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[Congressional Bills 105th Congress]
[From the U.S. Government Publishing Office]
[S. 2074 Introduced in Senate (IS)]

105th CONGRESS
  2d Session
                                S. 2074

 To guarantee for all Americans quality, affordable, and comprehensive 
                         health care coverage.

_______________________________________________________________________

                   IN THE SENATE OF THE UNITED STATES

                              May 13, 1998

 Mr. Wellstone introduced the following bill; which was read twice and 
                  referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL

 
 To guarantee for all Americans quality, affordable, and comprehensive 
                         health care coverage.

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

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Healthy Americans 
Act''.
    (b) Table of Contents.--The table of contents of the Act is as 
follows:

Sec. 1. Short title; table of contents.
  TITLE I--STATE UNIVERSAL HEALTH INSURANCE COVERAGE PROGRAMS--PHASE I

Subtitle A--Expansion of SCHIP To Provide Health Insurance Coverage to 
                         Additional Individuals

Sec. 101. Phase I State universal health insurance coverage plans.
          Subtitle B--State Health Coverage Outreach Programs

Sec. 111. Grants for State health coverage outreach programs.
  TITLE II--UNIVERSAL, AFFORDABLE, COMPREHENSIVE HEALTH CARE--PHASE II

Sec. 201. Phase II State plans.
Sec. 202. State law requiring a minimum benefits package that includes 
                            parity.
Sec. 203. State law requiring limitations on premiums and cost-sharing.
Sec. 204. Administration of, and definitions for, phase II State plans.
Sec. 205. Secretarial submission of legislative proposal to expand 
                            medicare benefits.
                     TITLE III--PATIENT PROTECTIONS

Sec. 301. Definitions.
                   Subtitle A--Utilization Management

Sec. 311. Definitions.
Sec. 312. Requirement for utilization review program.
Sec. 313. Standards for utilization review.
                   Subtitle C--Health Plan Standards

Sec. 321. Health plan standards.
Sec. 322. Minimum solvency requirements.
Sec. 323. Information on terms of plan.
Sec. 324. Access.
Sec. 325. Credentialing for health providers.
Sec. 326. Grievance procedures.
Sec. 327. Confidentiality standards.
Sec. 328. Discrimination.
Sec. 329. Prohibition on selective marketing.
                  Subtitle D--Miscellaneous Provisions

Sec. 331. Enforcement.
Sec. 332. Preemption.
Sec. 333. Effective dates; regulations.
                        TITLE IV--MISCELLANEOUS

Sec. 401. Nonapplication of ERISA.
Sec. 402. Sense of Congress regarding offsets.

  TITLE I--STATE UNIVERSAL HEALTH INSURANCE COVERAGE PROGRAMS--PHASE I

Subtitle A--Expansion of SCHIP To Provide Health Insurance Coverage to 
                         Additional Individuals

SEC. 101. PHASE I STATE UNIVERSAL HEALTH INSURANCE COVERAGE PLANS.

    Title XXI of the Social Security Act (42 U.S.C. 1397aa et seq.) is 
amended--
            (1) by striking the title heading and inserting the 
        following:

              ``TITLE XXI--STATE HEALTH INSURANCE PROGRAMS

         ``Part A--State Children's Health Insurance Program'';

                and
            (2) by adding at the end the following:

  ``Part B--State Universal Health Insurance Coverage Program--Phase I

``SEC. 2121. PURPOSE; STATE PLANS.

    ``(a) Purpose.--The purpose of this part is to provide funds to 
participating States to enable those States to initiate and expand 
State-administered systems of health insurance coverage for individuals 
and families with incomes at or below 300 percent of the poverty line.
    ``(b) Phase I State Universal Coverage Plan Required.--A State is 
not eligible for a payment under section 2125(a) unless the State has 
submitted to the Secretary a plan that--
            ``(1) sets forth how the State intends to use the funds 
        provided under this part to expand the State children's health 
        insurance program under part A to provide universal health 
        insurance coverage to eligible individuals and families within 
        the State consistent with the provisions of this part; and
            ``(2) has been approved under section 2122(d).

``SEC. 2122. PLAN REQUIREMENTS.

    ``(a) In General.--A phase I State universal health insurance 
coverage plan shall include a description, consistent with the 
requirements of this part, of the following:
            ``(1) Information on the current level of health insurance 
        coverage.--
                    ``(A) The current level of health insurance 
                coverage within the State as determined under 
                subsection (b) and the base coverage gap for the year 
                involved as determined under subsection (b)(4).
                    ``(B) Current State efforts to provide or obtain 
                health care coverage for uncovered individuals, 
                including the steps the State is taking to identify and 
                enroll all uncovered individuals who are eligible to 
                participate in public health insurance programs and 
                health insurance programs that involve public-private 
                partnerships.
            ``(2) Details of, and timelines for, the phase i state 
        universal coverage plan.--
                    ``(A) The activities that the State intends to 
                carry out using funds received under this part, 
                including how the State will coordinate efforts under 
                the program under this part with existing State efforts 
                to increase the health care coverage of individuals.
                    ``(B) Consistent with subsection (c), the manner in 
                which the State will reduce the base coverage gap for 
                the year involved, including a timetable with specified 
                targets for reducing the base coverage gap by 50 
                percent in 2 years and 100 percent in 4 years.
            ``(3) Details regarding maintenance of private levels of 
        financial support.--The manner in which the State will ensure 
        that employers within the State will continue to provide 
        existing levels of financial support toward the health 
        insurance premiums required for coverage of their employees.
            ``(4) Details of, and timelines for, state outreach 
        programs.--The manner in which, including a timetable, the 
        State will institute outreach programs funded under section 121 
        of the Healthy Americans Act.
            ``(5) Description of the phase ii plan.--A description of 
        the process that will be used to develop the phase II State 
        universal health insurance coverage plan required under part C, 
        including the timelines for developing the plan.
            ``(6) Other matters.--Any other matter determined 
        appropriate by the Secretary.
    ``(b) Current Level of Coverage.--
            ``(1) In general.--The Secretary, using the most recent 
        Medical Expenditure Panel Survey conducted by the Agency for 
        Health Care Policy and Research, another survey selected by the 
        Secretary, or an alternative system approved under paragraph 
        (3), shall determine the percentage of the population of the 
        State that is currently covered by a health insurance plan or 
        program.
            ``(2) Biannual survey.--The Secretary, acting through the 
        Agency for Health Care Policy and Research, shall provide for 
        the conduct of the Medical Expenditure Panel Survey (or another 
        survey selected by the Secretary) not less than biannually to 
        make coverage determinations for purposes of paragraph (1).
            ``(3) Use of alternative system.--The Secretary shall 
        permit a State to utilize an alternative population-based 
        monitoring system to make determinations with respect to 
        coverage in the State for purposes of paragraph (1) if the 
        Secretary, acting through the Health Care Financing 
        Administration, determines that such system meets or exceeds 
        the methodological standards utilized in the Medical 
        Expenditure Panel Survey.
            ``(4) Base coverage gap.--For purposes of subsection 
        (a)(1)(A), the base coverage gap for a State shall be equal to 
        100 percent of the eligible individuals and families in the 
        State for the year involved that have income equal to or less 
        than 300 percent of the poverty line, less the current level of 
        coverage for those individuals and families for such year as 
        determined under paragraph (1).
    ``(c) Reducing the Level of Uninsured Individuals.--
            ``(1) In general.--To be eligible to receive funds under 
        this part, a State shall agree to administer a phase I State 
        universal health insurance coverage plan with a goal of 
        providing health care coverage for 100 percent of the eligible 
        individuals and families who reside in the State and who have 
        income that is equal to or less than 300 percent of the poverty 
        line by not later than September 30, 2003.
            ``(2) Permissible activities.--A State may use amounts 
        provided under this part for any activities consistent with 
        this part that are appropriate to enroll individuals in health 
        plans and health programs to meet the targets contained in the 
        State plan under subsection (a)(2)(B), including through the 
        use of direct payments to health plans or providers of 
        services.
    ``(d) Process for Submission, Approval, and Amendment of Phase I 
State Plan.--The provisions of section 2106 apply to a phase I State 
plan under this part in the same manner as they apply to a State plan 
under part A, except that no phase I State plan may be effective 
earlier than October 1, 1998, and all phase I State plans must be 
submitted for approval by not later than September 30, 1999.

``SEC. 2123. COVERAGE REQUIREMENTS FOR PHASE I STATE PLANS.

