance abuse services (included within the

10 comprehensive benefit package) shall not exceed an

11 actuarial value based on the amount of the total ex12 penditures that would have been made in 2001 by

13 States and subdivisions of States for mental illness

14 and substance abuse services (included in such pack15 age as of 2001) if this Act had not been enacted.

16 (3) GENERAL HEALTH CARE INFLATION FAC17 TOR.—

18 (A) 1996 THROUGH 2000.—In this part,

19 the term ‘‘general health care inflation factor’’,

20 for a year, means the percentage increase in the

21 CPI (as specified under subsection (b)) for the

22 year plus the following:

23 (i) For 1996, 1.5 percentage points.

24 (ii) For 1997, 1.0 percentage points.

25 (iii) For 1998, 0.5 percentage points.
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1 (iv) For 1999 and for 2000, 0 per2 centage points.

3 (B) YEARS AFTER 2000.—

4 (i) RECOMMENDATION TO CON5 GRESS.—In 1999, the Board shall submit

6 to Congress recommendations, after con7 sultation with the Federal Reserve Board,

8 on what the general health care inflation

9 factor should be for years beginning with

10 2001.

11 (ii) FAILURE OF CONGRESS TO ACT.—

12 If the Congress fails to enact a law specify13 ing the general health care inflation factor

14 for a year after 2000, the Board, in Janu15 ary of the year before the year involved,

16 shall compute such factor for the year in17 volved. Such factor shall be the product of

18 the factors described in subparagraph (C)

19 for that fiscal year, minus 1.

20 (iii) STUDY BY FEDERAL RESERVE

21 BOARD.—Not later than January 1, 1999,

22 the Federal Reserve Board shall conduct a

23 study, and report to the National Health

24 Board, concerning what the general health

25 care inflation factor should be for years be-
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1 ginning with 2001. Such study shall con2 sider whether continued indexing with re3 spect to such factor is advisable and

4 whether the consumer price index should

5 be used (in whole or in part, modified or

6 unmodified) with respect to premium caps

7 for future years. The recommendations of

8 the Federal Reserve Board under such

9 study shall be considered in the rec10 ommendations submitted under clause (i).

11 (C) FACTORS.—The factors described in

12 this subparagraph for a year are the following:

13 (i) CPI.—1 plus the percentage

14 change in the CPI for the year, determined

15 based upon the percentage change in the

16 average of the CPI for the 12-month pe17 riod ending with August 31 of the previous

18 fiscal year over such average for the pre19 ceding 12-month period.

20 (ii) REAL GDP PER CAPITA.—1 plus

21 the average annual percentage change in

22 the real, per capita gross domestic product

23 of the United States during the 3-year pe24 riod ending in the preceding calendar year,
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1 determined by the Board based on data

2 supplied by the Department of Commerce.

3 (b) PROJECTION OF INCREASE IN CPI.—

4 (1) IN GENERAL.—For purposes of this section,

5 the Board shall specify, as of the time of publica6 tion, the annual percentage increase in the CPI (as

7 defined in section 1902(9)) for the following year.

8 (2) DATA TO BE USED.—Such increase shall be

9 the projection of the CPI contained in the budget of

10 the United States transmitted by the President to

11 the Congress in the year.

12 (c) SPECIAL ADJUSTMENT FOR MATERIAL CHANGES

13 IN DEMOGRAPHIC CHARACTERISTICS OF POPULATION.—

14 (1) ADJUSTMENT FOR LARGE GROUP PUR15 CHASER OPT-IN.—

16 (A) IN GENERAL.—The Board shall de17 velop a method for adjusting the health care

18 coverage area inflation factor for each health

19 care coverage area in order to reflect material

20 changes in the demographic characteristics of

21 community rate eligible individuals residing in

22 the coverage area (in comparison with such

23 characteristics for the previous year) as a result

24 of the termination of an election of one or more

25 large group purchasers under section 1406.
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1 (B) BASIS FOR ADJUSTMENTS.—Adjust2 ments under this paragraph (whether an in3 crease or decrease) shall be based on the char4 acteristics and factors used for making adjust5 ments in payments under section 6124.

6 (2) ADJUSTMENT FOR AREA TREND COMPARED

7 TO NATIONAL TREND.—

8 (A) IN GENERAL.—The Board shall de9 velop a method for adjusting the health care

10 coverage area inflator factor for each health

11 care coverage area in order to reflect material

12 changes in the demographic characteristics (in13 cluding at least age, gender, and socio-economic

14 status) and health status of community rate eli15 gible individuals residing in the coverage area

16 in comparison with the average change in such

17 characteristics for such individuals residing in

18 the United States. The adjustment under this

19 paragraph shall be for changes not taken into

20 account in the adjustment under paragraph (1).

21 (B) NEUTRAL ADJUSTMENT.—Such meth22 od (and any annual adjustment under this

23 paragraph) shall be designed to result in the

24 adjustment effected under this paragraph for a
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1 year not changing the weighted average of the

2 health care coverage area inflation factors.

3 (3) APPLICATION.—The Board shall provide, on

4 an annual basis, for an adjustment of health care

5 coverage area inflation factors under this subsection

6 using such methods.

7 (d) CONSULTATION PROCESS.—The Board shall have

8 a process for consulting with representatives of States be9 fore establishing the health care coverage area inflation

10 factors for each year under this section.

11 SEC. 6002. BOARD DETERMINATION OF NATIONAL PER CAP12 ITA BASELINE PREMIUM TARGET.

13 (a) IN GENERAL.—Not later than January 1, 1995,

14 the Board shall determine a national per capita baseline

15 premium target. Such target is equal to—

16 (1) the national average per capita current cov17 erage health expenditures (determined under sub18 section (b)),

19 (2) updated under subsection (c).

20 (b) DETERMINATION OF NATIONAL AVERAGE PER

21 CAPITA CURRENT COVERAGE HEALTH EXPENDITURES.—

22 (1) IN GENERAL.—The Board shall determine

23 the national average per capita current coverage

24 health expenditures equal to—
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1 (A) total covered current health care ex2 penditures (described in paragraph (2)), divided

3 by

4 (B) the estimated population in the United

5 States of community rate eligible individuals (as

6 determined by the Board as of 1993 under

7 paragraph (4)) for whom such expenditures

8 were determined.

9 The population under subparagraph (B) shall not in10 clude SSI recipients or AFDC recipients.

11 (2) CURRENT HEALTH CARE EXPENDITURES.—

12 For purposes of paragraph (1)(A), the Board shall

13 determine current health care expenditures as fol14 lows:

15 (A) DETERMINATION OF TOTAL EXPENDI16 TURES.—The Board shall first determine the

17 amount of total payments made for items and

18 services included in the comprehensive benefit

19 package (determined without regard to cost

20 sharing) in the United States in 1993.

21 (B) REMOVAL OF CERTAIN EXPENDITURES

22 NOT TO BE COVERED IN THE COMPREHENSIVE

23 BENEFIT PACKAGE.—The amount so deter24 mined shall be decreased by the proportion of
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1 such amount that is attributable to any of the

2 following:

3 (i) Medicare beneficiaries (other than

4 such beneficiaries who are community rate

5 eligible individuals).

6 (ii) AFDC recipients or SSI recipi7 ents.

8 (iii) Expenditures which are paid for

9 through workers’ compensation or auto10 mobile or other liability insurance.

11 (iv) Expenditures by parties (includ12 ing the Federal Government) that the

13 Board determines will not be payable by

14 community-rated plans for coverage of the

15 comprehensive benefit package under this

16 Act (as defined in section 1101).

17 (C) ADDITION OF PROJECTED EXPENDI18 TURES FOR UNINSURED AND UNDERINSURED

19 INDIVIDUALS.—The amount so determined and

20 adjusted shall be increased to take into account

21 increased utilization of, and expenditures for,

22 items and services covered under the com23 prehensive benefit package likely to occur, as a

24 result of coverage under a community-rated

25 health plan of individuals who, as of 1993 were
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1 uninsured or underinsured with respect to the

2 comprehensive benefit package. In making such

3 determination, such expenditures shall be based

4 on the estimated average cost for such services

5 in 1993 (and not on private payment rates es6 tablished for such services). In making such de7 termination, the estimated amount of uncom8 pensated care in 1993 shall be removed and will

9 not include adjustments to offset payments

10 below costs by public programs.

11 (D) ADDITION OF COSTS OF ADMINISTRA12 TION.—The amount so determined and ad13 justed shall be increased by an estimated per14 centage (determined by the Board, but no more

15 than 15 percent) that reflects the proportion of

16 premiums that are required for health plan ad17 ministration for State administration (including

18 costs for administration of income-related pre19 mium discounts and cost sharing reductions)

20 and for State premium taxes (which taxes shall

21 be limited to such amounts in 1993 as are at22 tributable to the health benefits to be included

23 in the comprehensive benefit package). Such ad24 justments shall not include any marketing fees
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1 (described in section 1511) or cooperative fees

2 (described in section 1305).

3 (E) DECREASE FOR COST SHARING.—The

4 amount so determined and adjusted shall be de5 creased by a percentage that reflects (i) the es6 timated average percentage of total amounts

7 payable for items and services covered under

8 the comprehensive benefit package that will be

9 payments in the form of cost sharing under a

10 higher cost sharing plan, and (ii) the percent11 age reduction in utilization estimated to result

12 from the application of high cost sharing.

13 (3) SPECIAL RULES.—

14 (A) BENEFITS USED.—The determinations

15 under this section shall be based on the com16 prehensive benefit package as in effect in 1996.

17 (B) ASSUMING NO CHANGE IN EXPENDI18 TURE PATTERN.—The determination under

19 paragraph (2) shall be made without regard to

20 any change in the pattern of expenditures that

21 may result from the enrollment of AFDC recipi22 ents and SSI recipients in community-rated

23 health plans.

24 (4) ELIGIBLE INDIVIDUALS.—In this sub25 section, the determination of who are community
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1 rate eligible individuals under this subsection shall

2 be made as though this Act was fully in effect in

3 each State as of 1993.

4 (c) UPDATING.—

5 (1) IN GENERAL.—Subject to paragraph (3),

6 the Board shall update the amount determined

7 under subsection (b)(1) for each of 1994 and 1995

8 by the appropriate update factor described in para9 graph (2) for the year.

10 (2) APPROPRIATE UPDATE FACTOR.—In para11 graph (1), the appropriate update factor for a year

12 is 1 plus the annual percentage increase for the year

13 (as determined by the Secretary, based on actual or

14 projected information) in private sector health care

15 spending for items and services included in the com16 prehensive benefit package (as of 1996).

17 (3) LIMIT.—The total, cumulative update under

18 this subsection shall not exceed 15 percent.

19 SEC. 6003. DETERMINATION OF AREA PER CAPITA PRE20 MIUM TARGETS.

21 (a) INITIAL DETERMINATION.—Not later than Janu22 ary 1, 1995, the Board shall determine, for each health

23 care coverage area for 1996, a health care coverage area

24 per capita premium target. Such target shall equal—
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1 (1) the national per capita baseline premium

2 target (determined by the Board under section

3 6002),

4 (2) updated by the health care coverage area in5 flation factor (as determined under section

6 6001(a)(2)) for 1996, and

7 (3) adjusted by the adjustment factor for the

8 health care coverage area (determined under sub9 section (c)).

10 (b) SUBSEQUENT DETERMINATIONS.—

11 (1) DETERMINATION.—Not later than March 1

12 of each year (beginning with 1996) the Board shall

13 determine, for each health care coverage area for the

14 succeeding year a health care coverage area per cap15 ita premium target.

16 (2) GENERAL RULE.—Subject to subsection (e),

17 such target shall equal—

18 (A) the health care coverage area per cap19 ita target determined under this section (with20 out regard to subsection (e)) for the health care

21 coverage area for the previous year,

22 (B) updated by the health care coverage

23 area inflation factor (as determined in section

24 6001(a)) for the year.
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1 (3) ADJUSTMENT FOR PREVIOUS EXCESS RATE

2 OF INCREASE IN EXPENDITURES.—Such target for a

3 year is subject to a decrease under section 6001(d).

4 (c) ADJUSTMENT FACTORS FOR HEALTH CARE COV5 ERAGE AREAS FOR INITIAL DETERMINATION.—

6 (1) IN GENERAL.—The Board shall establish an

7 adjustment factor for each health care coverage area

8 in a manner consistent with this subsection.

9 (2) CONSIDERATIONS.—In establishing the fac10 tor for each health care coverage area, the Board

11 shall consider, using information of the type de12 scribed in paragraph (3), the difference between the

13 national average of the factors taken into account in

14 determining the national per capita baseline pre15 mium target and such factors for the health care

16 coverage area, including variations in health care ex17 penditures and in rates of uninsurance and

18 underinsurance in the different areas and including

19 variations in the proportion of expenditures for serv20 ices provided by academic health centers in the dif21 ferent areas.

22 (3) TYPE OF INFORMATION.—The type of infor23 mation described in this paragraph is—

24 (A) information on variations in premiums

25 across States and across health care coverage
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1 areas within a State (based on surveys and

2 other data);

3 (B) information on variations in per capita

4 health spending by State, as measured by the

5 Secretary;

6 (C) information on variations across States

7 in per capita spending under the medicare pro8 gram and in such spending among health care

9 coverage areas within a State under such pro10 gram;

11 (D) area rating factors commonly used by

12 actuaries;

13 (E) information on variations in the extent

14 to which States and health care coverage areas

15 need additional investment because they have

16 successfully controlled health care costs; and

17 (F) information on variations among

18 States and health care coverage areas due to

19 underutilization of health care services resulting

20 from geographic barriers and lack of access to

21 health care services, particularly in underserved

22 rural and urban areas.

23 (4) APPLICATION OF FACTORS IN NEUTRAL

24 MANNER.—The application of the adjustment factors

25 under this subsection for 1996 shall be done in a
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1 manner so that the weighted average of the health

2 care coverage area per capita premium targets for

3 1996 is equal to the national per capita baseline pre4 mium target determined under section 6002. Such

5 weighted average shall be based on the Board’s esti6 mate of the expected distribution of community rate

7 eligible individuals (taken into account under section

8 6002) among the health care coverage areas.

9 (5) CONSULTATION PROCESS.—The Board shall

10 have a process for consulting with representatives of

11 States and purchasing cooperative before establish12 ing the adjustment for health care coverage areas

13 under this subsection.

14 (d) TREATMENT OF CERTAIN STATES.—

15 (1) NON-PARTICIPATING.—In the case of a

16 State that is not a participating State or otherwise

17 has not established health care coverage areas, the

18 entire State shall be treated under the provisions of

19 this part as composing a single health care coverage

20 area.

21 (2) CHANGES IN AREA BOUNDARIES.—In the

22 case of a State that changes the boundaries of its

23 health care coverage areas (including the establish24 ment of such areas after 1996), the Board shall pro25 vide a method for computing a health care coverage
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1 area per capita premium target for each health care

2 coverage area affected by such change in a manner

3 that—

4 (A) reflects the factors taken into account

5 in establishing the adjustment factors for health

6 care coverage areas under subsection (c), and

7 (B) results in the weighted average of the

8 newly computed regional targets for the health

9 care coverage areas affected by the change

10 equal to the weighted average of the regional

11 targets for the health care coverage areas as

12 previously established.

13 (e) ADJUSTMENT FOR PREVIOUS EXCESS RATE OF

14 INCREASE IN EXPENDITURES.—

15 (1) IN GENERAL.—If the actual weighted aver16 age accepted bid for a health care coverage area for

17 a year (as determined by the Board based on actual

18 enrollment in the first month of the year) exceeds

19 the health care coverage area per capita premium

20 target (determined under this section) for the year,

21 then the health care coverage area per capita premium target shall be reduced, by 1 22 ⁄2 of the excess

23 percentage (described in paragraph (2)) for the year,

24 for each of the 2 succeeding years.
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1 (2) EXCESS PERCENTAGE.—The excess percent2 age described in this paragraph for a year is the per3 centage by which—

4 (A) the actual weighted average accepted

5 bid (referred to in paragraph (1)) for a health

6 care coverage area for the year, exceeds

7 (B) the health care coverage area per cap8 ita premium target (determined under this sec9 tion) for the year.

10 SEC. 6004. INITIAL RATE FILING AND BID NEGOTIATION

11 PROCESS.

12 (a) FILING AND BIDDING PROCESS.—

13 (1) FILING COMMUNITY BIDS.—

14 (A) IN GENERAL.—Not later than July 1

15 before the first year, and not later than August

16 1 of each succeeding year, each plan seeking to

17 participate as a community-rated health plan,

18 with respect to the health care coverage area, in

19 the following year shall file a per capita commu20 nity bid in the manner specified under sub21 section (c).

22 (B) SUBMISSION OF BIDS TO COOPERA23 TIVES.—Each plan filing a per capita commu24 nity bid with respect to a health care coverage

25 area under subparagraph (A) shall also submit
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1 to the cooperative of such health care coverage

2 area a per capita premium bid (not to exceed

3 the rate filed under subparagraph (A) for such

4 plan) for coverage of the comprehensive benefit

5 package as specified in section 1101 in the

6 manner described under subsection (c).

7 (C) ESTABLISHMENT OF RULES AND PRO8 CEDURES FOR FILING PREMIUM BIDS.—In ac9 cordance with section 1660, each participating

10 State shall establish rules and procedures for

11 the filing of premium rates and submission of

12 premium bids by plans.

13 (D) DISCLOSURE.—In conjunction with

14 the filing of per capita community bids, the

15 State may determine to disclose (or not to dis16 close) the health care coverage area per capita

17 premium target for the health care coverage

18 area (determined under section 6003) for the

19 year involved.

20 (E) CONDITION.—Each community bid

21 filed and cooperative bid submitted under this

22 subsection with respect to a community-rated

23 health plan shall be conditioned upon the plan’s

24 agreement to accept any payment reduction

25 that may be imposed under section 6011.
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1 (2) NEGOTIATION PROCESS.—Following the

2 bidding process under paragraph (1), a cooperative

3 may conduct negotiations with health plans relating

4 to the premiums to be charged for such community5 rated health plans within a cooperative. Such nego6 tiations may result in the resubmission of bids to the

7 cooperative, but in no case shall a health plan resub8 mit a bid that exceeds its prior bid.

9 (3) LEGALLY BINDING BIDS.—All rates filed

10 and bids submitted under this subsection must be le11 gally binding with respect to the plans involved.

12 (4) ACCEPTANCE.—

13 (A) PER CAPITA COMMUNITY BID.—The

14 final community rate for a community-rated

15 health plan under this subsection shall be con16 sidered to be the accepted bid for such plan, ex17 cept as provided in subsection (e).

18 (B) PER CAPITA COOPERATIVE BID.—The

19 final cooperative bid submitted to a cooperative

20 for a community-rated health plan under this

21 subsection shall be considered to be the accept22 ed bid for such plan, except as provided in sub23 section (e).

24 (5) ASSISTANCE.—The Board shall provide

25 States and cooperatives with such information and
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1 technical assistance as may assist such States and

2 cooperatives in carrying out the provisions of this

3 subsection.

4 (b) SUBMISSION OF INFORMATION TO BOARD.—By

5 not later than September 1 of each year for which commu6 nity per capita bids are filed under subsection (a), each

7 State shall submit to the Board a report that discloses

8 for each community-rating area—

9 (1) information regarding the per capita com10 munity bid filed and accepted cooperative bids nego11 tiated under subsection (a) by the different plans;

12 (2)(A) for the first year, any information the

13 Board may request concerning an estimation of

14 the—

15 (i) enrollment likely in each such plan of

16 community rate eligible individuals through co17 operatives; and

18 (ii) the enrollment likely in each such plan

19 of community rate eligible individuals by enroll20 ment mechanisms other than cooperatives in ac21 cordance with section 1660, or

22 (B) for a succeeding year—

23 (i) the actual distribution of enrollment of

24 community rate eligible individuals in commu-
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1 nity-rated health plans through cooperatives;

2 and

3 (ii) the actual distribution of enrollment of

4 community rate eligible individuals in commu5 nity-rated health plans through enrollment

6 mechanisms other than cooperatives, in accord7 ance with section 1660;

8 in the year in which the report is transmitted; and

9 (3) limitations on capacity of community-rated

10 health plans.

11 (c) COMPUTATION OF WEIGHTED AVERAGE ACCEPT12 ED BID.—

13 (1) IN GENERAL.—For each health care cov14 erage area the Board shall determine a weighted av15 erage accepted bid for each year for which rates are

16 filed with the State under subsection (a). Such de17 termination shall be based on information on accept18 ed bids for the year, submitted under subsection

19 (b)(1), and shall take into account, subject to para20 graph (2), the information on enrollment distribu21 tion submitted under subsection (b)(2).

22 (2) ENROLLMENT DISTRIBUTION RULES.—In

23 making the determination under paragraph (1) for a

24 health care coverage area, the Board shall establish
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1 rules respecting the treatment of enrollment in plans

2 that are discontinued or are newly offered.

3 (3) EXCLUSION OF WORKSITE HEALTH PRO4 MOTION DISCOUNTS.—For purposes of calculating

5 the weighted average accepted bid and enforcing the

6 per capita premium targets in a health care coverage

7 area in a State, the Board shall consider the accept8 ed bids for the year, without consideration or inclu9 sion of any worksite health promotion discount.

10 (d) NOTICE TO CERTAIN STATES.—

11 (1) IN GENERAL.—By not later than October 1

12 of each year for which rates are filed with a State,

13 the Board shall notify a State—

14 (A) if the weighted average accepted bid

15 (determined under subsection (c)) for the health

16 care coverage area is greater than the health

17 care coverage area per capita premium target

18 for such area (determined under section 6003)

19 for the year, and

20 (B) of the weighted average discount rate

21 for the health care coverage area.

22 (2) NOTICE OF PREMIUM REDUCTIONS.—If no23 tice is provided to a State under paragraph (1), the

24 Board shall notify the State and each noncomplying

25 plan of any plan payment reduction computed under
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1 section 6011 for such a plan and the opportunity to

2 voluntarily reduce the accepted bid under subsection

3 (e) in order to avoid such a reduction.

4 (e) VOLUNTARY REDUCTION OF ACCEPTED BIDS.—

5 After the Board has determined under subsection (c) the

6 weighted average accepted bid for a health care coverage

7 area and the Board has determined plan payment reduc8 tions, before such date as the Board may specify (in order

9 to provide for an open enrollment period), a noncomplying

10 plan has the opportunity to voluntarily reduce its filed

11 community bid (and if applicable, its accepted cooperative

12 bid) by the amount of the plan payment reduction that

13 would otherwise apply to the plan. Such reduction shall

14 not affect the amount of the plan payment reduction for

15 any other plan for that year.

16 SEC. 6005. STATE FINANCIAL INCENTIVES.

17 (a) ELECTION.—Any participating State may elect to

18 assume responsibility for containment of health care ex19 penditures in the State consistent with this part. Such re20 sponsibility shall include submitting annual reports to the

21 Board on any activities undertaken by the State to contain

22 such expenditures. A participating State may regulate the

23 rates charged by providers furnishing health care items

24 and services to all private payers. Such regulation of rates

25 may not cause an experienced-rated health plan to be
932

•S 2296 PCS

1 charged, directly or indirectly, rates different from those

2 charged other community-rated health plans for the same

3 items and services or otherwise discriminate against expe4 rience-rated health plans.

5 (b) FINANCIAL INCENTIVE.—In the case of a State

6 that has made an election under subsection (a), if the

7 Board determines for a particular year (beginning with

8 the first year) that the statewide weighted average of the

9 weighted average discount rates (based on actual average

10 enrollment for the year), for health care coverage areas

11 in the State, is less than the statewide weighted average

12 of the health care coverage area per capita premium tar13 gets (based upon such enrollment) for such areas for the

14 year, then the amount of the State maintenance-of-effort

15 payment under section 9001(b), for the following year,

shall be reduced by 1 16 ⁄2 of the product of—

17 (1) the amount by which the amount of such

18 statewide average target exceeds the amount of such

19 statewide average accepted bid, divided by the

20 amount of such target; and

21 (2) the total of the amount of the Federal pay22 ments made in that particular year to the State

23 under subtitle B of title IX.

24 (c) ALTERNATIVE STATE PROVIDER PAYMENT SYS25 TEMS.—Notwithstanding any other provision of law, in the
933

•S 2296 PCS

1 case of an alternative State provider payment system that

2 has been approved by the Secretary and in continuous op3 eration since July 1, 1977, the payment rates and meth4 odologies required under the State system for services pro5 vided in that State shall apply to all purchasers and

6 payors, including those under employee welfare benefit

7 plans authorized under the Employee Retirement Income

8 Security Act of 1974, workers’ compensation programs

9 under State law, the Federal Employees’ Compensation

10 Act under chapter 81 of title 5, United States Code, and

11 Federal employee health benefit plans under chapter 89

12 of title 5, United States Code.

13 SEC. 6006. RECOMMENDATIONS TO ELIMINATE REGIONAL

14 VARIATIONS IN AREA TARGETS DUE TO VARI15 ATION IN PRACTICE PATTERNS; CONGRES16 SIONAL CONSIDERATION.

17 (a) ESTABLISHMENT OF ADVISORY COMMISSION ON

18 REGIONAL VARIATIONS IN HEALTH EXPENDITURES.—

19 The chair of the Board shall establish, by not later than

20 60 days after the date of appointment of the first chair,

21 an advisory commission on regional variations in health

22 expenditures.

23 (b) COMPOSITION.—The advisory commission shall

24 be composed of consumers, employers, providers, rep25 resentatives of health plans, States, individuals with exper-
934

•S 2296 PCS

1 tise in the financing of health care, individuals with exper2 tise in the economics of health care, and representatives

3 of diverse geographic areas.

4 (c) ELIMINATION OF REGIONAL VARIATION IN PRE5 MIUMS DUE TO PRACTICE PATTERN.—

6 (1) COMMISSION STUDY.—The advisory com7 mission shall examine methods of reducing or elimi8 nating variation in health care coverage area per

9 capita premium targets that are clearly due to vari10 ation in practice patterns not justified by differences

11 in need for health care services, presence of aca12 demic health centers or other facilities meeting re13 search, training, or care needs broader than those of

14 the population in the area, or other factors (such as

15 health care input prices and demographic factors),

16 by 2002.

17 (2) COMMISSION REPORT.—The advisory com18 mission shall submit to the Board a report that

19 specifies one or more methods for reducing or elimi20 nating the variation described in paragraph (1).

21 (3) BOARD RECOMMENDATIONS.—The Board,

22 after reviewing the report and such other studies as

23 it deems appropriate and after consulting with the

24 Prospective Payment Assessment Commission, the

25 Physician Payment Review Commission and such
935

•S 2296 PCS

1 other experts as it deems appropriate, shall submit

2 to Congress, by not later October 1, 1996, detailed

3 recommendations respecting the specific method to

4 be used to reduce or eliminate the variation de5 scribed in paragraph (1) by 2006. Such rec6 ommendations shall not propose the reduction or

7 elimination of differences in per capita premium tar8 gets that are not the result of inappropriate dif9 ferences in practice patterns and shall be designed

10 to avoid unnecessary disruption in the health care

11 systems and economies of affected regions.

