I 

110TH CONGRESS 

1ST SESSION H. R. 1200 

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

enhance the quality of the health care system. 

IN THE HOUSE OF REPRESENTATIVES 

FEBRUARY 27, 2007 

Mr. MCDERMOTT (for himself, Mr. DELAHUNT, Mr. KUCINICH, Ms. LEE, Ms. 

SCHAKOWSKY, Mr. HINCHEY, Mr. DICKS, Mr. FARR, Mr. GRIJALVA, Mr. 

OLVER, and Mr. GUTIERREZ) introduced the following bill; which was referred to the Committee on Energy and Commerce, and in addition to 

the Committees on Ways and Means, Oversight and Government Reform, 

and Armed Services, for a period to be subsequently determined by the 

Speaker, in each case for consideration of such provisions as fall within 

the jurisdiction of the committee concerned 

A BILL 

To provide for health care for every American and to control 

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

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

3 SECTION 1. SHORT TITLE; TABLE OF CONTENTS. 

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

5 ‘‘American Health Security Act of 2007’’. 

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

7 this Act is as follows: 

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Sec. 1. Short title; table of contents. 

TITLE I—ESTABLISHMENT OF A STATE-BASED AMERICAN 

HEALTH SECURITY PROGRAM; UNIVERSAL ENTITLEMENT; ENROLLMENT 

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

Sec. 102. Universal entitlement. 

Sec. 103. Enrollment. 

Sec. 104. Portability of benefits. 

Sec. 105. Effective date of benefits. 

Sec. 106. Relationship to existing Federal health programs. 

TITLE II—COMPREHENSIVE BENEFITS, INCLUDING PREVENTIVE 

BENEFITS AND BENEFITS FOR LONG-TERM CARE 

Sec. 201. Comprehensive benefits. 

Sec. 202. Definitions relating to services. 

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

Sec. 204. Exclusions and limitations. 

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

TITLE III—PROVIDER PARTICIPATION 

Sec. 301. Provider participation and standards. 

Sec. 302. Qualifications for providers. 

Sec. 303. Qualifications for comprehensive health service organizations. 

Sec. 304. Limitation on certain physician referrals. 

TITLE IV—ADMINISTRATION 

Subtitle A—General Administrative Provisions 

Sec. 401. American Health Security Standards Board. 

Sec. 402. American Health Security Advisory Council. 

Sec. 403. Consultation with private entities. 

Sec. 404. State health security programs. 

Sec. 405. Complementary conduct of related health programs. 

Subtitle B—Control Over Fraud and Abuse 

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

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

TITLE V—QUALITY ASSESSMENT 

Sec. 501. American Health Security Quality Council. 

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

Sec. 503. State quality review programs. 

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

TITLE VI—HEALTH SECURITY BUDGET; PAYMENTS; COST 

CONTAINMENT MEASURES 

Subtitle A—Budgeting and Payments to States 

Sec. 601. National health security budget. 

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

Sec. 603. State health security budgets. 

Sec. 604. Federal payments to States. 

Sec. 605. Account for health professional education expenditures. 

Subtitle B—Payments by States to Providers 

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

expenses on the basis of approved global budgets. 

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

Sec. 613. Payments to comprehensive health service organizations. 

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

Sec. 615. Payments for prescription drugs. 

Sec. 616. Payments for approved devices and equipment. 

Sec. 617. Payments for other items and services. 

Sec. 618. Payment incentives for medically underserved areas. 

Sec. 619. Authority for alternative payment methodologies. 

Subtitle C—Mandatory Assignment and Administrative Provisions 

Sec. 631. Mandatory assignment. 

Sec. 632. Procedures for reimbursement; appeals. 

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

THE MEDICALLY UNDERSERVED 

Subtitle A—Promotion and Expansion of Primary Care Professional Training 

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

goals. 

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

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

Subtitle B—Direct Health Care Delivery 

Sec. 711. Setaside for public health. 

Sec. 712. Setaside for primary health care delivery. 

Sec. 713. Primary care service expansion grants. 

Subtitle C—Primary Care and Outcomes Research 

Sec. 721. Set-aside for outcomes research. 

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

Subtitle D—School-Related Health Services 

Sec. 731. Authorizations of appropriations. 

Sec. 732. Eligibility for development and operation grants. 

Sec. 733. Preferences. 

Sec. 734. Grants for development of projects. 

Sec. 735. Grants for operation of projects. 

Sec. 736. Federal administrative costs. 

Sec. 737. Definitions. 

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TITLE VIII—FINANCING PROVISIONS; AMERICAN HEALTH 

SECURITY TRUST FUND 

Sec. 800. Amendment of 1986 code; Section 15 not to apply. 

Subtitle A—American Health Security Trust Fund 

Sec. 801. American Health Security Trust Fund. 

Subtitle B—Taxes Based on Income and Wages 

Sec. 811. Payroll tax on employers. 

Sec. 812. Health care income tax. 

Subtitle C—Increase in Excise Taxes on Tobacco Products 

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

TITLE IX—CONFORMING AMENDMENTS TO THE EMPLOYEE 

RETIREMENT INCOME SECURITY ACT OF 1974 

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

health security programs. 

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

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

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

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

Sec. 905. Effective date of title. 

TITLE X—ADDITIONAL CONFORMING AMENDMENTS 

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

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

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

related provisions. 

Sec. 1004. Effective date of title. 

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1 TITLE I—ESTABLISHMENT OF A 

2 STATE-BASED AMERICAN 

3 HEALTH SECURITY PRO4 GRAM; UNIVERSAL ENTITLE5 MENT; ENROLLMENT 

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

7 HEALTH SECURITY PROGRAM. 

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

9 United States a State-Based American Health Security 

10 Program to be administered by the individual States in 

11 accordance with Federal standards specified in, or estab12 lished under, this Act. 

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

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

15 604, a State must establish a State health security pro16 gram in accordance with this Act. 

17 (c) STATE DEFINED.— 

18 (1) IN GENERAL.—In this Act, subject to para19 graph (2), the term ‘‘State’’ means each of the 50 

20 States and the District of Columbia. 

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

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

23 the Northern Mariana Islands certifies to the Presi24 dent that the legislature of the Commonwealth or 

25 territory has enacted legislation desiring that the 

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1 Commonwealth or territory be included as a State 

2 under the provisions of this Act, such Common3 wealth or territory shall be included as a ‘‘State’’ 

4 under this Act beginning January 1 of the first year 

5 beginning 90 days after the President receives the 

6 notification. 

7 SEC. 102. UNIVERSAL ENTITLEMENT. 

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

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

10 United States or lawful resident alien (as defined in sub11 section (d)) is entitled to benefits for health care services 

12 under this Act under the appropriate State health security 

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

14 health security program’’ means, with respect to an indi15 vidual, the State health security program for the State in 

16 which the individual maintains a primary residence. 

17 (b) TREATMENT OF CERTAIN NONIMMIGRANTS.— 

18 (1) IN GENERAL.—The American Health Secu19 rity Standards Board (in this Act referred to as the 

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

21 care services under the appropriate State health se22 curity program under this Act such classes of aliens 

23 admitted to the United States as nonimmigrants as 

24 the Board may provide. 

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1 (2) CONSIDERATION.—In providing for eligi2 bility under paragraph (1), the Board shall consider 

3 reciprocity in health care services offered to United 

4 States citizens who are nonimmigrants in other for5 eign states, and such other factors as the Board de6 termines to be appropriate. 

7 (c) TREATMENT OF OTHER INDIVIDUALS.— 

8 (1) BY BOARD.—The Board also may make eli9 gible for benefits for health care services under the 

10 appropriate State health security program under this 

11 Act other individuals not described in subsection (a) 

12 or (b), and regulate the nature of the eligibility of 

13 such individuals, in order— 

14 (A) to preserve the public health of com15 munities; 

16 (B) to compensate States for the addi17 tional health care financing burdens created by 

18 such individuals; and 

19 (C) to prevent adverse financial and med20 ical consequences of uncompensated care, 

21 while inhibiting travel and immigration to the 

22 United States for the sole purpose of obtaining 

23 health care services. 

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1 (2) BY STATES.—Any State health security pro2 gram may make individuals described in paragraph 

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

4 (d) LAWFUL RESIDENT ALIEN DEFINED.—For pur5 poses of this section, the term ‘‘lawful resident alien’’ 

6 means an alien lawfully admitted for permanent residence 

7 and any other alien lawfully residing permanently in the 

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

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

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

11 1160, 1161, or 1255a). 

12 SEC. 103. ENROLLMENT. 

13 (a) IN GENERAL.—Each State health security pro14 gram shall provide a mechanism for the enrollment of indi15 viduals entitled or eligible for benefits under this Act. The 

16 mechanism shall— 

17 (1) include a process for the automatic enroll18 ment of individuals at the time of birth in the 

19 United States and at the time of immigration into 

20 the United States or other acquisition of lawful resi21 dent status in the United States; 

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

23 2009, of all individuals who are eligible to be en24 rolled as of such date; and 

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1 (3) include a process for the enrollment of indi2 viduals made eligible for health care services under 

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

4 (b) AVAILABILITY OF APPLICATIONS.—Each State 

5 health security program shall make applications for enroll6 ment under the program available— 

7 (1) at employment and payroll offices of em8 ployers located in the State; 

9 (2) at local offices of the Social Security Ad10 ministration; 

11 (3) at social services locations; 

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

13 practitioner locations); and 

14 (5) at other locations (including post offices 

15 and schools) accessible to a broad cross-section of in16 dividuals eligible to enroll. 

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

18 conjunction with an individual’s enrollment for benefits 

19 under this Act, the State health security program shall 

20 provide for the issuance of a health security card that shall 

21 be used for purposes of identification and processing of 

22 claims for benefits under the program. The State health 

23 security program may provide for issuance of such cards 

24 by employers for purposes of carrying out enrollment pur25 suant to subsection (a)(2). 

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1 SEC. 104. PORTABILITY OF BENEFITS. 

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

3 benefits for health care services covered under this Act, 

4 each State health security program— 

5 (1) shall not impose any minimum period of 

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

7 of 3 months before residents of the State are enti8 tled to, or eligible for, such benefits under the pro9 gram; 

10 (2) shall provide continuation of payment for 

11 covered health care services to individuals who have 

12 terminated their residence in the State and estab13 lished their residence in another State, for the dura14 tion of any waiting period imposed in the State of 

15 new residency for establishing entitlement to, or eli16 gibility for, such services; and 

17 (3) shall provide for the payment for health 

18 care services covered under this Act provided to indi19 viduals while temporarily absent from the State 

20 based on the following principles: 

21 (A) Payment for such health care services 

22 is at the rate that is approved by the State 

23 health security program in the State in which 

24 the services are provided, unless the States con25 cerned agree to apportion the cost between 

26 them in a different manner. 

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1 (B) Payment for such health care services 

2 provided outside the United States is made on 

3 the basis of the amount that would have been 

4 paid by the State health security program for 

5 similar services rendered in the State, with due 

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

7 size of the hospital, standards of service, and 

8 other relevant factors. 

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

10 health security program for a State may negotiate with 

11 such a program in an adjacent State a reciprocal arrange12 ment for the coverage under such other program of health 

13 care services to enrollees residing in the border region. 

14 SEC. 105. EFFECTIVE DATE OF BENEFITS. 

15 Benefits shall first be available under this Act for 

16 items and services furnished on or after January 1, 2009. 

17 SEC. 106. RELATIONSHIP TO EXISTING FEDERAL HEALTH 

18 PROGRAMS. 

19 (a) MEDICARE, MEDICAID AND STATE CHILDREN’S

20 HEALTH INSURANCE PROGRAM (SCHIP).— 

21 (1) IN GENERAL.—Notwithstanding any other 

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

23 (A) no benefits shall be available under 

24 title XVIII of the Social Security Act for any 

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1 item or service furnished after December 31, 

2 2008; 

3 (B) no individual is entitled to medical as4 sistance under a State plan approved under 

5 title XIX of such Act for any item or service 

6 furnished after such date; 

7 (C) no individual is entitled to medical as8 sistance under an SCHIP plan under title XXI 

9 of such Act for any item or service furnished 

10 after such date; and 

11 (D) no payment shall be made to a State 

12 under section 1903(a) or 2105(a) of such Act 

13 with respect to medical assistance or child 

14 health assistance for any item or service fur15 nished after such date. 

16 (2) TRANSITION.—In the case of inpatient hos17 pital services and extended care services during a 

18 continuous period of stay which began before Janu19 ary 1, 2009, and which had not ended as of such 

20 date, for which benefits are provided under title 

21 XVIII, under a State plan under title XIX, or a 

22 State child health plan under title XXI, of the Social 

23 Security Act, the Secretary of Health and Human 

24 Services and each State plan, respectively, shall promstockstill on PROD1PC66 with BILLS

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1 vide for continuation of benefits under such title or 

2 plan until the end of the period of stay. 

3 (b) FEDERAL EMPLOYEES HEALTH BENEFITS PRO4 GRAM.—No benefits shall be made available under chapter 

5 89 of title 5, United States Code, for any part of a cov6 erage period occurring after December 31, 2008. 

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

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

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

10 2008. 

11 (d) TREATMENT OF BENEFITS FOR VETERANS AND

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

13 eligibility of veterans for the medical benefits and services 

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

15 for the medical benefits and services provided by or 

16 through the Indian Health Service. 

17 TITLE II—COMPREHENSIVE BEN18 EFITS, INCLUDING PREVEN19 TIVE BENEFITS AND BENE20 FITS FOR LONG-TERM CARE 

21 SEC. 201. COMPREHENSIVE BENEFITS. 

22 (a) IN GENERAL.—Subject to the succeeding provi23 sions of this title, individuals enrolled for benefits under 

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

25 health security program for the following items and servmstockstill on PROD1PC66 with BILLS

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1 ices if medically necessary or appropriate for the mainte2 nance of health or for the diagnosis, treatment, or rehabili3 tation of a health condition: 

4 (1) HOSPITAL SERVICES.—Inpatient and out5 patient hospital care, including 24-hour-a-day emer6 gency services. 

7 (2) PROFESSIONAL SERVICES.—Professional 

8 services of health care practitioners authorized to 

9 provide health care services under State law, includ10 ing patient education and training in self-manage11 ment techniques. 

12 (3) COMMUNITY-BASED PRIMARY HEALTH

13 SERVICES.—Community-based primary health serv14 ices (as defined in section 202(a)). 

15 (4) PREVENTIVE SERVICES.—Preventive serv16 ices (as defined in section 202(b)). 

17 (5) LONG-TERM, ACUTE, AND CHRONIC CARE

18 SERVICES.— 

19 (A) Nursing facility services. 

20 (B) Home health services. 

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

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

23 individuals described in section 203(a). 

24 (D) Hospice care. 

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1 (E) Services in intermediate care facilities 

2 for individuals with mental retardation. 

3 (6) PRESCRIPTION DRUGS, BIOLOGICALS, INSU4 LIN, MEDICAL FOODS.— 

5 (A) Outpatient prescription drugs and bio6 logics, as specified by the Board consistent with 

7 section 615. 

8 (B) Insulin. 

9 (C) Medical foods (as defined in section 

10 202(e)). 

11 (7) DENTAL SERVICES.—Dental services (as de12 fined in section 202(h)). 

13 (8) MENTAL HEALTH AND SUBSTANCE ABUSE

14 TREATMENT SERVICES.—Mental health and sub15 stance abuse treatment services (as defined in sec16 tion 202(f)). 

17 (9) DIAGNOSTIC TESTS.—Diagnostic tests. 

18 (10) OTHER ITEMS AND SERVICES.— 

19 (A) OUTPATIENT THERAPY.—Outpatient 

20 physical therapy services, outpatient speech pa21 thology services, and outpatient occupational 

22 therapy services in all settings. 

23 (B) DURABLE MEDICAL EQUIPMENT.—Du24 rable medical equipment. 

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1 (C) HOME DIALYSIS.—Home dialysis sup2 plies and equipment. 

3 (D) AMBULANCE.—Emergency ambulance 

4 service. 

5 (E) PROSTHETIC DEVICES.—Prosthetic de6 vices, including replacements of such devices. 

7 (F) ADDITIONAL ITEMS AND SERVICES.— 

8 Such other medical or health care items or serv9 ices as the Board may specify. 

10 (b) COST-SHARING.— 

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

12 subsection, there are no deductibles, coinsurance, or 

13 copayments applicable to acute care and preventive 

14 benefits provided under this title. 

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

16 SERVICES.— 

17 (A) IN GENERAL.— 

18 (i) payments for home and commu19 nity-based long-term care services are sub20 ject to coinsurance of 20 percent; and 

21 (ii) payments for nursing facility serv22 ices are subject to coinsurance of 35 per23 cent. 

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1 (B) EXCEPTION.—With respect to the co2 insurance established under subparagraph 

3 (A)— 

4 (i) such coinsurance shall not apply to 

5 an individual with income (as defined by 

6 the Secretary) of not more than 100 per7 cent of the income official poverty line ap8 plicable to a family of the size involved; 

9 and 

10 (ii) in the case of an individual with 

11 such income that exceeds 100 percent, but 

12 is less than 200 percent, of such applicable 

13 poverty line, the coinsurance shall be re14 duced in the same proportion as the pro15 portion of such income is less than 200 

16 percent of such applicable poverty line. 

17 (c) PROHIBITION OF BALANCE BILLING.—As pro18 vided in section 531, no person may impose a charge for 

19 covered services for which benefits are provided under this 

20 Act. 

21 (d) NO DUPLICATE HEALTH INSURANCE.—Each 

22 State health security program shall prohibit the sale of 

23 health insurance in the State if payment under the insur24 ance duplicates payment for any items or services for 

25 which payment may be made under such a program. 

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1 (e) STATE PROGRAM MAY PROVIDE ADDITIONAL

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

3 limiting the benefits that may be made available under a 

4 State health security program to residents of the State 

5 at the expense of the State. 

6 (f) EMPLOYERS MAY PROVIDE ADDITIONAL BENE7 FITS.—Nothing in this Act shall be construed as limiting 

8 the additional benefits that an employer may provide to 

9 employees or their dependents, or to former employees or 

10 their dependents. 

11 SEC. 202. DEFINITIONS RELATING TO SERVICES. 

12 (a) COMMUNITY-BASED PRIMARY HEALTH SERV13 ICES.—In this title, the term ‘‘community-based primary 

14 health services’’ means ambulatory health services fur15 nished— 

16 (1) by a rural health clinic; 

17 (2) by a federally qualified health center (as de18 fined in section 1905(l)(2)(B) of the Social Security 

19 Act), and which, for purposes of this Act, include 

20 services furnished by State and local health agencies; 

21 (3) in a school-based setting; 

22 (4) by public educational agencies and other 

23 providers of services to children entitled to assist24 ance under the Individuals with Disabilities Edu25 cation Act for services furnished pursuant to a writmstockstill on PROD1PC66 with BILLS

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1 ten Individualized Family Services Plan or Indi2 vidual Education Plan under such Act; and 

3 (5) public and private nonprofit entities receiv4 ing Federal assistance under the Public Health 

5 Service Act. 

6 (b) PREVENTIVE SERVICES.— 

7 (1) IN GENERAL.—In this title, the term ‘‘pre8 ventive services’’ means items and services— 

9 (A) which— 

10 (i) are specified in paragraph (2); or 

11 (ii) the Board determines to be effec12 tive in the maintenance and promotion of 

13 health or minimizing the effect of illness, 

14 disease, or medical condition; and 

15 (B) which are provided consistent with the 

16 periodicity schedule established under para17 graph (3). 

18 (2) SPECIFIED PREVENTIVE SERVICES.—The 

19 services specified in this paragraph are as follows: 

20 (A) Basic immunizations. 

21 (B) Prenatal and well-baby care (for in22 fants under 1 year of age). 

23 (C) Well-child care (including periodic 

24 physical examinations, hearing and vision 

25 screening, and developmental screening and exmstockstill on PROD1PC66 with BILLS

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1 aminations) for individuals under 18 years of 

2 age. 

3 (D) Periodic screening mammography, Pap 

4 smears, and colorectal examinations and exami5 nations for prostate cancer. 

6 (E) Physical examinations. 

7 (F) Family planning services. 

8 (G) Routine eye examinations, eyeglasses, 

9 and contact lenses. 

10 (H) Hearing aids, but only upon a deter11 mination of a certified audiologist or physician 

12 that a hearing problem exists and is caused by 

13 a condition that can be corrected by use of a 

14 hearing aid. 

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

16 consultation with experts in preventive medicine and 

17 public health and taking into consideration those 

18 preventive services recommended by the Preventive 

19 Services Task Force and published as the Guide to 

20 Clinical Preventive Services, a periodicity schedule 

21 for the coverage of preventive services under para22 graph (1). Such schedule shall take into consider23 ation the cost-effectiveness of appropriate preventive 

24 care and shall be revised not less frequently than 

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1 once every 5 years, in consultation with experts in 

2 preventive medicine and public health. 

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

4 CARE SERVICES.—In this title, the term ‘‘home and com5 munity-based long-term care services’’ means the following 

6 services provided to an individual to enable the individual 

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

8 the community: 

9 (1) Home health aide services. 

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

11 psychiatric day care. 

12 (3) Medical social work services. 

13 (4) Care coordination services, as defined in 

14 subsection (g)(1). 

15 (5) Respite care, including training for informal 

16 caregivers. 

17 (6) Personal assistance services, and home18 maker services (including meals) incidental to the 

19 provision of personal assistance services. 

20 (d) HOME HEALTH SERVICES.— 

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

22 services’’ means items and services described in sec23 tion 1861(m) of the Social Security Act and includes 

24 home infusion services. 

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1 (2) HOME INFUSION SERVICES.—The term 

2 ‘‘home infusion services’’ includes the nursing, phar3 macy, and related services that are necessary to con4 duct the home infusion of a drug regimen safely and 

5 effectively under a plan established and periodically 

6 reviewed by a physician and that are provided in 

7 compliance with quality assurance requirements es8 tablished by the Secretary. 

9 (e) MEDICAL FOODS.—In this title, the term ‘‘med10 ical foods’’ means foods which are formulated to be con11 sumed or administered enterally under the supervision of 

12 a physician and which are intended for the specific dietary 

13 management of a disease or condition for which distinctive 

14 nutritional requirements, based on recognized scientific 

15 principles, are established by medical evaluation. 