    ``(a) Required Scope of Health Insurance Coverage.--Health 
insurance coverage provided under this part shall consist of any of the 
following:
            ``(1) Benchmark coverage.--Health benefits coverage that is 
        equivalent to the benefits coverage in a benchmark benefit 
        package described in section 2103(b).
            ``(2) Benchmark-equivalent coverage.--Health benefits 
        coverage that satisfies the requirements of section 2103(a)(2).
            ``(3) Secretary-approved coverage.--Any other health 
        benefits coverage that the Secretary determines, upon 
        application by a State, provides appropriate coverage for the 
        individuals and families residing in the State who have income 
        at or below 300 percent of the poverty line.
    ``(b) Cost-Sharing.--
            ``(1) Description; general conditions.--
                    ``(A) Description.--A phase I State universal 
                health insurance coverage plan shall include a 
                description, consistent with this subsection, of the 
                amount (if any) of premiums, deductibles, coinsurance, 
                and other cost-sharing imposed. Any such charges shall 
                be imposed pursuant to a public schedule.
                    ``(B) Protection for lower income individuals and 
                families.--The phase I State plan may only vary 
                premiums, deductibles, coinsurance, and other cost-
                sharing based on the income of the individuals and 
                families eligible under the plan in a manner that does 
                not favor individuals and families with higher income 
                over individuals and families with lower income.
            ``(2) Limitations on premiums and cost-sharing.--
                    ``(A) Individuals and families with income below 
                150 percent of poverty line.--In the case of an 
                individual or family whose income is at or below 150 
                percent of the poverty line, the State plan may not 
                impose--
                            ``(i) an enrollment fee, premium, or 
                        similar charge that exceeds the maximum monthly 
                        charge permitted consistent with standards 
                        established to carry out section 1916(b)(1) 
                        (with respect to individuals described in such 
                        section); and
                            ``(ii) a deductible, cost-sharing, or 
                        similar charge that exceeds an amount that is 
                        nominal (as determined consistent with 
                        regulations referred to in section 1916(a)(3), 
                        with such appropriate adjustment for inflation 
                        or other reasons as the Secretary determines to 
                        be reasonable).
                    ``(B) Other individuals and families.--For 
                individuals and families not described in subparagraph 
                (A), subject to paragraph (1)(B), any premiums, 
                deductibles, cost-sharing or similar charges imposed 
                under the phase I State plan may be imposed on a 
                sliding scale related to income, except that the total 
                annual aggregate cost-sharing imposed under this part 
                with respect to all individuals in a family may not 
                exceed 5 percent of the family's income for the year 
                involved.
    ``(c) Application of Certain Requirements.--
            ``(1) Restriction on application of preexisting condition 
        exclusions.--The phase I State universal health insurance 
        coverage plan shall not permit the imposition of any 
        preexisting condition exclusion for covered benefits under the 
        plan.
            ``(2) Compliance with other requirements.--Coverage offered 
        under this section shall comply with the requirements of 
        subpart 2 of part A of title XXVII of the Public Health Service 
        Act insofar as such requirements apply with respect to a health 
        insurance issuer that offers group health insurance coverage.

``SEC. 2124. ALLOTMENTS.

    ``(a) Appropriation.--For the purpose of providing allotments to 
States under this part, there is appropriated, out of any money in the 
Treasury not otherwise appropriated--
            ``(1) $39,000,000,000 for fiscal year 1999;
            ``(2) $45,000,000,000 for fiscal year 2000;
            ``(3) $59,000,000,000 for fiscal year 2001; and
            ``(4) $59,900,000,000 for fiscal year 2002 and each 
        succeeding fiscal year thereafter.
    ``(b) Base State Allocation.--
            ``(1) In general.--From the amount appropriated under 
        subsection (a) for a fiscal year for purposes of carrying out 
        the program under this part, after application of subsection 
        (e), the Secretary shall allot to each State with a phase I 
        State universal health insurance coverage plan approved under 
this part an amount equal to the sum of the amounts determined under 
paragraphs (2) and (3).
            ``(2) Determination of cost of individual coverage.--The 
        amount determined under this paragraph is the amount equal to--
                    ``(A) the product of--
                            ``(i) the designated Federal participation 
                        rate for the State as determined under 
                        subsection (c) and adjusted under subsection 
                        (d);
                            ``(ii) the estimated cost for the minimum 
                        benefits package required to comply under 
                        section 2123, not to exceed the sum of--
                                    ``(I) the total annual Government 
                                and employee contributions required for 
                                individual health benefits coverage 
                                under the Blue Cross/Blue Shield 
                                standard service benefit plan offered 
                                under chapter 89 of title 5, United 
                                States Code (adjusted for age, as the 
                                Secretary determines appropriate); and
                                    ``(II) the estimated average cost-
                                sharing expense for an individual; and
                            ``(iii) the estimated number of eligible 
                        individuals to be enrolled in the phase I State 
                        plan; less
                    ``(B) the sum of--
                            ``(i) the individual health insurance 
                        contribution and cost-sharing payments to be 
                        made in accordance with section 2123(b); and
                            ``(ii) any applicable employer contribution 
                        to such payments.
            ``(3) Determination of cost of family coverage.--The amount 
        determined under this paragraph is the amount equal to--
                    ``(A) the product of--
                            ``(i) the designated Federal participation 
                        rate for the State as determined under 
                        subsection (c) and adjusted under subsection 
                        (d);
                            ``(ii) the estimated cost for the minimum 
                        benefits package required to comply under 
                        section 2123, not to exceed the sum of--
                                    ``(I) the total annual Government 
                                and employee contributions required for 
                                family health benefits coverage under 
                                the Blue Cross/Blue Shield standard 
                                service benefit plan offered under 
                                chapter 89 of title 5, United States 
                                Code (adjusted for age, as the 
                                Secretary determines appropriate); and
                                    ``(II) the estimated average cost-
                                sharing expense for a family; and
                            ``(iii) the aggregate of the estimated 
                        number of eligible families to be enrolled in 
                        the phase I State plan; less
                    ``(B) the sum of--
                            ``(i) the family health insurance 
                        contribution and cost-sharing payments to be 
                        made in accordance with section 2123(b); and
                            ``(ii) any applicable employer contribution 
                        to such payments.
    ``(c) Federal Participation Rate.--For purposes of subsection 
(b)(1), the Federal participation rate for a State for a fiscal year 
shall be equal to the enhanced FMAP determined for the State under 
section 2105(b).
    ``(d) Enhanced State Allocation.--
            ``(1) Based on closure of base coverage gap.--
                    ``(A) In general.--The Secretary shall adjust the 
                amount of the Federal participation rate under 
                subsection (c) based on the decrease in the base 
                coverage gap in the State. An adjustment under the 
                preceding sentence shall apply for the 2 succeeding 
                fiscal years.
                    ``(B) Amount of adjustment.--The amount of the 
                Federal participation rate under subsection (c) with 
                respect to a State for a fiscal year shall be increased 
                by--
                            ``(i) 1 percentage point if the base 
                        coverage gap of the State has decreased by at 
                        least 50 percent by the date that is 2 years 
                        after the date the Secretary approves the phase 
                        I State plan; and
                            ``(ii) 3 percentage points if the base 
                        coverage gap of the State has decreased by 100 
                        percent by the date that is 4 years after the 
                        date the Secretary approves the phase I State 
                        plan.
                    ``(C) Full coverage.--For purposes of subparagraph 
                (B)(ii), a State shall be deemed to have decreased its 
                base coverage gap by 100 percent if the Secretary 
                determines that--
                            ``(i) 98 percent of all residents of the 
                        State who have individual or family income that 
                        is equal to or less than 300 percent of the 
                        poverty line are provided health insurance 
                        coverage under the phase I State plan; and
                            ``(ii) the remaining 2 percent of such 
                        residents is served by alternative health care 
                        delivery systems as demonstrated by the State.
            ``(2) Based on expenditures for coverage.--
                    ``(A) In general.--The Secretary shall adjust 
                annually the amount of the Federal participation rate 
                under subsection (c) if the State can demonstrate that 
                qualified plans have spent a sufficient percentage of 
                total premium income to provide covered health benefits 
                in the prior year.
                    ``(B) Amount.--The amount of the Federal 
                participation rate under subsection (b) with respect to 
                a State for a fiscal year shall be increased by--
                            ``(i) 0.25 percentage points if all 
                        qualified plans in the State expend at least 85 
                        percent of total income received from premiums 
                        (excluding all costs for marketing, 
                        advertising, promotion, health plan 
                        administration, profits, or capital 
                        accumulation) on the provision of covered 
                        health benefits; and
                            ``(ii) 0.5 percentage points if all 
                        qualified plans in the State expend at least 90 
                        percent of total income received from premiums 
                        (excluding all costs for marketing, 
                        advertising, promotion, health plan 
                        administration, profits, or capital 
                        accumulation) on the provision of covered 
                        health benefits.
    ``(e) Grants to Indian Tribes and Native Hawaiian Organizations.--
            ``(1) In general.--From the amounts appropriated under 
        subsection (a) for a fiscal year, the Secretary shall reserve 
        not more than 3 percent to make grants to Indian tribes and 
        Native Hawaiian organizations for development and 
        implementation of universal health insurance coverage plans for 
        members of such tribes and organizations.
            ``(2) Plan.--To be eligible to receive a grant under 
        paragraph (1), an Indian tribe or Native Hawaiian organization 
        shall submit a universal health insurance coverage plan to the 
        Secretary at such time, in such manner, and containing such 
        information, as the Secretary may require.
            ``(3) Regulations.--The Secretary shall issue regulations 
        specifying the requirements of this part that apply to Indian 
        tribes and Native Hawaiian organizations receiving grants under 
        paragraph (1).

``SEC. 2125. ADMINISTRATION.

    ``(a) Payments.--
            ``(1) Quarterly.--The Secretary shall make quarterly 
        payments to each State with a phase I State plan approved under 
        this part, from its allotment under section 2124.
            ``(2) Advance payment; retrospective adjustment.--The 
        Secretary may make payments under this part for each quarter on 
        the basis of advance estimates by the State and such other 
        investigation as the Secretary may find necessary, and may 
        reduce or increase the payments as necessary to adjust for any 
        overpayment or underpayment for prior quarters.
            ``(3) Flexibility in submittal of claims.--Nothing in this 
        subsection shall be construed as preventing a State from 
        claiming as expenditures in the quarter expenditures that were 
        incurred in a previous quarter.
    ``(b) Coordination.--The Secretary shall coordinate activities 
carried out under this part with activities carried out under titles 
XVIII, XIX, and part A, and under other Federal health programs.
    ``(c) Report.--Not later than January 1, 2000, and each January 1 
thereafter, the Secretary, in consultation with the General Accounting 
Office and the Congressional Budget Office, shall prepare and submit to 
the appropriate committees of Congress a report on the number of States 
receiving payments under this part for the year for which the report is 
being prepared as well as the level of insurance coverage attained by 
each such State.

