II

106TH CONGRESS

1ST SESSION S. 24

To provide improved access to health care, enhance informed individual choice

regarding health care services, lower health care costs through the use

of appropriate providers, improve the quality of health care, improve

access to long-term care, and for other purposes.

IN THE SENATE OF THE UNITED STATES

JANUARY 19, 1999

Mr. SPECTER introduced the following bill; which was read twice and referred

to the Committee on Finance

A BILL

To provide improved access to health care, enhance informed

individual choice regarding health care services, lower

health care costs through the use of appropriate providers, improve the quality of health care, improve access

to long-term care, and for other purposes.

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 ‘‘Health Care Assurance Act of 1999’’.

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

7 this Act is as follows:
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Sec. 1. Short title; table of contents.

TITLE I—EXPANSION OF THE STATE CHILDREN’S HEALTH

INSURANCE PROGRAM

Sec. 101. Increase in income eligibility.

TITLE II—EXPANDED HEALTH SERVICES FOR DISABLED

INDIVIDUALS

Sec. 201. Extension of medicare eligibility for disabled individuals who return

to work.

Sec. 202. Coverage of community-based attendant services under the medicaid

program.

Sec. 203. State option for medicaid eligibility for certain individuals.

TITLE III—HEALTH CARE INSURANCE COVERAGE

Subtitle A—General Provisions

Sec. 301. Amendments to the Employee Retirement Income Security Act of

1974.

‘‘SUBPART C—GENERAL INSURANCE COVERAGE REFORMS

‘‘CHAPTER 1—INCREASED AVAILABILITY AND CONTINUITY OF

HEALTH COVERAGE

‘‘Sec. 721. Definition.

‘‘Sec. 721A. Actuarial equivalence in benefits permitted.

‘‘Sec. 721B. Establishment of plan standards.

‘‘Sec. 721C. Rating limitations for community-rated market.

‘‘Sec. 721D. Rating practices and payment of premiums.

‘‘Sec. 721E. Qualified small employer purchasing groups.

‘‘Sec. 721F. Agreements with small employers.

‘‘Sec. 721G. Enrolling eligible employees, eligible individuals, and certain

uninsured individuals in qualified group health plans.

‘‘Sec. 721H. Receipt of premiums.

‘‘Sec. 721I. Marketing activities.

‘‘Sec. 721J. Grants to States and qualified small employer purchasing

groups.

‘‘Sec. 721K. Qualified small employer purchasing groups established by a

State.

‘‘Sec. 721L. Effective dates.

‘‘CHAPTER 2—REQUIRED COVERAGE OPTIONS FOR ELIGIBLE

EMPLOYEES AND DEPENDENTS OF SMALL EMPLOYERS

‘‘Sec. 722. Requiring small employers to offer coverage for eligible individuals.

‘‘Sec. 722A. Compliance with applicable requirements through multiple

employer health arrangements.

‘‘CHAPTER 3—REQUIRED COVERAGE OPTIONS FOR INDIVIDUALS

INSURED THROUGH ASSOCIATION PLANS

‘‘SUBCHAPTER A—QUALIFIED ASSOCIATION PLANS
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‘‘Sec. 723. Treatment of qualified association plans.

‘‘Sec. 723A. Qualified association plan defined.

‘‘Sec. 723B. Definitions and special rules.

‘‘SUBCHAPTER B—SPECIAL RULE FOR CHURCH, MULTIEMPLOYER, AND

COOPERATIVE PLANS

‘‘Sec. 723F. Special rule for church, multiemployer, and cooperative plans.

Sec. 302. Amendments to the Public Health Service Act relating to the group

market.

‘‘CHAPTER 2—GENERAL INSURANCE COVERAGE REFORMS

‘‘SUBCHAPTER A—INCREASED AVAILABILITY AND CONTINUITY OF HEALTH

COVERAGE

‘‘Sec. 2707. Definition.

‘‘Sec. 2707A. Actuarial equivalence in benefits permitted.

‘‘Sec. 2707B. Establishment of plan standards.

‘‘Sec. 2707C. Rating limitations for community-rated market.

‘‘Sec. 2707D. Rating practices and payment of premiums.

‘‘Sec. 2707E. Qualified small employer purchasing groups.

‘‘Sec. 2707F. Agreements with small employers.

‘‘Sec. 2707G. Enrolling eligible employees, eligible individuals, and certain

uninsured individuals in qualified group health plans.

‘‘Sec. 2707H. Receipt of premiums.

‘‘Sec. 2707I. Marketing activities.

‘‘Sec. 2707J. Grants to States and qualified small employer purchasing

groups.

‘‘Sec. 2707K. Qualified small employer purchasing groups established by a

State.

‘‘Sec. 2707L. Effective dates.

‘‘SUBCHAPTER B—REQUIRED COVERAGE OPTIONS FOR ELIGIBLE EMPLOYEES

AND DEPENDENTS OF SMALL EMPLOYERS

‘‘Sec. 2708. Requiring small employers to offer coverage for eligible individuals.

‘‘Sec. 2708A. Compliance with applicable requirements through multiple

employer health arrangements.

‘‘SUBCHAPTER C—REQUIRED COVERAGE OPTIONS FOR INDIVIDUALS INSURED

THROUGH ASSOCIATION PLANS

‘‘Sec. 2709. Treatment of qualified association plans.

‘‘Sec. 2709A. Qualified association plan defined.

‘‘Sec. 2709B. Definitions and special rules.

‘‘Sec. 2709C. Special rule for church, multiemployer, and cooperative

plans.

Sec. 303. Amendment to the Public Health Service Act relating to the individual market.

‘‘Sec. 2753. Applicability of general insurance market reforms.

Sec. 304. Effective date.

Subtitle B—Tax Provisions

Sec. 311. Enforcement with respect to health insurance issuers.
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‘‘Sec. 4980F. Failure of insurer to comply with certain standards for

health insurance coverage.

Sec. 312. Enforcement with respect to small employers.

Sec. 313. Enforcement by excise tax on qualified associations.

Sec. 314. Deduction for health insurance costs of self-employed individuals.

Sec. 315. Amendments to COBRA.

TITLE IV—PRIMARY AND PREVENTIVE CARE SERVICES

Sec. 401. Improvement of medicare preventive care services.

Sec. 402. Authorization of appropriations for healthy start program.

Sec. 403. Reauthorization of certain programs providing primary and preventive care.

Sec. 404. Comprehensive school health education program.

Sec. 405. Comprehensive early childhood health education program.

Sec. 406. Adolescent family life and abstinence.

TITLE V—PATIENT’S RIGHT TO DECLINE MEDICAL TREATMENT

Sec. 501. Patient’s right to decline medical treatment.

TITLE VI—PRIMARY AND PREVENTIVE CARE PROVIDERS

Sec. 601. Increased medicare reimbursement for physician assistants, nurse

practitioners, and clinical nurse specialists.

Sec. 602. Requiring coverage of certain nonphysician providers under the medicaid program.

Sec. 603. Medical student tutorial program grants.

Sec. 604. General medical practice grants.

TITLE VII—COST CONTAINMENT

Sec. 701. New drug clinical trials program.

Sec. 702. Medical treatment effectiveness.

Sec. 703. Health care cost containment and quality information program.

TITLE VIII—TAX INCENTIVES FOR PURCHASE OF QUALIFIED

LONG-TERM CARE INSURANCE

Sec. 801. Credit for qualified long-term care premiums.

Sec. 802. Inclusion of qualified long-term care insurance in cafeteria plans and

flexible spending arrangements.

Sec. 803. Exclusion from gross income for amounts received on cancellation of

life insurance policies and used for qualified long-term care insurance contracts.

Sec. 804. Use of gain from sale of principal residence for purchase of qualified

long-term health care insurance.

TITLE IX—NATIONAL FUND FOR HEALTH RESEARCH

Sec. 901. Establishment of Fund.
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1 TITLE I—EXPANSION OF THE

2 STATE CHILDREN’S HEALTH

3 INSURANCE PROGRAM

4 SEC. 101. INCREASE IN INCOME ELIGIBILITY.

5 (a) DEFINITION OF LOW-INCOME CHILD.—Section

6 2110(c)(4) of the Social Security Act (42 U.S.C. 42

7 U.S.C. 1397jj(c)(4)) is amended by striking ‘‘200’’ and

8 inserting ‘‘235’’.

9 (b) EFFECTIVE DATE.—The amendment made by

10 subsection (a) takes effect on October 1, 1999.

11 TITLE II—EXPANDED HEALTH

12 SERVICES FOR DISABLED IN13 DIVIDUALS

14 SEC. 201. EXTENSION OF MEDICARE ELIGIBILITY FOR DIS15 ABLED INDIVIDUALS WHO RETURN TO WORK.

16 (a) ADDITIONAL 24 MONTHS OF MEDICARE COV17 ERAGE FOR OASDI DISABILITY BENEFIT RECIPIENTS

18 WHO ARE WORKING.—The next to last sentence of section

19 226(b) of the Social Security Act (42 U.S.C. 426(b)) is

20 amended—

21 (1) by striking ‘‘throughout all of which’’ and

22 inserting ‘‘throughout the first 24 months of which’’;

23 and

24 (2) by inserting after ‘‘but not in excess of 24

25 such months’’ the following: ‘‘(plus 24 additional
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1 such months in the case of an individual who the

2 Commissioner determines would otherwise be enti3 tled to hospital insurance benefits under part A of

4 title XVIII but for the individual having earnings

5 that exceed the substantial gainful activity amount

6 (as defined in section 223(d)(4)))’’.

7 (b) MEDICARE BUY-IN FOR OASDI DISABILITY

8 BENEFIT RECIPIENTS WHO ARE WORKING.—

9 (1) IN GENERAL.—Section 1818A(d) of the So10 cial Security Act (42 U.S.C. 1395i–2a(d)) is amend11 ed by adding at the end the following:

12 ‘‘(3)(A) In the case of an individual described in sub13 paragraph (B), the monthly premium for a month shall

14 be paid for in the following manner:

15 ‘‘(i) If the individual’s income does not exceed

16 150 percent of the income official poverty line (as

17 defined by the Office of Management and Budget,

18 and revised annually in accordance with section

19 673(2) of the Omnibus Budget Reconciliation Act of

20 1981), 100 percent by the State of the individual’s

21 residence under the medicaid program under title

22 XIX.

23 ‘‘(ii) If the individual’s income exceeds 150 but

24 does not exceed 185 percent of the income official

25 poverty line (as so defined), 75 percent by such
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1 State under the medicaid program under title XIX

2 and 25 percent by the individual.

3 ‘‘(iii) If the individual’s income exceeds 185 but

4 does not exceed 200 percent of the income official

5 poverty line (as so defined), 50 percent by such

6 State under the medicaid program under title XIX

7 and 50 percent by the individual.

8 ‘‘(B) An individual is described in this subparagraph

9 if—

10 ‘‘(i) the individual establishes to the satisfaction

11 of the Secretary, subject to an annual review, that

12 the individual continues to satisfy the enrollment re13 quirements of subsection (a);

14 ‘‘(ii) the individual is not eligible for assistance

15 with payment of premiums for enrollment in the in16 surance program established by this part or with

17 payment of other cost-sharing imposed under this

18 part under title XIX, other than under section

19 1902(a)(10)(E)(v), or under any other Federal or

20 State assistance program; and

21 ‘‘(iii) the individual’s income does not exceed

22 200 percent of the income official poverty line (as so

23 defined).

24 ‘‘(C) Nothing in this paragraph shall be construed as

25 exempting an individual described in subparagraph (B)
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1 from being subject to any requirements relating to cost2 sharing that are imposed under the insurance program es3 tablished under this part.’’.

4 (2) MEDICAID PAYMENT FOR COVERAGE.—Sec5 tion 1902(a)(10)(E) of the Social Security Act (42

6 U.S.C. 1396a(a)(10)(E)) is amended—

7 (A) in clause (iii), by striking ‘‘and’’ at the

8 end; and

9 (B) by adding at the end the following:

10 ‘‘(v) for making medical assistance avail11 able for payment of medicare cost-sharing de12 scribed in section 1905(p)(3)(A)(i) in accord13 ance with section 1818A(d)(3)(A) for individ14 uals described in section 1818A(d)(3)(B); and’’

15 (3) EFFECTIVE DATE.—The amendments made

16 by this section take effect October 1, 1999.

17 SEC. 202. COVERAGE OF COMMUNITY-BASED ATTENDANT

18 SERVICES UNDER THE MEDICAID PROGRAM.

19 (a) REQUIRING COVERAGE FOR INDIVIDUALS ENTI20 TLED TO NURSING FACILITY SERVICES OR INTERMEDI21 ATE CARE FACILITY SERVICES FOR THE MENTALLY RE22 TARDED.—Section 1902(a)(10)(D) of the Social Security

23 Act (42 U.S.C. 1396a(a)(10)(D)) is amended—

24 (1) by inserting ‘‘(i)’’ after ‘‘(D)’’, and

25 (2) by adding at the end the following:
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1 ‘‘(ii) subject to section 1935(b), for the in2 clusion of qualified community-based attendant

3 services for any individual who, under the State

4 plan, is entitled to nursing facility services or

5 intermediate care facility services for the men6 tally retarded and who requires such services

7 based on functional need (and without regard to

8 age or disability);’’.

9 (b) MEDICAID COVERAGE OF COMMUNITY-BASED

10 ATTENDANT SERVICES.—

11 (1) IN GENERAL.—Title XIX of the Social Se12 curity Act (42 U.S.C. 1396 et seq.) is amended—

13 (A) by redesignating section 1935 as sec14 tion 1936, and

15 (B) by inserting after section 1934 the fol16 lowing new section:

17 ‘‘COVERAGE OF QUALIFIED COMMUNITY-BASED

18 ATTENDANT SERVICES

19 ‘‘SEC. 1935. (a) QUALIFIED COMMUNITY-BASED AT20 TENDANT SERVICES DEFINED.—

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

22 ‘qualified community-based attendant services’

23 means attendant services (as defined by the Sec24 retary) furnished to an individual—

25 ‘‘(A) on an as-needed basis under a plan of

26 service that is based on an assessment of func-
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1 tional need and that is agreed to by the individ2 ual;

3 ‘‘(B) in a home or community-based set4 ting, which may include a school, workplace, or

5 recreation or religious facility, but does not in6 clude a nursing facility, an intermediate care

7 facility for the mentally retarded, or other insti8 tutional facility;

9 ‘‘(C) under either an agency-provider

10 model or other model (as defined in subsection

11 (c)); and

12 ‘‘(D) the furnishing of which is selected,

13 managed, controlled by the individual (as de14 fined by the Secretary).

15 ‘‘(2) SERVICES INCLUDED.—Such term

16 includes—

17 ‘‘(A) backup and emergency attendant

18 services;

19 ‘‘(B) voluntary training on how to select,

20 manage, and dismiss attendants; and

21 ‘‘(C) health-related tasks (as defined by

22 the Secretary) that are assigned to, delegated

23 to, or performed by, unlicensed personal attend24 ants.
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1 ‘‘(3) EXCLUDED SERVICES.—Subject to para2 graph (4), such term does not include—

3 ‘‘(A) provision of room and board, and

4 ‘‘(B) prevocational, vocational, and sup5 ported employment.

6 ‘‘(4) FLEXIBILITY IN TRANSITION TO HOME

7 SETTING.—Under regulations of the Secretary, such

8 term may include expenditures for transitional costs,

9 such as rent and utility deposits, first months’s rent

10 and utilities, bedding, basic kitchen supplies, and

11 other necessities required for an individual to make

12 the transition from a nursing facility or intermediate

13 care facility for the mentally retarded to a home set14 ting.

15 ‘‘(b) LIMITATION ON AMOUNTS OF EXPENDITURES

16 AS MEDICAL ASSISTANCE.—

17 ‘‘(1) IN GENERAL.—In carrying out section

18 1902(a)(10)(D)(ii), a State shall permit an individ19 ual who is entitled to medical assistance with respect

20 to nursing facility services or intermediate care facil21 ity services for the mentally retarded and who quali22 fies for the receipt of such services to choose to re23 ceive medical assistance for qualified community24 based attendant services (rather than medical assist25 ance for such institutional services), in the most in-
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1 tegrated setting appropriate to the needs of the indi2 vidual, so long as the aggregate amount of the Fed3 eral expenditures for such individuals in a fiscal year

4 does not exceed the total that would have been ex5 pended for such individuals to receive such institu6 tional services in the year plus, subject to subsection

7 (e), the transitional allotment to the State for the

8 fiscal year involved, as determined under paragraph

9 (2)(B).

10 ‘‘(2) TRANSITIONAL ALLOTMENTS.—

11 ‘‘(A) TOTAL AMOUNT.—The total amount

12 of the transitional allotments under this para13 graph for—

14 ‘‘(i) fiscal year 2000 is $580,000,000,

15 ‘‘(ii) fiscal year 2001 is $480,000,000,

16 ‘‘(iii) fiscal year 2002 is

17 $380,000,000,

18 ‘‘(iv) fiscal year 2003 is

19 $280,000,000,

20 ‘‘(v) fiscal year 2004 is $180,000,000

21 and

22 ‘‘(vi) fiscal year 2005 is

23 $100,000,000.

24 ‘‘(B) STATE ALLOTMENTS.—The Secretary

25 shall provide a formula for the distribution of
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1 the total amount of the transitional allotments

2 provided in each fiscal year under subparagraph

3 (A) among States. Such formula shall give pref4 erence to States that have a relatively higher

5 proportion of long-term care services furnished

6 to individuals in an institutional setting but

7 who have a plan under subsection (e) to signifi8 cantly reduce such proportion.

9 ‘‘(C) USE OF FUNDS.—Such funds allotted

10 to, but not expended in, a fiscal year to a State

11 are available for expenditure in the succeeding

12 fiscal year.

13 ‘‘(c) DELIVERY MODELS.—For purposes of this sec14 tion:

15 ‘‘(1) AGENCY-PROVIDER MODEL.—The term

16 ‘agency-provider model’ means, with respect to the

17 provision of community-based attendant services for

18 an individual, a method of providing such services

19 under which a single entity contracts for the provi20 sion of such services.

21 ‘‘(2) OTHER MODEL.—The term ‘other model’

22 means a method, other than an agency-provider

23 model, for provision of services. Such a model may

24 include the provision of vouchers, direct cash pay-
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1 ments, or use of a fiscal agent to assist in obtaining

2 services.

3 ‘‘(d) QUALITY ASSURANCE.—

4 ‘‘(1) IN GENERAL.—No Federal financial par5 ticipation shall be available with respect to qualified

6 community-based attendant services furnished under

7 an agency-provider model or other model unless the

8 State establishes and maintains a quality assurance

9 program that is developed after public hearings, that

10 is based on consumer satisfaction, and that, in the

11 case of services furnished under the agency-provider

12 model, meets the following requirements:

13 ‘‘(A) SURVEY AND CERTIFICATION.—The

14 State periodically certifies and surveys such

15 provider-agencies. Such surveys are conducted

16 on an unannounced basis and average at least

17 1 a year for each agency-provider.

18 ‘‘(B) STANDARDS.—The State adopts

19 standards for survey and certification that

20 include—

21 ‘‘(i) minimum qualifications and train22 ing requirements for provider staff;

23 ‘‘(ii) financial operating standards;

24 and

25 ‘‘(iii) a consumer grievance process.
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1 ‘‘(C) MONITORING BOARDS.—The State

2 provides a system that allows for monitoring

3 boards consisting of providers, family members,

4 consumers, and neighbors to advise and assist

5 the State.

6 ‘‘(D) PUBLIC REPORTING.—The State es7 tablishes reporting procedures to make available

8 information to the public.

9 ‘‘(E) ONGOING MONITORING.—The State

10 provides ongoing monitoring of the delivery of

11 attendant services and the effect of those serv12 ices on the health and well-being of each recipi13 ent.

14 ‘‘(2) PROTECTION OF BENEFICIARIES.—

15 ‘‘(A) IN GENERAL.—The regulations pro16 mulgated under section 1930(h)(1) shall apply

17 with respect to the protection of the health,

18 safety, and welfare of individuals receiving

19 qualified community-based attendant services in

20 the same manner as they apply to individuals

21 receiving community supported living arrange22 ments services.

23 ‘‘(B) DEVELOPMENT OF ADDITIONAL REG24 ULATIONS.—The Secretary shall develop addi25 tional regulations to protect the health, safety,
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1 and welfare for individuals receiving qualified

2 community-based attendant services other than

3 under an agency-provider model. Such regula4 tions shall be designed to maximize the consum5 ers’ independence and control.

6 ‘‘(C) SANCTIONS.—The provisions of sec7 tion 1930(h)(2) shall apply to violations of reg8 ulations described in subparagraph (A) or (B)

9 in the same manner as they apply to violations

10 of regulations described in section 1930(h)(1).

11 ‘‘(e) TRANSITION PLAN.—

12 ‘‘(1) IN GENERAL.—As a condition for receipt

13 of a transitional allotment under subsection (b)(2),

14 a State shall develop a long-term care services tran15 sition plan that establishes specific action steps and

16 specific timetables to increase the proportion of long17 term care services provided under the plan under

18 this title in home and community-based settings,

19 rather than institutional settings.

20 ‘‘(2) PARTICIPATION.—The plan under para21 graph (1) shall be developed with major participa22 tion by both the State Independent Living Council

23 and the State Developmental Disabilities Council, as

24 well as input from the Councils on Aging.
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1 ‘‘(f) ELIGIBILITY.—Effective January 1, 2001, a

2 State may not exercise the option of coverage of individ3 uals under section 1902(a)(10)(A)(ii)(V) without provid4 ing coverage under section 1902(a)(10)(A)(ii)(VI).

5 ‘‘(g) REPORT ON IMPACT OF SECTION.—The Sec6 retary shall submit to Congress periodic reports on the

7 impact of this section on beneficiaries, States, and the

8 Federal Government.’’.

9 (c) COVERAGE AS MEDICAL ASSISTANCE.—

10 (1) IN GENERAL.—Section 1905(a) of the So11 cial Security Act (42 U.S.C. 1396d) is amended—

12 (A) by striking ‘‘and’’ at the end of para13 graph (26),

14 (B) by redesignating paragraph (27) as

15 paragraph (28), and

16 (C) by inserting after paragraph (26) the

17 following new paragraph:

18 ‘‘(27) qualified community-based attendant

19 services (to the extent allowed and as defined in sec20 tion 1935); and’’.

21 (2) ELIGIBILITY CLASSIFICATIONS.—Section

22 1902(a)(10)(A)(ii)(VI) of the Social Security Act

23 (42 U.S.C. 1396a(a)(10)(A)(ii)(VI)) is amended by

24 inserting ‘‘or qualified community-based attendant
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1 services’’ after ‘‘section 1915’’ each time such term

2 appears.