16 (f) MENTAL HEALTH AND SUBSTANCE ABUSE

17 TREATMENT SERVICES.— 

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

19 term ‘‘mental health and substance abuse treatment 

20 services’’ means the following services related to the 

21 prevention, diagnosis, treatment, and rehabilitation 

22 of mental illness and promotion of mental health: 

23 (A) INPATIENT HOSPITAL SERVICES.—In24 patient hospital services furnished primarily for 

25 the diagnosis or treatment of mental illness or 

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1 substance abuse for up to 60 days during a 

2 year, reduced by a number of days determined 

3 by the Secretary so that the actuarial value of 

4 providing such number of days of services 

5 under this paragraph to the individual is equal 

6 to the actuarial value of the days of inpatient 

7 residential services furnished to the individual 

8 under subparagraph (B) during the year after 

9 such services have been furnished to the indi10 vidual for 120 days during the year (rounded to 

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

12 services furnished to an individual described in 

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

14 in conformity with the plan of an organized sys15 tem of care for mental health and substance 

16 abuse services in accordance with section 

17 204(b)(2). 

18 (B) INTENSIVE RESIDENTIAL SERVICES.— 

19 Intensive residential services (as defined in 

20 paragraph (2)) furnished to an individual for 

21 up to 120 days during any calendar year, ex22 cept that— 

23 (i) such services may be furnished to 

24 the individual for additional days during 

25 the year if necessary for the individual to 

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1 complete a course of treatment to the ex2 tent that the number of days of inpatient 

3 hospital services described in subparagraph 

4 (A) that may be furnished to the individual 

5 during the year (as reduced under such 

6 subparagraph) is not less than 15; and 

7 (ii) reduced by a number of days de8 termined by the Secretary so that the actu9 arial value of providing such number of 

10 days of services under this paragraph to 

11 the individual is equal to the actuarial 

12 value of the days of intensive community13 based services furnished to the individual 

14 under subparagraph (D) during the year 

15 after such services have been furnished to 

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

17 of services described in subparagraph 

18 (D)(ii), for 180 days) during the year 

19 (rounded to the nearest day). 

20 (C) OUTPATIENT SERVICES.—Outpatient 

21 treatment services of mental illness or sub22 stance abuse (other than intensive community23 based services under subparagraph (D)) for an 

24 unlimited number of days during any calendar 

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1 tablished by the Secretary for the management 

2 of such services, and, in the case of services fur3 nished to an individual described in section 

4 204(b)(1) who is not an inpatient of a hospital, 

5 in conformity with the plan of an organized sys6 tem of care for mental health and substance 

7 abuse services in accordance with section 

8 204(b)(2). 

9 (D) INTENSIVE COMMUNITY-BASED SERV10 ICES.—Intensive community-based services (as 

11 described in paragraph (3))— 

12 (i) for an unlimited number of days 

13 during any calendar year, in the case of 

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

15 that are furnished to an individual who is 

16 a seriously mentally ill adult, a seriously 

17 emotionally disturbed child, or an adult or 

18 child with serious substance abuse disorder 

19 (as determined in accordance with criteria 

20 established by the Secretary); 

21 (ii) in the case of services described in 

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

23 during any calendar year, except that such 

24 services may be furnished to the individual 

25 for a number of additional days during the 

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1 year equal to the difference between the 

2 total number of days of intensive residen3 tial services which the individual may re4 ceive during the year under part A (as de5 termined under subparagraph (B)) and the 

6 number of days of such services which the 

7 individual has received during the year; or 

8 (iii) in the case of any other such 

9 services, for up to 90 days during any cal10 endar year, except that such services may 

11 be furnished to the individual for the num12 ber of additional days during the year de13 scribed in clause (ii). 

14 (2) INTENSIVE RESIDENTIAL SERVICES DE15 FINED.— 

16 (A) IN GENERAL.—Subject to subpara17 graphs (B) and (C), the term ‘‘intensive resi18 dential services’’ means inpatient services pro19 vided in any of the following facilities: 

20 (i) Residential detoxification centers. 

21 (ii) Crisis residential programs or 

22 mental illness residential treatment pro23 grams. 

24 (iii) Therapeutic family or group 

25 treatment homes. 

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1 (iv) Residential centers for substance 

2 abuse treatment. 

3 (B) REQUIREMENTS FOR FACILITIES.—No 

4 service may be treated as an intensive residen5 tial service under subparagraph (A) unless the 

6 facility at which the service is provided— 

7 (i) is legally authorized to provide 

8 such service under the law of the State (or 

9 under a State regulatory mechanism pro10 vided by State law) in which the facility is 

11 located or is certified to provide such serv12 ice by an appropriate accreditation entity 

13 approved by the State in consultation with 

14 the Secretary; and 

15 (ii) meets such other requirements as 

16 the Secretary may impose to assure the 

17 quality of the intensive residential services 

18 provided. 

19 (C) SERVICES FURNISHED TO AT-RISK

20 CHILDREN.—In the case of services furnished 

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

22 no service may be treated as an intensive resi23 dential service under this subsection unless the 

24 service is furnished in conformity with the plan 

25 of an organized system of care for mental 

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1 health and substance abuse services in accord2 ance with section 204(b)(2). 

3 (D) MANAGEMENT STANDARDS.—No serv4 ice may be treated as an intensive residential 

5 service under subparagraph (A) unless the serv6 ice is furnished in accordance with standards 

7 established by the Secretary for the manage8 ment of such services. 

9 (3) INTENSIVE COMMUNITY-BASED SERVICES

10 DEFINED.— 

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

12 community-based services’’ means the items 

13 and services described in subparagraph (B) pre14 scribed by a physician (or, in the case of serv15 ices furnished to an individual described in sec16 tion 204(b)(1), by an organized system of care 

17 for mental health and substance abuse services 

18 in accordance with such section) and provided 

19 under a program described in subparagraph 

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

21 the extent permitted under the law of the State 

22 in which the services are furnished, a non-phy23 sician mental health professional) pursuant to 

24 an individualized, written plan of treatment es25 tablished and periodically reviewed by a physimstockstill on PROD1PC66 with BILLS

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1 cian (in consultation with appropriate staff par2 ticipating in such program) which sets forth the 

3 physician’s diagnosis, the type, amount, fre4 quency, and duration of the items and services 

5 provided under the plan, and the goals for 

6 treatment under the plan, but does not include 

7 any item or service that is not furnished in ac8 cordance with standards established by the Sec9 retary for the management of such services. 

10 (B) ITEMS AND SERVICES DESCRIBED.— 

11 The items and services described in this sub12 paragraph are— 

13 (i) partial hospitalization services con14 sisting of the items and services described 

15 in subparagraph (C); 

16 (ii) psychiatric rehabilitation services; 

17 (iii) day treatment services for indi18 viduals under 19 years of age; 

19 (iv) in-home services; 

20 (v) case management services, includ21 ing collateral services designated as such 

22 case management services by the Sec23 retary; 

24 (vi) ambulatory detoxification services; 

25 and 

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1 (vii) such other items and services as 

2 the Secretary may provide (but in no event 

3 to include meals and transportation), 

4 that are reasonable and necessary for the diag5 nosis or active treatment of the individual’s 

6 condition, reasonably expected to improve or 

7 maintain the individual’s condition and func8 tional level and to prevent relapse or hos9 pitalization, and furnished pursuant to such 

10 guidelines relating to frequency and duration of 

11 services as the Secretary shall by regulation es12 tablish (taking into account accepted norms of 

13 medical practice and the reasonable expectation 

14 of patient improvement). 

15 (C) ITEMS AND SERVICES INCLUDED AS

16 PARTIAL HOSPITALIZATION SERVICES.—For 

17 purposes of subparagraph (B)(i), partial hos18 pitalization services consist of the following: 

19 (i) Individual and group therapy with 

20 physicians or psychologists (or other men21 tal health professionals to the extent au22 thorized under State law). 

23 (ii) Occupational therapy requiring 

24 the skills of a qualified occupational thera25 pist. 

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1 (iii) Services of social workers, trained 

2 psychiatric nurses, behavioral aides, and 

3 other staff trained to work with psychiatric 

4 patients (to the extent authorized under 

5 State law). 

6 (iv) Drugs and biologicals furnished 

7 for therapeutic purposes (which cannot, as 

8 determined in accordance with regulations, 

9 be self-administered). 

10 (v) Individualized activity therapies 

11 that are not primarily recreational or di12 versionary. 

13 (vi) Family counseling (the primary 

14 purpose of which is treatment of the indi15 vidual’s condition). 

16 (vii) Patient training and education 

17 (to the extent that training and edu18 cational activities are closely and clearly 

19 related to the individual’s care and treat20 ment). 

21 (viii) Diagnostic services. 

22 (D) PROGRAMS DESCRIBED.—A program 

23 described in this subparagraph is a program 

24 (whether facility-based or freestanding) which is 

25 furnished by an entity— 

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1 (i) legally authorized to furnish such a 

2 program under State law (or the State reg3 ulatory mechanism provided by State law) 

4 or certified to furnish such a program by 

5 an appropriate accreditation entity ap6 proved by the State in consultation with 

7 the Secretary; and 

8 (ii) meeting such other requirements 

9 as the Secretary may impose to assure the 

10 quality of the intensive community-based 

11 services provided. 

12 (g) CARE COORDINATION SERVICES.— 

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

14 coordination services’’ means services provided by 

15 care coordinators (as defined in paragraph (2)) to 

16 individuals described in paragraph (3) for the co17 ordination and monitoring of home and community18 based long term care services to ensure appropriate, 

19 cost-effective utilization of such services in a com20 prehensive and continuous manner, and includes— 

21 (A) transition management between inpa22 tient facilities and community-based services, 

23 including assisting patients in identifying and 

24 gaining access to appropriate ancillary services; 

25 and 

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1 (B) evaluating and recommending appro2 priate treatment services, in cooperation with 

3 patients and other providers and in conjunction 

4 with any quality review program or plan of care 

5 under section 205. 

6 (2) CARE COORDINATOR.— 

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

8 ‘‘care coordinator’’ means an individual or non9 profit or public agency or organization which 

10 the State health security program determines— 

11 (i) is capable of performing directly, 

12 efficiently, and effectively the duties of a 

13 care coordinator described in paragraph 

14 (1); and 

15 (ii) demonstrates capability in estab16 lishing and periodically reviewing and re17 vising plans of care, and in arranging for 

18 and monitoring the provision and quality 

19 of services under any plan. 

20 (B) INDEPENDENCE.—State health secu21 rity programs shall establish safeguards to as22 sure that care coordinators have no financial in23 terest in treatment decisions or placements. 

24 Care coordination may not be provided through 

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1 any structure or mechanism through which 

2 quality review is performed. 

3 (3) ELIGIBLE INDIVIDUALS.—An individual de4 scribed in this paragraph is an individual described 

5 in section 203 (relating to individuals qualifying for 

6 long term and chronic care services). 

7 (h) DENTAL SERVICES.— 

8 (1) IN GENERAL.—In this title, subject to sub9 section (b), the term ‘‘dental services’’ means the 

10 following: 

11 (A) Emergency dental treatment, including 

12 extractions, for bleeding, pain, acute infections, 

13 and injuries to the maxillofacial region. 

14 (B) Prevention and diagnosis of dental dis15 ease, including examinations of the hard and 

16 soft tissues of the oral cavity and related struc17 tures, radiographs, dental sealants, fluorides, 

18 and dental prophylaxis. 

19 (C) Treatment of dental disease, including 

20 non-cast fillings, periodontal maintenance serv21 ices, and endodontic services. 

22 (D) Space maintenance procedures to pre23 vent orthodontic complications. 

24 (E) Orthodontic treatment to prevent se25 vere malocclusions. 

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1 (F) Full dentures. 

2 (G) Medically necessary oral health care. 

3 (H) Any items and services for special 

4 needs patients that are not described in sub5 paragraphs (A) through (G) and that— 

6 (i) are required to provide such pa7 tients the items and services described in 

8 subparagraphs (A) through (G); 

9 (ii) are required to establish oral func10 tion (including general anesthesia for indi11 viduals with physical or emotional limita12 tions that prevent the provision of dental 

13 care without such anesthesia); 

14 (iii) consist of orthodontic care for se15 vere dentofacial abnormalities; or 

16 (iv) consist of prosthetic dental de17 vices for genetic or birth defects or fitting 

18 for such devices. 

19 (I) Any dental care for individuals with a 

20 seizure disorder that is not described in sub21 paragraphs (A) through (H) and that is re22 quired because of an illness, injury, disorder, or 

23 other health condition that results from such 

24 seizure disorder. 

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1 (2) LIMITATIONS.—Dental services are subject 

2 to the following limitations: 

3 (A) PREVENTION AND DIAGNOSIS.— 

4 (i) EXAMINATIONS AND PROPHY5 LAXIS.—The examinations and prophylaxis 

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

7 only consistent with a periodicity schedule 

8 established by the Board, which schedule 

9 may provide for special treatment of indi10 viduals less than 18 years of age and of 

11 special needs patients. 

12 (ii) DENTAL SEALANTS.—The dental 

13 sealants described in such paragraph are 

14 not covered for individuals 18 years of age 

15 or older. Such sealants are covered for in16 dividuals less than 10 years of age for pro17 tection of the 1st permanent molars. Such 

18 sealants are covered for individuals 10 

19 years of age or older for protection of the 

20 2d permanent molars. 

21 (B) TREATMENT OF DENTAL DISEASE.— 

22 Prior to January 1, 2014, the items and serv23 ices described in paragraph (1)(C) are covered 

24 only for individuals less than 18 years of age 

25 and special needs patients. On or after such 

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1 date, such items and services are covered for all 

2 individuals enrolled for benefits under this Act, 

3 except that endodontic services are not covered 

4 for individuals 18 years of age or older. 

5 (C) SPACE MAINTENANCE.—The items and 

6 services described in paragraph (1)(D) are cov7 ered only for individuals at least 3 years of age, 

8 but less than 13 years of age and— 

9 (i) are limited to posterior teeth; 

10 (ii) involve maintenance of a space or 

11 spaces for permanent posterior teeth that 

12 would otherwise be prevented from normal 

13 eruption if the space were not maintained; 

14 and 

15 (iii) do not include a space maintainer 

16 that is placed within 6 months of the ex17 pected eruption of the permanent posterior 

18 tooth concerned. 

19 (D) ORTHODONTIC TREATMENT.—Prior to 

20 January 1, 2014, the items and services de21 scribed in paragraph (1)(E) are covered only 

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

23 than 12 years of age, who have severe 

24 dentofacial abnormalities. On or after such 

25 date, such items and services are covered only 

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

2 than 12 years of age. 

3 (E) DENTURES.—Prior to January 1, 

4 2014, the dentures described in paragraph 

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

6 patients. On or after such date, dentures are 

7 covered for an individual consistent with a peri8 odicity schedule established by the Board, ex9 cept that the limitation of periodicity provided 

10 in such schedule shall not apply to a special 

11 needs patient. 

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

13 (A) MEDICALLY NECESSARY ORAL HEALTH

14 CARE.—The term ‘‘medically necessary oral 

15 health care’’ means oral health care that is re16 quired as a direct result of, or would have a di17 rect impact on, an underlying medical condi18 tion. Such term includes oral health care di19 rected toward control or elimination of pain, in20 fection, or reestablishment of oral function. 

21 (B) SPECIAL NEEDS PATIENT.—The term 

22 ‘‘special needs patient’’ includes an individual 

23 with a genetic or birth defect, a developmental 

24 disability, or an acquired medical disability. 

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1 (i) NURSING FACILITY; NURSING FACILITY SERV2 ICES.—Except as may be provided by the Board, the 

3 terms ‘‘nursing facility’’ and ‘‘nursing facility services’’ 

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

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

6 (j) SERVICES IN INTERMEDIATE CARE FACILITIES

7 FOR INDIVIDUALS WITH MENTAL RETARDATION.—Ex8 cept as may be provided by the Board— 

9 (1) the term ‘‘intermediate care facility for indi10 viduals with mental retardation’’ has the meaning 

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

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

13 and 

14 (2) the term ‘‘services in intermediate care fa15 cilities for individuals with mental retardation’’ 

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

17 such Act (as so in effect) in an intermediate care fa18 cility for individuals with mental retardation to an 

19 individual determined to require such services in ac20 cordance with standards specified by the Board and 

21 comparable to the standards described in section 

22 1902(a)(31)(A) of such Act (as so in effect). 

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

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

25 Social Security Act shall apply. 

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1 SEC. 203. SPECIAL RULES FOR HOME AND COMMUNITY2 BASED LONG-TERM CARE SERVICES. 

3 (a) QUALIFYING INDIVIDUALS.—For purposes of sec4 tion 201(a)(5)(C), individuals described in this subsection 

5 are the following individuals: 

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

7 older determined (in a manner specified by the 

8 Board)— 

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

10 assistance of an individual, at least 2 of the fol11 lowing 5 activities of daily living (or who has a 

12 similar level of disability due to cognitive im13 pairment)— 

14 (i) bathing; 

15 (ii) eating; 

16 (iii) dressing; 

17 (iv) toileting; and 

18 (v) transferring in and out of a bed or 

19 in and out of a chair; 

20 (B) due to cognitive or mental impair21 ments, to require supervision because the indi22 vidual behaves in a manner that poses health or 

23 safety hazards to himself or herself or others; 

24 or 

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1 (C) due to cognitive or mental impair2 ments, to require queuing to perform activities 

3 of daily living. 

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

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

6 to meet such alternative standard of disability for 

7 children as the Board develops. Such alternative 

8 standard shall be comparable to the standard for 

9 adults and appropriate for children. 

10 (b) LIMIT ON SERVICES.— 

11 (1) IN GENERAL.—The aggregate expenditures 

12 by a State health security program with respect to 

13 home and community-based long-term care services 

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

15 65 percent (or such alternative ratio as the Board 

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

17 the amount of payment that would have been made 

18 under the program during the period if all the home19 based long-term care beneficiaries had been resi20 dents of nursing facilities in the same area in which 

21 the services were provided. 

22 (2) ALTERNATIVE RATIO.—The Board may es23 tablish for purposes of paragraph (1) an alternative 

24 ratio (of payments for home and community-based 

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1 cility services) as the Board determines to be more 

2 consistent with the goal of providing cost-effective 

3 long-term care in the most appropriate and least re4 strictive setting. 

5 SEC. 204. EXCLUSIONS AND LIMITATIONS. 

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

7 for service are not available under this Act unless the serv8 ices meet the standards specified in section 201(a). 

9 (b) SPECIAL DELIVERY REQUIREMENTS FOR MEN10 TAL HEALTH AND SUBSTANCE ABUSE TREATMENT SERV11 ICES PROVIDED TO AT-RISK CHILDREN.— 

12 (1) REQUIRING SERVICES TO BE PROVIDED

13 THROUGH ORGANIZED SYSTEMS OF CARE.—A State 

14 health security program shall ensure that mental 

15 health services and substance abuse treatment serv16 ices are furnished through an organized system of 

17 care, as described in paragraph (2), if— 

18 (A) the services are provided to an indi19 vidual less than 22 years of age; 

20 (B) the individual has a serious emotional 

21 disturbance or a substance abuse disorder; and 

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

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

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

25 serves the needs of children, including an agenmstockstill on PROD1PC66 with BILLS

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1 cy involved with child welfare, special education, 

2 juvenile justice, or criminal justice. 

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

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

5 community-based service delivery network, which 

6 may consist of public and private providers, that 

7 meets the following requirements: 

8 (A) The system has established linkages 

9 with existing mental health services and sub10 stance abuse treatment service delivery pro11 grams in the plan service area (or is in the 

12 process of developing or operating a system 

13 with appropriate public agencies in the area to 

14 coordinate the delivery of such services to indi15 viduals in the area). 

16 (B) The system provides for the participa17 tion and coordination of multiple agencies and 

18 providers that serve the needs of children in the 

19 area, including agencies and providers involved 

20 with child welfare, education, juvenile justice, 

21 criminal justice, health care, mental health, and 

22 substance abuse prevention and treatment. 

23 (C) The system provides for the involve24 ment of the families of children to whom mental 

25 health services and substance abuse treatment 

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1 services are provided in the planning of treat2 ment and the delivery of services. 

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

5 treatment plans by multidisciplinary and multi6 agency teams, which are recognized and fol7 lowed by the applicable agencies and providers 

8 in the area. 

9 (E) The system ensures the delivery and 

10 coordination of the range of mental health serv11 ices and substance abuse treatment services re12 quired by individuals under 22 years of age who 

13 have a serious emotional disturbance or a sub14 stance abuse disorder. 

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

18 response to changes in treatment needs over 

19 time. 

20 (c) TREATMENT OF EXPERIMENTAL SERVICES.—In 

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

22 coverage determinations with respect to those services that 

23 are experimental in nature. Such determinations shall be 

24 made consistent with a process that provides for input 

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1 from representatives of health care professionals and pa2 tients and public comment. 

3 (d) APPLICATION OF PRACTICE GUIDELINES.—In 

4 the case of services for which the American Health Secu5 rity Quality Council (established under section 501) has 

6 recognized a national practice guideline, the services are 

7 considered to meet the standards specified in section 

8 201(a) if they have been provided in accordance with such 

9 guideline or in accordance with such guidelines as are pro10 vided by the State health security program consistent with 

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

12 be considered to have been provided in accordance with 

13 a practice guideline if the health care provider providing 

14 the service exercised appropriate professional discretion to 

15 deviate from the guideline in a manner authorized or an16 ticipated by the guideline. 

17 (e) SPECIFIC LIMITATIONS.— 

18 (1) LIMITATIONS ON EYEGLASSES, CONTACT

19 LENSES, HEARING AIDS, AND DURABLE MEDICAL

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

21 may impose such limits relating to the costs and fre22 quency of replacement of eyeglasses, contact lenses, 

23 hearing aids, and durable medical equipment to 

24 which individuals enrolled for benefits under this Act 

25 are entitled to have payment made under a State 

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1 health security program as the Board deems appro2 priate. 

3 (2) OVERLAP WITH PREVENTIVE SERVICES.— 

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

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

6 services are required to be covered only to the extent 

7 that they are required to be covered as preventive 

8 services. 

9 (3) MISCELLANEOUS EXCLUSIONS FROM COV10 ERED SERVICES.—Covered services under this Act 

11 do not include the following: 

12 (A) Surgery and other procedures (such as 

13 orthodontia) performed solely for cosmetic pur14 poses (as defined in regulations) and hospital or 

15 other services incident thereto, unless— 

16 (i) required to correct a congenital 

17 anomaly; 

18 (ii) required to restore or correct a 

19 part of the body which has been altered as 

20 a result of accidental injury, disease, or 

21 surgery; or 

22 (iii) otherwise determined to be medi23 cally necessary and appropriate under sec24 tion 201(a). 

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1 (B) Personal comfort items or private 

2 rooms in inpatient facilities, unless determined 

3 to be medically necessary and appropriate 

4 under section 201(a). 

5 (C) The services of a professional practi6 tioner if they are furnished in a hospital or 

7 other facility which is not a participating pro8 vider. 