``SEC. 2126. DEFINITIONS.

    ``In this part:
            ``(1) Poverty line.--The term `poverty line' means the 
        poverty line as defined in section 673(2) of the Community 
        Services Block Grant Act (42 U.S.C. 9902(2)) applicable to an 
        individual or a family of the size involved.
            ``(2) Eligible individuals and families.--The term 
        `eligible individuals and families' means an individual or 
        family who--
                    ``(A) is (or consists of) a resident of the State 
                involved;
                    ``(B) has a family income that does not exceed 300 
                percent of the poverty line;
                    ``(C) is (or consists of) a citizen of the United 
                States, a legal resident alien, or an individual 
                otherwise residing in the United States under the 
                authority of Federal law; and
                    ``(D) in the case of an individual, is not eligible 
                for benefits under the medicare program under title 
                XVIII or for medical assistance under the medicaid 
                program under title XIX (other than under the 
                application of section 1905(u)(4)).
            ``(3) Phase i state plan.--The term `phase I State plan' 
        means the State universal health insurance coverage plan 
        submitted under section 2121(b).
            ``(4) Qualified plan.--The term `qualified plan' means a 
        health insurance plan that satisfies the coverage requirements 
        described under section 2123 and participates in a phase I 
        State plan.''.

          Subtitle B--State Health Coverage Outreach Programs

SEC. 111. GRANTS FOR STATE HEALTH COVERAGE OUTREACH PROGRAMS.

    (a) Authority To Award Grants.--The Secretary of Health and Human 
Services shall award grants to States to establish State-administered 
outreach programs to maximize the enrollment of--
            (1) eligible individuals in the State medicaid program 
        under title XIX of the Social Security Act (42 U.S.C. 1396 et 
        seq.);
            (2) eligible children in the State children's health 
        insurance program under part A of title XXI of such Act (42 
        U.S.C. 1397aa et seq.); and
            (3) eligible individuals and families in the phase I State 
        universal health insurance coverage program under part B of 
        title XXI of such Act (as added by section 101).
    (b) State Outreach Plan Required.--
            (1) In general.--A State is not eligible for a grant under 
        this section unless--
                    (A) the State has submitted to the Secretary a plan 
                that sets forth how the State intends to use the funds 
                provided under this section to promote outreach efforts 
                to maximize the enrollment of eligible individuals for 
                the State programs described in subsection (a) within 
                the State; and
                    (B) the State notifies the Secretary that, not 
                later than September 30, 1999, the State shall submit a 
                phase I State universal health insurance coverage plan 
                for approval by the Secretary in accordance with the 
                requirements of part B of title XXI of the Social 
                Security Act (as added by section 101).
            (2) Use of funds.--Funds provided under this section may be 
        used for any purpose that is intended to promote the outreach 
        described in paragraph (1)(A) and is approved by the Secretary, 
        including--
                    (A) implementing the use of a single application 
                form to determine the eligibility of an individual or 
                family for assistance or benefits under public health 
                insurance programs and health insurance programs that 
                involve public-private partnerships;
                    (B) providing for the stationing of eligibility 
                workers at sites such as hospitals, health clinics, and 
                schools, at which individuals receive health care or 
                related services; and
                    (C) reimbursing localities and nonprofit entities 
                for training and administrative costs associated with 
                outreach activities.
    (c) Appropriation.--For the purpose of providing grants to States 
under this section, there is appropriated, out of any money in the 
Treasury not otherwise appropriated $3,400,000,000 for each of fiscal 
years 1999 through 2002.

  TITLE II--UNIVERSAL, AFFORDABLE, COMPREHENSIVE HEALTH CARE--PHASE II

SEC. 201. PHASE II STATE PLANS.

    Title XXI of the Social Security Act (42 U.S.C. 1397aa et seq.), as 
amended by section 101, is amended by adding at the end the following:

 ``Part C--State Universal Health Insurance Coverage Program--Phase II

 ``Subpart 1--Phase II State Universal Health Insurance Coverage Plans

``SEC. 2131. PURPOSE; STATE PLANS.

    ``(a) Purpose.--The purpose of this part is to provide funds to 
participating States to enable those States to establish State-
administered systems to ensure universal health insurance coverage.
    ``(b) Phase II State Universal Health Insurance Coverage Plan 
Required.--A State is not eligible for a payment under section 2135(a) 
unless the State has submitted to the Secretary a plan that--
            ``(1) sets forth how the State intends to use the funds 
        provided under this part to ensure universal, affordable, and 
        comprehensive health insurance coverage to eligible residents 
        of the State consistent with the provisions of this part; and
            ``(2) has been approved under section 2132(d).

``SEC. 2132. PLAN REQUIREMENTS.

    ``(a) In General.--A phase II State universal health insurance 
coverage plan shall include a description, consistent with the 
requirements of this part, of the following:
            ``(1) Information on the current level of health insurance 
        coverage.--
                    ``(A) The current level of health insurance 
                coverage within the State as determined under section 
                2122(b)(1).
                    ``(B) The base coverage gap for the year involved 
                for the State, as determined under subsection (b).
                    ``(C) Current State efforts to provide or obtain 
                health care coverage for uncovered individuals, 
                including the steps the State is taking to identify and 
                enroll all uncovered individuals who are eligible to 
                participate in public health insurance programs and 
                health insurance programs that involve public-private 
                partnerships.
            ``(2) Details of, and timelines for, the phase ii state 
        universal coverage plan.--
                    ``(A) The activities that the State intends to 
                carry out using funds received under this part, 
                including how the State will coordinate efforts under 
                the program under this part with existing State efforts 
                to increase the health care coverage of individuals.
                    ``(B) Consistent with subsection (c), the manner in 
                which the State will reduce the base coverage gap for 
                the year involved, including a timetable with specified 
                targets for reducing the base coverage gap by 100 
                percent on or before September 30, 2004.
            ``(3) Details regarding maintenance of private levels of 
        financial support and ensuring that benefits are obtained.--
                    ``(A) The manner in which the State will ensure 
                that employers within the State will continue to 
                provide existing levels of financial support toward the 
                health insurance premiums required for coverage of 
                their employees, which may include any of the 
                following:
                            ``(i) programs and activities to encourage 
                        the voluntary provision of employment-based 
                        health insurance coverage with voluntary 
                        employer contributions;
                            ``(ii) State laws requiring employers to 
                        provide employment-based health insurance 
                        coverage for employees with required minimum 
                        premium contributions by such employers;
                            ``(iii) State laws requiring employers to 
                        make payments to a health insurance purchasing 
                        fund or program for health insurance; and
                            ``(iv) other methods devised by the State.
                    ``(B) The manner in which the State will ensure 
                that individuals with family income that exceeds the 
                income level for eligibility for health insurance 
                coverage provided under a phase I State universal 
                health insurance coverage plan under part B will obtain 
                health benefits coverage.
            ``(4) Details of, and timelines for, guaranteeing a minimum 
        benefits package that includes parity, income protections, and 
        patient protections for all state residents.--
                    ``(A) The manner in which, including a timetable, 
                the State will institute a statewide minimum benefits 
                requirement that includes mental health and substance 
                abuse treatment parity, as described in subpart 2.
                    ``(B) The manner in which, including a timetable, 
                the State will institute a statewide maximum out-of-
                pocket expenses requirement that is based on individual 
                and family income level, as described in subpart 3.
            ``(5) Other matters.--Any other matter determined 
        appropriate by the Secretary.
    ``(b) Base Coverage Gap.--For purposes of subsection (a)(1)(B), the 
base coverage gap for a State for a year shall be equal to 100 percent 
of the eligible residents of the State for the year involved, less the 
current level of coverage for those residents for such year as 
determined under section 2122(b)(1).
    ``(c) Reducing the Level of Uninsured Individuals.--
            ``(1) In general.--To be eligible to receive funds under 
        this part, a State shall agree to administer a phase II State 
        universal health insurance coverage program with a goal of 
        ensuring, not later than September 30, 2004, health care 
        coverage for 100 percent of the eligible residents of the State 
        under a qualified plan or qualified program.
            ``(2) Permissible activities.--A State may use amounts 
        provided under this part for any activities consistent with 
        this part that are appropriate to enroll individuals in health 
        plans and health programs to meet the targets contained in the 
        State plan under subsection (a)(2)(B), including through the 
        use of direct payments to health plans or providers of 
        services.
    ``(d) Process for Submission, Approval, and Amendment of Phase II 
State Plan.--The provisions of section 2106 apply to a phase II State 
plan under this part in the same manner as they apply to a State plan 
under part A, except that no phase II State plan may be effective 
earlier than October 1, 2001, and all phase II State plans must be 
submitted for approval by not later than September 30, 2002.

``SEC. 2133. QUALIFIED PLANS AND QUALIFIED PROGRAMS.