12 (d) CONGRESSIONAL CONSIDERATION.—

13 (1) IN GENERAL.—Detailed recommendations

14 submitted under subsection (c)(3) shall apply under

15 this subtitle unless a joint resolution (described in

16 paragraph (2)) disapproving such recommendations

17 is enacted, in accordance with the provisions of

18 paragraph (3), before the end of the 60-day period

19 beginning on the date on which such recommenda20 tions were submitted. For purposes of applying the

21 preceding sentence and paragraphs (2) and (3), the

22 days on which either House of Congress is not in

23 session because of an adjournment of more than

24 three days to a day certain shall be excluded in the

25 computation of a period.
936

•S 2296 PCS

1 (2) JOINT RESOLUTION OF DISAPPROVAL.—A

2 joint resolution described in this paragraph means

3 only a joint resolution which is introduced within the

4 10-day period beginning on the date on which the

5 Board submits recommendations under subsection

6 (e)(3) and—

7 (A) which does not have a preamble;

8 (B) the matter after the resolving clause of

9 which is as follows: ‘‘That Congress disapproves

10 the recommendations of the National Health

11 Board concerning elimination of regional vari12 ation in health care coverage area premiums, as

13 submitted by the Board on lllllll.’’,

14 the blank space being filled in with the appro15 priate date; and

16 (C) the title of which is as follows: ‘‘Joint

17 resolution disapproving recommendations of the

18 National Health Board concerning elimination

19 of regional variation in health care coverage

20 area premiums, as submitted by the Board on

21 lllllll.’’, the blank space being filled

22 in with the appropriate date.

23 (3) PROCEDURES FOR CONSIDERATION OF RES24 OLUTION OF DISAPPROVAL.—Subject to paragraph

25 (4), the provisions of section 2908 (other than sub-
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•S 2296 PCS

1 section (a)) of the Defense Base Closure and Re2 alignment Act of 1990 shall apply to the consider3 ation of a joint resolution described in paragraph (2)

4 in the same manner as such provisions apply to a

5 joint resolution described in section 2908(a) of such

6 Act.

7 (4) SPECIAL RULES.—For purposes of applying

8 paragraph (3) with respect to such provisions—

9 (A) any reference to the Committee on

10 Armed Services of the House of Representatives

11 shall be deemed a reference to an appropriate

12 Committee of the House of Representatives

13 (specified by the Speaker of the House of Rep14 resentatives at the time of submission of rec15 ommendations under subsection (c)(3)) and any

16 reference to the Committee on Armed Services

17 of the Senate shall be deemed a reference to an

18 appropriate Committee of the Senate (specified

19 by the Majority Leader of the Senate at the

20 time of submission of recommendations under

21 subsection (c)(3)); and

22 (B) any reference to the date on which the

23 President transmits a report shall be deemed a

24 reference to the date on which the Board sub25 mits a recommendation under subsection (c)(3).
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•S 2296 PCS

1 (e) ELIMINATION OF REGIONAL VARIATION STATE

2 PAYMENT AMOUNTS.—

3 (1) COMMISSION STUDY.—The advisory com4 mission shall examine methods of reducing inappro5 priate variation among States in the level of pay6 ments required under subtitle A of title IX by 2002.

7 (2) COMMISSION REPORT.—The advisory com8 mission shall submit to the Board a report that

9 specifies one or more methods for reducing the vari10 ation described in paragraph (1).

11 (3) BOARD RECOMMENDATIONS.—The Board

12 shall submit to Congress, by not later than July 1,

13 1995, detailed recommendations respecting the spe14 cific method to be used to reduce the variation de15 scribed in paragraph (1) by 2002 in a budget neu16 tral manner with respect to total government pay17 ments and payments by the Federal Government. In

18 submitting recommendations under this paragraph,

19 the Board shall consider the fiscal capacity of the

20 States.

21 (4) CONGRESSIONAL CONSIDERATION.—

22 (A) IN GENERAL.—Subject to the succeed23 ing provisions of this paragraph, the provisions

24 of subsection (d) shall apply to recommenda25 tions under paragraph (3) in the same manner
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•S 2296 PCS

1 as they apply to recommendations under sub2 section (c)(3).

3 (B) SPECIAL RULES.—In applying sub4 paragraph (A)—

5 (i) the following shall be substituted

6 for the matter after the resolving clause

7 described in subsection (d)(2)(B): ‘‘That

8 Congress disapproves the recommendations

9 of the National Health Board concerning

10 reduction of regional variation in State

11 payments, as submitted by the Board on

12 lllllll.’’; and

13 (ii) the following shall be substituted

14 for the title described in subsection

15 (d)(2)(C): ‘‘Joint resolution disapproving

16 recommendations of the National Health

17 Board concerning reducing regional vari18 ation in State payments, as submitted by

19 the Board on lllllll.’’.

20 (f) INFORMATION.—The advisory commission shall

21 provide the Board, States, and community-rated health

22 plans with information about regional differences in health

23 care costs and practice patterns.
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•S 2296 PCS

1 SEC. 6007. REFERENCE TO LIMITATION ON ADMINISTRA2 TIVE AND JUDICIAL REVIEW OF CERTAIN DE3 TERMINATIONS.

4 For limitation on administrative and judicial review

5 of certain determinations under this part, see section

6 5232.

7 SEC. 6008. APPLICATION OF MARKETING AND COOPERA8 TIVE FEES.

9 Cooperative fees (as described in section 1305) and

10 health plan marketing fees (as described in section

11 1511(b)) shall not be incorporated into the calculation of

12 plan and health care coverage areas’ compliance with the

13 premium targets established in this part or in the deter14 mination of eligibility for discounts under subtitle B of

15 this title.

16 Subpart B—Plan and Provider Payment Reductions

17 to Maintain Expenditures within Targets

18 SEC. 6011. PLAN PAYMENT REDUCTION.

19 (a) PLAN PAYMENT REDUCTION.—In order to assure

20 that premium-related payments to community-rated

21 health plans offered in a health care coverage area are

22 consistent with the applicable area per capita target for

23 the health care coverage area (computed under this sub24 title), payment to a noncomplying plan (as defined in sub25 section (b)(2)) for a year is subject to a reduction in plan
941

•S 2296 PCS

1 payment by the amount equal to plan payment reduction

2 specified in subsection (c) for the year.

3 (b) NONCOMPLYING HEALTH CARE COVERAGE AREA

4 AND NONCOMPLYING PLAN DEFINED.—In this part:

5 (1) NONCOMPLYING HEALTH CARE COVERAGE

6 AREA.—The term ‘‘noncomplying health care cov7 erage area’’ means, for a year, a health care cov8 erage area for which the weighted average accepted

9 bid (computed under section 6004(c)) exceeds the

10 health care coverage area per capita premium target

11 for the year.

12 (2) NONCOMPLYING PLAN.—The term ‘‘non13 complying plan’’ means, for a year, a community

14 rated health plan offered in a noncomplying health

15 care coverage area if the applicable premium rate for

16 the year exceeds the maximum complying bid (as de17 fined in subsection (d)) for the year. No plan shall

18 be a noncomplying plan for a year before the first

19 year in which the plan is offered as a community

20 rated health plan under this Act.

21 (c) AMOUNT OF PLAN PAYMENT REDUCTION.—

22 (1) IN GENERAL.—The amount of the plan pay23 ment reduction, for a noncomplying plan offered in

24 a health care coverage area, is the area-wide reduc25 tion percentage (as defined in paragraph (2)) of the
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•S 2296 PCS

1 excess bid amount (as defined in paragraph (3)) for

2 the plan.

3 (2) AREA-WIDE REDUCTION PERCENTAGE.—

4 (A) IN GENERAL.—In paragraph (1), the

5 term ‘‘area-wide reduction percentage’’ means,

6 for a noncomplying plan offered in a health

7 care coverage area for a year—

8 (i) the amount by which—

9 (I) the weighted average accepted

10 bid (computed under section

11 6004(c)(1)) for the health care cov12 erage area for the year, exceeds (II)

13 the health care coverage area per cap14 ita target for the area for the year; di15 vided by

16 (ii) the sum, for noncomplying

17 plans offered in the health care cov18 erage area, of the plan proportions of

19 area excess bid amounts (described in

20 subparagraph (B)(i)) for the year.

21 (B) PLAN PROPORTION OF HEALTH CARE

22 COVERAGE AREA EXCESS BID AMOUNT DE23 SCRIBED.—

24 (i) IN GENERAL.—The ‘‘plan propor25 tion of area excess bid amount’’ described
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•S 2296 PCS

1 in this clause, for a noncomplying plan, is

2 the product of—

3 (I) the excess bid amount (as de4 fined in paragraph (3)) for the plan,

5 and

6 (II) the plan enrollment propor7 tion (as defined in clause (ii)) for the

8 plan.

9 (ii) PLAN ENROLLMENT PROPOR10 TION.—In clause (i)(II), the term ‘‘plan

11 enrollment proportion’’ means, with respect

12 to a health plan offered in a health care

13 coverage area, the total enrollment of com14 munity-rate eligible individuals enrolled in

15 such plan expressed as a percentage of the

16 total enrollment of community-rate eligible

17 individuals in all community-rated plans

18 offered in the health care coverage area.

19 Such proportion shall be computed based

20 on the information used in computing the

21 weighted average accepted bid for the area

22 under section 6004(c)(1).

23 (3) EXCESS BID AMOUNT.—In this subsection,

24 the ‘‘excess bid amount’’, with respect to a non25 complying plan for a year, is the amount by which—
944

•S 2296 PCS

1 (A) the accepted bid for the year (not tak2 ing into account any voluntary reduction under

3 section 6004(e)), exceeds

4 (B) the maximum complying bid (as de5 fined in subsection (d)) for the plan for the

6 year.

7 (d) COMMUNITY-RATED HEALTH PLANS WITH AN

8 ACCEPTED COOPERATIVE BID NOT EQUAL TO THE FINAL

9 COMMUNITY RATE FOR SUCH PLAN.—

10 (1) IN GENERAL.—For the purposes of this sec11 tion (relating to determining plan compliance and

12 plan payment reduction), if a community-rated

13 health plan has more than one applicable premium

14 rate, such health plan shall be treated as a separate

15 health plan with respect to each applicable premium

16 rate and the enrollment in each such health plan

17 shall be considered to be the number of community18 rated individuals enrolled in the community-rated

19 plan at the applicable premium rate.

20 (2) The applicable final premium rate with re21 spect to a community rated health plan shall be—

22 (A) for a community-rated plan offered

23 through the state-designated enrollment process

24 (or through any other manner of enrollment
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•S 2296 PCS

1 other than through a cooperative), the final

2 community rate; or

3 (B) for a community rated health plan of4 fered through a cooperative, the final coopera5 tive rate for such cooperative.

6 (e) MAXIMUM COMPLYING BID.—

7 (1) IN GENERAL.—In this part for the first

8 year and for subsequent years, the ‘‘maximum com9 plying bid’’ for each community-rated health plan, is

10 the health care coverage area per capita premium

11 target for the area (determined under section 6003)

12 for the year.

13 (2) SPECIAL RULES FOR NEW PLANS.—

14 (A) IN GENERAL.—Subject to subpara15 graph (B), in the case of a community rated

16 health plan that is first offered in a health care

17 coverage area in a year after the first year the

18 maximum complying bid shall be the health

19 care coverage area per capita premium target

20 for the year.

21 (B) AUTHORITY.—The Board or a State

22 may establish rules to modify the application of

23 subparagraph (A) for community-rated health

24 plans in the State in order—
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•S 2296 PCS

1 (i) to prevent abusive premium prac2 tices by entities previously offering plans,

3 or

4 (ii) to encourage the availability of all

5 types of plans in the State and to permit

6 establishment of new plans.

7 SEC. 6012. PROVIDER PAYMENT REDUCTION.

8 (a) PARTICIPATING PROVIDERS.—

9 (1) IN GENERAL.—Each community-rated

10 health plan in the health care coverage area, as part

11 of its contract or agreement with any participating

12 provider or group of participating providers shall—

13 (A) include a provision that provides that

14 if the plan is a noncomplying plan for a year,

15 payments to the provider (or group) shall be re16 duced by the applicable network reduction per17 centage (described in paragraph (2)) for the

18 year; and

19 (B) not include any provision which the

20 State determines otherwise varies the payments

21 to such providers (or group) because of, or in

22 relation to, a plan payment reduction under sec23 tion 6011 or otherwise is intended to nullify the

24 effect of subparagraph (A).
947

•S 2296 PCS

1 For purposes of this section, a plan described in sec2 tion 6011(d) shall be treated as a single plan with

3 the total enrollment of such plan equal to the sum

4 of the amounts described in section 6011(d)(1). The

5 Board may issue regulations relating to the require6 ments of this paragraph.

7 (2) APPLICABLE NETWORK REDUCTION PER8 CENTAGE.—

9 (A) IN GENERAL.—Subject to subpara10 graph (B), the ‘‘applicable network reduction

11 percentage’’, with respect to participating pro12 viders of a noncomplying plan for a year

13 equals—

14 (i) the plan payment reduction

15 amount for the plan for the year (as deter16 mined under section 6011(c)), divided by

17 (ii) the final accepted bid for the plan

18 for the year, adjusted under subparagraph

19 (B).

20 (B) INDUCED VOLUME OFFSET.—The

21 Board shall provide for an appropriate increase

22 of the percentage reduction computed under

23 subparagraph (A) to take into account any esti24 mated increase in volume of services provided

25 that may reasonably be anticipated as a con-
948

•S 2296 PCS

1 sequence of applying a reduction in payment

2 under this subsection. The Board may compute

3 and apply such increase differently for different

4 classes of providers or services or different

5 types of health plans (as the Board may de6 fine).

7 (b) OTHER PROVIDERS.—

8 (1) IN GENERAL.—Each community rated

9 health plan that is a noncomplying plan in a year

10 shall provide for a reduction in the amount of pay11 ments to providers (or groups of providers) that are

12 not participating providers under the applicable fee

13 schedule under section 1523 by the applicable non14 network reduction percentage (described in para15 graph (2)) for the year.

16 (2) APPLICABLE NONNETWORK REDUCTION

17 PERCENTAGE.—

18 (A) IN GENERAL.—Subject to subpara19 graph (B), the ‘‘applicable nonnetwork reduc20 tion percentage’’, with respect to

21 nonparticipating providers of a noncomplying

22 plan for a year is—

23 (i) the plan payment reduction

24 amount for the plan for the year (as deter25 mined under section 6011(c)), divided by
949

•S 2296 PCS

1 (ii) the final accepted bid for the plan

2 for the year, adjusted under subparagraph

3 (B).

4 (B) INDUCED VOLUME OFFSET.—The

5 Board shall provide for an appropriate increase

6 of the percentage reduction computed under

7 subparagraph (A) to take into account any esti8 mated increase in volume of services provided

9 that may reasonably be anticipated as a con10 sequence of applying a reduction in payment

11 under this subsection. The Board may compute

12 and apply such increase differently for different

13 classes of providers or services or different

14 types of health plans (as the Board may de15 fine).

16 (c) APPLICATION TO COST SHARING AND TO BAL17 ANCE BILLING RESTRICTIONS.—For purposes of applying

18 section 1523 (relating to balance billing limitations) and

19 part 2 of subtitle B of title I (relating to computation of

20 cost sharing), the payment basis otherwise used for com21 puting any limitation on billing or cost sharing shall be

22 such payment basis as adjusted by any reductions effected

23 under this section.
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•S 2296 PCS

1 PART 2—HEALTH EXPENDITURES OF LARGE

2 GROUP PURCHASERS

3 SEC. 6021. CALCULATION OF PREMIUM EQUIVALENTS.

4 (a) IN GENERAL.—By January 1, 1998, the Board

5 shall develop a methodology for calculating an annual per

6 capita expenditure equivalent for amounts paid for cov7 erage for the comprehensive benefit package within a large

8 group purchaser.

9 (b) ADJUSTMENT PERMITTED.—Such methodology

10 shall permit a large group purchaser to petition the Sec11 retary of Labor for an adjustment of the inflation adjust12 ment that would otherwise apply to compensate for mate13 rial changes in the demographic characteristics of the ex14 perience rate eligible individuals receiving coverage

15 through plans offered in a health care coverage area.

16 (c) REPORTING.—In 2001 and each subsequent year,

17 each large group purchaser shall report to the Secretary

18 of Labor, in a form and manner specified by the Secretary,

19 the average of the annual per capita expenditure equiva20 lent for the previous 3-year period.

21 SEC. 6022. SANCTIONS FOR LARGE GROUP PURCHASER

22 FOR EXCESS INCREASE IN EXPENDITURES.

23 (a) SANCTION.—

24 (1) ACTIONS AGAINST LARGE EMPLOYERS.—If

25 a large group purchaser that is a large employer has

26 two excess years (as defined in subsection (b)) in a
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•S 2296 PCS

1 3-year-period, then, effective beginning with the sec2 ond year following the second excess year in such pe3 riod, the Secretary of Labor shall take action under

4 section 1402.

5 (2) TERMINATION OF SPONSORSHIP FOR OTHER

6 LARGE GROUP PURCHASERS.—If a large group pur7 chaser that is not a large employer has two excess

8 years (as defined in subsection (b)) in a 3-year-pe9 riod, then, effective beginning with the second year

10 following the second excess year in such period—

11 (A) the Secretary of Labor shall terminate

12 the election of the large group purchaser under

13 section 1402; and

14 (B) an employer that was an experience15 rated employer with respect to such purchaser

16 shall become a community-rated employer (un17 less the employer has become an experience18 rated employer of another such large group

19 purchaser).

20 (3) INITIAL 3-YEAR PERIOD.—Paragraph (1)

21 shall apply to the 3-year period beginning on Janu22 ary 1, 1998.

23 (b) EXCESS YEAR.—

24 (1) IN GENERAL.—In subsection (a), the term

25 ‘‘excess year’’ means, for a large group purchaser, a
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•S 2296 PCS

1 year (after 2000) for which the rate of increase for

2 the large group purchaser (specified in paragraph

3 (2)) for the year, exceeds the national corporate in4 flation factor (specified in paragraph (3)) for the

5 year.

6 (2) RATE OF INCREASE FOR LARGE GROUP

7 PURCHASER.—The rate of increase for a large group

8 purchaser for a year, specified in this paragraph, is

9 the percentage by which the average of the annual

10 per capita expenditure equivalent for the large group

11 purchaser (reported under section 6021 (c)) for the

12 3-year period ending with such year, exceeds the av13 erage of the annual per capita expenditure equiva14 lent for the large group purchaser (reported under

15 such subsection) for the 3-year period ending with

16 the previous year.

17 (3) NATIONAL CORPORATE INFLATION FAC18 TOR.—The national corporate inflation factor for a

19 year, specified in this paragraph, is the average of

20 the general health care inflation factors (as defined

21 in section 6001(a)(3)) for each of the 3 years ending

22 with such year.
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•S 2296 PCS

1 PART 3—TREATMENT OF SINGLE-PAYER STATES

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

3 In the case of a Statewide single-payer State, for pur4 poses of section 1222(6), the Board shall compute a State5 wide per capita premium target for each year in the same

6 manner as the health care coverage area per capita pre7 mium target is determined under section 6003.

8 PART 4—TRANSITION PROVISIONS

9 SEC. 6041. MONITORING PRICES AND EXPENDITURES.

10 (a) IN GENERAL.—The Secretary shall establish a

11 program to monitor prices and expenditures in the health

12 care system in the United States.

13 (b) REPORTS.—The Secretary shall periodically re14 port to the President on—

15 (1) the rate of increase in expenditures in each

16 sector of the health care system, and

17 (2) how such rates compare with rate of overall

18 increase in health care spending and rate of increase

19 in the consumer price index.

20 (c) ACCESS TO INFORMATION.—

21 (1) IN GENERAL.—The Secretary may obtain,

22 through surveys or otherwise, information on prices

23 and expenditures for health care services. The Sec24 retary may compel health care providers and third

25 party payers to disclose such information as is nec26 essary to carry out the program under this section.
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•S 2296 PCS

1 (2) CONFIDENTIALITY.—Non-public informa2 tion obtained under this subsection with respect to

3 individual patients is confidential.

4 (d) PERIODIC REPORTS.—The Secretary shall peri5 odically issue public reports on the matters described in

6 subsection (b).

7 SEC. 6042. HEALTH CARE UTILIZATION RESEARCH PRO8 GRAM.

9 To assist health plans in determining the appropriate

10 cost of services to populations not previously covered by

11 private health insurance, the Secretary of Health and

12 Human Services shall conduct a program of research on

13 the characteristics and health care utilization patterns of

14 such populations, including Medicaid eligible individuals,

15 unemployed individuals, and out-of-labor force individuals.

16 Not later than 6 months after the date of enactment of

17 this Act, such program shall be completed and a report

18 concerning such program shall be submitted by the Sec19 retary to health plans in such form as the Secretary deter20 mines is the most useful to such plans
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1 Subtitle B—Premium-Related

2 Financings

3 PART 1—FAMILY PREMIUM PAYMENTS

4 Subpart A—Family Share

5 SEC. 6101. FAMILY SHARE OF PREMIUM.

6 (a) REQUIREMENT.—Each family enrolled in a com7 munity-rated health plan or in a, experienced-rated health

8 plan in a class of family enrollment is responsible for pay9 ment of the family share of premium payable respecting

10 such enrollment. Such premium may be paid by an em11 ployer or other person on behalf of such a family.

12 (b) FAMILY SHARE OF PREMIUM DEFINED.—

13 (1) IN GENERAL.—In this subtitle, the term

14 ‘‘family share of premium’’ means, with respect to

15 enrollment of a family—

16 (A) in a community-rated health plan, the

17 amount specified in paragraph (2) for the class,

18 or

19 (B) in an experienced-rated health plan,

20 the amount specified in paragraph (3) for the

21 class.

22 (2) COMMUNITY-RATED PLANS.—

23 (A) IN GENERAL.—The amount specified

24 in this paragraph for a health plan based on a

25 class of family enrollment is the sum of the
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•S 2296 PCS

1 base amounts described in subparagraph (B)

2 reduced (but not below zero) by the sum of the

3 amounts described in subparagraph (C).

4 (B) BASE.—The base amounts described

5 in this subparagraph (for a plan for a class of

6 enrollment) are as follows:

7 (i) PLAN PREMIUM.—The applicable

8 premium specified in section 6102(a) with

9 respect to such class of enrollment.

10 (ii) FAMILY COLLECTION SHORT11 FALL.—20 percent of the family collection

12 shortfall add-on (computed under section

13 6107 for such class).

14 (iii) MARKETING FEE.—Any applica15 ble marketing fee as described in section

16 1511(b).

17 (C) CREDITS AND DISCOUNTS.—The

18 amounts described in this subparagraph (for a

19 plan for a class of enrollment) are as follows:

20 (i) FAMILY CREDIT.—The amount of

21 the family credit under section 6103(a).

22 (ii) INCOME RELATED DISCOUNT.—

23 The amount of any income-related discount

24 provided under section 6104(a)(1).
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•S 2296 PCS

1 (iii) EXCESS PREMIUM CREDIT.—The

2 amount of any excess premium credit pro3 vided under section 6105.

4 (iv) LARGE GROUP SPONSOR OPT-IN

5 CREDIT.—The amount of any large group

6 sponsor opt-in credit provided under sec7 tion 6106.

8 (v) ADDITIONAL CREDIT FOR SSI AND

9 AFDC RECIPIENTS.—In the case of an SSI

10 or AFDC family or for whom the amount

11 described in clause (ii) is equal to the

12 amount described in section 6104(b)(1)(A),

13 the amount described in subparagraph

14 (B)(ii).

15 (D) LIMIT ON MISCELLANEOUS CRED16 ITS.—In no case shall the family share, due to

17 credits under subparagraph (C), be less than

18 zero.

19 (E) LIMITATION.—In no case shall the

20 family share for a particular plan be greater

21 than the premium otherwise payable under sec22 tion 6101 due to the application of the worksite

23 health promotion discount under section

24 6102(a)(1) and the worksite health promotion

25 adjustment to the credit under section 6103.
958

•S 2296 PCS

1 (3) EXPERIENCE-RATED PLANS.—

2 (A) IN GENERAL.—The amount specified

3 in this paragraph for an experience-rated health

4 plan based on a class of family enrollment is

5 the premium described in subparagraph (B) re6 duced (but not below zero) by the sum of the

7 amounts described in subparagraph (C).

8 (B) PREMIUM.—The premium described in

9 this subparagraph (for a plan for a class of en10 rollment) is the premium specified under sec11 tion 1404 with respect to the plan and class of

12 enrollment involved.

13 (C) CREDITS AND DISCOUNTS.—The

14 amounts described in this subparagraph (for a

15 plan for a class of enrollment) are as follows:

16 (i) FAMILY CREDIT.—The amount of

17 the family credit under section 6103(b).

18 (ii) INCOME RELATED DISCOUNT.—

19 The amount of any income-related discount

20 provided under section 6104(a)(2).

21 SEC. 6102. AMOUNT OF PREMIUM.

22 (a) COMMUNITY-RATED PLANS.—The amount of the

23 applicable premium charged by a community-rated health

24 plan for all families in a class of family enrollment under
959

•S 2296 PCS

1 a community-rated health plan offered in the health care

2 coverage area—

3 (1) with respect to a family enrolled through a

4 mechanism other than a cooperative, equal to the

5 product of—

6 (A) the final community rate for the plan

7 (as defined in section 6000(a)(3)),

8 (B) the uniform per capita conversion fac9 tor (as specified in section 6211) for the health

10 care coverage area, and

11 (C) the premium class factor established

12 by the Board for that class under section 1631;

13 increased for any applicable marketing fees (de14 scribed in section 1511); or

15 (2) with respect to a family enrolled through a

16 cooperative, equal to the product of—

17 (A) the final cooperative rate for the plan

18 (as defined in section 6000(a)(4));

19 (B) the uniform per capita conversion fac20 tor (described under section 6211) for the

21 health care coverage area;

22 (C) the premium class factor established

23 by Board for that class under section 1631.

24 (b) REFERENCE TO OTHER PREMIUMS.—The

25 amount of the premium charged by a large group pur-
960

•S 2296 PCS

1 chaser for all families in a class of family enrollment under

2 an experience-rated health plan offered by the purchaser

3 is specified under section 1404.

4 (c) SPECIAL RULES FOR DIVIDED FAMILIES.—In the

5 case of an individual who is a qualifying employee of an

6 employer, if the individual has a spouse or child who is

7 not treated as part of the individual’s family because of

8 section 1012—

9 (1) the combined premium for both families

10 under this section shall be computed as though such

11 section had not applied if such combined premium is

12 less than the total of the premiums otherwise appli13 cable (without regard to this subsection),

14 (2) the large group purchaser and the entity de15 scribed in section 1252 shall divide such combined

16 premium between the families proportionally (con17 sistent with rules established by the Board), and

18 (3) in such case, credits and other amounts

19 shall be pro-rated in a manner consistent with rules

20 established by the Board.

21 SEC. 6103. FAMILY CREDIT.

22 (a) COMMUNITY-RATED PLANS.—The credit pro23 vided under this section for a family enrolled in a commu24 nity-rated plan for a class of family enrollment is equal

25 to 80 percent of the weighted average premium (as defined
961

•S 2296 PCS

1 in section 6000(b)) for community-rated plans offered in

2 the health care coverage area for the class.