9 (f) NURSING FACILITY SERVICES AND HOME

10 HEALTH SERVICES.—Nursing facility services and home 

11 health services (other than post-hospital services, as de12 fined by the Board) furnished to an individual who is not 

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

14 the services are determined to meet the standards speci15 fied in section 201(a) and, with respect to nursing facility 

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

17 appropriate setting. 

18 SEC. 205. CERTIFICATION; QUALITY REVIEW; PLANS OF 

19 CARE. 

20 (a) CERTIFICATIONS.—State health security pro21 grams may require, as a condition of payment for institu22 tional health care services and other services of the type 

23 described in such sections 1814(a) and 1835(a) of the So24 cial Security Act, periodic professional certifications of the 

25 kind described in such sections. 

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

2 State health security program establish a quality review 

3 program that meets the requirements for such a program 

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

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

6 security program may require, consistent with standards 

7 established by the Board, that payment for services ex8 ceeding specified levels or duration be provided only as 

9 consistent with a plan of care or treatment formulated by 

10 one or more providers of the services or other qualified 

11 professionals. Such a plan may include, consistent with 

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

13 a further condition of payment for services. 

14 TITLE III—PROVIDER 

15 PARTICIPATION 

16 SEC. 301. PROVIDER PARTICIPATION AND STANDARDS. 

17 (a) IN GENERAL.—An individual or other entity fur18 nishing any covered service under a State health security 

19 program under this Act is not a qualified provider unless 

20 the individual or entity— 

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

22 section 302; 

23 (2) has filed with the State health security pro24 gram a participation agreement described in sub25 section (b); and 

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1 (3) meets such other qualifications and condi2 tions as are established by the Board or the State 

3 health security program under this Act. 

4 (b) REQUIREMENTS IN PARTICIPATION AGREE5 MENT.— 

6 (1) IN GENERAL.—A participation agreement 

7 described in this subsection between a State health 

8 security program and a provider shall provide at 

9 least for the following: 

10 (A) Services to eligible persons will be fur11 nished by the provider without discrimination 

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

13 religion, age, sex or sexual orientation, dis14 ability, handicapping condition, or (subject to 

15 the professional qualifications of the provider) 

16 illness. Nothing in this subparagraph shall be 

17 construed as requiring the provision of a type 

18 or class of services which services are outside 

19 the scope of the provider’s normal practice. 

20 (B) No charge will be made for any cov21 ered services other than for payment authorized 

22 by this Act. 

23 (C) The provider agrees to furnish such in24 formation as may be reasonably required by the 

25 Board or a State health security program, in 

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1 accordance with uniform reporting standards 

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

3 (i) quality review by designated enti4 ties; 

5 (ii) the making of payments under 

6 this Act (including the examination of 

7 records as may be necessary for the 

8 verification of information on which pay9 ments are based); 

10 (iii) statistical or other studies re11 quired for the implementation of this Act; 

12 and 

13 (iv) such other purposes as the Board 

14 or State may specify. 

15 (D) The provider agrees not to bill the pro16 gram for any services for which benefits are not 

17 available because of section 204(d). 

18 (E) In the case of a provider that is not 

19 an individual, the provider agrees not to employ 

20 or use for the provision of health services any 

21 individual or other provider who or which has 

22 had a participation agreement under this sub23 section terminated for cause. 

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

25 fee-for-service basis under section 612, the promstockstill on PROD1PC66 with BILLS

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1 vider agrees to submit bills and any required 

2 supporting documentation relating to the provi3 sion of covered services within 30 days (or such 

4 shorter period as a State health security pro5 gram may require) after the date of providing 

6 such services. 

7 (2) TERMINATION OF PARTICIPATION AGREE8 MENTS.— 

9 (A) IN GENERAL.—Participation agree10 ments may be terminated, with appropriate no11 tice— 

12 (i) by the Board or a State health se13 curity program for failure to meet the re14 quirements of this title; or 

15 (ii) by a provider. 

16 (B) TERMINATION PROCESS.—Providers 

17 shall be provided notice and a reasonable oppor18 tunity to correct deficiencies before the Board 

19 or a State health security program terminates 

20 an agreement unless a more immediate termi21 nation is required for public safety or similar 

22 reasons. 

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1 SEC. 302. QUALIFICATIONS FOR PROVIDERS. 

2 (a) IN GENERAL.—A health care provider is consid3 ered to be qualified to provide covered services if the pro4 vider is licensed or certified and meets— 

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

6 such services; 

7 (2) applicable requirements of Federal law to 

8 provide such services; and 

9 (3) any applicable standards established under 

10 subsection (b). 

11 (b) MINIMUM PROVIDER STANDARDS.— 

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

13 evaluate, and update national minimum standards to 

14 assure the quality of services provided under this 

15 Act and to monitor efforts by State health security 

16 programs to assure the quality of such services. A 

17 State health security program may also establish ad18 ditional minimum standards which providers must 

19 meet. 

20 (2) NATIONAL MINIMUM STANDARDS.—The na21 tional minimum standards under paragraph (1) shall 

22 be established for institutional providers of services, 

23 individual health care practitioners, and comprehen24 sive health service organizations. Except as the 

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

26 a hospital, nursing facility, or other institutional 

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1 provider of services shall meet standards for such a 

2 facility under the medicare program under title 

3 XVIII of the Social Security Act. Such standards 

4 also may include, where appropriate, elements relat5 ing to— 

6 (A) adequacy and quality of facilities; 

7 (B) training and competence of personnel 

8 (including continuing education requirements); 

9 (C) comprehensiveness of service; 

10 (D) continuity of service; 

11 (E) patient satisfaction (including waiting 

12 time and access to services); and 

13 (F) performance standards (including or14 ganization, facilities, structure of services, effi15 ciency of operation, and outcome in palliation, 

16 improvement of health, stabilization, cure, or 

17 rehabilitation). 

18 (3) TRANSITION IN APPLICATION.—If the 

19 Board provides for additional requirements for pro20 viders under this subsection, any such additional re21 quirement shall be implemented in a manner that 

22 provides for a reasonable period during which a pre23 viously qualified provider is permitted to meet such 

24 an additional requirement. 

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1 (4) EXCHANGE OF INFORMATION.—The Board 

2 shall provide for an exchange, at least annually, 

3 among State health security programs of informa4 tion with respect to quality assurance and cost con5 tainment. 

6 SEC. 303. QUALIFICATIONS FOR COMPREHENSIVE HEALTH 

7 SERVICE ORGANIZATIONS. 

8 (a) IN GENERAL.—For purposes of this Act, a com9 prehensive health service organization (in this section re10 ferred to as a ‘‘CHSO’’) is a public or private organization 

11 which, in return for a capitated payment amount, under12 takes to furnish, arrange for the provision of, or provide 

13 payment with respect to— 

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

15 by the Board), including at least hospital services 

16 and physicians services; and 

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

18 needed services; 

19 to an identified population which is living in or near a 

20 specified service area and which enrolls voluntarily in the 

21 organization. 

22 (b) ENROLLMENT.— 

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

24 or near the specified service area of a CHSO are eli25 gible to enroll in the organization; except that the 

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1 number of enrollees may be limited to avoid over2 taxing the resources of the organization. 

3 (2) MINIMUM ENROLLMENT PERIOD.—Subject 

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

5 with a CHSO shall be twelve months, unless the en6 rolled individual becomes ineligible to enroll with the 

7 organization. 

8 (3) WITHDRAWAL FOR CAUSE.—Each CHSO 

9 shall permit an enrolled individual to disenroll from 

10 the organization for cause at any time. 

11 (c) REQUIREMENTS FOR CHSOS.— 

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

13 the maximum extent feasible, shall make all services 

14 readily and promptly accessible to enrollees who live 

15 in the specified service area. 

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

17 furnish services in such manner as to provide con18 tinuity of care and (when services are furnished by 

19 different providers) shall provide ready referral of 

20 patients to such services and at such times as may 

21 be medically appropriate. 

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

23 CHSO that is a private organization— 

24 (A) CONSUMER REPRESENTATION.—At 

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

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1 board of directors must be consumer members 

2 with no direct or indirect, personal or family fi3 nancial relationship to the organization. 

4 (B) PROVIDER REPRESENTATION.—The 

5 CHSO’s board of directors must include at 

6 least one member who represents health care 

7 providers. 

8 (4) PATIENT GRIEVANCE PROGRAM.—Each 

9 CHSO must have in effect a patient grievance pro10 gram and must conduct regularly surveys of the sat11 isfaction of members with services provided by or 

12 through the organization. 

13 (5) MEDICAL STANDARDS.—Each CHSO must 

14 provide that a committee or committees of health 

15 care practitioners associated with the organization 

16 will promulgate medical standards, oversee the pro17 fessional aspects of the delivery of care, perform the 

18 functions of a pharmacy and drug therapeutics com19 mittee, and monitor and review the quality of all 

20 health services (including drugs, education, and pre21 ventive services). 

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

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

24 must be reasonable. 

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1 (7) UTILIZATION AND BONUS INFORMATION.— 

2 Each CHSO must— 

3 (A) comply with the requirements of sec4 tion 1876(i)(8) of the Social Security Act (re5 lating to prohibiting physician incentive plans 

6 that provide specific inducements to reduce or 

7 limit medically necessary services); and 

8 (B) make available to its membership utili9 zation information and data regarding financial 

10 performance, including bonus or incentive pay11 ment arrangements to practitioners. 

12 (8) PROVISION OF SERVICES TO ENROLLEES AT

13 INSTITUTIONS OPERATING UNDER GLOBAL BUDG14 ETS.—The organization shall arrange to reimburse 

15 for hospital services and other facility-based services 

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

17 members of the organization in accordance with the 

18 global operating budget of the hospital or facility ap19 proved under section 611. 

20 (9) BROAD MARKETING.—Each CHSO must 

21 provide for the marketing of its services (including 

22 dissemination of marketing materials) to potential 

23 enrollees in a manner that is designed to enroll indi24 viduals representative of the different population 

25 groups and geographic areas included within its 

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1 service area and meets such requirements as the 

2 Board or a State health security program may speci3 fy. 

4 (10) ADDITIONAL REQUIREMENTS.—Each 

5 CHSO must meet— 

6 (A) such requirements relating to min7 imum enrollment; 

8 (B) such requirements relating to financial 

9 solvency; 

10 (C) such requirements relating to quality 

11 and availability of care; and 

12 (D) such other requirements, 

13 as the Board or a State health security program 

14 may specify. 

15 (d) PROVISION OF EMERGENCY SERVICES TO NON16 ENROLLEES.—A CHSO may furnish emergency services 

17 to persons who are not enrolled in the organization. Pay18 ment for such services, if they are covered services to eligi19 ble persons, shall be made to the organization unless the 

20 organization requests that it be made to the individual 

21 provider who furnished the services. 

22 SEC. 304. LIMITATION ON CERTAIN PHYSICIAN REFERRALS. 

23 (a) APPLICATION TO AMERICAN HEALTH SECURITY

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

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

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

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

3 section under this Act any references in such section to 

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

5 deemed references to the Board and the American Health 

6 Security Program under this Act, respectively. 

7 (b) EXPANSION OF PROHIBITION TO CERTAIN ADDI8 TIONAL DESIGNATED SERVICES.—Section 1877(h)(6) of 

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

10 amended by adding at the end the following: 

11 ‘‘(L) Ambulance services. 

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

13 (c) CONFORMING AMENDMENTS.—Section 1877 of 

14 such Act is further amended— 

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

16 which payment otherwise may be made under this 

17 title’’ and inserting ‘‘for which a charge is imposed’’; 

18 (2) in subsection (a)(1)(B), by striking ‘‘under 

19 this title’’; 

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

21 (g) to read as follows: 

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

23 be made under a State health security program for 

24 a designated health service for which a claim is pre25 sented in violation of subsection (a)(1)(B). No indimstockstill on PROD1PC66 with BILLS

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1 vidual, third party payor, or other entity is liable for 

2 payment for designated health services for which a 

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

4 and 

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

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

7 and inserting ‘‘for which such a claim may not be 

8 presented under subsection (a)(1)’’. 

9 TITLE IV—ADMINISTRATION 

10 Subtitle A—General Administrative 

11 Provisions 

12 SEC. 401. AMERICAN HEALTH SECURITY STANDARDS 

13 BOARD. 

14 (a) ESTABLISHMENT.—There is hereby established 

15 an American Health Security Standards Board. 

16 (b) APPOINTMENT AND TERMS OF MEMBERS.— 

17 (1) IN GENERAL.—The Board shall be com18 posed of— 

19 (A) the Secretary of Health and Human 

20 Services; and 

21 (B) 6 other individuals (described in para22 graph (2)) appointed by the President with the 

23 advice and consent of the Senate. 

24 The President shall first nominate individuals under 

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

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1 for the operation of the Board by not later than 

2 January 1, 2008. 

3 (2) SELECTION OF APPOINTED MEMBERS.— 

4 With respect to the individuals appointed under 

5 paragraph (1)(B): 

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

7 backgrounds in health policy, health economics, 

8 the healing professions, and the administration 

9 of health care institutions. 

10 (B) They shall provide a balanced point of 

11 view with respect to the various health care in12 terests and at least 2 of them shall represent 

13 the interests of individual consumers. 

14 (C) Not more than 3 of them shall be from 

15 the same political party. 

16 (D) To the greatest extent feasible, they 

17 shall represent the various geographic regions 

18 of the United States and shall reflect the racial, 

19 ethnic, and gender composition of the popu20 lation of the United States. 

21 (3) TERMS OF APPOINTED MEMBERS.—Individ22 uals appointed under paragraph (1)(B) shall serve 

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

24 the individuals initially appointed shall be, as des25 ignated by the President at the time of their apmstockstill on PROD1PC66 with BILLS

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1 pointment, for 1, 2, 3, 4, and 5 years. During a 

2 term of membership on the Board, no member shall 

3 engage in any other business, vocation or employ4 ment. 

5 (c) VACANCIES.— 

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

7 vacancy in the membership of the Board in the same 

8 manner as the original appointment. The vacancy 

9 shall not affect the power of the remaining members 

10 to execute the duties of the Board. 

11 (2) VACANCY APPOINTMENTS.—Any member 

12 appointed to fill a vacancy shall serve for the re13 mainder of the term for which the predecessor of the 

14 member was appointed. 

15 (3) REAPPOINTMENT.—The President may re16 appoint an appointed member of the Board for a 

17 second term in the same manner as the original ap18 pointment. A member who has served for 2 consecu19 tive 6-year terms shall not be eligible for reappoint20 ment until 2 years after the member has ceased to 

21 serve. 

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

23 members of the Board may not be removed except 

24 by the President for cause. 

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1 (d) CHAIR.—The President shall designate 1 of the 

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

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

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

5 than the Secretary) shall be entitled to compensation at 

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

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

8 Code. 

9 (f) GENERAL DUTIES OF THE BOARD.— 

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

11 policies, procedures, guidelines, and requirements to 

12 carry out this Act, including those related to— 

13 (A) eligibility; 

14 (B) enrollment; 

15 (C) benefits; 

16 (D) provider participation standards and 

17 qualifications, as defined in title III; 

18 (E) national and State funding levels; 

19 (F) methods for determining amounts of 

20 payments to providers of covered services, con21 sistent with subtitle B of title VI; 

22 (G) the determination of medical necessity 

23 and appropriateness with respect to coverage of 

24 certain services; 

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1 (H) assisting State health security pro2 grams with planning for capital expenditures 

3 and service delivery; 

4 (I) planning for health professional edu5 cation funding (as specified in title VI); 

6 (J) allocating funds provided under title 

7 VII; and 

8 (K) encouraging States to develop regional 

9 planning mechanisms (described in section 

10 404(a)(3)). 

11 (2) REGULATIONS.—Regulations authorized by 

12 this Act shall be issued by the Board in accordance 

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

14 States Code. 

15 (g) UNIFORM REPORTING STANDARDS; ANNUAL RE16 PORT; STUDIES.— 

17 (1) UNIFORM REPORTING STANDARDS.— 

18 (A) IN GENERAL.—The Board shall estab19 lish uniform reporting requirements and stand20 ards to ensure an adequate national data base 

21 regarding health services practitioners, services 

22 and finances of State health security programs, 

23 approved plans, providers, and the costs of fa24 cilities and practitioners providing services. 

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1 Such standards shall include, to the maximum 

2 extent feasible, health outcome measures. 

3 (B) REPORTS.—The Board shall analyze 

4 regularly information reported to it, and to 

5 State health security programs pursuant to 

6 such requirements and standards. 

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

8 of the second year beginning after the date of the 

9 enactment of this Act, the Board shall annually re10 port to Congress on the following: 

11 (A) The status of implementation of the 

12 Act. 

13 (B) Enrollment under this Act. 

14 (C) Benefits under this Act. 

15 (D) Expenditures and financing under this 

16 Act. 

17 (E) Cost-containment measures and 

18 achievements under this Act. 

19 (F) Quality assurance. 

20 (G) Health care utilization patterns, in21 cluding any changes attributable to the pro22 gram. 

23 (H) Long-range plans and goals for the de24 livery of health services. 

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1 (I) Differences in the health status of the 

2 populations of the different States, including in3 come and racial characteristics. 

4 (J) Necessary changes in the education of 

5 health personnel. 

6 (K) Plans for improving service to medi7 cally underserved populations. 

8 (L) Transition problems as a result of im9 plementation of this Act. 

10 (M) Opportunities for improvements under 

11 this Act. 

12 (3) STATISTICAL ANALYSES AND OTHER STUD13 IES.—The Board may, either directly or by con14 tract— 

15 (A) make statistical and other studies, on 

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

17 any aspect of the operation of this Act, includ18 ing studies of the effect of the Act upon the 

19 health of the people of the United States and 

20 the effect of comprehensive health services upon 

21 the health of persons receiving such services; 

22 (B) develop and test methods of providing 

23 through payment for services or otherwise, ad24 ditional incentives for adherence by providers to 

25 standards of adequacy, access, and quality; 

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1 methods of consumer and peer review and peer 

2 control of the utilization of drugs, of laboratory 

3 services, and of other services; and methods of 

4 consumer and peer review of the quality of serv5 ices; 

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

7 records and information retrieval systems and 

8 budget systems for health services administra9 tion, and develop and test model systems for 

10 use by providers of services; 

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

12 of services, records and information retrieval 

13 systems useful in the furnishing of preventive 

14 or diagnostic services; 

15 (E) develop, in collaboration with the phar16 maceutical profession, and test, improved ad17 ministrative practices or improved methods for 

18 the reimbursement of independent pharmacies 

19 for the cost of furnishing drugs as a covered 

20 service; and 

21 (F) make such other studies as it may con22 sider necessary or promising for the evaluation, 

23 or for the improvement, of the operation of this 

24 Act. 

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1 (4) REPORT ON USE OF EXISTING FEDERAL

2 HEALTH CARE FACILITIES.—Not later than 1 year 

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

4 Board shall recommend to the Congress one or more 

5 proposals for the treatment of health care facilities 

6 of the Federal Government. 

7 (h) EXECUTIVE DIRECTOR.— 

8 (1) APPOINTMENT.—There is hereby estab9 lished the position of Executive Director of the 

10 Board. The Director shall be appointed by the 

11 Board and shall serve as secretary to the Board and 

12 perform such duties in the administration of this 

13 title as the Board may assign. 

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

15 delegate to the Director or to any other officer or 

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

17 Secretary of Health and Human Services (and sub18 ject to reimbursement of identifiable costs), to any 

19 other officer or employee of the Department of 

20 Health and Human Services, any of its functions or 

21 duties under this Act other than— 

22 (A) the issuance of regulations; or 

23 (B) the determination of the availability of 

24 funds and their allocation to implement this 

25 Act. 

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1 (3) COMPENSATION.—The Executive Director 

2 of the Board shall be entitled to compensation at a 

3 level equivalent to level III of the Executive Sched4 ule, in accordance with section 5314 of title 5, 

5 United States Code. 

6 (i) INSPECTOR GENERAL.—The Inspector General 

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

8 (1) in section 11(1), by inserting after ‘‘Cor9 poration;’’ the first place it appears the following: 

10 ‘‘the Chair of the American Health Security Stand11 ards Board;’’; 

12 (2) in section 11(2), by inserting after ‘‘Resolu13 tion Trust Corporation,’’ the following: ‘‘the Amer14 ican Health Security Standards Board,’’; and 

15 (3) by inserting before section 9 the following: 

16 ‘‘SPECIAL PROVISIONS CONCERNING AMERICAN HEALTH

17 SECURITY STANDARDS BOARD

18 ‘‘SEC. 8L. The Inspector General of the American 

19 Health Security Standards Board, in addition to the other 

20 authorities vested by this Act, shall have the same author21 ity, with respect to the Board and the American Health 

22 Security Program under this Act, as the Inspector General 

23 for the Department of Health and Human Services has 

24 with respect to the Secretary of Health and Human Serv25 ices and the medicare and medicaid programs, respec26 tively.’’. 

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

2 Board may deem necessary. 

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

4 Health and Human Services shall make available to the 

5 Board all information available from sources within the 

6 Department or from other sources, pertaining to the du7 ties of the Board. 

8 SEC. 402. AMERICAN HEALTH SECURITY ADVISORY COUN9 CIL. 

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

11 American Health Security Advisory Council (in this sec12 tion referred to as the ‘‘Council’’) to advise the Board on 

13 its activities. 

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

15 of— 

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

17 Chair of the Council; and 

18 (2) twenty members, not otherwise in the em19 ploy of the United States, appointed by the Board 

20 without regard to the provisions of title 5, United 

21 States Code, governing appointments in the competi22 tive service. 

23 The appointed members shall include, in accordance with 

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

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1 viders of health services, and of individuals (who shall con2 stitute a majority of the Council) who are representative 

3 of consumers of such services, including a balanced rep4 resentation of employers, unions, consumer organizations, 

5 and population groups with special health care needs. To 

6 the greatest extent feasible, the membership of the Council 

7 shall represent the various geographic regions of the 

8 United States and shall reflect the racial, ethnic, and gen9 der composition of the population of the United States. 

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

11 shall hold office for a term of 4 years, except that— 

12 (1) any member appointed to fill a vacancy oc13 curring during the term for which the member’s 

14 predecessor was appointed shall be appointed for the 

15 remainder of that term; and 

16 (2) the terms of the members first taking office 

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

18 of appointment, 5 at the end of the first year, 5 at 

19 the end of the second year, 5 at the end of the third 

20 year, and 5 at the end of the fourth year after the 

21 date of enactment of this Act. 

22 (d) VACANCIES.— 

23 (1) IN GENERAL.—The Board shall fill any va24 cancy in the membership of the Council in the same 

25 manner as the original appointment. The vacancy 

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1 shall not affect the power of the remaining members 

2 to execute the duties of the Council. 