    ``(a) In General.--To be eligible to receive funds under this part, 
a State shall establish and implement procedures to certify--
            ``(1) private and public health care plans as qualified 
        plans; and
            ``(2) public health care programs as qualified programs.
    ``(b) Requirements.--The procedures implemented under subsection 
(a) shall ensure that a plan or program is not certified under this 
section unless such plan or program--
            ``(1) provides benefits that satisfy the requirements of 
        subpart 2; and
            ``(2) complies with the income protections that limit out-
        of-pocket expenditures under subpart 3.
    ``(c) Decertification.--The Secretary shall promulgate regulations 
for the decertification of qualified plans or qualified programs for 
violations of the requirements of this part.

``SEC. 2134. ALLOTMENTS.

    ``(a) Appropriation.--For the purpose of providing allotments to 
States under this part, there is appropriated, out of any money in the 
Treasury not otherwise appropriated--
            ``(1) $25,100,000,000 for fiscal year 2002; and
            ``(2) $37,700,000,000 for fiscal year 2003 and each 
        succeeding fiscal year thereafter.
    ``(b) Base State Allocation.--
            ``(1) In general.--From the amount appropriated under 
        subsection (a) for a fiscal year for purposes of carrying out 
        the program under this part, after application of subsection 
        (e), the Secretary shall allot to each State with a phase II 
        State universal health insurance coverage plan approved under 
        this part an amount equal to the sum of the amounts determined 
        under paragraphs (2) and (3).
            ``(2) Determination of cost of individual coverage.--The 
        amount determined under this paragraph is the amount equal to--
                    ``(A) the product of--
                            ``(i) the designated Federal participation 
                        rate for the State as determined 
under subsection (c) and adjusted under subsection (d);
                            ``(ii) the estimated cost for the minimum 
                        benefits package required to comply under 
                        section 2133, not to exceed the sum of--
                                    ``(I) the total annual Government 
                                and employee contributions required for 
                                individual health benefits coverage 
                                under the Blue Cross/Blue Shield 
                                standard service benefit plan offered 
                                under chapter 89 of title 5, United 
                                States Code (adjusted for age, as the 
                                Secretary determines appropriate); and
                                    ``(II) the estimated average cost-
                                sharing expense for an individual; and
                            ``(iii) the estimated number of eligible 
                        individuals to be enrolled in the phase I State 
                        plan; less
                    ``(B) the sum of--
                            ``(i) the individual health insurance 
                        contribution and cost-sharing payments to be 
                        made in accordance with section 2152; and
                            ``(ii) any applicable employer contribution 
                        to such payments.
            ``(3) Determination of cost of family coverage.--The amount 
        determined under this paragraph is the amount equal to--
                    ``(A) the product of--
                            ``(i) the designated Federal participation 
                        rate for the State as determined under 
                        subsection (c) and adjusted under subsection 
                        (d);
                            ``(ii) the estimated cost for the minimum 
                        benefits package required to comply under 
                        section 2133, not to exceed the sum of--
                                    ``(I) the total annual Government 
                                and employee contributions required for 
                                family health benefits coverage under 
                                the Blue Cross/Blue Shield standard 
                                service benefit plan offered under 
                                chapter 89 of title 5, United States 
                                Code (adjusted for age, as the 
                                Secretary determines appropriate); and
                                    ``(II) the estimated average cost-
                                sharing expense for a family; and
                            ``(iii) the aggregate of the estimated 
                        number of eligible families to be enrolled in 
                        the phase I State plan; less
                    ``(B) the sum of--
                            ``(i) the family health insurance 
                        contribution and cost-sharing payments to be 
                        made in accordance with section 2152; and
                            ``(ii) any applicable employer contribution 
                        to such payments.
    ``(c) Federal Participation Rate.--For purposes of subsection 
(b)(1), the Federal participation rate for a State for a fiscal year 
shall be equal to the enhanced FMAP determined for the State under 
section 2105(b).
    ``(d) Enhanced State Allocation.--
            ``(1) Based on expenditures for coverage.--The Secretary 
        shall adjust annually the amount of the Federal participation 
        rate under subsection (c) if the State can demonstrate that 
        qualified plans or qualified programs have spent a sufficient 
        percentage of total premium income to provide covered health 
        benefits in the prior year.
            ``(2) Amount.--The amount of the Federal participation rate 
        under subsection (b) with respect to a State for a fiscal year 
        shall be increased by--
                    ``(A) 0.25 percentage points if all qualified plans 
                or qualified programs in the State expend at least 85 
                percent of total income received from premiums 
                (excluding all costs for marketing, advertising, 
                promotion, health plan administration, profits, or 
                capital accumulation) on the provision of covered 
                health benefits; and
                    ``(B) 0.5 percentage points if all qualified plans 
                or qualified programs in the State expend at least 90 
                percent of total income received from premiums 
                (excluding all costs for marketing, advertising, 
                promotion, health plan administration, profits, or 
                capital accumulation) on the provision of covered 
                health benefits.
    ``(e) Grants to Indian Tribes and Native Hawaiian Organizations.--
            ``(1) In general.--From the amounts appropriated under 
        subsection (a) for a fiscal year, the Secretary shall reserve 
        not more than 3 percent to make grants to Indian tribes and 
        Native Hawaiian organizations for development and 
        implementation of universal health insurance coverage plans for 
        members of such tribes and organizations.
            ``(2) Plan.--To be eligible to receive a grant under 
        paragraph (1), an Indian tribe or Native Hawaiian organization 
        shall submit a universal health insurance coverage plan to the 
        Secretary at such time, in such manner, and containing such 
        information, as the Secretary may require.
            ``(3) Regulations.--The Secretary shall issue regulations 
        specifying the requirements of this part that apply to Indian 
        tribes and Native Hawaiian organizations receiving grants under 
        paragraph (1).''.

SEC. 202. STATE LAW REQUIRING A MINIMUM BENEFITS PACKAGE THAT INCLUDES 
              PARITY.

    Part C of title XXI of the Social Security Act, as added by section 
201, is amended by adding at the end the following:

       ``Subpart 2--Minimum Benefits Package That Includes Parity

``SEC. 2141. MINIMUM BENEFITS PACKAGE THAT INCLUDES PARITY.

    ``Each State that submits a phase II State universal health 
insurance coverage plan under subpart 1 shall, as of the date that the 
State submits the State plan, have in effect a State law that requires 
any health plan that is offered in the State to--
            ``(1) offer benefits to enrollees under the plan that are 
        at least actuarially equivalent (determined without regard to 
        benefits offered to comply with the requirements of section 
        2142) to benefits offered under chapter 89 of title 5, United 
        States Code; and
            ``(2) satisfy the requirements of section 2142.

``SEC. 2142. PARITY IN MENTAL HEALTH AND SUBSTANCE ABUSE BENEFITS.

    ``(a) In General.--A health plan (or health insurance coverage 
offered in connection with such a plan) shall include mental health and 
substance abuse treatment benefits that are at least equal to the 
medical and surgical benefits provided by or in connection with the 
plan. The requirement for such parity of benefits shall apply to the 
imposition of aggregate lifetime limits, annual limits, deductibles, 
copayments, and other cost-sharing, limitations on the number of visits 
or hospital days allowed under or in connection with the plan, and any 
other benefit-related requirements as the Secretary may designate.
    ``(b) Separate Application to Each Option Offered.--In the case of 
a health plan that offers a participant or beneficiary 2 or more 
benefit package options under the plan, the requirements of this 
section shall be applied separately with respect to each such option.
    ``(c) Definitions.--In this section:
            ``(1) Aggregate lifetime limit.--The term `aggregate 
        lifetime limit' means, with respect to benefits under a health 
        plan or health insurance coverage, a dollar limitation on the 
        total amount that may be paid with respect to such benefits 
        under the plan or health insurance coverage with respect to an 
        individual or other coverage unit.
            ``(2) Annual limit.--The term `annual limit' means, with 
        respect to benefits under a health plan or health insurance 
        coverage, a dollar limitation on the total amount of benefits 
        that may be paid with respect to such benefits in a 12-month 
        period under the plan or health insurance coverage with respect 
        to an individual or other coverage unit.
            ``(3) Medical or surgical benefits.--The term `medical or 
        surgical benefits' means benefits with respect to medical or 
        surgical services, as defined under the terms of the plan or 
        coverage (as the case may be), but does not include mental 
        health or substance abuse benefits.
            ``(4) Mental health benefits.--The term `mental health 
        benefits' means benefits with respect to mental health 
        services, as defined under the terms of the plan or coverage 
        (as the case may be), but does not include benefits with 
        respect to treatment of substance abuse or chemical dependency.
            ``(5) Substance abuse benefits.--The term `substance abuse 
        benefits' means benefits with respect to treatment of substance 
        abuse or chemical dependency.''.

SEC. 203. STATE LAW REQUIRING LIMITATIONS ON PREMIUMS AND COST-SHARING.

    Part C of title XXI of the Social Security Act, as amended by 
section 202, is amended by adding at the end the following:

         ``Subpart 3--Limitations on Premiums and Cost-Sharing

``SEC. 2151. LIMITATIONS ON PREMIUMS AND COST-SHARING.

    ``Each State that submits a phase II State universal health 
insurance coverage plan under subpart 1 shall, as of the date that the 
State submits the State plan, have in effect a State law that satisfies 
the requirements of section 2152.

``SEC. 2152. LIMITATION ON PREMIUMS AND COST-SHARING.