3 (b) EXPERIENCE-RATED PLANS.—The credit pro4 vided under this section for a family enrolled in an experi5 ence-rated health plan for a class of family enrollment is

6 equal to the minimum employer premium payment re7 quired under section 6131 with respect to the family.

8 SEC. 6104. PREMIUM DISCOUNT BASED ON INCOME.

9 (a) IN GENERAL.—

10 (1) ENROLLEES IN COMMUNITY-RATED

11 PLANS.—Subject to paragraph (2), each family en12 rolled with a community-rated or experience-rated

13 plan is entitled to a premium discount under this

14 section, in the amount specified in subsection (b)(1)

15 if the family—

16 (A) is an AFDC or SSI family;

17 (B) is determined, under subtitle C of title

18 I, to have family adjusted income below 150

19 percent of the applicable poverty level; or

20 (C) is a family described in subsection

21 (c)(3) for which the family obligation amount

22 under subsection (c) for the year would other23 wise exceed a specified percent of family ad24 justed income described in such subsection.
962

•S 2296 PCS

1 (2) NO LIABILITY FOR INDIANS AND CERTAIN

2 VETERANS AND MILITARY PERSONNEL.—

3 (A) IN GENERAL.—In the case of an indi4 vidual described in subparagraph (B), because

5 the applicable health plan does not impose any

6 premium for such an individual, the individual

7 is not eligible for any premium discount under

8 this section.

9 (B) INDIVIDUALS DESCRIBED.—An indi10 vidual described in this subparagraph is—

11 (i) an electing veteran (as defined in

12 section 1012(d)(1)) who is enrolled under

13 a health plan of the Department of Veter14 ans Affairs and who, under the laws and

15 rules as in effect as of December 31, 1994,

16 has a service-connected disability or who is

17 unable to defray the expenses of necessary

18 care as determined under section 1722(a)

19 of title 38, United States Code;

20 (ii) active duty military personnel (as

21 defined in section 1012(d)(2)); and

22 (iii) an electing Indian (as defined in

23 section 1012(d)(3)).

24 (3) MONTHLY APPLICATION TO AFDC AND SSI

25 FAMILIES.—Paragraph (1)(A) (and the family obli-
963

•S 2296 PCS

1 gation amount under subsection (c) insofar as it re2 lates to an AFDC or SSI family) shall be applied to

3 the premium or family obligation amount only for

4 months in which the family is such an AFDC or SSI

5 family.

6 (b) AMOUNT OF PREMIUM DISCOUNT.—

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

8 paragraphs of this subsection, the amount of the

9 premium discount under this subsection for a family

10 under a class of family enrollment is equal to—

11 (A) 20 percent of—

12 (i) for a family enrolled in a commu13 nity-rated plan offered in a community-rat14 ing area, the weighted average premium

15 for community-rated plans offered in the

16 community-rating area, increased by any

17 amount provided under paragraph (2); or

18 (ii) for a family enrolled in an experi19 ence-rated plan offered in a premium area,

20 the weighted average premium for experi21 ence-rated plans offered in the premium

22 area (as determined under section

23 6131(b)(1)(A)) or, if less, the amount de24 termined under clause (i) for the commu-
964

•S 2296 PCS

1 nity-rating area in which the family re2 sides;

3 reduced (but not below zero) by—

4 (B) the sum of—

5 (i) the family obligation amount de6 scribed in subsection (c); and

7 (ii) the amount of any employer pay8 ment (not required under part 2) towards

9 the family share of premiums for covered

10 members of the family.

11 (2) INCREASE FOR COMMUNITY-RATED FAMI12 LIES TO ASSURE ENROLLMENT IN AT-OR-BELOW-AV13 ERAGE-COST PLAN.—In the case of a family enrolled

14 in a community-rated plan, if a State determines

15 that a family eligible for a discount under this sec16 tion is unable to enroll in an at-or-below-average17 cost plan (as defined in paragraph (3)) that serves

18 the area in which the family resides, the amount of

19 the premium discount under this subsection is in20 creased to the extent that such amount will permit

21 the family to enroll in a community-rated plan with22 out the need to pay a family share of premium

23 under this part in excess of the sum described in

24 paragraph (1)(B).
965

•S 2296 PCS

1 (3) AT-OR-BELOW-AVERAGE-COST PLAN DE2 FINED.—In this section, the term ‘‘at-or-below-aver3 age-cost plan’’ means a community-rated plan the

4 premium for which does not exceed, for the class of

5 family enrollment involved, the weighted average

6 premium for the community-rating area.

7 (c) FAMILY OBLIGATION AMOUNT.—

8 (1) DETERMINATION.—Subject to paragraphs

9 (2) and (3), the family obligation amount under this

10 subsection is determined as follows:

11 (A) NO OBLIGATION IF INCOME BELOW IN12 COME THRESHOLD AMOUNT OR IF AFDC OR SSI

13 FAMILY.—If the family adjusted income (as de14 fined in section 1282(d)) of the family is less

15 than the income threshold amount (specified in

16 paragraph (4)) or if the family is an AFDC or

17 SSI family, the family obligation amount is

18 zero.

19 (B) INCOME ABOVE INCOME THRESHOLD

20 AMOUNT.—If such income is at least such in21 come threshold amount and the family is not an

22 AFDC or SSI family, the family obligation

23 amount is the sum of the following:

24 (i) FOR INCOME (ABOVE INCOME

25 THRESHOLD AMOUNT) UP TO THE POV-
966

•S 2296 PCS

1 ERTY LEVEL.—The product of the initial

2 marginal rate (specified in paragraph (2))

3 and the amount by which—

4 (I) the family adjusted income

5 (not including any portion that ex6 ceeds the applicable poverty level for

7 the class of family involved), exceeds;

8 (II) such income threshold

9 amount.

10 (ii) GRADUATED PHASE OUT OF DIS11 COUNT UP TO 150 PERCENT OF POVERTY

12 LEVEL.—The product of the final marginal

13 rate (specified in paragraph (2)) and the

14 amount by which the family adjusted in15 come exceeds 100 percent (but is less than

16 150 percent) of the applicable poverty

17 level.

18 (2) MARGINAL RATES.—In paragraph (1), for a

19 year:

20 (A) INITIAL MARGINAL RATE.—The initial

21 marginal rate is the ratio of—

22 (i) 3 percent of the applicable poverty

23 level for the class of enrollment involved

24 for the year; to
967

•S 2296 PCS

1 (ii) the amount by which such poverty

2 level exceeds such income threshold

3 amount.

4 (B) FINAL MARGINAL RATE.—The final

5 marginal rate is 5.7 percent.

6 (3) LIMITATION TO 3.9 PERCENT FOR ALL FAM7 ILIES.—

8 (A) IN GENERAL.—In no case shall the

9 family obligation amount under this subsection

10 for the year exceed 3.9 percent.

11 (B) INDEXING OF PERCENTAGE.—

12 (i) IN GENERAL.—The percentage

13 specified in subparagraph (A) shall be ad14 justed for any year after 1994 so that the

15 percentage for the year bears the same

16 ratio to the percentage so specified as the

17 ratio of—

18 (I) 1 plus the general health care

19 inflation factor (as defined in section

20 6001(a)(3)) for the year, bears to

21 (II) 1 plus the percentage speci22 fied in section 1135 (relating to index23 ing of dollar amounts related to cost

24 sharing) for the year.
968

•S 2296 PCS

1 (ii) ROUNDING.—Any adjustment

2 under clause (i) for a year shall be round3 ed to the nearest multiple of 1/10 of 1 per4 centage point.

5 (4) INCOME THRESHOLD AMOUNT.—

6 (A) IN GENERAL.—For purposes of this

7 subtitle, the income threshold amount specified

8 in this paragraph is $1,000 (adjusted under

9 subparagraph (B)).

10 (B) INDEXING.—For the 1-year period be11 ginning on January 1, 1995, the income thresh12 old amount specified in subparagraph (A) shall

13 be increased or decreased by the same percent14 age as the percentage increase or decrease by

15 which the average CPI (described in section

16 1902(12)) for the 12-month-period ending with

17 August 31 of the preceding year exceeds such

18 average for the 12-month period ending with

19 August 31. 1993.

20 (C) ROUNDING.—Any increase or decrease

21 under subparagraph (B) for a year shall be

22 rounded to the nearest multiple of $10.

23 SEC. 6105. EXCESS PREMIUM CREDIT.

24 (a) IN GENERAL.—If plan payment reductions are

25 made for one or more community-rated health plans of-
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•S 2296 PCS

1 fered in a health care coverage area for plan payments

2 in a year under section 6021, all families enrolling in com3 munity-rated health plans shall receive a credit under this

4 section, in the amount described in subsection (b), in the

5 case of each family enrolled in a community-rated health

6 plan offered in the health care coverage area for premiums

7 in the year.

8 (b) AMOUNT OF CREDIT.—

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

10 the amount of the credit under this subsection, for

11 a family enrolled in a class of family enrollment in

12 a health care coverage area for a year, is the amount

13 that would be the weighted average premium for

14 such area, class, and year, if the per capita excess

15 premium amount (determined under subsection (c))

16 for the area for the year were substituted for the

17 weighted average discount rate for the health care

18 coverage area for the year.

19 (2) ADJUSTMENT TO ACCOUNT FOR USE OF ES20 TIMATES.—Subject to section 9201, if the total pay21 ments made to all community-rated health plans in

22 a year under section 6203 exceeds (or is less than)

23 the total of such payments estimated by the State

24 (based on the weighted average discount rate under

25 subsection (c)(1)), because of a difference between—
970

•S 2296 PCS

1 (A) the State’s estimate of the distribution

2 of enrolled families between excess premium

3 plans and other plans, and

4 (B) the actual distribution of such enrolled

5 families among such plans,

6 the amount of the credit under this section in the

7 second succeeding year shall be reduced (or in8 creased, respectively) by the amount of such excess

9 (or deficit) in the total of such payments made to all

10 such plans.

11 (c) PER CAPITA EXCESS PREMIUM AMOUNT.—The

12 per capita excess premium amount, for a health care cov13 erage area for a year, is the amount by which—

14 (1) the weighted average discount rate (as de15 fined in section 6000(a)(2)) for the area for the

16 year, exceeds

17 (2) the health care coverage area per capita

18 premium target for the area for the year.

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

20 (a) IN GENERAL.—If community-rated individuals

21 are owed a payment adjustment under section 6124 for

22 a year, then the State shall provide for a credit under this

23 section equal to 20 percent of the amount described in

24 subsection (b), in the case of each family enrolled in a
971

•S 2296 PCS

1 community-rated plan offered in the health care coverage

2 area.

3 (b) AMOUNT OF CREDIT.—The amount described in

4 this subsection, for a family enrolled in a class of family

5 enrollment for a health care coverage area for a year, is

6 the amount that would be the weighted average premium

7 for such area, class, and year, if the per capita large group

8 purchaser opt-in amount (determined under subsection

9 (c)) for the area for the year were substituted for the

10 weighted average discount rate for the area for the year.

11 (c) PER CAPITA LARGE GROUP PURCHASER OPT-IN

12 AMOUNT.—The per capita large group purchaser opt-in

13 amount, for a health care coverage area for a year, is—

14 (1) the total amount of the payment adjust15 ments owed for the year under section 6124, divided

16 by

17 (2) the estimated average number of community

18 rate eligible individuals in the health care coverage

19 area during the year (reduced by the average num20 ber of such individuals whose family share of pre21 miums, determined without regard to this section

22 and section 6107, is zero).

23 SEC. 6107. FAMILY COLLECTION SHORTFALL ADD-ON.

24 (a) IN GENERAL.—The family collection shortfall

25 add-on, for a health care coverage area for a class of en-
972

•S 2296 PCS

1 rollment for a year, is the amount that would be the

2 weighted average premium for such area, class, and year,

3 if the per capita collection shortfall amount (determined

4 under subsection (b)) for the area for the year were sub5 stituted for the weighted average discount rate for the

6 health care coverage area for the year.

7 (b) COMPUTATION OF PER CAPITA ADJUSTMENT

8 FOR COLLECTION SHORTFALLS.—

9 (1) PER CAPITA COLLECTION SHORTFALL

10 AMOUNT.—The per capita collection shortfall

11 amount, for a health care coverage area for a year,

12 under this subsection is equal to—

13 (A) the amount estimated under paragraph

14 (2)(A) for the year, divided by

15 (B) the estimated average number of com16 munity rate eligible individuals in the health

17 care coverage area during the year (reduced by

18 the average number of such individuals whose

19 family share of premiums, determined without

20 regard to this section and section 6106, is

21 zero).

22 (2) AGGREGATE COLLECTION SHORTFALL.—

23 (A) IN GENERAL.—Each State shall esti24 mate, for each year (beginning with the first

25 year) the total amount of payments which the
973

•S 2296 PCS

1 State can reasonably identify as owed to com2 munity-rated health plans under this Act (tak3 ing into account any premium reduction or dis4 count under this subtitle and including amounts

5 owed under subpart B and not taking into ac6 count any penalties) for the year and not likely

7 to be collected (after making collection efforts

8 described in section 6209) during a period spec9 ified by the Secretary beginning on the first day

10 of the year.

11 (B) EXCLUSION OF GOVERNMENT

12 DEBTS.—The amount under subparagraph (A)

13 shall not include any payments owed to a com14 munity-rated health plan by the Federal, State,

15 or local governments.

16 (C) ADJUSTMENT FOR PREVIOUS SHORT17 FALL ESTIMATION DISCREPANCY.—Subject to

18 section 9201, the amount estimated under this

19 paragraph for a year shall be adjusted to reflect

20 over (or under) estimations in the amounts so

21 computed under this paragraph for previous

22 years (based on actual collections), taking into

23 account interest payable based upon borrowings

24 (or savings) attributable to such over or under

25 estimations.
974

•S 2296 PCS

1 (c) APPORTIONMENT OF ADJUSTMENT.—The Board

2 shall implement a method for the distribution of the aggre3 gate collection shortfall amount for each health care cov4 erage area (as described in (b)(2)) across premiums in the

5 area. Such method shall reflect a blend of each plan’s

6 share of the area’s aggregate shortfall and the unadjusted

7 per-capita collection shortfall amount.

8 SEC. 6108. NO LOSS OF COVERAGE.

9 In no case shall the failure to pay amounts owed

10 under this Act result in an individual’s or family’s loss

11 of coverage.

12 SEC. 6109. APPLICATION OF ADJUSTMENTS.

13 Per-capita adjustments described in sections 6105,

14 6106, 6107 and 6125 shall be converted into adjustments

15 applicable to each class of premium under a methodology

16 to be established by the Board.

17 Subpart B—Repayment of Family Credit by Certain

18 Families

19 SEC. 6110. REPAYMENT OF FAMILY CREDIT BY CERTAIN

20 FAMILIES.

21 (a) IN GENERAL.—Subject to the succeeding provi22 sions of this subpart, each family which is provided a fam23 ily credit under section 6103(a) for a class of enrollment

24 is liable for repayment of an amount equal to the base
975

•S 2296 PCS

1 employment monthly premium (applicable to such class)

2 for the month under section 6122.

3 (b) REDUCTION FOR SELF-EMPLOYMENT PAY4 MENTS.—The liability of a family under this section for

5 a year shall be reduced (but not below zero) by the amount

6 of any employer payments made in the year under section

7 6126 based on the net earnings from self-employment of

8 a family member.

9 SEC. 6111. NO LIABILITY FOR FAMILIES EMPLOYED FULL10 TIME; REDUCTION IN LIABILITY FOR PART11 TIME EMPLOYMENT.

12 (a) IN GENERAL.—The amount of any liability under

13 section 6110 shall be reduced, in accordance with rules

14 established by the National Health Board consistent with

15 this section, based on employer premiums payable under

16 section 6121 with respect to the employment of a family

17 member who is a qualifying employee or with respect to

18 a family member. In no case shall the reduction under this

19 section result in any payment owing to a family.

20 (b) CREDIT FOR FULL-TIME AND PART-TIME EM21 PLOYMENT.—

22 (1) IN GENERAL.—Under rules of the Board, in

23 the case of a family enrolled under a class of family

24 enrollment, if a family member is a qualifying em25 ployee for a month and (except in the case described
976

•S 2296 PCS

1 in section 6114(a)) the employer is liable for pay2 ment under section 6121 based on such employ3 ment—

4 (A) FULL-TIME EMPLOYMENT CREDIT.—If

5 the employment is on a full-time basis (as de6 fined in section 1901(b)(2)(A)) the liability

7 under section 6110 shall be reduced by the

8 credit amount described in subparagraph (C).

9 (B) PART-TIME EMPLOYMENT CREDIT.—If

10 the employment is on a part-time basis (as de11 fined in section 1901(b)(2)(A)) the liability

12 under section 6110 shall be reduced by the em13 ployment ratio (as defined in section

14 1901(b)(2)(B)) of the credit amount described

15 in subparagraph (C).

16 (C) FULL-TIME MONTHLY CREDIT.—The

17 amount of the credit under this subparagraph,

18 with respect to employment by an employer in

a month, is 1 19 ⁄12 (or, if applicable, the fraction

20 described in paragraph (2)) of the amount owed

21 under section 6110, based on the class of en22 rollment, for the year.

23 (2) COVERAGE DURING ONLY PART OF A

24 YEAR.—In the case of a family that is not enrolled

25 in a community-rated health plan for all the months
977

•S 2296 PCS

1 in a year, the fraction described in this paragraph

2 is 1 divided by the number of months in the year in

3 which the family was enrolled in such a plan.

4 (3) AGGREGATION OF CREDITS.—For purposes

5 of paragraph (1)—

6 (A) INDIVIDUALS.—In the case of an indi7 vidual who is a qualifying employee of more

8 than one employer in a month, the credit for

9 the month shall equal the sum of the credits

10 earned with respect to employment by each em11 ployer. Such sum may exceed the credit amount

12 described in paragraph (1)(C).

13 (B) COUPLES.—In the case of a couple

14 each spouse of which is a qualifying employee

15 in a month, the credit for the month shall equal

16 the sum of the credits earned with respect to

17 employment by each spouse. Such sum may ex18 ceed the credit amount described in paragraph

19 (1)(C).

20 (c) TREATMENT OF CHANGE OF ENROLLMENT STA21 TUS.—In the case of a family for which the class of family

22 enrollment changes during a year, the Board shall estab23 lish rules for appropriate conversion and allocation of the

24 credit amounts under the previous provisions of this sec25 tion in a manner that reflects the relative values of the
978

•S 2296 PCS

1 base employment monthly premiums (as determined under

2 section 6122) among the different classes of family enroll3 ment.

4 SEC. 6112. LIMITATION OF LIABILITY BASED ON INCOME.

5 (a) IN GENERAL.—In the case of an eligible family

6 described in subsection (b), the repayment amount re7 quired under this subpart (after taking into account any

8 work credit earned under section 6111) with respect to

9 a year shall not exceed the amount of liability described

10 in subsection (c) for the year.

11 (b) ELIGIBLE FAMILY DESCRIBED.—An eligible fam12 ily described in this subsection is a family which is deter13 mined, under section 1282 by the State for the health care

14 coverage area in which the family resides, to have wage15 adjusted income (as defined in subsection (d)) below 300

16 percent of the applicable poverty level.

17 (c) AMOUNT OF LIABILITY.—

18 (1) DETERMINATION.—Subject to subsection

19 (f), in the case of a family enrolled in a class of en20 rollment with wage-adjusted income (as defined in

21 subsection (d)), the amount of liability under this

22 subsection is determined as follows:

23 (A) NO OBLIGATION IF INCOME BELOW IN24 COME THRESHOLD AMOUNT OR IF AFDC OR SSI

25 FAMILY.—If such income is than the income
979

•S 2296 PCS

1 threshold amount (specified in section

2 6104(c)(4)) or if the family is an AFDC or SSI

3 family, the amount of liability is zero.

4 (B) INCOME ABOVE INCOME THRESHOLD

5 AMOUNT.—If such income is at least such in6 come threshold amount and the family is not an

7 AFDC or SSI family, the amount of liability is

8 the sum of the following:

9 (i) FOUR PERCENT OF INCOME

10 (ABOVE INCOME THRESHOLD AMOUNT) UP

11 TO THE POVERTY LEVEL.—The initial

12 marginal rate (specified in paragraph

13 (2)(A)) of the amount by which—

14 (I) the wage-adjusted income

15 (not including any portion that ex16 ceeds the applicable poverty level for

17 the class of family involved), exceeds

18 (II) such income threshold

19 amount.

20 (ii) SECOND MARGINAL RATE.—The

21 second marginal rate (specified in para22 graph (2)(B) of the amount by which—

23 (I) the wage adjusted income

24 (not including any portion that ex25 ceeds twice the applicable poverty
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•S 2296 PCS

1 level for the class of family involved),

2 exceeds

3 (II) the applicable poverty level

4 for the class of family enrollment.

5 (iii) FINAL MARGINAL RATE.—Where

6 wage-adjusted income exceeds 200 percent

7 of the applicable poverty level, the final

8 marginal rate (specified in paragraph

9 (2)(C)) of the amount by which the wage10 adjusted income exceeds 100 percent of the

11 applicable poverty level.

12 (2) MARGINAL RATES.—In paragraph (1)—

13 (A) INITIAL MARGINAL RATE.—The initial

14 marginal rate, for a year for a class of enroll15 ment, is the ratio of—

16 (i) 4 percent of the applicable poverty

17 level for the class of enrollment for the

18 year, to

19 (ii) the amount by which such poverty

20 level exceeds such income threshold

21 amount.

22 (B) SECOND MARGINAL RATE.—The sec23 ond marginal rate, for a year for the class of

24 enrollment, is 7.6 percent.
981

•S 2296 PCS

1 (C) FINAL MARGINAL RATE.—The final

2 marginal rate, for a year for a class of enroll3 ment, is the ratio of—

4 (i) the amount by which (I) the

5 amount of the repayment amount de6 scribed in section 6111(a) exceeds (II) 5.8

7 percent of twice the applicable poverty level

8 (for the class and year); to

9 (ii) 200 percent of such poverty level.

10 (3) SECOND MARGINAL RATE.—

11 (A) IN GENERAL.—If, for a class of enroll12 ment for a health care coverage area in a State,

13 the second marginal rate exceeds the final mar14 ginal rate, the State may adjust such marginal

15 rates as provided in subparagraph (B).

16 (B) SAME RATE APPLICABLE.—Under an

17 adjustment made by a State under subpara18 graph (A), the second marginal rate and the

19 final marginal rate shall be the same and shall

20 be the ratio of—

21 (i) the amount by which (I) the

22 amount of the repayment amount de23 scribed in section 6111(a) exceeds (II) 4

24 percent of the applicable poverty level (for

25 the class and year); to
982

•S 2296 PCS

1 (ii) 200 percent of such poverty level.

2 (4) MONTHLY APPLICATION TO AFDC AND SSI

3 FAMILIES.—Paragraph (1) insofar as it relates to an

4 AFDC or SSI family shall be applied so as to reduce

5 to zero the liability amount only for months in which

6 the family is such an AFDC or SSI family.

7 (d) WAGE-ADJUSTED INCOME DEFINED.—In this

8 subtitle, the term ‘‘wage-adjusted income’’ means, for a

9 family, family adjusted income of the family (as defined

10 in section 1282), reduced by the sum of the following:

11 (1)(A) Subject to subparagraph (B), the

12 amount of any wages included in such family’s in13 come that is received for employment which is taken

14 into account in the computation of the amount of

15 employer premiums under section 6121 (without

16 consideration of section 6126).

17 (B) The reduction under subparagraph (A)

18 shall not exceed for a year $5,000 (adjusted under

19 section 6104(c)(3)(B)) multiplied by the number of

20 months (including portions of months) of employ21 ment with respect to which employer premiums were

22 payable under section 6121 (determined in a manner

23 consistent with section 1901(b)(3)).
983

•S 2296 PCS

1 (2) The amount of net earnings from self em2 ployment of the family taken into account under sec3 tion 6126.

4 (3) The amount of unemployment compensation

5 included in income under section 85 of the Internal

6 Revenue Code of 1986.

7 (e) DETERMINATIONS.—A family’s wage-adjusted in8 come and the amount of liability under subsection (c) shall

9 be determined by the applicable health care coverage area

10 upon application by a family under subpart B of part 3

11 of subtitle D of title I.

12 (f) NO LIABILITY FOR INDIANS AND CERTAIN VET13 ERANS AND MILITARY PERSONNEL.—The provisions of

14 paragraph (3) of section 6104(a) shall apply to the reduc15 tion in liability under this section in the same manner as

16 such paragraph applies to the premium discount under

17 section 6104.

18 SEC. 6113. PAYMENTS BY NONQUALIFYING EMPLOYEES.

19 (a) IN GENERAL.—In the case of an eligible family

20 described in paragraph (b), the net liability of the family

21 under this section shall be the amount described in sub22 section (c), limited by the amount described in subsection

23 (d) plus the amount described in subsection (e).

24 (b) ELIGIBLE FAMILY DESCRIBED.—The family de25 scribed in this paragraph is a family that has one or more
984

•S 2296 PCS

1 nonqualifying employees and has no full-time qualifying

2 employees. The Board shall develop rules for applying this

3 section to families whose employment status with respect

4 to exempt employers changes during the year.

5 (c) AMOUNT.—The amount described in this sub6 section is the sum of—

7 (1) the family share as defined in section 6101

8 (including any discounts under 6104); and

9 (2) the family credit repayment amount de10 scribed in subpart B of title VI (including any re11 ductions under section 6113); reduced by—

12 (3) the amount (if any) by which that the pre13 mium specified in 6102(a) with respect to such fam14 ily exceeds the weighted average premium (applica15 ble to the family).

16 (d) LIMIT.—The limit described in this subsection is

17 the following:

18 (1) for a family with family adjusted income of

19 less than 150 percent of the applicable poverty level,

20 4 percent of family adjusted income;

21 (2) for a family with family adjusted income of

22 at least 150 percent but less than 175 percent of the

23 applicable poverty level, 4.5 percent of family ad24 justed income;
985

•S 2296 PCS

1 (3) for a family with family adjusted income of

2 at least 175 percent but less than 225 percent of the

3 applicable poverty level, 5 percent of family adjusted

4 income; and

5 (4) for a family with family adjusted income of

6 at least 225 percent but less than 400 percent of the

7 applicable poverty level, 6 percent of family adjusted

8 income.

9 (e) The amount described in this subsection is the

10 amount in subsection (c)(3).

11 (f) INDEXING OF PERCENTAGES.—

12 (1) IN GENERAL.—The percentage of family ad13 justed income specified in paragraphs (1) through

14 (4) of subsection (d) shall be adjusted for any year

15 after 1994 so that the percentage for the year bears

16 the same ratio to the percentage so specified as the

17 ratio of—

18 (A) 1 plus the general health care inflation

19 factor (as defined in section 6001(a)(3)) for the

20 year, bears to

21 (B) 1 plus the percentage specified in sec22 tion 1135 (relating to indexing of dollar

23 amounts related to cost sharing) for the year.
986

•S 2296 PCS

1 (2) ROUNDING.—Any adjustment under para2 graph (1) for a year shall be rounded to the nearest

3 multiple of 1/10 of 1 percentage point.