3 (2) VACANCY APPOINTMENTS.—Any member 

4 appointed to fill a vacancy shall serve for the re5 mainder of the term for which the predecessor of the 

6 member was appointed. 

7 (3) REAPPOINTMENT.—The Board may re8 appoint an appointed member of the Council for a 

9 second term in the same manner as the original ap10 pointment. 

11 (e) QUALIFICATIONS.— 

12 (1) PUBLIC HEALTH REPRESENTATIVES.— 

13 Members of the Council who are representative of 

14 State health security programs and public health 

15 professionals shall be individuals who have extensive 

16 experience in the financing and delivery of care 

17 under public health programs. 

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

19 are representative of providers of health care shall 

20 be individuals who are outstanding in fields related 

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

22 who are representative of organizations or associa23 tions of professional health practitioners. 

24 (3) CONSUMERS.—Members who are represent25 ative of consumers of such care shall be individuals, 

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1 not engaged in and having no financial interest in 

2 the furnishing of health services, who are familiar 

3 with the needs of various segments of the population 

4 for personal health services and are experienced in 

5 dealing with problems associated with the consump6 tion of such services. 

7 (f) DUTIES.— 

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

9 Council— 

10 (A) to advise the Board on matters of gen11 eral policy in the administration of this Act, in 

12 the formulation of regulations, and in the per13 formance of the Board’s duties under section 

14 401; and 

15 (B) to study the operation of this Act and 

16 the utilization of health services under it, with 

17 a view to recommending any changes in the ad18 ministration of the Act or in its provisions 

19 which may appear desirable. 

20 (2) REPORT.—The Council shall make an an21 nual report to the Board on the performance of its 

22 functions, including any recommendations it may 

23 have with respect thereto, and the Board shall 

24 promptly transmit the report to the Congress, to25 gether with a report by the Board on any recmstockstill on PROD1PC66 with BILLS

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1 ommendations of the Council that have not been fol2 lowed. 

3 (g) STAFF.—The Council, its members, and any com4 mittees of the Council shall be provided with such secre5 tarial, clerical, or other assistance as may be authorized 

6 by the Board for carrying out their respective functions. 

7 (h) MEETINGS.—The Council shall meet as fre8 quently as the Board deems necessary, but not less than 

9 4 times each year. Upon request by 7 or more members 

10 it shall be the duty of the Chair to call a meeting of the 

11 Council. 

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

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

14 lieu of subsistence expenses during the performance of du15 ties of the Board in accordance with subchapter I of chap16 ter 57 of title 5, United States Code. 

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

18 Federal Advisory Committee Act shall not apply to the 

19 Council. 

20 SEC. 403. CONSULTATION WITH PRIVATE ENTITIES. 

21 The Secretary and the Board shall consult with pri22 vate entities, such as professional societies, national asso23 ciations, nationally recognized associations of experts, 

24 medical schools and academic health centers, consumer 

25 groups, and labor and business organizations in the formstockstill on PROD1PC66 with BILLS

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1 mulation of guidelines, regulations, policy initiatives, and 

2 information gathering to assure the broadest and most in3 formed input in the administration of this Act. Nothing 

4 in this Act shall prevent the Secretary from adopting 

5 guidelines developed by such a private entity if, in the Sec6 retary’s and Board’s judgment, such guidelines are gen7 erally accepted as reasonable and prudent and consistent 

8 with this Act. 

9 SEC. 404. STATE HEALTH SECURITY PROGRAMS. 

10 (a) SUBMISSION OF PLANS.— 

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

12 the Board a plan for a State health security pro13 gram for providing for health care services to the 

14 residents of the State in accordance with this Act. 

15 (2) REGIONAL PROGRAMS.—A State may join 

16 with 1 or more neighboring States to submit to the 

17 Board a plan for a regional health security program 

18 instead of separate State health security programs. 

19 (3) REGIONAL PLANNING MECHANISMS.—The 

20 Board shall provide incentives for States to develop 

21 regional planning mechanisms to promote the ration22 al distribution of, adequate access to, and efficient 

23 use of, tertiary care facilities, equipment, and serv24 ices. 

25 (b) REVIEW AND APPROVAL OF PLANS.— 

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

2 plans submitted under subsection (a) and determine 

3 whether such plans meet the requirements for ap4 proval. The Board shall not approve such a plan un5 less it finds that the plan (or State law) provides, 

6 consistent with the provisions of this Act, for the fol7 lowing: 

8 (A) Payment for required health services 

9 for eligible individuals in the State in accord10 ance with this Act. 

11 (B) Adequate administration, including the 

12 designation of a single State agency responsible 

13 for the administration (or supervision of the ad14 ministration) of the program. 

15 (C) The establishment of a State health se16 curity budget. 

17 (D) Establishment of payment methodolo18 gies (consistent with subtitle B of title VII). 

19 (E) Assurances that individuals have the 

20 freedom to choose practitioners and other 

21 health care providers for services covered under 

22 this Act. 

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

24 regional management and planning functions 

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1 with respect to the delivery and distribution of 

2 health care services that— 

3 (i) ensures participation of consumers 

4 of health services and providers of health 

5 services; and 

6 (ii) gives priority to the most acute 

7 shortages and maldistributions of health 

8 personnel and facilities and the most seri9 ous deficiencies in the delivery of covered 

10 services and to the means for the speedy 

11 alleviation of these shortcomings. 

12 (G) The licensure and regulation of all 

13 health providers and facilities to ensure compli14 ance with Federal and State laws and to pro15 mote quality of care. 

16 (H) Establishment of a quality review sys17 tem in accordance with section 503. 

18 (I) Establishment of an independent om19 budsman for consumers to register complaints 

20 about the organization and administration of 

21 the State health security program and to help 

22 resolve complaints and disputes between con23 sumers and providers. 

24 (J) Publication of an annual report on the 

25 operation of the State health security program, 

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1 which report shall include information on cost, 

2 progress towards achieving full enrollment, pub3 lic access to health services, quality review, 

4 health outcomes, health professional training, 

5 and the needs of medically underserved popu6 lations. 

7 (K) Provision of a fraud and abuse preven8 tion and control unit that the Inspector General 

9 determines meets the requirements of section 

10 412(a). 

11 (L) Prohibit payment in cases of prohib12 ited physician referrals under section 304. 

13 (2) CONSEQUENCES OF FAILURE TO COMPLY.— 

14 If the Board finds that a State plan submitted 

15 under paragraph (1) does not meet the requirements 

16 for approval under this section or that a State 

17 health security program or specific portion of such 

18 program, the plan for which was previously ap19 proved, no longer meets such requirements, the 

20 Board shall provide notice to the State of such fail21 ure and that unless corrective action is taken within 

22 a period specified by the Board, the Board shall 

23 place the State health security program (or specific 

24 portions of such program) in receivership under the 

25 jurisdiction of the Board. 

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1 (c) STATE HEALTH SECURITY ADVISORY COUN2 CILS.— 

3 (1) IN GENERAL.—For each State, the Gov4 ernor shall provide for appointment of a State 

5 Health Security Advisory Council to advise and 

6 make recommendations to the Governor and State 

7 with respect to the implementation of the State 

8 health security program in the State. 

9 (2) MEMBERSHIP.—Each State Health Security 

10 Advisory Council shall be composed of at least 11 in11 dividuals. The appointed members shall include indi12 viduals who are representative of the State health 

13 security program, public health professionals, pro14 viders of health services, and of individuals (who 

15 shall constitute a majority) who are representative of 

16 consumers of such services, including a balanced 

17 representation of employers, unions and consumer 

18 organizations. To the greatest extent feasible, the 

19 membership of each State Health Security Advisory 

20 Council shall represent the various geographic re21 gions of the State and shall reflect the racial, ethnic, 

22 and gender composition of the population of the 

23 State. 

24 (3) DUTIES.— 

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1 (A) IN GENERAL.—Each State Health Se2 curity Advisory Council shall review, and sub3 mit comments to the Governor concerning the 

4 implementation of the State health security pro5 gram in the State. 

6 (B) ASSISTANCE.—Each State Health Se7 curity Advisory Council shall provide assistance 

8 and technical support to community organiza9 tions and public and private non-profit agencies 

10 submitting applications for funding under ap11 propriate State and Federal public health pro12 grams, with particular emphasis placed on as13 sisting those applicants with broad consumer 

14 representation. 

15 (d) STATE USE OF FISCAL AGENTS.— 

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

17 program, using competitive bidding procedures, may 

18 enter into such contracts with qualified entities, such 

19 as voluntary associations, as the State determines to 

20 be appropriate to process claims and to perform 

21 other related functions of fiscal agents under the 

22 State health security program. 

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

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

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1 than 1 contract described in paragraph (1) be en2 tered into under a State health security program. 

3 SEC. 405. COMPLEMENTARY CONDUCT OF RELATED 

4 HEALTH PROGRAMS. 

5 In performing functions with respect to health per6 sonnel education and training, health research, environ7 mental health, disability insurance, vocational rehabilita8 tion, the regulation of food and drugs, and all other mat9 ters pertaining to health, the Secretary of Health and 

10 Human Services shall direct all activities of the Depart11 ment of Health and Human Services toward contributions 

12 to the health of the people complementary to this Act. 

13 Subtitle B—Control Over Fraud 

14 and Abuse 

15 SEC. 411. APPLICATION OF FEDERAL SANCTIONS TO ALL 

16 FRAUD AND ABUSE UNDER AMERICAN 

17 HEALTH SECURITY PROGRAM. 

18 The following sections of the Social Security Act shall 

19 apply to State health security programs in the same man20 ner as they apply to State medical assistance plans under 

21 title XIX of such Act (except that in applying such provi22 sions any reference to the Secretary is deemed a reference 

23 to the Board): 

24 (1) Section 1128 (relating to exclusion of indi25 viduals and entities). 

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

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

3 (4) Section 1124 (relating to disclosure of own4 ership and related information). 

5 (5) Section 1126 (relating to disclosure of cer6 tain owners). 

7 SEC. 412. REQUIREMENTS FOR OPERATION OF STATE 

8 HEALTH CARE FRAUD AND ABUSE CONTROL 

9 UNITS. 

10 (a) REQUIREMENT.—In order to meet the require11 ment of section 404(b)(1)(K), each State health security 

12 program must establish and maintain a health care fraud 

13 and abuse control unit (in this section referred to as a 

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

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

16 State medicaid fraud control unit (described in section 

17 1903(q) of the Social Security Act). 

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

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

20 government; 

21 (2) be separate and distinct from the State 

22 agency with principal responsibility for the adminis23 tration of the State health security program; and 

24 (3) meet 1 of the following requirements: 

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

2 State Attorney General or of another depart3 ment of State government which possesses 

4 statewide authority to prosecute individuals for 

5 criminal violations. 

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

7 which does not provide for the criminal prosecu8 tion of individuals by a statewide authority and 

9 has formal procedures, approved by the Board, 

10 that— 

11 (i) assure its referral of suspected 

12 criminal violations relating to the State 

13 health insurance plan to the appropriate 

14 authority or authorities in the States for 

15 prosecution; and 

16 (ii) assure its assistance of, and co17 ordination with, such authority or authori18 ties in such prosecutions. 

19 (C) It must have a formal working rela20 tionship with the office of the State Attorney 

21 General and have formal procedures (including 

22 procedures for its referral of suspected criminal 

23 violations to such office) which are approved by 

24 the Board and which provide effective coordina25 tion of activities between the fraud unit and 

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1 such office with respect to the detection, inves2 tigation, and prosecution of suspected criminal 

3 violations relating to the State health insurance 

4 plan. 

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

6 (1) have the function of conducting a statewide 

7 program for the investigation and prosecution of vio8 lations of all applicable State laws regarding any 

9 and all aspects of fraud in connection with any as10 pect of the provision of health care services and ac11 tivities of providers of such services under the State 

12 health security program; 

13 (2) have procedures for reviewing complaints of 

14 the abuse and neglect of patients of providers and 

15 facilities that receive payments under the State 

16 health security program, and, where appropriate, for 

17 acting upon such complaints under the criminal laws 

18 of the State or for referring them to other State 

19 agencies for action; and 

20 (3) provide for the collection, or referral for col21 lection to a single State agency, of overpayments 

22 that are made under the State health security pro23 gram to providers and that are discovered by the 

24 fraud unit in carrying out its activities. 

25 (d) RESOURCES.—The fraud unit must— 

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1 (1) employ such auditors, attorneys, investiga2 tors, and other necessary personnel; 

3 (2) be organized in such a manner; and 

4 (3) provide sufficient resources (as specified by 

5 the Board), 

6 as is necessary to promote the effective and efficient con7 duct of the unit’s activities. 

8 (e) COOPERATIVE AGREEMENTS.—The fraud unit 

9 must have cooperative agreements (as specified by the 

10 Board) with— 

11 (1) similar fraud units in other States; 

12 (2) the Inspector General; and 

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

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

15 Inspector General an application and annual reports con16 taining such information as the Inspector General deter17 mines to be necessary to determine whether the unit meets 

18 the previous requirements of this section. 

19 TITLE V—QUALITY ASSESSMENT 

20 SEC. 501. AMERICAN HEALTH SECURITY QUALITY COUNCIL. 

21 (a) ESTABLISHMENT.—There is hereby established 

22 an American Health Security Quality Council (in this title 

23 referred to as the ‘‘Council’’). 

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

25 perform the following duties: 

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1 (1) PRACTICE GUIDELINES.—The Council shall 

2 review and evaluate each practice guideline devel3 oped under part B of title IX of the Public Health 

4 Service Act. The Council shall determine whether 

5 the guideline should be recognized as a national 

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

7 for purposes of determining payments under a State 

8 health security program. 

9 (2) STANDARDS OF QUALITY, PERFORMANCE

10 MEASURES, AND MEDICAL REVIEW CRITERIA.—The 

11 Council shall review and evaluate each standard of 

12 quality, performance measure, and medical review 

13 criterion developed under part B of title IX of the 

14 Public Health Service Act. The Council shall deter15 mine whether the standard, measure, or criterion is 

16 appropriate for use in assessing or reviewing the 

17 quality of services provided by State health security 

18 programs, health care institutions, or health care 

19 professionals. 

20 (3) CRITERIA FOR ENTITIES CONDUCTING

21 QUALITY REVIEWS.—The Council shall develop min22 imum criteria for competence for entities that can 

23 qualify to conduct ongoing and continuous external 

24 quality review for State quality review programs 

25 under section 503. Such criteria shall require such 

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1 an entity to be administratively independent of the 

2 individual or board that administers the State health 

3 security program and shall ensure that such entities 

4 do not provide financial incentives to reviewers to 

5 favor one pattern of practice over another. The 

6 Council shall ensure coordination and reporting by 

7 such entities to assure national consistency in qual8 ity standards. 

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

10 the Board annually on the conduct of activities 

11 under such title and shall report to the Board annu12 ally specifically on findings from outcomes research 

13 and development of practice guidelines that may af14 fect the Board’s determination of coverage of serv15 ices under section 401(f)(1)(G). 

16 (5) OTHER FUNCTIONS.—The Council shall 

17 perform the functions of the Council described in 

18 section 502. 

19 (c) APPOINTMENT AND TERMS OF MEMBERS.— 

20 (1) IN GENERAL.—The Council shall be com21 posed of 10 members appointed by the President. 

22 The President shall first appoint individuals on a 

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

24 Council by not later than January 1, 2008. 

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1 (2) SELECTION OF MEMBERS.—Each member 

2 of the Council shall be a member of a health profes3 sion. Five members of the Council shall be physi4 cians. Individuals shall be appointed to the Council 

5 on the basis of national reputations for clinical and 

6 academic excellence. To the greatest extent feasible, 

7 the membership of the Council shall represent the 

8 various geographic regions of the United States and 

9 shall reflect the racial, ethnic, and gender composi10 tion of the population of the United States. 

11 (3) TERMS OF MEMBERS.—Individuals ap12 pointed to the Council shall serve for a term of 5 

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

14 initially appointed shall be, as designated by the 

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

16 3, and 4 years. 

17 (d) VACANCIES.— 

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

19 vacancy in the membership of the Council in the 

20 same manner as the original appointment. The va21 cancy shall not affect the power of the remaining 

22 members to execute the duties of the Council. 

23 (2) VACANCY APPOINTMENTS.—Any member 

24 appointed to fill a vacancy shall serve for the remstockstill on PROD1PC66 with BILLS

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1 mainder of the term for which the predecessor of the 

2 member was appointed. 

3 (3) REAPPOINTMENT.—The President may re4 appoint a member of the Council for a second term 

5 in the same manner as the original appointment. A 

6 member who has served for 2 consecutive 5-year 

7 terms shall not be eligible for reappointment until 2 

8 years after the member has ceased to serve. 

9 (e) CHAIR.—The President shall designate 1 of the 

10 members of the Council to serve at the will of the Presi11 dent as Chair of the Council. 

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

13 are not employees of the Federal Government shall be en14 titled to compensation at a level equivalent to level II of 

15 the Executive Schedule, in accordance with section 5313 

16 of title 5, United States Code. 

17 SEC. 502. DEVELOPMENT OF CERTAIN METHODOLOGIES, 

18 GUIDELINES, AND STANDARDS. 

19 (a) PROFILING OF PATTERNS OF PRACTICE; IDENTI20 FICATION OF OUTLIERS.—The Council shall adopt meth21 odologies for profiling the patterns of practice of health 

22 care professionals and for identifying outliers (as defined 

23 in subsection (e)). 

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

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1 ignated by the Board to be performed only at tertiary care 

2 centers which can meet standards for frequency of proce3 dure performance and intensity of support mechanisms 

4 that are consistent with the high probability of desired pa5 tient outcome. Reimbursement under this Act for such a 

6 designated procedure may only be provided if the proce7 dure was performed at a center that meets such stand8 ards. 

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

10 standards for education and sanctions with respect to 

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

12 provided under this Act. The Council shall develop criteria 

13 for referral of providers to the State licensing board if edu14 cation proves ineffective in correcting provider practice be15 havior. 

16 (d) DISSEMINATION.—The Council shall disseminate 

17 to the State— 

18 (1) the methodologies adopted under subsection 

19 (a); 

20 (2) the guidelines developed under subsection 

21 (b); and 

22 (3) the standards developed under subsection 

23 (c); 

24 for use by the States under section 503. 

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

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

3 practice, relative to applicable practice guidelines, suggests 

4 deficiencies in the quality of health care services being pro5 vided. 

6 SEC. 503. STATE QUALITY REVIEW PROGRAMS. 

7 (a) REQUIREMENT.—In order to meet the require8 ment of section 404(b)(1)(H), each State health security 

9 program shall establish 1 or more qualified entities to con10 duct quality reviews of persons providing covered services 

11 under the program, in accordance with standards estab12 lished under subsection (b)(1) (except as provided in sub13 section (b)(2)) and subsection (d). 

14 (b) FEDERAL STANDARDS.— 

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

16 standards with respect to— 

17 (A) the adoption of practice guidelines 

18 (whether developed by the Federal Government 

19 or other entities); 

20 (B) the identification of outliers (con21 sistent with methodologies adopted under sec22 tion 502(a)); 

23 (C) the development of remedial programs 

24 and monitoring for outliers; and 

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1 (D) the application of sanctions (consistent 

2 with the standards developed under section 

3 502(c)). 

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

5 under subsection (a) standards other than those es6 tablished under paragraph (1) so long as the State 

7 demonstrates to the satisfaction of the Council on an 

8 annual basis that the standards applied have been as 

9 efficacious in promoting and achieving improved 

10 quality of care as the application of the standards 

11 established under paragraph (1). Positive improve12 ments in quality shall be documented by reductions 

13 in the variations of clinical care process and im14 provement in patient outcomes. 

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

16 conduct quality reviews under subsection (a) unless the 

17 entity satisfies the criteria for competence for such entities 

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

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

20 section shall preclude an institutional provider from estab21 lishing its own internal quality review and enhancement 

22 programs. 

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1 SEC. 504. ELIMINATION OF UTILIZATION REVIEW PRO2 GRAMS; TRANSITION. 

3 (a) INTENT.—It is the intention of this title to re4 place by January 1, 2011, random utilization controls with 

5 a systematic review of patterns of practice that com6 promise the quality of care. 

7 (b) SUPERSEDING CASE REVIEWS.— 

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

9 provisions of this subsection, the program of quality 

10 review provided under the previous sections of this 

11 title supersede all existing Federal requirements for 

12 utilization review programs, including requirements 

13 for random case-by-case reviews and programs re14 quiring pre-certification of medical procedures on a 

15 case-by-case basis. 

16 (2) TRANSITION.—Before January 1, 2011, the 

17 Board and the States may employ existing utiliza18 tion review standards and mechanisms as may be 

19 necessary to effect the transition to pattern of prac20 tice-based reviews. 

21 (3) CONSTRUCTION.—Nothing in this sub22 section shall be construed— 

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

24 of the provision of care— 

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1 (i) in individual incidents where the 

2 quality of care has significantly deviated 

3 from acceptable standards of practice; and 

4 (ii) with respect to a provider who has 

5 been determined to be an outlier; or 

6 (B) as precluding the case management of 

7 catastrophic, mental health, or substance abuse 

8 cases or long-term care where such manage9 ment is necessary to achieve appropriate, cost10 effective, and beneficial comprehensive medical 

11 care, as provided for in section 204. 

12 TITLE VI—HEALTH SECURITY 

13 BUDGET; PAYMENTS; COST 

14 CONTAINMENT MEASURES 

15 Subtitle A—Budgeting and 

16 Payments to States 

17 SEC. 601. NATIONAL HEALTH SECURITY BUDGET. 

18 (a) NATIONAL HEALTH SECURITY BUDGET.— 

19 (1) IN GENERAL.—By not later than September 

20 1 before the beginning of each year (beginning with 

21 2008), the Board shall establish a national health 

22 security budget, which— 

23 (A) specifies the total expenditures (includ24 ing expenditures for administrative costs) to be 

25 made by the Federal Government and the 

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1 States for covered health care services under 

2 this Act; and 

3 (B) allocates those expenditures among the 

4 States consistent with section 604. 

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

6 shall not exceed the budget for the preceding year 

7 increased by the percentage increase in gross domes8 tic product. 

9 (2) DIVISION OF BUDGET INTO COMPONENTS.— 

10 The national health security budget shall consist of 

11 at least 4 components: 

12 (A) A component for quality assessment 

13 activities (described in title V). 

14 (B) A component for health professional 

15 education expenditures. 

16 (C) A component for administrative costs. 

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

18 as the ‘‘operating component’’) for operating 

19 and other expenditures not described in sub20 paragraphs (A) through (C), consisting of 

21 amounts not included in the other components. 

22 A State may provide for the allocation of this 

23 component between capital expenditures and 

24 other expenditures. 