    ``(a) Limitation.--A State that receives payments under this part 
shall ensure that no individual or family who enrolls in a qualified 
plan or under a qualified program shall be required to pay in excess of 
the maximum health insurance contribution determined under subsection 
(b) with respect to any premiums, deductibles, copayments, or cost-
sharing imposed on the individual or family.
    ``(b) Maximum Health Insurance Contribution.--For purposes of 
subsection (a), the maximum health insurance contribution of an 
individual or family shall be an amount equal to--
            ``(1) if the family income of the individual or family 
        involved is less than 100 percent of the poverty line, 0.5 
        percent of the gross annual income of such individual or 
        family;
            ``(2) if the family income of the individual or family 
        involved is at least 100 percent, but less than 200 percent, of 
        the poverty line, 3 percent of the gross annual income of such 
        individual or family;
            ``(3) if the family income of the individual or family 
        involved is at least 200 percent, but less than 400 percent, of 
        the poverty line, 5 percent of the gross annual income of such 
        individual or family; and
            ``(4) if the family income of the individual or family 
        involved is at least 400 percent of the poverty line, 7 percent 
        of the gross annual income of such individual or family.''.

SEC. 204. ADMINISTRATION OF, AND DEFINITIONS FOR, PHASE II STATE PLANS.

    Part C of title XXI of the Social Security Act, as amended by 
section 203, is amended by adding at the end the following:

                ``Subpart 4--Administration; Definitions

``SEC. 2155. ADMINISTRATION.

    ``(a) Payments.--
            ``(1) Quarterly.--The Secretary shall make quarterly 
        payments to each State with a phase II State plan approved 
        under this part, from its allotment under section 2134.
            ``(2) Advance payment; retrospective adjustment.--The 
        Secretary may make payments under this part for each quarter on 
        the basis of advance estimates by the State and such other 
        investigation as the Secretary may find necessary, and may 
        reduce or increase the payments as necessary to adjust for any 
        overpayment or underpayment for prior quarters.
            ``(3) Flexibility in submittal of claims.--Nothing in this 
        subsection shall be construed as preventing a State from 
        claiming as expenditures in the quarter expenditures that were 
        incurred in a previous quarter.
    ``(b) Coordination.--The Secretary shall coordinate activities 
carried out under this part with activities carried out under titles 
XVIII, XIX, and parts A and B, and under other Federal health programs.
    ``(c) Report.--Not later than January 1, 2003, and each January 1 
thereafter, the Secretary, in consultation with the General Accounting 
Office and the Congressional Budget Office, shall prepare and submit to 
the appropriate committees of Congress a report on the number of States 
receiving payments under this part for the year for which the report is 
being prepared as well as the level of insurance coverage attained by 
each such State.

``SEC. 2156. DEFINITIONS.

    ``In this part:
            ``(1) Health plan.--The term `health plan' includes any 
        organization that seeks to arrange for, or provide for the 
        financing and coordinated delivery of, health care services 
        directly or through a contracted health provider panel, and 
        shall include health maintenance organizations, preferred 
        provider organizations, single service health maintenance 
        organizations, single service preferred provider organizations, 
        other entities such as provider-hospital or hospital-provider 
        organizations, employee welfare benefit plans (as defined in 
        section 3(1) of the Employee Retirement Income Security Act of 
        1974 (29 U.S.C. 1002(1)), and multiple employer welfare plans 
        or other association plans, as well as carriers.
            ``(2) Poverty line.--The term `poverty line' has the 
        meaning given that term in section 2126(1).
            ``(3) Eligible residents of the state.--The term `eligible 
        residents of the State' means an individual who--
                    ``(A) is a resident of the State involved;
                    ``(B) is a citizen of the United States, a legal 
                resident alien, or an individual otherwise residing in 
                the United States under the authority of Federal law; 
                and
                    ``(C) is not eligible for benefits under the 
                medicare program under title XVIII, for medical 
                assistance under the medicaid program under title XIX, 
                or for health insurance coverage under a phase I State 
                plan under part B.
            ``(4) Qualified plan.--The term `qualified plan' means a 
        health insurance plan certified under section 2133 to provide 
        coverage to eligible residents of the State under this part and 
        participates in a phase II State plan.
            ``(5) Qualified program.--The term `qualified program' 
        means a health care program certified under section 2133 to 
        provide coverage to eligible residents of the State under this 
        part and participates in a phase II State plan.
            ``(6) Phase ii state plan.--The term `phase II State plan' 
        means the phase II State universal health insurance coverage 
        plan submitted under section 2131(b).''.

SEC. 205. SECRETARIAL SUBMISSION OF LEGISLATIVE PROPOSAL TO EXPAND 
              MEDICARE BENEFITS.

    Not later than 1 year after the date of the enactment of this Act, 
the Secretary of Health and Human Services shall submit to the 
appropriate committees of Congress a legislative proposal containing 
such technical and conforming amendments as are necessary to, with 
respect to a State, as of the date that the State's phase II universal 
health insurance coverage plan under part C of title XXI of the Social 
Security Act is first effective in the State--
            (1) apply the limitation on premiums and cost-sharing 
        established under section 2152 of the Social Security Act to 
        individuals who are residents of the State and who are entitled 
        to, or eligible for, items and services under the medicare 
        program under title XVIII of the Social Security Act (42 U.S.C. 
        1395 et seq.);
            (2) provide coverage for outpatient prescription drugs for 
        such individuals under the medicare program; and
            (3) provide full mental health and substance abuse 
        treatment parity to such individuals under the medicare 
        program, consistent with section 2142 of the Social Security 
        Act.

                     TITLE III--PATIENT PROTECTIONS

SEC. 301. DEFINITIONS.

    Unless specifically provided otherwise, as used in this title:
            (1) Carrier.--The term ``carrier'' means a licensed 
        insurance company, a hospital or medical service corporation 
        (including an existing Blue Cross or Blue Shield organization, 
        within the meaning of section 833(c)(2) of Internal Revenue 
        Code of 1986 as in effect before the date of the enactment of 
        this Act), a health maintenance organization, or other entity 
        licensed or certified by the State to provide health insurance 
        or health benefits.
            (2) Covered individual.--The term ``covered individual'' 
        means a member, enrollee, subscriber, covered life, patient or 
        other individual eligible to receive benefits under a health 
        plan.
            (3) Emergency services.--The term ``emergency services'' 
        means those health care services that are provided to a patient 
        after the sudden onset of a health condition that manifests 
        itself by symptoms of sufficient severity, including severe 
        pain, and the absence of such immediate health care attention 
        could reasonably be expected, to result in--
                    (A) placing the patient's health in serious 
                jeopardy;
                    (B) serious impairment to bodily function; or
                    (C) serious dysfunction of any bodily organ or 
                part.
            (4) Health plan.--The term ``health plan'' includes any 
        organization that seeks to arrange for, or provide for the 
        financing and coordinated delivery of, health care services 
        directly or through a contracted health provider panel, and 
        shall include health maintenance organizations, preferred 
        provider organizations, single service health maintenance 
        organizations, single service preferred provider organizations, 
        other entities such as provider-hospital or hospital-provider 
        organizations, employee welfare benefit plans (as defined in 
        section 3(1) of the Employee Retirement Income Security Act of 
        1974 (29 U.S.C. 1002(1)), and multiple employer welfare plans 
        or other association plans, as well as carriers.
            (5) Health provider.--The term ``health provider'' means an 
        individual who is licensed or certified under State law to 
        provide health care services and who is operating within the 
        scope of such licensure or certification.
            (6) Managed care plan.--
                    (A) In general.--The term ``managed care plan'' 
                means a plan operated by a managed care entity (as 
                defined in subparagraph (B)), that provides for the 
                financing and delivery of health care services to 
                persons enrolled in such plan through--
                            (i) arrangements with selected providers to 
                        furnish health care services;
                            (ii) explicit standards for the selection 
                        of participating providers;
                            (iii) organizational arrangements for 
                        ongoing quality assurance, utilization review 
                        programs, and dispute resolution; and
                            (iv) financial incentives for persons 
                        enrolled in the plan to use the participating 
                        providers and procedures provided for by the 
                        plan.
                    (B) Managed care entity.--The term ``managed care 
                entity'' includes a licensed insurance company, 
                hospital or medical service plan (including provider 
                and provider-hospital networks), health maintenance 
                organization, an employer or employee organization, or 
                a managed care contractor (as defined in subparagraph 
                (C)), that operates a managed care plan.
                    (C) Managed care contractor.--The term ``managed 
                care contractor'' means a person that--
                            (i) establishes, operates, or maintains a 
                        network of participating providers;
                            (ii) conducts or arranges for utilization 
                        review activities; and
                            (iii) contracts with an insurance company, 
                        a hospital or health service plan, an employer, 
                        an employee organization, or any other entity 
                        providing coverage for health care services to 
                        operate a managed care plan.
            (7) Provider network.--The term ``provider network'' means, 
        with respect to a health plan that restricts access, those 
        providers who have entered into a contract or agreement with 
        the plan under which such providers are obligated to provide 
        items and services under the plan to eligible individuals 
        enrolled in the plan, or have an agreement to provide services 
        on a fee-for-service basis.
            (8) Secretary.--The term ``Secretary'' means the Secretary 
        of Health and Human Services unless specifically provided 
        otherwise.
            (9) Specialized treatment expertise.--The term 
        ``specialized treatment expertise'' means expertise in 
        diagnosing and treating unusual diseases and conditions, 
        diagnosing and treating diseases and conditions that are 
        usually difficult to diagnose or treat, and providing other 
        specialized health care.
            (10) Sponsor.--The term ``sponsor'' means a carrier or 
        employer that provides a health plan.
            (11) Utilization review.--The term ``utilization review'' 
        means a set of formal techniques designed to monitor and 
        evaluate the clinical necessity, appropriateness and efficiency 
        of health care services, procedures, providers and facilities. 
        Techniques may include ambulatory review, prospective review, 
        second opinion, certification, concurrent review, case .

