I

106TH CONGRESS

1ST SESSION H. R. 1200

To provide for health care for every American and to control the cost and

enhance the quality of the health care system.

IN THE HOUSE OF REPRESENTATIVES

MARCH 18, 1999

Mr. MCDERMOTT (for himself, Mr. CONYERS, Mr. SANDERS, Mr. NADLER,

Mr. HINCHEY, Mr. SERRANO, Mr. FATTAH, Mr. OLVER, and Mr. COYNE)

introduced the following bill; which was referred to the Committee on

Commerce, and in addition to the Committees on Ways and Means, Government Reform, and Armed Services, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions

as fall within the jurisdiction of the committee concerned

A BILL

To provide for health care for every American and to control

the cost and enhance the quality of the health care system.

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

3 SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

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

5 ‘‘American Health Security Act of 1999’’.

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

7 this Act is as follows:

Sec. 1. Short title; table of contents.
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TITLE I—ESTABLISHMENT OF A STATE-BASED AMERICAN

HEALTH SECURITY PROGRAM; UNIVERSAL ENTITLEMENT; ENROLLMENT

Sec. 101. Establishment of a State-based American Health Security Program.

Sec. 102. Universal entitlement.

Sec. 103. Enrollment.

Sec. 104. Portability of benefits.

Sec. 105. Effective date of benefits.

Sec. 106. Relationship to existing Federal health programs.

TITLE II—COMPREHENSIVE BENEFITS, INCLUDING PREVENTIVE

BENEFITS AND BENEFITS FOR LONG TERM CARE

Sec. 201. Comprehensive benefits.

Sec. 202. Definitions relating to services.

Sec. 203. Special rules for home and community-based long-term care services.

Sec. 204. Exclusions and limitations.

Sec. 205. Certification; quality review; plans of care.

TITLE III—PROVIDER PARTICIPATION

Sec. 301. Provider participation and standards.

Sec. 302. Qualifications for providers.

Sec. 303. Qualifications for comprehensive health service organizations.

Sec. 304. Limitation on certain physician referrals.

TITLE IV—ADMINISTRATION

Subtitle A—General Administrative Provisions

Sec. 401. American Health Security Standards Board.

Sec. 402. American Health Security Advisory Council.

Sec. 403. Consultation with private entities.

Sec. 404. State health security programs.

Sec. 405. Complementary conduct of related health programs.

Subtitle B—Control Over Fraud and Abuse

Sec. 411. Application of Federal sanctions to all fraud and abuse under American Health Security Program.

Sec. 412. Requirements for operation of State health care fraud and abuse control units.

TITLE V—QUALITY ASSESSMENT

Sec. 501. American Health Security Quality Council.

Sec. 502. Development of certain methodologies, guidelines, and standards.

Sec. 503. State quality review programs.

Sec. 504. Elimination of existing utilization review programs; transition.

TITLE VI—NATIONAL HEALTH SECURITY BUDGET; PAYMENTS;

COST CONTAINMENT MEASURES

Subtitle A—Budgeting and Payments to States

Sec. 601. National health security budget.

Sec. 602. Computation of individual and State capitation amounts.

Sec. 603. State health security budgets.
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Sec. 604. Federal payments to States.

Sec. 605. Account for health professional education expenditures.

Subtitle B—Payments by States to Providers

Sec. 611. Payments to hospitals and other facility-based services for operating

expenses on the basis of approved global budgets.

Sec. 612. Payments to health care practitioners based on prospective fee

schedule.

Sec. 613. Payments to comprehensive health service organizations.

Sec. 614. Payments for community-based primary health services.

Sec. 615. Payments for prescription drugs.

Sec. 616. Approved devices and equipment.

Sec. 617. Payments for other items and services.

Sec. 618. Payment incentives for medically underserved areas.

Sec. 619. Authority for alternative payment methodologies.

Subtitle C—Mandatory Assignment and Administrative Provisions

Sec. 621. Mandatory assignment.

Sec. 622. Procedures for reimbursement; appeals.

TITLE VII—PROMOTION OF PRIMARY HEALTH CARE; DEVELOPMENT OF HEALTH SERVICE CAPACITY; PROGRAMS TO ASSIST

THE MEDICALLY UNDERSERVED

Subtitle A—Promotion and Expansion of Primary Care Professional Training

Sec. 701. Role of Board; establishment of primary care professional output

goals.

Sec. 702. Establishment of Advisory Committee on Health Professional Education.

Sec. 703. Grants for health professions education, nurse education, and the National Health Service Corps.

Subtitle B—Direct Health Care Delivery

Sec. 711. Setaside for public health block grants.

Sec. 712. Setaside for primary health care delivery.

Sec. 713. Primary care service expansion grants.

Subtitle C—Primary Care and Outcomes Research

Sec. 721. Set-aside for outcomes research.

Sec. 722. Office of Primary Care and Prevention Research.

Subtitle D—School-Related Health Services

Sec. 731. Authorizations of appropriations.

Sec. 732. Eligibility for development and operation grants.

Sec. 733. Preferences.

Sec. 734. Grants for development of projects.

Sec. 735. Grants for operation of projects.

Sec. 736. Federal administrative costs.

Sec. 737. Definitions.

TITLE VIII—FINANCING PROVISIONS; AMERICAN HEALTH

SECURITY TRUST FUND
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Sec. 800. Amendment of 1986 code; section 15 not to apply.

Subtitle A—American Health Security Trust Fund

Sec. 801. American Health Security Trust Fund.

Subtitle B—Taxes Based on Income and Wages

Sec. 811. Payroll tax on employers.

Sec. 812. Health care income tax.

Subtitle C—Increase in Excise Taxes on Tobacco Products

Sec. 821. Increase in excise taxes on tobacco products.

TITLE IX—CONFORMING AMENDMENTS TO THE EMPLOYEE

RETIREMENT INCOME SECURITY ACT OF 1974

Sec. 901. ERISA inapplicable to health coverage arrangements under State

health security programs.

Sec. 902. Exemption of State health security programs from ERISA preemption.

Sec. 903. Prohibition of employee benefits duplicative of benefits under State

health security programs; coordination in case of workers’ compensation.

Sec. 904. Repeal of continuation coverage requirements under ERISA and certain other requirements relating to group health plans.

Sec. 905. Effective date of title.

TITLE X—ADDITIONAL CONFORMING AMENDMENTS

Sec. 1001. Repeal of certain provisions in Internal Revenue Code of 1986.

Sec. 1002. Repeal of certain provisions in the Employee Retirement Income Security Act of 1974.

Sec. 1003. Repeal of certain provisions in the Public Health Service Act.

Sec. 1004. Effective date of title.

1 TITLE I—ESTABLISHMENT OF A

2 STATE-BASED AMERICAN

3 HEALTH SECURITY PRO4 GRAM; UNIVERSAL ENTITLE5 MENT; ENROLLMENT

6 SEC. 101. ESTABLISHMENT OF A STATE-BASED AMERICAN

7 HEALTH SECURITY PROGRAM.

8 (a) IN GENERAL.—There is hereby established in the

9 United States a State-Based American Health Security

10 Program to be administered by the individual States in
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1 accordance with Federal standards specified in, or estab2 lished under, this Act.

3 (b) STATE HEALTH SECURITY PROGRAMS.—In order

4 for a State to be eligible to receive payment under section

5 604, a State must establish a State health security pro6 gram in accordance with this Act.

7 (c) STATE DEFINED.—

8 (1) IN GENERAL.—In this Act, subject to para9 graph (2), the term ‘‘State’’ means each of the fifty

10 States and the District of Columbia.

11 (2) ELECTION.—If the Governor of Puerto

12 Rico, the Virgin Islands, Guam, American Samoa, or

13 the Northern Mariana Islands certifies to the Presi14 dent that the legislature of the Commonwealth or

15 territory has enacted legislation desiring that the

16 Commonwealth or territory be included as a State

17 under the provisions of this Act, such Common18 wealth or territory shall be included as a ‘‘State’’

19 under this Act beginning January 1 of the first year

20 beginning ninety days after the President receives

21 the notification.

22 SEC. 102. UNIVERSAL ENTITLEMENT.

23 (a) IN GENERAL.—Every individual who is a resident

24 of the United States and is a citizen or national of the

25 United States or lawful resident alien (as defined in sub-
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1 section (d) is entitled to benefits for health care services

2 under this Act under the appropriate State health security

3 program. In this section, the term ‘‘appropriate State

4 health security program’’ means, with respect to an indi5 vidual, the State health security program for the State in

6 which the individual maintains a primary residence.

7 (b) TREATMENT OF CERTAIN NONIMMIGRANTS.—

8 (1) IN GENERAL.—The American Health Secu9 rity Standards Board (in this Act referred to as the

10 ‘‘Board’’) may make eligible for benefits for health

11 care services under the appropriate State health se12 curity program under this Act such classes of aliens

13 admitted to the United States as nonimmigrants as

14 the Board may provide.

15 (2) CONSIDERATION.—In providing for eligi16 bility under paragraph (1), the Board shall consider

17 reciprocity in health care services offered to United

18 States citizens who are nonimmigrants in other for19 eign states, and such other factors as the Board

20 determines to be appropriate.

21 (c) TREATMENT OF OTHER INDIVIDUALS.—

22 (1) BY BOARD.—The Board also may make eli23 gible for benefits for health care services under the

24 appropriate State health security program under this

25 Act other individuals not described in subsection (a)
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1 or (b), and regulate the nature of the eligibility of

2 such individuals, in order—

3 (A) to preserve the public health of

4 communities,

5 (B) to compensate States for the addi6 tional health care financing burdens created by

7 such individuals, and

8 (C) to prevent adverse financial and med9 ical consequences of uncompensated care,

10 while inhibiting travel and immigration to the

11 United States for the sole purpose of obtaining

12 health care services.

13 (2) BY STATES.—Any State health security pro14 gram may make individuals described in paragraph

15 (1) eligible for benefits at the expense of the State.

16 (d) LAWFUL RESIDENT ALIEN DEFINED.—For pur17 poses of this section, the term ‘‘lawful resident alien’’

18 means an alien lawfully admitted for permanent residence

19 and any other alien lawfully residing permanently in the

20 United States under color of law, including an alien with

21 lawful temporary resident status under section 210, 210A,

22 or 234A of the Immigration and Nationality Act (8 U.S.C.

23 1160, 1161, or 1255a).
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1 SEC. 103. ENROLLMENT.

2 (a) IN GENERAL.—Each State health security pro3 gram shall provide a mechanism for the enrollment of indi4 viduals entitled or eligible for benefits under this Act. The

5 mechanism shall—

6 (1) include a process for the automatic enroll7 ment of individuals at the time of birth in the

8 United States and at the time of immigration into

9 the United States or other acquisition of lawful resi10 dent status in the United States,

11 (2) provide for the enrollment, as of January 1,

12 2001, of all individuals who are eligible to be en13 rolled as of such date, and

14 (3) include a process for the enrollment of indi15 viduals made eligible for health care services under

16 subsections (b) and (c) of section 102.

17 (b) AVAILABILITY OF APPLICATIONS.—Each State

18 health security program shall make applications for enroll19 ment under the program available—

20 (1) at employment and payroll offices of em21 ployers located in the State,

22 (2) at local offices of the Social Security

23 Administration,

24 (3) at social services locations,

25 (4) at out-reach sites (such as provider and

26 practitioner locations), and
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1 (5) at other locations (including post offices

2 and schools) accessible to a broad cross-section of

3 individuals eligible to enroll.

4 (c) ISSUANCE OF HEALTH SECURITY CARDS.—In

5 conjunction with an individual’s enrollment for benefits

6 under this Act, the State health security program shall

7 provide for the issuance of a health security card which

8 shall be used for purposes of identification and processing

9 of claims for benefits under the program. The State health

10 security program may provide for issuance of such cards

11 by employers for purposes of carrying out enrollment pur12 suant to subsection (a)(2).

13 SEC. 104. PORTABILITY OF BENEFITS.

14 (a) IN GENERAL.—To ensure continuous access to

15 benefits for health care services covered under this Act,

16 each State health security program—

17 (1) shall not impose any minimum period of

18 residence in the State, or waiting period, in excess

19 of three months before residents of the State are

20 entitled to, or eligible for, such benefits under the

21 program;

22 (2) shall provide continuation of payment for

23 covered health care services to individuals who have

24 terminated their residence in the State and estab25 lished their residence in another State, for the dura-
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1 tion of any waiting period imposed in the State of

2 new residency for establishing entitlement to, or

3 eligibility for, such services; and

4 (3) shall provide for the payment for health

5 care services covered under this Act provided to indi6 viduals while temporarily absent from the State

7 based on the following principles:

8 (A) Payment for such health care services

9 is at the rate that is approved by the State

10 health security program in the State in which

11 the services are provided, unless the States con12 cerned agree to apportion the cost between

13 them in a different manner.

14 (B) Payment for such health care services

15 provided outside the United States is made on

16 the basis of the amount that would have been

17 paid by the State health security program for

18 similar services rendered in the State, with due

19 regard, in the case of hospital services, to the

20 size of the hospital, standards of service, and

21 other relevant factors.

22 (b) CROSS-BORDER ARRANGEMENTS.—A State

23 health security program for a State may negotiate with

24 such a program in an adjacent State a reciprocal arrange-
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1 ment for the coverage under such other program of health

2 care services to enrollees residing in the border region.

3 SEC. 105. EFFECTIVE DATE OF BENEFITS.

4 Benefits shall first be available under this Act for

5 items and services furnished on or after January 1, 2001.

6 SEC. 106. RELATIONSHIP TO EXISTING FEDERAL HEALTH

7 PROGRAMS.

8 (a) MEDICARE AND MEDICAID.—

9 (1) IN GENERAL.—Notwithstanding any other

10 provision of law, subject to paragraph (2)—

11 (A) no benefits shall be available under

12 title XVIII of the Social Security Act for any

13 item or service furnished after December 31,

14 2000,

15 (B) no individual is entitled to medical as16 sistance under a State plan approved under

17 title XIX of such Act for any item or service

18 furnished after such date, and

19 (C) no payment shall be made to a State

20 under section 1903(a) of such Act with respect

21 to medical assistance for any item or service

22 furnished after such date.

23 (2) TRANSITION.—In the case of inpatient hos24 pital services and extended care services during a

25 continuous period of stay which began before Janu-
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1 ary 1, 2001, and which had not ended as of such

2 date, for which benefits are provided under title

3 XVIII, or under a State plan under title XIX, of the

4 Social Security Act, the Secretary of Health and

5 Human Services and each State plan, respectively,

6 shall provide for continuation of benefits under such

7 title or plan until the end of the period of stay.

8 (b) FEDERAL EMPLOYEES HEALTH BENEFITS PRO9 GRAM.—No benefits shall be made available under chapter

10 89 of title 5, United States Code, for any part of a cov11 erage period occurring after December 31, 2000.

12 (c) CHAMPUS.—No benefits shall be made available

13 under sections 1079 and 1086 of title 10, United States

14 Code, for items or services furnished after December 31,

15 2000.

16 (d) TREATMENT OF BENEFITS FOR VETERANS AND

17 NATIVE AMERICANS.—Nothing in this Act shall affect the

18 eligibility of veterans for the medical benefits and services

19 provided under title 38, United States Code, or of Indians

20 for the medical benefits and services provided by or

21 through the Indian Health Service.
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1 TITLE II—COMPREHENSIVE BEN2 EFITS, INCLUDING PREVEN3 TIVE BENEFITS AND BENE4 FITS FOR LONG-TERM CARE

5 SEC. 201. COMPREHENSIVE BENEFITS.

6 (a) IN GENERAL.—Subject to the succeeding provi7 sions of this title, individuals enrolled for benefits under

8 this Act are entitled to have payment made under a State

9 health security program for the following items and serv10 ices if medically necessary or appropriate for the mainte11 nance of health or for the diagnosis, treatment, or rehabili12 tation of a health condition:

13 (1) HOSPITAL SERVICES.—Inpatient and out14 patient hospital care, including 24-hour-a-day emer15 gency services.

16 (2) PROFESSIONAL SERVICES.—Professional

17 services of health care practitioners authorized to

18 provide health care services under State law, includ19 ing patient education and training in self-manage20 ment techniques.

21 (3) COMMUNITY-BASED PRIMARY HEALTH

22 SERVICES.—Community-based primary health serv23 ices (as defined in section 202(a)).

24 (4) PREVENTIVE SERVICES.—Preventive serv25 ices (as defined in section 202(b)).
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1 (5) LONG-TERM, ACUTE, AND CHRONIC CARE

2 SERVICES.—

3 (A) Nursing facility services.

4 (B) Home health services.

5 (C) Home and community-based long-term

6 care services (as defined in section 202(c)) for

7 individuals described in section 203(a).

8 (D) Hospice care.

9 (E) Services in intermediate care facilities

10 for individuals with mental retardation.

11 (6) PRESCRIPTION DRUGS, BIOLOGICALS, INSU12 LIN, MEDICAL FOODS.—

13 (A) Outpatient prescription drugs and

14 biologicals, as specified by the Board consistent

15 with section 515.

16 (B) Insulin.

17 (C) Medical foods (as defined in section

18 202(e)).

19 (7) DENTAL SERVICES.—Dental services (as de20 fined in section 202(h)).

21 (8) MENTAL HEALTH AND SUBSTANCE ABUSE

22 TREATMENT SERVICES.—Mental health and sub23 stance abuse treatment services (as defined in sec24 tion 202(f)).

25 (9) DIAGNOSTIC TESTS.—Diagnostic tests.
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1 (10) OTHER ITEMS AND SERVICES.—

2 (A) OUTPATIENT THERAPY.—Outpatient

3 physical therapy services, outpatient speech pa4 thology services, and outpatient occupational

5 therapy services in all settings.

6 (B) DURABLE MEDICAL EQUIPMENT.—Du7 rable medical equipment.

8 (C) HOME DIALYSIS.—Home dialysis sup9 plies and equipment.

10 (D) AMBULANCE.—Emergency ambulance

11 service.

12 (E) PROSTHETIC DEVICES.—Prosthetic de13 vices, including replacements of such devices.

14 (F) ADDITIONAL ITEMS AND SERVICES.—

15 Such other medical or health care items or

16 services as the Board may specify.

17 (b) COST-SHARING.—

18 (1) IN GENERAL.—Except as provided in this

19 subsection, there are no deductibles, coinsurance, or

20 copayments applicable to acute care and preventive

21 benefits provided under this title.

22 (2) COST-SHARING FOR LONG-TERM CARE

23 SERVICES.—

24 (A) IN GENERAL.—
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1 (i) payments for home and commu2 nity-based long-term care services are sub3 ject to coinsurance of 20 percent, and

4 (ii) payments for nursing facility serv5 ices are subject to coinsurance of 35 per6 cent.

7 (B) EXCEPTION.—With respect to the co8 insurance established under subparagraph

9 (A)—

10 (i) such coinsurance shall not apply to

11 an individual with income (as defined by

12 the Secretary) of not more than 100 per13 cent of the income official poverty line ap14 plicable to a family of the size involved;

15 and

16 (ii) in the case of an individual with

17 such income that exceeds 100 percent, but

18 is less than 200 percent, of such applicable

19 poverty line, the coinsurance shall be re20 duced in the same proportion as the pro21 portion of such income is less than 200

22 percent of such applicable poverty line.

23 (c) PROHIBITION OF BALANCE BILLING.—As pro24 vided in section 531, no person may impose a charge for
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1 covered services for which benefits are provided under this

2 Act.

3 (d) NO DUPLICATE HEALTH INSURANCE.—Each

4 State health security program shall prohibit the sale of

5 health insurance in the State if payment under the insur6 ance duplicates payment for any items or services for

7 which payment may be made under such a program.

8 (e) STATE PROGRAM MAY PROVIDE ADDITIONAL

9 BENEFITS.—Nothing in this Act shall be construed as

10 limiting the benefits that may be made available under a

11 State health security program to residents of the State

12 at the expense of the State.

13 (f) EMPLOYERS MAY PROVIDE ADDITIONAL BENE14 FITS.—Nothing in this Act shall be construed as limiting

15 the additional benefits that an employer may provide to

16 employees or their dependents, or to former employees or

17 their dependents.

18 SEC. 202. DEFINITIONS RELATING TO SERVICES.

19 (a) COMMUNITY-BASED PRIMARY HEALTH SERV20 ICES.—In this title, the term ‘‘community-based primary

21 health services’’ means ambulatory health services

22 furnished—

23 (1) by a rural health clinic;

24 (2) by a Federally qualified health center (as

25 defined in section 1905(l)(2)(B) of the Social Secu-
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1 rity Act), and which, for purposes of this Act, in2 clude services furnished by State and local health

3 agencies;

4 (3) in a school-based setting;

5 (4) by public educational agencies and other

6 providers of services to children entitled to assist7 ance under the Individuals with Disabilities Edu8 cation Act for services furnished pursuant to a

9 written Individualized Family Services Plan or

10 Individual Education Plan under such Act; and

11 (5) public and private nonprofit entities receiv12 ing Federal assistance under the Public Health

13 Service Act.

14 (b) PREVENTIVE SERVICES.—

15 (1) IN GENERAL.—In this title, the term ‘‘pre16 ventive services’’ means items and services—

17 (A) which—

18 (i) are specified in paragraph (2), or

19 (ii) the Board determines to be effec20 tive in the maintenance and promotion of

21 health or minimizing the effect of illness,

22 disease, or medical condition; and

23 (B) which are provided consistent with the

24 periodicity schedule established under para25 graph (3).
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1 (2) SPECIFIED PREVENTIVE SERVICES.—The

2 services specified in this paragraph are as follows:

3 (A) Basic immunizations.

4 (B) Prenatal and well-baby care (for in5 fants under one year of age).

6 (C) Well-child care (including periodic

7 physical examinations, hearing and vision

8 screening, and developmental screening and ex9 aminations) for individuals under 18 years of

10 age.

11 (D) Periodic screening mammography, Pap

12 smears, and colorectal examinations and exami13 nations for prostate cancer.

14 (E) Physical examinations.

15 (F) Family planning services.

16 (G) Routine eye examinations, eyeglasses,

17 and contact lenses.

18 (H) Hearing aids, but only upon a deter19 mination of a certified audiologist or physician

20 that a hearing problem exists and is caused by

21 a condition that can be corrected by use of a

22 hearing aid.

23 (3) SCHEDULE.—The Board shall establish, in

24 consultation with experts in preventive medicine and

25 public health and taking into consideration those
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1 preventive services recommended by the Preventive

2 Services Task Force and published as the Guide to

3 Clinical Preventive Services, a periodicity schedule

4 for the coverage of preventive services under para5 graph (1). Such schedule shall take into consider6 ation the cost-effectiveness of appropriate preventive

7 care and shall be revised not less frequently than

8 once every 5 years, in consultation with experts in

9 preventive medicine and public health.

10 (c) HOME AND COMMUNITY-BASED LONG-TERM

11 CARE SERVICES.—In this title, the term ‘‘home and com12 munity-based long-term care services’’ means the following

13 services provided to an individual to enable the individual

14 to remain in such individual’s place of residence within

15 the community:

16 (1) Home health aide services.