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1 (3) ALLOCATION AMONG COMPONENTS.—Tak2 ing into account the State health security budgets 

3 established and submitted under section 603, the 

4 Board shall allocate the national health security 

5 budget among the components in a manner that— 

6 (A) assures a fair allocation for quality as7 sessment activities (consistent with the national 

8 health security spending growth limit); and 

9 (B) assures that the health professional 

10 education expenditure component is sufficient 

11 to provide for the amount of health professional 

12 education expenditures sufficient to meet the 

13 need for covered health care services (consistent 

14 with the national health security spending 

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

16 (b) BASIS FOR TOTAL EXPENDITURES.— 

17 (1) IN GENERAL.—The total expenditures speci18 fied in such budget shall be the sum of the capita19 tion amounts computed under section 602(a) and 

20 the amount of Federal administrative expenditures 

21 needed to carry out this Act. 

22 (2) NATIONAL HEALTH SECURITY SPENDING

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

24 national health security spending growth limit de25 scribed in this paragraph for a year is (A) zero, or, 

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1 if greater, (B) the average annual percentage in2 crease in the gross domestic product (in current dol3 lars) during the 3-year period beginning with the 

4 first quarter of the fourth previous year to the first 

5 quarter of the previous year minus the percentage 

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

7 residing in any State the United States from the 

8 first quarter of the second previous year to the first 

9 quarter of the previous year. 

10 (c) DEFINITIONS.—In this title: 

11 (1) CAPITAL EXPENDITURES.—The term ‘‘cap12 ital expenditures’’ means expenses for the purchase, 

13 lease, construction, or renovation of capital facilities 

14 and for equipment and includes return on equity 

15 capital. 

16 (2) HEALTH PROFESSIONAL EDUCATION EX17 PENDITURES.—The term ‘‘health professional edu18 cation expenditures’’ means expenditures in hospitals 

19 and other health care facilities to cover costs associ20 ated with teaching and related research activities. 

21 SEC. 602. COMPUTATION OF INDIVIDUAL AND STATE CAPI22 TATION AMOUNTS. 

23 (a) CAPITATION AMOUNTS.— 

24 (1) INDIVIDUAL CAPITATION AMOUNTS.—In es25 tablishing the national health security budget under 

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1 section 601(a) and in computing the national aver2 age per capita cost under subsection (b) for each 

3 year, the Board shall establish a method for com4 puting the capitation amount for each eligible indi5 vidual residing in each State. The capitation amount 

6 for an eligible individual in a State classified within 

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

8 the product of— 

9 (A) a national average per capita cost for 

10 all covered health care services (computed 

11 under subsection (b)); 

12 (B) the State adjustment factor (estab13 lished under subsection (c)) for the State; and 

14 (C) the risk adjustment factor (established 

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

16 (2) STATE CAPITATION AMOUNT.— 

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

18 title, the term ‘‘State capitation amount’’ 

19 means, for a State for a year, the sum of the 

20 capitation amounts computed under paragraph 

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

22 as estimated by the Board before the beginning 

23 of the year involved. 

24 (B) USE OF STATISTICAL MODEL.—The 

25 Board may provide for the computation of 

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1 State capitation amounts based on statistical 

2 models that fairly reflect the elements that com3 prise the State capitation amount described in 

4 subparagraph (A). 

5 (C) POPULATION INFORMATION.—The Bu6 reau of the Census shall assist the Board in de7 termining the number, place of residence, and 

8 risk group classification of eligible individuals. 

9 (b) COMPUTATION OF NATIONAL AVERAGE PER CAP10 ITA COST.— 

11 (1) FOR 2008.—For 2008, the national average 

12 per capita cost under this paragraph is equal to— 

13 (A) the average per capita health care ex14 penditures in the United States in 200 (as esti15 mated by the Board); 

16 (B) increased to 2007 by the Board’s esti17 mate of the actual amount of such per capita 

18 expenditures during 2007; and 

19 (C) updated to 2008 by the national health 

20 security spending growth limit specified in sec21 tion 601(b)(2) for 2008. 

22 (2) FOR SUCCEEDING YEARS.—For each suc23 ceeding year, the national average per capita cost 

24 under this subsection is equal to the national aver25 age per capita cost computed under this subsection 

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1 for the previous year increased by the national 

2 health security spending growth limit (specified in 

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

4 (c) STATE ADJUSTMENT FACTORS.— 

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

6 paragraphs of this subsection, the Board shall de7 velop for each State a factor to adjust the national 

8 average per capita costs to reflect differences be9 tween the State and the United States in— 

10 (A) average labor and nonlabor costs that 

11 are necessary to provide covered health services; 

12 (B) any social, environmental, or geo13 graphic condition affecting health status or the 

14 need for health care services, to the extent such 

15 a condition is not taken into account in the es16 tablishment of risk groups under subsection (d); 

17 (C) the geographic distribution of the 

18 State’s population, particularly the proportion 

19 of the population residing in medically under20 served areas, to the extent such a condition is 

21 not taken into account in the establishment of 

22 risk groups under subsection (d); and 

23 (D) any other factor relating to operating 

24 costs required to assure equitable distribution 

25 of funds among the States. 

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1 (2) MODIFICATION OF HEALTH PROFESSIONAL

2 EDUCATION COMPONENT.—With respect to the por3 tion of the national health security budget allocated 

4 to expenditures for health professional education, the 

5 Board shall modify the State adjustment factors so 

6 as to take into account— 

7 (A) differences among States in health 

8 professional education programs in operation as 

9 of the date of the enactment of this Act; and 

10 (B) differences among States in their rel11 ative need for expenditures for health profes12 sional education, taking into account the health 

13 professional education expenditures proposed in 

14 State health security budgets under section 

15 603(a). 

16 (3) BUDGET NEUTRALITY.—The State adjust17 ment factors, as modified under paragraph (2), shall 

18 be applied under this subsection in a manner that 

19 results in neither an increase nor a decrease in the 

20 total amount of the Federal contributions to all 

21 State health security programs under subsection (b) 

22 as a result of the application of such factors. 

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

24 factors under this subsection during the 5-year pe25 riod beginning with 2008, the Board shall phase-in, 

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1 over such period, the use of factors described in 

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

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

4 and a factor that reflects the relative actual average 

5 per capita costs of health services of the different 

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

7 (5) PERIODIC ADJUSTMENT.—In establishing 

8 the national health security budget before the begin9 ning of each year, the Board shall provide for appro10 priate adjustments in the State adjustment factors 

11 under this subsection. 

12 (d) ADJUSTMENTS FOR RISK GROUP CLASSIFICA13 TION.— 

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

15 adjustment factor to the national average per capita 

16 costs computed under subsection (b) for individuals 

17 classified in each risk group (as designated under 

18 paragraph (2)) to reflect the difference between the 

19 average national average per capita costs and the 

20 national average per capita cost for individuals clas21 sified in the risk group. 

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

23 a series of risk groups, determined by age, health in24 dicators, and other factors that represent distinct 

25 patterns of health care services utilization and costs. 

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1 (3) PERIODIC ADJUSTMENT.—In establishing 

2 the national health security budget before the begin3 ning of each year, the Board shall provide for appro4 priate adjustments in the risk adjustment factors 

5 under this subsection. 

6 SEC. 603. STATE HEALTH SECURITY BUDGETS. 

7 (a) ESTABLISHMENT AND SUBMISSION OF BUDG8 ETS.— 

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

10 program shall establish and submit to the Board for 

11 each year a proposed and a final State health secu12 rity budget, which specifies the following: 

13 (A) The total expenditures (including ex14 penditures for administrative costs) to be made 

15 under the program in the State for covered 

16 health care services under this Act, consistent 

17 with subsection (b), broken down as follows: 

18 (i) By the 4 components (described in 

19 section 601(a)(2)), consistent with sub20 section (b). 

21 (ii) Within the operating component— 

22 (I) expenditures for operating 

23 costs of hospitals and other facility24 based services in the State; 

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1 (II) expenditures for payment to 

2 comprehensive health service organiza3 tions; 

4 (III) expenditures for payment of 

5 services provided by health care prac6 titioners; and 

7 (IV) expenditures for other cov8 ered items and services. 

9 Amounts included in the operating compo10 nent include amounts that may be used by 

11 providers for capital expenditures. 

12 (B) The total revenues required to meet 

13 the State health security expenditures. 

14 (2) PROPOSED BUDGET DEADLINE.—The pro15 posed budget for a year shall be submitted under 

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

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

18 year shall— 

19 (A) be established and submitted under 

20 paragraph (1) not later than October 1 before 

21 the year, and 

22 (B) take into account the amounts estab23 lished under the national health security budget 

24 under section 601 for the year. 

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1 (4) ADJUSTMENT IN ALLOCATIONS PER2 MITTED.— 

3 (A) IN GENERAL.—Subject to subpara4 graphs (B) and (C), in the case of a final budg5 et, a State may change the allocation of 

6 amounts among components. 

7 (B) NOTICE.—No such change may be 

8 made unless the State has provided prior notice 

9 of the change to the Board. 

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

11 made if the Board, within such time period as 

12 the Board specifies, disapproves such change. 

13 (b) EXPENDITURE LIMITS.— 

14 (1) IN GENERAL.—The total expenditures speci15 fied in each State health security budget under sub16 section (a)(1) shall take into account Federal con17 tributions made under section 604. 

18 (2) LIMIT ON CLAIMS PROCESSING AND BILL19 ING EXPENDITURES.—Each State health security 

20 budget shall provide that State administrative ex21 penditures, including expenditures for claims proc22 essing and billing, shall not exceed 3 percent of the 

23 total expenditures under the State health security 

24 program, unless the Board determines, on a case-by25 case basis, that additional administrative expendimstockstill on PROD1PC66 with BILLS

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1 tures would improve health care quality and cost ef2 fectiveness. 

3 (3) WORKER ASSISTANCE.—A State health se4 curity program may provide that, for budgets for 

5 years before 2011, up to 1 percent of the budget 

6 may be used for purposes of programs providing as7 sistance to workers who are currently performing 

8 functions in the administration of the health insur9 ance system and who may experience economic dis10 location as a result of the implementation of the pro11 gram. 

12 (c) APPROVAL PROCESS FOR CAPITAL EXPENDI13 TURES PERMITTED.—Nothing in this title shall be con14 strued as preventing a State health security program from 

15 providing for a process for the approval of capital expendi16 tures based on information derived from regional planning 

17 agencies. 

18 SEC. 604. FEDERAL PAYMENTS TO STATES. 

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

20 State health security program is entitled to receive, from 

21 amounts in the American Health Security Trust Fund, on 

22 a monthly basis each year, of an amount equal to one23 twelfth of the product of— 

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1 (1) the State capitation amount (computed 

2 under section 602(a)(2)) for the State for the year; 

3 and 

4 (2) the Federal contribution percentage (estab5 lished under subsection (b)). 

6 (b) FEDERAL CONTRIBUTION PERCENTAGE.—The 

7 Board shall establish a formula for the establishment of 

8 a Federal contribution percentage for each State. Such 

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

10 income and revenue capacity and such other relevant eco11 nomic indicators as the Board determines to be appro12 priate. In addition, during the 5-year period beginning 

13 with 2008, the Board may provide for a transition adjust14 ment to the formula in order to take into account current 

15 expenditures by the State (and local governments thereof) 

16 for health services covered under the State health security 

17 program. The weighted-average Federal contribution per18 centage for all States shall equal 86 percent and in no 

19 event shall such percentage be less than 81 percent nor 

20 more than 91 percent. 

21 (c) USE OF PAYMENTS.—All payments made under 

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

23 security program. 

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

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

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

3 fund covered health services from its own revenues. 

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

5 health services for less than the budgeted amount 

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

7 that year for uses consistent with this Act. 

8 SEC. 605. ACCOUNT FOR HEALTH PROFESSIONAL EDU9 CATION EXPENDITURES. 

10 (a) SEPARATE ACCOUNT.—Each State health secu11 rity program shall— 

12 (1) include a separate account for health pro13 fessional education expenditures; and 

14 (2) specify the general manner, consistent with 

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

16 distributed among different types of institutions and 

17 the different areas of the State. 

18 (b) DISTRIBUTION RULES.—The distribution of 

19 funds to hospitals and other health care facilities from the 

20 account must conform to the following principles: 

21 (1) The disbursement of funds must be con22 sistent with achievement of the national and pro23 gram goals (specified in section 701(b)) within the 

24 State health security program and the distribution 

25 of funds from the account must be conditioned upon 

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1 the receipt of such reports as the Board may require 

2 in order to monitor compliance with such goals. 

3 (2) The distribution of funds from the account 

4 must take into account the potentially higher costs 

5 of placing health professional students in clinical 

6 education programs in health professional shortage 

7 areas. 

8 Subtitle B—Payments by States to 

9 Providers 

10 SEC. 611. PAYMENTS TO HOSPITALS AND OTHER FACILITY11 BASED SERVICES FOR OPERATING EXPENSES 

12 ON THE BASIS OF APPROVED GLOBAL BUDG13 ETS. 

14 (a) DIRECT PAYMENT UNDER GLOBAL BUDGET.— 

15 Payment for operating expenses for institutional and facil16 ity-based care, including hospital services and nursing fa17 cility services, under State health security programs shall 

18 be made directly to each institution or facility by each 

19 State health security program under an annual prospec20 tive global budget approved under the program. Such a 

21 budget shall include payment for outpatient care and non22 facility-based care that is furnished by or through the fa23 cility. In the case of a hospital that is wholly owned (or 

24 controlled) by a comprehensive health service organization 

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

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1 budget, the global budget of the organization shall include 

2 the budget for the hospital. 

3 (b) Annual Negotiations; Budget Approval— 

4 (1) IN GENERAL.—The prospective global budg5 et for an institution or facility shall— 

6 (A) be developed through annual negotia7 tions between— 

8 (i) a panel of individuals who are ap9 pointed by the Governor of the State and 

10 who represent consumers, labor, business, 

11 and the State government; and 

12 (ii) the institution or facility; and 

13 (B) be based on a nationally uniform sys14 tem of cost accounting established under stand15 ards of the Board. 

16 (2) CONSIDERATIONS.—In developing a budget 

17 through negotiations, there shall be taken into ac18 count at least the following: 

19 (A) With respect to inpatient hospital serv20 ices, the number, and classification by diag21 nosis-related group, of discharges. 

22 (B) An institution’s or facility’s past ex23 penditures. 

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1 (C) The extent to which debt service for 

2 capital expenditures has been included in the 

3 proposed operating budget. 

4 (D) The extent to which capital expendi5 tures are financed directly or indirectly through 

6 reductions in direct care to patients, including 

7 (but not limited to) reductions in registered 

8 nursing staffing patterns or changes in emer9 gency room or primary care services or avail10 ability. 

11 (E) Change in the consumer price index 

12 and other price indices. 

13 (F) The cost of reasonable compensation 

14 to health care practitioners; 

15 (G) The compensation level of the institu16 tion’s or facility’s work force. 

17 (H) The extent to which the institution or 

18 facility is providing health care services to meet 

19 the needs of residents in the area served by the 

20 institution or facility, including the institution’s 

21 or facility’s occupancy level. 

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

23 financial and clinical performance, based on uti24 lization and outcomes data provided under this 

25 Act. 

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1 (J) The type of institution or facility, in2 cluding whether the institution or facility is 

3 part of a clinical education program or serves 

4 a health professional education, research or 

5 other training purpose. 

6 (K) Technological advances or changes. 

7 (L) Costs of the institution or facility asso8 ciated with meeting Federal and State regula9 tions. 

10 (M) The costs associated with necessary 

11 public outreach activities. 

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

13 reasonable rate of return on equity capital, 

14 independent of those operating expenses nec15 essary to fulfill the objectives of this Act. 

16 (O) Incentives to facilities that maintain 

17 costs below previous reasonable budgeted levels 

18 without reducing the care provided. 

19 (P) With respect to facilities that provide 

20 mental health services and substance abuse 

21 treatment services, any additional costs involved 

22 in the treatment of dually diagnosed individ23 uals. 

24 The portion of such a budget that relates to expendi25 tures for health professional education shall be conmstockstill on PROD1PC66 with BILLS

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1 sistent with the State health security budget for 

2 such expenditures. 

3 (3) PROVISION OF REQUIRED INFORMATION; DI4 AGNOSIS-RELATED GROUP.—No budget for an insti5 tution or facility for a year may be approved unless 

6 the institution or facility has submitted on a timely 

7 basis to the State health security program such in8 formation as the program or the Board shall specify, 

9 including in the case of hospitals information on dis10 charges classified by diagnosis-related group. 

11 (c) ADJUSTMENTS IN APPROVED BUDGETS.— 

12 (1) ADJUSTMENTS TO GLOBAL BUDGETS THAT

13 CONTRACT WITH COMPREHENSIVE HEALTH SERVICE

14 ORGANIZATIONS.—Each State health security pro15 gram shall develop an administrative mechanism for 

16 reducing operating funds to institutions or facilities 

17 in proportion to payments made to such institutions 

18 or facilities for services contracted for by a com19 prehensive health service organization. 

20 (2) AMENDMENTS.—In accordance with stand21 ards established by the Board, an operating and 

22 capital budget approved under this section for a year 

23 may be amended before, during, or after the year if 

24 there is a substantial change in any of the factors 

25 relevant to budget approval. 

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1 (d) DONATIONS PERMISSIBLE.—The States health 

2 security programs may permit institutions and facilities 

3 to raise funds from private sources to pay for newly con4 structed facilities, major renovations, and equipment. The 

5 expenditure of such funds, whether for operating or cap6 ital expenditures, does not obligate the State health secu7 rity program to provide for continued support for such ex8 penditures unless included in an approved global budget. 

9 SEC. 612. PAYMENTS TO HEALTH CARE PRACTITIONERS 

10 BASED ON PROSPECTIVE FEE SCHEDULE. 

11 (a) FEE FOR SERVICE.— 

12 (1) IN GENERAL.—Every independent health 

13 care practitioner is entitled to be paid, for the provi14 sion of covered health services under the State 

15 health security program, a fee for each billable cov16 ered service. 

17 (2) GLOBAL FEE PAYMENT METHODOLOGIES.— 

18 The Board shall establish models and encourage 

19 State health security programs to implement alter20 native payment methodologies that incorporate glob21 al fees for related services (such as all outpatient 

22 procedures for treatment of a condition) or for a 

23 basic group of services (such as primary care serv24 ices) furnished to an individual over a period of 

25 time, in order to encourage continuity and efficiency 

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1 in the provision of services. Such methodologies shall 

2 be designed to ensure a high quality of care. 

3 (3) BILLING DEADLINES; ELECTRONIC BILL4 ING.—A State health security program may deny 

5 payment for any service of an independent health 

6 care practitioner for which it did not receive a bill 

7 and appropriate supporting documentation (which 

8 had been previously specified) within 30 days after 

9 the date the service was provided. Such a program 

10 may require that bills for services for which payment 

11 may be made under this section, or for any class of 

12 such services, be submitted electronically. 

13 (b) PAYMENT RATES BASED ON NEGOTIATED PRO14 SPECTIVE FEE SCHEDULES.—With respect to any pay15 ment method for a class of services of practitioners, the 

16 State health security program shall establish, on a pro17 spective basis, a payment schedule. The State health secu18 rity program may establish such a schedule after negotia19 tions with organizations representing the practitioners in20 volved. Such fee schedules shall be designed to provide in21 centives for practitioners to choose primary care medicine, 

22 including general internal medicine and pediatrics, over 

23 medical specialization. Nothing in this section shall be con24 strued as preventing a State from adjusting the payment 

25 schedule amounts on a quarterly or other periodic basis 

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1 depending on whether expenditures under the schedule will 

2 exceed the budgeted amount with respect to such expendi3 tures. 

4 (c) BILLABLE COVERED SERVICE DEFINED.—In this 

5 section, the term ‘‘billable covered service’’ means a service 

6 covered under section 201 for which a practitioner is enti7 tled to compensation by payment of a fee determined 

8 under this section. 

9 SEC. 613. PAYMENTS TO COMPREHENSIVE HEALTH SERV10 ICE ORGANIZATIONS. 

11 (a) IN GENERAL.—Payment under a State health se12 curity program to a comprehensive health service organi13 zation to its enrollees shall be determined by the State— 

14 (1) based on a global budget described in sec15 tion 611; or 

16 (2) based on the basic capitation amount de17 scribed in subsection (b) for each of its enrollees. 

18 (b) BASIC CAPITATION AMOUNT.— 

19 (1) IN GENERAL.—The basic capitation amount 

20 described in this subsection for an enrollee shall be 

21 determined by the State health security program on 

22 the basis of the average amount of expenditures that 

23 is estimated would be made under the State health 

24 security program for covered health care services for 

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1 an enrollee, based on actuarial characteristics (as de2 fined by the State health security program). 

3 (2) ADJUSTMENT FOR SPECIAL HEALTH

4 NEEDS.—The State health security program shall 

5 adjust such average amounts to take into account 

6 the special health needs, including a disproportionate 

7 number of medically underserved individuals, of pop8 ulations served by the organization. 

9 (3) ADJUSTMENT FOR SERVICES NOT PRO10 VIDED.—The State health security program shall ad11 just such average amounts to take into account the 

12 cost of covered health care services that are not pro13 vided by the comprehensive health service organiza14 tion under section 303(a). 

15 SEC. 614. PAYMENTS FOR COMMUNITY-BASED PRIMARY 

16 HEALTH SERVICES. 

17 (a) IN GENERAL.—In the case of community-based 

18 primary health services, subject to subsection (b), pay19 ments under a State health security program shall— 

20 (1) be based on a global budget described in 

21 section 611; 

22 (2) be based on the basic primary care capita23 tion amount described in subsection (c) for each in24 dividual enrolled with the provider of such services; 

25 or 

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1 (3) be made on a fee-for-service basis under 

2 section 612. 

3 (b) PAYMENT ADJUSTMENT.—Payments under sub4 section (a) may include, consistent with the budgets devel5 oped under this title— 

6 (1) an additional amount, as set by the State 

7 health security program, to cover the costs incurred 

8 by a provider which serves persons not covered by 

9 this Act whose health care is essential to overall 

10 community health and the control of communicable 

11 disease, and for whom the cost of such care is other12 wise uncompensated; 

13 (2) an additional amount, as set by the State 

14 health security program, to cover the reasonable 

15 costs incurred by a provider that furnishes case 

16 management services (as defined in section 

17 1915(g)(2) of the Social Security Act), transpor18 tation services, and translation services; and 

19 (3) an additional amount, as set by the State 

20 health security program, to cover the costs incurred 

21 by a provider in conducting health professional edu22 cation programs in connection with the provision of 

23 such services. 