                   Subtitle A--Utilization Management

SEC. 311. DEFINITIONS.

    As used in this subtitle:
            (1) Adverse determination.--The term ``adverse 
        determination'' means a determination that an admission to or 
        continued stay at a hospital or that another health care 
        service that is required has been reviewed and, based upon the 
        information provided, does not meet the requirements for 
        clinical necessity, appropriateness, level of care, or 
        effectiveness.
            (2) Ambulatory review.--The term ``ambulatory review'' 
        means utilization review of health care services performed or 
        provided in an outpatient setting.
            (3) Appeals procedure.--The term ``appeals procedure'' 
        means a formal process under which a covered individual (or an 
        individual acting on behalf of a covered individual), attending 
        provider or facility may appeal an adverse utilization review 
        decision rendered by the health plan or its designee 
        utilization review organization.
            (4) Care coordinator.--The term ``care coordinator'' means 
        a health provider who performs case management functions in 
        consultation with the interdisciplinary health care team, the 
        patient, family, and community.
            (5) Case management.--The term ``case management'' means a 
        coordinated set of activities conducted for the individual 
        patient management of serious, complicated, protracted or 
        chronic health conditions that provides cost-effective and 
        benefit-maximizing treatments for extremely resource-intensive 
        conditions.
            (6) Clinical review criteria.--The term ``clinical review 
        criteria'' means the recorded (written or otherwise) screening 
        procedures, decision abstracts, clinical protocols and practice 
        guidelines used by the health plan to determine necessity and 
        appropriateness of health care services.
            (7) Comparable.--The term ``comparable'' means a health 
        provider who is licensed or certified in a manner that permits 
        the provider to authorize the equipment, services, or 
        procedures that are the subject of a review.
            (8) Concurrent review.--The term ``concurrent review'' 
        means utilization review conducted during a patient's hospital 
        stay or course of treatment.
            (9) Discharge planning.--The term ``discharge planning'' 
        means the formal process for determining, coordinating and 
        managing the care a patient receives following the discharge of 
        the patient from a facility.
            (10) Facility.--The term ``facility'' means an institution 
        or health care setting providing the prescribed health care 
        services under review. Such term includes hospitals and other 
        licensed inpatient facilities, ambulatory surgical or treatment 
        centers, skilled nursing facilities, residential treatment 
        centers, diagnostic, laboratory and imaging centers and 
        rehabilitation and other therapeutic health care settings.
            (11) Prospective review.--The term ``prospective review'' 
        means utilization review conducted prior to an admission or a 
        course of treatment.
            (12) Retrospective review.--The term ``retrospective 
        review'' means utilization review conducted after health care 
        services have been provided to a patient. Such term does not 
        include the retrospective review of a claim that is limited to 
        an evaluation of reimbursement levels, veracity of 
        documentation, accuracy of coding and adjudication for payment.
            (13) Second opinion.--The term ``second opinion'' means an 
        opportunity or requirement to obtain a clinical evaluation by a 
        provider other than the provider originally making a 
        recommendation for a proposed health service to assess the 
        clinical necessity and appropriateness of the initial proposed 
health service.
            (14) Utilization review organization.--The term 
        ``utilization review organization'' means an entity that 
        conducts utilization review.

SEC. 312. REQUIREMENT FOR UTILIZATION REVIEW PROGRAM.

    A health plan shall have in place a utilization review program that 
meets the requirements of this subtitle and that is certified by the 
State.

SEC. 313. STANDARDS FOR UTILIZATION REVIEW.

    (a) Establishment.--The Secretary of Health and Human Services, in 
consultation with the Secretary of Labor (referred to in this subtitle 
as the ``Secretaries''), shall establish standards for the 
establishment, operation, and certification and periodic 
recertification of health plan utilization review programs.
    (b) Alternative Standards.--
            (1) In general.--A State may certify a health plan as 
        meeting the standards established under subsection (a) if the 
        State determines that the health plan has met the utilization 
        standards required for accreditation as applied by a nationally 
        recognized, independent, nonprofit accreditation entity.
            (2) Review by state.--A State that makes a determination 
        under paragraph (1) shall periodically review the standards 
        used by the private accreditation entity to ensure that such 
        standards meet or exceed the standards established by the 
        Secretaries under this subtitle.
    (c) Utilization Review Program Requirements.--The standards 
developed by the Secretaries under subsection (a) shall require that 
utilization review programs comply with the following:
            (1) Documentation.--A health plan shall provide a written 
        description of the utilization review program of the plan, 
        including a description of--
                    (A) any activities assigned from the health plan to 
                other entities;
                    (B) the policies and procedures used under the 
                program to evaluate clinical necessity; and
                    (C) the clinical review criteria, information 
                sources, and the process used to review and approve the 
                provision of health care services under the program.
            (2) Prohibition.--With respect to the administration of the 
        utilization review program, a health plan may not employ 
        utilization reviewers or contract with a utilization management 
        organization if the conditions of employment or the contract 
        terms include financial incentives to reduce or limit the 
        provision of clinically necessary or appropriate services to 
        covered individuals.
            (3) Review and modification.--A health plan shall develop 
        procedures for periodically reviewing and modifying the 
        utilization review of the plan. Such procedures shall provide 
        for the participation of providers and consumers in the health 
        plan in the development and review of utilization review 
        policies and procedures.
            (4) Decision protocols.--
                    (A) In general.--A utilization review program shall 
                develop and apply recorded (written or otherwise) 
                utilization review decision protocols. Such protocols 
                shall be based on sound health care evidence.
                    (B) Protocol criteria.--The clinical review 
                criteria used under the utilization review decision 
                protocols to assess the appropriateness of health care 
                services shall be clearly documented and available to 
                participating health providers upon request. Such 
                protocols shall include a mechanism for assessing the 
                consistency of the application of the criteria used 
                under the protocols across reviewers, and a mechanism 
                for periodically updating such criteria.
            (5) Review and decisions.--
                    (A) Review.--The procedures applied under a 
                utilization review program with respect to the 
                preauthorization and concurrent review of the necessity 
                and appropriateness of health care devices, services or 
                procedures, shall require that qualified, comparable 
                health care providers supervise review decisions. With 
                respect to a decision to deny the provision of health 
                care devices, services or procedures, a comparable 
                provider shall conduct a subsequent review to determine 
                the clinical appropriateness of such a denial. 
                Comparable health providers from the appropriate 
                specialty area shall be utilized in the review process.
                    (B) Decisions.--All utilization review decisions 
                shall be made in a timely manner, as determined 
                appropriate when considering the urgency of the 
                situation.
                    (C) Adverse determinations.--With respect to 
                utilization review, an adverse determination or 
                noncertification of an admission, continued stay, or 
                service shall be clearly documented, including the 
                specific clinical or other reason for the adverse 
                determination or noncertification, and be available to 
                the covered individual and the affected provider or 
                facility. A health plan may not deny or limit coverage 
                with respect to a service that the enrollee has already 
                received solely on the basis of lack of prior 
                authorization or second opinion, to the extent that the 
                service would have otherwise been covered by the plan 
                had such prior authorization or a second opinion been 
                obtained.
                    (D) Notification of denial.--A health plan shall 
                provide a covered individual with timely notice of an 
                adverse determination or noncertification of an 
                admission, continued stay, or service. Such a 
                notification shall include information concerning the 
                utilization review program appeals procedure as well as 
                the telephone number for the Office.
            (6) Requests for authorization.--A health plan utilization 
        review program shall ensure that requests by covered 
        individuals or providers for prior authorization of a 
        nonemergency service shall be answered in a timely manner after 
        such request is received. If utilization review personnel are 
        not available in a timely fashion, any health care services 
        provided shall be considered approved.
            (7) New technologies.--A utilization review program shall 
        implement policies and procedures to evaluate the appropriate 
        use of new health care technologies or new applications of 
        established technologies, including health care procedures, 
        drugs, and devices. The program shall ensure that appropriate 
        providers participate in the development of technology 
        evaluation criteria.
            (8) Special rule.--Where prior authorization for a service 
        or other covered item is obtained under a program under this 
        section, the service shall be considered to be covered unless 
        there was intentional fraud or intentionally incorrect 
        information provided at the time such prior authorization was 
        obtained. If a provider intentionally supplied the incorrect 
        information that led to the authorization of clinically 
        unnecessary care, the provider shall be prohibited from 
        collecting payment directly from the enrollee, and shall 
        reimburse the plan and subscriber for any payments or 
        copayments the provider may have received.
    (d) Health Plan Requirements.--
            (1) Disclosure of information.--
                    (A) Prospective covered individuals.--A health plan 
                shall, with respect to any materials distributed to 
                prospective covered individuals, include a summary of 
                the utilization review procedures of the plan.
                    (B) Covered individuals.--A health plan shall, with 
                respect to any materials distributed to newly covered 
                individuals, include a clear and comprehensive 
                description of utilization review procedures of the 
                plan and a statement of patient rights and 
                responsibilities with respect to such procedures.
                    (C) State officials.--
                            (i) In general.--A health plan shall 
                        disclose to the State insurance commissioner, 
                        or other designated State official, the health 
                        plan utilization review program policies, 
                        procedures, and reports required by the State 
                        for certification.
                            (ii) Streamlining of procedures.--To the 
                        extent practicable, a State shall implement 
                        procedures to streamline the process by which a 
                        health plan documents compliance with the 
                        requirements of this title, including 
                        procedures to condense the number of documents 
                        filed with the State concerning such 
                        compliance.
            (2) Toll-free number.--A health plan shall have a 
        membership card which shall have printed on the card the toll-
        free telephone number that a covered individual should call to 
        receive precertification utilization review decisions.
            (3) Evaluation.--A health plan shall establish mechanisms 
        to evaluate the effects of the utilization review program of 
        the plan through the use of member satisfaction data or through 
        other appropriate means.
    (e) Emergency Care.--
            (1) Emergency medical condition.--For purposes of this 
        section the term `emergency medical condition' means a medical 
        condition manifesting itself by acute symptoms of sufficient 
        severity (including severe pain) such that a prudent layperson 
        (including the parent of a minor child or the guardian of a 
        disabled individual), who possesses an average knowledge of 
        health and medicine, could reasonably expect the absence of 
        immediate medical attention to result in--
                    (A) placing the health of the individual (or, with 
                respect to a pregnant woman, the health of the woman or 
her unborn child) in serious jeopardy,
                    (B) serious impairment to bodily functions, or
                    (C) serious dysfunction of any bodily organ or 
                part.
            (2) Preauthorization.--With respect to emergency services 
        furnished in a hospital emergency department, a health plan 
        shall not require prior authorization for the provision of such 
        services if the enrollee arrived at the emergency department 
        with symptoms that reasonably suggested an emergency medical 
        condition based on the judgment of a prudent layperson, 
        regardless of whether the hospital was affiliated with the 
        health plan. All procedures performed during the evaluation and 
        treatment of an emergency medical condition shall be covered 
        under the health plan.