3 (3) CONFORMING AMENDMENTS.—

4 (A) Section 1902(j) of the Social Security

5 Act (42 U.S.C. 1396a(j)) is amended by strik6 ing ‘‘of of’’ and inserting ‘‘of’’.

7 (B) Section 1902(a)(10)(C)(iv) of the So8 cial Security Act (42 U.S.C.

9 1396a(a)(10)(C)(iv)) is amended by inserting

10 ‘‘and (27)’’ after ‘‘(24)’’.

11 (d) REVIEW OF, AND REPORT ON, REGULATIONS.—

12 The Secretary of Health and Human Services shall review

13 existing regulations under title XIX of the Social Security

14 Act (42 U.S.C. 1396 et seq.) insofar as they regulate the

15 provision of home health services and other services in

16 home and community-based settings. The Secretary shall

17 submit to Congress a report on how excessive utilization

18 of medical services can be reduced under such title by

19 using qualified community-based attendant services.

20 (e) DEVELOPMENT OF FUNCTIONAL NEEDS ASSESS21 MENT INSTRUMENT.—The Secretary of Health and

22 Human Services shall develop a functional needs assess23 ment instrument that assesses an individual’s need for

24 qualified community-based attendant services and that
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1 may be used in carrying out sections 1902(a)(10)(D)(ii)

2 and 1935 of the Social Security Act.

3 (f) TASK FORCE ON FINANCING OF LONG-TERM

4 CARE SERVICES.—The Secretary of Health and Human

5 Services shall establish a task force to examine appro6 priate methods for financing long-term care services. Such

7 task force shall include significant representation of indi8 viduals (and representatives of individuals) who receive

9 such services.

10 (g) EFFECTIVE DATE.—The amendments made by

11 subsections (a), (b), and (c) shall apply to medical assist12 ance provided for items and services furnished on or after

13 January 1, 2000.

14 SEC. 203. STATE OPTION FOR MEDICAID ELIGIBILITY FOR

15 CERTAIN INDIVIDUALS.

16 (a) IN GENERAL.—Section 1903(f) of the Social Se17 curity Act (42 U.S.C. 1396b(f)) is amended—

18 (1) in paragraph (4)(C), by inserting ‘‘subject

19 to paragraph (5),’’ after ‘‘does not exceed’’, and

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

21 ‘‘(5)(A) A State may waive the income limitation de22 scribed in paragraph (4)(C) in such cases as the State

23 finds the potential for employment opportunities would be

24 enhanced through the provision of such services.
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1 ‘‘(B) In the case of an individual who is made eligible

2 for medical assistance because of subparagraph (A), not3 withstanding section 1916(b), the State may impose a pre4 mium based on a sliding scale relating to income.’’.

5 (b) EFFECTIVE DATE.—The amendments made by

6 subsection (a) shall apply to medical assistance provided

7 for items and services furnished on or after January 1,

8 2000.

9 TITLE III—HEALTH CARE

10 INSURANCE COVERAGE

11 Subtitle A—General Provisions

12 SEC. 301. AMENDMENTS TO THE EMPLOYEE RETIREMENT

13 INCOME SECURITY ACT OF 1974.

14 (a) IN GENERAL.—Part 7 of subtitle B of title I of

15 the Employee Retirement Income Security Act of 1974

16 (29 U.S.C. 1181 et seq.) is amended—

17 (1) by redesignating subpart C as subpart D;

18 and

19 (2) by inserting after subpart B, the following:
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1 ‘‘SUBPART C—GENERAL INSURANCE COVERAGE

2 REFORMS

3 ‘‘CHAPTER 1—INCREASED AVAILABILITY AND

4 CONTINUITY OF HEALTH COVERAGE

5 ‘‘SEC. 721. DEFINITION.

6 ‘‘As used in this subpart, the term ‘qualified group

7 health plan’ means a group health plan, and a health in8 surance issuer offering group health insurance coverage,

9 that is designed to provide standard coverage (consistent

10 with section 721A(b)).

11 ‘‘SEC. 721A. ACTUARIAL EQUIVALENCE IN BENEFITS PER12 MITTED.

13 ‘‘(a) SET OF RULES OF ACTUARIAL EQUIVALENCE.—

14 ‘‘(1) INITIAL DETERMINATION.—The NAIC is

15 requested to submit to the Secretary, within 6

16 months after the date of the enactment of this sub17 part, a set of rules which the NAIC determines is

18 sufficient for determining, in the case of any group

19 health plan, or a health insurance issuer offering

20 group health insurance coverage, and for purposes of

21 this section, the actuarial value of the coverage of22 fered by the plan or coverage.

23 ‘‘(2) CERTIFICATION.—If the Secretary deter24 mines that the NAIC has submitted a set of rules

25 that comply with the requirements of paragraph (1),
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1 the Secretary shall certify such set of rules for use

2 under this subpart. If the Secretary determines that

3 such a set of rules has not been submitted or does

4 not comply with such requirements, the Secretary

5 shall promptly establish a set of rules that meets

6 such requirements.

7 ‘‘(b) STANDARD COVERAGE.—

8 ‘‘(1) IN GENERAL.—A group health plan, and a

9 health insurance issuer offering group health insur10 ance coverage, shall be considered to provide stand11 ard coverage consistent with this subsection if the

12 benefits are determined, in accordance with the set

13 of actuarial equivalence rules certified under sub14 section (a), to have a value that is within 5 percent15 age points of the target actuarial value for standard

16 coverage established under paragraph (2).

17 ‘‘(2) INITIAL DETERMINATION OF TARGET AC18 TUARIAL VALUE FOR STANDARD COVERAGE.—

19 ‘‘(A) INITIAL DETERMINATION.—

20 ‘‘(i) IN GENERAL.—The NAIC is re21 quested to submit to the Secretary, within

22 6 months after the date of the enactment

23 of this subpart, a target actuarial value for

24 standard coverage equal to the average ac25 tuarial value of the coverage described in
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1 clause (ii). No specific procedure or treat2 ment, or classes thereof, is required to be

3 considered in such determination by this

4 subpart or through regulations. The deter5 mination of such value shall be based on a

6 representative distribution of the popu7 lation of eligible employees offered such

8 coverage and a single set of standardized

9 utilization and cost factors.

10 ‘‘(ii) COVERAGE DESCRIBED.—The

11 coverage described in this clause is cov12 erage for medically necessary and appro13 priate services consisting of medical and

14 surgical services, medical equipment, pre15 ventive services, and emergency transpor16 tation in frontier areas. No specific proce17 dure or treatment, or classes thereof, is re18 quired to be covered in such a plan, by this

19 subpart or through regulations.

20 ‘‘(B) CERTIFICATION.—If the Secretary

21 determines that the NAIC has submitted a tar22 get actuarial value for standard coverage that

23 complies with the requirements of subparagraph

24 (A), the Secretary shall certify such value for

25 use under this chapter. If the Secretary deter-
24

•S 24 IS

1 mines that a target actuarial value has not been

2 submitted or does not comply with the require3 ments of subparagraph (A), the Secretary shall

4 promptly determine a target actuarial value

5 that meets such requirements.

6 ‘‘(c) SUBSEQUENT REVISIONS.—

7 ‘‘(1) NAIC.—The NAIC may submit from time

8 to time to the Secretary revisions of the set of rules

9 of actuarial equivalence and target actuarial values

10 previously established or determined under this sec11 tion if the NAIC determines that revisions are nec12 essary to take into account changes in the relevant

13 types of health benefits provisions or in demographic

14 conditions which form the basis for the set of rules

15 of actuarial equivalence or the target actuarial val16 ues. The provisions of subsection (a)(2) shall apply

17 to such a revision in the same manner as they apply

18 to the initial determination of the set of rules.

19 ‘‘(2) SECRETARY.—The Secretary may by regu20 lation revise the set of rules of actuarial equivalence

21 and target actuarial values from time to time if the

22 Secretary determines such revisions are necessary to

23 take into account changes described in paragraph

24 (1).
25

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1 ‘‘SEC. 721B. ESTABLISHMENT OF PLAN STANDARDS.

2 ‘‘(a) ESTABLISHMENT OF GENERAL STANDARDS.—

3 ‘‘(1) ROLE OF NAIC.—The NAIC is requested

4 to submit to the Secretary, within 9 months after

5 the date of the enactment of this subpart, model

6 regulations that specify standards for making quali7 fied group health plans available to small employers.

8 If the NAIC develops recommended regulations

9 specifying such standards within such period, the

10 Secretary shall review the standards. Such review

11 shall be completed within 60 days after the date the

12 regulations are developed. Such standards shall

13 serve as the standards under this section, with such

14 amendments as the Secretary deems necessary. Such

15 standards shall be nonbinding (except as provided in

16 chapter 4).

17 ‘‘(2) CONTINGENCY.—If the NAIC does not de18 velop such model regulations within the period de19 scribed in paragraph (1), the Secretary shall specify,

20 within 15 months after the date of the enactment of

21 this subpart, model regulations that specify stand22 ards for insurers with regard to making qualified

23 group health plans available to small employers.

24 Such standards shall be nonbinding (except as pro25 vided in chapter 4).
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1 ‘‘(3) EFFECTIVE DATE.—The standards speci2 fied in the model regulations shall apply to group

3 health plans and health insurance issuers offering

4 group health insurance coverage in a State on or

5 after the respective date the standards are imple6 mented in the State.

7 ‘‘(b) NO PREEMPTION OF STATE LAW.—A State may

8 implement standards for group health plans available, and

9 health insurance issuers offering group health insurance

10 coverage offered, to small employers that are more strin11 gent than the standards under this section, except that

12 a State may not implement standards that prevent the of13 fering of at least one group health plan that provides

14 standard coverage (as described in section 721A(b)).

15 ‘‘SEC. 721C. RATING LIMITATIONS FOR COMMUNITY-RATED

16 MARKET.

17 ‘‘(a) STANDARD PREMIUMS WITH RESPECT TO COM18 MUNITY-RATED ELIGIBLE EMPLOYEES AND ELIGIBLE IN19 DIVIDUALS.—

20 ‘‘(1) IN GENERAL.—Each group health plan of21 fered, and each health insurance issuer offering

22 group health insurance coverage, to a small em23 ployer shall establish within each community rating

24 area in which the plan is to be offered, a standard

25 premium for enrollment of eligible employees and eli-
27

•S 24 IS

1 gible individuals for the standard coverage (as de2 fined under section 721A(b)).

3 ‘‘(2) ESTABLISHMENT OF COMMUNITY RATING

4 AREA.—

5 ‘‘(A) IN GENERAL.—Not later than Janu6 ary 1, 2000, each State shall, in accordance

7 with subparagraph (B), provide for the division

8 of the State into 1 or more community rating

9 areas. The State may revise the boundaries of

10 such areas from time to time consistent with

11 this paragraph.

12 ‘‘(B) GEOGRAPHIC AREA VARIATIONS.—

13 For purposes of subparagraph (A), a State—

14 ‘‘(i) may not identify an area that di15 vides a 3-digit zip code, a county, or all

16 portions of a metropolitan statistical area;

17 ‘‘(ii) shall not permit premium rates

18 for coverage offered in a portion of an

19 interstate metropolitan statistical area to

20 vary based on the State in which the cov21 erage is offered; and

22 ‘‘(iii) may, upon agreement with one

23 or more adjacent States, identify multi24 State geographic areas consistent with

25 clauses (i) and (ii).
28

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1 ‘‘(3) ELIGIBLE INDIVIDUALS.—For purposes of

2 this section, the term ‘eligible individuals’ includes

3 certain uninsured individuals (as described in section

4 721G).

5 ‘‘(b) UNIFORM PREMIUMS WITHIN COMMUNITY RAT6 ING AREAS.—

7 ‘‘(1) IN GENERAL.—Subject to paragraphs (2)

8 and (3), the standard premium for each group

9 health plan to which this section applies shall be the

10 same, but shall not include the costs of premium

11 processing and enrollment that may vary depending

12 on whether the method of enrollment is through a

13 qualified small employer purchasing group, through

14 a small employer, or through a broker.

15 ‘‘(2) APPLICATION TO ENROLLEES.—

16 ‘‘(A) IN GENERAL.—The premium charged

17 for coverage in a group health plan which cov18 ers eligible employees and eligible individuals

19 shall be the product of—

20 ‘‘(i) the standard premium (estab21 lished under paragraph (1));

22 ‘‘(ii) in the case of enrollment other

23 than individual enrollment, the family ad24 justment factor specified under subpara25 graph (B); and
29

•S 24 IS

1 ‘‘(iii) the age adjustment factor (spec2 ified under subparagraph (C)).

3 ‘‘(B) FAMILY ADJUSTMENT FACTOR.—

4 ‘‘(i) IN GENERAL.—The standards es5 tablished under section 721B shall specify

6 family adjustment factors that reflect the

7 relative actuarial costs of benefit packages

8 based on family classes of enrollment (as

9 compared with such costs for individual en10 rollment).

11 ‘‘(ii) CLASSES OF ENROLLMENT.—For

12 purposes of this subpart, there are 4 class13 es of enrollment:

14 ‘‘(I) Coverage only of an individ15 ual (referred to in this subpart as the

16 ‘individual’ enrollment or class of en17 rollment).

18 ‘‘(II) Coverage of a married cou19 ple without children (referred to in

20 this subpart as the ‘couple-only’ en21 rollment or class of enrollment).

22 ‘‘(III) Coverage of an individual

23 and one or more children (referred to

24 in this subpart as the ‘single parent’

25 enrollment or class of enrollment).
30

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1 ‘‘(IV) Coverage of a married cou2 ple and one or more children (referred

3 to in this subpart as the ‘dual parent’

4 enrollment or class of enrollment).

5 ‘‘(iii) REFERENCES TO FAMILY AND

6 COUPLE CLASSES OF ENROLLMENT.—In

7 this subpart:

8 ‘‘(I) FAMILY.—The terms ‘family

9 enrollment’ and ‘family class of enroll10 ment’ refer to enrollment in a class of

11 enrollment described in any subclause

12 of clause (ii) (other than subclause

13 (I)).

14 ‘‘(II) COUPLE.—The term ‘couple

15 class of enrollment’ refers to enroll16 ment in a class of enrollment de17 scribed in subclause (II) or (IV) of

18 clause (ii).

19 ‘‘(iv) SPOUSE; MARRIED; COUPLE.—

20 ‘‘(I) IN GENERAL.—In this sub21 part, the terms ‘spouse’ and ‘married’

22 mean, with respect to an individual,

23 another individual who is the spouse

24 of, or is married to, the individual, as
31

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1 determined under applicable State

2 law.

3 ‘‘(II) COUPLE.—The term ‘cou4 ple’ means an individual and the indi5 vidual’s spouse.

6 ‘‘(C) AGE ADJUSTMENT FACTOR.—The

7 Secretary, in consultation with the NAIC, shall

8 specify uniform age categories and maximum

9 rating increments for age adjustment factors

10 that reflect the relative actuarial costs of bene11 fit packages among enrollees. For individuals

12 who have attained age 18 but not age 65, the

13 highest age adjustment factor may not exceed 3

14 times the lowest age adjustment factor.

15 ‘‘(3) ADMINISTRATIVE CHARGES.—

16 ‘‘(A) IN GENERAL.—In accordance with

17 the standards established under section 721B, a

18 group health plan which covers eligible employ19 ees and eligible individuals may add a sepa20 rately-stated administrative charge which is

21 based on identifiable differences in legitimate

22 administrative costs and which is applied uni23 formly for individuals enrolling through the

24 same method of enrollment. Nothing in this

25 subparagraph may be construed as preventing a
32

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1 qualified small employer purchasing group from

2 negotiating a unique administrative charge with

3 an insurer for a group health plan.

4 ‘‘(B) ENROLLMENT THROUGH A QUALI5 FIED SMALL EMPLOYER PURCHASING GROUP.—

6 In the case of an administrative charge under

7 subparagraph (A) for enrollment through a

8 qualified small employer purchasing group, such

9 charge may not exceed the lowest charge of

10 such plan for enrollment other than through a

11 qualified small employer purchasing group in

12 such area.

13 ‘‘(c) TREATMENT OF NEGOTIATED RATE AS COMMU14 NITY RATE.—Notwithstanding any other provision of this

15 section, a group health plan and a health insurance issuer

16 offering health insurance coverage that negotiates a pre17 mium rate (exclusive of any administrative charge de18 scribed in subsection (b)(3)) with a qualified small em19 ployer purchasing group in a community rating area shall

20 charge the same premium rate to all eligible employees

21 and eligible individuals.

22 ‘‘SEC. 721D. RATING PRACTICES AND PAYMENT OF PRE23 MIUMS.

24 ‘‘(a) FULL DISCLOSURE OF RATING PRACTICES.—
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1 ‘‘(1) IN GENERAL.—A group health plan and a

2 health insurance issuer offering health insurance

3 coverage shall fully disclose rating practices for the

4 plan to the appropriate certifying authority.

5 ‘‘(2) NOTICE ON EXPIRATION.—A group health

6 plan and a health insurance issuer offering health

7 insurance coverage shall provide for notice of the

8 terms for renewal of a plan at the time of the offer9 ing of the plan and at least 90 days before the date

10 of expiration of the plan.

11 ‘‘(3) ACTUARIAL CERTIFICATION.—Each group

12 health plan and health insurance issuer offering

13 health insurance coverage shall file annually with the

14 appropriate certifying authority a written statement

15 by a member of the American Academy of Actuaries

16 (or other individual acceptable to such authority)

17 who is not an employee of the group health plan or

18 issuer certifying that, based upon an examination by

19 the individual which includes a review of the appro20 priate records and of the actuarial assumptions of

21 such plan or insurer and methods used by the plan

22 or insurer in establishing premium rates and admin23 istrative charges for group health plans—
34

•S 24 IS

1 ‘‘(A) such plan or insurer is in compliance

2 with the applicable provisions of this subpart;

3 and

4 ‘‘(B) the rating methods are actuarially

5 sound.

6 Each plan and insurer shall retain a copy of such

7 statement at its principal place of business for exam8 ination by any individual.

9 ‘‘(b) PAYMENT OF PREMIUMS.—

10 ‘‘(1) IN GENERAL.—With respect to a new en11 rollee in a group health plan, the plan may require

12 advanced payment of an amount equal to the month13 ly applicable premium for the plan at the time such

14 individual is enrolled.

15 ‘‘(2) NOTIFICATION OF FAILURE TO RECEIVE

16 PREMIUM.—If a group health plan or a health insur17 ance issuer offering health insurance coverage fails

18 to receive payment on a premium due with respect

19 to an eligible employee or eligible individual covered

20 under the plan involved, the plan or issuer shall pro21 vide notice of such failure to the employee or individ22 ual within the 20-day period after the date on which

23 such premium payment was due. A plan or issuer

24 may not terminate the enrollment of an eligible em25 ployee or eligible individual unless such employee or
35

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1 individual has been notified of any overdue pre2 miums and has been provided a reasonable oppor3 tunity to respond to such notice.

4 ‘‘SEC. 721E. QUALIFIED SMALL EMPLOYER PURCHASING

5 GROUPS.

6 ‘‘(a) QUALIFIED SMALL EMPLOYER PURCHASING

7 GROUPS DESCRIBED.—

8 ‘‘(1) IN GENERAL.—A qualified small employer

9 purchasing group is an entity that—

10 ‘‘(A) is a nonprofit entity certified under

11 State law;

12 ‘‘(B) has a membership consisting solely of

13 small employers;

14 ‘‘(C) is administered solely under the au15 thority and control of its member employers;

16 ‘‘(D) with respect to each State in which

17 its members are located, consists of not fewer

18 than the number of small employers established

19 by the State as appropriate for such a group;

20 ‘‘(E) offers a program under which quali21 fied group health plans are offered to eligible

22 employees and eligible individuals through its

23 member employers and to certain uninsured in24 dividuals in accordance with section 721D; and
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1 ‘‘(F) an insurer, agent, broker, or any

2 other individual or entity engaged in the sale of

3 insurance—

4 ‘‘(i) does not form or underwrite; and

5 ‘‘(ii) does not hold or control any

6 right to vote with respect to.

7 ‘‘(2) STATE CERTIFICATION.—A qualified small

8 employer purchasing group formed under this sec9 tion shall submit an application to the State for cer10 tification. The State shall determine whether to

11 issue a certification and otherwise ensure compliance

12 with the requirements of this subpart.

13 ‘‘(3) SPECIAL RULE.—Notwithstanding para14 graph (1)(B), an employer member of a small em15 ployer purchasing group that has been certified by

16 the State as meeting the requirements of paragraph

17 (1) may retain its membership in the group if the

18 number of employees of the employer increases such

19 that the employer is no longer a small employer.

20 ‘‘(b) BOARD OF DIRECTORS.—Each qualified small

21 employer purchasing group established under this section

22 shall be governed by a board of directors or have active

23 input from an advisory board consisting of individuals and

24 businesses participating in the group.
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1 ‘‘(c) DOMICILIARY STATE.—For purposes of this sec2 tion, a qualified small employer purchasing group operat3 ing in more than one State shall be certified by the State

4 in which the group is domiciled.

5 ‘‘(d) MEMBERSHIP.—

6 ‘‘(1) IN GENERAL.—A qualified small employer

7 purchasing group shall accept all small employers

8 and certain uninsured individuals residing within the

9 area served by the group as members if such em10 ployers or individuals request such membership.

11 ‘‘(2) VOTING.—Members of a qualified small

12 employer purchasing group shall have voting rights

13 consistent with the rules established by the State.

14 ‘‘(e) DUTIES OF QUALIFIED SMALL EMPLOYER PUR15 CHASING GROUPS.—Each qualified small employer pur16 chasing group shall—

17 ‘‘(1) enter into agreements with insurers offer18 ing qualified group health plans;

19 ‘‘(2) enter into agreements with small employ20 ers under section 721F;

21 ‘‘(3) enroll only eligible employees, eligible indi22 viduals, and certain uninsured individuals in quali23 fied group health plans, in accordance with section

24 721G;

25 ‘‘(4) provide enrollee information to the State;
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•S 24 IS

1 ‘‘(5) meet the marketing requirements under

2 section 721I; and

3 ‘‘(6) carry out other functions provided for

4 under this subpart.

5 ‘‘(f) LIMITATION ON ACTIVITIES.—A qualified small

6 employer purchasing group shall not—

7 ‘‘(1) perform any activity involving approval or

8 enforcement of payment rates for providers;

9 ‘‘(2) perform any activity (other than the re10 porting of noncompliance) relating to compliance of

11 qualified group health plans with the requirements

12 of this subpart;

13 ‘‘(3) assume financial risk in relation to any

14 such health plan; or

15 ‘‘(4) perform other activities identified by the

16 State as being inconsistent with the performance of

17 its duties under this subpart.