24 (c) BASIC PRIMARY CARE CAPITATION AMOUNT.— 

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1 (1) IN GENERAL.—The basic primary care capi2 tation amount described in this subsection for an en3 rollee with a provider of community-based primary 

4 health services shall be determined by the State 

5 health security program on the basis of the average 

6 amount of expenditures that is estimated would be 

7 made under the State health security program for 

8 such an enrollee, based on actuarial characteristics 

9 (as defined by the State health security program). 

10 (2) ADJUSTMENT FOR SPECIAL HEALTH

11 NEEDS.—The State health security program shall 

12 adjust such average amounts to take into account 

13 the special health needs, including a disproportionate 

14 number of medically underserved individuals, of pop15 ulations served by the provider. 

16 (3) ADJUSTMENT FOR SERVICES NOT PRO17 VIDED.—The State health security program shall ad18 just such average amounts to take into account the 

19 cost of community-based primary health services 

20 that are not provided by the provider. 

21 (d) COMMUNITY-BASED PRIMARY HEALTH SERVICES

22 DEFINED.—In this section, the term ‘‘community-based 

23 primary health services’’ has the meaning given such term 

24 in section 202(a). 

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1 SEC. 615. PAYMENTS FOR PRESCRIPTION DRUGS. 

2 (a) ESTABLISHMENT OF LIST.— 

3 (1) IN GENERAL.—The Board shall establish a 

4 list of approved prescription drugs and biologicals 

5 that the Board determines are necessary for the 

6 maintenance or restoration of health or of employ7 ability or self-management and eligible for coverage 

8 under this Act. 

9 (2) EXCLUSIONS.—The Board may exclude re10 imbursement under this Act for ineffective, unsafe, 

11 or over-priced products where better alternatives are 

12 determined to be available. 

13 (b) PRICES.—For each such listed prescription drug 

14 or biological covered under this Act, for insulin, and for 

15 medical foods, the Board shall from time to time deter16 mine a product price or prices which shall constitute the 

17 maximum to be recognized under this Act as the cost of 

18 a drug to a provider thereof. The Board may conduct ne19 gotiations, on behalf of State health security programs, 

20 with product manufacturers and distributors in deter21 mining the applicable product price or prices. 

22 (c) CHARGES BY INDEPENDENT PHARMACIES.— 

23 Each State health security program shall provide for pay24 ment for a prescription drug or biological or insulin fur25 nished by an independent pharmacy based on the drug’s 

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1 uct price established under subsection (b)) plus a dis2 pensing fee. In accordance with standards established by 

3 the Board, each State health security program, after con4 sultation with representatives of the pharmaceutical pro5 fession, shall establish schedules of dispensing fees, de6 signed to afford reasonable compensation to independent 

7 pharmacies after taking into account variations in their 

8 cost of operation resulting from regional differences, dif9 ferences in the volume of prescription drugs dispensed, dif10 ferences in services provided, the need to maintain expend11 itures within the budgets established under this title, and 

12 other relevant factors. 

13 SEC. 616. PAYMENTS FOR APPROVED DEVICES AND EQUIP14 MENT. 

15 (a) ESTABLISHMENT OF LIST.—The Board shall es16 tablish a list of approved durable medical equipment and 

17 therapeutic devices and equipment (including eyeglasses, 

18 hearing aids, and prosthetic appliances), that the Board 

19 determines are necessary for the maintenance or restora20 tion of health or of employability or self-management and 

21 eligible for coverage under this Act. 

22 (b) CONSIDERATIONS AND CONDITIONS.—In estab23 lishing the list under subsection (a), the Board shall take 

24 into consideration the efficacy, safety, and cost of each 

25 item contained on such list, and shall attach to any item 

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1 such conditions as the Board determines appropriate with 

2 respect to the circumstances under which, or the frequency 

3 with which, the item may be prescribed. 

4 (c) PRICES.—For each such listed item covered under 

5 this Act, the Board shall from time to time determine a 

6 product price or prices which shall constitute the max7 imum to be recognized under this Act as the cost of the 

8 item to a provider thereof. The Board may conduct nego9 tiations, on behalf of State health security programs, with 

10 equipment and device manufacturers and distributors in 

11 determining the applicable product price or prices. 

12 (d) EXCLUSIONS.—The Board may exclude from cov13 erage under this Act ineffective, unsafe, or overpriced 

14 products where better alternatives are determined to be 

15 available. 

16 SEC. 617. PAYMENTS FOR OTHER ITEMS AND SERVICES. 

17 In the case of payment for other covered health serv18 ices, the amount of payment under a State health security 

19 program shall be established by the program— 

20 (1) in accordance with payment methodologies 

21 which are specified by the Board, after consultation 

22 with the American Health Security Advisory Coun23 cil, or methodologies established by the State under 

24 section 620; and 

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1 (2) consistent with the State health security 

2 budget. 

3 SEC. 618. PAYMENT INCENTIVES FOR MEDICALLY UNDER4 SERVED AREAS. 

5 (a) MODEL PAYMENT METHODOLOGIES.—In addi6 tion to the payment amounts otherwise provided in this 

7 title, the Board shall establish model payment methodolo8 gies and other incentives that promote the provision of 

9 covered health care services in medically underserved 

10 areas, particularly in rural and inner-city underserved 

11 areas. 

12 (b) CONSTRUCTION.—Nothing in this title shall be 

13 construed as limiting the authority of State health security 

14 programs to increase payment amounts or otherwise pro15 vide additional incentives, consistent with the State health 

16 security budget, to encourage the provision of medically 

17 necessary and appropriate services in underserved areas. 

18 SEC. 619. AUTHORITY FOR ALTERNATIVE PAYMENT METH19 ODOLOGIES. 

20 A State health security program, as part of its plan 

21 under section 404(a), may use a payment methodology 

22 other than a methodology required under this subtitle so 

23 long as— 

24 (1) such payment methodology does not affect 

25 the entitlement of individuals to coverage, the 

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1 weighting of fee schedules to encourage an increase 

2 in the number of primary care providers, the ability 

3 of individuals to choose among qualified providers, 

4 the benefits covered under the program, or the com5 pliance of the program with the State health security 

6 budget under subtitle A; and 

7 (2) the program submits periodic reports to the 

8 Board showing the operation and effectiveness of the 

9 alternative methodology, in order for the Board to 

10 evaluate the appropriateness of applying the alter11 native methodology to other States. 

12 Subtitle C—Mandatory Assignment 

13 and Administrative Provisions 

14 SEC. 631. MANDATORY ASSIGNMENT. 

15 (a) NO BALANCE BILLING.—Payments for benefits 

16 under this Act shall constitute payment in full for such 

17 benefits and the entity furnishing an item or service for 

18 which payment is made under this Act shall accept such 

19 payment as payment in full for the item or service and 

20 may not accept any payment or impose any charge for 

21 any such item or service other than accepting payment 

22 from the State health security program in accordance with 

23 this Act. 

24 (b) ENFORCEMENT.—If an entity knowingly and will25 fully bills for an item or service or accepts payment in 

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1 violation of subsection (a), the Board may apply sanctions 

2 against the entity in the same manner as sanctions could 

3 have been imposed under section 1842(j)(2) of the Social 

4 Security Act for a violation of section 1842(j)(1) of such 

5 Act. Such sanctions are in addition to any sanctions that 

6 a State may impose under its State health security pro7 gram. 

8 SEC. 632. PROCEDURES FOR REIMBURSEMENT; APPEALS. 

9 (a) PROCEDURES FOR REIMBURSEMENT.—In accord10 ance with standards issued by the Board, a State health 

11 security program shall establish a timely and administra12 tively simple procedure to assure payment within 60 days 

13 of the date of submission of clean claims by providers 

14 under this Act. 

15 (b) APPEALS PROCESS.—Each State health security 

16 program shall establish an appeals process to handle all 

17 grievances pertaining to payment to providers under this 

18 title. 

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1 TITLE VII—PROMOTION OF PRI2 MARY HEALTH CARE; DEVEL3 OPMENT OF HEALTH SERV4 ICE CAPACITY; PROGRAMS TO 

5 ASSIST THE MEDICALLY UN6 DERSERVED 

7 Subtitle A—Promotion and Expan8 sion of Primary Care Profes9 sional Training 

10 SEC. 701. ROLE OF BOARD; ESTABLISHMENT OF PRIMARY 

11 CARE PROFESSIONAL OUTPUT GOALS. 

12 (a) IN GENERAL.—The Board is responsible for— 

13 (1) coordinating health professional education 

14 policies and goals, in consultation with the Secretary 

15 of Health and Human Services (in this title referred 

16 to as the ‘‘Secretary’’), to achieve the national goals 

17 specified in subsection (b); 

18 (2) overseeing the health professional education 

19 expenditures of the State health security programs 

20 from the account established under section 602(c); 

21 (3) developing and maintaining, in cooperation 

22 with the Secretary, a system to monitor the number 

23 and specialties of individuals through their health 

24 professional education, any postgraduate training, 

25 and professional practice; and 

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1 (4) developing, coordinating, and promoting 

2 other policies that expand the number of primary 

3 care practitioners. 

4 (b) NATIONAL GOALS.—The national goals specified 

5 in this subsection are as follows: 

6 (1) GRADUATE MEDICAL EDUCATION.—By not 

7 later than 5 years after the date of the enactment 

8 of this Act, at least 50 percent of the residents in 

9 medical residency education programs (as defined in 

10 subsection (e)(1)) are primary care residents (as de11 fined in subsection (e)(3)). 

12 (2) MIDLEVEL PRIMARY CARE PRACTI13 TIONERS.—To assure an adequate supply of primary 

14 care practitioners, there shall be a number, specified 

15 by the Board, of midlevel primary care practitioners 

16 (as defined in subsection (e)(2)) employed in the 

17 health care system as of January 1, 2011. 

18 (c) METHOD FOR ATTAINMENT OF NATIONAL GOAL

19 FOR GRADUATE MEDICAL EDUCATION; PROGRAM

20 GOALS.— 

21 (1) IN GENERAL.—The Board shall establish a 

22 method of applying the national goal in subsection 

23 (b)(1) to program goals for each medical residency 

24 education program or to medical residency education 

25 consortia. 

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1 (2) CONSIDERATION.—The program goals 

2 under paragraph (1) shall be based on the distribu3 tion of medical schools and other teaching facilities 

4 within each State health security program, and the 

5 number of positions for graduate medical education. 

6 (3) MEDICAL RESIDENCY EDUCATION CONSOR7 TIUM.—In this subsection, the term ‘‘medical resi8 dency education consortium’’ means a consortium of 

9 medical residency education programs in a contig10 uous geographic area (which may be an interstate 

11 area) if the consortium— 

12 (A) includes at least 1 medical school with 

13 a teaching hospital and related teaching set14 tings; and 

15 (B) has an affiliation with qualified com16 munity-based primary health service providers 

17 described in section 202(a) and with at least 1 

18 comprehensive health service organization es19 tablished under section 303. 

20 (4) ENFORCEMENT THROUGH STATE HEALTH

21 SECURITY BUDGETS.—The Board shall develop a 

22 formula for reducing payments to State health secu23 rity programs (that provide for payments to a med24 ical residency education program) that failed to meet 

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1 the goal for the program established under this sub2 section. 

3 (d) METHOD FOR ATTAINMENT OF NATIONAL GOAL

4 FOR MIDLEVEL PRIMARY CARE PRACTITIONERS.—To as5 sist in attaining the national goal identified in subsection 

6 (b)(2), the Board shall— 

7 (1) advise the Public Health Service on alloca8 tions of funding under titles VII and VIII of the 

9 Public Health Service Act, the National Health 

10 Service Corps, and other programs in order to in11 crease the supply of midlevel primary care practi12 tioners; and 

13 (2) commission a study of the potential benefits 

14 and disadvantages of expanding the scope of practice 

15 authorized under State laws for any class of midlevel 

16 primary care practitioners. 

17 (e) DEFINITIONS.—In this title: 

18 (1) MEDICAL RESIDENCY EDUCATION PRO19 GRAM.—The term ‘‘medical residency education pro20 gram’’ means a program that provides education 

21 and training to graduates of medical schools in order 

22 to meet requirements for licensing and certification 

23 as a physician, and includes the medical school su24 pervising the program and includes the hospital or 

25 other facility in which the program is operated. 

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1 (2) MIDLEVEL PRIMARY CARE PRACTI2 TIONER.—The term ‘‘midlevel primary care practi3 tioner’’ means a clinical nurse practitioner, certified 

4 nurse midwife, physician assistance, or other non5 physician practitioner, specified by the Board, as au6 thorized to practice under State law. 

7 (3) PRIMARY CARE RESIDENT.—The term ‘‘pri8 mary care resident’’ means (in accordance with cri9 teria established by the Board) a resident being 

10 trained in a distinct program of family practice med11 icine, general practice, general internal medicine, or 

12 general pediatrics. 

13 SEC. 702. ESTABLISHMENT OF ADVISORY COMMITTEE ON 

14 HEALTH PROFESSIONAL EDUCATION. 

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

16 Advisory Committee on Health Professional Education (in 

17 this section referred to as the ‘‘Committee’’) to advise the 

18 Board on its activities under section 701. 

19 (b) MEMBERSHIP.—The Committee shall be com20 posed of— 

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

22 Chair of the Committee; and 

23 (2) 12 members, not otherwise in the employ of 

24 the United States, appointed by the Board without 

25 regard to the provisions of title 5, United States 

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1 Code, governing appointments in the competitive 

2 service. 

3 The appointed members shall provide a balanced point of 

4 view with respect to health professional education, primary 

5 care disciplines, and health care policy and shall include 

6 individuals who are representative of medical schools, 

7 other health professional schools, residency programs, pri8 mary care practitioners, teaching hospitals, professional 

9 associations, public health organizations, State health se10 curity programs, and consumers. 

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

12 shall hold office for a term of 5 years, except that— 

13 (1) any member appointed to fill a vacancy oc14 curring during the term for which the member’s 

15 predecessor was appointed shall be appointed for the 

16 remainder of that term; and 

17 (2) the terms of the members first taking office 

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

19 of appointment, 2 at the end of the second year, 2 

20 at the end of the third year, 2 at the end of the 

21 fourth year, and 3 at the end of the fifth year after 

22 the date of enactment of this Act. 

23 (d) VACANCIES.— 

24 (1) IN GENERAL.—The Board shall fill any va25 cancy in the membership of the Committee in the 

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1 same manner as the original appointment. The va2 cancy shall not affect the power of the remaining 

3 members to execute the duties of the Committee. 

4 (2) VACANCY APPOINTMENTS.—Any member 

5 appointed to fill a vacancy shall serve for the re6 mainder of the term for which the predecessor of the 

7 member was appointed. 

8 (3) REAPPOINTMENT.—The Board may re9 appoint an appointed member of the Committee for 

10 a second term in the same manner as the original 

11 appointment. 

12 (e) DUTIES.—It shall be the duty of the Committee 

13 to advise the Board concerning graduate medical edu14 cation policies under this title. 

15 (f) STAFF.—The Committee, its members, and any 

16 committees of the Committee shall be provided with such 

17 secretarial, clerical, or other assistance as may be author18 ized by the Board for carrying out their respective func19 tions. 

20 (g) MEETINGS.—The Committee shall meet as fre21 quently as the Board deems necessary, but not less than 

22 4 times each year. Upon request by 4 or more members 

23 it shall be the duty of the Chair to call a meeting of the 

24 Committee. 

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1 (h) COMPENSATION.—Members of the Committee 

2 shall be reimbursed by the Board for travel and per diem 

3 in lieu of subsistence expenses during the performance of 

4 duties of the Board in accordance with subchapter I of 

5 chapter 57 of title 5, United States Code. 

6 (i) FACA NOT APPLICABLE.—The provisions of the 

7 Federal Advisory Committee Act shall not apply to the 

8 Committee. 

9 SEC. 703. GRANTS FOR HEALTH PROFESSIONS EDUCATION, 

10 NURSE EDUCATION, AND THE NATIONAL 

11 HEALTH SERVICE CORPS. 

12 (a) TRANSFERS TO PUBLIC HEALTH SERVICE.— 

13 From the amounts provided under subsection (c), the 

14 Board shall make transfers from the American Health Se15 curity Trust Fund to the Public Health Service under sub16 part II of part D of title III, title VII, and title VIII of 

17 the Public Health Service Act for the support of the Na18 tional Health Service Corps, health professions education, 

19 and nursing education, including education of clinical 

20 nurse practitioners, certified registered nurse anesthetists, 

21 certified nurse midwives, and physician assistants. Of the 

22 amounts so transferred in each year, not less than 50 per23 cent shall be expended for the support of the National 

24 Health Service Corps. 

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1 (b) RANGE OF FUNDS.—The amount of transfers 

2 under subsection (a) for any fiscal year shall be an amount 

(specified by the Board each year) not less than 4 3 ⁄100 percent and not to exceed 6 4 ⁄100 percent of the amounts the 

5 Board estimates will be expended from the Trust Fund 

6 in the fiscal year. 

7 (c) FUNDS SUPPLEMENTAL TO OTHER FUNDS.—The 

8 funds provided under this section with respect to provision 

9 of services are in addition to, and not in replacement of, 

10 funds made available under the provisions referred to in 

11 subsection (a) and shall be administered in accordance 

12 with the terms of such provisions. The Board shall make 

13 no transfer of funds under this section for any fiscal year 

14 for which the total appropriations for the programs au15 thorized by such provisions are less than the total amount 

16 appropriated for such programs in fiscal year 2006. 

17 Subtitle B—Direct Health Care 

18 Delivery 

19 SEC. 711. SETASIDE FOR PUBLIC HEALTH. 

20 (a) TRANSFERS TO PUBLIC HEALTH SERVICE.— 

21 From the amounts provided under subsection (c), the 

22 Board shall make transfers from the American Health Se23 curity Trust Fund to the Public Health Service for the 

24 following purposes (other than payment for services cov25 ered under title II): 

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1 (1) For payments to States under the maternal 

2 and child health block grants under title V of the 

3 Social Security Act. 

4 (2) For prevention and treatment of tuber5 culosis under section 317 of the Public Health Serv6 ice Act. 

7 (3) For the prevention and treatment of sexu8 ally transmitted diseases under section 318 of the 

9 Public Health Service Act. 

10 (4) Preventive health block grants under part A 

11 of title XIX of the Public Health Service Act. 

12 (5) Grants to States for community mental 

13 health services under subpart I of part B of title 

14 XIX of the Public Health Service Act. 

15 (6) Grants to States for prevention and treat16 ment of substance abuse under subpart II of part B 

17 of title XIX of the Public Health Service Act. 

18 (7) Grants for HIV health care services under 

19 parts A, B, and C of title XXVI of the Public 

20 Health Service Act. 

21 (8) Public health formula grants described in 

22 subsection (d). 

23 (b) RANGE OF FUNDS.—The amount of transfers 

24 under subsection (a) for any fiscal year shall be an amount 

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cent and not to exceed 14 1 ⁄100 percent of the amounts the 

2 Board estimates will be expended from the Trust Fund 

3 in the fiscal year. 

4 (c) FUNDS SUPPLEMENTAL TO OTHER FUNDS.—The 

5 funds provided under this section with respect to provision 

6 of services are in addition to, and not in replacement of, 

7 funds made available under the programs referred to in 

8 subsection (a) and shall be administered in accordance 

9 with the terms of such programs. 

10 (d) REQUIRED REPORTS ON HEALTH STATUS.—The 

11 Secretary shall require each State receiving funds under 

12 this section to submit annual reports to the Secretary on 

13 the health status of the population and measurable objec14 tives for improving the health of the public in the State. 

15 Such reports shall include the following: 

16 (1) A comparison of the measures of the State 

17 and local public health system compared to relevant 

18 objectives set forth in ‘‘Healthy People 2000’’ or 

19 subsequent national objectives set by the Secretary. 

20 (2) A description of health status measures to 

21 be improved within the State (at the State and local 

22 levels) through expanded public health functions and 

23 health promotion and disease prevention programs. 

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1 (3) Measurable outcomes and process objectives 

2 for improving health status, and a report on out3 comes from the previous year. 

4 (4) Information regarding how Federal funding 

5 has improved population-based prevention activities 

6 and programs. 

7 (5) A description of the core public health func8 tions to be carried out at the local level. 

9 (6) A description of the relationship between 

10 the State’s public health system, community-based 

11 health promotion and disease prevention providers, 

12 and the State health security program. 

13 (e) LIMITATION ON FUND TRANSFERS.—The Board 

14 shall make no transfer of funds under this section for any 

15 fiscal year for which the total appropriations for such pro16 grams are less than the total amount appropriated for 

17 such programs in fiscal year 2006. 

18 (f) PUBLIC HEALTH FORMULA GRANTS.—The Sec19 retary shall provide stable funds to States through for20 mula grants for the purpose of carrying out core public 

21 health functions to monitor and protect the health of com22 munities from communicable diseases and exposure to 

23 toxic environmental pollutants, occupational hazards, 

24 harmful products, and poor health outcomes. Such func25 tions include the following: 

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1 (1) Data collection, analysis, and assessment of 

2 public health data, vital statistics, and personal 

3 health data to assess community health status and 

4 outcomes reporting. This function includes the ac5 quisition and installation of hardware and software, 

6 and personnel training and technical assistance to 

7 operate and support automated and integrated infor8 mation systems. 

9 (2) Activities to protect the environment and to 

10 assure the safety of housing, workplaces, food, and 

11 water. 

12 (3) Investigation and control of adverse health 

13 conditions, and threats to the health status of indi14 viduals and the community. This function includes 

15 the identification and control of outbreaks of infec16 tious disease, patterns of chronic disease and injury, 

17 and cooperative activities to reduce the levels of vio18 lence. 

19 (4) Health promotion and disease prevention 

20 activities for which there is a significant need and a 

21 high priority of the Public Health Service. 

22 (5) The provision of public health laboratory 

23 services to complement private clinical laboratory 

24 services, including— 

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1 (A) screening tests for metabolic diseases 

2 in newborns; 

3 (B) toxicology assessments of blood lead 

4 levels and other environmental toxins; 

5 (C) tuberculosis and other diseases requir6 ing partner notification; and 

7 (D) testing for infectious and food-borne 

8 diseases. 

9 (6) Training and education for the public 

10 health professions. 

11 (7) Research on effective and cost-effective pub12 lic health practices. This function includes the devel13 opment, testing, evaluation, and publication of re14 sults of new prevention and public health control 

15 interventions. 

16 (8) Integration and coordination of the preven17 tion programs and services of community-based pro18 viders, local and State health departments, and 

19 other sectors of State and local government that af20 fect health. 

21 SEC. 712. SETASIDE FOR PRIMARY HEALTH CARE DELIV22 ERY. 

23 (a) TRANSFERS TO PUBLIC HEALTH SERVICE.— 

24 From the amounts provided under subsection (c), the 

25 Board shall make transfers from the American Health Semstockstill on PROD1PC66 with BILLS

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1 curity Trust Fund to the Public Health Service for the 

2 program of primary care service expansion grants under 

3 subpart V of part D of title III of the Public Health Serv4 ice Act (as added by section 713 of this Act). 