17 (2) Adult day health care, social day care or

18 psychiatric day care.

19 (3) Medical social work services.

20 (4) Care coordination services, as defined in

21 subsection (g)(1).

22 (5) Respite care, including training for informal

23 caregivers.
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1 (6) Personal assistance services, and home2 maker services (including meals) incidental to the

3 provision of personal assistance services.

4 (d) HOME HEALTH SERVICES.—

5 (1) IN GENERAL.—The term ‘‘home health

6 services’’ means items and services described in sec7 tion 1861(m) of the Social Security Act and includes

8 home infusion services.

9 (2) HOME INFUSION SERVICES.—The term

10 ‘‘home infusion services’’ includes the nursing, phar11 macy, and related services that are necessary to con12 duct the home infusion of a drug regimen safely and

13 effectively under a plan established and periodically

14 reviewed by a physician and that are provided in

15 compliance with quality assurance requirements es16 tablished by the Secretary.

17 (e) MEDICAL FOODS.—In this title, the term ‘‘med18 ical foods’’ means foods which are formulated to be con19 sumed or administered enterally under the supervision of

20 a physician and which are intended for the specific dietary

21 management of a disease or condition for which distinctive

22 nutritional requirements, based on recognized scientific

23 principles, are established by medical evaluation.

24 (f) MENTAL HEALTH AND SUBSTANCE ABUSE

25 TREATMENT SERVICES.—
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1 (1) SERVICES DESCRIBED.—In this title, the

2 term ‘‘mental health and substance abuse treatment

3 services’’ means the following services related to the

4 prevention, diagnosis, treatment, and rehabilitation

5 of mental illness and promotion of mental health:

6 (A) INPATIENT HOSPITAL SERVICES.—In7 patient hospital services furnished primarily for

8 the diagnosis or treatment of mental illness or

9 substance abuse for up to 60 days during a

10 year, reduced by a number of days determined

11 by the Secretary so that the actuarial value of

12 providing such number of days of services

13 under this paragraph to the individual is equal

14 to the actuarial value of the days of inpatient

15 residential services furnished to the individual

16 under subparagraph (B) during the year after

17 such services have been furnished to the indi18 vidual for 120 days during the year (rounded to

19 the nearest day), but only if (with respect to

20 services furnished to an individual described in

21 section 204(b)(1)) such services are furnished

22 in conformity with the plan of an organized sys23 tem of care for mental health and substance

24 abuse services in accordance with section

25 204(b)(2).
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1 (B) INTENSIVE RESIDENTIAL SERVICES.—

2 Intensive residential services (as defined in

3 paragraph (2)) furnished to an individual for

4 up to 120 days during any calendar year, ex5 cept that—

6 (i) such services may be furnished to

7 the individual for additional days during

8 the year if necessary for the individual to

9 complete a course of treatment to the ex10 tent that the number of days of inpatient

11 hospital services described in subparagraph

12 (A) that may be furnished to the individual

13 during the year (as reduced under such

14 subparagraph) is not less than 15; and

15 (ii) reduced by a number of days de16 termined by the Secretary so that the actu17 arial value of providing such number of

18 days of services under this paragraph to

19 the individual is equal to the actuarial

20 value of the days of intensive community21 based services furnished to the individual

22 under subparagraph (D) during the year

23 after such services have been furnished to

24 the individual for 90 days (or, in the case

25 of services described in subparagraph
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1 (D)(ii), for 180 days) during the year

2 (rounded to the nearest day).

3 (C) OUTPATIENT SERVICES.—Outpatient

4 treatment services of mental illness or sub5 stance abuse (other than intensive community6 based services under subparagraph (D)) for an

7 unlimited number of days during any calendar

8 year furnished in accordance with standards es9 tablished by the Secretary for the management

10 of such services, and, in the case of services fur11 nished to an individual described in section

12 204(b)(1) who is not an inpatient of a hospital,

13 in conformity with the plan of an organized sys14 tem of care for mental health and substance

15 abuse services in accordance with section

16 204(b)(2).

17 (D) INTENSIVE COMMUNITY-BASED SERV18 ICES.—Intensive community-based services (as

19 described in paragraph (3))—

20 (i) for an unlimited number of days

21 during any calendar year, in the case of

22 services described in section 1861(ff)(2)(E)

23 that are furnished to an individual who is

24 a seriously mentally ill adult, a seriously

25 emotionally disturbed child, or an adult or
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1 child with serious substance abuse disorder

2 (as determined in accordance with criteria

3 established by the Secretary);

4 (ii) in the case of services described in

5 section 1861(ff)(2)(C), for up to 180 days

6 during any calendar year, except that such

7 services may be furnished to the individual

8 for a number of additional days during the

9 year equal to the difference between the

10 total number of days of intensive residen11 tial services which the individual may re12 ceive during the year under part A (as de13 termined under subparagraph (B)) and the

14 number of days of such services which the

15 individual has received during the year, or

16 (iii) in the case of any other such

17 services, for up to 90 days during any cal18 endar year, except that such services may

19 be furnished to the individual for the num20 ber of additional days during the year de21 scribed in clause (ii).

22 (2) INTENSIVE RESIDENTIAL SERVICES DE23 FINED.—

24 (A) IN GENERAL.—Subject to subpara25 graphs (B) and (C), the term ‘‘intensive resi-
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1 dential services’’ means inpatient services pro2 vided in any of the following facilities:

3 (i) Residential detoxification centers.

4 (ii) Crisis residential programs or

5 mental illness residential treatment pro6 grams.

7 (iii) Therapeutic family or group

8 treatment homes.

9 (iv) Residential centers for substance

10 abuse treatment.

11 (B) REQUIREMENTS FOR FACILITIES.—No

12 service may be treated as an intensive residen13 tial service under subparagraph (A) unless the

14 facility at which the service is provided—

15 (i) is legally authorized to provide

16 such service under the law of the State (or

17 under a State regulatory mechanism pro18 vided by State law) in which the facility is

19 located or is certified to provide such serv20 ice by an appropriate accreditation entity

21 approved by the State in consultation with

22 the Secretary; and

23 (ii) meets such other requirements as

24 the Secretary may impose to assure the
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1 quality of the intensive residential services

2 provided.

3 (C) SERVICES FURNISHED TO AT-RISK

4 CHILDREN.—In the case of services furnished

5 to an individual described in section 204(b)(1),

6 no service may be treated as an intensive resi7 dential service under this subsection unless the

8 service is furnished in conformity with the plan

9 of an organized system of care for mental

10 health and substance abuse services in accord11 ance with section 204(b)(2).

12 (D) MANAGEMENT STANDARDS.—No serv13 ice may be treated as an intensive residential

14 service under subparagraph (A) unless the serv15 ice is furnished in accordance with standards

16 established by the Secretary for the manage17 ment of such services.

18 (3) INTENSIVE COMMUNITY-BASED SERVICES

19 DEFINED.—

20 (A) IN GENERAL.—The term ‘‘intensive

21 community-based services’’ means the items

22 and services described in subparagraph (B) pre23 scribed by a physician (or, in the case of serv24 ices furnished to an individual described in sec25 tion 204(b)(1), by an organized system of care
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1 for mental health and substance abuse services

2 in accordance with such section) and provided

3 under a program described in subparagraph

4 (D) under the supervision of a physician (or, to

5 the extent permitted under the law of the State

6 in which the services are furnished, a non-phy7 sician mental health professional) pursuant to

8 an individualized, written plan of treatment es9 tablished and periodically reviewed by a physi10 cian (in consultation with appropriate staff par11 ticipating in such program) which sets forth the

12 physician’s diagnosis, the type, amount, fre13 quency, and duration of the items and services

14 provided under the plan, and the goals for

15 treatment under the plan, but does not include

16 any item or service that is not furnished in ac17 cordance with standards established by the Sec18 retary for the management of such services.

19 (B) ITEMS AND SERVICES DESCRIBED.—

20 The items and services described in this sub21 paragraph are—

22 (i) partial hospitalization services con23 sisting of the items and services described

24 in subparagraph (C);

25 (ii) psychiatric rehabilitation services;
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1 (iii) day treatment services for indi2 viduals under 19 years of age;

3 (iv) in-home services;

4 (v) case management services, includ5 ing collateral services designated as such

6 case management services by the Sec7 retary;

8 (vi) ambulatory detoxification services;

9 (vii) such other items and services as

10 the Secretary may provide (but in no event

11 to include meals and transportation),

12 that are reasonable and necessary for the diag13 nosis or active treatment of the individual’s

14 condition, reasonably expected to improve or

15 maintain the individual’s condition and func16 tional level and to prevent relapse or hos17 pitalization, and furnished pursuant to such

18 guidelines relating to frequency and duration of

19 services as the Secretary shall by regulation es20 tablish (taking into account accepted norms of

21 medical practice and the reasonable expectation

22 of patient improvement).

23 (C) ITEMS AND SERVICES INCLUDED AS

24 PARTIAL HOSPITALIZATION SERVICES.—For
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1 purposes of subparagraph (B)(i), partial hos2 pitalization services consist of the following:

3 (i) Individual and group therapy with

4 physicians or psychologists (or other men5 tal health professionals to the extent au6 thorized under State law).

7 (ii) Occupational therapy requiring

8 the skills of a qualified occupational thera9 pist.

10 (iii) Services of social workers, trained

11 psychiatric nurses, behavioral aides, and

12 other staff trained to work with psychiatric

13 patients (to the extent authorized under

14 State law).

15 (iv) Drugs and biologicals furnished

16 for therapeutic purposes (which cannot, as

17 determined in accordance with regulations,

18 be self-administered).

19 (v) Individualized activity therapies

20 that are not primarily recreational or di21 versionary.

22 (vi) Family counseling (the primary

23 purpose of which is treatment of the indi24 vidual’s condition).
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1 (vii) Patient training and education

2 (to the extent that training and edu3 cational activities are closely and clearly

4 related to the individual’s care and treat5 ment).

6 (viii) Diagnostic services.

7 (D) PROGRAMS DESCRIBED.—A program

8 described in this subparagraph is a program

9 (whether facility-based or freestanding) which is

10 furnished by an entity—

11 (i) legally authorized to furnish such a

12 program under State law (or the State reg13 ulatory mechanism provided by State law)

14 or certified to furnish such a program by

15 an appropriate accreditation entity ap16 proved by the State in consultation with

17 the Secretary; and

18 (ii) meeting such other requirements

19 as the Secretary may impose to assure the

20 quality of the intensive community-based

21 services provided.

22 (g) CARE COORDINATION SERVICES.—

23 (1) IN GENERAL.—In this title, the term ‘‘care

24 coordination services’’ means services provided by

25 care coordinators (as defined in paragraph (2)) to
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1 individuals described in paragraph (3) for the co2 ordination and monitoring of home and community3 based long term care services to ensure appropriate,

4 cost-effective utilization of such services in a com5 prehensive and continuous manner, and includes—

6 (A) transition management between inpa7 tient facilities and community-based services,

8 including assisting patients in identifying and

9 gaining access to appropriate ancillary services;

10 and

11 (B) evaluating and recommending appro12 priate treatment services, in cooperation with

13 patients and other providers and in conjunction

14 with any quality review program or plan of care

15 under section 205.

16 (2) CARE COORDINATOR.—

17 (A) IN GENERAL.—In this title, the term

18 ‘‘care coordinator’’ means an individual or non19 profit or public agency or organization which

20 the State health security program determines—

21 (i) is capable of performing directly,

22 efficiently, and effectively the duties of a

23 care coordinator described in paragraph

24 (1), and
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1 (ii) demonstrates capability in estab2 lishing and periodically reviewing and re3 vising plans of care, and in arranging for

4 and monitoring the provision and quality

5 of services under any plan.

6 (B) INDEPENDENCE.—State health secu7 rity programs shall establish safeguards to as8 sure that care coordinators have no financial in9 terest in treatment decisions or placements.

10 Care coordination may not be provided through

11 any structure or mechanism through which

12 quality review is performed.

13 (3) ELIGIBLE INDIVIDUALS.—An individual de14 scribed in this paragraph is an individual described

15 in section 203 (relating to individuals qualifying for

16 long term and chronic care services).

17 (h) DENTAL SERVICES.—

18 (1) IN GENERAL.—In this title, subject to sub19 section (b), the term ‘‘dental services’’ means the

20 following:

21 (A) Emergency dental treatment, including

22 extractions, for bleeding, pain, acute infections,

23 and injuries to the maxillofacial region.

24 (B) Prevention and diagnosis of dental dis25 ease, including examinations of the hard and
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1 soft tissues of the oral cavity and related struc2 tures, radiographs, dental sealants, fluorides,

3 and dental prophylaxis.

4 (C) Treatment of dental disease, including

5 non-cast fillings, periodontal maintenance serv6 ices, and endodontic services.

7 (D) Space maintenance procedures to pre8 vent orthodontic complications.

9 (E) Orthodontic treatment to prevent se10 vere malocclusions.

11 (F) Full dentures.

12 (G) Medically necessary oral health care.

13 (H) Any items and services for special

14 needs patients that are not described in sub15 paragraphs (A) through (G) and that—

16 (i) are required to provide such pa17 tients the items and services described in

18 subparagraphs (A) through (G);

19 (ii) are required to establish oral func20 tion (including general anesthesia for indi21 viduals with physical or emotional limita22 tions that prevent the provision of dental

23 care without such anesthesia);

24 (iii) consist of orthodontic care for se25 vere dentofacial abnormalities; or
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1 (iv) consist of prosthetic dental de2 vices for genetic or birth defects or fitting

3 for such devices.

4 (I) Any dental care for individuals with a

5 seizure disorder that is not described in sub6 paragraphs (A) through (H) and that is re7 quired because of an illness, injury, disorder, or

8 other health condition that results from such

9 seizure disorder.

10 (2) LIMITATIONS.—Dental services are subject

11 to the following limitations:

12 (A) PREVENTION AND DIAGNOSIS.—

13 (i) EXAMINATIONS AND PROPHY14 LAXIS.—The examinations and prophylaxis

15 described in paragraph (1)(B) are covered

16 only consistent with a periodicity schedule

17 established by the Board, which schedule

18 may provide for special treatment of indi19 viduals less than 18 years of age and of

20 special needs patients.

21 (ii) DENTAL SEALANTS.—The dental

22 sealants described in such paragraph are

23 not covered for individuals 18 years of age

24 or older. Such sealants are covered for in25 dividuals less than 10 years of age for pro-
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1 tection of the 1st permanent molars. Such

2 sealants are covered for individuals 10

3 years of age or older for protection of the

4 2d permanent molars.

5 (B) TREATMENT OF DENTAL DISEASE.—

6 Prior to January 1, 2006, the items and serv7 ices described in paragraph (1)(C) are covered

8 only for individuals less than 18 years of age

9 and special needs patients. On or after such

10 date, such items and services are covered for all

11 individuals enrolled for benefits under this Act,

12 except that endodontic services are not covered

13 for individuals 18 years of age or older.

14 (C) SPACE MAINTENANCE.—The items and

15 services described in paragraph (1)(D) are cov16 ered only for individuals at least 3 years of age,

17 but less than 13 years of age and—

18 (i) are limited to posterior teeth;

19 (ii) involve maintenance of a space or

20 spaces for permanent posterior teeth that

21 would otherwise be prevented from normal

22 eruption if the space were not maintained;

23 and

24 (iii) do not include a space maintainer

25 that is placed within 6 months of the ex-
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1 pected eruption of the permanent posterior

2 tooth concerned.

3 (D) ORTHODONTIC TREATMENT.—Prior to

4 January 1, 2006, the items and services de5 scribed in paragraph (1)(E) are covered only

6 for individuals at least 6 years of age, but less

7 than 12 years of age, who have severe

8 dentofacial abnormalities. On or after such

9 date, such items and services are covered only

10 for individuals at least 6 years of age, but less

11 than 12 years of age.

12 (E) DENTURES.—Prior to January 1,

13 2006, the dentures described in paragraph

14 (1)(F) are not covered, except for special needs

15 patients. On or after such date, dentures are

16 covered for an individual consistent with a peri17 odicity schedule established by the Board, ex18 cept that the limitation of periodicity provided

19 in such schedule shall not apply to a special

20 needs patient.

21 (3) DEFINITIONS.—For purposes of this title:

22 (A) MEDICALLY NECESSARY ORAL HEALTH

23 CARE.—The term ‘‘medically necessary oral

24 health care’’ means oral health care that is re25 quired as a direct result of, or would have a di-
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1 rect impact on, an underlying medical condi2 tion. Such term includes oral health care di3 rected toward control or elimination of pain, in4 fection, or reestablishment of oral function.

5 (B) SPECIAL NEEDS PATIENT.—The term

6 ‘‘special needs patient’’ includes an individual

7 with a genetic or birth defect, a developmental

8 disability, or an acquired medical disability.

9 (i) NURSING FACILITY; NURSING FACILITY SERV10 ICES.—Except as may be provided by the Board, the

11 terms ‘‘nursing facility’’ and ‘‘nursing facility services’’

12 have the meanings given such terms in sections 1919(a)

13 and 1905(f), respectively, of the Social Security Act.

14 (j) SERVICES IN INTERMEDIATE CARE FACILITIES

15 FOR INDIVIDUALS WITH MENTAL RETARDATION.—Ex16 cept as may be provided by the Board—

17 (1) the term ‘‘intermediate care facility for indi18 viduals with mental retardation’’ has the meaning

19 specified in section 1905(d) of the Social Security

20 Act (as in effect before the enactment of this Act);

21 and

22 (2) the term ‘‘services in intermediate care fa23 cilities for individuals with mental retardation’’

24 means services described in section 1905(a)(15) of

25 such Act (as so in effect) in an intermediate care fa-
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1 cility for individuals with mental retardation to an

2 individual determined to require such services in ac3 cordance with standards specified by the Board and

4 comparable to the standards described in section

5 1902(a)(31)(A) of such Act (as so in effect).

6 (k) OTHER TERMS.—Except as may be provided by

7 the Board, the definitions contained in section 1861 of the

8 Social Security Act shall apply.

9 SEC. 203. SPECIAL RULES FOR HOME AND COMMUNITY10 BASED LONG-TERM CARE SERVICES.

11 (a) QUALIFYING INDIVIDUALS.—For purposes of sec12 tion 201(a)(5)(C), individuals described in this subsection

13 are the following individuals:

14 (1) ADULTS.—Individuals 18 years of age or

15 older determined (in a manner specified by the

16 Board)—

17 (A) to be unable to perform, without the

18 assistance of an individual, at least 2 of the fol19 lowing 5 activities of daily living (or who has a

20 similar level of disability due to cognitive

21 impairment)—

22 (i) bathing;

23 (ii) eating;

24 (iii) dressing;

25 (iv) toileting; and
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1 (v) transferring in and out of a bed or

2 in and out of a chair;

3 (B) due to cognitive or mental impair4 ments, to require supervision because the indi5 vidual behaves in a manner that poses health or

6 safety hazards to himself or herself or others;

7 or

8 (C) due to cognitive or mental impair9 ments, to require queuing to perform activities

10 of daily living.

11 (2) CHILDREN.—Individuals under 18 years of

12 age determined (in a manner specified by the Board)

13 to meet such alternative standard of disability for

14 children as the Board develops. Such alternative

15 standard shall be comparable to the standard for

16 adults and appropriate for children.

17 (b) LIMIT ON SERVICES.—

18 (1) IN GENERAL.—The aggregate expenditures

19 by a State health security program with respect to

20 home and community-based long-term care services

21 in a period (specified by the Board) may not exceed

22 65 percent (or such alternative ratio as the Board

23 establishes under paragraph (2)) of the average of

24 the amount of payment that would have been made

25 under the program during the period if all the home-
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1 based long-term care beneficiaries had been resi2 dents of nursing facilities in the same area in which

3 the services were provided.

4 (2) ALTERNATIVE RATIO.—The Board may es5 tablish for purposes of paragraph (1) an alternative

6 ratio (of payments for home and community-based

7 long term care services to payments for nursing fa8 cility services) as the Board determines to be more

9 consistent with the goal of providing cost-effective

10 long-term care in the most appropriate and least

11 restrictive setting.

12 SEC. 204. EXCLUSIONS AND LIMITATIONS.

13 (a) IN GENERAL.—Subject to section 201(e), benefits

14 for service are not available under this Act unless the

15 services meet the standards specified in section 201(a).

16 (b) SPECIAL DELIVERY REQUIREMENTS FOR MEN17 TAL HEALTH AND SUBSTANCE ABUSE TREATMENT SERV18 ICES PROVIDED TO AT-RISK CHILDREN.—

19 (1) REQUIRING SERVICES TO BE PROVIDED

20 THROUGH ORGANIZED SYSTEMS OF CARE.—A State

21 health security program shall ensure that mental

22 health services and substance abuse treatment serv23 ices are furnished through an organized system of

24 care, as described in paragraph (2), if—
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1 (A) the services are provided to an indi2 vidual less than 22 years of age;

3 (B) the individual has a serious emotional

4 disturbance or a substance abuse disorder; and

5 (C) the individual is, or is at imminent risk

6 of being, subject to the authority of, or in need

7 of the services of, at least 1 public agency that

8 serves the needs of children, including an agen9 cy involved with child welfare, special education,

10 juvenile justice, or criminal justice.

11 (2) REQUIREMENTS FOR SYSTEM OF CARE.—In

12 this subsection, an ‘‘organized system of care’’ is a

13 community-based service delivery network, which

14 may consist of public and private providers, that

15 meets the following requirements:

16 (A) The system has established linkages

17 with existing mental health services and sub18 stance abuse treatment service delivery pro19 grams in the plan service area (or is in the

20 process of developing or operating a system

21 with appropriate public agencies in the area to

22 coordinate the delivery of such services to indi23 viduals in the area).

24 (B) The system provides for the participa25 tion and coordination of multiple agencies and
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1 providers that serve the needs of children in the

2 area, including agencies and providers involved

3 with child welfare, education, juvenile justice,

4 criminal justice, health care, mental health, and

5 substance abuse prevention and treatment.

6 (C) The system provides for the involve7 ment of the families of children to whom mental

8 health services and substance abuse treatment

9 services are provided in the planning of treat10 ment and the delivery of services.

11 (D) The system provides for the develop12 ment and implementation of individualized

13 treatment plans by multidisciplinary and multi14 agency teams, which are recognized and fol15 lowed by the applicable agencies and providers

16 in the area.

17 (E) The system ensures the delivery and

18 coordination of the range of mental health serv19 ices and substance abuse treatment services re20 quired by individuals under 22 years of age who

21 have a serious emotion disturbance or a sub22 stance abuse disorder.

23 (F) The system provides for the manage24 ment of the individualized treatment plans de25 scribed in subparagraph (D) and for a flexible
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1 response to changes in treatment needs over

2 time.

3 (c) TREATMENT OF EXPERIMENTAL SERVICES.—In

4 applying subsection (a), the Board shall make national

5 coverage determinations with respect to those services that

6 are experimental in nature. Such determinations shall be

7 made consistent with a process that provides for input

8 from representatives of health care professionals and pa9 tients and public comment.