18 ‘‘(g) RULES OF CONSTRUCTION.—

19 ‘‘(1) ESTABLISHMENT NOT REQUIRED.—Noth20 ing in this section shall be construed as requiring—

21 ‘‘(A) that a State organize, operate or oth22 erwise establish a qualified small employer pur23 chasing group, or otherwise require the estab24 lishment of purchasing groups; and
39

•S 24 IS

1 ‘‘(B) that there be only one qualified small

2 employer purchasing group established with re3 spect to a community rating area.

4 ‘‘(2) SINGLE ORGANIZATION SERVING MUL5 TIPLE AREAS AND STATES.—Nothing in this section

6 shall be construed as preventing a single entity from

7 being a qualified small employer purchasing group in

8 more than one community rating area or in more

9 than one State.

10 ‘‘(3) VOLUNTARY PARTICIPATION.—Nothing in

11 this section shall be construed as requiring any indi12 vidual or small employer to purchase a qualified

13 group health plan exclusively through a qualified

14 small employer purchasing group.

15 ‘‘SEC. 721F. AGREEMENTS WITH SMALL EMPLOYERS.

16 ‘‘(a) IN GENERAL.—A qualified small employer pur17 chasing group shall offer to enter into an agreement under

18 this section with each small employer that employs eligible

19 employees in the area served by the group.

20 ‘‘(b) PAYROLL DEDUCTION.—

21 ‘‘(1) IN GENERAL.—Under an agreement under

22 this section between a small employer and a quali23 fied small employer purchasing group, the small em24 ployer shall deduct premiums from an eligible em25 ployee’s wages.
40

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1 ‘‘(2) ADDITIONAL PREMIUMS.—If the amount

2 withheld under paragraph (1) is not sufficient to

3 cover the entire cost of the premiums, the eligible

4 employee shall be responsible for paying directly to

5 the qualified small employer purchasing group the

6 difference between the amount of such premiums

7 and the amount withheld.

8 ‘‘SEC. 721G. ENROLLING ELIGIBLE EMPLOYEES, ELIGIBLE

9 INDIVIDUALS, AND CERTAIN UNINSURED IN10 DIVIDUALS IN QUALIFIED GROUP HEALTH

11 PLANS.

12 ‘‘(a) IN GENERAL.—Each qualified small employer

13 purchasing group shall offer—

14 ‘‘(1) eligible employees,

15 ‘‘(2) eligible individuals, and

16 ‘‘(3) certain uninsured individuals,

17 the opportunity to enroll in any qualified group health

18 plan which has an agreement with the qualified small em19 ployer purchasing group for the community rating area

20 in which such employees and individuals reside.

21 ‘‘(b) UNINSURED INDIVIDUALS.—For purposes of

22 this section, an individual is described in subsection (a)(3)

23 if such individual is an uninsured individual who is not

24 an eligible employee of a small employer that is a member
41

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1 of a qualified small employer purchasing group or a de2 pendent of such individual.

3 ‘‘SEC. 721H. RECEIPT OF PREMIUMS.

4 ‘‘(a) ENROLLMENT CHARGE.—The amount charged

5 by a qualified small employer purchasing group for cov6 erage under a qualified group health plan shall be equal

7 to the sum of—

8 ‘‘(1) the premium rate offered by such health

9 plan;

10 ‘‘(2) the administrative charge for such health

11 plan; and

12 ‘‘(3) the purchasing group administrative

13 charge for enrollment of eligible employees, eligible

14 individuals and certain uninsured individuals

15 through the group.

16 ‘‘(b) DISCLOSURE OF PREMIUM RATES AND ADMIN17 ISTRATIVE CHARGES.—Each qualified small employer

18 purchasing group shall, prior to the time of enrollment,

19 disclose to enrollees and other interested parties the pre20 mium rate for a qualified group health plan, the adminis21 trative charge for such plan, and the administrative charge

22 of the group, separately.

23 ‘‘SEC. 721I. MARKETING ACTIVITIES.

24 ‘‘Each qualified small employer purchasing group

25 shall market qualified group health plans to members
42

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1 through the entire community rating area served by the

2 purchasing group.

3 ‘‘SEC. 721J. GRANTS TO STATES AND QUALIFIED SMALL EM4 PLOYER PURCHASING GROUPS.

5 ‘‘(a) IN GENERAL.—The Secretary shall award

6 grants to States and small employer purchasing groups

7 to assist such States and groups in planning, developing,

8 and operating qualified small employer purchasing groups.

9 ‘‘(b) APPLICATION REQUIREMENTS.—To be eligible

10 to receive a grant under this section, a State or small em11 ployer purchasing group shall prepare and submit to the

12 Secretary an application in such form, at such time, and

13 containing such information, certifications, and assur14 ances as the Secretary shall reasonably require.

15 ‘‘(c) USE OF FUNDS.—Amounts awarded under this

16 section may be used to finance the costs associated with

17 planning, developing, and operating a qualified small em18 ployer purchasing group. Such costs may include the costs

19 associated with—

20 ‘‘(1) engaging in education and outreach efforts

21 to inform small employers, insurers, and the public

22 about the small employer purchasing group;

23 ‘‘(2) soliciting bids and negotiating with insur24 ers to make available group health plans;
43

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1 ‘‘(3) preparing the documentation required to

2 receive certification by the Secretary as a qualified

3 small employer purchasing group; and

4 ‘‘(4) such other activities determined appro5 priate by the Secretary.

6 ‘‘(d) AUTHORIZATION OF APPROPRIATIONS.—There

7 are authorized to be appropriated for awarding grants

8 under this section such sums as may be necessary.

9 ‘‘SEC. 721K. QUALIFIED SMALL EMPLOYER PURCHASING

10 GROUPS ESTABLISHED BY A STATE.

11 ‘‘A State may establish a system in all or part of the

12 State under which qualified small employer purchasing

13 groups are the sole mechanism through which health care

14 coverage for the eligible employees of small employers shall

15 be purchased or provided.

16 ‘‘SEC. 721L. EFFECTIVE DATES.

17 ‘‘(a) IN GENERAL.—Except as provided in this chap18 ter, the provisions of this chapter are effective on the date

19 of the enactment of this subpart.

20 ‘‘(b) EXCEPTION.—The provisions of section 721C(b)

21 shall apply to contracts which are issued, or renewed, after

22 the date which is 18 months after the date of the enact23 ment of this subpart.
44

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1 ‘‘CHAPTER 2—REQUIRED COVERAGE OPTIONS

2 FOR ELIGIBLE EMPLOYEES AND DEPEND3 ENTS OF SMALL EMPLOYERS

4 ‘‘SEC. 722. REQUIRING SMALL EMPLOYERS TO OFFER COV5 ERAGE FOR ELIGIBLE INDIVIDUALS.

6 ‘‘(a) REQUIREMENT TO OFFER.—Each small em7 ployer shall make available with respect to each eligible

8 employee a group health plan under which—

9 ‘‘(1) coverage of each eligible individual with re10 spect to such an eligible employee may be elected on

11 an annual basis for each plan year;

12 ‘‘(2) coverage is provided for at least the stand13 ard coverage specified in section 721A(b); and

14 ‘‘(3) each eligible employee electing such cov15 erage may elect to have any premiums owed by the

16 employee collected through payroll deduction.

17 ‘‘(b) NO EMPLOYER CONTRIBUTION REQUIRED.—An

18 employer is not required under subsection (a) to make any

19 contribution to the cost of coverage under a group health

20 plan described in such subsection.

21 ‘‘(c) SPECIAL RULES.—

22 ‘‘(1) EXCLUSION OF NEW EMPLOYERS AND

23 CERTAIN VERY SMALL EMPLOYERS.—Subsection (a)

24 shall not apply to any small employer for any plan

25 year if, as of the beginning of such plan year—
45

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1 ‘‘(A) such employer (including any prede2 cessor thereof) has been an employer for less

3 than 2 years;

4 ‘‘(B) such employer has no more than 2 el5 igible employees; or

6 ‘‘(C) no more than 2 eligible employees are

7 not covered under any group health plan.

8 ‘‘(2) EXCLUSION OF FAMILY MEMBERS.—Under

9 such procedures as the Secretary may prescribe, any

10 relative of a small employer may be, at the election

11 of the employer, excluded from consideration as an

12 eligible employee for purposes of applying the re13 quirements of subsection (a). In the case of a small

14 employer that is not an individual, an employee who

15 is a relative of a key employee (as defined in section

16 416(i)(1) of the Internal Revenue Code of 1986) of

17 the employer may, at the election of the key em18 ployee, be considered a relative excludable under this

19 paragraph.

20 ‘‘(3) OPTIONAL APPLICATION OF WAITING PE21 RIOD.—A group health plan and a health insurance

22 issuer offering group health insurance coverage shall

23 not be treated as failing to meet the requirements of

24 subsection (a) solely because a period of service by

25 an eligible employee of not more than 60 days is re-
46

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1 quired under the plan for coverage under the plan

2 of eligible individuals with respect to such employee.

3 ‘‘(d) CONSTRUCTION.—Nothing in this section shall

4 be construed as limiting the group health plans, or types

5 of coverage under such a plan, that an employer may offer

6 to an employee.

7 ‘‘SEC. 722A. COMPLIANCE WITH APPLICABLE REQUIRE8 MENTS THROUGH MULTIPLE EMPLOYER

9 HEALTH ARRANGEMENTS.

10 ‘‘(a) IN GENERAL.—In any case in which an eligible

11 employee is, for any plan year, a participant in a group

12 health plan which is a multiemployer plan, the require13 ments of section 722(a) shall be deemed to be met with

14 respect to such employee for such plan year if the em15 ployer requirements of subsection (b) are met with respect

16 to the eligible employee, irrespective of whether, or to what

17 extent, the employer makes employer contributions on be18 half of the eligible employee.

19 ‘‘(b) EMPLOYER REQUIREMENTS.—The employer re20 quirements of this subsection are met under a group

21 health plan with respect to an eligible employee if—

22 ‘‘(1) the employee is eligible under the plan to

23 elect coverage on an annual basis and is provided a

24 reasonable opportunity to make the election in such
47

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1 form and manner and at such times as are provided

2 by the plan;

3 ‘‘(2) coverage is provided for at least the stand4 ard coverage specified in section 721A(b);

5 ‘‘(3) the employer facilitates collection of any

6 employee contributions under the plan and permits

7 the employee to elect to have employee contributions

8 under the plan collected through payroll deduction;

9 and

10 ‘‘(4) in the case of a plan to which part 1 does

11 not otherwise apply, the employer provides to the

12 employee a summary plan description described in

13 section 102(a)(1) in the form and manner and at

14 such times as are required under such part 1 with

15 respect to employee welfare benefit plans.

16 ‘‘CHAPTER 3—REQUIRED COVERAGE OPTIONS

17 FOR INDIVIDUALS INSURED THROUGH ASSO18 CIATION PLANS

19 ‘‘Subchapter A—Qualified Association Plans

20 ‘‘SEC. 723. TREATMENT OF QUALIFIED ASSOCIATION

21 PLANS.

22 ‘‘(a) GENERAL RULE.—For purposes of this chapter,

23 in the case of a qualified association plan—

24 ‘‘(1) except as otherwise provided in this sub25 chapter, the plan shall meet all applicable require-
48

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1 ments of chapter 1 and chapter 2 for group health

2 plans offered to and by small employers;

3 ‘‘(2) if such plan is certified as meeting such

4 requirements and the requirements of this sub5 chapter, such plan shall be treated as a plan estab6 lished and maintained by a small employer, and indi7 viduals enrolled in such plan shall be treated as eli8 gible employees; and

9 ‘‘(3) any individual who is a member of the as10 sociation not enrolling in the plan shall not be treat11 ed as an eligible employee solely by reason of mem12 bership in such association.

13 ‘‘(b) ELECTION TO BE TREATED AS PURCHASING

14 COOPERATIVE.—Subsection (a) shall not apply to a quali15 fied association plan if—

16 ‘‘(1) the health insurance issuer makes an irrev17 ocable election to be treated as a qualified small em18 ployer purchasing group for purposes of section

19 721D; and

20 ‘‘(2) such sponsor meets all requirements of

21 this subpart applicable to a purchasing cooperative.

22 ‘‘SEC. 723A. QUALIFIED ASSOCIATION PLAN DEFINED.

23 ‘‘(a) GENERAL RULE.—For purposes of this chapter,

24 a plan is a qualified association plan if the plan is a mul-
49

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1 tiple employer welfare arrangement or similar

2 arrangement—

3 ‘‘(1) which is maintained by a qualified associa4 tion;

5 ‘‘(2) which has at least 500 participants in the

6 United States;

7 ‘‘(3) under which the benefits provided consist

8 solely of medical care (as defined in section 213(d)

9 of the Internal Revenue Code of 1986);

10 ‘‘(4) which may not condition participation in

11 the plan, or terminate coverage under the plan, on

12 the basis of the health status or health claims expe13 rience of any employee or member or dependent of

14 either;

15 ‘‘(5) which provides for bonding, in accordance

16 with regulations providing rules similar to the rules

17 under section 412, of all persons operating or ad18 ministering the plan or involved in the financial af19 fairs of the plan; and

20 ‘‘(6) which notifies each participant or provider

21 that it is certified as meeting the requirements of

22 this chapter applicable to it.

23 ‘‘(b) SELF-INSURED PLANS.—In the case of a plan

24 which is not fully insured (within the meaning of section
50

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1 514(b)(6)(D)), the plan shall be treated as a qualified as2 sociation plan only if—

3 ‘‘(1) the plan meets minimum financial solvency

4 and cash reserve requirements for claims which are

5 established by the Secretary and which shall be in

6 lieu of any other such requirements under this chap7 ter;

8 ‘‘(2) the plan provides an annual funding report

9 (certified by an independent actuary) and annual fi10 nancial statements to the Secretary and other inter11 ested parties; and

12 ‘‘(3) the plan appoints a plan sponsor who is

13 responsible for operating the plan and ensuring com14 pliance with applicable Federal and State laws.

15 ‘‘(c) CERTIFICATION.—

16 ‘‘(1) IN GENERAL.—A plan shall not be treated

17 as a qualified association plan for any period unless

18 there is in effect a certification by the Secretary that

19 the plan meets the requirements of this subchapter.

20 For purposes of this chapter, the Secretary shall be

21 the appropriate certifying authority with respect to

22 the plan.

23 ‘‘(2) FEE.—The Secretary shall require a

24 $5,000 fee for the original certification under para25 graph (1) and may charge a reasonable annual fee
51

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1 to cover the costs of processing and reviewing the

2 annual statements of the plan.

3 ‘‘(3) EXPEDITED PROCEDURES.—The Secretary

4 may by regulation provide for expedited registration,

5 certification, and comment procedures.

6 ‘‘(4) AGREEMENTS.—The Secretary of Labor

7 may enter into agreements with the States to carry

8 out the Secretary’s responsibilities under this sub9 chapter.

10 ‘‘(d) AVAILABILITY.—Notwithstanding any other

11 provision of this chapter, a qualified association plan may

12 limit coverage to individuals who are members of the

13 qualified association establishing or maintaining the plan,

14 an employee of such member, or a dependent of either.

15 ‘‘(e) SPECIAL RULES FOR EXISTING PLANS.—In the

16 case of a plan in existence on January 1, 1999—

17 ‘‘(1) the requirements of subsection (a) (other

18 than paragraphs (4), (5), and (6) thereof) shall not

19 apply;

20 ‘‘(2) no original certification shall be required

21 under this subchapter; and

22 ‘‘(3) no annual report or funding statement

23 shall be required before January 1, 2001, but the

24 plan shall file with the Secretary a description of the

25 plan and the name of the health insurance issuer.
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1 ‘‘SEC. 723B. DEFINITIONS AND SPECIAL RULES.

2 ‘‘(a) QUALIFIED ASSOCIATION.—For purposes of this

3 subchapter, the term ‘qualified association’ means any or4 ganization which—

5 ‘‘(1) is organized and maintained in good faith

6 by a trade association, an industry association, a

7 professional association, a chamber of commerce, a

8 religious organization, a public entity association, or

9 other business association serving a common or simi10 lar industry;

11 ‘‘(2) is organized and maintained for substan12 tial purposes other than to provide a health plan;

13 ‘‘(3) has a constitution, bylaws, or other similar

14 governing document which states its purpose; and

15 ‘‘(4) receives a substantial portion of its finan16 cial support from its active, affiliated, or federation

17 members.

18 ‘‘(b) COORDINATION.—The term ‘qualified associa19 tion plan’ shall not include a plan to which subchapter

20 B applies.
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1 ‘‘Subchapter B—Special Rule for Church,

2 Multiemployer, and Cooperative Plans

3 ‘‘SEC. 723F. SPECIAL RULE FOR CHURCH, MULTIEM4 PLOYER, AND COOPERATIVE PLANS.

5 ‘‘(a) GENERAL RULE.—For purposes of this chapter,

6 in the case of a group health plan to which this section

7 applies—

8 ‘‘(1) except as otherwise provided in this sub9 chapter, the plan shall be required to meet all appli10 cable requirements of chapter 1 and chapter 2 for

11 group health plans offered to and by small employ12 ers;

13 ‘‘(2) if such plan is certified as meeting such

14 requirements, such plan shall be treated as a plan

15 established and maintained by a small employer and

16 individuals enrolled in such plan shall be treated as

17 eligible employees; and

18 ‘‘(3) any individual eligible to enroll in the plan

19 who does not enroll in the plan shall not be treated

20 as an eligible employee solely by reason of being eli21 gible to enroll in the plan.

22 ‘‘(b) MODIFIED STANDARDS.—

23 ‘‘(1) CERTIFYING AUTHORITY.—For purposes

24 of this chapter, the Secretary shall be the appro25 priate certifying authority with respect to a plan to

26 which this section applies.
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1 ‘‘(2) AVAILABILITY.—Rules similar to the rules

2 of subsection (e) of section 723A shall apply to a

3 plan to which this section applies.

4 ‘‘(3) ACCESS.—An employer which, pursuant to

5 a collective bargaining agreement, offers an em6 ployee the opportunity to enroll in a plan described

7 in subsection (c)(2) shall not be required to make

8 any other plan available to the employee.

9 ‘‘(4) TREATMENT UNDER STATE LAWS.—A

10 church plan described in subsection (c)(1) which is

11 certified as meeting the requirements of this section

12 shall not be deemed to be a multiple employer wel13 fare arrangement or an insurance company or other

14 insurer, or to be engaged in the business of insur15 ance, for purposes of any State law purporting to

16 regulate insurance companies or insurance contracts.

17 ‘‘(c) PLANS TO WHICH SECTION APPLIES.—This sec18 tion shall apply to a health plan which—

19 ‘‘(1) is a church plan (as defined in section

20 414(e) of the Internal Revenue Code of 1986) which

21 has at least 100 participants in the United States;

22 ‘‘(2) is a multiemployer plan which is main23 tained by a health plan sponsor described in section

24 3(16)(B)(iii) and which has at least 500 participants

25 in the United States; or
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1 ‘‘(3) is a plan which is maintained by a rural

2 electric cooperative or a rural telephone cooperative

3 association and which has at least 500 participants

4 in the United States.’’.

5 (b) CONFORMING AMENDMENTS.—Section 731(d) of

6 the Employee Retirement Income Security Act of 1974

7 (29 U.S.C. 1186(d)) is amended by adding at the end the

8 following:

9 ‘‘(3) ELIGIBLE EMPLOYEE.—The term ‘eligible

10 employee’ means, with respect to an employer, an

11 employee who normally performs on a monthly basis

12 at least 30 hours of service per week for that em13 ployer.

14 ‘‘(4) ELIGIBLE INDIVIDUAL.—The term ‘eligible

15 individual’ means, with respect to an eligible em16 ployee, such employee, and any dependent of such

17 employee.

18 ‘‘(5) NAIC.—The term ‘NAIC’ means the Na19 tional Association of Insurance Commissioners.

20 ‘‘(6) QUALIFIED GROUP HEALTH PLAN.—The

21 term ‘qualified group health plan’ shall have the

22 meaning given the term in section 721.’’.
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1 SEC. 302. AMENDMENTS TO THE PUBLIC HEALTH SERVICE

2 ACT RELATING TO THE GROUP MARKET.

3 (a) IN GENERAL.—Subpart 2 of part A of title

4 XXVII of the Public Health Service Act (42 U.S.C.

5 300gg-4 et seq.) is amended—

6 (1) by inserting after the subpart heading the

7 following:

8 ‘‘CHAPTER 1—MISCELLANEOUS REQUIREMENTS’’;

9 and

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

11 ‘‘CHAPTER 2—GENERAL INSURANCE COVERAGE

12 REFORMS

13 ‘‘Subchapter A—Increased Availability and

14 Continuity of Health Coverage

15 ‘‘SEC. 2707. DEFINITION.

16 ‘‘As used in this chapter, the term ‘qualified group

17 health plan’ means a group health plan, and a health in18 surance issuer offering group health insurance coverage,

19 that is designed to provide standard coverage (consistent

20 with section 2707A(b)).

21 ‘‘SEC. 2707A. ACTUARIAL EQUIVALENCE IN BENEFITS PER22 MITTED.

23 ‘‘(a) SET OF RULES OF ACTUARIAL EQUIVALENCE.—

24 ‘‘(1) INITIAL DETERMINATION.—The NAIC is

25 requested to submit to the Secretary, within 6

26 months after the date of the enactment of this chap-
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1 ter, a set of rules which the NAIC determines is suf2 ficient for determining, in the case of any group

3 health plan, or a health insurance issuer offering

4 group health insurance coverage, and for purposes of

5 this section, the actuarial value of the coverage of6 fered by the plan or coverage.

7 ‘‘(2) CERTIFICATION.—If the Secretary deter8 mines that the NAIC has submitted a set of rules

9 that comply with the requirements of paragraph (1),

10 the Secretary shall certify such set of rules for use

11 under this chapter. If the Secretary determines that

12 such a set of rules has not been submitted or does

13 not comply with such requirements, the Secretary

14 shall promptly establish a set of rules that meets

15 such requirements.

16 ‘‘(b) STANDARD COVERAGE.—

17 ‘‘(1) IN GENERAL.—A a group health plan, and

18 a health insurance issuer offering group health in19 surance coverage, shall be considered to provide

20 standard coverage consistent with this subsection if

21 the benefits are determined, in accordance with the

22 set of actuarial equivalence rules certified under sub23 section (a), to have a value that is within 5 percent24 age points of the target actuarial value for standard

25 coverage established under paragraph (2).
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1 ‘‘(2) INITIAL DETERMINATION OF TARGET AC2 TUARIAL VALUE FOR STANDARD COVERAGE.—

3 ‘‘(A) INITIAL DETERMINATION.—

4 ‘‘(i) IN GENERAL.—The NAIC is re5 quested to submit to the Secretary, within

6 6 months after the date of the enactment

7 of this chapter, a target actuarial value for

8 standard coverage equal to the average ac9 tuarial value of the coverage described in

10 clause (ii). No specific procedure or treat11 ment, or classes thereof, is required to be

12 considered in such determination by this

13 chapter or through regulations. The deter14 mination of such value shall be based on a

15 representative distribution of the popu16 lation of eligible employees offered such

17 coverage and a single set of standardized

18 utilization and cost factors.