4 SEC. 6114. SPECIAL TREATMENT OF CERTAIN RETIREES

5 AND QUALIFIED SPOUSES AND CHILDREN.

6 (a) TREATMENT AS FULL-TIME EMPLOYEE.—Sub7 ject to subsection (d), an individual who is an eligible re8 tiree (as defined in subsection (b)) or a qualified spouse

9 or child (as defined in subsection (c)) for a month in a

10 year (beginning with 1998) is considered, for purposes of

11 section 6112, to be a full-time employee described in such

12 section in such month.

13 (b) ELIGIBLE RETIREE DEFINED.—In this section,

14 the term ‘‘eligible retiree’’ means, for a month, an individ15 ual who establishes to the satisfaction of the State (for

16 the health care coverage area in which the individual re17 sides), pursuant to rules of the Secretary, that the individ18 ual, as of the first day of the month—

19 (1) is at least 55, but less than 65, years of

20 age,

21 (2) is not employed on a full-time basis (as de22 fined in section 1901(b)(2)(A)),

23 (3) would be eligible (under section 226(a) of

24 the Social Security Act) for hospital insurance bene25 fits under part A of title XVIII of such Act if the
987

•S 2296 PCS

1 individual were 65 years of age based only on the

2 employment of the individual, or has completed 40

3 quarters of employment through a State or local

4 government, or has completed 40 quarters of em5 ployment through a State or local government, and

6 (4) is not a medicare-eligible individual.

7 (c) QUALIFIED SPOUSE OR CHILD DEFINED.—In

8 subsection (a), the term ‘‘qualified spouse or child’’ means,

9 in relation to an eligible retiree for a month, an individual

10 who establishes to the satisfaction of the community-rated

11 health plan (for the health care coverage area in which

12 the individual resides) under rules of the Secretary that

13 the requirements in one of the following paragraphs is met

14 with respect to the individual:

15 (1) The individual (A) is under 65 years of age

16 and is (and has been for a period of at least one

17 year) married to an eligible retiree or (B) is a child

18 of the eligible retiree.

19 (2) In the case of a person who was an eligible

20 retiree at the time of the person’s death—

21 (A) the individual was (and had for a pe22 riod of at least one year been) married to the

23 retiree at the time of the person’s death,

24 (B) the individual is under 65 years of age,
988

•S 2296 PCS

1 (C) the individual is not employed on a

2 full-time basis (as defined in section

3 1901(b)(2)(A)),

4 (D) the individual is not remarried, and

5 (E) the deceased spouse would still be an

6 eligible retiree in the month if such spouse had

7 not died.

8 (3) The individual is a child of an individual de9 scribed in paragraph (2).

10 (d) APPLICATION.—An individual may not be deter11 mined to be an eligible retiree or qualified spouse or child

12 unless an application has been filed with the State. Such

13 application shall contain such information as the Secretary

14 may require to establish such status and verify informa15 tion in the application. Any material misrepresentation in

16 the application is subject to a penalty in the same manner

17 as a misrepresentation described in section 1282.

18 SEC. 6115. SPECIAL TREATMENT OF CERTAIN MEDICARE

19 BENEFICIARIES.

20 In the case of an individual who would be a medicare21 eligible individual in a month but for the application of

22 section 1012(a) on the basis of employment (in the month

23 or a previous month) of the individual or the individual’s

24 spouse or parent, the individual (or spouse or parent, as

25 the case may be) so employed is considered, for purposes
989

•S 2296 PCS

1 of section 6112, to be a full-time employee described in

2 such section in such month.

3 PART 2—EMPLOYER PREMIUM PAYMENTS

4 Subpart A—Employers Exempt From Coverage

5 Obligations

6 SEC. 6116. EXEMPTION FROM COVERAGE OBLIGATIONS.

7 An exempt employer as defined section 6117 shall be

8 exempt from requirements described in this part, except

9 the requirement described in section 6120, unless the em10 ployer elects under section 6118 to be treated as a commu11 nity-rated employer.

12 SEC. 6117. EXEMPT EMPLOYER DEFINED.

13 (a) IN GENERAL.—In this section—

14 (1) the term ‘‘exempt employer’’ means an em15 ployer that does not employ, on average, more than

16 10 full-time equivalent employees;

17 (2) and is an employer with average annual

18 wages per full-time equivalent employee of less than

19 $24,000; and

20 (3) the average number of full-time equivalent

21 employees shall be determined by averaging the

22 number of full-time equivalent employees employed

23 by the employer in each countable month during the

24 year.
990

•S 2296 PCS

1 (b) COUNTABLE MONTH.—In paragraph (1), the

2 term ‘‘countable month’’ means, for an employer, a month

3 in which the employer employs any qualifying employee.

4 (c) DETERMINATIONS.—The number of full-time

5 equivalent employees shall be determined using the rules

6 under section 1901(b)(2).

7 (d) EXEMPT EMPLOYER.—The term ‘‘exempt em8 ployer’’ shall not include an individual described in section

9 6126(c)(2).

10 SEC. 6118. ELECTION.

11 A exempt employer may elect to be treated as a com12 munity-rated employer under the procedures described in

13 section.

14 SEC. 6119. TREATMENT OF EXEMPT EMPLOYERS.

15 (a) IN GENERAL.—

16 (1) COMMUNITY RATED EMPLOYER.—An ex17 empt employer shall be treated as a community

18 rated employer as of the first date of the first year

19 following an election made under section 6118.

20 (2) ELIGIBILITY FOR DISCOUNTS.—An exempt

21 employer making an election under section 6118

22 shall be eligible for discounts under 6123.
991

•S 2296 PCS

1 SEC. 6120. NONELECTING EXEMPT EMPLOYER.

2 (a) IN GENERAL.—The term ‘‘nonelecting exempt

3 employer’’ means an exempt employer that has not made

4 an election under section 6118.

5 (b) ASSESSMENT IN LIEU OF PARTICIPATION.—Each

6 State shall establish a mechanism to collect an assessment

7 of payroll from each non-electing employer to be used to

8 defray the cost of subsidies to the employees of such em9 ployer.

10 (c) AMOUNT OF ASSESSMENT.—For purposes of sub11 section (b)—

12 (1) with respect to employers with 5 or fewer

13 full-time equivalent employees, the assessment of

14 payroll under such subsection shall be 1 percent; and

15 (2) with respect to employers with more than 6

16 but less than 11 full-time equivalent employees, the

17 assessment of payroll under such subsection shall be

18 2 percent.

19 Subpart B—Community-Rated Employers

20 SEC. 6121. EMPLOYER PREMIUM PAYMENT REQUIRED.

21 (a) REQUIREMENT.—

22 (1) IN GENERAL.—Each community-rated em23 ployer described in paragraph (2) for a month shall

24 pay at least an amount equal to the sum across all

25 qualifying employees of the amount specified in sub26 section (b) for each such qualifying employee of the
992

•S 2296 PCS

1 employer. Such payments shall be made in accord2 ance with section 1345(c).

3 (2) EMPLOYER DESCRIBED.—An employer de4 scribed in this paragraph for a month is an employer

5 that—

6 (A) in a month employs one or more quali7 fying employees (as defined in section

8 1901(b)(1)); and

9 (B) is not exempt under section 3127 of

10 the Internal Revenue Code of 1986 from the

11 taxes imposed in section 3111 of such code.

12 (3) TREATMENT OF CERTAIN EMPLOYMENT BY

13 EXPERIENCE-RATED EMPLOYERS.—An experience14 rated employer shall be deemed, for purposes of this

15 subpart, to be a community-rated employer with re16 spect to qualifying employees who are not experience

17 rate eligible individuals.

18 (b) PREMIUM PAYMENT AMOUNT.—

19 (1) IN GENERAL.—Except as provided in sec20 tion 6123 (relating to a discount for certain employ21 ers), section 6124 (relating to large employers elect22 ing coverage through community-rated health plans),

23 section 6125 (relating to the employer collection

24 shortfall add-on), and section 6127 (relating to

25 qualified worksite health promotion programs, the
993

•S 2296 PCS

1 amount of the employer premium payment, for a

2 month for each qualifying employee of the employer

3 who is residing in a health care coverage area, is the

4 payment amount computed under paragraph (2)

5 with respect to such employee in such area.

6 (2) PAYMENT AMOUNT FOR EACH EMPLOYEE IN

7 A CLASS OF FAMILY ENROLLMENT.—Subject to

8 paragraph (4), the payment amount under this para9 graph, for an employer for each qualifying employee

10 residing in a health care coverage area, is the prod11 uct of—

12 (A) the base employment monthly premium

13 determined under section 6122 for the applica14 ble class of family enrollment (as defined in

15 paragraph (3)) for the previous month for the

16 health care coverage area, and

17 (B) the full-time employment ratio (as de18 fined in section 1901 for the previous month.

19 (3) APPLICABLE CLASS OF FAMILY ENROLL20 MENT.—The applicable class of family enrollment

21 described in this paragraph is the class of family en22 rollment selected by the qualifying employee.

23 (4) TREATMENT OF CERTAIN EMPLOYEES.—In

24 applying this subpart in the case of a qualifying em-
994

•S 2296 PCS

1 ployee (other than a medicare-eligible individual)

2 who is not enrolled in any health plan—

3 (A) the employee is deemed enrolled in a

4 community-rated health plan (for the health

5 care coverage area in which the individual re6 sides) in the dual parent class of enrollment,

7 and

8 (B) if the employee’s residence is not

9 known, the employee is deemed to reside in the

10 health care coverage area in which the employee

11 principally is employed for the employer.

12 (5) TRANSITIONAL RULES FOR FIRST MONTH IN

13 FIRST YEAR FOR A STATE.—In the case of an em14 ployer for a State in the first month of the State’s

15 first year—

16 (A) the premium amount for each qualify17 ing employee for such month shall be computed

18 by substituting ‘‘month’’ for ‘‘previous month’’

19 in paragraph (2);

20 (B) payment for such month shall be made

21 on the first of the month based on an estimate

22 of the payment for such month;

23 (C) an adjustment shall be made to the

24 payment in the following month to reflect the

25 difference between the payment in the first
995

•S 2296 PCS

1 month and the payment in the following month

2 (calculated without regard to the adjustment

3 under this subparagraph); and

4 (D) the reconciliation of premiums for

5 such first month under section 1602(c) shall be

6 included in the reconciliation of premiums for

7 the following 12 months.

8 (6) SPECIAL RULES FOR DIVIDED FAMILIES.—

9 In the case of an individual who is a qualifying em10 ployee of an employer, if the individual has a spouse

11 or child who is not treated as part of the individual’s

12 family because of section 1012—

13 (A) the employer premium payment under

14 this section shall be computed as though such

15 section had not applied, and

16 (B) the State shall provide for proportional

17 payments (consistent with rules established by

18 the Secretary) to the health plans (if different)

19 of the qualifying employee and of the employ20 ee’s spouse and children.

21 (7) SPECIAL RULES FOR CERTAIN EMPLOYEES

22 RESIDING ABROAD.—The Office of Personnel Man23 agement shall determine the appropriate (voluntary)

24 employer premium amount with respect to each em-
996

•S 2296 PCS

1 ployee described in section 1707 electing to purchase

2 coverage through the FEHBP.

3 (c) APPLICATION DURING TRANSITION PERIOD.—

4 (1) IN GENERAL.—For purposes of applying

5 this subpart in the case of an employer described in

6 paragraph (3), there shall only be taken into account

7 qualifying employees (and wages of such employees)

8 who reside in a participating State.

9 (2) EXCEPTION.—Paragraph (1) shall not

10 apply in determining the average number of full-time

11 equivalent employees or whether an employer is a

12 medium employer.

13 (3) EMPLOYER DESCRIBED.—An employer de14 scribed in this paragraph is an employer that em15 ploys one or more qualifying employees in a partici16 pating State and one or more qualifying employees

17 in a State that is not a participating State.

18 (d) EXEMPTION FROM PREMIUM PAYMENTS.—An

19 employer shall be exempt from the payment of health care

20 premiums for exempt individuals defined in section

21 1902(19).

22 SEC. 6122. COMPUTATION OF BASE EMPLOYMENT MONTH23 LY PREMIUM.

24 (a) IN GENERAL.—Each State shall provide for the

25 computation for each year (beginning with the first year)
997

•S 2296 PCS

1 of a base employment monthly premium for each class of

2 family enrollment as follows:

3 (1) INDIVIDUAL ENROLLMENT.—The base em4 ployment monthly premium for the individual class

of enrollment is equal to 1 5 ⁄12 of 80 percent of the

6 credit-adjusted weighted average premium (as de7 fined in paragraph (4)) for the health care coverage

8 area for the individual class of enrollment.

9 (2) COUPLE-ONLY ENROLLMENT.—

10 (A) IN GENERAL.—The base employment

11 monthly premium for the couple-only class of

enrollment is equal to 1 12 ⁄12 of 80 percent of the

13 product described in subparagraph (B), divided

14 by the sum described in subparagraph (C).

15 (B) TOTAL PREMIUMS FOR COUPLE-ONLY

16 ENROLLMENTS.—The product described in this

17 subparagraph is—

18 (i) the credit-adjusted weighted aver19 age premium for such health care coverage

20 area for the couple-only class of enroll21 ment, multiplied by

22 (ii) the sum, for all the months in the

23 year, of the number of covered families re24 ceiving coverage through community-rated
998

•S 2296 PCS

1 health plans within such class of enroll2 ment in each such month.

3 (C) NUMBER OF WORKERS AND EXTRA

4 WORKERS.—The sum described in this subpara5 graph is—

6 (i) the sum specified in subparagraph

7 (B)(ii), plus

8 (ii) the number of additional workers

9 (determined under subsection (b)(1)), for

10 families receiving coverage within such

11 class from community-rated health plans

12 offered for the health care coverage area.

13 (3) SINGLE AND DUAL PARENT ENROLL14 MENTS.—

15 (A) IN GENERAL.—The base employment

16 monthly premium for the single parent and

dual parent classes of enrollment is equal to 1 17 ⁄12

18 of 80 percent of the sum described in subpara19 graph (B), divided by the sum described in sub20 paragraph (C).

21 (B) TOTAL PREMIUMS FOR SINGLE AND

22 DUAL PARENT ENROLLMENTS.—The sum de23 scribed in this subparagraph is the sum of the

24 products described in the following clauses:
999

•S 2296 PCS

1 (i) TOTAL PREMIUMS FOR SINGLE

2 PARENT ENROLLMENT.—The product of—

3 (I) the credit-adjusted weighted

4 average premium for the health care

5 coverage area for the single parent

6 class of enrollment, multiplied by

7 (II) the sum, for all the months

8 in the year, of the number of covered

9 families receiving coverage through

10 community-rated health plans within

11 such class of enrollment in each such

12 month.

13 (ii) TOTAL PREMIUMS FOR DUAL PAR14 ENT ENROLLMENT.—The product of—

15 (I) the credit-adjusted weighted

16 average premium for such health care

17 coverage area for the dual parent

18 class of enrollment, multiplied by

19 (II) the sum, for all the months

20 in the year, of the number of covered

21 families receiving coverage through

22 community-rated health plans within

23 such class of enrollment in each such

24 month.
1000

•S 2296 PCS

1 (C) NUMBER OF WORKERS AND EXTRA

2 WORKERS.—The sum described in this subpara3 graph is—

4 (i) the sum specified in subparagraph

5 (B)(i)(II); plus

6 (ii) the sum specified in subparagraph

7 (B)(ii)(II); plus

8 (iii) the number of additional workers

9 (determined under subsection (b)(1)), for

10 families receiving coverage within the dual

11 parent class of enrollment from commu12 nity-rated health plans offered for the

13 health care coverage area.

14 (4) CREDIT-ADJUSTED WEIGHTED AVERAGE

15 PREMIUM DEFINED.—In this subsection, the term

16 ‘‘credit-adjusted weighted average premium’’ means,

17 for a class of enrollment and a health care coverage

18 area, the weighted average premium for the class

19 and area, reduced by the amount described in sec20 tion 6106(b) for such class and area.

21 (b) DETERMINATION OF ADDITIONAL WORKERS FOR

22 COUPLE-ONLY AND DUAL PARENT CLASS.—

23 (1) I N GENERAL.—Subject to paragraph (4),

24 the State shall determine, for each couple class of

25 family enrollment and in a manner specified by the
1001

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1 Board, an estimated total number of additional

2 workers equal to—

3 (A) 12 times the health care coverage

4 area-wide monthly average number of premium

5 payments (as determined under paragraph (2))

6 for covered families (as defined in paragraph

7 (3)) within such class of enrollment, minus

8 (B) the sum described in subsection

9 (a)(2)(B)(ii) or (a)(3)(B)(ii)(II) for the couple10 only and dual parent classes, respectively.

11 (2) COMPUTATION OF HEALTH CARE COVERAGE

12 AREA-WIDE MONTHLY AVERAGE NUMBER.—

13 (A) IN GENERAL.—In determining the

14 health care coverage area-wide monthly average

15 number of premium payments under paragraph

16 (1)(A), a covered family shall count for a month

17 as 1, or, if greater, the number computed under

18 subparagraph (B) (but in no case greater than

19 2).

20 (B) COUNTING OF FAMILIES IN WHICH

21 BOTH SPOUSES ARE QUALIFYING EMPLOY22 EES.—The number computed under this sub23 paragraph over all families within a couple-only

24 or dual parent class of enrollment in which both

25 spouses are qualifying employees is determined
1002

•S 2296 PCS

1 on a health care coverage area-wide basis based

2 on the following:

3 (i) For such a spouse, determine,

4 using the rules under section 1902 how

5 many full-time equivalent employees the

6 spouse is counted as, but not to exceed 1

7 for either spouse.

8 (ii) Add the 2 numbers determined

9 under clause (i) for spouses in such fami10 lies.

11 (3) C OVERED FAMILY DEFINED.—In this sub12 section, the term ‘‘covered family’’ means a family

13 other than—

14 (A) an SSI family or AFDC family,

15 (B) a family in which a spouse is a medi16 care-eligible individual, or

17 (C) a family that is enrolled in a health

18 plan other than a community-rated health plan.

19 (4) ADJUSTMENT TO ACCOUNT FOR USE OF ES20 TIMATES.—Subject to section 9201, if the total re21 ceipts of a State for all community-rated health

22 plans in a year under this subpart exceeds, or is less

23 than, the total of such receipts estimated for the

24 State (based on the base employment monthly pre-
1003

•S 2296 PCS

1 mium under subsection (a)), because of a difference

2 between—

3 (A) the State’s estimate of the estimated

4 total number of additional workers for the State

5 and the estimate of the number of covered fam6 ilies, and

7 (B) the actual total number of additional

8 workers and the actual number of covered fami9 lies,

10 the estimated total number of additional workers to

11 be applied under this section in the second succeed12 ing year shall be reduced, or increased, respectively,

13 in a manner that results in total receipts of the

14 State under this subpart in such succeeding year

15 being increased or decreased by the amount of such

16 excess (or deficit).

17 (c) BASIS FOR DETERMINATIONS.—

18 (1) PREMIUMS.—The determinations of pre19 miums and families under plans under this section

20 shall be made in a manner determined by the Board

21 and based on the premiums and families used by the

22 Board in carrying out subtitle A and shall be based

23 on estimates on an annualized basis.

24 (2) E MPLOYMENT.—The determinations of em25 ployment under this section for the first year for a
1004

•S 2296 PCS

1 State shall be based on estimates of employment es2 tablished by the State in accordance with standards

3 promulgated by the Secretary of Labor in consulta4 tion with the National Health Board.

5 (3) R EPORTS.—In accordance with rules estab6 lished by the Secretary of Labor in consultation with

7 the National Health Board, the State may require

8 large group purchaser employers to submit such

9 periodic information on employment as may be nec10 essary to monitor the determinations made under

11 this section, including months and extent of employ12 ment.

13 (d) TIMING OF DETERMINATION.—Determinations

14 under this section for a year shall be made by not later

15 than December 1, or such other date as the Board may

16 specify, before the beginning of the year.

17 SEC. 6123. PREMIUM DISCOUNT FOR CERTAIN EMPLOYERS.

18 (a) EMPLOYER DISCOUNT.—

19 (1) I N GENERAL.—Subject to section 6124(c)

20 and section 6125 (relating to the employer collection

21 shortfall add-on), the amount of the employer pre22 mium payment required under section 6121(b) for a

23 community-rated employer for any year for a quali24 fying employee shall not exceed the limiting percent-
1005

•S 2296 PCS

1 age (as defined in subsection (b)) of such qualifying

2 employee’s wages for that year.

3 (2) EXCLUSION OF FEDERAL GOVERNMENT EM4 PLOYERS.—Paragraph (1) shall not apply to the

5 Federal Government.

6 (b) LIMITING PERCENTAGE DEFINED.—In sub7 section (a)—

8 (1) A NY EMPLOYER.—For an employer that is

9 not a medium-sized employer (as defined in sub10 section (c)) or an exempt employer (as defined in

11 subsection 6117), the limiting percentage is 12 per12 cent.

13 (2) M EDIUM-SIZED EMPLOYERS.—For an em14 ployer that is a medium-sized employer and that has

15 an average number of full-time equivalent employees

16 and average annual wages per full-time equivalent

17 employee (as determined under subsection (d)), the

18 limiting percentage is the applicable percentage de19 termined based on following table:

Average number of

full-time

equivalent employees

$0– $12,000 $12,001– $15,000

$15,001– $18,000$18,001– $21,000$21,001– $24,000$24,001 or 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%
1006

•S 2296 PCS

Average number of

full-time

equivalent employees

$0– $12,000$12,001– $15,000$15,001– $18,000$18,001– $21,000$21,001– $24,000$24,001 or more

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%

1 (3) S MALL EMPLOYERS.—For an employer that

2 is an exempt employer and elects to be a commu3 nity-rated employer (in accordance of section

4 6119), the limiting percentage is the limiting per5 centage described in paragraph (2).

6 (4) EXPERIENCE-RATED EMPLOYERS.—The

7 value of discounts provided to an experience-rated

8 employer shall not exceed the amount that the em9 ployer would receive if the employer was treated as

10 a community-rated employer.

11 (c) MEDIUM-SIZED EMPLOYER DEFINED.—

12 (1) IN GENERAL.—In this section—

13 (A) the term ‘‘medium sized employer’’

14 means an employer that does not employ, on

15 average, less than 11 full-time equivalent em16 ployees or more than 75 full-time equivalent

17 employees; and

18 (B) the average number of full-time equiv19 alent employees shall be determined by averag20 ing the number of full-time equivalent employ-
1007

•S 2296 PCS

1 ees employed by the employer in each countable

2 month during the year.

3 (2) COUNTABLE MONTH.—In paragraph (1),

4 the term ‘‘countable month’’ means, for an em5 ployer, a month in which the employer employs any

6 qualifying employee.

7 (3) DETERMINATIONS.—The number of full8 time equivalent employees shall be determined using

9 the rules under section 1901(b)(2).

10 (d) AVERAGE ANNUAL WAGES PER FULL-TIME

11 EQUIVALENT EMPLOYEE DEFINED.—

12 (1) IN GENERAL.—In this section, the term

13 ‘‘average annual wages per full-time equivalent em14 ployee’’ means, for an employer for a year—

15 (A) the total wages paid in the year to in16 dividuals who, at the time of payment of the

17 wages, are qualifying employees of the em18 ployer; divided by

19 (B) the number of full-time equivalent em20 ployees of the employer in the year.

21 (2) D ETERMINATION.—The Board may estab22 lish rules relating to the computation of the average

23 annual wages for employers.
1008

•S 2296 PCS

1 (e) DETERMINATIONS.—For purposes of this section,

2 the number of employees and average wages shall be de3 termined on an annual basis.

4 (f) TREATMENT OF CERTAIN SELF-EMPLOYED INDI5 VIDUALS.—In the case of an individual who is a partner

6 in a partnership, is a 2-percent shareholder in an S cor7 poration (within the meaning of section 1372 of the Inter8 nal Revenue Code of 1986), or is any other individual who

9 carries on a trade or business as a sole proprietorship,

10 for purposes of this section—

11 (1) the individual is deemed to be an employee

12 of the partnership, S corporation, or proprietorship,

13 and

14 (2) the individual’s net earnings from self em15 ployment attributable to the partnership, S corpora16 tion, or sole proprietorship are deemed to be wages

17 from the partnership, S corporation, or proprietor18 ship.

19 (g) APPLICATION TO EMPLOYERS.—An employer

20 that claims that this section applies—

21 (1) shall provide notice to the State of the claim

22 at the time of making payments under this subpart;

23 and

24 (2) shall make available such information (and

25 provide access to such information) as the State may
1009

•S 2296 PCS

1 require (in accordance with regulations of the Sec2 retary of Labor) to audit the determination of—

3 (A) whether the employer is a medium em4 ployer, and, if so, the average number of full5 time equivalent employees and average annual

6 wages of the employer; and

7 (B) the total wages paid by the employer

8 for qualifying employees.

9 (h) T REATMENT OF MULTI-AREA EMPLOYERS.—In

10 the case in which this section is applied to an employer

11 that makes employer premium payments in more than one

12 health care coverage areas, the reduction under this sec13 tion shall be applied in a pro-rated manner to the premium

14 payments made to all such areas.

15 SEC. 6124. PAYMENT ADJUSTMENT FOR CERTAIN LARGE

16 EMPLOYERS.

17 (a) APPLICATION OF SECTION.—Except as otherwise

18 provided in this subsection, this section shall apply to the

19 employers described in section 6133.

20 (b) ADDITIONAL AMOUNT.—

21 (1) I N GENERAL.—If an employer subject to

22 this section for a year has an excess risk proportion

23 (specified in paragraph (3)) of greater than zero

24 with respect to a health care coverage area, then the

25 employer shall provide, on a monthly basis, for pay-
1010

•S 2296 PCS

1 ment to the premium clearinghouse for such area of

an amount equal to 1 2 ⁄12 of the excess risk amount

3 described in paragraph (2) for the year.

4 (2) EXCESS RISK AMOUNT.—The excess risk

5 amount described in this paragraph, for an employer

6 for a year with respect to a health care coverage

7 area, is equal to the product of the following:

8 (A) The final weighted average per capita

9 premium rate for the area for the year.

10 (B) The total average number of commu11 nity-rate eligible individuals who—

12 (i) are full-time employees (or family

13 members of such employees) of the em14 ployer, and

15 (ii) residing in the area,

16 in the year.

17 (C) The excess risk proportion (specified in

18 paragraph (3)) for the employer for such area.

19 (3) EXCESS RISK PROPORTION.—

20 (A) I N GENERAL.—The ‘‘excess risk pro21 portion’’, specified in this paragraph, with re22 spect to an employer and a health care coverage

23 area, is a percentage that reflects, for the year

24 involved, the amount by which—
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1 (i) the average demographic risk for

2 employees (and family members) described

3 in paragraph (2)(B) residing in the area,

4 exceeds

5 (ii) the average demographic risk for

6 all community-rate eligible individuals re7 siding in the area.