                   Subtitle C--Health Plan Standards

SEC. 321. HEALTH PLAN STANDARDS.

    (a) Establishment.--The Secretary of Health and Human Services, in 
conjunction with the Secretary of Labor (referred to in this subtitle 
as the ``Secretaries''), shall establish standards for the 
certification and periodic recertification of health plans, including 
standards which require plans to meet the requirements of this 
subtitle.
    (b) State Certification.--
            (1) In general.--A State shall provide for the 
        certification of health plans if the certifying authority 
        designated by the State determines that the plan meets the 
        applicable requirements of this title.
            (2) Requirement.--Effective on January 1, 1999, a health 
        plan sponsor may only offer a health plan in a State if such 
        plan is certified by the State under paragraph (1).
    (c) Construction.--Whenever in this subtitle a requirement or 
standard is imposed on a health plan, the requirement or standard is 
deemed to have been imposed on the sponsor of the plan in relation to 
that plan.

SEC. 322. MINIMUM SOLVENCY REQUIREMENTS.

    (a) In General.--Except as provided in subsection (b), each State 
shall apply minimum solvency requirements to all health plans offered 
or operating within the State to ensure the fiscal integrity of such 
plans. A health plan shall meet the financial reserve requirements that 
are established by the State to assure proper payment for health care 
services provided under the plan. Such requirements may include plan 
participation in a mechanism to provide for indemnification of plan 
failures even if a plan has met the reserve requirements.
    (b) Federal Standards.--The Secretaries shall establish minimum 
solvency standards that shall apply to all self-insured health plans. 
Such standards shall at least meet the solvency requirements 
established by the National Association of Insurance Commissioners.

SEC. 323. INFORMATION ON TERMS OF PLAN.

    (a) In General.--A health plan shall provide prospective covered 
individuals with written information concerning the terms and 
conditions of the health plan to enable such individuals to make 
informed decisions with respect to a certain system of health care 
delivery. Such information shall be standardized so that prospective 
covered individuals may compare the attributes of all such plans 
offered within the coverage area.
    (b) Understandability.--Information provided under this section, 
whether written or oral shall be easily understandable, truthful, 
linguistically appropriate and objective with respect to the terms 
used. Descriptions provided in such information shall be consistent 
with standards developed for supplemental insurance coverage under 
title XVIII of the Social Security Act (42 U.S.C. 1395 et seq.).
    (c) Required Information.--Information required under this section 
shall include information concerning--
            (1) coverage provisions, benefits, and any exclusions by 
        category of service or product;
            (2) plan loss ratios with an explanation that such ratios 
        reflect the percentage of the premiums expended for health 
        services;
            (3) prior authorization or other review requirements 
        including preauthorization review, concurrent review, post-
        service review, post-payment review and procedures that may 
        lead the patient to be denied coverage for, or not be provided, 
        a particular service or product;
            (4) an explanation of how plan design impacts enrollees, 
        including information on the financial responsibility of 
        covered individuals for payment for coinsurance or other out-
        of-plan services;
            (5) covered individual satisfaction statistics, including 
        disenrollment statistics and satisfaction statistics from those 
        who disenroll;
            (6) advance directives and organ donation;
            (7) the characteristics and availability of health care 
        providers and institutions participating in the plan, including 
        descriptions of the financial arrangements or contractual 
        provisions with hospitals, utilization review organizations, 
physicians, or any other provider of health care services that would 
affect the services offered, referral or treatment options, or 
provider's fiduciary responsibility to patients, including financial 
incentives regarding the provision of services; and
            (8) quality indicators for the plan and for participating 
        health providers under the plan, including population-based 
        statistics such as immunization rates and performance measures 
        such as survival after surgery, adjusted for case mix.

SEC. 324. ACCESS.

    (a) In General.--A health plan shall demonstrate that the plan has 
a sufficient number, distribution, and variety of qualified health care 
providers to ensure that all covered health care services will be 
available and accessible in a timely manner to adults, infants, 
children, and individuals with disabilities enrolled in the plan. Plans 
shall make reasonable efforts to address issues of cultural competence 
and appropriateness with respect to providers.
    (b) Availability of Services.--A health plan shall ensure that 
services covered under the plan are available in a timely manner that 
ensures a continuity of care, are accessible within a reasonable 
proximity to the residences of the enrollees, are available within 
reasonable hours of operation, and include emergency and urgent care 
services when clinically necessary and available which shall be 
accessible within the service area 24-hours a day, seven days a week.
    (c) Specialized Treatment.--A health plan shall demonstrate that 
plan enrollees have meaningful access, when clinically indicated in the 
judgment of the treating health provider, to specialized treatment 
expertise.
    (d) Chronic Conditions.--
            (1) In general.--Any process established by a health plan 
        to coordinate care and control costs may not impose an undue 
        burden on enrollees with chronic health conditions. The plan 
        shall ensure a continuity of care and shall, when clinically 
        indicated in the judgment of the treating health provider, 
        ensure ongoing direct access to relevant specialists for 
        continued care.
            (2) Care coordinator.--In the case of an enrollee who has a 
        severe, complex, or chronic condition, the health plan shall 
        determine, based on the judgment of the treating health 
        provider, whether it is clinically necessary or appropriate to 
        use a care coordinator from an interdisciplinary team.
    (e) Requirement.--
            (1) In general.--The requirements of this section may not 
        be waived and shall be met in all areas where the health plan 
        has enrollees, including rural areas. With respect to children, 
        such services shall include pediatric and pediatric specialty 
        services.
            (2) Out-of-network services.--If a health plan fails to 
        meet the requirements of this section, the plan shall arrange 
        for the provision of out-of-network services to enrollees in a 
        manner that provides enrollees with access to services in 
        accordance with the principles and parameters set forth in this 
        section.

SEC. 325. CREDENTIALING FOR HEALTH PROVIDERS.

    (a) In General.--A health plan shall credential health providers 
furnishing health care services under the plan.
    (b) Credentialing Process.--
            (1) In general.--A health plan shall establish a 
        credentialing process. Such process shall ensure that a health 
        provider is credentialed prior to that provider being listed as 
        a health provider in the health plan's marketing materials, in 
        accordance with recorded (written or otherwise) policies and 
        procedures.
            (2) Responsibility chief health care officer.--The chief 
        health care officer of the health plan, or another designated 
        health provider, shall have responsibility for the 
        credentialing of health providers under the plan.
            (3) Uniform applications.--A State shall develop a basic 
        uniform application that shall be used by all health plans in 
        the State for credentialing purposes.
            (4) Standards.--
                    (A) In general.--Credentialing decisions under a 
                health plan shall be based on objective standards with 
                input from health providers credentialed under the 
                plan. Information concerning all application and 
                credentialing policies and procedures shall be made 
                available for review by the health providers involved 
                upon written request.
                    (B) Right to review information.--A health provider 
                who undergoes the credentialing process shall have the 
                right to review the basis information, including the 
                sources of that information, that was used to meet the 
                designated credentialing criteria.

SEC. 326. GRIEVANCE PROCEDURES.