19 ‘‘(ii) COVERAGE DESCRIBED.—The

20 coverage described in this clause is cov21 erage for medically necessary and appro22 priate services consisting of medical and

23 surgical services, medical equipment, pre24 ventive services, and emergency transpor25 tation in frontier areas. No specific proce-
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1 dure or treatment, or classes thereof, is re2 quired to be covered in such a plan, by this

3 chapter or through regulations.

4 ‘‘(B) CERTIFICATION.—If the Secretary

5 determines that the NAIC has submitted a tar6 get actuarial value for standard coverage that

7 complies with the requirements of subparagraph

8 (A), the Secretary shall certify such value for

9 use under this chapter. If the Secretary deter10 mines that a target actuarial value has not been

11 submitted or does not comply with the require12 ments of subparagraph (A), the Secretary shall

13 promptly determine a target actuarial value

14 that meets such requirements.

15 ‘‘(c) SUBSEQUENT REVISIONS.—

16 ‘‘(1) NAIC.—The NAIC may submit from time

17 to time to the Secretary revisions of the set of rules

18 of actuarial equivalence and target actuarial values

19 previously established or determined under this sec20 tion if the NAIC determines that revisions are nec21 essary to take into account changes in the relevant

22 types of health benefits provisions or in demographic

23 conditions which form the basis for the set of rules

24 of actuarial equivalence or the target actuarial val25 ues. The provisions of subsection (a)(2) shall apply
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1 to such a revision in the same manner as they apply

2 to the initial determination of the set of rules.

3 ‘‘(2) SECRETARY.—The Secretary may by regu4 lation revise the set of rules of actuarial equivalence

5 and target actuarial values from time to time if the

6 Secretary determines such revisions are necessary to

7 take into account changes described in paragraph

8 (1).

9 ‘‘SEC. 2707B. ESTABLISHMENT OF PLAN STANDARDS.

10 ‘‘(a) ESTABLISHMENT OF GENERAL STANDARDS.—

11 ‘‘(1) ROLE OF NAIC.—The NAIC is requested

12 to submit to the Secretary, within 9 months after

13 the date of the enactment of this chapter, model reg14 ulations that specify standards for making qualified

15 group health plans available to small employers. If

16 the NAIC develops recommended regulations specify17 ing such standards within such period, the Secretary

18 shall review the standards. Such review shall be

19 completed within 60 days after the date the regula20 tions are developed. Such standards shall serve as

21 the standards under this section, with such amend22 ments as the Secretary deems necessary. Such

23 standards shall be nonbinding (except as provided in

24 chapter 4).
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1 ‘‘(2) CONTINGENCY.—If the NAIC does not de2 velop such model regulations within the period de3 scribed in paragraph (1), the Secretary shall specify,

4 within 15 months after the date of the enactment of

5 this chapter, model regulations that specify stand6 ards for insurers with regard to making qualified

7 group health plans available to small employers.

8 Such standards shall be nonbinding (except as pro9 vided in chapter 4).

10 ‘‘(3) EFFECTIVE DATE.—The standards speci11 fied in the model regulations shall apply to group

12 health plans and health insurance issuers offering

13 group health insurance coverage in a State on or

14 after the respective date the standards are imple15 mented in the State.

16 ‘‘(b) NO PREEMPTION OF STATE LAW.—A State may

17 implement standards for group health plans available, and

18 health insurance issuers offering group health insurance

19 coverage offered, to small employers that are more strin20 gent than the standards under this section, except that

21 a State may not implement standards that prevent the of22 fering of at least one group health plan that provides

23 standard coverage (as described in section 2707A(b)).
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1 ‘‘SEC. 2707C. RATING LIMITATIONS FOR COMMUNITY2 RATED MARKET.

3 ‘‘(a) STANDARD PREMIUMS WITH RESPECT TO COM4 MUNITY-RATED ELIGIBLE EMPLOYEES AND ELIGIBLE IN5 DIVIDUALS.—

6 ‘‘(1) IN GENERAL.—Each group health plan of7 fered, and each health insurance issuer offering

8 group health insurance coverage, to a small em9 ployer shall establish within each community rating

10 area in which the plan is to be offered, a standard

11 premium for enrollment of eligible employees and eli12 gible individuals for the standard coverage (as de13 fined under section 2707A(b)).

14 ‘‘(2) ESTABLISHMENT OF COMMUNITY RATING

15 AREA.—

16 ‘‘(A) IN GENERAL.—Not later than Janu17 ary 1, 2000, each State shall, in accordance

18 with subparagraph (B), provide for the division

19 of the State into 1 or more community rating

20 areas. The State may revise the boundaries of

21 such areas from time to time consistent with

22 this paragraph.

23 ‘‘(B) GEOGRAPHIC AREA VARIATIONS.—

24 For purposes of subparagraph (A), a State—
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1 ‘‘(i) may not identify an area that di2 vides a 3-digit zip code, a county, or all

3 portions of a metropolitan statistical area;

4 ‘‘(ii) shall not permit premium rates

5 for coverage offered in a portion of an

6 interstate metropolitan statistical area to

7 vary based on the State in which the cov8 erage is offered; and

9 ‘‘(iii) may, upon agreement with one

10 or more adjacent States, identify multi11 State geographic areas consistent with

12 clauses (i) and (ii).

13 ‘‘(3) ELIGIBLE INDIVIDUALS.—For purposes of

14 this section, the term ‘eligible individuals’ includes

15 certain uninsured individuals (as described in section

16 2707G).

17 ‘‘(b) UNIFORM PREMIUMS WITHIN COMMUNITY RAT18 ING AREAS.—

19 ‘‘(1) IN GENERAL.—Subject to paragraphs (2)

20 and (3), the standard premium for each group

21 health plan to which this section applies shall be the

22 same, but shall not include the costs of premium

23 processing and enrollment that may vary depending

24 on whether the method of enrollment is through a
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1 qualified small employer purchasing group, through

2 a small employer, or through a broker.

3 ‘‘(2) APPLICATION TO ENROLLEES.—

4 ‘‘(A) IN GENERAL.—The premium charged

5 for coverage in a group health plan which cov6 ers eligible employees and eligible individuals

7 shall be the product of—

8 ‘‘(i) the standard premium (estab9 lished under paragraph (1));

10 ‘‘(ii) in the case of enrollment other

11 than individual enrollment, the family ad12 justment factor specified under subpara13 graph (B); and

14 ‘‘(iii) the age adjustment factor (spec15 ified under subparagraph (C)).

16 ‘‘(B) FAMILY ADJUSTMENT FACTOR.—

17 ‘‘(i) IN GENERAL.—The standards es18 tablished under section 2707B shall specify

19 family adjustment factors that reflect the

20 relative actuarial costs of benefit packages

21 based on family classes of enrollment (as

22 compared with such costs for individual en23 rollment).
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1 ‘‘(ii) CLASSES OF ENROLLMENT.—For

2 purposes of this chapter, there are 4 class3 es of enrollment:

4 ‘‘(I) Coverage only of an individ5 ual (referred to in this chapter as the

6 ‘individual’ enrollment or class of en7 rollment).

8 ‘‘(II) Coverage of a married cou9 ple without children (referred to in

10 this chapter as the ‘couple-only’ en11 rollment or class of enrollment).

12 ‘‘(III) Coverage of an individual

13 and one or more children (referred to

14 in this chapter as the ‘single parent’

15 enrollment or class of enrollment).

16 ‘‘(IV) Coverage of a married cou17 ple and one or more children (referred

18 to in this chapter as the ‘dual parent’

19 enrollment or class of enrollment).

20 ‘‘(iii) REFERENCES TO FAMILY AND

21 COUPLE CLASSES OF ENROLLMENT.—In

22 this chapter:

23 ‘‘(I) FAMILY.—The terms ‘family

24 enrollment’ and ‘family class of enroll25 ment’ refer to enrollment in a class of
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1 enrollment described in any subclause

2 of clause (ii) (other than subclause

3 (I)).

4 ‘‘(II) COUPLE.—The term ‘couple

5 class of enrollment’ refers to enroll6 ment in a class of enrollment de7 scribed in subclause (II) or (IV) of

8 clause (ii).

9 ‘‘(iv) SPOUSE; MARRIED; COUPLE.—

10 ‘‘(I) IN GENERAL.—In this chap11 ter, the terms ‘spouse’ and ‘married’

12 mean, with respect to an individual,

13 another individual who is the spouse

14 of, or is married to, the individual, as

15 determined under applicable State

16 law.

17 ‘‘(II) COUPLE.—The term ‘cou18 ple’ means an individual and the indi19 vidual’s spouse.

20 ‘‘(C) AGE ADJUSTMENT FACTOR.—The

21 Secretary, in consultation with the NAIC, shall

22 specify uniform age categories and maximum

23 rating increments for age adjustment factors

24 that reflect the relative actuarial costs of bene25 fit packages among enrollees. For individuals
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1 who have attained age 18 but not age 65, the

2 highest age adjustment factor may not exceed 3

3 times the lowest age adjustment factor.

4 ‘‘(3) ADMINISTRATIVE CHARGES.—

5 ‘‘(A) IN GENERAL.—In accordance with

6 the standards established under section 2707B,

7 a group health plan which covers eligible em8 ployees and eligible individuals may add a sepa9 rately-stated administrative charge which is

10 based on identifiable differences in legitimate

11 administrative costs and which is applied uni12 formly for individuals enrolling through the

13 same method of enrollment. Nothing in this

14 subparagraph may be construed as preventing a

15 qualified small employer purchasing group from

16 negotiating a unique administrative charge with

17 an insurer for a group health plan.

18 ‘‘(B) ENROLLMENT THROUGH A QUALI19 FIED SMALL EMPLOYER PURCHASING GROUP.—

20 In the case of an administrative charge under

21 subparagraph (A) for enrollment through a

22 qualified small employer purchasing group, such

23 charge may not exceed the lowest charge of

24 such plan for enrollment other than through a
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1 qualified small employer purchasing group in

2 such area.

3 ‘‘(c) TREATMENT OF NEGOTIATED RATE AS COMMU4 NITY RATE.—Notwithstanding any other provision of this

5 section, a group health plan and a health insurance issuer

6 offering health insurance coverage that negotiates a pre7 mium rate (exclusive of any administrative charge de8 scribed in subsection (b)(3)) with a qualified small em9 ployer purchasing group in a community rating area shall

10 charge the same premium rate to all eligible employees

11 and eligible individuals.

12 ‘‘SEC. 2707D. RATING PRACTICES AND PAYMENT OF PRE13 MIUMS.

14 ‘‘(a) FULL DISCLOSURE OF RATING PRACTICES.—

15 ‘‘(1) IN GENERAL.—A group health plan and a

16 health insurance issuer offering health insurance

17 coverage shall fully disclose rating practices for the

18 plan to the appropriate certifying authority.

19 ‘‘(2) NOTICE ON EXPIRATION.—A group health

20 plan and a health insurance issuer offering health

21 insurance coverage shall provide for notice of the

22 terms for renewal of a plan at the time of the offer23 ing of the plan and at least 90 days before the date

24 of expiration of the plan.
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1 ‘‘(3) ACTUARIAL CERTIFICATION.—Each group

2 health plan and health insurance issuer offering

3 health insurance coverage shall file annually with the

4 appropriate certifying authority a written statement

5 by a member of the American Academy of Actuaries

6 (or other individual acceptable to such authority)

7 who is not an employee of the group health plan or

8 issuer certifying that, based upon an examination by

9 the individual which includes a review of the appro10 priate records and of the actuarial assumptions of

11 such plan or insurer and methods used by the plan

12 or insurer in establishing premium rates and admin13 istrative charges for group health plans—

14 ‘‘(A) such plan or insurer is in compliance

15 with the applicable provisions of this chapter;

16 and

17 ‘‘(B) the rating methods are actuarially

18 sound.

19 Each plan and insurer shall retain a copy of such

20 statement at its principal place of business for exam21 ination by any individual.

22 ‘‘(b) PAYMENT OF PREMIUMS.—

23 ‘‘(1) IN GENERAL.—With respect to a new en24 rollee in a group health plan, the plan may require

25 advanced payment of an amount equal to the month-
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1 ly applicable premium for the plan at the time such

2 individual is enrolled.

3 ‘‘(2) NOTIFICATION OF FAILURE TO RECEIVE

4 PREMIUM.—If a group health plan or a health insur5 ance issuer offering health insurance coverage fails

6 to receive payment on a premium due with respect

7 to an eligible employee or eligible individual covered

8 under the plan involved, the plan or issuer shall pro9 vide notice of such failure to the employee or individ10 ual within the 20-day period after the date on which

11 such premium payment was due. A plan or issuer

12 may not terminate the enrollment of an eligible em13 ployee or eligible individual unless such employee or

14 individual has been notified of any overdue pre15 miums and has been provided a reasonable oppor16 tunity to respond to such notice.

17 ‘‘SEC. 2707E. QUALIFIED SMALL EMPLOYER PURCHASING

18 GROUPS.

19 ‘‘(a) QUALIFIED SMALL EMPLOYER PURCHASING

20 GROUPS DESCRIBED.—

21 ‘‘(1) IN GENERAL.—A qualified small employer

22 purchasing group is an entity that—

23 ‘‘(A) is a nonprofit entity certified under

24 State law;
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1 ‘‘(B) has a membership consisting solely of

2 small employers;

3 ‘‘(C) is administered solely under the au4 thority and control of its member employers;

5 ‘‘(D) with respect to each State in which

6 its members are located, consists of not fewer

7 than the number of small employers established

8 by the State as appropriate for such a group;

9 ‘‘(E) offers a program under which quali10 fied group health plans are offered to eligible

11 employees and eligible individuals through its

12 member employers and to certain uninsured in13 dividuals in accordance with section 2707D;

14 and

15 ‘‘(F) an insurer, agent, broker, or any

16 other individual or entity engaged in the sale of

17 insurance—

18 ‘‘(i) does not form or underwrite; and

19 ‘‘(ii) does not hold or control any

20 right to vote with respect to.

21 ‘‘(2) STATE CERTIFICATION.—A qualified small

22 employer purchasing group formed under this sec23 tion shall submit an application to the State for cer24 tification. The State shall determine whether to
72

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1 issue a certification and otherwise ensure compliance

2 with the requirements of this chapter.

3 ‘‘(3) SPECIAL RULE.—Notwithstanding para4 graph (1)(B), an employer member of a small em5 ployer purchasing group that has been certified by

6 the State as meeting the requirements of paragraph

7 (1) may retain its membership in the group if the

8 number of employees of the employer increases such

9 that the employer is no longer a small employer.

10 ‘‘(b) BOARD OF DIRECTORS.—Each qualified small

11 employer purchasing group established under this section

12 shall be governed by a board of directors or have active

13 input from an advisory board consisting of individuals and

14 businesses participating in the group.

15 ‘‘(c) DOMICILIARY STATE.—For purposes of this sec16 tion, a qualified small employer purchasing group operat17 ing in more than one State shall be certified by the State

18 in which the group is domiciled.

19 ‘‘(d) MEMBERSHIP.—

20 ‘‘(1) IN GENERAL.—A qualified small employer

21 purchasing group shall accept all small employers

22 and certain uninsured individuals residing within the

23 area served by the group as members if such em24 ployers or individuals request such membership.
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1 ‘‘(2) VOTING.—Members of a qualified small

2 employer purchasing group shall have voting rights

3 consistent with the rules established by the State.

4 ‘‘(e) DUTIES OF QUALIFIED SMALL EMPLOYER PUR5 CHASING GROUPS.—Each qualified small employer pur6 chasing group shall—

7 ‘‘(1) enter into agreements with insurers offer8 ing qualified group health plans;

9 ‘‘(2) enter into agreements with small employ10 ers under section 2707F;

11 ‘‘(3) enroll only eligible employees, eligible indi12 viduals, and certain uninsured individuals in quali13 fied group health plans, in accordance with section

14 2707G;

15 ‘‘(4) provide enrollee information to the State;

16 ‘‘(5) meet the marketing requirements under

17 section 2707I; and

18 ‘‘(6) carry out other functions provided for

19 under this chapter.

20 ‘‘(f) LIMITATION ON ACTIVITIES.—A qualified small

21 employer purchasing group shall not—

22 ‘‘(1) perform any activity involving approval or

23 enforcement of payment rates for providers;

24 ‘‘(2) perform any activity (other than the re25 porting of noncompliance) relating to compliance of
74

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1 qualified group health plans with the requirements

2 of this chapter;

3 ‘‘(3) assume financial risk in relation to any

4 such health plan; or

5 ‘‘(4) perform other activities identified by the

6 State as being inconsistent with the performance of

7 its duties under this chapter.

8 ‘‘(g) RULES OF CONSTRUCTION.—

9 ‘‘(1) ESTABLISHMENT NOT REQUIRED.—Noth10 ing in this section shall be construed as requiring—

11 ‘‘(A) that a State organize, operate or oth12 erwise establish a qualified small employer pur13 chasing group, or otherwise require the estab14 lishment of purchasing groups; and

15 ‘‘(B) that there be only one qualified small

16 employer purchasing group established with re17 spect to a community rating area.

18 ‘‘(2) SINGLE ORGANIZATION SERVING MUL19 TIPLE AREAS AND STATES.—Nothing in this section

20 shall be construed as preventing a single entity from

21 being a qualified small employer purchasing group in

22 more than one community rating area or in more

23 than one State.

24 ‘‘(3) VOLUNTARY PARTICIPATION.—Nothing in

25 this section shall be construed as requiring any indi-
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1 vidual or small employer to purchase a qualified

2 group health plan exclusively through a qualified

3 small employer purchasing group.

4 ‘‘SEC. 2707F. AGREEMENTS WITH SMALL EMPLOYERS.

5 ‘‘(a) IN GENERAL.—A qualified small employer pur6 chasing group shall offer to enter into an agreement under

7 this section with each small employer that employs eligible

8 employees in the area served by the group.

9 ‘‘(b) PAYROLL DEDUCTION.—

10 ‘‘(1) IN GENERAL.—Under an agreement under

11 this section between a small employer and a quali12 fied small employer purchasing group, the small em13 ployer shall deduct premiums from an eligible em14 ployee’s wages.

15 ‘‘(2) ADDITIONAL PREMIUMS.—If the amount

16 withheld under paragraph (1) is not sufficient to

17 cover the entire cost of the premiums, the eligible

18 employee shall be responsible for paying directly to

19 the qualified small employer purchasing group the

20 difference between the amount of such premiums

21 and the amount withheld.
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1 ‘‘SEC. 2707G. ENROLLING ELIGIBLE EMPLOYEES, ELIGIBLE

2 INDIVIDUALS, AND CERTAIN UNINSURED IN3 DIVIDUALS IN QUALIFIED GROUP HEALTH

4 PLANS.

5 ‘‘(a) IN GENERAL.—Each qualified small employer

6 purchasing group shall offer—

7 ‘‘(1) eligible employees,

8 ‘‘(2) eligible individuals, and

9 ‘‘(3) certain uninsured individuals,

10 the opportunity to enroll in any qualified group health

11 plan which has an agreement with the qualified small em12 ployer purchasing group for the community rating area

13 in which such employees and individuals reside.

14 ‘‘(b) UNINSURED INDIVIDUALS.—For purposes of

15 this section, an individual is described in subsection (a)(3)

16 if such individual is an uninsured individual who is not

17 an eligible employee of a small employer that is a member

18 of a qualified small employer purchasing group or a de19 pendent of such individual.

20 ‘‘SEC. 2707H. RECEIPT OF PREMIUMS.

21 ‘‘(a) ENROLLMENT CHARGE.—The amount charged

22 by a qualified small employer purchasing group for cov23 erage under a qualified group health plan shall be equal

24 to the sum of—

25 ‘‘(1) the premium rate offered by such health

26 plan;
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1 ‘‘(2) the administrative charge for such health

2 plan; and

3 ‘‘(3) the purchasing group administrative

4 charge for enrollment of eligible employees, eligible

5 individuals and certain uninsured individuals

6 through the group.

7 ‘‘(b) DISCLOSURE OF PREMIUM RATES AND ADMIN8 ISTRATIVE CHARGES.—Each qualified small employer

9 purchasing group shall, prior to the time of enrollment,

10 disclose to enrollees and other interested parties the pre11 mium rate for a qualified group health plan, the adminis12 trative charge for such plan, and the administrative charge

13 of the group, separately.

14 ‘‘SEC. 2707I. MARKETING ACTIVITIES.

15 ‘‘Each qualified small employer purchasing group

16 shall market qualified group health plans to members

17 through the entire community rating area served by the

18 purchasing group.

19 ‘‘SEC. 2707J. GRANTS TO STATES AND QUALIFIED SMALL

20 EMPLOYER PURCHASING GROUPS.

21 ‘‘(a) IN GENERAL.—The Secretary shall award

22 grants to States and small employer purchasing groups

23 to assist such States and groups in planning, developing,

24 and operating qualified small employer purchasing groups.
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1 ‘‘(b) APPLICATION REQUIREMENTS.—To be eligible

2 to receive a grant under this section, a State or small em3 ployer purchasing group shall prepare and submit to the

4 Secretary an application in such form, at such time, and

5 containing such information, certifications, and assur6 ances as the Secretary shall reasonably require.

7 ‘‘(c) USE OF FUNDS.—Amounts awarded under this

8 section may be used to finance the costs associated with

9 planning, developing, and operating a qualified small em10 ployer purchasing group. Such costs may include the costs

11 associated with—

12 ‘‘(1) engaging in education and outreach efforts

13 to inform small employers, insurers, and the public

14 about the small employer purchasing group;

15 ‘‘(2) soliciting bids and negotiating with insur16 ers to make available group health plans;

17 ‘‘(3) preparing the documentation required to

18 receive certification by the Secretary as a qualified

19 small employer purchasing group; and

20 ‘‘(4) such other activities determined appro21 priate by the Secretary.

22 ‘‘(d) AUTHORIZATION OF APPROPRIATIONS.—There

23 are authorized to be appropriated for awarding grants

24 under this section such sums as may be necessary.
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1 ‘‘SEC. 2707K. QUALIFIED SMALL EMPLOYER PURCHASING

2 GROUPS ESTABLISHED BY A STATE.

3 ‘‘A State may establish a system in all or part of the

4 State under which qualified small employer purchasing

5 groups are the sole mechanism through which health care

6 coverage for the eligible employees of small employers shall

7 be purchased or provided.

8 ‘‘SEC. 2707L. EFFECTIVE DATES.

9 ‘‘(a) IN GENERAL.—Except as provided in this chap10 ter, the provisions of this chapter are effective on the date

11 of the enactment of this chapter.