8 (B) MEASUREMENT OF DEMOGRAPHIC

9 RISK.—

10 (i) IN GENERAL.—Demographic risk

11 under subparagraph (A) shall be meas12 ured, in a manner specified by the Board,

13 based on the demographic characteristics

14 described in section 6001(c)(1)(A), that re15 late to the actuarial value of the com16 prehensive benefit package.

17 (ii) PROVISION OF INFORMATION.—

18 Each employer to which this section ap19 plies shall submit, to each State for which

20 an additional payment may be required

21 under this section, such information (and

22 at such time) as the Board may require in

23 order to determine the demographic risk

24 referred to in subparagraph (A)(i).
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1 SEC. 6125. EMPLOYER COLLECTION SHORTFALL ADD-ON.

2 (a) I N GENERAL.—The amount payable by an em3 ployer under this subpart shall be increased by the amount

4 computed under subsection (b).

5 (b) AMOUNT.—The amount under this subsection for

6 an employer is equal to the premium payment amount that

7 would be payable under section 6121(a) if the per capita

8 collection shortfall amount (computed under section

9 6107(b)(1)) for the year were substituted for the weighted

10 average discount rate for the year. The weighted average

11 discount rate is used under section 6000(b)(1) in comput12 ing the weighted average premium, which in turn is used

13 under section 6122(a)(1) in computing the base employ14 ment monthly premium, which in turn is used under sec15 tion 6121(b)(2)(A) in computing the employer premium

16 amount.

17 (c) DISCOUNT NOT APPLICABLE.—Section 6123

18 shall not apply to the increase in the amount payable by

19 virtue of this section.

20 SEC. 6126. APPLICATION TO SELF-EMPLOYED INDIVIDUALS.

21 (a) IN GENERAL.—A self-employed individual (as de22 fined in section 1901(c)(2)) shall be considered, for pur23 poses of this subpart to be an employer of himself or her24 self and to pay wages to himself or herself equal to the

25 amount of net earnings from self-employment (as defined

26 in section 1901(c)(1)).
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•S 2296 PCS

1 (b) CREDIT FOR EMPLOYER PREMIUMS.—

2 (1) I N GENERAL.—In the case of a self-em3 ployed individual, the amount of any employer pre4 mium payable by virtue of subsection (a) in a year

5 shall be reduced (but not below zero) by the sum of

6 the following:

7 (A) Subject to paragraph (2), the amount

8 of any employer premiums payable under this

9 subpart (determined not taking into account

10 any adjustment in the premium amounts under

11 section 6123 or 6124) with respect to the em12 ployment of that individual in the year.

13 (B) The product of (i) the number of

14 months in the year the individual was employed

15 on a full-time basis by a experience-rated em16 ployer, and (ii) the employer premium that

17 would have been payable for such months under

18 this subpart (determined not taking into ac19 count any adjustment in the premium amounts

20 under section 6123 or 6124) for the class of en21 rollment if such employer had been a commu22 nity-rated employer.

23 (c) S PECIAL RULE FOR CERTAIN SELF-EMPLOYED

24 INDIVIDUALS.—
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•S 2296 PCS

1 (1) I N GENERAL.—In the case of certain self2 employed individuals described in paragraph (2), the

3 payment obligation under this section shall be lim4 ited to the liability described in subsection (c) of sec5 tion 6113 (substituting the amount of net earnings

6 from self employment (defined in section 1901(c)(1))

7 of such individual for wage adjusted income).

8 (2) S ELF-EMPLOYED INDIVIDUALS.—The indi9 viduals described in this paragraph are self-employed

10 individuals (as defined in section 1901(c)(2)) for a

11 year who are not employers with respect to other

12 qualifying employees in such year.

13 (3) SPECIAL RULE FOR CERTAIN CLOSELY14 HELD BUSINESSES.—

15 (A) I N GENERAL.—In the case of an indi16 vidual who—

17 (i) has wage-adjusted income (as de18 fined in section 6113(d), determined with19 out regard to paragraphs (1)(B) and (2)

20 thereof) that exceeds 300 percent (or such

21 higher percentage as the Board may estab22 lish) of the applicable poverty level, and

23 (ii) is both a substantial owner and an

24 employee of a closely held business,
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•S 2296 PCS

1 the amount of any reduction under paragraph

2 (1)(A) that is attributable to the individual’s

3 employment by that business shall be appro4 priately reduced in accordance with rules pre5 scribed by the Board, in order to prevent indi6 viduals from avoiding payment of the full

7 amount owed through fraudulent or secondary

8 employment arrangements.

9 (B) C LOSELY HELD BUSINESS.—For pur10 poses of subparagraph (A), a business is ‘‘close11 ly held’’ if it is an employer that meets the re12 quirements of section 542(a)(2) of the Internal

13 Revenue Code of 1986 or similar requirements

14 as appropriate in the case of a partnership or

15 other entity.

16 Subpart C—Large Group Purchasers

17 SEC. 6131. LARGE EMPLOYER PREMIUM PAYMENT RE18 QUIRED.

19 (a) P ER EMPLOYEE PREMIUM PAYMENT.—Subject

20 to section 6124, each experience-rated employer of a large

21 group purchaser that in a month in a year employs a

22 qualifying employee who is—

23 (1) enrolled in an experience-rated health plan

24 offered by the purchaser, shall provide for a pay25 ment toward the premium for the plan for such em-
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•S 2296 PCS

1 ployee in an amount at least equal to the large

2 group employer premium payment specified in sub3 section (b); or

4 (2) is not so enrolled, shall make employer pre5 mium payments with respect to such employment

6 under subpart B in the same manner as if the em7 ployer were a community-rated employer (except as

8 otherwise provided in such subpart).

9 (b) LARGE GROUP EMPLOYER PREMIUM.—

10 (1) AMOUNT.—

11 (A) IN GENERAL.—The amount of the

12 large employer premium payment for a month

13 in a year for a class of family enrollment for a

14 family residing in a premium area (established

15 under section 1404(e)) is 80 percent of the

16 weighted average monthly premium of the expe17 rience-rated health plans offered by the large

18 group purchaser for that class of enrollment for

19 families residing in that area.

20 (B) APPLICATION TO SELF-INSURED

21 PLANS.—In applying this paragraph in the case

22 of one or more experience-rated health plans

23 that are self-insured plans—

24 (i) the ‘‘premium’’ for the plan is the

25 actuarial equivalent of such premium,
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•S 2296 PCS

1 based upon the methodology (or such other

2 consistent methodology) used under section

3 6021(a) (relating to application of pre4 mium caps to experience-rated health

5 plans), and

6 (ii) the premium amount, for different

7 classes and, if applicable, for different pre8 mium areas, shall be computed in a man9 ner based on such factors as may bear a

10 reasonable relationship to costs for the

11 provision of the comprehensive benefit

12 package to the different classes in such

13 areas.

14 The Secretary of Labor shall establish rules to

15 carry out this subparagraph.

16 (2) L OW-WAGE EMPLOYEES.—In the case of a

17 low-wage employee entitled to a premium discount

18 under section 6104(a)(2), the amount of the em19 ployer premium payment for a month in a year for

20 a class of family enrollment shall be increased by the

21 amount of such premium discount.

22 (c) DETERMINATIONS.—

23 (1) B ASIS.—Determinations under this section

24 shall be made based on such information as the Sec25 retary of Labor shall specify.
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•S 2296 PCS

1 (2) TIMING.—Determinations of the monthly

2 premiums under this section for months in a year

3 shall be made not later than December 1 of the pre4 vious year.

5 (d) E XEMPTION FROM PREMIUM PAYMENTS.—An

6 employer shall be exempt from the payment of health care

7 premiums for exempt individuals defined in section

8 1902(16).

9 SEC. 6132. ASSISTANCE FOR LOW-WAGE FAMILIES.

10 (a) IN GENERAL.—Each large group purchaser shall

11 make an additional contribution towards the enrollment

12 in health plans of the purchaser by certain low-wage fami13 lies in accordance with section 6131(b)(2).

14 (b) REDUCTION IN COST SHARING.—An experience15 rated health plan shall provide reductions in cost sharing

16 to levels specified in section 1281 to experience-rated indi17 viduals who would be eligible for such reductions were they

18 enrolled in a community-rated plan.

19 SEC. 6133. EXCESS INCREASE IN PREMIUM EQUIVALENT.

20 If the Secretary of Labor finds that a large group

21 purchaser (other than a large employer) is in violation of

22 the requirements of section 6022 (relating to prohibition

23 against excess increase in premium expenditures), the Sec24 retary shall terminate the sponsorship in accordance with

25 such section.
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•S 2296 PCS

1 SEC. 6134. COST CONTROL.

2 Each large group purchaser shall control covered ex3 penditures in a manner that meets the requirements of

4 part 2 of subtitle A of this title.

5 SEC. 6135. COORDINATION OF PAYMENTS.

6 In the case of a married couple in which one spouse

7 is a qualifying employee of a community-rated plan or an8 other large group purchaser, the large group purchaser

9 shall make such payments as are required under this Act

10 to the plan in which the family is enrolled pursuant to

11 rules issued by the Secretary of Labor.

12 Subtitle C—Payments to Health

13 Plans and Miscellaneous Provi14 sions

15 SEC. 6200. ASSISTANCE TO PLANS.

16 States shall be responsible for assisting health plans

17 and cooperatives in the collection of premium payments.

18 A State may establish administrative systems (including

19 arrangements with private entities) to facilitate the collec20 tion of premiums from employers and families and the dis21 tribution of such premiums to health plans, consistent

22 with rules promulgated by the Board.

23 SEC. 6201. COMPUTATION OF BLENDED PLAN PAYMENT

24 AMOUNT.

25 (a) IN GENERAL.—For purposes of section 6203, the

26 payment amount for a community-rated health plan in a
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•S 2296 PCS

1 health care coverage area in a year is equal to a blended

2 payment amount reflecting the final accepted bid for each

3 plan, the number of enrollees in each premium class, and

4 the proportion of AFDC and SSI beneficiaries throughout

5 the health care coverage area served by the plan.

6 (b) M ETHODOLOGY.—The Board shall establish a

7 methodology by which the blended payment amount de8 scribed in subsection (a) shall be computed and applied.

9 (c) APPLICABLE RATES.—For purposes of establish10 ing the metholodogy described in subsection (b), if a com11 munity-rated health plan has more than one applicable

12 premium rate (as described in section 6011(d)(2)), such

13 health plan shall be treated as a separate health plan with

14 respect to each applicable premium rate and the enroll15 ment in each such health plan shall be considered to be

16 the number of individuals enrolled in the community-rated

17 plan at the applicable premium rate.

18 SEC. 6203. PAYMENT TO COMMUNITY-RATED HEALTH

19 PLANS.

20 (a) COMPUTATION OF BLENDED PLAN PAYMENT

21 AMOUNT.—For purposes of making payment adjustments

22 to plans under this section, a State shall compute, under

23 section 6201(a), a blended plan payment amount for each

24 community-rated health plan for enrollment for a year.

25 (b) AMOUNT OF PAYMENT TO PLANS.—
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•S 2296 PCS

1 (1) IN GENERAL.—Subject to subsection (d)

2 and section 6121(b)(5)(B), a State shall provide for

3 payment to each community-rated health plan, in

4 which a community-rated individual or family is en5 rolled, an amount equal to the net blended payment

6 amount (described in paragraph (2)), adjusted (con7 sistent with subsection (c)) to take into account the

8 relative actuarial risk associated with the coverage

9 with respect to the individual or family.

10 (2) NET BLENDED PAYMENT AMOUNT.—The

11 net blended payment amount described in this para12 graph is the blended plan payment amount (deter13 mined under section 6201(a)), reduced by—

14 (A) such amount multiplied by the sum

15 of—

16 (i) the administrative allowance per17 centage, computed under section 1213, and

18 (ii) 1.5 percentage points,

19 (B) any plan payment reduction imposed

20 under section 6011 for the plan for the year.

21 (c) APPLICATION OF RISK ADJUSTMENT AND REIN22 SURANCE METHODOLOGY.—A State shall use the reinsur23 ance and risk adjustment methodology developed under

24 section 1641 in making payments to health plans under

25 this section, except as provided in section 1642.
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1 (d) T REATMENT OF VETERANS, M ILITARY, AND IN2 DIAN HEALTH PLANS AND PROGRAMS.—

3 (1) VETERANS HEALTH PLAN.—In applying

4 this subtitle (and title VI) in the case of a commu5 nity-rated health plan that is a veterans health plan

6 of the Department of Veterans Affairs, the following

7 rules apply:

8 (A) For purposes of applying subtitle A of

9 title VI, families enrolled under the plan shall

10 not be taken into account.

11 (B) The provisions of subtitle A of title VI

12 shall not apply to the plan, other than such pro13 visions as require the plan to submit a per cap14 ita amount for each health care coverage area

15 on a timely basis, which amount shall be treat16 ed as the final accepted bid of the plan for the

17 area for purposes of subtitle B of such title and

18 this subtitle. This amount shall not be subject

19 to negotiation and not subject to reduction

20 under section 6011.

21 (C) For purposes of computing the blended

22 plan per capita payment amount under section

23 6201(a), the AFDC and SSI proportions (under

24 section 6202(a)) are deemed to be 0 percent.
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1 (2) U NIFORMED SERVICES HEALTH PLAN.—In

2 applying this subtitle (and title VI) in the case of a

3 community-rated health plan that is a Uniformed

4 Services Health Plan of the Department of Defense,

5 the following rules apply:

6 (A) For purposes of applying subtitle A of

7 title VI, families enrolled under the plan shall

8 not be taken into account.

9 (B) The provisions of subtitle A of title VI

10 shall not apply to the plan, other than such pro11 visions as require the plan to submit a per cap12 ita amount on a timely basis, which amount

13 shall be treated as the final accepted bid of the

14 plan for the area involved for purposes of sub15 title B of such title and this subtitle. This

16 amount shall not be subject to negotiation and

17 not subject to reduction under section 6011.

18 The Board, in consultation with the Secretary

19 of Defense, shall establish rules relating to the

20 area (or areas) in which such a bid shall apply.

21 (C) For purposes of computing the blended

22 plan per capita payment amount under section

23 6201(a), the AFDC and SSI proportions (under

24 section 6202(a)) are deemed to be 0 percent.
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1 (3) I NDIAN HEALTH PROGRAMS.—In applying

2 this subtitle (and title VI) in the case of a health

3 program of the Indian Health Service, the following

4 rules apply:

5 (A) Except as provided in this paragraph,

6 the plan shall not be considered or treated to be

7 a community-rated health plan and for pur8 poses of applying title VI, families enrolled

9 under the program shall not be taken into ac10 count.

11 (B) In accordance with rules established by

12 the Secretary, States (or contracting entities

13 under section 1252, at the election of the State)

14 shall act as agents for the collection of employer

15 premium payments (including payments of

16 large group purchasers) required under subtitle

17 B of title VI with respect to qualifying employ18 ees who are enrolled under a health program of

19 the Indian Health Service. The Secretary shall

20 permit States to retain a nominal fee to com21 pensate them for such collection activities. In

22 applying this subparagraph, the family share of

23 premium for such employees is deemed to be

24 zero for electing Indians (as defined in section

25 1012(d)(3)) and for other employees is the
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1 amount of the premium established under sec2 tion 8306(b)(4)(A), employees are deemed to be

3 residing in the area of residence (or area of em4 ployment), as specified under rules of the Sec5 retary, and the class of enrollment shall be such

6 class (or classes) as specified under rules of the

7 Secretary.

8 SEC. 6204. CALCULATION AND PUBLICATION OF GENERAL

9 FAMILY SHARE AND GENERAL EMPLOYER

10 PREMIUM AMOUNTS.

11 (a) FAMILY SHARE.—Each State shall compute and

12 publish the following components of the general family

13 share of premiums for each health care coverage area des14 ignated by the State:

15 (1) P LAN PREMIUMS.—For each plan offered,

16 the applicable premiums for such plan for each class

17 of family enrollment (including the amount of any

18 family collection shortfall).

19 (2) QUALIFIED WORKSITE HEALTH PRO20 MOTION.—For each plan offered, the premium dis21 count for each level of qualified worksite health pro22 motion program.

23 (3) FAMILY CREDIT.—The family credit amount

24 for each class of family enrollment, under section

25 6103.
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1 (4) EXCESS PREMIUM CREDIT.—The amount of

2 any excess premium credit provided under section

3 6105 for each class of family enrollment.

4 (5) L ARGE GROUP PURCHASER OPT-IN CRED5 IT.—The amount of any large group purchaser opt6 in credit provided under section 6106 for each class

7 of family enrollment.

8 (b) E MPLOYER PREMIUMS.—Each State shall com9 pute and publish the following components of the general

10 employer premium payment amount for each health care

11 coverage area designated by the State:

12 (1) B ASE EMPLOYER MONTHLY PREMIUM PER

13 WORKER.—The base employer monthly premium de14 termined under section 6122 for each class of family

15 enrollment.

16 (2) QUALIFIED WORKSITE HEALTH PRO17 MOTION.—The base monthly premium discount for

18 each level of qualified worksite health promotion pro19 gram.

20 (3) E MPLOYER COLLECTION SHORTFALL ADD21 ON.—The employer collection shortfall add-on com22 puted under section 6125(b).

23 (e) RECONCILIATION OF FAMILY SHARE.—

24 (1) I N GENERAL.—Each State shall provide for

25 the reconciliation of family payments in cases where
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1 the State determines that there has been an over2 payment or underpayment by or on the behalf of

3 such families in accordance with rules promulgated

4 by the Board.

5 (2) PROVISIONS.—In carrying out paragraph

6 (1), a State shall provide notice of amounts owed or

7 due to such families, distribute information on the

8 availability of premium discounts and reductions to

9 such families and include income reconciliation

10 forms for families that are provided with premium

11 discounts.

12 (3) NOTICE OF AMOUNT OWED.—If a State de13 termines that a family has paid any family share re14 quired under section 6101 and is not required to

15 repay any amount under section 6111 for a year, the

16 State shall provide notice of such determination to

17 the family. Such notice shall include a prominent

18 statement that the family is not required to make

19 any additional payment and is not required to file

20 any additional information with the State.

21 (4) C OORDINATION OF PAYMENTS FOR FAMI22 LIES THAT HAVE CHANGED RESIDENCE OVER THE

23 YEAR.—The State in which the community-rated

24 plan in which a family is enrolled in December of

25 each year (in this section referred to as the ‘‘final
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•S 2296 PCS

1 State’’) is responsible for the collection of any

2 amounts owed by the family under this subpart,

3 without regard to whether the family resided in the

4 State during the entire year in accordance with rules

5 promulgated by the Board.

6 SEC. 6205. ADJUSTMENT OF PAYMENTS TO HEALTH PLANS.

7 (a) I N GENERAL.—States shall develop and imple8 ment payment adjustment mechanisms and collect such

9 information as may be necessary for ensuring that pay10 ments to health plans are appropriate and sufficient.

11 (b) A DJUSTMENTS.—Mechanisms under subsection

12 (a) shall include methods for risk adjustment and reinsur13 ance (in accordance with section 1641 and 1642), the pay14 ment of premium discounts (in accordance with subtitle

15 B of title VI), payment adjustments to reflect each area’s

16 share of AFDC and SSI beneficiaries (in accordance with

17 subtitle C of title VI), and other adjustments necessary

18 to reconcile the amounts collected by plans with the

19 amounts plans are owed.

20 SEC. 6206. EMPLOYER PAYMENT REQUIREMENT.

21 (a) I N GENERAL.—Each employer shall provide for

22 payments required under section 6121 or 6131 in accord23 ance with the applicable provisions of this Act.

24 (b) E MPLOYERS IN SINGLE-PAYER STATES.—In the

25 case of an employer with respect to employees who reside
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•S 2296 PCS

1 in a single-payer State, the responsibilities of such em2 ployer under such system shall supersede the obligations

3 of the employer under subsection (a), except as the Board

4 may provide.

5 (c) EMPLOYERS PARTICIPATING MULTIEMPLOYER

6 PLAN.—In the case of an employer participating in a mul7 tiemployer plan, which plan elects to serve as a commu8 nity-rated employer on behalf of its participating employ9 ers, the employer’s payment obligation under section 6121

10 shall be deemed satisfied if the employer pays to the multi11 employer plan at least the premium payment amount spec12 ified in section 6121(b) and the plan has assumed legal

13 obligations of such an employer under such section.

14 SEC. 6207. REQUIREMENT FOR EMPLOYER PAYMENT AND

15 RECONCILIATION REPORTING.

16 (a) R EPORTING OF END-OF-YEAR INFORMATION TO

17 QUALIFYING EMPLOYEES.—

18 (1) I N GENERAL.—Each employer shall provide

19 with respect to each individual who was a qualifying

20 employee of the employer during any month in the

21 previous year information described in paragraph (2)

22 with respect to the employee.

23 (2) I NFORMATION TO BE SUPPLIED.—The in24 formation described in this paragraph, with respect
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•S 2296 PCS

1 to a qualifying employee, is the following (as speci2 fied by the Secretary):

3 (A) HEALTH CARE COVERAGE AREA IN4 FORMATION.——With respect to each health

5 care coverage area (or other appropriate area

6 with respect to a large group purchaser)

7 through which the individual obtained health

8 coverage:

9 (i) The total number of months of

10 full-time equivalent employment (as deter11 mined under section 1901(b)(2)) for each

12 class of enrollment.

13 (ii) The amount of wages attributable

14 to qualified employment and the amount of

15 covered wages (as defined in paragraph

16 (4)).

17 (iii) The total amount deducted from

18 wages and paid for the family share of the

19 premium.

20 (iv) Such other information as the

21 Secretary of Labor may specify.

22 (b) REPORTING OF INFORMATION FOR USE OF

23 STATES.—Each employer (including experience-rated em24 ployers) shall provide, in accordance with section

25 1604(e)(4), the following information.
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1 (1) ANNUAL BASIS.—The information described

2 in this paragraph, with respect to an employer, is

3 the following (as specified by the Secretary of

4 Labor):

5 (A) HEALTH CARE COVERAGE AREA IN6 FORMATION.—With respect to each health care

7 coverage area to which employer premium pay8 ments were payable in the year:

9 (i) For each qualifying employee in

10 the year—

11 (I) The total number of months

12 of full-time equivalent employment (as

13 determined under section 1901(b)(2))

14 for the employee for each class of en15 rollment.

16 (II) The total amount deducted

17 from wages and paid for the family

18 share of the premium of the qualify19 ing employee.

20 (ii) The total employer premium pay21 ment made under section 6121 for the

22 year with respect to the employment of all

23 qualifying employees residing in the cov24 erage area and, in the case of an employer

25 that has obtained (or seeks to obtain) a
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1 premium discount under section 6123, the

2 total employer premium payment that

3 would have been owed for such employ4 ment for the year but for such section.

5 (iii) The number of full-time equiva6 lent employees (determined under section

7 1901(b)(2)) for each class of family enroll8 ment in the year (and for each month in

9 the year in the case of an employer that

10 has obtained or is seeking a premium dis11 count under section 6123).

12 (iv) In the case of an employer to

13 which section 6124 applies in a year, such

14 additional information as the Secretary of

15 Labor may require for purposes of that

16 section.

17 (v) The amounts paid (and payable)

18 pursuant to section 6125.

19 (vi) The amount of covered wages for

20 each qualifying employee.

21 (2) MONTHLY BASIS.—

22 (A) IN GENERAL.—The information de23 scribed in this paragraph for a month for an

24 employer is such information as the Secretary

25 of Labor may specify regarding—
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1 (i) the identity of each eligible individ2 ual who changed qualifying employee sta3 tus with respect to the employer in the

4 month; and

5 (ii) in the case of such an individual

6 described in subparagraph (B)(i)—

7 (I) the consumer purchasing co8 operative for the area in which the in9 dividual resides, and

10 (II) the individual’s class of fam11 ily enrollment.

12 (B) C HANGES IN QUALIFYING EMPLOYEE

13 STATUS DESCRIBED.—For purposes of subpara14 graph (A), an individual is considered to have

15 changed qualifying employee status in a month

16 if the individual either (i) is a qualifying em17 ployee of the employer in the month and was

18 not a qualifying employee of the employer in

19 the previous month, or (ii) is not a qualifying

20 employee of the employer in the month but was

21 a qualifying employee of the employer in the

22 previous month.

23 (3) I NITIAL INFORMATION.—Each employer, at

24 such time before the first year in which qualifying

25 employees of the employer are enrolled in commu-
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1 nity-rated health plans as the Board may specify,

2 shall provide for the reporting of such information

3 relating to employment of eligible individuals as the

4 Board may specify.

5 (c) R ECONCILIATION OF EMPLOYER PREMIUM PAY6 MENTS.—

7 (1) PROVISION OF INFORMATION.—Each em8 ployer (whether or not the employer claimed (or

9 claims) an employer premium discount under section

10 6123 for a year) that is liable for employer premium

11 payments for any month in a year shall provide such

12 information as may be required (consistent with

13 rules of the Secretary of Labor) to determine the ap14 propriate amount of employer premium payments

15 that should have been made for all months in the

16 year (taking into account any employer premium

17 discount under section 6123 for the employer). Such

18 reconciliation process shall be conducted by the

19 State (with respect to community-rated employers)

20 and by the Secretary of Labor (with respect to expe21 rience-rated employers).

22 (2) DEADLINE.—Such information shall be pro23 vided not later than the beginning of February of

24 the following year with the payment to be made for

25 that month.
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1 (3) RECONCILIATION.—

2 (A) C ONTINUING EMPLOYERS.—Based on

3 such information, the employer shall adjust the

4 amount of employer premium payment made in

5 the month in which the information is provided

6 to reflect the amount by which the payments in

7 the previous year were greater or less than the

8 amount of payments that should have been

9 made.

10 (B) D ISCONTINUING EMPLOYERS.—In the

11 case of a person that ceases to be an employer

12 in a year, such adjustment shall be made in the

13 form of a payment to, or from, the State in14 volved.

15 (4) S PECIAL TREATMENT OF SELF-EMPLOYED

16 INDIVIDUALS.—Except as the Secretary of Labor

17 may provide, individuals who are employers only by

18 virtue of the operation of section 6126 shall have

19 employer premium payments attributable to such

20 section reconciled (in the manner previously de21 scribed in this subsection) under the process for the

22 collection of the family share of premiums under sec23 tion 6204 rather than under this subsection.

24 (d) N OTICE TO CERTAIN INDIVIDUALS WHO ARE

25 NOT EMPLOYEES.—
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1 (1) I N GENERAL.—A person that carries on a

2 trade or business shall notify in writing each individ3 ual described in paragraph (2) that the person is not

4 obligated to make any employer health care premium

5 payment (under section 6121) in relation to the

6 services performed by the individual for the person.

7 (2) INDIVIDUAL DESCRIBED.—An individual de8 scribed in this paragraph, with respect to a person,

9 is an individual who normally performs services for

10 the person in the person’s trade or business for more

11 than 40 hours per month but who is not an em12 ployee of the person (within the meaning of section

13 1901(a)).