10 (d) APPLICATION OF PRACTICE GUIDELINES.—In

11 the case of services for which the American Health Secu12 rity Quality Council (established under section 501) has

13 recognized a national practice guideline, the services are

14 considered to meet the standards specified in section

15 201(a) if they have been provided in accordance with such

16 guideline or in accordance with such guidelines as are pro17 vided by the State health security program consistent with

18 title V. For purposes of this subsection, a service shall

19 be considered to have been provided in accordance with

20 a practice guideline if the health care provider providing

21 the service exercised appropriate professional discretion to

22 deviate from the guideline in a manner authorized or an23 ticipated by the guideline.

24 (e) SPECIFIC LIMITATIONS.—
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1 (1) LIMITATIONS ON EYEGLASSES, CONTACT

2 LENSES, HEARING AIDS, AND DURABLE MEDICAL

3 EQUIPMENT.—Subject to section 201(e), the Board

4 may impose such limits relating to the costs and fre5 quency of replacement of eyeglasses, contact lenses,

6 hearing aids, and durable medical equipment to

7 which individuals enrolled for benefits under this Act

8 are entitled to have payment made under a State

9 health security program as the Board deems appro10 priate.

11 (2) OVERLAP WITH PREVENTIVE SERVICES.—

12 The coverage of services described in section 201(a)

13 (other than paragraph (3)) which also are preventive

14 services are required to be covered only to the extent

15 that they are required to be covered as preventive

16 services.

17 (3) MISCELLANEOUS EXCLUSIONS FROM COV18 ERED SERVICES.—Covered services under this Act

19 do not include the following:

20 (A) Surgery and other procedures (such as

21 orthodontia) performed solely for cosmetic pur22 poses (as defined in regulations) and hospital or

23 other services incident thereto, unless—

24 (i) required to correct a congenital

25 anomaly;
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1 (ii) required to restore or correct a

2 part of the body which has been altered as

3 a result of accidental injury, disease, or

4 surgery; or

5 (iii) otherwise determined to be medi6 cally necessary and appropriate under sec7 tion 201(a).

8 (B) Personal comfort items or private

9 rooms in inpatient facilities, unless determined

10 to be medically necessary and appropriate

11 under section 201(a).

12 (C) The services of a professional practi13 tioner if they are furnished in a hospital or

14 other facility which is not a participating pro15 vider.

16 (f) NURSING FACILITY SERVICES AND HOME

17 HEALTH SERVICES.—Nursing facility services and home

18 health services (other than post-hospital services, as de19 fined by the Board) furnished to an individual who is not

20 described in section 203(a) are not covered services unless

21 the services are determined to meet the standards speci22 fied in section 201(a) and, with respect to nursing facility

23 services, to be provided in the least restrictive and most

24 appropriate setting.
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1 SEC. 205. CERTIFICATION; QUALITY REVIEW; PLANS OF

2 CARE.

3 (a) CERTIFICATIONS.—State health security pro4 grams may require, as a condition of payment for institu5 tional health care services and other services of the type

6 described in such sections 1814(a) and 1835(a) of the So7 cial Security Act, periodic professional certifications of the

8 kind described in such sections.

9 (b) QUALITY REVIEW.—For requirement that each

10 State health security program establish a quality review

11 program that meets the requirements for such a program

12 under title V, see section 404(b)(1)(H).

13 (c) PLAN OF CARE REQUIREMENTS.—A State health

14 security program may require, consistent with standards

15 established by the Board, that payment for services ex16 ceeding specified levels or duration be provided only as

17 consistent with a plan of care or treatment formulated by

18 one or more providers of the services or other qualified

19 professionals. Such a plan may include, consistent with

20 subsection (b), case management at specified intervals as

21 a further condition of payment for services.

22 TITLE III—PROVIDER

23 PARTICIPATION

24 SEC. 301. PROVIDER PARTICIPATION AND STANDARDS.

25 (a) IN GENERAL.—An individual or other entity fur26 nishing any covered service under a State health security
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1 program under this Act is not a qualified provider unless

2 the individual or entity—

3 (1) is a qualified provider of the services under

4 section 302;

5 (2) has filed with the State health security pro6 gram a participation agreement described in sub7 section (b); and

8 (3) meets such other qualifications and condi9 tions as are established by the Board or the State

10 health security program under this Act.

11 (b) REQUIREMENTS IN PARTICIPATION AGREE12 MENT.—

13 (1) IN GENERAL.—A participation agreement

14 described in this subsection between a State health

15 security program and a provider shall provide at

16 least for the following:

17 (A) Services to eligible persons will be fur18 nished by the provider without discrimination

19 on the ground of race, national origin, income,

20 religion, age, sex or sexual orientation, dis21 ability, handicapping condition, or (subject to

22 the professional qualifications of the provider)

23 illness. Nothing in this subparagraph shall be

24 construed as requiring the provision of a type
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1 or class of services which services are outside

2 the scope of the provider’s normal practice.

3 (B) No charge will be made for any cov4 ered services other than for payment authorized

5 by this Act.

6 (C) The provider agrees to furnish such in7 formation as may be reasonably required by the

8 Board or a State health security program, in

9 accordance with uniform reporting standards

10 established under section 401(g)(1), for—

11 (i) quality review by designated enti12 ties;

13 (ii) the making of payments under

14 this Act (including the examination of

15 records as may be necessary for the

16 verification of information on which pay17 ments are based);

18 (iii) statistical or other studies re19 quired for the implementation of this Act;

20 and

21 (iv) such other purposes as the Board

22 or State may specify.

23 (D) The provider agrees not to bill the pro24 gram for any services for which benefits are not

25 available because of section 204(d).
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1 (E) In the case of a provider that is not

2 an individual, the provider agrees not to employ

3 or use for the provision of health services any

4 individual or other provider who or which has

5 had a participation agreement under this sub6 section terminated for cause.

7 (F) In the case of a provider paid under a

8 fee-for-service basis under section 612, the pro9 vider agrees to submit bills and any required

10 supporting documentation relating to the provi11 sion of covered services within 30 days (or such

12 shorter period as a State health security pro13 gram may require) after the date of providing

14 such services.

15 (2) TERMINATION OF PARTICIPATION AGREE16 MENTS.—

17 (A) IN GENERAL.—Participation agree18 ments may be terminated, with appropriate

19 notice—

20 (i) by the Board or a State health se21 curity program for failure to meet the

22 requirements of this title, or

23 (ii) by a provider.

24 (B) TERMINATION PROCESS.—Providers

25 shall be provided notice and a reasonable oppor-
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1 tunity to correct deficiencies before the Board

2 or a State health security program terminates

3 an agreement unless a more immediate termi4 nation is required for public safety or similar

5 reasons.

6 SEC. 302. QUALIFICATIONS FOR PROVIDERS.

7 (a) IN GENERAL.—A health care provider is consid8 ered to be qualified to provide covered services if the pro9 vider is licensed or certified and meets—

10 (1) all the requirements of State law to provide

11 such services,

12 (2) applicable requirements of Federal law to

13 provide such services, and

14 (3) any applicable standards established under

15 subsection (b).

16 (b) MINIMUM PROVIDER STANDARDS.—

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

18 evaluate, and update national minimum standards to

19 assure the quality of services provided under this

20 Act and to monitor efforts by State health security

21 programs to assure the quality of such services. A

22 State health security program may also establish ad23 ditional minimum standards which providers must

24 meet.
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1 (2) NATIONAL MINIMUM STANDARDS.—The na2 tional minimum standards under paragraph (1) shall

3 be established for institutional providers of services,

4 individual health care practitioners, and comprehen5 sive health service organizations. Except as the

6 Board may specify in order to carry out this title,

7 a hospital, nursing facility, or other institutional

8 provider of services shall meet standards for such a

9 facility under the medicare program under title

10 XVIII of the Social Security Act. Such standards

11 also may include, where appropriate, elements relat12 ing to—

13 (A) adequacy and quality of facilities;

14 (B) training and competence of personnel

15 (including continuing education requirements);

16 (C) comprehensiveness of service;

17 (D) continuity of service;

18 (E) patient satisfaction (including waiting

19 time and access to services); and

20 (F) performance standards (including or21 ganization, facilities, structure of services, effi22 ciency of operation, and outcome in palliation,

23 improvement of health, stabilization, cure, or

24 rehabilitation).
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1 (3) TRANSITION IN APPLICATION.—If the

2 Board provides for additional requirements for pro3 viders under this subsection, any such additional re4 quirement shall be implemented in a manner that

5 provides for a reasonable period during which a pre6 viously qualified provider is permitted to meet such

7 an additional requirement.

8 (4) EXCHANGE OF INFORMATION.—The Board

9 shall provide for an exchange, at least annually,

10 among State health security programs of informa11 tion with respect to quality assurance and cost

12 containment.

13 SEC. 303. QUALIFICATIONS FOR COMPREHENSIVE HEALTH

14 SERVICE ORGANIZATIONS.

15 (a) IN GENERAL.—For purposes of this Act, a com16 prehensive health service organization (in this section re17 ferred to as a ‘‘CHSO’’) is a public or private organization

18 which, in return for a capitated payment amount, under19 takes to furnish, arrange for the provision of, or provide

20 payment with respect to—

21 (1) a full range of health services (as identified

22 by the Board), including at least hospital services

23 and physicians services, and

24 (2) out-of-area coverage in the case of urgently

25 needed services,
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1 to an identified population which is living in or near a

2 specified service area and which enrolls voluntarily in the

3 organization.

4 (b) ENROLLMENT.—

5 (1) IN GENERAL.—All eligible persons living in

6 or near the specified service area of a CHSO are eli7 gible to enroll in the organization; except that the

8 number of enrollees may be limited to avoid over9 taxing the resources of the organization.

10 (2) MINIMUM ENROLLMENT PERIOD.—Subject

11 to paragraph (3), the minimum period of enrollment

12 with a CHSO shall be twelve months, unless the en13 rolled individual becomes ineligible to enroll with the

14 organization.

15 (3) WITHDRAWAL FOR CAUSE.—Each CHSO

16 shall permit an enrolled individual to disenroll from

17 the organization for cause at any time.

18 (c) REQUIREMENTS FOR CHSOS.—

19 (1) ACCESSIBLE SERVICES.—Each CHSO, to

20 the maximum extent feasible, shall make all services

21 readily and promptly accessible to enrollees who live

22 in the specified service area.

23 (2) CONTINUITY OF CARE.—Each CHSO shall

24 furnish services in such manner as to provide con25 tinuity of care and (when services are furnished by
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1 different providers) shall provide ready referral of

2 patients to such services and at such times as may

3 be medically appropriate.

4 (3) BOARD OF DIRECTORS.—In the case of a

5 CHSO that is a private organization—

6 (A) CONSUMER REPRESENTATION.—At

7 least one-third of the members of the CHSO’s

8 board of directors must be consumer members

9 with no direct or indirect, personal or family

10 financial relationship to the organization.

11 (B) PROVIDER REPRESENTATION.—The

12 CHSO’s board of directors must include at

13 least one member who represents health care

14 providers.

15 (4) PATIENT GRIEVANCE PROGRAM.—Each

16 CHSO must have in effect a patient grievance pro17 gram and must conduct regularly surveys of the sat18 isfaction of members with services provided by or

19 through the organization.

20 (5) MEDICAL STANDARDS.—Each CHSO must

21 provide that a committee or committees of health

22 care practitioners associated with the organization

23 will promulgate medical standards, oversee the pro24 fessional aspects of the delivery of care, perform the

25 functions of a pharmacy and drug therapeutics com-
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1 mittee, and monitor and review the quality of all

2 health services (including drugs, education, and pre3 ventive services).

4 (6) PREMIUMS.—Premiums or other charges by

5 a CHSO for any services not paid for under this Act

6 must be reasonable.

7 (7) UTILIZATION AND BONUS INFORMATION.—

8 Each CHSO must—

9 (A) comply with the requirements of sec10 tion 1876(i)(8) of the Social Security Act (re11 lating to prohibiting physician incentive plans

12 that provide specific inducements to reduce or

13 limit medically necessary services), and

14 (B) make available to its membership utili15 zation information and data regarding financial

16 performance, including bonus or incentive pay17 ment arrangements to practitioners.

18 (8) PROVISION OF SERVICES TO ENROLLEES AT

19 INSTITUTIONS OPERATING UNDER GLOBAL BUDG20 ETS.—The organization shall arrange to reimburse

21 for hospital services and other facility-based services

22 (as identified by the Board) for services provided to

23 members of the organization in accordance with the

24 global operating budget of the hospital or facility ap25 proved under section 611.
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1 (9) BROAD MARKETING.—Each CHSO must

2 provide for the marketing of its services (including

3 dissemination of marketing materials) to potential

4 enrollees in a manner that is designed to enroll indi5 viduals representative of the different population

6 groups and geographic areas included within its

7 service area and meets such requirements as the

8 Board or a State health security program may

9 specify.

10 (10) ADDITIONAL REQUIREMENTS.—Each

11 CHSO must meet—

12 (A) such requirements relating to min13 imum enrollment,

14 (B) such requirements relating to financial

15 solvency,

16 (C) such requirements relating to quality

17 and availability of care, and

18 (D) such other requirements,

19 as the Board or a State health security program

20 may specify.

21 (d) PROVISION OF EMERGENCY SERVICES TO NON22 ENROLLEES.—A CHSO may furnish emergency services

23 to persons who are not enrolled in the organization. Pay24 ment for such services, if they are covered services to eligi25 ble persons, shall be made to the organization unless the
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1 organization requests that it be made to the individual

2 provider who furnished the services.

3 SEC. 304. LIMITATION ON CERTAIN PHYSICIAN REFERRALS.

4 (a) APPLICATION TO AMERICAN HEALTH SECURITY

5 PROGRAM.—Section 1877 of the Social Security Act, as

6 amended by subsections (b) and (c), shall apply under this

7 Act in the same manner as it applies under title XVIII

8 of the Social Security Act; except that in applying such

9 section under this Act any references in such section to

10 the Secretary or title XVIII of the Social Security Act are

11 deemed references to the Board and the American Health

12 Security Program under this Act, respectively.

13 (b) EXPANSION OF PROHIBITION TO CERTAIN ADDI14 TIONAL DESIGNATED SERVICES.—Section 1877(h)(6) of

15 the Social Security Act (42 U.S.C. 1395nn(h)(6)) is

16 amended by adding at the end the following:

17 ‘‘(L) Ambulance services.

18 ‘‘(M) Home infusion therapy services.’’.

19 (c) CONFORMING AMENDMENTS.—Section 1877 of

20 such Act is further amended—

21 (1) in subsection (a)(1)(A), by striking ‘‘for

22 which payment otherwise may be made under this

23 title’’ and by inserting ‘‘for which a charge is

24 imposed’’;
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1 (2) in subsection (a)(1)(B), by striking ‘‘under

2 this title’’;

3 (3) by amending paragraph (1) of subsection

4 (g) to read as follows:

5 ‘‘(1) DENIAL OF PAYMENT.—No payment may

6 be made under a State health security program for

7 a designated health service for which a claim is pre8 sented in violation of subsection (a)(1)(B). No indi9 vidual, third party payor, or other entity is liable for

10 payment for designated health services for which a

11 claim is presented in violation of such subsection.’’;

12 and

13 (4) in subsection (g)(3), by striking ‘‘for which

14 payment may not be made under paragraph (1)’’

15 and by inserting ‘‘for which such a claim may not

16 be presented under subsection (a)(1)’’.

17 TITLE IV—ADMINISTRATION

18 Subtitle A—General Administrative

19 Provisions

20 SEC. 401. AMERICAN HEALTH SECURITY STANDARDS

21 BOARD.

22 (a) ESTABLISHMENT.—There is hereby established

23 an American Health Security Standards Board.

24 (b) APPOINTMENT AND TERMS OF MEMBERS.—
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1 (1) IN GENERAL.—The Board shall be com2 posed of—

3 (A) the Secretary of Health and Human

4 Services, and

5 (B) 6 other individuals (described in para6 graph (2)) appointed by the President with the

7 advice and consent of the Senate.

8 The President shall first nominate individuals under

9 subparagraph (B) on a timely basis so as to provide

10 for the operation of the Board by not later than

11 January 1, 2000.

12 (2) SELECTION OF APPOINTED MEMBERS.—

13 With respect to the individuals appointed under

14 paragraph (1)(B):

15 (A) They shall be chosen on the basis of

16 backgrounds in health policy, health economics,

17 the healing professions, and the administration

18 of health care institutions.

19 (B) They shall provide a balanced point of

20 view with respect to the various health care in21 terests and at least two of them shall represent

22 the interests of individual consumers.

23 (C) Not more than three of them shall be

24 from the same political party.
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1 (D) To the greatest extent feasible, they

2 shall represent the various geographic regions

3 of the United States and shall reflect the racial,

4 ethnic, and gender composition of the popu5 lation of the United States.

6 (3) TERMS OF APPOINTED MEMBERS.—Individ7 uals appointed under paragraph (1)(B) shall serve

8 for a term of 6 years, except that the terms of 5 of

9 the individuals initially appointed shall be, as des10 ignated by the President at the time of their ap11 pointment, for 1, 2, 3, 4, and 5 years. During a

12 term of membership on the Board, no member shall

13 engage in any other business, vocation or employ14 ment.

15 (c) VACANCIES.—

16 (1) IN GENERAL.—The President shall fill any

17 vacancy in the membership of the Board in the same

18 manner as the original appointment. The vacancy

19 shall not affect the power of the remaining members

20 to execute the duties of the Board.

21 (2) VACANCY APPOINTMENTS.—Any member

22 appointed to fill a vacancy shall serve for the re23 mainder of the term for which the predecessor of the

24 member was appointed.
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1 (3) REAPPOINTMENT.—The President may re2 appoint an appointed member of the Board for a

3 second term in the same manner as the original ap4 pointment. A member who has served for two con5 secutive 6-year terms shall not be eligible for re6 appointment until two years after the member has

7 ceased to serve.

8 (4) REMOVAL FOR CAUSE.—Upon confirmation,

9 members of the Board may not be removed except

10 by the President for cause.

11 (d) CHAIR.—The President shall designate one of the

12 members of the Board, other than the Secretary, to serve

13 at the will of the President as Chair of the Board.

14 (e) COMPENSATION.—Members of the Board (other

15 than the Secretary) shall be entitled to compensation at

16 a level equivalent to level II of the Executive Schedule,

17 in accordance with section 5313 of title 5, United States

18 Code.

19 (f) GENERAL DUTIES OF THE BOARD.—

20 (1) IN GENERAL.—The Board shall develop

21 policies, procedures, guidelines, and requirements to

22 carry out this Act, including those related to—

23 (A) eligibility;

24 (B) enrollment;

25 (C) benefits;
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1 (D) provider participation standards and

2 qualifications, as defined in title III;

3 (E) national and State funding levels;

4 (F) methods for determining amounts of

5 payments to providers of covered services, con6 sistent with subtitle B of title VI;

7 (G) the determination of medical necessity

8 and appropriateness with respect to coverage of

9 certain services;

10 (H) assisting State health security pro11 grams with planning for capital expenditures

12 and service delivery;

13 (I) planning for health professional edu14 cation funding (as specified in title VI);

15 (J) allocating funds provided under title

16 VII; and

17 (K) encouraging States to develop regional

18 planning mechanisms (described in section

19 404(a)(3)).

20 (2) REGULATIONS.—Regulations authorized by

21 this Act shall be issued by the Board in accordance

22 with the provisions of section 553 of title 5, United

23 States Code.

24 (g) UNIFORM REPORTING STANDARDS; ANNUAL RE25 PORT; STUDIES.—
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1 (1) UNIFORM REPORTING STANDARDS.—

2 (A) IN GENERAL.—The Board shall estab3 lish uniform reporting requirements and stand4 ards to ensure an adequate national data base

5 regarding health services practitioners, services

6 and finances of State health security programs,

7 approved plans, providers, and the costs of fa8 cilities and practitioners providing services.

9 Such standards shall include, to the maximum

10 extent feasible, health outcome measures.

11 (B) REPORTS.—The Board shall analyze

12 regularly information reported to it, and to

13 State health security programs pursuant to

14 such requirements and standards.

15 (2) ANNUAL REPORT.—Beginning January 1,

16 of the second year beginning after the date of the

17 enactment of this Act, the Board shall annually

18 report to Congress on the following:

19 (A) The status of implementation of the

20 Act.

21 (B) Enrollment under this Act.

22 (C) Benefits under this Act.

23 (D) Expenditures and financing under this

24 Act.
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1 (E) Cost-containment measures and

2 achievements under this Act.

3 (F) Quality assurance.

4 (G) Health care utilization patterns, in5 cluding any changes attributable to the pro6 gram.

7 (H) Long-range plans and goals for the de8 livery of health services.

9 (I) Differences in the health status of the

10 populations of the different States, including in11 come and racial characteristics.

12 (J) Necessary changes in the education of

13 health personnel.

14 (K) Plans for improving service to medi15 cally underserved populations.

16 (L) Transition problems as a result of im17 plementation of this Act.

18 (M) Opportunities for improvements under

19 this Act.

20 (3) STATISTICAL ANALYSES AND OTHER STUD21 IES.—The Board may, either directly or by

22 contract—

23 (A) make statistical and other studies, on

24 a nationwide, regional, state, or local basis, of

25 any aspect of the operation of this Act, includ-
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1 ing studies of the effect of the Act upon the

2 health of the people of the United States and

3 the effect of comprehensive health services upon

4 the health of persons receiving such services;

5 (B) develop and test methods of providing

6 through payment for services or otherwise, ad7 ditional incentives for adherence by providers to

8 standards of adequacy, access, and quality;

9 methods of consumer and peer review and peer

10 control of the utilization of drugs, of laboratory

11 services, and of other services; and methods of

12 consumer and peer review of the quality of serv13 ices;

14 (C) develop and test, for use by the Board,

15 records and information retrieval systems and

16 budget systems for health services administra17 tion, and develop and test model systems for

18 use by providers of services;

19 (D) develop and test, for use by providers

20 of services, records and information retrieval

21 systems useful in the furnishing of preventive

22 or diagnostic services;

23 (E) develop, in collaboration with the phar24 maceutical profession, and test, improved ad25 ministrative practices or improved methods for
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1 the reimbursement of independent pharmacies

2 for the cost of furnishing drugs as a covered

3 service; and

4 (F) make such other studies as it may con5 sider necessary or promising for the evaluation,

6 or for the improvement, of the operation of this

7 Act.

8 (4) REPORT ON USE OF EXISTING FEDERAL

9 HEALTH CARE FACILITIES.—Not later than one year

10 after the date of the enactment of this Act, the

11 Board shall recommend to the Congress one or more

12 proposals for the treatment of health care facilities

13 of the Federal Government.

14 (h) EXECUTIVE DIRECTOR.—

15 (1) APPOINTMENT.—There is hereby estab16 lished the position of Executive Director of the

17 Board. The Director shall be appointed by the

18 Board and shall serve as secretary to the Board and

19 perform such duties in the administration of this

20 title as the Board may assign.