12 ‘‘(b) EXCEPTION.—The provisions of section

13 2707C(b) shall apply to contracts which are issued, or re14 newed, after the date which is 18 months after the date

15 of the enactment of this chapter.

16 ‘‘Subchapter B—Required Coverage Options for Eli17 gible Employees and Dependents of Small Em18 ployers

19 ‘‘SEC. 2708. REQUIRING SMALL EMPLOYERS TO OFFER COV20 ERAGE FOR ELIGIBLE INDIVIDUALS.

21 ‘‘(a) REQUIREMENT TO OFFER.—Each small em22 ployer shall make available with respect to each eligible

23 employee a group health plan under which—

24 ‘‘(1) coverage of each eligible individual with re25 spect to such an eligible employee may be elected on

26 an annual basis for each plan year;
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1 ‘‘(2) coverage is provided for at least the stand2 ard coverage specified in section 2707A(b); and

3 ‘‘(3) each eligible employee electing such cov4 erage may elect to have any premiums owed by the

5 employee collected through payroll deduction.

6 ‘‘(b) NO EMPLOYER CONTRIBUTION REQUIRED.—An

7 employer is not required under subsection (a) to make any

8 contribution to the cost of coverage under a group health

9 plan described in such subsection.

10 ‘‘(c) SPECIAL RULES.—

11 ‘‘(1) EXCLUSION OF NEW EMPLOYERS AND

12 CERTAIN VERY SMALL EMPLOYERS.—Subsection (a)

13 shall not apply to any small employer for any plan

14 year if, as of the beginning of such plan year—

15 ‘‘(A) such employer (including any prede16 cessor thereof) has been an employer for less

17 than 2 years;

18 ‘‘(B) such employer has no more than 2 el19 igible employees; or

20 ‘‘(C) no more than 2 eligible employees are

21 not covered under any group health plan.

22 ‘‘(2) EXCLUSION OF FAMILY MEMBERS.—Under

23 such procedures as the Secretary may prescribe, any

24 relative of a small employer may be, at the election

25 of the employer, excluded from consideration as an
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1 eligible employee for purposes of applying the re2 quirements of subsection (a). In the case of a small

3 employer that is not an individual, an employee who

4 is a relative of a key employee (as defined in section

5 416(i)(1) of the Internal Revenue Code of 1986) of

6 the employer may, at the election of the key em7 ployee, be considered a relative excludable under this

8 paragraph.

9 ‘‘(3) OPTIONAL APPLICATION OF WAITING PE10 RIOD.—A group health plan and a health insurance

11 issuer offering group health insurance coverage shall

12 not be treated as failing to meet the requirements of

13 subsection (a) solely because a period of service by

14 an eligible employee of not more than 60 days is re15 quired under the plan for coverage under the plan

16 of eligible individuals with respect to such employee.

17 ‘‘(d) CONSTRUCTION.—Nothing in this section shall

18 be construed as limiting the group health plans, or types

19 of coverage under such a plan, that an employer may offer

20 to an employee.

21 ‘‘SEC. 2708A. COMPLIANCE WITH APPLICABLE REQUIRE22 MENTS THROUGH MULTIPLE EMPLOYER

23 HEALTH ARRANGEMENTS.

24 ‘‘(a) IN GENERAL.—In any case in which an eligible

25 employee is, for any plan year, a participant in a group
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1 health plan which is a multiemployer plan, the require2 ments of section 2722(a) shall be deemed to be met with

3 respect to such employee for such plan year if the em4 ployer requirements of subsection (b) are met with respect

5 to the eligible employee, irrespective of whether, or to what

6 extent, the employer makes employer contributions on be7 half of the eligible employee.

8 ‘‘(b) EMPLOYER REQUIREMENTS.—The employer re9 quirements of this subsection are met under a group

10 health plan with respect to an eligible employee if—

11 ‘‘(1) the employee is eligible under the plan to

12 elect coverage on an annual basis and is provided a

13 reasonable opportunity to make the election in such

14 form and manner and at such times as are provided

15 by the plan;

16 ‘‘(2) coverage is provided for at least the stand17 ard coverage specified in section 2707A(b);

18 ‘‘(3) the employer facilitates collection of any

19 employee contributions under the plan and permits

20 the employee to elect to have employee contributions

21 under the plan collected through payroll deduction;

22 and

23 ‘‘(4) in the case of a plan to which subchapter

24 A does not otherwise apply, the employer provides to

25 the employee a summary plan description described
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1 in section 102(a)(1) of the Employee Retirement In2 come Security Act of 1974 in the form and manner

3 and at such times as are required under such sub4 chapter A with respect to employee welfare benefit

5 plans.

6 ‘‘Subchapter C—Required Coverage Options for

7 Individuals Insured Through Association Plans

8 ‘‘SEC. 2709. TREATMENT OF QUALIFIED ASSOCIATION

9 PLANS.

10 ‘‘(a) GENERAL RULE.—For purposes of this chapter,

11 in the case of a qualified association plan—

12 ‘‘(1) except as otherwise provided in this sub13 chapter, the plan shall meet all applicable require14 ments of chapter 1 and chapter 2 for group health

15 plans offered to and by small employers;

16 ‘‘(2) if such plan is certified as meeting such

17 requirements and the requirements of this sub18 chapter, such plan shall be treated as a plan estab19 lished and maintained by a small employer, and indi20 viduals enrolled in such plan shall be treated as eli21 gible employees; and

22 ‘‘(3) any individual who is a member of the as23 sociation not enrolling in the plan shall not be treat24 ed as an eligible employee solely by reason of mem25 bership in such association.
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1 ‘‘(b) ELECTION TO BE TREATED AS PURCHASING

2 COOPERATIVE.—Subsection (a) shall not apply to a quali3 fied association plan if—

4 ‘‘(1) the health insurance issuer makes an irrev5 ocable election to be treated as a qualified small em6 ployer purchasing group for purposes of section

7 2707D; and

8 ‘‘(2) such sponsor meets all requirements of

9 this chapter applicable to a purchasing cooperative.

10 ‘‘SEC. 2709A. QUALIFIED ASSOCIATION PLAN DEFINED.

11 ‘‘(a) GENERAL RULE.—For purposes of this chapter,

12 a plan is a qualified association plan if the plan is a mul13 tiple employer welfare arrangement or similar

14 arrangement—

15 ‘‘(1) which is maintained by a qualified associa16 tion;

17 ‘‘(2) which has at least 500 participants in the

18 United States;

19 ‘‘(3) under which the benefits provided consist

20 solely of medical care (as defined in section 213(d)

21 of the Internal Revenue Code of 1986);

22 ‘‘(4) which may not condition participation in

23 the plan, or terminate coverage under the plan, on

24 the basis of the health status or health claims expe-
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1 rience of any employee or member or dependent of

2 either;

3 ‘‘(5) which provides for bonding, in accordance

4 with regulations providing rules similar to the rules

5 under section 412, of all persons operating or ad6 ministering the plan or involved in the financial af7 fairs of the plan; and

8 ‘‘(6) which notifies each participant or provider

9 that it is certified as meeting the requirements of

10 this chapter applicable to it.

11 ‘‘(b) SELF-INSURED PLANS.—In the case of a plan

12 which is not fully insured (within the meaning of section

13 514(b)(6)(D)), the plan shall be treated as a qualified as14 sociation plan only if—

15 ‘‘(1) the plan meets minimum financial solvency

16 and cash reserve requirements for claims which are

17 established by the Secretary and which shall be in

18 lieu of any other such requirements under this chap19 ter;

20 ‘‘(2) the plan provides an annual funding report

21 (certified by an independent actuary) and annual fi22 nancial statements to the Secretary and other inter23 ested parties; and
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1 ‘‘(3) the plan appoints a plan sponsor who is

2 responsible for operating the plan and ensuring com3 pliance with applicable Federal and State laws.

4 ‘‘(c) CERTIFICATION.—

5 ‘‘(1) IN GENERAL.—A plan shall not be treated

6 as a qualified association plan for any period unless

7 there is in effect a certification by the Secretary that

8 the plan meets the requirements of this subchapter.

9 For purposes of this chapter, the Secretary shall be

10 the appropriate certifying authority with respect to

11 the plan.

12 ‘‘(2) FEE.—The Secretary shall require a

13 $5,000 fee for the original certification under para14 graph (1) and may charge a reasonable annual fee

15 to cover the costs of processing and reviewing the

16 annual statements of the plan.

17 ‘‘(3) EXPEDITED PROCEDURES.—The Secretary

18 may by regulation provide for expedited registration,

19 certification, and comment procedures.

20 ‘‘(4) AGREEMENTS.—The Secretary of Labor

21 may enter into agreements with the States to carry

22 out the Secretary’s responsibilities under this sub23 chapter.

24 ‘‘(d) AVAILABILITY.—Notwithstanding any other

25 provision of this chapter, a qualified association plan may
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1 limit coverage to individuals who are members of the

2 qualified association establishing or maintaining the plan,

3 an employee of such member, or a dependent of either.

4 ‘‘(e) SPECIAL RULES FOR EXISTING PLANS.—In the

5 case of a plan in existence on January 1, 1999—

6 ‘‘(1) the requirements of subsection (a) (other

7 than paragraphs (4), (5), and (6) thereof) shall not

8 apply;

9 ‘‘(2) no original certification shall be required

10 under this subchapter; and

11 ‘‘(3) no annual report or funding statement

12 shall be required before January 1, 2001, but the

13 plan shall file with the Secretary a description of the

14 plan and the name of the health insurance issuer.

15 ‘‘SEC. 2709B. DEFINITIONS AND SPECIAL RULES.

16 ‘‘(a) QUALIFIED ASSOCIATION.—For purposes of this

17 subchapter, the term ‘qualified association’ means any or18 ganization which—

19 ‘‘(1) is organized and maintained in good faith

20 by a trade association, an industry association, a

21 professional association, a chamber of commerce, a

22 religious organization, a public entity association, or

23 other business association serving a common or simi24 lar industry;
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1 ‘‘(2) is organized and maintained for substan2 tial purposes other than to provide a health plan;

3 ‘‘(3) has a constitution, bylaws, or other similar

4 governing document which states its purpose; and

5 ‘‘(4) receives a substantial portion of its finan6 cial support from its active, affiliated, or federation

7 members.

8 ‘‘(b) COORDINATION.—The term ‘qualified associa9 tion plan’ shall not include a plan to which subchapter

10 B applies.

11 ‘‘SEC. 2709C. SPECIAL RULE FOR CHURCH, MULTIEM12 PLOYER, AND COOPERATIVE PLANS.

13 ‘‘(a) GENERAL RULE.—For purposes of this chapter,

14 in the case of a group health plan to which this section

15 applies—

16 ‘‘(1) except as otherwise provided in this sub17 chapter, the plan shall be required to meet all appli18 cable requirements of subchapter A and subchapter

19 B for group health plans offered to and by small em20 ployers;

21 ‘‘(2) if such plan is certified as meeting such

22 requirements, such plan shall be treated as a plan

23 established and maintained by a small employer and

24 individuals enrolled in such plan shall be treated as

25 eligible employees; and
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1 ‘‘(3) any individual eligible to enroll in the plan

2 who does not enroll in the plan shall not be treated

3 as an eligible employee solely by reason of being eli4 gible to enroll in the plan.

5 ‘‘(b) MODIFIED STANDARDS.—

6 ‘‘(1) CERTIFYING AUTHORITY.—For purposes

7 of this chapter, the Secretary shall be the appro8 priate certifying authority with respect to a plan to

9 which this section applies.

10 ‘‘(2) AVAILABILITY.—Rules similar to the rules

11 of subsection (e) of section 2709A shall apply to a

12 plan to which this section applies.

13 ‘‘(3) ACCESS.—An employer which, pursuant to

14 a collective bargaining agreement, offers an em15 ployee the opportunity to enroll in a plan described

16 in subsection (c)(2) shall not be required to make

17 any other plan available to the employee.

18 ‘‘(4) TREATMENT UNDER STATE LAWS.—A

19 church plan described in subsection (c)(1) which is

20 certified as meeting the requirements of this section

21 shall not be deemed to be a multiple employer wel22 fare arrangement or an insurance company or other

23 insurer, or to be engaged in the business of insur24 ance, for purposes of any State law purporting to

25 regulate insurance companies or insurance contracts.
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1 ‘‘(c) PLANS TO WHICH SECTION APPLIES.—This sec2 tion shall apply to a health plan which—

3 ‘‘(1) is a church plan (as defined in section

4 414(e) of the Internal Revenue Code of 1986) which

5 has at least 100 participants in the United States;

6 ‘‘(2) is a multiemployer plan which is main7 tained by a health plan sponsor described in section

8 3(16)(B)(iii) of the Employee Retirement Income

9 Security Act of 1974 and which has at least 500

10 participants in the United States; or

11 ‘‘(3) is a plan which is maintained by a rural

12 electric cooperative or a rural telephone cooperative

13 association and which has at least 500 participants

14 in the United States.’’.

15 (b) CONFORMING AMENDMENTS.—Section 2791(d)

16 of the Public Health Service Act (42 U.S.C. 300gg–91(d))

17 is amended by adding at the end the following:

18 ‘‘(15) ELIGIBLE EMPLOYEE.—The term ‘eligible

19 employee’ means, with respect to an employer, an

20 employee who normally performs on a monthly basis

21 at least 30 hours of service per week for that em22 ployer.

23 ‘‘(16) ELIGIBLE INDIVIDUAL.—The term ‘eligi24 ble individual’ means, with respect to an eligible em-
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1 ployee, such employee, and any dependent of such

2 employee.

3 ‘‘(17) NAIC.—The term ‘NAIC’ means the Na4 tional Association of Insurance Commissioners.

5 ‘‘(18) QUALIFIED GROUP HEALTH PLAN.—The

6 term ‘qualified group health plan’ shall have the

7 meaning given the term in section 2707.’’.

8 SEC. 303. AMENDMENT TO THE PUBLIC HEALTH SERVICE

9 ACT RELATING TO THE INDIVIDUAL MARKET.

10 Subpart 3 of part B of title XXVII of the Public

11 Health Service Act (42 U.S.C. 300gg-51 et seq.), as

12 amended by the Omnibus Consolidated and Emergency

13 Supplemental Appropriations Act, 1999 (Public Law 105-

14 277), is amended by adding at the end the following:

15 ‘‘SEC. 2753. APPLICABILITY OF GENERAL INSURANCE MAR16 KET REFORMS.

17 ‘‘The provisions of chapter 2 of subpart 2 of part A

18 shall apply to health insurance coverage offered by a

19 health insurance issuer in the individual market in the

20 same manner as they apply to health insurance coverage

21 offered by a health insurance issuer in connection with a

22 group health plan in the small or large group market.’’.

23 SEC. 304. EFFECTIVE DATE.

24 The amendments made by this subtitle shall apply

25 with respect to health insurance coverage offered, sold,
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1 issued, renewed, in effect, or operated on or after January

2 1, 2000.

3 Subtitle B—Tax Provisions

4 SEC. 311. ENFORCEMENT WITH RESPECT TO HEALTH IN5 SURANCE ISSUERS.

6 (a) IN GENERAL.—Chapter 43 of the Internal Reve7 nue Code of 1986 (relating to qualified pension, etc.,

8 plans) is amended by adding at the end the following:

9 ‘‘SEC. 4980F. FAILURE OF INSURER TO COMPLY WITH CER10 TAIN STANDARDS FOR HEALTH INSURANCE

11 COVERAGE.

12 ‘‘(a) IMPOSITION OF TAX.—

13 ‘‘(1) IN GENERAL.—There is hereby imposed a

14 tax on the failure of a health insurance issuer to

15 comply with the requirements applicable to such

16 issuer under—

17 ‘‘(A) chapter 2 of subpart 2 of part A of

18 title XXVII of the Public Health Service Act;

19 ‘‘(B) section 2753 of the Public Health

20 Service Act; and

21 ‘‘(C) subpart C of part 7 of subtitle B of

22 title I of the Employee Retirement Income Se23 curity Act of 1974.

24 ‘‘(2) EXCEPTION.—Paragraph (1) shall not

25 apply to a failure by a health insurance issuer in a
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1 State if the Secretary of Health and Human Serv2 ices determines that the State has in effect a regu3 latory enforcement mechanism that provides ade4 quate sanctions with respect to such a failure by

5 such an issuer.

6 ‘‘(b) AMOUNT OF TAX.—

7 ‘‘(1) IN GENERAL.—Subject to paragraph (2),

8 the amount of the tax imposed by subsection (a)

9 shall be $100 for each day during which such failure

10 persists for each person to which such failure re11 lates. A rule similar to the rule of section

12 4980D(b)(3) shall apply for purposes of this section.

13 ‘‘(2) LIMITATION.—The amount of the tax im14 posed by subsection (a) for a health insurance issuer

15 with respect to health insurance coverage shall not

16 exceed 25 percent of the amounts received under the

17 coverage for coverage during the period such failure

18 persists.

19 ‘‘(c) LIABILITY FOR TAX.—The tax imposed by this

20 section shall be paid by the health insurance issuer.

21 ‘‘(d) LIMITATIONS ON AMOUNT OF TAX.—

22 ‘‘(1) TAX NOT TO APPLY TO FAILURES COR23 RECTED WITHIN 30 DAYS.—No tax shall be imposed

24 by subsection (a) on any failure if—
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1 ‘‘(A) such failure was due to reasonable

2 cause and not to willful neglect, and

3 ‘‘(B) such failure is corrected during the

4 30-day period (or such period as the Secretary

5 may determine appropriate) beginning on the

6 first date the health insurance issuer knows, or

7 exercising reasonable diligence could have

8 known, that such failure existed.

9 ‘‘(2) WAIVER BY SECRETARY.—In the case of a

10 failure which is due to reasonable cause and not to

11 willful neglect, the Secretary may waive part or all

12 of the tax imposed by subsection (a) to the extent

13 that the payment of such tax would be excessive rel14 ative to the failure involved.

15 ‘‘(e) DEFINITIONS.—For purposes of this section, the

16 terms ‘health insurance coverage’ and ‘health insurance

17 issuer’ have the meanings given such terms in section

18 2791 of the Public Health Service Act and section 733

19 of the Employee Retirement Income Security Act of

20 1974.’’.

21 (b) CONFORMING AMENDMENT.—The table of sec22 tions for such chapter 43 is amended by adding at the

23 end the following new item:

‘‘Sec. 4980F. Failure of insurer to comply with certain standards

for health insurance coverage.’’.
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1 SEC. 312. ENFORCEMENT WITH RESPECT TO SMALL EM2 PLOYERS.

3 (a) IN GENERAL.—Chapter 47 of the Internal Reve4 nue Code of 1986 (relating to excise taxes on certain

5 group health plans) is amended by inserting after section

6 5000 the following new section:

7 ‘‘SEC. 5000A. SMALL EMPLOYER REQUIREMENTS.

8 ‘‘(a) GENERAL RULE.—There is hereby imposed a

9 tax on the failure of any small employer to comply with

10 the requirements applicable to such employer under—

11 ‘‘(1) subchapter C of chapter 2 of subpart 2 of

12 part A of title XXVII of the Public Health Service

13 Act;

14 ‘‘(2) section 2753 of the Public Health Service

15 Act; and

16 ‘‘(3) chapter 2 of subpart C of part 7 of sub17 title B of title I of the Employee Retirement Income

18 Security Act of 1974.

19 ‘‘(b) AMOUNT OF TAX.—The amount of tax imposed

20 by subsection (a) shall be equal to $100 for each day for

21 each individual for which such a failure occurs.

22 ‘‘(c) LIMITATION ON TAX.—

23 ‘‘(1) TAX NOT TO APPLY WHERE FAILURES

24 CORRECTED WITHIN 30 DAYS.—No tax shall be im25 posed by subsection (a) with respect to any failure

26 if—
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1 ‘‘(A) such failure was due to reasonable

2 cause and not to willful neglect, and

3 ‘‘(B) such failure is corrected during the

4 30-day period (or such period as the Secretary

5 may determine appropriate) beginning on the

6 1st date any of the individuals on whom the tax

7 is imposed knew, or exercising reasonable dili8 gence would have known, that such failure ex9 isted.

10 ‘‘(2) WAIVER BY SECRETARY.—In the case of a

11 failure which is due to reasonable cause and not to

12 willful neglect, the Secretary may waive part or all

13 of the tax imposed by subsection (a) to the extent

14 that the payment of such tax would be excessive rel15 ative to the failure involved.’’.

16 (b) CONFORMING AMENDMENT.—The table of sec17 tions for such chapter 47 is amended by adding at the

18 end the following new item:

‘‘Sec. 5000A. Small employer requirements.’’.

19 SEC. 313. ENFORCEMENT BY EXCISE TAX ON QUALIFIED AS20 SOCIATIONS.

21 (a) IN GENERAL.—Chapter 43 of the Internal Reve22 nue Code of 1986 (relating to qualified pension, etc.,

23 plans), as amended by section 311, is amended by adding

24 at the end the following new section:
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1 ‘‘SEC. 4980G. FAILURE OF QUALIFIED ASSOCIATIONS, ETC.,

2 TO COMPLY WITH CERTAIN STANDARDS FOR

3 HEALTH INSURANCE COVERAGE.

4 ‘‘(a) IMPOSITION OF TAX.—

5 ‘‘(1) IN GENERAL.—There is hereby imposed a

6 tax on the failure of a qualified association (as de7 fined in section 2709A of the Public Health Service

8 Act and section 723A of the Employee Retirement

9 Income Security Act of 1974), church plan (as de10 fined in section 414(e)), multiemployer plan, or plan

11 maintained by a rural electric cooperative or a rural

12 telephone cooperative association (within the mean13 ing of section 3(40) of the Employee Retirement In14 come Security Act of 1974) to comply with the re15 quirements applicable to such association or plans

16 under—

17 ‘‘(A) subchapter C of chapter 2 of subpart

18 2 of part A of title XXVII of the Public Health

19 Service Act;

20 ‘‘(B) section 2753 of the Public Health

21 Service Act; and

22 ‘‘(C) subchapters A and B of chapter 3 of

23 subpart C of part 7 of the Employee Retire24 ment Income Security Act of 1974.

25 ‘‘(2) EXCEPTION.—Paragraph (1) shall not

26 apply to a failure by a qualified association, church
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1 plan, multiemployer plan, or plan maintained by a

2 rural electric cooperative or a rural telephone coop3 erative association in a State if the Secretary of

4 Health and Human Services determines that the

5 State has in effect a regulatory enforcement mecha6 nism that provides adequate sanctions with respect

7 to such a failure by such a qualified association or

8 plan.

9 ‘‘(b) AMOUNT OF TAX.—The amount of the tax im10 posed by subsection (a) shall be $100 for each day during

11 which such failure persists for each person to which such

12 failure relates. A rule similar to the rule of section

13 4980D(b)(3) shall apply for purposes of this section.