14 (3) TIMING; EFFECTIVE DATE.—Such notice

15 shall be provided within a reasonable time after the

16 individual begins performing services for the person,

17 except that in no event is such a notice required to

18 be provided with respect to services performed before

19 January 1, 1998.

20 (4) EXCEPTIONS.—The Secretary shall issue

21 regulations providing exceptions to the notice re22 quirement of paragraph (1) with respect to individ23 uals performing services on an irregular, incidental,

24 or casual basis.
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1 (5) M ODEL NOTICE.—The Secretary shall pub2 lish a model notice that is easily understood by the

3 average reader and that persons may use to satisfy

4 the requirements of paragraph (1).

5 (e) SPECIAL RULES FOR SELF-EMPLOYED.—

6 (1) I N GENERAL.—In the case of an individual

7 who is treated as an employer under section 6126,

8 the individual shall provide, under subsection (f), in9 formation described in paragraph (2) with respect to

10 net earnings from self-employment income of the in11 dividual in each year.

12 (2) I NFORMATION TO BE SUPPLIED.—The in13 formation described in this paragraph, with respect

14 to an individual, is such information as may be nec15 essary to compute the amount payable under section

16 6131 by virtue of section 6126.

17 (f) DEADLINE.—Information required to be provided

18 by an employer for a year under this section—

19 (1) to a qualifying employee shall be provided

20 not later than the date the employer is required

21 under law to provide for statements under section

22 6051 of the Internal Revenue Code of 1986 for that

23 year, or

24 (2) to a State (through the national health care

25 data network) shall be provided not later than the
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1 date by which information is required to be filed

2 with the Secretary pursuant to agreements under

3 section 232 of the Social Security Act for that year.

4 (g) INFORMATION CLEARINGHOUSE FUNCTIONS.—

5 (1) D ESIGNATION.—The Board shall, through

6 the national health care data network, perform in7 formation clearinghouse functions under this section

8 with respect to employers, States, the Federal Gov9 ernment, and consumer purchasing cooperatives.

10 (2) F UNCTIONS.—The functions referred to in

11 paragraph (1) shall include—

12 (A) receipt of information submitted by

13 employers under subsection (b),

14 (B) from the information received, trans15 mittal of information required to appropriate

16 entities, and

17 (C) such other functions as the Board

18 specifies.

19 SEC. 6208. EQUAL VOLUNTARY CONTRIBUTION REQUIRE20 MENT.

21 (a) IN GENERAL.—

22 (1) EQUAL VOLUNTARY EMPLOYER PREMIUM

23 PAYMENT REQUIREMENT.—

24 (A) COMMUNITY-RATED HEALTH PLANS.—

25 If an employer makes available a voluntary em-
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•S 2296 PCS

1 ployer premium payment (as defined in sub2 section (d)) on behalf of a full-time employee

3 (as defined in section 1901(b)(2)(C)) who is en4 rolled in a community-rated health plan of a

5 health care coverage area in a class of family

6 enrollment, the employer shall make available

7 such a voluntary employer premium payment in

8 the same dollar amount to all qualifying em9 ployees (as defined in section 1901(b)(1)) of the

10 employer who are enrolled in any community11 rated health plan of the same coverage area in

12 the same class of family enrollment.

13 (B) EXPERIENCE-RATED HEALTH

14 PLANS.—If an experience-rated employer makes

15 available a voluntary employer premium pay16 ment on behalf of a full-time employee who is

17 enrolled in an experience-rated health plan of a

18 large group purchaser in a class of family en19 rollment in a premium area, the employer shall

20 make available such a voluntary employer pre21 mium payment in the same dollar amount to all

22 qualifying employees of the employer enrolled in

23 any experience-rated health plan of the same

24 purchaser in the same class of family enroll25 ment in the same premium area.
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1 (C) T REATMENT OF PART-TIME EMPLOY2 EES.—In applying subparagraphs (A) and (B)

3 in the case of a qualifying employee employed

4 on a part-time basis (within the meaning of sec5 tion 1901(b)(2)(A)(ii)), the dollar amount shall

6 be equal to the full-time employment ratio (as

7 defined in section 1901(b)(2)(B)) multiplied by

8 the dollar amount otherwise required.

9 (2) LIMIT ON VOLUNTARY EMPLOYER PREMIUM

10 PAYMENTS.—

11 (A) COMMUNITY-RATED HEALTH PLANS.—

12 An employer may not make available a vol13 untary employer premium payment on behalf of

14 an employee (enrolled in a community-rated

15 health plan of a health care coverage area in a

16 class of family enrollment) in an amount that

17 exceeds the maximum amount that could be

18 payable as the family share of premium (de19 scribed in section 6101(b)(2)) for the most ex20 pensive community-rated health plan of the

21 same area for the same class of family enroll22 ment.

23 (B) EXPERIENCE-RATED HEALTH

24 PLANS.—An employer may not make available a

25 voluntary employer premium payment on behalf
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1 of an employee (enrolled in an experience-rated

2 health plan of a large group purchaser in a

3 class of family enrollment in a premium area,

4 in an amount that exceeds the maximum

5 amount that could be payable as the family

6 share of premium (described in section

7 6101(b)(3)) for the most expensive experience8 rated health plan of the same purchaser for the

9 same class of family enrollment in the same

10 premium area.

11 (C) E XCLUSION OF PLANS WITHOUT MA12 TERIAL ENROLLMENT.—Subparagraphs (A)

13 and (B) shall not take into account any health

14 plan that does not have material enrollment (as

15 determined in accordance with regulations of

16 the Secretary of Labor).

17 (3) NONDISCRIMINATION AMONG PLANS SE18 LECTED.—An employer may not discriminate in the

19 wages or compensation paid, or other terms or con20 ditions of employment, with respect to an employee

21 based on the health plan (or premium of such a

22 plan) in which the employee is enrolled.

23 (b) REBATE REQUIRED IN CERTAIN CASES.—

24 (1) IN GENERAL.—Subject to subsection (c),

25 if—
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1 (A) an employer makes available a vol2 untary employer premium payment on behalf of

3 an employee, and

4 (B)(i) the sum of the amount of the appli5 cable family credit (under section 6103) and

6 the voluntary employer premium payment, ex7 ceeds (ii) the premium for the plan selected,

8 the employer must rebate to the employee an

9 amount equal to the excess described in subpara10 graph (B).

11 (2) T REATMENT OF MULTIPLE FULL-TIME EM12 PLOYMENT IN A FAMILY.—In the case of—

13 (A) an individual who is an employee of

14 more than one employer, or

15 (B) a couple for which both spouses are

16 employees,

17 if more than one employer provides for vol18 untary employer premium payments, the indi19 vidual or couple may elect to have paragraph

20 (1) applied with respect to all employment.

21 (c) EXCEPTION FOR COLLECTIVE BARGAINING

22 AGREEMENT.—Subsections (a) and (b) (other than sub23 section (a)(2)) shall not apply with respect to voluntary

24 employer premium payments made pursuant to a bona

25 fide collective bargaining agreement.
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1 (d) V OLUNTARY EMPLOYER PREMIUM PAYMENT.—

2 In this section, the term ‘‘voluntary employer premium

3 payment’’ means any payment designed to be used exclu4 sively (or primarily) towards the cost of the family share

5 of premiums for a health plan. Such term does not include

6 any employer premiums required to be paid under part

7 3 of subtitle B of title VI.

8 SEC. 6209. PAYMENT ARRANGEMENTS.

9 (a) COLLECTION OF FAMILY SHARE.—

10 (1) WITHHOLDING.—

11 (A) I N GENERAL.—In the case of a family

12 that includes a qualifying employee of an em13 ployer, the employer shall deduct from the

14 wages of the qualifying employee (in a manner

15 consistent with any rules of the Secretary of

16 Labor) the amount of the family share of the

17 premium for the plan in which the family is en18 rolled.

19 (B) MULTIPLE EMPLOYMENT.—In the case

20 of a family that includes more than one qualify21 ing employee, the family shall choose the em22 ployer to which subparagraph (A) will apply.

23 (C) P AYMENT.—Amounts withheld under

24 this paragraph shall be maintained in a manner

25 consistent with standards established by the
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1 Secretary of Labor and paid in a manner con2 sistent with the payment of employer premiums

3 under subtitle C.

4 (D) SATISFACTION OF LIABILITY.—An

5 amount deducted from wages of a qualifying

6 employee by an employer is deemed to have

7 been paid by the employee and to have satisfied

8 the employee’s obligation under subsection (a)

9 to the extent of such amount.

10 (2) OTHER METHODS.—In the case of a family

11 that does not include a qualifying employee, the

12 State shall require payment to be made prospec13 tively. Such payment may be required to be made

14 not less frequently than monthly. The Secretary may

15 issue regulations in order to assure the timely and

16 accurate collection of the family share due.

17 (b) TIMING AND METHOD OF PAYMENT OF EM18 PLOYER PREMIUMS.—

19 (1) FREQUENCY OF PAYMENT.—Payment of

20 employer premiums under section 6121 for a month

21 shall be made not less frequently than monthly (or

22 quarterly in the case of such payments made by vir23 tue of section 6126). The Secretary of Labor may

24 establish a method under which employers that pay

25 wages on a weekly or biweekly basis are permitted
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1 to make such employer payments on such a weekly

2 or biweekly basis.

3 (2) E LECTRONIC TRANSFER.—A State may re4 quire those employers that have the capacity to

5 make payments by electronic transfer to make pay6 ments under this subsection by electronic transfer.

7 SEC. 6210. ENFORCEMENT OF PREMIUM OBLIGATIONS.

8 (a) I N GENERAL.—The Secretary of Labor, in con9 sultation with the Secretary of Health and Human Serv10 ices, shall establish an expedited collection process to be

11 implemented in the event of non-payment of premiums by

12 an employer or an individual.

13 (b) PENALTIES.—The Secretary of Health and

14 Human Services (in the case of non-payment by individ15 uals) and the Secretary of Labor (in the case of non-pay16 ment by employers) may impose appropriate penalties in17 cluding premium surcharges and civil monetary penalties

18 in the amount of $5,000, or three times the amount of

19 the liability owed, whichever is more, to enforce the collec20 tion of amounts established under subtitle B of this title.

21 (c) DELEGATION.—The Federal Government may

22 delegate its responsibilities under this section to a State,

23 upon agreement by such State, if in the judgment of the

24 Secretary of Health and Human Services and the Sec25 retary of Labor such State would provide for the effective
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1 enforcement of premium obligations. Such States may uti2 lize the assistance referred to in sections 1673 and 1692

3 to enforce premium payments under this section.

4 SEC. 6211. DETERMINATION OF UNIFORM PER CAPITA CON5 VERSION FACTOR.

6 Each State, based on direction from the National

7 Health Board, shall specify, not later than April 1 of each

8 year (beginning with the year prior to the first year) a

9 uniform per capita conversion factor to be used under sec10 tion 6102(a)(2) in converting the accepted bid for each

11 plan for the year into the premium for an individual en12 rollment for such plan for the year. SSI or AFDC recipi13 ents shall not be included for purposes of computing the

14 conversion factor.

15 SEC. 6212. CERTAIN EMPLOYEES AND EMPLOYERS INELI16 GIBLE FOR PREMIUM ASSISTANCE.

17 An employee described in section 1707, and the em18 ployer of such employee, shall be considered ineligible for

19 any premium discounts under this title or other reductions

20 in cost sharing. Such employee shall be required to pay

21 a surcharge to the Office of Personnel Management to re22 flect additional administrative expenses relating to the re23 imbursement of covered services abroad.
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1 TITLE VIII—HEALTH AND

2 HEALTH-RELATED PRO3 GRAMS OF THE FEDERAL

4 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.

5 Subtitle E—Amendments to the

6 Employee Retirement Income

7 Security Act of 1974

8 SEC. 8401. GROUP HEALTH PLAN DEFINED.

9 Section 3 of the Employee Retirement Income Secu10 rity Act of 1974 (29 U.S.C. 1002) is amended by adding

11 at the end the following new paragraph:

12 ‘‘(42) The term ‘group health plan’ means an em13 ployee welfare benefit plan which provides medical care (as

14 defined in section 213(d) of the Internal Revenue Code

15 of 1986) to participants or beneficiaries directly or

16 through insurance, reimbursement, or otherwise.’’.
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1 SEC. 8402. LIMITATION ON COVERAGE OF GROUP HEALTH

2 PLANS UNDER TITLE I OF ERISA.

3 (a) IN GENERAL.—Section 4 of the Employee Retire4 ment Income Security Act of 1974 (29 U.S.C. 1003) is

5 amended—

6 (1) in subsection (a), by striking ‘‘subsection

7 (b)’’ and inserting ‘‘subsections (b) and (c)’’;

8 (2) in subsection (b), by striking ‘‘The provi9 sions’’ and inserting ‘‘Except as provided in sub10 section (c), the provisions’’; and

11 (3) by adding at the end the following new sub12 section:

13 ‘‘(c) COVERAGE OF GROUP HEALTH PLANS.—

14 ‘‘(1) LIMITED INCLUSION.—This title shall

15 apply to a group health plan only to the extent pro16 vided in this subsection.

17 ‘‘(2) COVERAGE UNDER CERTAIN PROVISIONS

18 WITH RESPECT TO CERTAIN PLANS.—

19 ‘‘(A) I N GENERAL.—Except as provided in

20 subparagraph (B), parts 1, 4, and 6 of subtitle

21 B shall apply to—

22 ‘‘(i) a group health plan which is

23 maintained by—

24 ‘‘(I) a large group purchaser (as

25 defined in section 1401(a) of the

26 Health Security Act), or
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1 ‘‘(II) a member of a large group

2 purchaser (as so defined) whose eligi3 ble sponsor is described in section

4 1401(b)(1)(C) (relating to rural elec5 tric cooperatives and rural telephone

6 cooperative associations), and

7 ‘‘(ii) a group health plan not de8 scribed in clause (i) which provides bene9 fits which are permitted under paragraph

10 (4) of section 1003 of the Health Security

11 Act.

12 ‘‘(B) SUPPLEMENTAL PLANS.—The Sec13 retary shall provide by regulation for treatment

14 as a separate group health plan of any arrange15 ment which would otherwise be treated under

16 this title as part of a group health plan to the

17 extent necessary to carry out the purposes of

18 this title.

19 ‘‘(3) D EFINITIONS AND ENFORCEMENT PROVI20 SIONS.—Sections 3, 501, 502, 503, 504, 505, 506,

21 507, 508, 509, 510, 511, and 514 and the preceding

22 subsections of this section shall apply to a group

23 health plan to the extent necessary to effectively

24 carry out, and enforce the requirements under the
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1 provisions of this title as they apply pursuant to this

2 subsection.

3 ‘‘(4) C IVIL ACTIONS.—Section 502(a)(1)(B) of

4 this Act (with respect to the cause of action for the

5 recovery of benefits) shall not apply to action by

6 participants, beneficiaries and fiduciaries governed

7 under subtitle C of title V of the Health Security

8 Act.

9 ‘‘(5) APPLICABILITY OF PREEMPTION RULES.—

10 Section 514 shall apply in the case of any group

11 health plan to which parts 1, 4, and 6 of subtitle B

12 apply under paragraph (2).’’.

13 (b) S TATE-CERTIFIED PLAN.—Section 514 of the

14 Employee Retirement Income Security Act of 1974 is

15 amended—

16 (1) in subsection (b)(2)(A), by inserting ‘‘,

17 State-certified health plans (as defined in section

18 1500 of the Health Security Act of 1994),’’ after

19 ‘‘insurance’’; and

20 (2) in subsection (b)(2)(B), by inserting ‘‘,

21 State-certified health plan,’’ before ‘‘other insurer’’.

22 (c) R EPORTING AND DISCLOSURE REQUIREMENTS

23 APPLICABLE TO GROUP HEALTH PLANS.—

24 (1) I N GENERAL.—Part 1 of subtitle B of title

25 I of such Act is amended—
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1 (A) in the heading for section 110 (29

2 U.S.C. 1030), by adding ‘‘BY PENSION PLANS’’

3 at the end;

4 (B) by redesignating section 111 (29

5 U.S.C. 1031) as section 112; and

6 (C) by inserting after section 110 the fol7 lowing new section:

8 ‘‘SPECIAL RULES FOR GROUP HEALTH PLANS

9 ‘‘SEC. 111. (a) I N GENERAL.—The Secretary may by

10 regulation provide special rules for the application of this

11 part to group health plans which are consistent with the

12 purposes of this title and the Health Security Act and

13 which take into account the special needs of participants,

14 beneficiaries, and health care providers under such plans.

15 ‘‘(b) EXPEDITIOUS REPORTING AND DISCLOSURE.—

16 Such special rules may include rules providing for—

17 ‘‘(1) reductions in the periods of time referred

18 to in this part,

19 ‘‘(2) increases in the frequency of reports and

20 disclosures required under this part, and

21 ‘‘(3) such other changes in the provisions of

22 this part as may result in more expeditious reporting

23 and disclosure of plan terms and changes in such

24 terms to the Secretary and to plan participants and

25 beneficiaries,
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1 to the extent that the Secretary determines that the rules

2 described in this subsection are necessary to ensure timely

3 reporting and disclosure of information consistent with the

4 purposes of this part and the Health Security Act as they

5 relate to group health plans.

6 ‘‘(c) ADDITIONAL REQUIREMENTS.—Such special

7 rules may include rules providing for reporting and disclo8 sure to the Secretary and to participants and beneficiaries

9 of additional information or at additional times with re10 spect to group health plans to which this part applies

11 under section 4(c)(2), if such reporting and disclosure

12 would be comparable to and consistent with similar re13 quirements applicable under the Health Security Act with

14 respect to plans maintained by regional alliances (as de15 fined in such section 1301 of such Act) and applicable reg16 ulations of the Secretary of Health and Human Services

17 prescribed thereunder.’’.

18 (2) C LERICAL AMENDMENT.—The table of con19 tents in section 1 of such Act is amended by striking

20 the items relating to sections 110 and 111 and in21 serting 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.’’.

22 (d) A PPLICABILITY OF CERTAIN ERISA PROTEC23 TIONS TO ENROLLED INDIVIDUALS.—The provisions of

24 sections 510 (relating to interference with rights protected
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1 under the Act) and 511 (relating to coercive interference)

2 of the Employee Retirement Income Security Act of 1974

3 shall apply, in relation to the provisions of this Act, with

4 respect to individuals enrolled or eligible to enroll under

5 large group purchaser health plans in the same manner

6 and to the same extent as such provisions apply, in rela7 tion to the provisions of the Employee Retirement Income

8 Security Act of 1974, with respect to participants and

9 beneficiaries enrolled or eligible to enroll in and under em10 ployee welfare benefit plans covered by title I of such Act.

11 SEC. 8403. REVISION OF COBRA CONTINUATION COVERAGE

12 REQUIREMENTS.

13 (a) A MENDMENTS TO THE EMPLOYEE RETIREMENT

14 INCOME SECURITY ACT OF 1974.—

15 (1) PERIOD OF COVERAGE.—Subparagraph (D)

16 of section 605(1)(D) of the Employee Retirement

17 Income Security Act of 1974 (29 U.S.C. 1161(2)) is

18 amended—

19 (A) by striking ‘‘or’’ at the end of clause

20 (i), by striking the period at the end of clause

21 (ii) and inserting ‘‘, or’’, and by adding at the

22 end the following new clause:

23 ‘‘(iii) eligible for coverage under a

24 qualified health plan in accordance with

25 title I of the Health Security Act.’’;
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1 (B) by adding at the end thereof the fol2 lowing:

3 ‘‘An individual whose employment has been ter4 minated by an employer offering health plans

5 through a large group purchaser must elect

6 within 30 days of the termination to either re7 main in the plan provided by the employer for

8 a period of not to exceed 12 months or until the

9 individual is covered under another health plan,

10 whichever is less, or purchase from another

11 plan in the marketplace.’’; and

12 (C) by striking ‘‘OR MEDICARE ENTITLE13 MENT’’ in the heading and inserting ‘‘, MEDI14 CARE ENTITLEMENT, OR QUALIFIED HEALTH

15 PLAN ELIGIBILITY’’.

16 (2) Q UALIFIED BENEFICIARY.—Section 607(3)

17 of such Act (29 U.S.C. 1167(2)) is amended by add18 ing at the end the following new subparagraph:

19 ‘‘(D) SPECIAL RULE FOR INDIVIDUALS

20 COVERED BY HEALTH SECURITY ACT.—The

21 term ‘qualified beneficiary’ shall not include any

22 individual who, upon termination of coverage

23 under a group health plan, is eligible for cov24 erage under a qualified health plan in accord25 ance with title I of the Health Security Act.’’
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1 (3) REPEAL UPON IMPLEMENTATION OF ACT.—

2 (A) I N GENERAL.—Part 6 of subtitle B of

3 title I of such Act (29 U.S.C. 601 et seq.) is

4 amended by striking sections 601 through 608

5 and by redesignating section 609 as section

6 601.

7 (B) CONFORMING AMENDMENTS.—

8 (i) Section 502(a)(7) of such Act (29

9 U.S.C. 1132(a)(7)) is amended by striking

10 ‘‘609(a)(2)(A)’’ and inserting

11 ‘‘601(a)(2)(A)’’.

12 (ii) Section 502(c)(1) is amended by

13 striking ‘‘paragraph (1) or (4) of section

14 606’’.

15 (iii) Section 514 of such Act (29

16 U.S.C. 1144) is amended by striking

17 ‘‘609’’ each place it appears in subsections

18 (b)(7) and (b)(8) and inserting ‘‘601’’.

19 (iv) The table of contents in section 1

20 of such Act is amended by striking the

21 items relating to sections 601 through 609

22 and inserting the following new item:

‘‘Sec. 601. Additional standards for group health plans.’’

23 (4) EFFECTIVE DATE.—

24 (A) PARAGRAPHS (1) AND (2).—The

25 amendments made by paragraphs (1) and (2)
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1 shall take effect on the date of the enactment

2 of this Act.

3 (B) PARAGRAPH (3).—The amendments

4 made by paragraph (3) shall take effect on the

5 first January 1 following the full implementa6 tion of universal coverage.

7 (b) AMENDMENT TO PUBLIC HEALTH SERVICE

8 ACT.—

9 (1) PERIOD OF COVERAGE.—Subparagraph (D)

10 of section 2202(2) of the Public Health Service Act

11 (42 U.S.C. 300bb–2(2)) is amended—

12 (A) by striking ‘‘or’’ at the end of clause

13 (i), by striking the period at the end of clause

14 (ii) and inserting ‘‘, or’’, and by adding at the

15 end the following new clause:

16 ‘‘(iii) eligible for coverage under a

17 qualified health plan in accordance with

18 title I of the Health Security Act,’’, and

19 (B) by striking ‘‘OR MEDICARE ENTITLE20 MENT’’ in the heading and inserting ‘‘, MEDI21 CARE ENTITLEMENT, OR QUALIFIED HEALTH

22 PLAN ELIGIBILITY’’.

23 (2) QUALIFIED BENEFICIARY.—Section 2208(3)

24 of such Act (42 U.S.C. 300bb–8(3)) is amended by

25 adding at the end the following new subparagraph:
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1 ‘‘(C) SPECIAL RULE FOR INDIVIDUALS

2 COVERED BY ACT.—The term ‘qualified bene3 ficiary’ shall not include any individual who,

4 upon termination of coverage under a group

5 health plan, is eligible for coverage under a

6 qualified health plan in accordance with title I

7 of the Health Security Act.’’.

8 (3) REPEAL UPON IMPLEMENTATION OF

9 HEALTH SECURITY ACT.—

10 (A) I N GENERAL.—Title XXII of such Act

11 (42 U.S.C. 300bb–1 et seq.) is hereby repealed.

12 (B) CONFORMING AMENDMENT.—The

13 table of contents of such Act is amended by

14 striking the item relating to title XXII.

15 (4) EFFECTIVE DATE.—

16 (A) PARAGRAPHS (1) AND (2).—The

17 amendments made by paragraphs (1) and (2)

18 shall take effect on the date of the enactment

19 of this Act.

20 (B) PARAGRAPH (3).—The amendments

21 made by paragraph (3) shall take effect on the

22 first January 1 following the full implementa23 tion of universal coverage.
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1 SEC. 8404. ADDITIONAL AMENDMENTS RELATING TO

2 GROUP HEALTH PLANS.

3 (a) REGULATIONS OF THE NATIONAL HEALTH

4 BOARD REGARDING CASES OF ADOPTION.—Section

5 601(c) of the Employee Retirement Income Security Act

6 of 1974 (as redesignated by section 8403) is amended by

7 adding at the end the following new paragraph:

8 ‘‘(4) REGULATIONS BY NATIONAL HEALTH

9 BOARD.—The preceding provisions of this subsection

10 shall apply except to the extent otherwise provided

11 in regulations of the National Health Board under

12 the Health Security Act.’’.

13 (b) C OVERAGE OF PEDIATRIC VACCINES.—Section

14 601(d) of such Act (as redesignated by section 8403) is

15 amended by adding at the end the following new sentence:

16 ‘‘The preceding sentence shall cease to apply to a group

17 health plan upon becoming a large group purchaser health

18 plan pursuant to an effective election of the plan sponsor

19 to be a large group purchaser under section 1401 of the

20 Health Security Act.’’.

21 (c) T ECHNICAL CORRECTIONS.—Effective as if in22 cluded in the enactment of the Omnibus Budget Reconcili23 ation Act of 1993—

24 (1) Subsection (a)(2)(B)(ii) of section 609 of

25 the Employee Retirement Income Security Act of
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1 1974 is amended by striking ‘‘section 13822’’ and

2 inserting ‘‘section 13623’’.

3 (2) Subsection (a)(4) of such section 609 is

4 amended by striking ‘‘section 13822’’ and inserting

5 ‘‘section 13623’’.

6 (3) Subsection (d) of such section 609 is

7 amended by striking ‘‘section 13830’’ and inserting

8 ‘‘section 13631’’.

9 SEC. 8405. PLAN CLAIMS PROCEDURES.

10 Section 503 of the Employee Retirement Income Se11 curity Act of 1974 (29 U.S.C. 1133) is amended—

12 (1) by inserting ‘‘(a) IN GENERAL.—’’ after

13 ‘‘SEC. 503.’’; and

14 (2) by adding at the end the following new sub15 section:

16 ‘‘(b) GROUP HEALTH PLANS.—In addition to the re17 quirements of subsection (a), a group health plan to which

18 parts 1, 4, and 5 apply under section 4(c)(2) shall comply

19 with the requirements of section 5201 of the Health Secu20 rity Act (relating to health plan claims procedure).’’.

21 SEC. 8406. PREEMPTION OF HAWAII PREPAID HEALTH

22 CARE ACT.

23 (a) IN GENERAL.—Section 514(b)(5) of the Em24 ployee Retirement Income Security Act of 1974 (29

25 U.S.C. 1144(b)(5)) is amended to read as follows:
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1 ‘‘(5)(A) Except as provided in subparagraphs

2 (B) and (C), subsection (a) shall not apply to the

3 Hawaii Prepaid Health Care Act (Haw. Rev. Stat.

4 §§ 393–1 through 393–51).

5 ‘‘(B) Nothing in subparagraph (A) shall be con6 strued to exempt from subsection (a) any State tax

7 law relating to employee benefits plans.