21 (2) DELEGATION.—The Board is authorized to

22 delegate to the Director or to any other officer or

23 employee of the Board or, with the approval of the

24 Secretary of Health and Human Services (and sub25 ject to reimbursement of identifiable costs), to any
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1 other officer or employee of the Department of

2 Health and Human Services, any of its functions or

3 duties under this Act other than—

4 (A) the issuance of regulations; or

5 (B) the determination of the availability of

6 funds and their allocation to implement this

7 Act.

8 (3) COMPENSATION.—The Executive Director

9 of the Board shall be entitled to compensation at a

10 level equivalent to level III of the Executive Sched11 ule, in accordance with section 5314 of title 5,

12 United States Code.

13 (i) INSPECTOR GENERAL.—The Inspector General

14 Act of 1978 (5 U.S.C. App.) is amended—

15 (1) in section 11(1) by inserting after ‘‘Cor16 poration;’’ the following: ‘‘the Chair of the American

17 Health Security Standards Board;’’;

18 (2) in section 11(2) by inserting after ‘‘Infor19 mation Agency,’’ the following: ‘‘the American

20 Health Security Standards Board,’’; and

21 (3) by inserting after the second section 8G the

22 following:
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1 ‘‘§ 8I. Special provisions concerning American Health

2 Security Standards Board

3 ‘‘The Inspector General of the American Health Se4 curity Standards Board, in addition to the other authori5 ties vested by this Act, shall have the same authority, with

6 respect to the Board and the American Health Security

7 Program under this Act, as the Inspector General for the

8 Department of Health and Human Services has with re9 spect to the Secretary of Health and Human Services and

10 the medicare and medicaid programs, respectively.’’.

11 (j) STAFF.—The Board shall employ such staff as the

12 Board may deem necessary.

13 (k) ACCESS TO INFORMATION.—The Secretary of

14 Health and Human Services shall make available to the

15 Board all information available from sources within the

16 Department or from other sources, pertaining to the

17 duties of the Board.

18 SEC. 402. AMERICAN HEALTH SECURITY ADVISORY COUN19 CIL.

20 (a) IN GENERAL.—The Board shall provide for an

21 American Health Security Advisory Council (in this sec22 tion referred to as the ‘‘Council’’) to advise the Board on

23 its activities.

24 (b) MEMBERSHIP.—The Council shall be composed

25 of—
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1 (1) the Chair of the Board, who shall serve as

2 Chair of the Council, and

3 (2) twenty members, not otherwise in the em4 ploy of the United States, appointed by the Board

5 without regard to the provisions of title 5, United

6 States Code, governing appointments in the competi7 tive service.

8 The appointed members shall include, in accordance with

9 subsection (e), individuals who are representative of State

10 health security programs, public health professionals, pro11 viders of health services, and of individuals (who shall con12 stitute a majority of the Council) who are representative

13 of consumers of such services, including a balanced rep14 resentation of employers, unions, consumer organizations,

15 and population groups with special health care needs. To

16 the greatest extent feasible, the membership of the Council

17 shall represent the various geographic regions of the

18 United States and shall reflect the racial, ethnic, and gen19 der composition of the population of the United States.

20 (c) TERMS OF MEMBERS.—Each appointed member

21 shall hold office for a term of four years, except that—

22 (1) any member appointed to fill a vacancy oc23 curring during the term for which the member’s

24 predecessor was appointed shall be appointed for the

25 remainder of that term; and
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1 (2) the terms of the members first taking office

2 shall expire, as designated by the Board at the time

3 of appointment, five at the end of the first year, five

4 at the end of the second year, five at the end of the

5 third year, and five at the end of the fourth year

6 after the date of enactment of this Act.

7 (d) VACANCIES.—

8 (1) IN GENERAL.—The Board shall fill any va9 cancy in the membership of the Council in the same

10 manner as the original appointment. The vacancy

11 shall not affect the power of the remaining members

12 to execute the duties of the Council.

13 (2) VACANCY APPOINTMENTS.—Any member

14 appointed to fill a vacancy shall serve for the re15 mainder of the term for which the predecessor of the

16 member was appointed.

17 (3) REAPPOINTMENT.—The Board may re18 appoint an appointed member of the Council for a

19 second term in the same manner as the original

20 appointment.

21 (e) QUALIFICATIONS.—

22 (1) PUBLIC HEALTH REPRESENTATIVES.—

23 Members of the Council who are representative of

24 State health security programs and public health

25 professionals shall be individuals who have extensive
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1 experience in the financing and delivery of care

2 under public health programs.

3 (2) PROVIDERS.—Members of the Council who

4 are representative of providers of health care shall

5 be individuals who are outstanding in fields related

6 to medical, hospital, or other health activities, or

7 who are representative of organizations or associa8 tions of professional health practitioners.

9 (3) CONSUMERS.—Members who are represent10 ative of consumers of such care shall be individuals,

11 not engaged in and having no financial interest in

12 the furnishing of health services, who are familiar

13 with the needs of various segments of the population

14 for personal health services and are experienced in

15 dealing with problems associated with the consump16 tion of such services.

17 (f) DUTIES.—

18 (1) IN GENERAL.—It shall be the duty of the

19 Council—

20 (A) to advise the Board on matters of gen21 eral policy in the administration of this Act, in

22 the formulation of regulations, and in the per23 formance of the Board’s duties under section

24 401; and
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1 (B) to study the operation of this Act and

2 the utilization of health services under it, with

3 a view to recommending any changes in the ad4 ministration of the Act or in its provisions

5 which may appear desirable.

6 (2) REPORT.—The Council shall make an an7 nual report to the Board on the performance of its

8 functions, including any recommendations it may

9 have with respect thereto, and the Board shall

10 promptly transmit the report to the Congress, to11 gether with a report by the Board on any rec12 ommendations of the Council that have not been

13 followed.

14 (g) STAFF.—The Council, its members, and any com15 mittees of the Council shall be provided with such secre16 tarial, clerical, or other assistance as may be authorized

17 by the Board for carrying out their respective functions.

18 (h) MEETINGS.—The Council shall meet as fre19 quently as the Board deems necessary, but not less than

20 four times each year. Upon request by seven or more mem21 bers it shall be the duty of the Chair to call a meeting

22 of the Council.

23 (i) COMPENSATION.—Members of the Council shall

24 be reimbursed by the Board for travel and per diem in

25 lieu of subsistence expenses during the performance of du-
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1 ties of the Board in accordance with subchapter I of chap2 ter 57 of title 5, United States Code.

3 (j) FACA NOT APPLICABLE.—The provisions of the

4 Federal Advisory Committee Act shall not apply to the

5 Council.

6 SEC. 403. CONSULTATION WITH PRIVATE ENTITIES.

7 The Secretary and the Board shall consult with pri8 vate entities, such as professional societies, national asso9 ciations, nationally recognized associations of experts,

10 medical schools and academic health centers, consumer

11 groups, and labor and business organizations in the for12 mulation of guidelines, regulations, policy initiatives, and

13 information gathering to assure the broadest and most in14 formed input in the administration of this Act. Nothing

15 in this Act shall prevent the Secretary from adopting

16 guidelines developed by such a private entity if, in the Sec17 retary’s and Board’s judgment, such guidelines are gen18 erally accepted as reasonable and prudent and consistent

19 with this Act.

20 SEC. 404. STATE HEALTH SECURITY PROGRAMS.

21 (a) SUBMISSION OF PLANS.—

22 (1) IN GENERAL.—Each State shall submit to

23 the Board a plan for a State health security pro24 gram for providing for health care services to the

25 residents of the State in accordance with this Act.
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1 (2) REGIONAL PROGRAMS.—A State may join

2 with one or more neighboring States to submit to

3 the Board a plan for a regional health security pro4 gram instead of separate State health security

5 programs.

6 (3) REGIONAL PLANNING MECHANISMS.—The

7 Board shall provide incentives for States to develop

8 regional planning mechanisms to promote the ration9 al distribution of, adequate access to, and efficient

10 use of, tertiary care facilities, equipment, and

11 services.

12 (b) REVIEW AND APPROVAL OF PLANS.—

13 (1) IN GENERAL.—The Board shall review

14 plans submitted under subsection (a) and determine

15 whether such plans meet the requirements for ap16 proval. The Board shall not approve such a plan un17 less it finds that the plan (or State law) provides,

18 consistent with the provisions of this Act, for the

19 following:

20 (A) Payment for required health services

21 for eligible individuals in the State in accord22 ance with this Act.

23 (B) Adequate administration, including the

24 designation of a single State agency responsible
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1 for the administration (or supervision of the

2 administration) of the program.

3 (C) The establishment of a State health

4 security budget.

5 (D) Establishment of payment methodolo6 gies (consistent with subtitle B of title VII).

7 (E) Assurances that individuals have the

8 freedom to choose practitioners and other

9 health care providers for services covered under

10 this Act.

11 (F) A procedure for carrying out long-term

12 regional management and planning functions

13 with respect to the delivery and distribution of

14 health care services that—

15 (i) ensures participation of consumers

16 of health services and providers of health

17 services, and

18 (ii) gives priority to the most acute

19 shortages and maldistributions of health

20 personnel and facilities and the most seri21 ous deficiencies in the delivery of covered

22 services and to the means for the speedy

23 alleviation of these shortcomings.

24 (G) The licensure and regulation of all

25 health providers and facilities to ensure compli-
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1 ance with Federal and State laws and to

2 promote quality of care.

3 (H) Establishment of a quality review sys4 tem in accordance with section 503.

5 (I) Establishment of an independent om6 budsman for consumers to register complaints

7 about the organization and administration of

8 the State health security program and to help

9 resolve complaints and disputes between con10 sumers and providers.

11 (J) Publication of an annual report on the

12 operation of the State health security program,

13 which report shall include information on cost,

14 progress towards achieving full enrollment, pub15 lic access to health services, quality review,

16 health outcomes, health professional training,

17 and the needs of medically underserved

18 populations.

19 (K) Provision of a fraud and abuse preven20 tion and control unit that the Inspector General

21 determines meets the requirements of section

22 412(a).

23 (L) Prohibit payment in cases of prohib24 ited physician referrals under section 304.
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1 (2) CONSEQUENCES OF FAILURE TO COMPLY.—

2 If the Board finds that a State plan submitted

3 under paragraph (1) does not meet the requirements

4 for approval under this section or that a State

5 health security program or specific portion of such

6 program, the plan for which was previously ap7 proved, no longer meets such requirements, the

8 Board shall provide notice to the State of such fail9 ure and that unless corrective action is taken within

10 a period specified by the Board, the Board shall

11 place the State health security program (or specific

12 portions of such program) in receivership under the

13 jurisdiction of the Board.

14 (c) STATE HEALTH SECURITY ADVISORY COUN15 CILS.—

16 (1) IN GENERAL.—For each State, the Gov17 ernor shall provide for appointment of a State

18 Health Security Advisory Council to advise and

19 make recommendations to the Governor and State

20 with respect to the implementation of the State

21 health security program in the State.

22 (2) MEMBERSHIP.—Each State Health Security

23 Advisory Council shall be composed of at least 11 in24 dividuals. The appointed members shall include indi25 viduals who are representative of the State health
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1 security program, public health professionals, pro2 viders of health services, and of individuals (who

3 shall constitute a majority) who are representative of

4 consumers of such services, including a balanced

5 representation of employers, unions and consumer

6 organizations. To the greatest extent feasible, the

7 membership of each State Health Security Advisory

8 Council shall represent the various geographic re9 gions of the State and shall reflect the racial, ethnic,

10 and gender composition of the population of the

11 State.

12 (3) DUTIES.—

13 (A) IN GENERAL.—Each State Health Se14 curity Advisory Council shall review, and sub15 mit comments to the Governor concerning the

16 implementation of the State health security pro17 gram in the State.

18 (B) ASSISTANCE.—Each State Health Se19 curity Advisory Council shall provide assistance

20 and technical support to community organiza21 tions and public and private non-profit agencies

22 submitting applications for funding under ap23 propriate State and Federal public health pro24 grams, with particular emphasis placed on as-
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1 sisting those applicants with broad consumer

2 representation.

3 (d) STATE USE OF FISCAL AGENTS.—

4 (1) IN GENERAL.—Each State health security

5 program, using competitive bidding procedures, may

6 enter into such contracts with qualified entities, such

7 as voluntary associations, as the State determines to

8 be appropriate to process claims and to perform

9 other related functions of fiscal agents under the

10 State health security program.

11 (2) RESTRICTION.—Except as the Board may

12 provide for good cause shown, in no case may more

13 than one contract described in paragraph (1) be

14 entered into under a State health security program.

15 SEC. 405. COMPLEMENTARY CONDUCT OF RELATED

16 HEALTH PROGRAMS.

17 In performing functions with respect to health per18 sonnel education and training, health research, environ19 mental health, disability insurance, vocational rehabilita20 tion, the regulation of food and drugs, and all other mat21 ters pertaining to health, the Secretary of Health and

22 Human Services shall direct all activities of the Depart23 ment of Health and Human Services toward contributions

24 to the health of the people complementary to this Act.
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1 Subtitle B—Control Over Fraud

2 and Abuse

3 SEC. 411. APPLICATION OF FEDERAL SANCTIONS TO ALL

4 FRAUD AND ABUSE UNDER AMERICAN

5 HEALTH SECURITY PROGRAM.

6 The following sections of the Social Security Act shall

7 apply to State health security programs in the same man8 ner as they apply to State medical assistance plans under

9 title XIX of such Act (except that in applying such provi10 sions any reference to the Secretary is deemed a reference

11 to the Board):

12 (1) Section 1128 (relating to exclusion of indi13 viduals and entities).

14 (2) Section 1128A (civil monetary penalties).

15 (3) Section 1128B (criminal penalties).

16 (4) Section 1124 (relating to disclosure of own17 ership and related information).

18 (5) Section 1126 (relating to disclosure of cer19 tain owners).

20 SEC. 412. REQUIREMENTS FOR OPERATION OF STATE

21 HEALTH CARE FRAUD AND ABUSE CONTROL

22 UNITS.

23 (a) REQUIREMENT.—In order to meet the require24 ment of section 404(b)(1)(K), each State health security

25 program must establish and maintain a health care fraud
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1 and abuse control unit (in this section referred to as a

2 ‘‘fraud unit’’) that meets requirements of this section and

3 other requirements of the Board. Such a unit may be a

4 State medicaid fraud control unit (described in section

5 1903(q) of the Social Security Act).

6 (b) STRUCTURE OF UNIT.—The fraud unit must—

7 (1) be a single identifiable entity of the State

8 government;

9 (2) be separate and distinct from the State

10 agency with principal responsibility for the adminis11 tration of the State health security program; and

12 (3) meet 1 of the following requirements:

13 (A) It must be a unit of the office of the

14 State Attorney General or of another depart15 ment of State government which possesses

16 statewide authority to prosecute individuals for

17 criminal violations.

18 (B) If it is in a State the constitution of

19 which does not provide for the criminal prosecu20 tion of individuals by a statewide authority and

21 has formal procedures, approved by the Board,

22 that (i) assure its referral of suspected criminal

23 violations relating to the State health insurance

24 plan to the appropriate authority or authorities

25 in the States for prosecution, and (ii) assure its
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1 assistance of, and coordination with, such au2 thority or authorities in such prosecutions.

3 (C) It must have a formal working rela4 tionship with the office of the State Attorney

5 General and have formal procedures (including

6 procedures for its referral of suspected criminal

7 violations to such office) which are approved by

8 the Board and which provide effective coordina9 tion of activities between the fraud unit and

10 such office with respect to the detection, inves11 tigation, and prosecution of suspected criminal

12 violations relating to the State health insurance

13 plan.

14 (c) FUNCTIONS.—The fraud unit must—

15 (1) have the function of conducting a statewide

16 program for the investigation and prosecution of vio17 lations of all applicable State laws regarding any

18 and all aspects of fraud in connection with any as19 pect of the provision of health care services and ac20 tivities of providers of such services under the State

21 health security program;

22 (2) have procedures for reviewing complaints of

23 the abuse and neglect of patients of providers and

24 facilities that receive payments under the State

25 health security program, and, where appropriate, for
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1 acting upon such complaints under the criminal laws

2 of the State or for referring them to other State

3 agencies for action; and

4 (3) provide for the collection, or referral for col5 lection to a single State agency, of overpayments

6 that are made under the State health security pro7 gram to providers and that are discovered by the

8 fraud unit in carrying out its activities.

9 (d) RESOURCES.—The fraud unit must—

10 (1) employ such auditors, attorneys, investiga11 tors, and other necessary personnel,

12 (2) be organized in such a manner, and

13 (3) provide sufficient resources (as specified by

14 the Board), as is necessary to promote the effective

15 and efficient conduct of the unit’s activities.

16 (e) COOPERATIVE AGREEMENTS.—The fraud unit

17 must have cooperative agreements (as specified by the

18 Board) with—

19 (1) similar fraud units in other States,

20 (2) the Inspector General, and

21 (3) the Attorney General of the United States.

22 (f) REPORTS.—The fraud unit must submit to the

23 Inspector General an application and annual reports con24 taining such information as the Inspector General deter-
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1 mines to be necessary to determine whether the unit meets

2 the previous requirements of this section.

3 TITLE V—QUALITY ASSESSMENT

4 SEC. 501. AMERICAN HEALTH SECURITY QUALITY COUNCIL.

5 (a) ESTABLISHMENT.—There is hereby established

6 an American Health Security Quality Council (in this title

7 referred to as the ‘‘Council’’).

8 (b) DUTIES OF THE COUNCIL.—The Council shall

9 perform the following duties:

10 (1) PRACTICE GUIDELINES.—The Council shall

11 review and evaluate each practice guideline devel12 oped under part B of title IX of the Public Health

13 Service Act. The Council shall determine whether

14 the guideline should be recognized as a national

15 practice guideline to be used under section 204(d)

16 for purposes of determining payments under a State

17 health security program.

18 (2) STANDARDS OF QUALITY, PERFORMANCE

19 MEASURES, AND MEDICAL REVIEW CRITERIA.—The

20 Council shall review and evaluate each standard of

21 quality, performance measure, and medical review

22 criterion developed under part B of title IX of the

23 Public Health Service Act. The Council shall deter24 mine whether the standard, measure, or criterion is

25 appropriate for use in assessing or reviewing the
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1 quality of services provided by State health security

2 programs, health care institutions, or health care

3 professionals.

4 (3) CRITERIA FOR ENTITIES CONDUCTING

5 QUALITY REVIEWS.—The Council shall develop min6 imum criteria for competence for entities that can

7 qualify to conduct ongoing and continuous external

8 quality review for State quality review programs

9 under section 503. Such criteria shall require such

10 an entity to be administratively independent of the

11 individual or board that administers the State health

12 security program and shall ensure that such entities

13 do not provide financial incentives to reviewers to

14 favor one pattern of practice over another. The

15 Council shall ensure coordination and reporting by

16 such entities to assure national consistency in qual17 ity standards.

18 (4) REPORTING.—The Council shall report to

19 the Board annually on the conduct of activities

20 under such title and shall report to the Board annu21 ally specifically on findings from outcomes research

22 and development of practice guidelines that may af23 fect the Board’s determination of coverage of serv24 ices under section 401(f)(1)(G).
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1 (5) OTHER FUNCTIONS.—The Council shall

2 perform the functions of the Council described in

3 section 502.

4 (c) APPOINTMENT AND TERMS OF MEMBERS.—

5 (1) IN GENERAL.—The Council shall be com6 posed of 10 members appointed by the President.

7 The President shall first appoint individuals on a

8 timely basis so as to provide for the operation of the

9 Council by not later than January 1, 2000.

10 (2) SELECTION OF MEMBERS.—Each member

11 of the Council shall be a member of a health profes12 sion. Five members of the Council shall be physi13 cians. Individuals shall be appointed to the Council

14 on the basis of national reputations for clinical and

15 academic excellence. To the greatest extent feasible,

16 the membership of the Council shall represent the

17 various geographic regions of the United States and

18 shall reflect the racial, ethnic, and gender composi19 tion of the population of the United States.

20 (3) TERMS OF MEMBERS.—Individuals ap21 pointed to the Council shall serve for a term of 5

22 years, except that the terms of 4 of the individuals

23 initially appointed shall be, as designated by the

24 President at the time of their appointment, for 1, 2,

25 3, and 4 years.
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1 (d) VACANCIES.—

2 (1) IN GENERAL.—The President shall fill any

3 vacancy in the membership of the Council in the

4 same manner as the original appointment. The va5 cancy shall not affect the power of the remaining

6 members to execute the duties of the Council.

7 (2) VACANCY APPOINTMENTS.—Any member

8 appointed to fill a vacancy shall serve for the re9 mainder of the term for which the predecessor of the

10 member was appointed.

11 (3) REAPPOINTMENT.—The President may re12 appoint a member of the Council for a second term

13 in the same manner as the original appointment. A

14 member who has served for two consecutive 5-year

15 terms shall not be eligible for reappointment until

16 two years after the member has ceased to serve.

17 (e) CHAIR.—The President shall designate one of the

18 members of the Council to serve at the will of the Presi19 dent as Chair of the Council.

20 (f) COMPENSATION.—Members of the Council who

21 are not employees of the Federal Government shall be en22 titled to compensation at a level equivalent to level II of

23 the Executive Schedule, in accordance with section 5313

24 of title 5, United States Code.
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1 SEC. 502. DEVELOPMENT OF CERTAIN METHODOLOGIES,

2 GUIDELINES, AND STANDARDS.

3 (a) PROFILING OF PATTERNS OF PRACTICE; IDENTI4 FICATION OF OUTLIERS.—The Council shall adopt meth5 odologies for profiling the patterns of practice of health

6 care professionals and for identifying outliers (as defined

7 in subsection (e)).

8 (b) CENTERS OF EXCELLENCE.—The Council shall

9 develop guidelines for certain medical procedures des10 ignated by the Board to be performed only at tertiary care

11 centers which can meet standards for frequency of proce12 dure performance and intensity of support mechanisms

13 that are consistent with the high probability of desired pa14 tient outcome. Reimbursement under this Act for such a

15 designated procedure may only be provided if the proce16 dure was performed at a center that meets such stand17 ards.

18 (c) REMEDIAL ACTIONS.—The Council shall develop

19 standards for education and sanctions with respect to

20 outliers so as to assure the quality of health care services

21 provided under this Act. The Council shall develop criteria

22 for referral of providers to the State licensing board if edu23 cation proves ineffective in correcting provider practice be24 havior.

25 (d) DISSEMINATION.—The Council shall disseminate

26 to the State—
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1 (1) the methodologies adopted under subsection

2 (a),

3 (2) the guidelines developed under subsection

4 (b), and

5 (3) the standards developed under subsection

6 (c),

7 for use by the States under section 503.

8 (e) OUTLIER DEFINED.—In this title, the term

9 ‘‘outlier’’ means a health care provider whose pattern of

10 practice, relative to applicable practice guidelines, suggests

11 deficiencies in the quality of health care services being pro12 vided.

13 SEC. 503. STATE QUALITY REVIEW PROGRAMS.

14 (a) REQUIREMENT.—In order to meet the require15 ment of section 404(b)(1)(H), each State health security

16 program shall establish one or more qualified entities to

17 conduct quality reviews of persons providing covered serv18 ices under the program, in accordance with standards es19 tablished under subsection (b)(1) (except as provided in

20 subsection (b)(2)) and subsection (d).