5 (b) RANGE OF FUNDS.—The amount of transfers 

6 under subsection (a) for any fiscal year shall be an amount 

(specified by the Board each year) not less than 6 7 ⁄100 percent and not to exceed 1 8 ⁄10 percent of the amounts the 

9 Board estimates will be expended from the Trust Fund 

10 in the fiscal year. 

11 (c) FUNDS SUPPLEMENTAL TO OTHER FUNDS.—The 

12 funds provided under this section with respect to provision 

13 of services are in addition to, and not in replacement of, 

14 funds made available under the sections 329, 330, 340, 

15 340A, 1001, and 2655 of the Public Health Service Act. 

16 The Board shall make no transfer of funds under this sec17 tion for any fiscal year for which the total appropriations 

18 for such sections are less than the total amount appro19 priated under such sections in fiscal year 2006. 

20 SEC. 713. PRIMARY CARE SERVICE EXPANSION GRANTS. 

21 Part D of title III of the Public Health Service Act 

22 (42 U.S.C. 254b et seq.) is amended by adding at the end 

23 thereof the following new subpart: 

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1 ‘‘Subpart XI—Primary Care Expansion 

2 ‘‘SEC. 340H. EXPANDING PRIMARY CARE DELIVERY CAPAC3 ITY IN URBAN AND RURAL AREAS. 

4 ‘‘(a) GRANTS FOR PRIMARY CARE CENTERS.—From 

5 the amounts described in subsection (c), the American 

6 Health Security Standards Board shall make grants to 

7 public and nonprofit private entities for projects to plan 

8 and develop primary care centers which will serve medi9 cally underserved populations (as defined in section 

10 330(b)(3)) in urban and rural areas and to deliver primary 

11 care services to such populations in such areas. The funds 

12 provided under such a grant may be used for the same 

13 purposes for which a grant may be made under subsection 

14 (c), (e), (f), (g), (h), or (i) of section 330. 

15 ‘‘(b) PROCESS OF AWARDING GRANTS.—The provi16 sions of subsection (k)(1) of section 330 shall apply to 

17 a grant under this section in the same manner as they 

18 apply to a grant under the corresponding subsection of 

19 such section. The provisions of subsection (r)(2)(A) of 

20 such section shall apply to grants for projects to plan and 

21 develop primary care centers under this section in the 

22 same manner as they apply to grants under such section. 

23 ‘‘(c) FUNDING AS SET-ASIDE FROM TRUST FUND.— 

24 Funds in the American Health Security Trust Fund (es25 tablished under section 801 of the American Health Secumstockstill on PROD1PC66 with BILLS

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1 rity Act of 2007) shall be available to carry out this sec2 tion. 

3 ‘‘(d) PRIMARY CARE CENTER DEFINED.—In this sec4 tion, the term ‘primary care center’ means— 

5 ‘‘(1) a health center (as defined in section 

6 330(a)(1)); 

7 ‘‘(2) an entity qualified to receive a grant under 

8 section 330, 1001, or 2651; or 

9 ‘‘(3) a Federally-qualified health center (as de10 fined in section 1905(l)(2)(B) of the Social Security 

11 Act).’’. 

12 Subtitle C—Primary Care and 

13 Outcomes Research 

14 SEC. 721. SET-ASIDE FOR OUTCOMES RESEARCH. 

15 (a) GRANTS FOR OUTCOMES RESEARCH.—The 

16 Board shall make transfers from the American Health Se17 curity Trust Fund to the Agency for Health Care Policy 

18 and Research under title IX of the Public Health Service 

19 Act for the purpose of carrying out activities under such 

20 title. The Secretary shall assure that there is a special em21 phasis placed on pediatric outcomes research. 

22 (b) RANGE OF FUNDS.—The amount of transfers 

23 under subsection (a) for any fiscal year shall be an amount 

(specified by the Board each year) not less than 1 24 ⁄100 percent and not to exceed 2 25 ⁄100 percent of the amounts the 

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1 Board estimates will be expended from the Trust Fund 

2 in the fiscal year. 

3 (c) FUNDS SUPPLEMENTAL TO OTHER FUNDS.—The 

4 funds provided under this section with respect to provision 

5 of services are in addition to, and not in replacement of, 

6 funds made available to the Agency for Health Care Policy 

7 and Research under 937 of the Public Health Service Act. 

8 The Board shall make no transfer of funds under this sec9 tion for any fiscal year for which the total appropriations 

10 under such section are less than the total amount appro11 priated under such section and title in fiscal year 2006. 

12 (d) CONFORMING AMENDMENT.—Section 937(b) of 

13 the Public Health Service Act (42 U.S.C. 299c–6(b)) is 

14 amended by inserting after ‘‘of the fiscal years 2001 

15 through 2005’’ the following: ‘‘and of fiscal year 2008 and 

16 each subsequent year’’. 

17 SEC. 722. OFFICE OF PRIMARY CARE AND PREVENTION RE18 SEARCH. 

19 (a) IN GENERAL.—Title IV of the Public Health 

20 Service Act is amended— 

21 (1) by redesignating parts G through I as parts 

22 H through J, respectively; and 

23 (2) by inserting after part F the following new 

24 part: 

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1 ‘‘PART G—RESEARCH ON PRIMARY CARE AND 

2 PREVENTION 

3 ‘‘SEC. 486E. OFFICE OF PRIMARY CARE AND PREVENTION 

4 RESEARCH. 

5 ‘‘(a) ESTABLISHMENT.—There is established within 

6 the Office of the Director of NIH an office to be known 

7 as the Office of Primary Care and Prevention Research 

8 (in this part referred to as the ‘Office’). The Office shall 

9 be headed by a director, who shall be appointed by the 

10 Director of NIH. 

11 ‘‘(b) PURPOSE.—The Director of the Office shall— 

12 ‘‘(1) identify projects of research on primary 

13 care and prevention, for children as well as adults, 

14 that should be conducted or supported by the na15 tional research institutes, with particular emphasis 

16 on— 

17 ‘‘(A) clinical patient care, with special em18 phasis on pediatric clinical care and diagnosis; 

19 ‘‘(B) diagnostic effectiveness; 

20 ‘‘(C) primary care education; 

21 ‘‘(D) health and family planning services; 

22 ‘‘(E) medical effectiveness outcomes of pri23 mary care procedures and interventions; and 

24 ‘‘(F) the use of multidisciplinary teams of 

25 health care practitioners; 

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1 ‘‘(2) identify multidisciplinary research related 

2 to primary care and prevention that should be so 

3 conducted; 

4 ‘‘(3) promote coordination and collaboration 

5 among entities conducting research identified under 

6 any of paragraphs (1) and (2); 

7 ‘‘(4) encourage the conduct of such research by 

8 entities receiving funds from the national research 

9 institutes; 

10 ‘‘(5) recommend an agenda for conducting and 

11 supporting such research; 

12 ‘‘(6) promote the sufficient allocation of the re13 sources of the national research institutes for con14 ducting and supporting such research; and 

15 ‘‘(7) prepare the report required in section 

16 486G. 

17 ‘‘(c) PRIMARY CARE AND PREVENTION RESEARCH

18 DEFINED.—For purposes of this part, the term ‘primary 

19 care and prevention research’ means research on improve20 ment of the practice of family medicine, general internal 

21 medicine, and general pediatrics, and includes research re22 lating to— 

23 ‘‘(1) obstetrics and gynecology, dentistry, or 

24 mental health or substance abuse treatment when 

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1 provided by a primary care physician or other pri2 mary care practitioner; and 

3 ‘‘(2) primary care provided by multidisciplinary 

4 teams. 

5 ‘‘SEC. 486F. NATIONAL DATA SYSTEM AND CLEARINGHOUSE 

6 ON PRIMARY CARE AND PREVENTION RE7 SEARCH. 

8 ‘‘(a) DATA SYSTEM.—The Director of NIH, in con9 sultation with the Director of the Office, shall establish 

10 a data system for the collection, storage, analysis, re11 trieval, and dissemination of information regarding pri12 mary care and prevention research that is conducted or 

13 supported by the national research institutes. Information 

14 from the data system shall be available through informa15 tion systems available to health care professionals and pro16 viders, researchers, and members of the public. 

17 ‘‘(b) CLEARINGHOUSE.—The Director of NIH, in 

18 consultation with the Director of the Office and with the 

19 National Library of Medicine, shall establish, maintain, 

20 and operate a program to provide, and encourage the use 

21 of, information on research and prevention activities of the 

22 national research institutes that relate to primary care 

23 and prevention research. 

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1 ‘‘SEC. 486G. BIENNIAL REPORT. 

2 ‘‘(a) IN GENERAL.—With respect to primary care 

3 and prevention research, the Director of the Office shall, 

4 not later than 1 year after the date of the enactment of 

5 this part, and biennially thereafter, prepare a report— 

6 ‘‘(1) describing and evaluating the progress 

7 made during the preceding 2 fiscal years in research 

8 and treatment conducted or supported by the Na9 tional Institutes of Health; 

10 ‘‘(2) summarizing and analyzing expenditures 

11 made by the agencies of such Institutes (and by 

12 such Office) during the preceding 2 fiscal years; and 

13 ‘‘(3) making such recommendations for legisla14 tive and administrative initiatives as the Director of 

15 the Office determines to be appropriate. 

16 ‘‘(b) INCLUSION IN BIENNIAL REPORT OF DIRECTOR

17 OF NIH.—The Director of the Office shall submit each 

18 report prepared under subsection (a) to the Director of 

19 NIH for inclusion in the report submitted to the President 

20 and the Congress under section 403. 

21 ‘‘SEC. 486H. AUTHORIZATION OF APPROPRIATIONS. 

22 ‘‘For the Office of Primary Care and Prevention Re23 search, there are authorized to be appropriated 

24 $150,000,000 for fiscal year 2008, $180,000,000 for fis25 cal year 2009, and $216,000,000 for fiscal year 2010.’’. 

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1 (b) REQUIREMENT OF SUFFICIENT ALLOCATION OF

2 RESOURCES OF INSTITUTES.—Section 402(b) of the Pub3 lic Health Service Act (42 U.S.C. 282(b)) is amended— 

4 (1) in paragraph (21), by striking ‘‘and’’ after 

5 the semicolon at the end; 

6 (2) in paragraph (22), by striking the period at 

7 the end and inserting ‘‘; and’’; and 

8 (3) by inserting after paragraph (22) the fol9 lowing new paragraph: 

10 ‘‘(23) after consultation with the Director of 

11 the Office of Primary Care and Prevention Re12 search, shall ensure that resources of the National 

13 Institutes of Health are sufficiently allocated for 

14 projects on primary care and prevention research 

15 that are identified under section 486E(b).’’. 

16 Subtitle D—School-Related Health 

17 Services 

18 SEC. 731. AUTHORIZATIONS OF APPROPRIATIONS. 

19 (a) FUNDING FOR SCHOOL-RELATED HEALTH SERV20 ICES.—For the purpose of carrying out this subtitle, there 

21 are authorized to be appropriated $100,000,000 for fiscal 

22 year 2010, $275,000,000 for fiscal year 2011, 

23 $350,000,000 for fiscal year 2012, and $400,000,000 for 

24 each of the fiscal years 2013 and 2014. 

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1 (b) RELATION TO OTHER FUNDS.—The authoriza2 tions of appropriations established in subsection (a) are 

3 in addition to any other authorizations of appropriations 

4 that are available for the purpose described in such sub5 section. 

6 SEC. 732. ELIGIBILITY FOR DEVELOPMENT AND OPER7 ATION GRANTS. 

8 (a) IN GENERAL.—Entities eligible to apply for and 

9 receive grants under section 734 or 735 are the following: 

10 (1) State health agencies that apply on behalf 

11 of local community partnerships and other commu12 nities in need of health services for school-aged chil13 dren within the State. 

14 (2) Local community partnerships in States in 

15 which health agencies have not applied. 

16 (b) LOCAL COMMUNITY PARTNERSHIPS.— 

17 (1) IN GENERAL.—A local community partner18 ship under subsection (a)(2) is an entity that, at a 

19 minimum, includes— 

20 (A) a local health care provider with expe21 rience in delivering services to school-aged chil22 dren; 

23 (B) 1 or more local public schools; and 

24 (C) at least 1 community based organiza25 tion located in the community to be served that 

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1 has a history of providing services to school2 aged children in the community who are at-risk. 

3 (2) PARTICIPATION.—A partnership described 

4 in paragraph (1) shall, to the maximum extent fea5 sible, involve broad based community participation 

6 from parents and adolescent children to be served, 

7 health and social service providers, teachers and 

8 other public school and school board personnel, de9 velopment and service organizations for adolescent 

10 children, and interested business leaders. Such par11 ticipation may be evidenced through an expanded 

12 partnership, or an advisory board to such partner13 ship. 

14 (c) DEFINITIONS REGARDING CHILDREN.—For pur15 poses of this subtitle: 

16 (1) The term ‘‘adolescent children’’ means 

17 school-aged children who are adolescents. 

18 (2) The term ‘‘school-aged children’’ means in19 dividuals who are between the ages of 4 and 19 (in20 clusive). 

21 SEC. 733. PREFERENCES. 

22 (a) IN GENERAL.—In making grants under sections 

23 734 and 735, the Secretary shall give preference to appli24 cants whose communities to be served show the most sub25 stantial level of need for such services among school-aged 

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1 children, as measured by indicators of community health 

2 including the following: 

3 (1) High levels of poverty. 

4 (2) The presence of a medically underserved 

5 population. 

6 (3) The presence of a health professional short7 age area. 

8 (4) High rates of indicators of health risk 

9 among school-aged children, including a high propor10 tion of such children receiving services through the 

11 Individuals with Disabilities Education Act, adoles12 cent pregnancy, sexually transmitted disease (includ13 ing infection with the human immunodeficiency 

14 virus), preventable disease, communicable disease, 

15 intentional and unintentional injuries, community 

16 and gang violence, unemployment among adolescent 

17 children, juvenile justice involvement, and high rates 

18 of drug and alcohol exposure. 

19 (b) LINKAGE TO COMMUNITY HEALTH CENTERS.— 

20 In making grants under sections 734 and 735, the Sec21 retary shall give preference to applicants that demonstrate 

22 a linkage to community health centers. 

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1 SEC. 734. GRANTS FOR DEVELOPMENT OF PROJECTS. 

2 (a) IN GENERAL.—The Secretary may make grants 

3 to State health agencies or to local community partner4 ships to develop school health service sites. 

5 (b) USE OF FUNDS.—A project for which a grant 

6 may be made under subsection (a) may include but not 

7 be limited to the cost of the following: 

8 (1) Planning for the provision of school health 

9 services. 

10 (2) Recruitment, compensation, and training of 

11 health and administrative staff. 

12 (3) The development of agreements, and the ac13 quisition and development of equipment and infor14 mation services, necessary to support information 

15 exchange between school health service sites and 

16 health plans, health providers, and other entities au17 thorized to collect information under this Act. 

18 (4) Other activities necessary to assume oper19 ational status. 

20 (c) APPLICATION FOR GRANT.— 

21 (1) IN GENERAL.—Applicants shall submit ap22 plications in a form and manner prescribed by the 

23 Secretary. 

24 (2) APPLICATIONS BY STATE HEALTH AGEN25 CIES.— 

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1 (A) In the case of applicants that are State 

2 health agencies, the application shall contain 

3 assurances that the State health agency is ap4 plying for funds— 

5 (i) on behalf of at least 1 local com6 munity partnership; and 

7 (ii) on behalf of at least 1 other com8 munity identified by the State as in need 

9 of the services funded under this subtitle 

10 but without a local community partnership. 

11 (B) In the case of the communities identi12 fied in applications submitted by State health 

13 agencies that do not yet have local community 

14 partnerships (including the community identi15 fied under subparagraph (A)(ii)), the State 

16 shall describe the steps that will be taken to aid 

17 the communities in developing a local commu18 nity partnership. 

19 (C) A State applying on behalf of local 

20 community partnerships and other communities 

21 may retain not more than 10 percent of grants 

22 awarded under this subtitle for administrative 

23 costs. 

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1 (d) CONTENTS OF APPLICATION.—In order to receive 

2 a grant under this section, an applicant must include in 

3 the application the following information: 

4 (1) An assessment of the need for school health 

5 services in the communities to be served, using the 

6 latest available health data and health goals and ob7 jectives established by the Secretary. 

8 (2) A description of how the applicant will de9 sign the proposed school health services to reach the 

10 maximum number of school-aged children who are at 

11 risk. 

12 (3) An explanation of how the applicant will in13 tegrate its services with those of other health and 

14 social service programs within the community. 

15 (4) A description of a quality assurance pro16 gram which complies with standards that the Sec17 retary may prescribe. 

18 (e) NUMBER OF GRANTS.—Not more than 1 planning 

19 grant may be made to a single applicant. A planning grant 

20 may not exceed 2 years in duration. 

21 SEC. 735. GRANTS FOR OPERATION OF PROJECTS. 

22 (a) IN GENERAL.—The Secretary may make grants 

23 to State health agencies or to local community partner24 ships for the cost of operating school health service sites. 

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1 (b) USE OF GRANT.—The costs for which a grant 

2 may be made under this section include but are not limited 

3 to the following: 

4 (1) The cost of furnishing health services that 

5 are not otherwise covered under this Act or by any 

6 other public or private insurer. 

7 (2) The cost of furnishing services whose pur8 pose is to increase the capacity of individuals to uti9 lize available health services, including transpor10 tation, community and patient outreach, patient 

11 education, translation services, and such other serv12 ices as the Secretary determines to be appropriate in 

13 carrying out such purpose. 

14 (3) Training, recruitment and compensation of 

15 health professionals and other staff. 

16 (4) Outreach services to school-aged children 

17 who are at risk and to the parents of such children. 

18 (5) Linkage of individuals to health plans, com19 munity health services and social services. 

20 (6) Other activities deemed necessary by the 

21 Secretary. 

22 (c) APPLICATION FOR GRANT.—Applicants shall sub23 mit applications in a form and manner prescribed by the 

24 Secretary. In order to receive a grant under this section, 

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1 an applicant must include in the application the following 

2 information: 

3 (1) A description of the services to be furnished 

4 by the applicant. 

5 (2) The amounts and sources of funding that 

6 the applicant will expend, including estimates of the 

7 amount of payments the applicant will receive from 

8 sources other than the grant. 

9 (3) Such other information as the Secretary de10 termines to be appropriate. 

11 (d) ADDITIONAL CONTENTS OF APPLICATION.—In 

12 order to receive a grant under this section, an applicant 

13 must meet the following conditions: 

14 (1) The applicant furnishes the following serv15 ices: 

16 (A) Diagnosis and treatment of simple ill17 nesses and minor injuries. 

18 (B) Preventive health services, including 

19 health screenings. 

20 (C) Services provided for the purpose de21 scribed in subsection (b)(2). 

22 (D) Referrals and followups in situations 

23 involving illness or injury. 

24 (E) Health and social services, counseling 

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1 ferrals regarding mental health and substance 

2 abuse. 

3 (F) Such other services as the Secretary 

4 determines to be appropriate. 

5 (2) The applicant is a participating provider in 

6 the State’s program for medical assistance under 

7 title XIX of the Social Security Act. 

8 (3) The applicant does not impose charges on 

9 students or their families for services (including col10 lection of any cost-sharing for services under the 

11 comprehensive benefit package that otherwise would 

12 be required). 

13 (4) The applicant has reviewed and will periodi14 cally review the needs of the population served by 

15 the applicant in order to ensure that its services are 

16 accessible to the maximum number of school-aged 

17 children in the area, and that, to the maximum ex18 tent possible, barriers to access to services of the ap19 plicant are removed (including barriers resulting 

20 from the area’s physical characteristics, its eco21 nomic, social and cultural grouping, the health care 

22 utilization patterns of such children, and available 

23 transportation). 

24 (5) In the case of an applicant which serves a 

25 population that includes a substantial proportion of 

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1 individuals of limited English speaking ability, the 

2 applicant has developed a plan to meet the needs of 

3 such population to the extent practicable in the lan4 guage and cultural context most appropriate to such 

5 individuals. 

6 (6) The applicant will provide non-Federal con7 tributions toward the cost of the project in an 

8 amount determined by the Secretary. 

9 (7) The applicant will operate a quality assur10 ance program consistent with section 734(d). 

11 (e) DURATION OF GRANT.—A grant under this sec12 tion shall be for a period determined by the Secretary. 

13 (f) REPORTS.—A recipient of funding under this sec14 tion shall provide such reports and information as are re15 quired in regulations of the Secretary. 

16 SEC. 736. FEDERAL ADMINISTRATIVE COSTS. 

17 Of the amounts made available under section 731, the 

18 Secretary may reserve not more than 5 percent for admin19 istrative expenses regarding this subtitle. 

20 SEC. 737. DEFINITIONS. 

21 For purposes of this subtitle: 

22 (1) The term ‘‘adolescent children’’ has the 

23 meaning given such term in section 732(c). 

24 (2) The term ‘‘at risk’’ means at-risk with re25 spect to health. 

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1 (3) The term ‘‘community health center’’ has 

2 the meaning given such term in section 330 of the 

3 Public Health Service Act. 

4 (4) The term ‘‘health professional shortage 

5 area’’ means a health professional shortage area des6 ignated under section 332 of the Public Health Serv7 ice Act. 

8 (5) The term ‘‘medically underserved popu9 lation’’ has the meaning given such term in section 

10 330 of the Public Health Service Act. 

11 (6) The term ‘‘school-aged children’’ has the 

12 meaning given such term in section 732(c). 

13 TITLE VIII—FINANCING PROVI14 SIONS; AMERICAN HEALTH 

15 SECURITY TRUST FUND 

16 SEC. 800. AMENDMENT OF 1986 CODE; SECTION 15 NOT TO 

17 APPLY. 

18 (a) AMENDMENT OF 1986 CODE.—Except as other19 wise expressly provided, whenever in this title an amend20 ment or repeal is expressed in terms of an amendment 

21 to, or repeal of, a section or other provision, the reference 

22 shall be considered to be made to a section or other provi23 sion of the Internal Revenue Code of 1986. 