14 ‘‘(c) LIABILITY FOR TAX.—The tax imposed by this

15 section shall be paid by the qualified association or plan.

16 ‘‘(d) LIMITATIONS ON AMOUNT OF TAX.—

17 ‘‘(1) TAX NOT TO APPLY TO FAILURES COR18 RECTED WITHIN 30 DAYS.—No tax shall be imposed

19 by subsection (a) on any failure if—

20 ‘‘(A) such failure was due to reasonable

21 cause and not to willful neglect, and

22 ‘‘(B) such failure is corrected during the

23 30-day period (or such period as the Secretary

24 may determine appropriate) beginning on the

25 first date the qualified association, church plan,
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1 multiemployer plan, or plan maintained by a

2 rural electric cooperative or a rural telephone

3 cooperative association knows, or exercising rea4 sonable diligence could have known, that such

5 failure existed.

6 ‘‘(2) WAIVER BY SECRETARY.—In the case of a

7 failure which is due to reasonable cause and not to

8 willful neglect, the Secretary may waive part or all

9 of the tax imposed by subsection (a) to the extent

10 that the payment of such tax would be excessive rel11 ative to the failure involved.’’.

12 (b) CONFORMING AMENDMENT.—The table of sec13 tions for such chapter 43, as amended by section 311, is

14 amended by adding at the end the following new item:

‘‘Sec. 4980G. Failure of qualified associations, etc., to comply

with certain standards for health insurance plans.’’.

15 SEC. 314. DEDUCTION FOR HEALTH INSURANCE COSTS OF

16 SELF-EMPLOYED INDIVIDUALS.

17 (a) FULL DEDUCTION IN 2001.—The table contained

18 in section 162(l)(1)(B) of the Internal Revenue Code of

19 1986 (relating to special rules for health insurance costs

20 of self-employed individuals) is amended—

21 (1) by striking ‘‘2000 and 2001’’ and all that

22 follows; and

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

‘‘2000 ............................................................. 50

‘‘2001 and thereafter ..................................... 100.’’.
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1 (b) EFFECTIVE DATE.—The amendments made by

2 this section shall apply to taxable years beginning after

3 December 31, 1999.

4 SEC. 315. AMENDMENTS TO COBRA.

5 (a) AMENDMENTS TO INTERNAL REVENUE CODE OF

6 1986.—

7 (1) LOWER COST COVERAGE OPTIONS.—Sub8 paragraph (A) of section 4980B(f)(2) of the Internal

9 Revenue Code of 1986 (relating to continuation cov10 erage requirements of group health plans) is amend11 ed to read as follows:

12 ‘‘(A) TYPE OF BENEFIT COVERAGE.—The

13 coverage must consist of coverage which, as of

14 the time the coverage is being provided—

15 ‘‘(i) is identical to the coverage pro16 vided under the plan to similarly situated

17 beneficiaries under the plan with respect to

18 whom a qualifying event has not occurred,

19 ‘‘(ii) is so identical, except such cov20 erage is offered with an annual $1,000 de21 ductible, and

22 ‘‘(iii) is so identical, except such cov23 erage is offered with an annual $3,000 de24 ductible.
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1 If coverage under the plan is modified for any

2 group of similarly situated beneficiaries, the

3 coverage shall also be modified in the same

4 manner for all individuals who are qualified

5 beneficiaries under the plan pursuant to this

6 subsection in connection with such group.’’.

7 (2) TERMINATION OF COBRA COVERAGE AFTER

8 ELIGIBLE FOR EMPLOYER-BASED COVERAGE FOR 90

9 DAYS.—Clause (iv) of section 4980B(f)(2)(B) of the

10 Internal Revenue Code of 1986 (relating to period of

11 coverage) is amended—

12 (A) by striking ‘‘or’’ at the end of sub13 clause (I),

14 (B) by redesignating subclause (II) as sub15 clause (III), and

16 (C) by inserting after subclause (I) the fol17 lowing:

18 ‘‘(II) eligible for such employer19 based coverage for more than 90 days,

20 or’’.

21 (3) REDUCTION OF PERIOD OF COVERAGE.—

22 Clause (i) of section 4980B(f)(2)(B) of the Internal

23 Revenue Code of 1986 (relating to period of cov24 erage) is amended by striking ‘‘18 months’’ each

25 place it appears and inserting ‘‘24 months’’.
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1 (4) CONTINUATION COVERAGE FOR DEPENDENT

2 CHILD.—Clause (i) of section 4980B(f)(2)(B) of the

3 Internal Revenue Code of 1986 is amended by add4 ing at the end the following:

5 ‘‘(VI) SPECIAL RULE FOR DE6 PENDENT CHILD.—In the case of a

7 qualifying event described in para8 graph (3)(E), the date that is 36

9 months after the date on which the

10 dependent child of the covered em11 ployee ceases to be a dependent child

12 under the plan.’’.

13 (b) AMENDMENTS TO EMPLOYEE RETIREMENT IN14 COME SECURITY ACT OF 1974.—

15 (1) LOWER COST COVERAGE OPTIONS.—Para16 graph (1) of section 602 of the Employee Retire17 ment Income Security Act of 1974 (29 U.S.C.

18 1162(1)) (relating to continuation coverage require19 ments of group health plans) is amended to read as

20 follows:

21 ‘‘(1) TYPE OF BENEFIT COVERAGE.—The cov22 erage must consist of coverage which, as of the time

23 the coverage is being provided—

24 ‘‘(A) is identical to the coverage provided

25 under the plan to similarly situated bene-
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1 ficiaries under the plan with respect to whom a

2 qualifying event has not occurred,

3 ‘‘(B) is so identical, except such coverage

4 is offered with an annual $1,000 deductible,

5 and

6 ‘‘(C) is so identical, except such coverage is

7 offered with an annual $3,000 deductible.

8 If coverage under the plan is modified for any group

9 of similarly situated beneficiaries, the coverage shall

10 also be modified in the same manner for all individ11 uals who are qualified beneficiaries under the plan

12 pursuant to this subsection in connection with such

13 group.’’.

14 (2) TERMINATION OF COBRA COVERAGE AFTER

15 ELIGIBLE FOR EMPLOYER-BASED COVERAGE FOR 90

16 DAYS.—Subparagraph (D) of section 602(2) of the

17 Employee Retirement Income Security Act of 1974

18 (29 U.S.C. 1162(2)(D)) (relating to period of cov19 erage) is amended—

20 (A) by striking ‘‘or’’ at the end of clause

21 (i),

22 (B) by redesignating clause (ii) as clause

23 (iii), and

24 (C) by inserting after clause (i) the follow25 ing:
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1 ‘‘(ii) eligible for such employer-based

2 coverage for more than 90 days, or’’.

3 (3) REDUCTION OF PERIOD OF COVERAGE.—

4 Subparagraph (A) of section 602(2) of the Employee

5 Retirement Income Security Act of 1974 (29 U.S.C.

6 1162(2)(A)) (relating to period of coverage) is

7 amended by striking ‘‘18 months’’ each place it ap8 pears and inserting ‘‘24 months’’.

9 (4) CONTINUATION COVERAGE FOR DEPENDENT

10 CHILD.—Subparagraph (A) of section 602(2) of the

11 Employee Retirement Income Security Act of 1974

12 (29 U.S.C. 1162(2)(A)) is amended by adding at the

13 end the following:

14 ‘‘(vi) SPECIAL RULE FOR DEPENDENT

15 CHILD.—In the case of a qualifying event

16 described in section 603(5), the date that

17 is 36 months after the date on which the

18 dependent child of the covered employee

19 ceases to be a dependent child under the

20 plan.’’.

21 (c) AMENDMENTS TO PUBLIC HEALTH SERVICE

22 ACT.—

23 (1) LOWER COST COVERAGE OPTIONS.—Para24 graph (1) of section 2202 of the Public Health Serv25 ice Act (42 U.S.C. 300bb-2(1)) (relating to continu-
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1 ation coverage requirements of group health plans)

2 is amended to read as follows:

3 ‘‘(1) TYPE OF BENEFIT COVERAGE.—The cov4 erage must consist of coverage which, as of the time

5 the coverage is being provided—

6 ‘‘(A) is identical to the coverage provided

7 under the plan to similarly situated bene8 ficiaries under the plan with respect to whom a

9 qualifying event has not occurred,

10 ‘‘(B) is so identical, except such coverage

11 is offered with an annual $1,000 deductible,

12 and

13 ‘‘(C) is so identical, except such coverage is

14 offered with an annual $3,000 deductible.

15 If coverage under the plan is modified for any group

16 of similarly situated beneficiaries, the coverage shall

17 also be modified in the same manner for all individ18 uals who are qualified beneficiaries under the plan

19 pursuant to this subsection in connection with such

20 group.’’.

21 (2) TERMINATION OF COBRA COVERAGE AFTER

22 ELIGIBLE FOR EMPLOYER-BASED COVERAGE FOR 90

23 DAYS.—Subparagraph (D) of section 2202(2) of the

24 Public Health Service Act (42 U.S.C. 300bb-
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1 2(2)(D)) (relating to period of coverage) is

2 amended—

3 (A) by striking ‘‘or’’ at the end of clause

4 (i),

5 (B) by redesignating clause (ii) as clause

6 (iii), and

7 (C) by inserting after clause (i) the follow8 ing:

9 ‘‘(ii) eligible for such employer-based

10 coverage for more than 90 days, or’’.

11 (3) REDUCTION OF PERIOD OF COVERAGE.—

12 Subparagraph (A) of section 2202(2) of the Public

13 Health Service Act (42 U.S.C. 300bb-2(2)(A)) (re14 lating to period of coverage) is amended by striking

15 ‘‘18 months’’ each place it appears and inserting

16 ‘‘24 months’’.

17 (4) CONTINUATION COVERAGE FOR DEPENDENT

18 CHILD.—Subparagraph (A) of section 2202(2) of the

19 Public Health Service Act (42 U.S.C. 300bb20 2(2)(A)) is amended by adding at the end the follow21 ing:

22 ‘‘(vi) SPECIAL RULE FOR DEPENDENT

23 CHILD.—In the case of a qualifying event

24 described in section 2203(5), the date that

25 is 36 months after the date on which the
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1 dependent child of the covered employee

2 ceases to be a dependent child under the

3 plan.’’.

4 (d) EFFECTIVE DATE.—The amendments made by

5 this section shall apply to qualifying events occurring after

6 the date of the enactment of this Act.

7 TITLE IV—PRIMARY AND

8 PREVENTIVE CARE SERVICES

9 SEC. 401. IMPROVEMENT OF MEDICARE PREVENTIVE CARE

10 SERVICES.

11 (a) WAIVER OF COINSURANCE FOR SCREENING MAM12 MOGRAPHY.—

13 (1) IN GENERAL.—Section 1834(c)(1)(C) of the

14 Social Security Act (42 U.S.C. 1395m(c)(1)(C)) is

15 amended by striking ‘‘80 percent of’’.

16 (2) WAIVER OF COINSURANCE IN OUTPATIENT

17 HOSPITAL SETTINGS.—The third sentence of section

18 1866(a)(2)(A) of the Social Security Act (42 U.S.C.

19 1395cc(a)(2)(A)) is amended by inserting after

20 ‘‘1861(s)(10)(A)’’ the following: ‘‘, with respect to

21 screening mammography (as defined in section

22 1861(jj)),’’.

23 (b) COVERAGE OF INSULIN PUMPS.—

24 (1) INCLUSION AS ITEM OF DURABLE MEDICAL

25 EQUIPMENT.—Section 1861(n) of the Social Secu-
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1 rity Act (42 U.S.C. 1395x(n)) is amended by insert2 ing before the semicolon the following: ‘‘, and in3 cludes insulin infusion pumps (as defined in sub4 section (uu)) prescribed by the physician of an indi5 vidual with Type I diabetes who is experiencing se6 vere swings of high and low blood glucose levels and

7 has successfully completed a training program that

8 meets standards established by the Secretary or who

9 has used such a pump without interruption for at

10 least 18 months immediately before enrollment

11 under part B’’.

12 (2) DEFINITION OF INSULIN INFUSION PUMP.—

13 Section 1861 of the Social Security Act (42 U.S.C.

14 1395x) is amended by adding at the end the follow15 ing:

16 ‘‘Insulin Infusion Pump

17 ‘‘(uu) The term ‘insulin infusion pump’ means an in18 fusion pump, approved by the Federal Food and Drug Ad19 ministration, that provides for the computerized delivery

20 of insulin for individuals with diabetes in lieu of multiple

21 daily manual insulin injections.’’.

22 (3) PAYMENT FOR SUPPLIES RELATING TO IN23 FUSION PUMPS.—Section 1834(a)(2)(A) of the So24 cial Security Act (42 U.S.C. 1395m(a)(2)(A)) is

25 amended—
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1 (A) in clause (ii), by striking ‘‘or’’ at the

2 end;

3 (B) in clause (iii), by inserting ‘‘or’’ at the

4 end; and

5 (C) by inserting after clause (iii) the fol6 lowing:

7 ‘‘(iv) which is an accessory used in

8 conjunction with an insulin infusion pump

9 (as defined in section 1861(uu)),’’.

10 (c) ANNUAL SCREENING PAP SMEAR AND PELVIC

11 EXAMS.—

12 (1) IN GENERAL.—Section 1861(nn) of the So13 cial Security Act (42 U.S.C. 1395x(nn) is amended

14 to read as follows:

15 ‘‘Screening Pap Smear; Screening Pelvic Exam

16 ‘‘(nn)(1) The term ‘screening pap smear’ means a di17 agnostic laboratory test consisting of a routine exfoliative

18 cytology test (Papanicolaou test) provided to a woman for

19 the purpose of early detection of cervical or vaginal cancer

20 and includes a physician’s interpretation of the results of

21 the test, if the individual involved has not had such a test

22 during the preceding year.

23 ‘‘(2) The term ‘screening pelvic exam’ means a pelvic

24 examination provided to a woman if the woman involved

25 has not had such an examination during the preceding
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1 year, and includes a clinical breast examination, relevant

2 history-taking, medical decision-making, and patient coun3 seling.’’.

4 (2) WAIVER OF COINSURANCE FOR PELVIC

5 EXAMS.—Section 1833(a)(1) of the Social Security

6 Act (42 U.S.C. 1395l(a)(1)) is amended—

7 (A) by striking ‘‘and (S)’’ and inserting

8 ‘‘(S)’’; and

9 (B) by striking the semicolon at the end

10 and inserting the following: ‘‘, and (T) with re11 spect to services described in section

12 1861(nn)(2), 100 percent of the payment basis

13 established under section 1848;’’.

14 (e) EFFECTIVE DATE.—The amendments made by

15 this section shall apply to items and services furnished on

16 or after the date of enactment of this Act.

17 SEC. 402. AUTHORIZATION OF APPROPRIATIONS FOR

18 HEALTHY START PROGRAM.

19 (a) AUTHORIZATION OF APPROPRIATIONS.—To en20 able the Secretary of Health and Human Services to carry

21 out the healthy start program established under the au22 thority of section 301 of the Public Health Service Act

23 (42 U.S.C. 241), there are authorized to be appropriated

24 $115,000,000 for fiscal year 2000, $150,000,000 for fis25 cal year 2001, $250,000,000 for fiscal year 2002, and
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1 $300,000,000 for each of the fiscal years 2003 through

2 2005.

3 (b) MODEL PROJECTS.—

4 (1) IN GENERAL.—Of the amount appropriated

5 under subsection (a) for a fiscal year, the Secretary

6 of Health and Human Services shall reserve

7 $50,000,000 for such fiscal year to be distributed to

8 model projects determined to be eligible under para9 graph (2).

10 (2) ELIGIBILITY.—To be eligible to receive

11 funds under paragraph (1), a model project shall—

12 (A) have been one of the original 15

13 Healthy Start projects; and

14 (B) be determined by Secretary of Health

15 and Human Services to have been successful in

16 serving needy areas and reducing infant mortal17 ity.

18 (3) USE OF PROJECTS.—A model project that

19 receives funding under paragraph (1) shall be uti20 lized as a resource center to assist in the training

21 of those individuals to be involved in projects estab22 lished under subsection (c). It shall be the goal of

23 such projects to become self-sustaining within the

24 project area.
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1 (4) PROVISION OF MATCHING FUNDS.—In pro2 viding assistance to a project under this subsection,

3 the Secretary of Health and Human Services shall

4 ensure that—

5 (A) with respect to fiscal year 2000, the

6 project shall make non-Federal contributions

7 (in cash or in-kind) towards the costs of such

8 project in an amount equal to not less than 20

9 percent of such costs;

10 (B) with respect to fiscal year 2001, the

11 project shall make non-Federal contributions

12 (in cash or in-kind) towards the costs of such

13 project in an amount equal to not less than 30

14 percent of such costs;

15 (C) with respect to fiscal year 2002, the

16 project shall make non-Federal contributions

17 (in cash or in-kind) towards the costs of such

18 project in an amount equal to not less than 40

19 percent of such costs; and

20 (D) with respect to each of the fiscal years

21 2003 through 2005, the project shall make non22 Federal contributions (in cash or in-kind) to23 wards the costs of such project in an amount

24 equal to not less than 50 percent of such costs

25 for each such fiscal year.
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1 (c) NEW PROJECTS.—Of the amount appropriated

2 under subsection (a) for a fiscal year, the Secretary of

3 Health and Human Services shall allocate amounts re4 maining after the reservation under subsection (b) for

5 such fiscal year among new demonstration projects and

6 existing special projects that have proven to be successful

7 as determined by the Secretary of Health and Human

8 Services. Such projects shall be community-based and

9 shall attempt to replicate healthy start model projects that

10 have been determined by the Secretary of Health and

11 Human Services to be successful.

12 SEC. 403. REAUTHORIZATION OF CERTAIN PROGRAMS PRO13 VIDING PRIMARY AND PREVENTIVE CARE.

14 (a) TUBERCULOSIS PREVENTION GRANTS.—Section

15 317(j)(1) of the Public Health Service Act (42 U.S.C.

16 247b(j)(1)) is amended by striking ‘‘2002’’ and inserting

17 ‘‘2003’’.

18 (b) SEXUALLY TRANSMITTED DISEASES.—Section

19 318(e)(1) of the Public Health Service Act (42 U.S.C.

20 247c(e)(1)) is amended—

21 (1) by striking ‘‘and such sums’’ and inserting

22 ‘‘such sums’’;

23 (2) by striking ‘‘1998’’ and inserting ‘‘1999’’;

24 and
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1 (3) by inserting before the period the following:

2 ‘‘, $130,000,000 for each of the fiscal years 2000

3 and 2001, and such sums as may be necessary for

4 each of the fiscal years 2002 through 2004’’.

5 (c) FAMILY PLANNING PROJECT GRANTS.—Section

6 1001(d) of the Public Health Service Act (42 U.S.C.

7 300(d)) is amended—

8 (1) by striking ‘‘and $158,400,000’’ and insert9 ing ‘‘$158,400,000’’; and

10 (2) by inserting before the period the following:

11 ‘‘; $430,000,000 for fiscal year 2000; and such sums

12 as may be necessary for each of the fiscal years

13 2001 through 2003’’.

14 (d) BREAST AND CERVICAL CANCER PREVENTION.—

15 Section 1510(a) of the Public Health Service Act (42

16 U.S.C. 300n–5(a)) is amended—

17 (1) by striking ‘‘and such sums’’ and inserting

18 ‘‘such sums’’; and

19 (2) by inserting before the period the following:

20 ‘‘, $185,000,000 for fiscal year 2000, and such sums

21 as may be necessary for each of the fiscal years

22 2001 through 2003’’.

23 (e) PREVENTIVE HEALTH AND HEALTH SERVICES

24 BLOCK GRANT.—Section 1901(a) of the Public Health
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1 Service Act (42 U.S.C. 300w(a)) is amended by striking

2 ‘‘$205,000,000’’ and inserting ‘‘$235,000,000’’.

3 (f) MATERNAL AND CHILD HEALTH SERVICES

4 BLOCK GRANT.—Section 501(a) of the Social Security

5 Act (42 U.S.C. 701(a)) is amended by striking

6 ‘‘$705,000,000 for fiscal year 1994 and each fiscal year

7 thereafter’’ and inserting ‘‘$705,000,000 for fiscal years

8 1994 through 1999, $800,000,000 for fiscal year 2000,

9 and such sums as may be necessary for each of the fiscal

10 years 2001 through 2003’’.

11 SEC. 404. COMPREHENSIVE SCHOOL HEALTH EDUCATION

12 PROGRAM.

13 (a) PURPOSE.—It is the purpose of this section to

14 establish a comprehensive school health education and pre15 vention program for elementary and secondary school stu16 dents.

17 (b) PROGRAM AUTHORIZED.—The Secretary of Edu18 cation (referred to in this section as the ‘‘Secretary’’),

19 through the Office of Comprehensive School Health Edu20 cation established in subsection (e), shall award grants to

21 States from allotments under subsection (c) to enable such

22 States to—

23 (1) award grants to local or intermediate edu24 cational agencies, and consortia thereof, to enable

25 such agencies or consortia to establish, operate, and
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1 improve local programs of comprehensive health edu2 cation and prevention, early health intervention, and

3 health education, in elementary and secondary

4 schools (including preschool, kindergarten, inter5 mediate, and junior high schools); and

6 (2) develop training, technical assistance, and

7 coordination activities for the programs assisted pur8 suant to paragraph (1).

9 (c) RESERVATIONS AND STATE ALLOTMENTS.—

10 (1) RESERVATIONS.—From the sums appro11 priated pursuant to the authority of subsection (f)

12 for any fiscal year, the Secretary shall reserve—

13 (A) 1 percent for payments to Guam,

14 American Samoa, the Virgin Islands, the Re15 public of the Marshall Islands, the Federated

16 States of Micronesia, the Northern Mariana Is17 lands, and the Republic of Palau, to be allotted

18 in accordance with their respective needs; and

19 (B) 1 percent for payments to the Bureau

20 of Indian Affairs.

21 (2) STATE ALLOTMENTS.—From the remainder

22 of the sums not reserved under paragraph (1), the

23 Secretary shall allot to each State an amount which

24 bears the same ratio to the amount of such remain25 der as the school-age population of the State bears
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1 to the school-age population of all States, except

2 that no State shall be allotted less than an amount

3 equal to 0.5 percent of such remainder.

4 (3) REALLOTMENT.—The Secretary may reallot

5 any amount of any allotment to a State to the extent

6 that the Secretary determines that the State will not

7 be able to obligate such amount within 2 years of

8 allotment. Any such reallotment shall be made on

9 the same basis as an allotment under paragraph (2).