21 (b) FEDERAL STANDARDS.—

22 (1) IN GENERAL.—The Council shall establish

23 standards with respect to—
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1 (A) the adoption of practice guidelines

2 (whether developed by the Federal Government

3 or other entities),

4 (B) the identification of outliers (con5 sistent with methodologies adopted under sec6 tion 502(a)),

7 (C) the development of remedial programs

8 and monitoring for outliers, and

9 (D) the application of sanctions (consistent

10 with the standards developed under section

11 502(c)).

12 (2) STATE DISCRETION.—A State may apply

13 under subsection (a) standards other than those es14 tablished under paragraph (1) so long as the State

15 demonstrates to the satisfaction of the Council on an

16 annual basis that the standards applied have been as

17 efficacious in promoting and achieving improved

18 quality of care as the application of the standards

19 established under paragraph (1). Positive improve20 ments in quality shall be documented by reductions

21 in the variations of clinical care process and im22 provement in patient outcomes.

23 (c) QUALIFICATIONS.—An entity is not qualified to

24 conduct quality reviews under subsection (a) unless the
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1 entity satisfies the criteria for competence for such entities

2 developed by the Council under section 501(b)(3).

3 (d) INTERNAL QUALITY REVIEW.—Nothing in this

4 section shall preclude an institutional provider from estab5 lishing its own internal quality review and enhancement

6 programs.

7 SEC. 504. ELIMINATION OF UTILIZATION REVIEW PRO8 GRAMS; TRANSITION.

9 (a) INTENT.—It is the intention of this title to re10 place by January 1, 2003, random utilization controls with

11 a systematic review of patterns of practice that com12 promise the quality of care.

13 (b) SUPERSEDING CASE REVIEWS.—

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

15 provisions of this subsection, the program of quality

16 review provided under the previous sections of this

17 title supersede all existing Federal requirements for

18 utilization review programs, including requirements

19 for random case-by-case reviews and programs re20 quiring pre-certification of medical procedures on a

21 case-by-case basis.

22 (2) TRANSITION.—Before January 1, 2003, the

23 Board and the States may employ existing utiliza24 tion review standards and mechanisms as may be
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1 necessary to effect the transition to pattern of prac2 tice-based reviews.

3 (3) CONSTRUCTION.—Nothing in this sub4 section shall be construed—

5 (A) as precluding the case-by-case review

6 of the provision of care—

7 (i) in individual incidents where the

8 quality of care has significantly deviated

9 from acceptable standards of practice, and

10 (ii) with respect to a provider who has

11 been determined to be an outlier; or

12 (B) as precluding the case management of

13 catastrophic, mental health, or substance abuse

14 cases or long-term care where such manage15 ment is necessary to achieve appropriate, cost16 effective, and beneficial comprehensive medical

17 care, as provided for in section 204.

18 TITLE VI—HEALTH SECURITY

19 BUDGET; PAYMENTS; COST

20 CONTAINMENT MEASURES

21 Subtitle A—Budgeting and

22 Payments to States

23 SEC. 601. NATIONAL HEALTH SECURITY BUDGET.

24 (a) NATIONAL HEALTH SECURITY BUDGET.—
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1 (1) IN GENERAL.—By not later than September

2 1 before the beginning of each year (beginning with

3 2000), the Board shall establish a national health

4 security budget, which—

5 (A) specifies the total expenditures (includ6 ing expenditures for administrative costs) to be

7 made by the Federal Government and the

8 States for covered health care services under

9 this Act, and

10 (B) allocates those expenditures among the

11 States consistent with section 604.

12 Pursuant to subsection (b), such budget for a year

13 shall not exceed the budget for the preceding year

14 increased by the percentage increase in gross domes15 tic product.

16 (2) DIVISION OF BUDGET INTO COMPONENTS.—

17 The national health security budget shall consist of

18 at least 4 components:

19 (A) A component for quality assessment

20 activities (described in title V).

21 (B) A component for health professional

22 education expenditures.

23 (C) A component for administrative costs.

24 (D) A component (in this title referred to

25 as the ‘‘operating component’’) for operating
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1 and other expenditures not described in sub2 paragraphs (A) through (C), consisting of

3 amounts not included in the other components.

4 A State may provide for the allocation of this

5 component between capital expenditures and

6 other expenditures.

7 (3) ALLOCATION AMONG COMPONENTS.—Tak8 ing into account the State health security budgets

9 established and submitted under section 603, the

10 Board shall allocate the national health security

11 budget among the components in a manner that—

12 (A) assures a fair allocation for quality as13 sessment activities (consistent with the national

14 health security spending growth limit); and

15 (B) assures that the health professional

16 education expenditure component is sufficient

17 to provide for the amount of health professional

18 education expenditures sufficient to meet the

19 need for covered health care services (consistent

20 with the national health security spending

21 growth limit under subsection (b)(2)).

22 (b) BASIS FOR TOTAL EXPENDITURES.—

23 (1) IN GENERAL.—The total expenditures speci24 fied in such budget shall be the sum of the capita25 tion amounts computed under section 602(a) and
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1 the amount of Federal administrative expenditures

2 needed to carry out this Act.

3 (2) NATIONAL HEALTH SECURITY SPENDING

4 GROWTH LIMIT.—For purposes of this subtitle, the

5 national health security spending growth limit de6 scribed in this paragraph for a year is (A) zero, or,

7 if greater, (B) the average annual percentage in8 crease in the gross domestic product (in current dol9 lars) during the 3-year period beginning with the

10 first quarter of the fourth previous year to the first

11 quarter of the previous year minus the percentage

12 increase (if any) in the number of eligible individuals

13 residing in any State the United States from the

14 first quarter of the second previous year to the first

15 quarter of the previous year.

16 (c) DEFINITIONS.—In this title:

17 (1) CAPITAL EXPENDITURES.—The term ‘‘cap18 ital expenditures’’ means expenses for the purchase,

19 lease, construction, or renovation of capital facilities

20 and for equipment and includes return on equity

21 capital.

22 (2) HEALTH PROFESSIONAL EDUCATION EX23 PENDITURES.—The term ‘‘health professional edu24 cation expenditures’’ means expenditures in hospitals
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1 and other health care facilities to cover costs associ2 ated with teaching and related research activities.

3 SEC. 602. COMPUTATION OF INDIVIDUAL AND STATE CAPI4 TATION AMOUNTS.

5 (a) CAPITATION AMOUNTS.—

6 (1) INDIVIDUAL CAPITATION AMOUNTS.—In es7 tablishing the national health security budget under

8 section 601(a) and in computing the national aver9 age per capita cost under subsection (b) for each

10 year, the Board shall establish a method for com11 puting the capitation amount for each eligible indi12 vidual residing in each State. The capitation amount

13 for an eligible individual in a State classified within

14 a risk group (established under subsection (d)(2)) is

15 the product of—

16 (A) a national average per capita cost for

17 all covered health care services (computed

18 under subsection (b)),

19 (B) the State adjustment factor (estab20 lished under subsection (c)) for the State, and

21 (C) the risk adjustment factor (established

22 under subsection (d)) for the risk group.

23 (2) STATE CAPITATION AMOUNT.—

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

25 title, the term ‘‘State capitation amount’’
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1 means, for a State for a year, the sum of the

2 capitation amounts computed under paragraph

3 (1) for all the residents of the State in the year,

4 as estimated by the Board before the beginning

5 of the year involved.

6 (B) USE OF STATISTICAL MODEL.—The

7 Board may provide for the computation of

8 State capitation amounts based on statistical

9 models that fairly reflect the elements that com10 prise the State capitation amount described in

11 subparagraph (A).

12 (C) POPULATION INFORMATION.—The Bu13 reau of the Census shall assist the Board in de14 termining the number, place of residence, and

15 risk group classification of eligible individuals.

16 (b) COMPUTATION OF NATIONAL AVERAGE PER CAP17 ITA COST.—

18 (1) FOR 1998.—For 2000, the national average

19 per capita cost under this paragraph is equal to—

20 (A) the average per capita health care ex21 penditures in the United States in 1998 (as

22 estimated by the Board),

23 (B) increased to 1999 by the Board’s esti24 mate of the actual amount of such per capita

25 expenditures during 1999, and
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1 (C) updated to 2000 by the national health

2 security spending growth limit specified in sec3 tion 601(b)(2) for 2000.

4 (2) FOR SUCCEEDING YEARS.—For each suc5 ceeding year, the national average per capita cost

6 under this subsection is equal to the national aver7 age per capita cost computed under this subsection

8 for the previous year increased by the national

9 health security spending growth limit (specified in

10 section 601(b)(2)) for the year involved.

11 (c) STATE ADJUSTMENT FACTORS.—

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

13 paragraphs of this subsection, the Board shall de14 velop for each State a factor to adjust the national

15 average per capita costs to reflect differences

16 between the State and the United States in—

17 (A) average labor and nonlabor costs that

18 are necessary to provide covered health services;

19 (B) any social, environmental, or geo20 graphic condition affecting health status or the

21 need for health care services, to the extent such

22 a condition is not taken into account in the es23 tablishment of risk groups under subsection (d);

24 (C) the geographic distribution of the

25 State’s population, particularly the proportion
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1 of the population residing in medically under2 served areas, to the extent such a condition is

3 not taken into account in the establishment of

4 risk groups under subsection (d); and

5 (D) any other factor relating to operating

6 costs required to assure equitable distribution

7 of funds among the States.

8 (2) MODIFICATION OF HEALTH PROFESSIONAL

9 EDUCATION COMPONENT.—With respect to the por10 tion of the national health security budget allocated

11 to expenditures for health professional education, the

12 Board shall modify the State adjustment factors so

13 as to take into account—

14 (A) differences among States in health

15 professional education programs in operation as

16 of the date of the enactment of this Act, and

17 (B) differences among States in their rel18 ative need for expenditures for health profes19 sional education, taking into account the health

20 professional education expenditures proposed in

21 State health security budgets under section

22 603(a).

23 (3) BUDGET NEUTRALITY.—The State adjust24 ment factors, as modified under paragraph (2), shall

25 be applied under this subsection in a manner that
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1 results in neither an increase nor a decrease in the

2 total amount of the Federal contributions to all

3 State health security programs under subsection (b)

4 as a result of the application of such factors.

5 (4) PHASE-IN.—In applying State adjustment

6 factors under this subsection during the five-year pe7 riod beginning with 2000, the Board shall phase-in,

8 over such period, the use of factors described in

9 paragraph (1) in a manner so that the adjustment

10 factor for a State is based on a blend of such factors

11 and a factor that reflects the relative actual average

12 per capita costs of health services of the different

13 States as of the time of enactment of this Act.

14 (5) PERIODIC ADJUSTMENT.—In establishing

15 the national health security budget before the begin16 ning of each year, the Board shall provide for appro17 priate adjustments in the State adjustment factors

18 under this subsection.

19 (d) ADJUSTMENTS FOR RISK GROUP CLASSIFICA20 TION.—

21 (1) IN GENERAL.—The Board shall develop an

22 adjustment factor to the national average per capita

23 costs computed under subsection (b) for individuals

24 classified in each risk group (as designated under

25 paragraph (2)) to reflect the difference between the
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1 average national average per capita costs and the

2 national average per capita cost for individuals clas3 sified in the risk group.

4 (2) RISK GROUPS.—The Board shall designate

5 a series of risk groups, determined by age, health in6 dicators, and other factors that represent distinct

7 patterns of health care services utilization and costs.

8 (3) PERIODIC ADJUSTMENT.—In establishing

9 the national health security budget before the begin10 ning of each year, the Board shall provide for appro11 priate adjustments in the risk adjustment factors

12 under this subsection.

13 SEC. 603. STATE HEALTH SECURITY BUDGETS.

14 (a) ESTABLISHMENT AND SUBMISSION OF BUDG15 ETS.—

16 (1) IN GENERAL.—Each State health security

17 program shall establish and submit to the Board for

18 each year a proposed and a final State health secu19 rity budget, which specifies the following:

20 (A) The total expenditures (including ex21 penditures for administrative costs) to be made

22 under the program in the State for covered

23 health care services under this Act, consistent

24 with subsection (b), broken down as follows:
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1 (i) By the 4 components (described in

2 section 601(a)(2)), consistent with sub3 section (b).

4 (ii) Within the operating component—

5 (I) expenditures for operating

6 costs of hospitals and other facility7 based services in the State,

8 (II) expenditures for payment to

9 comprehensive health service organiza10 tions,

11 (III) expenditures for payment of

12 services provided by health care prac13 titioners, and

14 (IV) expenditures for other cov15 ered items and services.

16 Amounts included in the operating compo17 nent include amounts that may be used by

18 providers for capital expenditures.

19 (B) The total revenues required to meet

20 the State health security expenditures.

21 (2) PROPOSED BUDGET DEADLINE.—The pro22 posed budget for a year shall be submitted under

23 paragraph (1) not later than June 1 before the year.

24 (3) FINAL BUDGET.—The final budget for a

25 year shall—
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1 (A) be established and submitted under

2 paragraph (1) not later than October 1 before

3 the year, and

4 (B) take into account the amounts estab5 lished under the national health security budget

6 under section 601 for the year.

7 (4) ADJUSTMENT IN ALLOCATIONS PER8 MITTED.—

9 (A) IN GENERAL.—Subject to subpara10 graphs (B) and (C), in the case of a final

11 budget, a State may change the allocation of

12 amounts among components.

13 (B) NOTICE.—No such change may be

14 made unless the State has provided prior notice

15 of the change to the Board.

16 (C) DENIAL.—Such a change may not be

17 made if the Board, within such time period as

18 the Board specifies, disapproves such change.

19 (b) EXPENDITURE LIMITS.—

20 (1) IN GENERAL.—The total expenditures speci21 fied in each State health security budget under sub22 section (a)(1) shall take into account Federal

23 contributions made under section 604.

24 (2) LIMIT ON CLAIMS PROCESSING AND BILL25 ING EXPENDITURES.—Each State health security
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1 budget shall provide that State administrative ex2 penditures, including expenditures for claims proc3 essing and billing, shall not exceed 3 percent of the

4 total expenditures under the State health security

5 program, unless the Board determines, on a case-by6 case basis, that additional administrative expendi7 tures would improve health care quality and cost

8 effectiveness.

9 (3) WORKER ASSISTANCE.—A State health se10 curity program may provide that, for budgets for

11 years before 2005, up to 1 percent of the budget

12 may be used for purposes of programs providing as13 sistance to workers who are currently performing

14 functions in the administration of the health insur15 ance system and who may experience economic dis16 location as a result of the implementation of the

17 program.

18 (c) APPROVAL PROCESS FOR CAPITAL EXPENDI19 TURES PERMITTED.—Nothing in this title shall be con20 strued as preventing a State health security program from

21 providing for a process for the approval of capital expendi22 tures based on information derived from regional planning

23 agencies.
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1 SEC. 604. FEDERAL PAYMENTS TO STATES.

2 (a) IN GENERAL.—Each State with an approved

3 State health security program is entitled to receive, from

4 amounts in the American Health Security Trust Fund, on

5 a monthly basis each year, of an amount equal to one6 twelfth of the product of—

7 (1) the State capitation amount (computed

8 under section 602(a)(2)) for the State for the year,

9 and

10 (2) the Federal contribution percentage (estab11 lished under subsection (b)).

12 (b) FEDERAL CONTRIBUTION PERCENTAGE.—The

13 Board shall establish a formula for the establishment of

14 a Federal contribution percentage for each State. Such

15 formula shall take into consideration a State’s per capita

16 income and revenue capacity and such other relevant eco17 nomic indicators as the Board determines to be appro18 priate. In addition, during the 5-year period beginning

19 with 2000, the Board may provide for a transition adjust20 ment to the formula in order to take into account current

21 expenditures by the State (and local governments thereof)

22 for health services covered under the State health security

23 program. The weighted-average Federal contribution per24 centage for all States shall equal 86 percent and in no

25 event shall such percentage be less than 81 percent nor

26 more than 91 percent.
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1 (c) USE OF PAYMENTS.—All payments made under

2 this section may only be used to carry out the State health

3 security program.

4 (d) EFFECT OF SPENDING EXCESS OR SURPLUS.—

5 (1) SPENDING EXCESS.—If a State exceeds it’s

6 budget in a given year, the State shall continue to

7 fund covered health services from its own revenues.

8 (2) SURPLUS.—If a State provides all covered

9 health services for less than the budgeted amount

10 for a year, it may retain its Federal payment for

11 that year for uses consistent with this Act.

12 SEC. 605. ACCOUNT FOR HEALTH PROFESSIONAL EDU13 CATION EXPENDITURES.

14 (a) SEPARATE ACCOUNT.—Each State health secu15 rity program shall—

16 (1) include a separate account for health pro17 fessional education expenditures, and

18 (2) specify the general manner, consistent with

19 subsection (b), in which such expenditures are to be

20 distributed among different types of institutions and

21 the different areas of the State.

22 (b) DISTRIBUTION RULES.—The distribution of

23 funds to hospitals and other health care facilities from the

24 account must conform to the following principles:
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1 (1) The disbursement of funds must be con2 sistent with achievement of the national and pro3 gram goals (specified in section 701(b)) within the

4 State health security program and the distribution

5 of funds from the account must be conditioned upon

6 the receipt of such reports as the Board may require

7 in order to monitor compliance with such goals.

8 (2) The distribution of funds from the account

9 must take into account the potentially higher costs

10 of placing health professional students in clinical

11 education programs in health professional shortage

12 areas.

13 Subtitle B—Payments by States to

14 Providers

15 SEC. 611. PAYMENTS TO HOSPITALS AND OTHER FACILITY16 BASED SERVICES FOR OPERATING EXPENSES

17 ON THE BASIS OF APPROVED GLOBAL

18 BUDGETS.

19 (a) DIRECT PAYMENT UNDER GLOBAL BUDGET.—

20 Payment for operating expenses for institutional and facil21 ity-based care, including hospital services and nursing fa22 cility services, under State health security programs shall

23 be made directly to each institution or facility by each

24 State health security program under an annual prospec25 tive global budget approved under the program. Such a
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1 budget shall include payment for outpatient care and non2 facility-based care that is furnished by or through the fa3 cility. In the case of a hospital that is wholly owned (or

4 controlled) by a comprehensive health service organization

5 that is paid under section 614 on the basis of a global

6 budget, the global budget of the organization shall include

7 the budget for the hospital.

8 (b) ANNUAL NEGOTIATIONS; BUDGET APPROVAL.—

9 (1) IN GENERAL.—The prospective global budg10 et for an institution or facility shall—

11 (A) be developed through annual negotia12 tions between (i) a panel of individuals who are

13 appointed by the Governor of the State and who

14 represent consumers, labor, business, and the

15 State government, and (ii) the institution or fa16 cility, and

17 (B) be based on a nationally uniform sys18 tem of cost accounting established under stand19 ards of the Board.

20 (2) CONSIDERATIONS.—In developing a budget

21 through negotiations, there shall be taken into

22 account at least the following:

23 (A) With respect to inpatient hospital serv24 ices, the number, and classification by diag25 nosis-related group, of discharges.
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1 (B) An institution’s or facility’s past ex2 penditures.

3 (C) The extent to which debt service for

4 capital expenditures has been included in the

5 proposed operating budget.

6 (D) The extent to which capital expendi7 tures are financed directly or indirectly through

8 reductions in direct care to patients, including

9 (but not limited to) reductions in registered

10 nursing staffing patterns or changes in emer11 gency room or primary care services or avail12 ability.

13 (E) Change in the consumer price index

14 and other price indices.

15 (F) The cost of reasonable compensation

16 to health care practitioners.

17 (G) The compensation level of the institu18 tion’s or facility’s work force.

19 (H) The extent to which the institution or

20 facility is providing health care services to meet

21 the needs of residents in the area served by the

22 institution or facility, including the institution’s

23 or facility’s occupancy level.

24 (I) The institution’s or facility’s previous

25 financial and clinical performance, based on uti-
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1 lization and outcomes data provided under this

2 Act.

3 (J) The type of institution or facility, in4 cluding whether the institution or facility is

5 part of a clinical education program or serves

6 a health professional education, research or

7 other training purpose.

8 (K) Technological advances or changes.

9 (L) Costs of the institution or facility asso10 ciated with meeting Federal and State regula11 tions.

12 (M) The costs associated with necessary

13 public outreach activities.

14 (N) In the case of a for-profit facility, a

15 reasonable rate of return on equity capital,

16 independent of those operating expenses nec17 essary to fulfill the objectives of this Act.

18 (O) Incentives to facilities that maintain

19 costs below previous reasonable budgeted levels

20 without reducing the care provided.

21 (P) With respect to facilities that provide

22 mental health services and substance abuse

23 treatment services, any additional costs involved

24 in the treatment of dually diagnosed individ25 uals.
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1 The portion of such a budget that relates to expendi2 tures for health professional education shall be con3 sistent with the State health security budget for

4 such expenditures.

5 (3) PROVISION OF REQUIRED INFORMATION; DI6 AGNOSIS-RELATED GROUP.—No budget for an insti7 tution or facility for a year may be approved unless

8 the institution or facility has submitted on a timely

9 basis to the State health security program such in10 formation as the program or the Board shall specify,

11 including in the case of hospitals information on dis12 charges classified by diagnosis-related group.

13 (c) ADJUSTMENTS IN APPROVED BUDGETS.—

14 (1) ADJUSTMENTS TO GLOBAL BUDGETS THAT

15 CONTRACT WITH COMPREHENSIVE HEALTH SERVICE

16 ORGANIZATIONS.—Each State health security pro17 gram shall develop an administrative mechanism for

18 reducing operating funds to institutions or facilities

19 in proportion to payments made to such institutions

20 or facilities for services contracted for by a com21 prehensive health service organization.

22 (2) AMENDMENTS.—In accordance with stand23 ards established by the Board, an operating and

24 capital budget approved under this section for a year

25 may be amended before, during, or after the year if
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1 there is a substantial change in any of the factors

2 relevant to budget approval.

3 (d) DONATIONS PERMISSIBLE.—The States health

4 security programs may permit institutions and facilities

5 to raise funds from private sources to pay for newly con6 structed facilities, major renovations, and equipment. The

7 expenditure of such funds, whether for operating or cap8 ital expenditures, does not obligate the State health secu9 rity program to provide for continued support for such ex10 penditures unless included in an approved global budget.

11 SEC. 612. PAYMENTS TO HEALTH CARE PRACTITIONERS

12 BASED ON PROSPECTIVE FEE SCHEDULE.

13 (a) FEE FOR SERVICE.—

14 (1) IN GENERAL.—Every independent health

15 care practitioner is entitled to be paid, for the provi16 sion of covered health services under the State

17 health security program, a fee for each billable cov18 ered service.

19 (2) GLOBAL FEE PAYMENT METHODOLOGIES.—

20 The Board shall establish models and encourage

21 State health security programs to implement alter22 native payment methodologies that incorporate glob23 al fees for related services (such as all outpatient

24 procedures for treatment of a condition) or for a

25 basic group of services (such as primary care serv-
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1 ices) furnished to an individual over a period of

2 time, in order to encourage continuity and efficiency

3 in the provision of services. Such methodologies shall

4 be designed to ensure a high quality of care.