24 (b) SECTION 15 NOT TO APPLY.—The amendments 

25 made by subtitle B shall not be treated as a change in 

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1 a rate of tax for purposes of section 15 of the Internal 

2 Revenue Code of 1986. 

3 Subtitle A—American Health 

4 Security Trust Fund 

5 SEC. 801. AMERICAN HEALTH SECURITY TRUST FUND. 

6 (a) IN GENERAL.—There is hereby created on the 

7 books of the Treasury of the United States a trust fund 

8 to be known as the American Health Security Trust Fund 

9 (in this section referred to as the ‘‘Trust Fund’’). The 

10 Trust Fund shall consist of such gifts and bequests as 

11 may be made and such amounts as may be deposited in, 

12 or appropriated to, such Trust Fund as provided in this 

13 Act. 

14 (b) APPROPRIATIONS INTO TRUST FUND.— 

15 (1) TAXES.—There are hereby appropriated to 

16 the Trust Fund for each fiscal year (beginning with 

17 fiscal year 2008), out of any moneys in the Treasury 

18 not otherwise appropriated, amounts equivalent to 

19 100 percent of the aggregate increase in tax liabil20 ities under the Internal Revenue Code of 1986 which 

21 is attributable to the application of the amendments 

22 made by this title. The amounts appropriated by the 

23 preceding sentence shall be transferred from time to 

24 time (but not less frequently than monthly) from the 

25 general fund in the Treasury to the Trust Fund, 

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1 such amounts to be determined on the basis of esti2 mates by the Secretary of the Treasury of the taxes 

3 paid to or deposited into the Treasury; and proper 

4 adjustments shall be made in amounts subsequently 

5 transferred to the extent prior estimates were in ex6 cess of or were less than the amounts that should 

7 have been so transferred. 

8 (2) CURRENT PROGRAM RECEIPTS.—Notwith9 standing any other provision of law, there are hereby 

10 appropriated to the Trust Fund for each fiscal year 

11 (beginning with fiscal year 2008) the amounts that 

12 would otherwise have been appropriated to carry out 

13 the following programs: 

14 (A) The medicare program, under parts A, 

15 B, and D of title XVIII of the Social Security 

16 Act (other than amounts attributable to any 

17 premiums under such parts). 

18 (B) The medicaid program, under State 

19 plans approved under title XIX of such Act. 

20 (C) The Federal employees health benefit 

21 program, under chapter 89 of title 5, United 

22 States Code. 

23 (D) The TRICARE program (formerly 

24 known as the CHAMPUS program), under 

25 chapter 55 of title 10, United States Code. 

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1 (E) The maternal and child health pro2 gram (under title V of the Social Security Act), 

3 vocational rehabilitation programs, programs 

4 for drug abuse and mental health services 

5 under the Public Health Service Act, programs 

6 providing general hospital or medical assistance, 

7 and any other Federal program identified by 

8 the Board, in consultation with the Secretary of 

9 the Treasury, to the extent the programs pro10 vide for payment for health services the pay11 ment of which may be made under this Act. 

12 (c) INCORPORATION OF PROVISIONS.—The provisions 

13 of subsections (b) through (i) of section 1817 of the Social 

14 Security Act shall apply to the Trust Fund under this Act 

15 in the same manner as they applied to the Federal Hos16 pital Insurance Trust Fund under part A of title XVIII 

17 of such Act, except that the American Health Security 

18 Standards Board shall constitute the Board of Trustees 

19 of the Trust Fund. 

20 (d) TRANSFER OF FUNDS.—Any amounts remaining 

21 in the Federal Hospital Insurance Trust Fund or the Fed22 eral Supplementary Medical Insurance Trust Fund after 

23 the settlement of claims for payments under title XVIII 

24 have been completed, shall be transferred into the Amer25 ican Health Security Trust Fund. 

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1 Subtitle B—Taxes Based on Income 

2 and Wages 

3 SEC. 811. PAYROLL TAX ON EMPLOYERS. 

4 (a) IN GENERAL.—Section 3111 (relating to tax on 

5 employers) is amended by redesignating subsection (c) as 

6 subsection (d) and inserting after subsection (b) the fol7 lowing new subsection: 

8 ‘‘(c) HEALTH CARE.—In addition to other taxes, 

9 there is hereby imposed on every employer an excise tax, 

10 with respect to having individuals in his employ, equal to 

11 8.7 percent of the wages (as defined in section 3121(a)) 

12 paid by him with respect to employment (as defined in 

13 section 3121(b)).’’. 

14 (b) SELF-EMPLOYMENT INCOME.—Section 1401 (re15 lating to rate of tax on self-employment income) is amend16 ed by redesignating subsection (c) as subsection (d) and 

17 inserting after subsection (b) the following new subsection: 

18 ‘‘(c) HEALTH CARE.—In addition to other taxes, 

19 there shall be imposed for each taxable year, on the self20 employment income of every individual, a tax equal to 8.7 

21 percent of the amount of the self-employment income for 

22 such taxable year.’’. 

23 (c) COMPARABLE TAXES FOR RAILROAD SERV24 ICES.— 

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1 (1) TAX ON EMPLOYERS.—Section 3221 is 

2 amended by redesignating subsection (c) as sub3 sections (d) and inserting after subsection (b) the 

4 following new subsection: 

5 ‘‘(c) HEALTH CARE.—In addition to other taxes, 

6 there is hereby imposed on every employer an excise tax, 

7 with respect to having individuals in his employ, equal to 

8 8.7 percent of the compensation paid by such employer 

9 for services rendered to such employer.’’. 

10 (2) TAX ON EMPLOYEE REPRESENTATIVES.— 

11 Section 3211 (relating to tax on employee represent12 atives) is amended by redesignating subsection (c) as 

13 subsection (d) and inserting after subsection (b) the 

14 following new paragraph: 

15 ‘‘(c) HEALTH CARE.—In addition to other taxes, 

16 there is hereby imposed on the income of each employee 

17 representative a tax equal to 8.7 percent of the compensa18 tion received during the calendar year by such employee 

19 representative for services rendered by such employee rep20 resentative.’’. 

21 (3) NO APPLICABLE BASE.—Subparagraph (A) 

22 of section 3231(e)(2) is amended by adding at the 

23 end thereof the following new clause: 

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1 ‘‘(iv) HEALTH CARE TAXES.—Clause 

2 (i) shall not apply to the taxes imposed by 

3 sections 3221(c) and 3211(c).’’. 

4 (4) TECHNICAL AMENDMENT.— 

5 (A) Subsection (d) of section 3211, as re6 designated by paragraph (2), is amended by 

7 striking ‘‘and (b)’’ and inserting ‘‘, (b), and 

8 (c)’’. 

9 (B) Subsection (d) of section 3221, as re10 designated by paragraph (1), is amended by 

11 striking ‘‘and (b)’’ and inserting ‘‘, (b), and 

12 (c)’’. 

13 (d) EFFECTIVE DATE.—The amendments made by 

14 this section shall apply to remuneration paid after Decem15 ber 31, 2008. 

16 SEC. 812. HEALTH CARE INCOME TAX. 

17 (a) GENERAL RULE.—Subchapter A of chapter 1 (re18 lating to determination of tax liability) is amended by add19 ing at the end thereof the following new part: 

20 ‘‘PART VIII—HEALTH CARE INCOME TAX ON 

21 INDIVIDUALS 

‘‘Sec. 59B. Health care income tax. 

22 ‘‘SEC. 59B. HEALTH CARE INCOME TAX. 

23 ‘‘(a) IMPOSITION OF TAX.—In the case of an indi24 vidual, there is hereby imposed a tax (in addition to any 

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1 other tax imposed by this subtitle) equal to 2.2 percent 

2 of the taxable income of the taxpayer for the taxable year. 

3 ‘‘(b) NO CREDITS AGAINST TAX; NO EFFECT ON

4 MINIMUM TAX.—The tax imposed by this section shall not 

5 be treated as a tax imposed by this chapter for purposes 

6 of determining— 

7 ‘‘(1) the amount of any credit allowable under 

8 this chapter, or 

9 ‘‘(2) the amount of the minimum tax imposed 

10 by section 55. 

11 ‘‘(c) SPECIAL RULES.— 

12 ‘‘(1) TAX TO BE WITHHELD, ETC.—For pur13 poses of this title, the tax imposed by this section 

14 shall be treated as imposed by section 1. 

15 ‘‘(2) REIMBURSEMENT OF TAX BY EMPLOYER

16 NOT INCLUDIBLE IN GROSS INCOME.—The gross in17 come of an employee shall not include any payment 

18 by his employer to reimburse the employee for the 

19 tax paid by the employee under this section. 

20 ‘‘(3) OTHER RULES.—The rules of section 

21 59A(d) shall apply to the tax imposed by this sec22 tion.’’. 

23 (b) CLERICAL AMENDMENT.—The table of parts for 

24 subchapter A of chapter 1 is amended by adding at the 

25 end the following new item: 

‘‘PART VIII. HEALTH CARE INCOME TAX ON INDIVIDUALS.’’. 

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1 (c) EFFECTIVE DATE.—The amendments made by 

2 this section shall apply to taxable years beginning after 

3 December 31, 2008. 

4 Subtitle C—Increase in Excise 

5 Taxes on Tobacco Products 

6 SEC. 821. INCREASE IN EXCISE TAXES ON TOBACCO PROD7 UCTS. 

8 (a) CIGARETTES.—Subsection (b) of section 5701 is 

9 amended— 

10 (1) by striking ‘‘$19.50 per thousand ($17 per 

11 thousand on cigarettes removed during 2000 or 

12 2001)’’ in paragraph (1) and inserting ‘‘$22.50 per 

13 thousand’’, and 

14 (2) by striking ‘‘$40.95 per thousand ($35.70 

15 per thousand on cigarettes removed during 2000 or 

16 2001)’’ in paragraph (2) and inserting ‘‘$47.25 per 

17 thousand’’. 

18 (b) CIGARS.—Subsection (a) of section 5701 is 

19 amended— 

20 (1) in paragraph (1), by striking ‘‘$1.828 cents 

21 per thousand ($1.594 per thousand on cigars re22 moved during 2000 or 2001)’’ in paragraph (1) and 

23 inserting ‘‘$2.11 per thousand’’, and 

24 (2) in paragraph (2) by striking ‘‘equal to’’ and 

25 all that follows in such paragraph and inserting 

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1 ‘‘equal to 23.91 percent of the price for which sold 

2 but not more than $56.25 per thousand.’’ 

3 (c) CIGARETTE PAPERS.—Subsection (c) of section 

4 5701 is amended by striking ‘‘1.22 cents (1.06 cents on 

5 cigarette papers removed during 2000 or 2001)’’ and in6 serting ‘‘1.41 cents’’. 

7 (d) CIGARETTE TUBES.—Subsection (d) of section 

8 5701 is amended by striking ‘‘2.44 cents (2.13 cents on 

9 cigarette tubes removed during 2000 or 2001)’’ and in10 serting ‘‘2.81 cents’’. 

11 (e) SMOKELESS TOBACCO.—Subsection (e) of section 

12 5701 is amended— 

13 (1) by striking ‘‘58.5 cents (51 cents on snuff 

14 removed during 2000 or 2001)’’ in paragraph (1) 

15 and inserting ‘‘67.5 cents’’, and 

16 (2) by striking ‘‘19.5 cents (17 cents on chew17 ing tobacco removed during 2000 or 2001)’’ in para18 graph (2) and inserting ‘‘22.5 cents’’. 

19 (f) PIPE TOBACCO.—Subsection (f) of section 5701 

20 is amended by striking ‘‘$1.0969 cents (95.67 cents on 

21 pipe tobacco removed during 2000 or 2001)’’ and insert22 ing ‘‘$1.27’’. 

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

24 this section shall apply to articles removed (as defined in 

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1 section 5702(k) of the Internal Revenue Code of 1986) 

2 after December 31, 2008. 

3 (h) FLOOR STOCKS TAXES.— 

4 (1) IMPOSITION OF TAX.—On tobacco products 

5 and cigarette papers and tubes manufactured in or 

6 imported into the United States which are removed 

7 before January 1, 2009, and held on such date for 

8 sale by any person, there is hereby imposed a tax in 

9 an amount equal to the excess of— 

10 (A) the tax which would be imposed under 

11 section 5701 of the Internal Revenue Code of 

12 1986 on the article if the article had been re13 moved on such date, over 

14 (B) the prior tax (if any) imposed under 

15 section 5701 or 7652 of such Code on such ar16 ticle. 

17 (2) AUTHORITY TO EXEMPT CIGARETTES HELD

18 IN VENDING MACHINES.—To the extent provided in 

19 regulations prescribed by the Secretary, no tax shall 

20 be imposed by paragraph (1) on cigarettes held for 

21 retail sale on January 1, 2009, by any person in any 

22 vending machine. If the Secretary provides such a 

23 benefit with respect to any person, the Secretary 

24 may reduce the $500 amount in paragraph (3) with 

25 respect to such person. 

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1 (3) CREDIT AGAINST TAX.—Each person shall 

2 be allowed as a credit against the taxes imposed by 

3 paragraph (1) an amount equal to $500. Such credit 

4 shall not exceed the amount of taxes imposed by 

5 paragraph (1) for which such person is liable. 

6 (4) LIABILITY FOR TAX AND METHOD OF PAY7 MENT.— 

8 (A) LIABILITY FOR TAX.—A person hold9 ing any article on January 1, 2009, to which 

10 any tax imposed by paragraph (1) applies shall 

11 be liable for such tax. 

12 (B) METHOD OF PAYMENT.—The tax im13 posed by paragraph (1) shall be paid in such 

14 manner as the Secretary shall prescribe by reg15 ulations. 

16 (C) TIME FOR PAYMENT.—The tax im17 posed by paragraph (1) shall be paid on or be18 fore July 31, 2009. 

19 (5) ARTICLES IN FOREIGN TRADE ZONES.— 

20 Notwithstanding the Act of June 18, 1934 (48 Stat. 

21 998, 19 U.S.C. 81a) and any other provision of law, 

22 any article which is located in a foreign trade zone 

23 on January 1, 2009, shall be subject to the tax im24 posed by paragraph (1) if— 

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1 (A) internal revenue taxes have been deter2 mined, or customs duties liquidated, with re3 spect to such article before such date pursuant 

4 to a request made under the 1st proviso of sec5 tion 3(a) of such Act, or 

6 (B) such article is held on such date under 

7 the supervision of a customs officer pursuant to 

8 the 2d proviso of such section 3(a). 

9 (6) DEFINITIONS.—For purposes of this sub10 section— 

11 (A) IN GENERAL.—Terms used in this sub12 section which are also used in section 5702 of 

13 the Internal Revenue Code of 1986 shall have 

14 the respective meanings such terms have in 

15 such section. 

16 (B) SECRETARY.—The term ‘‘Secretary’’ 

17 means the Secretary of the Treasury or his del18 egate. 

19 (7) CONTROLLED GROUPS.—Rules similar to 

20 the rules of section 5061(e)(3) of such Code shall 

21 apply for purposes of this subsection. 

22 (8) OTHER LAWS APPLICABLE.—All provisions 

23 of law, including penalties, applicable with respect to 

24 the taxes imposed by section 5701 of such Code 

25 shall, insofar as applicable and not inconsistent with 

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1 the provisions of this subsection, apply to the floor 

2 stocks taxes imposed by paragraph (1), to the same 

3 extent as if such taxes were imposed by such section 

4 5701. The Secretary may treat any person who bore 

5 the ultimate burden of the tax imposed by para6 graph (1) as the person to whom a credit or refund 

7 under such provisions may be allowed or made. 

8 TITLE IX—CONFORMING AMEND9 MENTS TO THE EMPLOYEE 

10 RETIREMENT INCOME SECU11 RITY ACT OF 1974 

12 SEC. 901. ERISA INAPPLICABLE TO HEALTH COVERAGE AR13 RANGEMENTS UNDER STATE HEALTH SECU14 RITY PROGRAMS. 

15 Section 4 of the Employee Retirement Income Secu16 rity Act of 1974 (29 U.S.C. 1003) is amended— 

17 (1) in subsection (a), by striking ‘‘(b) or (c)’’ 

18 and inserting ‘‘(b), (c), or (d)’’; and 

19 (2) by adding at the end the following new sub20 section: 

21 ‘‘(d) The provisions of this title shall not apply to 

22 any arrangement forming a part of a State health security 

23 program established pursuant to section 101(b) of the 

24 American Health Security Act of 2007.’’. 

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1 SEC. 902. EXEMPTION OF STATE HEALTH SECURITY PRO2 GRAMS FROM ERISA PREEMPTION. 

3 Section 514(b) of the Employee Retirement Income 

4 Security Act of 1974 (29 U.S.C. 1144(b)) (as amended 

5 by sections 904(b)(3)(B) and 1002(b) of this Act) is 

6 amended by adding at the end the following new para7 graph: 

8 ‘‘(8) Subsection (a) of this section shall not apply to 

9 State health security programs established pursuant to 

10 section 101(b) of the American Health Security Act of 

11 2007.’’. 

12 SEC. 903. PROHIBITION OF EMPLOYEE BENEFITS DUPLICA13 TIVE OF BENEFITS UNDER STATE HEALTH 

14 SECURITY PROGRAMS; COORDINATION IN 

15 CASE OF WORKERS’ COMPENSATION. 

16 (a) IN GENERAL.—Part 5 of subtitle B of title I of 

17 the Employee Retirement Income Security Act of 1974 is 

18 amended by adding at the end the following new section: 

19 ‘‘PROHIBITION OF EMPLOYEE BENEFITS DUPLICATIVE OF

20 STATE HEALTH SECURITY PROGRAM BENEFITS; CO21 ORDINATION IN CASE OF WORKERS’ COMPENSATION

22 ‘‘SEC. 519. (a) Subject to subsection (b), no employee 

23 benefit plan may provide benefits which duplicate payment 

24 for any items or services for which payment may be made 

25 under a State health security program established pursumstockstill on PROD1PC66 with BILLS

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1 ant to section 101(b) of the American Health Security Act 

2 of 2007. 

3 ‘‘(b)(1) Each workers compensation carrier that is 

4 liable (or would be liable but for the enactment of the 

5 American Health Security Act of 2007) for payment for 

6 workers compensation services furnished in a State shall 

7 reimburse the State health security plan for the State in 

8 which the services are furnished for the cost of such serv9 ices. 

10 ‘‘(2) In this subsection: 

11 ‘‘(A) The term ‘workers compensation carrier’ 

12 means an insurance company that underwrites work13 ers compensation medical benefits with respect to 1 

14 or more employers and includes an employer or fund 

15 that is financially at risk for the provision of work16 ers compensation medical benefits. 

17 ‘‘(B) The term ‘workers compensation medical 

18 benefits’ means, with respect to an enrollee who is 

19 an employee subject to the workers compensation 

20 laws of a State, the comprehensive medical benefits 

21 for work-related injuries and illnesses provided for 

22 under such laws with respect to such an employee. 

23 ‘‘(C) The term ‘workers compensation services’ 

24 means items and services included in workers com25 pensation medical benefits and includes items and 

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1 services (including rehabilitation services and long2 term-care services) commonly used for treatment of 

3 work-related injuries and illnesses.’’. 

4 (b) CONFORMING AMENDMENT.—Section 4(b) of 

5 such Act (29 U.S.C. 1003(b)) is amended by adding at 

6 the end the following: ‘‘Paragraph (3) shall apply subject 

7 to section 519(b) (relating to reimbursement of State 

8 health security plans by workers compensation carriers).’’. 

9 (c) CLERICAL AMENDMENT.—The table of contents 

10 in section 1 of such Act is amended by inserting after the 

11 item relating to section 518 the following new items: 

‘‘Sec. 519. Prohibition of employee benefits duplicative of state health security 

program benefits; coordination in case of workers’ compensation.’’. 

12 SEC. 904. REPEAL OF CONTINUATION COVERAGE REQUIRE13 MENTS UNDER ERISA AND CERTAIN OTHER 

14 REQUIREMENTS RELATING TO GROUP 

15 HEALTH PLANS. 

16 (a) IN GENERAL.—Part 6 of subtitle B of title I of 

17 the Employee Retirement Income Security Act of 1974 

18 (29 U.S.C. 1161 et seq.) is repealed. 

19 (b) CONFORMING AMENDMENTS.— 

20 (1) Section 502(a) of such Act (29 U.S.C. 

21 1132(a)) is amended— 

22 (A) by striking paragraph (7); and 

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1 (B) by redesignating paragraphs (8), (9), 

2 and (10) as paragraphs (7), (8), and (9), re3 spectively. 

4 (2) Section 502(c)(1) of such Act (29 U.S.C. 

5 1132(c)(1)) is amended by striking ‘‘paragraph (1) 

6 or (4) of section 606,’’. 

7 (3) Section 514(b) of such Act (29 U.S.C. 

8 1144(b)) is amended— 

9 (A) in paragraph (7), by striking ‘‘title),’’ 

10 the first place it appears and all that follows 

11 and inserting ‘‘title).’’; and 

12 (B) by striking paragraph (8). 

13 (4) The table of contents in section 1 of the 

14 Employee Retirement Income Security Act of 1974 

15 is amended by striking the items relating to part 6 

16 of subtitle B of title I of such Act. 

17 SEC. 905. EFFECTIVE DATE OF TITLE. 

18 The amendments made by this title shall take effect 

19 January 1, 2008. 

20 TITLE X—ADDITIONAL 

21 CONFORMING AMENDMENTS 

22 SEC. 1001. REPEAL OF CERTAIN PROVISIONS IN INTERNAL 

23 REVENUE CODE OF 1986. 

24 The provisions of titles III and IV of the Health In25 surance Portability and Accountability Act of 1996, other 

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1 than subtitles D and H of title III and section 342, are 

2 repealed and the provisions of law that were amended or 

3 repealed by such provisions are hereby restored as if such 

4 provisions had not been enacted. 

5 SEC. 1002. REPEAL OF CERTAIN PROVISIONS IN THE EM6 PLOYEE RETIREMENT INCOME SECURITY 

7 ACT OF 1974. 

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

9 the Employee Retirement Income Security Act of 1974 is 

10 repealed and the items relating to such part in the table 

11 of contents in section 1 of such Act are repealed. 

12 (b) CONFORMING AMENDMENT.—Section 514(b) of 

13 such Act (29 U.S.C. 1144(b)) is amended by striking 

14 paragraph (9). 

15 SEC. 1003. REPEAL OF CERTAIN PROVISIONS IN THE PUB16 LIC HEALTH SERVICE ACT AND RELATED 

17 PROVISIONS. 

18 (a) IN GENERAL.—Titles XXII and XXVII of the 

19 Public Health Service Act are repealed. 

20 (b) ADDITIONAL AMENDMENTS.— 

21 (1) Section 1301(b) of such Act (42 U.S.C. 

22 300e(b)) is amended by striking paragraph (6). 

23 (2) Sections 104 and 191 of the Health Insur24 ance Portability and Accountability Act of 1996 are 

25 repealed. 

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178 

•HR 1200 IH

1 SEC. 1004. EFFECTIVE DATE OF TITLE. 

2 The amendments made by this title shall take effect 

3 January 1, 2009. 

Æ 

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