10 (d) USE OF FUNDS.—Grant funds provided to local

11 or intermediate educational agencies, or consortia thereof,

12 under this section may be used to improve elementary and

13 secondary education in the areas of—

14 (1) personal health and fitness;

15 (2) prevention of chronic diseases;

16 (3) prevention and control of communicable dis17 eases;

18 (4) nutrition;

19 (5) substance use and abuse;

20 (6) accident prevention and safety;

21 (7) community and environmental health;

22 (8) mental and emotional health;

23 (9) parenting and the challenges of raising chil24 dren; and
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1 (10) the effective use of the health services de2 livery system.

3 (e) OFFICE OF COMPREHENSIVE SCHOOL HEALTH

4 EDUCATION.—The Secretary shall establish within the Of5 fice of the Secretary an Office of Comprehensive School

6 Health Education which shall have the following respon7 sibilities:

8 (1) To recommend mechanisms for the coordi9 nation of school health education programs con10 ducted by the various departments and agencies of

11 the Federal Government.

12 (2) To advise the Secretary on formulation of

13 school health education policy within the Depart14 ment of Education.

15 (3) To disseminate information on the benefits

16 to health education of utilizing a comprehensive

17 health curriculum in schools.

18 (f) AUTHORIZATION OF APPROPRIATIONS.—

19 (1) IN GENERAL.—There are authorized to be

20 appropriated $50,000,000 for fiscal year 2000 and

21 such sums as may be necessary for each of the fiscal

22 years 2001 and 2002 to carry out this section.

23 (2) AVAILABILITY.—Funds appropriated pursu24 ant to the authority of paragraph (1) in any fiscal

25 year shall remain available for obligation and ex-
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1 penditure until the end of the fiscal year succeeding

2 the fiscal year for which such funds were appro3 priated.

4 SEC. 405. COMPREHENSIVE EARLY CHILDHOOD HEALTH

5 EDUCATION PROGRAM.

6 (a) PURPOSE.—It is the purpose of this section to

7 establish a comprehensive early childhood health education

8 program.

9 (b) PROGRAM.—The Secretary of Health and Human

10 Services (referred to in this section as the ‘‘Secretary’’)

11 shall conduct a program of awarding grants to agencies

12 conducting Head Start training to enable such agencies

13 to provide training and technical assistance to Head Start

14 teachers and other child care providers. Such program

15 shall—

16 (1) establish a training system through the

17 Head Start agencies and organizations conducting

18 Head Start training for the purpose of enhancing

19 teacher skills and providing comprehensive early

20 childhood health education curriculum;

21 (2) enable such agencies and organizations to

22 provide training to day care providers in order to

23 strengthen the skills of the early childhood workforce

24 in providing health education;
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1 (3) provide technical support for health edu2 cation programs and curricula; and

3 (4) provide cooperation with other early child4 hood providers to ensure coordination of such pro5 grams and the transition of students into the public

6 school environment.

7 (c) USE OF FUNDS.—Grant funds under this section

8 may be used to provide training and technical assistance

9 in the areas of—

10 (1) personal health and fitness;

11 (2) prevention of chronic diseases;

12 (3) prevention and control of communicable dis13 eases;

14 (4) dental health;

15 (5) nutrition;

16 (6) substance use and abuse;

17 (7) accident prevention and safety;

18 (8) community and environmental health;

19 (9) mental and emotional health; and

20 (10) strengthening the role of parent involve21 ment.

22 (d) RESERVATION FOR INNOVATIVE PROGRAMS.—

23 The Secretary shall reserve 5 percent of the funds appro24 priated pursuant to the authority of subsection (e) in each
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1 fiscal year for the development of innovative model health

2 education programs or curricula.

3 (e) AUTHORIZATION OF APPROPRIATIONS.—There

4 are authorized to be appropriated $40,000,000 for fiscal

5 year 2000 and such sums as may be necessary for each

6 of the fiscal years 2001 and 2002 to carry out this section.

7 SEC. 406. ADOLESCENT FAMILY LIFE AND ABSTINENCE.

8 (a) DEFINITIONS.—Section 2002(a)(4)(G) of the

9 Public Health Service Act (42 U.S.C. 300z–1(a)(4)(G))

10 is amended by inserting ‘‘and abstinence’’ after ‘‘adop11 tion’’.

12 (b) GEOGRAPHIC DIVERSITY.—Section 2005 of the

13 Public Health Service Act (42 U.S.C. 300z–4) is

14 amended—

15 (1) by redesignating subsections (b) and (c) as

16 subsections (c) and (d), respectively; and

17 (2) by inserting after subsection (a) the follow18 ing:

19 ‘‘(b) In approving applications for grants for dem20 onstration projects for services under this title, the Sec21 retary shall, to the maximum extent practicable, ensure

22 adequate representation of both urban and rural areas.’’.

23 (c) SIMPLIFIED APPLICATION PROCESS.—Section

24 2006 of the Public Health Service Act (42 U.S.C. 300z–

25 5) is amended by adding at the end following:
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1 ‘‘(g) The Secretary shall develop and implement a

2 simplified and expedited application process for applicants

3 seeking less than $15,000 of funds available under this

4 title for a demonstration project.’’.

5 (d) AUTHORIZATION OF APPROPRIATIONS.—Section

6 2010(a) of the Public Health Service Act (42 U.S.C.

7 300z–9) is amended to read as follows:

8 ‘‘(a) For the purpose of carrying out this title, there

9 are authorized to be appropriated $75,000,000 for each

10 of the fiscal years 2000 through 2004.’’.

11 TITLE V—PATIENT’S RIGHT TO

12 DECLINE MEDICAL TREATMENT

13 SEC. 501. PATIENT’S RIGHT TO DECLINE MEDICAL TREAT14 MENT.

15 (a) RIGHT TO DECLINE MEDICAL TREATMENT.—

16 (1) RIGHTS OF COMPETENT ADULTS.—

17 (A) IN GENERAL.—Except as provided in

18 subparagraph (B), a State may not restrict the

19 right of a competent adult to consent to, or to

20 decline, medical treatment.

21 (B) LIMITATIONS.—

22 (i) AFFECT ON THIRD PARTIES.—A

23 State may impose limitations on the right

24 of a competent adult to decline treatment
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1 if such limitations protect third parties (in2 cluding minor children) from harm.

3 (ii) TREATMENT WHICH IS NOT MEDI4 CALLY INDICATED.—Nothing in this sub5 section shall be construed to require that

6 any individual be offered, or to state that

7 any individual may demand, medical treat8 ment which the health care provider does

9 not have available, or which is, under pre10 vailing medical standards, either futile or

11 otherwise not medically indicated.

12 (2) RIGHTS OF INCAPACITATED ADULTS.—

13 (A) IN GENERAL.—Except as provided in

14 subparagraph (B)(i) of paragraph (1), States

15 may not restrict the right of an incapacitated

16 adult to consent to, or to decline, medical treat17 ment as exercised through the documents speci18 fied in this paragraph, or through similar docu19 ments or other written methods of directive

20 which evidence the adult’s treatment choices.

21 (B) ADVANCE DIRECTIVES AND POWERS

22 OF ATTORNEY.—

23 (i) IN GENERAL.—In order to facili24 tate the communication, despite incapacity,

25 of an adult’s treatment choices, the Sec-
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1 retary, in consultation with the Attorney

2 General, shall develop a national advance

3 directive form that—

4 (I) shall not limit or otherwise

5 restrict, except as provided in sub6 paragraph (B)(i) of paragraph (1), an

7 adult’s right to consent to, or to de8 cline, medical treatment; and

9 (II) shall, at minimum—

10 (aa) provide the means for

11 an adult to declare such adult’s

12 own treatment choices in the

13 event of a terminal condition;

14 (bb) provide the means for

15 an adult to declare, at such

16 adult’s option, treatment choices

17 in the event of other conditions

18 which are medically incurable,

19 and from which such adult likely

20 will not recover; and

21 (cc) provide the means by

22 which an adult may, at such

23 adult’s option, declare such

24 adult’s wishes with respect to all

25 forms of medical treatment, in-
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1 cluding forms of medical treat2 ment such as the provision of nu3 trition and hydration by artificial

4 means which may be, in some cir5 cumstances, relatively nonburden6 some.

7 (ii) NATIONAL DURABLE POWER OF

8 ATTORNEY FORM.—The Secretary, in con9 sultation with the Attorney General, shall

10 develop a national durable power of attor11 ney form for health care decisionmaking.

12 The form shall provide a means for any

13 adult to designate another adult or adults

14 to exercise the same decisionmaking pow15 ers which would otherwise be exercised by

16 the patient if the patient were competent.

17 (iii) HONORED BY ALL HEALTH CARE

18 PROVIDERS.—The national advance direc19 tive and durable power of attorney forms

20 developed by the Secretary shall be hon21 ored by all health care providers.

22 (iv) LIMITATIONS.—No individual

23 shall be required to execute an advance di24 rective. This section makes no presumption

25 concerning the intention of an individual
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1 who has not executed an advance directive.

2 An advance directive shall be sufficient,

3 but not necessary, proof of an adult’s

4 treatment choices with respect to the cir5 cumstances addressed in the advance direc6 tive.

7 (C) DEFINITION.—For purposes of this

8 paragraph, the term ‘‘incapacity’’ means the in9 ability to understand or to communicate con10 cerning the nature and consequences of a health

11 care decision (including the intended benefits

12 and foreseeable risks of, and alternatives to,

13 proposed treatment options), and to reach an

14 informed decision concerning health care.

15 (3) HEALTH CARE PROVIDERS.—

16 (A) IN GENERAL.—No health care provider

17 may provide treatment to an adult contrary to

18 the adult’s wishes as expressed personally, by

19 an advance directive as provided for in para20 graph (2)(B), or by a similar written advance

21 directive form or another written method of di22 rective which clearly and convincingly evidence

23 the adult’s treatment choices. A health provider

24 who acts in good faith pursuant to the preced25 ing sentence shall be immune from criminal or
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1 civil liability or discipline for professional mis2 conduct.

3 (B) HEALTH CARE PROVIDERS UNDER

4 THE MEDICARE AND MEDICAID PROGRAMS.—

5 Any health care provider who knowingly pro6 vides services to an adult contrary to the adult’s

7 wishes as expressed personally, by an advance

8 directive as provided for in paragraph (2)(B),

9 or by a similar written advance directive form

10 or another written method of directive which

11 clearly and convincingly evidence the adult’s

12 treatment choices, shall be denied payment for

13 such services under titles XVIII and XIX of the

14 Social Security Act.

15 (C) TRANSFERS.—Health care providers

16 who object to the provision of medical care in

17 accordance with an adult’s wishes shall transfer

18 the adult to the care of another health care pro19 vider.

20 (4) DEFINITION.—For purposes of this sub21 section, the term ‘‘adult’’ means—

22 (A) an individual who is 18 years of age or

23 older; or

24 (B) an emancipated minor.
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1 (b) FEDERAL RIGHT ENFORCEABLE IN FEDERAL

2 COURTS.—The rights recognized in this section may be

3 enforced by filing a civil action in an appropriate district

4 court of the United States.

5 (c) SUICIDE AND HOMICIDE.—Nothing in this section

6 shall be construed to permit, condone, authorize, or ap7 prove suicide or mercy killing, or any affirmative act to

8 end a human life.

9 (d) RIGHTS GRANTED BY STATES.—Nothing in this

10 section shall impair or supersede rights granted by State

11 law which exceed the rights recognized by this section.

12 (e) EFFECT ON OTHER LAWS.—

13 (1) IN GENERAL.—Except as specified in para14 graph (2), written policies and written information

15 adopted by health care providers pursuant to sec16 tions 4206 and 4751 of the Omnibus Budget Rec17 onciliation Act of 1990 (Public Law 101–508), shall

18 be modified within 6 months after the enactment of

19 this section to conform to the provisions of this sec20 tion.

21 (2) DELAY PERIOD FOR UNIFORM FORMS.—

22 Health care providers shall modify any written forms

23 distributed as written information under sections

24 4206 and 4751 of the Omnibus Budget Reconcili25 ation Act of 1990 (Public Law 101–508) not later
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1 than 6 months after promulgation of the forms re2 ferred to in clauses (i) and (ii) of subsection

3 (a)(2)(B) by the Secretary.

4 (f) INFORMATION PROVIDED TO CERTAIN INDIVID5 UALS.—The Secretary shall provide on a periodic basis

6 written information regarding an individual’s right to con7 sent to, or to decline, medical treatment as provided in

8 this section to individuals who are beneficiaries under ti9 tles II, XVI, XVIII, and XIX of the Social Security Act.

10 (g) RECOMMENDATIONS TO CONGRESS ON ISSUES

11 RELATING TO A PATIENT’S RIGHT OF SELF-DETERMINA12 TION.—Not later than 180 days after the date of the en13 actment of this Act, and annually thereafter for a period

14 of 3 years, the Secretary shall provide recommendations

15 to Congress concerning the medical, legal, ethical, social,

16 and educational issues related to in this section. In devel17 oping recommendations under this subsection the Sec18 retary shall address the following issues:

19 (1) The contents of the forms referred to in

20 clauses (i) and (ii) of subsection (a)(2)(B).

21 (2) Issues pertaining to the education and

22 training of health care professionals concerning pa23 tients’ self-determination rights.

24 (3) Issues pertaining to health care profes25 sionals’ duties with respect to patients’ rights, and
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1 health care professionals’ roles in identifying, assess2 ing, and presenting for patient consideration medi3 cally indicated treatment options.

4 (4) Issues pertaining to the education of pa5 tients concerning their rights to consent to, and de6 cline, treatment, including how individuals might

7 best be informed of such rights prior to hospitaliza8 tion and how uninsured individuals, and individuals

9 not under the regular care of a physician or another

10 provider, might best be informed of their rights.

11 (5) Issues relating to appropriate standards to

12 be adopted concerning decisionmaking by incapaci13 tated adult patients whose treatment choices are not

14 known.

15 (6) Such other issues as the Secretary may

16 identify.

17 (h) EFFECTIVE DATE.—

18 (1) IN GENERAL.—This section shall take effect

19 on the date that is 6 months after the date of enact20 ment of this Act.

21 (2) SUBSECTION (g).—The provisions of sub22 section (g) shall take effect on the date of enactment

23 of this Act.
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1 TITLE VI—PRIMARY AND

2 PREVENTIVE CARE PROVIDERS

3 SEC. 601. INCREASED MEDICARE REIMBURSEMENT FOR

4 PHYSICIAN ASSISTANTS, NURSE PRACTITION5 ERS, AND CLINICAL NURSE SPECIALISTS.

6 (a) FEE SCHEDULE AMOUNT.—Section

7 1833(a)(1)(O) (42 U.S.C. 1395l(a)(1)(O)) is amended by

8 striking ‘‘85 percent’’ and inserting ‘‘90 percent’’ each

9 place it appears.

10 (b) TECHNICAL AMENDMENTS.—Section

11 1833(a)(1)(O) (42 U.S.C. 1395l(a)(1)(O)) is amended—

12 (1) by striking ‘‘clinic’’ and inserting ‘‘clinical’’;

13 and

14 (2) by striking the semicolon at the end and in15 serting a comma.

16 (c) EFFECTIVE DATE.—The amendments made by

17 this section shall apply with respect to services furnished

18 and supplies provided on and after January 1, 2000.

19 SEC. 602. REQUIRING COVERAGE OF CERTAIN NONPHYSI20 CIAN PROVIDERS UNDER THE MEDICAID

21 PROGRAM.

22 (a) IN GENERAL.—Section 1905(a) of the Social Se23 curity Act (42 U.S.C. 1396d(a)) is amended—

24 (1) in paragraph (26), by striking ‘‘and’’ at the

25 end;
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1 (2) by redesignating paragraph (27) as para2 graph (28); and

3 (3) by inserting after paragraph (26) the fol4 lowing:

5 ‘‘(27) services furnished by a physician assist6 ant, nurse practitioner, clinical nurse specialist (as

7 defined in section 1861(aa)(5)), and certified reg8 istered nurse anesthetist (as defined in section

9 1861(bb)(2)); and’’.

10 (b) CONFORMING AMENDMENT.—Section

11 1902(a)(10)(C)(iv) of the Social Security Act (42 U.S.C.

12 1396a(a)(10)(C)(iv)) is amended by inserting ‘‘and (27)’’

13 after ‘‘(24)’’.

14 (c) EFFECTIVE DATE.—The amendments made by

15 this section shall apply to services furnished under title

16 XIX of the Social Security Act (42 U.S.C. 1396 et seq.)

17 beginning with the first fiscal year quarter that begins

18 after the date of enactment of this Act.

19 SEC. 603. MEDICAL STUDENT TUTORIAL PROGRAM

20 GRANTS.

21 Part C of title VII of the Public Health Service Act

22 (42 U.S.C. 293j et seq.), as amended by the Omnibus

23 Consolidated and Emergency Supplemental Appropria24 tions Act, 1999 (Public Law 105-277), is amended by add25 ing at the end thereof the following:
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1 ‘‘SEC. 749. MEDICAL STUDENT TUTORIAL PROGRAM

2 GRANTS.

3 ‘‘(a) ESTABLISHMENT.—The Secretary shall estab4 lish a program to award grants to eligible schools of medi5 cine or osteopathic medicine to enable such schools to pro6 vide medical students for tutorial programs or as partici7 pants in clinics designed to interest high school or college

8 students in careers in general medical practice.

9 ‘‘(b) APPLICATION.—To be eligible to receive a grant

10 under this section, a school of medicine or osteopathic

11 medicine shall prepare and submit to the Secretary an ap12 plication at such time, in such manner, and containing

13 such information as the Secretary may require, including

14 assurances that the school will use amounts received under

15 the grant in accordance with subsection (c).

16 ‘‘(c) USE OF FUNDS.—

17 ‘‘(1) IN GENERAL.—Amounts received under a

18 grant awarded under this section shall be used to—

19 ‘‘(A) fund programs under which students

20 of the grantee are provided as tutors for high

21 school and college students in the areas of

22 mathematics, science, health promotion and

23 prevention, first aide, nutrition and prenatal

24 care;

25 ‘‘(B) fund programs under which students

26 of the grantee are provided as participants in
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1 clinics and seminars in the areas described in

2 paragraph (1); and

3 ‘‘(C) conduct summer institutes for high

4 school and college students to promote careers

5 in medicine.

6 ‘‘(2) DESIGN OF PROGRAMS.—The programs,

7 institutes, and other activities conducted by grantees

8 under paragraph (1) shall be designed to—

9 ‘‘(A) give medical students desiring to

10 practice general medicine access to the local

11 community;

12 ‘‘(B) provide information to high school

13 and college students concerning medical school

14 and the general practice of medicine; and

15 ‘‘(C) promote careers in general medicine.

16 ‘‘(d) AUTHORIZATION OF APPROPRIATIONS.—There

17 are authorized to be appropriated to carry out this section,

18 $5,000,000 for fiscal year 2000, and such sums as may

19 be necessary for fiscal year 2001.’’.

20 SEC. 604. GENERAL MEDICAL PRACTICE GRANTS.

21 Part C of title VII of the Public Health Service Act

22 (as amended by section 603) is further amended by adding

23 at the end thereof the following:
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1 ‘‘SEC. 749A. GENERAL MEDICAL PRACTICE GRANTS.

2 ‘‘(a) ESTABLISHMENT.—The Secretary shall estab3 lish a program to award grants to eligible public or private

4 nonprofit schools of medicine or osteopathic medicine, hos5 pitals, residency programs in family medicine or pediat6 rics, or to a consortium of such entities, to enable such

7 entities to develop effective strategies for recruiting medi8 cal students interested in the practice of general medicine

9 and placing such students into general practice positions

10 upon graduation.

11 ‘‘(b) APPLICATION.—To be eligible to receive a grant

12 under this section, an entity of the type described in sub13 section (a) shall prepare and submit to the Secretary an

14 application at such time, in such manner, and containing

15 such information as the Secretary may require, including

16 assurances that the entity will use amounts received under

17 the grant in accordance with subsection (c).

18 ‘‘(c) USE OF FUNDS.—Amounts received under a

19 grant awarded under this section shall be used to fund

20 programs under which effective strategies are developed

21 and implemented for recruiting medical students inter22 ested in the practice of general medicine and placing such

23 students into general practice positions upon graduation.

24 ‘‘(d) AUTHORIZATION OF APPROPRIATIONS.—There

25 are authorized to be appropriated to carry out this section,

26 $25,000,000 for each of the fiscal years 2000 through
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1 2002, and such sums as may be necessary for fiscal years

2 thereafter.’’.

3 TITLE VII—COST CONTAINMENT

4 SEC. 701. NEW DRUG CLINICAL TRIALS PROGRAM.

5 Part B of title IV of the Public Health Service Act

6 (42 U.S.C. 284 et seq.) is amended by adding at the end

7 the following:

8 ‘‘SEC. 409C. NEW DRUG CLINICAL TRIALS PROGRAM.

9 ‘‘(a) IN GENERAL.—The Director of the National In10 stitutes of Health (referred to in this section as the ‘Direc11 tor’) is authorized to establish and implement a program

12 for the conduct of clinical trials with respect to new drugs

13 and disease treatments determined to be promising by the

14 Director. In determining the drugs and disease treatments

15 that are to be the subject of such clinical trials, the Direc16 tor shall give priority to those drugs and disease treat17 ments targeted toward the diseases determined—

18 ‘‘(1) to be the most costly to treat;

19 ‘‘(2) to have the highest mortality; or

20 ‘‘(3) to affect the greatest number of individ21 uals.

22 ‘‘(b) AUTHORIZATION OF APPROPRIATIONS.—There

23 are authorized to be appropriated to carry out this section,

24 $120,000,000 for fiscal year 2000, and such sums as may
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1 be necessary for each of the fiscal years 2001 through

2 2004.’’.

3 SEC. 702. MEDICAL TREATMENT EFFECTIVENESS.

4 (a) RESEARCH ON COST-EFFECTIVE METHODS OF

5 HEALTH CARE.—Section 926 of the Public Health Service

6 Act (42 U.S.C. 299c–5) is amended—

7 (1) in subsection (a)—

8 (A) by striking ‘‘1994, and’’ and inserting

9 ‘‘1994,’’; and

10 (B) by inserting before the period the fol11 lowing: ‘‘, and such sums as may be necessary

12 for each of the fiscal years 2000 through

13 2002’’; and

14 (2) by adding at the end the following new sub15 section:

16 ‘‘(f) USE OF ADDITIONAL APPROPRIATIONS.—Within

17 amounts appropriated under subsection (a) for each of the

18 fiscal years 2000 through 2002 that are in excess of the

19 amounts appropriated under such subsection for fiscal

20 year 1999, the Secretary shall give priority to expanding

21 research conducted to determine the most cost-effective

22 methods of health care and for developing and disseminat23 ing new practice guidelines related to such methods. In

24 utilizing such amounts, the Secretary shall give priority

25 to diseases and disorders that the Secretary determines
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1 are the most costly to the United States and evidence a

2 wide variation in current medical practice.’’.