5 (3) BILLING DEADLINES; ELECTRONIC BILL6 ING.—A State health security program may deny

7 payment for any service of an independent health

8 care practitioner for which it did not receive a bill

9 and appropriate supporting documentation (which

10 had been previously specified) within 30 days after

11 the date the service was provided. Such a program

12 may require that bills for services for which payment

13 may be made under this section, or for any class of

14 such services, be submitted electronically.

15 (b) PAYMENT RATES BASED ON NEGOTIATED PRO16 SPECTIVE FEE SCHEDULES.—With respect to any pay17 ment method for a class of services of practitioners, the

18 State health security program shall establish, on a pro19 spective basis, a payment schedule. The State health secu20 rity program may establish such a schedule after negotia21 tions with organizations representing the practitioners in22 volved. Such fee schedules shall be designed to provide in23 centives for practitioners to choose primary care medicine,

24 including general internal medicine and pediatrics, over

25 medical specialization. Nothing in this section shall be con-
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1 strued as preventing a State from adjusting the payment

2 schedule amounts on a quarterly or other periodic basis

3 depending on whether expenditures under the schedule will

4 exceed the budgeted amount with respect to such expendi5 tures.

6 (c) BILLABLE COVERED SERVICE DEFINED.—In this

7 section, the term ‘‘billable covered service’’ means a service

8 covered under section 201 for which a practitioner is enti9 tled to compensation by payment of a fee determined

10 under this section.

11 SEC. 613. PAYMENTS TO COMPREHENSIVE HEALTH SERV12 ICE ORGANIZATIONS.

13 (a) IN GENERAL.—Payment under a State health se14 curity program to a comprehensive health service organi15 zation to its enrollees shall be determined by the State—

16 (1) based on a global budget described in sec17 tion 611, or

18 (2) based on the basic capitation amount de19 scribed in subsection (b) for each of its enrollees.

20 (b) BASIC CAPITATION AMOUNT.—

21 (1) IN GENERAL.—The basic capitation amount

22 described in this subsection for an enrollee shall be

23 determined by the State health security program on

24 the basis of the average amount of expenditures that

25 is estimated would be made under the State health
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1 security program for covered health care services for

2 an enrollee, based on actuarial characteristics (as de3 fined by the State health security program).

4 (2) ADJUSTMENT FOR SPECIAL HEALTH

5 NEEDS.—The State health security program shall

6 adjust such average amounts to take into account

7 the special health needs, including a disproportionate

8 number of medically underserved individuals, of pop9 ulations served by the organization.

10 (3) ADJUSTMENT FOR SERVICES NOT PRO11 VIDED.—The State health security program shall ad12 just such average amounts to take into account the

13 cost of covered health care services that are not pro14 vided by the comprehensive health service organiza15 tion under section 303(a).

16 SEC. 614. PAYMENTS FOR COMMUNITY-BASED PRIMARY

17 HEALTH SERVICES.

18 (a) IN GENERAL.—In the case of community-based

19 primary health services, subject to subsection (b), pay20 ments under a State health security program shall—

21 (1) be based on a global budget described in

22 section 611,

23 (2) be based on the basic primary care capita24 tion amount described in subsection (c) for each in-
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1 dividual enrolled with the provider of such services,

2 or

3 (3) be made on a fee-for-service basis under

4 section 612.

5 (b) PAYMENT ADJUSTMENT.—Payments under sub6 section (a) may include, consistent with the budgets devel7 oped under this title—

8 (1) an additional amount, as set by the State

9 health security program, to cover the costs incurred

10 by a provider which serves persons not covered by

11 this Act whose health care is essential to overall

12 community health and the control of communicable

13 disease, and for whom the cost of such care is other14 wise uncompensated,

15 (2) an additional amount, as set by the State

16 health security program, to cover the reasonable

17 costs incurred by a provider that furnishes case

18 management services (as defined in section

19 1915(g)(2) of the Social Security Act), transpor20 tation services, and translation services, and

21 (3) an additional amount, as set by the State

22 health security program, to cover the costs incurred

23 by a provider in conducting health professional edu24 cation programs in connection with the provision of

25 such services.
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1 (c) BASIC PRIMARY CARE CAPITATION AMOUNT.—

2 (1) IN GENERAL.—The basic primary care capi3 tation amount described in this subsection for an en4 rollee with a provider of community-based primary

5 health services shall be determined by the State

6 health security program on the basis of the average

7 amount of expenditures that is estimated would be

8 made under the State health security program for

9 such an enrollee, based on actuarial characteristics

10 (as defined by the State health security program).

11 (2) ADJUSTMENT FOR SPECIAL HEALTH

12 NEEDS.—The State health security program shall

13 adjust such average amounts to take into account

14 the special health needs, including a disproportionate

15 number of medically underserved individuals, of pop16 ulations served by the provider.

17 (3) ADJUSTMENT FOR SERVICES NOT PRO18 VIDED.—The State health security program shall ad19 just such average amounts to take into account the

20 cost of community-based primary health services

21 that are not provided by the provider.

22 (d) COMMUNITY-BASED PRIMARY HEALTH SERVICES

23 DEFINED.—In this section, the term ‘‘community-based

24 primary health services’’ has the meaning given such term

25 in section 202(a).
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1 SEC. 615. PAYMENTS FOR PRESCRIPTION DRUGS.

2 (a) ESTABLISHMENT OF LIST.—

3 (1) IN GENERAL.—The Board shall establish a

4 list of approved prescription drugs and biologicals

5 that the Board determines are necessary for the

6 maintenance or restoration of health or of employ7 ability or self-management and eligible for coverage

8 under this Act.

9 (2) EXCLUSIONS.—The Board may exclude re10 imbursement under this Act for ineffective, unsafe,

11 or over-priced products where better alternatives are

12 determined to be available.

13 (b) PRICES.—For each such listed prescription drug

14 or biological covered under this Act, for insulin, and for

15 medical foods, the Board shall from time to time deter16 mine a product price or prices which shall constitute the

17 maximum to be recognized under this Act as the cost of

18 a drug to a provider thereof. The Board may conduct ne19 gotiations, on behalf of State health security programs,

20 with product manufacturers and distributors in deter21 mining the applicable product price or prices.

22 (c) CHARGES BY INDEPENDENT PHARMACIES.—

23 Each State health security program shall provide for pay24 ment for a prescription drug or biological or insulin fur25 nished by an independent pharmacy based on the drug’s

26 cost to the pharmacy (not in excess of the applicable prod-
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1 uct price established under subsection (b)) plus a dis2 pensing fee. In accordance with standards established by

3 the Board, each State health security program, after con4 sultation with representatives of the pharmaceutical pro5 fession, shall establish schedules of dispensing fees, de6 signed to afford reasonable compensation to independent

7 pharmacies after taking into account variations in their

8 cost of operation resulting from regional differences, dif9 ferences in the volume of prescription drugs dispensed, dif10 ferences in services provided, the need to maintain expend11 itures within the budgets established under this title,

12 and other relevant factors.

13 SEC. 616. PAYMENTS FOR APPROVED DEVICES AND EQUIP14 MENT.

15 (a) ESTABLISHMENT OF LIST.—The Board shall es16 tablish a list of approved durable medical equipment and

17 therapeutic devices and equipment (including eyeglasses,

18 hearing aids, and prosthetic appliances), that the Board

19 determines are necessary for the maintenance or restora20 tion of health or of employability or self-management and

21 eligible for coverage under this Act.

22 (b) CONSIDERATIONS AND CONDITIONS.—In estab23 lishing the list under subsection (a), the Board shall take

24 into consideration the efficacy, safety, and cost of each

25 item contained on such list, and shall attach to any item
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1 such conditions as the Board determines appropriate with

2 respect to the circumstances under which, or the frequency

3 with which, the item may be prescribed.

4 (c) PRICES.—For each such listed item covered under

5 this Act, the Board shall from time to time determine a

6 product price or prices which shall constitute the max7 imum to be recognized under this Act as the cost of the

8 item to a provider thereof. The Board may conduct nego9 tiations, on behalf of State health security programs, with

10 equipment and device manufacturers and distributors in

11 determining the applicable product price or prices.

12 (d) EXCLUSIONS.—The Board may exclude from cov13 erage under this Act ineffective, unsafe, or overpriced

14 products where better alternatives are determined to be

15 available.

16 SEC. 617. PAYMENTS FOR OTHER ITEMS AND SERVICES.

17 In the case of payment for other covered health serv18 ices, the amount of payment under a State health security

19 program shall be established by the program—

20 (1) in accordance with payment methodologies

21 which are specified by the Board, after consultation

22 with the American Health Security Advisory Coun23 cil, or methodologies established by the State under

24 section 620, and
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1 (2) consistent with the State health security

2 budget.

3 SEC. 618. PAYMENT INCENTIVES FOR MEDICALLY UNDER4 SERVED AREAS.

5 (a) MODEL PAYMENT METHODOLOGIES.—In addi6 tion to the payment amounts otherwise provided in this

7 title, the Board shall establish model payment methodolo8 gies and other incentives that promote the provision of

9 covered health care services in medically underserved

10 areas, particularly in rural and inner-city underserved

11 areas.

12 (b) CONSTRUCTION.—Nothing in this title shall be

13 construed as limiting the authority of State health security

14 programs to increase payment amounts or otherwise pro15 vide additional incentives, consistent with the State health

16 security budget, to encourage the provision of medically

17 necessary and appropriate services in underserved areas.

18 SEC. 619. AUTHORITY FOR ALTERNATIVE PAYMENT METH19 ODOLOGIES.

20 A State health security program, as part of its plan

21 under section 404(a), may use a payment methodology

22 other than a methodology required under this subtitle so

23 long as—

24 (1) such payment methodology does not affect

25 the entitlement of individuals to coverage, the
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1 weighting of fee schedules to encourage an increase

2 in the number of primary care providers, the ability

3 of individuals to choose among qualified providers,

4 the benefits covered under the program, or the com5 pliance of the program with the State health security

6 budget under subtitle A, and

7 (2) the program submits periodic reports to the

8 Board showing the operation and effectiveness of the

9 alternative methodology, in order for the Board to

10 evaluate the appropriateness of applying the alter11 native methodology to other States.

12 Subtitle C—Mandatory Assignment

13 and Administrative Provisions

14 SEC. 631. MANDATORY ASSIGNMENT.

15 (a) NO BALANCE BILLING.—Payments for benefits

16 under this Act shall constitute payment in full for such

17 benefits and the entity furnishing an item or service for

18 which payment is made under this Act shall accept such

19 payment as payment in full for the item or service and

20 may not accept any payment or impose any charge for

21 any such item or service other than accepting payment

22 from the State health security program in accordance with

23 this Act.

24 (b) ENFORCEMENT.—If an entity knowingly and will25 fully bills for an item or service or accepts payment in
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1 violation of subsection (a), the Board may apply sanctions

2 against the entity in the same manner as sanctions could

3 have been imposed under section 1842(j)(2) of the Social

4 Security Act for a violation of section 1842(j)(1) of such

5 Act. Such sanctions are in addition to any sanctions that

6 a State may impose under its State health security

7 program.

8 SEC. 632. PROCEDURES FOR REIMBURSEMENT; APPEALS.

9 (a) PROCEDURES FOR REIMBURSEMENT.—In accord10 ance with standards issued by the Board, a State health

11 security program shall establish a timely and administra12 tively simple procedure to assure payment within 60 days

13 of the date of submission of clean claims by providers

14 under this Act.

15 (b) APPEALS PROCESS.—Each State health security

16 program shall establish an appeals process to handle all

17 grievances pertaining to payment to providers under this

18 title.
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1 TITLE VII—PROMOTION OF PRI2 MARY HEALTH CARE; DEVEL3 OPMENT OF HEALTH SERV4 ICE CAPACITY; PROGRAMS TO

5 ASSIST THE MEDICALLY UN6 DERSERVED

7 Subtitle A—Promotion and Expan8 sion of Primary Care Profes9 sional Training

10 SEC. 701. ROLE OF BOARD; ESTABLISHMENT OF PRIMARY

11 CARE PROFESSIONAL OUTPUT GOALS.

12 (a) IN GENERAL.—The Board is responsible for—

13 (1) coordinating health professional education

14 policies and goals, in consultation with the Secretary

15 of Health and Human Services (in this title referred

16 to as the ‘‘Secretary’’), to achieve the national goals

17 specified in subsection (b);

18 (2) overseeing the health professional education

19 expenditures of the State health security programs

20 from the account established under section 602(c);

21 (3) developing and maintaining, in cooperation

22 with the Secretary, a system to monitor the number

23 and specialties of individuals through their health

24 professional education, any postgraduate training,

25 and professional practice; and
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1 (4) developing, coordinating, and promoting

2 other policies that expand the number of primary

3 care practitioners.

4 (b) NATIONAL GOALS.—The national goals specified

5 in this subsection are as follows:

6 (1) GRADUATE MEDICAL EDUCATION.—By not

7 later than 5 years after the date of the enactment

8 of this Act, at least 50 percent of the residents in

9 medical residency education programs (as defined in

10 subsection (e)(1)) are primary care residents (as

11 defined in subsection (e)(3)).

12 (2) MIDLEVEL PRIMARY CARE PRACTI13 TIONERS.—To assure an adequate supply of primary

14 care practitioners, there shall be a number, specified

15 by the Board, of midlevel primary care practitioners

16 (as defined in subsection (e)(2)) employed in the

17 health care system as of January 1, 2005.

18 (c) METHOD FOR ATTAINMENT OF NATIONAL GOAL

19 FOR GRADUATE MEDICAL EDUCATION; PROGRAM

20 GOALS.—

21 (1) IN GENERAL.—The Board shall establish a

22 method of applying the national goal in subsection

23 (b)(1) to program goals for each medical residency

24 education program or to medical residency education

25 consortia.
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1 (2) CONSIDERATION.—The program goals

2 under paragraph (1) shall be based on the distribu3 tion of medical schools and other teaching facilities

4 within each State health security program, and the

5 number of positions for graduate medical education.

6 (3) MEDICAL RESIDENCY EDUCATION CONSOR7 TIUM.—In this subsection, the term ‘‘medical resi8 dency education consortium’’ means a consortium of

9 medical residency education programs in a contig10 uous geographic area (which may be an interstate

11 area) if the consortium—

12 (A) includes at least one medical school

13 with a teaching hospital and related teaching

14 settings, and

15 (B) has an affiliation with qualified com16 munity-based primary health service providers

17 described in section 202(a) and with at least

18 one comprehensive health service organization

19 established under section 303.

20 (4) ENFORCEMENT THROUGH STATE HEALTH

21 SECURITY BUDGETS.—The Board shall develop a

22 formula for reducing payments to State health secu23 rity programs (that provide for payments to a med24 ical residency education program) that failed to meet
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1 the goal for the program established under this sub2 section.

3 (d) METHOD FOR ATTAINMENT OF NATIONAL GOAL

4 FOR MIDLEVEL PRIMARY CARE PRACTITIONERS.—To as5 sist in attaining the national goal identified in subsection

6 (b)(2), the Board shall—

7 (1) advise the Public Health Service on alloca8 tions of funding under titles VII and VIII of the

9 Public Health Service Act, the National Health

10 Service Corps, and other programs in order to in11 crease the supply of midlevel primary care practi12 tioners, and

13 (2) commission a study of the potential benefits

14 and disadvantages of expanding the scope of practice

15 authorized under State laws for any class of midlevel

16 primary care practitioners.

17 (e) DEFINITIONS.—In this title:

18 (1) MEDICAL RESIDENCY EDUCATION PRO19 GRAM.—The term ‘‘medical residency education pro20 gram’’ means a program that provides education

21 and training to graduates of medical schools in order

22 to meet requirements for licensing and certification

23 as a physician, and includes the medical school su24 pervising the program and includes the hospital or

25 other facility in which the program is operated.
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1 (2) MIDLEVEL PRIMARY CARE PRACTI2 TIONER.—The term ‘‘midlevel primary care practi3 tioner’’ means a clinical nurse practitioner, certified

4 nurse midwife, physician assistance, or other non5 physician practitioner, specified by the Board, as au6 thorized to practice under State law.

7 (3) PRIMARY CARE RESIDENT.—The term ‘‘pri8 mary care resident’’ means (in accordance with cri9 teria established by the Board) a resident being

10 trained in a distinct program of family practice med11 icine, general practice, general internal medicine, or

12 general pediatrics.

13 SEC. 702. ESTABLISHMENT OF ADVISORY COMMITTEE ON

14 HEALTH PROFESSIONAL EDUCATION.

15 (a) IN GENERAL.—The Board shall provide for an

16 Advisory Committee on Health Professional Education (in

17 this section referred to as the ‘‘Committee’’) to advise the

18 Board on its activities under section 701.

19 (b) MEMBERSHIP.—The Committee shall be com20 posed of—

21 (1) the Chair of the Board, who shall serve as

22 Chair of the Committee, and

23 (2) 12 members, not otherwise in the employ of

24 the United States, appointed by the Board without

25 regard to the provisions of title 5, United States
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1 Code, governing appointments in the competitive

2 service.

3 The appointed members shall provide a balanced point of

4 view with respect to health professional education, primary

5 care disciplines, and health care policy and shall include

6 individuals who are representative of medical schools,

7 other health professional schools, residency programs, pri8 mary care practitioners, teaching hospitals, professional

9 associations, public health organizations, State health

10 security programs, and consumers.

11 (c) TERMS OF MEMBERS.—Each appointed member

12 shall hold office for a term of five years, except that—

13 (1) any member appointed to fill a vacancy oc14 curring during the term for which the member’s

15 predecessor was appointed shall be appointed for the

16 remainder of that term; and

17 (2) the terms of the members first taking office

18 shall expire, as designated by the Board at the time

19 of appointment, two at the end of the second year,

20 two at the end of the third year, two at the end of

21 the fourth year, and three at the end of the fifth

22 year after the date of enactment of this Act.

23 (d) VACANCIES.—

24 (1) IN GENERAL.—The Board shall fill any va25 cancy in the membership of the Committee in the
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1 same manner as the original appointment. The va2 cancy shall not affect the power of the remaining

3 members to execute the duties of the Committee.

4 (2) VACANCY APPOINTMENTS.—Any member

5 appointed to fill a vacancy shall serve for the re6 mainder of the term for which the predecessor of the

7 member was appointed.

8 (3) REAPPOINTMENT.—The Board may re9 appoint an appointed member of the Committee for

10 a second term in the same manner as the original

11 appointment.

12 (e) DUTIES.—It shall be the duty of the Committee

13 to advise the Board concerning graduate medical edu14 cation policies under this title.

15 (f) STAFF.—The Committee, its members, and any

16 committees of the Committee shall be provided with such

17 secretarial, clerical, or other assistance as may be author18 ized by the Board for carrying out their respective

19 functions.

20 (g) MEETINGS.—The Committee shall meet as fre21 quently as the Board deems necessary, but not less than

22 4 times each year. Upon request by four or more members

23 it shall be the duty of the Chair to call a meeting of the

24 Committee.
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1 (h) COMPENSATION.—Members of the Committee

2 shall be reimbursed by the Board for travel and per diem

3 in lieu of subsistence expenses during the performance of

4 duties of the Board in accordance with subchapter I of

5 chapter 57 of title 5, United States Code.

6 (i) FACA NOT APPLICABLE.—The provisions of the

7 Federal Advisory Committee Act shall not apply to the

8 Committee.

9 SEC. 703. GRANTS FOR HEALTH PROFESSIONS EDUCATION,

10 NURSE EDUCATION, AND THE NATIONAL

11 HEALTH SERVICE CORPS.

12 (a) TRANSFERS TO PUBLIC HEALTH SERVICE.—

13 From the amounts provided under subsection (c), the

14 Board shall make transfers from the American Health Se15 curity Trust Fund to the Public Health Service under sub16 part II of part D of title III, title VII, and title VIII of

17 the Public Health Service Act for the support of the Na18 tional Health Service Corps, health professions education,

19 and nursing education, including education of clinical

20 nurse practitioners, certified registered nurse anesthetists,

21 certified nurse midwives, and physician assistants. Of the

22 amounts so transferred in each year, not less than 50 per23 cent shall be expended for the support of the National

24 Health Service Corps.
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1 (b) RANGE OF FUNDS.—The amount of transfers

2 under subsection (a) for any fiscal year shall be an amount

(specified by the Board each year) not less than 4 3 ⁄100 percent and not to exceed 6 4 ⁄100 percent of the amounts the

5 Board estimates will be expended from the Trust Fund

6 in the fiscal year.

7 (c) FUNDS SUPPLEMENTAL TO OTHER FUNDS.—The

8 funds provided under this section with respect to provision

9 of services are in addition to, and not in replacement of,

10 funds made available under the provisions referred to in

11 subsection (a) and shall be administered in accordance

12 with the terms of such provisions. The Board shall make

13 no transfer of funds under this section for any fiscal year

14 for which the total appropriations for the programs au15 thorized by such provisions are less than the total amount

16 appropriated for such programs in fiscal year 1998.

17 Subtitle B—Direct Health Care

18 Delivery

19 SEC. 711. SETASIDE FOR PUBLIC HEALTH.

20 (a) TRANSFERS TO PUBLIC HEALTH SERVICE.—

21 From the amounts provided under subsection (c), the

22 Board shall make transfers from the American Health Se23 curity Trust Fund to the Public Health Service for the

24 following purposes (other than payment for services cov25 ered under title II):
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1 (1) For payments to States under the maternal

2 and child health block grants under title V of the

3 Social Security Act.

4 (2) For prevention and treatment of tuber5 culosis under section 317 of the Public Health Serv6 ice Act.

7 (3) For the prevention and treatment of sexu8 ally transmitted diseases under section 318 of the

9 Public Health Service Act.

10 (4) Preventive health block grants under part A

11 of title XIX of the Public Health Service Act.

12 (5) Grants to States for community mental

13 health services under subpart I of part B of title

14 XIX of the Public Health Service Act.

15 (6) Grants to States for prevention and treat16 ment of substance abuse under subpart II of part B

17 of title XIX of the Public Health Service Act.

18 (7) Grants for HIV health care services under

19 parts A, B, and C of title XXVI of the Public

20 Health Service Act.

21 (8) Public health formula grants described in

22 subsection (d).

23 (b) RANGE OF FUNDS.—The amount of transfers

24 under subsection (a) for any fiscal year shall be an amount

(specified by the Board each year) not less than 1 25 ⁄10 per-
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cent and not to exceed 14 1 ⁄100 percent of the amounts the

2 Board estimates will be expended from the Trust Fund

3 in the fiscal year.

4 (c) FUNDS SUPPLEMENTAL TO OTHER FUNDS.—The

5 funds provided under this section with respect to provision

6 of services are in addition to, and not in replacement of,

7 funds made available under the programs referred to in

8 subsection (a) and shall be administered in accordance

9 with the terms of such programs.

10 (d) REQUIRED REPORTS ON HEALTH STATUS.—The

11 Secretary shall require each State receiving funds under

12 this section to submit annual reports to the Secretary on

13 the health status of the population and measurable objec14 tives for improving the health of the public in the State.