    (a) In General.--A health plan shall adopt a timely and organized 
system for resolving complaints and formal grievances filed by covered 
individuals. Such system shall include--
            (1) recorded (written or otherwise) procedures for 
        registering and responding to complaints and grievances in a 
        timely manner;
            (2) documentation concerning the substance of complaints, 
        grievances, and actions taken concerning such complaints and 
        grievances, which shall be in writing, and be available upon 
        request to the Office for Consumer Information, Counseling and 
        Assistance with Health Care;
            (3) procedures to ensure a resolution of a complaint or 
        grievance;
            (4) the compilation and analysis of complaint and grievance 
        data;
            (5) procedures to expedite the complaint process if the 
        complaint involves a dispute about the coverage of an 
        immediately and urgently needed service; and
            (6) procedures to ensure that if an enrollee orally 
        notifies a health plan about a complaint, the plan (if 
        requested) must send the enrollee a complaint form that 
        includes the telephone numbers and addresses of member 
        services, a description of the plan's grievance procedure, and 
        the telephone number of the Officer for Consumer Information, 
        Counseling and Assistance with Health Care where enrollees may 
        register complaints.
    (b) Appeal Process.--A health plan shall adopt an appeals process 
to enable covered individuals and providers to appeal decisions that 
are adverse to the covered individuals. Such a process shall include--
            (1) the right to a review by a grievance panel;
            (2) the right to a second review with a different panel, 
        independent from the health plan; and
            (3) an expedited process for review in emergency cases.
The Secretaries shall develop guidelines for the structure and 
requirements applicable to the independent review panel.
    (c) Notification.--With respect to the complaint, grievance, and 
appeals processes required under this section, a health plan shall, 
upon the request of a covered individual, provide the individual a 
written decision concerning a complaint, grievance, or appeal in a 
timely fashion.
    (d) Non-Impediment to Benefits.--The complaint, grievance, and 
appeals processes established in accordance with this section may not 
be used in any fashion to discourage, prevent, or deny a covered 
individual from receiving clinically necessary care in a timely manner.
    (e) Due Process With Respect to Credentialing.--
            (1) Receipt of information.--A health provider who is 
        subject to credentialing under section 325 shall, upon written 
        request, receive from the health plan any information obtained 
        by the plan during the credentialing process that, as 
        determined by the credentialing committee, does not meet the 
        credentialing standards of the plan, or that varies 
        substantially from the information provided to the health plan 
        by the health provider.
            (2) Submission of corrections.--A health plan shall have a 
        formal, recorded (written or otherwise) process by which a 
        health provider may submit supplemental information to the 
        credentialing committee if the health provider determines that 
        erroneous or misleading information has been previously 
        submitted. The health provider may request that such 
        information be reconsidered in the evaluation for credentialing 
        purposes.
            (3) No entitlement.--
                    (A) In general.--A health provider is not entitled 
                to be selected or retained by a health plan as a 
                participating or contracting provider whether or not 
                such provider meets the credentialing standards 
                established under section 325.
                    (B) Economic considerations.--If economic 
                considerations, including the health care provider's 
                patterns of expenditure per patient, are part of a 
                selection decision, objective criteria shall be used in 
                examining such considerations and a written description 
                of such criteria shall be provided to applicants, 
                participating health providers, and enrollees. Any 
                economic profiling of health providers must be adjusted 
                to recognize case mix, severity of illness, and the age 
                and gender of patients of a health provider's practice 
                that may account for higher or lower than expected 
                costs, to the extent appropriate data in this regard is 
                available to the health plan.
            (4) Termination, reduction, or withdrawal.--
                    (A) Procedures.--A health plan shall develop and 
                implement procedures for the reporting, to appropriate 
authorities, of serious quality deficiencies that result in the 
suspension or termination of a contract with a health provider.
                    (B) Review.--A health plan shall develop and 
                implement policies and procedures under which the plan 
                reviews the contract privileges of health providers 
                who--
                            (i) have seriously violated policies and 
                        procedures of the health plan;
                            (ii) have lost their privilege to practice 
                        with a contracting institutional provider; or
                            (iii) otherwise pose a threat to the 
                        quality of service and care provided to the 
                        enrollees of the health plan.
                At a minimum, the policies and procedures implemented 
                under this subparagraph shall meet the requirements of 
                the Health Care Quality Improvement Act of 1986.
                    (C) Communication.--Health plans shall not restrict 
                nor inhibit communication between providers and 
                patients or penalize a provider making public the 
                failure of the health plan to comply with the 
                provisions of this title.
                    (D) Liability.--A health plan shall not require a 
                provider to sign any type of hold-harmless agreement as 
                a requirement for participation in the health plan.
                    (E) Due process.--The policies and procedures 
                implemented under subparagraph (B) shall include 
                requirements for the timely notification of the 
                affected health provider of the reasons for the 
                reduction, withdrawal, or termination of privileges, 
                and shall provide the health provider with the right to 
                appeal initially to the health plan and subsequently, 
                upon failure to resolve a dispute, to an independent 
                entity, the determination of reduction, withdrawal, or 
                termination. No reduction, withdrawal, or termination 
                of privileges shall be made without cause.
                    (F) Availability.--A written copy of the policies 
                and procedures implemented under this paragraph shall 
                be made available to a health provider on request prior 
                to the time at which the health provider contracts to 
                provide services under the plan.

SEC. 327. CONFIDENTIALITY STANDARDS.

    (a) In General.--A health plan shall ensure that the 
confidentiality of specified enrollee patient information and records 
is protected.
    (b) Policies and Procedures.--A health plan shall have written 
confidentiality policies and procedures. Such policies and procedures 
shall, at a minimum--
            (1) protect the confidentiality of enrollee patient 
        information within the administrative structure of the health 
        plan with special attention to sensitive health conditions and 
        history;
            (2) protect health care record information;
            (3) protect claim information;
            (4) establish requirements for the release of information; 
        and
            (5) inform health plan employees of the confidentiality 
        policies and procedures and enforce compliance with such 
        policies and procedures.
    (c) Patient Care Providers and Facilities.--A health plan shall 
ensure that providers, offices, and facilities responsible for 
providing covered items or services to plan enrollees have implemented 
policies and procedures to prevent the unauthorized or inadvertent 
disclosure of confidential patient information to individuals who 
should not have access to such information.
    (d) Release of Information.--An enrollee in a health plan shall 
have the opportunity to approve or disapprove the release of 
identifiable personal patient information by the health plan, except 
where such release is required under applicable law.

SEC. 328. DISCRIMINATION.

    (a) Enrollees.--A health plan (network or non-network) may not 
discriminate or engage (directly or through contractual arrangements) 
in any activity, including the selection of service area, that has the 
effect of discriminating against an individual on the basis of race, 
culture, national origin, gender, language, socio-economic status, age, 
disability, health status including genetic information, or anticipated 
utilization of health services.
    (b) Providers.--A health plan may not discriminate in the selection 
of members of the health provider or provider network (and in 
establishing the terms and conditions for membership in the network) of 
the plan based on--
            (1) the race, national origin, culture, age, or disability 
        of the health provider; or
            (2) the socio-economic status, disability, health status, 
        or anticipated utilization of health services of the patients 
        of the health provider.

SEC. 329. PROHIBITION ON SELECTIVE MARKETING.

    A health plan may not engage in marketing or other practices 
intended to discourage or limit the issuance of health plans to 
individuals on the basis of health condition, geographic area, 
industry, or other risk factors.

                  Subtitle D--Miscellaneous Provisions

SEC. 331. ENFORCEMENT.

    (a) In General.--A State shall prohibit the offering or issuance of 
any health plan in such State if such plan does not--
            (1) have in place a utilization review program that is 
        certified by the State as meeting the requirements of subtitle 
        A;
            (2) comply with the standards developed under subtitle B;
            (3) have in place a credentialing program that meets the 
        requirements of section 325;
            (4) comply with the requirements of subtitle C; and
            (5) meet any other requirements determined appropriate by 
        the Secretary.
    (b) Self-Insured Plans.--The Secretary of Labor may take corrective 
action to terminate or disqualify a self-insured plan that does not 
meet the standards developed under this title.

SEC. 332. PREEMPTION.

    Nothing in this title shall be construed to preempt any State law, 
or the implementation of such a State law, that provides protections 
for individuals that are equivalent to or stricter than the provisions 
of this title.

SEC. 333. EFFECTIVE DATES; REGULATIONS.

    (a) In General.--Except as otherwise provided in this section, this 
title shall take effect on the date of enactment of this Act.
    (b) Standards.--The standards and programs required under this 
title shall apply to health plans beginning on January 1, 1999.
    (c) Other Requirements.--The requirements of this subtitle shall 
apply to health plans beginning on January 1, 1999.
    (d) Regulations.--The Secretaries described in section 313(a) may 
promulgate regulations to carry out this Act.

                        TITLE IV--MISCELLANEOUS

SEC. 401. NONAPPLICATION OF ERISA.

    The provisions of section 514 of the Employee Retirement Income 
Security Act of 1974 (29 U.S.C. 1144) shall not apply with respect to 
health benefits provided under a group health plan (as defined in 
section 733(a) of that Act (29 U.S.C. 1191b(a)) qualified to offer such 
benefits under a phase I State universal health insurance coverage plan 
under part B of title XXI of the Social Security Act or under a phase 
II State universal health insurance coverage plan under part C of title 
XXI of that Act.

SEC. 402. SENSE OF CONGRESS REGARDING OFFSETS.

    It is the sense of Congress that any sums necessary for the 
implementation of this Act, and the amendments made by this Act, should 
be offset by--
            (1) reductions in unnecessary tax benefits available only 
        to individuals and large corporations that are in the maximum 
        tax brackets;
            (2) increases in taxes from the sale of tobacco products;
            (3) elimination of duplicative and wasteful military 
        spending; and
            (4) direct savings in health care expenditures resulting 
        from the implementation of this Act.
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