8 ‘‘(C) If the Secretary of Labor notifies the Gov9 ernor of the State of Hawaii that as the result of

10 an amendment to the Hawaii Prepaid Health Care

11 Act enacted after the date of the enactment of this

12 paragraph—

13 ‘‘(i) the proportion of the population with

14 health care coverage under such Act is less than

15 such proportion on such date, or

16 ‘‘(ii) the level of benefit coverage provided

17 under such Act is less than the actuarial equiv18 alent of such level of coverage on such date,

19 subparagraph (A) shall not apply with respect to the

20 application of such amendment to such Act after the

21 date of such notification.’’.

22 (b) E FFECTIVE DATE.—The amendment made by

23 subsection (a) shall take effect on the date of the enact24 ment of this Act.
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1 TITLE IX—AGGREGATE

2 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.

3 Subtitle B—Aggregate Federal

4 Payments to Participating State

5 SEC. 9100. CAPPED FEDERAL PAYMENTS.

6 (a) CAPPED ENTITLEMENT.—

7 (1) PAYMENT.—The Secretary shall provide for

8 each calendar quarter (beginning on or after Janu9 ary 1, 1996) for payment to each participating State

10 of an amount equal to the capped Federal payment

11 amount (as defined in subsection (b)(1)) for each

12 State for the quarter.

13 (2) ENTITLEMENT.—This section constitutes

14 budget authority in advance of appropriations Acts,

15 and represents the obligation of the Federal Govern16 ment to provide for the payment to States of the

17 capped Federal payment amount under this section.

18 (b) CAPPED FEDERAL PAYMENT AMOUNT.—
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1 (1) IN GENERAL.—In this section, the term

2 ‘‘capped Federal payment amount’’ means, for a

3 State for a calendar quarter in a year and subject

4 to paragraph (6) and subsection (e), the amount by

5 which—

(A) 1 6 ⁄4 of the total payment obligation (de7 scribed in paragraph (2)) owed to community8 rated and experience-rated plans in a State for

9 the year, exceeds

(B) 1 10 ⁄4 of the total amounts receivable (de11 scribed in paragraph (3)) by community-rated

12 and experience-rated plans for the year.

13 (2) T OTAL PAYMENT OBLIGATION.—The total

14 payment obligation described in this paragraph in a

15 State for a year is the total amount payable to com16 munity-rated and experience-rated plans for the fol17 lowing:

18 (A) P LAN PAYMENTS (AND CERTAIN COST

19 SHARING REDUCTIONS).—Payments to commu20 nity-rated health plans under section 6203 (in21 cluding amounts attributable to cost sharing re22 ductions under section 1281, not including a re23 duction under subsection (c)(2) thereof) and

24 equivalent payments to experience-rated plans.
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1 (B) ADMINISTRATIVE EXPENSES.—Pay2 ments to plans retained by the State for admin3 istration (in accordance with section 1213).

4 (3) T OTAL AMOUNTS RECEIVABLE.—The total

5 amounts receivable in a State for a year is the sum

6 of the following:

7 (A) P REMIUMS.—The amount payable to

8 community-rated and experience-rated plans for

9 the family share of premiums (and premium

10 equivalents), employer premiums (and premium

11 equivalents), and liabilities owed to health plans

12 under subtitle B of title VI, not taking into ac13 count any failure to make or collect such pay14 ments.

15 (B) OTHER GOVERNMENT PAYMENTS.—

16 The amounts payable to health plans under sec17 tions 9001, 9011, and 9101, payable under sec18 tion 1894 of the Social Security Act (as added

19 by section 4003) during the year and payable

20 under paragraph (4)(C).

21 (C) P AYMENT TO HEALTH PLANS.—Each

22 participating State is responsible for paying to

23 community-rated health plans a share of its

24 savings under this Act. Such amount shall

25 equal 25 percent of the net reduction in the
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1 projected expenditures of the State for health

2 care and related services that the National

3 Health Board estimates the State will experi4 ence as the result of the enactment of this Act.

5 A State may request the National Health

6 Board to review its estimate and shall be enti7 tled to present its case to the Board under pro8 cedures to be established by the Board. This

9 subparagraph shall not be construed as provid10 ing a State with a right to bring suit for such

11 payment.

12 (D) ADDITIONAL AMOUNT.—The amount

13 collected by the State under section 6120.

14 (4) NO PAYMENT FOR CERTAIN AMOUNTS.—

15 (A) IN GENERAL.—Each participating

16 State is responsible, under section 1284, for the

17 payment of amounts attributable to administra18 tive errors (described in subparagraph (B)).

19 (B) ADMINISTRATIVE ERRORS DE20 SCRIBED.—The administrative errors described

21 in this subparagraph include the following:

22 (i) An eligibility error rate for pre23 mium discounts, liability reductions, and

24 cost sharing reductions under sections

25 6104 and 6123, section 6113, and section
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1 1281, respectively, to the extent the appli2 cable error rate exceeds the maximum per3 missible error rate, specified by the appli4 cable Secretary under section 1284, with

5 respect to the section involved.

6 (ii) Misappropriations or other State

7 expenditures that the Secretary finds are

8 attributable to malfeasance or misfeasance

9 by the State.

10 (5) SPECIAL RULES FOR SINGLE-PAYER

11 STATES.—In applying this subsection in the case of

12 a single-payer State, the Secretary shall develop and

13 apply a methodology for computing an amount of

14 payment (with respect to each calendar quarter) that

15 is equivalent to the amount of payment that would

16 have been made to the State for the quarter if the

17 State were not a single-payer State.

18 (6) LARGE GROUP PURCHASERS.—The Sec19 retary, in consultation with the Secretary of Labor,

20 shall withhold an appropriate amount from the

21 capped Federal payment amount as may be nec22 essary to make payments to plans offered by large

23 group purchasers.

24 (c) DETERMINATION OF CAPPED FEDERAL PAY25 MENT AMOUNTS.—
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1 (1) R EPORTS.—At such time as the Secretary

2 may require before the beginning of each fiscal year,

3 each State shall submit to the Secretary such infor4 mation as the Secretary may require to estimate the

5 capped Federal payment amount under this section

6 for the succeeding calendar year (and the portion of

7 such year that falls in such fiscal year).

8 (2) ESTIMATION.—Before the beginning of each

9 year, the Secretary shall estimate the capped Fed10 eral payment amount for calendar quarters in such

11 year. Such estimate shall be based on factors includ12 ing prior financial experience in the State, future es13 timates of income, wages, and employment, and

14 other characteristics of the area found relevant by

15 the Secretary. The Secretary shall transmit to Con16 gress, on a timely basis consistent with the timely

17 appropriation of funds under this section, a report

18 that specifies an estimate of the total capped Fed19 eral amounts owed to States under this section for

20 the fiscal and calendar year involved.

21 (d) P AYMENTS TO STATES.—Subject to subsection

22 (e), the provisions of section 9101(b) apply to payments

23 under this section in the same manner as they apply to

24 payments under section 9101.

25 (e) CAP ON PAYMENTS.—
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1 (1) IN GENERAL.—The total amount of the

2 capped Federal payments made under this section

3 for quarters in a fiscal year may not exceed the cap

4 specified under paragraph (2) for the fiscal year.

5 (2) CAP.—Subject to paragraphs (3) and (6)—

6 (A) F ISCAL YEARS 1996 THROUGH 2000.—

7 The cap under this paragraph for fiscal years

8 1996 through 2000 is $285,000,000,000. Six

9 months prior to the beginning of fiscal year

10 1996, the National Health Board, in consulta11 tion with the Director of the Office of Manage12 ment and Budget, shall determine the appor13 tionment of this amount among the fiscal years

14 for the period described in the preceding sen15 tence.

16 (B) S UBSEQUENT FISCAL YEAR.—The cap

17 under this paragraph for a fiscal year after fis18 cal year 2000 is the cap under this paragraph

19 for the previous fiscal year (not taking into ac20 count paragraph (3)) multiplied by the product

21 of the factors described in subparagraph (C) for

22 that fiscal year and for each previous year after

23 fiscal year 2000.
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1 (C) FACTOR.—The factor described in this

2 subparagraph for a fiscal year is 1 plus the fol3 lowing:

4 (i) CPI.—The percentage change in

5 the CPI for the fiscal year, determined

6 based upon the percentage change in the

7 average of the CPI for the 12-month pe8 riod ending with May 31 of the previous

9 fiscal year over such average for the pre10 ceding 12-month period.

11 (ii) POPULATION.—The average an12 nual percentage change in the population

13 of the United States during the 3-year pe14 riod ending in the preceding calendar year,

15 determined by the Board based on data

16 supplied by the Bureau of the Census.

17 (iii) REAL GDP PER CAPITA.—The av18 erage annual percentage change in the

19 real, per capita gross domestic product of

20 the United States during the 3-year period

21 ending in the preceding calendar year, de22 termined by the Board based on data sup23 plied by the Department of Commerce.

24 (3) CARRYFORWARD.—If the total of the

25 capped Federal payment amounts for all States for
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1 all calendar quarters in a fiscal year is less than the

2 cap specified in paragraph (2) for the fiscal year,

3 then the amount of such surplus shall be accumu4 lated and will be available in the case of a year in

5 which the cap would otherwise be breached.

6 (4) NOTIFICATION.—

7 (A) I N GENERAL.—If the Secretary antici8 pates that the amount of the cap, plus any

9 carryforward from a previous year accumulated

10 under paragraph (3), will not be sufficient for

11 a fiscal year, the Secretary shall notify the

12 President, the Congress, and each State. Such

13 notification shall include information about the

14 anticipated amount of the shortfall and the an15 ticipated time when the shortfall will first

16 occur.

17 (B) R EQUIRED ACTION.—Within 30 days

18 after receiving such a notice, the President shall

19 submit to Congress a report containing specific

20 legislative recommendations for actions which

21 would eliminate the shortfall.

22 (5) CONGRESSIONAL CONSIDERATION.—

23 (A) EXPEDITED CONSIDERATION.—If a

24 joint resolution the substance of which approves

25 the specific recommendations submitted under
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1 paragraph (4)(B) is introduced, subject to sub2 paragraph (B), the provisions of section 2908

3 (other than subsection (a)) of the Defense Base

4 Closure and Realignment Act of 1990 shall

5 apply to the consideration of the joint resolution

6 in the same manner as such provisions apply to

7 a joint resolution described in section 2908(a)

8 of such Act.

9 (B) SPECIAL RULES.—For purposes of ap10 plying subparagraph (A) with respect to such

11 provisions, any reference to the Committee on

12 Armed Services of the House of Representatives

13 shall be deemed a reference to an appropriate

14 Committee of the House of Representatives

15 (specified by the Speaker of the House of Rep16 resentatives at the time of submission of rec17 ommendations under paragraph (4)) and any

18 reference to the Committee on Armed Services

19 of the Senate shall be deemed a reference to an

20 appropriate Committee of the Senate (specified

21 by the Majority Leader of the Senate at the

22 time of submission of such recommendations).

23 (6) METHOD FOR ADJUSTING THE CAP FOR

24 CHANGES IN INFLATION.—If the inflation rate, as

25 measured by the percentage increase in the CPI, is
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1 projected to be significantly different from the infla2 tion rate projected by the Council of Economic Advi3 sors to the President as of October 1993, the Sec4 retary may adjust the caps under paragraph (2) so

5 as to reflect such deviation from the projection.

6 Subtitle C—Borrowing Authority to

7 Cover Cash-flow Shortfalls

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

9 SHORTFALLS.

10 (a) I N GENERAL.—The Secretary shall make avail11 able loans to States in order to cover any period of tem12 porary cash-flow shortfall attributable to any of the follow13 ing:

14 (1) Any estimation discrepancy (including those

15 described in subsection (e)(1)).

16 (2) A period of temporary cash-flow shortfall

17 attributable to an administrative error (described in

18 subsection (e)(2)).

19 (3) A period of temporary cash-flow shortfall

20 relating to the relative timing during the year in

21 which amounts are received and payments are re22 quired to be made.

23 (b) TERMS AND CONDITIONS.—

24 (1) I N GENERAL.—Loans shall be made under

25 this section under terms and conditions, consistent
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1 with this subsection, specified by the Secretary, in

2 consultation with the Secretary of the Treasury and

3 taking into account Treasury cash management

4 rules.

5 (2) PERIOD.—Loans under this section shall be

6 repayable with interest over a period of not to exceed

7 2 years.

8 (3) I NTEREST RATE.—The rate of interest on

9 such loans shall be at a rate determined by the Sec10 retary of the Treasury taking into consideration the

11 current average rate on outstanding marketable obli12 gations of the United States.

13 (4) A PPROPRIATE PAYMENT ADJUSTMENTS.—

14 As a condition of providing a loan under subsection

15 (a)(1), the Secretary shall require the State to make

16 such adjustments under the appropriate estimation

17 adjustment provision (described in subsection (f)) in

18 order to assure the repayment of the amount so bor19 rowed.

20 (5) LIMITATION ON LOAN BALANCE OUTSTAND21 ING.—The total balance of loans outstanding at any

22 time to a State shall not exceed—

23 (A) for the first year, 25 percent of the es24 timated total premiums for the State for such

25 year, or
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1 (B) for a subsequent year, 25 percent of

2 the actual total premiums for the State for the

3 previous year.

4 (c) REPAYMENT.—

5 (1) ESTIMATION DISCREPANCIES AND TIM6 ING.—Loans made under paragraphs (1) and (3) of

7 subsection (a) shall be repaid through a reduction in

8 the payment amounts otherwise required to be made

9 under section 9102 to the State.

10 (2) ADMINISTRATIVE ERROR.—Loans made

11 under subsection (a)(2) shall be repaid through a

12 temporary increase in the amount of the State main13 tenance-of-effort payment required under section

14 9001.

15 (d) R EPORTS.—The Secretary shall annually report

16 to Congress on the loans made (and loan amounts repaid)

17 under this section.

18 (e) SOURCES OF DISCREPANCY DESCRIBED.—

19 (1) ESTIMATION DISCREPANCIES.—The esti20 mation discrepancies described in this paragraph are

21 discrepancies in estimating the following:

22 (A) The average premium payments per

23 family under section 6122(b).

24 (B) The AFDC and SSI proportions under

25 section 6202.
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1 (C) The distribution of enrolled families in

2 different risk categories for purposes of section

3 1351(c).

4 (D) The distribution of enrollment in ex5 cess premium plans (for purposes of calculating

6 and applying the reduced weighted average ac7 cepted bid under section 6105(c)(1)).

8 (E) The collection shortfalls (used in com9 puting the family collection shortfall add-on

10 under section 6107).

11 (2) ADMINISTRATIVE ERRORS.—The adminis12 trative errors described in this paragraph are errors

13 described in section 9201(b)(4)(B)(ii).

14 (f) ESTIMATION ADJUSTMENT PROVISIONS DE15 SCRIBED.—The estimation adjustment provisions, referred

16 to in subsection (b)(4)) are the following adjustments (cor17 responding to the respective estimation discrepancies spec18 ified in subsection (d)(1)):

19 (1) Adjustments for average premium payments

20 per family under section 6122(b)(4).

21 (2) Adjustments in the AFDC and SSI propor22 tions under section 6202(d).

23 (3) Adjustments pursuant to the methodology

24 described in section 1641.
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1 (4) Adjustments in excess premium credit pur2 suant to section 6105(b)(2).

3 (5) Adjustment in the collection shortfall add4 on under section 6107(b)(2)(C)).

5 (g) ADVANCES; LIMITATIONS ON ADVANCES.—

6 (1) I N GENERAL.—Subject to paragraph (2),

7 the Secretary of the Treasury is authorized to ad8 vance to the Secretary, under terms and conditions

9 determined by the Secretary of the Treasury,

10 amounts sufficient to cover the loans made to States

11 by the Secretary under this section.

12 (2) L IMITATION.—The total balance of Treas13 ury advances outstanding at any time to the Sec14 retary under paragraph (1) shall not exceed

15 $3,500,000,000.

16 SEC. 9201. CONTINGENCIES.

17 Each State shall provide that any surplus of funds

18 resulting from an estimation discrepancy described in sec19 tion 9200(e)(1), up to a reasonable amount specified by

20 the Secretary, shall be held in a contingency fund estab21 lished by the State and used to fund any future shortfalls

22 resulting from such a discrepancy.

23 TITLE X—WORKERS COMPENSA24 TION MEDICAL SERVICES

TABLE OF CONTENTS OF TITLE
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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.

1 SEC. 10000. APPLICATION OF INFORMATION REQUIRE2 MENTS.

3 (a) IN GENERAL.—The provisions of—

4 (1) part 3 of subtitle B of title V (relating to

5 use of standard forms); and

6 (2) section 1916(2) (relating to health care in7 formation);

8 shall apply to the provision of workers compensation medi9 cal services provided by a health plan or health care pro10 vider in the same manner as such provisions apply with

11 respect to the provision of services included in the com12 prehensive benefit package.

13 (b) INFORMATION.—Subject to the provisions of part

14 2 of subtitle B of title V, health plans and health care

15 providers that render workers compensation medical serv16 ices shall provide to the worker and to the workers com17 pensation carrier, the employer or both, as appropriate,

18 relevant health care information necessary to assist the

19 worker in the safe and timely return to work.

20 (c) COMPLIANCE WITH DUTIES AND REQUIRE21 MENTS.—The health plan and its providers shall comply

22 with legal duties and reporting requirements under State
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1 workers compensation laws, and other Federal and State

2 laws, including laws regarding the reporting of occupa3 tional injuries and diseases.

4 (d) R ULES.—The Secretary of Labor shall promul5 gate rules to clarify the responsibilities of health plans and

6 health care providers in carrying out the provisions re7 ferred to in subsection (a).

8 SEC. 10001. PROVISION OF CARE IN DISPUTED CASES.

9 (a) IN GENERAL.—In cases in which a workers com10 pensation claim is challenged by the employer, the workers

11 compensation carrier, or both, a health plan shall provide

12 or pay for all medical care included in the comprehensive

13 benefits package according to the applicable workers com14 pensation fee schedule, if any, until such time as a deter15 mination is made through the adjudication process that

16 the claim is compensable as a workers compensation claim.

17 If such a determination is made, the workers compensa18 tion carrier (or the employer, if self insured) shall reim19 burse the health plan (for the cost of services delivered

20 to the member for the work-related illness or injury) and

21 the worker (for any copayments, deductibles or coinsur22 ance costs incurred for such services).

23 (b) A PPLICABILITY.—Subsection (a) shall not apply

24 in a case where compensation has been accepted by the

25 insurer or the employer, or paid without prejudice.
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1 SEC. 10002. DEMONSTRATION PROJECTS.

2 (a) A UTHORIZATION.—The Secretary of Health and

3 Human Services and the Secretary of Labor are author4 ized to conduct demonstration projects under this section

5 in one or more States with respect to treatment of work6 related injuries and illnesses.

7 (b) DEVELOPMENT OF WORK-RELATED PROTO8 COLS.—

9 (1) IN GENERAL.—The Secretary of Health and

10 Human Services and the Secretary of Labor, in con11 sultation with the States and such experts on work12 related injuries and illnesses as each such Secretary

13 finds appropriate, shall develop protocols for the ap14 propriate treatment of work-related conditions.

15 (2) TESTING OF PROTOCOLS.—The Secretary of

16 Health and Human Services and the Secretary of

17 Labor shall enter into contracts with one or more

18 community-rated health plans to test the validity of

19 the protocols developed under subsection (a).

20 (c) D EVELOPMENT OF CAPITATION PAYMENT MOD21 ELS.—The Secretary of Health and Human Services and

22 the Secretary of Labor shall develop, using protocols devel23 oped under subsection (b) if possible, methods of providing

24 for payment by workers compensation carriers to health

25 plans on a per case basis, capitated payment for the treat26 ment of specified work-related injuries and illnesses.
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1 SEC. 10003. COMMISSION ON WORKERS COMPENSATION

2 MEDICAL SERVICES.

3 (a) E STABLISHMENT.—There is created a Commis4 sion on Workers Compensation Medical Services (in this

5 section referred to as the ‘‘Commission’’).

6 (b) COMPOSITION.—

7 (1) I N GENERAL.—The Commission shall con8 sist of 15 members appointed in accordance with

9 paragraph (2). Members of the Commission shall in10 clude—

11 (A) one or more individuals representing

12 State workers compensation commissioners;

13 (B) one or more individuals representing

14 State workers compensation funds;

15 (C) one or more individuals representing

16 labor organizations;

17 (D) one or more members representing em18 ployers (other than workers compensation in19 surance carriers);

20 (E) one or more members representing

21 workers compensation insurance carriers;

22 (F) one or more members of the medical

23 profession having expertise in occupational

24 health; and
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1 (G) one or more educators or researchers

2 having expertise in the field of occupational

3 health.

4 Eight members of the Commission shall constitute a

5 quorum.

6 (2) APPOINTMENTS.—Members of the Commis7 sion shall be appointed by the President and shall

8 include—

9 (A) three members appointed from among

10 individuals recommended by the Speaker of the

11 House of Representatives;

12 (B) three members appointed from among

13 individuals recommended by the Minority Lead14 er of the House of Representatives;

15 (C) three members appointed from among

16 individuals recommended by the Majority Lead17 er of the Senate; and

18 (D) three members appointed from among

19 individuals recommended by the Minority Lead20 er of the Senate.

21 (3) NO COMPENSATION EXCEPT TRAVEL EX22 PENSES.—Members of the Commission shall serve

23 without compensation, but each member shall receive

24 travel expenses, including per diem in lieu of subsist-
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1 ence, in accordance with sections 5702 and 5703 of

2 title 5, United States Code.

3 (c) DUTIES.—

4 (1) I N GENERAL.—The Commission shall study

5 the relationship of workers compensation medical

6 services to the new health system under this Act in

7 terms of impact on the cost of workers compensation

8 medical services, access to appropriate care for in9 jured workers, and quality of medical care and its

10 impact on functional and vocational outcomes for in11 jured workers.

12 (2) EVALUATION ISSUES TO BE ADDRESSED.—

13 In its deliberations under paragraph (1), the Com14 mission shall consider the following issues in examin15 ing the relationship between health plans and work16 ers compensation medical services:

17 (A) The impact of health reform on work18 ers compensation medical costs and premium

19 rates charged to employers for workers com20 pensation insurance.

21 (B) The extent and impact of cost-shifting

22 and price discrimination between the workers

23 compensation medical system and traditional

24 health insurers.
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1 (C) The impact of experience rating ad2 justments resulting from workers compensation

3 medical services on workplace safety.

4 (D) The advantages and disadvantages of

5 maintaining separate financing, payment and

6 delivery systems for workers compensation med7 ical services, including the impact on—

8 (i) the quality of medical care deliv9 ered to workers injured or made ill on the

10 job;

11 (ii) the incentives for employers to

12 maintain safe work-places; and

13 (iii) workers compensation indemnity

14 benefit costs, medical costs and the overall

15 costs of the workers compensation system.

16 (E) The advisability and appropriateness

17 of transferring financial responsibility for some

18 or all workers compensation medical benefits to

19 health plans.

20 (F) The impact of State-to-State variations

21 in medical and rehabilitation benefits on costs,

22 access and quality of care.

23 (G) The options that are available to ac24 complish the delivery of workers compensation
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1 benefits not included in the comprehensive ben2 efit package in integrated systems

3 (H) Whether capitated rates can be devel4 oped for workers compensation medical bene5 fits, and the impact of using such rates on med6 ical and indemnity costs, access, and quality of

7 care.

8 (I) The impact of provider choice, with re9 spect to an injured worker, on workers com10 pensation medical costs, wage-loss benefits

11 costs, and quality of care.

12 (d) STAFF SUPPORT.—The Secretary of Health and

13 Human Services and the Secretary of Labor shall provide

14 staff support for the Commission.

15 (e) REPORTS.—The Commission shall submit a final

16 report on its work to the President, the Committee on

17 Labor and Human Resources of the Senate and the Com18 mittee on Education and Labor of the House of Rep19 resentatives, by not later than October 1, 2000. Such re20 port shall include a recommendation as to whether a

21 transfer of financial responsibility for some or all medical

22 benefits to health plans should be effected, and a detailed

23 implementation plan should such a transfer be rec24 ommended. Prior to the submission of the final report, the

25 Commission shall submit such interim reports on issues
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1 addressed by the Commission as the members of the Com2 mission determine to be appropriate.

3 TITLE XI—TRANSITIONAL

4 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.

5 SEC. 11001. IMPOSITION OF REQUIREMENTS.

6 (a) I N GENERAL.—The Secretary and the Secretary

7 of Labor shall apply the provisions of this title to assure,

8 to the extent possible, the maintenance of current health

9 care coverage and benefits during the period between the

10 enactment of this Act and the dates its provisions are im11 plemented in the various States.

12 (b) ENFORCEMENT.—

13 (1) HEALTH INSURANCE PLANS.—The Sec14 retary shall enforce the requirements of this title

15 with respect to health insurance plans. The Sec16 retary shall promulgate regulations to carry out the

17 requirements under this title with respect to health

18 insurance plans. The Secretary shall promulgate reg-
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1 ulations with respect to section 11004 within 90

2 days after the date of the enactment of this Act.

3 (2) S ELF-INSURED PLANS.—The Secretary of

4 Labor shall enforce the requirements of this title

5 with respect to self-insured plans. Such Secretary

6 shall promulgate regulations to carry out the re7 quirements under this title as they relate to self8 funded plans.

9 (3) A RRANGEMENTS WITH STATES.—The Sec10 retary and the Secretary of Labor may enter into ar11 rangements with a State to enforce the requirements

12 of this title with respect to health insurance plans

13 and self-insured plans issued or sold, or established

14 and maintained, in the State.

15 (c) PREEMPTION.—The requirements of this title do

16 not preempt any State law unless State law directly con17 flicts with such requirements. The provision of additional

18 protections under State law shall not be considered to di19 rectly conflict with such requirements. The Secretary (or,

20 in the case of a self-insured plan, the Secretary of Labor)

21 may issue letter determinations with respect to whether

22 this Act preempts a provision of State law.

23 (d) I NTERIM FINAL REGULATIONS.—Section 1911

24 shall apply to regulations issued to carry out this title.

25 The Secretary may consult with States and the National
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1 Association of Insurance Commissioners in issuing regula2 tions and guidelines under this title.

3 (e) CONSTRUCTION.—The provisions of this title shall

4 be construed in a manner that assures, to the greatest

5 extent practicable, continuity of health benefits under

6 health benefit plans in effect on the effective date of this

7 Act.

8 (f) SPECIAL RULES FOR ACQUISITIONS AND TRANS9 FERS.—The Secretary may issue regulations regarding the

10 application of this title in the case of health insurance

11 plans (or groups of such plans) which are transferred from

12 one insurer to another insurer through assumption, acqui13 sition, or otherwise.

14 SEC. 11002. ENFORCEMENT.

15 (a) IN GENERAL.—Any health insurer or health bene16 fit plan sponsor that violates a requirement of this title

17 shall be subject to a civil money penalty of not more than

18 $25,000 for each such violation. The provisions of section

19 1128A of the Social Security Act (other than subsections

20 (a) and (b)) shall apply to civil money penalties under this

21 subsection in the same manner as they apply to a penalty

22 or proceeding under section 1128A(a) of such Act.