15 Such reports shall include the following:

16 (1) A comparison of the measures of the State

17 and local public health system compared to relevant

18 objectives set forth in ‘‘Health People 2000’’ or sub19 sequent national objectives set by the Secretary.

20 (2) A description of health status measures to

21 be improved within the State (at the State and local

22 levels) through expanded public health functions and

23 health promotion and disease prevention programs.
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1 (3) Measurable outcomes and process objectives

2 for improving health status, and a report on out3 comes from the previous year.

4 (4) Information regarding how Federal funding

5 has improved population-based prevention activities

6 and programs.

7 (5) A description of the core public health func8 tions to be carried out at the local level.

9 (6) A description of the relationship between

10 the State’s public health system, community-based

11 health promotion and disease prevention providers,

12 and the State health security program.

13 (e) LIMITATION ON FUND TRANSFERS.—The Board

14 shall make no transfer of funds under this section for any

15 fiscal year for which the total appropriations for such pro16 grams are less than the total amount appropriated for

17 such programs in fiscal year 1998.

18 (f) PUBLIC HEALTH FORMULA GRANTS.—The Sec19 retary shall provide stable funds to States through for20 mula grants for the purpose of carrying out core public

21 health functions to monitor and protect the health of com22 munities from communicable diseases and exposure to

23 toxic environmental pollutants, occupational hazards,

24 harmful products, and poor health outcomes. Such func25 tions include the following:
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1 (1) Data collection, analysis, and assessment of

2 public health data, vital statistics, and personal

3 health data to assess community health status and

4 outcomes reporting. This function includes the ac5 quisition and installation of hardware and software,

6 and personnel training and technical assistance to

7 operate and support automated and integrated infor8 mation systems.

9 (2) Activities to protect the environment and to

10 assure the safety of housing, workplaces, food, and

11 water.

12 (3) Investigation and control of adverse health

13 conditions, and threats to the health status of indi14 viduals and the community. This function includes

15 the identification and control of outbreaks of infec16 tious disease, patterns of chronic disease and injury,

17 and cooperative activities to reduce the levels of vio18 lence.

19 (4) Health promotion and disease prevention

20 activities for which there is a significant need and a

21 high priority of the Public Health Service.

22 (5) The provision of public health laboratory

23 services to complement private clinical laboratory

24 services, including—
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1 (A) screening tests for metabolic diseases

2 in newborns,

3 (B) toxicology assessments of blood lead

4 levels and other environmental toxins,

5 (C) tuberculosis and other disease requir6 ing partner notification, and

7 (D) testing for infectious and food-borne

8 diseases.

9 (6) Training and education for the public

10 health professions.

11 (7) Research on effective and cost-effective pub12 lic health practices. This function includes the devel13 opment, testing, evaluation, and publication of re14 sults of new prevention and public health control

15 interventions.

16 (8) Integration and coordination of the preven17 tion programs and services of community-based pro18 viders, local and State health departments, and

19 other sectors of State and local government that af20 fect health.

21 SEC. 712. SETASIDE FOR PRIMARY HEALTH CARE DELIV22 ERY.

23 (a) TRANSFERS TO PUBLIC HEALTH SERVICE.—

24 From the amounts provided under subsection (c), the

25 Board shall make transfers from the American Health Se-
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1 curity Trust Fund to the Public Health Service for the

2 program of primary care service expansion grants under

3 subpart V of part D of title III of the Public Health

4 Service Act (as added by section 713 of this Act).

5 (b) RANGE OF FUNDS.—The amount of transfers

6 under subsection (a) for any fiscal year shall be an amount

(specified by the Board each year) not less than 6 7 ⁄100 percent and not to exceed 1 8 ⁄10 percent of the amounts the

9 Board estimates will be expended from the Trust Fund

10 in the fiscal year.

11 (c) FUNDS SUPPLEMENTAL TO OTHER FUNDS.—The

12 funds provided under this section with respect to provision

13 of services are in addition to, and not in replacement of,

14 funds made available under the sections 329, 330, 340,

15 340A, 1001, and 2655 of the Public Health Service Act.

16 The Board shall make no transfer of funds under this sec17 tion for any fiscal year for which the total appropriations

18 for such sections are less than the total amount appro19 priated under such sections in fiscal year 1998.

20 SEC. 713. PRIMARY CARE SERVICE EXPANSION GRANTS.

21 Part D of title III of the Public Health Service Act

22 (42 U.S.C. 254b et seq.) is amended by adding at the end

23 thereof the following new subpart:
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1 ‘‘Subpart IX—Primary Care Expansion

2 ‘‘SEC. 340E. EXPANDING PRIMARY CARE DELIVERY CAPAC3 ITY IN URBAN AND RURAL AREAS.

4 ‘‘(a) GRANTS FOR PRIMARY CARE CENTERS.—From

5 the amounts described in subsection (c), the American

6 Health Security Standards Board shall make grants to

7 public and nonprofit private entities for projects to plan

8 and develop primary care centers which will serve medi9 cally underserved populations (as defined in section

10 330(b)(3)) in urban and rural areas and to deliver primary

11 care services to such populations in such areas. The funds

12 provided under such a grant may be used for the same

13 purposes for which a grant may be made under subsection

14 (c), (e), (f), (g), (h), or (i) of section 330.

15 ‘‘(b) PROCESS OF AWARDING GRANTS.—The provi16 sions of subsection (j)(1) of section 330 shall apply to a

17 grant under this section in the same manner as they apply

18 to a grant under the corresponding subsection of such sec19 tion. The provisions of subsection (l)(2)(A) of such section

20 shall apply to grants for projects to plan and develop pri21 mary care centers under this section in the same manner

22 as they apply to grants under such section.

23 ‘‘(c) FUNDING AS SET-ASIDE FROM TRUST FUND.—

24 Funding to carry out this section is provided from the
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1 American Health Security Trust Fund in accordance with

2 section 912 of the American Health Security Act.

3 ‘‘(d) PRIMARY CARE CENTER DEFINED.—In this sec4 tion, the term ‘primary care center’ means—

5 ‘‘(1) a health center (as defined in section

6 330(1)),

7 ‘‘(2) an entity qualified to receive a grant under

8 section 330, 1001 or 2655, or

9 ‘‘(3) a Federally-qualified health center (as de10 fined in section 1905(l)(2)(B) of the Social Security

11 Act).’’.

12 Subtitle C—Primary Care and

13 Outcomes Research

14 SEC. 721. SET-ASIDE FOR OUTCOMES RESEARCH.

15 (a) GRANTS FOR OUTCOMES RESEARCH.—The

16 Board shall make transfers from the American Health Se17 curity Trust Fund to the Agency for Health Care Policy

18 and Research under title IX of the Public Health Service

19 Act for the purpose of carrying out activities under such

20 title. The Secretary shall assure that there is a special em21 phasis placed on pediatric outcomes research.

22 (b) RANGE OF FUNDS.—The amount of transfers

23 under subsection (a) for any fiscal year shall be an amount

(specified by the Board each year) not less than 1 24 ⁄100 percent and not to exceed 2 25 ⁄100 percent of the amounts the
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1 Board estimates will be expended from the Trust Fund

2 in the fiscal year.

3 (c) FUNDS SUPPLEMENTAL TO OTHER FUNDS.—The

4 funds provided under this section with respect to provision

5 of services are in addition to, and not in replacement of,

6 funds made available to the Agency for Health Care Policy

7 and Research under section 926 of the Public Health

8 Service Act. The Board shall make no transfer of funds

9 under this section for any fiscal year for which the total

10 appropriations under such section are less than the total

11 amount appropriated under such section and title in fiscal

12 year 1998.

13 (d) CONFORMING AMENDMENT.—Section 926(a) of

14 the Public Health Service Act (42 U.S.C. 299c–5(a)) is

15 amended by striking ‘‘$115,000,000’’ and all that follows

16 and inserting ‘‘for each fiscal year (beginning with fiscal

17 year 2000) such sums as may be necessary.’’.

18 SEC. 722. OFFICE OF PRIMARY CARE AND PREVENTION RE19 SEARCH.

20 (a) IN GENERAL.—Title IV of the Public Health

21 Service Act is amended—

22 (1) by redesignating parts G through I as parts

23 H through J, respectively; and

24 (2) by inserting after part F the following new

25 part:
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1 ‘‘PART G—RESEARCH ON PRIMARY CARE AND

2 PREVENTION

3 ‘‘SEC. 486E. OFFICE OF PRIMARY CARE AND PREVENTION

4 RESEARCH.

5 ‘‘(a) ESTABLISHMENT.—There is established within

6 the Office of the Director of NIH an office to be known

7 as the Office of Primary Care and Prevention Research

8 (in this part referred to as the ‘Office’). The Office shall

9 be headed by a director, who shall be appointed by the

10 Director of NIH.

11 ‘‘(b) PURPOSE.—The Director of the Office shall—

12 ‘‘(1) identify projects of research on primary

13 care and prevention, for children as well as adults,

14 that should be conducted or supported by the na15 tional research institutes, with particular emphasis

16 on—

17 ‘‘(A) clinical patient care, with special em18 phasis on pediatric clinical care and diagnosis,

19 ‘‘(B) diagnostic effectiveness,

20 ‘‘(C) primary care education,

21 ‘‘(D) health and family planning services,

22 ‘‘(E) medical effectiveness outcomes of pri23 mary care procedures and interventions,

24 ‘‘(F) the use of multidisciplinary teams of

25 health care practitioners.
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1 ‘‘(2) identify multidisciplinary research related

2 to primary care and prevention that should be so

3 conducted;

4 ‘‘(3) promote coordination and collaboration

5 among entities conducting research identified under

6 any of paragraphs (1) and (2);

7 ‘‘(4) encourage the conduct of such research by

8 entities receiving funds from the national research

9 institutes;

10 ‘‘(5) recommend an agenda for conducting and

11 supporting such research;

12 ‘‘(6) promote the sufficient allocation of the re13 sources of the national research institutes for con14 ducting and supporting such research; and

15 ‘‘(7) prepare the report required in section

16 486G.

17 ‘‘(c) PRIMARY CARE AND PREVENTION RESEARCH

18 DEFINED.—For purposes of this part, the term ‘primary

19 care and prevention research’ means research on improve20 ment of the practice of family medicine, general internal

21 medicine, and general pediatrics, and includes research

22 relating to—

23 ‘‘(1) obstetrics and gynecology, dentistry, or

24 mental health or substance abuse treatment when
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1 provided by a primary care physician or other

2 primary care practitioner, and

3 ‘‘(2) primary care provided by multidisciplinary

4 teams.

5 ‘‘SEC. 486F. NATIONAL DATA SYSTEM AND CLEARINGHOUSE

6 ON PRIMARY CARE AND PREVENTION RE7 SEARCH.

8 ‘‘(a) DATA SYSTEM.—The Director of NIH, in con9 sultation with the Director of the Office, shall establish

10 a data system for the collection, storage, analysis, re11 trieval, and dissemination of information regarding pri12 mary care and prevention research that is conducted or

13 supported by the national research institutes. Information

14 from the data system shall be available through informa15 tion systems available to health care professionals and pro16 viders, researchers, and members of the public.

17 ‘‘(b) CLEARINGHOUSE.—The Director of NIH, in

18 consultation with the Director of the Office and with the

19 National Library of Medicine, shall establish, maintain,

20 and operate a program to provide, and encourage the use

21 of, information on research and prevention activities of the

22 national research institutes that relate to primary care

23 and prevention research.
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1 ‘‘SEC. 486G. BIENNIAL REPORT.

2 ‘‘(a) IN GENERAL.—With respect to primary care

3 and prevention research, the Director of the Office shall,

4 not later than one year after the date of the enactment

5 of this part, and biennially thereafter, prepare a report—

6 ‘‘(1) describing and evaluating the progress

7 made during the preceding two fiscal years in re8 search and treatment conducted or supported by the

9 National Institutes of Health;

10 ‘‘(2) summarizing and analyzing expenditures

11 made by the agencies of such Institutes (and by

12 such Office) during the preceding two fiscal years;

13 and

14 ‘‘(3) making such recommendations for legisla15 tive and administrative initiatives as the Director of

16 the Office determines to be appropriate.

17 ‘‘(b) INCLUSION IN BIENNIAL REPORT OF DIRECTOR

18 OF NIH.—The Director of the Office shall submit each

19 report prepared under subsection (a) to the Director of

20 NIH for inclusion in the report submitted to the President

21 and the Congress under section 403.

22 ‘‘SEC. 486H. AUTHORIZATION OF APPROPRIATIONS.

23 ‘‘For the Office of Primary Care and Prevention Re24 search, there are authorized to be appropriated

25 $150,000,000 for fiscal year 2000, $180,000,000 for fis26 cal year 2001, and $216,000,000 for fiscal year 2002.’’.
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1 (b) REQUIREMENT OF SUFFICIENT ALLOCATION OF

2 RESOURCES OF INSTITUTES.—Section 402(b) of the Pub3 lic Health Service Act (42 U.S.C. 282(b)) is amended—

4 (1) in paragraph (13), by striking ‘‘and’’ after

5 the semicolon at the end;

6 (2) in paragraph (14), by striking the period at

7 the end and inserting ‘‘; and’’; and

8 (3) by inserting after paragraph (14) the fol9 lowing new paragraph:

10 ‘‘(15) after consultation with the Director of

11 the Office of Primary Care and Prevention Re12 search, shall ensure that resources of the National

13 Institutes of Health are sufficiently allocated for

14 projects on primary care and prevention research

15 that are identified under section 486E(b).’’.

16 Subtitle D—School-Related Health

17 Services

18 SEC. 731. AUTHORIZATIONS OF APPROPRIATIONS.

19 (a) FUNDING FOR SCHOOL-RELATED HEALTH SERV20 ICES.—For the purpose of carrying out this subtitle, there

21 are authorized to be appropriated $100,000,000 for fiscal

22 year 2002, $275,000,000 for fiscal year 2003,

23 $350,000,000 for fiscal year 2004, and $400,000,000 for

24 each of the fiscal years 2005 and 2006.
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1 (b) RELATION TO OTHER FUNDS.—The authoriza2 tions of appropriations established in subsection (a) are

3 in addition to any other authorizations of appropriations

4 that are available for the purpose described in such sub5 section.

6 SEC. 732. ELIGIBILITY FOR DEVELOPMENT AND OPER7 ATION GRANTS.

8 (a) IN GENERAL.—Entities eligible to apply for and

9 receive grants under section 734 or 735 are the following:

10 (1) State health agencies that apply on behalf

11 of local community partnerships and other commu12 nities in need of health services for school-aged chil13 dren within the State.

14 (2) Local community partnerships in States in

15 which health agencies have not applied.

16 (b) LOCAL COMMUNITY PARTNERSHIPS.—

17 (1) IN GENERAL.—A local community partner18 ship under subsection (a)(2) is an entity that, at a

19 minimum, includes—

20 (A) a local health care provider with expe21 rience in delivering services to school-aged chil22 dren;

23 (B) one or more local public schools; and

24 (C) at least one community based organi25 zation located in the community to be served
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1 that has a history of providing services to

2 school-aged children in the community who are

3 at-risk.

4 (2) PARTICIPATION.—A partnership described

5 in paragraph (1) shall, to the maximum extent fea6 sible, involve broad based community participation

7 from parents and adolescent children to be served,

8 health and social service providers, teachers and

9 other public school and school board personnel, de10 velopment and service organizations for adolescent

11 children, and interested business leaders. Such par12 ticipation may be evidenced through an expanded

13 partnership, or an advisory board to such partner14 ship.

15 (c) DEFINITIONS REGARDING CHILDREN.—For pur16 poses of this subtitle:

17 (1) The term ‘‘adolescent children’’ means

18 school-aged children who are adolescents.

19 (2) The term ‘‘school-aged children’’ means in20 dividuals who are between the ages of 4 and 19 (in21 clusive).

22 SEC. 733. PREFERENCES.

23 (a) IN GENERAL.—In making grants under sections

24 734 and 735, the Secretary shall give preference to appli25 cants whose communities to be served show the most sub-
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1 stantial level of need for such services among school-aged

2 children, as measured by indicators of community health

3 including the following:

4 (1) High levels of poverty.

5 (2) The presence of a medically underserved

6 population.

7 (3) The presence of a health professional short8 age area.

9 (4) High rates of indicators of health risk

10 among school-aged children, including a high propor11 tion of such children receiving services through the

12 Individuals with Disabilities Education Act, adoles13 cent pregnancy, sexually transmitted disease (includ14 ing infection with the human immunodeficiency

15 virus), preventable disease, communicable disease,

16 intentional and unintentional injuries, community

17 and gang violence, unemployment among adolescent

18 children, juvenile justice involvement, and high rates

19 of drug and alcohol exposure.

20 (b) LINKAGE TO COMMUNITY HEALTH CENTERS.—

21 In making grants under sections 734 and 735, the Sec22 retary shall give preference to applicants that demonstrate

23 a linkage to community health centers.
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1 SEC. 734. GRANTS FOR DEVELOPMENT OF PROJECTS.

2 (a) IN GENERAL.—The Secretary may make grants

3 to State health agencies or to local community partner4 ships to develop school health service sites.

5 (b) USE OF FUNDS.—A project for which a grant

6 may be made under subsection (a) may include but not

7 be limited to the cost of the following:

8 (1) Planning for the provision of school health

9 services.

10 (2) Recruitment, compensation, and training of

11 health and administrative staff.

12 (3) The development of agreements, and the ac13 quisition and development of equipment and infor14 mation services, necessary to support information

15 exchange between school health service sites and

16 health plans, health providers, and other entities au17 thorized to collect information under this Act.

18 (4) Other activities necessary to assume oper19 ational status.

20 (c) APPLICATION FOR GRANT.—

21 (1) IN GENERAL.—Applicants shall submit ap22 plications in a form and manner prescribed by the

23 Secretary.

24 (2) APPLICATIONS BY STATE HEALTH AGEN25 CIES.—
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1 (A) In the case of applicants that are State

2 health agencies, the application shall contain

3 assurances that the State health agency is ap4 plying for funds—

5 (i) on behalf of at least one local com6 munity partnership; and

7 (ii) on behalf of at least one other

8 community identified by the State as in

9 need of the services funded under this sub10 title but without a local community part11 nership.

12 (B) In the case of the communities identi13 fied in applications submitted by State health

14 agencies that do not yet have local community

15 partnerships (including the community identi16 fied under subparagraph (A)(ii)), the State

17 shall describe the steps that will be taken to aid

18 the communities in developing a local commu19 nity partnership.

20 (C) A State applying on behalf of local

21 community partnerships and other communities

22 may retain not more than 10 percent of grants

23 awarded under this subtitle for administrative

24 costs.
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1 (d) CONTENTS OF APPLICATION.—In order to receive

2 a grant under this section, an applicant must include in

3 the application the following information:

4 (1) An assessment of the need for school health

5 services in the communities to be served, using the

6 latest available health data and health goals and ob7 jectives established by the Secretary.

8 (2) A description of how the applicant will de9 sign the proposed school health services to reach the

10 maximum number of school-aged children who are

11 at risk.

12 (3) An explanation of how the applicant will in13 tegrate its services with those of other health and

14 social service programs within the community.

15 (4) A description of a quality assurance pro16 gram which complies with standards that the Sec17 retary may prescribe.

18 (e) NUMBER OF GRANTS.—Not more than one plan19 ning grant may be made to a single applicant. A planning

20 grant may not exceed two years in duration.

21 SEC. 735. GRANTS FOR OPERATION OF PROJECTS.

22 (a) IN GENERAL.—The Secretary may make grants

23 to State health agencies or to local community partner24 ships for the cost of operating school health service sites.
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1 (b) USE OF GRANT.—The costs for which a grant

2 may be made under this section include but are not limited

3 to the following:

4 (1) The cost of furnishing health services that

5 are not otherwise covered under this Act or by any

6 other public or private insurer.

7 (2) The cost of furnishing services whose pur8 pose is to increase the capacity of individuals to uti9 lize available health services, including transpor10 tation, community and patient outreach, patient

11 education, translation services, and such other serv12 ices as the Secretary determines to be appropriate in

13 carrying out such purpose.

14 (3) Training, recruitment and compensation of

15 health professionals and other staff.

16 (4) Outreach services to school-aged children

17 who are at risk and to the parents of such children.

18 (5) Linkage of individuals to health plans, com19 munity health services and social services.

20 (6) Other activities deemed necessary by the

21 Secretary.

22 (c) APPLICATION FOR GRANT.—Applicants shall sub23 mit applications in a form and manner prescribed by the

24 Secretary. In order to receive a grant under this section,
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1 an applicant must include in the application the following

2 information:

3 (1) A description of the services to be furnished

4 by the applicant.

5 (2) The amounts and sources of funding that

6 the applicant will expend, including estimates of the

7 amount of payments the applicant will receive from

8 sources other than the grant.

9 (3) Such other information as the Secretary de10 termines to be appropriate.

11 (d) ADDITIONAL CONTENTS OF APPLICATION.—In

12 order to receive a grant under this section, an applicant

13 must meet the following conditions:

14 (1) The applicant furnishes the following serv15 ices:

16 (A) Diagnosis and treatment of simple ill17 nesses and minor injuries.

18 (B) Preventive health services, including

19 health screenings.

20 (C) Services provided for the purpose de21 scribed in subsection (b)(2).

22 (D) Referrals and followups in situations

23 involving illness or injury.

24 (E) Health and social services, counseling

25 services, and necessary referrals, including re-
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1 ferrals regarding mental health and substance

2 abuse.

3 (F) Such other services as the Secretary

4 determines to be appropriate.

5 (2) The applicant is a participating provider in

6 the State’s program for medical assistance under

7 title XIX of the Social Security Act.

8 (3) The applicant does not impose charges on

9 students or their families for services (including col10 lection of any cost-sharing for services under the

11 comprehensive benefit package that otherwise would

12 be required).

13 (4) The applicant has reviewed and will periodi14 cally review the needs of the population served by

15 the applicant in order to ensure that its services are

16 accessible to the maximum number of school-aged

17 children in the area, and that, to the maximum ex18 tent possible, barriers to access to services of the ap19 plicant are removed (including barriers resulting

20 from the area’s physical characteristics, its eco21 nomic, social and cultural grouping, the health care

22 utilization patterns of such children, and available

23 transportation).

24 (5) In the case of an applicant which serves a

25 population that includes a substantial proportion of
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1 individuals of limited English speaking ability, the

2 applicant has developed a plan to meet the needs of

3 such population to the extent practicable in the lan4 guage and cultural context most appropriate to such

5 individuals.

6 (6) The applicant will provide non-Federal con7 tributions toward the cost of the project in an

8 amount determined by the Secretary.

9 (7) The applicant will operate a quality assur10 ance program consistent with section 734(d).

11 (e) DURATION OF GRANT.—A grant under this sec12 tion shall be for a period determined by the Secretary.

13 (f) REPORTS.—A recipient of funding under this sec14 tion shall provide such reports and information as are re15 quired in regulations of the Secretary.

16 SEC. 736. FEDERAL ADMINISTRATIVE COSTS.

17 Of the amounts made available under section 731, the

18 Secretary may reserve not more than 5 percent for admin19 istrative expenses regarding this subtitle.

20 SEC. 737. DEFINITIONS.

21 For purposes of this subtitle:

22 (1) The term ‘‘adolescent children’’ has the

23 meaning given such term in section 732(c).