3 (b) RESEARCH ON MEDICAL TREATMENT OUT4 COMES.—

5 (1) IMPOSITION OF TAX ON HEALTH INSUR6 ANCE POLICIES.—

7 (A) IN GENERAL.—Chapter 36 of the In8 ternal Revenue Code of 1986 (relating to cer9 tain other excise taxes) is amended by adding

10 at the end the following:

11 ‘‘Subchapter F—Tax on Health Insurance

12 Policies

‘‘Sec. 4491. Imposition of tax.

‘‘Sec. 4492. Liability for tax.

13 ‘‘SEC. 4491. IMPOSITION OF TAX.

14 ‘‘(a) GENERAL RULE.—There is hereby imposed a

15 tax equal to .001 cent on each dollar, or fractional part

16 thereof, of the premium paid on a policy of health insur17 ance.

18 ‘‘(b) DEFINITION.—For purposes of subsection (a),

19 the term ‘policy of health insurance’ means any policy or

20 other instrument by whatever name called whereby a con21 tract of insurance is made, continued, or renewed with re22 spect to the health of an individual or group of individuals.
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1 ‘‘SEC. 4492. LIABILITY FOR TAX.

2 ‘‘The tax imposed by this subchapter shall be paid,

3 on the basis of a return, by any person who makes, signs,

4 issues, or sells any of the documents and instruments sub5 ject to the tax, or for whose use or benefit the same are

6 made, signed, issued, or sold. The United States or any

7 agency or instrumentality thereof shall not be liable for

8 the tax.’’.

9 (B) CONFORMING AMENDMENT.—The

10 table of subchapters for chapter 36 of such

11 Code is amended by adding at the end the fol12 lowing:

‘‘SUBCHAPTER F. Tax on health insurance policies.’’.

13 (2) ESTABLISHMENT OF TRUST FUND.—

14 (A) IN GENERAL.—Subchapter A of chap15 ter 98 of such Code (relating to trust fund

16 code) is amended by adding at the end the fol17 lowing:

18 ‘‘SEC. 9511. TRUST FUND FOR MEDICAL TREATMENT OUT19 COMES RESEARCH.

20 ‘‘(a) CREATION OF TRUST FUND.—There is estab21 lished in the Treasury of the United States a trust fund

22 to be known as the ‘Trust Fund for Medical Treatment

23 Outcomes Research’ (referred to in this section as the

24 ‘Trust Fund’), consisting of such amounts as may be ap-
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1 propriated or credited to the Trust Fund as provided in

2 this section or section 9602(b).

3 ‘‘(b) TRANSFERS TO TRUST FUND.—There is hereby

4 appropriated to the Trust Fund an amount equivalent to

5 the taxes received in the Treasury under section 4491 (re6 lating to tax on health insurance policies).

7 ‘‘(c) DISTRIBUTION OF AMOUNTS IN TRUST FUND.—

8 On an annual basis the Secretary shall distribute the

9 amounts in the Trust Fund to the Secretary of Health

10 and Human Services. Such amounts shall be available to

11 the Secretary of Health and Human Services to pay for

12 research activities related to medical treatment out13 comes.’’.

14 (B) CONFORMING AMENDMENT.—The

15 table of sections for subchapter A of chapter 98

16 of such Code is amended by adding at the end

17 the following:

‘‘Sec. 9511. Trust Fund for Medical Treatment Outcomes Research.’’.

18 (3) EFFECTIVE DATE.—The amendments made

19 by this subsection shall apply to policies issued after

20 December 31, 1999.

21 SEC. 703. HEALTH CARE COST CONTAINMENT AND QUALITY

22 INFORMATION PROGRAM.

23 (a) GRANT PROGRAM.—
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1 (1) IN GENERAL.—The Secretary of Health and

2 Human Services (referred to in this section as the

3 ‘‘Secretary’’) shall make grants to States that estab4 lish or operate health care cost containment and

5 quality information systems (as defined in subsection

6 (f)(1)). In order to be eligible for a grant under this

7 section, a State must establish or operate a system

8 which, at a minimum, meets the Federal standards

9 established under subsection (c).

10 (2) USE OF FUNDS.—States may use grant

11 funds received under this section only to establish a

12 health care cost containment and quality information

13 system or to improve an existing system operated by

14 the State.

15 (b) SUBMISSION OF APPLICATIONS.—To be eligible

16 for a grant under this section, a State must submit an

17 application to the Secretary within 2 years after the date

18 of the enactment of this section. Such application shall

19 be submitted in a manner determined appropriate by the

20 Secretary and shall include the designation of a State

21 agency that will operate the health care cost containment

22 and quality information system for the State. The Sec23 retary shall approve or disapprove a State application

24 within 6 months after its submission.
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1 (c) MINIMUM FEDERAL STANDARDS.—Not later than

2 6 months after the date of the enactment of this section,

3 the Secretary, after consultation with the Agency for

4 Health Care Policy and Research, other Federal agencies,

5 the Joint Commission on Accreditation of Hospitals,

6 States, health care providers, consumers, insurers, health

7 maintenance organizations, businesses, academic health

8 centers, and labor organizations that purchase health care,

9 shall establish Federal standards for the operation of

10 health care cost containment and quality information sys11 tems by States receiving grants under this section.

12 (d) COLLECTION AND PUBLIC DISSEMINATION OF

13 INFORMATION BY STATES.—

14 (1) IN GENERAL.—A State receiving a grant

15 under this section shall require that a health care

16 cost containment and quality information system will

17 collect at least the information described in para18 graph (2) and publicly disseminate such information

19 in a useful format to appropriate persons such as

20 businesses, consumers of health care services, labor

21 organizations, health plans, hospitals, and other

22 States.

23 (2) INFORMATION DESCRIBED.—The informa24 tion described in this paragraph is the following:

25 (A) Information on hospital charges.
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1 (B) Clinical data.

2 (C) Demographic data.

3 (D) Information regarding treatment of in4 dividuals by particular health care providers.

5 (3) PRIVACY AND CONFIDENTIALITY.—The

6 State cost containment and quality information sys7 tem shall ensure that patient privacy and confiden8 tiality is protected at all times.

9 (e) COMPLIANCE.—If the Secretary determines that

10 a State receiving grant funds under this section has failed

11 to operate a system in accordance with the terms of its

12 approved application, the Secretary may withhold payment

13 of such funds until the State remedies such noncompli14 ance.

15 (f) DEFINITIONS.—For purposes of this section—

16 (1) the term ‘‘health care cost containment and

17 quality information system’’ means a system which

18 is established or operated by a State in order to col19 lect and disseminate the information described in

20 subsection (d)(2) in accordance with subsection

21 (d)(1) for the purpose of providing information on

22 health care costs and outcomes in the State; and

23 (2) the term ‘‘State’’ means a State, the Dis24 trict of Columbia, the Commonwealth of Puerto

25 Rico, the Virgin Islands, Guam, American Samoa,
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1 and includes the Commonwealth of the Northern

2 Mariana Islands.

3 (g) AUTHORIZATION.—

4 (1) IN GENERAL.—There are authorized to be

5 appropriated for the purpose of carrying out this

6 section not more than $150,000,000 for fiscal years

7 2000 through 2002, and such sums as may be nec8 essary thereafter, to remain available until expended.

9 (2) ALLOCATION TO STATES.—The Secretary

10 shall allocate the amounts available for grants under

11 this section in any fiscal year in accordance with a

12 formula developed by the Secretary which takes into

13 account—

14 (A) the number of hospitals in a State rel15 ative to the total number of hospitals in all

16 States;

17 (B) the population of the State relative to

18 the total population of all States; and

19 (C) the type of system operated or in20 tended to be operated by the State, including

21 whether the State establishes an independent

22 State agency to operate the system.
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1 TITLE VIII—TAX INCENTIVES

2 FOR PURCHASE OF QUALI3 FIED LONG-TERM CARE IN4 SURANCE

5 SEC. 801. CREDIT FOR QUALIFIED LONG-TERM CARE PRE6 MIUMS.

7 (a) GENERAL RULE.—Subpart C of part IV of sub8 chapter A of chapter 1 of the Internal Revenue Code of

9 1986 (relating to refundable credits) is amended by redes10 ignating section 35 as section 36 and by inserting after

11 section 34 the following:

12 ‘‘SEC. 35. LONG-TERM CARE INSURANCE CREDIT.

13 ‘‘(a) GENERAL RULE.—In the case of an individual,

14 there shall be allowed as a credit against the tax imposed

15 by this subtitle for the taxable year an amount equal to

16 the applicable percentage of the premiums for a qualified

17 long-term care insurance contract (as defined in section

18 7702B(b)) paid during such taxable year for such individ19 ual or the spouse of such individual.

20 ‘‘(b) APPLICABLE PERCENTAGE.—

21 ‘‘(1) IN GENERAL.—For purposes of this sec22 tion, the term ‘applicable percentage’ means 28 per23 cent reduced (but not below zero) by 1 percentage

24 point for each $1,000 (or fraction thereof) by which
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1 the taxpayer’s adjusted gross income for the taxable

2 year exceeds the base amount.

3 ‘‘(2) BASE AMOUNT.—For purposes of para4 graph (1) the term ‘base amount’ means—

5 ‘‘(A) except as otherwise provided in this

6 paragraph, $25,000,

7 ‘‘(B) $40,000 in the case of a joint return,

8 and

9 ‘‘(C) zero in the case of a taxpayer who—

10 ‘‘(i) is married at the close of the tax11 able year (within the meaning of section

12 7703) but does not file a joint return for

13 such taxable year, and

14 ‘‘(ii) does not live apart from the tax15 payer’s spouse at all times during the tax16 able year.

17 ‘‘(c) COORDINATION WITH MEDICAL EXPENSE DE18 DUCTION.—Any amount allowed as a credit under this

19 section shall not be taken into account under section

20 213.’’.

21 (b) CONFORMING AMENDMENT.—The table of sec22 tions for such subpart C is amended by striking the item

23 relating to section 35 and inserting the following:

‘‘Sec. 35. Long-term care insurance credit.

‘‘Sec. 36. Overpayments of tax.’’.
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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, 1999.

4 SEC. 802. INCLUSION OF QUALIFIED LONG-TERM CARE IN5 SURANCE IN CAFETERIA PLANS AND FLEXI6 BLE SPENDING ARRANGEMENTS.

7 (a) CAFETERIA PLANS.—The last sentence of section

8 125(f) of the Internal Revenue Code of 1986 (defining

9 qualified benefits) is amended by striking ‘‘shall not’’ and

10 inserting ‘‘shall’’.

11 (b) FLEXIBLE SPENDING ARRANGEMENTS.—Section

12 106(c) of the Internal Revenue Code of 1986 (relating to

13 contributions by employer to accident and health plans)

14 is amended—

15 (1) in paragraph (1), by striking ‘‘include’’ and

16 inserting ‘‘shall not’’; and

17 (2) in the heading, by striking ‘‘INCLUSION’’

18 and inserting ‘‘EXCLUSION’’.

19 (c) EFFECTIVE DATE.—The amendments made by

20 this section shall apply to taxable years beginning after

21 December 31, 1998.
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1 SEC. 803. EXCLUSION FROM GROSS INCOME FOR AMOUNTS

2 RECEIVED ON CANCELLATION OF LIFE IN3 SURANCE POLICIES AND USED FOR QUALI4 FIED LONG-TERM CARE INSURANCE CON5 TRACTS.

6 (a) IN GENERAL.—

7 (1) EXCLUSION FROM GROSS INCOME.—

8 (A) IN GENERAL.—Part III of subchapter

9 B of chapter 1 of the Internal Revenue Code of

10 1986 (relating to items specifically excluded

11 from gross income) is amended by redesignat12 ing section 139 as section 140 and by inserting

13 after section 138 the following new section:

14 ‘‘SEC. 139. AMOUNTS RECEIVED ON CANCELLATION, ETC.

15 OF LIFE INSURANCE CONTRACTS AND USED

16 TO PAY PREMIUMS FOR QUALIFIED LONG17 TERM CARE INSURANCE.

18 ‘‘No amount (which but for this section would be in19 cludible in the gross income of an individual) shall be in20 cluded in gross income on the whole or partial surrender,

21 cancellation, or exchange of any life insurance contract

22 during the taxable year if—

‘‘(1) such individual has attained age 591 23 ⁄2 on

24 or before the date of the transaction, and

25 ‘‘(2) the amount otherwise includible in gross

26 income is used during such year to pay for any
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1 qualified long-term care insurance contract (as de2 fined in section 7702B(b)) which—

3 ‘‘(A) is for the benefit of such individual or

4 the spouse of such individual if such spouse has

attained age 591 5 ⁄2 on or before the date of the

6 transaction, and

7 ‘‘(B) may not be surrendered for cash.’’.

8 (B) CONFORMING AMENDMENT.—The

9 table of sections for such part III is amended

10 by striking the item relating to section 139 and

11 inserting the following:

‘‘Sec. 139. Amounts received on cancellation, etc. of life insurance

contracts and used to pay premiums for qualified

long-term care insurance.

‘‘Sec. 140. Cross references to other Acts.’’.

12 (2) CERTAIN EXCHANGES NOT TAXABLE.—Sec13 tion 1035(a) of such Code (relating to certain ex14 changes of insurance contracts) is amended by strik15 ing the period at the end of paragraph (3) and in16 serting ‘‘; or’’, and by adding at the end the follow17 ing:

18 ‘‘(4) in the case of an individual who has attained age 591 19 ⁄2, a contract of life insurance or an

20 endowment or annuity contract for a qualified long21 term care insurance contract (as defined in section

22 7702B(b)), if the qualified long-term care insurance

23 contract may not be surrendered for cash.’’.
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1 (b) EFFECTIVE DATE.—The amendments made by

2 this section shall apply to taxable years beginning after

3 December 31, 1999.

4 SEC. 804. USE OF GAIN FROM SALE OF PRINCIPAL RESI5 DENCE FOR PURCHASE OF QUALIFIED LONG6 TERM HEALTH CARE INSURANCE.

7 (a) IN GENERAL.—Subsection (d) of section 121 of

8 the Internal Revenue Code of 1986 (relating to exclusion

9 of gain from sale of principal) is amended by adding at

10 the end the following:

11 ‘‘(9) ELIGIBILITY OF HOME EQUITY CONVER12 SION SALE-LEASEBACK TRANSACTION FOR EXCLU13 SION.—

14 ‘‘(A) IN GENERAL.—For purposes of this

15 section, the term ‘sale or exchange’ includes a

16 home equity conversion sale-leaseback trans17 action.

18 ‘‘(B) HOME EQUITY CONVERSION SALE19 LEASEBACK TRANSACTION.—For purposes of

20 subparagraph (A), the term ‘home equity con21 version sale-leaseback’ means a transaction in

22 which—

23 ‘‘(i) the seller-lessee—

24 ‘‘(I) sells property which during

25 the 5-year period ending on the date
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1 of the transaction has been owned and

2 used as a principal residence by such

3 seller-lessee for periods aggregating 2

4 years or more,

5 ‘‘(II) uses a portion of the pro6 ceeds from such sale to purchase a

7 qualified long-term care insurance

8 contract (as defined in section

9 7702B(b)), which contract may not be

10 surrendered for cash,

11 ‘‘(III) obtains occupancy rights

12 in such property pursuant to a written

13 lease requiring a fair rental, and

14 ‘‘(IV) receives no option to repur15 chase the property at a price less than

16 the fair market price of the property

17 unencumbered by any leaseback at the

18 time such option is exercised, and

19 ‘‘(ii) the purchaser-lessor—

20 ‘‘(I) is a person,

21 ‘‘(II) is contractually responsible

22 for the risks and burdens of owner23 ship and receives the benefits of own24 ership (other than the seller-lessee’s
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1 occupancy rights) after the date of

2 such transaction, and

3 ‘‘(III) pays a purchase price for

4 the property that is not less than the

5 fair market price of such property en6 cumbered by a leaseback, and taking

7 into account the terms of the lease.

8 ‘‘(C) ADDITIONAL DEFINITIONS.—For pur9 poses of subparagraph (B)—

10 ‘‘(i) OCCUPANCY RIGHTS.—The term

11 ‘occupancy rights’ means the right to oc12 cupy the property for any period of time,

13 including a period of time measured by the

14 life of the seller-lessee on the date of the

15 sale-leaseback transaction (or the life of

16 the surviving seller-lessee, in the case of

17 jointly held occupancy rights), or a periodic

18 term subject to a continuing right of re19 newal by the seller-lessee (or by the surviv20 ing seller-lessee, in the case of jointly held

21 occupancy rights).

22 ‘‘(ii) FAIR RENTAL.—The term ‘fair

23 rental’ means a rental for any subsequent

24 year which equals or exceeds the rental for
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1 the 1st year of a sale-leaseback trans2 action.’’.

3 (b) EFFECTIVE DATE.—The amendment made by

4 this section shall apply to sales after December 31, 1999,

5 in taxable years beginning after such date.

6 TITLE IX—NATIONAL FUND FOR

7 HEALTH RESEARCH

8 SEC. 901. ESTABLISHMENT OF FUND.

9 (a) ESTABLISHMENT.—There is established in the

10 Treasury of the United States a fund, to be known as the

11 ‘‘National Fund for Health Research’’ (in this section re12 ferred to as the ‘‘Fund’’), consisting of such amounts as

13 are transferred to the Fund under subsection (b) and any

14 interest earned on investment of amounts in the Fund.

15 (b) TRANSFERS TO FUND.—

16 (1) IN GENERAL.—The Secretary of the Treas17 ury shall transfer to the Fund amounts equivalent to

18 amounts designated under paragraph (2) and re19 ceived in the Treasury.

20 (2) AMOUNTS.—

21 (A) HEALTH PLAN SET ASIDE.—With re22 spect to each calendar year beginning with the

23 first full calendar year after the date of enact24 ment of this Act, each health plan shall set
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1 aside and transfer to the Treasury of the

2 United States an amount equal to—

3 (i) for the first full calendar year,

4 0.25 percent of all health premiums re5 ceived with respect to the plan for such

6 year;

7 (ii) for the second full calendar year,

8 0.5 percent of all health premiums received

9 with respect to the plan for such year;

10 (iii) for the third full calendar year,

11 0.75 percent of all health premiums re12 ceived with respect to the plan for such

13 year; and

14 (iv) for the fourth and each succeed15 ing full calendar year, 1 percent of all

16 health premiums received with respect to

17 the plan for such year.

18 (3) TRANSFERS BASED ON ESTIMATES.—The

19 amounts transferred by paragraph (1) shall annually

20 be transferred to the Fund within 30 days after the

21 President signs an appropriations Act for the De22 partments of Labor, Health and Human Services,

23 and Education, and related agencies, or by the end

24 of the first quarter of the fiscal year. Proper adjust25 ment shall be made in amounts subsequently trans-
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1 ferred to the extent prior estimates were in excess

2 of or less than the amounts required to be trans3 ferred.

4 (4) DEFINITION.—As used in this subsection,

5 the term ‘‘health plan’’ means a group health plan

6 (as defined in section 2791(a) of the Public Health

7 Service Act and any individual health insurance (as

8 defined in section 2791(b)(5) of such Act) operated

9 by a health insurance issuer.

10 (c) OBLIGATIONS FROM FUND.—

11 (1) IN GENERAL.—Subject to the provisions of

12 paragraph (4), with respect to the amounts made

13 available in the Fund in a fiscal year, the Secretary

14 of Health and Human Services shall distribute—

15 (A) 2 percent of such amounts during any

16 fiscal year to the Office of the Director of the

17 National Institutes of Health to be allocated at

18 the Director’s discretion for the following activi19 ties:

20 (i) for carrying out the responsibilities

21 of the Office of the Director, including the

22 Office of Research on Women’s Health and

23 the Office of Research on Minority Health,

24 the Office of Alternative Medicine, the Of25 fice of Rare Disease Research, the Office
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1 of Behavioral and Social Sciences Research

2 (for use for efforts to reduce tobacco use),

3 the Office of Dietary Supplements, and the

4 Office for Disease Prevention; and

5 (ii) for construction and acquisition of

6 equipment for or facilities of or used by

7 the National Institutes of Health;

8 (B) 2 percent of such amounts for transfer

9 to the National Center for Research Resources

10 to carry out section 1502 of the National Insti11 tutes of Health Revitalization Act of 1993 con12 cerning Biomedical and Behavioral Research

13 Facilities;

14 (C) 1 percent of such amounts during any

15 fiscal year for carrying out section 301 and

16 part D of title IV of the Public Health Service

17 Act with respect to health information commu18 nications; and

19 (D) the remainder of such amounts during

20 any fiscal year to member institutes and cen21 ters, including the Office of AIDS Research, of

22 the National Institutes of Health in the same

23 proportion to the total amount received under

24 this section, as the amount of annual appro25 priations under appropriations Acts for each
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1 member institute and Centers for the fiscal year

2 bears to the total amount of appropriations

3 under appropriations Acts for all member insti4 tutes and Centers of the National Institutes of

5 Health for the fiscal year.

6 (2) PLANS OF ALLOCATION.—The amounts

7 transferred under paragraph (1)(D) shall be allo8 cated by the Director of the National Institutes of

9 Health or the various directors of the institutes and

10 centers, as the case may be, pursuant to allocation

11 plans developed by the various advisory councils to

12 such directors, after consultation with such direc13 tors.

14 (3) GRANTS AND CONTRACTS FULLY FUNDED

15 IN FIRST YEAR.—With respect to any grant or con16 tract funded by amounts distributed under para17 graph (1), the full amount of the total obligation of

18 such grant or contract shall be funded in the first

19 year of such grant or contract, and shall remain

20 available until expended.

21 (4) TRIGGER AND RELEASE OF MONIES AND

22 PHASE-IN.—

23 (A) TRIGGER AND RELEASE.—No expendi24 ture shall be made under paragraph (1) during

25 any fiscal year in which the annual amount ap-
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1 propriated for the National Institutes of Health

2 is less than the amount so appropriated for the

3 prior fiscal year.

4 (B) PHASE-IN.—The Secretary of Health

5 and Human Services shall phase-in the distribu6 tions required under paragraph (1) so that—

7 (i) 25 percent of the amount in the

8 Fund is distributed in the first fiscal year

9 for which funds are available;

10 (ii) 50 percent of the amount in the

11 Fund is distributed in the second fiscal

12 year for which funds are available;

13 (iii) 75 percent of the amount in the

14 Fund is distributed in the third fiscal year

15 for which funds are available; and

16 (iv) 100 percent of the amount in the

17 Fund is distributed in the fourth and each

18 succeeding fiscal year for which funds are

19 available.

20 (d) BUDGET TREATMENT OF AMOUNTS IN FUND.—

21 The amounts in the Fund shall be excluded from, and

22 shall not be taken into account, for purposes of any budget

23 enforcement procedure under the Congressional Budget
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1 Act of 1974 or the Balanced Budget and Emergency Defi2 cit Control Act of 1985.

Æ