23 (b) EQUITABLE REMEDIES.—

24 (1) IN GENERAL.—A civil action may be

25 brought by the applicable Secretary—
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1 (A) to enjoin any act or practice which vio2 lates any provision of this title, or

3 (B) to obtain other appropriate equitable

4 relief (i) to redress such violations, or (ii) to en5 force any provision of this title, including, in

6 the case of a wrongful termination of (or re7 fusal to renew) coverage, reinstating coverage

8 effective as of the date of the violation.

9 SEC. 11003. REQUIREMENTS RELATING TO PRESERVING

10 CURRENT COVERAGE.

11 (a) PROHIBITION OF TERMINATION.—

12 (1) G ROUP HEALTH INSURANCE PLANS.—Each

13 health insurer that provides a group health insur14 ance plan may not terminate (or fail to renew) cov15 erage for any covered employee if the employer of

16 the employee continues the plan, except in the case

17 of—

18 (A) nonpayment of required premiums,

19 (B) fraud, or

20 (C) misrepresentation of a material fact re21 lating to an application for coverage or claim

22 for benefits.

23 (2) I NDIVIDUAL HEALTH INSURANCE PLANS.—

24 Each health insurer that provides coverage to a cov25 ered individual under an individual health insurance
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1 plan may not terminate (or fail to renew) coverage

2 for such individual (or a covered dependent), except

3 in the case of—

4 (A) nonpayment of required premiums,

5 (B) fraud, or

6 (C) misrepresentation of a material fact re7 lating to an application for coverage or claim

8 for benefits.

9 (2) EFFECTIVE DATE OF TITLE.—

10 (A) IN GENERAL.—This subsection shall

11 take effect on the effective date of this title and

12 shall apply to coverage on or after such date.

13 (B) DEFINITION.—Except as otherwise

14 provided, in this title the term ‘‘effective date of

15 this title’’ means the date of the enactment of

16 this Act.

17 (b) A CCEPTANCE OF NEW MEMBERS IN A GROUP

18 HEALTH INSURANCE PLAN.—

19 (1) I N GENERAL.—In the case of a health in20 surer that provides a group health insurance plan

21 that is in effect on the effective date of this title, the

22 insurer is required—

23 (A) to accept all individuals, and their eli24 gible dependents, who become full-time employ-
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1 ees (as defined in section 1901(b)(2)(C)) of an

2 employer covered after such effective date;

3 (B) to establish and apply premium rates

4 that are consistent with section 11004(b); and

5 (C) to limit the application of pre-existing

6 condition restrictions in accordance with section

7 11005.

8 (2) C ONSISTENT APPLICATION OF RULES RE9 LATING TO DEPENDENTS AND WAITING PERIODS.—

10 In this subsection, the term ‘‘eligible dependent’’,

11 with respect to a group health insurance plan, has

12 the meaning provided under the plan as of October

13 27, 1993, or, in the case of a plan not established

14 as of such date, as of the date of establishment of

15 the plan.

16 SEC. 11004. RESTRICTIONS ON PREMIUM INCREASES DUR17 ING TRANSITION.

18 (a) D IVISION OF HEALTH INSURANCE PLANS BY

19 SECTOR.—For purposes of this section, each health in20 surer shall divide its health insurance business into the

21 following 3 sectors:

22 (1) Health insurance for groups with at least

23 100 covered lives (in this section referred to as the

24 ‘‘large group sector’’)
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1 (2) Health insurance for groups with fewer

2 than 100 covered lives (in this section referred to as

3 the ‘‘small group sector’’).

4 (3) Health insurance for individuals, and not

5 for groups (in this section referred to as the ‘‘indi6 vidual sector’’).

7 (b) P REMIUM CHANGES TO REFLECT CHANGES IN

8 GROUP OR INDIVIDUAL CHARACTERISTICS OR TERMS OF

9 COVERAGE.—

10 (1) A PPLICATION.—The provisions of this sub11 section shall apply to changes in premiums that re12 flect—

13 (A) changes in the number of individuals

14 covered under a plan;

15 (B) changes in the group or individual

16 characteristics (including age, gender, family

17 composition or geographic area but not includ18 ing health status, claims experience or duration

19 of coverage under the plan) of individuals cov20 ered under a plan;

21 (C) changes in the level of benefits (includ22 ing changes in cost-sharing) under the plan;

23 and

24 (D) changes in any material terms and

25 conditions of the health insurance plan (other
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1 than factors related to health status, claims ex2 perience, and duration of coverage under the

3 plan).

4 (2) S PECIFICATION OF REFERENCE RATE FOR

5 EACH SECTOR.—Each health insurer shall calculate

6 a reference rate for each such sector. The reference

7 rate for a sector shall be calculated so that, if it

8 were applied using the rate factors specified under

9 paragraph (3), the average premium rate for individ10 uals and groups in that sector would approximate

11 the average premium rate charged individuals and

12 groups in the sector as of the effective date of this

13 title.

14 (3) SINGLE SET OF RATE FACTORS WITHIN

15 EACH SECTOR.—

16 (A) IN GENERAL.—Each health insurer

17 shall develop for each sector a single set of rate

18 factors which will be used to calculate any

19 changes in premium that relate to the reasons

20 described in subparagraphs (B) through (D) of

21 paragraph (1).

22 (B) STANDARDS.—Such rate factors—

23 (i) shall relate to reasonable and ob24 jective differences in demographic charac25 teristics, in the design and in levels of cov-
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1 erage, and in other terms and conditions of

2 a contract,

3 (ii) shall not relate to expected health

4 status, claims experience, or duration of

5 coverage of the one or more groups or indi6 viduals, and

7 (iii) shall comply with regulations es8 tablished under subsection (f).

9 (4) COMPUTATION OF PREMIUM CHANGES.—

10 (A) IN GENERAL.—Changes in premium

11 rates that relate to the reasons described in

12 paragraph (1) shall be calculated using the rate

13 factors developed pursuant to paragraph (3).

14 (B) APPLICATION TO CHANGES IN NUMBER

15 OF COVERED INDIVIDUALS.—In the case of a

16 change in premium rates related to the reason

17 described in paragraph (1)(A), the change in

18 premium rates shall be calculated to reflect,

19 with respect to the enrollees who enroll or

20 disenroll in a health insurance plan, the sum of

21 the products, for such individuals, of the ref22 erence rate (determined under paragraph (2))

23 and the rate factors (specified under paragraph

24 (3)) applicable to such enrollees.

25 (C) APPLICATION OF OTHER FACTORS.—
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1 (i) IN GENERAL.—In the case of a

2 change in premium rates related to a rea3 son described in subparagraph (B), (C), or

4 (D) of paragraph (1), the change in pre5 mium rates with respect to each health in6 surance plan in each sector shall reflect the

7 rate factors specified under paragraph (3)

8 applicable to the reason as applied to the

9 current premium charged for the health in10 surance plan. Such rate factors shall be

11 applied in a manner so that the resulting

12 adjustment, to the extent possible, reflects

13 the premium that would have been charged

14 under the plan if the reason for the change

15 in premium had existed at the time that

16 the current premium rate was calculated.

17 (ii) NO REFLECTION OF CHANGE IN

18 HEALTH STATUS.—In applying the rate

19 factors under this subparagraph, the ad20 justment shall not reflect any change in

21 the health status, claims experience or du22 ration of coverage with respect to any em23 ployer or individual covered under the

24 plan.
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1 (5) L IMITATION ON APPLICATION.—This sub2 section shall only apply—

3 (A) to changes in premiums occurring on

4 or after the date of the enactment of this Act

5 to groups and individuals covered as of such

6 date, and

7 (B) with respect to groups and individuals

8 subsequently covered, to changes in premiums

9 subsequent to such coverage.

10 (6) APPLICATION TO COMMUNITY-RATED

11 PLANS.—Nothing in this subsection shall require the

12 application of rate factors related to individual or

13 group characteristics with respect to community14 rated plans.

15 (c) LIMITATIONS ON CHANGES IN PREMIUMS RELAT16 ED TO INCREASES IN HEALTH CARE COSTS AND UTILIZA17 TION.—

18 (1) A PPLICATION.—The provisions of this sub19 section shall apply to changes in premiums that re20 flect increases in health care costs and utilization.

21 (2) E QUAL INCREASE FOR ALL PLANS IN ALL

22 SECTORS.—

23 (A) IN GENERAL.—Subject to subpara24 graph (B), the annual percentage increase in

25 premiums by a health insurer for health insur-
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1 ance plans in the individual sector, small group

2 sector, and large group sector, to the extent

3 such increase reflect increases in health care

4 costs and utilization, shall be the same for all

5 such plans in those sectors.

6 (B) SPECIAL RULE FOR LARGE GROUP

7 SECTOR.—The annual percentage increase in

8 premiums by a health insurer for health insur9 ance plans in the large group sector may vary

10 among such plans based on the claims experi11 ence of an employer (to the extent the experi12 ence is credible), so long as the weighted aver13 age of such increases for all such plans in the

14 sector complies with the requirement of sub15 paragraph (A).

16 (C) GEOGRAPHIC APPLICATION.—Subpara17 graphs (A) and (B)—

18 (i) may be applied on a national level,

19 or

20 (ii) may vary based on geographic

21 area, but only if (I) such areas are suffi22 ciently large to provide credible data on

23 which to calculate the variation and (II)

24 the variation is due to reasonable factors

25 related to the objective differences among
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1 such areas in costs and utilization of

2 health services.

3 (D) EXCEPTIONS TO ACCOMMODATE STATE

4 RATE REFORM EFFORTS.—Subparagraphs (A)

5 and (B) shall not apply, in accordance with

6 guidelines of the Secretary, to the extent nec7 essary to permit a State to narrow the vari8 ations in premiums among health insurance

9 plans offered by health insurers to similarly sit10 uated groups or individuals within a sector.

11 (E) E XCEPTION FOR RATES SUBJECT TO

12 PRIOR APPROVAL.—Subparagraphs (A) and (B)

13 shall not apply to premiums that are subject to

14 prior approval by a State insurance commis15 sioner (or similar official) and are approved by

16 such official.

17 (F) O THER REASONS SPECIFIED BY THE

18 SECRETARY.—The Secretary may specify

19 through regulations such other exceptions to

20 the provisions of this subsection as the Sec21 retary determines are required to enhance sta22 bility of the health insurance market and con23 tinued availability of coverage.

24 (3) EVEN APPLICATION THROUGHOUT A

25 YEAR.—In applying the provisions of this subsection
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1 to health insurance plans that are renewed in dif2 ferent months of a year, the annual percentage in3 crease shall be applied in a consistent, even manner

4 so that any variations in the rate of increase applied

5 in consecutive months are even and continuous dur6 ing the year.

7 (4) P ETITION FOR EXCEPTION.—A health in8 surer may petition the Secretary (or a State acting

9 under a contract with the Secretary under section

10 11001(b)(3)) for an exception from the application

11 of the provisions of this subsection. The Secretary

12 may approve such an exception if—

13 (A) the health insurer demonstrates that

14 the application of this subsection would threat15 en the financial viability of the insurer, and

16 (B) the health insurer offers an alternative

17 method for increasing premiums that is not

18 substantially discriminatory to any sector or to

19 any group or individual covered by a health in20 surance plan offered by the insurer.

21 (d) PRIOR APPROVAL FOR CERTAIN RATE IN22 CREASES.—

23 (1) IN GENERAL.—If the percentage increase in

24 the premium rate for the individual and small group

25 sector exceeds a percentage specified by the Sec-
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1 retary under paragraph (2), annualized over any 12-

2 month period, the increase shall not take effect un3 less the Secretary (or a State acting under a con4 tract with the Secretary under section 11001(b)(3))

5 has approved the increase.

6 (2) PERCENTAGE.—The Secretary shall specify,

7 for each 12-month period beginning after the date of

8 the enactment of this Act, a percentage that will

9 apply under paragraph (1). Such percentage shall be

10 determined taking into consideration the rate of in11 crease in health care costs and utilization, previous

12 trends in health insurance premiums, and the condi13 tions in the health insurance market. Within 30 days

14 after the date of the enactment of this Act, the Sec15 retary shall first specify a percentage under this

16 paragraph.

17 (e) DOCUMENTATION OF COMPLIANCE.—

18 (1) P ERIOD FOR CONFORMANCE.—Effective 1

19 year after the date of the enactment of this Act, the

20 premium for each health insurance plan shall be

21 conformed in a manner that complies with the provi22 sions of this section.

23 (2) M ETHODOLOGY.—Each health insurer shall

24 document the methodology used in applying sub25 sections (b) and (c) with respect to each sector (and
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1 each applicable health plan). Such documentation

2 shall be sufficient to permit the auditing of the ap3 plication of such methodology to determine if such

4 application was consistent with such subsections.

5 (3) C ERTIFICATION.—For each 6-month period

6 in which this section is effective, each health insurer

7 shall file a certification with the Secretary (or with

8 a State with which the Secretary has entered into an

9 arrangement under section 11001(b)(3)) that the in10 surer is in compliance with such requirements.

11 (f) REGULATIONS.—The Secretary shall establish

12 regulations to carry out this section. Such regulations may

13 include guidelines relating to the permissible variation

14 that results from the use of demographic or other charac15 teristics in the development of rate factors. Such guide16 lines may be based on the guidelines currently used by

17 States in applying rate limitations under State insurance

18 regulations.

19 (g) EFFECTIVE PERIOD.—This section shall apply to

20 premium increases occurring during the period beginning

21 on the date of the enactment of this Act and ending, for

22 a health insurance plan provided in a State, on the first

23 day of the State’s first year.
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1 SEC. 11005. REQUIREMENTS RELATING TO PORTABILITY.

2 (a) T REATMENT OF PREEXISTING CONDITION EX3 CLUSIONS.—

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

5 provisions of this subsection, a group health benefit

6 plan may exclude coverage with respect to services

7 related to treatment of a preexisting condition, but

8 the period of such exclusion may not exceed 6

9 months. The exclusion of coverage shall not apply to

10 services furnished to newborns or in the case of a

11 plan that did not apply such exclusions as of the ef12 fective date of this title.

13 (2) CREDITING OF PREVIOUS COVERAGE.—

14 (A) I N GENERAL.—A group health benefit

15 plan shall provide that if an individual covered

16 under such plan is in a period of continuous

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

18 with respect to particular services as of the date

19 of initial coverage under such plan, any period

20 of exclusion of coverage with respect to a pre21 existing condition for such services or type of

22 services shall be reduced by 1 month for each

23 month in the period of continuous coverage.

24 (B) D EFINITIONS.—As used in this para25 graph:
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1 (i) PERIOD OF CONTINUOUS COV2 ERAGE.—The term ‘‘period of continuous

3 coverage’’ means, with respect to particu4 lar services, the period beginning on the

5 date an individual is enrolled under a

6 group or individual health benefit plan,

7 self-insured plan, the medicare program, a

8 State medicaid plan, or other health bene9 fit arrangement which provides benefits

10 with respect to such services and ends on

11 the date the individual is not so enrolled

12 for a continuous period of more than 3

13 months.

14 (ii) PREEXISTING CONDITION.—The

15 term ‘‘preexisting condition’’ means, with

16 respect to coverage under a health benefits

17 plan, a condition which has been diagnosed

18 or treated during the 6-month period end19 ing on the day before the first date of such

20 coverage (without regard to any waiting

21 period).

22 (b) WAITING PERIODS.—A self-insured plan, and an

23 employer with respect to a group health insurance plan,

24 may not discriminate among employees in the establish25 ment of a waiting period before making health insurance
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1 coverage available based on the health status, claims expe2 rience, receipt of health care, medical history, or lack of

3 evidence of insurability, of the employee or the employee’s

4 dependents.

5 SEC. 11006. REQUIREMENTS LIMITING REDUCTION OF BEN6 EFITS.

7 (a) I N GENERAL.—A self-insured sponsor may not

8 make a modification of benefits described in subsection

9 (b).

10 (b) MODIFICATION OF BENEFITS DESCRIBED.—

11 (1) I N GENERAL.—A modification of benefits

12 described in this subsection is any reduction or limi13 tation in coverage, effected on or after the effective

14 date of this title, with respect to any medical condi15 tion or course of treatment for which the anticipated

16 cost is likely to exceed $5,000 in any 12-month pe17 riod.

18 (2) TREATMENT OF TERMINATION.—A modi19 fication of benefits includes the termination of a

20 plan if the sponsor, within a period (specified by the

21 Secretary of Labor) establishes a substitute plan

22 that reflects the reduction or limitation described in

23 paragraph (1).

24 (c) REMEDY.—Any modification made in violation of

25 this section shall not be effective and the self-insured
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1 sponsor shall continue to provide benefits as though the

2 modification (described in subsection (b)) had not oc3 curred.

4 SEC. 11007. NATIONAL TRANSITIONAL HEALTH INSURANCE

5 RISK POOL.

6 (a) E STABLISHMENT.—In order to assure access to

7 health insurance during the transition, the Secretary is

8 authorized to establish a National Transitional Health In9 surance Risk Pool (in this section referred to as the ‘‘na10 tional risk pool’’) in accordance with this section.

11 (b) ADMINISTRATION.—

12 (1) I N GENERAL.—The Secretary may admin13 ister the national risk pool through contracts with—

14 (A) one or more existing State health in15 surance risk pools,

16 (B) one or more private health insurers, or

17 (C) such other contracts as the Secretary

18 deems appropriate.

19 (2) COORDINATION WITH STATE RISK POOLS.—

20 The Secretary may enter into such arrangements

21 with existing State health insurance risk pools to co22 ordinate the coverage under such pools with the cov23 erage under the national risk pool. Such coordina24 tion may address eligibility and funding of coverage
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1 for individuals currently covered under State risk

2 pools.

3 (c) ELIGIBILITY FOR COVERAGE.—The national risk

4 pool shall provide health insurance coverage to individuals

5 who are unable to secure health insurance coverage from

6 private health insurers because of their health status or

7 condition (as determined in accordance with rules and pro8 cedures specified by the Secretary).

9 (d) BENEFITS.—

10 (1) I N GENERAL.—Benefits and terms of cov11 erage provided through the national risk pool shall

12 include items and services, conditions of coverage,

13 and cost sharing (subject to out-of-pocket limits on

14 cost sharing) comparable to the benefits and terms

15 of coverage available in State health insurance risk

16 pools.

17 (2) PAYMENT RATES.—Payments under the na18 tional risk pool for covered items and services shall

19 be made at rates (specified by the Secretary) based

20 on payment rates for comparable items and services

21 under the medicare program. Providers who accept

22 payment from the national risk pool shall accept

23 such payment as payment in full for the service,

24 other than for cost sharing provided under the na25 tional risk pool.
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1 (e) PREMIUMS.—

2 (1) I N GENERAL.—Premiums for coverage in

3 the national risk pool shall be set in a manner speci4 fied by the Secretary.

5 (2) VARIATION.—Such premiums shall vary

6 based upon age, place of residence, and other tradi7 tional underwriting factors other than on the basis

8 of health status or claims experience.

9 (3) L IMITATION.—The premiums charged indi10 viduals shall be set at a level that is no less than

11 150 percent of the premiums that the Secretary esti12 mates would be charged to a population of average

13 risk for the covered benefits.

14 (f) TREATMENT OF SHORTFALLS.—

15 (1) E STIMATES.—The Secretary shall estimate

16 each year the extent to which the total premiums

17 collected under subsection (e) in the year are insuffi18 cient to cover the expenses of the national risk pool

19 with respect to the year.

20 (2) TEMPORARY BORROWING AUTHORITY.—The

21 Secretary of the Treasury is authorized to advance

22 to the Secretary amounts sufficient to cover the

23 amount estimated under paragraph (1) during the

24 year before assessments are collected under para25 graph (3), except that the total balance of such
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1 Treasury advances at any time shall not exceed

2 $1,500,000,000. The Secretary shall repay such

3 amounts, with interest at a rate specified by the Sec4 retary of the Treasury, from the assessments under

5 paragraph (3).

6 (3) ASSESSMENTS.—

7 (A) IN GENERAL.—Each health benefit

8 plan sponsor shall be liable for an assessment

9 in the amount specified in subparagraph (C).

10 (B) AMOUNT.—For each year for which

11 amounts are advanced under paragraph (2), the

12 Secretary shall—

13 (i) estimate the total amount of pre14 miums (and premium equivalents) for

15 health benefits under health benefit plans

16 for the succeeding year, and

17 (ii) calculate a percentage equal to (I)

18 the total amounts repayable by the Sec19 retary to the Secretary of the Treasury

20 under paragraph (2) for the year, divided

21 by the amount determined under clause (i).

22 (C) A SSESSMENT AMOUNT.—The amount

23 of an assessment for a sponsor of a health ben24 efit plan for a year shall be equal to the per25 centage calculated under subparagraph (B)(ii)
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(or, if less, 1 1 ⁄2 of 1 percent) of the total amount

2 of premiums (and premium equivalents) for

3 health benefits under the plan for the previous

4 year.

5 (D) S ELF-INSURED PLANS.—The amount

6 of premiums (and premium equivalents) under

7 this paragraph shall be estimated—

8 (i) by the Secretary for health insur9 ance plans, and

10 (ii) by the Secretary of Labor for self11 insured plans.

12 Such estimates may be based on a methodology

13 that requires plans liable for assessment to file

14 information with the applicable Secretary.

15 SEC. 11008. DEFINITIONS.

16 In this title:

17 (1) A PPLICABLE SECRETARY.—The term ‘‘ap18 plicable Secretary’’ means—

19 (A) the Secretary with respect to health in20 surance plans and insurers, or

21 (B) the Secretary of Labor with respect to

22 self-insured plans and self-insured plan spon23 sors.

24 (2) C OVERED EMPLOYEE.—The term ‘‘covered

25 employee’’ means an employee (or dependent of such
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1 an employee) covered under a group health benefits

2 plan.

3 (3) C OVERED INDIVIDUAL.—The ‘‘covered indi4 vidual’’ means, with respect to a health benefit plan,

5 an individual insured, enrolled, eligible for benefits,

6 or otherwise covered under the plan.

7 (4) GROUP HEALTH BENEFITS PLAN.—The

8 term ‘‘group health benefits plan’’ means a group

9 health insurance plan and a self-insured plan.

10 (5) GROUP HEALTH INSURANCE PLAN.—

11 (A) IN GENERAL.—The term ‘‘group

12 health insurance plan’’ means a health insur13 ance plan offered primarily to employers for the

14 purpose of providing health insurance to the

15 employees (and dependents) of the employer.

16 (B) INCLUSION OF ASSOCIATION PLANS

17 AND MEWAS.—Such term includes—

18 (i) any arrangement in which coverage

19 for health benefits is offered to employers

20 through an association, trust, or other ar21 rangement, and

22 (ii) a multiple employer welfare ar23 rangement (as defined in section 3(40) of

24 the Employee Retirement Income Security
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1 Act of 1974), whether funded through in2 surance or otherwise.

3 (6) HEALTH BENEFITS PLAN.—The term

4 ‘‘health benefits plan’’ means health insurance plan

5 and a self-insured health benefit plan.

6 (7) HEALTH BENEFIT PLAN SPONSOR.—The

7 term ‘‘health benefit plan sponsor’’ means, with re8 spect to a health insurance plan or self-insured plan,

9 the insurer offering the plan or the self-insured

10 sponsor for the plan, respectively.

11 (8) HEALTH INSURANCE PLAN.—

12 (A) I N GENERAL.—Except as provided in

13 subparagraph (B), the term ‘‘health insurance

14 plan’’ means any contract of health insurance,

15 including any hospital or medical service policy

16 or certificate, any major medical policy or cer17 tificate, any hospital or medical service plan

18 contract, or health maintenance organization

19 subscriber contract offered by an insurer.

20 (B) E XCEPTION.—Such term does not in21 clude any of the following—

22 (i) coverage only for accident, dental,

23 vision, disability income, or long-term care

24 insurance, or any combination thereof,
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1 (ii) medicare supplemental health in2 surance,

3 (iii) coverage issued as a supplement

4 to liability insurance,

5 (iv) worker’s compensation or similar

6 insurance, or

7 (v) automobile medical payment insur8 ance,

9 or any combination thereof.

10 (C) STOP LOSS INSURANCE NOT COV11 ERED.—Such term does not include any aggre12 gate or specific stop-loss insurance or similar

13 coverage applicable to a self-insured plan. The

14 Secretary may develop rules determining the

15 applicability of this subparagraph with respect

16 to minimum premium plans or other partially

17 insured plans.

18 (9) H EALTH INSURER.—The term ‘‘health in19 surer’’ means a licensed insurance company, a pre20 paid hospital or medical service plan, a health main21 tenance organization, or other entity providing a

22 plan of health insurance or health benefits with re23 spect to which the State insurance laws are not pre24 empted under section 514 of the Employee Retire25 ment Income Security Act of 1974.
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1 (10) I NDIVIDUAL HEALTH INSURANCE PLAN.—

2 (A) I N GENERAL.—The term ‘‘individual

3 health insurance plan’’ means any health insur4 ance plan directly purchased by an individual or

5 offered primarily to individuals (including fami6 lies) for the purpose of permitting individuals

7 (without regard to an employer contribution) to

8 purchase health insurance coverage.

9 (B) I NCLUSION OF ASSOCIATION PLANS.—

10 Such term includes any arrangement in which

11 coverage for health benefits is offered to indi12 viduals through an association, trust, list-billing

13 arrangement, or other arrangement in which

14 the individual purchaser is primarily responsible

15 for the payment of any premium associated

16 with the contract.

17 (C) TREATMENT OF CERTAIN ASSOCIATION

18 PLANS.—In the case of a health insurance plan

19 sponsored by an association, trust, or other ar20 rangement that provides health insurance cov21 erage both to employers and to individuals, the

22 plan shall be treated as—

23 (i) a group health insurance plan with

24 respect to such employers, and
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1 (ii) an individual health insurance

2 plan with respect to such individuals.

3 (11) S ELF-INSURED PLAN.—The term ‘‘self-in4 sured plan’’ means an employee welfare benefit plan

5 or other arrangement insofar as the plan or arrange6 ment provides benefits with respect to some or all of

7 the items and services included in the comprehensive

8 benefit package (as in effect as of January 1, 1996)

9 that is funded in a manner other than through the

10 purchase of one or more health insurance plans.

11 Such term shall not include a group health insur12 ance plan described in paragraph (5)(B)(ii).

13 (12) SELF-INSURED SPONSOR.—The term ‘‘self14 insured sponsor’’ includes, with respect to a self-in15 sured plan, any entity which establishes or main16 tains the plan.

17 (13) STATE COMMISSIONER OF INSURANCE.—

18 The term ‘‘State commissioner of insurance’’ in19 cludes a State superintendent of insurance.

20 SEC. 11009. TERMINATION.

21 (a) HEALTH INSURANCE PLANS.—The provisions of

22 this title shall not apply to a health insurance plan pro23 vided in a State on and after the first day of the first

24 year for the State.
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1 (b) S ELF-INSURED PLANS.—The provisions of this

2 title shall not apply to a self-insured plan that—

3 (1) is sponsored by a sponsor that is an eligible

4 sponsor of a large group sponsor (described in sec5 tion 1311(b)(1)), as of the effective date of the elec6 tion under section 1312(c); or

7 (2) is sponsored by a sponsor that is not such

8 an eligible sponsor, with respect to individuals or

9 groups in a State on and after the first day of the

10 first year for the State.

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