24 (2) The term ‘‘at risk’’ means at-risk with re25 spect to health.
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1 (3) The term ‘‘community health center’’ has

2 the meaning given such term in section 330 of the

3 Public Health Service Act.

4 (4) The term ‘‘health professional shortage

5 area’’ means a health professional shortage area des6 ignated under section 332 of the Public Health Serv7 ice Act.

8 (5) The term ‘‘medically underserved popu9 lation’’ has the meaning given such term in section

10 330 of the Public Health Service Act.

11 (6) The term ‘‘school-aged children’’ has the

12 meaning given such term in section 732(c).

13 TITLE VIII—FINANCING PROVI14 SIONS; AMERICAN HEALTH

15 SECURITY TRUST FUND

16 SEC. 800. AMENDMENT OF 1986 CODE; SECTION 15 NOT TO

17 APPLY.

18 (a) AMENDMENT OF 1986 CODE.—Except as other19 wise expressly provided, whenever in this title an amend20 ment or repeal is expressed in terms of an amendment

21 to, or repeal of, a section or other provision, the reference

22 shall be considered to be made to a section or other provi23 sion of the Internal Revenue Code of 1986.

24 (b) SECTION 15 NOT TO APPLY.—The amendments

25 made by subtitle B shall not be treated as a change in
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1 a rate of tax for purposes of section 15 of the Internal

2 Revenue Code of 1986.

3 Subtitle A—American Health

4 Security Trust Fund

5 SEC. 801. AMERICAN HEALTH SECURITY TRUST FUND.

6 (a) IN GENERAL.—There is hereby created on the

7 books of the Treasury of the United States a trust fund

8 to be known as the American Health Security Trust Fund

9 (in this section referred to as the ‘‘Trust Fund’’). The

10 Trust Fund shall consist of such gifts and bequests as

11 may be made and such amounts as may be deposited in,

12 or appropriated to, such Trust Fund as provided in this

13 Act.

14 (b) APPROPRIATIONS INTO TRUST FUND.—

15 (1) TAXES.—There are hereby appropriated to

16 the Trust Fund for each fiscal year (beginning with

17 fiscal year 2000), out of any moneys in the Treasury

18 not otherwise appropriated, amounts equivalent to

19 100 percent of the aggregate increase in tax liabil20 ities under the Internal Revenue Code of 1986 which

21 is attributable to the application of the amendments

22 made by this title. The amounts appropriated by the

23 preceding sentence shall be transferred from time to

24 time (but not less frequently than monthly) from the

25 general fund in the Treasury to the Trust Fund,
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1 such amounts to be determined on the basis of esti2 mates by the Secretary of the Treasury of the taxes

3 paid to or deposited into the Treasury; and proper

4 adjustments shall be made in amounts subsequently

5 transferred to the extent prior estimates were in ex6 cess of or were less than the amounts that should

7 have been so transferred.

8 (2) CURRENT PROGRAM RECEIPTS.—Notwith9 standing any other provision of law, there are hereby

10 appropriated to the Trust Fund for each fiscal year

11 (beginning with fiscal year 2000) the amounts that

12 would otherwise have been appropriated to carry out

13 the following programs:

14 (A) The medicare program, under parts A

15 and B of title XVIII of the Social Security Act

16 (other than amounts attributable to any pre17 miums under such parts).

18 (B) The medicaid program, under State

19 plans approved under title XIX of such Act.

20 (C) The Federal employees health benefit

21 program, under chapter 89 of title 5, United

22 States Code.

23 (D) The CHAMPUS program, under chap24 ter 55 of title 10, United States Code.
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1 (E) The maternal and child health pro2 gram (under title V of the Social Security Act),

3 vocational rehabilitation programs, programs

4 for drug abuse and mental health services

5 under the Public Health Service Act, programs

6 providing general hospital or medical assistance,

7 and any other Federal program identified by

8 the Board, in consultation with the Secretary of

9 the Treasury, to the extent the programs pro10 vide for payment for health services the pay11 ment of which may be made under this Act.

12 (c) INCORPORATION OF PROVISIONS.—The provisions

13 of subsections (b) through (i) of section 1817 of the Social

14 Security Act shall apply to the Trust Fund under this Act

15 in the same manner as they applied to the Federal Hos16 pital Insurance Trust Fund under part A of title XVIII

17 of such Act, except that the American Health Security

18 Standards Board shall constitute the Board of Trustees

19 of the Trust Fund.

20 (d) TRANSFER OF FUNDS.—Any amounts remaining

21 in the Federal Hospital Insurance Trust Fund or the Fed22 eral Supplementary Medical Insurance Trust Fund after

23 the settlement of claims for payments under title XVIII

24 have been completed, shall be transferred into the Amer25 ican Health Security Trust Fund.
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1 Subtitle B—Taxes Based on Income

2 and Wages

3 SEC. 811. PAYROLL TAX ON EMPLOYERS.

4 (a) IN GENERAL.—Section 3111 (relating to tax on

5 employers) is amended by redesignating subsection (c) as

6 subsection (d) and by inserting after subsection (b) the

7 following new subsection:

8 ‘‘(c) HEALTH CARE.—In addition to other taxes,

9 there is hereby imposed on every employer an excise tax,

10 with respect to having individuals in his employ, equal to

11 8.7 percent of the wages (as defined in section 3121(a))

12 paid by him with respect to employment (as defined in

13 section 3121(b)).’’

14 (b) SELF-EMPLOYMENT INCOME.—Section 1401 (re15 lating to rate of tax on self-employment income) is amend16 ed by redesignating subsection (c) as subsection (d) and

17 by inserting after subsection (b) the following new sub18 section:

19 ‘‘(c) HEALTH CARE.—In addition to other taxes,

20 there shall be imposed for each taxable year, on the self21 employment income of every individual, a tax equal to 8.7

22 percent of the amount of the self-employment income for

23 such taxable year.’’

24 (c) COMPARABLE TAXES FOR RAILROAD SERV25 ICES.—
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1 (1) TAX ON EMPLOYERS.—Section 3221 is

2 amended by redesignating subsections (c), (d), and

3 (e) as subsections (d), (e), and (f), respectively, and

4 by inserting after subsection (b) the following new

5 subsection:

6 ‘‘(c) HEALTH CARE.—In addition to other taxes,

7 there is hereby imposed on every employer an excise tax,

8 with respect to having individuals in his employ, equal to

9 8.7 percent of the compensation paid by such employer

10 for services rendered to such employer.’’

11 (2) TAX ON EMPLOYEE REPRESENTATIVES.—

12 Subsection (a) of section 3211 (relating to tax on

13 employee representatives) is amended by redesig14 nating paragraph (3) as paragraph (4) and by in15 serting after paragraph (2) the following new para16 graph:

17 ‘‘(3) HEALTH CARE.—In addition to other

18 taxes, there is hereby imposed on the income of each

19 employee representative a tax equal to 8.7 percent of

20 the compensation received during the calendar year

21 by such employee representative for services ren22 dered by such employee representative.

23 (3) NO APPLICABLE BASE.—Subparagraph (A)

24 of section 3231(e)(2) is amended by adding at the

25 end thereof the following new clause:
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1 ‘‘(iv) HEALTH CARE TAXES.—Clause

2 (i) shall not apply to the taxes imposed by

3 sections 3221(c) and 3211(a)(3).’’

4 (4) TECHNICAL AMENDMENTS.—

5 (A) Paragraph (4) of section 3211(a), as

6 redesignated by paragraph (2), is amended by

7 striking ‘‘and (2)’’ and inserting ‘‘, (2), and

8 (3)’’.

9 (B) Subsection (f) of section 3221, as re10 designated by paragraph (1), is amended by

11 striking ‘‘and (b)’’ and inserting ‘‘, (b), and

12 (c)’’.

13 (d) EFFECTIVE DATE.—The amendments made by

14 this section shall apply to remuneration paid after Decem15 ber 31, 2000.

16 SEC. 812. HEALTH CARE INCOME TAX.

17 (a) GENERAL RULE.—Subchapter A of chapter 1 (re18 lating to determination of tax liability) is amended by add19 ing at the end thereof the following new part:

20 ‘‘PART VIII—HEALTH CARE INCOME TAX ON

21 INDIVIDUALS

‘‘Sec. 59B. Health care income tax.

22 ‘‘SEC. 59B. HEALTH CARE INCOME TAX.

23 ‘‘(a) IMPOSITION OF TAX.—In the case of an indi24 vidual, there is hereby imposed a tax (in addition to any
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1 other tax imposed by this subtitle) equal to 2.2 percent

2 of the taxable income of the taxpayer for the taxable year.

3 ‘‘(b) NO CREDITS AGAINST TAX; NO EFFECT ON

4 MINIMUM TAX.—The tax imposed by this section shall not

5 be treated as a tax imposed by this chapter for purposes

6 of determining—

7 ‘‘(1) the amount of any credit allowable under

8 this chapter, or

9 ‘‘(2) the amount of the minimum tax imposed

10 by section 55.

11 ‘‘(c) SPECIAL RULES.—

12 ‘‘(1) TAX TO BE WITHHELD, ETC.—For pur13 poses of this title, the tax imposed by this section

14 shall be treated as imposed by section 1.

15 ‘‘(2) REIMBURSEMENT OF TAX BY EMPLOYER

16 NOT INCLUDIBLE IN GROSS INCOME.—The gross in17 come of an employee shall not include any payment

18 by his employer to reimburse the employee for the

19 tax paid by the employee under this section.

20 ‘‘(3) OTHER RULES.—The rules of section

21 59A(d) shall apply to the tax imposed by this sec22 tion.’’

23 (b) CLERICAL AMENDMENT.—The table of parts for

24 subchapter A of chapter 1 is amended by adding at the

25 end the following new item:

‘‘Part VIII. Health care income tax on individuals.’’
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1 (c) EFFECTIVE DATE.—The amendments made by

2 this section shall apply to taxable years beginning after

3 December 31, 2000.

4 Subtitle C—Increase in Excise

5 Taxes on Tobacco Products

6 SEC. 821. INCREASE IN EXCISE TAXES ON TOBACCO PROD7 UCTS.

8 (a) CIGARETTES.—Subsection (b) of section 5701 is

9 amended—

10 (1) by striking ‘‘$19.50 per thousand ($17 per

11 thousand on cigarettes removed during 2000 or

12 2001)’’ in paragraph (1) and inserting ‘‘$22.50 per

13 thousand’’, and

14 (2) by striking ‘‘$40.95 per thousand ($35.70

15 per thousand on cigarettes removed during 2000 or

16 2001)’’ in paragraph (2) and inserting ‘‘$47.25 per

17 thousand’’.

18 (b) CIGARS.—Subsection (a) of section 5701 is

19 amended—

20 (1) by striking ‘‘$1.828 cents per thousand

21 ($1.594 cents per thousand on cigars removed dur22 ing 2000 or 2001)’’ in paragraph (1) and inserting

23 ‘‘$2.11 per thousand’’, and

24 (2) by striking ‘‘equal to’’ and all that follows

25 in paragraph (2) and inserting ‘‘equal to 23.91 per-
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1 cent of the price for which sold but not more than

2 $56.25 per thousand.’’

3 (c) CIGARETTE PAPERS.—Subsection (c) of section

4 5701 is amended by striking ‘‘1.22 cents (1.06 cents on

5 cigarette papers removed during 2000 or 2001)’’ and in6 serting ‘‘1.41 cents’’.

7 (d) CIGARETTE TUBES.—Subsection (d) of section

8 5701 is amended by striking ‘‘2.44 cents (2.13 cents on

9 cigarette tubes removed during 2000 or 2001)’’ and in10 serting ‘‘2.81 cents’’.

11 (e) SMOKELESS TOBACCO.—Subsection (e) of section

12 5701 is amended—

13 (1) by striking ‘‘58.5 cents (51 cents on snuff

14 removed during 2000 or 2001)’’ in paragraph (1)

15 and inserting ‘‘67.5 cents’’, and

16 (2) by striking ‘‘19.5 cents (17 cents on chew17 ing tobacco removed during 2000 or 2001)’’ in para18 graph (2) and inserting ‘‘22.5 cents’’.

19 (f) PIPE TOBACCO.—Subsection (f) of section 5701

20 is amended by striking ‘‘$1.0969 cents (95.67 cents on

21 pipe tobacco removed during 2000 or 2001)’’ and insert22 ing ‘‘$1.27’’.

23 (g) EFFECTIVE DATE.—The amendments made by

24 this section shall apply to articles removed (as defined in
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1 section 5702(k) of the Internal Revenue Code of 1986)

2 after December 31, 2000.

3 (h) FLOOR STOCKS TAXES.—

4 (1) IMPOSITION OF TAX.—On tobacco products

5 and cigarette papers and tubes manufactured in or

6 imported into the United States which are removed

7 before January 1, 2001, and held on such date for

8 sale by any person, there is hereby imposed a tax in

9 an amount equal to the excess of—

10 (A) the tax which would be imposed under

11 section 5701 of the Internal Revenue Code of

12 1986 on the article if the article had been re13 moved on such date, over

14 (B) the prior tax (if any) imposed under

15 section 5701 or 7652 of such Code on such ar16 ticle.

17 (2) AUTHORITY TO EXEMPT CIGARETTES HELD

18 IN VENDING MACHINES.—To the extent provided in

19 regulations prescribed by the Secretary, no tax shall

20 be imposed by paragraph (1) on cigarettes held for

21 retail sale on January 1, 2001, by any person in any

22 vending machine. If the Secretary provides such a

23 benefit with respect to any person, the Secretary

24 may reduce the $500 amount in paragraph (3) with

25 respect to such person.
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1 (3) CREDIT AGAINST TAX.—Each person shall

2 be allowed as a credit against the taxes imposed by

3 paragraph (1) an amount equal to $500. Such credit

4 shall not exceed the amount of taxes imposed by

5 paragraph (1) for which such person is liable.

6 (4) LIABILITY FOR TAX AND METHOD OF PAY7 MENT.—

8 (A) LIABILITY FOR TAX.—A person hold9 ing any article on January 1, 2001, to which

10 any tax imposed by paragraph (1) applies shall

11 be liable for such tax.

12 (B) METHOD OF PAYMENT.—The tax im13 posed by paragraph (1) shall be paid in such

14 manner as the Secretary shall prescribe by reg15 ulations.

16 (C) TIME FOR PAYMENT.—The tax im17 posed by paragraph (1) shall be paid on or be18 fore July 31, 2001.

19 (5) ARTICLES IN FOREIGN TRADE ZONES.—

20 Notwithstanding the Act of June 18, 1934 (48 Stat.

21 998, 19 U.S.C. 81a) and any other provision of law,

22 any article which is located in a foreign trade zone

23 on January 1, 2001, shall be subject to the tax im24 posed by paragraph (1) if—
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1 (A) internal revenue taxes have been deter2 mined, or customs duties liquidated, with re3 spect to such article before such date pursuant

4 to a request made under the 1st proviso of sec5 tion 3(a) of such Act, or

6 (B) such article is held on such date under

7 the supervision of a customs officer pursuant to

8 the 2d proviso of such section 3(a).

9 (6) DEFINITIONS.—For purposes of this

10 subsection—

11 (A) IN GENERAL.—Terms used in this sub12 section which are also used in section 5702 of

13 the Internal Revenue Code of 1986 shall have

14 the respective meanings such terms have in

15 such section.

16 (B) SECRETARY.—The term ‘‘Secretary’’

17 means the Secretary of the Treasury or his del18 egate.

19 (7) CONTROLLED GROUPS.—Rules similar to

20 the rules of section 5061(e)(3) of such Code shall

21 apply for purposes of this subsection.

22 (8) OTHER LAWS APPLICABLE.—All provisions

23 of law, including penalties, applicable with respect to

24 the taxes imposed by section 5701 of such Code

25 shall, insofar as applicable and not inconsistent with
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1 the provisions of this subsection, apply to the floor

2 stocks taxes imposed by paragraph (1), to the same

3 extent as if such taxes were imposed by such section

4 5701. The Secretary may treat any person who bore

5 the ultimate burden of the tax imposed by para6 graph (1) as the person to whom a credit or refund

7 under such provisions may be allowed or made.

8 TITLE IX—CONFORMING AMEND9 MENTS TO THE EMPLOYEE

10 RETIREMENT INCOME SECU11 RITY ACT OF 1974

12 SEC. 901. ERISA INAPPLICABLE TO HEALTH COVERAGE AR13 RANGEMENTS UNDER STATE HEALTH SECU14 RITY PROGRAMS.

15 Section 4 of the Employee Retirement Income Secu16 rity Act of 1974 (29 U.S.C. 1003) is amended—

17 (1) in subsection (a), by striking ‘‘subsection

18 (b)’’ and inserting ‘‘subsections (b) and (c)’’; and

19 (2) by adding at the end the following new sub20 section:

21 ‘‘(c) The provisions of this title shall not apply to any

22 arrangement forming a part of a State health security pro23 gram established pursuant to section 101(b) of the Amer24 ican Health Security Act of 1999.’’.
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1 SEC. 902. EXEMPTION OF STATE HEALTH SECURITY PRO2 GRAMS FROM ERISA PREEMPTION.

3 Section 514(b) of the Employee Retirement Income

4 Security Act of 1974 (29 U.S.C. 1144(b)) is amended by

5 adding at the end the following new paragraph:

6 ‘‘(10) Subsection (a) of this section shall not apply

7 to State health security programs established pursuant to

8 section 101(b) of the American Health Security Act of

9 1999.’’.

10 SEC. 903. PROHIBITION OF EMPLOYEE BENEFITS DUPLICA11 TIVE OF BENEFITS UNDER STATE HEALTH

12 SECURITY PROGRAMS; COORDINATION IN

13 CASE OF WORKERS’ COMPENSATION.

14 (a) IN GENERAL.—Part 5 of subtitle B of title I of

15 the Employee Retirement Income Security Act of 1974 is

16 amended by adding at the end the following new section:

17 ‘‘PROHIBITION OF EMPLOYEE BENEFITS DUPLICATIVE OF

18 STATE HEALTH SECURITY PROGRAM BENEFITS; CO19 ORDINATION IN CASE OF WORKERS’ COMPENSATION

20 ‘‘SEC. 518. (a) Subject to subsection (b), no employee

21 benefit plan may provide benefits which duplicate payment

22 for any items or services for which payment may be made

23 under a State health security program established pursu24 ant to section 101(b) of the American Health Security Act

25 of 1999.
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1 ‘‘(b)(1) Each workers compensation carrier that is

2 liable (or would be liable but for the enactment of the

3 American Health Security Act) for payment for workers

4 compensation services furnished in a State shall reimburse

5 the State health security plan for the State in which the

6 services are furnished for the cost of such services.

7 ‘‘(2) In this subsection:

8 ‘‘(A) The term ‘workers compensation carrier’

9 means an insurance company that underwrites work10 ers compensation medical benefits with respect to

11 one or more employers and includes an employer or

12 fund that is financially at risk for the provision of

13 workers compensation medical benefits.

14 ‘‘(B) The term ‘workers compensation medical

15 benefits’ means, with respect to an enrollee who is

16 an employee subject to the workers compensation

17 laws of a State, the comprehensive medical benefits

18 for work-related injuries and illnesses provided for

19 under such laws with respect to such an employee.

20 ‘‘(C) The term ‘workers compensation services’

21 means items and services included in workers com22 pensation medical benefits and includes items and

23 services (including rehabilitation services and long24 term-care services) commonly used for treatment of

25 work-related injuries and illnesses.’’.
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1 (b) CLERICAL AMENDMENT.—The table of contents

2 in section 1 of such Act is amended by inserting after the

3 item relating to section 517 the following new items:

‘‘Sec. 518. Prohibition of employee benefits duplicative of state health security

program benefits; coordination in case of workers’ compensation.’’.

4 SEC. 904. REPEAL OF CONTINUATION COVERAGE REQUIRE5 MENTS UNDER ERISA AND CERTAIN OTHER

6 REQUIREMENTS RELATING TO GROUP

7 HEALTH PLANS.

8 (a) IN GENERAL.—Part 6 of subtitle B of title I of

9 the Employee Retirement Income Security Act of 1974

10 (29 U.S.C. 1161 et seq.) is repealed.

11 (b) CONFORMING AMENDMENTS.—

12 (1) Section 502(a) of such Act (29 U.S.C.

13 1132(a)) is amended—

14 (A) by striking paragraph (7); and

15 (B) by redesignating paragraph (8) as

16 paragraph (7).

17 (2) Section 502(c)(1) of such Act (29 U.S.C.

18 1132(c)(1)) is amended by striking ‘‘paragraph (1)

19 or (4) of section 606 or’’.

20 (3) Section 4301(c)(4) of the Omnibus Budget

21 Reconciliation Act of 1993 (Public Law 103–66; 107

22 Stat. 377) and the amendments made thereby are

23 repealed.
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1 (4) The table of contents in section 1 of the

2 Employee Retirement Income Security Act of 1974

3 is amended by striking the items relating to part 6

4 of subtitle B of title I of such Act.

5 SEC. 905. EFFECTIVE DATE OF TITLE.

6 The amendments made by this title shall take effect

7 January 1, 2001.

8 TITLE X—ADDITIONAL

9 CONFORMING AMENDMENTS

10 SEC. 1001. REPEAL OF CERTAIN PROVISIONS IN INTERNAL

11 REVENUE CODE OF 1986.

12 The provisions of titles III and IV of the Health In13 surance Portability and Accountability Act, other than

14 subtitles D and H and section 342, are repealed and the

15 provisions of law that were amended or repealed by such

16 provisions are hereby restored as if such provisions had

17 not been enacted.

18 (c) RELATED AMENDMENTS.—Strike subsections (l)

19 and (m) of section 401 of the Health Insurance Portability

20 and Accountability Act of 1996.

21 SEC. 1002. REPEAL OF CERTAIN PROVISIONS IN THE EM22 PLOYEE RETIREMENT INCOME SECURITY

23 ACT OF 1974.

24 (a) IN GENERAL.—Part 7 of subtitle B of title I of

25 the Employee Retirement Income Security Act of 1974 is
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1 repealed and the items relating to such part in the table

2 of contents in section 1 of such Act are repealed.

3 (b) ADDITIONAL AMENDMENTS.—Section 514(b) of

4 such Act (29 U.S.C. 1144(b)) is amended by striking

5 paragraph (9).

6 SEC. 1003. REPEAL OF CERTAIN PROVISIONS IN THE PUB7 LIC HEALTH SERVICE ACT AND RELATED

8 PROVISIONS.

9 (a) IN GENERAL.—Titles XXII and XXVII of the

10 Public Health Service Act are repealed.

11 (b) ADDITIONAL AMENDMENTS.—(1) Section

12 1301(b) of such Act (42 U.S.C. 300e(b)) is amended by

13 striking paragraph (6).

14 (2) Sections 104 and 191 of the Health Insurance

15 Portability and Accountability Act of 1996 are repealed.

16 SEC. 1004. EFFECTIVE DATE OF TITLE.

17 The amendments made by this title shall take effect

18 January 1, 2001.

Æ